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## NOTEs TO THE FINANCIAL sTATEMENTs 

FAIRFAx MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 30 JUNE 2013 

## 36. FINANCIAL AND CAPITAL RIsk MANAGEMENT (CONTINUED) 

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## Sensitivity analysis 

The table below shows the effect on net profit and equity after income tax if interest rates at reporting date had been 30% higher or lower with all other variables held constant, taking into account all underlying exposures and related hedges. Concurrent movements in interest rates and parallel shifts in the yield curves are assumed. 

A sensitivity of 30% (2012: 30%) has been selected as this is considered reasonable given the current level of both short term and long term Australian interest rates. A 30% sensitivity would move short term interest rates at 30 June 2013 from around 2.82% to 3.67% representing a 85 basis point shift (2012: 106 basis point shift). 

In 2013, 66% (2012: 72%) of the Group’s debt, taking into account all underlying exposures and related hedges was denominated in Australian Dollars; therefore, only the movement in Australian interest rates is used in this sensitivity analysis. 

Based on the sensitivity analysis, if interest rates were 30% higher, net profit would be impacted by the interest expense being higher on the Group’s net floating rate Australian Dollar positions during the year. 

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## (B) FoReiGn CuRRenCy RiSk 

Foreign currency risk refers to the risk that the value or the cash flows arising from a financial commitment, or recognised asset or liability will fluctuate due to changes in foreign currency rates. The Group’s foreign currency exchange risk arises primarily from: 

• borrowings denominated in foreign currency; and 

• firm commitments and/or highly probable forecast transactions for receipts and payments settled in foreign currencies and prices dependent on foreign currencies respectively. 

