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## 10 DERIVATIVE FINANCIAL INSTRUMENTS 

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The above table shows the Group’s financial derivative holdings at year end. Refer to note 2(o) for information on the calculation of fair values. 

## (a) Interest rate swaps - cash flow hedge 

Interest rate swaps are to exchange a floating rate of interest for a fixed rate of interest. The objective of the transaction is to hedge the core borrowings of the business to minimise the impact of interest rate volatility within acceptable levels of risk thereby limiting the volatility on the Group’s financial results. The total amount of interest rate swaps at balance date was $44,971,623 (2012: $45,940,337). The fixed interest rates range between 3.05% and 5.71% (2012: 3.99% and 5.71%). 

Refer note 26 for timing of expected cash flows relating to interest rate swaps. 

## 11 INVENTORIES 

## (b) Foreign exchange contracts - cash flow hedge 

The objective of these contracts is to hedge highly probable anticipated foreign currency purchases against currency fluctuations. These contracts are timed to mature when import purchases are scheduled for payment. The total of foreign exchange contracts amount to US$90,700,000, NZ$107,499,336 (2012: US$76,750,000, NZ$99,138,128). 

No material hedge ineffectiveness for interest rate swaps or foreign exchange contracts exists as at balance date (2012:Nil). 

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Inventory has been reviewed for stock selling below cost and no provision (2012: $0) has been made. 

