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## NOTEs TO THE FINANCIAL sTATEMENTs 

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

## 16. DERIVATIVE FINANCIAL INsTRUMENTs 

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* Present value of exercise price of the put option over subsidiary shares. The put and the call option are exercisable in the period July 2013 – September 2013. 

The Group uses derivative financial instruments to reduce the exposure to fluctuations in interest rates and foreign currency rates. 

The Group formally designates hedging instruments to an underlying exposure and details the risk management objectives and strategies for undertaking hedge transactions. The Group assesses at inception and on a semi-annual basis thereafter, as to whether the derivative financial instruments used in the hedging transactions are effective at offsetting the risks they are designed to hedge. Due to the high effectiveness between the hedging instrument and underlying exposure being hedged, value changes in the derivatives are generally offset by changes in the fair value or cash flows of the underlying exposure. Any derivatives not formally designated as part of a hedging relationship are fair valued with any changes in fair value recognised in the income statement. 

The derivatives entered into are over the counter instruments within liquid markets. 

## HEDGING ACTIVITIES 

## (i) CASH FloW HedGeS – inTeReST RATe And CRoSS CuRRenCy SWAPS 

At 30 June 2013, the Group held cross currency swaps designated as hedges of future contracted interest payments on the USD denominated senior notes issued in July 2007. The cross currency swaps are being used to hedge a combination of future movements in interest rates and foreign currency exchange rates. 

