Page 62 - NZPM Annual Report 2017

NZPM GROUP ANNUAL REPORT 2017

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 March 2017

20. FINANCIAL RISK MANAGEMENT (CONTINUED)

(e) Financial instruments by category
Financial assets:
All financial assets (cash and cash equivalents, trade and other receivables) are categorised as loans and
receivables.

Financial liabilities:
Financial liabilities include several categories:

Fair value through profit or loss:
Derivatives

Measure at amortised cost:
Bank overdraft
Trade and other payables
Borrowings (finance lease liabilities and secured bank loans)
Co-operative share capital

(f) Fair value hierarchy

The fair value of financial instruments traded in an active market is based on the quoted market prices at the
balance date. These instruments are included in Level 1.

The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. Specific valuation techniques used to value financial instruments include:

• Quoted market prices or dealer quotes for similar instruments;
• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on
the observable yield curve;
• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance
date, with the resulting value discounted back to present value;
If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in
Level 3.

The fair value of the following financial assets and liabilities approximate their carrying amounts:
cash and cash equivalents, trade and other receivables, trade and other payables and loans and borrowings

2017 2016
LEVEL 2
$’000 $’000
Interest rate swaps 736 1,217
Forward foreign exchange contracts (61) 40

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