Notes to the financial statements
Year ended 31 March 2016
31 Financial risk management (continued)
Interest rate risk
The Group’s exposure to fluctuations in interest rates relates primarily to interest rate swaps, cross currency swaps, loans
and borrowings (Note 15) and the ECS (Note 16). Interest rate risk is managed on an on-going basis with the primary
objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates.
As at 31 March 2016, the Group has interest rate swaps with total notional amount of $2,166.2 million (2015: $1,538.2
million), whereby the Group has agreed with counterparties to exchange, at specified intervals, the difference between
the floating rate benchmarks and fixed rate interest amounts calculated by reference to the agreed notional amounts.
As at 31 March 2015, the Group classified $150.0 million of interest rate swaps as hedging instruments in qualifying cash
flow hedges; hedge accounting was discontinued in the current financial year.
At the reporting date, the interest rate profile of the interest-bearing financial instruments that are subject to interest
rate risk was:
Group
Trust
Notional amount
Notional amount
2016
2015
2016
2015
$’000
$’000
$’000
$’000
Fixed rate instruments
Loans and borrowings
(422,880)
(319,140)
(422,880)
(319,140)
Exchangeable Collateralised Securities
(354,000)
(366,024)
–
–
Collateral loan
–
–
(354,000)
(366,024)
(776,880)
(685,164)
(776,880)
(685,164)
Variable rate instruments
Loans and borrowings
(2,897,755)
(2,052,829)
(2,209,305)
(2,037,304)
Interest rate swaps
1,816,244
1,138,200
968,200
1,138,200
Cross currency swaps
(405,562)
(210,678)
(405,562)
(210,678)
(1,487,073)
(1,125,307)
(1,646,667)
(1,109,782)
Sensitivity analysis
A 100 basis points (“bp”) movement in interest rates at the reporting date would increase/(decrease) total return and
Unitholders’ funds (before any tax effects) as shown in the table below. The analysis was performed on the same basis
for 2015.
.202
A-REIT ANNUAL REPORT
2015/2016
