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CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS
CONTINUED
e) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flow associated with the instrument will fluctuate due to
changes in the market interest rates. The Group uses derivative financial instruments to assist in managing its interest rate exposure.
Speculative trading is not undertaken. The Group’s interest rate risk arises from the interest receivable on
’Cash and cash equivalents’
and interest payable on
‘Interest bearing loans’
.
At the reporting date it is estimated that an increase of one percentage point in floating interest rates would have increased the Group’s
profit after tax and retained earnings by $8.3 million
(31 December 2015: increased by $13.6 million). A one percentage point decrease
in interest rates would have an equal and opposite effect.
Profile
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
December 2016
$m
December 2015
$m
Fixed rate instruments
Financial assets
-
-
Financial liabilities
1
(773.3)
(753.9)
Total fixed rate instruments
(773.3)
(753.9)
Variable rate instruments
Financial assets
1,576.5
2,167.8
Financial liabilities
1
(393.9)
(351.0)
Total variable rate instruments
1,182.6
1,816.8
1
Total interest bearing financial liabilities includes liabilities associated with held for sale during the reporting period. Refer to Note 30:
Held for sale.
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