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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
f)
Net fair values of financial assets and liabilities
continued
Methods and valuation techniques
continued
The fair value of interest bearing liabilities is:
Listed debt:
10-Year-Fixed-Rate Guaranteed Notes fair value US$212.4 million, equivalent to $295.0 million; carrying value US$201.3
million, equivalent to $279.6 million (31 December 2015: fair value US$207.5 million, equivalent to $284.2 million; carrying value US
$201.3 million, equivalent to $275.8 million).
Unlisted debt
: Guaranteed Senior Notes fair value US$368.3 million, equivalent to $511.6 million; carrying value US$339.0 million,
equivalent to $470.8 million (31 December 2015: fair value US$377.6 million, equivalent to $517.3 million; carrying value US$339.0
million, equivalent to $464.4 million).
Cash flow hedges
The Group’s foreign currency forward contracts are not traded in active markets. The fair values of these contracts are estimated using a
valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates and are included in Level
2 of the fair value hierarchy.
Option to acquire shares
The Group’s option to acquire shares is not related to a listed entity and as such the fair value cannot be observed from a market price. The
Monte-Carlo simulation technique used incorporates market observable data including multiples of similar companies to derive a value
of the company and compares this to the contractual exercise price to determine a fair value.
Valuation process
The internal valuation process for unlisted investments, unlisted debt and cash flow hedges
is managed by a team in the Group finance
department which performs the valuations required for financial reporting purposes. The valuation team reports to the CIMIC’s CFO.
Discussions on valuation processes and outcomes are held between the valuation team and CFO as required. The methods and valuation
techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.
Valuation inputs
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements. There were no significant inter-relationships between unobservable inputs that materially affect fair values.
g)
Interest bearing loans
Syndicated loans
On 21 June 2013, CIMIC Finance Limited, a wholly owned subsidiary of the Company, entered into a syndicated bank facility for $1,000.0
million, maturing on 21 June 2016. On 8 December 2014 the maturity date of this facility was extended to 8 December 2017. Carrying
amount at 31 December 2016: $nil million (carrying amount at 31 December 2015: $nil million).
Financial assets/ financial
liabilities
Significant unobservable inputs
Range of inputs
Relationship of unobservable inputs to fair
value
Unlisted investments
Growth rates
2.5% - 3.0%
The impact on a change in the unobservable
inputs would not change significantly
amounts recognised in profit or loss, total
assets or total liabilities or total equity
Internal rate of return
9%
Discount rates
10% - 15%
Option to acquire shares
Expected exercise period
1 – 10 years
EBITDA multiple
6-12 times
Discount rates
15%
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