IGO Interactive Annual Report 2019

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2019 Notes to the consolidated financial statements 30 June 2019 (continued) Risk This section of the notes includes information on the Group's exposure to various risks and shows how these could affect the Group's financial position and performance. 20 Derivatives The Group has the following derivative financial instruments: 2019 $'000 2018 $'000 Current assets Diesel hedging contracts - cash flow hedges 484 1,990 484 1,990 (a) Instruments used by the Group Derivative financial instruments may be used by the Group in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates, commodity prices and diesel prices. The derivative financial instruments are classified as held for trading and accounted for at fair value through profit or loss unless they are designated as cash flow hedges. The Group's accounting policy for its cash flow hedges is set out below. The fair value of the derivative instruments at the reporting date is reflected in current and non-current assets and liabilities in the balance sheet and is calculated by comparing the contracted rate to the market rates for derivatives with the same length of maturity. Refer to note 21 and below for details of the diesel fuel risk being mitigated by the Group’s derivative instruments as at 30 June 2019 and 30 June 2018. Diesel The Group held various diesel fuel hedging contracts at 30 June 2019 and 30 June 2018 to reduce the exposure to future increases in the price of the Singapore gasoil component of landed diesel fuel cost. The following table details the diesel fuel hedging contracts outstanding at the reporting date: Litres of oil ('000) Weighted average price (AUD/litre) Fair value 2019 2018 2019 2018 2019 $'000 2018 $'000 0 - 6 months 8,756 5,400 0.67 0.51 272 1,342 6 -12 months 8,818 2,700 0.67 0.51 212 648 Total 17,574 8,100 0.67 0.51 484 1,990 (b) Recognition and measurement Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either: • hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges); or • hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges). Independence Group NL 38 100 — IGO ANNUAL REPORT 2019