NOTES TO THE FINANCIAL STATEMENTS
RAMSAY HEALTH CARE LIMITED
17 Financial risk management (Continued)
Interest rate sensitivity
The following sensitivity analysis has been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period.
At the end of the reporting period, as specified in the following table, if the interest rates had been higher or lower than the year end rates
and all other variables were held constant, the consolidated entity’s post tax profit and Other Comprehensive Income would have been affected
Judgements of reasonably possible movements:
Post Tax Profit
Other Comprehensive Income
+60 basis points (2020: +45 basis points) (3.5) -1 1.4 1.4
-60 basis points (2020: -45 basis points) 3.5 -1 (1.1) (1.0)
+50 basis points (2020: +55 basis points) 2.2 (0.1) -2 1.0
-50 basis points (2020: -55 basis points) (2.2) 0.3 -2 (0.9)
+30 basis points (2020: +40 basis points) 14.3 (4.8) -2 11.8
-30 basis points (2020: -40 basis points) (12.5) 4.8 -2 (12.0)
1 There would be no significant impact on net profit as unhedged interest rate exposures are not significant.
2 There were no outstanding interest rate derivative contracts which have been designated as effective hedges at the year end.
The assumed movement in basis points for the interest rate sensitivity analysis is based on the interest rate volatility observed during the
relevant financial year. The change in sensitivity applied for 2021, versus 2020, is due to the change in interest rate volatilities applicable
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities
(when revenue or expense is denominated in a different currency from the Group’s functional currency) and the Group’s net investments in
The Group manages its foreign exchange rate exposure within approved policy parameters by utilising foreign currency swaps and forwards.
When a derivative is entered into for the purpose of being a hedging instrument, the Group negotiates the terms of those derivatives to
match the terms of the hedged exposure. For hedges of forecast transactions, the derivatives cover the period of exposure from the point
the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in
The Group hedges its exposure to fluctuations on the translation into Australian dollars of its foreign operations by holding net borrowings in
foreign currencies and by using foreign currency swaps and forward contracts.
Annual Report 2021 113