50 annual report 2012  kAThMANdu 10 dERIVATIVE FINANCIAL INSTRuMENTS Group pArent 2012 nZ$’000 2011 nZ$’000 2012 nZ$’000 2011 nZ$’000 Asset Interest rate swaps - cash flow hedge - 2 - - - 2 - - Less non-current portion: - - - - Current portion - 2 - - Liabilities Interest rate swaps - cash flow hedge 990 340 - - Foreign exchange contracts - cash flow hedge 2,889 10,466 - - 3,879 10,806 - - Less non-current portion: Interest rate swaps - cash flow hedge 751 301 - - Current portion 3,128 10,505 - - 11 INVENTORIES (a) Interest rate swaps - cash flow hedge (b) Foreign exchange contracts - cash flow hedge The above table shows the Group’s financial derivative holdings at year end. Refer to note 2(o) for information on the calculation of fair values.  the objective of these contracts is to hedge highly probable  anticipated foreign currency purchases against currency  fluctuations. these contracts are timed to mature when  import purchases are scheduled for payment. the total of  foreign exchange contracts amount to uS$76,750,000,  nZ$ 99,138,128 (2011: uS $ 63,050,000, nZ$ 84,184,649 ). the effectiveness of the contracts is measured by comparing  the changes in the present value of the cash flow arising from  the hedged forecast purchase at the forward rate, with the  changes in fair value of the forward contract. Interest rate swaps are to exchange a floating rate of interest  for a fixed rate of interest. the objective of the transaction is  to hedge the core borrowings of the business to minimise the  impact of interest rate volatility within acceptable levels of risk  thereby limiting the volatility on the Group’s financial results.  the total amount of interest rate swaps at balance date was  $45,940,337 (2011: $40,284,450). the fixed interest rates  range between 3.99% and 5.71% (2011: 4.73% and 5.25%). the effectiveness of the contracts is measured by comparing  the changes in the present value of the cash flow arising  from the hedged forecast interest rate at fixed rate, with the  changes in fair value of the forward contract. Inventory has been reviewed for stock selling below cost and no provision (2011: $0) has been made. Group pArent 2012 nZ$’000 2011 nZ$’000 2012 nZ$’000 2011 nZ$’000 Trading stock 60,391 47,146 - - Goods in transit 12,904 6,855 - - 73,295 54,001 - -