NOTES TO THE FINANCIAL STATEMENTS CONTINUED Notes to and forming part of the Consolidated Financial Statements For the period from incorporation to 26 June 2004 entity  entity 2004 2004 $’000 $’000 FINANCIAL INSTRUMENTS The parent entity and its controlled entity are parties to derivative financial instruments in the  normal course of business in order to hedge exposures to foreign exchange and interest rate changes. The economic entity retails products that have been imported from South East Asia. In order to protect against exchange rate movements, the economic entity has entered into forward exchange rate contracts to purchase USD. The contracts are timed to mature in line with forecasted payments  for imports and cover forecast purchases for the coming 3 months on a rolling basis. At balance date the following amounts were committed on foreign currency forward exchange contracts: - 7 to 12 months  0  0 Weighted average rate of contracts  70 cents  0 Buy United States dollars and sell Australian dollars with maturity  These forward exchange contracts are hedging future purchases and unrealised gains and losses on  the contracts, together with the costs of the contracts, are deferred and will be recognised in the  measurement of the underlying transaction provided the underlying contract is still expected to occur  as originally designated. Gains and losses arising from hedging contracts terminated prior to maturity are also carried forward  until the designated hedged transaction occurs. The following gains, losses and costs have been deferred as at the balance date:  - unrealised gains  16  0 - total gains (a)  16  0 - realised losses and costs  0  - unrealised losses and costs  0 - total losses and costs (refer (b))  0  0 Net gains/(losses and costs)  16  0 (a) Included in other creditors under Note 17 (b) Included in sundry debtors under Note 8  SUPER CHEAP AUTO GROUP LIMITED ANNUAL REPORT 2004 69