KATHMANDU A NNUAL REPORT  2013 49 10 DERIVATIVE FINANCIAL INSTRUMENTS (a) Interest rate swaps - cash flow hedge  (b) Foreign exchange contracts - cash flow hedge 11 INVENTORIES Inventory has been reviewed for stock selling below cost and no provision (2012: $0) has been made. Refer note 26 for timing of expected cash flows relating to  interest rate swaps. No material hedge ineffectiveness for interest rate swaps or  foreign exchange contracts exists as at balance date (2012:Nil).  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$90,700,000, NZ$107,499,336  (2012: US$76,750,000, NZ$99,138,128). 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 $44,971,623  (2012: $45,940,337). The fixed interest rates range between  3.05% and 5.71% (2012: 3.99% and 5.71%). The above table shows the Group’s financial derivative holdings at year end. Refer to note 2(o) for information on the calculation of fair  values.  GROUP PARENT 2013  NZ$’000 2012  NZ$’000 2013  NZ$’000 2012  NZ$’000 Asset Interest rate swaps - cash flow hedge 27 - - - Foreign exchange contracts - cash flow hedge 7,887 - - - 7,914 - - - Less non-current portion: Interest rate swaps - cash flow hedge 27 - - - Current portion 7,887 - - - Liabilities Interest rate swaps - cash flow hedge 686 990 - - Foreign exchange contracts - cash flow hedge - 2,889 - - 686 3,879 - - Less non-current portion: Interest rate swaps - cash flow hedge 628 751 - - Current portion 58 3,128 - - GROUP PARENT 2013 2012 2013 2012 NZ$’000 NZ$’000 NZ$’000 NZ$’000 Trading stock 64,597 60,391 - - Goods in transit 15,434 12,904 - - 80,031 73,295 - -