30 June 2014 Notes to the Financial Statements Franking credits NOTE 34. FINANCIAL INSTRUMENTS Financial risk management objectives Market risk Mineral Resources Limited Annual Report 2014  83 Notes to the  Financial  Statements For personal use only The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: The Consolidated Entity’s activities expose it to a variety of financial risks: market risk (including foreign  currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Consolidated Entity’s overall  risk management program focuses on the unpredictability of financial markets and seeks to minimise potential  adverse effects on the financial performance of the Consolidated Entity. The Consolidated Entity uses derivative  financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives  are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Consolidated  Entity uses different methods to measure different types of risk to which it is exposed. These methods include  sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit  risk and beta analysis in respect of investment portfolios to determine market risk. Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board of  Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the Consolidated  Entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial  risks within the Consolidated Entity’s operating units. Finance reports to the Board on a monthly basis. The Consolidated Entity undertakes certain transactions denominated in foreign currency and is exposed to  foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial  liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using  sensitivity analysis and cash flow forecasting. The Consolidated Entity enters into forward exchange contracts to buy and sell specified amounts of foreign  currencies in the future at stipulated exchange rates. The objective in entering the forward exchange contracts  is to protect the Consolidated Entity against unfavourable exchange rate movements for both the contracted  and anticipated future sales undertaken in foreign currencies. As at 30 June 2014, there were no open forward  exchange contracts. The maturity, settlement amounts and the average contractual exchange rates of the Consolidated Entity’s  outstanding forward foreign exchange contracts at the reporting date was as follows: Foreign currency risk Sell Australian dollars Average exchange rates 30 June 2014 $’000 30 June 2013 $’000 30 June 2014 30 June 2013 Buy US dollars Maturity: 0 - 3 months - 4,888  - 1.0271  Consolidated 30 June 2014 $’000 30 June 2013 $’000 Franking credits available for subsequent financial years based on a tax rate of 30% 21,380  8,248  •  franking credits that will arise from the payment of the amount of the provision for income tax at the  reporting date •  franking debits that will arise from the payment of dividends recognised as a liability at the reporting date •  franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date