Year-end Financial Instrument Check List

30 June marks the financial year-end for many Australian and New Zealand public and private companies, as well as Councils. With an ever increasing compliance burden, we have put together a practical check list for those entities that have exposure to financial instruments such as FX forwards, FX options and interest rate swaps. Those familiar with the international accounting standards understand the minefield that they are, with pages upon pages of text. We have boiled them down to five simple, practical and fundamental items.

 

Fair value (IFRS 13 / AASB 13)

IFRS 13 clearly states that valuations need to be an independent “exit price” for the transaction. It is hard to argue that a valuation from one of the counterparties to the transaction (i.e. the bank), constitutes an independent valuation, however, there are still many companies that rely on their bank for this information. Such reliance on the bank is understandable when the auditor accepts this approach, although we are seeing a much bigger push by the audit community to challenge companies on the lack of independence of a bank valuation given the bank is counterparty and valuer of the financial instrument. Historically there have been few economic alternatives to bank valuations, that is no longer a valid argument.

 

CVA/DVA (IFRS 13 / AASB 13)

The most recent compliance requirement for companies using financial instruments is the adjustment to fair value for credit. IFRS 13 requires a Credit Value Adjustment (CVA) or Debit Value Adjustment (DVA) to all financial instruments. Financial institutions have been credit adjusting their own positions for years, however, the requirement has filtered down so that all parties to financial instrument transactions must calculate and apply a credit adjustment. There is a strong argument that it is overkill for companies using financial instruments to hedge their foreign exchange cashflows (payments/receipts) or debt using plain vanilla instruments to have to make CVA/DVA adjustments. There is little added-value to the company, there is a cost to calculate the adjustment and the number is often immaterial (still have to calculate the number to determine its immateriality, however). It is different if you are trading financial instruments or are using credit hungry instruments such as cross-currency interest rate swaps but auditors, as prescribed by the accounting standards, are (or should be) forcing all financial instruments to be adjusted by CVA/DVA. There is a multitude of approaches to calculating CVA/DVA from the complex (potential future exposure method) to the simple (current exposure method). For those using plain vanilla instruments such as FX forwards or interest rate swaps then a simple methodology is appropriate. It is worth noting that the movement in both FX rates and interest rates over the last 12 months means valuations have moved significantly over the last 12 months which results in higher, more material CVA/DVA adjustments.

 

Sensitivity analysis (IFRS 7)

As part of the notes to the accounts under IFRS 7 there is a requirement to include a sensitivity analysis for financial instruments. This is a “what if” scenario that requires the re-calculation of fair value if the underlying market data is flexed. Often a +/-10% movement in the spot rate is used for FX instruments and a +/-100bp parallel shift in the yield curve for interest rate instruments. In theory there should be some sense check applied to the probability of the movement occurring i.e. if interest rates are close to zero then there is a low probability of a -100 basis point adjustment in the curve. We see little evidence of this in practice.

 

Hedge effectiveness testing (IAS 39 / IFRS 9 / AASB 9)

One of the biggest headaches at year-end is for those hedge accounting. Hedge accounting was introduced for practical reasons – remove noisy P&L volatility from unrealised gains/losses on financial instruments and put these adjustments on the balance sheet instead. In the early days of hedge accounting the approach was complicated and expensive. As auditors and accountants understanding of hedge accounting has developed over time, the process of hedge accounting has become much less complex. The most important aspect is the documentation. The effectiveness testing aspect of hedge accounting is fairly straightforward, particularly when utilising a treasury management system. The replacement of IAS 39 by IFRS 9 (effective 1 Jan 2018) will make hedge accounting a little easier with the removal of the 80-125% bright line and removal of the requirement to split option valuations between time and intrinsic value.

 

Time versus intrinsic (IAS 39)

Until IFRS 9 is effective (Jan 2018), companies hedge accounting for FX options (whether outright purchased options or in a collar relationship) must split the value of an option into its time and intrinsic components. The intrinsic value of an FX option is the difference between the prevailing market forward rate for the expiry of the FX option versus the strike price. The time value of an FX option is the difference between the overall FX option valuation and the intrinsic value. By definition, time value is a function of the time left to the expiry of the FX option. The longer the time to expiry, the higher the time value as there is a greater probability of the FX option being exercised. The intrinsic value goes to the balance sheet whilst the time value goes to P&L. Splitting time and intrinsic value is not too easy to do on the back of an envelope/spreadsheet, rather it is something that lends itself to be derived from a system.

 

Summary

Many companies try to complete the necessary compliance through using spreadsheets and bank valuations which is not only poor practice (valuations should be independent) but also error prone and time consuming. There are low cost systems available that can streamline, simplify and improve the ever increasing burden of year-end reporting requirements.

This article should not be taken as accounting advice but rather a practical guide and check list.

Feature client: Ports of Auckland

As Auckland’s population continues its strong growth trajectory, the Ports of Auckland logo Ports of Auckland has had to keep pace in order to provide the goods a growing city requires. There is not only the domestic demand for cars, food, consumables, etc. to satisfy, but also NZ’s export industry and burgeoning cruise ship tourism.

At 30 June 2014 Ports of Auckland had approximately $180 million of debt, a portion of which was hedged using interest rate swaps. The company has irregular FX exposure through imported capital expenditure and is also required to adjust its derivative valuations for credit to comply with IFRS 13 (CVA/DVA).

Ports of Auckland is one of Hedgebook’s oldest clients having been a Hedgebook user for a number of years. Historically, Ports of Auckland relied on excel spreadsheets, bank valuations and treasury advisors to stay on top of its derivative exposures. Hedgebook does not replace the treasury advisor (entirely) but it does replace the spreadsheets and bank valuations.

Ports of Auckland specifically uses Hedgebook for year-end compliance and ongoing debt management.

Know your position: FX Volatility, friend or foe?

The FX market is no stranger to volatility. Whether it is global economic or political uncertainties, or a country’s interest rate outlook, they all play out in the currency markets. The constant push and pull of both known and unknown information can lead to bouts of extreme volatility. FX traders love volatility. There are plenty of opportunities to enter and exit positions and make money. FX trading is not for the faint hearted however, it is easier to lose money than it is to make it. But how do businesses that are buying or selling goods and services in foreign currencies navigate their way through the challenges of managing FX risk? FX trading is not a core function for most businesses but yet the impact of the FX market can make or break a financial year. I have witnessed businesses being wiped out due to adverse FX movements such as the commodity exporter that saw commodity prices plummet at the same time as the FX rate soar, a catastrophic combination. On the other hand I have seen a business live to trade another year because it was sitting on significant gains from in-the-money FX hedges that were cashed up to offset the losses suffered in the core business.

There is a plethora of risk management approaches to FX risk. To start with there is the philosophical debate about whether to hedge or not. Some would say that it is a zero-sum game in the long run i.e. periods of currency strength will be offset by periods of weakness, therefore, there is no incentive to hedge, just live with the swings and roundabouts of the prevailing spot rate. Of course the question is whether a business can sustain periods of adverse currency movements long enough to stay in business and enjoy the good times. For those that do participate in FX hedging there are questions of how much to hedge, when to hedge, which financial instrument to use?

The NZD/AUD exchange rate in the last few months has demonstrated massive volatility strengthening 10c (>10%) in less than six months. For years the NZD was extremely weak against the high flying AUD. As every other economy was cutting interest rates following the GFC the Aussies were just digging up more of its natural resources and selling it to China. The global recession did not come to Australia. More recently there has been a significant change in the Australian economic outlook. Current account surplus has turned to deficit as its trading partners have slowed, forcing the Reserve Bank to loosen monetary policy. At the same time the better performing NZ economy has been able to sustain a removal of the post-recession super loose monetary policy conditions. As shown below the interest rate differential of NZ and Australia remains a clear influence on the exchange rate.

Aussie int rate diffs

 

The importance of the Australian economy to New Zealand means that there are a lot of NZ companies exporting to Australia that are having to manage the NZD/AUD exchange rate. Everyone has a view – some you pay for (treasury advisors, consultants) some you don’t (bankers, taxi drivers) but they all have one thing in common – nobody knows the future direction of FX rates. That’s not to say taking advice (paid for or otherwise) is not relevant. No advice will be right all of the time but so long as the view is well considered and relevant to your business then it is hard to be critical after the fact with the benefit of hindsight. Hedging buys a business the necessary time to adjust selling prices or supply contracts to the new FX level.

A fundamental aspect of FX hedging decisions is to quantify and understand the impact of FX movements on the business. By regularly making and updating foreign cashflow forecasts, capturing existing hedging in place and understanding the impact of FX movements on the unhedged component of foreign cashflows, a company is in a much better position to make informed hedging decisions. Whether it is a budget rate or a costing rate to protect knowing your position is essential for making better FX hedging decisions. One thing is certain – FX markets will always be volatile – the question is whether a company has enough visibility on its current position to make sound decisions about the future. Hedgebook is a tool that can help give a company the visibility it needs to make informed FX hedging decisions.

 

Why use an interest rate swap and how does it work?

It seems like only yesterday that I started my treasury career at one of NZ’s leading treasury advisory consultants, alas it was closer to 15 years ago. “We advise clients on managing their fx and interest rate exposures”, they said. “We use derivatives such as interest rate swaps to hedge risk”, they said. “Eh?”, I thought!

The financial markets have a lot of jargon but one quickly learns that many of the underlying concepts are quite simple. It is easy to assume people in the finance industry have a more in depth understanding of financial products than they actually do. There are plenty of examples of people who are exposed to interest rate swaps but whose understanding is rudimentary. Examples are young auditors who are coming across financial instruments rarely, or the back office clerk who is settling cashflows. Quite frankly there are also plenty of senior people who one might reasonably expect to have a greater level of understanding of these financial products than they actually do, such as senior auditors and CFOs.

In this article I attempt to explain in simple terms the purpose of an interest rate swap and how it works.

Why use an interest rate swap? When I was first learning about IRSs it was explained to me that they were simply an exchange of cashflows, either fixed for floating or floating for fixed, to hedge interest rate risk. Might as well have been in French for all it meant to me at the time. So I will try and take a step back. To my mind the best way to understand an IRS is by way of an example and the easiest example is that of a borrower who wishes to fix his interest rate exposure. Many of us borrow money from the bank in the form of a mortgage for our home and we choose to lock in the certainty of the interest rate payments by way of fixing the interest rate for a few years. A pretty simple concept. The corporate borrower has a few more options available to them to achieve certainty over interest costs on borrowings. They could borrow on a fixed rate basis very much akin to our residential mortgages. Alternatively, the corporate borrower could borrow from the bank on a floating rate basis and then enter a pay fixed interest rate swap to lock in the interest rate. The outcome is the same, however, the advantage of the IRS is the flexibility it allows the borrower in regards to the term he or she can fix and the flexibility to restructure. In terms of tenor, it is common for a borrower to fix through the IRS market out to ten years or longer. It is much harder, and expensive, to get the bank to fix interest rates long term as the bank needs to be compensated for tying up capital for such an extended period of time. It is also much harder, and expensive, to break debt that has been borrowed on a fixed rate basis, however, restructuring an IRS is a straightforward process and allows the corporate borrower to take advantage of prevailing interest rate market opportunities or “play the yield curve” to use financial market parlance.

How does an IRS work? Explaining how an IRS works requires us to understand the concept of exchanging cashflows. The diagram below represents the cashflows associated with a borrower using an IRS to fix interest costs:

IRS cashflow

 

1) The company borrows money from the bank, say $1 million for our example, on a floating rate basis. There are floating rate benchmarks for different currencies i.e. BKBM in NZ, BBSW in Australia, EURIBOR in Europe, etc. and this floating rate changes/sets every day. The bank will charge a margin on the money it lends, say 2.00%. The effect for the company is it borrows money at floating rate + 2.00%.

2) The company wishes to fix his interest cost and to achieve this enters a pay fixed / receive floating IRS with a bank (maybe the same bank as it has borrowed from, but not necessarily). We will assume the company wishes to fix the entire $1 million i.e. the swap is entered for $1 million. It could just as easily decide to fix only half i.e. $500,000. Herein lies some of the flexibility an IRS allows the company when considering its interest rate risk management profile. Under the terms of the pay fixed swap the borrower will pay the bank a fixed interest rate and receive floating interest from the bank i.e. exchange of cashflows. Note, there is no exchange of principal, only interest.

The floating rate received through the swap offsets the floating rate paid to the bank for the debt. The net impact to the borrower is paying a fixed rate (through the swap) plus the margin the bank charges for borrowing the money (2.00%).

There are some important factors to consider when entering an IRS to ensure the hedge is at its most optimal. The roll-dates of the IRS should match that of the debt i.e. if the floating rate on the debt sets every three months then so should the floating rate on the IRS, and on the same day. The underlying reference rate on the debt and the swap should also match i.e. BKBM, BBSW, EURIBOR, etc. Both of these things ensure there is no “basis risk” within the hedge as well as ensuring it passes muster from a hedge accounting perspective if it is designated into a hedge relationship.

The example above is designed to provide a basic understanding of the concept of an interest rate swap. We have used the floating rate borrower as an example. However, IRSs are used by an array of market participants for a multitude of uses including investors wishing to structure their income profiles or borrowers who have borrowed on a fixed term but wish to have exposure to floating interest rates. However, the underlying concepts are fairly straightforward.

 

Feature client: Palmerston North City Council

Palmerston North City Council (PNCC) is fairly typical of a NZ local authority in that Council is a sophisticated borrower with autonomy around the management of its interest rate risk exposure. Councils can access funding through a number of sources such as traditional bank funding, private placements and, in more recent years, the Local Government Funding Agency (LGFA). As at 30 June 2014 PNCC had debt of $117 million and $104 million of pay fixed swaps to provide certainty of interest costs. PNCC has a Treasury Policy which prescribes that no more than 45% of the total borrowings should have a floating rate profile. Pay fixed interest rate swaps are entered into to hedge the fair value interest rate risk. PNCC has been a Hedgebook client for a number of years graduating from one-off valuations for 30 June Financial Reporting requirements, to an on-going subscription client using Hedgebook’s Treasury Management System, HedgebookPro. Says PNCC’s Strategy Manager – Finance Steve Paterson, “It is important that Council manages ratepayers’ money in a transparent and prudential manner. Using HedgebookPro provides an appropriate level of comfort that the risks arising from financial instruments are adequately captured and monitored. Additionally, the reporting functionality helps the Finance team to operate efficiently.”

The majority of NZ’s local authorities are borrowers and many are using derivatives to manage the interest rate risk. Several NZ councils are using Hedgebook’s Treasury Management System including Kapiti Coast District Council, Nelson City Council, Selwyn District Council, South Taranaki District Council, Western Bay of Plenty District Council, Greater Wellington Regional Council, Masterton District Council and Thames-Coromandel District Council.

Hedge accounting fx options: time versus intrinsic value

FX options make up an element of many companies fx risk management strategies. FX options lock in the certainty of worst case exchange rate outcomes while allowing participation in favourable rate movements. In my experience, companies are often reluctant to write out a cheque for the premium so for many the preferred strategy is collar options. A collar option involves writing, or selling, an fx option simultaneously as buying the fx option in order to reduce premium, often to zero.

After transacting the fx option, the challenge comes for those that are hedge accounting and the requirement to split the valuation of the fx option into time value and intrinsic value. IAS 39 allows the intrinsic value of an fx option to be designated in a hedge relationship and can therefore remain on the balance sheet. The time value of the fx option is recognised through profit or loss.

The intrinsic value of an fx option is the difference between the prevailing market forward rate for the expiry of the fx option versus the strike price. We can use an Australian based exporter to the US as an example. In our example the exporter forward hedged US$1 million of export receipts six months ago (the USD income is due to be received in three months’ time). At the time of hedging the AUD/USD rate was 0.8750 and the nine month forward rate was 0.8580. The company chose to hedge with a nine month zero cost collar[1] (ZCC). Six months’ ago the ZCC might have been as follows:

  • Option 1: Bought USD Put / AUD Call at a strike of 0.9000
  • Option 2: Sold AUD Put / USD Call expiring at a strike of 0.8000

AUD USD

The intrinsic value of each leg of the collar will be determined by the difference in the forward rate at valuation date versus the strike rates. For option 1, the bought option, if the forward rate is above the strike of 0.9000 then the fx option will have positive intrinsic value i.e. it is “in-the-money”. It is important to note that the intrinsic value of a bought fx option cannot be negative. The purchaser, or holder, of the fx option has all of the rights and would not choose to exercise the fx option if the market rate was below the strike price. They would simply choose to walk away from the fx option, let it expire worthless, and transact at the lower market rate.

For the sold fx option the opposite is true. If the forward rate is below the strike price (less than 0.8000 in our example) then the exporter, as the writer of the option, will be exercised upon and the difference between the market rate and the strike rate will be negative intrinsic value. Intrinsic value of a sold fx option cannot be positive.

The time value of an fx option is the difference between the overall fx option valuation and the intrinsic value. By definition, time value is a function of the time left to the expiry of the fx option. The longer the time to expiry, the higher the time value as there is a greater probability of the fx option being exercised. A purchased fx option begins life with positive time value that decays over time to zero. A sold fx option begins life with negative time value and tends to zero by expiry date.

When hedge accounting for fx options the splitting of intrinsic value (balance sheet) and time value (P&L) does not have to be a time consuming exercise. At Hedgebook we like to make life easy so as part of the FX Options Held Report the valuations are automatically split by intrinsic value and time value. The screen shot below shows the HedgebookPro output using our Aussie exporter example. With the significant weakening of the AUD in the last six months we see the zero intrinsic value of the bought option at a strike of 0.9000 and very little time value as there is little chance of the AUD strengthening to above 0.9000 by the time the option expires by 30 June. The sold fx option has a large, negative intrinsic value. The exporter will be exercised upon and have to convert the US$1 million of receipts at AUD/USD 0.8000 versus a market rate of closer to 0.7600. There is a small amount of negative time value.

HedgebookPro FX Options Held Report  

FX Options Held Intrinsic_Time

HedgebookPro’s easy to use Treasury Management System calculates fx option valuations split into intrinsic and time value. This simplifies life for those that already use fx options and hedge account, whilst removing obstacles to hedge accounting for those that perceive the accounting requirements as too hard.

The IASB is looking to remove the requirement to split fx option valuations into intrinsic and time components which will simplify the hedge accounting process further, however, currently this appears to be a 2018 story, unless companies choose to adopt early. In the meantime, HedgebookPro provides an easy to use system to ease the pain of hedge accounting fx options.

[1] Premium received from the sold option offsets the premium paid on the bought option.

Quantifying bank counterparty credit spread inputs for CVA

At Hedgebook we are often asked by our clients what the appropriate credit spreads are when calculating CVA (Credit Value Adjustment) under the current exposure method. The current exposure method requires a credit spread over the risk-free rate (swap rates) to determine the discount factor for future Cashflows. The current exposure method is appropriate for calculating credit adjustments for vanilla financial instruments such as foreign exchange forwards and options, and interest rate swaps. If your derivatives are in-the-money then the credit valuation adjustment quantifies the risk of your counterparty defaulting.

One appropriate source for quantifying appropriate credit spreads is the secondary bond market where bank/corporate bonds are traded amongst fixed income participants. The banks are active issuers into this market and as such provide a useful guide to how the market views their credit worthiness. By looking at spreads over swap we can derive a credit term structure to use in the calculation of CVA.

The following table shows the spread over swap for senior bank bonds in the NZ fixed income market. The data has been extracted using the January 2015 month-end corporate bond pricing information from one of the four Australian owned NZ registered trading banks.

  6 mths to
1 yr
1 to 2 yrs 2 to 3 yrs 3 to 4 yrs 4 to 5 yrs
ANZ 20 to 30 bp N/A 42 bp 52 to 59 bp 60 to 61 bp
ASB 22 bp N/A 41 to 50 bp 55 bp N/A
BNZ 21 bp N/A N/A 55 to 60 bp 63 bp
Westpac N/A N/A 41 bp 57 bp 64 bp

* bp = basis points per annum. 1bp = 0.01%

As each of these banks is rated AA- by S&P it is intuitive that their senior bonds trade within close proximity to each other. From the information we can generalise and build a credit term structure that can be plugged into valuation models to determine CVA. An estimated AA- credit curve could be:

  • 1 year = 25 bp
  • 2 year = 35 bp (linearly interpolated between 1 and 3 year points)
  • 3 year = 45 bp
  • 4 year = 55 bp
  • 5 year = 65 bp

The reality is that the CVA calculation is not very sensitive to these inputs so it is not necessary for a corporate with vanilla instruments to agonise over the credit assumptions. That said, the assumptions must be defensible and, more importantly from an IFRS 13 perspective, observable.

Furthermore, we would argue that if you are a corporate banked by more than one of the four banks in the table above then there is little added value in creating a curve for each counterparty. As we have shown, there is little difference in the market’s credit view between one AA- NZ bank and another.

The CVA module within the HedgebookPro app allows the user to create multiple credit curves and assign them appropriately to the relevant instruments. However, creating multiple curves will only be of added value if the counterparties are of materially different credit standing.

Tru-Test, world leading supplier of agri products, subscribes to HedgebookPro

We are pleased to announce that Tru-Test Limited has recently subscribed to HedgebookPro.

Tru-Test Limited is a public unlisted company based in Auckland and is the world’s leading manufacturer of livestock weigh scale indicators and milk metering equipment. Almost four out of every five livestock weigh scales and milk meters sold in the world today bear the name Tru-Test.

Tru-Test is exposed to foreign exchange movements, with Australia, the Americas, Asia and Europe being its main markets and so having a system that can record, report and value these hedges is important for Tru-Test in managing its risks.

Tru-Test’s Chief Financial Officer Ian Hadwin said “as we have continued our growth we recognized that spreadsheets were no longer an appropriate way of managing our foreign exchange and interest rate risks. With The new IFRS 13 requirements to calculate CVA and DVA Hedgebook has made this easy.”

We welcome Ian and Tru-Test as new HedgebookPro users.

HedgebookPro new features and reports

Whilst many of us have been spending quality time at the beach and in the surf over recent weeks (in NZ anyway) the Hedgebook development team has been kept busy and out of the sunlight. We pride ourselves on being nimble and able to develop quickly in response to feedback from our users. As such we have completed three significant additions to the HedgebookPro app:

  • Real-time FX spot rates and forward points onto the landing page of the app
  • Email alerts
  • Interest Accrual Report

 

Real-time fx spot rates and forward points onto the landing page of the app

Naturally, a company that is using HedgebookPro to manage its fx derivatives requires visibility over key exchange rates to aid the decision making process when entering hedges. To date, the only underlying fx data exposed within the HedgebookPro app is the spot and forward rate used in the valuation of the derivative. We have added the ability for HedgebookPro users to subscribe to a live fx rates module which are displayed on the landing page when the user first logs into the app. The rates are real-time and refresh every five seconds. Currently we display key cross rates and forward points for NZ and Australia. The image below shows the NZD version. The rates can be “popped out” into a new browser window and will update even if the HedgebookPro app is closed. With the current high volatility in exchange rates, this new HedgebookPro feature will help decision makers keep abreast of their key fx rates. Contact us at help@hedgebook.co.nz if you wish to enable this feature.

Rates on HBPro

 

Email alert for maturing instruments

We have added email alerts functionality to HedgebookPro to help users administer their derivatives. Now a user can receive a daily email that summarises all their fx and interest rate products that are maturing, including drawn debt. The alert will help to ensure appropriate actions are made on a timely basis such as Cashflows at the maturity of fx forwards/options or refinancing of debt. An email into your inbox will clearly tell you what is imminent, in fact the user can decide how far in advance of maturity they want to be notified.

Interest Accrual Report

Many of our HedgebookPro users spend hours at month-end using spreadsheets to calculate the interest accrual on interest rate swaps for accounting purposes. HedgebookPro now does this at the click of a button. As one of our clients said, “That is great.  Will save our Accountant from some time consuming calcs each month.” Steve Paterson, Strategy Manager – Finance, Palmerston North City Council.

You’re welcome.

HedgebookPro will continue to evolve and offer the best value for money of any treasury management system on the market today and we look forward to sharing the developments in future newsletters. If you have any suggestions please share them with us as we are committed to delivering useful, practical features to the Hedgebook app to help make the treasury function run smoothly.

 

Publicly listed EBOS Group subscribes to HedgebookPro

We are pleased to announce that EBOS Group Limited has recently taken HedgebookPro.

EBOS Group is a publicly listed company on the New Zealand Stock Exchange and has over 2,200 staff headquartered in New Zealand with over 40 offices located throughout Australasia. EBOS Group is one of the largest suppliers of international healthcare brands in the Australasian region.

EBOS Group has multiple entities with various interest rate and foreign exchange derivatives. To effectively manage the financial reporting requirements of these multiple entities EBOS knew they needed a system. Independent derivative valuations, IFRS 7 and IFRS 9 compliance is made easy with HedgebookPro. Hedgebook’s solution fitted the bill with its simple but intuitive approach to a complex area. Cost was also an issue as EBOS Group, whilst being a large company, does not have overly complex hedges and so needed a system which did the basics well.

EBOS Group’s Group Accountant Tonia Johnson said “the key requirements for us were around complying with the accounting standards, specifically doing hedge accounting under IFRS9. Hedgebook covers this off, as well as being easy to use and cost-effective.”

We welcome Tonia and EBOS Group as new HedgebookPro users.