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15. Borrowings continued c Bank facilities and assets pledged as security continued The carrying amounts of assets pledged as security by Southern Cross Austereo Pty Ltd for current and non-current borrowings are Consolidated 2015 000 2014 000 Current assets Floating charge Cash and cash equivalents 143046 55623 Receivables 121543 114977 Total current assets pledged as security 264589 170600 Non-current assets Floating charge Receivables 3633 5304 Investments accounted for using the equity method 2980 7944 Property plant and equipment 163841 171343 Intangible assets 1289440 1650612 Total non-current assets pledged as security 1459894 1835203 Total assets pledged as security 1724483 2005803 Recognition and Measurement Borrowings Borrowings are initially recognised at fair value net of transaction costs incurred. Transaction costs that have been paid for or accrued prior to the drawdown of debt are classified as prepayments. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds net of transaction costs and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Borrowing costs Borrowing costs are expensed over the life of the facility to which they relate. 16. Financial Risk Management The Groups activities expose it to a variety of financial risks market risk the Groups main exposure to market risk is interest rate risk liquidity risk and cash flow interest rate risk. There is a relatively low level of credit risk on receivables that is managed by careful business practices refer Note 10. The Groups overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as interest rate swaps to hedge certain risk exposures. The Risk Management Policy is carried out by management under policies approved by the Board. Senior management of the Group identify quantify and qualify financial risks as part of developing and implementing the risk management process. The Risk Management Policy is a written document approved by the Board that outlines the financial risk management process to be adopted by management. Specific financial risks that have been identified by the Group are interest rate risk and liquidity risk. a Interest rate risk Nature of interest rate risk Interest rate risk is the Groups exposure to the risk that interest rates move in a way that adversely affects the ability of the Group to pay its interest rate commitments. The Groups interest rate risk arises from long-term borrowings which are taken out at variable interest rates and therefore expose the Group to a cash flow risk. Interest rate risk management The Group does not have a formal policy to fix rates on its borrowings but manages its cash flow interest rate risk by using variable to fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from variable rates to fixed rates. Generally the Group raises long-term borrowings at variable rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest rate swaps the Group agrees with other parties to exchange at specified intervals quarterly the difference between fixed contract rates and variable rate interest amounts calculated by reference to the agreed notional principal amounts. 59 SOUTHERN CROSS AUSTEREO ANNUAL REPORT 2015