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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2011
40 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (cont’d)
At 31 December 2010:
(i) Cash flow hedges
(a) Foreign currency forward contracts designated as hedges against expected future sales in United States
Dollar (USD) are as follows:
Average Exchange
Sell USD Range of Maturity Period Rate
(In million) RM/USD
22.0 From January 2011 to February 2011 3.1423
At 31 December 2010, net fair value gain of $681,000 with a deferred tax expense of $170,000 relating
to the cash flow hedges of the expected future sales that were assessed to be highly effective was
included in other comprehensive income. Certain forward contracts were assessed to be ineffective.
Accordingly, the fair value gain of $91,000 with a deferred tax expense of $22,000 was recognised in
the profit or loss.
(b) The foreign currency forward contract designated as a hedge against expected future purchase in
Singapore Dollar (SGD) is as follows:
Average Exchange
Buy SGD Maturity Period Rate
(S$’000) RM/SGD
73.0 January 2011 2.388
The cash flow hedge on this forward contract was assessed to be ineffective. Accordingly, the fair value
loss of $500 was recognised in the profit or loss.