NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
41 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The Group has the following derivative financial instruments accounted as:
At 31 December 2014:
(i)
Cash flow hedges
Forward currency contracts designated as hedges to manage its foreign currency risk on expected future sales
receivables in United States Dollar (USD):
(a)
Average Exchange
Sell USD
Range of Maturity Period
Rate
(In million)
RM/USD
53.4
From January 2015 to May 2015
3.4047
A fair value loss of $2,123,000 with a deferred tax credit of $510,000 on such contracts relating to effective hedges
has been included in the hedging reserves. The cash flow hedges of certain contracts were assessed to be ineffective.
Accordingly, a fair value loss of $18,000 with a deferred tax credit of $4,000 in respect of these contracts has
been recognised in profit or loss.
(b)
Average Exchange
Buy USD
Range of Maturity Period
Rate
(In million)
RM/USD
1.3
April 2015
3.5226
A fair value loss of $800 with a deferred tax credit of $200 on such contracts relating to ineffective hedges has
been recognised in profit or loss.
(ii)
Interest rate swap contract
An interest rate swap contract to manage its interest rate risk arising from floating rate borrowings in United States
Dollar (USD):
Receive
Pay
Notional
Floating
Fixed
Amount
Maturity Period
Interest Rate
Interest Rate
(USD million)
7.5
March 2016
3 months London
0.70%
Inter-bank Offer Rate
A fair value loss of $21,000 with a deferred tax credit of $5,000 relating to the interest rate swap contract has been
recognised in profit or loss.
150
THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
