NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
41 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (CONT’D)
At 31 December 2013 (cont’d):
(ii)
Interest rate swap contracts
Interest rate swap contracts 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)
i) 2.5
March 2014
3 months London
2.47%
Inter-bank Offer Rate
ii) 12.0
March 2016
3 months London
0.70%
Inter-bank Offer Rate
A fair value loss of $62,000 with a deferred tax credit of $15,000 related to the interest rate swap contracts was
recognised in the profit or loss.
42 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
(a)
Estimation Uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
reporting period are discussed below. The Group based its assumptions and estimates on parameters available
when the financial statements were prepared. Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising beyond the control of the Group. Such
changes are reflected in the assumptions when they occur.
(i)
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. The recoverable amount
of the cash-generating unit is determined based on the higher of fair value less cost of disposal and value
in use. Management also reviews other economic factors and market conditions to assess whether the
recoverable amount as determined using this method is sustainable. Changes in the market value of the
cash-generating unit could affect the recoverable amount. The carrying amount of goodwill at 31 December
2014 was $20,247,000 (2013: $20,603,000). More details are given in note 16.
(ii)
Depreciation of property, plant and equipment
Property, plant and equipment are depreciated using the appropriate basis as outlined in note 2.11 over the
estimated useful lives of these assets. The carrying amount of the Group’s property, plant and equipment at
31 December 2014 was $35,737,000 (2013: $34,403,000). Changes in the estimated economically recoverable
ore reserves and resources and expected level of usage and technological developments could impact the
economic useful lives and the residual values of these assets, therefore, future depreciation charges could
be revised.
152
THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
