18. Other financial assets and financial liabilities (cont’d.) (b) Derivative assets/liabilities Group 2016 2015 RM’000 RM’000 Derivative assets Current: Currency hedge - effective hedges (i) – 525 Non-current: Interest rate swaps (“IRS”) - effective hedges (ii) 1,472 976 Derivative liabilities Current: Currency hedge - effective hedges (i) 6,655 – Non-current: Interest rate swaps (“IRS”) - effective hedges (iii) 691 1,931 (i) At 31 December 2016, the Group held forward currency contracts designated as hedges of expected future receipts and payments denominated in United States Dollars. The forward currency contracts are being used to hedge the foreign currency risk of the highly probable forecasted transactions. The net notional amount of the currency hedging arrangement as at 31 December 2016 was RM63,550,000 (2015: RM136,991,000). (ii) In the previous financial year, the Group entered into a USD300.0 million interest rate swap arrangement to hedge 50% of its subsidiary’s outstanding USD term loan facility. Under this arrangement, the Group pays fixed interest rate of 1.31% + 1.05% per annum and receives cash flows at floating rates. The notional amount of the interest rate swap arrangement as at 31 December 2016 was RM1,345,350,000 (2015: RM1,288,200,000) and will mature on 20 September 2018. (iii) In the previous financial year, the Group entered into a USD52.5 million interest rate swap arrangement to hedge 25% of its subsidiary’s USD term loan facility. Under this arrangement, the Group pays fixed interest rate of 1.90% + 1.00% per annum and receives cash flows at floating rates. The notional amount of the interest rate swap arrangement as at 31 December 2016 was RM241,693,000 (2015: RM231,426,000) and will mature on 6 May 2022. In the current financial year, the Group entered into an additional interest rate swap arrangement to hedge 23% of its subsidiary’s USD term loan facility. Under this arrangement, the Group pays fixed interest rate of 1.96% + 1.00% per annum and receives cash flows at floating rates. The notional amount of the interest rate swap arrangement as at 31 December 2016 was RM217,797,000 and will mature on 4 July 2022. MISC BERHAD • Annual Report 2016 254 notes to the financial statements - 31 december 2016
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