Maxis Berhad | Annual Report 2013

129 OVERVIEW OUR BUSINESS STRATEGIC REVIEW CORPORATE GOVERNANCE FINANCIAL STATEMENTS Maxis Berhad Annual Report 2013 OTHER INFORMATION 21 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) The details of the derivative financial instruments are set out as below: (continued) (b) IRS COM- CONTRACT/ MENCEMENT NOTIONAL DATE AMOUNT INTEREST RATE RM’000 17 July 2012 200,000 The Group and Company pay a fixed interest rate of 3.50% per annum in exchange for receiving KLIBOR on the notional principal amount. 25 July 2012 500,000 The Group and Company pay a fixed interest rate of 3.43% per annum in exchange for receiving KLIBOR on the notional principal amount. At the reporting date, the Group and the Company have recognised derivative financial assets and derivative financial liabilities of RM144,750,000 (2012: RM28,196,000) and RM117,128,000 (2012: RM398,036,000) respectively, a reduction in fair value losses by RM397,462,000 (2012: an increase in fair value losses by RM6,864,000) from the prior financial year, on remeasuring the fair values of the derivative financial instruments. The corresponding movement has been included in equity in the cash flow hedging reserve. For the current financial year, RM230,518,000 was reclassified to the statements of profit or loss to offset the unrealised foreign exchange loss of RM230,593,000 which arose from the weakening RM against USD and SGD, and recognition of additional interest expense of RM75,000 as the underlying interest rates were lower than the hedged interest rates on the borrowings. This has resulted in a reduction in the debit balance of the cash flow hedging reserve as at 31 December 2013 by RM166,944,000 and recorded a credit balance of RM61,264,000. For the financial year ended 31 December 2012, RM109,833,000 was reclassified to the statements of profit or loss to offset the unrealised foreign exchange gain of RM109,230,000 which arose from the strengthening RM against USD offset by the weakening RM against SGD, and recognition of additional interest expense of RM603,000 as the underlying interest rates were lower than the hedged interest rates on the borrowings. This has resulted in a debit balance in the cash flow hedging reserve as at 31 December 2012 of RM105,680,000. The gains or losses recognised in the cash flow hedging reserve in equity will be continuously released to the statements of profit or loss within finance costs until the underlying borrowings are repaid. As the Group and the Company intend to hold the borrowings and associated derivative financial instruments to maturity, any changes to the fair values of the derivative financial instruments will not impact the statements of profit or loss and will be taken to the cash flow hedging reserve in equity. The method and assumption applied in determining the fair value of derivatives are disclosed in Note 3(i) to the financial statements. 22 DEFERRED TAXATION Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the statements of financial position: GROUP 2013 2012 RM’000 RM’000 Deferred tax assets 127,618 121,003 Deferred tax liabilities (495,585) (548,070) (367,967) (427,067)