Maxis Berhad
Annual Report 2014
142
Notes to the
Financial Statements
31 December 2014
21 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The details of the derivative financial instruments are set out as below: (continued)
(b) IRS
Com-
mencement
date
Contract/
Notional amount
Interest Rate
2014
2013
RM’000 RM’000
17 July 2012
200,000
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
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
RM244,452,000 (2013: RM144,750,000) and RM15,848,000 (2013: RM117,128,000) respectively, an increase in fair value gains
by RM200,982,000 (2013: a reduction in fair value losses by RM397,462,000) 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, RM219,673,000 was reclassified to the statements of profit or loss to offset the foreign exchange
losses of RM218,431,000 which arose from the weakening RM against USD and SGD, and the interest expense of RM1,242,000
as the underlying interest rates were higher than the hedged interest rates on the borrowings. This reduced the credit balance
of the cash flow hedging reserve as at 31 December 2014 by RM18,691,000 to RM42,573,000.
For the financial year ended 31 December 2013, RM230,518,000 was reclassified to the statements of profit or loss to offset
the foreign exchange losses 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 reduced 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.
All derivative financial instruments are used by the Group and the Company for hedging purposes.
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.
