ACCOUNTABILITY 252 YINSON HOLDINGS BERHAD 38. DERIVATIVES (CONTINUED) (a) Subsidiaries of the Group had entered into a series of USD interest swap contracts with banks. The interest rate swaps reflect the changes in fair value of those interest rate swaps which have been designated as cash flows hedge and are used to manage the exposure to the risk of changes in market interest rates arising from floating rate bank loans of the subsidiaries. (b) Subsidiaries of the Group had entered into the forward contracts to mitigate the Group’s exposure from exchange rate movements on foreign currency positions originating primarily from firm commitments denominated in currencies which are not in the functional currency of the respective subsidiaries and from net assets in foreign operations where the functional currencies are not in Ringgit Malaysia. (c) As mentioned in Note 48, with the issuance of the 1,000,000 RCPS over 4 tranches, the Investors will receive the equivalent number of warrants for an aggregate consideration of USD1.00 (equivalent to RM3.90) to each Investor in each tranche. The warrants are exercisable and convertible into new ordinary shares of YPOHL, an indirect whollyowned subsidiary of the Company, equivalent to 10% of the issued share capital of YPOHL or 7.2% of the issued share capital of YPOHL in the event where a mandatory redemption occurs prior to exercise of the warrants. The warrants are exercisable (i) upon an initial public offering (“IPO”) of YPOHL within five years from First Tranche Closing, being the date on which the initial issuance of RCPS and warrants is completed pursuant to the subscription agreement; or (ii) within 18 months following the fifth anniversary of the First Tranche Closing if no IPO of YPOHL has been consummated within that five-year period. The exercise price of the warrants is variable, but capped to the maximum of the post-subscription value of YPOPL after exercise of warrants (to be adjusted by distributions to ordinary shareholders), with a floor exercise price of USD3.3 billion (RM12.8 billion). As the warrants are derivatives that will be settled other than by the exchange of a fixed amount of cash for a fixed number of YPOHL’s own equity instruments (i.e. ordinary shares), the warrants are classified as a derivative financial liability in accordance with MFRS 132/IAS 32 Financial Instruments: Presentation. As the Group has no contractual obligation to settle the warrants within the next 12 months, the derivative financial liability arising from the warrants is classified as a non-current liability. The warrants are exercisable and convertible into new ordinary shares of YPOHL, equivalent to 10% of the issued share capital of YPOHL or 7.2% of the issued share capital of YPOHL in the event where a mandatory redemption occurs prior to exercise of the warrants. As at 31 January 2026, a total of 500,000 warrants were issued. Refer to Note 48 for more details. The fair values of the interest rate swaps and foreign exchange forward contracts are determined by using the prices quoted by the counterparty banks which are categorised as Level 2 of the fair value hierarchy. The fair value of the warrants is determined using a Binomial Option Pricing Model. The valuation incorporates significant unobservable inputs, including assumptions on volatility, expected term, and probability-weighting of redemption and IPO events, which are categorised as Level 3 of the fair value hierarchy. There are no transfers from Level 1 and Level 3 or out of Level 2 during the financial year. The effects of the interest rate swaps and foreign exchange forward contracts on the Group’s financial position and performance are disclosed in Note 44(a) and Note 44(c).
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