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Notes to the Financial Statements (cont’d)
For the financial year ended 31 December 2011
34. Derivative financial instruments
Derivative financial instruments included in the statement of financial position as at 31 December are as follows:
Group and Company
Assets Liabilities
2011 RM’000 RM’000
Interest rate swap contract – 865
Foreign currency forward contracts – 419
– 1,284
Current – 419
Non-current – 865
2010
Interest rate swap contract – 1,375
Foreign currency forward contracts 1,162 1
1,162 1,376
Current 1,162 1
Non-current – 1,375
These represent the fair value of:
(a) An interest rate swap contract entered into for the purpose of managing interest rate risk. The fair value changes of this
contract are recognised in profit or loss.
(b) Foreign currency forward contracts entered into for the purpose of hedging against foreign exchange risk. The fair value
changes are recognised in the other comprehensive income and accumulated in equity under hedging reserve to the
extent that the hedges are effective.
The Group has the following derivative financial instruments accounted as:
At 31 December 2011
(i) Cash flow hedges
Foreign currency forward contracts designated as hedges against expected future sales in United States Dollar (USD):
Sell USD Range of maturity period Average exchange rate
(in million) RM/USD
47.1 From January 2012 to March 2012 3.1716
The fair value loss of RM119,000 with a deferred tax income of RM30,000 on such contracts that relate to effective
hedges was included in the hedging reserve (Note 31) in respect of the contracts. The cash flow hedges of certain
future forward contracts were assessed to be ineffective. Accordingly, the fair value loss of RM300,000 with a deferred
tax income of RM75,000 was recognised in profit or loss.
MALAYSIA SMELTING CORPORATION (43072-A) • ANNUAL REPORT 2011 147