Annual Report 2012 - IOI Group

NOTES TO THEFINANCIAL STATEMENTS42. FINANCIAL INSTRUMENTS (Continued)42.1 Foreign currency risk (Continued)42.1.2 Foreign currency risk exposure (Continued)Company2011Contract based currency USD EUR SGDMaturity 1 yearRM’000 1 yearRM’000 1 yearRM’000Financial assets inforeign currenciesCash and bank balances 27 – 8,107 – 13,170 –Amounts due fromsubsidiaries 150,209 – 845,309 – 1,104,350 –Financial liabilitiesin foreign currenciesBorrowings (302,700) (1,816,200) – – – –Amounts due tosubsidiaries (261,196) (2,075,012) – – – –Currency derivativesStructured and hybrids 351,500 315,050 – (350,240) – –Net exposure (62,160) (3,576,162) 853,416 (350,240) 1,117,520 –i. The Group is net short in USD by USD1.6 billion (equivalent to RM5.1 billion) (2011 – USD1.4 billion (equivalentto RM4.4 billion)) where USD1.8 billion (equivalent to RM5.9 billion) (2011 – USD1.2 billion (equivalent to RM3.6billion)) is due beyond 12 months. This short position is expected to be met from its future revenue streammainly denominated in USD;ii.The foreign currency long-short mismatch between forward commodity contracts (as hedge items) and foreigncurrency forward derivative (as hedging instruments) is attributed to intragroup forward commodity sales andpurchases that give rise to net currency exposure at the entity level. Foreign currency long-short position fromforward commodity contracts of both related entities are eliminated on consolidation (but not necessarily itsfair value gain or loss arising from foreign currency) i.e. leaving behind the currency long short on foreigncurrency forward derivative.218IOI CORPORATION BERHADAnnual Report 2012