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21. Derivative financial instruments (cont’d.)
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedge item
is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months. Derivatives held
for trading are those which do not qualify for hedge accounting.
During the financial year, the Group and the Company recognised a gain of RM451.1 million and RM435.5 million respectively arising
from fair value changes of derivative liabilities. The fair value changes are attributable to changes in foreign exchange spot and
forward rate, changes in yield curve and changes in market price of fuel. The method and assumptions applied in determining the
fair value of derivatives are disclosed in Note 40.
Group
2017
2016
Notional
amount
RM’000
Fair
value
RM’000
Notional
amount
RM’000
Fair
value
RM’000
Interest rate caps
233,112
12
318,524
261
Interest rate swaps
3,258,863
(81,498)
3,742,478
(171,568)
Cross currency interest rate swaps
336,309
79,248
384,851
140,102
Forward foreign exchange contracts
1,515,904
393,146
1,952,282
783,702
Commodity derivatives
771,487*
50,914
4,848,218*
184,195
Company
2017
2016
Notional
amount
RM’000
Fair
value
RM’000
Notional
amount
RM’000
Fair
value
RM’000
Interest rate caps
233,112
12
318,524
261
Interest rate swaps
3,258,863
(81,476)
3,742,478
(171,568)
Cross currency interest rate swaps
336,309
79,248
384,851
140,102
Forward foreign exchange contracts
1,515,904
393,146
1,952,282
783,702
Commodity derivatives
530,316*
35,169
4,848,218*
184,195
* in barrels
(i) Forward foreign exchange contracts and cross currency interest rate swaps
The notional principal amounts of the outstanding forward foreign exchange contracts and cross currency interest rate swaps
at 31 December 2017 were RM1.852 billion (2016: RM2.337 billion).
As at 31 December 2017, the Group has hedged approximately 46% (2016: 59%) of its USD liabilities pertaining to its aircraft
and engine loans into Malaysian Ringgit (“RM”) by using long dated foreign exchange forward contracts and cross currency
interest rate swaps to manage its foreign currency risk. The latest weighted average of USD:RM forward exchange rate is
3.2355 (2016: 3.2373). Gains and losses recognised in the hedging reserve in equity on hedging instruments as of 31 December
2017 will be continuously released to the income statement within foreign exchange gains/(losses) until the full repayment of
the term loans (refer Note 31 to the financial statements).
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
[ ]
AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS
318