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Axiata Group Berhad | Annual Report 2016
FINANCIAL STATEMENTS
200
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
19. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Non-hedging derivatives financial instruments (continued)
(e) Put option over shares held by NCI in edotco SG (continued)
(i)
On 19 December 2016, the Put Option and Call Option Agreement was terminated upon the completion of the acquisition of 12.50%
stake in edotco SG as disclosed in Note 5(a)(xvi) to the financial statements. Accordingly, the Group extinguished the put option
amounting to RM272.9 million from other reserve of RM172.8 million and RM100.1 million from retained earnings respectively.
(ii) On 19 December 2016, a revised shareholder’s agreement was entered with Yoma of edotco SG comprising, amongst others, the
following:
(a) a right of first offer over the remaining edotco SG shares in the event of a proposed sale of the remaining shares held by Yoma;
(b) grants of a put option by the Group to Yoma to require the Group to purchase the remaining shares held by Yoma together with
shareholder’s loan for a purchase price equivalent of USD35.0 million, or such other price as both parties may agree; and
(c) grants of a call option by Yoma to the Group to require Yoma to sell to the Group, the remaining shares held by Yoma together
with shareholder’s loan for a purchase price at higher of USD35.0 million and fair market value of the shares.
The Group recognised a derivative liability and other reserve of RM156.7 million on initial recognition.
Derivative designated as hedging instrument
(f) Net investment hedge – Cross currency interest rate swaps
The underlying debt instrument for the CCIRS is the Group’s Notes as disclosed in Note 16(b) to the financial statements. The hedge is
designed to hedge against foreign currency and interest rate risks.
The information relating to the derivatives of a subsidiary of the Group as at 31 December 2016 is as follows:
Notional
amount
USD’ million
Notional
amount
SGD’ million
Period
Exchange
period
Fixed
interest
rate paid
Fixed
interest
rate received
Fair value assets
2016
RM’000
2015
RM’000
300.0
421.3 28 Oct 2010 -
28 Apr 2020
Semi-annually 4.315% and
4.350% on
SGD notional
5.375%
on USD
notional
92,759
101,807
The payment of the Group’s SGD notional amounts of USD300.0 million is designated as a hedge of net investment in the Group’s investment
in its associate. The hedge has been fully effective from inception and for the financial year.
The Group recognised a loss of RM67.6 million (2015: RM125.3 million) in OCI after reclassification of an unrealised foreign exchange loss of
RM58.2 million (2015: RM238.1 million) on the underlying Notes from the profit or loss to OCI.
The fair value changes of the derivative are attributable to future exchange rates and interest rate movements.