Singapore Airlines 2009 Annual Report Download - page 199
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197
37 Financial Instruments (in $ million) (continued)
(c) Derivative fi nancial instruments and hedging activities (continued)
Cash fl ow hedges (continued)
As at 31 March 2009, the Company has also set aside USD 268.7 million (2008: USD 331.5 million)
in short-term deposits to hedge against foreign currency risk for a portion of the forecast USD capital
expenditure in the next 10 months.
During the fi nancial year, the Group entered into fi nancial instruments to hedge expected future
payments in SGD. The outstanding contracts are as follows:
Currency hedging contracts maturing in April 2009 – March 2010
The Group and the Company
Foreign currency
Currency amount sold SGD purchased
AUD 30.5 30.4
CHF 3.0 3.9
CNY 43.0 9.1
EUR 6.0 11.8
GBP 10.4 22.8
INR 351.0 10.1
JPY 1,748.0 28.5
KRW 2,295.0 2.5
NZD 7.6 6.0
TWD 18.0 0.8
The cash fl ow hedges of the expected future purchases in USD and expected future payments in SGD in the
next 12 months are assessed to be highly effective and at 31 March 2009, a net fair value gain before tax
of $455.1 million (2008: net fair value loss before tax of $115.8 million), with a related deferred tax credit
of $110.5 million (2008: $24.3 million), is included in the fair value reserve in respect of these contracts.
As at 31 March 2009, the Company had interest rate cap contracts at a strike rate of 6.50% (2008: nil),
maturing in 7 to 10 years, to hedge against risk of increase in aircraft lease rentals.
The Group also has interest rate swap contracts in place whereby it pays fi xed rates of interest ranging from
3.00% to 4.95% and receives a variable rate linked to LIBOR. These contracts are used to protect a portion
of the lease liabilities from exposure to fl uctuations in interest rates. The maturity period of these contracts
ranges from 1 March 2014 to 5 March 2016.
The cash fl ow hedges of some of the interest rate swap contracts are assessed to be highly effective and
as at 31 March 2009, a net fair value loss before tax of $14.4 million (2008: $14.8 million), with a related
deferred tax asset of $2.4 million (2008: $2.7 million), was included in the fair value reserve in respect of
these contracts.