Page 126 - HRC_AR2020

124 I 2020 ANNUAL REPORT I financial reports

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 (CONTINuED)

21 sHare capital
2020 2019
rM’000 rM’000

issued and fully paid 300,000,000 units of ordinary shares
At 1 January/At 31 December 300,000 300,000

22 retaineD earninGs
The Company is able to distribute dividends out of its retained earnings under the single-tier system.

23 otHer reserVes
(a) cash flow hedge reserve and cost of hedging reserve

The cash flow hedge reserve is used to record gains and losses on derivatives that are designated and qualify as cash
flow hedges and that are recognised in other comprehensive income. Amounts are reclassified to profit or loss when
the associated hedged transaction affects profit or loss.
The cost of hedging is seen as cost of achieving the risk mitigation inherent in the hedge. It is incurred to protect the
Company against unfavourable changes in price. The changes in the cost of hedging is initially recognised in other
comprehensive income and removed from equity and recognised in profit or loss in the same period that the hedged
cash flows affect profit or loss.
cash flow cost of
hedge reserve hedging reserve
rM’000 rM’000
2020
At 1 January 175,346 (34,059)
Interest rate swap contracts (11,042) -
Refining margin swap contracts 659,613 41,906
Recycled to profit or loss, included in finance cost (Note 8) 8,426 -
Recycled to profit or loss, included in purchases (823,935) -
Deferred tax 41,144 (10,057)
At 31 December 49,552 (2,210)

2019
At 1 January 196,512 (32,373)
Interest rate swap contracts (8,802) -
Refining margin swap contracts 76,486 (2,218)
Recycled to profit or loss, included in finance cost (Note 8) 2,688 -
Recycled to profit or loss, included in purchases (98,222) -
Deferred tax 6,684 532

At 31 December 175,346 (34,059)

(b) exchange translation reserve
The exchange translation reserve represents the exchange differences arising from the translation of the financial
statements of the Company whose functional currency is different from the presentation currency.