Example of transaction to which regulation 9 applies

This guidance applies only to exchanges of shares for QCBs happening before 6 April 2010

Dromsall plc has a wholly-owned investment subsidiary incorporated in Jersey, Dromsall (Jersey) Ltd, which accounts in US dollars and has net assets of $20 million. The group's accounting date is 31 December.

Dromsall plc partially hedges its investment in the subsidiary by an external loan of $10 million, commencing on 1 January 2003. The following exchange gains or losses on the loan are taken to reserves:

Year ended 31 December 2003 £220,000 loss
Year ended 31 December 2004 £95,000 loss
Year ended 31 December 2005 £15,000 gain
Aggregate £300,000 loss

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