EXCEL FORCE MSC BERHAD Annual Report 2017

108 30. Financial Instruments (cont’d) (b) Financial risk management objectives and policies (cont’d) (iii) Market risks (cont’d) (B) Foreign currency risk (cont’d) Foreign currency sensitivity analysis The following table demonstrates the sensitivity of the Group’s and the Company’s profit before tax for the financial year to a reasonably possible change in the USD and SGD exchange rates against the functional currencies of the Group and of the Company, with all other variables held constant. Group and Company 2017 2016 Change in Effect on Change in Effect on currency profit before currency profit before rate tax rate tax RM RM USD Strengthened 10% 37,971 Strengthened 10% 53,334 Weakened 10% (37,971) Weakened 10% (53,334) SGD Strengthened 10% 382 Strengthened 10% 15,158 Weakened 10% (382) Weakened 10% (15,158) (c) Fair value of financial instruments (i) Methods and assumptions used to estimate fair value The fair value of financial assets and financial liabilities are determined as follows: Financial instruments not carried at fair value and whose carrying amounts are reasonable approximation of fair value The carrying amount of short term receivables and payables, cash and bank balances, current portion of amount due from a subsidiary company and short term loan and borrowing are reasonable approximation of fair value due to the relatively short-term nature of these financial instruments and insignificant impact of discounting. The carrying amount of long term floating rate loan approximates their fair value as the loan will be re-priced to market interest rate on or near reporting date. Financial instruments not carried at fair value and whose carrying amounts are not reasonable approximation of fair value The fair value of non-current portion of amount due from a subsidiary company is estimated by discounting the expected future cash flows at market lending rates for similar types of lending, borrowing or leasing arrangements at the end of the reporting period. At the end of the reporting period, these amounts are carried at amortised costs and the carrying amounts are approximate to their fair values. Financial instruments carried at fair value The fair value of short term funds is determined by reference to the exchange quoted market bid prices at the close of the business at the end of each reporting period. Notes To The Financial Statements 31 December 2017 (cont’d)