Wah Seong Corporation Berhad Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 FINANCIAL STATEMENTS WAH SEONG CORPORATION BERHAD ANNUAL REPORT 2017 145 12 DERIVATIVE FINANCIAL ASSETS Group Contract/ notional amount Assets RM’000 Liabilities RM’000 2017 Current Non-hedging derivatives Financial assets at fair value through profit or loss - Forward currency contracts SGD1,200,000 94 - 2016 Current Non-hedging derivatives Financial assets at fair value through profit or loss - Forward currency contracts USD1,724,000 581 - The Company did not hold any derivative financial instruments as at 31 December 2017 (2016: Nil). Non-hedging derivatives The Group uses forward currency contracts to manage some of the transaction exposures and limit its exposure to adverse fluctuation in foreign currency. These contracts are not designated as cash flow or fair value hedges. Forward currency contracts The Group enters into foreign currency forward contracts to protect the Group from movements in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Forward currency contracts are mainly used to hedge certain trade receivables and trade payables denominated in Singapore Dollar for which firm commitments existed at the reporting date, extending to April 2018 (2016: February 2017). Gains or losses arising from fair value changes of its financial assets and financial liabilities During the financial year, the Group recognised a loss of RM487,000 (2016: gain of RM995,000) respectively in the profit or loss arising from fair value changes of its derivative financial assets and liabilities. The method and assumptions applied in determining the fair value of derivatives are disclosed in Note 47.