Wah Seong Corporation Berhad Annual Report 2020

159 ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 20 DERIVATIVE FINANCIAL ASSETS/(LIABILITIES) (CONTINUED) 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 United States Dollar (2019: United States Dollar) for which firm commitments existed at the reporting date, extending to September 2021 (2019: December 2020). Gains or losses arising from fair value changes of its financial assets and financial liabilities During the financial year, the Group recognised a gain of RM2,959,000 (2019: loss of RM896,000) 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 46. 21 TIME DEPOSITS Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000 Time deposits placed with licensed banks in Malaysia 59,879 29,472 5,306 4,700 Time deposits with maturity more than 3 months 23,362 22,670 - - Short term investments 642 623 642 623 83,883 52,765 5,948 5,323 Short term investments are liquid investments held for investment purposes. As at 31 December 2020 and 31 December 2019, the Group and the Company have no exposure to foreign currency risk for time deposits and short term investments. The effective interest rates of time deposits of the Group and the Company are as follows: Group Company 2020 2019 2020 2019 % % % % Time deposits 1.00 – 4.00 2.40 – 3.31 2.90 – 3.20 2.50