Wah Seong Corporation Berhad Annual Report 2021 200 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 45 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Liquidity risk (continued) Within 1 year Total contractual undiscounted cash flows Total carrying amount Company RM’000 RM’000 RM’000 2020 Non-derivative financial liabilities Financial guarantees* 294,422 294,422 - Other payables and accruals 2,061 2,061 2,061 Amounts owing to subsidiaries 17,216 17,216 17,216 Loans and borrowings 131,386 131,386 126,759 445,085 445,085 146,036 * This represents the maximum exposure to the Company in the event that the financial guarantee contracts issued by the Company to its subsidiaries are called upon. These liabilities have been included in the consolidated statement of financial position of the Group and hence will not result in any additional liability to the Group. 46 FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying amounts of financial assets and liabilities classified within current assets and current liabilities respectively approximate their fair values due to the relatively short term nature of these financial instruments. The fair values of forward exchange contracts are estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate. Fair values of non-derivative financial liabilities are calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. The carrying amount of financial liabilities measured at amortised cost approximates their respective fair values. Fair value hierarchy The table below summarises all financial instruments carried at fair value as at 31 December 2021 and 31 December 2020, based on a hierarchy that reflects the significance of the inputs used in measuring its respective fair values. The levels are defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical financial assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the financial asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the financial asset or liability that are not based on observable market data (unobservable inputs).
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