GHL System Berhad Annual Report 2020

158 G H L S y s t e m S B e r h a d 1 9 9 4 0 1 0 0 7 3 6 1 ( 2 9 3 0 4 0 - D ) NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 CONT’D 27. DERIVATIVE (cont’d) (c) In the previous financial year, the Group do not recognised any gain or loss arising from fair value changes of derivative financial instruments where the forward contracts have been entered on 31 December 2019. (d) Forward currency contracts of the Group are categorised as Level 1 in the fair value hierarchy. The fair value of forward foreign currency contract is determined using forward exchange market rates at the end of the financial year. The fair value of a forward foreign exchange contract is the amount that would be payable or receivable upon termination of the outstanding position arising and is determined by reference to the difference between the contracted rate and the forward exchange rate as at the end of the reporting period applied to a contract of similar amount and maturity profile. 28. EMPLOYEE BENEFITS OBLIGATIONS Group 2020 2019 RM RM Present value of unfunded obligations 2,233,582 1,395,720 Recognised liability for defined benefit obligations 2,233,582 1,395,720 (a) Liability for employee benefits obligations GHL Systems Philippines, Inc. (“GSP”), a 99.99% owned subsidiary of GHL Asia Pacific Limited recognised liability for defined benefit obligations based on actuarial valuation report dated 4 February 2021. GSP operates a defined benefit plan that provides pension benefit for employees upon retirement based on Republic Act 7641. Under the plan, eligible employees are entitled to retirement benefit of one-half month salary for every year of service, a fraction of at least six (6) months is considered as one (1) whole year. The retirement benefit are payable to employees who are at least 60 years old with at least 6 years of services. (b) Employee benefits obligations is denominated in PHP. (c) The following table demonstrates the sensitivity analysis of the Group to a reasonably possible change in the PHP exchange rates against the respective functional currency of the Group entities, with all other variables held constant: Group 2020 2019 RM RM Profit after tax PHP/RM - strengthen by 10% (2019: 10%) (169,752) (106,075) PHP/RM - weaken by 10% (2019: 10%) 169,752 106,075