134 FINANCIAL STATEMENTS & OTHERS ENRA GROUP BERHAD ANNUAL REPORT 2023 Notes To The Financial Statements 31 March 2023 (Cont’d) 13. DERIVATIVE ASSETS/(LIABILITY) (CONT’D) (a) Derivatives are initially recognised at fair value on the date the derivative contracts are entered into and are subsequently remeasured to fair value with changes in fair value being recognised in profit or loss. (b) The Group and Company use forward foreign currency contracts to manage some of the foreign currency transaction exposure. These contracts are not designated as cash flow or fair value hedges and are entered into for period consistent with foreign currency transaction exposure and fair value changes exposure. The Group and Company do not apply hedge accounting. Forward foreign currency contracts represent selling and buying contracts are used to hedge the principal and interest of other borrowings of the Company denominated in Singapore Dollar and to hedge the Group’s receivable from a customer denominated in US Dollar for which the commitments existed at the reporting date. (c) During the financial year, the Group and the Company recognised a net gain of RM98,000 (2022: loss of RM553,000) and RM41,000 (2022: loss of RM Nil) respectively arising from the fair value changes in derivatives. The methods and assumptions applied in determining the fair values of derivatives are disclosed in Note 35(b)(v) to the financial statements. 14. CASH AND BANK BALANCES AND SHORT TERM FUNDS Group Company 2023 2022 2023 2022 RM’000 RM’000 RM’000 RM’000 Fixed deposits with licensed banks 3,714 6,615 2,100 2,100 Cash and bank balances 6,880 7,685 258 1,796 10,594 14,300 2,358 3,896 Short term funds: - Investment in money market funds in Malaysia 2,200 5,987 2,200 5,987 12,794 20,287 4,558 9,883 (a) Cash and bank balances and short term funds are financial assets where cash and bank balances are measured at amortised cost, while short term funds are measured at fair value through profit or loss. (b) Investment in money market funds in Malaysia represent investments in highly liquid money market instruments, which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value and hence, meet the definition to be classified as cash and cash equivalents. (c) Certain deposits with licensed banks are pledged to licensed banks as security for credit facilities granted to the Group and the Company as set out in Notes 21 and 22 to the financial statements. The fixed deposits of the Group and of the Company bear average interest of 2.87% (2022: 1.21%) and 2.62% (2022: 1.70%) per annum respectively. The fixed deposits of the Group and of the Company have maturity period between one (1) month to twelve (12) months (2022: one (1) month to twelve (12) months). (d) Included in the cash and bank balances of the Group is an amount of RM1,323,000 (2022: RM1,710,000) held under the Housing Development Accounts (Control and Licensing) Amendment Act, 2015 (“HDA”). Certain bank balances held under HDA are pledged to licensed bank as security for credit facilities granted to the Group as set out in Note 22 to the financial statements. (e) Information on financial risks of cash and bank balances and short term funds is disclosed in Note 36 to the financial statements.
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