NTUC Income AR 2017

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 14. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) 2016 Contract or Underlying Principal $’000 Positive Revaluation $’000 Negative Revaluation $’000 Net $’000 Life Insurance Par Fund Forward foreign exchange 8,680,417 20,700 157,198 (136,498) Options 1,734 – 1 (1) Interest rate swaps 537,465 1,594 1,210 384 Futures 681,445 2,951 1,845 1,106 Cross currency swaps 1,069,797 – 162,081 (162,081) 10,970,858 25,245 322,335 (297,090) Life Insurance Non-Par Fund Forward foreign exchange 459,771 25 11,840 (11,815) Investment-Linked Fund Forward foreign exchange 282,469 3,259 3,884 (625) Options 173 41 – 41 Futures 66,270 114 232 (118) Cross currency swaps 2,749 – 138 (138) 351,661 3,414 4,254 (840) General Insurance Fund Forward foreign exchange 550,237 2,921 10,636 (7,715) Shareholders’ Fund Forward foreign exchange 675,571 1,898 8,484 (6,586) Futures 46,891 351 129 222 Cross currency swaps 26,793 – 2,613 (2,613) 749,255 2,249 11,226 (8,977) Total 13,081,782 33,854 360,291 (326,437) At the reporting date, all derivative financial instruments balances are current, as they are classified as ‘held for trading’ in accordance with FRS 39 Financial Instruments: Recognition and Measurement . The Co-operative enters into master netting arrangements with counterparties. The credit risk associated with favourable contracts is reduced by the master netting arrangement to the extent that if an event of default occurs, all amounts with the counterparty are settled on a net basis. Master netting arrangements do not meet the criteria for offsetting of financial assets and liabilities on the statement of financial position, as the legal right to set off the transactions is conditional upon default. ANNUAL REPORT 2017 EVERY DAY MADE DIFFERENT 105