Sunny Tew

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2007 (Continued)13. Derivative financial instrumentsThe Group and the Company2007 2006$ $Forward foreign exchange contracts 2,667,408 4,870,228The Group and the Company use currency derivatives to hedge significant future transactions and cash flows in foreign currency. The Group and the Company is party toa variety of forward foreign exchange contracts in the management of its exchange rate exposures. The instruments purchased are denominated in United States Dollarwhich is the currency of the Group’s and the Company’s purchases.At the balance sheet date, the total notional amount of outstanding forward foreign exchange contracts to which the Group and the Company are committed is as follows:The Group and the Company2007 2006$ $Foreign currency forward contracts 28,490,000 134,895,000The above derivatives are measured at fair value at each balance sheet date. Their fair values are determined based on the quoted market price for equivalent instrumentsat the balance sheet date. All these foreign currency forward contracts expire within the next financial year.Changes in fair value of hedging currency derivatives amounting to $2,202,820 (2006: $4,870,228) have been derecognised/( recognised) in the hedging reserve in equity.HG METAL MANUFACTURING LIMITED ANNUAL REPORT 200779