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Fima Corporation Berhad
(21185-P)
financial statements
160
NOTES TO THE FINANCIAL STATEMENTS
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development
of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity/funding and credit risks. The Group
operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative
transactions.
(a) Interest Rate Risk
The Group’s primary interest rate risk relates to interest-bearing debt as at year end. The investments in financial assets are
mainly short term in nature and they are not held for speculative purposes.
The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The
Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This
strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection
against rate hikes.
The information on maturity dates and effective interest rates of financial assets and liabilities are disclosed in their respective
notes.
(b) Foreign Exchange Risk
The Group operates internationally and is exposed to various currencies, mainly Indonesian Rupiah. Foreign currency
denominated assets and liabilities together with expected cash flows from highly probable purchases and sales give rise
to foreign exchange exposures.
Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept
to an acceptable level. There are no material unhedged financial assets and financial liabilities that are not denominated in
the functional currencies of the Company and its subsidiaries.