175 / 188
171
NOTES TO THE FINANCIAL STATEMENTS
F i m a C o r p o r at i o n B e r h a d ( 2 1 1 8 5 - P ) •
A n n u a l R e p o r t 2 0 1 8
36. 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.
Sensitivity analysis
The carrying amounts of the Group’s financial assets and liabilities denominated in foreign currency are as follows:
2018
2017
RM’000
RM’000
IDR
Assets
- Trade and other receivables
29,141
27,796
- Cash and cash equivalents
31,809
51,797
60,950
79,593
Liabilities
- Trade and other payables
13,948
13,662