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175

KUMPULAN FIMA BERHAD

(11817-V) |

Annual Report

2016

38. 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) Liquidity/Funding Risk

The Group defines liquidity/funding risk as the risk that funds will not be available to meet liabilities as

they fall due.

The Group actively manages its operating cash flows and the availability of funding so as to ensure

that all funding needs are met. As part of its overall prudent liquidity management, the Group maintains

sufficient levels of cash or cash convertible instruments to meet its working capital requirements. To

ensure availability of funds, the Group closely monitors its cash flow position on a regular basis.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Company’s liabilities at the reporting date based

on contractual undiscounted repayment obligations.

Contractual Cashflow

on demand or within

one year

2016

2015

RM’000

RM’000

Group

Financial liabilities:

Trade and other payables (excluding provision)

87,508

138,563

Borrowings

15,281

5,944

Total undiscounted financial liabilities

102,789

144,507