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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