4 FINANCIAL RISK MANAGEMENT (continued) (a) Financial risk management policies (continued) Market risk (continued) (iii) Finance rate risk The Group’s finance rate risk mainly arises from term loans. Term loans issued at variable rates expose the Group to cash flow finance rate risk. The Company has been in constant engagement with its lender to manage its finance rate risk and has been advised that the current KLIBOR is still being referenced for its borrowings. The Company has also been informed that currently, the lender shall be guided by further announcement by Bank Negara Malaysia (BNM) on the timeline for the migration to the alternative reference rate (ARR) upon the cessation of the current KLIBOR rate. Upon the issuance of the guidelines, the lenders will engage the Company on the transition plan. The finance rate profile of the Group’s finance bearing financial assets, based on carrying amounts as at the end of the financial year was: Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000 Financial assets At fixed rate: Fixed deposits 81,119 127,748 37,395 16,688 At floating rate (exposed to cash flow finance rate risk): Loans to subsidiaries - - 1,041,370 1,002,053 81,119 127,748 1,078,765 1,018,741 The finance rate profile of the Group’s finance bearing financial liabilities, based on carrying amounts as at the end of the reporting period was: Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000 Financial liabilities At fixed rate: Loan due to a related company - 47,152 - 10,108 Borrowings 378,935 354,550 - - 378,935 401,702 - 10,108 At floating rate (exposed to cash flow finance rate risk): Borrowings 414,121 552,550 414,121 552,550 Loan due to a subsidiary - - 123,782 128,856 414,121 552,550 537,903 681,406 793,056 954,252 537,903 691,514 NOTESTOTHE FINANCIAL STATEMENTS FORTHE FINANCIALYEAR ENDED 31 DECEMBER 2021 WHO WE ARE STATEMENT & DISCUSSION BY OUR LEADERS HOWWE OPERATE MSM Malaysia Holdings Berhad ANNUAL INTEGRATED REPORT 2021 310
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