Chemical Company of Malaysia Berhad Annual Report 2019

25. Financial instruments (continued) 25.6Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, profit rates and other prices that will affect the Group’s financial position or cash flows. 25.6.1 Profit rate risk The Group’s fixed rate borrowing and highly liquid investments with financial institutions are exposed to a risk of change in their fair value due to changes in profit rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in profit rates. Investments in equity investments and short-term receivables and payables are not significantly exposed to profit rate risk. Risk management objectives, policies and processes for managing the risk The Group’s exposure to the risk of changes in profit rates relates primarily to the floating profit rate unsecured term loans. Changes in the profit rate may expose the Group to a risk of change in cash flows. The excess fund placed with licensed banks and other financial institutions and corporations are for certain periods during which the profit rates are fixed. The management reviews the profit rates at regular intervals. Exposure to profit rate risk The profit rate profile of the Group’s and the Company’s significant profit-bearing financial instruments, based on carrying amounts as at the end of the reporting period are as follows:   Group   Company 2019 2018 2019 2018 Fixed rate instruments Financial assets 79,153 89,550 10,155 18,747 Financial liabilities (98,000) (98,000) (98,000) (98,000) (18,847) (8,450) (87,845) (79,253) Floating rate instruments Financial assets - - 11,853 22,778 Financial liabilities (97,080) (95,802) (20,000) (46,442) (97,080) (95,802) (8,147) (23,664) BUSINESS OVERVIEW OTHER INFORMATION GOVERNANCE STRUCTURE 197 ANNUAL REPORT 2019 FINANCIAL STATEMENTS