DESTINI Annual Report 2020

38. Financial Instruments (Cont’d) (c) Financial risk management objectives and policies (Cont’d) (iii) Market risks (Cont’d) (b) Interest rate risk The Group’s and the Company’s fixed rate deposits placed with licensed banks and borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. The Group and the Company manage the interest rate risk of its deposits with licensed financial institutions by placing them at the most competitive interest rates obtainable, which yield better returns than cash at bank and maintaining a prudent mix of short and long term deposits. The Group and the Company manage its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group and the Company constantly monitor its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group and the Company do not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. The carrying amounts of the Group’s and of the Company’s financial instruments that are exposed to interest rate risk are as follows: 2020 2019 RM RM Group Fixed rate instruments Financial liabilities 12,823,746 21,416,387 Floating rate instruments Financial liabilities 105,270,911 114,748,688 Company Floating rate instruments Financial liabilities 16,156,179 24,546,499 ANNUAL REPORT 2020 DESTINI BERHAD Notes to Financial Statements 190