EXCEL FORCE MSC BERHAD Annual Report 2017

106 30. Financial Instruments (cont’d) (b) Financial risk management objectives and policies (cont’d) (iii) Market risks (A) Interest rate risk The Group’s and the Company’s fixed rate deposits placed with licensed banks and borrowing 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 borrowing is exposed to a risk of change in cash flows due to changes in interest rates. The Group manages the interest rate risk of its deposits with licensed banks 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 manages its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amount as at the end of the reporting period was: Group 2017 2016 RM RM Floating rate instruments Short term funds 14,734,445 15,882,729 Loan and borrowing (4,240,002) (5,221,110) 10,494,443 10,661,619 Fixed rate instruments Deposits with licensed banks 206,914 727,135 Company 2017 2016 RM RM Floating rate instruments Short term funds 14,734,445 15,882,729 Loan and borrowing (4,240,002) (5,221,110) 10,494,443 10,661,619 Fixed rate instruments Amount due from a subsidiary company 1,382,376 2,093,947 Deposits with licensed banks 206,914 727,135 1,589,290 2,821,082 Notes To The Financial Statements 31 December 2017 (cont’d)