EXCEL FORCE MSC BERHAD Annual Report 2020

EXCEL FORCE MSC BERHAD - ANNUAL REPORT 2020 113 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CONT’D) 35. FINANCIAL INSTRUMENTS (CONT’D) (b) Financial risk management objectives and policies (Cont’d) (iii) Market risks (1) 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 Groupmanages the interest rate risk of its deposits with licensed banks by placing themat themost 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 are as follows: 2020 2019 RM RM Group Fixed rate instrument Financial asset Fixed deposits with licensed banks 207,568 211,019 Floating rate instrument Financial asset Short-term funds 19,875,977 19,801,575 Company Fixed rate instruments Financial assets Amount due from a subsidiary company - 750,469 Fixed deposits with licensed banks 207,568 211,019 207,568 961,488 Floating rate instrument Financial asset Short-term funds 19,875,977 19,801,575