PRG Holdings Berhad Annual Report 2018

33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s deposits placed with financial institutions and borrowings are exposed to a risk of changes in their fair values due to changes in market interest rates. The Group’s and the Company’s borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short term receivables and payables are not exposed to interest rate risk. The Group and the Company borrow for operations at fixed and variable rates using hire purchase, term loans, trade financing facilities and bank overdraft. There is no formal hedging policy with respect to interest rate exposure. The following tables set out the carrying amounts, the average effective interest rates as at the end of the reporting period and the remaining maturities of the Group’s and of the Company’s financial instruments that are exposed to interest rate risk: Average effective More Group interest Within 1 - 2 2 - 3 3 - 4 4 - 5 than rate Total 1 year years years years years 5 years Note % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 31 December 2018 Fixed rate Amounts owing by associates 13 - USD 3.00 4,899 187 4,712 - - - - - VND 3.00 36 36 - - - - - Deposits placed with financial institutions 17 - RM 3.65 - 3.85 1,467 1,467 - - - - - - USD 2.30 - 2.45 868 868 - - - - - - VND 4.50 - 5.50 3,094 3,094 - - - - - - HKD 2.00 - 2.10 6,408 6,408 - - - - - Investments in short term funds 17 3.41 - 3.58 175 175 - - - - - Hire purchase creditors 20 2.66 - 2.77 (839) (613) (193) (33) - - - Floating rate Trade bills 20 - VND 7.00 - 7.80 (3,097) (3,097) - - - - - Term loans 20 - RM 4.62 - 6.27 (19,015) (374) (2,462) (2,076) (1,701) (457) (11,945) - HKD 8.50 (15,060) (15,060) - - - - - 2018 A N N U A L R E P O R T 158 notes to the financial statements 31 December 2018 (continued)