PRG Holdings Berhad Annual Report 2019

ANNUAL REPORT 2019 183 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 cont’d 37. 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: Group Average effective interest rate Total Within 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years More than 5 years Note % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 31 December 2019 Fixed rate Amounts owing by associates - USD 15(g) 3.00 4,623 - 4,623 - - - - Deposits placed with financial institutions 20 - RM 3.12 - 3.36 1,133 1,133 - - - - - - USD 1.45 762 762 - - - - - - VND 4.80 - 7.20 6,319 6,319 - - - - - - SGD 0.60 1,519 1,519 - - - - - Floating rate Trade bills 23 - USD 3.80 (122) (122) - - - - - - EUR 7.00 (898) (898) - - - - - Term loans 23 - RM 4.97-6.30 (21,191) (1,993) (2,348) (4,507) (460) (483) (11,400) - SGD 7.50 (1,993) (726) (1,267) - - - - - HKD 6.00 (8,411) (8,411) - - - - - Bank overdraft - RM 23 8.89 (384) (384) - - - - -