FGV Annual Report 2012

38 Felda Global Ventures Holdings Berhad 4 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Financial risk management policies (continued) Market risk (continued) (iii) Interest rate risk The Group’s interest rate risk mainly arises from borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable rates. The Group lends money to jointly controlled entity at floating rate. The Group borrows money from a significant shareholder at a fixed rate. The Group is not exposed to fair value interest rate risk as all of its borrowings from financial institutions and interest bearing amount due from jointly controlled entity are not classified as fair value through profit or loss and borrowings from a significant shareholder is at a fixed rate. The interest rate profile of the Group’s interest bearing financial assets, based on carrying amounts as at the end of the reporting period was: Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Financial assets At fixed rate Fixed deposits 5,464,772 1,506,997 4,179,612 459,300 At floating rate Amount due from jointly controlled entity 75,306 45,520 – – If interest rates on its floating rate financial assets had been 10 basis points higher/lower with all other variables held constant, the profit after tax of the Group will increase/decrease by approximately RM571,000 (2011: RM21,000). The interest rate profile of the Group’s interest bearing financial liabilities, based on carrying amounts as at the end of the reporting period was: Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Financial liabilities At fixed rate Loan due to a significant shareholder 1,840,271 1,840,448 1,840,271 1,840,448 At floating rate Term loans 38,669 51,171 – – Revolving credits – 463,021 – – Bankers acceptances 561,000 288,300 – – 2,439,940 2,642,940 1,840,271 1,840,448 If interest rates on its floating rate financial liabilities had been 10 basis points higher/lower with all other variables held constant, the profit after tax of the Group will increase/decrease by approximately RM154,000 (2011: RM461,000). Other financial assets and financial liabilities are non-interest bearing, and therefore are not affected by changes in interest rates. Notes to the Financial Statements for the financial year ended 31 December 2012