FGV Annual Report 2015

221 WHO WE ARE & WHAT WE DO OUR STRATEGIC INTENT & PERFORMANCE HOWWE ARE GOVERNED CREATING SUSTAINABLE VALUE OUR NUMBERS ADDITIONAL INFORMATION DETAILS OF THE ANNUAL GENERAL MEETING Notes to the Financial Statements For The Financial Year Ended 31 December 2015 ADDRESSING OUR RISKS & OPPORTUNITIES Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 4 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Financial risk management policies (continued) Market risk (continued) (iii) Finance rate risk (continued) Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Financial liabilities (continued) At floating rate (exposed to cash flow finance rate risk) LLA liability 4,627,195 4,680,829 - - Loans due to subsidiaries - - 312,500 - Term loans 165,601 182,230 - - 4,792,796 4,863,059 312,500 - 10,070,904 9,383,755 2,726,419 2,202,920 If finance rates on its floating rate financial liabilities and discount rate on LLA liability increased/decreased by 50 basis points and borrowings increased/decreased by 10 basis points with all other variables held constant, the profit after tax of the Group will increase by RM207,551,000 (2014: RM205,936,000) and decrease by RM235,901,000 (2014: RM232,186,000) respectively. Other financial assets and financial liabilities are non-finance bearing, and therefore are not affected by changes in finance rates. Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group adopts the policy of dealing with customers with an appropriate credit history, and obtaining sufficient security where appropriate, including payments in advance, to mitigate credit risk. The financial assets exposure can be illustrated as follows: