DESTINI AR 2017

41. Financial Instruments (Cont’d) (b) Financial risk management objectives and policies (Cont’d) (iii) Market risks (Cont’d) (b) 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 Group manages the interest rate risk of its deposits with licensed financial institutions by placing them at the most 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 carrying amounts of the Group’s and of the Company’s financial instruments that are exposed to interest rate risk are as follows: 2017 2016 RM RM Group Fixed rate instruments Financial liabilities 2,464,850 2,674,484 Floating rate instruments Financial liabilities 176,513,486 82,327,339 Company Fixed rate instruments Financial liabilities 10,700 24,033 Floating rate instruments Financial liabilities 57,947,662 62,339,169 169 DESTINI BERHAD Annual Report 2017