Maxis Berhad | Annual Report 2012

Maxis Berhad // Annual Report 2012 168 33 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Market risk (continued) (ii) Interest rate risk The Group’s and the Company’s interest rate risk arises from deposits with licensed banks, deferred payment creditors, borrowings, loan from a related party and inter-company loans carrying fixed and variable interest rates. The objectives of the Group’s and of the Company’s interest rate risk management policies are to allow the Group and the Company to effectively manage the interest rate fluctuation through the use of fixed and floating interest rates debt and derivative financial instruments. The Group and the Company adopt a non-speculative stance which favours predictability over interest rate fluctuations. The interest rate profile of the Group’s and of the Company’s borrowings are also regularly reviewed against prevailing and anticipated market interest rates to determine whether refinancing or early repayment is warranted. The Group and the Company manage their cash flow interest rate risk by using cross currency interest rate swap contracts and interest rate swap contracts. Such swaps have the economic effect of converting certain borrowings from floating rates to fixed rates. The net exposure of financial assets and financial liabilities of the Group and of the Company to interest rate risk (before and after taking effect of cross currency interest rate swap and interest rate swap contract) and the periods in which the borrowings mature or reprice (whichever is earlier) are as follows: Weighted average effective interest rate/ Floating profit margin at Total interest reporting date carrying rate Fixed interest rate/profit margin Group (per annum) amount < 1 year < 1 year 1-2 years 2-5 years > 5 years % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 31 December 2012 Deposits with licensed banks 3.07 881,585 – 881,585 – – – Trade payables 2.33 (58,597) (58,597) – – – – Finance lease liabilities 5.78 (6,982) – (2,061) (2,183) (2,738) – Syndicated term loans 1.94 (2,583,174) (2,583,174) – – – – Term loans 3.32 (1,701,278) (1,701,278) – – – – Islamic Medium Term Notes 5.01 (2,482,446) – – – – (2,482,446) Loan from a related party 7.60 (38,188) (38,188) – – – – Gross exposure (5,989,080) (4,381,237) 879,524 (2,183) (2,738) (2,482,446) CCIRSs and IRSs: - syndicated term loans 4.81 2,583,174 – (368,746) (1,911,818) (302,610) - term loans 4.33 926,188 – – – (926,188) Net exposure (871,875) 879,524 (370,929) (1,914,556) (3,711,244) NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2012 Continued