Maxis Berhad | Annual Report 2013

155 OVERVIEW OUR BUSINESS STRATEGIC REVIEW CORPORATE GOVERNANCE FINANCIAL STATEMENTS Maxis Berhad Annual Report 2013 OTHER INFORMATION 33 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Market risk (continued) (ii) Interest rate risk (continued) The sensitivity of the Group’s and of the Company’s profit before tax for the financial year and equity to a reasonably possible change in RM and USD interest rates with all other factors held constant and based on composition of liabilities with floating interest rates at the reporting date are as follows: IMPACT ON PROFIT BEFORE TAX FOR THE FOR THE FINANCIAL YEAR IMPACT ON EQUITY (1) GROUP COMPANY GROUP AND COMPANY 2013 2012 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM - increased by 0.5% (2012: 0.5%) (3,994) (1,659) (5,244) (891) 22,735 25,800 - decreased by 0.5% (2012: 0.5%) 3,994 1,659 5,244 891 (22,735) (25,800) USD - increased by 0.5% (2012: 0.5%) (1,186) (293) – – 38,932 52,515 - decreased by 0.5% (2012: 0.5%) 1,186 293 – – (38,932) (52,515) Note: (1) Represents cash flow hedging reserve The impacts on profit before tax for the financial year are mainly as a result of interest expenses/income on floating rate payables, loan from a related party and borrowings not in a designated hedging relationship. For borrowings in a designated hedging relationship, as these are effectively hedged, the interest rate movements will not have any impact on the statements of profit or loss. (b) Credit risk The objectives of the Group’s and of the Company’s credit risk management policies are to manage their exposure to credit risk from deposits, cash and bank balances, receivables, derivative financial instruments and inter-company loans. They do not expect any third parties to fail to meet their obligations given the Group’s and the Company’s policies of selecting creditworthy counterparties. The Group has no significant concentration of credit risk as the Group’s policy limits the concentration of financial exposure to any single counterparty. Credit risk of trade receivables is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via limiting the Group’s dealings with creditworthy business partners and customers. Trade receivables are monitored on an on-going basis via the Group’s management reporting procedures. At the Company level, inter-company loans exposure to bad debts is not significant since the subsidiaries do not have historical default. For deposits, cash and bank balances, the Group and the Company seek to ensure that cash assets are invested safely and profitably by assessing counterparty risks and allocating placement limits for various creditworthy financial institutions. As for derivative financial instruments, the Group and the Company enter into the contracts with various reputable counterparties to minimise the credit risks. The Group and the Company consider the risk of material loss in the event of non-performance by the above parties to be unlikely. The Group’s and the Company’s maximum exposure to credit risk is equal to the carrying value of those financial instruments.