2012 Annual Report - Media Prima Berhad

44 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a)
Market risks (continued)
(ii)
Price risk
The Group is exposed to equity securities price risk because of investments held by the Group classified
on the consolidated statement of financial position as available-for-sale and fair value through profit and
loss. The Group is not exposed to commodity price risk. No financial instruments or derivatives have been
employed to hedge this risk as the risk is deemed to be insignificant.
(iii) Cash flow and fair value interest rate risk
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NETWORKS
The Group’s interest rate risk arises from long-term borrowings and debt instruments. Borrowings issued
at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at
variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group
policy is to maintain appropriate level of borrowings in fixed rate instruments to ensure that some level of
predictability in cash flows are preserved while ensuring that the Group maintains its cost of debt and
gearing ratio at healthy levels within the limits of any covenants. During 2012 and 2011, the Group’s
borrowings at fixed rate were denominated in RM.
The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking
into consideration refinancing, renewal of existing positions and alternative financing. Based on these
scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each
simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities
that represent the major interest-bearing positions.
Based on frequent simulations performed, for which the Group assesses its interest rates risk exposure to
be within tolerable limits, the impact on post tax profit of interest rates shift would be as disclosed below:
Impact of changes to interest rates to
profit and loss (net of tax)
Finance cost Interest rates
for the financial for the financial
year ended year ended
31 December 2012 31 December
(Note 4) 2012 –0.50% –0.25% 0.25% 0.50%
RM’000 % RM’000 RM’000 RM’000 RM’000
Revolving credit (2,504) 3.85% 245 122 (122) (245)
BGMTN (3,635) 4.27% 319 160 (160) (319)
RFRB (9,140) 6.50% 527 264 (264) (527)
Term loans (10,133) 5.10% 745 373 (373) (745)
Bank guarantee (1,035) 2.60% 158 79 (79) (158)
Hire purchase (860) 4.00% 81 41 (41) (81)
CPMTN (144) 4.38% 12 6 (6) (12)
(27,451) 2,087 1,045 (1,045) (2,087)
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2012
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