MIMOS Annual Report 2007

29. FINANCIAL INSTRUMENTS(a)Financial Risk Management Objectives and PoliciesThe Group’s financial risk management policy seeks to ensure that adequate financial resourcesare available for the development of the Group’s businesses whilst managing its interest rate, foreignexchange, liquidity and credit risks. The Group operates within clearly defined guidelines that are approvedby the Board and the Group’s policy is to not engage in speculative transactions.(b)Interest Rate RiskThe Group’s primary interest rate risk relates to interest-bearing debt, as the Group had no substantiallong-term interest bearing assets as at 31 December 2006. The investment in financial assets are mainlyshort term in nature and they are not held for speculative purposes but have mostly placed in fixeddeposits or occasionally, in short term commercial papers which yield better returns than cash at bank.(c)Foreign Exchange RiskThe Group is exposed to United States Dollar and Japanese Yen. Foreign currency denominated assetsand liabilities together with expected cash flows from highly probable purchases give rise to foreign exchangeexposures. The Group's foreign exchange risk is limited due to the Malaysian Ringgit's exchange ratebeing pegged to the US Dollar and transactions denominated in Japanese Yen are relatively minimal.(d)Liquidity RiskThe Group actively manages its debt maturity profile, operating cash flows and the availability of fundingso as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudentliquidity management, the Group maintains sufficient levels of cash or cash convertible investmentsto meet its working capital requirements.(e)Credit RiskCredit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals,limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’sassociations to business partners with high creditworthiness. Trade receivables are monitored on anongoing basis via management reporting procedures.The Group has no significant concentration of credit risk with any single counterparty except as disclosedin Note 16 and 17 to the financial statements. In addition, the Group strives to maintain available bankingfacilities of a reasonable level to its overall debt position.(f)Fair ValuesThe carrying amounts of financial assets and liabilities of the Group at balance sheet date approximatetheir fair values .It is not practical to estimate the fair value of the Group's non-current unquoted shares because of the lackof quoted market prices and the inability to estimate fair value without incurring excessive costs.Annual Report 2007 115