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212
Notes to the financial statements
31 December 2012
(continued)
Annual Report 2012 KPJ Healthcare Berhad
39. Financial risk management objectives and policies (continued)
(b) Liquidity risk (continued)
Analysis of financial instruments by remaining contractual maturities (continued)
On demand
or within
One to five
Over five
one year
years
years
Total
RM’000
RM’000
RM’000
RM’000
2011
Group
Payables
379,977
-
-
379,977
Borrowings
142,048
52,615
250,548
445,211
Deposits
-
9,830
5,665
15,495
Total undiscounted financial liabilities
522,025
62,445
256,213
840,683
Company
Payables
91,570
152,942
281,702
526,214
Borrowings
65,000
-
-
65,000
Total undiscounted financial liabilities
156,570
152,942
281,702
591,214
(c) Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of
changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. The Group’s policy is to manage interest
cost using a mix of fixed and floating rate debts.
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the Group’s profit net of tax
would have been RM471,571 (2011: RM249,215) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and
borrowings. The assumed movement in interest rate for interest rate sensitivity analysis is based on the currently observable market environment.
(d) Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange
rates.
The Group has four subsidiaries abroad; two hospitals in Jakarta, Indonesia, an aged care facility in Queensland, Australia and a pharmaceutical
distributor in Singapore. The Group does not face significant exposure from currency risk as these subsidiaries operate independently; pharmaceutical
drugs and medical supplies are supplied from and distributed in the country these subsidiaries operate. Hence, transactions involving foreign currency
are minimal and risks are limited to the translation of foreign currency functional financial statement to that of the presentation currency.