Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2022 150 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 28. FINANCIAL INSTRUMENTS (CONT’D) (a) Financial Risk Management Policies (Cont’d) Market Risk (Cont’d) (i) Foreign currency risk (Cont’d) Foreign Currency Risk Sensitivity Analysis The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies at the end of the reporting period, with all other variables held constant: The Group The Company 2022 2021 2022 2021 Increase/ Increase/ Increase/ Increase/ (Decrease) (Decrease) (Decrease) (Decrease) RM RM RM RM Effects on profit after taxation/equity Singapore Dollar: - strengthened by 5% (1,489) 231,908 15,443 249,447 - weakened by 5% 1,489 (231,908) (15,443) (249,447) United States Dollar: - strengthened by 5% 4,017,020 2,145,228 - 199,893 - weakened by 5% (4,017,020) (2,145,228) - (199,893) Others*: - strengthened by 5% (8,290) (922) - - - weakened by 5% 8,290 922 - - * Denominated in Euro, Great Britain Pound and Indonesian Rupiah. (ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises mainly from short-term borrowing with variable rate. The Group’s policy is to obtain the most favourable interest rates available and by maintaining a balanced portfolio of mix of fixed and floating rate borrowings. The Group’s fixed deposits with licensed banks are carried at amortised cost. Therefore, they are not subject to interest rate risk as defined in MFRS 7 since neither carrying amounts nor the future cash flows will fluctuate because of a change in market interest rates. The Group’s exposure to interest rate risk based on the carrying amounts of the financial instruments at the end of the reporting period is disclosed in Note 26 to the financial statements. Interest Rate Risk Sensitivity Analysis Any reasonably possible change in the interest rates of floating rate short-term borrowing at the end of the reporting period does not have a material impact on the profit after taxation and equity of the Group and hence, no sensitivity analysis is presented. The Company does not have any floating rate borrowings and hence, no sensitivity analysis is presented.
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