SCC Holdings Berhad Annual Report 2019

notes to the financial statement 31 december 2019 (cont’d) 94 SCC Holdings Berhad | Annual Report 2019 31. Financial Instruments (Cont’d) (b) Financial risk management (cont’d) (iii) Market risks (a) Foreign currency exchange risk (cont’d) Foreign currency sensitivity analysis The following table demonstrates the sensitivity of the Group’s profit before taxation to a reasonably possible change in the USD, EUR and GBP exchange rates against RM, with all other variables held constant. Group Change in currency rate Effect on profit before taxation 2019 2018 RM’000 RM’000 USD Strengthened 5% 12 2 Weakened 5% (12) (2) EUR Strengthened 5% - 1 Weakened 5% - (1) GBP Strengthened 5% 1 - Weakened 5% (1) - (b) Interest rate risk The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in market interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in market interest rate. The Group manages its interest rate risk exposure from interest bearing borrowings by obtaining financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. The interest rate profile of the Group’s interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was: Group 2019 2018 RM’000 RM’000 Fixed rate instrument Financial Liability - Lease liabilities 854 - Floating rate instrument Financial Liability - Bank borrowings - 127