34. FINANCIAL INSTRUMENTS (CONTINUED) 34.6 Market risk (continued) 34.6.2 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 loan and borrowings with variable rates. The Group’s policy is to obtain the most favourable interest rates available and by maintaining a balanced portfolio mix of fixed and floating rate borrowings. The Group’s fixed deposits with licensed banks and fixed rate loans and borrowings 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 18 to the financial statements. Interest rate risk sensitivity analysis The following table demonstrates the sensitivity of the Group and of the Company when a change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased/(decreased) posttax profit or loss by the amounts shown below. This analysis assumes that all other variables remained constant: Group Profit or loss Company Profit or loss 100 bp increase 100 bp decrease 100 bp increase 100 bp decrease 1.7.2022 to 31.12.2023 Floating rate instruments (531) 531 (380) 380 1.7.2021 to 30.6.2022 Floating rate instruments (811) 811 (175) 175 34.6.3 Other price risk Equity price risk arises from the Group’s investments in quoted equity securities. Risk management objectives, policies and processes for managing the risk Management of the Group monitors the quoted equity investments on a portfolio basis. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the Board of Directors. Equity price risk sensitivity analysis The Group does not have investments in quoted equity securities at the end of the reporting date. Integrated Report 2023 293
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