321 SECTION 6 FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2025 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 42 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Market risk (continued) (a) Foreign currency risk (continued) Company Denominated in USD RM’000 31 December 2025 Cash and cash equivalents 16 Net exposure 16 31 December 2024 Cash and cash equivalents 10 Net exposure 10 (b) Cash flow and fair value interest rate risks Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates. The Group’s and the Company’s exposure to interest rate risks relates primarily to the Group’s and the Company’s time deposits and interest bearing borrowings. Surplus funds are placed with licensed financial institutions to earn interest income based on prevailing market rates. The Group and the Company manage its interest rate risks by placing such funds on short tenures of 12 months or less. The Group and the Company generally borrow principally on a floating rate basis and ensure that interest rates obtained are competitive. The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instrument have been presented in Notes 14, 16, 18 and 24. Fair value sensitivity for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as a fair value hedge. Therefore, a change in interest rates for these financial instruments at the end of the reporting period would not affect profit or loss. Sensitivity analysis for variable rate instruments At the reporting date, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group’s and the Company’s profit or loss after tax and equity would have been approximately RM1,757,000 and RM Nil (2024: RM2,534,000 and RM Nil) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.
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