ANNUAL REPORT 2024 FOR THE FINANCIAL YEAR ENDED 31 MARCH 2024 FINANCIAL STATEMENTS NOTES TO THE 193 49. FINANCIAL INSTRUMENTS (CONT’D) 49.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D) (a) Market Risk (Cont’d) (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 long-term borrowings with variable rates. The Group’s policy is to obtain the most favourable interest rates available and by maintaining a balanced portfolio of fixed and floating rate borrowings. The Group’s fixed rate deposits and borrowings are carried at amortised cost. Therefore, they are not subject to interest rate risk as defined in MFRS 7 since neither the 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 financial year is disclosed in Notes 24, 25, 26 and 32 to the financial statements. Interest Rate Risk Sensitivity Analysis The following table details the sensitivity analysis to a reasonably possible change in the interest rates at the end of the financial year, with all other variables held constant:- Group Company 2024 2023 2024 2023 RM’000 RM’000 RM’000 RM’000 Effects on Profit After Taxation Increase of 100 bp (444) (441) (4) (15) Decrease of 100 bp 444 441 4 15 (iii) Equity Price Risk The Group and the Company do not have any quoted investments and hence, is not exposed to equity price risk. (b) Credit Risk The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries. The Company monitors the results of these subsidiaries regularly and repayments made by the subsidiaries. (i) Credit Risk Concentration Profile The Group’s major concentration of credit risk relates to the amounts owing by two (2) customers (2023 - three (3) customers) which constituted approximately 95% (2023 - 96%) of its trade receivables (excluding accrued income) at the end of the financial year.
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