ENRA Group Berhad Annual Report 2019

140 ENRA GROUP BERHAD ∞ Annual Report 2019 page Notes to the Financial Statement 31 March 2019 42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The financial risk management objective of the Group is to optimise value creation for shareholders whilst minimising the potential adverse impact arising from fluctuations in interest rates and the unpredictability of the financial markets. TheGroup operates within an established riskmanagement framework and clearly definedguidelines that are regularly reviewed by the Board of Directors and does not trade in derivative financial instruments. Financial risk management is carried out through risk review programmes, internal control systems, insurance programmes and adherence to the Group financial risk management policies. The Group is exposed mainly to credit risk, interest rate risk, liquidity and cash flow risk and foreign currency risk. Information on the management of the related exposures is detailed below. (i) Credit risk Cash deposits and trade receivables may give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. It is the Group’s policy to monitor the financial standing of these counter parties on an ongoing basis to ensure that the Group is exposed to minimal credit risk. The Group’s primary exposure to credit risk arises through its trade receivables. The credit period is generally for a period of 30 days to 60 days. The exposure to credit risk is monitored on an ongoing basis. There are no specific considerations of credit risk other than as disclosed in Note 13 to the financial statements and the maximum exposures to credit risk of the Group are represented by the carrying amounts of the financial assets in the statements of financial position. As at the end of the reporting period, other than the amounts owing by the subsidiaries amounting to RM60,182,000 (2018: RM77,912,000), which represent 98.00% (2018: 95.00%) of trade and other receivables of the Company, there is no significant concentration of credit risk of the Company. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statements of financial position. Exposure to credit risk At the end of the reporting period, the Group’s and the Company’s maximumexposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. Information regarding credit enhancements for trade and other receivables is disclosed in Note 13 to the financial statements. (ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the financial instruments of the Group and of the Company would fluctuate because of changes in market interest rates. TheGroup’s and theCompany’s exposure to interest rate risk arises primarily from their fixed deposits with licensed banks, short term funds, borrowings, lease liabilites and amounts due from subsidiaries. The Group borrows at both, fixed and floating rates of interest to generate the desired interest profile and to manage the exposure of the Group and of the Company to interest rate fluctuations. Sensitivity analysis for interest rate risk The following table demonstrates the sensitivity analysis of the Group and of the Company if interest rates at the end of reporting period changed by 10 basis points with all other variables held constant: Group Company 2019 RM’000 Profit/(Loss) after tax 2018 RM’000 Profit/(Loss) after tax 2019 RM’000 Profit/(Loss) after tax 2018 RM’000 Profit/(Loss) after tax Increase by 0.1% (2018: 0.1%) 3 (37) 54 24 Decrease by 0.1% (2018: 0.1%) (3) 37 (54) (24)