ENRA Group Berhad | Annual Report 2022 167 NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2022 37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont’d) (iv) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates. The Group is subject to foreign exchange fluctuations through the import and export of finished goods. The Group also has cash and bank balances, receivables, payables and borrowings denominated in foreign currencies. At the end of reporting period, the Group holds bank balance denominated in foreign currencies as disclosed in Note 14(f) to the financial statements. The Group is also exposed to foreign currency risk in respect of the foreign subsidiaries. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity analysis of the Group and of the Company to a reasonably possible change of exchange rates in the US Dollar (“USD”), British Pound (“GBP), and Australian Dollar (“AUD”) against RM respectively, with all variables held constant. 3% is the sensitivity rate used when reporting foreign currency risk exposures internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. Group Company 2022 2021 2022 2021 RM’000 RM’000 RM’000 RM’000 Profit/(Loss) after tax USD/RM - strengthen by 3% (2021: 3%) (145) 48 – 235 - weaken by 3% (2021: 3%) 145 (48) – (235) GBP/RM - strengthen by 3% (2021: 3%) 358 (564) (254) 217 - weaken by 3% (2021: 3%) (358) 564 254 (217) AUD/RM - strengthen by 3% (2021: 3%) – (82) – – - weaken by 3% (2021: 3%) – 82 – –
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