DESTINI Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS 42. Financial Instruments (Cont’d) (c) Financial risk management objectives and policies (Cont’d) (iii) Market risks (Cont’d) (b) Interest rate risk (Cont’d) Cash flow sensitivity analysis for floating rate instruments A change in 0.25% interest rate at the end of the reporting period would have increased the Group’ and the Company’s (loss)/profit before tax by RM286,891 (2018: RM340,254) and RM61,366 (2018: RM95,677) respectively, arising mainly as a result of higher interest expense on floating rate loans and borrowings. This analysis assumes that all other variables remain constant. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. (c) Market price risk Market price risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market prices (other than interest or foreign exchange rates). The Group and the Company are exposed to equity price risk arising from its investment in quoted instrument. This investment is listed on Bursa Malaysia and is classified as fair value through profit or loss. Management of the Group and the Company monitors the value of the equity investments by considering the movements in the quoted price. The buy and sell decisions are approved by the Risk Management Committee of the Group. Market price risk sensitivity analysis At the reporting date, if the stock indices had been 10% higher/lower, with all other variables held constant, the Group’s and the Company’s (loss)/profit before tax would have been RM43,013 (2018: RM113,666) lower/higher, arising as a result of higher/lower fair value gain on held for trading investment in equity instrument. (d) Fair values of financial instruments The carrying amounts of short term receivables and payables, cash and cash equivalents and short term borrowings approximate their fair value due to the relatively short term nature of these financial instruments and/ or insignificant impact of discounting. FINANCIAL STATEMENTS 06 ANNUAL REPORT 2019 197