ENRA Group Berhad Annual Report 2018

123 A N N U A L R E P O R T 2 0 1 8 NOTES TO THE FINANCIAL STATEMENTS 31 March 2018 cont’d 42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont’d) (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. The Group’s and the Company’s exposure to interest rate risk arises primarily from their fixed deposits with licensed banks, short term funds, borrowings 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 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Profit/(Loss) after tax Profit/(Loss) after tax Profit/(Loss) after tax Profit/(Loss) after tax Increase by 0.1% (2017: 0.1%) 37 11 (20) (15) Decrease by 0.1% (2017: 0.1%) (37) (11) 20 15