FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2024 120 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 28. FINANCIAL INSTRUMENTS (CONT’D) (a) Financial Risk Management Policies (Cont’d) Market Risk (Cont’d) (ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash ows of a nancial instrument will uctuate because of changes in market interest rates. The exposure to interest rate risk arises mainly from investments in xed rate debt securities and long-term borrowing with variable rate. The Group adopts a policy of obtaining the most favourable interest rates available and by maintaining a balanced portfolio mix of xed and oating rate borrowings. The xed rate debt instruments of the Group are not subject to interest rate risk since neither carrying amounts nor the future cash ows will uctuate because of a change in market interest rates. Interest Rate Risk Sensitivity Analysis The Group does not have any oating rate borrowings and hence, no sensitivity analysis is presented. (iii) Equity price risk The exposure to equity price risk arises mainly from changes in quoted investment prices of the Group. The Group manages its exposure to equity price risk by maintaining a portfolio of equities with different risk pro les. Equity Price Risk Sensitivity Analysis If prices for quoted investments at the end of the reporting period strengthened by 10% (2023: 10%) with all other variables being held constant, the Group’s and the Company’s pro t after taxation would have increased by RM4,214,365 and RM3,005,986 (2023: RM3,264,766 and RM1,736,961) respectively. A 10% (2023: 10%) weakening in the quoted prices would have had an equal but opposite effect on the Group’s and the Company’s pro t after taxation. Credit Risk The exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group and the Company manage their exposures to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other nancial assets (including quoted investments, cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. Also, the Company’s exposure to credit risk includes loans and advances to subsidiaries, and corporate guarantee given to nancial institutions for credit facilities granted to certain subsidiaries. The Company monitors the ability of the subsidiaries to serve their loans on an individual basis. (i) Credit risk concentration pro le At the end of the reporting period, the Group’s major concentration of credit risk relates to the amounts owing by 2 (2023: 2) customers which constituted approximately 39% (2023: 34%) of its total trade receivables (including related parties), net of loss allowance. (ii) Maximum exposure to credit risk At the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount of each class of nancial assets recognised in the statement of nancial position of the Group and of the Company after deducting any allowance for impairment losses (where applicable).
RkJQdWJsaXNoZXIy NDgzMzc=