Financial Statements Financial Statements Press Metal Aluminium Holdings Berhad 288 289 Integrated Annual Report 2023 Notes to the Financial Statements Notes to the Financial Statements 28. FINANCIAL INSTRUMENTS (CONT’D) 28.6 Market risk (cont’d) 28.6.1 Currency risk (cont’d) Currency risk sensitivity analysis (cont’d) Equity Group Company 2023 RM’000 2022 RM’000 2023 RM’000 2022 RM’000 USD against RM 74,278 84,816 58,406 64,964 Profit or loss Group Company 2023 RM’000 2022 RM’000 2023 RM’000 2022 RM’000 USD and RMB against RM - USD (228,719) (11,424) (130,311) 3,910 - RMB (13,078) 20,905 - - (241,797) 9,481 (130,311) 3,910 A 10% (2022: 10%) weakening of RM against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant. 28.6.2 Interest rate risk The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short-term receivables and payables are not significantly exposed to interest rate risk. Risk management objectives, policies and processes for managing the risk Interest rate exposure arising from the Group’s borrowings is managed through the use of fixed and floating rate debts. The Group will consider entering into derivative financial instruments where necessary to achieve an appropriate mix of fixed and floating rate exposure within the Group’s policy. The Group and the Company are also exposed to the ongoing Secured Overnight Financing Rate (“SOFR”) on its financial instruments. The SOFR is a benchmark interest rate for dollar-denominated derivatives and loans that replaced the London Interbank Offered Rate (“LIBOR”). 28. FINANCIAL INSTRUMENTS (CONT’D) 28.6 Market risk (cont’d) 28.6.2 Interest rate risk (cont’d) Exposure to interest rate risk The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was: Group Company 2023 RM’000 2022 RM’000 2023 RM’000 2022 RM’000 Fixed rate instruments Financial assets 171,097 141,515 - 78,333 Financial liabilities (3,029,067) (2,539,143) (2,800,000) (2,300,000) (2,857,970) (2,397,628) (2,800,000) (2,221,667) Floating rate instruments Financial liabilities (1,598,786) (2,554,170) (839,567) (1,097,712) Interest rate risk sensitivity analysis Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss. Cash flow sensitivity analysis for variable rate instruments A change of 30 basis points (“bp”) in interest rates at the end of the reporting period would have increased/ (decreased) post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant. Profit or loss 2023 2022 30 bp increase RM’000 30 bp decrease RM’000 30 bp increase RM’000 30 bp decrease RM’000 Group Floating rate instruments (3,645) 3,645 (5,824) 5,824 Company Floating rate instruments (1,914) 1,914 (2,503) 2,503
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