261 INTEGRATED ANNUAL REPORT 2025 ACCOUNTABILITY | NOTES TO THE FINANCIAL STATEMENTS 43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (a) Market risk (continued) (i) Interest rate risk (continued) Sensitivity Profit or loss is sensitive to higher/lower interest expenses from unhedged variable rate loans as a result of changes in interest rates. The impact to the Group’s profit arising from increase/decrease in interest rates by 10 basis points for the current financial year is RM3 million (2024: RM5 million), taking into account that only the unhedged portion of these variable rate loans is exposed to interest rate fluctuations. The impact to the Company’s profit arising from increase/decrease in interest rates by 10 basis points has been assessed as immaterial for both the current and previous financial year. (ii) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities and the Group’s net investments in foreign subsidiaries. The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group entities, primarily RM, USD, INR, Brazilian Reias (“BRL”) and Norwegian Krone (“NOK”). The Group holds cash and cash equivalents denominated in foreign currencies for working capital purposes. The other financial instruments denominated in foreign currencies include finance lease receivables, trade and other receivables, trade and other payables, loans and borrowings and lease liabilities. The Group is also exposed to currency translation risk arising from its net investment in foreign operations primarily in Labuan, Singapore, Norway, Republic of the Marshall Islands, British Virgin Islands, Brazil, India and the Netherlands. Except as disclosed in Note 43(a)(ii), the Group’s investments in its foreign subsidiaries, joint ventures and associates are not hedged as the currency position in these investments is considered to be long term in nature. The currency profile of monetary financial assets and financial liabilities are as follows: Denominated in currencies other than the entities’ functional currencies Group Malaysian Ringgit RM million United States Dollar RM million Others RM million Denominated in functional currencies RM million Total RM million 2025 Other investments - - 7 56 63 Receivables - 37 146 573 756 Intercompany receivables - 822 316 15,786 16,924 Cash and bank balances 22 19 45 2,593 2,679 Borrowings - (112) - (15,942) (16,054) Lease liabilities - - (20) (59) (79) Payables (5) (7) (126) (1,211) (1,349) Intercompany payables (56) (483) (13) (16,687) (17,239) Derivatives: Interest rate swaps - - - 342 342 Foreign exchange forward contracts - (1) - - (1) (39) 275 355 (14,549) (13,958)
RkJQdWJsaXNoZXIy NDgzMzc=