ACCOUNTABILITY 260 YINSON HOLDINGS BERHAD 44. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (a) Market risk (continued) (i) Interest rate risk (continued) Effects of hedge accounting on the financial position and performance The effects of the above-mentioned interest rate swaps on the Group’s financial position and performance are as follows: 2026 RM million Interest rate swaps Carrying amount (current and non-current asset, net) 137 Notional amount 5,508 Hedge ratio of project financing loans 80% Change in fair value of outstanding hedging instruments since 1 February (198) Change in value of hedged item used to determine hedge effectiveness (198) Weighted average hedged rate for the financial year 3.89% to 8.48% 2025 RM million Interest rate swaps Carrying amount (current and non-current asset, net) 342 Notional amount 7,036 Hedge ratio of project financing loans 81% Change in fair value of outstanding hedging instruments since 1 February (13) Change in value of hedged item used to determine hedge effectiveness (13) Weighted average hedged rate for the financial year 3.89% to 8.56% The maturity period of interest rate swaps ranges from November 2027 to September 2039 (2025: November 2027 to September 2039). 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 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, taking into account that only the unhedged portion of these variable rate loans is exposed to interest rate fluctuations. (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, with primarily RM, USD, INR, Brazilian Reias, Peruvian Sol, Singapore Dollar, and Norwegian Krone. 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.
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