| ANNUAL REPORT 2015
188
NOTES TO THE FINANCIAL STATEMENTS
30 June 2015 (cont’d)
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
(iii) 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 exposure of the Group and of the Company to interest rate risk relates primarily to their interest-bearing borrowings
on floating rates. The Group does not use derivative financial instruments to hedge this risk.
Sensitivity analysis for interest rate risk
The following table demonstrates the sensitivity analysis of the Group and Company if interest rates at the end of each
reporting period changed by fifty (50) basis points with all other variables held constant:
Group
Company
2015
2014
2015
2014
RM’000
RM’000
RM’000
RM’000
Profit after tax
- increase by 0.5% (2014: 0.5%)
(497)
(487)
(46)
(27)
- decrease by 0.5% (2014: 0.5%)
497
487
46
27
The sensitivity is higher in 2015 than in 2014 because of lower deposits with licensed banks during the financial year.
The assumed movement in basis points for interest rate sensitivity analysis is based on current observable market
environment.
