3. joy.docx - Systematic risk of the company Interest rate risk is the risk that the fair value or cash flows in the future of the Group’s financial

3. joy.docx - Systematic risk of the company Interest rate...

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Systematic risk of the company Interest rate risk is the risk that the fair value or cash flows in the future of the Group’s financial instruments will undulate because market interest rates change. The Group’s exposure to interest rate risk relate mainly to Group’s bank deposits places with licensed banks, borrowings and fixed income fund. The fixed rate of deposits placed with licensed bank expose the Group to fair value interest rate risk while variable rate of fixed income fund expose the Group to interest rate risk in cash flow. According to appendix 1, the amount of borrowings and finance lease payable is RM316,644,044 (2017: RM310,041,970) expose the Group to interest rate risk. Sensitivity analysis for interest rate risk. At the end of reporting period, a change of 50 (2017: 50) basis points in interest rates, with all other variables maintain constant, will decrease or increase the equity and profit after tax of the Group by roughly RM1,203,247 (2017: RM1,178,159), relating primarily as a result of higher or lower interest expense at floating rate financial liability.
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