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ENRICHING STAKEHOLDER ASPIRATIONS ENRICHING PERFORMANCE ENRICHING THE COMMUNITY ENRICHING ACCOUNTABILITY & INTEGRITY ENRICHING RESILIENCE & SUSTAINABLE GROWTH

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

34. FINANCIAL RISK
the group and KWap are exposed to financial risks arising from their operations and the use of financial instruments.
the key financial risks include interest rate risk, equity price risk, credit risk and liquidity risk.
the group and KWap have an approved set of guidelines and policies as well as internal controls which set out the
overall business strategies for the management of the risks. the overall financial risk management objective is to
enhance the contributors’ value through the effective management of the risks.
the policies and procedures of risk management are reviewed and approved by the board. the following sections
provide the details regarding the group’s and KWap’s exposure to the above-mentioned financial risks as well as the
objectives, policies and processes for the management of these risks.

(a) Interest rate risk
interest rate risk is the risk of the fluctuation of fair value or future cash flows of financial instruments due to
changes in the market interest rates. the group’s and KWap’s exposure to the risk of changes in the market
interest rates relate primarily to loans and receivables and external borrowings with floating interest rates.

the group and KWap actively manage the interest rate risk with the maintenance of an interest rate cover ratio of
a minimum of one and a half times.

Interest rate sensitivity
the following table demonstrates the sensitivity to the reasonable possible change in interest rates on the portion
of borrowings. With all other variables held constant, the table summarises the group’s and KWap’s exposure to
interest rate risk on the loans and receivables and external borrowings with floating interest rates and fixed income
securities.

Group KWAP Group KWAP
Effect On Effect On
Effect On Effect On Profit Before Profit Before
Equity Equity Tax Tax
RM’000 RM’000 RM’000 RM’000

2023
increase in 100 basis points (2,639,261) (2,639,261) (14,724) (14,724)
decrease in 100 basis points 2,639,261 2,639,261 14,724 14,724

2022
increase in 100 basis points (2,020,964) (2,020,964) (11,833) (11,833)
decrease in 100 basis points 2,020,964 2,020,964 11,833 11,833
the group and KWap are exposed to various risks associated with the fluctuations in the prevailing levels of
interest rate on its statements of financial position and statements of cash flows. the following table indicates
KWap’s financial assets and financial liabilities at their effective interest rate and the carrying amount analysed by
the maturity date or the next repricing date, whichever is earlier.

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