36. FINANCIAL INSTRUMENTS AND FINANCIAL RISKS (CONTINUED) Market risk (Continued) (iii) Interest rate risk The Group’s exposure to market risk for changes in interest rates relate primarily to variable rate bank borrowings with financial institutions. The Group maintains an efficient and optimal interest cost structure using a combination of fixed and variable rate debts, and long and short term borrowings. The exposure of the Group’s borrowings to interest rate changes and contractual repricing dates as at the end of the reporting period are as follows: Weighted average effective interest rate Group 2024 2023 2024 2023 % % $’000 $’000 Within 6 months 4.31 4.45 8,921 18,947 After 6 months but within 12 months 3.53 3.25 934 912 After one year but within five financial years 5.60 3.25 3,660 4,541 After five financial years 5.60 4.78 693 1,660 Total 14,208 26,060 The Company is not exposed to significant interest rate risk. Interest rate sensitivity analysis The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50-basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rate had been 50 basis points higher or lower and all other variables were held constant, the Group’s loss for the financial year ended 30 September 2024 would decrease/increase by $71,000 (2023: decrease/increase by $130,000). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings. The Company’s profit or loss and equity are not significantly affected by the changes in interest rates as the Company has no significant variable interest-bearing financial instruments. Liquidity risk Liquidity risk refers to the risk in which the Group and the Company encounter difficulties in meeting their short-term obligations. Liquidity risk is managed by matching the payment and receipt cycle. The Group and the Company actively manage their operating cash flows so as to ensure that all repayment needs are met. As part of overall prudent liquidity management, the Group and the Company maintain sufficient levels of cash to meet working capital requirements. 133 ANNUAL REPORT 2024 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
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