255 F INANC IAL Statements Sect ion 05 Annual Report 2022 NOTES TO THE F INANC I AL STATEMENTS For the year ended 31 December 2022 45. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Contd.) (d) Foreign currency risk (contd.) Sensitivity analysis for foreign currency risk The following table demonstrate the sensitivity of the Group’s profit net of tax and equity to a reasonably possible change in the USD, RMB, THB, SGD and IDR exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Group 2022 RM’000 Profit net of tax/equity 2021 RM’000 Profit net of tax/equity RM/USD - strengthened 3% - (48) - weakened 3% - 48 RM/RMB - strengthened 3% (456) (479) - weakened 3% 456 479 RM/THB - strengthened 3% (58) (70) - weakened 3% 58 70 RM/SGD - strengthened 3% (8) (30) - weakened 3% 8 30 RM/IDR - strengthened 3% (7) (16) - weakened 3% 7 16 46. CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholders’ value. At the same time, the Group continues to ensure the various requirements and covenants arising from the borrowings as disclosed in Note 31 are complied with. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives and policies during the year ended 31 December 2022 and 2021. The Group monitors capital using a gearing ratio, which is net debt divided by total equity. The Group’s policy is to keep the gearing ratio not exceeding 1.50 times. The Group includes within net debt, total outstanding principal obligations under all financing facilities and all other indebtness for borrowed monies, hire purchase obligations, finance lease obligations, fair value of financial instruments in connection with borrowed monies and any other financial guarantees, but excluding any non-recourse financing.
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