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SUSTAINABILITY JOURNEY HOW WE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 309

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

4 FINANCIAL RISK MANAGEMENT
(a) Financial risk management policies

The Group is exposed to market risk (including foreign currency exchange risk, commodity price risk and finance rate
risk), credit risk and liquidity risk arising from its business activities. The Group’s overall risk management strategy
seeks to minimise adverse effects from the unpredictability of financial markets on the Group’s financial performance.
The Group uses relevant derivative financial instruments to hedge the risk of such commercial exposure and ensure the
implementation risk action plans to effectively mitigate the risks.
The Board of Directors has overall responsibility for the oversight of financial risk management which includes risk
identification, operational or strategic, and the subsequent action plans to manage these risks. Management is
responsible for identifying, monitoring and managing the Group’s risk exposures.
Market risk
(i) Foreign currency exchange risk
The Group operates internationally and is exposed to foreign currency exchange risk arising from various currency
exposures, primarily with respect to the United States Dollar (“USD”).
The Group manages its currency exposure through foreign currency forward contracts.
As at 31.12.2021, a 10% weakening of the USD against Malaysia Ringgit (“RM”) at the date of statement of
financial position would increase the Group’s profit after tax of approximately RM11,077,000.
As at 31.12.2020, a 10% weakening of the USD against Malaysia Ringgit (“RM”) at the date of statement of
financial position would reduce the Group’s loss after tax of approximately RM5,536,000.

The above exposure mainly as a result of foreign exchange gains/losses on translation of payables. The analysis
assumes that all other variables remain constant.
(ii) Commodity price risk

The Group is exposed to raw sugar prices which are subject to fluctuations due to unpredictable factors such as
weather, change of global demand and global production.
Management is responsible for managing the Group’s exposure to raw sugar input cost against selling prices of
refined sugar set by the Government. Management meets regularly to review their raw sugar requirements and
price trends and then decides when to buy and price raw sugar consignments so that a refining margin is locked
to ensure budgeted profits are met. In addition, the Group enters into New York 11 raw sugar future contracts to
manage its raw sugar purchase cost.
A sensitivity analysis has been performed based on the Group’s exposure to sugar futures as at year end. If price
of raw sugar increases or decreases by 10% with all other variables held constant, the Group’s profit after tax and
equity would decrease or increase by RM10,846,000 (2020: loss after tax and equity would decrease or increase
by RM6,845,000).