Group Overview Operation and Financial Review Financials Other Information Sustainability and Governance 149 Annual Report 2025 Notes to the financial statements For the financial year ended 31 December 2025 35. Financial risk management objectives and policies (cont’d) (b) Foreign currency risk (cont’d) Based on a sensible simulation, with all other variables held constant, sensitivity analysis on the change of exchange rate of Rupiah against USD are as follows: 2025 2024 Variable Increase/ (decrease) Increase/(decrease) in profit before tax Rp million Increase/(decrease) in profit before tax Rp million Exchange rate of Rupiah against US Dollar 10%/(10%) Rp213,315/(Rp213,315) Rp186,019/(Rp186,019) (c) Commodity price risk Commodity price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices. The Group is exposed to commodity price risk due to certain factors, such as weather, government policy, level of demand and supply in the market and the global economic environment. Such exposure mainly arises from its purchase of CPO where the profit margin on sale of its finished products may be affected if the cost of CPO (which is the main raw material used in the refinery plants to manufacture cooking oils and fats products) increases and the Group is unable to pass such cost increases to its customers. During 2025 and 2024, it has been the Group’s policy that no hedging in financial instruments shall be undertaken. The Group’s policy is to minimise the risks of its raw material costs arising from the fluctuations in the commodity prices by increasing self-sufficiency in CPO for the refinery operations. (d) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group has credit risk arising from the credit granted to its customers and plasma farmers and placement of current accounts and deposits in the banks. At the end of the reporting period, the Group’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the consolidated balance sheet. Other than as disclosed below, the Group has no concentration of credit risk. Cash and cash equivalents Credit risk arising from placements of current accounts and deposits is managed in accordance with the Group’s policy. Such limits are set to minimise the concentration of credit risk and therefore mitigate financial loss through potential failure of the banks.
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