76 The above analysis has been prepared assuming that the amounts of liability outstanding at the reporting date was outstanding for the whole year. The Group’s sensitivity to 1 percent 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. This information is not a forecast or prediction of future market conditions and should be used with care. Interest rate swap contracts Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt held and the cash flow exposures on the issued variable rate debt held. The detail various information regarding interest rate swap contracts outstanding at the end of the reporting period, interest rate swap contract assets and liabilities are included in Note 37.1 to consolidated financial statements. Interest rate swap contracts will be settled every month. The floating rate on the interest rate swap contracts is 1-month SOFR (formerly was 1-month LIBOR) plus 1.25 percent. The Group will settle the difference between fixed and floating rate on a net basis. Commodity price risk The Group is affected by the price volatility of certain petroleum products. Its operating activities require the ongoing purchase and manufacture of petroleum therefore require a continuous crude oil and petroleum products. The Group is exposed to changes in the price of crude oil and petroleum products on its forecast purchases. The Group enters into derivative transactions to limit these risks. Hedging activities are evaluated regularly to align with Group expectations about the price changes and defined risk appetite; ensuring the most cost-effective hedging strategies are applied. Commodity derivative contracts The Group has a policy to enter into commodity derivative contracts to manage the commodity price risk associated with anticipated purchase transactions in next 24 months. The Group policy is to enter into crack spread swap contracts up to 50 percent of production quantity and enter into crude oil swap contracts up to 100 percent. However, the Company has no outstanding of commodity derivative contracts as of 31 December 2023 and 2022. 369 56-1 ONE REPORT 2023 Notes to the Consolidate Financial Statements
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