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Notes to the Consolidated Financial Statements31 December 2024ESR Group Limited Annual Report 2024241STRATEGIC REPORTSCORPORATE GOVERNANCEFINANCIAL STATEMENTS44.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESThe Group%u2019s principal financial instruments comprise bank and other borrowings, financial liabilities included in trade and other payables, cash and bank balances, trade receivables, financial assets included in prepayments, other receivables and other assets, financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, and financial assets included in other non-current assets. The main purpose of these financial instruments is to raise finance for the Group%u2019s operations. The Group has various financial assets such as trade receivables, cash and short-term deposits, which arose directly from its operations. The main risks faced by the Group are interest rate risk, foreign currency risk, credit risk, liquidity risk and equity price risk. The Group monitors closely and assesses the use of financial derivative instruments as additional tools when appropriate to manage the financial risks exposure. The Group does not hold or issue financial derivative instruments for trading purposes. The directors review and agree policies for managing each of the risks which are summarised beloInterest rate riskThe Group%u2019s exposure to the risk of changes in interest rates relates primarily to its interest-bearing bank and other borrowings. The interest rates and terms of repayments of the borrowings are disclosed in note 25.The following table demonstrates the sensitivity to reasonably possible changes in interest rates, with all other variables held constant, of the Group%u2019s profit before tax (mainly the impact on floating rate borrowings). The Group%u2019s equity is not affected, other than the consequential effect on the accumulated losses of the changes in profit before tax as disclosed below.Increase/(decrease) in basis point(Decrease)/increase in profit before taxUS$%u2019000Year ended 31 December 2024100/(100)(53,048)/53,048Year ended 31 December 2023100/(100)(54,587)/54,587Foreign currency riskThe Group had monetary assets and liabilities, which were denominated in foreign currencies, and were exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, and recognised assets and liabilities, which are denominated in currencies that are not the functional currencies of the relevant entities.