172 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 42 BORROWINGS (CONTINUED) Effective finance rates for borrowings are as follows: Group Company Finance rate Effective finance rate at date of statement of financial position per annum Finance rate Effective finance rate at date of statement of financial position per annum 2023 Islamic short term trade financing Fixed 3.18 – 4.67 - - Short term trade financing Fixed 2.30 – 7.58 - - Islamic term loans Fixed/floating 3.75 – 5.53 - - Hire purchase Fixed 3.00 Fixed 5.10 Sukuk Fixed/Floating 5.15 – 6.25 Fixed/floating 5.15 – 6.25 2022 Islamic short term trade financing Fixed 2.36 - 5.85 - - Short term trade financing Fixed 2.60 – 6.36 - - Islamic term loans Fixed/floating 3.75 - 5.53 - - Hire purchase Fixed 1.96 - 2.87 - - Sukuk Fixed 5.20 - 5.63 Fixed 5.20 - 5.63 The secured Islamic term loans of RM433,266,000 (2022: RM556,876,000) is secured against a leasehold land, debenture, certain bank balances of the Group and a director of subsidiary. The secured short term trade financing of RM6,178,000 (2022: RM5,851,000) is secured over certain property, plant and equipment. The secured Sukuk of RM398,348,000 is secured against a land of a subsidiary. Islamic term loans MSM Malaysia Holdings Berhad (“MSMH”), a subsidiary of the Company is required to comply with certain financial covenants i.e. consolidated net debt and financing to equity ratio, consolidated net debt and financing to earnings before interest, tax, depreciation and amortisation (“EBITDA”) ratio and consolidated finance payment cover ratio (collectively known as ”financial covenants”). The financial covenants are to be complied with annually (2022: annually). On 13 December 2023, CIMB has issued a Supplemental Letter, informing MSMH that the Bank has agreed to waive 2 of the 3 financial covenants i.e. Consolidated Net Debt and Financing to EBITDA Ratio and Consolidated Finance Payment Cover Ratio for the financial year ended 31 December 2023. Therefore, MSMH was not required to meet these covenants. MSMH has complied with the other covenant for the financial year ended 31 December 2023.
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