191 ENRA GROUP BERHAD ANNUAL REPORT 2025 Notes To The Financial Statements (Cont’d) 31 March 2025 Registration No: 95 199201005296 (236800 - T) 30. FINANCIAL INSTRUMENTS (continued) (c) Fair value hierarchy (continued) Level 3 fair value The significant unobservable input used in determining the fair value measurement of Level 3 financial instruments as well as the relationship between key unobservable inputs and fair value, is detailed in the table below: Financial instruments Valuation technique used Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value Financial liabilities Land entitlement payment Discounted cash flows method Estimated market value of size of the land entitlement The higher the market value, the higher the fair value of the liabilities would be. The following table shows a reconciliation of Level 3 fair values of land entitlement payments: Group 2025 2024 RM’000 RM’000 Balance as at beginning of financial year 20,969 20,969 Reclassed to liabilities directly associated with disposal group classified as held-for-sale (8,000) - Balance as at end of financial year 12,969 20,969 31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The financial risk management objective of the Group is to optimise value creation for shareholders whilst minimising the potential adverse impact arising from fluctuations in interest rates and the unpredictability of the financial markets. The Group operates within an established risk management framework and clearly defined guidelines that are regularly reviewed by the Board of Directors and does not trade in derivative financial instruments. Financial risk management is carried out through risk review programmes, internal control systems, insurance programmes and adherence to the Group financial risk management policies. The Group is exposed mainly to credit risk, interest rate risk, liquidity and cash flow risk and foreign currency risk. Information on the management of the related exposures is detailed below. (i) Credit risk Cash deposits and trade receivables may give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. It is the Group’s policy to monitor the financial standing of these counter parties on an ongoing basis to ensure that the Group is exposed to minimal credit risk.
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