Notes to the Financial Statements for the Financial Year Ended 30 September 2024 MKH BERHAD ANNUAL REPORT 2024 Laying The Foundation of Excellence Where People Matter Guided by Leadership, Inspired by People Delivering Value That Matters to People PG. 298 43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (iii) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to foreign currency risk when the currency denomination differs from its functional currency. The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group entities, primarily Ringgit Malaysia (“RM”), Indonesian Rupiah (“IDR”) and Chinese Renminbi (“RMB”). The foreign currency in which these transactions are denominated is mainly United States Dollar (“USD”). Foreign currency exposure in transactions and currencies other than functional currencies of the operating entities are kept to an acceptable level. The Group also holds cash and bank balances denominated in USD for working capital purposes. The Group is also exposed to currency translation risk arising from its net investments in foreign operations. The Group’s net investment in The Peoples’ Republic of China and Republic of Indonesia are not hedged as currency positions in RMB and IDR are considered to be long-term in nature. Financial assets and liabilities denominated in USD are as follows: The Group 2024 2023 RM RM USD Bank balances 2,144,443 2,748,340 Trade receivables 16,893 282,672 Loans and borrowings - (2,359,952)
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