NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2025 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT'D) (c) Significant accounting estimates and judgements (Cont'd) (viii) Deferred tax assets (Note 20) - deferred tax assets are recognised for deductible temporary differences, unused tax losses and unabsorbed capital allowances based on the projected future taxable profits of the Group to the extent that is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and unabsorbed capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the future financial performance of the Group. (ix) Impairment loss on receivables (Note 21) - the Group accounts for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. The Group uses a simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit loss (“ECL”) for trade receivables, contract assets and loan receivables. (x) Inventories (Note 23) - the saleability of inventories are reviewed by management on a periodic basis. This review involves comparison of the carrying value of the inventory items with the respective net realisable value. The purpose is to ascertain whether a write down to net realisable value is required to be made. (xi) Fair values of biological assets (Note 26) - to arrive at the fair value of fresh fruit bunches (“FFB”), the management considered the oil content of the unripe FFB and derived the assumption that the net cash flows to be generated from FFB prior to more than 15 days to harvest to be negligible, therefore quantity of unripe FFB on bearer plant of up to 15 days prior to harvest was used for valuation purpose. Costs to sell, which include harvesting and transport cost, are deducted in arriving at the net cash flows to be generated. (xii) Provision of post-employment benefit obligations (Note 30) - the provision is determined using actuarial valuation prepared by an independent actuary. The actuarial valuation involved making assumptions about discount rate, future salary increase, mortality rates, resignation rate, disability rate and normal retirement age. As such, this estimated provision amount is subject to significant uncertainty. (xiii) Liquidated ascertained damages in relation to the construction of KTM Komuter Station (Note 30(c)) – significant estimate is required in determining the potential liquidated ascertained damages. This estimate is based on the correspondences received, and updates on the legal assessment status from time to time. The details of provision are disclosed in Note 30(c). 6 Financial Insights Through Numbers 1 3 5 2 4 7 PG | 183 ANNUAL REPORT 2025 MKH BERHAD
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