NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2025 3. MATERIAL ACCOUNTING POLICY INFORMATION (CONT'D) (v) Financial instruments (Cont'd) (i) F inancial assets Measurement category Criteria Financial assets Financial assets at amortised cost Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Receivables and deposits (Note 21) Cash, bank balances and term deposits (Note 27) Financial assets measured at fair value through profit or loss (“FVTPL”) Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through profit or loss. Other investment (Note 18) Short-term placements (Note 27) Impairment of financial assets and contract assets An impairment loss is recognised in profit or loss based on expected credit losses (“ECL”) at the end of each reporting period. The Group and the Company apply the simplified approach to measure the impairment of trade receivables, contract assets and loan receivables at lifetime ECL. The ECL are estimated based on the Group’s and the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the end of the reporting period, including time value of money where appropriate. To measure the ECL, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables. The Group and the Company have therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. For other financial assets such as loan receivables, other receivables and amount due from intercompany, the Group and the Company recognise lifetime ECL when there has been a significant increase in credit risk since initial recognition. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group and the Company consider reasonable and supportable information that is relevant and available without due cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and includes forward looking information. 6 Financial Insights Through Numbers 1 3 5 2 4 7 PG | 195 ANNUAL REPORT 2025 MKH BERHAD
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