NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2025 42. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D) (i) Credit risk (Cont'd) Financial guarantees The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to subsidiaries and creditors for credit terms granted to subsidiaries and an associate. The Company monitors on an ongoing basis the repayments made by the subsidiaries and their financial performance. The maximum exposure to credit risk amounts to RM327,184,187 (2024: RM358,732,483) representing the outstanding credit facilities of the subsidiaries guaranteed by the Company at the reporting date. At the reporting date, there was no indication that the subsidiaries would default on their repayment. (ii) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations when they fall due. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and financial liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through use of stand-by credit facilities. The Group actively manages its operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions so as to achieve overall cost effectiveness. As at 30 September 2025, the current liabilities of the Company have exceeded the current assets by RM79,465,728, which includes loans and borrowings of RM220,553,425 and amount due to subsidiaries of RM322,124 and accruals of RM957,001. The net current liabilities position is mainly due to the capitalisation of amount owing by subsidiaries into investment in subsidiaries. As at 30 September 2025, the Company complied with all of its loan covenants. Despite having the net current liabilities position, the Board of Directors is of the view that the Company will be able to meet its financial obligations as and when it was due with following measures placed by the Group: 1. Dividend receivable from the on-going projects’ stakeholders; and 2. Launch of projects in subsidiaries namely, Srijang Kemajuan Sdn. Bhd. and Suria Villa Sdn. Bhd., which currently hold a land bank amounting to RM182,226,451 and RM267,090,346, respectively. 6 Financial Insights Through Numbers 1 3 5 2 4 7 PG | 295 ANNUAL REPORT 2025 MKH BERHAD
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