191 ANNUAL REPORT 2025 MST GOLF GROUP BERHAD 2. BASIS OF PREPARATION (CONT’D) 2.7 Significant accounting estimates and judgements (cont’d) 2.7.1 Estimation uncertainties (cont’d) Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below (cont’d). Revenue recognition - Estimating stand-alone selling price – Points loyalty programme (cont’d) As points issued under the programme with the validity period of up to 1 to 2 years (2024: 1 to 2 years), estimates of the stand-alone selling price are subject to significant uncertainty. Any significant changes in customers’ redemption patterns will impact the estimated redemption rate. As at 31 December 2025, the estimated liability for unredeemed points was RM1,367,000 (2024: RM2,095,000). If the estimated redemption rate used had been higher by 1% than management’s estimate, the carrying amount of the estimated liability for unredeemed points as at 31 December 2025 would have been higher by RM139,000 (2024: RM80,000). Provisions for restoration costs Provisions for restoration costs are recognised when the Group has a present legal obligation from lease agreements for leased stores during the year. The Group estimated the present value of the dismantlement, removal and restoration costs of the leased stores upon termination of the lease agreement. At 31 December 2025, the carrying amount of provisions for restoration costs amounting to RM2,206,000 (2024: RM2,258,000). A 10% difference in the estimated costs to restore the leased areas would result in approximately RM221,000 (2024: RM226,000) variance in provisions for restoration costs. Determining the lease term of contracts with renewal and termination options – Group as lessee The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate. Refer to Note 4 for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term. 2.7.2 Significant management judgement There are no significant judgments applied by the management in the accounting policies of the Group and of the Company that have a significant effect on the financial statements.
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