NOTES TO FINANCIAL STATEMENTS 31 December 2025 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (cont’d) The change in basis points for the sensitivity analyses during the year is due to the interest rate volatility observed in the current market environment in which the Group operates and management’s expectation for possible future change of interest rates over the financial year. If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s profit for the year would decrease/ increase by US$1.1 million. This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings. If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Company’s profit for the year would decrease/ increase by US$280,104. This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings. Other than the exposure on the bank borrowing described above, no interest rate sensitivity was performed since the Group’s and the Company’s exposure to interest rate on their variable rate borrowing other than the bank borrowing described above is not significant. (iii) Overview of the Group’s exposure to credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. As at 31 December 2025, the Group’s maximum exposure to credit risk without taking into account any collateral held or other credit enhancements, which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties, arises from the carrying amount of the respective recognised financial assets as stated in the statements of financial position. The Group minimises credit risk via advance payments from customers, sales secured by letters of credit, strict credit terms and regular monitoring of customers’ financial standing. The Group develops and maintains its credit risk gradings to categorise exposures according to their degree of risk of default. The Group uses its own trading records to rate its major customers and other debtors. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. The Group’s and the Company’s current credit risk framework comprises the following categories: Category Description Basis for recognising expected credit losses (ECL) Performing The counterparty has a low risk of default. 12-month ECL Doubtful Amount is >30 days past due or there has been a significant increase in credit risk since initial recognition. Lifetime ECL - not creditimpaired In default Amount is >90 days past due or there is evidence indicating the asset is creditimpaired. Lifetime ECL - credit-impaired Write-off There is evidence indicating that the debtor is in severe financial difficulty and the Group has no realistic prospect of recovery. Amount is written off 79 GEO ENERGY | ANNUAL REPORT 2025
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