NOTES TO FINANCIAL STATEMENTS 31 December 2025 4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (cont’d) (iv) Credit risk management The Group minimises credit risk by adopting a policy of dealing with creditworthy counterparties. The Group uses its own trading records to rate its major customers and other debtors and continuously monitors its exposures and credit ratings of its counterparties. As at 31 December 2025, 66% (2024 : 62%) of the Group’s revenue are derived from customers in China, which represent concentration risk within this geographical location. There is concentration of credit risk as 99% (2024 : 58%) of the Group’s trade receivables relate to three customers (2024 : three customers) at the end of the financial year. This excludes those under Cooperation Agreement. The Group minimises its credit risk by securing most of its sales with letters of credit. In determining the recoverability of a receivable, the Group considers any change in the credit quality of the receivable from the date credit was initially granted up to the end of reporting period. The Company has an amount due from a subsidiary which accounted for 76% (2024 : 61%) of the Company’s other receivables. As of 31 December 2025, the Group has a refundable deposit from GPE of US$30,000,000 (2024 : US$30,000,000), representing 64% (2024 : 57%) of the Group’s current deposits and prepayments [Note 9(a)]. This amount is expected to be recoverable within the next financial year by the due date of 31 December 2026. The carrying amount of financial assets represents the maximum credit risk exposure of the Group and Company. Further details of credit risk on trade and other receivables are disclosed in Note 8 to the financial statements. (v) Liquidity risk management Liquidity risk is the risk that the Group and Company will not be able to meet their financial obligations as they fall due. The Group and Company have been able to service all its debts obligations and fund their operations through internal funds, lease liabilities and bank borrowings. The Group and Company closely monitor the working capital requirements and minimises its liquidity risk by ensuring sufficient available funds and credit lines. In addition, given rising pressure on the governments to placate climate concerns, there exist the possibility of inception of public policies to mandate climate driven goals and requirements on the financial institutions. This in turn may place restrictions on the ability of the Group to maintain continuous access to financing as well as continuity of present financing facilities granted to the Group. Management has considered the aforementioned possibility to be remote, and as of the date of the financial statements, believe that such restrictions have yet to materialise and does not present a risk on the Group’s liquidity. Further, management believes that if there are any changes arising from climate driven goals and requirements on the financing facilities, the Group has sufficient means to continue to operate as a going concern given a combination of (i) net positive cash inflow from operating activities as well as (ii) incumbent prepayment facilities with its coal sales contracts. 81 GEO ENERGY | ANNUAL REPORT 2025
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