29. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS AND OTHER EXPLANATORY INFORMATION (CONTINUED) 29H. Capital risk (Continued) The bank defines leverage ratio as total bank borrowings divided by total tangible networth and shareholders’ networth as aggregate of paid up capital and revenue reserves. Group 2025 2024 Total borrowings ($) 34,699,636 25,240,718 Total tangible networth ($) 61,311,673 58,548,393 Leverage ratio 0.57 0.43 The Group and the Company are in compliance with all externally imposed capital requirements for the reporting years ended 31 December 2025 and 31 December 2024. 30. CONTINGENT LIABILITIES The Company has provided an undertaking to provide continuing financial support to the subsidiaries, Megachem Australia Pty Ltd and Megachem Specialty Chemicals (I) Private Limited, to enable the subsidiaries to meet their obligations as and when they fall due. As at 31 December 2025, the net liabilities of Megachem Australia Pty Ltd and Megachem Specialty Chemicals (I) Private Limited amounted to $1,131,000 (2024: $1,481,000) and $844,000 (2024: $812,000) respectively. The net liabilities of these two subsidiaries are mainly made up of their payables owed to the Company. The Company has also provided corporate guarantees to banks for subsidiaries’ loans. The corporate guarantees are as follows: Company 2025 2024 $ $ Corporate guarantees provided to subsidiaries’ bank loans 6,890,764 5,890,101 Fair value of the corporate guarantee was not recognised by the Company. 31. CAPITAL COMMITMENTS Group Company 2025 2024 2025 2024 $ $ $ $ Purchase of property, plant and equipment 3,048,560 15,138,501 3,026,589 14,932,789 MEGACHEM LIMITED ANNUAL REPORT 2025 170 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2025
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