4 FINANCIAL RISK MANAGEMENT (continued) (a) Financial risk management policies (continued) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations due to shortage of funds. The Group maintains a sufficient level of cash and cash equivalents to meet the Group’s working capital requirements by closely monitoring its cash flows. Due to the nature of its business, the Group has adopted prudent liquidity risk management in maintaining and obtaining sufficient credit facilities from financial institutions. Cash flow forecasting is performed in the operating entities of the Group and then aggregated by management. Management monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal statements of financial position ratio targets and, if applicable, external regulatory or legal requirements – for example, currency restrictions. As at 31 December 2021, the Group has no undrawn committed borrowing facilities (2020: RM Nil). Based on the term sheet and consent letters obtained from its lender, financial covenants shall be computed based on the Group’s consolidated annual audited financial statement for the financial year ended 31 December 2021 onwards. As at 31 December 2021, the Group and the Company have complied with all of the financial covenants. The Company plans to manage its liquidity risk by receiving income in the form of dividends and management fees from its subsidiaries and to restructure the repayment of loan due to a subsidiary to meet its obligations over the next twelve months. The Company also plans to meet the covenants requirement for the financial year ending 31 December 2022 by monetising its non-core assets. As a consequence, the Company will be able to meet its debt obligations as and when they fall due within the next twelve months. Surplus cash is invested in profit bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the above-mentioned forecasts. At the reporting date, the Group held cash investments of RM81,119,000 (2020: RM127,748,000) and other liquid assets of RM113,656,000 (2020: RM68,173,000) that are expected to readily generate cash inflows for managing liquidity risk. At the reporting date, the Company held cash investments of RM37,395,000 (2020: RM16,688,000) and other liquid assets of RM16,387,000 (2020: RM3,672,000) that are expected to readily generate cash inflows for managing liquidity risk. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining maturity periods at the reporting date to the contractual maturity dates. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows. The table below summaries the maturity profile of the Group’s and Company’s financial liabilities based on the remaining maturity periods at the statement of financial position date. The amounts disclosed in the table are based on contractual undiscounted cash flows. NOTESTOTHE FINANCIAL STATEMENTS FORTHE FINANCIALYEAR ENDED 31 DECEMBER 2021 SUSTAINABILITY JOURNEY HOWWE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 313
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