GHL System Berhad Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 165 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 CONT’D 33. CAPITAL AND FINANCIAL RISK MANAGEMENT (a) Capital management The primary objective of the capital management of the Group is to maintain a strong capital base and safeguard the ability of the Group to continue as a going concern whilst maintaining an optimal capital structure, so as to maximise shareholders value. The management reviews the capital structure by considering the cost of capital and the risks associated with the capital. No changes were made in the objectives, policies or procedures during the financial years ended 31 December 2019 and 31 December 2018. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Total capital is managed at Group level, which comprises shareholders’ funds, cash and cash equivalents and bank borrowings. The gearing ratios are as follows: Group Company 2019 2018 2019 2018 RM RM RM RM Total lease liabilities 15,308,900 - 270,265 - Total borrowings 26,204,219 34,667,861 - 229,981 Less: Cash and and bank balances (138,627,060) (102,309,084) (3,128,665) (9,799,257) Less: Other investments (53,270,574) (42,833,438) (42,164,039) (42,732,647) Net cash (150,384,515) (110,474,661) (45,022,439) (52,301,923) Total equity attributable to owners of the parent 442,449,971 406,225,050 200,110,747 175,665,115 Gearing ratio -* -* -* -* * The gearing ratios for the Group and for the Company are not presented as the Group and the Company are in net cash position. Pursuant to the requirements of Practice Note No. 17/2005 of the Bursa Malaysia Securities Berhad, the Group is required to maintain a consolidated shareholders’ equity of not less than or equals to twenty- five percent (25%) of the issued and paid-up capital and such shareholders’ equity is not less than RM40 million. The Group has complied with this requirement for the financial year ended 31 December 2019. The Group is not subject to any other externally imposed capital requirements. (b) Financial risk management The financial risk management policy of the Group and of the Company is to ensure that adequate financial resources are available for the development of the operations of the Group and of the Company whilst managing its financial risks, including credit risk, liquidity and cash flow risks, interest rate risk and foreign currency risk. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Group’s and the Company’s policy is not to engage in speculative transactions.