GHL System Berhad Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 167 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 CONT’D 33. CAPITAL AND FINANCIAL RISK MANAGEMENT (cont’d) (b) Financial risk management (cont’d) (iv) Price risk (cont’d) As the investment of unit trust are mainly cash funds or money market placement where the risk of analysis in value is insignificant, the Directors were of the opinion that the Company was not subject to significant exposure to price risk and accordingly, no sensitivity analysis was being presented at the end of each financial year. (v) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates. Subsidiaries operating in Australia, Philippines and Thailand have assets and liabilities together with expected cash flows from anticipated transactions denominated in foreign currencies that give rise to foreign exchange exposures. The Group also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. The sensitivity analysis for foreign currency risk has been disclosed in Notes 13, 20, 22, 25, 27 and 28 to the financial statements respectively. 34. MATERIAL LITIGATION On 25 September 2019, a subsidiary, GHL ePayments Sdn. Bhd. (“eGHL” or “Defendant”) had been served with a sealed Writ of Summons together with Statement of Claim both dated 19 September 2019 (“Writ”) by Messrs. Shukor Baljit & Partners, the solicitors acting for Bestinet Sdn. Bhd. (“Plaintiff”). The Plaintiff alleges that the Defendant has misrepresented and breached the contract with respect to the development, management and maintenance of digital wallet. As a result of that, the Plaintiff suffers loss and claims for the following: a) Judgment for the amount of RM371,000.00; b) Pre-judgment interest at the rate of 5% per annum on the amount of RM371,000.00 from the date of filing of the Writ up to the date of judgment; c) Interest at the rate of 5% per annum on the amount of RM371,000.00 from the date of judgment to the date of full and final payment; d) General damages of RM3,362,492.34 to be assessed by the Court; e) Interest at the rate of 5% per annum on general damages from the date of judgment up to the date of full and final payment; f) Costs; and g) Any further or other relief as the Court deems fit. Messrs. Shearn Delamore & Co. has been appointed as solicitors to represent eGHL and is preparing the Statement of Defence accordingly. The Directors are of the opinion, after taking appropriate legal advice, that no provision for the abovementioned claims is necessary.