GHL System Berhad Annual Report 2023

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2023 CONT’D 32. CAPITAL AND FINANCIAL RISK MANAGEMENT (Cont’d) (a) Capital management (Cont’d) 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 more than 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 2023. 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 risk, interest rate risk, price 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 are not to engage in speculative transactions. (i) Credit risk Cash deposits and trade and other receivables could give rise to credit risk which requires the loss to be recognised if a counter party fails to perform as contracted. The counter parties are creditworthy counterparties. It is the policy of the Group and the Company to monitor the financial standing of these counter parties on an ongoing basis to ensure that the Group and the Company are exposed to minimal credit risk. The primary exposure of the Group and of the Company to credit risk arises through its trade receivables. The trading terms of the Group and of the Company with their customers are mainly on credit, except for new customers, where deposits in advance are normally required. Overdue balances are reviewed regularly by senior management. The credit risk concentration profile has been disclosed in Note 20. (ii) Liquidity and cash flow risk The funding requirements of the Group and of the Company and their liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group and the Company monitor their cash flows and ensure that sufficient funding is in place to meet the obligations as and when they fall due. The Group and the Company actively manage their debts maturity profile, operating cash flows and availability of funding so as to ensure that all operating, investing and financing needs are met. In executing their liquidity risk management strategies, the Group and the Company measure and forecast their cash commitments and maintains a level of cash and cash equivalents deemed adequate to finance the activities of the Group and the Company. The analysis of financial instruments by remaining contractual maturities has been disclosed in Notes 13, 25 and 26 respectively. (iii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the financial instruments of the Group and of the Company would fluctuate because of changes in market interest rates. The exposure of the Group and of the Company to interest rate risk arises primarily from their deposits with licensed banks and borrowings. 158 GHL SYSTEMS BERHAD 199401007361 (293040-D)

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