162 GHL SYSTEMS BERHAD 199401007361 (293040-D) ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2021 CONT’D 33. CAPITAL AND FINANCIAL RISK MANAGEMENT (Cont’d) (a) Capital management (Cont’d) The gearing ratios are as follows: Group Company 2021 2020 2021 2020 RM RM RM RM Total lease liabilities 5,921,374 9,061,212 295,823 401,533 Total borrowings 52,389,494 22,174,854 37,417,392 - Less: - Cash and bank balances (180,112,080) (148,893,921) (4,557,515) (5,466,566) - Other investments (101,578,702) (64,809,567) (96,733,322) (60,016,520) Net cash (223,379,914) (182,467,422) (63,577,622) (65,081,553) Total equity attributable to owners of the parent 508,872,191 481,757,649 253,280,119 232,835,608 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 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 2021. 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 is 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 to monitor the financial standing of these counter parties on an ongoing basis to ensure that the Group is exposed to minimal credit risk. The primary exposure of the Group to credit risk arises through its trade receivables. The trading terms of the Group with its 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 to the financial statements.
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