GHL SYSTEMS BERHAD 199401007361 (293040-D) ANNUAL REPORT 2022 ,/08/ 3*4,4 (Cont’d) b) Operational Risk – In 2022, the Group reported a total of 288 risks of which 258 risks (90%) were classified as minor and moderate risk. The remaining 10% was addressed with adequate and appropriate mitigation strategies to ensure that the residual risk is minimised. Operational risk management, which forms part of the Group’ Enterprise Risk Management Framework, is a continual process applied by the Group in a half yearly cycle that includes risk assessment, risk decision making, and implantation of risk controls, which result in acceptance, mitigation, or avoidance of risks. c) Liquidity Risk – As indicated in Section 2.6, the Group is in a net cash surplus position and therefore has no net gearing. Short term purchases for Telco prepaid top-ups are typically funded with internal generated cash or Bankers Acceptances and are liquidated when these are on-sold to merchants. Longer term EDC terminal purchases are funded with long term bank term loans. The Group plans to fund the planned expansion in the Payment Facilitator (PF) and Direct Acquiring business by commensurately increasing its bank term loans and internal generated cash. Given the Group’s strong cash flow and lack of net gearing, it is well positioned to do so. d) Foreign Currency Risk – EDC terminals are purchased in USD and therefore can expose the Group to foreign currency risk as the Group’s functional currency is in Ringgit Malaysia. The Group minimises its exposure to foreign currency risk by purchasing USD spot at the time of recording the vendor liability. The Group does not hedge against any foreign currency fluctuations in the net asset value of its overseas subsidiaries as these investments are of a long term nature. This would, however, be re-visited should a significant event occur that would cause a permanent diminution in the foreign currency denomination of its overseas subsidiaries. '6563& 13041&$54 2022 improved as easing of COVID lockdown measures enabled more consumption at in-store merchants led to higher TPV and revenue growth. Additionally, the group’s focus on high growth, high margin line of business such as merchant acquiring and the SME lending is expected to contribute to the growth in revenues going forward. Although cross border travel reopened in 2022, the numbers remained cautious and China remained closed throughout 2022, impacting the tourism segment within ASEAN. The good news, however, is that China has reopened its international travel for its citizens in early 2023, and this has led to encouraging improvements for the tourism and travel segments in the markets we operate in. Although the recovery in consumption and activities in 2022 flowed through the group’s operations, there remains concerns in the form of inflation and higher interest rates in the global economies. Geo-political tensions and the ongoing conflict in Europe and the effects of supply chain disruptions in sectors such as electronics, automotive, energy and commodities may impact growth of global economies. Despite the global headwinds, our Group’s diverse range of business pillars, merchant base and geographical mix, should still lead to revenue improvements as more ASEAN consumers increasingly adopt cashless as a mean of conducting their online and in-store transactions. We are cautiously optimistic of improvements in 2023 compared to 2022 where the group recorded a revenue improvement but margins were impacted due to merchant and revenue type mix. The Group remains positive in the long-term potential of the ASEAN e-payments industry and believes the trends of switching to e-payments and cashless channels will continue going forward. %*7*%&/%4 The Board of Directors has declared a single-tier interim dividend of 2.5 sen per ordinary share, amounting to RM28,537,497 in respect of the financial year ended 31 December 2022, which was paid on 28 December 2022, based on the latest number of ordinary shares. MANAGEMENT DISCUSSION AND ANALYSIS CONT’D
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