Top Glove Corporation Berhad (TGCB) is a leading rubber gloves manufacturer. During one of the after-office meet-ups with your old friend, Andy Pamelo, he asked for your help to enlighten him on the performance of TGCB. He was planning to buy shares of TGCB and has studied some essential sections in TGCB's 2021 Financial Statements.

Andy referred you to the section on assets in the TGCB's Statement of Financial Position, and he was puzzled why the TGCB's brand, which is well-known around the world, was not listed as an asset of the company. Additionally, he was curious about the item "Intangible assets". He wanted to know what intangible assets and why they were included as assets, even though they have no physical substance?

Andy recognised the importance of cash in any business organisation, and he was concerned when he saw that TGCB reported negative net cash flows from investing activities (for the group), as reported in the statement of cash flows. He was confused about this fact because TGCB is a profitable company. He wanted to know why a profitable company could report negative cash flows from investing activities.

Before both of you departed, Andy asked a final question about the independent auditor of TGCB when he referred to the opinion paragraphs of the report. In particular, he wanted to know the role of independent auditors in TGCB.

You had promised Andy to prepare a note addressing all the questions and will send it to his email.

1. Explain why TGCB reported negative net cash flows from investing activities. Should Andy be concerned about this situation? Include in your explanation the importance of other sources of cash flows and an example of a company with negative net cash flows from investing. (Word limit: 150 words or less)

STATEMENT OF FINANCIAL POSITION (GROUP) As at 31 August 2021 2021 Note RM'000 Assets Non-current assets Property, plant and equipment 16 3,958,715 Right-of-use assets 17 210,649 Investment properties 18 227,400 Investment in an associate 20 13,069 Deferred tax assets 21 17,073 Biological assets 574 22 392 Investment securities: Unquoted investments Intangible assets 23 1,008,795 5,436,667 Current assets Inventories 24 1,144,705 Trade and other receivables 25 566,299 Other current assets 26 118,174 Tax recoverable 5,803 22 1,323,297 Investment securities: Money market funds Investment securities: Debt securities 22 306,622 Derivative financial Instruments 27 2,411 878,446 Cash and bank balances 28 4,345,757 Total assets 9,782,424 STATEMENT OF CASH FLOWS as at 31 August 2021 Net cash flows from investing activities Investing activities Purchase of property, plant and equipment (1,334,018) (806,400) Additions to investment properties (26,902) Purchase of right-of-use assets (554) (9,455) Purchase of intangible assets (207) (32) Purchase of biological assets (546) (28) Placement of money market funds (2,763,264) (1,699,296) Withdrawal of money market funds 3,114,598 28,729 Purchase of debt securities (24,555) Proceeds from disposal of debt securities 107,776 Proceeds from disposal of right-of-use assets 763 Net (increase)/decrease in bank balances pledged with banks (365) 2,472 Decrease/(increase) in monies held in debt service reserve account 729 (17) Interest received 61,575 23,889 Dividends from subsidiaries Proceeds from disposal of property, plant and equipment 1,258 6,651 Additions to investment in subsidiaries Repayment from subsidiaries Net cash flows (used in)/generated from investing activities (1,247,900) (2,369,503) (322,604) 22,400 2020 RM'000 3,010,233 201,425 163,900 10,425 19,589 28 392 1,012,319 4,418,311 530,729 798,805 74,884 1,674,631 45 1,208,559 4,287,653 8,705,964 (2,730,882) (1,400,674) 691,600 2,861,389 (97,307) 24,818 9,741 6,483,958 1,630,710 (424,477) (586,600) 342,690 108,418 6,460,189 453,195