NANYANG PRESS HOLDINGS BERHAD
33. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
On 18 December 2004, the Company had signed a subscription agreement with Hebat Simfoni Sdn Bhd (“HSSB”). Pursuant to this Agreement, HSSB would subscribe for 3,000,000 ordinary shares of nominal value of RM1.00 in the share capital of RMSB. Upon completion of the Agreement, HSSB would be the registered shareholder of 60% and the Company would be the registered shareholder of 40% of the enlarged issued and paid up share capital of RMSB. Following the completion of the aforesaid agreement, RMSB ceased to be a subsidiary and has become an associate of the Company.
Financial Risk Management Objectives and Policies The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks. The Group operates within clearly defined guidelines that are approved by the Board. The Board has established a Risk Management Committee to ensure that the policies and guidelines on risk management are reviewed periodically and adhered to.
(b) Interest Rate Risk The Group’s primary interest rate risk relates to interest-bearing debt, as the Group had no substantial long-term interest-bearing assets as at 30 June 2005. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets.
The information on maturity dates and effective interest rates of financial assets and liabilities are disclosed in their respective notes.
(c) Foreign Exchange Risk The Group’s exposure to foreign currency risk is minimal.
(d) Liquidity Risk The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness.
(e) Credit Risk Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring procedures. Credit risk is minimised and monitored via strictly limiting the Group’s associations to business partners with sound creditworthiness. Collaterals are also obtained from some customers to further mitigate the credit risk exposure. Trade receivables are monitored on an ongoing basis via Group management reporting procedures.
The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments.