2012 Annual Report - Media Prima Berhad

Media Prima Berhad
Notes to
the Financial Statements
for the financial year ended 31 December 2012
43 CONTINGENT LIABILITIES (CONTINUED)
(a)
Material litigation (continued)
In relation to the defamation suits against the Group, these have emanated exclusively from its extensive
reporting of news and events. As the purveyor of news and information, the Group faces the threat of legal
suits on a daily and an ongoing basis. The law does not restrict anyone from filing a suit against another
regardless of motive, objective and amount. Even practising the highest standard of reporting and journalism
will not avoid the risk of legal suits for the simple reason that people will sue if they perceive that they have
been wronged. Hence, having regard to the array of legal defences available to a media company, simply
having a legal suit filed against it does not necessarily nor automatically translate into a liability for the Group,
whether contingent or otherwise. Furthermore, it is noted that regardless of amount claimed, the current trend
of award for defamation suits once liability is determined by the Courts is between RM50,000 to RM300,000
(2011: RM50,000 to RM300,000).
In addition, for the defamation suits against NSTP, it already has in place insurance coverage against damages,
if any, awarded against it.
Based on the above and after taking appropriate legal advice, no provision has been made in the financial
statements of the Group as at 31 December 2012 as the Directors are of the opinion that most of the claims
have no sustainable merit. The Directors do not therefore expect the outcome of the legal suits against the
Group to have a material impact on the financial position of the Group.
44 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks, including:
(a)
Market risks
(i)
(ii)
foreign currency exchange risk – risk that the value of a financial instrument will fluctuate due to changes
in foreign exchange rates
fair value interest rate risk – risk that the value of a financial instrument will fluctuate due to changes in
market interest rates
(iii) cash flow interest rate risk – risk that future cash flows associated with a financial instrument will fluctuate.
In the case of a floating rate debt instrument, such fluctuations result in a change in the effective interest
rate of the financial instrument, usually without a corresponding change in its fair value
(iv) price risk – risk that the value of a financial instrument will fluctuate as a result of changes in market prices,
whether those changes are caused by factors specific to the individual instrument or its issuer or factors
affecting all instrument traded in the market
(b) credit risk – risk that one party to a financial instrument will fail to discharge an obligation and cause the other
party to incur a financial loss
(c) liquidity risk (funding risk) – risk that an entity will encounter difficulty in raising funds to meet commitments
associated with financial instruments
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annual
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2012
The Group’s overall financial risk management programme focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. Financial risk management is
carried out through risk reviews, internal control systems, insurance programmes and adherence to the Group’s
financial risk management policies. The Board regularly reviews these risks and approves the treasury policies, which
covers the management of these risks.