ANNUAL REPORT 2008 - KNM Steel Sdn Bhd

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 28. Financial instruments (cont’d) Financial risk management objectives and policies (Cont’d) Effective interest rates/profit rates and repricing analysis (Cont’d) Group Average effective interest rates/ More profit rates Less than 1 - 2 2 – 3 3 – 4 4 – 5 than 5 per annum Total 1 year years years years years years 2007 % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Floating rate instruments Bank overdraft - secured - AUD 10.00 – 10.50 (54) (54) – – – – – Bank overdraft - unsecured - RM 7.25 – 8.25 (3,652) (3,652) – – – – – - Euro 8.00 (46) (46) – – – – – - AED 6.18 (3,345) (3,345) – – – – – CP/MTN 3.51 – 3.99 (200,000) (200,000) – – – – – Floating rate term loans - secured - RMB 6.16 – 6.80 (6,704) (6,704) – – – – – - Euro 5.63 (32,988) (32,988) – – – – – (246,789) (246,789) – – – – – Fixed rate instruments Fixed rate term loans - unsecured - Euro 1.00 - 4.03 (19,125) (9,862) (6,241) (393) (405) (419) (1,805) Deposits with licensed banks 3.45 - 5.50 28,067 28,067 – – – – – Deposits with financial institutions 3.35 3,780 3,780 – – – – – 12,722 21,985 (6,241) (393) (405) (419) (1,805) Foreign currency risk The Group’s exposure to foreign currency risk is mainly from contract revenue, purchases and borrowings denominated in US Dollars, Australian Dollars, United Arabs Emirates Dirham, Chinese Renminbi, Euro, Brazilian Real and Canadian Dollars. The Group does not view the exposure to these currencies to be significant. Certain subsidiaries’ financial statements are denominated exclusively in Euro, Indian Rupees, US Dollars, Brazilian Real, Australian Dollars, Chinese Renminbi, United Arab Emirates Dirhams, Saudi Riyal, Canadian Dollars and Brunei Dollars. The Group does not view the exposure to Euro, Indian Rupees, US Dollars, Brazilian Real, Australian Dollars, Chinese Renminbi, United Arab Emirates Dirhams, Saudi Riyal, Canadian Dollars and Brunei Dollars to be significant. Exposure to foreign currency risk is monitored on an ongoing basis. The Group hedges its foreign currency risk of its trade balances denominated in foreign currency. KNM GROUP BERHAD 102 ANNUAL REPORT 2008
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 28. Financial instruments (cont’d) Financial risk management objectives and policies (Cont’d) Liquidity risk Prudent liquid risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Fair values Recognised financial instruments At balance sheet date, the carrying amounts of cash and cash equivalents, receivables, deposits and prepayments, payables and accrued expenses, short term borrowings, and floating rate term loan - secured approximate fair value due to the relatively short term nature of these financial instruments. In respect of amount due from subsidiary companies, a reasonable estimate of fair value could not be made as the financial instrument has an unspecified period of repayment. The carrying amounts of the long term loans approximate fair values as they are subject to variable interest rates which in turn approximate the current market interest rates for similar loans at balance sheet date. The Company provides financial guarantees to banks for credit facilities extended to certain subsidiaries. The fair value of such financial guarantees is not expected to be material as the probability of the subsidiaries defaulting on the credit lines is remote. It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted market prices and the inability to estimate fair value without incurring excessive costs. The fair value of fixed rate term loan - unsecured, together with the carrying amounts shown in the balance sheets, is as follows: 2008 2007 Carrying Fair Carrying Fair amount value amount value RM’000 RM’000 RM’000 RM’000 Fixed rate term loan - unsecured 9,414 8,748 19,125 17,849 Unrecognised financial instruments The fair value of the unrecognised financial instruments, together with the carrying amounts is as follows: 2008 2007 Carrying Fair Carrying Fair amount value amount value RM’000 RM’000 RM’000 RM’000 Forward foreign exchange contracts – (20,689) – 10,143 KNM GROUP BERHAD 103 ANNUAL REPORT 2008
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KNM GROUP BERHAD (521348-H) World C
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CONTENTS 2 Corporate Information 3
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CORPORATE STRUCTURE AS AT 18 MAY 20
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Malaysia China Canada USA Brazil Au
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CHAIRMAN'S MESSAGE (CONT’D) FINAN
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CHAIRMAN'S MESSAGE (CONT’D) GLOBA
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5-YEAR GROUP FINANCIAL HIGHLIGHTS K
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PROFILE OF DIRECTORS DATO’ MOHAMA
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PROFILE OF DIRECTORS (CONT’D) LEE
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CORPORATE GOVERNANCE STATEMENT The
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CORPORATE GOVERNANCE STATEMENT (CON
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AUDIT COMMITTEE REPORT (CONT’D) 2
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AUDIT COMMITTEE REPORT (CONT’D) (
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STATEMENT ON INTERNAL CONTROL The B
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ANALYSIS OF SHAREHOLDINGS as at 18
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ANALYSIS OF SHAREHOLDINGS as at 18
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LIST OF MAJOR PROPERTIES OWNED BY T
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DIRECTORS’ REPORT for year ended
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DIRECTORS’ REPORT (CONT’D) Dire
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DIRECTORS’ REPORT (CONT’D) Opti
Page 53 and 54: BALANCE SHEETS AT 31 DECEMBER 2008
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Page 57 and 58: CONSOLIDATED STATEMENT OF CHANGES I
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Page 127 and 128: KNM GROUP BERHAD (Company No. 52134
Page 129: (521348-H)
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ANNUAL REPORT 2008 - KNM Steel Sdn Bhd

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