Notes to the Financial Statements 30 June 2008 - Abterra

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Notes to the Financial Statements30 June 200832. RELATED PARTY TRANSACTIONSAn entity or an individual is considered a related party of the Group for the purpose of the financial statements:(i) It possesses the ability (directly or indirectly) to control or exercise significant influence over theoperating and financial decision of the Group; or(ii) It is subject to common control or common significant influence.In addition to the information disclosed elsewhere in the financial statements, the following transactionstook place between the Group and the related parties at terms agreed between the parties:GroupCompany2008 2007 2008 2007$’000 $’000 $’000 $’000Management fee income from subsidiarycompanies - - 673 1,506Settlement of liabilities by subsidiaries - - 2,447 -Settlement of liabilities on behalf ofsubsidiaries - - 31,219 -Receipts by subsidiaries on behalf ofholding company - - 10,028 -Receipts by holding company on behalf ofsubsidiaries - - 33,195 -Finance to subsidiary - - 9,994 -Loan to subsidiaries - - 28,468 -Loan from subsidiaries - - 3,763 -Loan from immediate holding company 1,120 460 964 460Rental expense of a residential premisespaid to a related company 23 - 23 -Acquisition of 45% equity interest of TianjinLant Development Co., Ltd, from ultimateholding company 20,700 - 20,700 -94ABTERRAAnnual Report 2008
Notes to the Financial Statements30 June 200833. SIGNIFICANT AND SUBSEQUENT EVENTS(i) Purchase of a commercial property at 7 Temasek Boulevard, #11-05 Suntec Tower One, Singapore 038987(The “Property”)On 26 August 2008, the Company completed the purchase of the Property from Park Central InvestmentsPte. Ltd. (the “Vendor”). The purchase consideration for the Property is $31,636,000 and was fundedthrough a combination of both external bank financing and internal resources.(ii) Conversion of $31 million Convertible Notes Due 2010 (“Tranche 2 Notes”)Subsequent to the year end, an additional $3.0 million of Tranche 2 Notes have been converted, bringingthe total converted Tranche 2 Notes to $19.8 million, and the amount outstanding after the conversion is$11.2 million.34. FINANCIAL RISK MANAGEMENT - CONTINUING OPERATIONSFinancial risk factorsThe Group’s activities expose itself to a variety of financial risks. The Group’s overall business strategies,tolerance of risk and general risk management philosophy are determined by directors in accordance withprevailing economic and operating conditions.(a) Credit riskCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting infinancial loss to the Group. The Group manages such risks by dealing with a diversity of credit-worthycounterparties to mitigate any significant concentration of credit risk. Credit policy includes assessingand evaluation of existing and new customers’ credit reliability and monitoring of receivable collections.The Group places its cash and cash equivalents with creditworthy institutions.Trade receivables are generally on 90 days to 120 days term. As the Group and the Company does not holdany collateral, the maximum exposure to credit risk for each class of financial instruments is the carryingamount of that class of financial instruments presented on the balance sheet, except for the corporateguarantees provided to banks on subsidiaries’ loans as disclosed in Note 31 (c).ABTERRAAnnual Report 200895
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Notes to the Financial Statements 30 June 2008 - Abterra

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