Page 116 - ar2010

The principal activities of the Company are investment holding and provision of management services to subsidiaries. The principal activities of the subsidiaries in the Group are mainly the operation of specialist hospitals. There was no signifcant change in the nature of these activities during the fnancial year ended 31 December 2010.

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.

In the previous fnancial year, the Directors regarded Johor Corporation, a body corporate established under the Johor Corporation Enactment (No. 4 of 1968) (as amended by Enactment No. 5 of 1995), as the ultimate holding corporation.

The address of the registered offce of the Company is: Suite 12B, Level 12, Menara Ansar, 65 Jalan Trus,

80000 Johor Bahru, Johor

The address of the principal place of business of the Company is: 202, Jalan Pahang 53000 Kuala Lumpur

2 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Financial risk management 2.1 Financial risk factors

The Group’s activities expose it to a variety of fnancial risks: market risk (including foreign currency exchange risk, cash fow

and fair value interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall fnancial risk management objective is to ensure that the Group creates value for its shareholders. The Group focuses on the unpredictability of fnancial markets and seeks to minimise potential adverse effects on the fnancial performance of the Group. Financial risk management is carried out through risk reviews, internal control systems, an insurance programme and adherence to Group fnancial risk management policies.

a) Market risk

(i) Foreign currency exchange risk

The Group has two (2) subsidiaries abroad; a hospital in Jakarta, Indonesia and a pharmaceutical distributor in

Singapore. The Group does not face signifcant exposure from currency risk as both these subsidiaries operate independently; pharmaceutical drugs and medical supplies are supplied from and distributed in the country these subsidiaries operate. Hence, transactions involving foreign currency are minimal and risks are limited to the translation of foreign currency functional fnancial statement to that of the presentation currency.

The Group’s interest rate risk arises from long term borrowings. Borrowings issued at variable rates exposes the

Group to cash fow interest rate risk which is partially offset by cash held at variable rates. Borrowings issued at fxed rates exposes the Group to fair value interest rate risk. During the fnancial year 2010, the Group’s borrowings were denominated in Ringgit Malaysia.

The Group tries to minimise interest rate increases by focusing its long term borrowings on Commercial Notes/

Medium Term Notes (‘CPMTN’). The Group is currently at the fnal stage of refnancing CPMTN from RM250 million which is expiring in 2011 to RM500 million which is expected to expire in 2017. Average interest rate for CPMTN for 2010 is 2.85%.

The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into

consideration refnancing, renewal of existing positions and alternative fnancing. Based on these scenarios, the Group calculates the impact on proft and loss of a defned interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing position.