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Notes to the Financial Statements (cont’d)<br />
For the financial year ended 31 December 2011<br />
35. Capital commitments<br />
Group Company<br />
2011 2010 2011 2010<br />
Capital expenditure: RM’000 RM’000 RM’000 RM’000<br />
Approved and contracted for:<br />
- Investment in an associate 10,535 9,756 10,535 9,756<br />
- Property, plant and equipment 6,162 1,717 6,040 1,662<br />
16,697 11,473 16,575 11,418<br />
Approved but not contracted for:<br />
- Property, plant and equipment 632 5,255 – –<br />
36. Contingent liabilities (unsecured)<br />
Group<br />
At 31 December 2011, the Group has the following contingent liabilities:<br />
(a) Since the takeover of Rahman Hydraulic Tin Sdn. Bhd. (RHT) on 22 November 2004, the following legal suit is pending<br />
against RHT:<br />
Two former directors of RHT had made a claim for compensation amounting to approximately RM2.4 million pursuant<br />
to service agreements entered on 31 March 2000 between them and RHT. One of the former directors has commenced<br />
proceedings in the Industrial Court for wrongful dismissal as the managing director of RHT, seeking reinstatement. The<br />
claims were dismissed by the Industrial Court. The appeal of the director for a judicial review was also dismissed by<br />
the court. The director further appealed to the Court of Appeal on 29 June 2009. The matter has been fixed for case<br />
management on 8 May 2012. It is the vendor’s intention to dispute the claims of these former directors based on its<br />
solicitors’ advice that the service agreements are void and therefore are of no effect. A notice of motion to strike out the<br />
director’s appeal has been filed on 6 March 2012.<br />
In accordance with the Sale of Shares Agreement dated 1 October 2004 between the vendor of RHT and the Company<br />
(the Purchaser), the vendor shall do the necessary to defend and settle all legal suits against RHT in relation to matters<br />
occurred prior to completion date, being 22 November 2004 or shall cause these legal suits to be transferred from RHT<br />
to the vendor.<br />
(b) In May 2008, the Minister of Energy and Mineral Resources, Indonesia issued a new regulation regarding mine reclamation<br />
and closure as detailed in the Minister Regulation No. 18 year 2008, which requires a company to provide a mine closure<br />
guarantee in the form of a time deposit placed in a state owned bank in Indonesia. The subsidiary in Indonesia does not<br />
believe that a deposit is required under the terms of its Contract of Work but it is working with the Indonesian Mining<br />
Association to review these requirements with the Indonesian government and discuss other options for the mine closure<br />
guarantee.<br />
(c) On 9 February 2011, the Penang High Court delivered a decision that the Company has to pay RM121,200, interest at<br />
the rate of 4% per annum from the date of claim to the date of judgment and further interest at 8% per annum after date<br />
of judgment to date of payment. This is in respect of a statement of claim received by the Company on 7 February 2006<br />
from a party for RM1.28 million with interest at 8% p.a. from the date of summons to the date of settlement plus costs<br />
for an alleged cost overrun for the implementation of an Enterprise Resource Planning System. The party filed an appeal<br />
to the Court of Appeal against the judgement of Penang High Court allowing only part of its claim. No hearing date has<br />
been fixed for the appeal.<br />
MALAYSIA SMELTING CORPORATION (43072-A) • ANNUAL REPORT 2011 149