FEDERAL INTERNATIONAL (2000) LTD

Federal International (2000) Ltd AR 2002and its Subsidiary Companies68Notes to the Financial Statements33. COMMITMENTS AND CONTINGENCIES (cont’d)Future commitmentsAs at balance sheet date, the Group had outstanding forward contracts to purchase and sell foreign currenciesamounting to $478,488 (2001 : $761,019) and $1,339,375 (2001 : Nil) respectively. The net unrealisedexchange gain/(loss) arising from these forward contracts commitments as at 31 December 2002 and 31December 2001 amount to $43,524 and ($3,123) respectively, have not been recognised in the profit andloss account.Contingent liabilitiesGROUPCOMPANY2002 2001 2002 2001$ $ $ $(a)Contingent liabilities not providedfor in the financial statements :-Bankers guarantees andperformance bonds 1,217,321 3,454,062 – –Corporate guaranteesgiven to banks :- in favour of subsidiarycompanies – – 80,652,293 59,473,700- in favour of a third party – 282,020 – –- in favour of associatedcompanies 800,000 – – –Discounted receivables 883,045 – – –2,900,366 3,736,082 80,652,293 59,473,700(b)(c)After the balance sheet date and as at the date of the Auditor’s Report, the Group incurred furthercontingent liabilities through the issuance of bankers guarantees amounting to $232,755 (2001 :$72,425) and became fully discharged of its contingent liability in respect of $883,045 in discountedreceivables.A third party claimed against a subsidiary company and its minority shareholders, who are also itsexecutive directors, for alleged infringement of intellectual property rights. The subsidiary companyand its minority shareholders have denied the allegations and have instructed their lawyers to defendand counterclaim.No provision has been made for these claims as the Directors do not expect any material loss toresult from this action.34. SUBSEQUENT EVENT(a) On 15 April 2003, the Company subscribed for 12,000,000 additional new ordinary shares of $1each at par in its wholly-owned subsdiary company, Federal Hardware Engineering Co Pte Ltd, throughthe capitalisation of $12,000,000 in amount due from the subsdiary company.(b)Subsequent to year-end, a third party served a legal notice to inform a subsidiary company that itwould commence legal action against the subsidiary company for negligently contaminating its telecommunicationequipment during the course of the subsidiary company’s maintenance service.No provision has been made for the liability that may arise from the potential suit as the Directors donot expect any material loss to result from this action.