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