CAHYA MATA SARAWAK ANNUAL REPORT 2016

www.cmsb .com.my Cahya Mata Sarawak Berhad 176 Section 07 Financial StatementS NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2016 37. COMMITMENTS (CONT'D.) (c) Operating lease commitments - as lessor The Group has entered into an operating lease agreement on its investment property. This lease has a remaining lease term of more than 5 years. The future minimum lease payments receivable under the operating lease contracted for at the reporting date were as follows: Group 2016 2015 RM’000 RM’000 Not later than 1 year 2,710 1,720 Later than 1 year and not later than 5 years 5,542 4,659 Later than 5 years 3,240 4,320 11,492 10,699 Investment property rental income recognised in profit or loss during the financial year is disclosed in Note 4. 38. CONTINGENCIES (a) Group Company 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000 Share of contingent liabilities of an associate 1,093 2,189 179 359 (b) (i) At an Extraordinary General Meeting held on 21 March 2013, the Company obtained approval from its shareholders to provide a proportionate corporate guarantee in the amount of up to USD43 million and RM87.2million and other financial assistance (including shareholders’ support and other collateral) for the benefit of OM Materials (Sarawak) Sdn. Bhd. (“OM Sarawak”). Following the shareholders’ approval on 21 March 2013, OM Sarawak entered into the Facilities Agreement (“FA”) dated 28 March 2013 with a consortium of banks (“Lenders”) for credit facilities of USD215 million and RM436 million to part finance the construction and operation of a ferro silicon alloy smelter (“Project”). As required under the FA, both the Company and SISB entered into the Project Support Agreement (“PSA”) dated even date which provides for a proportionate corporate guarantee (guaranteeing all of OM Sarawak’s payment obligations under the FA until 18 months after completion of the Project, including without limitation, the principal amount, the interest accrued thereon and related hedging payments, the completion of the Project, and all of SISB’s obligations under the finance documents, which consist primarily of providing the shareholders’ support described below); shareholders’ support (which may be in the form of shareholders’ advances or subscription to fully paid up ordinary shares in OM Sarawak); and other collateral from the shareholders of OM Sarawak, proportionate to their respective shareholdings, as security for the FA. On 31 October 2016, OM Sarawak formalised a restructuring and rescheduling exercise (“R&R Exercise”) with the Lenders whereby OM Sarawak was granted, inter alia, a 3-year moratorium on the principal repayments by the Lenders. Accordingly, the FA and PSA were amended to reflect the consequential changes arising from the R&R Exercise but the essential terms and the principle of the Company’s obligations remain the same as those in the original FA and PSA (as stated above). In essence, under the amended and restated FA and PSA, the Company is still providing a proportionate corporate guarantee guaranteeing all of OM Sarawak’s payment obligations under the amended and restated FA until 18 months after completion of the Project or the end of the moratorium period, whichever is the later.