Page 28 - ar2011

Business review
Resources
A mid extreme volatility and growing
uncertainty in the global commodities
and financial markets, MSC Group
achieved a 13% growth in its revenue to a record
high of RM3.1 billion. Profts before exceptional
losses rose 53% to RM116.4 million for the year
ended 31 December 2011 compared to RM76.0
million in 2010. The group remained one of the
top tin smelters in the world despite increasing
competition.
MSC Group’s fnancial position improved during
the year. Net cash fow generated from operating
activities improved from RM56.2 million to RM208.8
million. The strong cash fows enabled MSC Group
to reduce its bank borrowings by RM137.6 million
and consequently improved its gearing level to 1.2
from 2.3. The Board of MSC Group has proposed
a fnal dividend of 18 sen per share which would
return RM13.5 million to shareholders. Together
with an interim dividend of 12 sen per share paid
in September 2011 the total dividend paid and
proposed for the fnancial year 2011 would amount
to RM22.5 million.
TIN MINING AND
SMELTING OPERATIONS
The operating and fnancial results among MSC
Group’s business units were, however, mixed. The
international tin smelting business and the tin mining
operations in Malaysia achieved a commendable
performance with better production, sales and profts
on the back of improved operating effciencies and
higher tin prices. However, MSC Group’s operations
in Indonesia were adversely affected by lower sales
and production in the fourth quarter of 2011 as a
result of the unexpected development over the
shipment of tin metals when the Indonesian Tin
Association imposed an export moratorium on tin
shipments from Bangka Island, effective 1st October
2011. Furthermore, lower tin prices and higher unit
cost of production, compounded by the low volume
of production in the fourth quarter, had resulted in
signifcant operating losses to P. T. Koba. Although
P. T. Koba has submitted an application to renew
its Contract of Work (COW) for a further extension
of 10 years to 2023, on grounds of prudence,
P. T. Koba decided to make an additional provision
for mine closure and reclamation/rehabilitation costs
and other impairments. These had further increased
P. T. Koba’s losses.
During the year, signifcant resources were mobilised
throughout the supply chain to achieve sustainability
and growth in the volume of tin concentrates and
tin bearing materials for smelting at MSC Group’s
smelting plant in Butterworth. MSC Group’s initiatives
included pursuing constructive engagements globally
with all stakeholders in the supply chain, especially
in dealing with confict mineral issues to ensure
transparency and accountability in its international
mineral sourcing. Upgrading of smelting and refning
facilities were also undertaken to improve effciency
and increase production capacity. An additional
production unit was also successfully installed at the
Group’s tin mine in Perak, Malaysia. The results of
all these efforts enabled MSC Group to increase its
overall metal production in 2011 by 2.7% to 46,599
metric tonnes, thus maintaining its position as the
second largest supplier of tin metal globally.
Rahman Hydraulic Tin currently undertakes its
operations over fve mining leases in the state of Perak
Reverse circulation drilling at Rahman Hydraulic
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