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Mudajaya unit to take RM98mil hit on earnings

17 Jan 2017

TheStar

PETALING JAYA: Mudajaya Corp Bhd, a wholly owned subsidiary of Mudajaya Group Bhd, will take an RM98.35mil hit on its earnings in the financial year ended Dec 31, 2016 (FY16) arising from a decision on its arbitration case.

 

In a Bursa Malaysia filing yesterday, the group said this was because the RM98.35mil had been recognised as revenue in previous years.

On Oct 30, 2015, Mudajaya had commenced adjudication proceedings against CMC Machipex Sdn Bhd for a principal sum of RM175.33mil, as well as late payment interest and cost.

 

Shortly after the commencement of the adjudication proceedings, Mudajaya had guided that the payment claims, if successful, would contribute positively to the group’s FY16 earnings.

 
According to a subcontract agreement dated August 2011, Mudajaya was engaged by CMC as the subcontractor to design and construct phase four of a 1,000MW power plant project in Teluk Penchalang, Perak.

 

The subcontract was worth RM720mil.

 

However, due to the non-payment by CMC and disputes arising from Mudajaya’s payment claims, Mudajaya said the company sought for an adjudication claim for payment under Section 5 of the Construction Industry Payment and Adjudication Act 2012.

 

CMC admitted some of the claims, but disputed the rest of Mudajaya’s claims.

 

In turn, CMC made a counterclaim in the form of a set-off totalling RM61.76mil.

 

CMC did not seek for a counterclaim in excess of Mudajaya’s claims.

 

Mudajaya continues to pursue the adjudication claims for work done for CMC, in accordance with provisions of the subcontract agreement, which includes negotiations through arbitration and the dispute adjudication board.


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