KUALA LUMPUR: Mudajaya Group Bhd, currently on an adjudication claim to seek more than RM175 million from CMC Machipex Sdn Bhd, expects the Kuala Lumpur Regional Centre For Arbitration (KLRCA) decision to have a negative impact of RM98.35 million on the group’s earnings.
In a statement to Bursa Malaysia, the construction and property development group said it had sought payment claims for work done totalling RM175.33 million (principal sum) plus late payment interest and cost from CMC in adjudication proceedings that began in October 2015.
CMC engaged Mudajaya Corp as the subcontractor to execute and complete certain works associated with TNB Janamanjung Sdn Bhd’s RM6 billion ultra-supercritical coal-fired 1,000MW power plant project in Manjung, Perak.
While CMC admitted some of the claims by Mudajaya, it disputed the rest and, in turn, made a counterclaim in the form of a “set off” in the amount of RM61.76 million.
Mudajaya Corp intends to pursue this claim matter in accordance to the provisions of the subcontract agreement, which includes negotiations via the Dispute Adjudication Board and arbitration.
In its announcement to the bourse, Mudajaya did not say when or whether KLRCA, the adjudication authority under the Construction Industry Payment & Adjudication Act 2012, had given its judgment on the dispute.
However, the company said: “The decision of the adjudicator will have a negative impact of RM98.35 million on the earnings of the Mudajaya group for the financial year ended Dec 31, 2016, as the said amount had been recognised as revenue in prior years.”
For the nine months ended Sept 30, 2016, the Mudajaya group reported revenue of RM519 million and loss before tax (LBT) of RM133.8 million.
The sharp increase in LBT from RM12 million in the previous year’s corresponding period was primarily due to equity accounting of associate losses from RKM Powergen Pvt Ltd and impairment of assets provided for during the second quarter of 2016.