Mudajaya to book RM111.9 million non-cash impairment

PETALING JAYA: Mudajaya Group Bhd, which entered into a settlement with its consortium partners on outstanding claims for the completed Tanjung Bin 4 power project, will record a non-cash impairment of RM111.9 million in its books.
This represents a deviation of more than 10% between its audited and unaudited financial statements for the fourth quarter ended Dec 31, 2016 (FY16) of RM383.7 million and RM264.9 million, respectively.
Under the settlement agreement with GE Power Services (Malaysia) Sdn Bhd and Alstom Power Systems in respect of outstanding claims relating to the construction of a 1 x 1,000MW net coal-fired power plant at Tanjung Bin in Johor, GE Power will pay Mudajaya a sum of RM60 million in cash.
The project was completed and handed over to the client in March 2016.
The group said at the time of the release of its financial statements for FY16, its board and management firmly believed that the claims had a strong chance of recovery.
Mudajaya had not previously announced its outstanding claims against GE Power.
Nonetheless, Mudajaya noted that it is in the best commercial interests of the group to agree to the settlement as it will provide the group with cash of RM60 million that it can deploy towards new and existing projects, as well retain its rights to any recovery from insurance proceeds that were part of its total claims, via GE as the consortium leader for the project.
“In the event there is any future recovery from the insurance claims, a partial reversal of the impairment will be recognised then,” it added.