KUALA LUMPUR (Sept 5): Sarawak Consolidated Industries Bhd (SCIB) said a RM16.28 million contract secured by the group two years ago for the development of a solid waste transfer station in Pontian, Johor has been terminated.
The civil engineering specialist had announced the award of the engineering, procurement, construction and commissioning contract to its wholly-owned subsidiary, SCIB Infraworks Sdn Bhd, by Satria Kasturi (M) Sdn Bhd on Sept 10, 2021.
In a filing with Bursa Malaysia on Tuesday, SCIB said SCIB Infraworks and Satria Kasturi have mutually terminated the contract and agreed to release each other from all claims and obligations related to the contract, except for the claims for work done, which were agreed upon as of May 12 last year.
“The company is enforcing its rights under the contract and taking the necessary measures to protect SCIB’s interests in mitigating the risks arising from cost factor," the group said, in explaining the rationale for the termination.
“The board of directors, having taken into consideration all aspects of the termination of the contract, is of the opinion that the entering of the aforesaid notice of termination is at the best interest of the company,” it added in its filing with Bursa Malaysia on Tuesday.
SCIB noted that there are no risks identified in relation to the contract termination except for the non-payment of the work claim.
Meanwhile, the outstanding amounts due and owing by the client have been fully impaired in the financial year ended June 30, 2023 (FY2023). As such, it will not have any material effect on the group's gearing, earnings and net assets for FY2024.
Shares of SCIB, which has appreciated by over three times year-to-date, closed half a sen or 1.09% lower at 45.5 sen, giving the group a market capitalisation of RM291.31 million.