After commencing legal actions against Highbase Strategic Sdn Bhd as announced in May this year, Mun Siong Engineering says it has received a series of payments from Highbase to its associate company, Pegasus Advance Engineering Sdn Bhd (PAE M). The total amounts received amounts to RM3.4 million ($1.0 million).
The amount will be written back in the company’s 2HFY2022 results and will have a “material positive impact” on Mun Siong’s results for the FY2022.
Mun Siong, in FY2021, wrote an impairment loss for trade receivables on amounts du from Highbase. Highbase is the local partner to the Worldwide Master Service Agreement for Integrated Turnaround and Maintenance Mechanical Static awarded by Petroliam Nasional Berhad (Petronas).
Highbase owns a 51% stake in HIMS Integrated Services Sdn Bhd, while Mun Siong owns the remaining 49% in HIMS.
The total impairment loss for trade receivables amounted to RM2.3 million as at June 30.
PAE M, according to Mun Siong’s 1QFY2022 announcement on May 15, commenced legal actions in the Malaysian court to recover the amount owed by Highbase.
See also: Sembcorp issues $350 mil of guaranteed notes due 2036 at 3.65%
“These were work orders received from Petronas and were subcontracted by Highbase to PAE M through HIMS. PAE M had completed these work orders and sales invoices issued. PAE M’s claims against HIMS, resulting in impairment in trade receivables in HIMS’s FY2021 accounts substantially exceeded its shareholder’s funds,” reads the statement released by Mun Siong.
Highbase has since made a series of payments to PAE M via HIMS since the 3QFY2022. As at Dec 22, PAE M has recovered the full sum of the amount owing of RM2.3 million.
PAE M, from the 4QFY2021 to 1HFY2022, had also completed work orders issued by Petronas to Highbase amounting to RM4.7 million, which it held back its invoicing as it wanted to clarify how it was to be paid with Highbase.
“Being prudent, PAE M made an impairment of RM4.7 million in FY2021, a significant portion of its contract assets,” says Mun Siong.
“For the contract assets of RM4.7 million, we are being or to be paid based on assignment and other documents signed by Highbase to enable direct payment by Petronas. At the date of this announcement, we have received RM1.1 million. The balance sum of RM3.6 million is pending final approval and direct payment from Petronas to HIMS,” the company adds.
In Taiwan, Mun Siong says it has recognised all costs incurred on its CPC Kaohsiung Turnaround Project to date after CPC Kaohsiung and the Taiwan branch office agreed on the final billing for the project, which was completed at the end of January.
CPC is short for Taiwan CPC Corporation, a state-owned company.
The revenue arising from this project, which was recognised up to Sept 30, was $17.1 million, or 89.3% of the final agreed contract value. The remaining 10.7%, substantially project profit, will be recognised in FY2022 as revenue.
Also in Taiwan, the public construction commission (PCC) has ruled in Mun Siong’s favour as the “alleged bribery” took place after the project was properly awarded to the Taiwan branch. However, the PCC ruled in CPC’s favour after deeming consultant as an agent of the Taiwan Branch, in which the Taiwan Branch is liable for the consultant’s actions. Mun Siong says the branch office can appeal to the Taiwan administrative court.
“As for the total penalties amount of TWD3.8 million ($167,301) on Aug 8, CPC deducted the penalty amount of TWD3.0 million (for the CPC Talin Integrated Turnaround project) from one of the existing CPC jobs. In November 2022, CPC deducted the penalty amount of TWD0.8 million from the CPC Kaohsiung Turnaround project,” adds Mun Siong. Likewise, its branch office can appeal to the Taiwan administrative court.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Mun Siong, on June 21, announced that its branch office in Kaohsiung, Taiwan, received two letters dated June 15 and 16 from the CPC. Through its letters, the CPC said that they are “demanding their rights in accordance with the Taiwan Procurement Act for the return of the entire bid deposits relating to the two Integrated Turnaround projects undertaken by the Branch Office in 2019 and 2021”.
CPC has asked for the return of the entire bid deposit of TWD2.29 million in relation to the first Turnaround project awarded on June 11, 2019, while it asked for the return of the entire bid deposit of TWD1.08 million for the second Turnaround project.
The call for the return of the above bid deposits was due to the alleged violation of the above Taiwan laws and regulations as CPC is owned by the state.
Shares in Mun Siong closed flat at 4.9 cents on Dec 22.
