KUALA LUMPUR (Dec 19): Shareholders of KNM Group Bhd today aired their concerns on the company's operations going forward following the sharp drop on crude oil prices.
 
In the four-hour long EGM, shareholders raised issues pertaining to declining crude oil prices, Petroliam Nasional Bhd (Petronas)-related contracts and the RM2.1 billion Peterborough project in UK.
 
KNM assured shareholders that the process equipment manufacturer is 'less impacted' by the declining crude oil prices as it is principally involved in onshore downstream activities.
 
The group also assured shareholders that its work package contract for the Pengerang Integrated Complex (PIC) project is secured despite Petronas' announcement it will cut 15% to 20% of its capital expenditure next year.
 
"They [Petronas] will go ahead as the final investment decision has been made in April this year," KNM's group finance director Terence Tan told reporters after the EGM.
 
"We won one of the work packages with Sinopec, which is contractual. So, I think it will go ahead," he added.
 
Apart from that, Tan revealed that KNM is currently bidding for at least four more work package contracts for the PIC project.
 
He declined to disclose how much the contracts are worth, saying it was 'sensitive' and 'still a running figure'.
 
"If we get the contracts, we can move to another level," he said.
 
Currently, KNM derives 5% of its income revenue stream locally, while 95% is from across the globe.
 
Tan said Europe continues to be a major earnings driver -- contributing about 62% -- followed by Asia 32% and the remainder from the Americas.
 
In UK, Tan expects the RM2.1 billion build-to-own Peterborough project to contribute 25% to 30% of its bottomline in the fourth quarter of 2017.
 
This will come from phase 1 of the 80%-owned waste-to-energy plant, which is expected to complete construction in the second quarter of 2017, he said.
 
Currently, KNM is undergoing due diligence for the project and is awaiting the final technical report. Once completed, the group would be able to seal a financing deal with UK banks.
 
Tan said phase 1, which will generate 17.6 megawatts, will cost 100 million pounds.
 
On the recently approved rights issue of one-for five existing KNM shares, Tan hopes KNM's share price would improve to undergo the corporate exercise as it is below par value of 50 sen currently.
 
"We have a six-month window. We hope so [for the price to hit 50 sen]. We just have to wait," he said, adding KNM would seek extension form Bursa if its share price falls short.
 
Additionally, Tan said KNM is 'not in a hurry' to list its German-based Borsig AG on the Singapore Stock Exchange, citing the reason of persisting poor O&G sentiment.
 
KNM share price gained 0.5 sen or 1.04% to 48.5 sen, translating to a market capitalisation of RM791.71 million.