KUALA LUMPUR (Oct 7): KNM Process Systems Sdn Bhd (KNMPS), a wholly-owned subsidiary of KNM Group Bhd, has on Oct 6 accepted a letter of award from United Kingdom (UK)-based Drenl Ltd to undertake the engineering, procurement, construction and commissioning (EPCC) of a waste-to-energy facility at Beddington Lane, Croydon, UK, amounting to £88 million (approximately RM581 million).

In its filing to Bursa Malaysia today, it was revealed that KNMPS has also been awarded the operation and maintenance (O&M) of the said waste-to-energy facility, subject to the finalisation of the terms and conditions.

The EPCC contract duration is approximately 27 months commencing after receiving notice to proceed from Drenl and is expected to contribute positively to KNM Group's earnings for the financial years ending Dec 31, 2016, 2017 and 2018.

KNM Group said that the contract is subject to certain risks mainly in the power and construction industries in the UK.

"These include changes in general economic conditions such as, but not limited to, inflation, environmental, health and safety regulations, taxation, foreign exchanges, interest rates, labour and material supply; changes in business and operating conditions such as, but not limited to, government and statutory regulations; and deterioration in prevailing market conditions," said KNM Group.

KNM Group is already operating in these industries and hence would continue to be exposed to risk factors that they currently face whilst operating in these industries.

"Although KNM Group with its vast experience may undertake efforts to mitigate the various risk factors, there is no assurance that any change in the above risk factors will not have a material adverse effect on the business and operations of KNM and/or KNMPS," added the group.

KNM Group's shares were trading up 4 sen or 8.42% at 51.5 sen at noon market close today, with 68.13 million shares traded. It was the second most actively traded counter on Bursa Malaysia this morning.

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