This article first appeared in The Edge Financial Daily on December 13, 2018

KUALA LUMPUR: Prestariang Bhd has confirmed its concession for the national immigration control system (SKIN) project with the government has been terminated, effective Jan 19 next year.

In a stock exchange filing yesterday, Prestariang said its wholly-owned subsidiary Prestariang SKIN Sdn Bhd (PSKIN) had received a letter from the home affairs ministry dated Dec 11, confirming the decision of the cabinet to terminate the SKIN project by way of expropriation.

It noted that depending on the final amount of compensation for the termination, the termination of the concession agreement may have a negative impact on the group’s 15-month financial period ending March 31, 2019.

“The actual financial impact can only be ascertained once PSKIN’s negotiation and discussion with the government have been concluded,” said Prestariang.

PSKIN, which Prestariang reiterated is not in default of the concession agreement, is entitled to compensation in accordance with the formula set out in the agreement.

On Monday, Home Minister Tan Sri Muhyiddin Yassin announced that the cabinet had decided to scrap the RM3.5 billion SKIN project, in which Prestariang holds a 70% stake, based on the need for a new system, to save government funds.

Meanwhile, Prestariang assured shareholders that the group currently has other existing contracts under its technology and talent division, which includes its software, training and education businesses, and these businesses are expected to continue to be sustainable and viable.

“The company therefore will continue to focus on growing these existing businesses. In this respect, the board of directors is confident about the group’s ability to continue to meet its existing financial obligations,” it said.

These include the obligations of another subsidiary, Prestariang Services Sdn Bhd, which will be determined by the outcome of the negotiations with the government.

“The company will make the necessary announcements once there is any material development,” said Prestariang.

Prestariang shares closed unchanged at 29 sen yesterday, giving it a market value of RM139.87 million. Its share price has lost 35% since the termination news broke on Monday from 46 sen.