KUALA LUMPUR (Aug 20): KUB Malaysia Bhd said an arbitration proceeding has been initiated against its wholly-owned unit KUB Builders Sdn Bhd (KUBB) by a contractor to claim RM34.19 million in relation to works done at klia2.

The claim was filed by Swee Construction & Transports Co (M) Sdn Bhd (Swee) in relation to works KUBB subcontracted to Swee in 2012, according to KUB's filing on Bursa Malaysia.

The claim amount comprises RM18.19 million for certified works and retention sum, and RM16 million non-certified claims, like loss and expenses, and loss of profit.

The arbitrator has directed the parties to file their statement of claim and statement of defence on Sept 23 and Oct 16 respectively. The hearing dates have been fixed on Jan 18 to 26, next year.

Further, Swee has also filed for an adjudication pursuant to the Construction Industry Payment Act 2012 (CIPAA) for the sum of RM18.19 million, which is part of the amount claimed under the arbitration proceedings, said KUB. 

KUB said KUBB and Swee had, on Jan 21, signed a statement of final account (SFA) amounting to RM21.19 million (inclusive of the retention sum), under which KUB had paid RM4 million, but Swee had only recognised a sum of RM3 million as payment related to the final account.

This, said KUB — which is primarily in manufacturing of telecommunications and electronic products, besides provision of engineering and support services — gave rise to the claim for RM18.19 million.

The remaining claim of RM16 million is in respect of the prolongation cost, loss of profit, financial charges, and interests arising from the project delays, said KUB.

KUB does not expect any adverse impact on the group’s existing operations in the event the judgement awarded is against KUBB, in which its net investment stood at RM40.88 million.

“However, the foreseeable financial impact, if any, would be an expense of RM16 million, excluding any interest compounded, in the current financial year, plus the estimated arbitration cost of RM310,000 (excluding goods and services tax),” KUB added.

KUB (fundamental: 1.15; valuation: 1.5) fell one sen or 3.17% to 30.5 sen today, giving it a market capitalisation of RM175.29 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)