PETALING JAYA: ATA IMS Bhd has received fresh notices of termination of contract from Dyson Manufacturing Sdn Bhd and Dyson Operations Pte Ltd.
In a filing with Bursa Malaysia yesterday, ATA IMS noted its units, JABCO Filter System Sdn Bhd and Winsheng Plastic Industry Sdn Bhd (WSP), received the notices of termination dated Dec 12 and Dec 22 from Dyson Manufacturing and Dyson Operations.
“The effective date of the terminations shall be March 31, 2023, or such later termination date as may be agreed by the parties in writing,” ATA IMS said.
The Johor-based electronics manufacturing services (EMS) player noted the contracts were terminated without cause and with notice.
The company is presently taking legal advice on the possible recourse available.
“Having regard to the provisions of the contract by which such right of termination without cause is conferred and subject to the legal advice, the company reserves its rights to consider challenging the exercise of a termination right if such right is arbitrarily or unreasonably exercised,” the firm stated.
ATA IMS said sales of products related to the customer represent 100% of JABCO’s revenue, while sales of products related to the customer represent 82% of WSP’s revenue.
The collective sales of the customer’s products by JABCO and WSP represent 42% of ATA IMS’ revenue for the six months ended Sept 30.
“The financial impact is, therefore, material in all aspects arising from the termination of the contracts,” it said.
For the six months ended Sept 30, JABCO contributed a profit before tax of RM33.9mil to ATA IMS’ loss before tax of RM10.8mil, while WSP contributed a loss before tax of RM4.9mil.
ATA IMS said it would discuss with the customer to purchase back all stocks used for the customer amounting to RM60mil as at Sept 30 to ensure all stocks can be cleared before March 31, 2023.
It added an impairment test of the goodwill on consolidation of RM76.4mil discounted cash flow and a sensitivity test would need to be performed on the new projection with the termination of the customer contract.
ATA IMS added the net book values of property, plant and equipment which are currently used for the customer’s orders are estimated to be RM80mil.
In addition, the company is working with the customer and suppliers to identify any purchase orders raised by the company for materials and components that are non-cancellable for a delivery date beyond March 31, 2023.
ATA IMS said it had net current assets amounting to RM439mil, and cash less borrowings of RM90mil respectively as at Sept 30, and will be able to meet its financial obligations when they become due.
