Zelan records negative revenue of RM39.2m in 3Q

KUALA LUMPUR: Loss-making Zelan Bhd recorded negative revenue from its continuing operations in Indonesia totaling RM39.2 million in the third quarter ended Dec 31, 2010 and warned of more losses in the current fourth quarter.

Explaining the negative revenue, Zelan said on Wednesday, Feb 16 this was due to a reversal made on the revenue recognised earlier as a result of additional foreseeable losses for the Indonesian project.

It said net losses for the 3Q were RM41.29 million compared with RM60.38 million. Loss per share was 7.33 sen versus 10.72 sen.

Zelan said there was minimal revenue recognised from other existing projects during the 3Q and warned it was expected to continue to make losses in the final quarter as its revenue was expected to come only from its existing secured order book.

"The group recorded a loss after tax from continuing operations of RM40.5 million as compared to RM64.4 million losses in the preceding year's quarter," it said.

It said due to the delays suffered by the group over the project in Indonesia, the group had applied for an extension of time. However, in December 2010, the owner of the project issued a notice, indicating their intention to take over the outstanding works.

Zelan said it had been negotiating with the owner for a supplementary agreement to set out the remaining outstanding works and the cost to be incurred to complete the works and a revised timeline for completing the outstanding works.

It cautioned there was a possibility that liquidated ascertained damages of a maximum of about RM125 million may be imposed and the performance bond issued by the group to the owner of the project of RM132 million may be drawn down.

"It may also result in delays in the collection of the outstanding progress billings previously certified by the owner of the project of approximately RM181 million, potentially pending ascertainment of costs to completion by the independent consultants," it said.

During the financial year to date under review, the group disposed of 46.38 million IJM Corporation Bhd shares for a net cash consideration of RM239.870 million.