Reference is made to the Company's audited financial statements for the financial year ended 31 December 2022 and earlier interim financial reports for the 4th quarter ended 31 December 2022, 1st quarter ended 31 March 2023, announcement made on 2 June 2023, and the request from Bursa Malaysia for additional information dated 7 June 2023.

Background

On 20 September 2006, Crest Builder Sdn Bhd (“CBSB” or “Respondent”), a wholly owned subsidiary and a major subsidiary of Crest Builder Holdings Berhad, was appointed as the main contractor by Saujana Triangle Sdn Bhd (“STSB” or “Claimant”) to construct and complete a project, known as Cadangan Pembangunan 1 Blok Apartment dan Podium Letak Kereta bagi Fasa 1B yang mengandungi Block B (36 Tingkat) – 518 Unit, Podium B Letak Kereta (6 Tingkat), 2 Kolam Renang, 1 Rumah Kelab dan 2 Pencawang Letrik TNB on Part of Lot PT 31431, Mukim Sungai Buloh, Daerah Petaling, Selangor Darul Ehsan.

In essence, the dispute between the parties arose due to, amongst others, the failure by STSB to make timely payment to CBSB. CBSB contended that STSB had repudiated the contract and thereby terminating the contract by accepting the repudiation in September 2011. Subsequently, notwithstanding the termination by CBSB, STSB terminated the contract based on a notice of default issued by the Architect in January 2012. STSB thereafter issued a Notice of Reference of Arbitration on 8 May 2012 to refer the disputes to arbitration.

STSB claimed against CBSB for the alleged liquidated ascertained damages (“LAD”) for the delay in the completion of the works according to the contract, additional LAD after determination of the contract, LAD to purchasers, increased in cost to complete works, defects, additional cost in project administration, additional holding cost, additional overheads, prolongation cost as well as the loss and damages suffered as a result thereof totalling to RM94.686 million. STSB also claimed for interest on the abovementioned amounts of losses and damages at the rate of 8% per annum from the date of accrual to the date of full realization, and the cost of the arbitration.

CBSB counterclaimed against STSB for unpaid certified sums, uncertified sums for value of work done, idling costs and daywork, retention sum and loss and expenses amounting to RM31.084 million. CBSB also counterclaimed for the interest on abovementioned amounts at the rate of 5% per annum from the date of accrual to the date of full realization, and the cost of the arbitration.

Summary of the Final Award of Arbitration

The Final Award is dated 12 May 2023. The Award was released to our Solicitors on 1 June 2023.

The Tribunal has awarded and directed that, in full and final settlement of all disputes, claims and counterclaims in the arbitration as follows

1. The Claimant (STSB) is not awarded any of their original claims amounting to RM94.686 million.
2. The Respondent (CBSB) has been awarded monetary sums amounting to RM18.361 million (out of original counterclaims of RM31.084 million) for unpaid certified sums, costs of idling and dayworks and retention sum, plus interest at 5% per annum from 13 May 2023 until the actual realization of the said payment by the Claimant (STSB) to the Respondent (CBSB).
3. The Claimant (STSB) shall bear and pay the Respondent’s cost of the arbitration in the sum of RM2.127 million.
4. The Claimant (STSB) shall bear and pay the costs of the award and reimburse the Respondent if the Respondent has already paid any part of such cost.

Financial and Operational impact of the Final Award

The Final Award will not have any operational impact on CBSB, and at the same time the awarded monetary sums will bring positive cash inflow to CBSB.

However, the outcome of the arbitration will have a negative impact on the earnings of CBSB and the Group for the financial year ending 31 December 2023. The loss arising from the difference between CBSB’s original claim of RM31.084 million (represented by carrying amount of trade receivables and contract assets) will not be fully recovered from the Final Award.

This announcement is dated 8 June 2023.