ENRA Group Berhad Annual Report 2021

FINANCIAL STATEMENTS & OTHERS ENRA Group Berhad | Annual Report 2021 184 NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2021 41. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (cont’d) (d) Claim against SPM Terminal Pty Ltd (“SPMT”) as the “1st Respondent” and ESPML as the “2nd Respondent” On 11 January 2021, ESPML had received a Notice of Arbitration dated 4 January 2021 to commence arbitration proceeding by Controval USA LLC (“Controval”). The alleged dispute arises out of a Purchase Order purportedly entered into between Controval and Respondents (defined in the Notice of Arbitration as being the 1st Respondent and 2nd Respondent) for inter alia, the engineering, procurement and fabrication of a Leased Automated Custody Transfer with 8” Coriolis FlowMeters unit (“LACT”) to be installed in a condensate storing, offloading facilities constructed by the 2nd Respondent on the vessel known as “Ratu ENRA” (“Vessel”). The Claimant allegedly claimed that the Respondents had failed to pay the Claimant for services performed under the Contract (as defined in the said Notice of Arbitration and which includes the said Purchase Order). The Claimant is claiming from the Respondents a sum of USD351,832 for unpaid invoices under the Contract, interest on the amount awarded from 7 July 2020 until settlement of the award, all arbitration costs including the Claimant’s representative’s costs and expenses and such other amounts deemed appropriate by the Arbitral Tribunal. Controval has referred the matter for arbitration in Singapore in accordance with the rules of the Singapore International Arbitration Centre. ESPML is of the view that the Notice for Arbitration against it as 2nd Respondent is baseless and is seeking legal advice on the matter. ESPML as the 2nd Respondent intends to vigorously defend its position in this matter. The Arbitral Tribunal has issued the Procedural Order on 30 April 2021, with Controval served its points of claims for a sum of USD381,211 on 28 May 2021. ESPML has until 9 July 2021 to serve its response via its solicitor to defend itself and to counter claim against Controval. (e) COVID-19 Pandemic The 2019 Novel Coronavirus infection (“COVID-19”) was declared a pandemic by the World Health Organisation on 11 March 2020. The Government of Malaysia imposed a Movement Control Order on 18 March 2020 and subsequently entered into various phases and intensity of MCO depending on the statistic and the severity of the active cases. Since then, the Group and the Company has experienced certain disruption to its operations including: (i) distorted level of demand for certain products and services as a consequence of cashflow management and cost optimisation exercises by certain customers; and (ii) uncertainty of the various movement control orders in practice in respect of permitted political, economic and social activities. Consequently, the Company recognised impairment loss on investment in subsidiaries of RM11,701,000 and the Group recognised total impairment loss on goodwill of RM8,536,000 as the result of the COVID-19 pandemic. Also, the Group and the Company recognised compensation for mutual separation scheme of RM1,205,000 and RM1,129,000 respectively during the financial year. The details are disclosed in Notes 7, 9 and 34 to the financial statements. As at the date of authorisation of the financial statements, the COVID-19 pandemic situation is still evolving and uncertain. The Group and the Company has therefore considered the impact of the COVID-19 pandemic across its business operations and took the necessary precautions and provisions where necessary. The Group and the Company will also continue to actively monitor and manage its funds and operations to minimise any impact arising from the COVID-19 pandemic.