KUALA LUMPUR – ATA IMS Bhd has announced that it is facing potential impairment of goodwill due to consolidation as well as possible downsizing and a write-down of “right-of-use assets” after its contracts were terminated by the Dyson group.
On December 23, the company announced that it had received termination notices for various contracts from Dyson Manufacturing Sdn Bhd and Dyson Operations Pte Ltd involving its units – JABCO Filter System Sdn Bhd and Winsheng Plastic Industry Sdn Bhd (WSP).
The electronics manufacturing service provider also stated that it acquired the entire equity interest in IMS Group in 2018, which has been accounted for using reverse accounting “in accordance with Malaysian Financial Reporting Standards 3, Business Combinations”.
“Arising from this acquisition, the group recognised a goodwill of RM76.4 million.
“Goodwill is not amortised but tested for impairment annually based on projected revenues, profit, and loss accounts, and the discounted cash flows of the various cash-generating units within the group,” it said in a stock filing exchange today.
The company said it is in the process of discussions with customers and working out “new projections to assess the impact on goodwill on consolidation”.
It will then “provide an estimate of the impairment, if any, as soon as possible”.
In addition, ATA IMS also warned that due to the termination of contracts, there may be a need for downsizing activities to reduce excess capacity, such as an early termination of certain tenancy agreements for the leasing of the production plant, warehouse, and hostel.
“The company is in the process of assessing which of the leased facilities may need to be terminated, and also estimating the write-down of right-of-use assets as a result of the early termination of tenancy agreements.
“We will provide an estimate as soon as possible,” it said in the filing. – Bernama, December 28, 2022
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