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153
Gamuda Berhad (29579-T) • Annual Report 2012
3.
Significant accounting estimates and judgements (cont’d.)
(h)
Provision for development cost
The Group recognises a provision for development cost in respect of development projects undertaken by its
subsidiaries. In determining the provision, the Group has made assumptions in relation to the development
cost incurred on the completed phases. As at 31 July 2012, the carrying amount of provision for development
cost was RM24,210,000 (2011: RM9,330,000). Further details are provided in Note 38.
If the actual claims differ by 10% from management’s estimates, the Group’s provision for development cost
will increase by RM2,421,000 (2011 : RM933,000)
(i)
Recoverability of amount due from customers - MMC Gamuda JV
Included in amount due from customers is an amount due from Wayss & Freytag (Malaysia) Sdn. Bhd. (“W&F”)
to a jointly controlled entity, MMC-Gamuda JV (“Joint Venture”) amounting to RM41,525,000 which is subject to
arbitration. This represents the Group’s share of the total of RM83,050,000 for the cost incurred to complete
the works as a result of the termination of the contract as disclosed in Note 40.
Significant judgement is involved in the assessment of the expected outcome of this legal case. however, the
directors are confident, based on external legal counsel’s consultation, that this amount is recoverable as the
Joint Venture has a high probability of succeeding in its claims against the W&F. hence, no provision has been
made.
(j)
Interests in associated companies
At reporting date, included in the carrying amount of interests in associated companies, is the Group’s
share of receivables due from Syarikat Bekalan Air Selangor Sdn. Bhd. (“SYABAS”) to Syarikat Pengeluar
Air Sungai Selangor Sdn. Bhd. (“SPLASh”) which are outstanding amounting to RM569,278,000 (2011:
RM417,015,000).
The slower recovery of receivables by SPLASh from SYABAS is primarily due to partial payments received from
SYABAS. The directors of SPLASh are of the opinion that the amount will be fully settled by SYABAS within two
years.
(k)
Timing of settlement of trade receivables
Included in trade receivables is an amount due from an associated company, Syarikat Pengeluar Air Sungai
Selangor Sdn. Bhd. (“SPLASh”) to a subsidiary, Gamuda Water Sdn. Bhd. (“Gamuda Water”) amounting to
RM193,091,000 (2011: RM160,310,000) for the supply of treated water.
Pursuant to the agreement with SPLASh, Gamuda Water’s agreed trade credit term is 7 days from the date
SPLASh receives its payment from Syarikat Bekalan Air Selangor Sdn. Bhd. (“SYABAS”). The slower recovery
of debt by the Gamuda Water from SPLASh is primarily due to partial payments received by SPLASh from
SYABAS.
The directors are of the opinion that this amount will be fully settled within two years.
NoTES To ThE FINANCIAL STATEMENTS
31 July 2012