KUALA LUMPUR: ATA IMS Bhd says it may have to downsize its activities to reduce excess capacity following the termination notices for various contracts by British home appliance maker Dyson last week.
The electronics manufacturing service (EMS) provider said this included early termination of certain tenancy agreements for leasing of its 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 of assets as a result of the early termination of tenancy agreements. We will provide an estimate as soon as possible," the company said in a filing to Bursa Malaysia today.
ATA IMS said there was also the goodwill of RM76.4 million, materialising from its acquisition of the entire stake in IMS Group back in 2018.
It said while the goodwill was not amortised, it was 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 company.
"The company is in the process of discussions with customers and working out the new projections to assess the impact on goodwill on consolidation, and will provide an estimate of the impairment, if any, as soon as possible," it added.
Last Friday, ATA IMS received termination notices for various contracts from Dyson Manufacturing Sdn Bhd and Dyson Operations Pte Ltd.
ATA IMS said its units JABCO Filter System Sdn Bhd and Winsheng Plastic Industry Sdn Bhd (WSP) had received the notices of termination in relation to referred supplier contract for components/materials supply, a framework agreement for goods/services supply, and equipment loan contracts.
The effective date of the terminations is March 31, 2023, "or such dates as agreed by the parties."
ATA IMS said product sales represented 100 per cent of JABCO's revenue and 82 per cent of WSP's revenue.
Collectively, Dyson product sales made up about 42 per cent of the group's revenue for the six months ended Sept 30, 2022.