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2+$11(6%85* 6hares of construction and engineer ing group, $veng slumped almost a fifth on Thursday.
This was after it warned that its $ustralasian specialist contract 0c &onnel 'owell is expected to post an operating loss in its year to end -une, with the company hit by extra costs related to a delayed gas project in the 3hilippines.
The liTuefied natural gas /1G project has been the subject of sig nificant delay and disruption caused by the &29,' pandemic, in cluding related supply chain disrup tions and the inability to mobilise people to the reTuisite locations to efficiently execute work, the com pany said, with the client electing to call on project guarantees of almost 5 million.
,n late afternoon trade, $veng’s shares were down per cent at 5 . , having now lost almost per cent of their value over the past year.
,nternational and domestic $us tralian border closures made travel impossible over an extended period of the project’s life, to the %atangas site in the 3hilippines, and other lo cations where eTuipment was being manufactured.
/ater supply chain disruptions were further exacerbated by the 5ussia 8kraine war.
³,t is now evident that the %/1G
project has suffered further delay and is expected to be completed later this calendar year,´ it said.
1egotiations are continuing with the client to take into account the impact of &29,' , the 5us sia 8kraine war and the resolution of certain contract claims, including claims for extension of time.%ut despite this µand our continued efforts to ensure that the project is delivered safely to the appropriate level of Tuality and in the shortest timeframe’, the client has elected to call on project guarantees.
Expected
0c&onnell 'owell settled an amount of 5 million to the group’s $ustralian bankers with a further 5 million expected to be settled by -une .
³These same bankers are support ive and we are currently agreeing repayment terms for the remaining balance,´ it said. The company had cash on hand of about 5 billion, with the company saying that, along with extended payment terms, it would be able to fully support the company’s working capital needs.
0c&onnell 'owell also believes, however, that it is prudent to provide for the anticipated additional costs associated with the extended time to complete the project, together with an allowance for possible liTuidated damages associated with delayed completion, given that the client has not yet granted an extension of time.