The contract was formally terminated on Feb. 9.
Ithra is cooperating with the Employer (the Omani Ministry of Transport and Communication) and the Engineer (Hill International) to effect a formal handover of the Contract to what has been termed a “Completion Contractor”, after which a settlement account will be produced by the Employer.
The substantive reasons given in the notice of termination are related to Ithra not meeting contractual milestones and Ithra’s assessment is that the termination is unjustified, wrongful and unlawful.
Ultra is in discussions with its legal and claims advisers regarding the termination of the Contract and recovery of Ithra’s costs and claims.
An exceptional, non-underlying, provision will be recognised in the year to December 2014 in respect of the Contract. The provision, which totals £47m, includes the write off of contract balances, together with provision for all known liabilities.
Cumulative revenue recognised from the Contract is £114m, with 2014 revenue limited to £12m recognised in the six months to June 2014.
Additionally, Ultra has also reviewed its activities in the Middle East and while it continues to do business there and see good opportunities in the region, there may be some short term impact.
Consequently, it has been decided to take a non-cash impairment of the outstanding goodwill on the Al Shaheen joint venture in the UAE totalling £7.4m. Ultra is a minority shareholder in Al Shaheen, the JV partner being Emirates Advanced Investments (EAI). Al Shaheen’s principle area of business is in the training sector.