KUALA LUMPUR (Nov 23): Kerjaya Prospek Bhd is demanding RM20 million in termination damages from BCM Holdings Sdn Bhd, a subsidiary of Ecofirst Consolidated Bhd, after BCM suddenly decided not to proceed with the RM404.35 million residential project it awarded to the group in June this year.

Kerjaya Prospek said its solicitor has issued a letter to BCM, instructing them to make the specified payment within seven days from Nov 21.

If BCM fails to do so, legal action will be initiated against the group to recover the owed amount, said Kerjaya Prospek in an announcement to Bursa Malaysia.

“KPM enforces its right to recover the pre-agreed damages pursuant to clause 14 of the LA, which stated that in the event of pre-determination of the letter of award or contract or any contract and or agreement by BCM, BCM shall irrevocably and immediately compensate and pay KPM termination damages for a sum of RM20 million,” it said.

Aside from the potential impact on its order book and the one-time gain of RM20 million resulting from the mentioned termination damages, there are no other significant financial impacts on the group for the financial year ending Dec 31, 2023, said Kerjaya Prospek.

Kerjaya Prospek through its wholly-owned unit Kerjaya Prospek (M) Sdn Bhd secured the contract from BCM on June 8 for the proposed development of a service apartment at Seksyen 92, Kuala Lumpur. The project was scheduled to start on Aug 1.

But the group announced on Tuesday that BCM had decided not to proceed with the contract.

The contract loss resulted in a reduction of Kerjaya Prospek's outstanding order book to RM4.3 billion from RM4.7 billion.

Kerjaya Prospek’s net profit grew 23.5% to RM35.57 million for the third quarter ended Sept 30, 2023 (3QFY2023) from RM28.81 million, mainly due to improved progress of construction work activities. Revenue rose 39.6% to RM362.2 million for 3QFY2023 from RM259.4 million a year ago, with the construction segment remaining the main contributor.

For the nine months ended Sept 30, the group’s net profit rose 12% to RM96.55 million from RM86.2 million as revenue increased by 15.8% to RM968.75 million from RM836.91 million.

Shares of Kerjaya Prospek closed four sen or 2.76% lower at RM1.41 on Thursday. At this price, the group is valued at RM1.79 billion.