KUALA LUMPUR (Sept 6): Builder-cum-property developer Gadang Holdings Bhd (KL:GADANG) said its subsidiaries have been hit with a civil suit by their subcontractor, claiming for an amount of RM9.77 million in alleged outstanding payments for works done related to the Johor Bahru–Singapore Rapid Transit System (RTS) Link project.
Gadang's wholly owned subsidiary Gadang Engineering (M) Sdn Bhd (GESB), together with Usaha Pesona Sdn Bhd, a wholly owned sub-subsidiary of GESB, were served with the writ of summon and statement of claim by its subcontractor JF Foundation (M) Sdn Bhd over bored piling works carried out in relation to the RTS Link project.
"The defendants [GESB and Usaha Pesona] are disputing the claim and are seeking the necessary legal advice to contest the claim," Gadang said in a bourse filing on Friday.
The case has been fixed for a case management on Sept 26, 2024 via eReview.
According to the statement of claim retrieved by The Edge, JF Foundation said it was appointed as subcontractor by Usaha Pesona in September 2022 for the supply and installation of bored piling and contiguous bored piling works for the RTS project worth RM50.41 million.
JF Foundation claimed that its performance towards the subcontract agreement has been "assessed, certified, and that they have completed their contractual obligations".
However, the subcontractor claimed that Usaha Pesona had only made a total payment of RM17.88 million, after materials back-charge, although the supposedly cumulative work done amount claimed is RM55.04 million. As such, the outstanding balance claimed by JF Foundation stood at RM9.77 million.
"The first defendant [Usaha Pesona] has failed, refused, and/or neglected to certify the rest of the progress claims forms so as to make the balance payment amount, which is validly owed and payable to the plaintiff as of today," the statement of claim read.
"Moreover, the first defendant had on several occasions made unequivocal admission on the debt and further undertook to the plaintiff that they would make the balance overdue payment to the plaintiff. Nevertheless, the first defendant has failed, refused and/or neglected to make their full payment as promised to the plaintiff despite that the plaintiff reminded and requested several times from the first defendant," it added.
For its financial year ended May 31, 2024 (FY2024), Gadang returned to the black with a net profit of RM4.71 million, compared to a net loss of RM29.3 million in FY2023, driven by higher contributions from the property division, and reduced impairments and accounting provisions compared to the previous year.
Full-year revenue increased to RM583.6 million, up 18% year-on-year from RM496.1 million, primarily due to higher progress in construction projects and better sales in property development projects.
Gadang’s shares closed half a sen or 1.45% lower at 34 sen on Friday, valuing the group at RM244 million.