Gadang says RM9.77m claimed by subcontractor is idling costs that are not payable

• Gadang also referred to the delay in making an immediate announcement about the suit, explaining that ongoing negotiations between the parties initially aimed to resolve the matter amicably.

KUALA LUMPUR (Sept 10): Gadang Holdings Bhd (KL:GADANG) said a sum of RM9.77 million allegedly owed by its units for work done related to the Johor Bahru–Singapore Rapid Transit System (RTS) Link project are idling costs that are not payable.

On Sept 6, the builder-cum-property developer had announced that its wholly owned subsidiary Gadang Engineering (M) Sdn Bhd (GESB), together with GESB's sub-subsidiary Usaha Pesona Sdn Bhd, have been sued by its subcontractor JF Foundation (M) Sdn Bhd over bored piling works carried out in relation to the RTS Link project.

In a bourse filing on Monday, Gadang said JF Foundation's suit centres on the alleged failure of Usaha Pesona "to certify and pay for certain items, primarily the idling costs".

“However, [Usaha Pesona] contests that the said items are not payable. Whereas [GESB] strongly disputes the undertaking that was allegedly given under its name to [JF Foundation], concerning any failure to certify and pay for works carried out under the said project,” it added.

Gadang said Usaha Pesona and GESB will contest the dispute raised in the suit. The case has been fixed for case management on Sept 26.

In its filing, Gadang also referred to the delay in making an immediate announcement about the suit, explaining that ongoing negotiations between the parties initially aimed to resolve the matter amicably.

The board believed that it was premature to announce the litigation as discussions were still ongoing at the time, the group said.

For the year ended May 31, 2024 (FY2024), Gadang returned to the black with a net profit of RM4.71 million, compared with a net loss of RM29.3 million in FY2023, driven by higher contributions from the property division, and reduced impairments and accounting provisions.

Revenue increased 18% to RM583.6 million from RM496.1 million, primarily due to higher progress in construction projects and better sales in property development projects.

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