Kerjaya Prospek Group Bhd’s multimillion-ringgit contract to construct a residential building for BCM Holdings Sdn Bhd, a subsidiary of EcoFirst Consolidated Bhd, has been canceled, resulting in significant implications for both parties. In a recent announcement to Bursa Malaysia, Kerjaya Prospek revealed that it had not yet initiated any work on the project.
The termination of the contract has prompted Kerjaya Prospek to take legal action to recover pre-agreed damages, as stipulated in the Letter of Award (LOA). According to the company’s solicitors, BCM is obligated to pay these damages to Kerjaya Prospek (M) Sdn Bhd, a wholly-owned subsidiary of Kerjaya Prospek Group.
Despite the setback, Kerjaya Prospek Group stressed that it would continue to monitor the situation and provide updates as necessary. The cancellation of this contract has caused a reduction in the company’s outstanding order book, from RM4.7 billion to approximately RM4.3 billion. Year-to-date job replenishment has also decreased from RM1.6 billion to about RM1.2 billion. However, the latter figure is still within management’s targeted range for the year, which is RM1.2 billion.
BCM Holdings had been granted six months to hand over the project to Kerjaya Prospek, but the handover had not taken place at the time of contract termination. The project was initially intended to involve the construction of a main residential building.
Kerjaya Prospek’s Chairman, Datuk Tee Eng Ho, stated that the company had not mobilized any resources for this contract, as the handover had not occurred. When asked whether there was a dispute leading to BCM’s decision to terminate the contract, Tee mentioned that he could not comment on the matter, as it was not directly related to Kerjaya Prospek.
Kerjaya Prospek is now focusing on taking legal action to enforce its rights and potentially recover a lump sum amount as compensation, although the terms of the agreement cannot be disclosed.
Looking ahead to 2024, Kerjaya Prospek aims to secure new jobs totaling approximately RM1.5 billion, with a particular focus on data center-related contracts. The company intends to collaborate with Samsung to secure such projects. Currently, most of Kerjaya Prospek’s projects are residential, with approximately 40% coming from related party transactions (RPT) with Kerjaya Prospek Property Bhd (KPP) and Eastern & Oriental Bhd (E&O). Tee highlighted that RPT projects are easier to manage in terms of collection, but the company remains committed to competing externally in the industry.
This development comes as the company navigates the changing landscape of its project portfolio and strategic partnerships.