Guocoland faces RM5.5 mil impact after arbitration loss to contractor

• The arbitration was brought against the subsidiary, GLM Emerald Hills (Cheras) Sdn Bhd (GLM EHills), by Barisan Performa Sdn Bhd, a company contracted to undertake site clearance, earthworks, and other preparatory work on a parcel of land before the contract was terminated.

KUALA LUMPUR (June 18): Guocoland (Malaysia) Bhd (KL:GUOCO) said the group faces a net financial impact of RM5.54 million following an arbitration ruling against its wholly owned subsidiary over a disputed project termination.

The arbitration was brought against the subsidiary, GLM Emerald Hills (Cheras) Sdn Bhd (GLM EHills), by Barisan Performa Sdn Bhd, a company contracted to undertake site clearance, earthworks, and other preparatory work on a parcel of land before the contract was terminated.

While GLM EHills asserted that the termination was mutually agreed upon, Barisan Performa claimed that the contract had been unlawfully repudiated.

The arbitrator ruled in favour of Barisan Performa, ordering GLM EHills to pay RM6.36 million, comprising RM1.24 million for work completed and materials left on site, and RM5.12 million in loss of profit due to the alleged repudiation, said Guocoland in a bourse filing on Wednesday.

Additionally, GLM EHills must pay 5% annual interest on the awarded sum from the date the amounts were due until full payment, along with RM414,488 in incidental costs.

Guocoland said the subsidiary has already recognised a provision of RM1.24 million, and so the estimated net financial impact is RM5.54 million.

GLM EHills said it is consulting its solicitors on the next course of action, including a possible application to set aside the award.

For the nine months ended March 31, 2025 (9MFY2025), Guocoland reported a net profit of RM11.99 million, down 7.9% from RM13.02 million a year earlier. Revenue declined 13.3% to RM284.29 million from RM327.73 million.

Net profit for FY2024 was RM54.41 million against RM34.6 million in the previous year, while revenue rose to RM433.74 million from RM430 million.

Guocoland’s shares closed unchanged at 62.5 sen, giving the group a market capitalisation of RM437.79 million. Year-to-date, the stock has fallen 6%.

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