KUALA LUMPUR: Electrical and mechanical firm YFG Bhd, which ventured into property development last year, said it sees minimal impact on its revenue from the termination of the RM255.9 million contract by Palikota Sdn Bhd to build Jesselton Residences Waterfront in Kota Kinabalu, Sabah.

However, the impact on the group’s net profit remains uncertain, said its deputy head of finance and accounts, Wilson Ang.

“It will affect revenue, but the associated cost to that [contract] will cease [to be accounted for], so the impact is actually minimal,” he told reporters after the group’s annual general meeting yesterday.

Ang said it is still early to ascertain the impact on its profit as there are a number of claims to be made against Palikota.

“We have to wait until the hearing,” he added. YFG is set for an inter-parte injunction hearing on Dec 9 after it was granted an injunction by the Kuala Lumpur High Court on Nov 26. The move prevents Palikota from calling on the performance bond of RM12.8 million from YFG’s banker, United Overseas Bank (M) Bhd, until YFG’s claim of breach of contract is heard and decided.

YFG had previously announced it will sue Palikota for ending the contract, which was awarded to its subsidiary YFG Trolka Sdn Bhd on Aug 1 last year.

YFG managing director Lim Chong Ling (pic) said the firm will provide further updates to Bursa Malaysia on the suit.

Prior to receiving the notice of contract termination from Palikota and the call on performance bonds, he said YFG had sought for mutual termination following the discovery of some technical issues. Lim said YFG was not given time extension for the construction of the project to resolve the technical issues, which Palikota viewed as a ‘delay’.

“We are arguing on the submission for the extension of time, which was not granted to us. So that is the reason why we are challenging it. I cannot disclose details to you [now] because it is part of the court hearing,” he added.

Meanwhile, YFG expects to win 30% of construction tenders worth about RM500 million in the next 12 months.

This article first appeared in The Edge Financial Daily, on December 4, 2014.