KUALA LUMPUR (April 18): Spring Gallery Bhd has bagged a building job from Prinsip Nusantara Sdn Bhd (PNSB) and Spring Gallery's wholly-owned unit Profit Sunland Sdn Bhd (PSSB) to develop a RM260 million mixed development project in Johor.

In a filing with Bursa Malaysia today, Spring Gallery said it entered into a managing contractor agreement (MCA) with PNSB, in which PSSB has been appointed as the managing contractor for the development on a 2.44ha land in Johor Bahru, Johor.

The development project, which is located at Perling, Johor Bahru, has a gross development value of RM260 million and gross development cost of RM176.5 million, inclusive of the contract value awarded to PSSB and the land cost.

The land, which currently houses the Johor State Tennis Academy, is to be built into a commercial development in accordance with Johor's development policies.

"The development on the land includes the relocation of the academy on a 3.26ha land at Taman Nusa Duta, Johor Bahru and to construct a new state tennis academy consisting of indoor and outdoor tennis courts together with a shooting range and multipurpose courts at Taman Nusa Duta or such other sporting amenities as required by the state government.

"The development also comprises the development of the land into a mixed development project consisting of a three-storey shop office consisting of 18 units and two blocks of 25-storey medium end apartments with a total of 472 units subdivided into three types.

"It will consist of 196 units, 200 units, and 76 units respectively," Spring Gallery said, adding that the MCA was in line with its diversification into construction as another revenue source to reduce reliance on its existing ceramic business.

In a separate statement, Spring Gallery said it was grateful to be awarded this project as it is the company's first project in Johor following its achievements in Terengganu.

"This project will also set to lead the company in spreading our wings in the southern state and many other states to come.

"With the recent developments in the company, we are confident that it will contribute positively to the profit earnings of the group in the upcoming and subsequent financial years (financial years ending June 30, 2017, 2018 and 2019)," said Spring Gallery executive director Kuan Poh Huat.

The development order is expected to be obtained in July 2016 and the targeted completion date of the project is 30 months from the execution date of the MCA.

Spring Gallery intends to finance the job via internally generated funds, bank borrowings and/or funds raised from the rights issue of irredeemable convertible preference shares with warrants.

It added that the exact mix of funds would be determined by the management at a later date.

Spring Gallery rose 1.5 sen or 2.21% to close at 69.5 sen for a market capitalisation of RM72.6 million.