Diploma denies insolvency claims

Diploma Group chief executive Nick Di Latte has strongly denied claims by subcontractors that the ASX-listed company was behind on paying its bills, saying recent activity by the company had placed it in a strong position to pay its debts.

Emails obtained this week by Business News showed a long list of contractors had been contacted by LVA Legal managing director Louis van Aardt, who said he had been acting on behalf of a range of companies claiming they hadn’t been paid by Diploma over the past 12 months.

Other emails obtained by Business News detailed claims from contractors that worked on The Precinct on Ogilvie project in Applecross, which Diploma Construction completed on behalf of developer Norup + Wilson earlier this year, regarding unpaid bills dating back to September last year.

Another contractor claimed to be owed money from the Queens Riverside project in East Perth, despite the works being completed more than three years ago.

But Mr Di Latte said the actions of Mr van Aardt and the contractors’ claims, which had been reported today in other publications, were “mischievous, misleading and inaccurate”.

“When jobs don’t go that well, there is pain for all, and unfortunately some people think that by going to the press, it creates leverage for them to negotiate with me and that’s not the case,” Mr Di Latte told Business News.

“We’re working through these commercial disputes and I’m pretty confident that we’ll come through it.”

Mr Di Latte said a recent update of the company’s operations showed it had the financial capacity to satisfy its contractual obligations to its subcontractors.

The ASX update, released yesterday, showed Diploma Group was in line for a significant cash boost within the next three months, stemming from the completion of settlement of its Capri apartments in Rockingham and the $42 million sale of its Quest Adelaide Terrace development.

Diploma also said it was restructuring its construction arm to become DGX Construction, which would be based in a separate Leederville office.

The establishment of DGX Construction as a standalone entity was another of Mr van Aardt’s concerns, with the lawyer saying in an email he would contact the Australian Securities and Investments Commission this week about the matter.

However, Mr Di Latte said the restructure of what was previously known as Diploma Contracting, an entity initially set up in 2010 to service the resources sector, was to create a clear distinction between the group’s development and building divisions.

“That’s the logic of why we changed the name,” he said.

“But at the same time we still have separation, it operates in a different premises to the property arm of the group so it’s not impacting on our ability to win work like it has been.

“Clients are looking at us saying ‘you’re actually a developer, you’re competing against me, why would I give you an apartment project to build when I can give it to someone who’s not’.”