KUALA LUMPUR (July 26): KPMG PLT has resigned from its role as the external auditor of Sarawak Consolidated Industries Bhd (SCIB), the largest maker of precast concrete products in Sarawak, effective immediately.
In a bourse filing today, SCIB said it had received a notice in writing dated July 23 from KPMG on its resignation as the auditor of the company with immediate effect.
"To put the matter into context, the company has been inter alia seeking legal advice regarding recent events surrounding KPMG that have caused adverse speculation against the company. This is in light of a perception that the company shares similarities to that of another publicly listed company, which is currently in litigation with KPMG," explained SCIB.
"Accordingly, concerns were raised by the company as to whether KPMG is able to continue acting independently in their capacity as the auditor consonant with Rule 400.5 of the Malaysian Institute of Accountants By-Laws (on professional ethics and conduct)," it added.
KPMG is currently embroiled in a dispute with Serba Dinamik Holdings Bhd after the former highlighted audit issues involving transactions of more than RM3.5 billion to the company's independent directors in June.
Serba Dinamik and SCIB share a major shareholder in Datuk Mohd Abdul Karim Abdullah, who holds a substantial stake in both companies. He holds a 27.07% interest in Serba Dinamik and 36.8% of SCIB.
"Following this, KPMG has in the notice stated that the views and opinions of [SCIB] on KPMG’s independence, coupled with the potential of a claim by the company, have compromised KPMG’s ability to continue to independently discharge their professional duties as the auditor of the company. In the circumstances, KPMG is constrained to give notice of their resignation as the auditor of the company with immediate effect pursuant to Section 281 of the Companies Act 2016," said SCIB.
SCIB added that it is currently in the midst of identifying a new auditor to fill the vacancy and will make an immediate announcement upon finalisation of the appointment.
In a separate filing, SCIB said its subsidiary SCIB Industrialised Building System Sdn Bhd (SIBS), together with its joint-venture (JV) company Sasoakai Resources Sdn Bhd, had accepted an engineering, procurement, construction and commissioning (EPCC) contract for the maintenance of roadworks in Terengganu worth RM138.5 million.
SIBS and Sasoakai Resources on Feb 5 entered into a JV agreement in relation to the maintenance of roadwork contract in Terengganu on a concession basis.
The duration of the contract is for five years from Aug 1, 2021 to July 31, 2026.
SCIB said the contract will not have any effect on the group's issued share capital and the shareholdings of its substantial shareholders.
It added that any profits attributable to the group would be realised in stages over the tenure of the contract based on the progress of the project, adding that the contract is expected to contribute positively to the group’s future earnings.
“The contract secured is not expected to have any material effect on net assets of the group for the financial year ending June 30, 2022 (FY22)."
At the noon market close, SCIB shares were down 1.5 sen or 2.07% at 71 sen, bringing it a market capitalisation of RM345.95 million. The stock was down 48.18% year-to-date (YTD).