Wednesday 06 Dec 2023
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KUALA LUMPUR (Nov 8): Sarawak Consolidated Industries Bhd (SCIB) said its external auditor has expressed a qualified opinion on the group’s financial statement for the year ended June 30, 2022 (FY22), pertaining to a settlement agreement relating to six construction projects carried out in Qatar and Oman.

The qualified opinion  is linked to the settlement agreement signed between SCIB and the project’s clients on Nov 10, 2021, the civil engineering group said in a filing, citing the report by the auditor, Nexia SSY PLT.

According to the report, due to the lack of sufficient audit evidence of the transactions, Nexia was unable to determine the “accuracy, existence and completeness” of the group and company’s receivables due from the foreign project owners’ as at July 1, 2021, amounting to RM60.67 million and RM11.86 million respectively.

Additionally, Nexia said it was also unable to determine the “accuracy and correctness” of accumulated losses as at July 1, 2021, amounting to RM53.92 million and RM38.11 million for the group and company respectively.

“We were unable to satisfy ourselves that the subsequent transactions if any affecting these balances, that they do not contain material misstatements that materially affect the current period’s financial statements.

“We are therefore unable to satisfy ourselves in respect of the following assertions and obtain sufficient appropriate audit evidence to determine whether the following do not contain material misstatements,” the auditor said.

Nexia said SCIB’s settlement agreements with the construction project owners had developed with a termination clause being triggered due to the latter’s non-payment of an instalment due on June 30, 2022.

Subsequently, novation agreements between parties were inked in September, whereby SCIB’s liabilities due to the projects’ subcontractors were to be carried by the project owners.

“The group’s legal representative has agreed to be appointed as stakeholder for the purpose of payment, execution and/or administration of the novation and settlement agreements,” Nexia said.

In response to the qualified opinion, SCIB said the group does not foresee the audit matters being carried forward to FY23.

“There is no financial impact in particular to the trade receivables balances in respect to the foreign project owners, which have been fully impaired in the financial statements for FY22,” the group said.

Shares in SCIB closed unchanged at 15 sen on Tuesday (Nov 8), giving the group a market capitalisation of RM84.58 million.

Edited ByS Kanagaraju
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