KUALA LUMPUR (Oct 30): Ireka Corp Bhd (KL:IREKA), a Practice Note 17 (PN17) construction company, said its external auditor has expressed a disclaimer of opinion on the company’s audited financial statements for the financial year ended June 30, 2024 (FY2024).

Baker Tilly Monteiro Heng PLT in its independent auditors’ report said it had not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the statements.

The external auditor noted that as at June 30, 2024, Ireka Corp saw current liabilities exceeding its current assets by RM158.18 million. The group also recorded a capital deficiency of RM112.16 million.

Ireka had in February 2022 triggered the PN17 criteria, as the shareholders' equity of the group was 50% or less than its share capital. The group managed to obtain several extensions from Bursa Malaysia to submit its regularisation plan, the latest deadline being Feb 28, 2025.

On top of that, the auditor highlighted that Ireka has been served with winding up petitions by Hong Leong Bank Bhd and Ambank (M) Bhd.

"These events or conditions indicate the existence of a material uncertainty which may cast significant doubt about the group’s and the company’s (Ireka Engineering & Construction Sdn Bhd) ability to continue as going concerns," Baker Tilly added.

This is at least the third time that Ireka's external auditor had flagged a material uncertainty relating to the group's ability to continue as a going concern over the past four years.

In response, Ireka said it expects to address all issues related to Baker Tilly's disclaimer of opinion by FY2025.

The group has secured a RM1.07 billion project, which is set to last four years, starting from Sept 30, 2024.

The sub-contract, awarded by Sabah-based Gammerlite Sdn Bhd, involves the upgrade of a section of the Pan Borneo Highway in Sabah.

"This pivotal contract marks a significant milestone for the company, contributing substantially to our construction order book value and will strengthen the group’s cash flow and profitability over the next four years," it said.

Besides that, Ireka said it will address the high capital deficiency of RM112.16 million in the proposed PN17 regularisation plan. The winding up petitions by AmBank and Hong Leong will also be addressed, with its aim to achieve an amicable solution and agree on a revised settlement plan.

Additionally, Ireka said the group intends to launch three new development projects with an estimated total gross development value (GDV) of RM768.5 million in 2025, which is expected to contribute positively to the company's profitability.

"We will also continue to actively seek new opportunities to enhance our construction and development order book value," it added.