KUALA LUMPUR (December 31): Sarawak Consolidated Industries Bhd (SCIB) has stated that its external auditor has expressed a qualified opinion on the group’s audited financial statements for the year ended June 30, 2021 (FY21).
He also said his annual report for FY21 remains on hold as the group needs more time to update the report’s statements.
The annual report is now expected to be released on Jan.31, 2022, the Sarawak-based civil engineering firm said in a stock exchange filing Friday, Dec.31, 2021.
Trading in SCIB shares has been suspended since November 9, after Bursa Malaysia Securities rejected the group’s appeal for an extension to December 31 for the group to publish its annual report for fiscal year 21, which had to be submitted by October 31st.
The group said its external auditor, Nexia SSY PLT, expressed a qualified opinion on the audited financial statements submitted Thursday.
The qualified opinion was expressed in relation to the settlement agreements signed by the group on November 10 with several parties regarding six engineering, procurement, construction and commissioning (EPCC) projects carried out in Qatar and in Oman.
Nexia SSY said that after the signing of the settlement agreements, the directors of SCIB decided to reclassify the transactions relating to eight overseas-based projects (including the six projects carried out in Qatar and Oman), disclosing the net amount owed to group and company of US $ 15.67 million (RM 64.22 million) and US $ 4.25 million (RM 17.85 million) respectively as project management fee .
As a result, the group and the company have made adjustments to the financial statements, the auditor said.
“We have not been able to obtain sufficient and appropriate audit evidence on the EPCC contracts and all related adjustments,” said Nexia SSY.
“Accordingly, the impact of net income recognized in the statement of operations and other comprehensive income as disclosed, amounting to RM 3,549,473, has not been determined.
“Therefore, we were unable to determine whether said adjustments were deemed necessary,” said the auditor.
Difference between audited and unaudited profits
In a separate statement, SCIB said there was a difference of more than 10% between profit after tax and the non-controlling interest of the group reported in the sixth unaudited quarterly results of fiscal year 21 and the audited financial statements.
The variance was caused, among other things, by the recognition of a gain of RM 5.5 million in relation to the settlement agreement with Gaya Belian Sdn Bhd et al., Which was reclassified from the movement of reserves to others. income.
This was also due to the recognition of a total net provision for depreciation in the amount of Ringgit 52.5 million which included an amount due for overseas projects of Ringgit 50.9 million; additional impairment losses of RM 2.6 million based on sales payment profiles over an 18 month period; and a reversal of depreciation of RM 1 million due to the recognition of the advance payment made for the project under award.
Another contributing factor, SCIB said, was the RM 1.7 million advisory fee expensed due to unsuccessful projects.
SCIB is the second group under the belt of Serba Dinamik CEO Datuk Mohd Abdul Karim Abdullah to have been suspended from operations by the stock exchange for non-compliance.
The group changed its external auditor after KPMG resigned on July 26, following a lawsuit by its sister company Serba Dinamik against KPMG over audit matters.
SCIB said the impact of movement restrictions in Malaysia and abroad due to Covid-19 had also hampered its efforts to finalize and publish the annual report.
SCIB Managing Director and CEO Rosland Othman said the group remains committed to creating value and optimizing performance over the coming year.
“We will continue to expand into Peninsular Malaysia and East Malaysia. We have restructured our geographic positioning by taking a closer look at potential emerging markets, particularly in home and neighboring countries.
As of December 31, 2021, SCIB reported that its order book remained stable at RM 1.2 billion, resulting in good profit visibility through 2026.
“By focusing on harnessing our strength as the largest manufacturer of precast concrete and industrialized building systems (IBS) in East Malaysia, we can develop opportunities across South East Asia.
“In addition, SCIB also plans to expand our manufacturing operations in Peninsular Malaysia, in addition to adopting 3D printing technology in our construction projects, as we believe this will give us the competitive edge necessary to be competitive. in the construction industry, ”Rosland added.
Shares of SCIB were last traded at 20.5 sen, giving it a market capitalization of 119.3 million ringgit.