After Bursa's reprimand, SCIB says group now has stronger internal controls and audit processes

• SCIB acknowledged that the late submission of its Annual Report 2021 was primarily due to complexities in auditing overseas construction contracts.

KUALA LUMPUR (Dec 5): Sarawak Consolidated Industries Bhd (SCIB), which was reprimanded by Bursa Securities last week for the late submission of its Annual Report 2021 — with two of its former board members, including Datuk Mohd Abdul Karim Abdullah also fined by the regulator — said it has since taken significant measures to ensure such delays do not recur.

These measures include the timely publication of its Annual Report 2023 on Oct 31, 2023, to demonstrate its renewed commitment to timely and transparent financial disclosures, the industrialised building systems specialist said in a statement on Monday.

SCIB acknowledged that the late submission of its Annual Report 2021 was primarily due to complexities in auditing overseas construction contracts, which was noted by Bursa in its public reprimand of the company. 

SCIB also said the issue had highlighted areas for improvement in the group's financial reporting processes. The issue, it added, was further complicated by the untimely resignation of its external auditors KPMG PLT. 

The resignation, according to Bursa, was due to SCIB requesting for the auditors' voluntary resignation, stemming from concerns related to the perceived similarities between SCIB and its sister company Serba Dinamik Holdings Bhd, where KPMG had raised an audit issue involving transactions of more than RM3.5 billion.

Bursa's reprimand of the group last Friday said it had failed to submit its Annual Report 2021, including the audited financial statements and its auditors’ and directors’ report for the 18 months ended June 30, 2021, on or before Oct 31, 2021. SCIB only issued its Annual Report 2021 on Jan 17, 2022.

Bursa Securities also fined two top SCIB officials at the time of the offence — Mohd Abdul Karim and Rosland Othman — RM27,000 each. Mohd Abdul Karim was the group's non-independent and non-executive chairman at the material time, while Rosland was its managing director cum chief executive officer. Mohd Abdul Karim stepped down from his chairman post in October 2022 and retired from the group's board in December that year, while Rosland, 50, left the group in June this year.

In its Monday statement, SCIB said their departure had "paved the way for the appointment of new board members who bring with them a reinforced focus on governance, compliance and operational integrity".

SCIB group managing director Ku Chong Hong also said that the recent challenges the group faced had been a learning opportunity for them, leading to stronger internal controls and audit processes. 

“Our new board members have been instrumental in this turnaround, ensuring that SCIB not only adheres to, but exceeds the standards expected by our regulators and stakeholders,” said Ku.

For the first quarter ended Sept 30, 2023 (1QFY2024), SCIB posted a net profit of RM926 million against a net loss of RM871 million in the same period a year earlier (1QFY2023). Quarterly revenue rose 29.91% to RM39.40 million, from RM30.33 million last year. The improved earnings was driven by its manufacturing segment, which saw a higher profit margin and higher sales volume of its foundation piles for the roads upgrading, extension of factories and school projects in Sarawak.

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