Ireka Corp’s auditor flags group's ability to operate as going concern

• Baker Tilly Monteiro Heng PLT noted that as at June 30, Ireka’s current liabilities exceeded its current assets by RM48.72 million and the group recorded a capital deficiency of RM44.91 million, according to Ireka's bourse filing on Tuesday.

KUALA LUMPUR (Oct 31): Ireka Corp Bhd said its external auditor could not provide a basis for an audit opinion on the group’s audited financial statements for the year ended June 30, 2023 (FY2023) as it is unable to obtain sufficient appropriate audit evidence.

Baker Tilly Monteiro Heng PLT noted that as at June 30, Ireka’s current liabilities exceeded its current assets by RM48.72 million and the group recorded a capital deficiency of RM44.91 million, according to Ireka's bourse filing on Tuesday.

The auditor's report also noted that Ireka had in February 2022 triggered the Practice Note 17 (PN17) criteria under the Main Market Listing Requirements, as the shareholders' equity of the group was 50% or less than its share capital.

Baker Tilly also highlighted that Hong Leong Bank Bhd and Ambank (M) Bhd have filed a lawsuit against Ireka and its unit Ireka Engineering & Construction Sdn Bhd.

The two banks were claiming RM4.24 million from the group, comprising a claim on overdraft facilities amounting to RM3.1 million and a claim on revolving credit amounting to RM1.14 million.

"These events or conditions indicate the existence of a material uncertainty which may cast significant doubt about the group’s and the company’s ability to continue as going concerns," said the auditor.

Ireka said it expects to address all issues related to the disclaimer of opinion by FY2024.

The group also said that it has applied to Bursa Securities for a further extension of six months until Feb 29, 2024 to submit its regularisation plan.

The application is still pending the consideration and decision from Bursa Securities, it added.

In January this year, the group reported that the RM163.9 million contract awarded to Ireka Engineering & Construction in June 2020 had been terminated.

Shares in Ireka Corp closed unchanged at 51 sen, valuing the group at RM116.7 million. Year to date, the stock has fallen by 12.07%.

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