Pestech International Berhad has received a qualified audit opinion for its financial year ended March 31, 2026, after its external auditors cited uncertainty over the recoverability of RM50.31 million in contract assets tied to the group’s construction project in Iraq.
The engineering and infrastructure solutions provider said its external auditor, Nexia SSY PLT, issued the qualified opinion due to the inability to determine whether an impairment should be recognised on the contract assets amid ongoing geopolitical tensions in the Middle East.
The auditors said they had obtained sufficient evidence regarding the existence, measurement and stage of completion of the contract assets. However, the continuing regional conflict and the closure of the Strait of Hormuz have created significant uncertainty over whether the outstanding amounts can be fully recovered.
Management has not recognised any impairment allowance on the RM50.31 million contract assets.
As a result, the auditors said they were unable to obtain sufficient appropriate audit evidence to assess the recoverability of the assets or determine whether adjustments were required to the group’s financial statements, including its reported profit and shareholders’ equity.
Despite the qualification, Nexia SSY stated that, except for the uncertainty surrounding the Iraq project, the group’s financial statements present a true and fair view of Pestech’s financial position, financial performance and cash flows in accordance with Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS) and the Companies Act 2016.
Pestech said it has implemented several measures to address the auditors’ concerns.
The share was suspended this morning.
