KUALA LUMPUR (May 31): Sapura Energy Bhd said its external auditor has expressed its unqualified opinion with material uncertainty related to the group's ability to continue as a going concern.

Messrs Ernst & Young PLT (E&Y) expressed the opinion in the audited financial statements of the group for the financial year ended Jan 31 2022 (FY22), the group said in a bourse filing.

E&Y highlighted that the integrated upstream service provider’s reported a net loss of RM9.06 billion for FY22, and that its current liabilities exceeded its current assets by RM12.45 billion.

The auditor noted that Sapura Energy faces severe liquidity constraints, and together with its 22 units have obtained restraining orders under Section 368 of the Companies Act 2016, as well as separate contractual standstill arrangements with lenders — which will expire on June 10 and June 6 respectively.

It noted that Sapura Energy is in the process of undertaking a scheme of arrangements (SoA) and compromise under Section 366 of the Act.

“These events or conditions… indicate the existence of material uncertainties that may cast significant doubt on the group’s and the company’s ability to continue as a going concern.

“Nevertheless, the financial statements of the group and of the company have been prepared on a going concern basis, the validity of which is highly dependent on obtaining extensions of the restraining order and standstill arrangements; and the successful and timely implementation of the proposed SoA which requires the applicants to secure approvals from at least 75% of the scheme creditors in the court convened meetings,” it added.

E&Y noted that should the going concern basis for the preparation of the financial statement be no longer appropriate, adjustments would have to be made in the financial statements relating to the amounts and classification of the assets and liabilities.

“No such adjustments have been made to these financial statements,” it added.

Sapura Energy shares ended unchanged at 8.5 sen on Tuesday (May 31), giving the group a market capitalisation of RM1.36 billion.