KUALA LUMPUR: Sapura Energy Bhd's external auditor has issued an unqualified opinion with material uncertainty on its ability to continue as a going concern for its audited financial statements for the financial year ended Jan 31, 2024.

In a filing with Bursa Malaysia Securities Sapura Energy said, Messrs. Ernst & Young PLT said the group had prepared its financial statement on a going concern basis when the validity of it is highly dependent on obtaining extensions for restraining orders; favourable outcomes of the legal claims for the terminated engineering & construction projects; and the successful and timely implementation of the proposed scheme of arrangements which requires Sapura Energy and its companies to secure approvals from at least 75 per cent of the scheme creditors in the court convened meetings. 

Sapura Energy group and company's current liabilities exceeded their current assets by RM14.5 billion and RM2.2 billion respectively, and the group is facing severe liquidity constraints.

"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," the auditor said.

"Our opinion is not qualified in respect of this matter," Ernst &Young said.

Key audit matters disclosed in external audit report in the company's annual report include impairment assessment of goodwill on consolidation and property, plant and equipment ; and revenue from construction contracts recognised on percentage of completion method. 

In response, Sapura Energy said its board expects that a mutually beneficial scheme of arrangement is likely achieve majority support of creditors.

This is because it will be able to offer higher recovery under the scheme of arrangement compared to the recovery under liquidation, and that the group has sufficient funds to sustain its operations until such a scheme is concluded. 

Sapura Energy acknowledged that while there exists material uncertainties which may cast significant doubt about the ability of the group and of the company to continue as a going concern, its board is of the opinion that the going concern basis used in the preparation of financial statements is appropriate, and no adjustments were necessary to the recoverability and classification of the carrying amount of assets or the amount and classification of liabilities.

https://www.nst.com.my/business/corporate/2024/06/1063066/sapura-energys-external-auditor-issues-unqualified-opinion-its