KUALA LUMPUR (Nov 9): The auditor of Barakah Offshore Petroleum Bhd has issued a disclaimer of opinion on the group’s audited financial statements for the financial year ended June 30, 2020 (FY20), as they could not obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Messrs Morison AAC PLT highlighted several bases for its disclaimer of opinion, including Barakah’s current liabilities exceeding its current assets by RM240.82 million, a deficit in shareholders’ fund of RM158.45 million, and the notices of demand relating to a default on term loan facilities received by Kota Laksamana 101 Ltd, a wholly-owned subsidiary of the group.

The auditor also noted that the group is an affected listed issuer under Practice Note 17 following the default in payment, and that Barakah’s wholly-owned subsidiary PBJV Group Sdn Bhd has received a notice of suspension of its license from Petroliam Nasional Bhd (Petronas) for three years, besides the fact that the group is involved in several pending material litigations.

“Because we were appointed as auditors of the group in 2020, and a modified opinion on the existence and valuation of inventories as at June 30, 2019, was issued in the auditors’ report for the financial year ended June 30, 2019, we were not able to observe the counting of the physical inventories at the beginning of the financial year or satisfy ourselves concerning those inventory quantities by alternative means.

“Since opening inventories affect the determination of the results of operations, we were unable to determine whether adjustments to the results of operations and retained earnings might be necessary for the opening balances as at July 1, 2019,” said the auditor.

The group, meanwhile, is in the process of formulating a plan to regularise its PN17 status, which is due for submission on May 17, 2021.

Barakah closed unchanged at 4.5 sen today, with a market capitalisation of RM37.61 million.