Barakah’s independent auditor issues disclaimer of opinion on FY19 accounts

TheEdge Fri, Nov 01, 2019 12:37am - 4 years View Original


KUALA LUMPUR (Oct 31): Practice Note 17 company Barakah Offshore Petroleum Bhd said its independent auditor Crowe Malaysia PLT has issued a disclaimer of opinion of the group’s financial statements for the year ended June 30, 2019.

The auditor said it is not expressing an opinion on the group and the company's financial statements because it has not been able to obtain sufficient appropriate audit evidence to ascertain the appropriateness of the preparation of the financial statements of the group and the company on a going concern basis.

This is because the directors, it said, have prepared the financial statements on the assumption that the group and the company are going concerns, but the assumption is highly dependent upon, among others, the formulation of a viable plan to regularise the financial conditions of the group for timely submission to Bursa Malaysia and relevant authorities for approval. The plan also has to be approved by the relevant parties and be implemented sucessfully in a timely manner.

The assumption is also dependent on the group's ability to achieve sustainable and viable operations so as to generate sufficient cash flow to enable it to meet its obligations as and when they fall due.

"In the event these do not materialise, the group and the company may be unable to realise their assets and discharge their liabilities in the normal course of business. In view of the matters set out above, there are material uncertainties that may cast significant doubt on the ability of the group and of the company to continue as going concerns," the auditor said.

It has also not been able to observe the counting of physical inventories in a timely manner. "As such, we were not able to satisfy ourselves by alternative means concerning the existence and valuation of inventories held as at June 30, 2019," the auditor said.

In response to the key audit matters raised by the auditor, Barakah said it is currently formulating and implementing a plan to regularise its condition. It has approximately six months to submit the plan to the relevant authorities for approval.

For the financial period from Jan 1, 2018 to June 30, 2019, Barakah incurred a net loss of RM383.21 million. As at end-June, its current liabilities exceeded its current assets by RM145.69 million, with a deficit in shareholders’ equity of RM188.76 million.

The group's current liabilities comprised manly trade payables and bank borrowings of RM258.06 million and RM45.1 million, respectively. This brings its total borrowings to RM186.36 million, according to Barakah's financial statements.

Shares of Barakah closed unchanged at 3 sen today, valuing the company at RM25.07 million. The stock has remained below 10 sen since May this year.

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