KUALA LUMPUR (April 29): Oil and gas outfit TH Heavy Engineering Bhd's (THHE) external auditor Messrs UHY has expressed a disclaimer of opinion on its audited financial statements for the financial year ended Dec 31, 2021 (FY21).

According to THHE's bourse filings with Bursa Malaysia on Friday (April 29), UHY said it did not express an opinion on the financial statements of the Practice Note 17 company as it was unable to obtain sufficient appropriate audit evidence to provide a basis to ascertain the appropriateness of the preparation of the financial statements of the group on a going concern basis.

Among the unresolved matters that formed the basis of UHY's disclaimer of opinion include THHE's investment of RM297.33 million in its subsidiaries, as well as the amount due from its subsidiaries of RM69.17 million as at end-December 2021, which THHE management is unable to estimate their recoverable amount.  

Pointing to the provision for foreseeable losses for an offshore process platform project that were carried in the consolidated statement of financial position as at Dec 31, 2021 at RM7.42 million, UHY said it was also unable to satisfy itself by alternative means concerning the provision amount which may have been overstated.

As THHE has not consolidated its newly-acquired subsidiary THHE Destini Sdn Bhd for FY21, the auditor noted that it was unable to determine whether adjustments in relation to the acquisition are required to be made to the group’s financial statements.

In a separate filing, THHE said it is currently formulating a proposed regularisation plan which will comprise, among others, a capital reconstruction exercise involving the issuance of new irredeemable convertible preference shares-i, and a capital reduction and amalgamation exercise.

"The group is also looking and exploring other asset acquisition with sustainable and viable business to regularise the financial conditions and immediately enhance the order book," it added.

THHE has until Aug 22 to submit the proposed regularisation plan to Bursa Malaysia.

Trading in THHE securities has been suspended since Dec 9 last year. It last closed at one sen, bringing it a market capitalisation of RM22.21 million.