The oil and gas outfit, now in Practice Note 17 (PN17) status, posted a net loss of RM3.16 billion at the company level and RM3.67 billion at the group level for the financial year ended Jan 31, 2023 (FY2023).
The unqualified opinion was put forward by external auditor Ernst & Young PLT in an extract of its latest audit report on the group.
The auditors also raised the issue of the RM12.66 billion and RM1.75 billion in liabilities at the group and company levels respectively.
“(Sapura Energy) is faced with a severe liquidity constraint mainly due to its financial losses, lack of access to working capital and bank guarantee facilities and an unsustainable level of debts,” the auditors said.
A key matter flagged by the auditors was the carrying values of the group’s goodwill as well as property, plant and equipment (PPE).
These amounted to RM239.1 million and RM5.08 billion respectively, which collectively represents 42% of the group’s assets.
Sapura Energy has said that their PPE, including vessels, were due to be tested for impairment in view of the group’s loss-making position.
“Due to the significance of the carrying values of goodwill and PPE, and the complexity and subjectivity involved in the impairment assessment, we consider this as an area of audit focus,” Ernst & Young added.
Restraining order on creditors
Sapura Energy and 22 of its subsidiaries have been given an extension of a restraining order against the creditors as they continue with the process of undertaking schemes of arrangement (SOA).
The order had expired on June 11 but it has now been extended by nine months to March 10, next year.
“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 orders,” the auditors said.
Other conditions included 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 a court-convened meeting, as well as financial assistance from a white knight,” the auditor added.
The group’s board of directors expects the extension of the restraining order would lead to a “mutually beneficial” scheme of arrangement with the creditors.
At 11.30am, Sapura Energy’s share price slipped 12.5% or half-a-sen to 3.5 sen, giving it a market capitalisation of RM489.36 million.