The Board of Directors of the Company wishes to announce that Messrs. HLB Ler Lum Chew PLT, the Company’s Independent Auditors, had expressed a material uncertainty related to going concern in the Company’s Audited Financial Statements for the financial year ended 30 June 2023. Pursuant to Paragraph 9.19(37) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Company hereby sets out below the full details of the modified opinion and material uncertainty related to going concern by the Independent Auditors’ Report dated 26 October 2023 contained in the Annual Report (a copy of which is attached with this Announcement):-

(A) DETAILS OF THE MODIFIED OPINION DISCLOSED IN THE INDEPENDENT AUDITORS’ REPORT

Opinion

We have audited the financial statements of Barakah Offshore Petroleum Berhad, which comprise the statements of financial position as at 30 June 2023 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 60 to 111 of the Annual Report.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2023, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to Note 28 to the financial statements which describes the uncertainty related to the outcome of the pending material litigations against the Group by its customers and subcontractors. Our opinion is not qualified in respect of this matter.

Material Uncertainty Related to Going Concern

We draw attention to Note 2.1 to the financial statements which discloses the premise upon which the Group have prepared its financial statements by applying the going concern assumption, notwithstanding that the Group incurred a net loss of RM4,003,000 during the financial year ended 30 June 2023, and as at that date, the Group’s current liabilities exceeded its current assets by RM18,214,000 and it had a deficit of shareholders’ funds of RM15,054,000, thereby indicating the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

(B) STEPS TAKEN OR PROPOSED TO BE TAKEN TO ADDRESS THOSE KEY AUDIT MATTERS PERTAINING TO THE MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

The Company have implemented the following initiatives to address the going concern matter:

1. The Company has an active plan to locate a buyer and appointed a technical advisor to assist the Company in appointing an auctioneer for its pipe laying barge and machinery and equipment on board (“KL 101”) before the financial year end, which led to classification of KL101 as non-current asset held for sale as at 30 June 2023 as disclosed in Note 6 to the financial statements. As at the date of this report, the auctioneer has been appointed and both parties are in the midst of establishing the details of auction.
2. The Company had submitted its regularisation plan on 14 November 2022 and subsequently announced its revised regularisation plan on 20 February 2023 which comprises proposed capital reduction, share consolidation, shares issuance, rights issue with warrants, employees’ shares option scheme 2013/2023 termination and establishment of employees’ shares scheme.  Following the auditors’ opinion on the audit of the financial statements for the financial year ended 30 June 2023, the Company will reformulate a revised regularisation plan to be submitted to Bursa Securities.
3. The license suspension imposed against its wholly-owned subsidiary, PBJV Group Sdn Bhd (“PBJV”) since July 2019 has been uplifted by PETRONAS on 6 April 2023. The license renewal application by PBJV from PETRONAS has been successful and PBJV been granted the PETRONAS License for a period of three (3) years from 18 April 2023, and subsequently obtained full reinstatement of SWEC (Standardised Work and Equipment Categories) code in respect of all its Twenty-Seven (27) Approved License Categories. The Company has since been invited to submit bids and tenders, and able to secure contracts directly from clients.
4. The Company has been proactively exploring business opportunity with non-oil and gas customers and oil and gas customers. In July 2023, the Company had obtained letter of awards for contract amendment and contract extension from its existing customers for Provision of Pan Malaysia Maintenance, Construction and Modification (PM-MCM) Contracts for Year 2018 to 2023 Package A (West Malaysia)(“the Contracts”). The Contracts, which were expired in July 2023, had been extended to 31 December 2024.
5. On 3 August 2023, the Company has received a letter of award from Brunei Shell Petroleum Co Sdn. Bhd. for supply of engineering work, materials, fabrication, load out, decommission, installation and commissioning of one unit of Single Point Mooring Buoy (SPM 2) at the shoreline of Brunei Darussalam.
6. The Company had obtained advice from its external solicitors on the pending material litigations. Based on the advice from the external solicitors, the potential financial exposure to the Company is deemed immaterial due to the claims against the Company are not fully substantiated.

The Company has also considered the timeline of the ongoing legal proceedings and assessed that the conclusion of any material litigations will most likely fall beyond twelve months period from the date of the financial statements.

(C) TIMELINE FOR THE STEPS REFERRED TO IN SUB-PARAGRAPH (B) ABOVE

Barring any unforeseen circumstances, the Company expects to resolve the abovementioned issues relating to the material uncertainty related to going concern in the subsequent financial year.

(D) ALL KEY AUDIT MATTERS DISCLOSURE IN THE EXTERNAL AUDITORS’ REPORT

Please refer to pages 55 to 59 of the Annual Report enclosed to this Announcement.

This announcement is dated 30 October 2023.