Sapura Energy posts RM190mil profit in FY25, but going concern risks remain
KUALA LUMPUR: Sapura Energy Bhd has returned to profitability for the first time in six years, posting a net profit of RM190 million for the financial year ended January 31, 2025 (FY25), compared to a net loss of RM509 million in FY24.
The group's revenue rose 8.9 per cent year-on-year (YoY) to RM4.7 billion, driven by improved performance across its core business segments.
The audited financial statements for FY25 were accompanied by an unqualified audit opinion from external auditors Messrs. Ernst & Young PLT (EY). However, EY highlighted a material uncertainty regarding the company's ability to continue as a going concern.
In its report, EY noted that the group's current liabilities still exceed its current assets and that Sapura Energy continues to face severe liquidity challenges.
Despite this, the financial statements were prepared on a going concern basis, which EY stated is contingent upon the timely approval, execution, and completion of the Proposed Regularisation Plan by the Long Stop Date of March 11, 2026. The plan is crucial for activating the group's schemes of arrangement (SOA), conditional funding agreements, and settlements tied to previously terminated engineering and construction (E&C) projects.
Similar going concern uncertainties were flagged in FY2022, FY2023, and FY2024. These concerns included the need for extensions of restraining orders, favourable legal outcomes related to E&C claims, and at least 75 per cent approval from scheme creditors at court-convened meetings for the SOA.
Over the past few years, Sapura Energy has met several critical milestones, enabling progress on finalising its regularisation plan. The group is targeting a formal submission to Bursa Malaysia by May 2025.
In a filing with Bursa, the board expressed confidence in the group's future, stating that the successful execution of key restructuring initiatives has laid a strong foundation for the completion of the regularisation plan.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Focus Malaysia
4 days ago
- Focus Malaysia
Sabah's GRS gov't steps up accountability with RM1.97b lawsuit against global audit giant EY
THE Sabah state government under Gabungan Rakyat Sabah (GRS) is continuing to signal a firmer commitment towards transparency and accountability in managing state institutions. Towards this end, the Sabah Development Bank (SDB), one of the state's most important financial institutions, has filed a RM1.97 bil lawsuit against global audit giant Ernst & Young (EY), alleging negligence in its audit work between 2017 to 2022, sources told FocusM. According to court documents sighted by FocusM, EY is accused of failing to detect serious financial irregularities during its audits, contributing to the accumulation of more than RM2.2 bil in non-performing loans (NPLs) and substantial losses for SDB. Initiated after an internal review under the Sabah leadership, the lawsuit marks a decisive step by the GRS administration to address long-standing financial problems at the bank. The case also represents a broader effort to safeguard public funds and reinforce integrity across government-linked institutions. In its statement of claim, SDB outlined 17 key points of alleged audit negligence by EY, including: Failure to detect over RM2.2 bil in NPLs Weak internal controls and failure to identify credit risks Reliance on outdated collateral valuation reports which lead to asset misstatements Audits conducted without professional scepticism Use of 'creative accounting' to mask financial weaknesses through loan 'evergreening' practices EY is also accused of having been aware of the true extent of asset impairments since 2017 but failing to advise SDB to make appropriate provisions, allegedly to maintain a positive financial image for the bank in order to support its bond and market borrowings. Clamping down on mismanagement On July 10 last year, State Finance Minister Datuk Masidi Manjun disclosed in the State Legislative Assembly that as of May 2023, a staggering 75% of SDB's RM6.6 bil loan portfolio had turned non-performing or impaired. He revealed that the former management had engaged in 'creative accounting' whereby new loans were issued to delinquent borrowers to repay old debts, thus masking the true extent of the NPL problem. Between 2017 and 2022 alone, the previous leadership allegedly 'fabricated' RM580 mil in book profits by recycling credit and recording unpaid interest as paper gains. Worse, many loans were approved without proper due diligence, allowing unqualified borrowers to tap into public funds. The bank's bond-driven funding model also worsened its liabilities as repayments fell short of bond maturities, thus forcing SDB to borrow further just to stay afloat. While financial mismanagement of this scale would once have been quietly buried, the present administration has chosen transparency. 'Cleaning up the dirt' The move comes as part of a wider approach under Chief Minister Datuk Seri Hajiji Noor's leadership. Based on new report, several individuals, including GRS assemblymen, are expected to be charged in court soon over alleged misconduct involving state-issued mining licenses. Throughout that investigation, the Sabah state government has publicly committed to giving full cooperation to the Malaysian Anti-Corruption Commission (MACC) with no political interference. The MACC has since clarified that the Chief Minister was not among those under investigation, and enforcement officials acknowledged the state's openness during the probe. Together, these developments point to a shift in Sabah's political and administrative culture that prioritises public accountability over political convenience. In SDB's case, EY was continuously appointed as external auditor by the previous state governments. However, it was only after the GRS government took over the state administration and new management was appointed at SDB that the true scale of the losses was uncovered. Since assuming oversight of SDB in mid-2023, the GRS administration has taken steps to overhaul the bank's governance. The bank was formally placed under the Chief Minister's Incorporation and the State Treasury with the new board launching sweeping reforms. These include a full internal audit, re-classification of loans in line with Bank Negara Malaysia (BNM) standards and legal action against 43 NPL borrowers. Professional recovery agencies have been engaged with the board targeting the recovery of RM1 bil in NPLs annually over three years. In the first year alone, SDB recovered RM1.9 bil in legacy loans from government-linked companies (GLCs) while reducing the bank's bond obligations from RM5 bill to RM3.3 bil. In early 2024, SDB rejected RM1.5 bil worth of new loan applications after stricter credit reviews, signalling a renewed focus on financial discipline. Very broadly, this lawsuit sends a clear message that even large corporate players will be held accountable if public interests are harmed. It also underscores the expectation that auditors, banks and other state-linked entities must meet higher governance standards going forward. Looking ahead, the GRS-led government is expected to pursue further improvements to financial oversight across state agencies and government-linked companies. The ultimate aim is to prevent a repeat of past failings, ensure stronger protections for public funds and build public confidence in Sabah's key institutions. As the state continues to focus on economic development, job creation and investor confidence, this latest move shows that governance reforms remain a key part of the agenda. – June 19, 2025 Main image credit: Sabah Development Bank's website
The Star
4 days ago
- The Star
Romania leads CEE in FDI projects despite drop in capital inflows: EY survey
BUCHAREST, June 18 (Xinhua) -- Romania saw a 57 percent surge in foreign direct investment (FDI) projects in 2024, the strongest growth in Central and Eastern Europe(CEE), according to consulting firm EY. This comes despite a 14 percent decline in total FDI inflows, which fell to 5.7 billion euros (6.5 billion U.S. dollars) from 6.6 billion euros (7.5 billion dollars) in 2023, EY said in its Attractiveness Survey Romania 2025 released on Wednesday. Bogdan Ion, country managing partner at EY Romania and Moldova, said that the increase in project numbers reflects a shift toward more capital-intensive, high-value investments. To sustain this trend, he emphasized the importance of strengthening Romania's digital capabilities and infrastructure. This propelled Romania up four places to 13th in Europe's FDI attractiveness ranking, ahead of Hungary and Serbia. The increase in projects contrasts with a 31 percent drop in job creation, indicating a shift toward capital-intensive, automated investments. Although 58 percent of surveyed executives expect Romania's attractiveness to grow, that's down from 67 percent last year. Key concerns include macroeconomic risks, geopolitical tensions, and rising costs. Romania's appeal is driven by market access, cost competitiveness, tax incentives, and European Union-backed funding, but EY warns that long-term growth depends on improving infrastructure, workforce readiness, and innovation capacity.
The Sun
15-06-2025
- The Sun
FMM strongly objects to Port Klang's tariff hike, warns of hit to export competitiveness
PETALING JAYA: The Federation of Malaysian Manufacturing (FMM) has expressed its strong objection to the impending tariff increase at Port Klang, which was approved by the Ministry of Transport (MoT) and officially gazetted on Friday. The association said these cost increases come at a time when industries are already under immense pressure from global trade disruptions and significant domestic policy shifts. It noted that the new tariff increase place a severe burden on Malaysian manufacturers and further weaken the nation's export competitiveness while eroding Malaysia's position as a preferred regional trade and logistics hub. To note, the overall tariff revision at Port Klang, amounting to a 30% increase, will be implemented in three phases, with the first phase taking effect on July 1. Among the key changes that will heavily impact importers and exporters are a 30% hike in container handling charges and a steep escalation in container storage charges, which are set to rise by between 197% and 243%. FMM president Tan Sri Soh Thian Lai said while the association notes MoT's decision to stagger the port tariff increase over three phases following engagement with FMM and the Malaysian National Shippers' Council, FMM maintains that the timing remains deeply concerning. 'The sharp initial escalation beginning July 1, 2025 poses immediate and damaging consequences to the cost structures of exporters and importers alike. 'This comes at a time when industries are already contending with unresolved external shocks, including the ongoing US tariff threats on Malaysian exports, the expansion of the Sales and Service Tax (SST), and a scheduled restructuring of electricity tariffs. 'The convergence of these cost pressures will deliver a heavy blow to manufacturers and exporters at a critical juncture in Malaysia's economic recovery, further eroding the country's export competitiveness,' Soh said in a statement. Under the newly gazetted tariff structure by the Port Klang Authority, container handling charges for a 20-foot container will increase by 30% in total, implemented over three phases. The current rate of RM300 will eventually rise to RM390, with an estimated RM90 added per container upon full implementation. Given that Port Klang handles about 12.5 million TEUs annually, the full increase could translate to an additional RM1.125 billion in annual costs to industry once all phases are in effect. Soh noted that Malaysian ports have traditionally enjoyed a competitive edge due to reasonable cost structures. 'However, with the new rates, container handling fees will approach US$120–130 (RM509-552) per TEU, similar to rates in Singapore and Hong Kong, but well above Asean neighbours such as Vietnam, Indonesia, and Thailand. 'This will erode Malaysia's value proposition and increase the risk of cargo diversion to competing regional ports. 'Furthermore, Malaysia's drop to 34th in the IMD World Competitiveness Ranking and its current standing at 26th in the World Bank's Logistics Performance Index highlight the urgency of containing cost escalations. 'This tariff hike sends the wrong signal to investors and could significantly disrupt trade flow and business planning at a time when manufacturers are already struggling with margin pressures, high logistics costs, and global uncertainty,' Soh said. FMM said the government must take a holistic view of the cascading cost impacts on Malaysian businesses and consumers. 'Port tariffs, SST expansion, electricity hikes and international trade headwinds must be evaluated together. No single ministry or agency can make isolated decisions without assessing the full burden being placed on industry,' Soh said. FMM called for an immediate pause in the implementation of the port tariff increase, electricity base tariff revision and expanded SST scope. 'We urge the government to reconvene with industry stakeholders to reassess the economic and operational consequences and align all measures under a coordinated national cost impact strategy. If these measures proceed as scheduled, July 1, 2025 will mark a critical inflection point for Malaysian industry. 'A combination of port tariff hikes, new SST taxes, electricity cost increases, and global tariff threats will crash down on businesses, overwhelming their ability to remain competitive and sustainable. These cost increases will eventually translate into higher prices for consumers and a slowdown in manufacturing investment and job creation,' Soh said. FMM stands ready to work with the government to realign policy implementation timelines, ensure transparency in cost justifications, and develop a coordinated national strategy to support industry growth and protect the welfare of consumers.
