Pursuant to paragraph 9.19(37) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of EKA (“Board”) wishes to announce that the Company’s independent auditors, STYL Associates PLT, had included the material uncertainty related to going concern in its independent auditors' report dated 25 April 2019 ("IAR") for the financial statements of the Group and of the Company for the financial year ended 31 December 2018.

The material uncertainty related to going concern and key audit matters disclosed as reported in the IAR are as follows:

1. “We draw attention to Note 2 to the financial statements which disclosed the premise upon which the Group and the Company have prepared its financial statements by applying the going concern assumption, notwithstanding that the Group and the Company incurred a net loss of RM3,897,341 and of RM1,093,442 respectively during the financial year ended 31 December 2018, and as at that date, the Group's and the Company's current liabilities exceeded its current assets by RM78,926,867 and RM68,581,387 respectively and deficits of shareholders' funds of RM30,669,053 and RM60,437,232 respectively, thereby indicating the existence of a material uncertainty which may cast significant doubt about the Group's and the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

The Company is an affected listed issuer pursuant to Paragraph 2.1(e) of Practice Note 17 under the Main Market Listing Requirements and is required to submit its regularisation plan to the regulatory authorities within the stipulated timeframe under the Main Market Listing Requirements. The ability of the Group and the Company to continue as going concern is dependent upon successful and timely implementation of the regularisation plan.

On 28 August 2018, the Court had pursuant to Section 366 of the Companies Act 2016, sanctioned the schemes of arrangement and compromise (which forms part of the component of the Company’s regularisation plan) which was approved with modification by the scheme creditors at a court convened meeting held on 18 July 2018. The schemes of arrangement and compromise were effective from 7 September 2018 upon lodgement of the order of the Court with the Registrar of Companies.  Subsequently, on 14 January 2019, the shareholders of EKA have approved the Company’s regularisation plan.  In addition to the above, the Board wishes to inform that the Company had filed the petition for the Company’s Capital Reconstruction (which forms part of the component of the Company’s regularisation plan) at the High Court of Malaya at Penang on 30 April 2019.  Barring any unforeseen circumstances, the regularisation plan is expected to be completed within the next financial year.

2)         Impairment assessment on the carrying amount of property, plant and equipment

“The Group carries significant property, plant and equipment as disclosed in Note 4 to the financial statements and is subject to impairment assessment. We have focused on the impairment assessment as the process is complex and it requires significant judgements and estimates of the future results and key assumptions which are based on assumptions that are affected by expected future market and economic conditions in the determining their recoverable amounts.”

The audit approach to address the key audit matters:

• Assessing the Group's calculation of the recoverable amount of the property, plant and equipment assets by comparing to the current market value of all those assets.
• Making inquiries with the management regarding the action plans to realise the carrying amount.
• Evaluate the adequacy and appropriateness of disclosure of impairment assessment made in the financial statements.

3)         Contingent liabilities relating to material litigation

“We focused on this area because of the potential significance of the contingent liabilities. The assessment as to whether or not a liability should be recognised and whether amounts can be reliably estimated includes, to a certain extent, judgment from management.”

The audit approach to address the key audit matters:

• Communicate with the management and review of the board minutes to discuss developments in legal proceedings.
• Review legal correspondences and obtained confirmations from the Group’s external solicitors in order to consider the appropriateness of the disclosures made in the Group’s financial statements.

This announcement is dated 28 May 2019.