Annica auditor qualifies opinion on recoverability of $1.6m due from disposal of business unit

SINGAPORE - The auditor of Annica Holdings has qualified its opinion of the oil and gas company's 2018 financial statements with regard to the recoverability of $1.6 million due from the disposal of a business unit.

Auditor Baker Tilly, in its report, explained that the receivable was the amount outstanding from Annica's sale of GPE Power Systems (M) Sdn Bhd. The outstanding balance is secured by a charge over shares of a private limited company and the personal guarantee of a related party of the purchaser.

"We are unable to obtain sufficient appropriate audit evidence with respect to the amounts of cash flows that can be received by the group and the company from the shares pledged and the personal guarantee. Accordingly, we are not able to obtain sufficient appropriate audit evidence to satisfy ourselves with respect to the expected credit loss of this receivable," the auditor said.

Except for this matter, Baker Tilly said it found the rest of Catalist-listed Annica's audited financial statements to be true and fair.

In July 2018, Annica announced it was selling its 70 per cent stake in GPE Power Systems for $2 million to GPE executive director Chong Shin Mun, who owns the remaining 30 per cent stake.

The deal was guaranteed by a charge over 21,875 ordinary shares, or 14.58 per cent, of Seri Beskaya Sdn Bhd, a private limited company held by a Tan Yock Chew - a related party to Ms Chong. There was also a personal guarantee by Ms Tan in favour of Annica.

The first two tranche payments of $200,000 each have been paid, and the third tranche of $600,000, after a previous deferment, is due on April 30, 2019.

Annica said it will consider enforcing Ms Tan's security should Ms Chong fail to meet her payment obligations then.