KUALA LUMPUR (Feb 9): Reneuco Bhd, whose latest annual report saw a disclaimer of opinion by its external auditor, said its special independent review (SIR) found that the sales transactions and costs with identified customers and suppliers “were sufficiently supported” by relevant documentation.
The SIR, conducted by Messrs UHY FLVS Sdn Bhd, also “received confirmation from the respective parties” for the sales transactions and cost of sales transactions, Reneuco said in its annual report.
The SIR was conducted upon the request of its external auditor Messrs Al Jafree Salihin Kuzaimi PLT, which flagged trade receivables balances of RM321.26 million from July 1, 2019 to June 30, 2023.
Al Jafree also flagged RM196.31 million in trade payables balances. The two items were included in the communicated scope of the SIR, Reneuco’s report showed.
Among the SIR’s recommendations are to periodically update business addresses of debtors and creditors, and to “ensure that all documentation includes appropriate acknowledgement and signatures to validate the authenticity of the documents”.
On the debt assignment, involving a transfer to shareholder OHP Ventures Sdn Bhd of RM10 million owed to a former director/shareholder, Reneuco said the debt assignment “has been accurately and appropriately accounted for”, based on the legal opinion obtained from a professional law firm.
Separately, Reneuco also undertook an independent technical review on three hydroelectric projects by KBM Konsult Sdn Bhd, which found that two of them (in Perak and Sabah) demonstrate “strong financial viability” and "reasonable annualised rate of return”.
“In summary, while the project exhibits strong financial indicators, careful attention to optimisation, detailed financial reporting, and strategic planning for major milestones will contribute to its long-term success,” it said.
For the third project, located in Pahang, KBM Konsult said its success “hinges on effective execution”, adding that the project is progressing in accordance with the overall set milestones.
Reneuco said UHY and KBM Konsult were appointed following requests for proposal issued by the company’s audit and steering committees. The SIR was completed on Jan 17 and the independent technical review on Jan 19, it said.
Reneuco’s external auditor Al Jafree issued the disclaimer of opinion, as it said the completion of the evaluation of the appropriateness of the management’s expert work on the SIR has been impeded by time limitation.
This is considering the fact it had yet to obtain and complete the assessment on the reply of the queries to the management’s expert and has yet to perform other required procedures as at the date of this report, it said.
The SIR was provided to Al Jafree on Jan 24 this year, it added. As for the three technical reports, only one had been received by the auditor on Jan 23. The remaining two project reports are still outstanding as of the date of the annual report on Feb 8, it said.
Reneuco fell into Practice Note 17 status following the disclaimer of opinion by its external auditor which accompanied its annual report, released on Feb 8. The eventual release — past its initial deadline of Jan 31 — meant that the company’s shares will not be suspended from trading, as warned by regulators previously.
Reneuco closed 1.5 sen lower at 5.5 sen, giving it a market capitalisation of RM61.7 million.