KUALA LUMPUR (May 1): Apex Equity Holdings Bhd's external auditor is unconvinced that the group will be able to recover RM23.8 million in loan receivable, though its directors is confident that the sum is recoverable and had made no impairment loss in its financial statements for the year ended Dec 31, 2023.

Its auditor — Crowe Malaysia PLT — said it is unable to obtain sufficient appropriate audit evidence to support the recoverability of the sum, citing changes in circumstances after the reporting period that caused a significant deterioration in the credit quality of the loan receivable.

As such, it had expressed a qualified opinion on the company's FY2023 financial statements due to the matter, to declare its opinion about this uncertainty.

“Had an adjustment for impairment of this loan receivable been made, the carrying amount of receivables would have been decreased by the same amount for the group. Similarly, profit after taxation for the financial year and retained profits of the group would have decreased by the same amount,” the auditor said in its audit report that Apex released via a bourse filing.

For FY2023, the group reported a net profit of RM7.32 million, up 14.2% from RM6.41 million in FY2022. Revenue climbed 26.9% to RM45.62 million from RM35.94 million.

According to Apex, in the second quarter of 2024, the group became aware of a potential discontinuance of an ongoing project awarded to a party to which it had given a loan of RM23.8 million.

“The outcome of this development, which is unascertainable at this juncture, may or may not cause a change in the credit quality of the said loan receivable in the future,” it said.

Subsequently, it concluded that the development was a non-adjusting event that did not affect the recoverability assessment made for FY2023 and had not made any impairment to the loan receivable.

However, Apex did not disclose more details about the project nor the party associated with the loan.

Apart from the matter described in the basis for the qualified opinion, the auditors said the group's financial statements gave a true and fair view of its financial position as at Dec 31, 2023.

In response, Apex said it had taken note of the qualified opinion issued, and said it had decided to take a different position from its auditor, due to, among others, information it received from relevant parties, including the party to which the loan was given, and the historical payment trend.

"The company is actively monitoring the event and shall continuously assess the development of the event for any financial impact which will be reflected in the subsequent financial reports, if any," Apex added.

Shares of Apex remained unchanged at 97 sen on Tuesday, valuing the group at RM207 million. Year to date, the counter has fallen 12 sen or 11%.