KUALA LUMPUR (May 1): The new auditors of Annum Bhd (KL:ANNUM), formerly Cymao Holdings bhd, have decided to withhold their opinion on the financial statements of the plywood products manufacturer for the period ended Dec 31, 2025, citing prior unresolved issues and doubts about the group's ability to continue as a going concern.

In a bourse filing, Messrs LTTH PLT said they are unable to form a opinion on Annum's financial position and performance based on the statements due to pervasive limitations in obtaining sufficient appropriate audit evidence, primarily linked to issues flagged by the previous auditor, who had also issued a disclaimer of opinion on Annum's accounts for the 18 months ended June 30, 2023.

Among key concerns raised were unverified opening balances, due to issues that Annum's previous auditor, Messrs SBY Partners PLT, was also unable to verify.

These included the existence, accuracy, completeness and valuation of significant assets carried over from the prior period, including plant and machinery (RM53.6 million) and intangible assets (RM23.6 million).

Also not verified were the accounting for the disposal of subsidiaries, and the recognition of a subsidiary based on a management control agreement despite lacking voting rights or ownership interests — which is a departure from accounting standards — followed by a deemed disposal.

SBY had also expressed concerns over the recognition of RM197.3 million in revenue from plywood trading and RM50.3 million from wholesale trading of goods, suggesting the group might have acted as an agent rather than a principal, and were unable to verify the related inventory.

In particular, LTTH said it was unable to access the working papers of the component auditors who audited the subsidiaries, or those of the previous group auditor. "Additionally, we could not obtain sufficient appropriate audit evidence to resolve these issues," LTTH said in its independent auditors' report that Annum filed to Bursa Malaysia.  

Annum, according to LTTH, also disposed of plant and equipment during FY2024 that had been the subject of a qualification in the previous auditor's disclaimer of opinion, resulting in a gain of RM20.9 million. But LTTH could not verify the existence and valuation of these assets.

As such, no restatement of prior period balances were made, and LTTH could not determine whether the opening balances as at July 1, 2023 were fairly stated, affecting the reliability of the current period's financial statements.

And while Annum has been classified as a financially distressed company under Practice Note 17 (PN17) since May 2024 following SBY's disclaimer of opinion on its accounts, Annum has "neither submitted a regularisation plan nor provided us with sufficient details" about it, LTTH said. Annum, meanwhile, have on April 10 submitted an application for six more months, until Nov 8, to submit its PN17 exit plan, the outcome of which remains pending.
 
All these "indicate a material uncertainty that casts significant doubt on the group’s and the company’s ability to continue as a going concern", said LTTH.

In response to the issues raised by LTTH, Annum said it "will work closely with the principal adviser to formulate the proposed regularisation plan". "Barring any unforeseen circumstances, the company expects to resolve the issue relating to the disclaimer of opinion within the next financial year," Annum said in its Wednesday filing.

Last July, Annum said it had appointed Parker Russell to conduct an independent review on its audited financial statements, whom it later said had confirmed the existence, accuracy and functionality of assets disputed by SBY.

Annum had also previously experienced delays in releasing its FY2023 annual report. Initially due on Oct 31, 2023, the report was only submitted on May 8, 2024 after the company struggled to find a suitable auditor, with 31 audit firms reportedly declining the appointment due to a lack of resources. Although SBY Partners was eventually appointed on March 29, 2024, they were unable to verify the company’s financials, leading to the disclaimer of opinion and further delays.

Shares of Annum closed down half a sen or 10% at 4.5 sen on Wednesday, giving the group a market value of RM10.2 million. So far this year, the stock has fallen two sen.