KUALA LUMPUR: Axis Inc Bhd shares plunged on heavy selling as investors reacted to the company’s failure to meet the deadline to submit audited accounts for the financial year ended March 31.
Coming out of Thursday’s trading suspension yesterday afternoon, the stock dropped to a low of 28 sen in the first half hour and closed at 30.5 sen, down 4.5 sen.
In reply to a Bursa Malaysia query on July 31, Axis directors said its external auditor Messrs Horwath had disclosed in their draft financial statements full details of the material unresolved issues and the amount involved, which included receivables as at March 31, 2008 amounting to about RM105mil.
The amount is a significant increase over the approximate RM11mil outstanding in the previous financial year. Subsequent to the balance sheet date, about RM20mil had been settled by its contract manufacturers, Axis said.
It also said Messrs Horwath were unable to obtain sufficient appropriate audit evidence and explanations to ascertain the basis of the advances made to the contract manufacturers, and whether the advances and settlement were in compliance with the strategic alliance agreement between the parties.
The recoverability of the outstanding balances due from the contract manufacturers in relation to the trade receivables and advances was also in question.
Pending more information and explanation on the above matters, Horwath was unable to complete the audit and form an audit opinion, Axis said.
The company said its board was committed to resolving the issues raised by Horwath. However, the full impact would only be known after the special audit.
An analyst in a bank-backed research house believed the unresolved accounting issues was the main reason for the plunge in Axis’ share price since July 25.
He added that Axis’ involvement in the winding-up of betting operator Global Trader Europe Ltd further fuelled investors’ worries.
Axis’ 2007 annual reports shows about 23.3 million shares or 15.2% of its share base were pledged with Kenanga Capital Sdn Bhd for Saipuddin Lim Abdullah, about 19.5 million shares, or 12.7%, pledged with RHB Capital Bhd for Lee Han Boon, and another 10.6 million shares, or 6.9%, pledged with RHB for Koh Tee Jin.
RHB Research maintained its “underperform” call on the stock as the indicative fair value was unchanged at 24 sen.
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