KUALA LUMPUR (April 30): Construction outfit Lebtech Bhd’s external auditor has issued a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern in its audited financial statements for the financial year ended Dec 31, 2023 (FY2023).

The auditor, Messrs Jamal Amin & Partners PLT, highlighted the company’s reliance on related parties for its business activities.

According to the financial statements, 52.77% of the company's revenue in FY2023 came from related parties. Additionally, a staggering 88% of the company's outstanding receivables are due from related parties.

"This has inadvertently increased the exposure to credit risk and going concern risk," the auditor added.  

In response, Lebtech said the group has commenced the process to address the issue as it has continuously sought avenues for other projects that are beyond the related party transactions, resulting in a 7.08% reduction for settlement of transactions between related party’s receivables to RM66.42 million in FY2023, from RM71.48 million in FY2022.

In a previous bourse filing, Lebtech posted a net profit of RM249,000 in FY2023, from RM89 million in FY2022, while revenue dropped 19% to RM16.31 million from RM20.17 million previously. 

It said the decrease in revenue was mainly due to the construction project being in the final stage and deferment of the new project. 

Lebtech was last traded at 79 sen on June 9, 2023, giving the group a market capitalisation of RM108 million.