KUALA LUMPUR: Lebtech Bhd’s external auditor Afrizan Tarmili Khairul Azhar has highlighted the group’s focus on related party activities as a material uncertainty related to going concern in its financial statement audit for the year ended Dec 31, 2018.
“The group conducted its activities during the year mainly with related parties and these had been approved during the group’s annual general meeting. This has inadvertently increased the exposure to credit risk and going-concern risk.
“For the financial year ended at Dec 31, 2018, the group through its subsidiary company, derived 100% of its revenue from related parties and at the balance sheet date, 98% of group’s trade receivables [were] due from related parties. Our opinion is not qualified in respect of this matter,” it said in a report the group filed with the stock exchange yesterday.
The auditor said the recoverability of receivables from related parties, impairment and allowance for doubtful debts are considered to be a significant risk due to the pervasive nature of these balances to the financial statements and how they can affect the group’s working capital management.
In response, Lebtech’s board said the group has started addressing the issue and is continuously seeking avenues for other projects that are outside related party transactions.
Yesterday, trading of Lebtech’s shares was halted by Bursa Malaysia at 4.07pm to make way for the announcement. Trading will resume today.