KUALA LUMPUR (Aug 7): Cash-strapped LYC Healthcare Bhd (KL:LYC) said its external auditor has issued a disclaimer of opinion on the group’s audited financial statements for the financial year ended March 31, 2025 (FY2025).
In a bourse filing on Thursday, LYC said Crowe Malaysia PLT highlighted material uncertainties that may cast significant doubt on the group’s ability to continue as a going concern.
The basis for the disclaimer of opinion stems from LYC’s net losses of RM12.215 million at the group level and RM15.875 million at the company level. In addition, the group’s current liabilities exceeded its current assets by RM63.516 million as at end-March 2025.
Crowe also noted that redeemable preference shares of LYC’s subsidiary, amounting to RM14.820 million and RM41.370 million respectively (totalling RM56.190 million), are due for redemption in September and October 2025.
An extension of the redemption period for these shares will be granted by the third-party subscriber until Sept 23, 2026 and Oct 19, 2026 respectively, subject to the settlement of all dividends and related expenses, and the extension documents being duly stamped.
On June 3, LYC announced that it had triggered Guidance Note 3 (GN3) criteria, as the group’s shareholders’ equity of RM25.360 million was 25% or less of its issued and paid-up capital as at end-March. Consequently, LYC is required to submit a proposed regularisation plan to the relevant authorities and implement it within the stipulated time frame.
Crowe also highlighted LYC’s disposal of its 55% stake in Elite Dental Team Sdn Bhd, which was completed on Dec 31, 2024, noting that Elite Dental Group's accounts up to that date remained consolidated in LYC’s financial statements for FY2025.
The revenue, cost of sales, other operating income, administrative expenses, and finance costs of Elite Dental Group included in LYC’s FY2025 accounts amounted to RM15.55 million, RM2.004 million, RM700,302, RM13.45 million, and RM132,618 respectively. These represented 10.0%, 2.3%, 10.2%, 18.4%, and 1.3% respectively of the corresponding consolidated figures.
Elite Dental Group contributed RM634,360 in profit before taxation to the group’s loss before taxation of RM8.090 million, and RM633,878 in profit after taxation to the group’s loss after taxation of RM12.215 million, representing 7.8% and 5.2% respectively, of the corresponding group figures.
“In particular, we were unable to obtain sufficient appropriate audit evidence to verify the accuracy and completeness of administrative expenses recorded for Elite Dental Group up to the date of disposal. Accordingly, we were unable to determine whether adjustments were necessary to the group’s consolidated financial statements in respect of this component,” said the auditor.
Crowe was appointed as LYC’s external auditor after Baker Tilly Monteiro Heng PLT resigned on Feb 3, citing an inability to agree on audit fees.
LYC, which operates confinement homes, childcare centres, senior living homes, and family clinics, has been reporting annual losses since 2012. For FY2025, it posted a net loss of RM12.2 million on revenue of RM155.52 million.
LYC’s filing indicated that the group’s management is in the process of formulating a regularisation plan. As such, there is currently insufficient information available on the final plan and how it will address the group’s present financial condition.
Shares of LYC, which have fallen over 81% year-to-date, closed unchanged at two sen on Thursday. This gives the group a market capitalisation of RM14.80 million.