Debtors weigh down Commsoft

By Phil Boeyen, ShareChat Business News Editor

Monday 19th March 2001

Telecommunications software company Commsoft (NZSE: CSG) continues to be troubled by debtor collections.

The company, which listed on the ASX and NZSE last year, has announced revenue of just A$3.865 million in the six months ended December, with an operating loss of more than A$6 million.

"This disappointing result is primarily a consequence of the specific experience with debtor collections during the last six months and a desire by the directors to portray a realistic and conservative picture of the company's debtor position," it says in a statement.

When the company announced its interim result for the six months to September 2000 it had made a provision of A$700,000 for doubtful debts, but that has ballooned to more than A$4 million.

Commsoft's directors say they are conscious of the "increasing scrutiny and concern by capital markets of the ability of companies to achieve satisfactory cash collections in this difficult economic environment."

"All outstanding debtors have been reviewed and where payment has not been made within the company's trading terms, aggressive and conservative provisioning has been made."

In its earlier result the company said it was confident it would be repaid any outstanding debts but that assurance appears to have disappeared from the latest statement.

Instead the company says it has adopted a conservative approach in making the provision set out above to ensure that shareholders can have confidence in its balance sheet.

Commsoft shares are currently trading at less than a third of the $2 they hit last November.

Tech investment company Strathmore (NZSE: SMR) owns around 16% of Commsoft.

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