The Delisting Of Englotechs

I had always paid attention to Trade Receivables in a company's account.

In the posting The Receivables Issue And Megan

• Point is .. when trade receivables keeps on increasing each single quarter, then it is utmost prudent that the investor be on the alert... for these trade receivables can easily be re-classified as doubtful debts!

Or how about Transmile Receivables?

Anyway on Sept 2007, I wrote on Englotechs Trade Receivables. I found it so incredible because I was looking at a company which said it had "gone on a exercise to boost sales revenue by offering easier credit terms!" The company was so financially weak, loans kept on increasing and the company wanted to offer easier credit terms??!!

May 2008, on the Edge Financial Daily.

• 02-05-2008: 12 report accounts deviations in a day
  by Sharmila Ganapathy
  
  KUALA LUMPUR: As many as 12 companies, the majority of which are listed on the Second Board, reported deviations between their unaudited and audited accounts for the financial year ended Dec 31, 2007 on Wednesday.
  
  Topping the list by variance size was Main Board-listed Englotechs Holding Bhd, which reported a 720% deviation between its unaudited and audited FY07 profit after tax figures.
  
  Englotechs reported unaudited net profits amounting to RM3.14 million versus the audited RM19.5 million audited net losses reported for the year.
  
  In a filing to Bursa Malaysia, it said the variances were due to a RM14 million provision of doubtful debts and net unrealised foreign exchange losses.

Yup, the nightmare came true as a portion of Englotechs receivables were reclassified as doubtful debts!

March 2009 MARC downgrades Englotech

• MARC said on March 27 the rating action was based on the cotton glove manufacturer’s failure to meet its profit payment of RM1.7 million due on March 26 this year as confirmed by OSK Trustees Bhd...

On today's papers.

• Englotechs to be delisted
  
  Published: 2010/01/27
  
  ENGLOTECHS Holding Bhd will be delisted from the stock exchange on February 8.
  
  Bursa Malaysia Bhd yesterday said it had dismissed Englotechs’ appeal on the delisting.
  
  “After due consideration of all facts and circumstances of the matter, (Bursa Malaysia) decided to dismiss Englotechs’ appeal and to delist the securities of the company,” the regulator said.

How?

Don't you think it's very important to pay attention to this trade receivable issue?

Companies can record sales very easily. As they say locally, 'sell cheap, cheap, sure got people buy one'. Selling cheap ( got profit?) is easy, collection is another story. And when time pass too long without collection, these receivables needs to be reclassified as bad debts.

Just take a look at Englotech today.