Reply from a listing company to small shareholder

There are a few questions that i hope you may help me with.

After going through the recent Quoter report, i found that there is some unhealthy situations in the company finance.

Trade receivables number is hiking a new high. The number even is higher than the earning of xxx.

[LJ] Yes, our nature of business is normally base on milestone, and typically the collection is rather long. The industry norm is like 12 months. It has been a common pattern for software industry. However, it does not mean that we should be the same as the industry.

We have since last year trying to improve various areas to enhance the upfront collection. Some of the things we have done are like: -

a) increase upfront deposit from 20% to 50% for new customers

b) refrain from starting job or control delivery if no payment is received

c) improve collection to be more aggressive



Over the past 2 years, we have improved the situation of our A/R as follows. But before that I would like to point out that Other Receivable should not be concluded as A/R as it is the investment amount to China (Other Receivable in FY 2007 = 2 Mil). Because initially we classified the progressive investment as cash advance. After the conversion this year, this receivable will be reclassified as investment. As for other receivable in FY 2006, they were for investment (RM 1.0 Mil).



FY 2006 FY 2007

Revenue 7.78 Mil 12.4 Mil

A/R 5.9 Mil 8.0 Mil

Other Receivable 2.5 Mil 2.0 Mil

A/R vs Revenue 75.8% 64.5%



For this coming financial year 2008, we foresee the A/R will be further improved below 55%.

We are continuously looking to improve the A/R situation, but is not something we can change over night. But we are not stopping at this.

Means, company has earning in business,but receive no cash from client. Is the company having any difficulty to collect cash from client?

If possible, please advise me that the amount of money own by the largest client and what is that company?

[LJ] Our client base, since IPO, has been improved where we do not rely on single largest customer anymore. For this question, I should reply such that the largest money owing is ranging from 500K to 1.5 Million for any project (some customer may have multiple projects with us). Typically, if the client is unable to pay in lump sum, we will strive for instalment agreement with them. This arrangement is working OK so far for us.

How many months of credit terms for clients?

[LJ] Normal credit terms is about 30 days from the invoice date.

From the point of management, how much is trade receivables will change to bad debts provision?

[LJ] So far, all our A/Rs were able to be fully collected. We have not had write-offs provision so far. And by looking at our current A/R list, we do not foresee any write-off potential.


Up to date, any further reduction or increase in trade receivables and cash? please advise the estimated figures.

[LJ] Please see explanation above. Up till today, we do have improvement in A/R and cash. But since we have not announced Q3, please excuse me for not able to reveal the actual figures until we finalize them by end of May 2008.



How is the business in China? as i have not find any income from that development in the last report.

[LJ]The biz was rolled out in Dec 2007. And now has been commercialized and starting to generate revenue.



According to the agreement, the profit sharing is monthly basis, am i right?

[LJ] The collaboration has been converted to equity relationship, the announcement was made subsequently last year. Currently we are pending the completion of equity conversion.



If you find that is too difficult to answer via email, i am willing to visit the management if you able to arrange a special appoinment for me.

[LJ] Email or meeting is OK with us. You are always welcome to visit our office too. Please do let me know if you desire to visit us. I can arrange for it.


不能说的秘密