10 Aussie tech players hit the wall owing over $1M last year
- 12 December, 2017 12:55
Ten Australian information media and telecommunications companies hit the wall owing more than $1 million last year, according to the latest figures by the country’s corporate regulator.
The Australian Securities and Investments Commission (ASIC) published its annual Insolvency statistics: External administrators’ reports (July 2016 to June 2017) on 12 December, providing an overview of the reports lodged by the country’s liquidators, receivers and voluntary administrators over the past year.
The latest report reveals that during the financial year ending June 2017, there were at least 10 companies operating in the information media and telecommunications market segment that owed more than $1 million when referred to administrators, liquidators or receivers.
At the same time, no fewer 27 tech companies owed up to $1 million upon referral, while 106 companies in the industry sector owed up to $250,000 in unpaid taxes, according to the report.
Most information media and telecommunications companies owed less than $250,000 to unsecured creditors. Most unsecured creditors got nothing back. In nine cases, unsecured creditor got up to 20 cents in the dollar and only one got between 51 and 100 cents in the dollar.
The main causes of failure in all industries, as well as in the information media and telecommunications industry, were inadequate cash flow or high cash use, poor strategic management of business and the new one reporting this year was trading losses found in 34 per cent of reports.
In the two previous years, poor financial control including lack of records was the third main reason.
The report also revealed that the information media and telecommunications industry segment was among the top three industries exceeding the percentage of unpaid taxes and charges over $1 million (six per cent) compared with the average percentage across all industries, which stood at 4.6 per cent. The other two were Mining (13.6 per cent) and Construction (6.5 per cent).
Overall, information media and telecommunications industry players accounted for 168 of the initial external administrators’ reports filed with ASIC during FY17, equating to about 2.2 per cent of the total, which came to 7,765, ranking the tech industry segment ninth in terms of total volume.
On the upside, the total number of companies in the information media and telecommunications industry that were the subject of external administrators’ reports during the year was lower than during the previous year.
In the previous financial year, there were 225 information media and telecommunications companies under external administration, with the industry taking up the position number seven in the rank.
The report comes after a year that saw several local IT companies and telco players placed into administration or enter liquidation.
Some recent cases, which would not be included in the ASIC report, include Australian mobile phone repair firm, 101 IT Solutions, which traded as Fonebiz and was placed into liquidation just over a month after being placed into voluntary administration, in November.
Just a month earlier, Queensland’s Data Centre Technologies entered voluntary liquidation, more than two decades after it began operating, albeit under a number of trading names.
In early August, Telstra partner, Interactive Telecoms, went into voluntary administration after the company was hit by financial difficulties arising from ongoing changes in the way Telstra structures its commissions for licensed retailers. It was liquidated in September.
Also in September, Queensland-based Soma Information Technology, which traded as Soma IT, entered liquidation owing over $1 million to creditors.