Allied Technologies will concentrate on its core communications infrastructure business as it endeavours to bounce back from a year of losses.
The services company has reported losses of $5.84 million on revenue of $34.1 million for the year ended June 30. It recorded profits of $1.15 million in the previous financial year on revenues of $11.54 million.
The losses were $2 million more than expected, which managing director, Michael Addison largely attributed to a $1.6 million write-down of its ATA division. Actual trading losses were about $3.7 million, he said.
In an attempt to stop the rot, Allied has put its TUSC Systems subsidiary up for sale just 12 months after acquiring it.
According to Addison, a halving of the group's share price had been the major catalyst.
"The board considered that building the group through further acquisition was no longer a realistic prospect," he stated in its annual financial report.
According to the report, project management issues, new operating division investments and falling revenues in its Allied Technologies Australia (ATA) business unit had caused the alarming results.
Addison claimed it had now resolved its problematic contracts and closed its professional services division. This had resulted in a $2 million reduction in salary and overhead costs.
Allied would not be implementing any further rationalisation plans, he said, but would concentrate solely on its core business: communications infrastructure.
"One market area of interest is VoIP technology and the transition of PABX towards this," he said. "It's an area where we are working with partners and seeing opportunities."
ARN also understands the company is in due diligence talks with a prospective TUSC buyer.
Addison said it had received a number of expressions of interests and the sale process was well underway. He refused to be drawn on when it would close.