Beleaguered IT and communications integrator, Commander (ASX: CDR), has reported a $245 million net loss in the six months to December 31.
The listed integrator experienced a 7 per cent decline in first-half revenues to $458 million. Net profits took the biggest dive, falling from a loss of $6 million in the first half of 2007 to a loss of $245 million in first-half 2008.
In a presentation to investors on Friday, Commander CEO, Amanda Lacaze, said she hoped the results presentation would be a "once in a lifetime" event and stressed the figures did not reflect the company's turnaround plan or improved cash flow position.
"The Commander I am running today is different to the one which we are reporting on," she said. "We have taken an extensive review of the business and our turnaround plan is well underway."
The major contributor to the loss was a $193 million impairments write-off, which included $129 million in goodwill, $29 million in receivables and $17 million in inventory. Commander also took a $34 million hit in relation to finance and debt costs.
Of Commander's total revenue in the first half, 46 per cent came from its data and hardware reseller division, 19 per cent from managed services and 35 per cent from traditional voice and network operations. Nearly half of its gross margins stemmed from managed services.
At the end of December, the company's cash flow was $100 million in the red.
"The previous business strategy was focused on top line growth. But this focus has meant people in the business have not been consistent with bottom line growth," Lacaze said.
"Another significant issue was the trading halt in October, which represented a break point in operations of business and created a great deal of uncertainty with staff, customers and suppliers. Many of our suppliers significantly tightened trading terms at that time."
In a bid to curb its spiralling share price and reduce debt, Commander announced a major turnaround plan in January. The business review and restructure saw it shed 600 staff and abandon its hardware reseller business.
Four weeks into its new plan, Lacaze said Commander was benefiting from a more streamlined, simplified market approach and expected to be cash positive for January and February.
"Previously, half of our revenue was through the resale of data hardware and equipment but it's a low-margin business. It's important if you want to be successful in that part of the market to have an underlying focus on costs and be running an extremely streamlined, quick to market and low-cost organisation," she said. "Given that this was only one part of our business and was counter-intuitive to our services business, which is focused on headcount and value, we have decided to exit that market."
Commander is also in the process of selling off non-core assets and has already banked $10 million for the sale of its wholesale network subsidiary, Unitel, to M2 this month. It also picked up $30,000 from the sale of its WA-based enterprise ICT business to Empired.
Commander's shares were trading at $0.145 at the time of press.