Embattled ASX-listed distributor, Cellnet, has reported a $4.6 million net loss in the year to June 30.
The disappointing result was delivered despite a $14.9 million profit from the demerger of its Mercury Mobility business. The company also made $2 million from the sale of other assets. But a goodwill write-off of $8.5 million relating to acquisitions and operations, along with $3.1 million in doubtful debts, saw its bottom line plunge into the red.
Cellnet’s year-on-year revenue also took a tumble, falling from $528 million to $439 million over the same period. In its report, Cellnet attributed the 16 per cent drop to the loss of HP and Apple business.
HP terminated its relationship with Cellnet in December. At the time, managing director, Stephen Harrison, told ARN he was “unfazed” by HP’s decision and claimed Cellnet’s bottom line could actually improve after the loss of the Personal Systems Group contract.
“We did drop a lot of revenue, but we still had fixed costs of doing much bigger business in the second half of the year,” Harrison told ARN today. “We have addressed that now and reduced our fixed costs through back-end processes.”
He stressed the company was now debt-free and had reduced stockholdings to appropriate levels. It had also setup an internal sales and marketing team.
“You can put this down to a really big tidy up over the last 12 months,” Harrison said. “We were looking to break even or have a slight profit, but the market has been pretty tough and we have gone through a lot of changes with vendors, resellers and internal redundancies. I think things have now settled down – where we are going compared to the last year is chalk and cheese.”
However, Harrison didn’t rule out further redundancies or operational changes if the market climate continued to decline.
“It’s tough going out there for IT distributors and resellers,” he said.