Embattled ASX-listed distributor, Cellnet (ASX: CLT), has reported a $15.8 million net loss for the year to June 30.
The result is 235 per cent down from last year’s $4.7m loss and comes off a 55 per cent drop in full-year revenue to $196.2 million. In its ASX statement, Cellnet attributed $9.6m to its decision to quit the desktop and notebook distribution business last October.
Cellnet sold its IBM distribution business to Avnet in June and cut ties with remaining IT vendors shortly afterwards. The distributor said those actions shaved $54m in revenue off its full-year top-line, after originally estimating revenue would fall by $95m.
Continuing operations incurred a $6.1m loss including inventory write-downs and provisions of $2.5m, it stated. The termination of Cellnet’s New Zealand telco supplies contract 12 months ago was the other major contributor to overall revenue decline.
“These operations are unsatisfactory but the board believes the corrective actions taken over the course of the past year will change this result around,” Cellnet stated in its financial report. “In addition, the board continues to consider all options available to it to effectively utilise the cash realised from these operations to ensure the continuing operations are sound and all shareholders are provided with an appropriate return on the capital employed in the business.”
According to the report, exiting from IT distribution in two stages allowed the company to refocus on its retail arm.
“The delayed exit was necessary in order to build up the retail segment of the business and reduce some of the corporate overheads which would not have been sustainable with the reduced operations,” Cellnet stated in its Directors’ report. “The sale and exit from the server and print segments in June 2009 was done when we were confident the retail segment was able to not only provide a profit but a return to shareholders commensurate with the working capital invested in this segment.”
The company anticipated a return to profitability in the next financial year.