Software specialist distributor, Manaccom, has gone into administration after its parent company, Jumbo Interactive Limited (ASX:JIN) decided to stop funding the business.
Deloitte has been appointed as the administrator to the subsidiary.
Jumbo CEO and executive director, Mike Veverka claimed it had been funding the business for years and tried to turn it around but it became apparent that it wasn’t going to reach profitability for a while.
Manaccom experienced a trading loss of $3.8 million before tax in the 2010 financial year. Of this, the software publishing and distribution business contributed $16.15 million revenue and a segment (pre-tax) result of $1.8 million. The software distributor's poor financial performance, came after losing its most significant vendor partner, Trend Micro, in May 2009.
The Group incurred a total loss of $7.3 million when factoring in additional extraordinary expenses, including write-downs.
Despite this, Manaccom previously maintained a profitable record. It reported a 55 per cent increase in revenue to $59 million, along with net profits of $2.96 million (up 8 per cent year-on-year) for the 2009 financial year.
Jumbo claimed adverse market conditions for over-the-counter software, was a major contributing factor to Manaccom’s loss.
About 35 staff will be impacted by the decision to wind down the Manaccom business, Veverka said.
The parent company intends to put a proposal for a deed of company arrangement in place to ensure a substantial return to Manaccom creditors.
“We’re hoping to come up with a suitable arrangement with all the creditors and just shut the business down without too much fuss,” he said.
The list of creditors has not been released at this stage. The first creditors meeting will be held on February 10.
Without Manaccom in the picture, parent company, Jumbo expects to achieve a half-year net profit between $2.5-$2.7 million for the period to December 31, 2010.
The distributor's founder, Ian Mackay, left the business in June 2010, when Jumbo bought him out of the business.
Manaccom specialised in providing publishing and re-publishing services for software developers. Its distribution line up included McAfee, Acronis, Net Nanny and MYOB.
It supplied products to a number of retailers including Harvey Norman, Officeworks, Dick Smith, JB Hi-Fi as well as independent resellers.