Queensland-based distributor, Cellnet (ASX:CLT) has reported a 64 per cent increase in net profit to $1.524 million for the first six months to December 31.
The distributor attributed the result to an expanded customer base, product offering and an efficiently operating business.
However, the termination of the Sandisk distribution agreement, which was finalised on January 26, is expected to put a $2 million dent in revenue for the remainder of the financial year, but net profit impact is expected to be immaterial.
In a statement to the ASX, Cellnet said there was still room to expand its operations through the use of existing infrastructure.
The share buy back program resulted in more than 3.6 million shares repurchased at an average price of $0.325 per share, totalling $1.17 million.
It highlighted there were still some challenges to be met in full capacity utilisation and effectively utilising cash resources available.
“In this regard, several potential opportunities have been considered and the company continues to seek appropriate opportunities,” Cellnet said.
Cellnet’s balance sheet has remained debt free with $19m available in cash resources.
The distributor remains optimistic that it can improve its earnings during the second half of the 2011 financial year.
It is also defending a court summons by the liquidators of Leading Solutions, McGrathNicol, which are seeking to recover more than $1.2 million from Cellnet, on the grounds the money was received as 'unfair preference' prior to Leading going into administration.
"Cellnet denies any liability under the claim, will vigorously defend it and pursue the recovery of any costs associated with such action," the distributor said in a statement.