ASX-listed integrator, UXC Group (ASX:UXC), is set to make a large compensation claim against the Federal Government due to its cancellation of various green schemes.
According to the company’s half-yearly results, a number of business units are facing a fire sale and millions of dollars in losses due directly to the Government’s cancellation of various Green schemes. All retail and Government-supported environmental solutions activities are set to shut by Q1 2011.
“The Federal Government’s recent decision to cancel the Greens Loans program, to cease the Green Start program before its commencement, and to further slash environmental programs… make it imperative that we exit lines of business and services that are contingent upon Federal Government funded initiatives,” UXC said in its report.
“The operational losses we have incurred in the areas to be divested net to some $5.1 million,” it said. “Much of this is due to building infrastructure and capability to deliver Federal Government supported environmental programs that should’ve delivered substantial revenue, but which instead were poorly utilised.
“As a consequence, we are pursuing a claim against the Government for selected costs incurred.”
But the company has been forced to write down another $6 million because the units in question are unlikely to reach the sales costs needed to pay for the investment.
Other environmental programs cited included the discontinued solar hot water and insulation schemes, which the company also claimed caused similar revenue fluctuations and losses.
“We are no longer prepared to make major investments in capital and staff based on programs that are not de-risked for industry,” the company report said.
UXC reported a massive 75 per cent drop in net profit to $3.8m. Total net losses from discontinued operations, including the failed greens scheme units, rose by 22 per cent to $14.85m.
ARN contacted a spokesperson for the Environment Minister, Tony Burke, but had yet to receive a comment by the time of going to press.