IT services company, Anittel Group (ASX:AYG), has reported a dramatic 1215.5 per cent drop in profits after tax to a loss of $13.47 million for the half year ending December 31, 2010. But revenue over the same period rose 1221.6 per cent to $31.67m.
At the same time last year, Anittel’s net profit after tax was a $1.02m loss with total revenue of $2.4m in revenue.
According to Anittel’s half-year results filed on the Australian Stock Exchange, the main reason for the major loss in profits was a $10.86m impairment write down of goodwill due to a fall in product sales in Tasmania and the poor performance of the IT services division.
“This period has been challenging from several perspectives with the major impact on performance being the drop in product sales in Tasmania…where the economy was in recession,” the filing said. “It is important to note that the consolidated entity has …not lost the clients, but rather business and government have reduced their hardware spending for the time being.
“The board and management are in the process of regearing the business to capitalise on its organic growth strategies.”
Anittel’s earnings before interest, taxes, depreciation and amortisation were a loss of $937,438, of which $500,000 was due to redundancies made in December 2010.
The company’s chairman and director, Peter Kazacos, and Vicki Kazacos also made a 90-day loan to Anittel worth $1.25m to be used to pay off $1m worth of debt.
Aside from cutting 10 per cent of total staff resulting in an annualised saving of $2.4m, the company board will also be slashed from seven to four directors. The previous state-based management structure has been changed to a national structure and the acquisitions drive has been firmly stopped with organic growth now the aim of 2011.
The large losses come after Anittel went on a major acquisition drive in 2010. Axxis, Accord Technologies, Aspirence, D2K Townsville, Netrics and Anittel were all bought up by Kazacos’ now renamed firm, Hostech.
The loss was much higher than earlier indications released to the media of around $800,000 with Tasmania performing below expectation.
While the results were only released on March 1, Anittel’s share price suffered a dramatic fall on February 25. The volume of stocks traded rose dramatically to 5.69 million and the price fell by 20 per cent to 0.008 cents a share.
The next day saw share prices fall another 12.5 per cent to 0.007 cents a share with 4.7m shares traded. As of 3:10pm on March 1, Anittel shares have fallen by 14.29 per cent to 0.006 cents a share with 959,000 shares traded.