Online IT equipment retailer Harris Technology is moving to embark on a major capital raising effort to boost its inventory as it works to meet surging demand amid COVID-19.
The publicly listed retailer has completed a private placement of 43.9 million additional shares at an issue price of 8 cents per share to raise roughly $3.5 million.
The company is raising additional capital to fund a sustained increase in its inventory to meet the increased demand for its products and to reduce debt.
The demand surge can be seen in the company’s financials for the half year to 30 June 2020, with unaudited revenue up to $9.9 million, compared to the previous half year period ended 31 December 2019, with revenue at $4.1 million.
In late July, Harris revealed its fourth quarter and full year results, with unaudited revenue for the 2020 financial year to the end of June standing at $14.1 million and unaudited profit of nearly $1.1 million.
According to Harris, the increase in revenue is expected to be sustained for the foreseeable future in both the traditional electronics division as well as its new pro-hygiene division, which was established in the second half of the year ended 30 June 2020.
Increasing the company’s working capital via the new capital raising effort is also intended to accelerate its investment in growing underlying sales and the development of new products. A larger capital base will also allow Harris to negotiate improved terms with suppliers.
The move comes after a relatively buoyant financial year for Harris, pushed by a surge in revenue from its online IT and electronics sales as Australians rush to set up home offices in the midst of the coronavirus pandemic.
Harris Technology in April claimed its revenue increase has also been in part a result of its “strategic leveraging” of the marketing and distribution power of major e-commerce platforms such as Amazon Australia.
“In early July, we are delighted to achieve the top Amazon Australia ranking, and are grateful for all the customer reviews and feedback received,” Harris Technology CEO Garrison Huang said. “We have been able to take advantage of Amazon Australia’s strong logistic and marketing power to grow our footprints on Amazon.
“Our strategy of working in partnership with the major e-commerce platforms is certainly contributing to our bottom line, with online sales growing substantially over the past year. We are continuously working closely with platforms such as Amazon, Kogan, Catch and eBay to compliment the product offerings by leveraging HT’s expertise and knowledge in IT/CE products.
“This all culminates in the big financial turn-around in FY20 as we delivered an annual net profit before tax in excess of approximately $1.05million (unaudited), compared to the previous year's result ofa $732,000 loss (audited). We are now looking forward to another exceptional growth year ahead,” he added.
Harris’ capital raising move follows similar moves by a number of other Australian Securities Exchange (ASX)-listed technology players, including NextDC, Dicker Data and Rhipe, with publicly listed players having been able to pull in millions of dollars of fresh investment due to emergency measures by Australia’s financial powers.