Cellnet operating profits take a tumble

ASX-listed distributor to gain from demerger of Mercury Mobility but flags operating loss

Cellnet is expecting full-year net profits will reach $7.5 million for the 12 months to June 30. But despite the buoyant top-line figure, the ASX-listed distributor is forecasting a net loss of $1 million from operations.

According to an ASX disclosure statement, the figure will include about $6.5 million in profit from the demerger of its mobile content division, Mercury Mobility, which is due to list early this week. The amount is dependent on Mercury's share price averaging at $0.20 during its first 10 days of training.

Earlier Cellnet documents value the mobile content business at $7.1 million.

The distributor also pocketed $2 million from the sale of a warehouse and office premises in New Zealand earlier this year.

However, Cellnet stated it was expecting a $1 million loss on operations over the same period, compared to $1.6 million net profit in the year to June 30, 2006.

In its ASX statement, the company blamed one-time management termination payments and relocation costs for the unsatisfactory result. Cellnet CEO, Mark Bloomer, pointed to the departure of at least four key executives over the last six months as a major contributor to the forecast result.

He predicted a brighter outlook over the next financial year, with some of its relocation decisions translating into costs savings.

Further details would be released once the results had been finalised, he said.