Commander blames order processing problems for financial woes
- 30 August, 2007 12:45
Order processing issues and delays rolling out its franchise strategy have seen Commander report a net loss of $5.3 million for the 12 months to June 30. It recorded a net profit of $25.9 million in the previous financial year. Annual revenues were up by 38 per cent to $1.09 billion.
Gross earnings prior to restructuring costs came in at $67.2 million and met ithe integrator's June guidance targets. Commander had originally forecast full-year earnings of $95-$101 million but slashed this to $80-$90 million in May due to disruptions caused by its franchise business. This was revised again in June to $65 million after the integrator reported problems integrating the Commander and Volante ICT ordering and maintenance systems.
Managing director, Adrian Coote, said it had been a challenging year.
"This has been a disappointing year in a number of respects but we remain confident that we have taken the right action to put the business in a significantly better position to grow profitability and revenue," he said in a statement.
Coote said it conducted an independent review of its transaction systems and was now implementing recommendations around that. With six of its 41 franchisees left to sign, he said it was also starting to see good results from the more mature operations.
Commander's traditional voice hardware and networking business was the weakest link, recording flat revenues and 1.3 per cent decline in gross margin. Its data hardware and services businesses, however, were buoyed by the Volante acquisition and recorded revenue and margin increases. Key achievements over the past year included a multi-million dollar contract with Foster's Group and retaining or renewing managed services contracts.
Commander's financial woes over the last six months have left its share price in tatters, falling from $2 in February down to $0.75 at close of play on Wednesday.
Coote said the share price reflected the downgrades in earnings.
"The only way to deal with that is to focus on the fundamentals going forward," he said.