Solution 6 posts loss, continues takeover drive
- 24 February, 2000 12:49
Solution 6's aggressive acquisition strategy of the past year has been the main cause of the company's overall operating loss of $65.97 million for the half year to December 1999, officials said.
Solution 6's recent acquisitions include CMS/Data, PKF and CVSI Australian and Singapore.
The company yesterday released its financial results for the six month period up to December 1999, but was unfazed by the losses.
"(The losses) look very significant on the surface, but they are actually very meaningful in terms of the investment made by Solution 6," said Chris Tyler, Solution 6's CEO.
The company reported revenues for the December 1999 half-year of $70.4 million -- up from $34.07 million for the same period in 1998 -- and abnormal losses of $51.8 million.
According to Solution 6's chief financial officer, Tom Montgomery, the company's core revenue stayed "roughly flat" over the period, but $36 million in revenue was added from the acquisitions. He said there was a significant uptake in Australian revenues predominantly because of the local acquisitions.
According to Montgomery, Solution 6's losses can by mainly attributed to the cost of integrating acquired organisations, new internal infrastructure and systems, and sales losses as a result of Y2K. "Software licensing sales went down due to Y2K, plus there are a number of new products to be released in the first half of 2000.
"We are not losing customers . . . they are involved in negotiations with us and have not gone to other (competitors)."
Montgomery said he does not expect Solution 6 to return to profitability in the next six months, but did expect improvement through the period as a result of the introduction of new 32-bit products.
Despite the losses, Solution 6 plans to continue its acquisition trail and, despite failing to acquire UK-based Pegasus Group, has stepped up plans in Europe and the UK.
Additionally, Montgomery said the company is actively pursuing listing on the Nasdaq before the end of the year. "It's a natural step to take, but we will get more acquisitions under our belt [first]," he said.