Heres my analysis of Pracom Arthur 12/6
PRACOM LIMITED 2002-06-12 ASX-SIGNAL-G
HOMEX - Melbourne
+++++++++++++++++++++++++ Following substantial change within the organisation over the last 3 months, the Board of Pracom Limited would like to provide shareholders with an update on the company's development.
The difficult trading conditions experienced in the first half year have continued during the second half of the financial year. This, combined with the strategic changes in the company over the same period, will lead to an expected EBITDA loss (Earnings before Interest, Tax, Depreciation and Amortisation) of less than $4m for the full year.
In light of the trading performance, the Board completed a strategic review in February 2002, which identified the need for significant change in the organisation. The key findings of the review were that the business:
* was overly complex and difficult to understand; * was carrying too much cost, particularly in central overheads; and * needed more focused management that was accountable for the financial performance.
On 1 March, the former CEO resigned and the Board subsequently appointed David Paranthoiene as Managing Director and Bruce Carter as Technology Director. Both are founders of the organisation.
In the past three months, the following actions have been taken to implement the recommendations of the strategic review:
* Simplified the business by restructuring into two operating divisions - Services and Technology.
* Disposed of the Retail Distribution Division which had been a consistent loss-making under-performer that was draining the company resources.
* Streamlined application software development ensuring revenue matches expenses.
* Applied renewed focus on our core Steadycom technology, particularly the Intel agreement to licence Pracom's intellectual property.
* Reduced total headcount in the business by over 100 people since January 2002.
* Instigated a rigorous cost-cutting program across all operating expenditure.
* Redeployed resources available to business unit managers to ensure they can deliver on profitable budget commitments.
The actions detailed above are expected to deliver on-going savings in operational expenditure of over $5m next financial year.
Operating cash flow has continued to support healthy cash reserves throughout the second half of the year.
THE PRACOM BUSINESS GOING FORWARD
The structure of the business for the future has been simplified into two operating divisions, reflecting Pracom's core competencies. This structure is now in place.
The Services Division is concentrating on providing outsource services to major corporations in Australia including telecommunications carriers. These services include specialised call centre and logistics operations, and managing field workforces that undertake broadband/telephony installations for carriers and structured electrical, voice and data cabling projects for major constructions or fitouts.
The Technologies Division is focusing on driving the sales and distribution of the Steadycom Platform and the recently released software developed in conjunction with and licenced to Intel, known as the Open Programmable Server (OPS). The Steadycom Platform and OPS are advanced telco-grade serversoffering high density, reliability and scalability to corporations and telecommunications carriers for a range of value added applications such as voice recognition systems or advanced IVR solutions.
OUTLOOK FOR PRACOM
Following the significant change that has been instigated within in the company, the Board believes that next financial year will benefit significantly from the operating cost reductions that have been achieved over the last 3 months. The management team aretotally focused on improving the financial performance of the company.
The company has now refined a vision that exploits our core strengths - combining people, process and technology to deliver solutions to customers that add value to their business. The Board and the management team are committed to delivering improved results and with business planning for 2002/03 being well advanced, the company forecast is focused on delivering strong EBITDA growth.
D Paranthoiene MANAGING DIRECTOR
For further information please contact David Paranthoiene on (03) 9677 8888.
