One year after its change of ownership, national computing business ComputerCORP Ltd is close to completing a major restructuring and about to embark on a series of acquisitions.
One year after its change of ownership, national computing business ComputerCORP Ltd is close to completing a major restructuring and about to embark on a series of acquisitions.
ComputerCORP had grown during the past 18 years to become a significant player in the Western Australian computing market with smaller but growing operations in other states.
Its founders, Hugh Smith, Rod Durston and Michael Rickers, sold the business last year to listed company Etick Ltd for $8.4 million in cash and scrip.
The deal has soured somewhat since then, with the value of their shares sinking from an issue price of 25 cents to about 15 cents currently.
Current chairman Domenic Martino, formerly of accounting firm Deloitte, said the new owners were surprised by the challenges they confronted when they took control of the business and have needed to implement extensive changes.
“It’s been harder than we first thought it would be,” he told WA Business News.
Mr Martino likened the turnaround to a private equity play, where the new owners restructure the business before resuming profitable growth.
ComputerCORP achieved rapid growth in 2005-06 – its last year in private hands – with turnover jumping to $143 million.
The new owners initially pursued further growth, acquiring Melbourne companies FED IT Pty Ltd and Notebook Depot Pty Ltd for $1.5 million.
This lifted staff numbers to more than 300 nationally and contributed to further growth in revenue.
However, trading profits were below expectations. The group wrote-off $10 million in goodwill and incurred a loss of $10.8 million in the half-year to December 2006.
The new owners commenced a review of the business under chief executive Robin Rindell, who joined last December.
This has resulted in substantial changes, with the closure of its branded assembled desktop PC unit, the sale of Notebook Depot back to its previous owners, and a reduction in staff numbers to about 250.
The company also needed to raise a further $4.2 million in capital, through a rights issue pitched at 20 cents per share.
Mr Martino, who holds a 21 per cent stake, said the new owners were implementing a more streamlined national management structure.
“It attempted to go national so it sacrificed profits,” he said.
“They went out and replicated exactly what they had here [in WA], which was very successful.
“That’s good for growing but it’s costly.
“You have got have a national structure to run a national firm, you can’t have five individual offices.”
Mr Martino said the new owners had also shifted the focus from infrastructure procurement, which he said was a low-margin business, towards infrastructure services and solutions.
He said Mr Rindell previously held a senior role at South African computing business Datatec, which completed 50 acquisitions over five years.
ComputerCORP was aiming to complete about six acquisitions over the coming year, targeting businesses with turnover of between $15 million and $150 million.
That would lift the group’s turnover to between $300 and $400 million.
