Coventry posts loss after $10m IT write-down

Automotive and industrial products supplier Coventry Group Ltd has posted a $1.2 million loss for the year to June 2007 after big write-downs in the value of its new IT system and goodwill on its interstate operations.

The loss, which was foreshadowed early this month, marked the second year running that Coventry's performance has been adversely affected by write-downs.

Its normalised profit after tax, which adjusted for the one-off factors, was $13.4 million, virtually unchanged from $13.5 million in the previous financial year.

The group increased revenue by just four per cent to $526.4 million. Within this total, the industrial products division lifted sales by 19 per cent while the automotive division suffered a seven per cent fall following the sale of the NSW operation and IT integration problems in other states.

The biggest contributor to the 2007 loss was a $10.4 million writedown in the value of the company's IT system.

The IT project, which commenced roll-out two years ago, originally had a budget of $14 million, but executive chairman Roger Flynn told WA Business News early this month the cost would be substantially higher.

Coventry initially engaged external contractors to implement the new system, the Oracle e-business suite, but is now using internal resources to manage the implementation.

The second big contributor to the loss was an $8.8 million goodwill write-off on its automotive businesses in Queensland and the Northern Territory.

The company said it had been internally focused during 2007 on its IT project, the planned relocation to new automotive premises and integration of acquisitions.

It said that 2008 would be a year of transition "in which all these projects will be brought to fruition".

"The underlying potential of the group remains strong and there are a lot of positive initiatives within the business by many highly committed staff," the company said in a statement.