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Dumped by IT wave

THE old saying that people should stick to their knitting has proved its worth with the announcement from yet another resource company-cum-IT company going full circle after caught being up in, and spat out by, the technology hype.

Surfboard Ltd has quietly closed its Sydney office and dropped the Surfboard name in favour of its original name, Grange Resources, after a technology-focused sojourn, which burnt a $6.1 million hole in earnings.

Surfboard Ltd had planned to set up as an applications service provider for the financial services industry.

Along the way it took the scalps of Don Hagan, Paul Biancardi and Philip Brown.

Its shares, currently trading at around 10 cents, are a far cry from its $1.46 high in early 2000 on news that it was to take over Surfboard, and still well short of Grange’s 80 cent share price established prior to the change in activities to dot.com.

Grange Resources was the one-time investment vehicle of Swiss fund manger Hans-Rudi Moser and Ludger Kolmascher.

Blame for many of the problems Surfboard faced was put squarely at the feet of its former chief executive Don Hagan, who was the former head of Austar and LibertyOne.

But unlike other resource companies lost in the IT bubble, Grange Resources had the backing of its “Highway” copper mine in Queensland, which kept the money flowing in.

The scaleback in the technology arena is already paying off for the company.

Its half-yearly report released last week indicates revenue had climbed to $12.3 million compared with $9.2 million for the corresponding period last year. Meanwhile, costs have more than halved, from $23.7 million to just $11.7 million during the same six monthly periods. The fall off in expenses has meant a turnaround in profit to $536,000 compared with the $15 million loss for the first half of 2000-01.

Another junior WA resource company, Allied Mining and Processing, also moved into technology as a means of diversifying its revenue stream. It is reported to have invested about $200,000 in an Internet audio design company, including a dedicated West Coast Eagles Internet radio station and Worldwide FM, which was the baby of comedian Kevin “Bloody” Wilson.

The venture ended when administrators being called in mid way through last year.

Another resource company, North Star Limited, changed its name in early 2000 to Wet Dreams Ltd before embarking on an expensive exercise to sell its surf wear products, which it was hoped would eventually rival that of Billabong. After little more than a year, the company was forced to scale back its operations and was left looking for other options.

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