Kordia turns forecast profit into loss
The future of state-owned enterprise Kordia is again in question after a forecast annual profit of $1.7 million turned into an $8.6m loss.
It is not the first time the telecommunications and transmission company has disappointed as it seeks to wean itself off its past mainstay of running the country's analogue television transmission network and develop new revenue streams.
State-owned Enterprises Minister Tony Ryall wrote to Kordia chairwoman Lorraine Witten last December indicating that there might be no Government bailout for the company if it ran aground.
He told Witten that if Kordia borrowed any more money it should ensure lenders were "specifically made aware" that their loans were not guaranteed by the Crown.
Witten said she believed all state-owned enterprises were advised of the need for the clarification.
"Kordia has sought no additional loans and has delivered strong debt reduction over the past eight years," she said.
"Debt was over $120m and has reduced to $60m at June 30. This reduction continues."
Kordia, which employs more than 1000 staff in 20 offices in New Zealand and Australia, reported a loss of $8.6m for the year to June on a 3 per cent drop in revenues to $301m.
In its last statement of intent in November it had forecast a profit of $1.7m on revenues of $312m.
The company said it had been hit by "some problem contracts" in Australia, including a significant one that proved unprofitable, as well as by adverse exchange rate movements.
In its interim results published in March, Kordia said it had started legal proceedings against an Australian customer, disputing the termination of a contract and seeking a judgment on other contractual issues.
Witten said the dispute had been resolved out of court.
Kordia forecast in its November statement that it would make a profit of $7m this financial year and $11.1m in the following financial year, but it has sometimes forecast profits that have not materialised or been reduced as deadlines have approached.
In its 2012 statement of intent it had forecast a profit of $4.1m in the 2014 financial year.
Kordia is due to carry out the second leg of a strategic review in the 2015-16 financial year after an earlier review saw it sell internet provider Orcon last year.
Ryall said in his letter to Witten that he expected the full co-operation of Kordia's board to ensure the most value was obtained from the process.
Witten would not comment on the options that might be considered.
"It is the job of the board to undertake regular strategic reviews," she said.
"The board will assess the scope and terms to ensure it reflects the economic and competitive landscape for the group at that time."
Kordia had a wobble in 2009 when it posted a $1.1m loss and slashed its 2010 profit forecast from $12m to $1.3m, and its 2011 profit forecast from $18m to $6.1m.
But in 2012 it reported a $12m annual profit, led by an improvement in its Australian engineering business, and then signed a A$90m ($117m) two-year contract to provide a communications network for Australia Pacific's A$23 billion liquefied natural gas coal-seam gas project in Queensland.
Kordia said its New Zealand business had exceeded revenue and profit targets in the past year.