SCEE flags massive writedown

THE reason behind Southern Cross Electrical Engineering's request for a trading halt is now clear, with the company revealing a deep schism at a board level over both its future direction and millions of dollars in cuts.
SCEE flags massive writedown SCEE flags massive writedown SCEE flags massive writedown SCEE flags massive writedown SCEE flags massive writedown

Haydn Black

Reporter

Chairman John Cooper, Dr Jack Hamilton and Peter Forbes resigned as directors of the company following a recent review, which is almost complete

The company has confirmed redundancies will be made, buildings will be sold and assets auctioned off as it searches for savings.

The board now comprises new chairman Derek Parkin, Gianfranco Tomasi, CEO Chris Douglass and new director Simon Buchhorn.

The board says SCEE needs to ensure that its business is appropriately structured for the market conditions and lower forecast activity levels as the resources sector contracts.

The company expects to save $3-4 million from terminations after $1 million of restructuring costs.

It has ended its Rockhampton lease and will downsize its Brisbane office, with changes also likely at its Western Australian offices. It hopes to save $400,000 per annum.

The company's plant, equipment and systems have been reviewed and the sale of assets that are surplus to forecast activity requirements has commenced.

It is expecting a writedown of $3.5 million, with depreciation savings of $2 million.

SCEE hopes to be debt free by year's end. It is also expected to renew its banking facilities in August at a lower level to reflect the slowdown in the resources sector.

It will review $17 million of goodwill on its balance sheet from previous acquisitions, and has flagged a substantial writedown.

The company hopes to return to profitably by mid-year with a cash balance of more than $40 million.

Market conditions continue to be challenging as a result of highly competitive tendering, lower margins and commercially focused clients, but the company is actively tendering and is considering looking internationally for work across sectors.

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