Redundancy costs push Kordia deeper into red

SOE warns over more unbudgeted costs if NZ business doesn't turn around

Kordia Group has announced an after tax loss of $4.4 million for the first half of 2009, $1 million over a budgeted loss of $3.4 million.

Kordia says the shortfall is due to unbudgeted redundancy costs in its New Zealand engineering consultancy business.

Revenue of $116m for the first six months was behind budget by 1.2% or $1.4 million.

The result comes at an difficult time, with the new government putting heads of state-owned enterprises on notice to lift their performance and to contribute to government revenue.

The revenue shortfall in revenue is primarily in Kordia's contracting and consulting business, Kordia Solutions, which is 10.7% down on the same period last year.  Kordia says two major one-off transactions, the sale of the Australian broadcast repair and maintenance business to Broadcast Australia and the termination of the Extend underwrite agreement with Telecom, boosted revenue in 2008.

Kordia says it is being "transformed", despite difficult market conditions. The company is moving from dependence on the declining broadcast business, heading towards analog switch-off, into a diversified telecommunications business, it says.

Kordia projects a stronger second half, led by improved performances from the Orcon, Kordia Networks and the Australian contracting and consulting businesses, together with reductions in overheads. However, it also warns that if the New Zealand contracting and consulting businesses continue to contract, this "will result in further unbudgeted redundancy costs and impact the NPAT position".

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