Brocker Technology Group's local office has laid off 40 staff and is exiting the computer products distribution business as the fallout from financial mismanagement in its Australian arm continues.
Brocker New Zealand told its 40 staff of their fate over the weekend – most of whom came from the old Sealcorp distribution business, but also from the head office team, middle management and administration. Brocker has also laid off 35 staff in its Australian office, which reports to the local office.
Brocker communications manager Nigel Murphy says a restructuring process for Brocker group’s lines of business was started last year but the problems in Australia accelerated and widened the redundancy net for both New Zealand and Australia.
Murphy says 30 other positions were lost late last year as part of the group’s review and Brocker is to continue cutting staffing costs from its high last year of 250 to 90. After Friday's cuts there are presently 177 staff. Much of the rest of the cuts will be when “non-core” business units are sold off or wound down over the next few weeks, he says.
Up for sale is ICS, Brocker’s cellphone services business, and a number of product lines from Brocker’s online telecommunications service provision unit, which rolled out in October last year. Brocker's flagship Bloodhound messaging service is part of the telecomms service unit, but is likely to not be sold, says Murphy. Brocker plans to “eliminate” non-performing businesses by March 31, 2001.
The local redundancies mean Brocker exits the computer distribution business here (with the exception of its Autodesk product) and in Australia. The professional services and Datec operations in Australia – under separate management and in separate companies – will continue. In New Zealand, Brocker will continue to operate a fine-tuned telecommunications service unit, its cellphone distribution business - which is a key distributor for Telecom - and a professional services division.
Brocker started life as computer distributor Sealcorp but that business had become less attractive as profit margins decreased over recent years, Murphy says. The company is listed on the Toronto and Nasdaq stock exchanges.
Murphy says the resignation of board member Julie Clarkson on the same day as the accounting irregularities in Australia were announced were not related.
Brocker’s up-coming complex share-swap merger with Asia-Pacific holding company Littauer Technologies is rumoured to be hanging in the balance as the problems continue. Brocker formally announced its restructuring to the Nasdaq after market close on Friday and said it had appointed PricewaterhouseCoopers to review Australia’s accounting irregularities. PwC is also to conduct a review of the group’s accounts for corporate governance and bank security purposes, a review expected to be completed within two weeks.
Trading in Brocker’s shares was stopped on the Nasdaq and Toronto stock exchange on February 15. At the time, they were trading on the Nasdaq at around $US0. 48c, meaning Brocker was in danger of being delisted as the Nasdaq requires shares to maintain a minimum bid price of $US1 or more.
Brocker says an internal audit showed an improper application of accounting procedures in Australia had resulted in an overstatement of a loss in net income of $C4.5 million. “The improper invoicing resulted in a shortfall of about $C1.2 million in the lending facility collateralised by the invoices,” Brocker says in a statement. “Brocker rectified this shortfall earlier in the week, and the lending facility remains in place. After allowing for these adjustments, management estimates that Brocker’s shareholders’ equity will remain in excess of $C21 million.”