Melbourne IT enters trading halt

Hosting and domain services company Melbourne IT entered a trading halt this morning as it prepares to release the results of an internal business review.

The trading halt is expected to last until Thursday this week, at which time the company will announce the outcome of the review of its business, first flagged in November last year.

Melbourne IT indicated that it was studying a potential sale of elements of its business to a large offshore entity, as a result of deferred contracts and difficult trading conditions. 

The board told shareholders it would continue discussions with several parties that had previously expressed interest in taking over divisions of Melbourne IT.

The company’s eBusiness Solutions and ForTheRecord divisions have been the hardest hit, hurt by aggressive pricing and reductions in government federal respectively. 

Melbourne IT also suffered a setback to its $600,000 transformation project started by the company in 2010. It initially forecast the project would be completed in 2012, but late last year announced the project would not be finalised until 2013.

A difficult 2011 was followed by an equally tough financial year 2012, in which the company reported net profit and revenue drops of 16 and 5 percent respectively. It recorded the same percentage drops in 2011.

In FY2012, the company posted net profit of $11.4 million, from $11.5 million the previous year, and revenue of $170.6 million, down from $179.8 million.

It also recorded a non-cash impairment charge of $2 million after writing down the value of ForTheRecord.