By Ian Neubauer
Staging Connections Group (SCG) has attributed an overambitious growth strategy as one of the key reasons for the dire financial circumstance the company finds itself in now.
“The business commenced a process of building a global business at least twice our size,” newly appointed CEO, Tony Chamberlain, said at SCG’s annual general meeting in Sydney yesterday (November 19).
Other factors Chamberlain highlighted were a downturn in forecasted sales, asset depreciation, redundancy payments to former CEO Michael Garner and other executives, and failure of its Australian-based creative service division to secure any major events.
The perfect storm of skyrocketing expenses and nosediving revenue targets saw SCG’s debt rise from $35.9 million to $97.7 million in the 12 months ended June 30. It also saw the company’s shares fall to 90 cents in December 2007 to a new low of 3 cents today (November 20).
Revenue of $194.5 million did little to offset operating costs which, along with increasing credit charges, resulted in a net loss of $4.1 million for the period.
SCG chairman John Churchill the board was confident in Chamberlain’s ability to repair the fundamentals of the business.
“The board’s major focus continues to be on debt reduction and recently we announced the sale of our UK business Essential Lighting and the rationalisation of our UK operations,” he said.
“Staging Connections is unique in the event services market. We believe that our ability to deliver a range of integrated event services to customers anywhere in the world, our experience and primary market positions held by our businesses, places [our] company in a strong position when markets rebound.”
SCG did not provide an earnings guidance for 2009.
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