Chariot writes off $7.3m after failed VoIP venture

Stuart Corner
Saturday, 02 September 2006 02:56

Business IT - Technology

Chariot has reported an asset write down of $7.3 million resulting from its failed VoIP joint venture with Transcom International and has vowed to hit back at Transcom's $3.2 million legal claim over the business with one of its own for an even higher figure.

Chariot announced in July that it and two its directors were facing a $3.2 legal claim from Transcom over the failed collaboration, entered into in late 2004.  Since then Transcom has accused Chariot of failing to disclose to the ASX the fact that its $4 million investment in the joint venture had been written down to zero.

In its annual results to 30 June 2006 Chariot reported "an amount relating to the impairment of assets of $7.3 million specifically relating to the investment made in Transcom International Limited in the 2005 financial year."

Noting the $3.2 million legal claim the company said: "the directors have considered the claim and taken legal advice and believe that the claims are made without merit. The claim will be defended and counter claims will be made in due course for sums in excess of the claims received.

"At the date of this report the directors do not believe there will be any economic loss to the entity and as a consequence, no contingent liability and no contingent asset have been brought to account." Meanwhile, Chariot has just launched its own VoIP service independent of Transcom.

For the year, Chariot reported revenue growth of 15 percent from $21.4 million to $24.7 million and a net after-tax loss of $7.7 million. Excluding the $7.3 million impairment of assets, Chariot recorded EBITDA of $1.7 million (2005: $4.2 million) and a net loss after-tax of $389,000 (2005: $1.5 million). The company previously reported that it expected to report EBITDA of around $2 million with a small net loss. Broadband customer number were up 35 percent from 14,000 to approximately 19,000.

In August, Chariot retrenched staff  and closed of the majority of its offices in Queensland, New South Wales and Victoria, leaving its head office in Adelaide and two regional centres in Ballarat and Southport. It said that the restructure was expected to realise net operational savings in excess of $1 million for the 2007 financial year and $1.3 million on an annualised basis. It now claims "this difficult process is tracking to the original timetable for completion by the end of October, 2005 (sic)."