CIO

Service Stream blames writedowns for 1H loss

Service Stream’s (ASX:SSM) 1H earnings were impacted by writedowns from lost revenue at a large infrastructure project and a shortfall in its telecom business, CEO Graeme Sumner said today.

The company, which provides end-to-end services for the telecom and utilities industries, reported an $8.6 million net loss on Friday.

Service Stream was forced to write down $15.8 million in costs from the McCourt Dando GCDA civil engineering project, when a contractual dispute resulted in the company not being paid for works rendered, Sumner said in an Open Briefing.

While Service Stream is suing to recoup the lost revenues, the fact that it chose to write down the costs is an indication that the company is not confident it will be successful, he added.

The company has taken moves to stimulate a turnaround, including exiting the civil construction business and implementing structural and personnel changes, he said. But the company is expecting 2H10 to be in-line with the first half, and does not expect to pay a dividend.