Information technology company Pisces Group, which is chaired by former Liberal leader John Hewson, looks likely to avoid liquidation, the company’s administrator says.
Rodgers Reidy Chartered Accountants partner Robert Moodie says the company has examined its cost base to ensure it operates successfully in the future.
“There’s a deed of company arrangement proposal that’s being put forward to their creditors which I think will be accepted, and we’ve gone through the expenditure side of the business and pretty much looked at every opportunity for cutting back expenses to put them in a position where we can hand control of the company back to the board.”
“At this stage, based on the forecasts that have been prepared, we have reviewed the business in substantial detail and believe it to returnable. Now, forecasts by default contain assumptions, so ultimately the proof will be what happens in the next year.”
Pisces Group is a major distributor of support systems to the broking industry though subsidiary Pisces Communication.
Moodie says the company’s major problem was that it was assuming it would be able to obtain capital before the global financial crisis hit.
“The business was still in its growth phase that was moving at its own rate where they were planning an influx of capital. The financial crisis came along and capital suddenly became less attainable. Previously, they’ve had substantial funds available from third party investors, but more recently that has become a problem.”
Pisces, which has an annual turnover of about $9 million, has debts of about $3.1 million. According to its accounts, it posted a $13.5 million loss in 2007-08 after a $934,000 profit the previous year.
The company previously had 37 employees, but Moodie says that number has been reduced.
“There have been a number of redundancies and we’ve negotiated reasonable reductions in overheads with suppliers. There’s also been a number of key contracts we’ve been able to disclaim and we’ve been able to reduce month-by-month expenditure.”
John Hewson was appointed chairman of Pisces Group in April 2008.
He was previously a director of financial services group Elderslie Finance, which collapsed in July 2008, owing $140 million, one month after Hewson resigned from the company’s board.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
