Snowball shows early form despite loss
Financial services group Snowball has released its preliminary annual results and despite a 538 per cent increase in revenue to $5.24 million, will post an overall loss of $6.16 million.
However Snowball chief operating officer Carl Scarcella says the figures distort the true nature of the group which has only been operating in its current form for six months after completing a merger and restructure with Fleet Capital.
In September last year Fleet Capital purchased all the shares and options in Snowball but under the conditions of the deal Snowball vendors would hold nearly 90 per cent of the issued capital value of Fleet effectively becoming the holding company for Snowball.
As a result of this move Scarcella says the revenue figures only represent the last six months for the group and their size and increase should not be compared with that of Fleet Capital.
He also says that about half of the loss, $3.02 million, is due to a writedown of goodwill which came about due to current market conditions and the transition from Fleet to Snowball.
“The balance of the loss is due to the fact that Snowball is a developing business and was tied up in the roll-out of our online financial planning tools and Web site. However, this is now done and is in use so we expect to cut back on development costs in the next financial year,” Scarcella says.
“We have told the market that we did not expect a profit at this time because Snowball is still in a building phase but we do expect a reversal towards the end of the year and hope to be cash flow positive.”
AUTHOR
Jason Spits
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