Rumours that Brisbane based distributor Cellnet had acquired Adelaide based distributor Powermove have been dismissed with the real acquisition identified as the Company that in the past sold ‘Powerguard’ branded products to Harvey Norman, they have also acquired a gaming Company.
Cellnet who has re-positioned their business during the past 12 months has moved into new categories including gaming to deliver future growth.
Despite a 92% fall in net profit the Company has managed to increase revenues by 27% of which 8% came from their core businesses. Net profit was $405,000 VS $5,982,000 in the prior year.
On 1 July 2019, the group acquired 100% of Service Smart Pty Ltd, who manufacture and distribute Powerguard branded products that are sold primarily via Harvey Norman stores in Australia.
Cellnet paid $713,815 in cash plus contingent consideration, which provides for earn-out payments to be made to the vendor of 25% of gross profit over an agreed forecast gross profit floor.
The distributor claims that the smartphone market has undergone somewhat of a revolution in the last 12-18 months while at the same time the A$ has depreciated strongly impacting their business.
In their latest financial report, the Company claims to have re-positioned the business for growth, with a major upgrade of the supply chain operation.
The Company has also appointed Sony DADC as their 3PL in Australia which executives claim, ‘is expected to improve delivery times and accuracy as well as further reducing costs’.
Another acquisition was gaming Company Turn Left Distribution a move which Cellnet claims will isolate the Company from a downturn across a particular segment or product while positioning the company for growth.
TLD is a leading distributor of gaming accessories and console games across multiple platforms, regions and demographics. Games market analyst Newzoos is predicting phenomenal global market growth to continue,
with the total games market estimated to grow from $137.9 billion in 2018 to $180.1 billion in 2021. TLD leaves Cellnet well placed to take advantage of the expected continuous growth.
On the FY2019 result, Managing Director, Alan Sparks said: “Although down on last year, we are pleased to be able to produce a profitable result while transforming the business. We have reduced our cost base and moved into fast-growing areas which will provide us with diversification and future growth. I am excited about the future for Cellnet.”
