Monday, 6 May 2013

DealNet Capital well positioned to grow recurring-revenue businesses, it says

DealNet Capital Corp. (CNSX:DLS), which last month launched its One Dealer subsidiary that offers a full suite of services to the HVAC industry across North America, announced Monday last year's financial results, saying it is well positioned to strategically focus invesments and grow recurring revenue businesses, with the company reporting a fourth quarter operating income before any one-time charges. 
DealNet, previously called GameCorp, last year transitioned from the gaming industry to heating, ventilation and air conditioning (HVAC) financing and services, water heater rentals and business process outsourcing (BPO), with the infrastructure of the BPO business underpinning the HVAC delivery platform.
One Dealer is designed to provide comprehensive services and financing solutions to indepedent HVAC dealers and their customers in North America, bringing together more than 80,000 small and intermediate-sized dealers in the industry under one umbrella. Specifically, the subsidiary is launching a full suite of financing and rental programs, extended warranty products, logistical support, customer services, wholesale product supply and home protection plans. 
The business is also expected to help HVAC dealers provide a better customer experience by leveraging call center time through DealNet's BPO unit - OC Communications Group. 
"We are pleased to release our audited consolidated financial statements for fiscal 2012," said chairman and CEO, Graham Simmonds, in a statement released Monday with the annual figures. 
"We have experienced better than expected growth in the last quarter which serves to provide a healthy foundation to further develop our existing BPO business and roll out of our consumer financing suite of services targeting the HVAC industry," he added.
The company reported results for the 15 months ending December 31, 2012, having changed its fiscal year-end from September 30 to December 31 to better align its reporting with its key operating subsidiary. 
Total revenues for the 15-month period totaled $2.18 million compared to nil in the 12 months to September 30 2011, with the last quarter of 2012 generating $1.46 million in revenue on the back of material new contracts signed for the company's BPO unit. 
For the three months to December 31, net loss was $0.26 million. Excluding a one-time expense of $0.47 million tied to vested stock options, however, the company actually made a net profit of $0.2 million for the final quarter of 2012. 
"The company continues to execute its strategy to leverage the BPO subsidiary to enter the consumer financing market as both a provider of alternative financing as well as other services critical to consumer finance companies," said DealNet in the statement Monday. 
"Management expects the initiative to be gross margin accretive shortly after being launched."              
Indeed, One Dealer will initially be rolled out in the Ontario market, but using the BPO unit, DealNet says the service offerings could be "easily scaled" to support a larger North American-wide dealer network. 
The launch will begin with "several initial services", the company said last month, and will be further boosted with the introduction of One Dealer Financial Services - the underwriting arm - and One Dealer Home Services - the consumer home services arm. 
In late April, DealNet said it was in various stages of signing several dealers to its program, and expects to launch the consumer home services arm in the coming weeks, with the underwriting arm to be launched shortly afterward. 

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