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Stream ‘sorry’ for financial performance

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Stream Group has apologised for its “unacceptable” performance this financial year.

In a trading update to the Australian Securities Exchange, the claims services provider cites a benign market until December, costs associated with entering the UK market and the merger with loss adjuster Cerno.

“This performance is not acceptable and the board has taken action to improve cost control and reduce costs,” the company says.

In the six months to December 31 Stream made a net loss of more than $8 million, compared with a $623,590 profit in the corresponding period of 2013.

Figures for the full financial year will be released by the end of August.

Stream reports a significant increase in claims in the current half, with 12,115 open claims at the end of April, compared with 4511 at the same time last year.

This is due to expanded operations across Australia, New Zealand and the UK, and increased weather claims in Australia.

Stream says the impact of such weather events makes it hard to predict profitability.

“For this reason [Stream] will in future not provide earnings guidance until earnings can be predicted with more certainty.”

Stream last month announced a non-renounceable rights issue aimed at raising $3.36 million to provide working capital and reduce debt.

It says commitments of $1 million had been received as of last Wednesday.

Stream invested more than $13 million in Cerno, which is being wound up after agreement could not be reached with debt-holders.