Key Concepts and Questions

 ● Melbourne IT has lost 5% revenue in the past 5 years from $186.2 million to $170.6 million - Overall this is a very minimal lose in 5 years however is still present. I think my company may be having trouble with finding new ways to compete within the industry.

●  Melbourne IT's net debt remains low and reduced 25% year-on-year from $21.2 million to $16 million - Obviously a positive factor to see that debt has decreased while revenue is decreasing. Possible indication that although the company is losing revenue they are still receiving a comfortable income to pay off large debt.

● Melbourne IT accepted an all-cash offer for their Digital Brand Services (DBS) division in March 2013 for $152.5 million. - Although they have made a significant profit of selling this division I read that the DBS division was in-fact one of the highest profiting divisions, if not the highest, which makes me worry that even though there loosing revenue there happy to sell off a large profit making division. Is my firm going through a crisis where they need to sell or is there something I'm missing and this is a strategic approach?

● I found that Melbourne IT is currently undergoing what they're calling a 'System Transformation Project'.  - Unfortunately there was no in-depth information about this so called project however in my opinion this is telling me that Melbourne IT is searching for new innovative ways to engage the public through a complete systems transformation. Possibly new ways such as an Iphone app, which in my thoughts is a terrific idea in hope of competing amongst the industry and the constantly changing economy.

● Overall it has been stated many times throughout the annual report and articles online that Melbourne IT has a bright and positive future. - In my thoughts and briefly stated in the 2012 annual report Melbourne IT is taking a more narrow approach to their services in terms of selling off their DBS division and focusing on domain registry.

Questions

● Melbourne IT's Primary debt facility was refinanced in 2012 with a four year extension, maintaining favourable terms, for $38 million USD.  I understand this to some extent, not much at all, anyone care to elaborate?  

● Melbourne IT has made the decision to take a non-cash impairment charge of $2 million to the carrying value for one of their divisions. Does anyone know what taking a non-cash impairment charge implies? Is this good or bad?

● The final dividend for Melbourne IT was partially franked (40%) due to the use of the R&D tax credits. Seriously confused on this one. Does anyone have an idea what this means?

● The I.T. industry is a hugely competitive industry, as raised before a systems transformation to iphone apps for example would be a great idea in hope of competing in the future economy. I'm interested to know if anyone has other ideas as to how Melbourne IT could compete or more importantly how is your company going to compete?

● Melbourne IT has sold off a large profiting division, the Digital Brand Services division, so that they can isolate their research into domain registry and other divisions in hope of increasing revenue that way. I am interested to know what your thoughts are on this. do you think they made a wise choice?

● As I further read into the annual report I realised that the DBS division was responsible for one third of the overall revenue for a particular year.  I'm interested to know how you react to this new information. Is my company possibly going through financial hardship, forcing them to sell a large division? Or is there a possible strategic approach behind this?