Business Description:
Adacel Technologies Limited (ADA) is involved in the development and sale of simulation, software applications and services for Air Traffic Management, Airport, Air Traffic Control Training, and Airborne Vehicle Systems. The company operates in two business divisions comprising software engineering and simulation and training.

Strategy Analysis:
Adacel has recently restructured its Australian operations. The company decided to focus on its global core products and technologies in aviation and defence simulation and control from its North American base. In Australia Adacel will retain high and core defence and aviation capabilities including the Joint Strike Fighter programs, and exit all non-core activities. The company will also integrate its e-learning simulation business into North America. The restructuring is aimed at removing losses in Australia and reducing corporate costs and the North American cost base. Due to contract delays, the company indicated that the operating result for the June half is expected to be an operating loss similar to that in the December half year. Adacel posted after tax losses of $14.7m for 1HY04 compared with after tax gain of 35m in 1HY03. Operating revenue down 43% to $21.7m, mainly impacted by the sale of Enterprise Services business and exit of other Australian operations during the period. In addition, revenue was affected by lower North American contributions and surging Australian Dollar caused 41% of the decline. One off charges was a significant contributor to the disappointing result. Management wrote down the value of goodwill and intangibles relating to North America by $5.4m and wrote off $1.3m of work in progress to their recoverable amount. In addition, $2m of Intellectual Property and goodwill was written down for Australian division and accelerated depreciation of $1m of Australian fixed asset to reflect the recoverable amount.