Brisbane CCTV, security reseller Kudos Australasia climbing out of debt hole

Kudos Australasia’s managing director Andrew Christodoulou has sounded a warning to ambitious businesses to be careful who they partner with, as his company climbs out of administration following events that could have buried the company.

The Queensland-based CCTV and security installation provider appointed administrators in November to help it resolve nearly $1 million reported in debts. 

According to an initial creditors' report filed to ASIC, Kudos, which partners with the likes of Hikvision, Synology, PowerShield and Ubiquity Networks, owed $750,000 to electrical and communications contractor Stowe Australia. Among other debts are $95,000 to CCTV distributor Central Security Distribution and a $5100 to Queensland ID security specialist Nxient, according to a report to creditors. 

According to Christodoulou, the trouble started after another company that Kudos had entrusted to complete part of a significant project went into liquidation. He said Kudos had taken on a substantial project after 16 years of positive growth.

“We decided we would start taking on larger projects, including a big city project in Brisbane,” Christodoulou said.

“To take on the contract we were bound to do a section of work that we couldn’t do in-house, so we had to outsource. We outsourced that work to an outside company, the largest company in Australia doing what it was doing, to install a directional antenna system for the entire building, and they went into liquidation.”

Christodoulou said a second contractor Kudos reached out to also failed to deliver.

With mounting debts and deadlines, Kudos appointed administrators to manage the situation. After tabling all the affairs, creditors voted in support of a deed of company arrangement, which was established for an 18-month period to make repayments amounting to between 6 and 22 cents on each dollar owed.

Employee numbers were reduced from more than 20 full-time staff to 10, in line with the administrator's recommendations. Several of the firm's large, higher-risk contracts were shelved in favour of smaller, manageable contracts. 

“Through the process of administration the administrator took over and deemed it right to shrink the company, get rid of large projects for the time being and concentrate on smaller works that would turn a profit quicker,” Christodoulou said.

“During administration we turned a profit and continue to do so now. We’re now trading under a deed of company agreement (DOCA). We’re pushing towards paying all the creditors back under that DOCA.”

Christodoulou said the Brisbane building market had seen big construction firms contract smaller builders in order to meet their obligations, resulting in smaller margins for service providers and uncertainty around accountability when things went wrong.

“We’re not playing in that market anymore, we maybe weren’t big enough to play in that market,” he said.

“But when we took the project on, it would have been around 30 percent of our annual turnover, so we weren’t playing too dangerously.

“What we didn’t bank on was having a major player that we were contracting to going into liquidation. You can take out insurance to protect yourself against that but you’re not going to win a tender because the insurance is huge.”

Christodoulou's advice to other resellers and service providers was to consider the scope of their upcoming deals and be mindful of the partners they chose.

“Don’t be bullied into taking on something that’s so tempting,” he said.

“The contract was a beauty. For our business it was a job that going to change the way our company went forward. It was a prestigious project within Brisbane, we fought a lot of people to get it, we won it by the skin of our teeth and had that disaster not have happened, then we would have been in the position to do further fit-outs for huge blue-chip Australian companies.”

Kudos Security is the trading name of Kudos Australasia, which was founded by Christodoulou in 1999.