Vocus has published its audited full year results reporting revenue for the 2017 financial year of $1.82 billion, up 119 per cent from the previous year.
The revenue includes the initial eight month contribution from Nextgen of $127.1 million and a full 12 month contribution from the M2 merger.
The company also announced that chairman, David Spence, will not stand for re-election at the annual general meeting as he will retire from the board on 24 October 2017. Spence was appointed the company’s director and chairman in June 2010.
The underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was unchanged from the previously announced unaudited results, $366.4 million, or up 70 per cent from the previous year.
The underlying net profit after tax (NPAT) after minority interests was $152.3 million, up 50 per cent from the previous year. However, the company's statutory NPAT was at a $1.4 billion loss.
“The underlying result reflects another strong year of growth for Vocus, however it was not at the level we anticipated at the beginning of the financial year and we are working through a number of projects to address this,” Vocus CEO, Geoff Horth, said.
“The FY17 year and in particular 2HFY17, has been a period of transition as the business has focused on the completion and integration of Nextgen; and the implementation of business plans that will maximise returns and leverage the infrastructure platform and operational scale that has been created through recent acquisitions.”
Following a review of the business, Vocus has recognised a non-cash impairment to the value of its business of $1.53 billion post tax cash generating units (CGUs) across Australia and New Zealand - $1.33 billion in Australia and $199 million in New Zealand.
“We recognise that this write off does not reflect well on the prices paid in M&A [mergers and acquisitions] transactions in recent years and is a reflection in part of the significantly higher earnings multiples the sector has traded on in the relatively recent past,” Horth said.
“The write down also reflects the more competitive business environment, in particular in the Australian and New Zealand consumer markets that have had the impact of lowering our expectations for future growth rates in the sector. Once again the board and senior leadership team have moved rapidly over the last six months to address these issues, improve the performance of the business and restore returns to shareholders.”
Vocus informed shareholders that Dodo and iPrimus ended the year with 7.3 per cent market share in National Broadband Network (NBN - ex-satellite) compared to 6.4 per cent at the beginning of the period.
The Consumer businesses in both Australia and New Zealand are focused on lowering costs and improving the customer experience through automating the customer interface and backend platforms in turn driving lower churn rates, according to the telco. Vocus also revealed the relaunch of iPrimus in Australia to take place in the current quarter.
On the enterprise and wholesale business, the company plans to relaunch a partner program to maximise opportunities on the National Broadband Network market.
Vocus received two acquisition proposals recently, one from Affinity Equity Partners and another from Kohlberg Kravis Roberts & Co (KKR).
During the due diligence process with KKR and Affinity, the company said it received numerous proactive approaches from parties expressing interest in acquiring assets within the Vocus portfolio. Following those, the board identified a number of Australian assets, of material value, that may be considered non-core.
The board will undertake a strategic review and consider options for divestment of these non-core assets to strengthen the company’s balance sheet position to fund the core activities of the group.
Vocus’ currently expects to report underlying EBITDA in the financial year of 2018 in the range of $370-390 million generated on revenue in the range $1.9-2 billion. Underlying NPAT is expected to be in the range $140-150 million.