Publicly-listed managed services provider MOQ Limited has signalled its intentions for further acquisitions, particularly in the Microsoft Dynamics space.
MOQ CEO, Joe D’Addio, confirmed the team was working through a range of opportunities and that any acquisition would need to have a strong market position in the services space; a high proportion of recurring services; profitability and has a strong management position.
In August, MOQ acquired fellow Microsoft partner, Wardy IT for $7.5 million, with more than 330 employees across the business.
D’Addio said the acquisition was an inflection point for MOQ in boosting its digital services capability, contributing in excess of $20 million in services in FY20.
“The initial focus is to ensure Wardy IT continues its positive momentum and financial performance, while at the same time we have commenced a combined sales and marketing effort into each other’s partner and client base,” he said in an address to shareholders. “We are already experiencing positive additional opportunities for both businesses.”
MOQ chairman, David Shein, described the acquisition as a ‘masterstroke’ in building a long term, sustainable and market leading business.
“We continue to look at focused acquisitions that will enhance our market offerings and presence,” Shein said. “The priority for any acquisition will be a strong cultural fit and earnings accretive result. We would love to find a few more Wardy IT’s.”
Shein expects FY20 will produce strong growth for the company following key appointments across the business, and there was still room for improvement.
“Our FY19 results showed pleasing organic top line growth, however our underlying profit was not the result we would have liked to deliver,” Shein said. “Although this past financial year hasn’t been without its challenges, I remain confident in our strategy, management team and our partners to continue to leverage our enhanced relevance to our customers and ensure this delivers improved profitability.
Shein admitted the company has been ‘a bit too conservative’ in its investment to build out its management team, and has now placed key executive leaders within key areas of its business covering managed services, professional services and the NSW region.
“I am now confident we have put the team in place to give us the opportunity to deliver on our business objectives,” he said. “I recognise this should have occurred more promptly but I am confident that we can now look forward to a brighter and more profitable future.
“We now have dedicated and committed leaders in all key lines of business and the results will be reflected in the second half of this year - green shoots are starting to emerge.”
During FY19, MOQ saw net profit after tax grow 103 per cent, going from $1.1 million in FY18 to $2.3 million in the year ended 30 June 2019.
The NPAT increase was due to a tax ruling that resulted in $1.4 million of deferred tax assets taken up as a result of $5.1 million in additional tax losses being recognised.
Revenue for the full year increased 15 per cent to $68 million as a result of a six per cent growth in services to $31.1 million and technology sales were up by 23 per cent to $36.5 million.