Publicly listed MOQ Limited will conduct a review of its professional services business and operations following a $3.5 million write-off and provide for contract cost overruns.
In a statement lodged with the Australian Securities Exchange (ASX), the company said it has "engaged the assistance of an external advisor with a mandate to review and recommend steps to be taken to substantively upgrade the company’s operational controls and project governance."
MOQ said it identified an issue after analysing variations in the budget versus actual earnings before tax (EBITDA) for November 2021.
The company claimed it undertook a comprehensive assessment of the status of its portfolio of professional services customer contracts, the status of work in progress on several larger customer contracts and its limited capacity to charge relevant customers further material fees to complete these contracts in accordance with its fixed fee arrangements.
“While various options are being explored to minimise these losses, including contract renegotiations, the scale of the provision reflects a desire to prudently acknowledge the material extent of the issues arising out of the current circumstances,” the company said.
It has also initiated discussions with its bank regarding the potential impact on covenants for the reporting period ending 31 December, which are due to be reported by March.
First half FY22 statutory EBITDA loss is forecast to sit between $3 - $3.5 million. MOQ assured other areas of the business were performing broadly in line with budget and the company continues to “operate in the normal course.”
Recently MOQ appointed a new CFO Brett Bergheim to replace Danny Loh. Bergheim has extensive experience in the IT industry and was previously the CFO for NTT Australia and Dimension Data Australia. He was also a manager at EY.
In October, Peter Ward stepped in as the new MOQ CEO following Joe D’Addio's resignation after more than six years.