SMS sees net loss of $42.1M
- 22 August, 2017 16:18
SMS Management & Technology (ASX:SMX) has posted $42.1 million net loss for the financial year of 2017 ended on 30 June.
The company, which is expected to be acquired by ASG Group, recorded total revenue for FY17 of $304.5 million, or seven per cent less than the previous reported year when the company’s revenue was $328.7 million.
The reported earnings before interest, tax, depreciation and amortisation (EBITDA) came in at a loss of $37.9 million. This includes a non-cash goodwill impairment charge of $46.7 million, termination costs of $900,000 and transaction costs of $1.2 million related to the, now terminated, DWS acquisition scheme agreement.
Fellow Australian Securities Exchange (ASX)-listed IT services firm, DWS (ASX:DWS), struck a deal in February to acquire SMS for $124 million, but conceded it would not submit a counter bid for SMS after ASG Group made a binding offer for the company on 13 June.
“EBITDA prior to significant items improved in the second half, following initiatives to stabilise the business and focus on operational efficiency,” SMS chief executive, Nick Rostolis, said.
“The business has had a number of challenges over the recent years, and whilst only recording a modest EBITDA improvement, it is encouraging to deliver an uplift in line with our second half objectives and market expectations.”
The EBITDA prior to significant items was $10.9 million, or 31 per cent less than the previous year which posted $15.7 million.
“This is an improved result compared to both the second half of last financial year and the first half of 2017,” SMS chairman, Derek Young, said.
“Whilst this result demonstrates that a level of stability has been restored to the business, the lower margins and current level of contract wins reflect the highly competitive nature of the market.”
The company had $209 million in contract wins in 2017, as opposed to $251 million the year before or 17 per cent less.
The company’s revenue for the Consulting services was down by 10 per cent and the M&T Resources was down by two per cent compared to the previous year.