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Arq Group posts reported net loss of $2.6M

First half year results following name change and business transformation
Arq Group CEO Martin Mercer.

Arq Group CEO Martin Mercer.

IT services and solutions provider Arq Group has released its half year results for the period ended 30 June posting a reported net loss of $2.6 million.

Underlying net profit after tax (NPAT) was $9.1 million, which excluded transaction costs, integration costs, Arq brand costs, unwinding of discount on other financial liabilities and loss on reassessment of contingent consideration liability.

Arq has, however, been able to declare an interim dividend of $0.035 per ordinary share (100 per cent franked).

Formerly Melbourne IT, Arq Group announced in April along with the name change that it was transforming the business from a selling domains and hosting company to a services provider.

One of the changes was to change its reporting period to a calendar year.

Arq revenue was $112.4 million, underlying, which excludes one-off and non-recurring expenses, earnings before interest, tax, depreciation and amortisation (EBITDA) was $18.6 million.

“The Group’s strong underlying financial performance has been achieved alongside several significant operational milestones, including the development and launch of the new Arq Group brand and company identity, the move into new office space in Melbourne and Sydney, the signing of a new debt facility for the Group, and an improvement in measured staff engagement over the same period last year," CEO Martin Mercer said.

The publicly-listed services provider said the Enterprise division provided continued strong growth with revenue growth of 39 per cent versus the prior comparative period, 113 per cent in underlying EBITDA, and a net increase of 82 billable heads. The SMB Solutions business has been impacted by lower sales.

"Arq Group has successfully laid the foundations for continued growth, and following a strong first half, the ES business will finish comfortably ahead of our expectation for the 2018 financial year," Mercer said.  

"The SMB business will finish lower than our expectation due to lower than anticipated Solutions sales and the unexpected cancellation of services to a major customer. 

"As a result, we expect the Group underlying EBITDA for 2018 to be between $37 million and $39 million. We expect underlying EBITDA growth in FY19 of 7-15 per cent, accelerating further in FY20."