IT provider SMS plunges into the red ahead of buy-out vote
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Acquisition target SMS Management and Technology has plunged into the red with a $42.1 million full-year loss on lower revenues.
The loss compares with a $9.7 million profit in 2016.
The IT services provider’s revenue fell 7.4 per cent to $304.5 million, down from $328.7 in the previous year.
SMS is the subject of a $134 million acquisition offer from Japanese-owned ASG Group.
The result included a $46.7 million goodwill write down.
Chief executive Mr Rick Rostolis pointed to an improvement in earnings before interest, tax, depreciation and amortisation (EBITDA) in the second half, but conceded “the business has had a number of challenges over recent years”.
Chairman Derek Young said: “While 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.”
Revenue at SMS’s consulting business fell 10 per cent to $211.6 million and EBITDA was down 25 per cent to $18.9 million “reflecting the weak sales pipeline leading into the financial year”.
Sales in the recruitment business, M&T Resources, fell by 2 per cent to $92.9 million and EBITDA fell 9 per cent to $5.5 million.
The business had $9.1 million in debt at the end of June.
Mr Young encouraged shareholders to vote in favour of ASG Group’s offer as “the best available opportunity to realise value for their shares”.
A vote is due to take place on September 1.
SMS shares were flat at $1.78.