Empired Limited Announces H1 FY19 Results

On February 28, 2019, Empired Limited (ASX:EPD) announced half-yearly result for the financial year 2019. It reported an increase of 4% in its revenue to $89 Mn as compared to the previous corresponding period. Its revenue from Australia and New Zealand operation stood at $60 Mn, up 7% PCP, and at $29 Mn, down 2% PCP respectively.

It also reported 23% increase in EBITDA on PCP to $8.2 Mn, 50% increase in NPAT on PCP to $2.2 Mn, 49% increase in Earnings per Share on PCP to $0.014. This attributes to the reason for modest margin expansion as services skew to digital solutions. Its net debt increased to $15.4m up 14% as compared to the previous corresponding period.

As per the release, the company has done significant investments to secure multi-year, multi-million dollar digital transformation contract in New Zealand public sector with DIA. Besides this, its investments are in cohesion with delivering SaaS growth and increase in contracted users by 65% to 11,000 plus. Other than this, the company’s investments in managed services were positioned to bid on $300 Mn plus of large multi-year strategic contracts in the coming 12 months.

Its East Coast expansion strategy delivered 14% growth on PCP. Its Digital Solutions (Australia) grew by 16% on PCP and in its international reach process, it has targeted more than 1000 people in Australia, New Zealand, USA & India.

Empired believes that its New Zealand operation is now stabilized, and earnings recovery will be back on track. Therefore, the company expects double-digit earnings growth in both FY19 & FY20 because of multi-year contracts in FY20 and exposures to high growth services. It will contest $300m+ in large strategic deals overcoming 12 months. It expects earnings skew H2 EBITDA to be stronger than H1 EBITDA. It also expects its net debt to reduce in H2 FY2019 owing to improvement in full-year operating cash flow.

Empired Ltd. is an Australian listed IT service provider which provides services in customer relationship management, enterprise resource planning, cloud services, and enterprise content management. As per timeline, in FY14 it acquired OBS & eSavvy, expanded into East Coast, and secured multi-year contracts which included $46 Mn from main roads, and $50 Mn from strategic agreements. In 2015, it executed the acquisition of Intergen in New Zealand and secured Multi-Year Contracts which included $15 Mn from InterOil MS, $10 Mn from ENI MS, and $20 Mn from strategic contracts. In FY16, through its integration of acquisitions, it secured multiyear contracts which included $15 Mn from Western Power MS, $10 Mn DET Vic MS, and $10 Mn Horizon Power MS. In FY2017-18, it implemented its portfolio sales model which included platform consolidation, re-set balance sheet, and $12 Mn Cohesion contract.

On the stock information front, EPD’s share price last traded at $0.49, down -1.01% during days’ trade with intraday volume of 442,406. It is trading PE multiple of 16.18x with the market capitalization of $79.26 Mn and EPS of 0.031 AUD. Its 52 weeks high has been noted at $0.57 and 52 weeks low at $0.38. Its absolute return for 3 months, 1 year, and 5 years are 8.79%, 12.50%, and -23.85% respectively.

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