Arq Group, formerly Melbourne IT, has reported its financial results for the first-half of 2020, recording a net loss after tax of almost AU$129 million.
The company is claiming underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of just over AU$12 million from continuing operations for the six months to December 2019. However, reported EBITDA was a AU$31 million loss.
Revenue for the reported period was AU$83.6 million, down from the AU$100 million revenue generated a year prior.
With this set of results, the company has switched to AASB16 accounting standards, which on its balance sheet has affected only its operating expenses.
Arq Group earlier this month announced the sale of its Enterprise Services Division for a cost of AU$35 million, leaving the company with only its SMB Division and the need for a new name, as it is also selling the rights to the Arq brand.
The company told shareholders on Thursday the sale is scheduled to be completed on 2 March 2020. It expects the net proceeds received from the sale to be AU$21.6 million, which will be used to retire debt.
As of 31 December 2019, net debt was AU$53 million. It expects gross debt at the completion of the sale to be AU$42 million.
Arq said that in addition to working with its lenders to "ensure the orderly reduction of debt", the company will continue to focus on "stringent cost management and value maximising options for the SMB Division".
It told shareholders it is progressing discussions with interested parties for the sale of its SMB division, and has received several non-binding letters of indicative proposals.
"The group is progressing parties through due diligence with a view to firming up these proposals," it wrote. "The board is encouraged by the strong interest in the SMB division."
Arq Group expects the completion of a sale of the SMB division to occur on or after Q2 2020.
The company is also heading to court with an Australian telco for unreceived funds.
"The disputed receivable with a major telco customer is approximately AU$10 million at 31 December 2019. A trial date has been set for July 2020, and the group remains confident in our legal position," it said.
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