Empired flags buy-back, updates outlook

02/07/2019 - 11:55

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Empired plans to undertake a buy-back of up to 10 per cent of its shares, while also announcing that it would cut operating costs and capex in the current financial year to help boost earnings.

Empired is led by Russel Baskerville.

Empired plans to undertake a buy-back of up to 10 per cent of its shares, while also announcing that it would cut operating costs and capex in the current financial year to help boost earnings.

The ICT services company said the on-market buy-back of up to 15.3 million shares would be undertaken over the next 12 months, starting from July 17, with Euroz acting as the broker for the buy-back.

Empired said it considered an on-market buy-back to be an effective method of returning capital to shareholders at a time when its shares were trading at a significant discount to the intrinsic value of the company.

“The company expects the buy-back to be earnings per share positive based on existing circumstances,” it said.

Today, the company also announced its underlying earnings before interest, tax, depreciation and amortisation for the year to June 2019 was expected to be in the range of between $15.2 million and $15.8 million, from anticipated revenue of between $174 million and $177 million.

The underlying revenue and EBITDA numbers fall short of the company's previous guidance of double digit growth in FY19.

Empired also expects to incur a non-cash impairment charge in the range of $22 million and $25 million, following a review of the carrying value of assets.

Managing director Russell Baskerville said that, as the market evolved toward public cloud solutions, the company had taken a conservative approach to the carrying value of its legacy assets.

Looking ahead to FY20, the company said it expected revenue growth, after recently securing a number of recurring managed services contracts, but did not specify the amount of growth.

It also foreshadowed improved EBITDA and materially improved net profit and cash flow.

The drivers included a material reduction in depreciation and amortisation as a resuilt of this year's impaitment charge, plus cuts to operating costs and a material reduction in capital investments.

The company said its goal was to resume the payment of dividends in the medium term. 

Shares in the company were up 13 per cent today to trade at 30.5 cents each. They recently fell to a three-year low of 24.5 cents.

 

 

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