Julian Challingsworth
Spirit Technology Solutions has expressed a ‘very challenging period’ as net profit plunged $53.16 million into the red for the financial year ending 30 June.
Revenue was up 31.7 per cent to $135.33 million and earnings before tax (EBITDA) was down 36.9 per cent to $7.2 million.
In its report to shareholders, the company said revenue and earnings pressures were largely attributable to the managed services business unit with its other two operating divisions - cyber security, and collaboration and communication - exceeded internal expectations
Specifically, Spirit pointed to numerous factors including cost pressures, the complexity and breadth of product sets, range of customer sizes, vendors and systems that followed from a fast paced acquisition strategy, placing a strain on the delivery and backend support structures to enable a streamlined and efficient customer experience.
In light of the performance shortfall, Spirit undertook a strategic review and is implementing a restructuring plan for the unit that carries both “opportunity and risk”. As a result, a non-cash impairment expense of $48.4 million was booked in FY22, of which $43.1 million was related to ‘goodwill’.
In June, Spirit detailed its operational restructure to align its key units, which includes Intalock, Spirit IT&T and Nexgen.
The operational restructure is expected to cost $1 million as the company factors in costs “associated with employee restructuring”.
Spirit said the first half of FY22 was dominated by COVID-19 related lockdowns across Sydney, Melbourne and Brisbane constraining its ability to fully execute on required installations across the capital cities.
“This represented one of the most difficult markets seen in generations and the resilience of revenue in the first half reflected the strength of the business model in terms of product and geographic diversification. That resilience in revenue however, did not translate into earnings resilience," it noted.
The company told shareholders its immediate strategic priorities were to improve profitability performance, drive organic growth and increase positive cash flow from its operations.
In July, former Tesserent CEO Julian Challingsworth took over the reins from Sol Lukatsky.
