Empired shares tumble 43%, denies sensitive info leak

National IT provider Empired was forced to deny that sensitive information was leaked after an enquiry from the Australian Securities Exchange as to why its share price tumbled this week.

The ASX wrote to Empired yesterday to enquire if the company knew of any reasons for the price falling from 77 cents on Friday to 56 cents by yesterday, accompanied by a noticeable increase in stock trading activity.

The Perth-headquartered company went into a trading halt yesterday and, in a reply back to the ASX this morning, denied that any sensitive information was leaked, while also releasing an update of its financial position to the market.

Empired company secretary Mark Waller said that the financial information was “generated for internal management purposes” and the company “was not aware of any cessation of confidentiality” before the public update this morning.

As of 11am Friday morning, the price had dipped even further to 44 cents - a drop of 43 percent since close of trade last Friday.

In the market update, Empired revealed “transitional” difficulties have impacted the first half of financial year 2016. These costs have included a restructure of the Australian sales team, costing $4.1 million; delays in commencement of new contracts, costing $1.1 million; and a once-off plant and equipment write-down of $2.3 million after consolidating nine offices to three.

“Whilst we have delivered strong top line growth, we are disappointed by the number of items impacting profitability in the first half and are confident that these items are either one-off or transitionary in nature,” said Empired managing director Russell Baskerville.

“The initiatives undertaken during the first half of financial year 2016 have been critical in positioning the organisation for long term sustainability and improved margin performance which we consider prudent in uncertain economic times.”

For the entire 2016 financial year, Empired narrowed its revenue forecast to a range between $159 million and $169 million. The company noted to the ASX that this was not a downgrade from the previous guidance of $155 million to $175 million.

Despite the first-half difficulties, Empired’s numbers stack up well compared to previous years. The 2015 fiscal year saw it rake in $128.3 million in revenue, up 92 percent from $67 million in 2014. That performance saw it stamp into 13th position in the 2015 CRN Fast50.

However, Empired decided not to pay out a dividend in August after the spectacular 2015 results, citing the need to invest in additional staff to take on all the new work. The head count had grown in a year from 419 to 919 at the time.