Arq Group to sell off SMB reseller, telco business

Arq Group will divest its SMB reseller and telco businesses in an effort to focus on its core operations.

The former Melbourne IT's directors determined that the SMB Indirect business unit, where the two businesses fall under, is no longer core to the group’s strategy and will be sold off the unit “as soon as practicable”.

This decision follows up from the 2016 sale of Arq’s global reseller part of SMB, the proceeds of which financed the acquisition of Infoready, which formed the core of its data and analytics business within the company’s enterprise division.

As a result, SMB Indirect was excluded from the half-year financial results Arq released today. In the six months ended 31 December, the company posted a loss in the first half as its earnings continue to be impacted by recent acquisitions and rebranding costs.

Arq posted a loss of $2.3 million, compared to last year’s profit of $14.3 million. This comes despite an 8 percent revenue bump to $213 million.

The costs that impacted profitability included $9.7 million on reassessment of contingent consideration liability and just under $2 million in rebranding costs.

“2018 was a transformational year that set up a return to growth in 2019,” chief executive Martin Mercer said.

“During 2018, Arq Group invested in growth, including the development and launch of a
new brand and company identity and a move into new offices in Melbourne and Sydney.”

The company added that underlying EBITDA met expectations at $37.6 million, although it was down from $38.6 million the previous year.

“We are proud of our result. The growth experienced over the last five years has been reflected in our underlying EBITDA, which has grown at a compound annual rate of 45 percent from $5.8 million to $37.6 million,” Mercer said.

“We have a clear and achievable plan and we are firmly focused on execution and growth
in 2019.”