Citadel Group reports "disappointing" FY19, citing delayed contracts

Managed services provider Citadel Group has revealed that delays in some customer contracts affected its FY19 financial results, leading to declines in revenue and profits.

In an ASX announcement (pdf) released today, Citadel chief executive Darren Stanley called FY19 a “mixed year” for the company due to a “disappointing” financial performance reflected by contract delays and low customer spending during the Federal Election.

In the year ended 30 June 2019, the company posted $99.2 million in revenue, down 6.9 percent from $106.5 million the previous year. EBITDA came in at $23.3 million, down 31.7 percent from $34.1 million, while net profit after tax is $10.9 million, a 43.8 percent reduction from last year’s $19.4 million.

Revenue was dragged down by its Knowledge business, which saw a 25 percent decline, but its software/SaaS revenue and technology revenue grew 23 percent and 20.7 percent, respectively. Health revenue also rose 7.1 percent.

Stanley said the results were proof that its recent “Citadel 2.0” strategy “is the right growth strategy” for the company to create a more diverse client base and secure more software/SaaS revenue over time.

“We are focused on building our business for the long term and the contract wins achieved in FY19 position us well for the future,” Stanley said.

“More importantly, we’ve continued to invest in the new products, processes and channels and channels that will enable our growth.”

The software/SaaS business benefited from recent investments into product development, with its Citadel-IX platform benefiting the most with 157 percent growth. The technology business meanwhile grew off the back of contract wins from Monash University, The Spotless Group and the University of Melbourne. The health business also won contracts for its CHARM platform with 3 hospitals and one pharmaceutical company.

Looking ahead, Citadel is expecting a return to revenue growth in FY20 as it looks to ramp up its software/SaaS business while also exploring potential overseas expansion and additional channel partnerships.