Junior Australian IT services provider, Empired Ltd (ASX: EPD), saw its share price cut 37% today after shares emerged from a trading halt.
On Wednesday afternoon, Empired shares entered a trading halt, "pending the release of a trading update." Then, at the ASX's open this morning, shares traded sharply lower before further falls saw its share price sink as much as 37% lower at the close.
What happened?
Empired said the integration of acquisitions, contract delays and closure of offices would take its toll on financial performance. It said it expects to report revenue of approximately $79 million for the first half of its 2016 financial year while EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to come it at just 1%-2% of revenue. However, adjusting for the "one off" or "transitional" items would result in an EBITDA margin of 8% to 9% the company said.
In the second half of the financial year, Empired's management expect to report revenue between $80 million and $90 million and an EBITDA margin between 8% and 10%.
The company's new full-year revenue guidance of between $159 million and $169 million compares with its previous revenue forecast between of $155 million and $175 million.
"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," Empired managing director, Russell Baskerville, said. "We are confident in the investments and strategic initiatives undertaken and look forward to delivering improved financial performance and value creation for our shareholders."
Empired also expects to report a $2.3 million write-down to the carrying value of its property, plant and equipment.
