In early trade the iSentia Group Ltd (ASX: ISD) share price has tumbled 2% to $1.71 following the release of its full-year results.
Key highlights include:
- Revenue fell 1% to $155.1 million.
- EBITDA dropped 19% to $41.5 million.
- Underlying net profit after tax and amortization down 24% to $24.7 million.
- Impairment of its King Content business of $39.4 million.
- Statutory net loss of $13.5 million.
- Earnings per share of 12.4 cents.
- Dividends per share of 6.2 cents.
As was largely expected, the media intelligence and content marketing company delivered a disappointing full-year result.
The main drag on its performance was of course the embattled King Content business which the company acquired in 2015. Revenue in its Content Marketing segment fell 30% to $14.4 million during the 12 months. Segment EBITDA swung from a profit of $3.6 million last year to a loss of $4.4 million this year.
Management has decided to fully write down the value of the business, resulting in an impairment charge of $39.4 million and the discontinuation of the King Content brand.
Its operations will now be fully integrated into the iSentia brand, where management believes it can deliver a positive contribution in FY 2018.
Elsewhere iSentia's Australia/New Zealand segment posted a 1% increase in revenue to $107.9 million. However, segment EBITDA fell 6% to $46.6 million due largely to an increase in copyright fees.
Finally, although the company's Asia segment posted an impressive 16% increase in revenue to $32.9 million, it wasn't enough to stop segment EBITDA falling 5% to $6.6 million due to a clean-up of bad debt and higher data costs in North Asia.
The company finished the financial year with net debt of $51.7 million, representing a gearing ratio of 1.25x. This is comfortably within its loan covenant of 3.25x.
Should you invest?
Whilst I think iSentia's core business is a great one and its shares look reasonably cheap at 14x earnings, I plan to hold off an investment for the time being until there are signs that its turnaround plan is working.
At its annual general meeting in late November iSentia plans to provide the market with its FY 2018 guidance. I would suggest investors at least wait for that before making a move.
In the meantime I would sooner invest in quality tech shares like XERO FPO NZX (ASX: XRO) and Altium Limited (ASX: ALU) which are growing very strongly.
