Kordia reports strong growth in new ICT divisions, $55M impairment

Kordia reports strong growth in new ICT divisions, $55M impairment

Impairment on Australian business takes Kordia Group to $47M loss from $9.6M profit in 2020.

Sheridan Broadbent (Kordia Group)

Sheridan Broadbent (Kordia Group)

Credit: Kordia Group

Kordia Group has delivered revenue from continuing operations of $122.9 million for the year ended 30 June 2021, slightly improved on $119.5 million in 2020. The state-owned group’s EBITDA was also flat, at $31.8 million, up slightly from $31.7 million.

The company, which sold its Australian telco contracting operation after balance date, said on a business-as-usual basis, the group would have earned revenue of $271 million for the year ended 30 June 2021, with EBITDA of $34 million.

Kordia made a one-off non-cash write-off of $55 million from that sale. Net profit after tax from continuing operations of $9.5 million was down from $13.7 million in 2020. 

However, including the impairment, the net loss to its government shareholder was $47 million compared with a $9.6 million profit in 2020, Kordia Group's full accounts show.

"We acknowledge the seriousness of this impact in these results, which was taken to place the group in a stronger position to invest in and develop out core proposition - managing mission critical networks and services for our customers," a commentary from CEO Shaun Rendell and chair Sheridan Broadbent in Kordia's annual report said.

The Australian telco contracting industry had undergone significant change over the past few years, with market conditions becoming increasingly volatile and challenging, particularly for smaller, boutique, players, Broadbent said.

Kordia faced a difficult decision to scale up at significant cost to compete with larger players or to exit the market. The sale is designed to place Kordia in a stronger position to invest in and deepen its core proposition -- managing mission critical networks and managed security services for customers.

"This will enable us to focus on high growth business areas including cyber security, and network services such as cloud, modern workplace solutions, and connectivity," Broadbent said. "Both of these areas are experiencing unprecedented demand and growth."

Kordia has made a series of acquisitions in the core ICT services and security markets over the last few years.

With many businesses accelerating cloud migration and digital transformation in the wake of COVID-19, customer demand for reliable connectivity and the ability to work remotely and collaboratively has grown rapidly.

“Kordia’s decision to acquire cloud migration experts, EMRGE, in early 2020 has led our shift into cloud transformation solutions for our customers," Broadbent said. "There is high demand for managed digital transformation implemented with risk management top of mind."

With cyber attacks on the rise, Kordia’s security division also experienced strong growth.

“Demand for Kordia’s managed security services grew 58 per cent year on year, and our independent cyber security consultancy, Aura Information Security, also experienced unprecedented demand -- particularly in the wake of the many ransomware attacks against high-profile New Zealand organsiations,” Broadbent said.

Kordia Group bolstered its capability in the managed security through the strategic acquisition of SecOps in June and in addition, the provider's network construction and management team continued to deliver.

While COVID-19 restrictions saw a lot of work put on hold in 2020, the past year saw the completion of several significant projects -- including the City Rail Link, the installation of a new satellite at Warkworth and an in-building 5G coverage solution at Commercial Bay.

The team also played a vital role in ensuring customers’ "mission-critical networks" remained up-and-running during the pandemic.

"This was especially important to those that are responsible for providing critical lifeline services and ensuring safety of life at sea," Broadbent said.

Kordia -- which was founded as a broadcasting infrastructure company -- said the traditional media and broadcast market continued to undergo significant disruption, however, the organisation remained committed to supporting its customers as they responded to industry changes.

The business also ended the year on a note of caution. The loss of CEO Scott Bartlett to cancer this year and the impact of COVID-19 had prompted the company to pause and reflect on its purpose and vision, Broadbent added.

"As we look ahead, led ably by our new CEO Shaun Rendell, we do so with a firm belief that the direction we take is more sustainable, more defensible and will drive improved value creation for our customers, our company, our people and our shareholder," she said.

“Our New Zealand business unit is performing exceptionally well. The board is confident that our strengthened focus on the New Zealand market, and the high-growth areas of the business, will continue to drive positive growth, and ultimately a better outcome for the shareholder long-term."

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