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CHAIRMAN of Australian internet network company Vocus (ASX: VOC), David Spence, will step down after the company posted a full year loss of nearly $1.5 billion.
The disappointing full year loss is the result of heavy write downs on goodwill for some of its recent acquisitions.
Adding salt to the wounds of investors, the company has decided to abandon paying a dividend, instead the group will redirect funds to projects and debt reduction.
Revenue for the period more than doubled from FY16, however, reaching $1.8 billion. Earnings were also up by 70 per cent to $366.4 million for FY17.
The main hit to the company's final results was a $1.5 billion non-cash impairment. The impairment was the result of a full year audit process where Vocus reviewed the value of its assets and goodwill.
Vocus CEO Geoff Horth acknowledged these results do not look good for the company.
"We recognise that this write off does not reflect well on the prices paid in M&A transactions in recent years," says Horth.
"The write down also reflects the more competitive business environment, in particular the Australian and New Zealand consumer markets that has had the impact of lowering our expectations for future growth rates in the sector."
Recent acquisitions of M2 Group, Amcom, and Nextgen Networks buoyed the internet network company, but couldn't stop the impairment charge the company had to take.
Chairman of the Vocus board, David Spence, will not be standing for re-election at the company's annual general meeting after serving as chairman for seven years.
The announcement of Spence's departure from Vocus follows Monday's news that Kohlberg, Kravis & Roberts (KKR) and Affinity Equity Partners would be withdrawing their bids to takeover Vocus.
Vocus has forecast earnings in FY18 of between $370 to $390 million and revenue in the range of $1.9 to $2 billion.
The company finished FY17 with good market share results. Dodo and iPrimus ended the year with a 7.3 per cent market share in the NBN. The company is focusing on relaunching iPrimus in Australia in the first quarter of FY18.
During FY17 the company committed to begin working on the Australia Singapore Cable (ASC) project which is a 4,600km submarine cable linking Australia, Indonesia, and Singapore. Vocus says the project remains on track to be ready for service in the first quarter of FY19.
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