Webcentral halves losses following restructure

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Webcentral halves losses following restructure
Joe Demase (Webcentral and 5G Networks)

Web hosting services provider Webcentral has reduced its losses after completing its restructure after it was acquired by telco services provider 5G Networks in late 2020.

To account for the 5GN acquisition, Webcentral is reporting an 18-month financial year (January 2020 to 30 June 2021) after aligning its reporting period to match with its parent, moving from a January to December financial year. The company will revert back to a 12-month period moving forward.

In the 18 months ended 30 June 2021, Webcentral reported revenue of $78.2 million, down 6.4 percent from $83.6 million in the year ended 31 December 2019. Net loss after tax was $62.6 million, down 52.3 percent from $131.3 million.

Webcentral also broke down the results into three six-month periods, with the third period ending 30 June reporting a loss of $2.4 million, down from $41 million in the prior six-month period, and EBITDA of $2.8 million, compared to a loss of $38.2 million.

The company said the improvements reflect the changes brought by the 5GN acquisition, including its focus on profitable revenue sources and products; on-shoring customer support, infrastructure and operating platform improvements, cost-cutting measures and capital raises.

In its own ASX announcement, parent 5G Networks reported growth after completing a number of acquisitions, including Webcentral, during the period.

In the year ended 30 June 2021, the telco services provider reported revenue of $87 million, up 77 percent from $49.3 million, while underlying EBITDA was $15.5 million, up 144 percent from $6.3 million. Net loss after tax was $6.4 million, up from $2.2 million.

5GN said the Webcentral acquisition had been “transformational” to the results, materially changing the scale and earnings profile of the business, providing access to
a complementary customer base.

The company added that the acquisitions of ColoAu and Intergrid Group, as well as the launch of the 5GN Wholesale portal and wholesale strategy also contributed to the growth.

In July, Webcentral and 5G Networks announced plans to merge, with the former absorbing the latter. The companies said the merger is “progressing well” and is on track to be completed sometime in October or November this year.

Webcentral is also looking to take over Perth managed services provider Cirrus Networks despite holding just under 9 percent of the company’s shares. Cirrus however has been pushing back and is urging shareholders to reject the takeover bid.

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