Inabox buy hits MNF Group financials

Telecommunications software and services provider MNF Group (ASX:MNF) has flagged declines in revenue and profit for the year ending June, citing negative impacts stemming from its acquisition of Inabox Group’s (ASX:IAB) wholesale business, among other factors.

MNF Group’s after-tax net profit fell by roughly 3.9 percent, compared to the year prior, to $11.4 million, the company told shareholders in its annual financial results, released on 27 August. At the same time, revenue declined by about 2.4 percent, to nearly $215.6 million.

The company said its 2019 net profit after tax (NPAT) was negatively impacted by $1.2 million of acquisition costs, associated with the Inabox purchase, incurred during the year. It also flagged amortisation costs of $1.4 million during the year. 

MNF Group struck a deal to acquire the wholesale and enablement business of Inabox Group late last year, in a deal worth between $30.5 million-$35.5 million, ultimately fending off a rival offer for the business by SB&G Telecoms in December. 

The company has touted its successful acquisition as being highly complementary and synergistic with the wholesale business of its Symbio brand. 

“IAB performs a leading role in the Australian wholesale telecommunications market and brings considerable volume and scale to the MNF business. The company is also recognised as the leading provider of SaaS enablement services to the industry – strongly complementing the MNF business,” MNF Group CEO Rene Sugo said when the acquisition plans were announced.

In its latest financials, MNF Group told shareholders that the integration of the business is well underway, with most of the operational teams set to complete integration over the next few months and network integration expected to be finalised by the end of 2020. 

The company also indicated that, although full year revenue had declined, in part due to a decrease in lower margin transactional revenue, its gross profit margin had increased from $69 million in FY18 to $82.5 million this year. 

While MNF Group’s revenue and NPAT figures were slightly down, the company’s underlying NPAT – not including acquisition and amortisation expenses – in 2019 was up by 13 percent, year-on-year, to $15.9 million.

In the same period, the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 11 percent, to $27.2 million, with FY20 guidance remaining unchanged at $33 million-$36 million. 

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