Internet service provider Vocus (ASX: VOC) has seen its profits fall away in FY20 as it grapples with how COVID-19 will impact the small-to-medium business sector.
The company posted a loss for FY20 of $178.2 million today, down from a profit of $34 million last year, with revenue also dipping by 6 per cent.
Vocus attributes this downturn to an $202 million impairment to its goodwill and brand, relating to the uncertainty faced by its Australian SME clients.
"Due to the uncertainty caused by COVID-19, the outlook for the small to medium business sector is more challenging for the foreseeable future," says Vocus.
As such, the company has reduced the carrying value of intangible assets related to its retail business unit from $500 million to $298 million.
"The strong growth of the Vocus Network Services and New Zealand business units continues to support carrying values of intangible assets of $781 million and $366 million respectively," says Vocus.
The Sydney-based telco delivered EBITDA growth of 3.5 per cent to $361.3 million in FY20, with recurring revenue up 6 per cent.
In addition, revenue from high-margin data networks grew by 3 per cent for the full year, with NBN revenue up 42 per cent year on year.
"Vocus' FY20 results show that we are firmly on track in our three-year turnaround, meeting all aspects of financial guidance that was first provided in July 2019," says Vocus managing director and CEO Kevin Russell.
"The Group operated strongly throughout the year and especially during COVID-19, which has reinforced the essential nature of telecoms infrastructure and services.
"Revenues have been resilient and cash collections strong across the organisation."
Shares in Vocus are up 7.51 per cent to $3.15 per share at 2:52pm AEST.
Updated at 4:01pm AEST on 19 August 2020.
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