David Shein

Feb 28, 2022

Poor project governance and controls see MOQ slip $3.5M into the red Poor project governance and controls see MOQ slip $3.5M into the red New project management team and systems are being implemented. Credit: MOQ Limited Poor project governance and controls have contributed to MOQ Limited’s net loss of $3.56 million for the half year ending 31 December 2021. The Australian IT service provider's profit fell by a staggering 368 per cent year-on-year after having posted $1.32 million in the black for half year 2020. MOQ's profit fall sits alongside a 181 per cent drop in earnings before tax (EBITDA), landing at $3.26 million in the red for the first half of the financial year. The period included the acquisition and integration of Dienst Consulting , divestment of non-core asset in SkoolBag and the write off and provisions of $3.5 million resulting from professional service contract cost over-runs. In December, MOQ revealed it was undertaking a comprehensive operational review by an independent third party to help improve the company’s operational controls and project governance. To date, the changes have been adopted in principle and will be progressively implemented by the management team as MOQ’s ‘Back on Track’ plan. As part of this, MOQ is seeking to raise additional equity capital of about $6 million to fully implement a range of personnel and processing changes to reset the company’s project management, finance functions, satisfy its general working capital and banking requirements. Total revenue for MOQ was up 22 per cent to $42.4 million including services revenue growth of 14.1 per cent to $25.2 million, recurring revenue growth of 9.6 per cent to $10.7 million and Azure cloud services revenue growth from $100,000 to $1.8 million. Technology services margins decreased 2.5 per cent due to competitive pressures and supply chain disruptions and recurring services margins fell 5.1 per cent. MOQ said corrective measures were being implemented. Underlying EBITDA loss from continuing operations was $4.3 million down, from a $2.2 million profit in the previous corresponding year. This excludes the impact of $700,000 related to merger and acquisition costs, Microsoft Expert MSP investment and AASB15 adjustment. In his report to shareholders, MOQ non-executive chairman David Shein said the executive team responsible for project management and related financial controls was in the process of being refreshed and enhanced with “new, appropriately skilled personnel and the efficient integration of relevant systems”. The publicly listed company particularly highlighted its Microsoft business as it continues to underpin the demand for its services in the market. “Over the last two years MOQdigital has focused intently on the strategic Microsoft partnership through an extensive transformation process across people, processes and systems to attain the Azure Expert MSP certification,” Shein said. “This focus on cloud technologies has assisted with the retention and attraction of an increasingly skilled and dedicated workforce.” Shein said the company was gearing up to address the digital transformation market demand through investing in its digital services capability and recurring services to support consumption models including Azure cloud. “The strategy to focus on high demand, higher value digital services continues to gain traction and we believe that if we successfully execute on these strategic initiatives, this should result in increased shareholder value and returns,” he said.