New customer wins help UXC deliver solid IT results

UXC’s Business Solution Group has reported substantial lifts in revenue and pre-tax earnings

Substantial new customer wins proved the highlight for UXC’s (ASX:UXC) IT services division in the past financial year.

UXC’s Business Solution Group reported revenue of just more than $406 million for the 12 months to June 30, up from $294 million in 2007. Pre-tax earnings reached $36.5 million, up from $30.6 million in 2007. The group is one of three divisions under the ASX-listed UXC umbrella.

Group managing director, Cris Nicolli, emphasised its ability to nab 240 new customers over the past 12 months as a key highlight. The company now claims to have 2900 customers on its book across a range of industries such as financial services, government, resources, energy and utilities and ICT.

“Our customer win rate was fantastic – we added a lot of new customers and substantial ones at that,” Nicolli said. “These came from across the board and included new Oracle clients, managed services wins, SAP customers and Microsoft work across the ERP space. These customers spend more than $250,000 a year with us.”

The Business Solution Group’s annuity revenues as a proportion of overall sales also increased from 23 per cent to 26 per cent.

UXC made a number of IT acquisitions in February including Getronics, ITIL consulting company, Lucid IT, and boutique SAP consulting company, Intacct. Overall, the company added 600 people to its IT division, bringing its total team to 1800.

In its financial statement, the company said the three strategic purchases had given it broader capabilities and an increased ability to provide integrated services to customers as well as step into the managed services space.

However, it warned Getronics’ lower margin structure had lowered its short-term pre-tax earnings figure for the second half of the year. As a result, UXC said it would look at restructuring lower margin infrastructure business units by rationalising operations and standardising systems.

“The acquisitions didn’t contribute to the profitability of the group for the year, but Getronics did give us a significant revenue kick,” Nicolli said. “The acquisition of Getronics was to get access to managed services and network management centre capabilities for our other businesses – rather than build these facilities, we are reinvesting in Getronics’ to make them scalable for the rest of our group.

“It’s a solid result for a company of our size with as mixed a business as we have.”

Going forward, the Business Solution Group’s top priorities are to grow its annuity business, promote cross-selling opportunities across its various IT units and streamlining and rationalising operations overall.

“We want to be very client-facing, then try to align to the right customer base, which is an ongoing challenge in our industry,” Nicolli said.

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