Hostech posts first positive quarter

Data, voice and managed services contributed to 24 per cent of the entity's total sales during the quarter

ASX-listed reseller Hostech (ASX:HTC) has posted its first positive quarter with earnings before tax totalling $300,000.

For its quarter ending June 30 operating cash flow was negative $507,000, which the company said was due to integration costs relating to the acquisitions of Anittel, Axxis, Accord Technologies and Aspirence. It was also due to some large Anittel tax payments relating to prior quarters.

Most of the back office integration has been completed and all the financial and HR reporting has been merged on one platform.

Data, voice and managed services contributed to 24 per cent of Hostech’s total sales during the quarter and grew by 22 per cent.

“We did not experience the anticipated June increase in hardware sales, June growth was driven by low margin one-off software license sales and the increase of high margin recurring revenues,” Hostech said in a statement to the ASX.

The entity reported it has $836,000 in cash on hand and a $2.2 million working capital facility with $1.4m repaid during the quarter.

It also expanded its team of 230 staff across 15 locations.

Hostech said its revenue growth during the quarter was exceptional.

“The reinvigoration of the sales teams and the focus on cross selling is delivering results,” the company said.

Revenue grew 53 per cent from April to May, due to the completion of smaller acquisitions, and a further 49 per cent from May to June.

For FY11, Hostech anticipates it will achieve $70m-$90m in revenues and earnings before tax to reach $7m-$9m.

It stated it will continue its acquisition spree to build the business into a significant IT and telecommunications player in the market.

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