Tough year for Melbourne IT

Encouraging signs of improvement in the market for 2013

Melbourne IT has reported a 5 per cent year-on-year decrease in revenue to $170.6 million and net profit dip of 16 per cent to $11.4 million for its full year results ending December 31.

EBIT also took a 21 per cent hit, down to $15 million. The company states its full year results were in line with its guidance and EBIT and NPAT were impacted by a non-cash impairment charge of $2 million, stemming from its ForTheRecord (FTR) division.

The Digital Brand Services unit full year revenue was flat year-on-year at $55.2 million and EBIT was up 6 per cent to $9.5 million. This year, it will place significant investment into the arrival of new gTLDs, which are expected to drive more demand for domain strategy consulting, increased registration revenue, brand protection growth and the commencement of more than 110 ‘.brand’ registry services contracts from the second half of 2013.

“We probably didn’t achieve as much as what we would have liked,” Melbourne IT CEO and managing director, Theo Hnarakis, said. “We put a lot of effort into the ‘brand’ work and we think ‘brand’ investment will pay huge dividends from the middle of the year and onwards as ICANN starts releasing new TLDs and allowing corporate customers to release their brands on to the market.”

The SMB Solutions business full year revenue was down 8 per cent to $82.2 million and EBIT was also down 17 per cent to $12.8 million. Melbourne IT has made investments in personnel, new products and improving customer experience.

Hnarakis said this division was impacted ‘several million dollars’ by Microsoft's exit and also the impact of some credit card scams it was hit with.

“We continue to be challenged in the SMB business and we’re continuing to rollout the transformation strategy, which we think, SMB in particular, will be the major beneficiary from that investment,” he said.

It is spending $28-$30 million on its internal IT transformation, due for completion at the end of the year. TechMahindra has been appointed as its integration partner and it will allow Melbourne IT to save costs, streamline processes and launch new products.

The Enterprise Services unit also decreased 3 per cent in revenue to $26.1 million, but EBIT rose 35 per cent to $2.3 million year-on-year.

Melbourne IT stated its FTR division, has had a strong start to 2013, despite a revenue decrease of 12 per cent to $6.9 million and EBIT contribution of $100,000.

“FTR is starting to rebound and we’ve doubled the sales activity in January and February,” he said.

It is continuing to place payments on its net debt, which has come down from $21 million to $16 million.

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