Oakton full-year profit falls 9 per cent ahead of Dimension Data buyout

Oakton records $164 million revenues - a one per cent increase

IT consultant Oakton has posted a full year net profit of $8.32 million - a 9 per cent fall on the previous year.

The result follows an August 12 offer from the Japanese owned, Dimension Data, to acquire IT services company for $171 million.

Under the deal, which has Oakton’s board approval, Dimension Data has offered shareholders $1.90 a share, a 42.6 per cent premium to the volume weighted average price for the three months to Monday 11 August 2014.

According to a company statement, the Board of Oakton unanimously recommends that all Oakton shareholders vote in favour of the deal in the absence of a superior proposal and subject to an independent expert opining that the Scheme is in the best interests of Oakton shareholders.

The FY2014 final dividend of $0.04 per share will be paid irrespective of the outcome.    If the deal is approved and implemented, the $1.90 cash amount per share will not be reduced as a result of the declaration and payment of the FY2014 final dividend of $0.04 per share.

The deal process is now underway and is expected to be implemented in November 2014.

In the past year, Oakton recorded a revenue increase of 1 per cent to $164 million.

However, EBITDA decreased by 3 per cent to $14.06 million.

The Oakton Board declared a fully franked final dividend of 0.4 cents per share.

The total dividend payout for the year is 8 cents (9.5 cents). The dividend will be paid on September 16.

Oakton managing director and chief executive, Neil Wilson, said market conditions during 2014 again remained challenging across all industry sectors.  

"In particular, there continues to be a large number of project deferrals and delays by customers in all sectors. Despite this, we recorded an improved performance in the second half of FY2014 across most key metrics," he said.

"It is pleasing to note that, outside of NSW and ACT (which again have been impacted by reduced Federal Government spending), operating performance has shown solid organic sales and revenue growth which has resulted in overall revenue growth in FY2014 over the participating convertible preferred share price."

He said the company's production effort had grown year on year and was 11 per cent over the pcp, reflecting an overall increase in market share.  

"The long term investment in our off shore facility in Hyderabad is again making a significant contribution to our performance and our strategic positioning, with their share of total production being over 26 per cent (pcp 20 per cent)," he said.  

"Our ability to meet reduced price expectations from our customers has enabled us to maintain and improve market share in a number of sectors."

The company has also invested in a generation of Non-Person-based Revenue (NPR), including Oakton Applications as a service and other “cloud” related serviceintegration models.  

Wilson said the investment had enabled the company to significantly increase revenue.    "Our strategic positioning is now generating larger engagements with longer term annuity revenue streams and has resulted in a record sales year of $200m," he said.

"Reflecting this, the level of booked and committed revenue into the next financial year is well ahead of last year’s level."

He said the company's mature off shore capability, deep specialisation and project/managed service engagement approach is now enabling a shift to a service integration and application delivery ‘as a service’ business model.

"This is becoming increasingly important as many Cloud-based business and technology services emerge and require careful integration and operation."

Read more: Dimension Data Australia to buy Oakton for about $171m

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Tags NTTNeil WilsonOaktonOakton managing director and chief executivedimension data

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