IT consulting and services company, Oakton, has recorded strong results for the half-year ending December 2003, announcing a net profit after tax of $3.26 million, up 12.2 per cent over the same period last year.
Managing director of ASX-listed Oakton, Paul Holyoake, attributed the increase in profitability in part to the divestment of its products division which it sold off to Canberra-based software company, The Distillery, in July last year.
Oakton decided to sell its products division, which developed and sold software for the law enforcement market, after it posted a $3 million loss. As part of the acquisition, The Distillery will provide Oakton with $5.5 million in services contracts over a three-year period.
“The products division held us back and was a drain on our management and financial resources," Holyoake said. "Selling the division has allowed us to focus more greatly on our services business.
“Integral to our growth strategy is to have in place the management team, operational processes and infrastructure required to continue to build the business. While this has increased our overheads in the period, we now have the foundations in place on which we can continue to grow both organically and through continued acquisition."
Oakton acquired Microsoft Solutions business partner, Aston IT, for $4 million in May last year.
In 2002, the company also snapped up the Australian arm of Tier Consulting and Oracle distributor and systems integrator, mPower.
On the back of a 14 per cent increase in sales, successful integration of acquisitions had contributed to a 23 per cent increase in gross profit, Holyoake said.
Oakton’s services business breaks down to 25 per cent outsourcing services, 8 per cent strategy architecture services and 67 per cent delivery services, such as software development, information management, application integration and development and project management.
Holyoake said the company would focus heavily on the Sydney market in 2004. Oakton’s revenue from its Sydney operations represented 29.2 per cent of total revenue for the half-year, up from 23.6 per cent for the same period a year earlier.
Holyoake said there was evidence in the market that there was a sustainable increase in the demand for IT services and he expected this to translate to increased earnings over time.
He predicted the company would continue to show steady growth in the second half of the year.