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Integrators record strong results

Integrators record strong results

In a sign of the strength and buoyancy of the local market, ASX-listed integrators are reporting above average results for the first half of the financial year.

UXC's Business Solutions Group (BSG) revenue was well up in the first six months to December 31, leaping 41 per cent from $94.5 million to $133.65 million. EBITDA rose by 30 per cent to $13.5 million.

"We're very happy: not only was our revenue and margin growth good, our whole company was positively stronger," CEO, Cris Nicolli, said. He highlighted SAP, Oracle, and its applications businesses as standouts. UXC now has more than 800 staff focused on these areas. "The one we are pleased about, that has grown mostly organically, is our Microsoft ERP business [including Dynamics, Navision, Axapta and Great Plains]. It is starting to make significant inroads in being seen as a creditable ERP supplier to the mid-market," he said. Nicolli said BSG had also seen its partner business grow in leaps and bounds. "We've been doing good work with the multinationals in winning and bidding for business," he said.

Current integration partners include CSC, Oracle, Accenture, IBM, Cap Gemini and EDS. UXC skills most sought after were application know-how in Microsoft, SAP and business intelligence, as well as networking skills in contact centre and VoIP, Nicolli said.

"We also have an application development team in Tasmania which is appealing," he said. "We have worked with CSC on several cases using these skills." Commander also met its financial guidance forecasts, reporting a 59 per cent increase in its first-half revenues to $506 million to December 31. The results incorporate earnings from Volante, which it acquired in April last year.

The ASX-listed ICT provider recorded an EBITDA of $22.8 million, but a net loss of $5.59 million. Commander managing director, Adrian Coote, attributed this to $15 million in asset depreciation on government premises.

Services proved a strong earner, with year-on year revenue increasing from $36 million in the first half of FY2006 to $99.6 million in the first half of FY07. The segment now represents about 20 per cent of total business. ICT hardware sales more than doubled from $108.2 million to $231.5 million. Coote singled out Commander's franchise program as a significant growth contributor. It has now signed 27 franchisees, 11 of which are operational.

Services player, Oakton, was another strong ASX performer. It chalked up record revenue of $47.02 million to December 31, up 27.2 per cent year-on year. Net profit after tax was also up by 29.8 per cent to $9.17 million.

CEO and managing director, Neil Wilson, said the combination of its well-established business strategy and strong market conditions were propelling growth. While its full results were not available at time of press, Queensland-based integrator, Data#3, has already confirmed record first-half results, with profit up by 12-13 per cent to $4.3 million.

For many integrators, managed services will be a key driver in coming months. Commander's Coote said it had retained all of its services contracts since the Volante acquisition, as well as taken on fresh clients. The most notable was a new three-year, multimillion dollar managed services deal with Mitsubishi Motors for desktop, server and network services.

All integrators also signalled further acquisitions.

Overall, the outlook for the second half is optimistic. UXC's Nicolli said its sales were expected to accelerate in the coming months as larger contacts were signed off and rolled out.


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