Volante posts reduced profit

Volante posts reduced profit

IT service provider Volante Group has announced a profit after tax of $4.3 million for the year to June 30, a drop from the $7.2 million after-tax profit recorded the year before.

Allan Brackin, Volante's managing director, attributed the company's drop in profits to unfavourable market conditions. "It was the most difficult year in the history of the IT industry. The hardest period was from January to March; that was hardest market anyone has ever seen."

Volante recorded total revenue for the year of $364.8 million, compared to $372.3 million for the same period the previous year. Brackin said that because Volante is a fixed-cost business, when there is a drop in revenues the company cannot offset such a loss by lowering its operating costs.

However, Brackin said Volante's financial results could have been far worse if the company had not made some critical decisions over the last 12 months, such as cutting its services staff and merging two of its product groups, AMS/VIT and Netbridge, into one group, which now come under the Volante Systems banner.

"The results were not stellar, but compared to our competitors and the industry as a whole, we are pleased."

According to the company statement, Volante recorded cash generation of $25 million from operations and a balance of $16 million in the bank. "Control of assets and cash have been paramount to us," Brackin said.

Despite signs that the market is picking up, Brackin is not expecting a significant increase in revenues. "Gartner says there'll be a 10 per cent growth in services, and due to the amount of consolidation we've seen in the market it is fair to expect an IT upturn, but at this stage I'm not predicting an increase in revenue. We're not forecasting huge organic growth.

"For the last four or five months we've traded steadily and we've seen a 20 per cent increase in revenue since Q1."

Volante's business plan going forward is to continue to expand in the middle-tier services space, ultimately claiming a $420 million share in the $8 billion services and procurement market, according to Brackin.

"We've invested a substantial amount in services -- more than $10 million over the last four years. Our core business, our focus and our niche is still the middle-tier services space and we will continue to invest in that area."

Volante will continue to grow its business through acquisition and it currently has three IT services company already lined up for possible buyouts. "We're looking to buy well-established services companies priced at around the $25 million mark and merge them into our business. It's important for us that the companies are a good cultural fit and that their back-end systems are compatible with ours so we can bring them across in a faster and more cost-effective way."

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