Despite “a tough and uncertain trading environment,” itX Group Limited got off to an excellent start and posted a record first half result, according to its 2010 annual report.
The company then came up against major challenges in the second half of the year.
itX managing director, Laurie Sellers, said revenue increased 20.9 per cent and the company was able to deliver a record net profit after tax of $3.5 million, representing an increase of 25.5 per cent over the previous year’s first half.
Some of the 2010 highlights include reporting cash balances of more than $11 million at June 30, 2010, after payments of $6.4 million for business acquisition and dividends.
“Our software distribution business continued to be very strong and grew,” Sellers said. “A lot of that was thanks to the growth in VMware. But all of our top named products, including IBM, Citrix, Trend, Oracle – all posted good strong solid results throughout the year.”
Sellers said the second half of the year presented an even harder and more uncertain market.
“The weaker portion was on the hardware side, predominantly with Sun. A lot of that was caused by the sheer disruption of Oracle acquiring Sun - for no other reason than it caused people to step back and take a ‘wait-and-see’ approach. Therefore, there was a bit of a gap in the order intake for a little while. In terms of the actual transition of the takeover itself, it took some time for people to transition across to agreements under Oracle rather than Sun.”
On a positive note, Sellers said the order intake has got a lot stronger over the last few weeks. “People are settling down now and into the new Oracle/Sun relationship.”
Meanwhile, the company’s hosting and IT services division, ICO, performed satisfactorily, he said, with sales being just slightly ahead of last year.
The one to watch, he said, is Sydmed, the newly acquired medical device distribution business.
“We’ve got some hopeful prospects for that going forward. They form the technology products division. Here we are distributing products that aren’t core IT products, but are still tech-related products. They inherently have a better margin.”
Looking ahead, Sellers said he expected conditions to remain “pretty tough,” at least in the first half of 2011.
Indeed, all eyes are on the formalisation of the itX acquisition by Avnet.
Asked about potential staff changes or restructuring, Sellers said he can’t disclose specific details.
“I’m not in a position to talk about the future because it hasn’t been fully discussed and determined. We need to get to a point to whether it’s going to happen or not, which will be determined by shareholders on November 29.”
While admitting it was difficult to specify, he said preliminary discussions are “for running the two businesses in the same shape at the moment, at least for the rest of the financial year.”
“As we get to know each other, we’ll see the areas where there’s potential synergy,” Sellers said.