ASX-listed services provider, Oakton (ASX:OKN) has revealed poor market conditions in Victoria will impact the Group’s overall first half earnings before tax figures for FY11.
In a statement to the ASX, Oakton indicated market conditions in Victoria were not as strong in other states due to the November state election. This is also coupled with general underperformance of the Victorian business, which means it will be well short of its FY11 first half EBITDA targets.
“The impact of this will mean the Group EBITDA for 1H FY11, will be below the corresponding period last year (after adjusting for legal expenses associated with the Tenix arbitration process),” Oakton said. “While there has been recent sales pipeline growth in the Victorian business, a performance improvement program has commenced to review all aspects of the Victorian operations.”
As a result, Bruce Minahan, has been appointed as the general manager of Victoria and will be charged with leading the improvement program.
The company said trading conditions were strong in NSW and Queensland, and to keep up with the increased business activity, it has increased staff numbers. It also reported increased business activity in ACT, but the results of this will come to light in the second half of FY11.
The company expects to achieve its Group target of greater than 70 per cent of FY11 forecast revenue.
“Consistent with our business strategy, a number of large projects won by the company are increasing and the high level of conversion of these into long term managed service arrangements is continuing,” Oakton said. “Operating cash flow continues to meet our expectations, and the previously indicated targets regarding near-term debt elimination and FY11 interim dividend payout ratio of about 40 per cent are on track.”
It will release its first half year results on February 8.