ASX-listed IT reseller, Data#3 (ASX:DTL), has advised investors its first half profits will be far ahead of what it previously predicted. But the company is warning its second half will not be as lucrative.
In November, the company told investors to expect a first half 2010/2011 net profit before tax of $10 million to $11 million. It now expects it to be $11.6m, but the figures have yet to be audited or finalised.
“This represents an increase of approximately 70 per cent on the 2009/2010 first half results of $6.8m,” Data#3 said in a statement. “Revenue is expected to increase approximately 23 per cent overall with solid growth in product and services revenues.”
According to Data#3 chief financial officer, Brem Hill, the increase in profits came because of an usually strong performances from all five of the company’s main divisions.
“Typically in the past we’d have one line of business that wouldn’t meet plan or have a disappointing result,” he said. “We’ve also typically been more of a Queensland-centric business in the past, but now we’re seeing more and more growth in our NSW and Victorian centres as well as South Australia and Western Australia.
“The standout for us has been our licensing business and solutions. It typically has a very strong first half and this year was no different.”
Although Data#3 was largely unaffected by the flood waters that recently devastated parts of Queensland, Hill said the damage to the bottom line had not been calculated and that it may still hurt future results.
“It’s really hard to tell at this stage how our customers will be impacted,” he said. “We haven’t gotten feedback from them yet so it’ll probably get visibility over the next two to three months and the impact could go on for up to six months.”
Even without losing business to the floods, Hill said he was keen to caution investors against expecting the second half of the financial year to be as lucrative as the first.
“Our licensing business has a stronger first half compared to our second half,” he said. “We don’t expect licensing to contribute as much to our second half… we’ve also increased our headcount quite substantially in our first half so that will add people costs throughout the second half.
“We’ve also had a fairly significant program of increasing our premises and facilities.”
Hill said he was unable to definitively explain recent share price fluctuations and speculated it could be due to flood concerns or profit taking.