DWS Advanced Business Solutions (ASX:DWS) has blamed a major stand-down of contract labour and investment into a new business unit, as factors contributing to its FY11 half-year profit loss.
The IT provider reported an increase in revenue and a decrease in profits in its half-yearly financial results ending December 31, 2010.
According to the results, revenue rose by 0.7 per cent to $48.45 million compared to the same period last year while net profit after tax dropped by 3 per cent to $8.97m.
Pre-tax profit was down 4.7 per cent to $12.77m and the balance sheet currently has $15.5m in cash.
A key factor contributing to the reduction in profits was a major stand-down of contract labour for a 7 week period from December 2010 to January 2011. $275,000 was also invested into a new Business Intelligence unit, which will not deliver earnings until the second half of the year.
“We have implemented a key client risk management program which is expected to see us reduce our exposure to any one client to not more than 20 per cent of revenue by June 2011,” DWS said in a presentation to shareholders.
It claimed to be looking at acquisition opportunities to “seed new business lines and complement existing operations.”
“Margins [are] expected to stabilise in H2 with improved utilisation, continued roll-out of rate increase in Victoria and lower investment requirements for BI practice,” it said. “Margins were adversely affected by lower utilisation and increased employment costs.”