Oakton reports profit fall amidst 'challenging conditions'

Oakton reports profit fall amidst 'challenging conditions'

Outlook remains positive as company shifts to 'as-a-service' business model

IT services provider Oakton has recorded a half-year profit fall as it shifts its business model to integration and solution delivery ‘as-a-service’.

The company has posted a half year net profit of $4.1 million, a 9.5 per cent decrease compared to the previous period.

Revenue was also down 3.3 per cent to $81.1 million and EBITDA decreased by 5.4 per cent of $6.9 million.

This is despite the company increasing its market share and overall staff numbers.

According to a company statement, onshore staff numbers have been reduced through natural attrition and targeted separations, while the company employed more than 80 new staff for its Indian operations.

The board has declared a fully-franked dividend of four cents per share to be paid on May 6.

Oakton chief executive and managing director, Neil Wilson, said market conditions remained challenging across all industry sectors in the first half of FY2014.

“There continues to be a large number of project deferrals and delays by clients in all sectors,” he said.

“Based on the current pipeline and Q2 sales, we expect an improved performance in the second half.”

He said there was modest growth outside of NSW and ACT, which again had been impacted by a reduced Federal Government spend.

“The long term investment in our off shore facility in Hyderabad is again making a significant contribution to our performance and our strategic positioning, with its share of total production up to 25 per cent,” he said.

“Also of note is our investment in the generation of non-person based revenue, including Oakton Solutions-as-a-service, and other Cloud related service models.

“This investment has enabled us to increase revenue from these sources by 50 per cent compared to the previous period.”

Wilson said the strategic positioning of the company was now generating longer term annuity streams and that he expected continued growth in the second half of the financial year.

“We continue to invest in the business to ensure our service offer remains relevant,” he said.

"Our mature off shore capability, deep specialisation and project/managed service engagement approach are now enabling a shift to a service integration and solution delivery as a service business model.”

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Tags Oakton chief executive Neill Wilsonhyderabadthe federal government

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