ASX-listed Melbourne IT (ASX:MLB) has revealed its net profit has dipped to minus $4.6 million in the first half of its 2014 financial year, ending June 30.
Net profit was adversely impacted by a non-cash impairment expense of $8.59 million and transaction cost of $1.34 million relating to its acquisition of Netregistry Group in February. No further costs are expected in the second half of the year.
The decision to impair $8.59 million of Melbourne IT legacy software was the consequence of a decision to move to a single technology platform, which will drive significant synergy and customer experience benefits in the future, the company said.
Revenue was up 16 per cent to $59.6 million compared to $51.3 million at the same time last year. The growth was underpinned by the Netregistry acquisition and Melbourne IT group managing director and CEO, Martin Mercer, said he was pleased with the integration progress between the two.
“The impact of the restructuring undertaken in the second half of last year and the contribution from Netregistry is evident in the solid underlying performance of the business,” Mercer said.
Earnings before tax took a slight dip from $3.7 million in the previous half-year to $3.6 million. However, underlying earnings before tax was up 32 per cent to $4.9 million.
Underlying revenue from the Melbourne IT business is up one per cent driven by improved business performance in its SMB solutions and enterprise services divisions, Mercer said.
The company expects a softer revenue performance in the second half of the year, but it will be partially offset by its acceleration into its enterprise services division and savings from disciplined cost management.