DWS records strong growth following acquisitions

DWS records strong growth following acquisitions

Records first half revenue of more than $5m as compared to prior corresponding period

ASX-listed IT services company, DWS (ASX:DWS), has recorded a strong performance in the first half of 2017, following the completed integrations of acquired businesses, Phoenix and Symplicit, in 2015.

The figures reveal revenue to be $73 million, which is up eight per cent from the prior corresponding period. Additionally, its EBITDA margin improved to 18.5 per cent from 17.7 per cent. The company also recorded an NPAT of $9 million, up 19 per cent from the prior corresponding period.

“The strong organic growth achieved by DWS in the first half demonstrates the success of DWS’ breadth and depth strategy and the successful integration of the Phoenix and Symplicit acquisitions,” DWS CEO, Danny Wallis, said.

“DWS’ digital and customer led innovation service offering led by Symplicit continues to perform well and to be highly sought after by our clients.”

DWS bought user experience (UX) digital design and innovation consultancy business, Symplicit, in June 2015. The acquisition was largely based on the opportunity to capture downstream revenues from building and managing digital applications emerging from Symplicit's projects.

The acquisition cost DWS an upfront payment of $8.5 million, followed by further payments of up to a total of $6.5 million. These figures are conditional on adjustment of the upfront price based on final FY2015 EBITDA and EBITDA growth performance over a three-year period.

Later in August 2015, DWS also bought 75 per cent of Phoenix IT & T Consulting for $19.5 million. At the time, the acquisition was expected to provide DWS with annual revenue of more than $40 million across a diverse base of clients from sectors such as telecommunications, financial services, utilities and transport.

At the time of the acquisition, Wallis also expected the integration to broaden DWS’ IT services offerings in areas such as productivity and sourcing, and business consulting.

In terms of DWS’ current financial position at the half-yearly point of FY17, liquidity remains steady with $9.5 million of cash in hand at 31 December 2016, after net repayment of $2 million of bank debt during the period.

Following a breakdown of revenue by industry sector, the results show a strong demand for services from clients in new industries including banking and finance and utilities and transport, reflecting portfolio growth and diversification after the acquisitions.

Looking forward, Wallis said the company will continue its “breadth and depth” strategy by focusing on enhanced service offering and cross-selling by sales teams.

The company also said it expects the second half of FY17 to reflect the growth of the first half of FY17, with continued organic growth and cost management.

At the time of writing, DWS' shares were trading at $1.59.

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