Publicly listed IT service provider DWS has cited acquisition costs as the main reason behind its 23 per cent half year profit tumble down to $5.3 million
The net profit result soaked up an after tax impact of $1.98 million due to the acquisitions costs associated with Projects Assured and Object Consulting for the first half of FY20 ending December 31.
The deals also netted $750,000 of amortisation costs due to a new accounting treatment for leases while DWS also incurred a $500,000 loss from its joint venture Site Supervisor.
First half revenue increased one per cent to $83.02 million while underlying EBITDA was up two per cent on the previous corresponding period, reaching $12.32 million.
Lower than expected demand in banking, finance, IT&C and transport sectors were offset by an increase in demand in the government and defence sectors, DWS revealed in a statement to shareholders.
Total consulting staff numbers were down from 763 to 745 due to the lower demand in its traditional services business and under-performance experienced within its Symplicit arm.
DWS CEO and managing director, Danny Wallis, said strategies were currently in place to improve the performance of its Symplicit business while Object Consulting will be integrated into the traditional DWS service offering.
“Given these changes and assuming similar conditions to those in H1 FY20, we expect a stronger performance for the DWS Group in H2 FY20,” he said.
“DWS’ acquisition of Projects Assured and our strategy to increase our footprint in government and defence has led to an increase in underlying EBITDA for the first half of FY20 despite reduced demand from other industry sectors, under performance by our Symplicit business and initial losses from the integration of the newly acquired Object Consulting business.”
DWS acquired Projects Assured in 2018 and snapped up Object Consulting in September last year following Object's collapse into administration.