DWS weathers profit decline after acquisition hit

DWS weathers profit decline after acquisition hit

Included the after-tax impact of $8.7 million of costs relating to its acquisition of Projects Assured and Object Consulting

Danny Wallis (DWS)

Danny Wallis (DWS)

Credit: DWS

Publicly-listed IT services provider DWS has reported net profit after tax (NPAT) of $7.5 million for the year ending 30 June 2020, a decline of nearly $2.8 million, or 27 per cent, compared to the prior year. 

The company told shareholders that its FY20 reported NPAT included the after-tax impact of $8.7 million of costs relating to its acquisition of Projects Assured and Object Consulting, along with $400,000 net cost of restructuring due to COVID-19 and a $700,000 loss from DWS’s joint venture, Site Supervisor.

Broadly, the company’s operating cash flow (before interest and tax and adjusting for leases) came to $32 million, which is 156.6 per cent of reported earnings before interest, tax, depreciation and amortisation (EBITDA) and 112.5 per cent of underlying EBITDA.

Meanwhile, revenue from continuing operations was nearly $168 million, up by almost $4.5 million, year-on-year, or about 3 per cent. Underlying EBITDA was $28.5  million, an increase of $2 million, or about 8 per cent compared to the previous year. 

At the same time, underlying net profit after tax (NPAT) stood at $17.4 million, up by roughly $580,000, equating to 3 per cent, year-on-year.

The company said that the key drivers of its latest financial results included trading conditions impacted by COVID-19, such as lower than expected demand in the banking and finance, information technology and communications (IT&C) and transport sectors, offset by an increase in demand in the government and defence sector.

Total consulting staff numbers decreased to 720, from 751 the year prior, due to lower than expected demand in DWS traditional services and underperformance of its Symplicit business, offset by an increase in headcount in Projects Assured.

Indeed, utilisation of staff was lower during the period as consultant numbers were adjusted to match the lower than expected client demand in DWS traditional services as a result of COVID-19-impacted trading conditions and due to a one-off mandatory leave initiative implemented at short notice by a key client during the year

However, the company stressed to shareholders that, during the period, it had acted quickly to adapt to the COVID-19-impacted trading conditions and used its strong cash flow to fund the acquisition of the Object Consulting business, to pay acquisition costs for Projects Assured and to continue to fund ongoing investment in DWS’s core service offerings.  

“Despite the impact of COVID-19 on trading conditions, the actions taken by the DWS  Executive and management has led to growth in underlying EBITDA and underlying NPAT,” DWS CEO and managing director Danny Wallis said.   

“This coupled with continued strong cash generation has meant that the DWS Limited Group is in a relatively strong position and well placed to benefit when trading conditions improve,” he added.

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