UXC flies federation flag, plans more acquisitions

UXC flies federation flag, plans more acquisitions

A combination of organic growth and aggressive acquisitions has seen ASX-listed IT services company, UXC, announce net profit after tax of $9.01 million for the financial year ending June 30. Up from $6.67 million in the previous financial year, the profit derived from revenues totaling $189.07 million.

"The success really comes down to our business model of building up dominant positions in the niches we operate in," UXC finance director and company secretary, Mark Hubbard, said. "We have established a powerhouse now in terms of the companies that are in our federation, and are getting a track record for being able to achieve what we set out to do."

The contribution made by the company's recently acquired business subsidiaries, which include Red Rock Consulting and Fieldforce, was evidenced through the company's earnings before interest, tax, depreciation and amortisation (EBITDA) growth. Of the 108 per cent recorded growth, only 40 per cent was contributed by business units established as part of UXC prior to FY2003/04.

This massive contribution was a result of the company's federation model, which enabled it to avoid the pitfalls on integration and consolidation, Hubbard claimed.

"We've seen some companies go down the acquisitive path and try to integrate everything into one brand and one management structure," he said.

"This has destroyed value, cultures and staff.

"Our federation model really helps as we're buying management teams who have successfully run their businesses in the past. They're able to focus on customers and service delivery, and we can take some of the burdens like fiscal management and corporate governance off them."

UXC had also improved its ability to collaborate between business units and divisions to eek out more synergies and profit opportunities, Hubbard said.

"We're implementing programs around cross-business unit selling, incentive programs, marketing and increased visibility of our product offers for existing customers," he said.

In the current financial year the company would look to achieve a revenue run rate of $230 million.

"There are signs that the industry is easing, but it's forecast to be only four or five per cent growth," he said. "But as we have purchased a number of businesses in July this year, we have an entire year's earnings to be contributed for this financial year."

In coming months UXC would pursue further acquisitions, both in the sectors it currently operates in and in new niches, Hubbard said.

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