DWS trims more than 100 contractors to protect profits

DWS trimmed more than 100 contractors in the 2017 financial year to protect profitability amid a slight dip in revenue.

The publicly listed IT company, which provides outsourced IT services, reported a 4.9 percent fall in revenue to $137.4 million in the year ended 30 June 2017.

However, DWS' earnings and profit both increased; underlying EBITDA was up 4.6 percent to $26.9 million and net profit after tax was up 5 percent to $17.7 million.

The company's total billable consultants fell from 715 last year to 596 on 30 June 2017. "Billable consultant capacity continues to be managed tightly to match client demand," according to a company statement.

The decline in revenue was blamed on "a number of factors including a decline in contractor numbers – mainly as a result of a decrease in demand from a large [information technology and communications] client".

The client loss drove DWS to reduce contractors in Victoria, though DWS increased permanent staff in the state, as well as growing chargeable staff in New South Wales and Queensland.

DWS focused on productivity and aligning consultant numbers to client demand, which helped it improve EBITDA margin from 18 percent to 19 percent year-on-year.

The report marks the first set of results since DWS failed to acquire competitor SMS Management & Technology after ASG swooped in with a stronger bid.

The failed acquisition attempt cost DWS $749,000, the company revealed today.

DWS has made a number of acquisitions over recent years, including IT services firm Phoenix IT&T for $20 million and UX supplier Symplicit for $8.5 million.

However, in today's ASX release, DWS said it had trimmed its bank debt by $9 million to $15 million "in the absence of M&A activity".