Oakton sees steady sales ahead of DiData deal

Australian IT service integrator Oakton has managed to maintain steady sales for the 2014 financial year – but admitted it has had to cut prices to win work.

In its yearly financial announcement to the ASX, Oakton said revenue rose 1.4 percent from the previous year to $164.3 million.

However, net profit after tax plunged 9.1 percent to $8.3 million. EBITDA was also down, now at $14.1 million for the year.

The results announcement follow last week's news of a takeover proposal by Dimension Data. 

"Our ability to meet reduced price expectations from our customers has enabled us to maintain and improve market share in a number of sectors," said Neil Wilson, managing director and CEO.

Contribution from offshoring has grown. The share of total production out of the Indian branch has now hit 26 percent, up from 20 percent in 2013. The Hyderabad office now employs 309 staff out of Oakton's total workforce of 1203.

Work out of Western Australia was also a strong contributor, with that state contributing 5 percent of revenue, up from 3 percent in 2013.

The company stated that ongoing investment in cloud services has seen a growth in "non-person based revenue", and that this sets up the coming year.

"Our strategic positioning is now generating larger engagements with long tern annuity revenue streams – and has resulted in a record sales year of $200 million," said Wilson. "Reflecting this, the level of booked and committed revenue into the next financial year is well ahead of last year's level."

Wilson also said that cash flow had improved as the 2014 financial year went on.

"Pleasingly, our cash flow improved in the second half, with our first half cash flow impacted by timing of milestone payments on some engagements."

The company stated that "as-a-service" and cloud integration would continue to drive the short-term future. Offshoring is also expected to be a continuing focus, with "minimal head count growth" expected in Australia but overseas staff numbers to increase in financial year 2015.

Oakton reported that government budget cuts had resulted in a "flat" market in the ACT and the integrator expects both federal and state government work to remain "flat" for the coming year.

The statement also emphasised that the board "unanimously recommends that all Oakton shareholders vote in favour" of the Dimension Data acquisition proposal.