Data#3 has reported a 5 percent fall in net profit to $6.8 million for the first half of the fiscal year, citing volatile market conditions specifically in the public sector.
Revenue fell 7 percent to $406.2 million for the six month period, dragged down by an almost 10 percent fall in product sales to $338.6 million. Small consolation came from a 12 percent increase in services sales to $66.6 million.
In a statement to the market, the company said its first half was "slightly ahead of our plan due largely to a solid performance from our licensing solutions business" and a major contract win with a new medical facility in WA.
However, the company said it expected to see further uncertainty in both the public and private sectors for the next six months and therefore declined to provide the market with guidance for the full year.
Operating costs for the six months - including for rent, amortisation and depreciation - increased 19 percent to $8 million over the period.
Data#3 said a change in timing of licensing contract renewals and the continuation of challenging and competitive market conditions had also weighed the company down.
Public sector doubts
Yesterday, Data#3's CEO John Grant told CRN the results were negatively impacted by the lack of certainty around the Queensland Government’s IT strategy, due to its stalled $5 million State of IT review. He said the company had been forced to re-focus away from government contracts to the private sector.
But the knight in shining armor for the company during the period was Western Australia's Fiona Stanley Hospital, with which the integrator signed a lucrative network build and services supply contract.
The $50 million deal was awarded to both Data#3 and Dimension Data. Data#3 will provide Cisco network infrastructure and services while DiData will take care of enterprise computing, storage and backup. Data#3 declined to reveal what its share of the deal was worth.
It said while an uncertain investment environment constrained project services revenues and hampered anticipated growth in outsourcing and as-a-service revenue, it experienced “strong growth in maintenance reselling revenues as customers elected to extend the life of existing equipment in preference to replacement”.
The company has net assets of $32.5 million. Its share price fell to $1.19 immediately following the announcement but had recovered most of its value by mid afternoon.
-1.jpg&w=100&c=1&s=0)
.png&w=100&c=1&s=0)
