Volante reports $7.6m profit

Australian IT services outfit Volante Group has reported a profit after tax of $7.6 million on sales revenue of $348.3 million for its year ending 30 June 2004.

The result included the contribution from its February acquisition of local box builder Ipex which increased the company's annual revenue by 55 percent.

Seven months down the track, company CEO Alan Brackin claimed the integration of Ipex had been completed with no redundancies. Staff that had left following the acquisition had been replaced. "Sales teams and systems are in place," he said.

Brackin claimed there had been no affect on relationships with multinational vendors such as HP following the Ipex acquisition.

"HP continues to be our biggest brand," he said, adding that it was up to the customer to choose the brand that suits them.

"Obviously we compete with HP in services contracts - both companies are aware of that. The best man [company] wins," he said.

Over the next financial year, Volante would spend up to $5 million in project services, covering seven practice areas which include connectivity, information life cycle management (ILM), software platforms, managed services, strategic consulting services, security and business solutions.

Brackin claimed security and ILM were growth areas and a general IT infrastructure refresh going on. "There is a whole pile of areas where there's money to be spent," he said.

In the government market, a big focus for Volante this year would be in securing business with South Australian government departments. The company has 100 staff on the ground in South Australia and won a contract Adelaide-based with oil and gas company Santos in 2002.

Volante would bid for contracts in other states "as they come up," Brackin said.

He said customers now see the company as a "fully fledged" Australian IT services company. "People see us as being flexible - management's on the ground. People that run the company are in Australia.

Volante and KAZ were the only Australian companies that could compete strongly against the multinationals in the high-end IT services market in this country, he said. "Government [departments] realise that we can do the job as well as the multinationals can. It comes down to your ability to deliver, to get reference sites and that people trust you," he said.

The company had no plans to chase business offshore, with the exception of New Zealand, Brackin said. There were no plans to do business in Asia, he said. "It's a tough marketplace - how do you break into China? Our IP is really about how we can deliver our contracts and our projects. Breaking in as a services organisation in those countries - you'd have to have a very buoyant [market] situation to do that," he said.

On the offshoring issue, Brackin believed contracts should be fulfilled in Australia. "I don't think the price differential is that great. The customer has got to feel they're getting better value for money out of your organisation," he said.

Volante had cash $22.6 million cash in the bank at 30 June, compared with $14.8 million at 31 December 2003. Bank debt was $20 million, compared with $12 million at 30 June 2003, the company said.

Meanwhile, Brackin - who previously indicated his intention to exit the organisation - expected the company to find a replacement for him by Christmas. Volante hired a consulting firm two months ago to hunt for a new CEO, he said.

Brackin has been driving company strategy while chief operating officer Hugh Bickerstaff looks after day-to-day operations. The company is looking internally and externally for a replacement for Brackin, who said he planned to become involved in non-profit or community organisations after he departs from Volante.