Datacom Group reports continued growth

Datacom Group reports continued growth

Auckland, Monday, 15 August 2011. Datacom Group has completed a satisfactory trading year with increases in both revenue and trading profit on the previous year. Net profit after tax was, however, down on last year after taking into account a change in depreciation rules and impairment charges.

Datacom Group chairman John Holdsworth said revenues for the financial year ended 31 March 2011 increased by 8.7 percent from $667million last year to $725 million this year. Trading profit before tax and impairment charges increased by 7.8 percent from $42.1 million to $45.4 million.

Group earnings before interest, tax, depreciation and amortisation (EBITDA) also showed a solid increase of 6.5 percent, moving from $59.8 million last year to $63.7million, which provided the cash generation for continued business investment and growth.

The Group trading profit before tax of $45.4million was impacted by goodwill impairment costs of $3.3 million and one-off business closure costs of $3.2 million resulting in a net profit before tax of $38.9 million, which was down on last year's $42.1 million.

The majority of these impairment and closure costs related to the Company's Sydney-based software development business which was closed during the year. Datacom will continue to service this market using its well-established software development resources in Queensland and New Zealand.

Datacom's main Australian activities of IT management continued to perform well in Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra.

Net profit after tax (NPAT) ended at $22.3 million compared with $30.2 million last year. The decrease in NPAT was due to the lower pre-tax profit figure and an increase in the current tax charge of $4.5 million as required under accounting rules in response to the recent changes to the tax law around deductibility of depreciation on buildings in New Zealand. The $4.5 million additional tax charge related mainly to the IRD's decision not to allow depreciation on Datacom's datacentres.

Revenue from overseas operations was $380 million, slightly ahead of NZ's $345 million. Staff numbers at year end totalled 3,371, comprising 1,864 in New Zealand, 938 in Australia and 569 in Asia.

A summary of the year's results are as follows:

2011

2010

$000'

$000'

Revenue

725,000

667,000

Normalised Trading Profit before tax

45,368

42,066

Goodwill impairment & amortisation

(3,273)

One-off Business closure costs

(3,154)

Profit before income tax

38,941

42,066

Normal income tax expense

(12,130)

(11,820)

Deferred tax adjustment

(4,545)

Profit after tax from continuing operations

22,266

30,246

At March 2011, the Group was showing a 10 year compound annual growth rate of 14 percent for revenue and 11 percent for profit, which shows the underlying fundamentals of the Group's business remain strong and stable, Mr Holdsworth said.

-ENDS-

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