Datacom posts flat annual profit

TOM PULLAR-STRECKER
Last updated 12:35 01/09/2014

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Privately owned computer services firm Datacom has reported a 46 per cent increase in its net profit to $51.4 million and lured a top executive from IBM Australia to its ranks.

Datacom said its operating profit for the year to March was flat once the sale of its 850-person Asian contact centre business in April last year was taken out of the equation. The contact-centre business, which provided IT helpdesk support for businesses including Microsoft and Hewlett-Packard, was sold to United States helpdesk specialist Convergys for A$20m, resulting in a NZ$17m gain.

Revenues rose 1 per to $881m and, for the first time in three years, Datacom earned most of those in New Zealand.

The revenues for its New Zealand business rose 12 per cent to $466m, but revenues from Australia and Asia fell, reflecting the sale of the contact-centre business and a "depressed IT project" market in Australia. Datacom has maintained a presence in Malaysia and the Philippines but quit China as a result of the contact-centre divestment.

The company's staff numbers rose 6 per cent to 3756. Chief executive Jonathan Ladd said about 900 of those were software developers, a figure that would only increase.

Datacom appointed Theresa Eyssens to head its Australian subsidiary. Eyssens previously headed IBM's natural resources industry sector team in Australia and New Zealand.

The company has become a major regional player in the Australian and New Zealand IT industries after growing its revenues and profits by an average rate of 12.5 per cent and 11 per cent, respectively, over the past 10 years.

Ladd said new developments had included customising the payroll system it originally developed for the New Zealand mid-market so it could support small and medium-sized businesses in Australia.

It also supplies payroll software developed by Germany's SAP for larger clients.

Australia has had its own equivalent of New Zealand's Novopay payroll debacle, at Queensland Health.

"There is a heightened sensitivity around large payroll service operations," Ladd said.

Datacom has also been developing its own intellectual property in the markets for education and local authority software.

Ladd again ruled out the company listing any time soon.

The shift to cloud computing was helping clients cut the proportion of their IT budgets that had to be dedicated solely to keeping their existing systems running from about 80 per cent of their total IT budget to about 50 to 60 per cent, he said.

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