SMS revenues up but profits plunge 40%

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SMS revenues up but profits plunge 40%
Tom Stianos

SMS Management & Technology has seen mixed results, growing revenues 13 percent to $314.4 million, while suffering significant falls in profit and earnings.

The firm reported a 40 percent fall in net profit after tax to $12.7 million for the financial year ending 30 June 2014.

Earnings before interest, tax, depreciation and amortisation were down 29 percent to $20.9 million.

The company said the result was impacted by a "decline in client demand and project margin in the consulting business" and a number of one-off items.

This included a $1.1 million write off of accrued revenue and trade debt on withdrawal from an unsatisfactory sub-contract in Singapore. The company also reported $0.4 million in termination costs associated with "streamlining the corporate overhead structure", and $0.4 million in due diligence and acquisition related costs.

Reported net profit after tax also included $0.5 million after tax of amortisation associated with acquired customer contracts and relationships.

CEO Tom Stianos said there were some project deferrals and reduced IT spending in many sectors. "Weak market conditions, particularly in Victoria and the ACT, have made for another challenging year. Uncertainty about macro-economic factors led to project deferrals and reduced IT spending in many sectors, but this was not across the board with some business units generating increased contract wins."

"Despite soft market conditions in Victoria and the ACT, improvements in other regions and our focus on increasing exposure to multi-year contracts and managed services are serving us well as we enter the new financial year."

The profit result was in line with guidance given in May.

Earlier this month SMS announced that Stianos would step down at the end of the calendar year after 26 years at the company.

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