Melbourne IT revenues up 8 per cent in 2009

Listed online services provider records revenue and after tax profit increase, announces $25m in new IT projects

Online services provider, Melbourne IT (ASX:MLB) has recorded an eight per cent rise year-on-year in revenues for its full financial year to 31 December 2009.

The company also posted a decline in before tax earnings of one per cent to $200.1 million on the previous year but upped its after tax profits by four per cent to $16.8 million on the back of what it called "effective treasury and tax planning".

In a statement to the ASX, Melbourne IT CEO and Managing Director, Theo Hnarakis, said strong results in the Digital Brand Services and Enterprise Services divisions drove the results and "illustrate how our strategic shift to higher-margin services continues to deliver results, with almost 60% of total revenues now derived from IT services".

“The strength of the Australian dollar and the international impact of the global financial crisis impacted revenues across the board," Hnarakis continued in the statement. "Tight cost controls helped ensure our full year guidance was met. However, given that 57% of our revenues are derived internationally – particularly from the United States and Europe – the second half performance and full year result is pleasing as those markets have suffered far worse than Australia during the global financial crisis and the Australian dollar remains strong.”

The company also pointed to a reduction in customer churn as boosting the results; in the first quarter of 2009 (January to March) Melbourne IT recorded a customer turnover rate of 24.3 per cent and in the October to December period it fell to 6.4 per cent.

“At the end of the first half I said that we felt the worst was behind us and the second half performance has vindicated that view, particularly the encouraging growth from Digital Brand Services and Enterprise Services, Hnarakis said. "However, the continued strength of the Australian dollar will put pressure on domain revenues from our partner division in 2010 and provides an unwelcome headwind to DBS’s excellent growth potential."

The company also announced it will undergo two IT projects in 2010. The first is an integration project called Integrated Web Services that aims to allow Melbourne IT staff to sell the company's full suite of offerings. The second, Operational Support Systems, "will improve infrastructure stability and allow the organisation to manage a greater variety of products and services",

The two projects will commence in March 2010 and cost $25 million over three years.

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