Oakton shares slump 15% on 1H guidance

IT services company Oakton (ASX:OKN) has revealed it expects a year-on-year ebitda decline for the first half, due a poor showing at its Victorian operations

Shares in IT services and consulting company Oakton (ASX:OKN) fell 15.5 per cent on Wednesday, after the company advised it expects its 1H ebitda to be down year-on-year.

The company has said its Victorian office will likely deliver ebitda well below its targets for the half year, which will drag down the group's performance.

Its activities in the state have been impacted partly by a decline in government contracts in the lead up to the state election on 27 November.

A program has been implemented to improve the business, which has included appointing senior executive, Bruce Minahan, as the general manager of Victoria.

The company advised it still expects FY11 revenue and adjusted ebitda to be up from the previous year. While it also still expects to book 70 per cent of its revenue targets by the end of December, earnings for the year should be less weighted to the first half than is typical.

Trading conditions remain strong in NSW and Queensland, and business activities in the ACT have started to increase following the lengthy federal election process, Oakton added.

The company reported a 42 per cent growth in net profit to $20.2 million in FY10. Ebitda increased 32 per cent to $32.3 million, while revenue declined four per cent to $186 million.

OKN shares ended Wednesday's trading 15.5 per cent lower at $2.620, the lowest closing point since July.

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