Oakton forecasts $90m revenue in 2H11

Oakton (ASX:OKN) expects revenue and adjusted ebitda for 2H11 to be in line with the first half, but said it will accrue higher than expected legal expenses during the period

IT services company, Oakton (ASX:OKN), has projected revenue for 2H11 to be in line with the $90 million in revenue the company made in the first half.

But in an investor presentation, Oakton said it expects to accrue higher than expected legal costs from a lawsuit against utility and transport services company Tenix.

The $12 million lawsuit, which Oakton filed March last year and is still in arbitration, alleges that Tenix wrongfully terminated a software subcontract Tenix had granted the company under its traffic infringement services deal with the State of Victoria.

Adjusting for legal costs ebitda, like revenue, should be in line with the first half, Oakton said.

The company reported a 1H11 ebitda of $13.3 million excluding arbitration costs, and $11.2 million including these costs.

Most areas of the business are expected to report sequential growth, the company said, but added that Queensland and New South Wales results for the third quarter were lower than expected.

Oakton said the overall market is gradually improving, with Federal Government spending increasing after the election – but said this spending could be impacted by Tuesday's budget.

The company expects its revenue backlog to improve going into FY12, and will aim to acquire increased market share across most of its operating sectors including Federal Government.

Oakton added that it expects FY12 to be the year for returns on the transformation investments it has made since FY08.

OKN shares fell 2.84 per cent in Friday's trading to $2.050.

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