SMS to use profits for further acquisitions

Peter Dinham
Tuesday, 18 August 2009 15:43

IT Industry - Market

Australian consulting group, SMS, has reported after tax profits of $24.3 million for 2009 and is looking to use some of its profits on more acquisitions of specialist practices where it previously relied on external capabilities to deliver those services.

In the full year to the end of June, SMS achieved revenues of $230.6 million, with net profits down by two percent on 2008, and the company declaring a fully franked dividend of 25 cents per share for the financial year.

SMS CEO, Tom Stianos, said the company plans to “acquire more specialist practices in areas where we have relied on external capabilities,” which he said would further underpin SMS’ growth as “one of Australia’s leading systems integration and business services companies.”

Stianos said SMS had strengthened its balance sheet by increasing cash to $26.5million, further improving working capital management, and securing a debt facility to assist with potential acquisitions and growth strategies.

“Despite instability in the business environment, SMS has demonstrated the resilience of its business model by delivering a consistent result for FY2009 during a period when many were expecting a retraction in performance due to the Global Financial Crisis.

“This consistent performance has been rewarded by the market with SMS being added to the S&P ASX 200 index.”

SMS reported increased revenues from the utilities, mining and  infrastructure and state government sectors, which it said, together with its established strength in financial services and ICT, had given the company “greater diversification across Australia’s largest enterprises.”

“The business promptly responded to the changing market conditions by slowing recruitment in the second quarter and reducing overhead costs in the third quarter,” Stianos said.

Stianos also said that in May this year SMS had acquired the Pelion Group, a company specialising in business performance improvement using data management and business intelligence tools such as IBM Cognos, and he said, the acquisition had added “an important practice to our NSW office.”

“Integration is now complete, with the sales pipeline meeting expectations.

“The Pelion acquisition follows a number of similar acquisitions completed over the last few years,” Stianos said, adding that those acquisitions had been embedded into the SMS business unit structure and extended across regional offices, “further driving leverage of the acquisitions and maximising cross-sell opportunities.”