Amcom falls on lower profit growth

Shares in Amcom Telecommunications have fallen more than 5 per cent on the back of a significant decrease in profit growth for the 2013-14 financial year.

The company released its financial results this morning, which showed revenue and overall profit both increased 8 per cent for the year, largely driven by recurring business.

The company’s annual recurring revenue base increased by 16 per cent to $122 million, driving the 8 per cent increase in overall revenue to $170.4 million.

Underlying profit, that is, profit before $763,000 acquisition costs incurred during the year were taken into account, increased 12 per cent - a result in line with Amcom’s forecasts and what it also hopes to achieve for the 2014-15 financial year.

However, that increase is well down on previous underlying profit reports - this time last year Amcom reported its 11th consecutive year where underlying profit had increased by more than 20 per cent.

The market appeared unimpressed with the results with Amcom's shares down 5.6 per cent to $1.85 each at WST 3:20pm.

The reportable net profit after tax rose from $20.7 million in the 2012-13 financial year to $22.3 million for the year ending June 30, but it's still down on FY2012 when Amcom reported profit of $28.3 million.

Chief executive Clive Stein said the recurring revenue base was a key measure for the company and proof it had performed well.

Meanwhile, Amcom’s $2.5 million investment in its cloud technology offered the opportunity for positive growth going forward.

“We have continued to innovate and invest in our business as demonstrated with the deployment of Amcom Cloud Collaboration (ACC), leading to our ground breaking partnership with AARNet and our major contract win with the University of Melbourne,” Mr Stein said, referring to previously reported deals.

“The Higher Education and Research sector is generally an early adopter of new technology and it, together with ACC, will be another growth driver for us in the future.”

According to global consulting firm Frost and Sullivan, the national enterprise market for unified communications services such as Amcom Cloud Collaboration stands at over $1.3 billion.

Amcom has indicated its intention to acquire businesses to facilitate growth going forward following a $40 million capital raising in June.

It followed the $14.3 million acquisition of fellow Perth information technology company aCure Technology in August last year, which added three data centres to Amcom’s four located in Perth.

That acquisition is expected to add more than $3 million to Amcom’s earnings in the 2014-15 financial year.

Meanwhile, also reported today, ASG Group has announced the sale of its Bentley Data Centre to Sydney-based Vocus Communications for $11.7 million.