OAKTON LIMITED Consulting Technology
APPENDIX 4E ‐ FINAL REPORT
Lodged with the ASX under listing rule 4.3A
Report for the financial year ended 30 June 2014
Previous corresponding period is the financial year ended 30 June 2013
RESULTS FOR ANNOUNCEMENT TO THE MARKET
$000s | ||||
Revenues from ordinary activities | up | 1.3% | to | $164,465 |
Profit from ordinary activities after tax attributable to members | down | 9.1% | to | $8,323 |
Net profit for the period attributable to members | down | 9.1% | to | $8,323 |
Amount Total amount
Final dividend
Date of payment per share of dividend
$'000
Year ended 30 June 2013 16 September 2013 4.75 cents $4,271
Interim dividend
Year ended 30 June 2014 6 May 2014 4.00 cents $3,599
Total paid $7,870
Final dividend
Year ended 30 June 2014 16 September 2014 4.00 cents $3,600
Total dividends per share paid or payable in respect of the year ended 30 June 2014 - 8.0 cents (prior period ‐ 9.5 cents)
There are no dividend reinvestment plans in operation. All dividends paid and proposed are on ordinary shares, are fully franked at 30% tax rate and do not comprise any foreign sourced dividend.
Current period Prior period
Net tangible asset backing per ordinary share 24.1 cents 23.6 cents
Market conditions during FY2014 again remained challenging across all industry sectors. In particular, there
continues to be a large number of project deferrals and delays by customers in all sectors. Despite this an improved performance in the second half of FY2014 across most key metrics was achieved.
It is pleasing to note that, outside of NSW and ACT (which again have been impacted by reduced Federal Government spending), operating performance has shown solid organic sales and revenue growth which has resulted in overall revenue growth in FY2014 over the pcp. Once again production effort has grown year on year and was 11% over the pcp, reflecting an overall increase in market share.
The long term investment in the off shore facility in Hyderabad, India is again making a significant contribution to the Company's performance and strategic positioning, with that facility's share of total production being over 26% (pcp 20%). The Company's ability to meet reduced price expectations from customers has enabled the maintenance and improvement of market share in a number of sectors.
Investment in the generation of Non‐Person based Revenue (NPR), including Oakton Applications as a service and other "cloud" related service integration models has enabled a significant increase in revenue from these sources.
The Company's strategic positioning is now generating larger engagements with longer term annuity revenue streams and has resulted in a record sales year of $200m (up 20% on the pcp) which comprise revenue relating to both the current and future years. Reflecting this, the level of booked and committed revenue into the next financial year is well ahead of last year's level. Backlog into the following financial years is also significantly up on the pcp. Cash flow improved in the second half with first half cash flow impacted by timing of milestone payments on some engagements.
The Company continues to invest in the business to ensure the service offering remains relevant to rapidly changing industry directions and customers' evolving requirements. The mature off shore capability, deep specialisation and project/managed service engagement approach is now enabling a shift to a service integration and application delivery 'as a service' business model. This is becoming increasingly important as many cloud based business and technology services emerge and require careful integration and operation.
The financial report is in the process of being audited.
The financial report is not likely to contain an independent audit report that is subject to a modified opinion, emphasis of matter or other matter paragraph.
Oakton Limited and its controlled entities
For the year ended 30 June 2014
Consolidated Entity
Notes | 2014 $'000 | 2013 $'000 |
Revenue Revenue from services 1 Other revenue 1 | 161,785 2,680 | 160,219 2,209 |
164,465 | 162,428 | |
Less: Expenses Administration Business development Cost of third party software and disbursements Finance costs 2 Human resources 2 Occupancy Depreciation 2 Technology | (3,787) (375) (6,329) (373) (134,729) (3,462) (3,051) (1,585) | (3,817) (381) (3,515) (271) (134,636) (3,248) (2,714) (1,874) |
(153,691) | (150,456) | |
Profit before income tax Income tax expense | 10,774 (2,451) | 11,972 (2,816) |
Profit from continuing operations | 8,323 | 9,156 |
Profit for the year Other comprehensive income | 8,323 - | 9,156 - |
Total comprehensive income for the year | 8,323 | 9,156 |
Profit attributable to members of the parent | 8,323 | 9,156 |
Total comprehensive income attributable to the members of the parent | 8,323 | 9,156 |
Basic earnings per share for continuing operations (cents per share) Diluted earnings per share for continuing operations (cents per share) | 9.3 9.2 | 10.1 10.0 |
This statement should be read in conjunction with the accompanying notes.
Consolidated Statement of Financial PositionOakton Limited and its controlled entities
As at 30 June 2014
Consolidated Entity
2014 $'000 | 2013 $'000 | |
Current assets Cash and cash equivalents Receivables | 2,354 41,036 | 6,947 35,875 |
Total current assets | 43,390 | 42,822 |
Non current assets Deferred tax assets Property, plant and equipment Intangible assets | 2,460 10,765 80,019 | 1,997 8,283 80,019 |
Total non current assets | 93,244 | 90,299 |
Total assets | 136,634 | 133,121 |
Current liabilities Payables Current tax payable Provisions | 20,129 631 10,663 | 19,078 41 10,101 |
Total current liabilities | 31,423 | 29,220 |
Non current liabilities Provisions | 1,061 | 706 |
Total non current liabilities | 1,061 | 706 |
Total liabilities | 32,484 | 29,926 |
Net assets | 104,150 | 103,195 |
Equity Contributed capital Reserves Retained earnings | 49,052 348 54,750 | 48,858 237 54,100 |
Total equity | 104,150 | 103,195 |
This statement should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in EquityOakton Limited and its controlled entities
For the year ended 30 June 2014
Consolidated Entity Year ended 30 June 2014 Contributed capital $'000 Reserves $'000 Retained earnings $'000 Total $'000Balance at the beginning of the year Profit for the year | 48,858 237 54,100 103,195 - - 8,323 8,323 |
Total comprehensive income for the year | - - 8,323 8,323 |
Transactions with equity holders in their capacity as equity holders: Contributions Share buy-back Employee share scheme Foreign currency translation Dividends paid | 119 - - 119 - - - - 75 169 197 441 - (58) - (58) - - (7,870) (7,870) |
Total transactions with owners in their capacity as owners: | 194 111 (7,673) (7,368) |
Balance at the end of the year | 49,052 348 54,750 104,150 |
Consolidated Entity Year ended 30 June 2013 | Contributed capital $'000 | Reserves $'000 | Retained earnings $'000 | Total $'000 |
Balance at the beginning of the year 52,439 578 53,903 106,920 | ||||
Profit for the year - - 9,156 9,156 | ||||
Total comprehensive income for the year - - 9,156 9,156 | ||||
Transactions with equity holders in their capacity as equity holders: | ||||
Contributions 65 - - 65 | ||||
Share buy-back (3,669) - - (3,669) | ||||
Employee share scheme 23 (306) 362 79 | ||||
Foreign currency translation - (35) - (35) | ||||
Dividends paid - - (9,321) (9,321) | ||||
Total transactions with owners in their capacity as owners: (3,581) (341) (8,959) (12,881) | ||||
Balance at the end of the year 48,858 237 54,100 103,195 |
This statement should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash FlowsOakton Limited and its controlled entities
For the year ended 30 June 2014
2014 $'000 | 2013 $'000 | |
Cash flow from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid | 174,481 (163,265) 135 (373) (2,287) | 176,141 (158,864) 432 (271) (4,729) |
Net cash provided by operating activities | 8,691 | 12,709 |
Cash flow from investing activities Payment for property, plant and equipment | (5,533) | (1,630) |
Net cash used in investing activities | (5,533) | (1,630) |
Cash flow from financing activities | ||
Proceeds from share issue Share Buy-back costs Repayment of debt Dividends paid | 119 - - (7,870) | 65 (4,194) - (9,321) |
Net cash used by financing activities | (7,751) | (13,450) |
Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year | (4,593) 6,947 | (2,371) 9,318 |
Cash and cash equivalents at end of the year | 2,354 | 6,947 |
This statement should be read in conjunction with the accompanying notes.
Notes to the Financial StatementsOakton Limited and its controlled entities
For the year ended 30 June 2014
Consolidated Entity
2014 $'000 | 2013 $'000 | |
1. Revenue Revenues from continuing operations Revenue from services Other revenue Interest, other persons Research and development concession | 161,785 135 2,545 | 160,219 432 1,777 |
164,565 | 162,428 | |
2. Profit from continuing operations Profit from continuing operations before income tax has been determined after the following specific expenses: Depreciation of non current assets Leasehold improvements Software developed Plant and equipment | 607 1,246 1,198 | 298 1,391 1,025 |
Total depreciation of non current assets | 3,051 | 2,714 |
Human Resources expense Employee benefits Expense of share-based payments Other | 107,799 441 26,489 | 105,854 79 28,703 |
Total Human Resources expense | 134,729 | 134,636 |
Finance costs Bank bill facility | 373 | 271 |
Total finance costs expense | 373 | 271 |
Other Operating lease rentals (included in Occupancy costs) | 2,854 | 2,692 |
Total other expense | 2,854 | 2,692 |
Notes to the Financial Statements continued Oakton Limited and its controlled entities For the year ended 30 June 2014
3. Subsequent eventsAs outlined in the market release of 12 August 2014, the Company announced a recommended cash offer from Dimension Data
Australia Pty Limited of $1.90 per share for 100% of Oakton. Key aspects of this are:
Scheme Implementation Deed entered into with Dimension Data Australia.
Oakton shareholders to receive $1.90 cash per share subject to Oakton shareholder approval, court approval and all other conditions being satisfied or waived.
The offer price represents an attractive premium of:
o 29.7% to last close on 11 August 2014;
o 35.5% to 1 month volume weighted average price ("VWAP"); and
o 42.6% to 3 month VWAP
The Board of Oakton unanimously recommends that all Oakton shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an Independent Expert opining that the Scheme is in the best interests of Oakton shareholders.
Subject to the same qualifications, the Executive Chairman and CEO, representing 11.3% of the total shares outstanding, intend to vote all of their Oakton shares in favour of the Scheme.
The FY2014 final dividend of $0.04 per share will be paid irrespective of the outcome of the Scheme.
If the Scheme is approved and implemented, the $1.90 cash amount per share will not be reduced as a result of the declaration and payment of the FY2014 final dividend of $0.04 per share.
The Scheme process is now underway and is expected to be implemented in November 2014.
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