IT service provider Oakton (ASX:OKN) has reported a 35% slump in FY11 profit, due to litigation costs and a worse than expected showing at its Victorian business.
The company reported profit of $13.1 million for the financial year. Excluding litigation costs associated with the recently-resolved contract dispute with Tenix Solutions, profit would have fallen 20% to $16.8 million.
Revenue dipped 1% to $183.9 million when accounting for a portion of the $15 million settlement payment from Tenix, but excluding these proceeds the decline would have been 5%.
Oakton CEO Neil Wilson said the FY11 results “have not met expectations.” He blamed a significant under-performance of the company's Victorian operations, as first flagged in its 1H results.
But he said a turnaround program initiated in the state as a response had made progress, leading to improved results by the final quarter.
Market share had increased at its other Australian offices in Canberra, Sydney and Brisbane, although the NSW business missed expectations in the final quarter. Oakton also has a presence in Hyderabad, India.
Commenting on prospects for the current financial year, Wilson said “we have built a reasonable level of committed revenue and a solid pipeline of potential revenue as we enter into FY12.”
OKN shares fell 3.51% on Tuesday to $1.785.