Omesti cautiously optimistic

KUALA LUMPUR: Loss-making IT services provider Omesti Bhd is non-committal on a turnaround in the company’s fortunes for the financial year ending March 31, 2016 (FY16), citing the challenging economic climate, but it sees better contribution from the digital and infrastructure services segment going forward.
Its executive director Monteiro Gerald Clair told a press conference after the company’s AGM yesterday that its job pipeline is still strong, with the expectation of one or two more project awards in the coming months.
CFO Richard Voon said the company is supported by its order book of RM231 million, where the contract tenure ranges from three months to three years.
“We’ve a RM231 million order book, no one has cancelled the orders. It’s good news but we’ve seen a lot of instances where projects that were supposed to be completed and delivered within the first quarter were delayed, but not cancelled, hence revenue for the first quarter is the lowest in five quarters,” he said.
Omesti posted a net loss of RM7.03 million for the first quarter ended June 30, 2015, versus a net profit of RM1.09 million. Revenue came down by 21.08% to RM74.21 million from RM94.04 million.
For the financial year ended March 31, 2015 (FY15), it reported a net loss of RM138,772 compared with a net profit of RM31.97 million a year before, mainly due to lower gain on dilution of equity interest in an associate, loss on fair value adjustments on investment and higher impairment loss on goodwill.
Omesti is involved in three business segments namely business performance services, trading and distribution services, digital and infrastructure services, which contributed 50%, 40% and 10% to its revenue in FY15 respectively.
Citing that the contribution from the digital and infrastructure services has jumped from 6% in FY14 to 10% in FY15, Voon expects new businesses within this segment to continue gaining traction.
However, from the profitability perspective, he said the new businesses, which include fibre broadband solutions fiber@home and Ohana, are still weighing down on the company’s earnings.
“Yes, they are contributing losses, but we’re confident that these businesses will have a ‘hockey stick effect’ for the time to come,” Voon said.
Omesti serves a wide range of customers including government-linked and public sector companies, telcos and the financial services industry.
Voon said the depreciating ringgit has little impact on the company as its revenue largely comes from the local market.
“We do have procurement in foreign currencies, but we have hedging instruments and we’ll negotiate with overseas suppliers,” he added.
Asked about plans by Microlink Solutions Bhd, a 79.09% subsidiary of Omesti, to transfer its listing from the ACE Market to the Main Market, Voon said a few factors have to be taken into consideration, including the current market condition.
“We would like to see the move up to the Main Market, but it’s still largely dependent on the board of Microlink,” he added.
Microlink, a banking software provider, swung into the red, registering a net loss of RM723,000, for the first quarter ended June 30, 2015.