​Managed services business drives NEC Australia's continued return to profit

NEC Australia believes the success of its managed service business underpinned the reported 15 percent revenue growth during the 2016 financial year.
Written by Aimee Chanthadavong, Contributor

NEC Australia (NECA) continued to recover from the previous year's business restructure, reporting operating profit for the full year ending March 31, 2016 reached AU$4.3 million, after recording a small operating profit of AU$0.1 million in the previous year.

The company also reported revenue grew 15 percent from AU$386 million to AU$443 million year on year.

The company noted its operating profit is a key metric of its operational success, and said the improvement in overall results was partly due to significant improvement in the managed services division, which saw the commencement of three major ongoing contracts, along with growth in other business divisions.

NEC Australia also believes the positive results were underpinned by effective ongoing management of sales and general administrative expenses. In fact, total depreciation, amortisation, and impairment reduced to AU$17.2 million from AU$25.5 million year on year.

The company also highlighted that during the full year the company invested in moving the enterprise resource planning solutions of IT Services and IT Solutions onto the same one as NEC Australia.

"The investment will improve efficiency through all NECA business divisions now using a common ERP platform," the company said.

NEC Australia said it anticipates to continue to produce operating profits going forward, believing its contract to help CrimTrac upgrade its national automated fingerprint identification system (NAFIS), a deal valued at AU$52 million, will underpin the success.

The NAFIS will allow police the ability to undertake facial recognition matching with approximately 12 million existing images that are currently held in police databases nationally.

Additionally, the NEC said it will continue to service its other contracts signed during 2016 full year, including the AU$10.8 million system build contract it inked with the Department of Education and Training; the four-year contract it has with the Australian Department of Foreign Affairs and Trade; and another contract it has with Western Australia Department of Water.

More recently in June, NEC announced plans to establish a AU$4.38 million Global Security Intel Centre (GSIC) in Adelaide that will focus on Internet of Things (IoT) security.

Once established, the centre will form part of NEC's cybersecurity network, with the GSIC expected to complement security-focused facilities located globally, including Japan and Singapore.

The facility builds on the memorandum of understanding (MoU) NEC signed in March with the University of Adelaide's Smart City initiative. Under the MoU, the organisations will work closely on research and development with the aim of building efficient, safe, and sustainable cities of the future.

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