EDS NZ shows a positive 2004 with some disappointments

It's good to be back in black

EDS New Zealand turned in a good year in calendar 2004 with almost a quarter of its revenue growth attributable to the Best Shore scheme, says managing director Rick Ellis. Best Shore provides for the New Zealand company to take on work from overseas through the EDS corporation, and was set up with the help of a $1.5 million government investment.

The company’s financial results show revenues increasing from $327 million to $ 411 million, for an after-tax profit of $44.8 million.

EDS is now fully back in the black after its bottom line was badly hit for the past two years by a change in accounting policy from the US which adjusted the way it accounts for partly completed projects.

The Best Shore project now employs 279 people, Ellis says, keeping pace with the targets established when the grant was made. “Everyone will be keeping an eye on those targets and they’ll grumble at us if we don’t meet them; never mind how many tens of millions of dollars we’ve brought into the country,” he says.

Through Best Shore, EDS NZ has secured what Ellis calls an “exciting” contract doing ICT design work for an unnamed US company establishing a plant in China.

Other solid contributors to growth were the Fonterra outsourcing contract, “significant” business with the Ministry of Social Development and Inland Revenue and a legacy SAP support business for North American companies.

A planned applications services business — “design and code-cutting” — has not lived up to expectations, Ellis says. And an intention to push down into the “second-tier” market, placing less reliance on large-scale customers, has also met with mixed success. The Intralot subcontract for monitoring of poker machines is a recent outcome of that emphasis, he says.

EDS had hopes that an end-to-end rates-collection service for Auckland Regional Council would be taken up by other local authorities, but there has been a disappointing lack of movement there. “Councils seem to want to stick with their in-house systems,” Ellis says.

The statement carries a $647,000 restructuring provision, much of which serves to reposition EDS NZ within the corporation’s “agile enterprise” platform, an international network of servers and storage offered as a utility, which Ellis sees as an important element of future ICT services. “This is a journey that Fonterra [among others] has begun,” he says.

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