DUG makes savings measures

Personnel cuts, executive pay deferrals and reducing office space will be part of a $US4.2 million savings drive for DUG Technology.

The ASX-listed provider of supercomputing services reported $US 8.7 million of revenue in the September quarter, although it posted a cash deficit of about $2 million for the three month period.

DUG also has a $US12.5 million debt with Commonwealth Bank of Australia due in July 2022.

Today, it said it had restructured its services business, following a softer market in oil and gas, a move with expected savings of $US4.2 million in the 2020 financial year.

Redundancies will cost $US850,000 but will save $US4.1 million, while reducing office space will save $US550,000 in the second half of the 2022 calendar year.

DUG will stop third party research and development projects and create separate business units for its major overseas service centres, with profit-sharing and salary deferements part of the initiative. 

At the top, key executives such as managing director Matt Lamont will defer salary, in Dr Lamont’s case it will be 20 per cent, or about $8,000 a month deferred.

“While the result of these initiatives is a reduction in fixed costs, DUG believes these changes will also serve to preserve cash reserves, position the business line for future opportunities and maximise profit-making ability,” the company said. 

“Personnel reduction has been focussed on support staff where continual improvements in software efficiency and functionality have now enabled more streamlined workflows. 

“Careful analysis of projects with respect to profitability criteria will also assist moving forward. 

“For example larger, more compute-intensive projects will be favoured over smaller yet more complex projects.”

Shares in DUG were up 4.6 per cent to 80 cents each at the closing bell today.