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Investment in services pays off for ASG

Investment in services pays off for ASG

Services provider gets back in black

New contract wins and growth within its ‘New World’ services business model has contributed towards ASG Group’s strong results for the financial year ending June 30.

During the past six months, the ASX-listed IT services provider (ASX:ASZ), has secured contracts or preferred bidder status worth $100 million. Some of its biggest customers include Clough, Australian Transport Safety Bureau and Australian Maritime Safety Authority.

ASG recently sold its Perth data centre to Vocus Communications for $11.7 million.

According to ASG CEO, Geoff Lewis, its pipeline of business opportunities exceeds $250 million.

“Our investment in New World technology is delivering substantial and sustainable results at both the top line and at the EBITDA margin level,” he said. “We have decreased our costs and will accelerate our debt reduction with the recent sale of our data centre for $11.7 million.

“Leveraging our investment in New World and capitalising on efficiencies across the business, we’re now realising the return of our investment over the past few years.”

Net profit was in the black at $9 million, in comparison to the previous financial year’s $26.7 million dip.

It achieved an earnings before tax record of $22 million, a $41.9 million increase on the previous year and revenue was also up $7.6 million to $160.1 million.

ASG has its eye on achieving EBITDA margins of 14 per cent and outlined that will be done through an offshoring strategy, targeting 10 per cent of its workforce by the 2016 financial year; attaining more New World service contracts and fixing its overheads as services revenue increases.

“We are now reaping the rewards of our ‘New World’ business model and together with the cost savings realised in our strategic review, ASG has proved we can deliver a solid and robust financial performance,” Lewis said. “We can already see the continuation of our growth in business levels throughout FY2015.”

In a statement to the ASX, ASG chairman, Ron Baxter, said it would continue to commit funds towards refining its service offerings to optimise quality and productivity.

“We remember and acknowledge that observers and analysts criticised us for initiatives and expenditure which caused short-term hits to profitability,” Baxter said. “We have now demonstrated that those necessary actions have put us ahead of international and domestic competition and positioned us perfectly for the business environment which is now before us.”

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