ASG riding high but could use more resources

ASG riding high but could use more resources

WA service provider says skills shortage is only drag

WA-based outsourcer, ASG, has cited the skills shortage as the major limiter of its already strong growth as it posts a 66 per cent rise in half-year earnings to $7 million.

ASG is expecting earnings of $7 million for the six months to December 31, up year-on-year from $4.2 million. The company reported a 36 per cent rise in net profit to $7 million on $76.7 million in revenue for the 2006-07 financial year.

ASG chief financial officer, Dean Langenbach, said the company was performing strongly, due partly to favourable market conditions, ongoing contract wins and boosted national coverage hingeing on a new national delivery model. It was likely those would continue to pay dividends in 2008, he said.

"The limiting factor is that it's not about winning the business, it's about finding the resources. If we could find 100 more people tomorrow, we'd find them all work," he said.

Dimension Data Australia boss, Steve Nola, also recently cited the skills shortage as an important limit to its potential growth, when reporting the system integrator's latest results.

ASG's primary strength is in Oracle applications and selective sourcing. Over the last year it netted ongoing contracts with Qantas, Ericsson and the Victorian government and was eyeing up another $600 million in contracts due to be let over the current year, Langenbach said.

The service provider had also done well protecting its margins, reporting an increase to profit margins of four per cent over the last two years. ASG was expecting the skills shortage to become less of a factor in the next few years, partly as a result of its increased success in working with sub-contractors, including some large multinationals, he said.

"We're doing that in a number of bids at the moment," Langenbach said. "And if a particular couple of contracts come through in 2008, things could improve a lot more."

Langenbach said the company was on track to hit its goal of $200 million a year in revenue by full-year 2010.

ASX-listed ASG held its AGM November 21. Chairman, Stan Lewis, said ASG had completed its fifth successive record year.

"Our outlook is very promising, with an expectation that we will continue to add to our already strong contracted revenue base and protect our operating margins as we grow," Lewis said at the meeting. "Underpinning this progress is the strength of the selective outsourcing market and ASG's growing status within in."

Lewis said he was particularly pleased with the success of ASG's Vindaloo Systems acquisition in November last year, which had helped the Perth-based service provider build a stronger business foundation on the eastern seaboard.

He also highlighted that ASG had been able to position itself as the prime contractor in a number of bidding consortia, which facilitated deal negotiations.

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