ASG secures $53 million in new contracts in first half FY11

ASG secures $53 million in new contracts in first half FY11

Acquired companies Capiotech, Courtland Business Solutions, Dowling Consulting and Progress Pacific contributed $20 million in new contracts


Expanded product offerings, product partners and geographies has lead to higher value contracts, for ASX-listed IT company, ASG Group (ASX: ASZ).

The integrator stated it had secured $53 million worth of new contracts in the first half of the 2011 financial year, ending December 31.

Revenue for the company rose 27 per cent to $74.03 million, earnings before tax increased 17 per cent to $12.20 million, compared to the previous year.

ASG stated revenue in the first half of the 2011 financial year, was partly impacted by delays relating to skills shortage, the Federal election, and some hangover from project service weakness at the end of FY10.

Net profit took a 5.7 per cent dip to $6.09 million, however represents a solid increase of more than 16 per cent when the first half of FY10 is adjusted to the statutory tax rate.

Earnings before tax margins experienced a slight decrease to 16.5 per cent, compared to the previously corresponding period, due to one off costs related to the integration of acquisitions and rebranding.

During the period, ASG raised $31.3 million by way of debt and equity issuance, which will go towards growth initiatives including its new datacentre and acquisitions.

With ASG's newly expanded product and service offering, the company expects to increase its opportunity pipeline.

“ASG's strategy to drive revenue growth by extending our geographical reach, product offering and successfully entering the strategically important SAP market is already delivering revenue growth and allowing us to compete more effectively with large foreign vendors,” ASG group managing director, Geoff Lewis said in a statement to the ASX. “We are also very conscious of sticking to what we do best and we are pleased that our model of focussing on long term contracts with blue chip clients continues to underpin a strong stable recurring revenue base.

“ASG did incur a number of growth related one off costs during this reporting period, which had some impact on the bottom line, however we see this as an investment in the future growth of the business, the full benefits of which we expect to see in FY12 and beyond.”

It has also positioned itself to secure much larger contracts. Previously, ASG focussed on securing contracts up to the value of $100 million, but has increased its share to $100 to $500 million segment.

The ASX-listed company, made a string of acquisitions last year including Capiotech, Courtland Business Solutions, Dowling Consulting, and Progress Pacific.

The acquired companies have already contributed $20 million in new contracts across areas such as SAP services, business intelligence and consulting.

“The rate of new contract wins is expected to continue to accelerate as customers become increasingly aware of ASG's newly expanded business capabilities and integration benefits continue to emerge,” ASG said.

Courtland Business Solutions secured three significant SAP contracts with Citic Pacific Mining, Hancock Prospects and Australian Premium Iron.

Capiotech was undertaking a $4 million extension towards its business intelligence services provided to the Qantas eQ Program.

Dowling Consulting have secured $1.5 million in contracted revenue to provide high end consulting services to CorpTech, the Queensland Government's shared services solution.

Progress Pacific also recently secured the prime contractor role for one of the largest FMCG companies in the soft drink and snack food industry worth $6 million contracted for 2011 with extended services expected to be to the value of $15-$20 million beyond 2011.

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Tags Mergers and acquisitionsASG Grouphalf-yearly resultscapiotechDowling ConsultingCourtland Business SolutionsProgress Pacific

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