Despite profit loss CSG revenue grows

Expenses associated with acquisitions, contract wins and ramping up its business negatively impacted CSG's net profit

IT services provider CSG (ASX:CSV) has met its FY10 guidance forecast despite suffering a $2.8 million net profit loss.

It indicated the negative impact was due to expenses associated with acquisitions, contract wins and ramping up its business.

After taking this into account, its revised net profit was $34.3m.

Despite this, it managed to achieve 41 per cent revenue growth totalling $277m and earnings before tax was up 20 per cent to $59m.

Earlier this year, CSG acquired two New Zealand companies, KMBS and LSL, which CSG said had significantly contributed in the second half of the year. Operating cash for the year was $35m.

CSG CEO, Denis Mackenzie, said in a statement to the ASX it had been a busy six to eight months.

“CSG has been able to achieve company transforming acquisitions in very volatile markets, without significantly increasing debt, without putting strain on our management team and at the same time continuing to organically grow the business,” Mackenzie said. “We now have a national business in both our businesses in Australia in IT services and print services.”

Mackenzie indicated growth in 2011 would stem from its contract wins in the eastern states and the planned expansion of its national print services business, particularly in Sydney and Melbourne.

“We expect this business to continue to grow organically and we will be adding IT services,” he said. “Much of the profit for next year is already locked in as a result of the multi-year contracts in IT services and the annuity service revenue in print services, which drives 80 per cent of profit in this business.”

In May CSG partnered with Canon in a $31m arrangement to ramp up its print services business.