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'New World' strategy drives ASG profit rebound

Brian Karlovsky | Feb. 11, 2014
ASX-listed IT services provider ASG has returned to profit on the back of stronger revenue and reduced operating costs, its interim half-yearly financial results reveal.

ASX-listed IT services provider ASG has returned to profit on the back of stronger revenue and reduced operating costs, its interim half-yearly financial results reveal.

The company reported a profit of $3.8 million, which equates to an earning per share of $1.85, compared to a $4.6 million loss for the previous period.

Revenue for the half year increased to $79 million from $75.8 million in the previous period — a result chief executive, Geoff Lewis, said was driven by growing momentum from "new world" services in an otherwise challenging business environment.

"The organic growth we are seeing now is the result of significant investment in our new world strategy, which has given us a significant first mover advantage as the IT services market matures," he said.

"We now have completed almost a year of sustainable growth in revenues and margins and have significantly reduced our cost base.

ASG reported EBITDA of $10.7 million, compared with an EBITDA of $2.3 million in the previous corresponding period.

Net profit before tax was $5.6 million — a $12.5 million improvement on the first half of year.

The cash flow from the strong operating result has been used to strengthen the balance sheet.

Further investment of $1.7 million has been made in the ASG's New World Software-as-a-Service capability in direct response to the needs of existing and new clients, according to a company statement.

ASG expects further significant growth in new world business.

Lewis said the pipeline of select opportunities at either proposal or qualification stage exceeded $200 million.

"ASG does not believe technology based acquisitions will provide entry into the new world market," he said.

"The key is in transforming the business model to make yourself relevant by delivering utility priced solutions directly to business customers.

"The fact that ASG is already banking organic new world revenues validates this view."

 

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