ASG six-month profit rises to $6.5m
ASG Group Limited (ASZ) posted an NPAT of $6.5 million for the first half of FY10, up 32.5% on a year earlier. The IT services provider reported a 14.5% increase in EBITDA to $10.4 million, while revenue was down 9.3% to $58.2 million reflecting lower product sales and revenue from capital projects offset by continued growth in its major services business.
“Continued strong growth in revenue from managed services contracts and cost control initiatives put in place to respond to the economic downturn were key drivers of strong operating performance and the record profit,” ASG said.
The company said it benefited from overheads and efficient national delivery of long-term service contracts.
ASG said earnings per share were up 24.3% to 4.7 cents, while a 1.5c per share fully franked interim dividend was declared.
Managing director, Geoff Lewis, said cost cutting measure put in place in late 2008 delivered a significant advantage, allowing for profitability to grow given the economic downturn had only a limited impact upon its key businesses.
“Our cash flows remain very strong and our balance sheet continues to strengthen, giving us a great platform to pursue organic and acquisitive growth,” Mr Lewis said.
“In particular, we are pleased that we have grown our operating margins, testament to the capability and efficiency of our national IT infrastructure and the cost-related efficiency measures.”
Since the New Year, the company has announced two major contract wins worth a total of $58 million, which lifted ASG’s contract asset bank to $450 million.
”ASG has also been nominated as Preferred Tenderer on two further major contracts and is now engaged in exclusive negotiations, with completion expected in the March quarter,” the company said.
Mr Lewis said ASG’s balance sheet primed the company for strong growth in FY11 and FY12.
“We now have an outstanding platform for growth, with minimal net debt and significant capability to fund new initiatives,” he said.
“We are currently assessing a number of acquisition opportunities and expect to be able to make further announcements during the second half of FY10.”
Mr Lewis said the company was confident full year earnings would show growth over FY09, though would be impacted to some degree by investment in new growth initiatives.
As at 1104 AEDT, ASG Group shares were down 5.5c to $1.185.
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