IT services provider ASG Group has announced an interim net profit of $4.9 million, a 16 per cent increase on the previous corresponding period.
IT services provider ASG Group has announced an interim net profit of $4.9 million, a 16 per cent increase on the previous corresponding period.
The profit result was achieved on revenue of $64.1 million, an increase of 25.7 per cent over the same period last year.
Earnings before interest, tax, depreciation and amortisation was up 26.1 per cent to $9.1 million and in line with EBITDA guidance provided in November of around $9 million for the December half.
Earnings per share were 3.8 cents, 13 per cent higher than the same period last year and directors have declared an interim dividend of one cent per share, fully franked.
The result was driven by a continued strong operational performance in each of the group's businesses and the addition of new contracts from existing and new customers, ASG said.
ASG managing director Geoff Lewis said the performance was very strong in spite of the conditions prevailing in the economy and the broader IT services market.
"While the current economic climate is impacting trading conditions for many in our sector, ASG remains in a good position," said Mr Lewis.
"During the six month period, we continued to produce very strong cashflow and secured a number of new contracts.
"This demonstrates the continued ability of ASG to deliver revenue and earnings growth, even in a difficult operating environment.
"We are looking forward to a strong full year performance for FY09, which we expect to exceed last year's record results, and the current indications are for continued strength into FY10."
Mr Lewis said ASG's strong cashflow fulfilled one of the company's major objectives for the first half of FY09 and provided strength and flexibility to pursue new opportunities and to maintain ASG's growth path.
"We appreciate that general economic and market conditions have deteriorated, however ASG's foundation of long term contracts, our focus on client's operational systems and an efficient national delivery platform are providing us with locked-in revenue streams and earnings stability," he said.
"With approximately 70% of our revenue rolling on to each successive business year, this is a key point of differentiation between ASG and other market participants in our sector."
Recently, ASG announced that it had won new contracts with a range of new and existing clients with a total value of approximately $30 million. The customers include Symbion Pharmacy Services, the Department of Prime Minister and Cabinet, Airservices Australia and the National Museum of Australia.
Mr Lewis said the outlook for ASG in the second half of the 2009 financial year was positive.
"ASG is currently in advanced discussions regarding a number of major contracts. Although final decisions are yet to be made, ASG has strong indications of further success in these large-scale strategic opportunities," he said
"Furthermore, we continue to have significant qualified prospects within a strong pipeline of opportunities for the second half of FY09 and into FY10."
Mr Lewis said that given the volatile economic climate, ASG would continue to maintain a conservative balance sheet, with a focus on preserving cash. The company's aim is to pursue the maximum possible self-sufficiency in cash flow and working capital funding.
"While ASG remains fully committed to an increased total FY09 dividend consistent with earnings growth, we have reduced the half year dividend to 1 cent per share in the interests of conserving cash to support business growth from internal resources," he said.
"Because of the new work that we have already won and our confidence of securing significant new contracts in the near future, we intend to conserve internal cash reserves to support the additional working capital investment.
"To balance this, we expect to declare a higher final dividend to bring the total FY09 distribution into line with expected increased earnings with a payout ratio consistent with FY08."
Mr Lewis said that because directors believe that current trading prices of the Company's shares do not reflect ASG's underlying intrinsic value, the Dividend Reinvestment Plan will not be offered to shareholders at the half-year.
No decision has been made regarding the DRP at the full-year.
