​ASG thanks managed services for expected FY16 revenue of AU$185m

Australian-listed ASG Group has released its 2016 financial year earnings guidance, expecting revenue to fall just shy of AU$190 million after a solid year of managed services contracts and platform migration.
Written by Asha Barbaschow, Contributor

IT solutions firm ASG Group has announced it is expecting to post revenue in the range of AU$185-190 million for the 2016 financial year.

The company told shareholders on Wednesday it is also expecting an earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 14 percent for the 12-month period.

ASG chief executive Geoff Lewis cited the company's managed service contracts as well as its transition of clients to ASG's New World platform as the reasons for the projected revenue.

In April, ASG signed a two-year deal with the federal government that will contribute to the revamp of the Australian Bureau of Statistics' (ABS) technology environment.

The deal, expected to deliver revenue of more than AU$10 million over two years, will see ASG deliver a new enterprise data management environment using Oracle technology to help the ABS produce statistical information.

Although it was the first engagement with the ABS, Lewis said that at the time it gave him confidence it would be the start of a long-term relationship.

"ASG has one of the largest enterprise analytics practices in Australia and we are excited to deliver our unique expertise to help federal government departments transform their technology environments, delivering definitive business outcomes," he said.

Earlier this year, ASG started working with The Department of Finance on the rollout of its new electronic workplace environment, with the four-year deal expected to cost AU$29 million.

Within the same month, ASG also secured a five-year AU$105 million contract with the Victorian Department of Education and Training to develop a purpose-built, private cloud platform for finance and procurement applications.

In addition to this, ASG also signed a AU$7 million Oracle Peoplesoft HRMS and Payroll managed services contract extension with the Western Australian Department of Education for an initial two years, with a one-year extension option.

Within the 2016 financial year, the company also signed a AU$23.8 million deal with the Australian Department of Infrastructure and Regional Development in September, which sees ASG in charge with providing the department with infrastructure and desktop services, as well as end-to-end service management for five years, with options to extend the deal for a further three years thereafter.

In January, ASG signed with Victorian energy provider United Energy and Multinet Gas in a five-year AU$22 million infrastructure managed services deal, which also has three one-year expansion options, and in February the company resigned a AU$9 million two-year managed services contract with the Victorian Department of Education and Training for its information technology division.

For its first half results, ASG reported its New World service contracts helped lift revenue by 12.6 percent to AU$88.2 million with EBITDA of AU$12.7 million.

For the financial year ending June 2015, ASG was awarded AU$200 million worth of contracts, which saw the company post a net profit after tax of AU$9.5 million, up 6 percent from the 2014 financial year. EBITDA was AU$20.2 million, down 8 percent from FY14.

Lewis told shareholders on Wednesday that despite tightness in the economy, ASG's outlook for both the 2017 and 2018 financial years remains positive, saying the company is budgeting for growth on the back of full year contributions from a number of major, long-term contracts for New World services secured in 2016.

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