Transcript Internal Communications update
Annual Meeting October 2014
Ron Baxter
Chairman
Ian Campbell
Chairman Elect
Geoff Lewis
Managing Director/CEO
Company Overview
The ASG Board
Ronald Baxter: Outgoing Chairman Geoff Lewis: Managing Director, CEO Ian Campbell: Chairman Elect Stephen Johnston: Non Executive Director Grant Pestell: Non Executive Director
The ASG Executive Team
Geoff Lewis: Managing Director, CEO Dean Langenbach: COO, CFO Gerald Strautins: Executive - Strategy ASX code:
ASZ
Number of Shares on Issue:
206,720,839
Share Price:
$0.77
Market Capital:
$160 million 2
Ron Baxter
Chairman
3
Evolution of the Business Model
• • • • •
Strategy Foundation
– Managed Service pedigree; client relationships; long term contracts
Origins of the New World
– Ownership Model/Utility Model/Per-use Service-based model – Gartner stated view 2008
The ASG Strategy
– The trend to New World is recognised – Strategy formulation in FY2011 – Full suite of service offerings completed
Strategic Realignment
– Structural change February 2013; New World focus – Balance sheet, cost structures and accounting policies
Today
– Strong organic growth, profit growth – Cash flow, Balance Sheet strength, rapid debt reduction – Board Renewal; Remuneration Review – 3 years of consistent strategic development 4
The ASG New World Journey
“Organizations are switching from company-owned
hardware and software assets to per-use service-based models" so that the "projected shift to computing ... will result in dramatic growth in IT products in some areas and significant reductions in other areas.”
Gartner Inc. , 2008
5
Evolution of the Business Model
• • • • •
Strategy Foundation
– Managed Service pedigree; client relationships; long term contracts
Origins of the New World
– Ownership Model/Utility Model/Per-use Service-based model – Gartner stated view 2008
The ASG Strategy
– The trend to New World is recognised – Strategy formulation in FY2011 – Full suite of service offerings completed
Strategic Realignment
– Structural change February 2013; New World focus – Balance sheet, cost structures and accounting policies
Today
– Strong organic growth, profit growth – Cash flow, Balance Sheet strength, rapid debt reduction – Board Renewal; Remuneration Review – 3 years of consistent strategic development 6
The ASG New World Journey
"We expect that FY2010 and FY2011 will be seen in retrospect as
critically important in the ultimate development of ASG Group as it will exist in five years time."
Chairman’s Address ASG AGM, November 2010
7
Evolution of the Business Model
• • • • •
Strategy Foundation
– Managed Service pedigree; client relationships; long term contracts
Origins of the New World
– Ownership Model/Utility Model/Per-use Service-based model – Gartner stated view 2008
The ASG Strategy
– The trend to New World is recognised – Strategy formulation in FY2011 – Full suite of service offerings completed
Strategic Realignment
– Structural change February 2013; New World focus – Balance sheet, cost structures and accounting policies
Today
– Strong organic growth, profit growth – Cash flow, Balance Sheet strength, rapid debt reduction – Board Renewal; Remuneration Review – 3 years of consistent strategic development 8
The ASG New World Journey
"Our current enviable position is the result of selection of the correct
strategy three years ago and following through with strong, consistent
and focused implementation."
Chairman’s Address ASG AGM, October 2014
9
• • • • • •
FY14 Review
Validation of business strategy
– ASG revenues insulated due to contracted long-term service contracts – New World – the right strategy and the right investment – Organic growth – $200m in new business for FY14
Aggressive debt reduction
– Strategy to strengthen balance sheet achieved – Sale of Bentley Data Centre in FY15 – Debt reduction plan ahead of schedule
Solid growth metrics
– Revenue Growth – 5.0% – Strong EBITDA of $22m – Record Operating Cash of $22m
Board Renewal Remuneration review completed and implemented ASG’s New World strategy recognised by global players as leading the way
10
Ian Campbell
Chairman Elect
11
Putting us on the right track
•
Distinguished career with ASG
– Joined the Board in July 2003 when ASG listed •
Achievements at ASG
– Director since listing – Head of the Audit Committee – Head of Corporate M&A – Chairman since February 2008 – Integral to the strategic direction and positioning of ASG through its strategic transformation 12
Looking forward Observations
•
The Market
– Corporates – Federal Government – State Government – QLD, VIC •
ASG’s Position
– Parallels with past industry inflection points – Early Adopter vs Follower status – Replication of the ASG Business Model – Defendable position – We know how to transform organisations to the New World - without risk 13
ASG’s outlook
•
Strong underlying business fundamentals
– Consistent EBITDA margins in FY15, increasing in FY16 – FY15 increase in revenue will be backloaded to H2 due to contract timing – Recurring revenue locked in •
Offshoring
– 10% by FY16 – Will increase EBITDA and cash position •
Overheads to remain stable
•
ASG’s first mover advantage creating long-term, sustainable opportunities
– Evidence of the ‘right’ strategy – Transforming sales from push to pull scenario – ASG’s reputation and referenceability major differentiator in key markets – Sound Federal Government experience
Despite the intrinsic value of New World IP & projected EBITDA, ASG is undervalued on a comparative multiple basis
14
Geoff Lewis
Managing Director/CEO
15
•
New World strategy delivering tangible results
•
Secure long-term contracts provide locked-in revenue
– 76% of revenue is recurring – Secured $200m in significant New World and Traditional contracts • Department of Defence • • Clough AMSA • AGC – Federal Government • Ministerial directives for New World – moved from ‘should’ to ‘must’ • Thought leadership and proven results • Break-through into Tier 1 Agencies
Solid organic pipeline
• • $100m in negotiation advised in FY14 Results presentation – signing completed $250+m in pipeline opportunities • Transforming existing Managed Services to New World 16
‘New World’ Reality
• •
Fundamental shift to New World – a structural change to the industry
• – – – Cloud services market expected to be $US107 billion by 2017 Enterprises expect 46% of IT services to be Cloud in 3 years 61% of all technology spending funded by business buyers (IDC Cloud Track Survey, September 2013)
Government and large corporates actively pursuing benefits of New World: 30% - 40% savings
•
Traditional Business models not aligned to take advantage of the New World
– – – Large multi-nationals disaggregating Large multi-nationals tied to their existing business models Many organisations unwilling/unable to abandon their existing business models • Making tactical acquisitions to shore-up revenue – not to transform their business model
ASG advantage
– – Successfully executing on the strategy - not simply ‘talking the talk’ Driving economies of scale – – Strong referenceability in key markets Agility 17
The Aspiration
“What has been surprising is how fast the enterprise space is moving. One of the things that we concluded was that nimbleness and speed is going to be an important part of the future.”
Meg Whitman, CEO HP Bloomberg 7 October 2014
18
The Reality - ASG
•
New World leverage
– – Driving economies of scale Strong referenceability in key markets •
ASG’s first mover advantage creating long-term, sustainable opportunities
– – – – – Evidence of the ‘right’ strategy Transforming sales from push to pull scenario ASG’s reputation and referenceability major differentiator in key markets Sound Federal Government experience Successfully targeting Tier 1 Agencies •
Global Validation of the ASG Model
– – ASG first ANZ partner to win Global and ANZ Oracle Excellence Award Multi-Nationals sub-contracting to ASG as they cannot react to the changing dynamics of the industry 19
Proxy Results
Proxy Results
Resolution 1
Remuneration Report
For Against
64,285,356 2,868,785
Abstain
493,314
Chairman’s undirected votes (Chairman’s discretion) Undirected votes (Other Proxy Holders discretion)
431,801 724,746
Resolution 2
Re-election of a director Ian Campbell – Mr 71,953,342
Resolution 3
Re-election of a director – Mr Grant Pestell 64,976,100
Resolution 4
Issue of options to related party – Mr Geoffrey Lewis 61,885,923
Resolution 5
Issue of options to related Party – Mr Ian Campbell 54,650,177
Resolution 6
Spill Resolution 28,446,906 1,101,451 8,077,343 11,940,407 19,176,153 44,386,115 880,596 881,946 121,180 121,180 846,711 440,051 440,051 437,930 437,930 695,708 734,746 734,746 724,746 724,746 734,746 21