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
ASX code:
ASZ
Number of Shares on Issue:
206,720,839
Share Price:
$0.77
Market Capital:
$160 million
Dean Langenbach: COO, CFO
Gerald Strautins: Executive - Strategy
2
3
Ron Baxter
Chairman
4
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
5
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
6
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
7
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
8
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
9
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
10
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
11
Ian Campbell
Chairman Elect
12
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
13
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
14
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
15
Geoff Lewis
Managing Director/CEO
16
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
17
‘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
18
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
19
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
Proxy Results
21
Proxy Results
For
Against
Abstain
Chairman’s
undirected
votes
(Chairman’s
discretion)
Undirected
votes (Other
Proxy Holders
discretion)
Resolution 1
Remuneration Report
64,285,356
2,868,785
493,314
431,801
724,746
Resolution 2
Re-election of a director – Mr
Ian Campbell
71,953,342
1,101,451
880,596
440,051
734,746
Resolution 3
Re-election of a director– Mr
Grant Pestell
64,976,100
8,077,343
881,946
440,051
734,746
Resolution 4
Issue of options to related
party – Mr Geoffrey Lewis
61,885,923
11,940,407
121,180
437,930
724,746
Resolution 5
Issue of options to related
Party – Mr Ian Campbell
54,650,177
19,176,153
121,180
437,930
724,746
Resolution 6
Spill Resolution
28,446,906
44,386,115
846,711
695,708
734,746