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Ashley Services Reduces Net Profits

Ashley Services Reduces Net Profits
Aug 19, 2015 By Ben Visser

Ashley Services Group (ASX:ASH) released its full FY15 results, recording disappointing net profits.

The company reported a statutory net profit after tax of $13.1 million, down 7.33 per cent on the previous year. The final fully franked dividend of 4.1 cents was also declared and is in line with Prospectus forecasts. Pay date is 25th September to shareholders on the register by 4th September. The full year IPO dividend of 6.4 cents represents a pay-out ratio of 65 per cent of NPATA.

Proforma revenues came in at $305.8 million, up 6.5 per cent on the previous year, mainly due to increased labour hire revenues, which included the full year impact from three major national logistics contracts, secured in the prior year. However Proforma revenues did come in 13.7 million below prospectus forecasts, due primarily to lower than expected revenues from ASG Integracom and Concept, down $11.1 and $6.4 million respectively.

Proforma EBITDA came in $20.7 million, down 9.6 per cent on the previous year and $10.3 million or 33 per cent below prospectus forecasts. This was largely due to a decrease in profits from the ASG Integracom business and increased corporate costs incurred as a result of becoming a publicly listed entity. EBITDA from the labour hire and ASG training businesses increased 23 per cent from the previous year.

The company increased net cash to $12.4 million, up 9.8 million from December 2014. The second half cash flows benefitted from the seasonality associated with the labour hire business.

Looking into to 2016, the company’s MD, Ross Shrimpton commented, “ASH is focusing on growth in the training business by diversifying both funding sources and market segments. Growth is expected in the corporate training market, particularly through the telecommunications, hospitality and children’s services industries. ASH will also market diploma and advance diploma qualifications, all of which are higher value courses, utilising VET FEE-HELP funding. ASH has invested during FY15 in establishing the structures and qualifications to expand in these areas and should see growth by Q2 of FY16. The labour hire business remains in a steady state and ASH expects FY16 NPATA to be in line with the Proforma FY15 result.”

In late April the company’s share price tumbled 55 per cent as it released disappointing earnings forecasts. The company has recently been in the media as some investors feel they were misled in the prospectus. Today’s results illustrate the company’s recent struggle to generate net profits and its share price will likely suffer on the opening.

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Ben Visser Author: Ben Visser Aug 19, 2015

Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.

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