Programmed Full Year Media Release 4.00pm 26.5.15 · PDF...
Transcript of Programmed Full Year Media Release 4.00pm 26.5.15 · PDF...
ASX Release
1. Non-‐trading items were the final payment of $1.4 million for the acquisition of Programmed Turnpoint (announced in July 2014); restructuring costs of $2.8 million; $0.6 million for Programmed's share of the net loss by its associate OneShift; $1.0 million settling a liquidator’s claim arising from payment received for work performed in 2008; and a tax credit of $1.1 million relating to these non-‐trading items.
47 Burswood Road Burswood WA 6100
T (08) 9216 2100 F (08) 9216 2186
www.programmed.com.au
Programmed Maintenance Services Ltd
ACN 054 742 264
27 May 2015
Results for FY15 Statutory NPAT $25.7 million
NPAT before non-‐trading items1. $30.4 million, down 4.7% Revenue $1.4 billion in line with FY14
Final dividend up 4.5% to 11.5 cps, fully franked Net debt down to $7 million from $42 million
Programmed (ASX:PRG), which provides staffing, maintenance and facility management services, today announced an after-‐tax profit of $30.4 million before non-‐trading items1. for the year to 31 March 2015 (FY14: $31.9 million) down 4.7% on FY14. After non-‐trading items1., after-‐tax profit was $25.7 million (FY14: $30.5 million).
Earnings before interest and tax (EBIT) by the Property & Infrastructure division were 16% above FY14, but lower earnings by the Resources and Workforce divisions resulted in a decline of 5% in group EBIT before non-‐trading items1. to $50.1 million (FY14: $52.8 million).
Revenue was $1,434 million, similar to FY14 ($1,435 million), with a 7% increase in the Property & Infrastructure division offset by lower revenue in the Resources division.
Continued focus on capital management and strong operational cash flow reduced net debt to $7.0 million at 31 March 2015 from $42.2 million at 31 March 2014. As a result, interest expense was down 27% to $5.4 million.
The board has determined to increase the final dividend by 4.5% to 11.5 cents per share fully franked, payable on 24 July 2015 to shareholders on the register at 3 July 2015. This will bring dividends for the full year to 18 cents per share fully franked (FY14: 17 cents).
Chris Sutherland, managing director of Programmed, said: ‘Our business model, providing staffing, maintenance and facility management services across all industry sectors, gives Programmed considerable strength and has enabled us to deliver a reasonable result for shareholders in markets that continue to present new challenges. We are pleased to have maintained very strong cash flow, reduced debt and increased the dividend.
‘We are targeting markets that are forecast to grow and are seeking new strategic positions in some emerging markets. In the past year, we have secured new long-‐term work in education, social housing, defence, tourism and food/agriculture, all industries forecast to grow over the next ten years. As a result, we
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project that growth in Property & Infrastructure earnings should offset any potential fall in Resources earnings in FY16.
‘We are on the short lists for the Western Australian schools PPP (public-‐private partnership) and the new federal courts PPP in ACT, and are positioned to benefit from further PPP projects.
‘We are also having more success with selling a greater range of maintenance services to our property customers.
‘We have invested in two new Workforce opportunities: OneShift to benefit from growth in the online staffing sector, and an alliance with APM to become a National Job Network provider to the Federal Government.
‘We are investing heavily in technology to give the business a more efficient and lower cost base, along with significantly greater field capability to service our customers.
‘Our balance sheet is strong, with just $7 million of net debt at the end of March 2015, enabling us to take advantage of further growth opportunities, and we continue to evaluate potential acquisitions to increase our scale, and ways in which we can expand in our existing markets.
'As announced on Monday, we look forward to progressing discussions with Skilled Group on the possibility of combining our businesses. While there is no certainty that a transaction will eventuate, we believe the strategic rationale for combining the businesses is strong. It would create a stronger, more efficient and more competitive workforce solution provider covering staffing, maintenance and facility management operations, diversified across all sectors of the economy and better positioned to take advantage of growth opportunities,' said Chris Sutherland.
Group Results FY15 31 Mar 2015
$m
FY14 31 Mar 2014
$m
% change
Revenue 1,434.2 1,434.9 (0.0%) Results before non-‐trading Items EBITDA 61.4 64.0 (4.1%) Depreciation and amortisation (11.3) (11.2) 0.9% EBIT 50.1 52.8 (5.1%) Interest (5.4) (7.4) (27.0%) Profit before tax 44.7 45.4 (1.5%) Income tax expense (14.3) (13.5) 5.9% Profit after tax (before non-‐trading items) 30.4 31.9 (4.7%) Non-‐trading items Restructuring and other costs (3.8) (1.0) Incentive payment (Turnpoint acquisition) (1.4) Share of net loss of associate (OneShift) (0.6) (0.7) Tax on non-‐trading items 1.1 0.3 Profit after tax (statutory basis) 25.7 30.5 (15.7%) Earnings per share (cents; before non-‐trading items) 25.7 26.9 (4.5%) Earnings per share (cents; statutory basis) 21.7 25.8 (15.9%) Weighted average shares on issue (million) 118.5 118.2
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Divisional Results
Property & Infrastructure FY15 31 Mar 2015
$m
FY14 31 Mar 2014
$m
% change
Revenue 807.6 751.9 7% EBIT (before non-‐trading items) 32.4 28.0 16%
The Property & Infrastructure division provides a range of maintenance, building and operational services, including painting, electrical, communications, grounds, specialist turf, signage, general building repairs and facility management. Growth in revenue arose from new long-‐term facility management contracts and the higher margin was the result of improved operational control across many areas of the business.
Painting volumes were similar to the prior year, but on reduced invested capital due to a greater mix of sundry work. Invested capital in long-‐term painting maintenance programs was $97.2 million at 31 March 2015 compared with $110.2 million a year earlier. Painting margins were higher due to lower overheads and improved job management, offset partially by lower indexation revenue from existing contracts.
The division’s grounds maintenance operations performed well, with improved margins and a number of new outsourcing contracts. A significant milestone was a contract to finance, build and maintain for five years the new, elite-‐standard training ground for the Fremantle Football Club. This work will commence later in 2015. A new grounds FBM (finance-‐build-‐maintain) program is now being marketed to sporting clubs, schools and local councils around Australia and New Zealand.
Exposure to electrical works in new commercial buildings is being reduced and there is increasing focus on fit-‐out, maintenance and upgrades of electrical, data and communications systems in existing buildings and infrastructure. This opens up greater opportunities to work with the division’s other customers. FY2016 has begun with a strong backlog of electrical maintenance and upgrade work.
The division's facility management and maintenance activities continue to grow and nine significant long-‐term contracts have been secured or renewed since March 2014, including:
• A new five year contract to maintain social housing in New Zealand, which commenced on 1 July 2014; • Renewal of the Western Australian social housing maintenance contract for the South West region, and
the addition of two new regions, which commenced on 2 November 2014 for an initial five years; • Renewal of the facility management contract on Rottnest Island for a further five years, with the scope
expanded to include all accommodation housekeeping, which commenced on 1 August 2014; • A new three year contract to maintain Fonterra’s logistics distribution centres in New Zealand, which
commenced on 1 September 2014; • A new 14 year contract for maintenance and lifecycle refurbishment of the South Queensland
Correctional Centre, which commenced on 1 July 2014; • A new contract with Coles to maintain its support office and state office facilities, which commenced in
September 2014;
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• Renewal of the estate services contract with Energy Australia at Yallourn Power Station for a further four years;
• A second PPP contract in New Zealand to maintain four schools for 25 years; and • A 39 year PPP contract to maintain student accommodation at Wollongong University.
Existing public assets are getting older and require upgrades and greater levels of maintenance to maintain service. The growing population is requiring new assets to be built, thus creating further opportunities, and increasingly governments at all levels are looking for privately funded and managed solutions.
Resources FY15 31 Mar 2015
$m
FY14 31 Mar 2014
$m
% change
Revenue 247.5 306.9 (19%) EBIT (before non-‐trading items) 20.1 24.4 (18%)
The Resources division provides a range of workforce, maintenance, construction support and operational services to both the offshore oil and gas and onshore mining sectors. Revenue was affected by the conclusion of a major offshore project and the lower oil price which caused some operators to defer seismic exploration work in the second half of Programmed’s fiscal year.
Demand for vessel management, manning, catering and logistical services has fallen in recent months by approximately 25%, compared to the prior corresponding period, as a number of oil and gas operators have elected to defer greenfield exploration expenditure and as offshore construction activity associated with the Gorgon / Wheatstone developments comes off its peak. Work is projected to remain at about the current level as offshore construction work continues on the Ichthys and then the Prelude developments, and due to ongoing field extension drilling and increased production and operations support.
While negotiations for a new Australian marine EBA continue, there remains some risk of industrial action, with associated short-‐term revenue and cost impacts during the negotiations.
Minimal work was undertaken for onshore mining companies in FY15, but outsourcing opportunities are been sought in FY16.
Workforce FY15 31 Mar 2015
$m
FY14 31 Mar 2014
$m
% change
Revenue 376.8 372.8 1% EBIT (before non-‐trading items) 7.5 10.5 (29%)
The Workforce division provides a range of staffing services across all industry sectors. While revenue was similar to FY14, margins were lower due to ongoing weakness in the blue collar economy and the impact of structural changes across the staffing industry.
The business has been reshaped in response to these changes. A significant upgrade of the core Workforce business system has been completed to provide new capability that operates simply and efficiently across any mobile device. The system also enables further centralisation of recruitment functions in each state
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and expansion of the mobile account/sales network, reducing the need for some branches and lowering overall overhead costs. This redesign of the way the business functions was completed in October 2014, resulting in a reduction in the number of branches and personnel and ongoing cost savings of more than $3 million per annum. Thus, the second half EBIT of $4.5 million, which was $1.5 million higher than the first half EBIT of $3 million, is the business’ current earnings rate.
OneShift, the start-‐up online recruitment business in which Programmed invested $5 million for a 27.5% equity stake in October 2013, continues to develop and grow.
The Federal Government has restructured how unemployed people are managed back to work and recently tendered for new National Employment Services providers. The tender seeks service providers in more than 50 regions across Australia, and Programmed has formed an alliance with APM (a national provider of workforce and rehabilitation services) which has secured contracts in nine regions, including the metropolitan areas of Sydney and Perth and the major regional centres of Geelong and Gold Coast. These contracts are due to start on 1 July 2015.
Unallocated Costs
Unallocated costs, which relate to corporate overheads and non-‐trading income and expenses, were $9.9 million (FY14: $10.1 million).
Cash Flow and Net Debt
Cash flow remained strong, with gross operating cash flow of $80.9 million, similar to FY14 ($80.6 million). Net operating cash flow was $65.7 million, 18% higher than FY14 ($55.8 million).
Net debt fell a further $35.2 million to $7.0 million at 31 March 2015 from $42.2 million at 31 March 2014. The company's net debt to equity ratio fell to 1.7% from 10.3% at 31 March 2014.
For further information contact:
General / Investor Enquiries Chris Sutherland Managing Director Telephone: +61 8 9216 2123
Investor Enquiries Katina Nadebaum Company Secretary Telephone: +61 8 9216 2191
Media Enquiries Ashley Rambukwella Financial & Corporate Relations Telephone: +61 407 231 282
About Programmed
Programmed is a leading provider of staffing, maintenance and facility management services. The group consists of three divisions:
• Property & Infrastructure: provides maintenance, building and operational services to the property and infrastructure sectors.
• Resources: provides maintenance, construction and operational services to the resources sector.
• Workforce: provides recruitment and labour hire services to a range of industries including mining, construction, industrial, manufacturing, infrastructure, transport and logistics.
The group employs approximately 10,000 people across a broad range of government and private sector businesses. Its ability to recruit and deploy staff is supported by an active database of approx. 60,000 people. Programmed provides services to over 7,000 customers, often under long-‐term contracts, and delivers these services through a network of over 100 branches throughout Australia and New Zealand.
Programmed's business model is built around its ability to recruit, retain and deploy a large directly-‐employed workforce of professional, skilled and semi-‐skilled staff with a wide range of capabilities.
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