Australia – Programmed full year revenue up 22%, sells part of marine business

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By (Danny Romero)

Programmed Maintenance Services (ASX: PRG), an Australia-based provider of maintenance and staffing services, today reported that revenue increased 21.8% to AUD 2.7 billion (USD 2.0 billion) in the full year ending 31 March 2017. The revenue reflected a full year contribution from the Skilled Group, which Programmed acquired in 2015.

(AUD millions)
FY 2017
FY 2016
FY 2017 (USD millions)

Programmed, which provides staffing, maintenance and facility management services, also announced an after-tax profit of AUD 41.3 million (USD 30.8 million) before amortisation and non-trading items for the year to 31 March 2017, an increase from AUD 38.8 million (USD 28.9 million) in 2016. After amortisation and non-trading items, the company’s after-tax profit was AUD 12.3 million (USD 9.2 million) compared to an after-tax loss of AUD 98.0 million last year.

‘In difficult trading conditions, with continuing weakness in some of our markets, we are pleased to have completed the integration of Skilled, generated strong cash flow, paid down debt, and set the foundations for future growth,’ Chris Sutherland, Managing Director of Programmed, said.

“While some economic indicators point to business confidence improving and the economy strengthening in the next 12 months, our recent trading suggests that many businesses in the sectors we serve are still seeking to reduce costs,” Sutherland said. “Governments at all levels are also tightening expenditure. In light of the present uncertainties, and to improve the company’s return on capital in FY18, we have reduced annual costs by a further AUD 10 million (USD 7.4 million) per year since the end of the financial year, with the redundancy of approximately 60 management and administrative personnel. In making these changes, we have taken steps to ensure that our plans to grow sales or improve services will not be impeded.”

The group operates in staffing and maintenance divisions. Revenue was broken down as follows:

(AUD millions)
FY 2017
FY 2016
FY 2017 (USD millions)

The Staffing division provides a range of staffing services across all industry sectors. It trades as five business units: Skilled Workforce (blue collar); Professionals (white collar); Health Professionals (hospitals and aged care); Training Services (licensed RTO and GTO); and OneShift (online recruitment). Programmed acquired OneShift in March 2017.

The group’s Professionals staffing business has been restructured, merging systems and sales management with those of Skilled Workforce. The group created a stand-alone Health Professionals business to ‘develop a unique staffing and direct care services business in the health, aged care and disability sectors’. Meanwhile, the Training Services acquired the training business of Apprenticeships Australia from the Chamber of Commerce and Industry of Western Australia.

The Maintenance division provides a range of maintenance, building and operational service to asset owners across all industry sectors. The division trades as five main business units: Property Services; Electrical Technologies; Facility Management; Industrial Maintenance; and Marine Services

“In the Maintenance division, growth in revenue and earnings by the non-marine businesses was offset by significant falls by the Marine business due to the impact of lower oil and gas prices and completion of major offshore construction contracts. Excluding the Marine results, Maintenance revenue was up 19% and EBITA was up 33%,” Sutherland said. The Marine business provides a range of workforce, maintenance, construction manning support and operational services to the offshore oil and gas and marine services sectors

“To enable the Marine business to benefit from operating as part of a global enterprise, we have formed a 50/50 partnership with Atlas Professionals, a Netherlands-based global provider of staffing services to the oil and gas industry,” Sutherland said.

As part of the agreement, Programmed will sell Atlas 100% of its international marine activities and 50% of its Australian and New Zealand marine services business for AUD 29 million (USD 21.6 million), of which AUD 7.5 million (USD 5.6 million) will be paid up-front and AUD 21.5 million (16.0 million) will be subject to a vendor finance arrangement, with the finance carrying 5% interest. This transaction remains subject to due diligence and completion of sale and shareholder agreements, and is expected to be completed on or before 30 June 2017.

“Atlas will bring opportunities with its global customers to the Australian and New Zealand joint venture, which will enable the marine business to enjoy the benefits of operating as part of a global enterprise.The result will be a stronger and more capable marine services business servicing the Australian and New Zealand market.

Looking ahead, Sutherland said, “Programmed’s model, providing staffing, maintenance and facility management services gives us considerable strength in an economy that continues to present challenges. While demand for staff in some sectors has weakened in the past year, there are growing opportunities in the public infrastructure, tourism, education, health and aged care sectors. We also believe the resources sector has completed its period of downsizing and staff reductions, and expect growth in the next 12 months, particularly in oil and gas.

“While the last year has been challenging, we have a clear vision and long-term plan to grow our business,” Sutherland said.

In trading today, Programmed Maintenance Services shares closed at AUD 1.82 (USD 1.36), up 3.70% on the day and 18.02% below its 52-week high of AUD 2.22 (USD 1.66), set on 27 July 2016. Based on its current share price the company has a market value of AUD 450.30 million (USD 336.5 million).

Source:: Australia – Programmed full year revenue up 22%, sells part of marine business


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