FY2014 Results Presentation By Chris Sutherland, Managing Director - - PowerPoint PPT Presentation

FY2014 Results Presentation

By Chris Sutherland, Managing Director 28 May 2014

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Important notice and disclaimer

The information contained in this presentation is for information purposes only and does not constitute an offer to issue, or arrange to issue, securities or other financial products. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial

• circumstances. Past performance is no guarantee of future performance.

No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this

• presentation. To the maximum extent permitted by law, none of Programmed Maintenance

Services Limited, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied, is given as to the accuracy, completeness, likelihood of achievement or reasonableness of any forecasts, projections, prospects or returns contained in this presentation. Such forecasts, projections, prospects or returns are by their nature subject to significant uncertainties and contingencies. This presentation should be read in conjunction with the 2014 Annual Report which can be found on the Programmed website at www.programmed.com.au.

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Welcome to the world of Programmed

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Safety pause

Programmed starts every formal meeting with a safety pause. Today, I wish to focus on General Housekeeping “A PLACE FOR EVERYTHING AND EVERYTHING IN ITS PLACE”

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Safety – 34% reduction in LTIFR (lost time injury frequency rate) to 1.99 Revenue of $1,435 million, down 5% EBIT1 of $51.8 million, similar to last year Profit before Tax1 of $44.4 million, up 5.5% Profit after tax of $31.11 million, down 3% Earnings per share of 26.3c1, down 3% Fully franked final dividend of 11 cents per share Gross operating cash flow was $80.6 million

• r 129% of EBITDA

Net debt down 37% to $42.2 million

Group FY14 highlights

1 Before share of loss ($0.68 million) of associates accounted for

using the equity method (OneShift)

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Group results

Group Results

Year Ended 31 March 2014 Year Ended 31 March 2013 % change $m $m Revenue 1,434.9 1,517.4 (5.4%) EBITDA 1, 2 64.0 67.0 (4.5%) Depreciation and amortisation (11.2) (12.4) 9.7% Restructuring costs (1.0) (2.6) EBIT 2 51.8 52.0 (0.4%) Interest (7.4) (9.9) 25.3% Profit before Tax 2 44.4 42.1 5.5% Income tax expense 3 (13.2) (9.9) (33.3%) Profit after Tax 2 31.1 32.1 (3.1%) Share of net loss of associates (OneShift) (0.7) 0.0 0.0% Profit after Tax (statutory basis) 30.5 32.1 (5.2%) Earnings per Share 2 26.3 27.2 (3.2%) Earnings per Share (statutory basis) 25.8 27.2 (5.2%) Weighted Average Shares on Issue (million) 118.2 118.2

1 Before restructuring costs 2 Before share of loss of associates accounted for using the equity method (OneShift) 3 2013 includes $2.7m tax benefit from utilisation of tax losses carried forward from previous years

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Group revenue by region

NSW 15% QLD 14% SA 5% VIC 18% WA 41% New Zealand 6% Other 1%

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Government & Infrastructure 44% Manufacturing & Industrial 12% Retail & Commercial 7% Transport 4% Other 9% Offshore Oil & Gas 20% Onshore Mining 4%

(5% pcp)

Group revenue by sector

(8% pcp) (42% pcp)

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Group cash flow

Group Cash Flow

Year Ended 31 March 2014 Year Ended 31 March 2013 % change $m $m Gross Operating Cash Flow 80.6 90.6 (11%) Interest paid (7.8) (9.5) 18% Income tax paid (17.0) (24.2) 30% Net Operating Cash Flow 55.8 56.9 (2%) Net purchases of non current assets (4.9) (6.6) Payment for businesses (5.1) (8.9) Other investing cash flows 0.4 0.5 Net Investing Cash Flow (9.6) (15.0) 36% Net borrowings / (repayments) (36.7) (22.9) Dividends paid (18.9) (15.4) Net Financing Cash Flow (55.6) (38.3) (45%) Net Increase / (Decrease) in Cash (9.4) 3.6 (363%) Cash at beginning of year 38.3 34.7 Exchange Rate Variances 0.6 0.1 Cash at End of Period 29.5 38.3 (23%)

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Group balance sheet

Balance Sheet

31 Mar 2014 31 Mar 2013 % change $m $m Cash 29.5 38.3 (23%) Trade and other receivables 201.4 222.9 (10%) Contract recoverables 110.2 113.6 (3%) Inventories 73.0 63.7 15% Property, plant & equipment 26.4 27.6 (4%) Goodwill & other intangible assets 260.2 259.9 0% Other assets 33.3 27.2 22% Total Assets 734.0 753.2 (3%) Trade and other payables 162.4 159.9 2% Borrowings 71.7 105.4 (32%) Provisions and other liabilities 89.5 96.3 (7%) Total Liabilities 323.6 361.6 (11%) Total Equity 410.4 391.6 5% Net Debt 42.2 67.1 (37%) Net Debt / Equity 10.3% 17.1% (40%)

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Property & Infrastructure division

Margins increased through improved operational controls Painting volumes similar to FY2013 but margins higher due to lower overheads and improved job management Facility management revenue higher due to new contracts, but increased business development resulted in lower margins KLM electrical business and Turnpoint specialist turf business rebranded as Programmed Electrical Technologies and Programmed Turnpoint Exposure to new commercial building electrical works reduced, and focus on fit-out, maintenance and upgrades

• f electrical, data and communication systems increased, improving profitability despite lower revenue

Increasing opportunities as governments outsource operations and maintenance of public infrastructure

372.1 379.6 751.7 381.3 370.6 751.9 1H 2H Full Year

Property & Infrastructure Revenue ($m)

FY13 FY14 8.3 14.8 23.1 11.0 17.0 28.0 1H 2H Full Year

Property & Infrastructure EBIT ($m)

FY13 FY14

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Resources division

Revenue and earnings lower due to completion of onshore mining project Offshore oil and gas sector’s results in line with FY2013 and contributed all the division’s earnings Demand for vessel management, manning, catering and logistical services remained strong Major contract secured for works associated with Inpex’s Ichthys project Negotiations for new Australian marine EBA continue and there remains some risk of industrial action with associated short term revenue and cost impacts.

179.2 175.1 354.3 148.4 158.5 306.9 1H 2H Full Year

Resources Revenue ($m)

FY13 FY14 14.0 17.0 31.0 11.9 12.5 24.4 1H 2H Full Year

Resources EBIT ($m)

FY13 FY14

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Integrated Workforce division

Margins increase through reducing costs More than $2 million invested in upgrading core business system to enhance ability to find and support job seekers and improve customer service Costs to be lowered through using the upgraded system to centralise recruitment functions in each state, expand the mobile account/sales network and reduce the number of branches Customers encouraged to value the “Programmed Difference” Acquired a 27.5% equity stake in OneShift, a start-up online business which matches temporary workers with businesses on a fee per candidate basis

204.6 202.5 407.1 192.2 180.6 372.8 1H 2H Full Year

Workforce Revenue ($m)

FY13 FY14 4.6 6.1 10.7 4.9 5.6 10.5 1H 2H Full Year

Workforce EBIT ($m)

FY13 FY14

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Strategy

• 4. Growth

a) marketing and customer development b) build scale c) expansion in resources d) expansion in public infrastructure

• 1. Safety
• 2. People and Culture
• 3. Systems and Integration

To achieve our vision, we have a plan built on 4 key components.

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Strategy

• 4. Growth

a) marketing and customer development b) build scale c) expansion in resources d) expansion in public infrastructure

• 1. Safety
• 2. People and Culture
• 3. Systems and Integration

To achieve our vision, we have a plan built on 4 key components.

• critical risk standards
• life saving rules
• behavioural tools
• risk assessments

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Strategy

• 4. Growth

a) marketing and customer development b) build scale c) expansion in resources d) expansion in public infrastructure

• 1. Safety
• 2. People and Culture
• 3. Systems and Integration

To achieve our vision, we have a plan built on 4 key components.

• education and promotion of

the Programmed Difference is now wide spread

• ur customer service

culture program under development

• common customer

satisfaction measurement and reporting pilot running and will be fully implemented by end of year

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Strategy

• 4. Growth

a) marketing and customer development b) build scale c) expansion in resources d) expansion in public infrastructure

• 1. Safety
• 2. People and Culture
• 3. Systems and Integration

To achieve our vision, we have a plan built on 4 key components.

• upgraded finance, project,

reporting and CRM system scope and plan finalised - 18 month project

• upgraded workforce system

with full service capability across any mobile device for job seekers and customers; now complete and being rolled out across the workforce division

• HR system upgrade-this year
• total investment $17 m and

cost savings > $5 m pa

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Strategy

• 4. Growth

a) marketing and customer development b) build scale c) expansion in resources d) expansion in public infrastructure

• 1. Safety
• 2. People and Culture
• 3. Systems and Integration

To achieve our vision, we have a plan built on 4 key components.

• schools
• universities
• councils
• aged care and retirement
• horse racing / sports stadia
• tourism
• agribusiness
• water
• mining infrastructure
• marine / oil and gas

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Conclusion

We are pleased to have maintained EBIT (before equity accounting our interest in OneShift), delivered a strong operational performance (particularly with respect to safety, retention of customers, and employee engagement), reduced debt and increased dividends. This was despite the challenges presently confronting many businesses, where organic revenue growth is weak, costs continue to rise, and the online world is challenging traditional business structures. Our ability to offer staffing, maintenance and facility management services to all sectors means that Programmed’s performance does not depend on one group of customers or one industry sector. The strength of our business model was demonstrated again last year, with

• ur Property & Infrastructure division’s earnings increasing by 21% to offset a similar

decrease in our Resources division’s earnings, while our Workforce division’s earnings were similar to the previous year despite a fall in revenue. We are confronting the opportunities and challenges of a developing online and digital world by investing heavily in technology over the next two years to give the business a more efficient and lower cost base as well as significantly greater field capability to service our customers. There is a significant uptrend at present in outsourcing by government and industry, and we have a very large pipeline of opportunities to tender over the next 12 months. Our business model, providing staffing, maintenance and facility management services across all industry sectors, gives Programmed considerable strength and we will continue to manage the group conservatively, while pursuing and taking advantage of growth

• pportunities that arise.

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Appendix

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Safety is paramount. We will act to ensure the safety and environmental well- being of our customers, the public and ourselves.

Our Vision: To be a leading provider of staffing, maintenance and facility management services, without injury

SAFETY TEAMWORK

We respect everyone’s contribution by working together to achieve common goals and project outcomes. Our sense of team extends to building long-term customer and community relationships for the benefit of all.

ACCOUNTABILITY

We encourage individuals and teams to take responsibility and ownership of the process, and the

• utcome, through

decisive leadership and initiative.

HONESTY & INTEGRITY

Our business relationships are based on fair, open, and ethical principles. We take pride in the way we work with our customers and communities, the integrity of our services, and doing what we say we are going to do.

RECOGNITION & ENJOYMENT

We are a people

• business. We

recognise and reward

• utstanding

achievement, and provide opportunity for

• ur employees to

develop and

• succeed. We create

an environment for every team member to have a positive, enjoyable and rewarding work experience.

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Programmed today

$1.4 billion+ revenue 100+ offices around Australia and NZ 10,000+ employees

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The Programmed Difference

The Programmed Difference are the core attributes of our company that support all the services we deliver; 1) our ability to recruit and develop the right people 2) our ability to deploy the right person with the right competency to each job 3) our ability to get safety right on the ground 4) our ability to manage IR in an increasingly difficult environment 5) our ability to manage HR in an increasing regulatory environment 6) our ability to deliver operational improvements, flexibility and high levels of satisfaction to our customers

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Customers contract a complete MANAGEMENT and / or maintenance SOLUTION Customers contract the STAFFING service

PROPERTY & INFRASTRUCTURE

Maintenance, Building and Operational Services

Customers contract the TASK capability

Our structure

RESOURCES

Maintenance, Construction and Operational Services

INTEGRATED WORKFORCE

Recruitment and Labour Hire Services

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Group revenue

757.7 759.7 1,517.4 723.6 711.3 1,434.9 1H 2H Full Year

Group Revenue ($m)

FY13 FY14

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Group EBIT

20.4 31.6 52.0 21.8 30.0 51.8 1H 2H Full Year

Group EBIT ($m)

FY13 FY14

1 Before share of loss ($0.68 million) of associates accounted for

using the equity method (OneShift)

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FY14 segment revenue

Revenue by division

Year Ended 31 March 2014 Year Ended 31 March 2013 % change $m $m Property & Infrastructure 751.9 751.7 0% Resources 306.9 354.3 (13%) Workforce 372.8 407.1 (8%) Other Revenue 3.3 4.3 Total Consolidated Revenue 1,434.9 1,517.4 (5%)

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FY14 segment EBIT

EBIT by division

Year Ended 31 March 2014 Year Ended 31 March 2013 % change $m $m Property & Infrastructure 28.0 23.1 21% Resources 24.4 31.0 (21%) Workforce 10.5 10.7 (2%) Unallocated (10.1) (10.2) 1% Restructuring Costs (1.0) (2.6) Total Consolidated EBIT 51.8 52.0 (0%)

1 Before share of loss ($0.68 million) of associates accounted for

using the equity method (OneShift)

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