Melbourne-based services company, Programmed (PRG), has managed to ride out a sharp slide in revenue and earnings from its resources business to post a basically steady result for the 12 months to March 31.
The company has lifted final dividend 10% to 11c a share, up from the 15c a share paid in 2012-13.
Investors liked the result – the shares ended up 3.6% at $2.89.
The result was made better by the company managing to absorb a 5% slide in revenue for the year to $1.435 billion, thanks to that drop in resource division sales and profits.
The company reported an after-tax profit of $31.1 million for the year to March, before equity accounting its 27.5% interest in OneShift, a start-up online staffing business.
PRG 1Y – Programmed posts solid result, higher payout
"This result was only 3% below the previous year ($32.1 million in FY2013) when there was an abnormal tax benefit of $2.7 million," the company explained in yesterday’s statement.
"After equity accounting a loss of $0.68 million on the company’s interest in OneShift, net profit after tax was $30.5 million.
"Importantly, profit before tax, at $44.4 million, was up 5.5% over FY2013 ($42.1 million) due to lower interest costs of $7.4 million (FY2013: $9.9 million) arising from strong capital management and lower debt.
"Income tax expense was back at a normal level of $13.2 million, compared with $9.9 million in FY2013 due to the abnormal tax benefit," directors explained in what was a fairly convoluted explanation of the profit."
"Earnings before interest and tax (EBIT) was flat on the previous year at $51.8 million (2012-13: $52.0 million), with lower earnings from the resources division offset by higher earnings from the property & infrastructure division."
Directors said the property & infrastructure division’s revenue was steady for the year, and margins "were increased through better operational controls across the business to deliver a 21% increase in EBIT to $28.0 million".
That offset a 21% slide in EBIT for the resource division (and a 13% drop in revenues) "due almost entirely to reduced onshore mining project activity”, according to yesterday’s statement.
"The offshore oil and gas sector component delivered a similar result to the previous year, contributing all the Resources division’s earnings.
"The Workforce division’s EBIT was maintained at $10.5 million (FY2013: $10.7 million) despite lower revenue, due to improved margins arising from further reduction in operating costs," directors said.
Despite the problems during the year, the company cut net debt to just $42.2 million for the year, down 37% on a year earlier.
CEO Chris Sutherland said in yesterday’s statement:
‘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 our 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."
