Programmed Maintenance Services

By Dan Stratful (AFA)

Tuesday 21st August 2012

Programmed Maintenance Services (ASX: PRG) announced a robust year of growth in the year to 31 March 2012 (FY12) with profit after tax increasing 41% to $31 million while EBIT increased 34% and revenue from continuing operations increased 14%.

The Resources division underpinned the FY12 result with Resources' earnings nearly doubling as PRG provided a range of workforce, maintenance, construction support and operational services to the offshore oil and gas and onshore mining sectors.

The fast growing state of Western Australia provided the bulk of FY12 group revenue at 41% with New Zealand providing just 4%, while progress was made on net debt reduction in the year which fell to $88 million from $118 million.

While Property & Infrastructure remains PRG's highest division by revenue its margins have been eroding while the Resources division provides much higher margins.

PRG expects to expand its operations in FY13 with moderate growth in earnings expected and FY13's priorities are to minimise the impact of weakness in the general (non-resources) economy and expand the Resources division.

PRG's acquisition of Turnpoint has been completed and with revenue and EBIT of $22 million and $3 million respectively, the acquisition is forecast to be earnings accretive in FY13.

PRG is a low PE (ratio) stock which means the dividend yield is reasonable. The historical FY12 full year dividend leaves PRG trading at a dividend yield of 5.4%pa, while the FY13 full year dividend is expected to be slightly higher giving a 5.6%pa yield and higher again in FY14 providing a yield of 5.8%pa.

About Programmed Maintenance Services:
PRG provides staffing, maintenance and project services to a broad range of government and private sector industries in the resources, infrastructure, education, manufacturing & logistics, commercial/retail/tourism and recreation markets. PRG operates through a network of over 100 branch and office locations throughout Australia and New Zealand. Established in 1951, and listing in the ASX in 1999, PRG has over 10,000 skilled and semi-skilled staff and over 7,500 customer relationships.

Status: GROWTH BUY

PRG's shares today traded at $2.39

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