For personal use only 2017 ANNUAL REPORT 2017 Annual General Meeting Programmed is a leading provider The annual general meeting of shareholders in the company will be held of staffing, maintenance and facility at 9.30am (WST) on Friday 28 July 2017 at Brookfield Tower 2, Ground Floor, management services. 123 St Georges Terrace, Perth WA 6000. We directly employ more than 20,000 people across a broad range of industries, providing services to more than 10,000 customers, often under long-term contracts. Our business model is built around our ability to recruit, deploy, manage and maintain a large directly employed workforce of professional, skilled and semi-skilled staff. We operate through a network of more than 100 branches, often delivering multiple services from across our business. 2017 Corporate Governance Statement and Appendix 4G Contents disclosures Programmed has published its 2017 1 Our Services 54 Financial Statements Corporate Governance Statement and 2 Chairman’s Letter 58 Notes to the Financial Statements the disclosures required by Appendix 4G of the ASX Listing Rules in the Investor 3 Results in Brief 109 Directors’ Declaration Centre section of its website: www. 4 Business Summary 110 Auditor’s Independence programmed.com.au/investors Declaration 6 The Programmed Difference For personal use only Shareholders are encouraged to read the 111 Independent Auditor’s Report 7 Managing Director’s Review Corporate Governance Statement and of Operations 115 ASX Additional Information Appendix 4G disclosures. 15 Our People 117 Summary of Financial Statistics 17 Caring for Our Community 119 Corporate Directory Programmed Maintenance 19 Directors’ Report Services Limited ABN 61 054 742 264 B Programmed 2017 Annual Report Our Services Staffing Recruitment, staff hire and Pictured: Programmed account manager Clint Boyle works within managed labour services. our Staffing division managing a number of contracts in Auckland, New Zealand. For personal use only Maintenance Maintenance, building and operational services. Pictured: Programmed electrician Sabrina Coates works flexibly as part of our Electrical Technologies business based in Perth. Programmed 2017 Annual Report 1 Chairman’s Letter Bruce Brook Chairman In difficult trading conditions, we are pleased to have completed The board works closely with management to monitor our the integration of Skilled, generated strong cash flow, paid down safety performance which regrettably has not improved over debt and set the foundations for future growth. the past year, as measured by both the Long Term Injury We deliver staffing, maintenance and facility management Frequency Rate (1.7) and the Total Injury Frequency Rate (12). services to all sectors of the economy, and in the past year we This followed a number of years when there were considerable have absorbed a significant decline in marine services work by improvements. Management has prepared a plan to improve growing our property and infrastructure maintenance activities safety performance further, and both board and management and reducing our overheads. are committed to the goal of Zero harm. Our FY2017 results include, for the first time, 12 months’ I would like to recognise and thank Andrea Grant, who has revenue and earnings from Skilled and reflect a company retired from the board to commence a new career in the USA. continuing to adjust its costs and integrating its operations The board has determined at this time not to replace Andrea, to deliver the long-term plan for the business. Revenue was but will consider the need for a replacement director next year. $2,691 million, up 22% on the previous year, and profit before I thank all shareholders for their support during this challenging amortisation and non-trading items was $41.3 million, up 6.4%. year for Programmed. We incurred amortisation and non-trading expenses totalling Finally, I would like to thank Chris Sutherland and the entire $29 million after tax to complete the Skilled integration and to Programmed team for their commitment and efforts on behalf provide for other one-off items. After non-trading items, our of customers and shareholders. reported profit was $12.3 million compared to a $98 million loss in FY2016. Importantly, we are pleased to have maintained very strong cash flow. Net debt, which was $302 million on completion of the Skilled acquisition in October 2015 and $239.1 million at Bruce Brook 31 March 2016, has been reduced further to $200 million at Chairman 31 March 2017. We have announced a final dividend of 3.5 cents 24 May 2017 per share, fully franked, payable on 31 July 2017, bringing dividends for the year to 7 cents fully franked. For personal use only 20,000 260 metres/ Number of employees working across the organisation each day 63 storeys Highest point painted 2 Programmed 2017 Annual Report Results in Brief Revenue: $2.7b Profit after Tax: $41.3m Revenue by Division (continuing operations) before amortisation and non-trading items 3,000 45 40 2,500 35 2,000 30 1,500 25 51% Staffing 20 1,000 49% Maintenance 10 500 EBIT by Division 5 0 0 13 14 15 16 17 13 14 15 16 17 Earnings per Share: 16.2 cps Dividends: 7.0 cps (before amortisation and non-trading items) fully franked 35 20 38% Staffing 18 30 62% Maintenance 16 25 14 Revenue by State/Country 12 20 10 15 8 10 7 4 5 2 0 0 29% WA 6% NZ 13 14 15 16 17 13 14 15 16 17 24% NSW 5% SA 20% VIC 3% TAS 12% QLD 1% Other Gross Operating Cash Flow: Net Debt: $200.0m Revenue by Sector $85.8m % of EBITDA % of Equity 100 200% 300 45% 180% 40% 95 250 160% 35% 140% 90 200 30% 120% 25% For personal use only 85 100% 150 20% 80% 80 100 15% 60% 36% Government & infrastructure Manufacturing & industrial 10% 16% 75 40% 50 13% Onshore mining 20% 5% 12% Retail & commercial 70 0 7% Offshore oil & gas 0% 0% 5% Transport 13 14 15 16 17 13 14 15 16 17 11% Other Programmed 2017 Annual Report 3 Business Summary STAFFING Staffing services including: REVENUE ($m) 2016 2017 ◆ Short-term, temporary and casual staffing 1,600 ◆ Permanent recruitment ◆ Trainees and apprentices 1,400 ◆ Trades, transport, warehousing, 1,370.0 manufacturing, mining staff 1,200 ◆ IT, engineering, healthcare, management, administration, call centre staff 1,000 ◆ General labour 896.7 ◆ Training services 800 ◆ OneShift, an online staff recruitment application 686.5 700.7 683.5 Services provided across Australia and 600 New Zealand to most sectors including mining, energy, construction, manufacturing, 400 industrial, infrastructure, utilities, agriculture, communications, transport and logistics, government, health, aged care and 200 196.0 education. 0 2017 Commentary 1H 2H Full year ◆ Revenue significantly higher than FY17 due to the additional 6 month contribution from Skilled EBITA ($m) 2016 2017 ◆ As a result, EBITA was $35.8 million, up 65% 40 ◆ Demand in manufacturing, industrial, 35.8 materials, transport and logistics sectors 35 tightened further in the second half, lowering margins ◆ Have in past month reduced management 30 and administration expenses further ◆ Completed 100% exit of Skilled head 25 office in Hawthorn to deliver future cash savings 21.7 20 20.2 ◆ Developing plan for expansion of Health 17.8 Professional business 15.6 ◆ Training Services business concluded the 15 purchase of Apprenticeships Australia contracts with major LNG operators For personal use only 10 5 3.9 0 1H 2H Full year 4 Programmed 2017 Annual Report MAINTENANCE REVENUE ($m) 2016 2017 Maintenance and operational services to maintain and/or operate assets including: 1,400 ◆ Painting 1,309.3 1,316.8 ◆ Grounds maintenance and landscaping ◆ Specialist turf construction and 1,200 maintenance for golf and horse racing ◆ Corporate imaging and signage 1,000 ◆ Building projects and repair ◆ Electrical and lighting installation and repair 800 796.3 ◆ Audio visual, data and communications 670.7 installation and repair 646.1 600 ◆ Facility management and 513.0 maintenance services ◆ Industrial maintenance, shutdowns 400 and minor capital works ◆ Offshore vessel management, catering and manning services for vessels, rigs, 200 platforms and FPSO’s Services provided across Australia and New 0 Zealand, often under long-term contracts and planned maintenance programs to 1H 2H Full year most sectors including mining, energy, manufacturing, industrial, infrastructure, utilities, agriculture, communications, EBITA ($m) 2016 2017 government, health, aged care and education. 70 2017 Commentary ◆ Revenue steady with growth in the property and infrastructure sectors offset 60 59.4 58.7 by steep decline in oil & gas / marine services ◆ EBITA was flat, however excluding 50 marine, EBITA was up 33% ◆ The Property Services business performed well, with the sales pipeline 40 across its traditional education, aged care, 36.8 33.9 retail and commercial sectors remaining solid 30 ◆ The Facility Management business 24.8 consolidated its contract wins of the last 22.6 12 months, and has a strong pipeline 20 For personal use only of further opportunities under active development 10 ◆ The Industrial Maintenance business improved its performance compared to the prior year 0 ◆ Demand for Marine Services fell significantly however we expect FY17 to 1H 2H Full year be the bottom of the earnings cycle Programmed 2017 Annual Report 5 The Programmed Difference The Programmed Difference is our ability to: Deliver operational improvements, flexibility and high levels of satisfaction Deploy the right person with the right Get safety right on the ground to our customers competency to each job