Programmed Maintenance Services Limited

PRG Details
Scheme implementation deed with PERSOL: Programmed Maintenance Services Limited (ASX: PRG) has entered in a Scheme Implementation Deed with Tokyo Stock Exchange-listed PERSOL Holdings (one of the largest staffing companies in Japan), as per which PERSOL has proposed to acquire 100% of PRG’s issued capital for a cash price of $3.02 per share. This is reflective of an acquisition multiple of 10.3x FY17 EBITDA. As of now, PRG board has unanimously recommended in favour of the Scheme in absence of a superior proposal and a forthcoming Independent Expert’s Report. Programmed may also declare and pay a fully-franked special dividend on or shortly before the implementation date of the Scheme. Accordingly, the cash consideration of $3.02 cash per share might get reduced by the amount of any such special dividend. Voting by PRG shareholders is scheduled for October 2017. 

Timetable for the Implementation of the Scheme (Source: Company reports)
 
Strong free cash flow generation: As per the performance of the group during the year to 31 March 2017, trading conditions had remained difficult while the group completed the integration of Skilled, generated strong cash flow, paid down debt and set the foundations for future growth. PRG grew its property and infrastructure maintenance activities and reduced overheads while absorbing a significant decline in marine services work. The revenue was $2.691 billion reflecting a rise of 22% over previous year, while profit before amortisation and non?trading items was up 6.4% to $41.3 million. After non?trading items, the statutory profit was $12.3 million compared to a loss of $98 million reported in the previous year. PRG’s cash flow was very strong, with net operating cash flow of $61.5 million reflecting a 5% rise on the previous year. As a result, PRG’s net debt reduced to $200 million at 31 March 2017, compared with $239 million of previous year.

Stock Performance: PRG Stock has moved up 67.13% in last six months (as at August 18, 2017) and is trading near its high levels, which is also close to PERSOL’s offer price. Given the present scenario and intense competition in the industry, we believe it might be a good time to take profits on the stock. We give a “Sell” recommendation on the stock at the current price of $ 3.00


PRG daily chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.