Australia and New Zealand

During the period the Australian and New Zealand businesses were combined, with all Company financial reports now reflecting this.

The changes delivered operational and cost efficiencies as part of the Company’s strategy to streamline the business Revenue from wholly owned entities saw modest growth of 0.5 per cent to $2.1 billion, attributable to the increased work in services provided to the Infrastructure sector (including social infrastructure). Earnings before interest, tax and amortisation (EBITA) margins were stable at five per cent.

Proportionately consolidated revenues (our share of revenue from joint venture operations) declined by 3.1 per cent to $2.5 billion. This was mostly attributable to the conclusion of the Yarra Trams contract provided by the TransdevTSL joint venture in November last year. EBITA margins on a proportionately consolidated basis grew 0.2 percentage points to 4.3 per cent despite an increasingly competitive and generally tough operating environment.

Resources and Industrial

The Resources and Industrial sector saw revenue decline compared with the same period last year, driven largely by reduced project activity. This was partially offset by the ramp-up of new contracts such as BHP Billiton Iron Ore and Origin Energy’s BassGas onshore and offshore maintenance contracts.

The outlook for the sector has improved following the upswing in economic conditions together with increased investment in high-quality and targeted business development activities.

Services to the oil and gas industry saw some improvement in margins following an increase in shutdown activity during the second half. Transfield Worley extended its relationship with Woodside for the delivery of brownfield project and maintenance services to Woodside’s Western Australian offshore and onshore gas facilities for a further four years.

Transfield Services renewed its maintenance, capital works, shutdown execution, subcontractor management and support services contract with Qenos and secured project work with the same client.

Transfield Services maintains a strong presence in the oil and gas maintenance services sector, with the Company seeking to leverage its market leading position to secure higher value asset management services.

Our disciplined approach to tendering is expected to result in sustainable growth of margins in the mid to longer term. We are actively pursuing significant long-term opportunities in the upstream oil and gas sectors as well as niche services to blue-chip clients.

Services to the mining industry are seeing steady growth, particularly in iron ore. Opportunities for Transfield Services include both contracting with the mine owners and original equipment manufacturers providing ‘in country’ construction and maintenance services.

The Company is seeking to expand the scope and scale of mining activity with clients including BHP Billiton, Rio Tinto, Dalrymple Bay Coal Terminal, ThyssenKrupp and Worsley Alumina.

We also boosted our engineering design capabilities when we acquired Industrial Contract Designers (Asia Pacific) Pty Ltd (ICD) from Shell Australia in November 2009. ICD’s team of 180 people deliver engineering and design of maintenance and brownfield projects to the hydrocarbons, processing and related industries.

Benmore to Haywards High Voltage Direct Current line in Port Underwood, Marlborough Sounds, New Zealand. A two-man crew was dropped off by helicopter at the tower for work to be performed on conductive bolted joints.

Infrastructure Services

The Infrastructure Services sector saw revenue decline compared with the same period last year. Growth in the power, water and rail industries was offset by a decline in revenue from the conclusion of the Yarra Trams contract and reduced volumes from the renegotiated Chorus contract in New Zealand.

The power industry achieved increased volumes of work with long-term services contracts in Australia and New Zealand, as well as securing more than $175 million worth of projects. A focus on retaining and growing core areas of substation, industrial services and operations helped to improve volumes and continues to position the business in higher technical value areas and margins.

Our contract wins during the year included a national grid reinforcement project with Transpower at Brownhill valued at NZ$40 million and a two-year NZ$18 million renewal to our main grid equipment operations contract with the same client. We also secured a new 10-year $68 million contract with Aurora Energy to support its delivery of energy supply services to five of Victoria’s major public hospitals.

The water group continued to deliver strong year-on-year organic growth from existing long-term contracts and new business wins. Gippsland Water Factory began to treat domestic wastewater in late November 2009 and we successfully completed Australia’s largest irrigation project as part of the FutureFlow alliance. 

The roads business provides asset management services to Lane Cove Tunnel in Sydney, CityLink and EastLink toll roads in Melbourne, NZ Transport Agency in Auckland and surrounds, as well as road maintenance services in Victoria and Tasmania.

In 2010, Transfield Services secured an extension of our contract with ConnectEast until 2015, NZ Transport Agency for another 10 years and Thames-Coromandel District Council in New Zealand for a further three years.

The rail business saw growth in the projects area and also benefited from Australian Federal Government stimulus spending. The business is focused on delivering rail maintenance, program management, engineering and project delivery services and maintains over 4,500 kilometres of track across Western Australia, South Australia and New South Wales. The pipeline is growing with significant opportunities emerging beyond stimulus spending.

During the year, we completed several stimulus-funded projects for the Australian Rail Track Corporation, including the Parkes to Cootamundra upgrade project. The project involved laying more than 300,000 concrete sleepers over 201 kilometres in eight months, including mobilisation.

Services to the public transport industry include the provision of operations and maintenance for public transport through the Company’s joint venture TransdevTSL, comprising Brisbane Ferries and TransdevTSL - Shorelink Buses in Sydney. 

Brisbane Ferries increased its customer numbers by 4.75 per cent to 6.5 million in 2009, while achieving zero lost-time injuries. Two new CityCats were launched during 2010 and three new express services were introduced.

Our telecommunications business was selected by NBN Co Limited to construct one of the first release sites at Minnamurra and Kiama Downs south of Wollongong in New South Wales during July 2010. This followed input into the design process earlier in 2010. 

The renegotiated 10-year NZ$1 billion Chorus contract commenced during the first half of this financial year, positioning the Company well to benefit from infrastructure programs. The work involves maintenance and build services as well as the provision of fibre installation services.

We also secured a continuation of a ten-year relationship with Telstra, with a three-year contract to project manage upgrades to Telstra’s telephone exchange assets across Australia.

Gippsland Water Factory alliance Maintenance Coordinator Steve Kanara [left] with Gippsland Water Factory Site Operator Chris Davies during commissioning handover. The Factory began treating domestic wastewater in November 2009.

Property and Facilities Management

The business achieved strong growth compared with the same period last year, by capitalising on contracts with long-term government customers, improving the pipeline of opportunities and providing services to new customers and regions.

During the period, we expanded our range of services to social infrastructure through building and refurbishment upgrades as part of government stimulus package works.

We won a new $200 million contract with Western Australia Department of Housing and increased our scope of work with Housing NSW by $100 million, which is in addition to the original $385 million contract awarded in August 2008 and $30 million of project work awarded in May 2009.

We secured an integrated asset management and property maintenance services contract for 190 of City of Melbourne’s properties until 2014. The business was also awarded its first contract in the $104 billion Australian health sector with a $7.2 million three-year facilities management contract in November 2009 with Austin Health. 

Our project management subsidiary, APP, continues to grow organically. During the year, APP secured engineering project management services for the Australian Grand Prix in Melbourne for the next three years and project management of Qantas’ new corporate offices in Sydney and NAB’s in Melbourne.