Highlights:

  • Capital structure review successfully completed, significantly strengthening TSI Fund’s financial position.
  • Transfield Services team achieved seven years’ lost-time injury free at Collinsville Power Station.
  • Starfish Hill Wind Farm delivered availability of more than 90 per cent, a major improvement from the 76.6 per cent it averaged prior to Transfield Services taking over operation and maintenance of the farm.
  • In June 2010, Australia’s Asset Management Council recognised the outstanding performance by awarding Transfield Services’ Starfish Hill team with a Silver Award.

Transfield Services Infrastructure Fund

Transfield Services Infrastructure Fund’s (TSI Fund) assets performed to expectations as they continued to benefit from Transfield Services’ engineering expertise as the operations and maintenance provider. TSI Fund achieved net profit after tax (NPAT) (excluding the impact of the capital structure review initiatives) of $18.4 million which was $3.7 million down on the comparable figure for FY09. Transfield Services share of this underlying NPAT was $9.3 million and the Company received $17 million in cash distributions during the period.

TSI Fund’s capital structure review (review) was completed during the second half of the financial year and resulted in three key initiatives that included the sale of Mt Millar Wind Farm for $191 million, a fully underwritten $110 million equity raising, and refinancing and extending the maturity of TSI Fund’s corporate-level debt to June 2015. TSI Fund now has a significantly improved balance sheet with net debt reduced to $462 million as at 30 June 2010 from $725 million as at 30 June 2009 and gearing reduced to 52 per cent from 66 per cent.

As a result of the review outcomes, Transfield Services incurred a one-off after tax equity accounting cost totalling $22.9 million ($16 million non-cash) being Transfield Services pro-rata share of TSI Fund’s sale of the Mt Millar Wind Farm, interest rate swap break costs and other transaction costs.

Following the conclusion of the TSI Fund’s recapitalisation:

  • Transfield Services’ additional »» investment in TSI Fund totals $43.2 million, which represents 61.8 million securities at 70 cents per security on this additional investment, Transfield Services expects to receive a forecast annualised distribution yield of 11.7 per cent
  • Transfield Services’ share of the final distribution for the year ended 30 June 2010 from TSI Fund will be $7.7 million, and
  • Transfield Services’ holding decreased from 48.4 per cent at 30 June 2009 to 44.5 per cent.

A FY10 final distribution of 4.0 cents per security was declared, in-line with guidance given in the May 2010 Equity Offer document. This brings total FY10 distributions to 10.0 cents per security and will be payable on 20 September 2010. TSI Fund reaffirmed that in the medium-term, it expects to be able to maintain future distributions at least at 8.2 cents per security.

Transfield Services invested further in TSI Fund because the review has provided TSI Fund with a stable long-term capital structure, which will enable us to benefit from the ongoing provision of services and sustainable dividends. Transfield Services remains manager of TSI Fund and provides operations and maintenance services to its wholly-owned assets.