Transfield Services announces impairment charge - Confirms FY09 guidance

Transfield Services announced today that its full year results would be impacted by an impairment charge of A$168 million (US$135 million) on a pre-tax basis.

The impairment charge is attributable to the deterioration in economic conditions and higher risk premiums specific to the North American subsidiary USM. USM responded by implementing initiatives to improve operating efficiency and client services, ensuring USM is well positioned to respond to improvements in the US economy.

The impairment charge will not impact the Company’s ability to pay dividends or impact debt covenants.

Excluding the impairment charge, Transfield Services is expected to achieve the previously stated guidance of growth at the lower end of the 10 – 20 per cent Net Profit After Tax (pre-amortisation) range.

The net debt position at 30 June 2009 was approximately A$390 million, down from A$584 million at 30 June 2008. Excluding the impact of foreign exchange rates, the reduction in net debt was A$325 million on a constant currency basis, reflecting the ongoing focus on capital management initiatives.

Transfield Services Managing Director and Chief Executive Officer, Dr Peter Goode, said: “Since joining Transfield Services in April this year, my immediate focus was on delivering the FY09 guidance with an emphasis on tighter accountability of divisional management and operational efficiency.”

“It is satisfying to confirm FY09 guidance – with NPAT growth (pre amortisation) exceeding 10 per cent in the face of challenging conditions. This demonstrates the resilience of our business model.”

“As the Company advised in May, opportunities in Australia and New Zealand from government stimulus packages in the Infrastructure Services and Facilities Management sectors continue to materialise. Further to this, the growth in our Emerging Markets region continues to be strong.”

“Our North American businesses, including USM, are well positioned to respond to improvements in conditions. Our business in Canada continues to exceed expectations.”

“We look forward to providing further details on the operating performance at the full year results announcement.”

This announcement is based on un-audited numbers. Detailed full year results will be announced on 26th August, 2009.