Transfield Services delivers 33 per cent increase in net profit

24 February 2010

• Revenue of $2.0 billion including joint ventures
• NPAT up 33 per cent to $40.1 million
• Record cash flow from operations
• Dividend of 5 cents per share
• Group margins maintained
• Strengthened balance sheet for future growth
• Work-in-hand of $10.6 billion
• Full year forecast guidance confirmed

Transfield Services today announced Net Profit after Tax of $40.1 million for the half year ending 31 December 2009, up 33 per cent compared to the same period last year. An investment of $8 million (gross) was made in business efficiency initiatives in the period, making this an even stronger result.

The Board of Transfield Services declared a fully franked interim dividend of 5 cents per share, payable on 14 April 2010, in line with stated dividend policy.

Managing Director and Chief Executive Officer, Dr Peter Goode, said today: “The Company has produced a strong result in a difficult business environment. These results show we have increased our business discipline across all fronts, enabling us to deliver an outstanding cash management result with record cash flows.”

“A highlight of these results is that we have maintained our margins while keeping our workin- hand level on a constant currency basis.”

“Operational highlights included the solid performances from our infrastructure and facilities management businesses and our greater than 90 per cent success in contract renewals across the business.”

“The Company is benefiting from the global experience of a strengthened executive team and investments in streamlining our operational structure. Further investments in the future growth of the Company have been made by enhancing the Company’s marketing and business development capabilities.”

The Company’s focus on capital management initiatives improved its financial position. A highlight during the period was the completion of a U.S private placement that raised US$170 million. These facilities, plus record net operating cashflows, were used to repay and partly cancel other United States dollar denominated debt facilities. As a result, the Company extended its average debt facility maturity profile from 1.8 years to 3.7 years.

A focus on cash management enabled substantial debt repayment, with net debt of $270 million at the end of the half driven by a reduction in net working capital days from 13 days to 5 days compared to the same period last year. The net debt to EBITDA ratio improved to 1.2 times from 1.7 times since 30 June 2009 and gearing (net debt to equity) improved from 50 per cent to 35 per cent.

Dr Goode said: “Our focus has been on ensuring we can respond more quickly and effectively to customer needs and market demands. An example of this was our $13 million acquisition of ICD, which has broadened our capabilities with in-demand, expert engineering skills.”

“In 2009, we continued to improve our safety performance. We reduced our Lost Time Injury Frequency Rate (LTIFR) by 28 per cent from 2.26 to 1.62 and our Total Recordable Injury Frequency Rate (TRIFR) by 17 per cent from 8.30 to 6.89.”

Outlook

Transfield Services has a resilient business model built on industry and geographic diversity. The Company is seeing a strengthening pipeline of opportunities and is confident it will continue to expand its business by concentrating on strong cash management and margin preservation in market segments and geographies exhibiting good growth potential.

The Company maintains its guidance of flat to modest NPAT growth in the 2010 financial year assuming no further material deterioration in economic and market conditions. We anticipate a return to growth in the 2011 financial year underpinned by the recovering global economy and our increased business discipline and efficiency.

For detailed commentary of operational performance of the half, please refer to the Management Discussion and Analysis contained in the Half Year Report.
All financials are in Australian dollars unless otherwise noted.

Transfield Services' 2010 Half Year Results: ASX Statement

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