Transfield Services meets first half guidance, delivers record contracted revenue as it achieves strategic milestones

  • 1H EBITDA of $78.3 million, in-line with most recent guidance
  • Strategic milestones continue to be achieved with Easternwell acquisition
  • Momentum building with contracted revenue at record level of $11.9bn
  • Dividend of 5 cents per share maintained
  • Investment in future growth has impacted operating cashflow
  • Full year guidance confirmed; updated to include Easternwell contribution

Transfield Services today reiterates its full year guidance target, confirms it has record contracted revenue and delivered key elements of its strategy despite continuing tough conditions.

Normalised Net Profit After Tax (NPAT) was $27.6 million for the half year ended 31 December 2010. Including non-recurring items reported NPAT was $14.0 million, as a result of one-off restructuring costs of $7.3 million and transaction costs relating to the Easternwell acquisition of $6.3 million.

Contracted revenue finished the half at a record level of $11.9 billion.

Managing Director and Chief Executive Officer, Peter Goode, said today: “Despite a difficult period, we are pleased to report that momentum in the business has begun to build, reflected in our record contracted revenue of $11.9 billion.”

“We have secured a further $1.2 billion of work since 31 December 2010 and have a pipeline of more than $30 billion in opportunities across our markets as we continue to strengthen business development and pursue sustainable growth.”

“We continued to execute on our strategic objective to be more involved at the front end of major resource projects with the acquisition of Easternwell. This positions us as Australia’s leading oil and gas service provider and provides a platform to pursue higher margin, higher value-add contracts in this key growth sector.”

“Furthermore, it deepens Transfield Services’ exposure to growth opportunities in iron ore, coal, conventional oil and gas and coal seam gas markets at a time when Australia’s expanding resource sector is entering a period of converging upcycles across a broad range of commodities,” Mr Goode said.

The Board has declared a fully franked interim dividend of 5 cents per share, payable on 20 April 2011.

Gearing was at 35 per cent at 31 December 2010, or 29 per cent (at the lower end of our target range) excluding the equity bridge loan associated with the Easternwell acquisition which was repaid in January 2011.

In the Australia and New Zealand region, significant work was secured with new and existing long-term clients, including Amcor Australasia, the Western Australian Department of Transport, Sydney Water, Australian Rail Track Corporation, Housing New Zealand and Chorus in New Zealand. Work volumes in the New Zealand business continued to be strong.

Total Revenue in the Americas region (including contributions from joint ventures) increased by 9.4 per cent in local currency terms, driven by increased volumes of work due to stabilising economic conditions. Business streamlining and contract optimisation initiatives are also delivering results.

The FT Services joint venture continues to expand its position in Canada with the extension to the Suncor asset management contract for five years for CAD$2 billion. The joint venture also expanded its client base with the award of the maintenance contract with Nexen Inc as well as pursuing an expanding pipeline of opportunities.

During the half, our Middle East and Asia business secured more than $50 million in wins and renewals with clients including Gasco (Abu Dhabi Gas Company) and Takreer (Abu Dhabi Oil Refining Company).

Since 31 December 2010, the company has secured more than $1.2 billion in new work, including a 10-year contract with South Australia Water valued at $550 million (50 per cent share of joint venture) and a five year $540 million contract with the New South Wales Department of Services, Technology and Administration.

Outlook

Excluding the acquisition of Easternwell and subject to there being no deterioration in economic conditions, Transfield Services reiterates a target of mid-single digit percentage growth for FY2011 NPAT (normalised to exclude one-off significant items), based on FY2010 normalised NPAT of $96 million and an 87 cent USD/AUD exchange rate.

As disclosed to the market on 13 December 2010, the Company indicated that Easternwell is expected to contribute circa $40 million in EBITDA for the six months ending 30 June 2011. Including the contribution from Easternwell, Transfield Services now expects in the range of 10 to 15 per cent growth for FY2011 NPAT (normalised to exclude one-off significant items), based on FY2010 normalised NPAT of $96 million and an 87 cent USD/AUD exchange rate.

FY12 outlook

With the improving outlook in the resources and infrastructure sectors together with business streamlining initiatives that continue to gain traction, the business is well positioned to achieve strong growth.

  • Including the Easternwell acquisition EBITDA growth is expected to be in the range of 30 – 35 per cent
  • This assumption is based on current economic conditions

For detailed commentary of operational performance of the half, please refer to the Management Discussion and Analysis.

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Transfield Services employs over 19,000 people across 18 industries and 10 countries. We are a global provider of operations, maintenance and construction services to the Resources, Energy, Industrial, Infrastructure, Property and Defence sectors.
We deliver asset management services across all phases of the asset lifecycle, from concept and creation, to services that sustain, optimise and enhance our Client’s assets. With diverse global experience and expertise, we share our knowledge and challenge thinking to develop and implement innovative solutions that deliver real value for our Clients. Our unique approach enables us to deliver continuous improvements in asset performance and sustain long term relationships with our Clients and partners.