Transfield Services’ strong second half delivers result in line with guidance

  • Revenue including JV and Associates of A$4.0 billion
  • EBITDA up 14.9 per cent to A$232.3 million
  • Strong second half turnaround in operating cashflow
  • Reported Net Loss after Tax of A$19.7 million
  • Operating Net Profit after Tax up 4.3 per cent to A$100.1 million
  • Major strategic milestones achieved with strong balance sheet to support growth
  • Contracted revenue momentum with over A$5 billion of renewals and new contracts
  • Total FY11 dividend of 14 cents per share

Transfield Services today announced that it has delivered in line with its FY11 earnings guidance, while achieving major strategic milestones.

As a result of delivering key strategic initiatives, several non-recurring items contributed to a Reported Net Loss after Tax of A$19.7 million. The bulk of these non-recurring items were non-cash.

Operating Net Profit after Tax (excluding non-recurring items) was $100 million compared to $96 million in the prior year.

“The Company delivered several important milestones during FY11, including the sale of USM, the sell down of TSI Fund and the acquisition of Easternwell. These initiatives will support long-term growth and better align the Company with our strategic goals,” said Managing Director and CEO of Transfield Services, Peter Goode.

“Momentum generated by our enhanced business development function continues to build as we pursue a healthy pipeline of opportunities in key growth sectors,” Mr Goode said.

The Board declared a final dividend of 9 cents per share, payable on 26 October 2011. The final dividend for the year will be franked at 25 per cent, and represents a dividend payout ratio (to operating NPAT) of 78 per cent.

Reported gearing (net debt to net debt plus equity) at 30 June 2011 was 18 per cent following the proceeds from the sale of USM being used to reduce net debt. Excluding the proceeds from USM, gearing at 30 June 2011 was 30 per cent, within the Company’s long term targeted range.

The Australian & New Zealand business secured major contracts with the South Australian and New South Wales governments. Organic growth was also seen in the power and telecommunications sectors, while Easternwell was awarded new work in the oil and gas sector.

The Americas region saw revenue stable compared to the same period last year in local currency terms. Contributing to this result was double digit growth from the Infrastructure Roads business offset by declines in the USM business. The Canadian business saw modest revenue growth with highlights during the period including the C$2.1 billion five year contract extension with Suncor Energy, and the expansion of its client base with Nexen Inc. The Resources & Energy US business (formerly known as TIMEC) successfully renewed its top three clients during the year.

The Middle East & Asia region’s contribution was impacted by the stronger Australian dollar as well as reduced activity across the region generally. Project activity in the region remains stifled with constrained economic conditions expected to continue, particularly in the U.A.E.

Outlook

With the strategic alignment of the business significantly progressed the Company is now able to focus on long-term growth. In the short-term, growth aspirations will be challenging given the current economic and business environment.

The Company is responding to these challenges with a streamlined business, higher value service offerings and an increased exposure to sectors with a strong growth outlook. With contracted revenue momentum from an enhanced business development function, Transfield Services expects long-term earnings growth. This is underpinned by a portfolio of contracts with quality clients and an appropriate level of risk.

Following the sale of USM and the sell down of TSI Fund, an earnings gap will exist while opportunities are pursued to reinvest the proceeds from these transactions. The Company plans to reinvest the proceeds during the second half of FY12.

The Company is targeting an absolute growth rate of up to 5% in operational NPAT (pre-amortisation) in FY12. However, excluding the USM and TSI Fund (RAC) contributions from FY11, the year on year pre-amortisation NPAT growth rate is expected to be 25%. These growth targets are based on USD/AUD parity and are subject to no deterioration in economic conditions.

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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.