Transfield Services delivers 33 percent increase in net profit

TIMEC’s parent company Transfield Services announced today Net Profit after Tax of AU$40.1 million (~US$35.99) for the half year ending December 31, 2009, up 33 percent compared to the same period last year. An investment of AU$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 April 14, 2010, in line with stated dividend policy.

“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” said Managing Director and Chief Executive Officer Dr. Peter Goode.

“A highlight of these results is that we have maintained our margins while keeping our work in 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 percent 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 US private placement that raised US$170 million. These facilities, plus record net operating cash flows, were used to repay and partly cancel other US 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 AU$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 June 30, 2009 and gearing (net debt to equity) improved from 50 percent to 35 percent.

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.