Transfield Services 37.7% Profit Increase

28 August 2003
ASX Announcement

Transfield Services delivers a 37.7 percent increase in net profit after tax to $26.8 million for the 2002/03 year

In the 2002/03 financial year Transfield Services achieved profit after tax of $26.8 million which represents an increase of 37.7 percent on last financial year. This result was achieved on revenue of $1033.1 million which is an increase of 28.9 percent on last year.

The ‘Services’ part of the business performed very well, achieving earnings before interest, tax and amortisation (EBITA) of $25.6 million, an increase of 21.3 percent on the previous year. The infrastructure investments showed strong growth delivering EBITA of $20.7 million, an increase of 41.7 percent on last year.

The Board declared a fully franked final dividend of 7 cents per share, to be paid on 15 October 2003 which follows a fully franked interim dividend of 6 cents per share, which was paid on 15 April 2003. The dividend of 13 cents for the full year represents a 30 percent increase on the previous year.

Transfield Services’ Managing Director, Peter Watson, said, “the Company entered a number of new ‘Services’ contracts during the year and acquired REB Engineering. This acquisition provides further expansion of our business in Queensland. These new activities will contribute full year earnings in the 2003/04 year.”

“New business of $ 800 million since 30 June 2002 includes:
- NSW Housing Facilities Maintenance - $120 million over 2 years
- Mackay Sugar Maintenance Services - $200 million over 5 years
- Telstra Cable Plant Records - $83 million over 5 years
- WMC Resources Maintenance Management – managing work valued at $127 million in 2003/04.
- Melbourne Water Corporation Maintenance Services - $60 million over 5 years”

“Since listing in May 2001 clients have renewed over 95 percent of contracts by value and have approved extensions on all significant contracts since 30 June 2002 including:

- Telstra Facilities Management - $350 million over 3.5 years
- Department of Administrative and Infrastructure Services Facilities Management - $40 million over 2 years
- Australian Rail Track Corporation Infrastructure Maintenance - $80 million over 4 years
- BHP Steel Maintenance Services – $110 million over 1 year (rolling 5 year contract)
- Department of Defence Garrison Support and Maintenance Services - $48 million over 2 years
- Rottnest Island Authority Facilities Maintenance - $22.5 million over 3 years”

“We now have over 80 ‘Services’ contracts with a total value of over $3.4 billion conservatively calculated only on existing contract terms.”

“In February 2003, we achieved financial close on a $115 million expansion of the Townsville Power Station. Based on revised cashflow forecasts and external advice on rates of return, this expansion along with the acquisition of the remaining 50 percent of Collinsville Power Station has added considerable value to our portfolio of infrastructure investments including Macarthur and Yan Yean plants. The value of the infrastructure investments, net of project debt, at 30 June 2003, is estimated to be up to $160 million compared with the balance sheet net asset value of $61 million.”

“The Balance Sheet has cash balances of $34.3 million. Borrowings of $214.3 million shown on the balance sheet are non-recourse project financing associated with the infrastructure investments and consequently Transfield Services is effectively debt free.”

“We have successfully acquired and integrated two businesses during the year. The Company’s strong cashflow and effectively unutilised debt facilities mean we are in a position to pursue further acquisitions should opportunities arise.“ he said.

Consolidated financial performance summary
$’Millions
Year ended 30 June 2003 2002 change
Operating revenue
Services 963.5 756.7
Infrastructure 69.5 44.8
1033.1 801.5 28.9%
EBITA
Services 25.6 21.1
Infrastructure 20.7 14.6
46.3 35.6 30.1%
EBIT
Services 24.5 20.1
Infrastructure 20.7 14.6
45.2 34.7 30.3%
Profit after tax
Services 20.6 16.1
Infrastructure 6.2 3.3
26.8 19.5 37.7%
Basic earnings per share 19.4 cents 14.2 cents

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