Transfield Services 2009 Annual Report
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2009 ANNUAL REPORT { essential } Transfield Services Limited Annual Report 2009 i Contents 002 Who We Are and What We Do 004 Growth and Financial Highlights 006 Chairman’s Report Transfield Services exceeded on the guidance we gave to the market, with underlying Net Profit After Tax (pre- amortisation and impairment charge) increasing by 16.6 per cent to $123.6 million. 008 Managing Director and CEO’s Report Increased business efficiency in challenging market conditions has created a much stronger than usual second half result and an improved platform for growth. 012 Review of Operations 012 Australia Australian revenue, including our joint ventures, achieved growth of 2.1 per cent to $2.07 billion from Infrastructure Services and government stimulus package growth. 014 New Zealand New Zealand revenue, including joint ventures, increased by 4.7 per cent to $560.6 million due to a strong second half. 016 North America North American revenue grew by 48.9 per cent to $1.5 billion with the ongoing expansion of the FT Services joint venture and new contracts in transport infrastructure. 018 Emerging Markets Strong growth in shutdown and long-term maintenance contracts led to revenue increasing by 117 per cent to $179.7 million. 020 Transfield Services Infrastructure Fund (TSI Fund) Our investment delivered our shareholders a cash distribution of $15.6 million. 022 Our People and Our Achievements We reduced our Lost Time Injury Frequency Rate by 16.44 per cent, from 2.25 injuries per million hours worked the previous year to 1.88 this year. 026 Board of Directors 028 Senior Executive Team 030 Corporate Governance 037 Financial Report 141 Corporate Directory Two control room operators on our EastLink contract in Notice of Annual General Meeting Melbourne, Australia. Shareholders are advised that the 2009 Annual General Meeting of Transfield Services will be held on Wednesday, 4 November 2009 at Front cover: 10.00am (AEDST), at the AGL Theatre, Museum of Sydney, Corner Phillip and An FT Services Bridge Streets, Sydney. employee on the joint venture’s Suncor Energy contract in Fort Currency and Financial References McMurray, Canada. All financials are in Australian Dollars, unless otherwise specified. All financials on page one through to 36 are based on proportionately consolidated accounts. They include revenue and expenses from our joint ventures and associates on a line-by-line basis, unless otherwise indicated. ii Transfield Services Limited Annual Report 2009 You might not see all the things that we do… but you would know if we stopped doing them... Transfield Services Limited Annual Report 2009 1 CFDBVTFXFEFMJWFS essential services 0VSFYQFSUTLJMMTEFMJWFStTBGFUZTZTUFNTBOEQSPDFTTFTtDPNQMFYQSPKFDU 2 Transfield Services Limited Annual Report 2009 BOENBOBHFinfrastructureHMPCBMMZ XBUFS QVCMJDUSBOTQPSU QPXFS GBDJMJUJFTNBOBHFNFOU USBOTQPSUJOGSBTUSVDUVSF EFGFODF PJMBOEHBT UFMFDPNNVOJDBUJPOT NJOJOHBOEQSPDFTT BOEXPSLGPSDFNBOBHFNFOUtXIPMFPGMJGFBTTFUNBOBHFNFOU Transfield Services Limited Annual Report 2009 3 Transfield Services’ Industrial Services Centre in Kwinana, Western Australia, provides engineering, fabrication, mechanical and shutdown services. Resilient business and quality earnings deliver strong cash result Services EBITA is up 14.1 per cent to $179 million including joint ventures Underlying NPAT growth of 16.6 per cent to $123.6 million; statutory loss of $55 million due to impairment charge $80 million of free cash flow after financing costs, capex and dividends paid Work-in-hand strong at $11.1 billion Net debt of $389 million – a reduction of 33 per cent on the previous year 4 Transfield Services Limited Annual Report 2009 Growth and Financial Highlights # WORK-IN-HAND REVENUE 2H $11.1 billion $4.32 billion 1H $12.0 $5.0 $10.0 $4.0 $8.0 $3.0 $6.0 $2.0 $4.0 $2.0 $1.0 $0.0 $0.0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 # SERVICES EBITA 2H NET PROFIT AFTER TAX*# 2H NJMMJPO 1H $123.6 NJMMJPO 1H $200.0 $120.0 $100.0 $150.0 $80.0 $100.0 $60.0 $40.0 $50.0 $20.0 $0.0 $0.0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 * Pre-amortisation and impairment charge. REVENUE BY INDUSTRY GROUP REVENUE BY CONTRACT TYPE 3FTPVSDFTBOE 'JYFEGFFGPS Industrial TFSWJDF *OGSBTUSVDUVSF Cost 4FSWJDFT 17% SFJNCVSTBCMF ,1*"MMJBODF 39% 30.4% 54% 29% 30.6% 1SPQFSUZ 4DIFEVMF BOE'BDJMJUJFT PGSBUFT .BOBHFNFOU "MMGJOBODJBMTBSFCBTFEPOQSPQPSUJPOBUFMZDPOTPMJEBUFEBDDPVOUT5IFZJODMVEFSFWFOVFBOE FYQFOTFTGSPNPVSKPJOUWFOUVSFTBOEBTTPDJBUFTPOBMJOFCZMJOFCBTJT VOMFTTPUIFSXJTFJOEJDBUFE Transfield Services Limited Annual Report 2009 5 5SBOTöFME4FSWJDFTNVMUJTFDUPS NVMUJSFHJPOBM BQQSPBDIVOEFSQJOOFECZMPOHUFSNSFMBUJPOTIJQT XJUICMVFDIJQBOEHPWFSONFOUDMJFOUTXJMM DPOUJOVFUPTVTUBJOVT 6 TransfieldTTrannsfifieeld SeServiceservicr esssL LLimitedimiti edd AnnualAnnuual RReporteepooorrt 20092009 Chairman’s Report While global economic conditions have $BQJUBM.BOBHFNFOU 5IF$PNQBOZT'VUVSF challenged companies internationally, I congratulate Peter Goode and the entire team In challenging economic times, we have Transfield Services finished the year in for a commitment to good cash management demonstrated we can respond quickly and good financial shape. practices that have delivered quality results. decisively to new challenges and opportunities Our resilient business model delivered quality by delivering quality earnings in the 2009 The Company’s full year net debt of $389 results – revenue up 18 per cent to $4.32 billion financial year. million has been reduced by $195 million since including joint ventures – with continuing the prior comparable period due to ongoing Transfield Services’ multi-sector, multi- demand for our essential services as the capital management initiatives and strong cash regional approach underpinned by long-term maintenance of clients’ key infrastructure generation from each region. relationships with blue-chip and government remained a priority. This included our clients will continue to sustain us. We are United States markets where we defended The capital raising in November was essential well positioned to capitalise on emerging our revenues in the face of the United States to strengthening our balance sheet – we raised opportunities across key markets, including recession and focused on consolidation $267 million through a pro-rata rights issue renewable energy, liquefied natural gas, initiatives. and institutional placement and completed a infrastructure and electrical services. new US$367 million banking facility maturing With $11.1 billion work-in-hand, we are well in January 2012. Net debt to EBITDA ratio I would like to thank the Board, Peter Goode positioned to grow this figure by capturing decreased from 2.98 to 1.73 times. and the Transfield Services team for their opportunities in the emerging markets and in dedication to and delivery of quality results and North America as that market recovers. 3FOFXBCMF&OFSHZ#VTJOFTT also the shareholders for your support. This process is being led by new Managing Our strategic involvement in ongoing Director and Chief Executive Officer, Peter renewable energy development delivered Goode, who took up his role in April after we results this year when we realised the first farewelled his long-serving predecessor, milestone in our wind farm development Peter Watson. portfolio, selling two of our wind farm developments to AGL for $9 million. The sale Dr Goode has an impressive global track included first rights of negotiation for potential record in services companies and well honed construction management opportunities for Anthony Shepherd commercial skills in our core industries. In the the Barn Hill project. presentation of his first financial results, he has Chairman led the team to deliver a stronger second half The Company is continuing development financial result for the Company. work on its wind farm portfolio, and is currently focusing on its Northern Queensland assets. The Company exceeded market guidance, with an underlying Net Profit After Tax increase of 16.6 per cent to $123.6 million for the #PBSEBOE$PSQPSBUF(PWFSOBODF year to 30 June 2009 (pre- amortisation and I am focused on ensuring the experience impairment charge). Including amortisation of the Board reflects industry and market and the impairment charge, the Company expectations of responsible governance. I am reported a Net Loss After Tax of $55 million. overseeing the Board renewal process with the objective of ensuring the Board continues In July 2009, Transfield Services announced an to be independent, experienced and suitable impairment charge of A$148.4 million (post-tax) for a global company. In this regard, Mr Jagjeet on our North American Facilities Management (Jeet) Bindra was appointed to the Board as subsidiary USM due to deteriorating economic an independent non-executive Director of the conditions and higher risk premiums specific Company in July 2009. He has more than 35 to USM. The USM business is well positioned to years’ international experience in all segments take advantage of a recovering economy of the energy industry. with its consolidated service offering to major retail clients. I would like to thank David Sutherland for his contribution to the Board. David resigned The Board declared a fully franked final from the Board in July 2009 due to family dividend of 7.25 cents per share, payable on commitments. 12 October 2009, bringing the full year dividend to 12 cents per share. Transfield Services Limited Annual Report 2009 7 8FBSFBXPSMEDMBTT NBJOUFOBODFDPNQBOZ UIBUNBJOUBJOTUIFFTTFOUJBM BTTFUTPGPVSDVTUPNFST