Transfield Services delivers solid cash result
- Full year statutory NPAT $84.8 million
- Full year reported NPAT pre-amortisation of $106 million, in line with April guidance
- Operating cash flow of $123 million, up 49 per cent leading to cash conversion of 76 per cent
- Earnings per share (EPS) of 15.6 cents
- Final FY12 dividend of 9 cents per share, unfranked and payable on 24 October 2012
Transfield Services announced today that it has delivered full year NPAT pre-amortisation of $106 million, including revenues and costs related to growth and restructuring initiatives. A reconciliation of the underlying result is included in the Investor Presentation and the Full Year Report.
Cash conversion was 76 per cent and operating cash-flow was $123 million, up 49 per cent. Proportionately consolidated EBITDA margin was 6.1 per cent.
“Our focus on improving capital management systems and making the business more efficient is reflected in our solid cash result,” said Transfield Services Managing Director and CEO, Peter Goode.
“Our pre-amortisation NPAT included several revenues and costs related to growth and restructuring initiatives that will benefit the Company from FY13 onwards.”
“They include the consolidation of our existing power generation asset management businesses into an integrated operations maintenance and support business in joint venture with WorleyParsons; acquiring control of InserTS in Chile which will accelerate our growth in this attractive market; the unlocking of value in our Ratch Australia Corporation (RAC) investment and the elimination of contingent liabilities related to Loy Yang A, Collinsville and Townsville power stations.”
“Global economic conditions are volatile, but we remain confident that with a more efficient business, a healthy balance sheet, strong footholds in growth markets and a new focus on providing higher-value services to our clients, we are well placed.”
Transfield Services’ financial position remains strong with an extended three-year debt maturity profile and gearing at 32 per cent, providing capacity to pursue growth opportunities.
Transfield Services’ pipeline of new business opportunities increased 6.3 per cent to $30.3 billion, as large scale resources and energy projects move towards the operations and maintenance stage of their lifecycles. The order book grew to $11.0 billion, plus there is an additional $2.6 billion in contract extensions and $585 million of contracts at preferred bidder status.
The deployment of the Group’s new Enterprise Resource Planning (ERP) system continues. To date, it has provided business efficiencies and resulted in $15 million in annualised costs being taken out of the business in July 2012. Additional cost savings are expected as the deployment continues across Australia and New Zealand.
Excluding Easternwell, revenue in the Australia and New Zealand business increased by 9.5 per cent, reflecting the commencement of several large multiyear contracts.
EBITDA margins declined however, due to an underperforming contract (Brownhill) and the FY11 sale of the wind farm development business to RAC.
Easternwell‘s proportionately consolidated EBITDA was $77 million. The Energy (oil & gas) business performed strongly and won new multi-year contracts with QGC, Santos and Chevron commencing in late FY12 and early FY13. This was offset by the performance of the Minerals (coal & iron ore) business, which was affected by extreme weather and a poor operating performance in the first half, which has now been resolved. Easternwell’s EBITDA for FY13 is anticipated to be $90-$102 million, dependent on the strength of the mining market. The risk of a downturn in activity in the mining sector in Australia is being managed by exploring the deployment of Minerals rigs to other parts of the Company’s international business, as Easternwell is further integrated into the Group.
EBITDA in the Americas business declined slightly due to less leveraged work in the second half. During the year, the FTS joint venture was successfully renegotiated on terms that allow broader growth in key North American markets. The first step in this growth is the Steier Oilfield Service strategic acquisition in the oil rich Williston Basin.
Proportionately consolidated margins in the Middle East and Asia business grew to 6.8 per cent, up 1.3 percentage points, reflecting strong contract performance and control of overheads. Hofincons grew in line with expectations and expanded into operations and maintenance in the power industry, and facilities management in the retail sector.
A tragic aspect of the Company’s performance in the year was the death of three employees, one in the Rail business and two in the Indian subsidiary. Transfield Services remains committed to implementing industry leading safety practices and culture across all of its businesses and will continue driving improvements in processes, procedures and individual behaviours.
The Lost Time Injury Frequency Rate declined by 3 per cent year on year to 1.14 injuries per million hours worked.
The Board declared a final dividend for FY12 of 9 cents per share, unfranked and payable on 24 October 2012. The total dividends for FY12 of 14 cents represent a dividend payout ratio to NPAT of 90 per cent, which is above the Group’s target dividend payout ratio range of between 50-70 per cent of full year NPAT.
Transfield Services announced a share buy back on 5 October 2011 with the intention of buying back up to 44 million shares within the following 12 month period. A total of 27.8 million shares were acquired in the period to 30 June 2012 at a cost of $62 million.
EPS accretion from the share buy-back in FY12 was 1 per cent. For FY13 it is expected to be around 3 per cent, reflecting a full year impact of shares acquired during FY12, and shares acquired since 30 June 2012.
With the growth and restructuring initiatives that occurred in FY12; business efficiency and cost savings expected with the deployment of the ERP system; improvement in the management of project risk; the expected growth in key markets of oil & gas in Australia and North America and mining in Chile, Transfield Services is well placed to meet the challenging economic conditions expected in FY13.
The Company is anticipating NPAT pre-amortisation for FY13 at the lower end of the consensus range of $125 – $135 million (EPS of approximately 20.1 cents to 22 cents).
This outlook assumes A$/US$ of approximately $1.05 and no extreme weather events.
AudiocastAn Audiocast of our 2012 Full Year Results can be heard from our Results Annoucements page in Investor Centre.
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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.