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Transfield Services delivers $48.4 million profit

ASX Announcement Transfield Services delivers $48.4 million profit before tax

Transfield Services has achieved profit before tax of $48.4 million for the year ended 30 June 2004. This represents a 33.7 percent increase on the prior comparable period to 30 June 2003. This result was achieved on revenue of $1,238 million, which represents an increase of 19.8 percent on the prior comparable period.

As reported previously, Transfield Services Limited elected to adopt the new tax consolidation regime as of 1 July 2003. The company has booked a net credit to income tax expense of $34.6 million. This positive impact results from the re-measurement of the group's power generation assets for tax purposes under the new legislation.

The net profit after tax of $68.2 million (inclusive of the tax consolidation adjustment) for the year ended 30 June 2004 represents an increase of 154.5 percent when compared with $26.8 million for the prior period. The profit after tax excluding unusual tax effects is $33.6 million for the year ended 30 June 2004, which represents an increase of 38.3 percent on the prior comparable period (profit after tax excluding unusual tax effects is included in the attached table to enable easy comparison).

The ‘Services’ part of the business performed strongly, achieving earnings before interest, tax and amortisation (EBITA) of $35.1 million, which represents an increase of 37.1 percent on the prior comparable period.

The infrastructure investments performed in line with expectations delivering EBITA of $23.6 million, which represents a 14.0 percent increase on the prior comparable period. The Board declared a fully franked final dividend of 9 cents per share to be paid on 15 October 2004. This will apply for shareholders on record at 22 September 2004. This follows a fully franked interim dividend of 7 cents per share, which was paid on 15 April 2004. The dividend of 16 cents for the full year represents a 23 percent increase on the previous year.

Transfield Services’ Managing Director, Peter Watson, said he was very pleased with the company’s performance.

“All segments of our business, including joint ventures, are performing well and have driven growth along with contributions from new business such as REB Engineering and the newly expanded Yarra Trams and new contracts such as WMC Resources, Mackay Sugar and Santos”, Mr Watson said.

Highlights in the period from 1 July 2003 include:

• Extensions to significant contracts including Department of Defence, QNI (BHPBilliton), NSW Department of Commerce, BlueScope Steel, NSW Department of Housing, Sydney Water and Shell Refinery Malaysia. Since listing in May 2001, clients have renewed over 92 percent of contracts by value.

• Additional work with existing clients and new contracts highlighted by:

- Telstra Land and Buildings – $32 million over 2 years

- Santos Maintenance Services – $60 million over 3 years

- Lane Cove Tunnel Operations and Maintenance – $75 million over 5 years commencing post construction

- Sugar Australia - $21 million over 3.5 years

• The company has work in hand of over $5.8 billion conservatively calculated only on existing contract terms.

• Transfield Services and Colonial First State Property launched a property services joint venture called Five D Holdings Pty Ltd.

• Transfield Services and Transdev signed a contract to operate and maintain Brisbane City Council Rivercat and Ferry Service.

• Achieved financial close for a $250 million power station at Kemerton in Western Australia.

• Yarra Trams, a 50/50 joint venture between Transfield Services and Transdev, entered a five year partnership with the State Government of Victoria to operate Melbourne’s entire tram network.

• Acquired Serco Group NZ to expand the Company’s property and asset management operations in New Zealand. At 30 June 2004 Transfield Services had cash balances of $ 57.0 million. Borrowings of $366.0 million are non-recourse project financing associated with the infrastructure investments and consequently Transfield Services is effectively debt free.

“The foundation of our growth is the quality, diversity and size of our existing client base. We continue to undertake additional work with existing clients as well as pursuing a solid pipeline of new opportunities,” Mr Watson said.

“We continue our strong focus on continuous improvement. This is reflected in the further refinement of our management systems and processes and the pursuit of even better health and safety outcomes.”

“We achieved triple certification for our quality, health, safety and environment systems this year – believed to be a first for an Australian services company.”

“The company’s cashflow and sound balance sheet facilitate a complementary acquisition strategy. Future growth is underpinned by our approach with existing clients and new opportunities as well as expected completion of the Townsville and Western Australian power station projects in calendar 2005. Completion of these two projects will add considerable value to our portfolio of infrastructure investments. The value of the investments, net of project debt, is estimated to be approximately $275 million late in calendar 2005,” Mr Watson said.

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