Transfield Services Leverages Core Strengths

27 August 2007

Transfield Services Leverages Core Strengths To Create Global Growth

Record Financial Results – NPAT up 57 per cent
Work–in-hand figure of $9.1 billion, up $2.0 billion

A growing North American business
Transfield Services Infrastructure Fund Success

Transfield Services today announced an operational net profit after tax of $87.3 million, an increase of 57.1 per cent on the prior comparable period.
The Company reported net profit after tax of $114.3 million, an increase of 105.6 per cent on the prior comparable period.

As previously announced on 21 August 2007, this figure included a one-off gain from the disposal of its 51 per cent share in Transfield Services Infrastructure Fund (TSI Fund) of $34.7 million offset by $7.8 million AASB139 adjustment for the refinancing of the infrastructure portfolio in September 2006.

Earnings per share, excluding one-off impacts, were 46 cents per share, up from 33.9 cents per share on the previous year.

The Board declared a fully franked final dividend of 18 cents per share, bringing the full year ordinary dividend to 31 cents per share, up 29 per cent on the previous year.

The result was achieved on revenue from ordinary activities of $2.4 billion, an increase of 26.6 per cent on the 12 months to 30 June 2006.

On an operational basis – excluding the one-off impacts – the Services business delivered earnings before interest, tax and amortisation (EBITA) of $185.6 million, an increase of 60.4 per cent on the previous comparable period.

The Services segment delivered operational EBITA of $114.4 million, up 82.2 per cent. The Infrastructure segment delivered operational EBITA of $71.2 million, an increase of 34.6 per cent.

Transfield Services’ work-in-hand totalled a record $9.1 billion, up $2.0 billion on the prior year. More than $1.6 billion of this increase was attributable to growth from new contracts, or expanded existing contracts.
A major highlight for the year was the growth of our International business particularly in North America. EBITA increased from a negligible position to $36.4 million in 2006-07 due to a full year’s contribution from US Maintenance and a four month contribution from TIMEC, which was acquired in February 2007.

Next year, Transfield Services will benefit from a full year contribution from both Suncor and TIMEC. Added to this will be expected growth in the contribution from Hofincons in India, which has a workforce of 4,000 in one of the fastest growing economies in the world.

Transfield Services’ Managing Director and Chief Executive Officer, Mr Peter Watson, said: “Today we are reporting another year of record results. We have achieved substantial increases in profitability for our Australian businesses, driven by strong growth in our infrastructure services, major contributions from infrastructure investments and expanded project management capabilities.”

“During the year, we established a global corporate structure, including the appointment of four experienced and proven CEO’s and invested in our systems and processes to provide the platform to expand internationally.”

“Our global business has been a great success story. We are delivering on our North American strategy and establishing a firm foundation from which to leverage our core strengths to create future sustainable growth in the world’s largest outsourced market.”

“The Transfield Services Infrastructure Fund, which listed in June 2007, will drive a new growth phase for our business. Transfield Services is the Fund’s manager, and provides asset management and development services to the TSI Fund,” Mr Watson said.

“The TSI Fund will also generate long term, reliable cash over and above its accounting profits.”

“In Australia and New Zealand, Transfield Services has won major new work in roading, rail, telecommunications and electricity infrastructure. Significantly improved margins in the Australian and New Zealand businesses reflect our Company’s strong operational performance, focus on risk management, and the leveraging of our shared support services.“

“We have delivered substantial benefits to our clients through our high value adding alliance based relationships and this is reflected in our results.”

“There is strong global demand for high quality infrastructure services and Transfield Services is well positioned to provide these to create better roads, more effective transport systems and more reliable and sustainable water and power supplies.”

In North America, US Maintenance achieved significant growth, expanded its customer base and moved into new product areas. Overall, EBITA for US Maintenance was up

23.4 per cent on the prior year. TIMEC’s results exceeded expectations for the first four months. The outlook for TIMEC is positive, driven by its clients’ higher demand for refined products and increasing environmental compliance requirements.

“Today we commence work on our major contract with Canadian oil sands company, Suncor Energy. This key, long term contract will contribute positively to our results for many years to come. There is a significant market interest in the services provided by our joint venture, Flint Transfield Services, which is confident of expanding its customer base.”

With the establishment of TSI, net debt of Transfield Services has reduced from $517 million as at 30 June 2006 to $338 million as at 30 June 2007, with funding headroom of approximately $260 million. In July 2007, Transfield Services completed the establishment of a new $750 million debt facility with eight leading domestic and international banks.

Mr Watson thanked his team for their contribution to this landmark year: “Transfield Services continues to deliver outstanding results with another record breaking year. This sustained outstanding performance is a testament to the strength and skills of our most important asset – our people.”

“Transfield Services is establishing itself as a global services company and employs more than 23,000 people, with more than half of our team outside Australia.”

“Ensuring the safety of our people is our number one priority, and our absolute aim is ‘no injuries to anyone at any time’. This year we have again improved on our safety record.”

“Our outlook is very positive, based on a good growth prospects from our foothold in growing markets, a strong balance sheet, rigorous company-wide risk management, a low risk profile, and a strong, skilled and dedicated team.”

Transfield Services is a leading global provider of operations, maintenance, and asset and project management services. Transfield Services has more than 23,000 employees working across Australia, New Zealand, the United States, the United Arab Emirates, Qatar, South East Asia, India and Canada. The Company operates across diverse industries including: mining and process; hydrocarbons; roads; rail and public transport; water; power; telecommunications; facilities management; and defence. Transfield Services Limited is publicly listed in Australia and included in the S&P/ASX 200 with a turnover of more than $2.4 billion. www.transfieldservices.com

PERFORMANCE HIGLIGHTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2007
AUSTRALIA
Facilities Management

New Contract

• Telstra – new contract through joint venture company Sentinar over five years. Contract includes facilities management and telepower services to Telstra’s network buildings and telecommunications assets. The 50/50 joint venture brings together Transfield Services’ facilities management expertise and Silcar’s telepower services.

Retained Contracts

• Department of Defence, WA – retained Garrison Support Services contract in Western Australia over five years. Contract includes accommodation and hospitality services, range and training area management, recreational facility operations, inventory services, equipment repair and transport.
• Department of Defence, Victoria – retained Garrison Support Services contract in Victoria over five years. Contract includes services to all Army, Air Force and Naval installations, including the in-house provision of hospitality and catering, building on a seven-year relationship with Defence Victoria.

Transport Infrastructure
New Contracts

• Genesee & Wyoming Australia Pty Ltd (GWA) – new contract to refurbish and upgrade 394 kilometres of railway lines on the Eyre Peninsula in South Australia over two years. Transfield Services and MVM Rail, in an unincorporated joint venture called TRAX, commenced work in May 2007.
• VicRoads – new roads maintenance contract over three years. Transfield Services, through acquisition of Road Development & Construction Pty Ltd (RDC) provides general road repairs, landscaping and tree maintenance, sign and guidepost maintenance, pavement rehabilitation and incident responses in designated regions and networks.
• Rail Infrastructure Corporation – new contract for the inspection and maintenance of 320 road bridges over rail lines throughout NSW over six years. Work involves the inspection, repair and management of major upgrades for all wood, steel and concrete bridges.

Extended Contracts

• Australian Rail Track Corporation – extended contract in South Australia over two years. Services include routine maintenance of over 2,700 kilometres of standard gauge track and associated civil infrastructure assets.
• Roads and Traffic Authority (RTA) NSW – retained contract until 2010. Services include maintaining pavements, delineation, guard barriers, landscaped areas, bridges, traffic signals and drainage systems for the NSW RTA in the North East region of Sydney. We also provide a 24-hour, 7-day emergency response service.
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Acquisition
• Road Development & Construction Pty Ltd (RDC) – RDC is an established roads maintenance service provider in regional Victoria and has established term maintenance contracts and general bridge and civil construction contracts.

Mining, Process and Hydrocarbons
New Contract
• Australian Paper Maryvale – new contract in Gippsland, Victoria to provide services to Maryvale Paper Mill, due for completion in the first half of 2008. Including mechanical and electrical capital works, the contract involves a major upgrade to improve the operational efficiency and environmental performance of the plant. The scope of the project includes all civil, mechanical, instrumentation and electrical work associated with the upgrade on the site.

Renewed Contract
• Shell Refining Pty Ltd – renewed contract providing maintenance services at the Clyde Refinery and Gore Bay Terminal over five years. Services include repair, predictive and preventative maintenance. Transfield Services and its Alliance Partners have provided a range of services including General Maintenance, Project and Tanks Management, Shutdown Execution and other Support Services at the refinery and terminal since March 1999.

Acquisition
• In February 2007, Transfield Services acquired ABB, an industrial maintenance services company, which has a workforce of 161 people in the Illawarra, Botany and Newcastle regions.

Power and Telecommunications
New Contracts
• Horizon Power – new four year contract to provide asset management, maintenance and capital works in the Esperance region of Western Australia.
• Griffin Energy – new ten-year contract through joint venture company Transfield Worley Power Services to provide operations and maintenance services to BlueWaters Power Station at Collie in Western Australia.
• Ericsson – provided resources to Ericsson to support the rollout of the new Telstra "Next G" Mobile Broadband Network, including erection of the mobile antennae and other infrastructure hardware, completed during the year.
• Transend Networks– two contracts secured to deliver a line uprating project and a project to design and build a substation and transmission line.
• Delta Electricity – new four-year contract through joint venture company Transfield Worley Power Services for maintenance support.
• Western Power – new contracts to construct a substation and provide brownfield distribution and transmission services.
• Bell Bay Power Station – new contract through joint venture company Transfield Worley Power Services, to provide operations and maintenance services.
• SP AusNet – new contracts providing major transmission and distribution capital works.
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Acquisitions
• In March 2007, Transfield Services acquired Feeder Contract Field Services Pty Ltd in Victoria and NJ Construction WA Pty Ltd in Western Australia. These acquisitions enhanced our transmission and distribution services with more than 50 technically-skilled high voltage employees.

Water
New Contracts
• Water Corporation – new five-year contract signed in August 2006 in Western Australia in joint venture with Sinclair Knight Merz (SKM). Contract services include design and upgrade works to pump stations and pipeline infrastructure as part of a managing contractor partnership.
• Queensland Government – new contract to manage the scope, design, construction and commissioning of the eastern section of the Western Corridor Water Pipeline project from Luggage Point and Gibson Island to Bundamba, valued over two years as part of an alliance with AJ Lucas, GHD, Sunwater and McCalls.
• Southern Regional Water Pipeline Company – new contract to operate and maintain the southern regional water pipeline from Wivenhoe Dam to the Gold Coast in Queensland, valued over five years as part of an alliance with United Utilities.

Joint Ventures
• TransDev TSL – joint venture with TransDev formed in September 2006, incorporating existing public transport businesses of Yarra Trams, Brisbane Ferries and Shorelink buses, to pursue opportunities in the Australian and New Zealand public transport sector.

− Yarra Trams – Performed strongly over the period, with farebox revenue growth of 13.6 per cent, driven by patronage growth and fare evasion reduction.
− Brisbane Ferries – Performed strongly over the period with 99 per cent on-time running.

• Five D – joint venture with CSFP won new contracts with Flight Centre over two years; Orix over two years; Optus over one year; and AFP over five years.

NEW ZEALAND
Transmission and Distribution
Retained Contract
• Auckland City Council – retained/extended street lighting contract.
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Facilities Management
Retained Contracts
• New Zealand Defence Force – retained/extended two-year contract at the Waiouru army base providing a comprehensive range of maintenance services.
• Franklin District Council – retained contract continuing to provide routine maintenance services to Franklin District Council’s road network in New Zealand, including pavement, drainage structure, bridge, park and recreation maintenance services.

Infrastructure
Retained Contract
• South Wairarapa District Council – retained contract operating the South Wairarapa District Council’s Ultra Filtration Plant. Services include managing all operational processes from water coming into the plant from the Waiohine River through to pumping it out for supply to the towns. Maintenance services and a range of water reticulation services around the region are also provided.

Acquisitions
• N Forsyth Ltd – acquisition of a roading contracting company in Lower Hutt, New Zealand, enhancing our roading and water network contracting services in the Wellington region, acquired in December 2006.
• AC Blackmore Ltd – acquisition of a roading contracting company in Auckland, New Zealand, which enhances our roading contracting services in the Auckland region, acquired in April 2007.
• Kapiti Roadmakers & Contractors Ltd – acquisition of a roading contracting company’s assets in Paraparaumu, New Zealand, which enhances our roading contracting services on the Kapiti Coast, acquired in March 2007.

INTERNATIONAL
North America
New Contracts
• Suncor Energy – new asset management services contract in Canadian oil sands valued at A$1.1 billion over five years through joint venture company Flint Transfield Services.
• Florida Department of Transport – Transfield Services is part of the successful design, construct, operate and maintain consortium with Babcock & Brown and Bouygues Travaux Publics for the Miami Tunnel. This is the first major public-private-partnership to be undertaken in Miami.

Acquisitions
• US Maintenance – acquired in July 2006 to enter the North American facilities management industry. Extended contracts with Wal-Mart, Toys ‘R’ Us, Target and Bank of America.
• TIMEC – acquired in February 2007. A leading provider of industrial maintenance and specialty services to the hydrocarbon, petrochemical and winery industries in the United
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States, TIMEC works with 39 of the 150 refineries and has long-standing, low risk contracts with blue-chip clients including Conoco Phillips, Chevron, ExxonMobil and Shell.

Joint Venture
• FT Services – joint venture with Flint Energy Services formed in August 2006 to pursue opportunities in the Canadian hydrocarbon and power market, including the oil sands market, winning a major contract with Suncor Energy in February 2007.

Gulf Region
New Contracts
• Abu Dhabi Onshore Company for Oil Exploration (ADCO) – Transfield-Emdad Services LLC, a joint venture with Emdad L.L.C. in UAE, won a long-term contract in late 2006 with Emdad to operate and maintain an Oil Based Mud (OBM) treatment plant near Habshan in Abu Dhabi.
• Gasco – In early 2007, Transfield-Emdad successfully completed its first major shutdown over two months at the GASCO refinery at Ruwais in UAE. The multi million-dollar shutdown was completed ahead of time and involved the mobilisation of more than 880 people.

Acquisition
• Hofincons – in India, a leading provider of asset management and maintenance services to clients across India and the Gulf Region, acquired in October 2006. They have successfully leveraged off our presence in Canada and the Middle East to gain valuable contracts providing a variety of asset management and other services.

Asia
New Contract
• Offshore Oil Engineering Company Ltd – new contract with a Chinese Government entity through Broadspectrum. Contract services include instrumentation, electrical, mechanical and communications commissioning support services for the construction and installation of oil platforms in the Peng Lai field, Bohai Bay, in north east China.

INFRASTRUCTURE INVESTMENTS
• The Transfield Services Infrastructure Fund was successfully listed on June 2007.
• During the year, Transfield Services increased its stake in Loy Yang A Power Station by acquiring a further 4.71 per cent from Mitsui & Company for a total acquisition and associated cost of $64.4 million, increasing its ownership to 14.03 per cent of the power station and mine. The power station is among the lowest marginal cost generators in Australia and as a quality base load generator with low fuel cost, modern design and comparative efficiencies, the plant is operated as a ‘must run’ power producer. This interest is now an asset of the Transfield Services Infrastructure Fund.

ENDS

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