Coffey International Limited ABN 16 003 835 112
Level 3, Tower 1, 495 Victoria Avenue Chatswood NSW 2067 Australia
19 August 2009
Company Announcements Office
Australian Stock Exchange Limited
Exchange Centre
Level 4, 20 Bridge Street
Sydney NSW 2000
Via e-lodgements: Sequence #468
Dear Sir / Madam
RE: RESULTS FOR THE YEAR ENDED 30 JUNE 2009
Please find attached the year end media results release in relation to the Company’s results for the year
ended 30 June 2009:
Yours faithfully
John E. Hartigan
Company Secretary
1
ASX & MEDIA RELEASE
19 August 2009
Coffey International Limited Full Year Results
Year ending 30 June 2009
1.
Highlights
Total revenue up 45% to $808.7m
Fee revenue up 36% to $510.4m
Operating EBITDA up 12% to $56.0m
NPAT up 7% to $16.4m
EPS up 4% to 14.5 cents per share
Improvement in working capital management from 76 days to 49 days
Fully franked final dividend of 4.5 cents per share
Total annual fully franked dividend of 13.0 cents per share
Funding capacity of $107m available to support growth plans.
The Directors of global professional services consultancy Coffey International Limited ((ASX:COF) (the Company))
today announced full year operating earnings before interest, tax, depreciation, amortisation and vendor earn-out
and vendor share-based payment expense (“Operating EBITDA”) of $56.0 million for the year ended 30 June 2009,
up 12% on the previous year. (Vendor earn-out and share-based payment expense relates to the current year
expense for vendor cash paid performance earn-outs and the expensing of the fair value of shares issued to
vendors on acquisition that are tied to employment conditions.)
This result is within the Company’s guidance provided in June this year.
This result was achieved on a 36% increase in fee revenue to $510.4 million and a 45% increase in total revenue
to $808.7 million.
June 2009
$000
June 2008
$000
Change
%
Revenue from continuing operations
808,664
558,571
45%
Fee Revenue
510,371
376,558
36%
Revenue Reimbursables
298,293
182,013
64%
Operating EBITDA (pre vendor earn-out and vendor share based payment
expense)
55,983
49,767
12%
Depreciation
(8,563)
(6,525)
Amortisation of intangibles
(3,696)
(3,343)
Vendor earn-out and vendor share-based payment expenses
(2,639)
(4,851)
EBIT
41,085
35,048
17%
Net interest expense
(12,119)
(7,856)
Profit before income tax
28,966
27,192
7%
Income tax expense and minority interests
(12,548)
(11,885)
Net profit after income tax attributable to members
16,418
15,307
7%
Profit after tax before amortisation and vendor share based payment
expense
22,753
22,920
(1)%
EPS before amortisation and vendor share-based payment expense (cps)
20.1
20.8
(3)%
Basic EPS (cps)
14.5
13.9
Diluted EPS (cps)
13.3
13.0
Dividend per share (cps)
13.0
16.0
(19)%
Net debt
92,845
91,880
Net debt to equity plus debt
33%
32%
Interest Cover (times)
4.6
6.3
Net Assets
191,143
196,062
2
The reported Net Profit has increased 7% to $16.4 million, representing earnings of 14.5 cents per share. Earnings
per share prior to amortisation and vendor share-based payment expense was down 3% to 20.1 cents per share.
The Directors have declared a fully franked final dividend of 4.5 cents per share. This brings the total annual fully
franked dividend to 13 cents per share, compared with 16 cents the year before. The full year dividend represents
65% of earnings per share pre-amortisation and share-based payment expense, which is within the Company’s
policy of a 60 to 80% payout ratio.
The Directors have determined that the Company’s dividend reinvestment plan will be reinstated for this dividend
with a discount of 5%.
The record date for the final dividend is 16 October 2009 and it will be paid on 30 October 2009.
2. OVERVIEW COMMENTS
Managing Director Roger Olds said: Coffey has achieved a solid result during a year when the global financial
crisis (GFC) had a major impact on some of our client sectors. We have increased net profit after tax by 7% to
$16.4 million, and it is clear that the strategy we have pursued over the past five years to diversify across services,
sectors and geographies has proven to be effective, cushioning the effects of the GFC.
The 2008-09 financial year has been a story of two halves: the first half of the year resulted in the best Coffey had
ever recorded. While we saw a significant decline in the third quarter as a direct result of the GFC, we saw a solid
rebound in the fourth quarter, finishing with a strong month in June.
In March and April we acted decisively to reduce costs and increase operational efficiencies, gaining
annual cost
savings
of approximately $10 million.
This initiative triggered one-off costs of $2 million, mainly relating to
redundancy costs.
The Company undertook four (4) small acquisitions during the financial year to 30 June 2009.
These comprised a testing and laboratory business in New Zealand, a testing and laboratory business based in
Australia, a project management business in South Africa and an international development business based in
England. Each of these acquisitions strategically expanded our service offering and client base.
Our capital position remains strong. We have $107 million of cash and unused debt facilities available to support
our growth plans and these debt facilities are locked in until February 2012.
Eighteen months ago, we commenced a transformation programme, Platform For Growth. This
programme is
delivering benefits to the business and is now embedded within our company strategy.
As part of the transformation, we developed a new management structure and formed a new executive team, which
was finalised in February
2009. In recent months the team has
lead the development of
our next three year
strategic plan. This plan has been approved by the Board and internally communicated.
Consulting affected by the GFC but rebounded
After a strong first half in all parts of our Consulting Division, we experienced a decline in revenue in the third
quarter, particularly in the mining and commercial property sectors. This decline was largely due to projects being
cancelled or put on hold as capital supply became difficult to access and / or expensive for clients in these sectors.
Decisive action was undertaken to gain cost efficiencies, and the division’s performance rebounded throughout the
fourth quarter as a result of these savings and the announcement of government spending on infrastructure. Some
significant projects have also been secured with major LNG projects being developed in northern Australia and
Papua New Guinea. Consulting operating EBITDA declined 9% to $44.2 million.
International Development had a stellar performance
During the year we have seen the International Development Division surge ahead without any impact from the
GFC, as governments and development agencies around the globe have invested in developing nations. Coffey is
a global leader in this market and our exposure to some of the world’s major aid agencies, as well as our significant
track record of successful delivery, has seen us continue to win large, long-term projects in this sector. We also
secured a major five-year training contract with the Saudi Arabian National Guard. International Development
operating EBITDA jumped 203% to $25.2 million.
3
Project management has performed well despite a challenging environment
Our Project Management Division has performed well despite the significant drop in commercial property
development. The geographical diversification of the business and an increased focus on government spending
saw the business deliver a good portfolio of projects. It has managed the decline in Dubai well, through an early
focus on the Abu Dhabi market in advance of the decline. South Africa continued to grow and the acquisition of
BFH increased our market presence. Project Management Operating EBITDA contribution improved 26% to $13.4
million.
3. SEGMENT RESULTS
Segment Fee Revenue
$’000
Operating EBITDA
$’000
2009
2008
% Change
2009
2008
% Change
Consulting
283,271
251,326
13%
44,221
48,687
(9)%
International Development
151,948
65,462
132%
25,163
8,317
203%
Project Management
75,152
59,770
26%
13,440
10,706
26%
Unallocated expenses
(26,841)
(17,952)
50%
Total Group
510,371
376,558
36%
55,983
49,758
13%
4. COMMENTARY ON SEGMENT RESULTS
4.1 Consulting – Operating EBITDA $44.2 (FY08: $48.7)
With the exception of the third quarter, the Consulting Division had a good year. In the third quarter the impact of
the GFC became evident. The reduced availability
of capital
in the mining and commercial property sectors
affected several Coffey businesses. In addition, the delayed Australian Government infrastructure spending placed
many projects in limbo.
This lead to a drop in revenue and reduced utilisations.
The LNG spending provided a
positive counter to this, and the winning of several major projects helped support strengthening utilisations and
corresponding contribution in the fourth quarter. We also acted quickly to cut costs in response to the downturn in
revenues, and we have maintained this lower cost base as revenues have risen.
A selection of key projects undertaken by the specialist businesses within the Consulting Division are as follows:
Business
Projects
Coffey Environments
Clients in the resources, particularly mining, oil and gas, and property areas were the
key focus. Key wins during the year for Coffey Environments included asbestos risk
management with Department
of Defence, assessment and remediation work with
Mobil, occupational hygiene services with Rio Tinto and Chevron.
Coffey Geotechnics
Infrastructure and resources, particularly oil and gas were key sectors. Key wins
included
Northern Hume Alliance -
Tarcutta Bypass, Northwest Rail Link, Banora
Point upgrade site investigations. Ongoing large projects with the Wheatstone and
Gorgon LNG projects in Western Australia with Chevron and Inpex, and Kapit coffer
dam for Lihir Gold in PNG.
Coffey Information
Infrastructure and resources were key sectors. Key wins included
Tarcutta Bypass
Alliance, Coopernook to Herons Creek and Ballina Bypass Alliance plus
ongoing
work on Northern Hume Alliance.
Significant work was also conducted on the
Wheatstone and Gorgon projects.
4
Coffey Mining
Resources was a key sector although the business is expanding into other sectors in
Brazil. Key wins included
Waratah Coal in Australia, Votorantim Metals in Brazil,
Newcrest Limited in Indonesia, Citadel Resources in Saudi Arabia and TransAfrica in
West Africa.
Coffey Natural Systems
The key sector was resources. A number of key wins including LNG work with Shell
Australia, and
the
Exxon Mobil LNG project
in PNG. Other projects included the
Frieda River project with Xtrata Copper, both in Papua New Guinea, Daewoo SIA in
Myanmar and an APY Lands project with Coffey International Development.
Coffey Rail
The key sector was infrastructure but with some resource projects as well. Key wins
included Eltham Stabling and Signalling, VicTrack Level Crossings, Tasmanian Rail
Track Upgrade, and Regional Rail Corridor Studies.
Peron / Stratcorp
The key sector was infrastructure. Key wins included
Sunshine Coast University
Hospital; the Water Secure project following the development of the Western
Corridor Recycled Water Project and the Gold Coast Desalination Plant; a number of
Racing Victoria projects, and assisting Tasmania United Football Club’s bid for an A-
League team licence. Other projects included support to the Victorian Government’s
retender of the train and tram network project, and Skilled Stadium redevelopment in
Geelong.
4.2 International Development Business – Operating EBITA $25.2 (FY08: $8.3)
The International Development Division produced a significant result with Operating EBITDA up 203% to $25.2
million. This result was in part due to the contribution from the MSI business, based in the USA, but also reflects
increased contributions from the European and Australian businesses. The excellent year-on-year growth for
Coffey International Development reflects its position as a global leader in international development. The strategy
to gain exposure to some of the largest government aid agencies in the world has been particularly effective. In
particular the increased exposure to the UK’s Department for International Development (DFID), AusAID and
USAID. But we also secured increasing work from the UN, the European Commission, as well as the Asian
Development Bank and the World Bank. During the year we also secured our first major training contract via
Specialist Training Australia (STA) with a five-year contract for the Saudi Arabian National Guard. The International
Development Division has continued to expand its service offering, client exposure and contract employee network.
The Division made one acquisition this year with the purchase of The Evaluation Partnership, a small, highly
strategic acquisition which introduced complementary services and increased the Division’s access to the
European Union.
A selection of key projects includes:
Region
Project
Americas
•
A USAID project to support legal reforms in Mexico. This project will run for five years.
Asia Pacific
•
An AusAID project to support education sector development in Aceh. The project is the
second phase of the Education rehabilitation program that Coffey International
Development successfully ran from 2005-2008.
•
An AusAID project to improve maternal neonatal health in Indonesia.
Europe / Africa
•
A UK DFID contract to design a five-year post-conflict recovery programme for
Northern Uganda.
•
The International Finance Corporation, part of the World Bank Group has engaged
Coffey International Development to help banks improve small and medium enterprise
funding in African and Asian countries, ultimately helping to create jobs and stimulate
economic growth.
•
A project to improve rural livelihoods in India on behalf of DFID.
Middle East
•
A number of projects to improve quarantine and food security for Middle Eastern
governments.
•
STA has been successfully implementing specialist training on behalf of the Saudi
Arabian National Guard (SANG).
5
4.3 Project Management – Operating EBITDA $13.4 (FY08: $10.7)
The Project Management Division performed
well in a market where the commercial property sector was heavily
impacted by the GFC. Operating EBITDA improved 26% to $13.4 million.
The GFC caused a sharp downturn in the commercial and retail property market in the second and third quarter
and the reduced access to capital resulted in a number of projects being put on hold. While the Division saw some
corresponding decline in performance, the strength of having a broad geographic footprint spanning Africa, the
Middle East, Australia, and New Zealand paid off and the Division performed well overall. The Australian operation
secured a number of major government contracts in defence, education and housing. Coffey Projects won work
which is part of the Australian Government’s infrastructure stimulus packages, to implement the “Building the
Education Revolution” in Western Australia, Queensland, Victoria and the Northern Territory. The Division also won
a major project with the Department of Defence to manage the introduction of a new air combat capability
(AIR6000) that will meet Australia's needs to 2030 and beyond.
Operations in New Zealand, Africa and the Middle East have equally seen private and institutional developers
withdraw from the market but have managed to continue to source work from other sectors.
Coffey Projects registered in Singapore during the financial year and is expanding to better service the Marina Bay
Sands project, a major commercial development stretching across 40 acres. While this project is being managed
from Singapore the opportunity arose from our investment in South African Bovell, Freeman and Holley, the one
acquisition made by the Project Management Division during the financial year.
A selection of key projects includes:
Region
Project
Africa
•
Vodacom Techno Centre and Foreshore
•
Capicol Zambezi Mall and Villas
•
Icon House in Ghana
Australia
•
Building the Education Revolution projects in Western Australia,
Queensland, Victoria and Northern Territory
•
AIR6000 project for Department of Defence
•
NSW Housing Stimulus packages
•
Wheatstone LNG project
New Zealand
•
Waikato Hospital Redevelopment, due for completion in 2013
•
Christchurch International Airport integrated terminal
•
Britomart Precinct, a major commercial development in Auckland
•
Auckland Rail DART 1 and 2 – upgrading and enhancement of
critical rail infrastructure
Middle East
•
Abu Dhabi Center for Housing and Service Facilities Development
•
Umm Al Quwain Hospital for the Ministry of Public Works.
4.4 Unallocated expenses – $26.8 (FY08: $18.0)
Unallocated expenses comprise certain operating costs which are managed centrally rather than being charged
back to the businesses. Unallocated expenses include Finance, Systems, People and Culture, Corporate
Development, and Business Development, as well as the governance and operational costs of the public company
itself.
During the year the Company appointed key group executives as part of the new Executive Management
Team. Costs associated with the recruitment and remuneration of these executives contributed to the
increase. Costs were also incurred as a result of the transformation programme developed by the Company. This
investment has significantly increased our capacity to grow the Company over the next three years, and beyond. It
will also allow us to drive cost efficiencies throughtout the Company.
By their nature these costs will increase in total value as the business grows. However, we continue to manage the
increases in line with the Company’s needs, and growth plans.
6
5. OUTLOOK
The 2009 financial year was impacted in the Consulting and Project Management Divisions by the GFC during the
third quarter, but was cushioned by the International Development Division which was not affected. Management
reacted swiftly to the downturn, reducing headcount where necessary and creating cost efficiencies equivalent to
$10 million per annum. This, combined with strong project wins, saw the fourth quarter rebound. The economic
outlook is generally seen to be improving but the speed of the
recovery is uncertain. The current mood is one of
cautious optimism. We will continue to monitor the situation month by month and act accordingly.
The Company has, and continues, to restructure its management framework to ensure the Company is agile and
able to rapidly change to meet market demands. The Executive Management Team and Board have been actively
planning the next three years of the Company
strategy and have
developed
a new strategic plan to meet the
specific needs of the Company and ensure it is well-equipped to meet the challenges facing our clients. Most areas
of the business continue to perform well, the International Development Division in particular, and we are confident
that we have a strong plan in place to kepp our performance improving.
The new three-year strategy has identified seven strategic imperatives:
A united Coffey team executing the strategy
Develop a culture of ‘One Coffey’
Be agile, innovative and aspirational
Grow organically
Leverage existing equity and debt capacity
Create more efficiency to enhance profitability, and
Deliver improvement in working capital and cash flow.
As we celebrate our 50th
anniversary, the Company is poised to progress the next phase of its growth journey,
launching global Coffey. We will focus primarily on organic growth across the four regions we have now defined for
our business (Asia Pacific, the Americas, Europe and the Middle East, and Africa). We will utilise our existing cash
and debt facility to fund this growth. Improvements in working capital management will remain a focus to limit the
increase in debt and borrowing costs. The business fundamentals are strong, and we are confident that we are well
positioned to take advantage of the recovery in the global economy.
Roger Olds
Managing Director
19 August 2009
-ends-
Investor and Media contacts:
Diana Krause, External Communications Manager, Coffey International Limited
P: (+61) (3) 9473 1300; M: (+61) 420 959 942; E: diana_krause@coffey.com
About Coffey
Coffey International Limited (ASX:COF) has been operating for 50 years, and is part of the S&P/ASX 300. We have a range of
specialist businesses working in the social and physical infrastructure markets, and collectively, we aim to achieve our vision: to
be global specialists solving emerging challenges to improve the lives of communities.
Around the world, we are providing services at every stage of the infrastructure lifecycle – starting with planning and financing
the project, through development and resolving the technical challenges to the management of resources, timelines and
budgets. The cycle continues as we use our specialist knowledge to ensure objectives continue to be met in the long term and
infrastructure is appropriately maintained.
Our work involves a wide range of built assets – like roads, buildings, gas pipelines, mines, and sporting facilities – just about
everything that is required to meet the demands of a growing world population, rapid urbanisation and heightened
environmental sustainability awareness.
Through our expertise, we are also enabling government and aid agencies to strengthen local communities, increasing quality of
life and living standards. We develop mechanisms and manage projects across a range of social infrastructure, including
economic development, education and training and health.
We have over 4,000 people working on projects in more than 80 countries and permanent offices throughout the Americas,
Africa, Asia Pacific, Europe and the Middle East.
Visit coffey.com for more information.
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NEWS 
