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Coffey International Limited Full Year Results Year ending 30 June 2009

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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.

See also: Presentation, webcast and Appendix 4E

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


June 2008




Revenue from continuing operations




Fee Revenue




Revenue Reimbursables




Operating EBITDA (pre vendor earn-out and vendor share based payment expense)







Amortisation of intangibles



Vendor earn-out and vendor share-based payment expenses







Net interest expense



Profit before income tax




Income tax expense and minority interests



Net profit after income tax attributable to members




Profit after tax before amortisation and vendor share based payment expense




EPS before amortisation and vendor share-based payment expense (cps)




Basic EPS (cps)



Diluted EPS (cps)



Dividend per share (cps)




Net debt



Net debt to equity plus debt



Interest Cover (times)



Net Assets



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.

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


Operating EBITDA




% Change



% Change








International Development







Project Management







Unallocated expenses




Total Group








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.

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:




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).


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:




Vodacom Techno Centre and Foreshore

Capicol Zambezi Mall and Villas

Icon House in Ghana


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 throughout 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.

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 keep 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.


Investor and Media contacts:

Diana Krause, External Communications Manager, Coffey International Limited
P: (+61) (3) 9473 1300; M: (+61) 420 959 942; E: