Photo by James Ball - www.dlscape.com Coffey International Limited FY2013 Half Year Results Presentation 11 February 2013
Agenda Financial Performance Business Performance Outlook Presenters John Douglas Managing Director Urs Meyerhans Finance Director COF FY2013 Half Year Results Presentation 2
Turnaround is on track - firm foundations for growth Significant financial de-risking Revenues showing resilience despite mining market pressures Further reduction of debt Competitive refinancing completed Evidence of cultural change Strong safety disciplines Working capital at historic lows Managers are more commercial and responsive to market conditions Staff turnover at target Firm foundations in place for profitable growth COF FY2013 Half Year Results Presentation 3
FINANCIAL PERFORMANCE
Key metrics achieved despite some soft market conditions H1 2012 H2 2012 H1 2013 ($m) ($m) ($m) Total revenue 334.9 343.2 359.8 Fee revenue 212.5 209.0 213.2 Fee revenue from continuing businesses 207.2 207.5 213.2 Underlying EBITDA 1 23.0 16.7 17.8 Underlying EBITDA from continuing businesses 20.4 16.4 17.8 Restructuring costs 0.0 (1.2) (1.9) Impairment 0.0 (37.4) 0.0 Vendor earn-out 0.0 (1.6) 0.0 EBITDA 2 23.0 (23.5) 15.9 EBIT 18.6 (28.2) 11.3 NPAT attributable to members of Coffey International Limited 4.6 (39.1) 3.7 NPAT from continuing businesses 2.4 (39.4) 3.7 EPS (Basic - cents per share) 2.8 (16.3) 1.5 ¹ Underlying EBITDA EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) before restructuring costs, impairment, and vendor earn-out ² EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation COF FY2013 Half Year Results Presentation Financial Performance 5
Resilient profits COF FY2013 Half Year Results Presentation Financial Performance 6
Positive operating cash flow $11.7m $10.8m $11.0m $13.7m $4.2m $4.6m H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 ($9.5m) COF FY2013 Half Year Results Presentation Financial Performance 7
Continuous debt reduction $121.2m Net Debt/ EBITDA = 3.75 Net Debt/ EBITDA $77.5m = 1.95 $66.0m Net Debt/ EBITDA = 1.66 $58.1m Net Debt/ EBITDA = 1.68 $32.3m $39.7m* $39.7m $34.5m* Net Debt Underlying EBITDA Net Debt Underlying EBITDA Net Debt Underlying EBITDA Net Debt Underlying EBITDA H2 2011 H1 2012 H2 2012 H1 2013 * Half year Underlying EBITDA is calculated as the sum of the prior 12 months EBITDA. COF FY2013 Half Year Results Presentation Financial Performance 8
Improved working capital position Components of change in net debt Net Debt at 30 Jun 2012 EBITDA WC Reduction WC Sales Growth Balance Sheet Movement Interest & Tax Capital Spend Net FX & Other Net Debt at 31 Dec 2012 12.2 (0.6) $'m 15.9 (5.5) (8.3) (3.9) (1.9) (58.1) (66.0) Net Operating Cash Inflow $13.7m COF FY2013 Half Year Results Presentation Financial Performance 9
Debt facility extended for 3 years Competitive process Term 3 years until February 2016 $149.0m Facility Limit Improved balance sheet enabled facility limit reduction to $127m $90.9m* Headroom Commercially sound financial undertakings Pricing benefits from decreasing leverage and decreased limits $58.1m Net Debt 31 December 2012 * Facility refinance in H2 reduces $90.9m headroom by $22m, reducing future borrowing costs. COF FY2013 Half Year Results Presentation Financial Performance 10
Reducing interest and tax H1 2012 H2 2012 H1 2013 ($m) ($m) ($m) EBITDA 23.0 (23.5) 15.9 Depreciation and amortisation (4.4) (4.7) (4.6) Interest (9.4) (5.4) (5.3) Profit Before Taxation and Minority Interests 9.2 (33.6) 6.0 Taxation (4.4) (5.4) (2.2) Minority interests (0.2) (0.1) (0.1) NPAT 4.6 (39.1) 3.7 EPS (Basic - cents per share) 2.8 (16.3) 1.5 No interim dividend will be declared. The Board is committed to the reinstatement of dividends and will review dividends at the 2013 full year. COF FY2013 Half Year Results Presentation Financial Performance 11
Reduced interest costs Interest Expense $9.4m $1.6m $1.4m $5.4m $1.1m $5.3m $1.2m* * Interest rate swap entered into in 2008 matures February 2014 $6.4m $4.3m $4.1m H1 2012 H2 2012 H1 2013 Accounting Fixed Rate > Market* Market Rate Interest Expense** **Facility refinancing secured reduction in borrowing costs COF FY2013 Half Year Results Presentation Financial Performance 12
EBITDA by segment 2011 2012 2013 H1 H2 FY H1 H2 FY H1 ($m) ($m) ($m) ($m) ($m) ($m) ($m) Fee Revenue 222.6 201.0 423.6 212.5 209.0 421.5 213.2 Geosciences 117.9 117.0 234.9 132.4 132.6 265.0 137.9 International Development 67.5 54.8 122.3 54.3 57.1 111.4 59.9 Project Management 26.5 20.4 46.9 19.3 17.5 36.8 15.4 Other 10.7 8.9 19.6 6.5 1.8 8.3 0.0 Underlying EBITDA 15.6 16.7 32.3 23.0 16.7 39.7 17.8 Geosciences 8.2 14.5 22.7 16.3 13.2 29.5 12.1 International Development 10.4 5.0 15.4 8.0 6.8 14.8 8.9 Project Management 0.7 (0.6) 0.1 0.0 (0.3) (0.3) (0.8) Other (0.2) 1.3 1.0 2.4 (0.5) 1.9 0.0 Corporate (3.5) (3.5) (7.0) (3.7) (2.5) (6.2) (2.4) EBITDA Margin % of Fee Revenue 7% 8% 8% 11% 8% 9% 8% Geosciences 7% 12% 10% 12% 10% 11% 9% International Development¹ 15% 9% 13% 15% 12% 13% 15% Project Management 3% (3%) 0% 0% (2%) (1%) (5%) ¹International Development H1 FY13 EBITDA / total revenue margin 5.8% Note: A 4 year history is included in the Appendix COF FY2013 Half Year Results Presentation Financial Performance 13
BUSINESS PERFORMANCE
Safety is our first priority COF FY2013 Half Year Results Presentation Business Performance 15
Safety discipline remains strong 7.0 Coffey LTIFR* (12 month rolling average) June 2010 to December 2012 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 LTIFR LTIFR External Safety Benchmark *LTIFR = Lost Time Injury Frequency Rate COF FY2013 Half Year Results Presentation Business Performance 16
Continuing to build the management team New Appointment COF FY2013 Half Year Results Presentation Business Performance 17
Staff turnover at long term target 13% Target Note: Excludes redundancies, retirement, business sales/closures COF FY2013 Half Year Results Presentation Business Performance 18
Turnaround is on track firm foundations for profitable growth Significant progress to date - financial and cultural de-risking Be the best again Safety focus and discipline in place Organisational restructure and overhead cost out completed Portfolio review completed Significant balance sheet repair Equity raising and asset sales Improved working capital management Strong cash flow performance Second refinancing completed Strengthened management team with improved commercial discipline and market responsiveness Staff turnover down to target Strong emphasis on Geosciences profitability and margin improvement Continue to build organisational capability and quality Focus our people externally Consolidate our brands Build a differentiated market position Embed new behaviours with all employees Invest in staff development Deliver organic growth within the existing geographic footprint Increase non-australian revenues Continue to strengthen the balance sheet while returning to dividend payment COF FY2013 Half Year Results Presentation Business Performance 19
Our businesses Fee Revenue H1 2013 EBITDA Breakdown H1 2013 Geosciences 65% International Development* 28% Project Management 7% Geosciences 58% International Development 42% Project Management 0% $213.2m $17.8m Employee Numbers June 2011 June 2012 December 2012 Geosciences 1,650 1,950 1,920 International Development** 1,600 1,600 1,700 Project Management 200 200 170 Functional shared services 330 290 260 Corporate 20 20 20 * International Development is 42% of Coffey s total revenue ** Includes project specific contractors (1,300 contractors) COF FY2013 Half Year Results Presentation Business Performance 20
Geosciences - resilient revenues Fee Revenue H1 2013 by Region Half Yearly Fee Revenue by Sector $137.9m APAC 86% Americas 10% Africa 2% Europe & Middle East 2% $ m 160 140 120 100 80 60 40 20 - $132.4m $132.6m $137.9m $117.9m $117.0m $46.3m $51.9m $49.5m $38.6m $39.8m $37.5m $39.3m $37.4m $42.0m $42.9m $26.8m $26.8m $28.1m $15.6m $19.4m $13.2m $11.7m $22.9m $20.8m $27.3m H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 Infrastructure Mining Oil & Gas Other * * This also contains work in the Commercial Property sector of $13.6m COF FY2013 Half Year Results Presentation Business Performance 21
Geosciences - margin upside Geoscience Half Yearly Underlying EBITDA Margin 15% 16% Target 8% 9% 7% 12% 12% 10% 9% H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 COF FY2013 Half Year Results Presentation Business Performance 22
International Development diverse long term revenues Operating out of three hubs: Australia, USA and UK low risk exposure Most work is with three major aid donors: AusAID, USAID and DFID Stable business with more than 180 diverse projects in over 70 countries in the developing world Many programs of a 3-5 year tenure Good success in winning work and delivering contracts in strong Australian market Meeting challenges in the US market by bidding on, and winning, more diverse projects Gaining market share in Europe and performing ahead of expectations Regional operations working together on bids to optimise project delivery and impact Clients include: COF FY2013 Half Year Results Presentation Business Performance 23
$ million International Development growth in the US, opportunity in the UK International Development Fee Revenue ($AUD) by Region 90.0 80.0 70.0 $71.6m Impact of Tatweer Project $82.0m $80.3m $71.2m $67.5m 60.0 $54.8m $54.2m $57.1m $59.9m 50.0 40.0 30.0 USA Australia UK Other 20.0 10.0 0.0 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 COF FY2013 Half Year Results Presentation Business Performance 24
Project Management business right sized for current market Fee Revenue H1 2013 by Region $15.4m Australia & New Zealand 89% Africa 11% $ m 30 25 20 15 10 5 - $26.5m $10.8m $15.7m Half Yearly Fee Revenue by Sector $20.4m $9.6m $10.8m $19.3m $9.1m $10.2m $17.5m $12.3m $5.2m $15.4m $10.8m $4.6m H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 Government Private ANZ and African operations completely exited the Middle East Fixed or time based fees no development or equity risk Some impact of the Government stimulus work completing, particularly in VIC Yet to see any private sector property cycle recovery H1 2013 15% reduction in headcount Carefully managed to broadly deliver a break-even result for 2013 COF FY2013 Half Year Results Presentation Business Performance 25
OUTLOOK
Key businesses exposed to good diversified sectors Geosciences International Development Project Management Infrastructure Mining Oil & Gas Government Aid Government Property Private Property 12 Month Contracted Fee Revenue at June 2012 12 Month Contracted Fee Revenue at December 2012 $101m $90m $20m $108m $72m $18m Reduced International Development order book comes largely from the US and reflects recent uncertainty around the election and sequestration COF FY2013 Half Year Results Presentation Outlook 27
Outlook Revenues showing resilience despite a soft mining market Diversified revenue streams and industry exposure Expecting a stronger profit in H2 2013 International Development showing steady reliable growth and consistent margins Anticipate that Projects will broadly break-even despite a tough market Geosciences faces attractive areas of growth outside mining (order book is strong). H1 restructuring will show benefits in H2 Refinancing will continue to show benefits in H2 Ongoing improvement to NPAT expected in H2 2013 No interim dividend will be declared. The Board is committed to the reinstatement of dividends and will review dividends at the 2013 full year. COF FY2013 Half Year Results Presentation Outlook 28
Turnaround is on track firm foundations for growth Significant financial de-risking Revenues showing resilience despite mining market pressures Further reduction of debt Competitive refinancing completed Evidence of cultural change Strong safety disciplines Working capital at historic lows Managers are more commercial and responsive to market conditions Staff turnover at target Firm foundations in place for profitable growth COF FY2013 Half Year Results Presentation Outlook 29
APPENDIX
P&L by Segment 2009 2010 2011 2012 2013 H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) Fee Revenue 261.2 249.3 510.5 241.0 234.7 475.7 222.6 201.0 423.6 212.5 209.0 421.5 213.2 Geosciences 138.1 118.1 256.2 126.7 111.9 238.5 117.9 117.0 234.9 132.4 132.6 265.0 137.9 International Development 71.6 80.3 151.9 71.2 82.0 153.2 67.5 54.8 122.3 54.3 57.1 111.4 59.9 Project Management 37.3 37.9 75.2 32.9 28.4 61.3 26.5 20.4 46.9 19.3 17.5 36.8 15.4 Other 14.2 13.0 27.2 10.3 12.4 22.7 10.7 8.9 19.6 6.5 1.8 8.3 0.0 Underlying EBITDA 34.9 20.5 55.4 30.5 17.5 47.9 15.6 16.7 32.3 23.0 16.7 39.7 17.8 Geosciences 20.9 9.2 30.1 19.8 9.7 29.5 8.2 14.5 22.7 16.3 13.2 29.5 12.1 International Development 9.9 9.3 19.2 10.0 10.4 20.5 10.4 5.0 15.4 8.0 6.8 14.8 8.9 Project Management 5.5 4.7 10.1 4.1 0.4 4.5 0.7 (0.6) 0.1 0.0 (0.3) (0.3) (0.8) Other 2.3 1.1 3.5 0.1 0.4 0.5 (0.2) 1.3 1.0 2.4 (0.5) 1.9 0.0 Corporate (3.8) (3.8) (7.6) (3.6) (3.5) (7.1) (3.5) (3.5) (7.0) (3.7) (2.5) (6.2) (2.4) Underlying EBITDA Margin % of Fee Revenue 13% 8% 11% 13% 7% 10% 7% 8% 8% 11% 8% 9% 8% Geosciences 15% 8% 12% 16% 9% 12% 7% 12% 10% 12% 10% 11% 9% International Development¹ 14% 12% 13% 14% 13% 13% 15% 9% 13% 15% 12% 13% 15% Project Management 15% 12% 13% 12% 2% 7% 3% (3%) 0% 0% (2%) (1%) (5%) ¹International Development H1 FY13 EBITDA / total revenue margin 5.8% COF FY2013 Half Year Results Presentation 31
Stable Balance Sheet H1 2012 H2 2012 H1 2013 ($m) ($m) ($m) Cash & equivalents 37.1 37.7 50.8 Current assets (excl. cash) 159.9 148.4 149.3 Non-current assets (excl. cash) 189.2 152.7 151.2 Total assets 386.2 338.8 351.3 Current borrowings 5.6 0.1 0.2 Other current liabilities 94.8 89.6 95.9 Non-current borrowings 109.0 103.6 108.7 Other non-current liabilities 12.5 12.1 9.7 Net assets 164.3 133.4 136.8 Net debt to (Equity + Net debt) 32% 33% 30% COF FY2013 Half Year Results Presentation 32
Financial Results Reconciliation H1 2012 H1 2013 Continuing Discontinuing Total Continuing Discontinuing Total ($m) ($m) ($m) ($m) ($m) ($m) Net profit/(loss) for the year 2.4 2.2 4.6 3.7-3.7 Add back: Minority interests 0.2 0.2 0.1 0.1 Net interest expense 9.4-9.4 5.3-5.3 Income tax (expense)/benefit 3.9 0.4 4.4 2.2-2.2 Depreciation and amortisation 4.4 0.1 4.5 4.6-4.6 EBITDA 20.3 2.7 23.0 15.9-15.9 Add back: Restructuring costs - - - 1.9-1.9 Underlying EBITDA 1 20.3 2.7 23.0 17.8-17.8 COF FY2013 Half Year Results Presentation 33
Disclaimer The material in this presentation is a summary of the Half Year Results of Coffey International Limited (Coffey) for the 6 months ended 31 December 2012 and an update on Coffey s activities and is current at the date of preparation, 11 February 2013. Further details are provided in the Company s full year accounts and results announcement released on 11 February 2013. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the presentation ( forward-looking statements ). Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Coffey and its Directors) which may cause the actual results or performance of Coffey to be materially different from any future results or performance expressed or implied by such forward-looking statements. This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Due care and consideration should be undertaken when considering and analysing Coffey s financial performance. All references to dollars are to Australian Dollars unless otherwise stated. To the maximum extent permitted by law, neither Coffey nor its related corporations, Directors, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it. This presentation should be read in conjunction with other publicly available material. Further information including historical results and a description of the activities of Coffey is available on our website, coffey.com Photos owned by Coffey or Coffey employees and permission is provided. COF FY2013 Half Year Results Presentation 34