Q3 2015 trading update presentation ASX - Coffey · Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013...

Coffey International LimitedQ3 FY2015 Trading Update April 29, 2015

Agenda

01 Q3 FY2015 performance

02 Strategic update

229 April 2015Coffey Q3 FY2015 trading update

John DouglasManaging Director

Urs MeyerhansFinance Director

Q3 FY2015 Resilience in tough markets


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• Net debt remains tightly controlled

• International Development – Revenues within expectations – Contract awards starting to flow through

• Project Management profitable

• Geoservices– Property revenue strong, Transport Infrastructure is prospective, Mining

and Oil & Gas revenue declining – Order book yet to reflect Transport Infrastructure opportunities

Net debt remains tightly controlled at $61m


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Net debt by quarter

• Each 1c decrease/increase in the AUD against the USD increases/decreases debt by $0.34m• AUD devaluation increased total debt by $2m from December 14 to March15

Netdebt

$61m

Net debt$m 121 123 78 78 66 75 58 69 58 61 61 61 48 65 61 61

$40m $40m $40m

$121m $123m

$78m $78m $66m

$75m $58m

$69m $58m $61m $61m $61m

$48m

$25m $21m $21m

$30m $32m

$37m $29m $38m

$29m $51m $23m

$31m $32m $26m $22m $29m

$18m $30m $32m

$151m $155m

$115m$107m $104m $104m

$109m

$92m $89m $93m$87m $83m

$77m$82m

$91m $93m

Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15

Corporate bonds Net bank debt Cash - Held largely in International Development

International Development Revenues within expectations


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International Development quarterly total revenue by region

41%

40%

19%

• Specialist Training Australia (STA) contributed $3.9m of revenue in Q3 FY2014Business was sold in June 2014

International Development Contract awards starting to flow through


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$222m

$168m $167m $165m$178m

$213m

$173m

$231m$213m

$198m $206m

Jun 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15

International Development 12 month contracted total revenue

International Development 12 month contracted total revenue by quarter

• Contracted revenue beyond 12 months has doubled since March 2014 to over $200m • The value of contracts short listed or in negotiation remains at high levels


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Project Management quarterly total revenue

Project Management Steady flow of Government work

$12m $12m

$11m$12m

$10m

$8m$7m $8m

$7m$8m

$6m $6m$7m $6m $6m

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

Private Government

83%

17%


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Geoservices quarterly fee revenue by industry

Geoservices - Property strong, Transport Infrastructure prospective, Mining and Oil & Gas down

• Transport Infrastructure in Q2 FY2015 included $1.3m of fee revenue for the now terminated East West Link project

$67m $66m $62m

$71m $68m $70m

$60m $60m $58m

$53m

$46m

$52m $53m $49m

$43m

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

Transport Infrastructure Property Infrastructure Oil & Gas Mining Other

26%

14%

22%

30%

8%

Geoservices - order book still subdued, yet to reflectTransport Infrastructure opportunities


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Geoservices 12 month contracted fee revenue

$101m$108m

$117m

$100m$94m

$101m $98m$90m $93m

$86m$80m

Jun 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15

Geoservices 12 month contracted fee revenue

• December 2014 contains $3m of East West Link revenue removed by March 2015 following termination of the project.

Agenda


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01 Q3 FY2015 performance

02 Strategic update− Market conditions− Key impacts− Strategy from here− A different perspective on Geoservices− FY2015 earnings guidance

• Modest profit in a difficult market

• Underpinned by a focus on the fundamentals− Reduced debt, diversified its source and lengthened its tenure− Building capability while matching capacity to markets− Strong client and revenue focus

• Significant client market volatility since November 2014− Infrastructure delays in VIC & QLD – NSW remains very prospective − Oil price lower− Iron ore price down, copper price down sharply, gold price stabilising − A$ down – very helpful for profits if not the balance sheet− Property market remains strong− Some pressure on the foreign aid budget in Australia− Bipartisan support for 0.7% gross national index (GNI) target in UK

• Management committed and responsive − Good diversification− Strong technical reputation− Well positioned in some key markets− Track record in responding quickly to changes


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H1 FY2015 financial results as reported February 2015Tough market, responsive management

A clearer outlook now for Transport Infrastructure in Australia

• Political stability in NSW confirmed– Clear result– Mandate for financing mechanism– Ministerial stability

• Queensland showing some cause for optimism– Passage of time has been helpful– No anti-infrastructure rhetoric

• Victoria seems to have resolved East-West link– Implications for subcontractors like Coffey still unclear− Resolving this issue will allow a focus on new infrastructure


12

Energy and resources face increasing pressure


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Source: www.indexmundi.com

Key impacts for Coffey from energy and resource weakness

• Cost pressures in Canada, particularly our Calgary business due to oil sands exposure

• Australia is seeing the end of an investment cycle in gas

• A shift in focus from finding and developing new resources to production at established projects. Pressure on early stage mining services, particularly:– Exploration management – Resource delineation– Feasibility studies

• Cost pressures in WA and Brazil due to their significant exposure to iron ore


14

Energy and resources weakness impacting the broader Australian economy

• Planning for a sustained period of more modest growth in the Australian economy

• Exchange rate in USD 70 cent range is helpful to a business that is still a net exporter of Australian talent


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Source: www.xe.com

Strategy from here Well diversified revenues matter


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Q3 YTD FY2015 total revenue by sector

54% International Development• Performing well, stable margins

• Longer term contracts withthree creditworthy governments

• Variabilised employment model

28% Infrastructure (transport and property)• Positive outlook

• Serviced by our Geoservices and Project Management businesses

15% Energy & Resources (oil & gas and mining)• Under pressure

• Serviced only by our Geoservices business3%

Strategy from here Business priorities

• International Development – Continue to service three politically aligned governments– On-going market share growth from the US and the UK Governments

• Project Management– Continue to grow profitability– Growth available in existing geographies

• Geoservices – Focus on Transport and Property Infrastructure– Exploit opportunities on east coast of Australia, New Zealand and the UK– Draw on our reputation for managing geotechnical risk and creating value

• Geoservices – Reduce costs and risk in Energy and Resources– Refocus mining strategy on operations– Reduce exposure to high cost oil and gas projects– Restructure to match capacity to markets– Maximise investment in spatial data infrastructure


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Strategy from here Benefits from Geoservices restructure

Restructure costs$m

Non-cash goodwill impairment

$m

Annualised benefit$m

H2 FY2015 restructuring 6 – 8 12 7 - 9

H2 FY2015 Geoservices restructuring:• Reduce exposure to high cost oil projects• Focus our mining strategy on operations• Match capacity to markets• Streamline management structure

A different perspective on Geoservices


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$8.2m

$14.5m $16.4m

$13.2m $12.1m

$5.0m

$7.5m

$3.8m $2.9m

H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015

Geoservices underlying EBITDA

$6.0m

($3.1m)

H1 2015 H1 2015

Geoservices GeoservicesANZ International


2008 2014 2015

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2008 BRW Client Choice Awards – Best consulting engineering firm

2014 BRW Client Choice Awards – Best consulting engineering firm (revenue greater than $200m)2014 BRW Client Choice Awards – Best provider to the primary industry sector2015 Financial Review Client Choice Awards – Best Queensland firm2015 Finalist – Best consulting engineering firm (revenue greater than $200m)2015 Financial Review Client Choice Awards – Best provider to the construction & infrastructure sector

Geoservices ANZ Client metrics strong and improving

EBITDA¹$m

Restructure cost$m

Annualised benefit$m

Proforma EBITDA$m

Geoservices ANZ 12 2 – 3 2 – 3 14 – 15

Geoservices International (6.2) 4 – 5 5 – 6 breakeven

Total Geoservices 5.8 6 – 8 7 – 9 14 – 15


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Restructuring will positively impact Geoservices profitability

1 EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisaton) run rate: H1 FY2015 times 2

FY2014$m

FY2015 guidance$m

Underlying EBITDA¹ 26.2 18 – 20

Restructuring costs² 2.5 6 – 8

Non-cash goodwill impairment 0.0 12

Reported EBITDA³ 23.7 (0 – 2)

NPAT 4.4 (16 - 18)


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Full year FY2015 earnings guidance

1 Underlying EBITDA - EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation) before restructure costs and impairment.2 EBITDA Earnings Before Interest, Tax, Depreciation & Amortisation.³ In H1 FY2015 Geoservices implemented headcount reductions of 70 in response to our ongoing alignment of capacity to client demand.

The cost of this headcount reduction was not reported as a restructure cost.4 NPAT - Net Profit After Tax

4

• No final dividend will be paid for FY2015

In summary

• Remain committed to a portfolio of well diversified revenues

• Responding to significantly changed market environments– Transport & Property Infrastructure positive– Increasing pressures Energy & Resources

• Expect to deliver an immediate profit uplift from cost reduction initiatives


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Questions

Disclaimer

The material in this presentation is a summary of the results of Coffey International Limited (Coffey) for the 3 months ended 31 March 2015 and an update on Coffey’s activities and is current at the date of preparation, 29 April 2015. Further details are provided in the Company’s full year accounts and results announcement released on 11 August 2014. and its half year accounts and results announcement released on 9 February 2015.

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 andassumptions 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 reliedupon 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.


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