Coffey International Limited Annual General Meeting · Annual General Meeting 4 November 2014....

Coffey International Limited Annual General Meeting4 November 2014

Welcome

John Mulcahy Chairman

Our Board of Directors

34 November 2014Coffey 2014 AGM Presentation

From top left to right: Susan Oliver, Chair - HR & Remuneration Committee, Guy Cowan, Chair – Risk & Audit Committee,Leeanne Bond, Non-executive Director, Stuart Black AM, Non-executive Director

From bottom left to right: Urs Meyerhans – Finance Director, John Douglas – Managing Director and John Mulcahy - Chairman

Proceedings

Chairman’s address 01Managing Director’s address 02General questions 03Business of the meeting 04Close 05

4

John DouglasManaging Director

Presenters

John MulcahyChairman


01Chairman’s address

John Mulcahy

Performance overview


Resilient operating cash flow


Dividend considerations

• Board and management committed to reducing debt to increase financial stability in uncertain economic conditions

• Further debt reduction will deliver greater value to shareholders over the long term

• No final dividend for FY2014

• Board will review its position on dividends in the current financial year

• The Board is actively reviewing options to minimise the potential loss of franking credits available to shareholders resulting from the planned reduction in the corporate tax rate effective July 1 2015


Executive remuneration aligned to company performance

• Executive remuneration structure balanced between fixed remuneration, short term incentives and long term incentives

• Structured to ensure management focus on strong and sustainable business performance

• Short-term incentive payments restricted to two executives who exceeded financial objectives, paid only 50% of entitlements

• Board determined no other executives would be awarded short-term payments for FY2014

• 100% forfeiture of long-term incentives as performance hurdles not achieved

• No increase in fixed remuneration for Key Management Personnel, other than one market adjustment


Board changes

• Retirement of Stuart Black AM at the close of the meeting, after 12 years’ service

• Re-election of John Mulcahy and Leeanne Bond

• Board size reduced to six Directors

• Reduced Board comprises appropriate balance of skills and experience for Coffey at this time


10

Conclusion

• Business fundamentals established and delivered meaningful change

• Uncertain and challenging market conditions continuing

• Still more work to do

• Focused on delivering shareholder value


02Managing Director’s address

John Douglas1.Review of FY20142.Update on Q1 FY2015

Safety and security is our first priority

13

Photo Credit: D3/ACSOR


Strong safety discipline

14

Coffey lost time injury frequency rate - LTIFR (12 month rolling average)June 2010 to September 2014

0.64


0.43

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Jun-

10

Sep-

10

Dec

-10

Mar

-11

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

LTIFR LTIFR External Safety Benchmark

Improved profitability


Total revenue $628.1m (8.8%)

Underlying EBITDA 1 $26.2m (9.1%)

EBITDA 2 $23.7m 27.4%

Net profit after tax $4.4m

Operating cashflow $20.9m 15.7%

Net debt $48.1m 17.1%

Note: Percentage movements are full year 2014 compared to full year 2013.1 Underlying EBITDA - EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) before restructure costs. Please refer to the EBITDA reconciliation in the appendix.2 EBITDA - EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation).

Fundamentals delivered

• Safety disciplines strengthened

• Portfolio reshaped

• Liabilities reduced

• Strong focus on cost accountability

• Staff numbers managed to build capability and match capacity to markets

• Management team strengthened

• Ongoing cultural change around six behaviours: Ingenuity, Delivery, Collaboration, Integrity, Respect, and Intelligent risk


16

Client focus, sales focus

• Significant market and client research in FY2012

• Rebranded in FY2013 to reduce complexity

• Digital launch in FY2014

• H2 FY2014 launched a company-wide pursuits management system

• Refocused on five key industries with stronger and more targeted account management

• Better selecting and managing our professional sales staff

• Currently running a significant sales step up program for our key technical staff

• Focused on delivering great results for our clients and clients’ clients


Pleasing signs of improved client focus

18

In February, this year, our clients voted the firm as winners of two prestigious BRW Client Choice Awards –‘Best Consulting Engineering Firm (revenue greater than $200 million)’ and ‘Best Provider to the Primary Industry Sector’.


5 industries

3 businesses

Integrated businesses and diversified revenue streams

19

PropertyMiningOil & GasTransportInfrastructure

Project Management Geoservices


International Development

International Development

Diversified industries - revenues and profits from secure sources


20

International Development revenues come from donor governments in the US, Australia, the UK and Europe (particularly Scandinavia)

Diversified revenues


55%

5%

40%

$367.2m

$313.4m $334.9m $343.2m

$359.8m $328.6m $324.0m $304.1m

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

Half yearly total revenue by business

Geoservices Project Management International Development Discontinued businesses

22

People – managing capacity while building capability

*International Development head count includes 1,600 contracted employees - up from 1,300 in June 2013


420 350 340 310 280 220 170 170

1,650 1,600 1,610 1,600 1,700 1,700 1,990 1,970

260200 200 200 170 150

120 120

1,6801,650 1,800 1,950 1,920

1,700 1,530 1,570

4,0103,800

3,950 4,060 4,0703,770 3,810 3,830

Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14

Head count

Geoservices Project Management International Development* Corporate & Functional shared services

Recognising our talents


23

Keri Hartog won the Australian Contaminated Land Consultants Association Young Achiever

Award

Harry Poulos was elected as a Foreign Associate to the US National Academy of Engineering

Jonathan Moss in the UK was awarded an Officer of the Order of the British Empire (OBE) for his work as part of the Provincial Reconstruction

Team in Helmand, Afghanistan.

Michael Blackam won the Australian Water Association Best Journal Paper 2013-14

Mickey Davachi in Canada was named the 2014 Calgary Geotechnical Society Engineer of the Year.

Geoservices – focused on fee revenue


81%

19%

$159.1m $157.3m$172.3m $170.2m

$189.0m

$159.9m

$141.1m$123.5m

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

Geoservices half yearly total revenue

Reimbursable revenue Fee revenue

Geoservices – a tough year in Australia - growth internationally


Year on year:• Geoservices fee revenues down 19%• Australian fee revenues down 29%• International fee revenues up 25%

70%

30%

$117.9m $117.0m

$132.4m $132.6m $137.9m

$120.0m

$110.4m

$97.9m

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

Geoservices fee revenue by geography

Europe & Middle East Africa Americas New Zealand Australia

Geoservices – diversified industry approach


$117.9m $117.0m

$132.4m $132.6m$137.9m

$120.0m$110.4m

$97.9m

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

Geoservices fee revenue by industry

Transport infrastructure Mining Oil & Gas Property Other

17%

24%

15%

9%

35%

Geoservices – margins remain a challenge

27

7%

12% 12%

10%9%

4%

7%

4%

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

Geoservices margins (Underlying EBITDA/fee revenue)


• H2 FY2014 underlying EBITDA margin of 4% in line with H2 FY2013, however the comparative half included restructuring costs of $5.8m

• Taking the restructuring costs into account, reported EBITDA margins improved from -1.0% in H2 FY2013 to the 4.0% reported in H2 FY2014

Geoservices – impact on margins


28

Impact Response

Testing business saw a revenue gap as large oil & gas projects were completed before road projects took up the gap

Strengthened management

Project cancellations in Australia reduced demand for Environmental & Social Impact Assessment work

Careful reduction in staff numbers. Have recently had some important project wins

Exploration work in Africa reduced significantly

Drilling business restructured – costs both reduced and variablised

Increased debt collection difficulties with junior mining clients in particular

Tight control of WIP and receivables

Increased discounting in the Australian market in particular

Tightly controlled delegations for discounting. Improved targeting of clients and better selling

Project Management – a return to profitability


$38.0m

$24.1m $24.1m$22.4m

$17.9m$14.7m $14.7m $12.4m

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

Project Management half yearly total revenue by client

Private Government

70%

30%

$0.7m

($0.6m) $0.0m ($0.3m) ($0.8m) ($1.0m)

$0.3m$0.5m

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

Project Management underlying EBITDA

International Development – growing revenue


30

International Development – stable margins

31

7%

4%

6%

5%

6% 6% 6% 6%

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

International Development margins (Underlying EBITDA/total revenue)


2. Q1 update

First quarter update

Balance sheet• Debt down 11% on prior September• Bond issue provides diversification and increased tenure

Geoservices• Revenues stabilising with limited mining exposure • Geoservices margins in line with H2 FY2014• 12 month forward contracted fee revenue also stabilising

Project Management• Project Management revenue in line with previous quarter – business remains profitable

International Development• International Development revenues down as lower margin work completed • Positive outlook


Continuing to reduce debt


$104.2m $123.1m

$77.5m $78.3m$66.0m

$75.3m$58.1m

$68.8m$58.0m $60.6m $61.4m $61.0m

$48.1m $40.0m

$29.6m $32.2m

$37.1m $28.7m$37.7m

$28.6m$50.8m $23.1m

$30.7m $32.3m $25.9m $22.3m$28.9m

$17.3m

$150.8m$155.3m

$114.6m$107.0m $103.7m $103.9m

$108.9m

$91.9m $88.7m$92.9m

$87.3m$83.3m

$77.0m$82.4m

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

Net Bank Debt Cash - held largely in International Development Corporate Bonds

$25.1m

Debt by quarter

Each 1c devaluation of the AUD against the USD increases our debt by $0.3m – Q1 FY2014 on Q1 FY2015 impact $2.1m increase

Bond matures in September 2019, banking facility being renegotiated and extended to September 2017

11% reduction

Geoservices – revenues stabilising with limited mining exposure


Geoservice quarterly fee revenue by sector

$4.1m $4.1m $3.6m $2.3m $5.6m $5.7m$1.8m

$7.9m$3.5m $3.5m $3.5m $5.0m $4.2m

$7.4m $7.3m $7.6m $7.5m$8.0m $8.1m

$6.7m

$5.6m$7.0m $6.8m $6.9m

$7.8m $8.0m

$7.8m $7.8m $7.4m $12.1m$13.3m $13.5m

$10.4m

$11.7m $14.3m $12.0m $11.9m$11.8m $14.2m

$21.1m $20.9m $19.8m

$23.0m$18.6m $18.9m

$18.2m$11.9m $11.5m

$11.5m $8.0m$8.3m $6.9m

$26.1m $25.8m$23.6m

$25.8m $22.9m $23.4m

$22.4m $23.4m $21.5m$18.8m

$15.6m$19.0m $19.8m

$66.5m $65.9m$62.0m

$70.6m $68.4m $69.6m

$59.5m $60.5m $57.8m

$52.6m

$45.9m

$51.9m $53.1m

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

Transport infrastructure Mining Oil & Gas Property Other

Geoservices contracted fee revenue stable


36

$101.0m$104.5m

$108.0m

$116.5m

$100.0m$94.5m

$101.0m$98.0m

$90.0m$93.4m

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

Geoservices 12 month contracted fee revenue

International Development – revenues down as lower margin work completed


37

International Development total revenue by client

$5.9m $6.0m $6.2m $6.5m

$5.5m$8.6m

$8.9m$8.8m

$10.9m $13.1m $12.5m $11.8m

$12.7m

$17.9m $21.3m $27.0m $27.9m

$25.9m

$33.0m$29.3m

$31.8m

$25.8m$28.6m $25.6m $32.5m

$26.8m

$24.8m$29.5m

$28.8m $32.8m $19.0m

$16.8m

$16.2m$19.3m

$35.4m$32.4m $30.7m

$29.6m

$32.2m

$60.0m$68.7m $72.0m

$76.4m$71.1m

$81.8m$72.8m

$81.2m $82.5m$85.7m

$82.1m$86.1m

$74.1m

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

US Government clients Aust Government clientsUK/Europe Government clients Other clients - including Development BanksClients of discontinued businesses (including STA)

International Development – positive outlook


38

$221.7m

$198.7m

$167.9m $167.0m $164.9m$178.0m

$212.7m

$173.2m

$230.7m

$212.8m

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

International Development 12 month contracted total revenue

The value of contracted work has declined since June 2014, reflecting the completion of several projects. However, our client procurement cycles have a number of new projects at the proposal and negotiation stage, all of which are scheduled to be awarded through the remainder of FY2015.

03General questions

How to ask questions

1. Show your yellow voting card or red non-voting card

2. Wait for the attendant to bring the microphone

3. State your name then ask your questions


04Business of the meeting

Formal resolutions

Voting Procedure


42

Item 1. Financial Report

To receive and consider the Financial Report of the Company and the consolidated entity, and the Reports of the Directors and Auditor for the financial year ended 30 June 2014.

Ordinary business


43

Item 2. Election of Directors

Ordinary business


44

Item 2a. Re-election of Dr John Mulcahy AM

To consider and, if thought fit, to pass the following as an ordinary resolution:

“That Dr John Mulcahy, a Director who retires at the close of the Meeting in accordance with the Company’s Constitution and being eligible, is re-elected as a Director of the Company”.

Ordinary business


Item 2a. Re-election of John Mulcahy

Proxies have been received in respect of this resolution as follows:

% Number

96.30 For 84,924,020

1.57 Open* 1,382,223

2.13 Against 1,880,296

Abstain 136,945

Ordinary business


46

* Includes 1,109,210 votes directed to the Chairman

Resolution 2a.

Re-election of Dr John Mulcahy

Mark your voting card


47

Item 2b. Re-election of Ms Leeanne Bond


“That Ms Leeanne Bond, a Director who voluntarily retires at the close of the Meeting in accordance with the Company’s Constitution and being eligible, is re-elected as a Director of the Company.”

Ordinary business


Item 2b. Re-election of Leeanne Bond

Proxies have been received in respect of this resolution as follows:% Number

97.44 For 85,969,615

1.58 Open* 1,391,503

0.98 Against 862,985

Abstain 99,381

Ordinary business


49


Resolution 2b.

Re-election of Ms Leeanne Bond



50

Item 3. Adoption of the Remuneration Report

Ordinary business


51

Item 3. Adoption of the Remuneration Report

To consider and, if thought fit, to pass as an ordinary resolution:

“That the Remuneration Report for the financial year ended 30 June 2014, as set out in the Directors’ Report section of the Annual Report, be adopted”.

(Note – the vote on this resolution is advisory only and does not bind the Directors or the Company).

Ordinary business


52

Item 3. Adoption of Remuneration Report


95.47 For 83,521,489

1.56 Open* 1,365,865

2.97 Against 2,594,687

Abstain 865,582

Ordinary business


53


Resolution 3.

Adoption of the Remuneration Report



54

Item 4. Long term incentive grants to Executive Directors

Ordinary business


55

Item 4a. Long term incentive grant to Mr John Douglas, Managing Director


“That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of 1,672,940 fully paid ordinary shares to the Trustee of the Coffey Rewards Share Plan for the benefit of Mr John Douglas, Managing Director on the terms described in the Explanatory Notes to the Notice convening the Meeting”.

Special business


56

Item 4a. Long term incentive grant to Mr John Douglas, Managing Director

Proxies have been received in respect of this resolution as follows:

% Number

93.63 For 82,604,658

1.58 Open* 1,390,370

4.79 Against 4,227,089

Abstain 138,272

Special business


57


Resolution 4a.

Long term incentive grant to Mr John Douglas



58

Item 4b. Long term incentive grant to Mr Urs Meyerhans, Finance Director


“That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of 862,610 fully paid ordinary shares to the Trustee of the Coffey Rewards Share Plan for the benefit of Mr Urs Meyerhans, Finance Director on the terms described in the Explanatory Notes to the Notice convening the Meeting”.

Special business


59

Item 4b. Long term incentive grant to Mr Urs Meyerhans, Finance Director


93.63 For 82,602,239

1.58 Open* 1,392,789

4.79 Against 4,227,089

Abstain 138,272

Special business


60


Resolution 4b.

Long term incentive grant to Mr Urs Meyerhans



61

Please deposit voting cards in ballot boxes

Poll has now closed

05Close

Disclaimer

The material in this presentation is a summary of the results of Coffey International Limited (Coffey) for the 12 months ended 30 June 2014 and an update on Coffey’s activities and is current at the date of preparation, 4 November 2014. Further details are provided in the Company’s full year accounts and results announcement released on 11 August 2014.

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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Coffey International Limited Annual General Meeting · Annual General Meeting 4 November 2014....

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