letter to shareholders

29 October 2012

FY2012 financial results

responding to external factors by improving operational focus

Dear Shareholders,
The last year was marked by significant restructuring and setting a sound platform for the future of your Company. The result for the year ending 30 June 2012 has been unsatisfactory. An after tax loss of $5.9 million was incurred, which included an after tax loss of $4.6 million from discontinued operations, largely the closure of commercial construction.
Revenues from continuing operations were $226.4 million, an increase of 14% on the previous year. The result, while supported by growth in the mining and related sectors, was significantly affected by the high Australian dollar, lower commodity prices, and weakening conditions in the industrial sectors. This was emphasised early in 2012 by the termination of a major contract due to the closure of an aluminium smelter in the Hunter Valley, as well as significant negative economic impact on the steel and aluminium industries.
At last year's Annual General Meeting (AGM), we announced a shift in the company's strategic direction by withdrawing from the high-risk and low-return commercial construction market and focussing the business on maintenance, engineering and project management services with construction restricted primarily to mining infrastructure and selected utilities. This strategy has achieved a lower risk profile for the company that we expect to result in a more sustainable income stream going forward.
The Board and management team is resolutely committed to Thomas & Coffey providing maintenance services to existing and new customers. In particular, this includes servicing operation-critical equipment for our mining and industrial customers and offering practical solutions to their operational problems.
We understand that Shareholders are disappointed. We too are disappointed and acknowledge these results are unacceptable. We believe the company's strategic shift, improved operational focus, tight controls on support cost and improved risk/return profile have gone a long way to establishing a sound platform for the future.
FY2012 was characterised by difficult external economic conditions and market changes. The strong Australian dollar, lower commodity prices and weakening operating conditions in the industrial sectors, particularly steel and aluminium, have resulted in reduced business activity for heavy industries.

• ZERO HARM

• INTEGRITY

• CONTINUOUS IMPROVEMENT

• INDIVIDUAL ACCOUNTABILITY

• TEAMWORK

• OUR CUSTOMERS

long-term, value adding relationships with our customers

our people - united to face challenges

safety - journey to achieving

'Zero Harm'


Our withdrawal from the commercial construction market saw the closure of construction units in Sydney, Newcastle, Perth, Darwin, Brisbane and the prefabricated building business (also located in Brisbane) and, sadly, the loss of many talented and capable people. We have, where possible, redeployed operations people - based on their skills and expertise - to areas of the company where they can deliver maximum benefit.
Under our One Company strategy, we enhanced cooperation among the regions, working together to offer customers in all regions our broad range of expertise and experience. In the field and in our workshops, our people's team spirit has led to more inter-regional projects and the provision of consolidated services for new and existing customers.
We are concentrating on providing a wider range of services to our customers. Delivery of maintenance services based on our core competencies to our customer base enables us to grow long-term relationships built on trust and shared values.
Complementary project work, together with maintenance services, further strengthens relationships with our key customers. Understanding our customers' needs and consistent delivery of high quality value-added solutions are crucial to establishing our future as a business.
As a service-based business, people remain our most valuable asset. Rapidly changing external market conditions and the necessary responses made FY2012 a challenging year as we restructured the company to better carry out our strategy whilst retaining as many of our loyal, committed and highly-skilled team as possible.
Our management team has also been strengthened with the appointment of additional experienced managers who are complementing our excellent longer term team members.
The focus for our people in FY2013 continues to be on the basics - performance management, supervisory skills development and addressing competency gaps inhibiting employees from performing to their maximum potential, which should lead to further productivity gains.
All of these need to be supported by a very mean and lean "no frills" support structure, in Head Office and within each Region, with tight cost controls, and with particular emphasis on constantly achieving higher productivity levels in every corner of our business. This is also an area of high focus.
Thomas & Coffey continues to hold the safety of our people, customers and contractors as a core value. Zero Harm is the standard to which we strive and our customers expect.

• ZERO HARM

• INTEGRITY

• CONTINUOUS IMPROVEMENT

• INDIVIDUAL ACCOUNTABILITY

• TEAMWORK

• OUR CUSTOMERS



It is pleasing to report we achieved a 35% reduction in lost time injury frequency rates
(LTIFR) and a 35% reduction in total recordable injury frequency rates (TRIFR) in FY2012. These results can be largely attributed to a consistent focus on safety at all levels.

Lost Time Injury Frequency Rate



(LTIFR) in million hours

Total Recordable Injury Frequency Rate

(TRIFR) in million hours



resilience and adapting to change

outlook



Despite these achievements and improvements in safety outcomes, we still have more work to do in order to totally eliminate injuries.
In FY2013, our focus is to continually improve safety performance through the refinement and simplification of our systems and further improvement of training and communication methods.
This commitment has to be driven from the top, and will only be of value if all our people
"walk the talk" when it comes to safety!
Thomas & Coffey is a resilient company. During FY2012, we have seen our people 'get on with it', determined to keep doing better notwithstanding trying conditions. This culture enables us to collectively take stock of our strengths and overcome the ongoing challenges and changes - both internally and externally.
This resilience stems from our values of teamwork and continuous improvement as well as our commitment to achieve the optimum outcome for our customers. This is manifested in the disciplined approach we have towards our operations.
To achieve this, we will ensure that economies of scale are achieved in supporting our operations and combine back office services wherever possible. Keeping support costs very low as we improve business efficiency and maintain our vigour is critical to success.
The Board and Executive Team are committed to leading Thomas & Coffey to restored profitability and a position where we can recommence paying dividends soon.
The next six months will be challenging. The company and our customers face a multitude of external challenges including the volatility of mining commodity prices, a strong Australian

• ZERO HARM

• INTEGRITY

• CONTINUOUS IMPROVEMENT

• INDIVIDUAL ACCOUNTABILITY

• TEAMWORK

• OUR CUSTOMERS



dollar and variable demand for coal, steel and aluminium in the countries to which we export. In the short term, these are impacting activity levels, including key customers' maintenance expenditure.
We are confident that, in the medium term, our customers will increase their activity levels, strengthening ongoing demand for our specialised maintenance services. The growth prospects for the company in the long-term are strong.
We look forward to providing a market update at the AGM on 22 November.
In conclusion, we'd like to acknowledge and thank you, our Shareholders, for your continuing support and patience through a very tough period. We acknowledge that we have let you down and we are committed to restore the company to profitability.
We would also like to recognise the determination and commitment of the Board, Executive Team and all our wonderful employees and thank them for their ongoing support. We commend their hard work and dedication as well as their unwavering resolve to build a better Thomas & Coffey.
Yours faithfully

Robert Critchley Rex Comb
Chairman Managing Director

who we are

Thomas & Coffey is an ASX-listed company that employs around 1000 people in key industrial and mining centres throughout New South Wales and Queensland. We provide specialised maintenance and project delivery services to the mining, heavy industry, manufacturing and utilities sectors.

what we do

Our highly-skilled and competent workforce understand customers' operational needs and offer targeted solutions in the following areas:

• Industrial maintenance and trade services - including asset management and optimisation as well as preventative

maintenance activities such as shutdowns / down days, equipment servicing, machinery repair and inspection.

• Workshop services - including plant and equipment rebuild / repair, production of spares and consumables, fabrication, machining, welding, air-conditioning & refrigeration and electrical work.

• Project management and execution - including infrastructure, plant and facility construction, relocation and upgrade, civil and building works, major repair / installation and plant outages.


• ZERO HARM

• INTEGRITY

• CONTINUOUS IMPROVEMENT

• INDIVIDUAL ACCOUNTABILITY

• TEAMWORK

• OUR CUSTOMERS

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