Gresham Mining & Infrastructure Services Quarterly

After a break earlier this year, we are pleased to present Edition 21 of the Gresham Mining & Infrastructure Services Quarterly (GMISQ), a snapshot of the performance, news and trends across the resources (including oil & gas) and infrastructure services sectors. In this edition, we review the sector performance for the nine months ending 30 September 2018. Following a strong 2017, the Gresham Mining and Infrastructure Services Index (GMISI) has continued to advance in the year to date, increasing by c.7% relative to the broader market’s c.3% improvement. The increase was driven by the strong share price appreciation of a range of the mid-large size constituents, with Seven Group, WorleyParsons, ALS, Emeco and Service Stream all recording significant gains. However, there has been variability in market performance across the group, highlighted by more than half of the 50 companies recording share price falls. The most dramatic loss of value was seen by RCR Tomlinson, which recently undertook a deeply discounted entitlement offer following cost overruns at a major solar project. The FY18 reporting season was generally positive, with the majority of constituents achieving double digit revenue and EBITDA growth for the period. Analysts are forecasting similar growth over the next two financial years. The positive outlook is reflected in sector valuation multiples, which continue to be above the long term average. In this Edition’s Quarterly Focus, we recap on the improving conditions in the mining sector that are contributing to the performance of services companies. In particular, recent data illustrates that there has been increases in exploration spending as well as a number of new mining projects which will support order books across a range of businesses. Private M&A has been active during the year, with the most significant transaction being Ausdrill’s announced acquisition of hard-rock underground mining specialist Barminco at an enterprise value of c.$700m. The merger of SRG and GCS has been the only public deal announced to date in 2018.

Editorial Team

(1) The Gresham Mining and Infrastructure Services Index is a market capitalisation weighted index comprising 50 mining and infrastructure services companies selected by Gresham at the date of Chris Branston Tom Waddell David Burton this report. [email protected] [email protected] [email protected]

Edition 21 Gresham Advisory Partners Ltd is a leading Australian mergers and acquisitions/corporate advisory 1 October 2018 business and one of Australia’s largest and highest ranking independent corporate advisors. Share Price Movements

GMISI CONSTITUENTS1 LEADERS & LAGGARDS (SHARE PRICE)1

Leaders Laggers Ranks Market Cap (A$m) Share Company price Sep Dec 30 Sep 18 31 Dec 17 Δ %

1 1 CIMIC Group Ltd. (ASX:CIM) 16,654 16,683 -0% 2 3 Seven Group Holdings Ltd. (ASX:SVW) 7,675 4,845 48% 3 2 Orica Ltd. (ASX:ORI) 6,458 6,845 -6% 4 6 WorleyParsons Ltd. (ASX:WOR) 5,577 3,916 42% 5 4 Downer EDI Ltd. (ASX:DOW) 4,692 4,121 14% 6 7 ALS Ltd. (ASX:ALQ) 4,385 3,501 28% 7 5 Mineral Resources Ltd. (ASX:MIN) 2,984 3,964 -25% 8 9 Spotless Group Holdings Ltd. (ASX:SPO) 1,532 1,273 20% 9 8 Monadelphous Group Ltd. (ASX:MND) 1,513 1,633 -7% 10 12 Emeco Holdings Ltd. (ASX:EHL) 1,097 704 40% 11 10 Ausdrill Ltd. (ASX:ASL) 942 948 -30% 12 14 NRW Holdings Ltd. (ASX:NWH) 777 584 33% 13 16 Service Stream Ltd. (ASX:SSM) 650 488 35% 14 15 Macmahon Holdings Ltd. (ASX:MAH) 560 496 13% 15 11 Cardno Ltd. (ASX:CDD) 537 710 -21% PERFORMANCE RELATIVE TO S&P 200 INDICES1 16 18 Imdex Ltd. (ASX:IMD) 440 386 13% 17 17 MACA Ltd. (ASX:MLD) 326 451 -28% 18 26 SRG Global Ltd. (ASX:GCS) 308 192 -23% 19 23 Alliance Aviation Services Ltd. (ASX:AQZ) 307 225 36% 20 13 RCR Tomlinson Ltd. (ASX:RCR) 286 661 -65% 21 20 AJ Lucas Group Ltd. (ASX:AJL) 278 243 -9% 22 27 Pacific Energy Ltd. (ASX:PEA) 234 192 7% 23 29 Fleetwood Corp. Ltd. (ASX:FWD) 222 176 -16% 24 24 GR Engineering Services Ltd. (ASX:GNG) 216 221 -2% 25 21 MMA Offshore Ltd. (ASX:MRM) 210 240 -13% 26 28 Southern Cross Electrical Engineering Ltd. (ASX:SXE) 167 179 -8% 27 25 Lycopodium Ltd. (ASX:LYL) 167 195 -14% 28 19 Boart Longyear Ltd. (ASX:BLY) 158 263 -40% 29 36 Mastermyne Group Ltd. (ASX:MYE) 155 82 89% 30 22 Decmil Group Ltd. (ASX:DCG) 155 226 -41% 31 31 RPMGlobal Holdings Ltd. (ASX:RUL) 147 156 -7% 32 32 Austin Engineering Ltd. (ASX:ANG) 133 150 -12% 33 34 Watpac Ltd. (ASX:WTP) 126 122 3% PERFORMANCE OVER TIME 34 30 BSA Ltd. (ASX:BSA) 119 159 -25% 35 33 Boom Logistics Ltd. (ASX:BOL) 104 123 -15% 36 37 Mitchell Services Ltd. (ASX:MSV) 85 76 11% 37 39 Veris Ltd. (ASX:VRS) 76 59 17% 38 38 Veem Ltd. (ASX:VEE) 72 70 2% 39 n/a Primero Group Ltd. (ASX:PGX) 63 n/a n/a 40 40 Swick Mining Services Ltd. (ASX:SWK) 53 59 -10% 41 42 Tempo Australia Ltd. (ASX:TPP) 48 58 -17% 42 41 Saunders International Ltd. (ASX:SND) 44 59 -25% 43 44 Matrix Composites & Engineering Ltd. (ASX:MCE) 42 51 -18% 44 47 Valmec Ltd. (ASX:VMX) 33 21 2% 45 43 Neptune Marine Services Ltd. (ASX:NMS) 28 55 -49% 46 46 XRF Scientific Ltd. (ASX:XRF) 23 27 -15% 47 48 Laserbond Ltd. (ASX:LBL) 16 14 17% 48 49 Resource Development Group Ltd. (ASX:RDG) 15 11 35% 49 45 LogiCamms Ltd. (ASX:LCM) 14 29 -50% 50 50 VDM Group Ltd. (ASX:VMG) 12 5 100%

Notes: (1) Performance measured over the period 31-Dec-17 to 30-Sep-18 (inclusive). Source: FactSet, IRESS. 2

2 FY2018 Results Summary

FY2018 results were generally positive, with more than half of index constituents reporting double digit revenue and EBITDA growth. Balance sheets across the sector are relatively conservative.

REVENUE GROWTH (FY17-18)

EBITDA GROWTH (FY17-18)

EBITDA MARGINS (FY18)

NET DEBT / ENTERPRISE VALUE

Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)

Notes: (1) Only companies with consensus earnings forecasts are included in charts. Source: FactSet. 3

3 Forecast Earning & Profitability

Analysts are forecasting a continuation of recent growth over FY19-20, with nearly all companies expected to achieve increases in earnings over the next two years, driven by strong revenue growth as well as margin expansion.

FORECAST REVENUE GROWTH (FY18-20F CAGR)

FORECAST EBITDA GROWTH (FY18-20F CAGR)

EBITDA MARGINS (FY19F)

Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)

Notes: (1) Only companies with consensus earnings forecasts are included in charts. Source: FactSet. 4

4 Valuation Multiples

While there has been some downward trending in sector valuation multiples in 2018 as analyst earnings expectations have been revised, multiples generally remain strong. The median GMISI constituent FY19 forecast P/E multiple of c.14x sits materially above the longer term forward median multiple of c.10x, and nearly all large cap companies have a PE of greater than 15x.

1 YEAR FORWARD PRICE EARNINGS RATIO OVER TIME

PRICE EARNINGS RATIO (FY19F)

DIVIDEND YIELD (FY19F)

Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)

Notes: (1) Only companies with consensus earnings forecasts are included in charts; (2) Share prices are as at 30-Sep-18; (3) Earnings multiples are not calendarised; (4) Companies exhibiting negative multiples have been excluded from the above analysis. Source: FactSet. 5

5 Valuation Multiples (cont.)

Market expectations regarding growth are also reflected in enterprise value multiples, with the median FY19 EBIT and EBITDA multiples being 10.9x and 6.7x respectively. Nearly all companies are trading substantially above net asset value.

EV/EBIT (FY19F)

EV/EBITDA (FY19F)

PRICE/NTA

Companies trading at a discount to NTA

Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)

Notes: (1) Only companies with consensus earnings forecasts are included in charts; (2) Share prices are as at 30-Sep-18 (3) Earnings multiples are not calendarised; (4) Enterprise Value is based on market capitalisation plus minority interests and last reported net debt adjusted for capital raisings and acquisitions. (5) Companies exhibiting negative multiples have been excluded from the above analysis. Source: FactSet. 6

6 Contract Awards

The second half of FY2018 saw a reasonable amount of contract activity. There was a long list of small to medium size awards to the ASX-listed companies as well as a number of much larger contract wins, including MACA’s recent $700 million life-of-mine contract with Chinese-owned Carabella Resources.

MAJOR CONTRACT AWARDS

Date Commodity/ Company Client Project/Facility Location Services Value (A$m) Announced Sector

28-Sep-18 CIMIC Group Victorian Government Metro Tunnel VIC Design and construction 400 Infra.

Waikeria Corrections New Zealand 18-Sep-18 CIMIC Group and Treatment NZ Design and construction NZ$750 Infra. Government Facility PPP

17-Sep-18 CIMIC Group Antofagasta Minerals Encuentro Chile Mining services 420 Copper

Construction, logistics and 13-Sep-18 Decmil Group QGC Various QLD 150 Gas maintenance

10-Sep-18 CIMIC Group BHP Nickel West Leinster WA Mining services 190 Nickel

Underground mining 7-Sep-18 Ausdrill (Barminco) AngloGold Ashanti Sunrise Dam WA 700 Gold services

Millmerran Power 5-Sep-18 Downer EDI Commodore QLD Mining services 286 Coal Partners

Major Road Project 4-Sep-18 Decmil Group Drysdale Bypass VIC Design and construction 86 Infra. Authority

31-Aug-18 Maca Carabella Resources Bluff Coal QLD Mining services 700 Coal

29-Aug-18 GR Engineering Services Fosterville Gold Mine Fosterville Gold Mine VIC EPC 24 Gold

29-Aug-18 CIMIC Group Nevada Copper Pumpkin Hollow Nevada, USA EPC 118 Copper

North Luzon 28-Aug-18 CIMIC Group NLEX Corporation Philippines Construction 140 Infra. Expressway

North West Shelf 21-Aug-18 WorleyParsons Woodside Energy WA EPCM n/a Oil & Gas project

21-Aug-18 Pacific Energy Mineral Resources Wodgina WA EPC (power station) 30 Lithium

Zhejiang China Manufacturing 21-Aug-18 WorleyParsons Chevron Province, EPC n/a Oil & Gas Plant Project China

21-Aug-18 GR Engineering Services Saracen Carosue Dam WA EPC 18 Gold

Refinery Balikpapan, Project management 17-Aug-18 WorleyParsons PT Pertamina Development Master n/a Oil & Gas Indonesia consultancy Plan Underground mining 13-Aug-18 Ausdrill (AUMS) Roxgold Bagassi South Burkina Faso US$160 Gold services

9-Aug-18 WorleyParsons CNOOC Buzzard Phase II UK EPC n/a Oil & Gas

Roma Hospital 7-Aug-18 Watpac Queensland Health QLD Construction 74 Infra. Redevelopment

Source: Company announcements. 7

7 Contract Awards (cont.)

Date Commodity/ Company Client Project/Facility Location Services Value (A$m) Announced Sector

1-Aug-18 CIMIC Group Resource Generation Boikarabelo South Africa EPC; O&M US$310 Coal

31-Jul-18 Maca Regis Resources Duketon South WA Mining Services 590 Gold

27-Jul-18 Downer EDI Neoen Numurkah Solar Farm VIC EPC n/a Infra.

18-Jul-18 NRW Holdings BHP South Flank Precinct WA Bulk Earthworks 176 Iron Ore

16-Jul-18 Downer EDI Chevron Gorgon/Wheatstone WA Maintenance/support n/a Gas

12-Jul-18 CIMIC Group OZ Minerals Prominent Hill SA Stockpile rehandle services 112 Copper/Gold

Southern Cross 9-Jul-18 CPB Dragados Samsung Westconnex NSW Electrical Installation 55 Infra. Electrical Engineering

29-Jun-18 CIMIC Group QCoal Northern Hub NSW Mining Services 480 Coal

28-Jun-18 Service Stream NBN Co NBN AUS O&M 45 Infra.

22-Jun-18 CIMIC Group BHP Rocky's Reward WA Mining Services 225 Nickel

21-Jun-18 NRW Holdings Stanmore Coal Isaac Plains East QLD O&M 93 Coal

VIC, QLD, 15-Jun-18 Visionstream NBN Co NBN Construction 390 Infra. NSW

15-Jun-18 CIMIC Group BHP South Flank WA Mining Infrastructure 260 Iron Ore

New Zealand 15-Jun-18 Decmil Group Department of n/a NZ Construction 125 Infra. Corrections Adelaide Airport 14-Jun-18 Watpac Adelaide Airport SA Construction Management n/a Infra. Terminal Expansion

12-Jun-18 Pacific Energy Beacon Minerals Jaurdi Gold Project WA Electricity supply n/a Gold

NSW Health Hornsby Ku-ring-gai 6-Jun-18 Watpac NSW Building works n/a Infra. Infrastructure Hospita

6-Jun-18 CIMIC Group Coronado Curragh QLD Mining Services 160 Coal

30-May-18 WorleyParsons Tullow Oil South Lokichar Kenya front end engineering design n/a Oil & Gas

Queensland North Queensland 30-May-18 Watpac QLD managing contractor n/a Infra. Government Stadium

29-May-18 NRW Holdings Coronado Curragh QLD Mining Services 210 Coal

Explosive Ordnance 29-May-18 Watpac Department of Defence Logistics Reform NSW; VIC Construction 120 Infra. Programs Century Open Pit 29-May-18 Downer EDI New Century Resources QLD Mining Services n/a Zinc Mine Zenviron Crudine Ridge Wind 28-May-18 (Monadelphous and CWP Renewables NSW EPC 200 Infra. Farm ZEM Energy) Source: Company announcements. 8

8 Contract Awards (cont.)

Date Commodity/ Company Client Project/Facility Location Services Value (A$m) Announced Sector Siou Underground 25-May-18 Ausdrill (AUMS) SEMAFO Burkina Faso Mining Services US$211 Gold Mine North-South Singapore’s Land Engineering and 24-May-18 CIMIC Group Transportation Singapore 380 Infra. Transport Authority construction Corridor project

21-May-18 WorleyParsons Neptune Energy North Sea Nova field Norway EPCIC n/a Oil & Gas

15-May-18 Maca BHP Mining Area C WA Crushing and screening 82.5 Iron Ore

Yanbu Aramco Sinopec 15-May-18 WorleyParsons Yanbu Industrial City Saudi Arabia. General engineering service n/a Oil & Gas Refining Company

14-May-18 Downer EDI First Solar Beryl Solar Farm NSW EPC 150 Infra.

New Zealand’s Ministry 1-May-18 Decmil Group New NZ Schools NZ Construction NZ$24.3 Infra. of Education

30-Apr-18 RCR Tomlinson Pacific Hydro Haughton Solar Farm QLD EPC, O&M 175 Infra.

Greenough River 10-Apr-18 RCR Tomlinson Synergy EPC 60 Infra. Solar Farm

28-Mar-18 MMA Offshore ConocoPhillips Bayu-Undan Timor Supply support services n/a Oil & Gas

Global Construction 28-Mar-18 CITIC Pacific Mining Sino Iron Project WA Scaffolding services n/a Iron Ore Services

28-Mar-18 CIMIC Arutmin Senakin Indonesia Mining services 150 Coal

26-Mar-18 CIMIC BHP Mount Arthur NSW Mining services 185 Coal

Lendlease Bouygues 23-Mar-18 BSA NorthConnex Project NSW Fire protection n/a Infra. Joint Venture

Kuwait Environmental 20-Mar-18 WorleyParsons Kuwait Oil Company Kuwait Project management 129 Oil & Gas Remediation Program Australian Terminal 6-Mar-18 CIMIC Operations BP Fuel Terminals AUS Asset management 150 Oil & Gas Management Australian Defence Jindalee Operational 5-Mar-18 RCR Tomlinson WA Facilities management 93 Infra. Force Radar Network BHP Billiton Mitsubishi 28-Feb-18 Downer EDI Blackwater QLD Mining services 600 Coal Alliance

27-Feb-18 NRW Holdings Rio Tinto Marandoo WA Civil works 37 Iron Ore

Alliance Aviation Copper / 20-Feb-18 Glencore Ernest Henry Mine QLD Transport services n/a Services Gold 8 South Esplanade Pty EI8HT South 19-Feb-18 Watpac VIC Construction services 82 Real Estate Ltd Esplanade Plenty Road Upgrade VicRoads & Melton City 9-Feb-18 Decmil Group & Westwood Drive VIC Road construction 37 Infra. Council Extension Alliance Aviation 2-Feb-18 Newmont Granites Mine NT Transport services n/a Gold Services

Alliance Aviation 15-Jan-18 Glencore Celmont Mine QLD Transport services n/a Coal Services Melbourne Metro Trains 15-Jan-18 RCR Tomlinson Underground Rail VIC Construction services 70 Infra. Melbourne Loop Source: Company announcements. 9

9 Corporate Activity

The major transactions announced during 2018 have been Ausdrill’s acquisition of Barminco which will create Australia’s second largest mining services company, and the merger of SRG and GCS.

MERGERS & ACQUISITIONS

Date Target Value Interest Status Target Business Seller Acquirer Forum Cons. Announced HQ (A$m) (%)

Water recycling Hitachi Zosen 21-Aug-18 Complete Osmoflo Holdings SA n/a n/a Private 100% Cash plants Corporation

Underground mining Various 15-Aug-18 Pending Barminco WA Ausdrill 697 Private 100% Scrip contractor investors

Quadrant American Industrial 5-Jul-18 Complete CQMS Razer Mining products QLD Private n/a Private 100% Cash Partners Equity

G&S Engineering 4-Jul-18 Pending Engineering services WA Calibre DRA Group n/a Private 100% Cash Services Global 21-Jun-18 Complete Vertech Group Engineering services WA Sonomatic n/a Private n/a n/a Energy

Engineering and Global Construction 12-Jun-18 Pending SRG WA n/a 137 Public 100% Scrip construction services Services

Hard rock Curtin 2-May-18 Complete HiSeis WA Ausdrill n/a Private n/a Cash exploration services University

Underground Diamond 2-May-18 Complete network installation WA Ausdrill Powerlines Plus n/a Private 100% n/a Communications services

Steel manufacturing Franco DSI Underground 30-Apr-18 Pending Fero Group WA n/a Private 100% Cash and anti-corrosion family Australia

Matilda Equipment 30-Apr-18 Complete Equipment hire QLD n/a Emeco Holdings 80 Private 100% Cash Holdings Contract Power Remote power Cash and 23-Mar-18 Complete WA n/a Pacific Energy 90 Private 100% Group generation scrip Elton Consulting Professional and Cash and 12-Mar-18 Complete NSW n/a Veris 16 Private 100% Group advisory services scrip Cash and 13-Feb-18 Pending TMM Group Mining services QLD n/a Macmahon n/a Private 100% scrip 12-Feb-18 Pending Radco Drilling Drilling services QLD n/a Mitchell Services 5 Private 100% Cash The Rutherford Electrical 31-Jan-18 Complete NSW n/a The PBE Group n/a Private 100% Cash Group products/services Materials recycling John Swire 31-Jan-18 Complete Alex Fraser Group VIC Hanson Australia 208 Private 100% Cash services & Sons

17-Jan-18 Complete NDY Management Engineering services NSW n/a Tetra Tech n/a Private 100% n/a

11-Jan-18 Complete Hall Contracting Construction services QLD n/a Crescent Capital n/a Private 100% Cash

Hydraulic and drive Hy-Performance 10-Jan-18 Complete products and QLD n/a Atlas Copco AB 21 Private 100% Cash Fluid Power services

Pipeline 4-Jan-18 Complete APTS maintenance WA n/a Valmec Limited n/a Private 100% Cash services

Source: Company announcements. 10

10 Corporate Activity (cont.)

A number of companies have tapped the market during 2018, with several entitlement offers relating to acquisition funding. RCR Tomlinson also announced a deeply discount $100m rights issue to strengthen its balance sheet and address financial impacts of the cost overruns at a solar project.

CAPITAL RAISINGS

(Discount) / Amount Raised 0.8 Status Company Type Premium to Last Purpose (A$m) Price (%)

28-Aug-18 Active RCR Tomlinson Limited Entitlement Offer 100 (64.3%) Strengthen balance sheet

Improve cash position and 23-Aug-18 Active Decmil Group Limited Placement 50 (12.6%) to fund strategic opportunities / tenders.

17-Aug-18 Active Ausdrill Limited Entitlement Offer 250 (14.0%) Repayment of debt

Fleetwood Corporation 25-Jul-18 Active Entitlement Offer 60 (11.8%) Acquisition funding Limited

23-Mar-18 Complete Pacific Energy Limited Rights Issue 21.45 (7.4%) Acquisition funding

30-Apr-18 Active Emeco Holdings Limited Entitlement Offer 90 (10.7%) Acquisition funding

5-Apr-18 Complete SRG Limited Placement 20 (4.7%) Acquisition funding

Placement + 19-Jan-18 Complete AJ Lucas Group Limited 53 (11.1%) Reduce borrowings Entitlement

8-Jan-18 Complete Valmec Limited Placement 5.1 (4.0%) Reduce borrowings

ACTIVE SHARE BUYBACKS

Date Announced Company Type Size Purpose

20-Mar-18 Pacific Energy Limited On-market Up to 1.1% Capital management

14-Feb-18 Service Stream On-market Up to 7.5% Capital management

20-Nov-17 ALS On-market Up to A$175 million Capital management

23-Aug-17 Watpac On-market Up to 10.0% Capital management

Acquire shares where the Board deems the 28-Feb-17 Cardno On-market Up to 10.0% share price to be below intrinsic value

Source: Company announcements. 11

11 Executive Movements

EXECUTIVE & DIRECTOR APPOINTMENTS1

Date Announced Company Name Role Date Effective 25-Sep-18 Orica Christopher Davis CFO 1-Oct-18 6-Sep-18 WorleyParsons Andrew Livers NED 5-Sep-18 30-Aug-18 RPMGlobal Holdings Stewart Butel NED 1-Sep-18 28-Aug-18 Emeco Holdings Ian Testrow MD and CEO 28-Aug-18 15-Aug-18 Boom Logistics Tony Spassopoulos MD and CEO 20-Sep-18 7-Aug-18 RCR Tomlinson Bruce James Interim CEO 7-Aug-18 6-Aug-18 Cardno Ian Ball CEO and Managing Director 9-Aug-18 17-Jul-18 Veem Mike Bailey Independent NED 17-Jul-18 16-Jul-18 Ausdrill Robert Cole NED 14-Jul-18 16-Jul-18 Ausdrill Alexandra Atkins NED 14-Jul-18 3-Jul-18 Decmil Group Dickie Dique NED 3-Jul-18 28-Jun-18 Tempo Australia Ltd Ian Lynass2 MD (continuing as CEO) 28-Jun-18 28-Jun-18 Logicamms Dan Drewe Interim CEO 6-Jul-18 18-Jun-18 Ausdrill Mark Norwell MD and CEO 17-Sep-18 7-Jun-18 Mastermyne Group Julie Whitcombe NED 7-Jun-18 28-May-18 Downer EDI Nicole Hollows Independent NED 19-Jun-18 12-Apr-18 Veem Ltd Peter Torre Independent NED 12-Apr-18 29-Mar-18 Veris Brian Elton Executive Director 29-Mar-18 26-Mar-18 Macmahon Holdings Kim Horne NED 26-Mar-18 20-Mar-18 Tempo Australia Ian Lynass CEO 19-Mar-18 28-Feb-18 Decmil Group David Saxelby Chairman 1-Mar-18 28-Feb-18 Decmil Group Don Argent NED 1-Mar-18 23-Feb-18 XRF Scientific Vance Stazzonelli2 MD (continuing as CEO) 23-Feb-18 22-Feb-18 RCR Tomlinson David Robinson NED 1-Mar-18 19-Feb-18 Austin Engineering Sybrandt van Dyk NED 1-Mar-18 15-Feb-18 Cardno Rebecca Ranich NED 19-Mar-18 2-Jan-18 Neptune Marine Services Nicholas Cocks NED 2-Jan-18

EXECUTIVE & DIRECTOR RESIGNATIONS / RETIREMENTS

Date Announced Company Name Role Date Effective 28-Sep-18 Watpac Bronwyn Morris NED 30-Sep-18 28-Sep-18 Cardno Gary Jandegian / Robert Prieto NED 24-Oct-18 28-Sep-18 Cardno Neville Buch NED and Deputy Chairman 31-Dec-18 25-Sep-18 Orica Vince Nicoletti CFO 31-Dec-18 20-Sep-18 Macmahon Vyril Vella NED 31-Oct-18 15-Aug-18 Boom Logistics Brenden Mitchell MD and CEO 20-Sep-18 7-Aug-18 RCR Tomlinson Paul Dalgleish MD and CEO 7-Aug-18 16-Jul-18 Ausdrill Donald Argent NED 13-Jul-18 2-Jul-18 RPMGlobal Holdings Ian Runge NED 30-Jun-18 29-Jun-18 Ausdrill Mark Connelly NED 29-Jun-18 28-Jun-18 Logicamms Flora Furness CEO 6-Jul-18 13-Apr-18 Cardno Andrew (Andy) Goodwin CEO and Managing Director 13-Apr-18 3-Apr-18 Tempo Australia Ltd Guido Bressani NED 3-Apr-18 28-Feb-18 Decmil Group Denis Criddle NED 1-Nov-18 28-Feb-18 Austin Engineering Charlie Sartain NED 1-Apr-18 6-Feb-18 Ausdrill Ron Sayers Managing Director Within 12 months 2-Jan-18 Neptune Marine Services Dominic Siu NED 2-Jan-18

Notes: (1) Excludes alternate appointments; (2) Internal appointment. Source: Company announcements. 12

12 Quarterly Focus: Mining Expenditure

While infrastructure spending has been a key feature of the market, improving activity in the mining sector has also been a driver of the solid FY18 reporting season and outlook for FY19. Strengthened commodity prices have driven a rebound in exploration expenditure, and there is evidence that mining capex has bottomed with the number and value of new projects increasing over the last year.

EXPLORATION SPENDING Exploration across gold and base metals has increased significantly over the last year, particularly for brownfields projects. Spending is coming from both the juniors who have enjoyed improved access to capital, and mid-tier to major producers seeking to efficiently replace reserves. This has flowed through to improved activity for exploration exposed services companies. For example, Imdex recorded a 35% EBITDA increase in FY18 as its REFLEX instruments on rent reached its highest level since 2012. Testing services company ALS saw its commodities division EBITDA improve 32% as sample flows improved throughout the year.

Mineral Exploration by Commodity ($m) Mineral Exploration by Deposit Type ($m) Gold Exploration Budgets

400 1,200 FY18 FY19 Budget Company 350 ($m) ($m) 1,000 300 Newcrest 72 90-100 250 800 Northern 200 600 45 60 Star 150 400 100 Evolution 32 40-55 50 200 Saracen 17 60 0 0

St Barbara 14 21-27

Jun-2013 Jun-2008 Jun-2009 Jun-2010 Jun-2011 Jun-2012 Jun-2014 Jun-2015 Jun-2016 Jun-2017 Jun-2018

Jun-2016 Jun-2009 Jun-2010 Jun-2011 Jun-2012 Jun-2013 Jun-2014 Jun-2015 Jun-2017 Jun-2018 Jun-2008 (1) Based on USD budgets converted at 0.72 AUD/USD Base Metals Gold Iron Ore Coal New Deposits Existing Deposits

CAPEX SPENDING While completion of the wave of major LNG projects has seen significant falls in industry capex over the last several years, macro data indicates that investment is levelling out, and improving for metal and coal projects. Further, there has been an increase in both the number and value of new projects classified at the announced or feasibility stage across a range of commodities. Capex on new iron ore projects will be a major driver of work for a number of the engineering and construction companies in the coming years.

Capex by Commodity ($m) Value of Potential New Projects ($b) Major Projects

18,000 250 Company Project Capex ($m) 16,000 14,000 200 South Flank BHP US$3,400m 12,000 (Iron ore) 10,000 150 Koodaideri Rio US$2,200m 8,000 (Iron ore) 6,000 100 Eliwana (Iron 4,000 FMG US$1,275m ore) 2,000 50 0 Oz Carrapeteena A$900m Minerals

Jun-2009 Jun-2011 Jun-2013 Jun-2015 Jun-2017

Oct-2010 Oct-2012 Oct-2014 Oct-2016

Feb-2012 Feb-2014 Feb-2016 Feb-2018 Feb-2010 Cooper Publicly announced Feasibility Sole Gas A$355m Energy Coal Oil and Gas Metal Ore Oct-13 Oct-14 Oct-15 Oct-16 Oct-17

Source: ABS (2018) Mineral and Petroleum Exploration, Australia 8412.0; ABS (2018) Private New Capital Expenditure and Expected Expenditure, Australia 5625.0; Office of the Chief Economist, Resources and Energy Quarterly (December 2017, June 2018).

13 Gresham’s Credentials

LANDMARK MERGERS & ACQUISITIONS

2018 2016 2015 2014 2014 2013

Advised Advised First Lead Advised the Wesfarmers on State Super on Independent Advised Bank of Advised Boral on Lonsdale the sale of its its acquisition of financial adviser Queensland on the formation of Consortium on underwriting and the land titles to the Board of the acquisition of a US$1.6bn joint the acquisition of insurance and registry BHP Billiton on $2.5bn loan venture with a 50-year lease broking functions of Land the demerger of portfolio from USG Corporation of Port of businesses Use Victoria South32 Investec Melbourne

MINING AND INFRASTRUCTURE SERVICES

2018 2017 2017 2016 2015 2013

Adviser to Advised CHAMP Advisor to Coffey Advised Clough Adviser to Advisor to SCEE Barminco on its and Frontenac International in in relation to its Quadrant on the in relation to the proposed on the sale of relation to takeover by sale of CQMS acquisition of acquisition by H-E Parts acquisition by Murray & Razor Heyday5 Ausdrill International Tetra Tech Roberts

TAKEOVER RESPONSE

2017 2017 2016 2014 2013 2011

Advised DUET Advised Asciano on Group in relation Advised Little Advisor to UGL in its takeover by a Advised David Advised Fosters to its $13bn World relation to its consortium led by Jones in relation on its $12.3bn takeover by a Beverages on takeover by Canada Pension to acquisition by takeover by consortium its acquisition CIMIC Plan Investment Woolworths SABMiller comprising CKP, by Lion Board CKI and PAH

AWARDS & ACCOLADES

Excellence in 2011 M&A Deal 2009 Most Secondary Market Equity Raising of 2007 Best M&A Best M&A Deal Corporate of the Year Innovative Deal the Year Deal in Australia Advisory - 2012 SABMiller’s Babcock & Wesfarmers’ Wesfarmers’ Wesfarmers’ Boutique / acquisition of Brown $2.6bn equity acquisition of acquisition of Independent Foster’s Group Infrastructure’s raising Coles Coles recapitalisation

14 Contact Details

Chris Branston Charlie Graham Matt Keenan Executive Director, Perth Managing Director, Sydney Managing Director, Melbourne E: [email protected] E: [email protected] E: [email protected] T: +61 8 9213 0290 T: +61 2 9224 0247 T: +61 3 9664 0353

Michael Smith Neville Spry Michail Lagogiannis Executive Director, Perth Managing Director, Sydney Executive Director, Melbourne E: [email protected] E: [email protected] E: [email protected] T: +61 8 9213 0290 T: +61 2 9224 0237 T: +61 3 9664 0375

Gresham Advisory Partners Limited ABN 88 093 611 413

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Terms and Conditions

Information contained in this publication The opinions, advice, recommendations and other information contained in this publication, whether express or implied, are published or made by Gresham Advisory Partners Limited (ABN 88 093 611 413), Australian financial services license (247113), and by its officers and employees (collectively “Gresham Advisory Partners”) in good faith in relation to the facts known to it at the time of preparation. Gresham Advisory Partners has prepared this publication without consideration of the investment objectives, financial situation or particular needs of any individual investor, and you should not rely on the publication for the purpose of making a financial decision.

To whom this information is provided This publication is only made available to persons who are wholesale clients within the meaning of section 761G of the Corporations Act 2001. This publication is supplied on the condition that it is not passed on to any person who is a retail client within the meaning of section 761G of the Corporations Act 2001.

Disclaimer and limitation of liability To the maximum extent permitted by law, Gresham Advisory Partners will not be liable in any way for any loss or damage suffered by you through use or reliance on this information. Gresham Advisory Partners’ liability for negligence, breach of contract or contravention of any law, which cannot be lawfully excluded, is limited, at Gresham Advisory Partners’ option and to the maximum extent permitted by law, to resupplying this information or any part of it to you, or to paying for the resupply of this information or any part of it to you.

No warranties made as to content Gresham Advisory Partners makes no warranty, express or implied, concerning this publication. The publication provided by us on an “AS IS” basis at your sole risk. Gresham Advisory Partners expressly disclaims, to the maximum extent permitted by law, any implied warranty of merchantability or fitness for a particular purpose, including any warranty for the use or the results of the use of the publication with respect to its correctness, quality, accuracy, completeness, or reliability.

Copyright Copyright in this publication is owned by Gresham Advisory Partners. You may use the information in this publication for your own personal use, but you must not (without Gresham Advisory Partners’ consent) alter, reproduce or distribute any part of this publication, transmit it to any other person or incorporate the information into any other document.

General matters These Terms and Conditions are governed by the law in force in the State of Victoria, and the parties irrevocably submit to the non-exclusive jurisdiction of the courts of Victoria and courts of appeal from them for determining any disputes concerning the Terms and Conditions. If the whole or any part of a provision of these Terms and Conditions are void, unenforceable or illegal in a jurisdiction it is severed for that jurisdiction. The remainder of the Terms and Conditions have full force and effect and the validity or enforceability of that provision in any other jurisdiction is not affected. This clause has no effect if the severance15 alters the basic nature of the Terms and Conditions or is contrary to public policy. If Gresham Advisory Partners do not act in relation to a breach by you of these Terms and Conditions, this does not waive Gresham Advisory Partners’ right to act with respect to subsequent or similar breaches.