Gresham Mining & Infrastructure Services Quarterly
We are pleased to present Edition 24 of the Gresham Mining and Infrastructure Services Quarterly (GMISQ), a snapshot of the performance, news and trends across the resources and infrastructure services sectors.
The Gresham Mining and Infrastructure Services Index (GMISI) fell 6% during the September quarter, compared to a 2% increase in the broader equity market. This was driven by share prices decreases from several of the largest companies in the index, including a 30% decline in CIMIC’s price. Excluding the 5 largest constituents, the GMISI would have increased by 3%, with 33 of the 50 companies seeing share price appreciation.
In this edition we review the FY19 reporting season across the sector, which was characterised by generally strong performance. Around two thirds of participants recorded double digit revenue and earnings growth, with companies exposed to mining production well represented in the top half of the group. The outlook also remains positive, evidenced by most companies providing outlook statements guiding towards continued growth in FY20, and favourable demand noted across both resources and infrastructure. This is consistent with significant contract award activity observed during in the quarter, and median consensus forecast revenue growth of 10% pa over the next two years. Despite the positive FY19 reporting season, the market reaction was mixed across the sector, reflecting high expectations heading into results.
Valuation multiples have generally strengthened slightly, driven by increasing share prices across the majority of smaller constituents. The median FY20 PE and EV/EBIT ratios sit at 12.4x and 8.2x respectively, both above long term averages.
There was limited corporate activity during the period, with QIC’s proposed acquisition of Pacific Energy and Cardno’s planned demerger the most notable. However, there is likely to be further activity in the coming months, with a number of processes underway. In addition, after virtually no primary equity raisings for the better part of a decade, there are some potential IPOs in the pipeline for the next 12 months. The first successful listing was maintenance services group Mader, with the fate of other potential candidates depending on conditions in a relatively fragile IPO market.
Editorial Team
Chris Branston Tom Waddell David Burton [email protected] [email protected] [email protected]
Edition 24 Gresham Advisory Partners Ltd is a leading Australian mergers and acquisitions/corporate advisory 1 October 2019 business and one of Australia’s largest and highest ranking independent corporate advisors. Share Price Movements
GMISI CONSTITUENTS1 LEADERS & LAGGARDS (SHARE PRICE)1
Ranks Market Cap (A$m) Share Leaders Laggards Company price Sep Jun 30 Sep 19 30 Jun 19 r % 96%
1 1 CIMIC Group Ltd. (ASX:CIM) 10,198 14,517 -30% 63% 58% 2 2 Orica Ltd. (ASX:ORI) 8,578 7,701 11% 47% 36% 3 3 WorleyParsons Ltd. (ASX:WOR) 6,752 7,635 -12%
4 4 Seven Group Holdings Ltd. (ASX:SVW) 5,912 6,275 -6%
5 5 Downer EDI Ltd. (ASX:DOW) 4,639 4,115 13%
6 6 ALS Ltd. (ASX:ALQ) 3,869 3,564 9% (17%) (17%) (24%) (28%) (30%) 7 7 Mineral Resources Ltd. (ASX:MIN) 2,517 2,818 -11%
8 10 Ausdrill Ltd. (ASX:ASL) 1,530 1,251 22%
CIMIC Valmec
9 9 Monadelphous Group Ltd. (ASX:MND) 1,485 1,774 -16% Synertec
Laserbond SRGGlobal
10 11 Service Stream Ltd. (ASX:SSM) 1,066 1,129 -7% PacificEnergy
11 12 NRW Holdings Ltd. (ASX:NWH) 874 943 -8% Tempo Australia
12 13 Emeco Holdings Ltd. (ASX:EHL) 619 669 -7% SaundersInternational
13 14 Imdex Ltd. (ASX:IMD) 543 494 7% NeptuneMarine Services
14 15 Cardno Ltd. (ASX:CDD) 498 420 19% ResourceDevelopment Group
15 18 Pacific Energy Ltd. (ASX:PEA) 465 295 58% 1 16 16 Macmahon Holdings Ltd. (ASX:MAH) 442 399 11% PERFORMANCE RELATIVE TO S&P 200 INDICES
17 17 Alliance Aviation Services Ltd. (ASX:AQZ) 289 324 -11%
18 19 MACA Ltd. (ASX:MLD) 257 241 7%
10% 7%
19 22 Lycopodium Ltd. (ASX:LYL) 216 192 12% 6%
4%
2% 2%
2% 2% 1%
20 21 Decmil Group Ltd. (ASX:DCG) 211 216 -3% 0%
21 23 Civmec Ltd. (ASX:CVL) 207 174 19%
22 26 BSA Ltd. (ASX:BSA) 189 139 35%
(0%)
(1%) (1%)
23 24 Fleetwood Corp. Ltd. (ASX:FWD) 183 161 14%
(5%)
(6%)
(6%) (6%) 24 20 SRG Global Ltd. (ASX:SRG) 181 218 -17%
25 28 Boart Longyear Ltd. (ASX:BLY) 171 131 30%
26 27 Engenco Ltd. (ASX:EGN) 171 132 30%
27 30 RPMGlobal Holdings Ltd. (ASX:RUL) 166 123 34% IT
28 25 MMA Offshore Ltd. (ASX:MRM) 163 150 9%
GMISI
A-REIT
Energy Utilities
29 29 Southern Cross Electrical Engineering Ltd. (ASX:SXE) 134 126 6% Materials
Resources
Industrials
Cons.Disc.
HealthCare
S&P/ASX200 Cons.Staples
30 31 GR Engineering Services Ltd. (ASX:GNG) 134 123 9% AllOrdinaries TelcoServices
31 34 Mastermyne Group Ltd. (ASX:MYE) 121 95 28% Financial-x-A-REIT
32 32 Austin Engineering Ltd. (ASX:ANG) 110 104 6% 33 33 Mitchell Services Ltd. (ASX:MSV) 99 103 -3% PERFORMANCE OVER TIME 34 37 AJ Lucas Group Ltd. (ASX:AJL) 79 60 31%
35 41 Laserbond Ltd. (ASX:LBL) 72 37 96% 90 Gresham Mining & Infrastructure Services Index (GMISI) 36 36 Boom Logistics Ltd. (ASX:BOL) 72 66 10% S&P/ASX 200 37 35 Veem Ltd. (ASX:VEE) 72 69 4% 80 S&P/ASX 200 Resources 38 39 Swick Mining Services Ltd. (ASX:SWK) 63 53 2% GMISI (less top 5) 39 38 Primero Group Ltd. (ASX:PGX) 55 59 -6%
40 40 LogiCamms Ltd. (ASX:LCM) 46 37 24% 70
41 43 Matrix Composites & Engineering Ltd. (ASX:MCE) 42 32 30%
42 44 Valmec Ltd. (ASX:VMX) 38 28 36% 60 43 45 XRF Scientific Ltd. (ASX:XRF) 33 25 35%
44 42 Saunders International Ltd. (ASX:SND) 26 35 -24% 50 45 46 Veris Ltd. (ASX:VRS) 21 17 19%
46 50 Neptune Marine Services Ltd. (ASX:NMS) 16 11 47%
47 48 VDM Group Ltd. (ASX:VMG) 14 13 - 40
48 51 Synertec Corp. Ltd. (ASX:SOP) 11 7 63%
49 47 Tempo Australia Ltd. (ASX:TPP) 10 14 -28% 30 50 49 Resource Development Group Ltd. (ASX:RDG) 9 11 -17% Sep16 Mar17 Sep17 Mar18 Sep18 Mar19 Sep19
Notes: (1) Performance measured over the period 30-Jun-19 to 30-Sep-19 (inclusive). Source: FactSet, IRESS. 2
2 FY19 Results Snapshot: Performance and Gearing
FY19 results were generally positive, with most companies achieving growth, with median sector revenue, EBITDA and EBIT growth of 14%, 19% and 21% respectively on a pcp basis.
REVENUE GROWTH FY19 PCP (%)
100.0% 80.0% 60.0% 40.0% 20.0% Median: 13.7% - (20.0%) (40.0%)
(60.0%)
AJL
LYL
LBL
BLY
ASL
SXE
XRF TPP CVL
EHL
VEE
VRS
PEA BSA
RUL
BOL
SRG
SOP SPO
CIM
PGX
ALQ
AQZ SND
IMD
MIN
CDD
EGN
SSM
DCG
RDG
LCM
MYE
ANG
SWK
MCE
MSV
MLD
GNG
SVW
VMX
NMS
FWD
VMG
MAH
WOR
MND
NWH
DOW MRM
EBITDA GROWTH FY19 PCP (%)
100.0% 80.0% 60.0%
40.0% Median: 18.6% 20.0% - (20.0%) (40.0%)
(60.0%)
AJL
LYL
LBL
BLY
ASL
SXE
XRF CVL
EHL
VEE
VRS
BSA
PEA
RUL
BOL
SRG
SPO
CIM
PGX
ALQ
AQZ
IMD
MIN
CDD
EGN
SSM
RDG
LCM
MYE
ANG
SWK
MSV
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH
DOW MRM
EBIT GROWTH FY19 PCP (%)
100.0% 80.0% 60.0%
40.0% Median: 20.7% 20.0% - (20.0%) (40.0%)
(60.0%)
AJL
LYL
LBL
BLY
ASL
SXE
XRF CVL
EHL
VEE
BSA
PEA
RUL
BOL
SRG
SPO CIM
PGX
ALQ
AQZ
IMD
MIN
CDD
EGN
SSM
LCM
MYE
ANG
SWK
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH DOW
NET DEBT / ENTERPRISE VALUE
90.0%
60.0%
30.0% Median: 8%
-
(30.0%)
(60.0%)
(90.0%)
AJL
LYL
LBL
BLY
ASL ORI
SXE
TPP CVL XRF
EHL
VEE
VRS
BSA
PEA
RUL
BOL
SRG
SOP
CIM
PGX
ALQ
AQZ SND
IMD
MIN
CDD
EGN
SSM
DCG
RDG
LCM
MYE
ANG
SWK
MCE
MSV
MLD
GNG
SVW
VMX
NMS
FWD
VMG
MAH
WOR
MND
NWH
DOW MRM
Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)
Source: FactSet; Company filings. Note: for companies reporting part year results during the quarter, the prior corresponding period reflects the prior year’s part year results. 3
3 FY19 Results Snapshot: Guidance Statements
The majority of companies provided some form of guidance for FY20, with nearly all predicting solid growth over the previous year.
SELECTED GUIDANCE STATEMENTS
Company Business Guidance Statement
“Alliance retains a positive outlook for the 2020 financial year. Scheduled services are expected to Alliance Charter aviation services increase for a number of resource sector clients as a result of high commodity prices and increasing Aviation mine production levels”
Diversified mining “Targeting an underlying NPAT(A) for FY20 of around $140m on the assumption that the positive Ausdrill services market, and global and regional conditions remain favourable” (FY19 underlying NPAT(A): $103m)
“Australia and New Zealand continues to experience significant public sector infrastructure spend by Resource & infrastructure State and Federal Governments. A number of significant projects in the West Australian Iron Ore and Decmil construction LNG sectors also continue to progress to construction. Based on the Company’s current tender pipeline and order book, Decmil expects FY20 revenue to be ~$700 million.” (FY19 Revenue: $663m)
“Downer is targeting NPATA of around $365 million before minority interests for the 2020 financial Downer Diversified services year” (FY19 NPATA: $340.1m)
“Our objective in FY20 is to continue deleveraging by growing earnings and using strong operating Emeco Mining equipment rental cash flow to reduce debt. ... With strong demand in iron ore and gold projects in the west, we are also excited by significant opportunities to enhance our commodity diversification”
“Mining production levels and commodity prices are expected to support further investment in the industry, which is positive for IMDEX….At a company level, IMDEX has had a positive start to FY20. Imdex Mining technology The increase in activity that was evident in 4Q20 has continued and is reflected in the Company’s growing instrument fleet”
Mineral process “At present, the Company expects to generate revenues in the order of $220M with earnings Lycopodium engineering generally in line with those achieved in this past year”
Maca Contract mining & civil “Positive outlook for FY20…” FY20 Revenue: $720m (FY19 Revenue: $665m)
“The Company expects FY20 revenue of $1.2 – 1.3 billion, and EBIT of $80-90 million” Macmahon Contract mining (FY19 Revenue: $1,103m; FY19 underlying EBIT: $75.1m) “While growth prospects over the longer term are positive, revenue for the 2019/20 financial year will Resources & be dependent on the timing of the execution of work recently secured, as well as the value and timing infrastructure Monadelphous of future successful awards of additional resources construction contracts. High levels of market construction & competition, price sensitivity and customer expectations for cost competitive delivery will drive maintenance demand for productivity improvements, and continue to challenge margins” “We remain very confident of strong activity levels across the resources and infrastructure sectors over NRW Contract mining & civil the years ahead. NRW is forecasting revenue at circa $1.5 billion in FY20” (FY19 Revenue: $1,126.3m) “The Company notes that the resource industry outlook remains positive and it is confident of Pacific Energy Remote power achieving another solid result for FY20. Guidance of $58 - $59 million in underlying EBITDA is provided for FY20.” (FY19 EBITDA: $65.8 m)
“The Group is focussed on delivering further revenue and profit growth in FY20, subject to a Service Stream Utilities services continuation of prevailing market conditions”
“On a Group basis, FY20 underlying EBIT growth is expected in the mid to high single digits against FY19 underlying EBIT .... Growth in FY20 earnings expected through continued mining parts demand, Seven Group Equipment sales & rental growing new equipment orders, continued level of infrastructure activity in NSW/VIC and growth in WA equipment hire market”
Southern Cross Multi sector electrical “Targeting FY20 revenues over $420m” (FY 19 Revenue: $386m) EE engineering
Multi sector construction “Well positioned for sustainable growth in FY20 and beyond under-pinned by record work in hand and SRG & maintenance a significant and growing recurring revenue base”
“Entered FY20 in a strong positon on the back of success in resetting contracts and winning new work Swick Drilling contracting in FY19…. Revenue and earnings growth expected in FY20”
“The energy, chemicals and resources market indicators and growth in backlog provide evidence of Resources & Worley continued improvement in market conditions. However, our markets are being tempered by infrastructure engineering macroeconomic global uncertainty.”
Source: Company reports and presentations. 4
4 FY19 Results Snapshot: Market Reaction
Share price performance on the day of results announcements was mixed, reflecting high market expectations in the current positive operating environment.
SHARE PRICE REACTION
15.0%
10.0%
5.0% Median: 0.8%
-
(5.0%)
(10.0%)
(15.0%)
AJL
LYL
LBL
BLY
ASL
SXE
CVL
TPP
XRF
EHL
VEE
VRS
PEA
BSA
RUL
BOL
SRG
CIM
SPO
SOP
PGX
ALQ
AQZ
SND
IMD
MIN
EGN
CDD
SSM
DCG
RDG
LCM
MYE
ANG
SWK
MCE
MSV
MLD
GNG
SVW
VMX
NMS
FWD
VMG
MAH
WOR
MND
NWH
DOW MRM
MAJOR POSITIVE MOVEMENTS MAJOR NEGATIVE MOVEMENTS
LBL was able to better previous Despite reporting improved guidance and continues to financial performance year-on- Laserbond +18% target double digit growth in Boart Longyear -22% year, the share price fell on thin revenue year on year volumes.
In addition to strong revenue CIM reported 1H19 NPAT +1% and earnings growth, MAH also on pcp to A$367mn, with Macmahon +17% announced the Company’s first CIMIC Group -14% strong mining performance dividend in seven years. offset by a fall in construction revenue and earnings.
VMX reported a 65% increase in underlying EBITDA driven by GR Engineering GNG reported a 36% drop in Valmec +11% -14% revenue in FY19 on the back of growth in the Company’s Services Service segments. lower project execution activity.
Southern Cross SXE delivered a 13% increase Share price fell despite earnings above guidance and Electrical +9% in EBITDA and 51% increase in Emeco -9% net profit after tax. consensus and positive outlook Engineering commentary.
BSA reported record underlying EBITDA driven by growth CVL reported a 31% fall in revenue and 40% decrease in BSA +9% across all operating divisions Civmec -7% and the successful divestment EBITDA during a “year of of HVAC Build. consolidation”.
Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)
Source: Company announcements, FactSet. 5
5 Forecast Profitability
Following the FY19 reporting season, analysts are forecasting strong growth over the next 2 years, driven by both the top line and modest margin expansion.
FORECAST REVENUE GROWTH (FY19-21F CAGR)
30.0%
25.0%
20.0% Median: 10% 15.0%
10.0%
5.0%
-
(5.0%)
(10.0%)
(15.0%)
LYL
LBL
BLY
ASL ORI
SXE
XRF
EHL
VEE
BSA PEA
RUL
SRG
CIM
PGX
ALQ
AQZ IMD
MIN
SSM
DCG
MYE
ANG
SWK
MCE
MSV
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH
DOW MRM
FORECAST EBITDA GROWTH (FY19-21F CAGR)
50.0%
40.0%
30.0%
Median: 13% 20.0%
10.0%
-
(10.0%)
LYL
LBL
BLY
ORI ASL
SXE
XRF
EHL
VEE
VRS
BSA PEA
RUL
BOL
SRG
CIM
PGX
ALQ
IMD AQZ
MIN
SSM
DCG
MYE
ANG
SWK
MSV
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH
DOW MRM
EBITDA MARGINS (FY20F)
30.0%
25.0%
20.0% Median: 13%
15.0%
10.0%
5.0%
-
LYL
LBL
BLY
ASL ORI
SXE
XRF
EHL
VEE
BSA PEA
RUL
SRG
CIM
PGX
ALQ
AQZ IMD
MIN
SSM
DCG
MYE
ANG
SWK
MCE
MSV
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH
DOW MRM
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-19. Source: FactSet. 6
6 Valuation Multiples
Despite the GMISI falling during the September quarter, meadian forward PE multiples increased, reflecting share price increases across the majority of the index’s smaller constituents.
1 YEAR FORWARD PRICE EARNINGS RATIO OVER TIME
18x
16x
14x
12x GMISI Median: 10.4x 10x
8x
6x
GMISI 4x All Ordinaries 2x Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19
PRICE EARNINGS RATIO (FY20F)
30x
25x
20x
15x Median: 12.4x
10x
5x
-
LYL
LBL
ORI ASL
SXE
XRF
EHL
VEE
VRS
PEA BSA
RUL
BOL
SRG
CIM
PGX
ALQ
AQZ
IMD
MIN
CDD
SSM
DCG
MYE
ANG
SWK
MSV
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH DOW
DIVIDEND YIELD (FY20F)
8.0%
7.0%
6.0%
5.0% Median: 3.6%
4.0%
3.0%
2.0%
1.0%
-
LYL
LBL
ORI ASL
SXE
XRF
VEE
PEA BSA
SRG
CIM
PGX
ALQ
AQZ IMD
MIN
SSM
DCG
MYE
ANG
SWK
MLD
GNG
SVW
FWD
MAH
WOR
MND
NWH DOW
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-19; (3) Earnings multiples are not calendarised; (4) Companies exhibiting negative multiples have been excluded from the above analysis. Source: FactSet. 7
7 Valuation Multiples (cont.)
The sector’s median FY20 EV/EBIT and EV/EBITDA multiples are 8.2x and 5.5x respectively. Consistent with historical observations, there continues to be a trend of larger companies (market capitalisation > $1bn) typically trading on higher multiples.
EV/EBIT (FY20F)
20.0x 18.0x 16.0x 14.0x 12.0x Median: 8.2x 10.0x 8.0x 6.0x 4.0x 2.0x
-
LYL
LBL
BLY
ASL ORI
SXE
XRF
EHL
VEE
VRS
BSA
PEA
RUL
BOL
SRG
CIM
PGX
ALQ
IMD AQZ
MIN
SSM
DCG
MYE
ANG
SWK
MSV
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH DOW
EV/EBITDA (FY20F)
12.0x
10.0x
8.0x Median: 5.5x 6.0x
4.0x
2.0x
-
LYL
LBL
BLY
ORI ASL
SXE
XRF
EHL
VEE
VRS
BSA
PEA
RUL
BOL
SRG
CIM
PGX
ALQ
AQZ
IMD
MIN
SSM
DCG
MYE
ANG
SWK
MCE
MSV
MLD
GNG
SVW
VMX
FWD
MAH
WOR
MND
NWH
DOW MRM
PRICE/NTA
600.0%
500.0%
400.0%
300.0% Median: 209%
200.0% Companies trading at a discount to NTA 100.0%
-
AJL
LYL
LBL
ORI ASL
SXE
TPP XRF CVL
EHL
VEE
VRS
BSA
PEA
RUL
BOL
SRG
CIM SOP
PGX
ALQ
AQZ SND
IMD
MIN
CDD
EGN
DCG
RDG
LCM
MYE
ANG
SWK
MCE
MSV
MLD
GNG
SVW
VMX
NMS
FWD
VMG
MAH
MND
NWH MRM Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)
Notes: (1) Only companies with consensus earnings forecasts are included in charts; (2) Share prices are as at 30-Sep-19 (3) Earnings multiples are not calendarised; (4) Enterprise Value is based on market capitalisation plus minority interests and last reported net debt adjusted for capital raisings and acquisitions. (5) Companies exhibiting negative multiples have been excluded from the above analysis. Source: FactSet. 8
8 Contract Awards
There was a significant amount of contracting activity during the quarter, particularly within government transport and infrastructure projects.
MAJOR CONTRACT AWARDS
Date Commodity/ Company Client Project/Facility Location Services Value (A$m) Announced Sector Australian and Victorian 30-Sep-19 CIMIC Group Limited Monash Freeway upgrade VIC Design & construct 761 Infra. Governments Service Stream 30-Sep-19 Optus Mobile Optus 5G network AUS Design & construct ~40 Infra. Limited
26-Sep-19 BSA Limited NBN Co NBN AUS Operate and Maintain n/a Infra. Network Augmentation Service Stream 23-Sep-19 NBN Co NBN AUS and n/a Infra. Limited Restoration Fairbairn Dam 23-Sep-19 SRG Global Limited Sunwater Limited QLD Supply and installation 12 Infra. Improvement Service Stream 17-Sep-19 NBN Co NBN AUS Operate and Maintain n/a Infra. Limited Sydney Metro City & 17-Sep-19 CIMIC Group Limited NSW Government Southwest Pitt Street NSW Design & construct 463 Infra. Station 13-Sep-19 CIMIC Group LimitedCoronado Global Resources Curragh Mine QLD Mining Services 1,300 Coal
Arrow Energy; AGIG; Water 11-Sep-19 Valmec Limited Various AUS Service and construction 43 Various Corporation; Incitec Pivot Design, supply & 3-Sep-19 SRG Global Limited Built Obayashi JV Parramatta Square NSW 44 Infra. installation Western Sydney 2-Sep-19 CIMIC Group Limited Australian Government International (Nancy-Bird NSW Earthworks 323 Infra. Walton) Airport 2-Sep-19 CIMIC Group Limited Victorian Government North East Link VIC Early Works 195 Infra.
NRW Holdings 29-Aug-19 Rio Tinto Koodaideri Mine WA Pre-strip 95 Iron Ore Limited Design, supply & 27-Aug-19 CIMIC Group Limited Queensland Government Cross River Rail QLD 900 Infra. installation Primero Group 27-Aug-19 Thyssen Krupp Industrial South Flank WA Pre-assembly n/a Iron Ore Limited WorleyParsons 20-Aug-19 Vår Energi AS Jotun A FPSO Norway Life extension n/a Oil & Gas Limited Monadelphous Kemerton lithium Structural, mechanical 20-Aug-19 Albemarle WA n/a Lithium Group Limited hydroxide plant and piping Nepean Hospital 20-Aug-19 CIMIC Group Limited NSW Government NSW Construction 379 Infra. Redevelopment Stage 1 AJ Lucas Group 19-Aug-19 Kestrel Coal Pty Ltd Kestrel Coal Mine QLD Drilling 70 Coal Limited Stage 3 of the Karratha / Main Roads WA WA 81 Tom Price Road 19-Aug-19 Maca Limited Shepparton Alternative Construction Infra. VicRoads Route Roundabout VIC 10 Upgrades WorleyParsons 19-Aug-19 Reliance Industries Limited MJ Field India Project management n/a Oil & Gas Limited
16-Aug-19 CIMIC Group Limited NSW Government Campbelltown Hospital NSW Construction 424 Infra.
15-Aug-19 Downer EDI Limited Department of Defence Critical Systems Branch AUS Various 154.5 Infra.
Source: Company announcements. 9
9 Contract Awards
A number of companies (CIMIC, Downer, Monadelphous, NRW) have won multiple major contract awards.
MAJOR CONTRACT AWARDS
Date Commodity/ Company Client Project/Facility Location Services Value (A$m) Announced Sector Taxiway Mike and Remote 14-Aug-19 CIMIC Group Limited Auckland Airport NZ Construction NZ$221 Infra. Stands Stage 2
13-Aug-19 Civmec Limited Fortescue Metals Group Eliwana WA Fabrication & installation n/a Iron Ore
Built Constructions Sandstone Precinct NSW
Shape Group 231 Elizabeth Street NSW Southern Cross Commercial, Electrical & 13-Aug-19 Electrical Cockram Constructions Embark Apartments ACT >35 data centre Instrumentation Engineering Ltd and energy Hutchinson Builders RUData SYD53 NSW
Agnew hybrid renewable EDL Agnew Pty Ltd WA energy project
9-Aug-19 Downer EDI Limited AusNet Services Gas distribution network AUS Operate and Maintain 350 Infra.
Transport for NSW New Intercity Fleet NSW Build & maintain Infra.
8-Aug-19 CIMIC Group Limited Pacific National New diesel locomotives AUS Build 260 Infra.
n/a Various n/a Mining Services Mining
6-Aug-19 Ausdrill Limited West African Resources Sanbrado Gold Project Africa Mining Services 235 Gold
Talinga Orana Gas Origin QLD Construction Oil & Gas Gathering Station
BMA Hay Point Coal Terminal QLD Shutdown Coal Monadelphous 5-Aug-19 Shutdown and 150 Group Limited South32 Worsley Alumina Refinery WA Alumina mechanical Rope access, tank Yarwun alumina refinery; Alumina; Iron Rio Tinto QLD; WA inspection and Tom Price Mine Ore refurbishment Monadelphous West Angelas Deposits C 2-Aug-19 Rio Tinto WA Construction >100 Iron Ore Group Limited and D Project Mastermyne Group 1-Aug-19 Anglo American Aquila Mine QLD Outbye services 95 Coal Limited WorleyParsons Gulf of Hook-up and 31-Jul-19 BP Mad Dog 2 n/a Oil & Gas Limited Mexico commissioning
23-Jul-19 Downer EDI Limited AusNet Services Distribution network VIC Operate and Maintain 600 Infra.
Pacific Energy 19-Jul-19 Round Oak Minerals Jaguar WA Power supply n/a Copper/zinc Limited Mitchell Services SMS Innovative Mining Pty 15-Jul-19 Kirkalocka Gold Project WA Drilling 33 Gold Limited Ltd Metropolitan passenger rail 3-Jul-19 CIMIC Group Limited Sydney Trains NSW Maintenance & logistics 630 Infra. fleet NRW Holdings 3-Jul-19 Stanmore Coal Isaac Plains East QLD Dry hire 450 Coal Limited
1-Jul-19 CIMIC Group Limited State of Queensland Cross River Rail QLD Construction 2,730 Infra.
Source: Company announcements. 10
10 Corporate Activity
QIC’s proposed acquisition of Pacific Energy (which included matching a competing proposal) was the largest announced M&A transaction of the quarter. Cardno also announced the demerger of its quality, testing and measurement business from its consulting business.
MERGERS & ACQUISITIONS
Date Value Interest Status Target Business Target HQ Seller Acquirer Forum Cons. Announced (A$m) (%)
Quality, Fortitude 21-Aug-19 Pending Intega Group Testing and Cardno Cardno (shareholders) na Public 100% Scrip Valley, QLD Measurement
Wilson Mining Services Pty Mining Gateshead, Mastermyne Group Cash/ 16-Aug-19 Pending na 7.6 Private 100% Ltd products NSW Limited Scrip
Macquarie 13-Aug-19 Complete HVAC Build Major Projects HVAC BSA Fredon Air Pty Ltd 5.5 Private 100% Cash Park, NSW
MTQ Neptune Marine Services Engineering Cash/ 24-Jul-19 Pending Perth, WA Corporation MMA Offshore Limited 18.5 Public 100% Limited (key subsidiaries) services Scrip Limited
Landsdale, 24-Jul-19 Pending Pacific Energy Limited Energy supply na QIC Private Capital Pty Ltd 538 Public 100% Cash WA
Infrastructure Melbourne, 1-Jul-19 Complete PLC Consulting Pty Ltd na Ricardo plc 10 Private 100% Cash advisory VIC
CAPITAL RAISINGS
(Discount) / Date Amount Raised Status Company Type Premium to Last Purpose Announced (A$m) Price (%) Strengthen balance sheet and 20-Sep-19 Pending Swick Mining Services Ltd Placement 15 8% providing liquidity to support growth
ACTIVE SHARE BUYBACKS
Date Announced Company Type Size Purpose
Acquire shares where the Board deems the 21-Feb-19 Cardno On-market 10% share price to be below intrinsic value
14-Dec-18 CIMIC Group Limited On-market 10% Ongoing capital management
21-Nov-18 Boom Logistics On-market 10% Ongoing capital management
20-Nov-18 ALS On-market Up to A$225m Ongoing capital management
Source: Company announcements. 11
11 Executive Movements
EXECUTIVE & DIRECTOR APPOINTMENTS
Date Announced Company Name Role Date Effective
23-Sep-19 Macmahon Holdings Limited Bruce Munro Non-executive Director 1-Oct-19
23-Sep-19 Macmahon Holdings Limited Hamish Tyrwhitt Non-executive Director 1-Oct-19
23-Sep-19 Macmahon Holdings Limited Michael Finnegan Managing Director 1-Oct-19
2-Sep-19 BSA Limited Christopher Halios-Lewis Non-executive Director 29-Aug-19
26-Aug-19 Boart Longyear Limited Tye Burt Non-executive Director 23-Aug-19
26-Aug-19 Boart Longyear Limited Kevin McArthur Chairman 1-Sep-19
15-Aug-19 Tempo Australia Ltd William Howard Director 16-Aug-19 Resource Development Group 12-Aug-19 Ivan Ruefli Director 12-Aug-19 Limited 6-Aug-19 Synertec Corporation Limited Dennis Lin Non-executive Director 27-Aug-19
29-Jul-19 Swick Mining Services Ltd Stuart Carmichael Non-executive Director 29-Jul-19
EXECUTIVE & DIRECTOR RESIGNATIONS / RETIREMENTS
Date Announced Company Name Role Date Effective
30-Sep-19 Downer EDI Limited Annabelle Chaplain Non-executive Director 7-Nov-19
5-Sep-19 Service Stream Limited Raelene Murphy Non-executive Director 23-Oct-19
30-Aug-19 Orica Limited Ian Cockerill Non-executive Director 30-Aug-19
21-Aug-19 Seven Group Holdings Limited Bruce McWilliam Director 14-Nov-19
19-Aug-19 Imdex Limited Bernie Ridgeway Managing Director 1-Jul-20
15-Aug-19 Tempo Australia Ltd Ian Lynass Non-executive Director 16-Aug-19
15-Aug-19 Ausdrill Limited Keith Gordon Non-executive Director 1-Sep-19 Resource Development Group Non-executive Director & 12-Aug-19 Andrew (Andy) Haslam 12-Aug-19 Limited Chairman 6-Aug-19 Synertec Corporation Limited Freddie Heng Non-executive Director 27-Aug-19
Source: Company announcements. 12
12 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
Advised CHAMP Advisor to Coffey Advised Clough Adviser to Adviser to Advisor to SCEE and Frontenac International in in relation to its Barminco on its Quadrant on the in relation to the on the sale of relation to takeover by acquisition by sale of CQMS acquisition of H-E Parts acquisition by Murray & Ausdrill Razor Heyday5 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
13 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 Mark Stevens Executive Director, Perth Managing Director, Sydney Managing Director, Melbourne E: [email protected] E: [email protected] E: [email protected] T: +61 8 9213 0286 T: +61 2 9224 0237 T: +61 3 9664 0381
Gresham Advisory Partners Limited ABN 88 093 611 413
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