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1
Gresham Mining & Infrastructure Services Quarterly
Chris Branston
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 trendsacross 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) hascontinued 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 themid-large size constituents, with Seven Group, WorleyParsons, ALS, Emeco and Service Stream allrecording significant gains. However, there has been variability in market performance across thegroup, highlighted by more than half of the 50 companies recording share price falls. The mostdramatic loss of value was seen by RCR Tomlinson, which recently undertook a deeply discountedentitlement offer following cost overruns at a major solar project.
The FY18 reporting season was generally positive, with the majority of constituents achievingdouble digit revenue and EBITDA growth for the period. Analysts are forecasting similar growthover 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 onthe improving conditions in the mining sector that are contributing to the performance of servicescompanies. In particular, recent data illustrates that there has been increases in explorationspending as well as a number of new mining projects which will support order books across arange of businesses.
Private M&A has been active during the year, with the most significant transaction being Ausdrill’sannounced acquisition of hard-rock underground mining specialist Barminco at an enterprisevalue of c.$700m. The merger of SRG and GCS has been the only public deal announced to date in2018.
Editorial Team
Gresham Advisory Partners Ltd is a leading Australian mergers and acquisitions/corporate advisorybusiness and one of Australia’s largest and highest ranking independent corporate advisors.
Edition 21
October 2018
The Gresham Mining and Infrastructure Services Index is a market capitalisation weighted index comprising 50 mining and infrastructure services companies selected by Gresham at the date of this report.
David Burton
Tom Waddell
(1)
2
Ranks
Company
Market Cap (A$m) Share priceΔ %Sep Dec 30 Sep 18 31 Dec 17
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%
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%
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%
Share Price Movements
Notes: (1) Performance measured over the period 31-Dec-17 to 30-Sep-18 (inclusive). Source: FactSet, IRESS.
2
Leaders Laggers
GMISI CONSTITUENTS1 LEADERS & LAGGARDS (SHARE PRICE)1
PERFORMANCE RELATIVE TO S&P 200 INDICES1
PERFORMANCE OVER TIME
3
FY2018 Results Summary
3
Notes: (1) Only companies with consensus earnings forecasts are included in charts.Source: FactSet.
Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)
NET DEBT / ENTERPRISE VALUE
EBITDA MARGINS (FY18)
EBITDA GROWTH (FY17-18)
REVENUE GROWTH (FY17-18)
FY2018 results were generally positive, with more than half of index constituents reporting double digit revenue andEBITDA growth. Balance sheets across the sector are relatively conservative.
4
FORECAST REVENUE GROWTH (FY18-20F CAGR)
FORECAST EBITDA GROWTH (FY18-20F CAGR)
EBITDA MARGINS (FY19F)
Forecast Earning & Profitability
4
Notes: (1) Only companies with consensus earnings forecasts are included in charts.Source: FactSet.
Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)
Analysts are forecasting a continuation of recent growth over FY19-20, with nearly all companies expected to achieveincreases in earnings over the next two years, driven by strong revenue growth as well as margin expansion.
5Notes: (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.
Valuation MultiplesWhile there has been some downward trending in sector valuation multiples in 2018 as analyst earnings expectationshave been revised, multiples generally remain strong. The median GMISI constituent FY19 forecast P/E multiple of c.14xsits materially above the longer term forward median multiple of c.10x, and nearly all large cap companies have a PE ofgreater than 15x.
5
Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)
1 YEAR FORWARD PRICE EARNINGS RATIO OVER TIME
DIVIDEND YIELD (FY19F)
PRICE EARNINGS RATIO (FY19F)
6
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.
Valuation Multiples (cont.)
Market expectations regarding growth are also reflected in enterprise value multiples, with the median FY19 EBIT andEBITDA multiples being 10.9x and 6.7x respectively. Nearly all companies are trading substantially above net assetvalue.
6
Large Cap (>$1bn) Mid Cap (between $200m and $1bn) Small Cap (<$200m)
Companies trading at a discount to NTA
EV/EBIT (FY19F)
EV/EBITDA (FY19F)
PRICE/NTA
7
Contract Awards
7
Source: Company announcements.
Date Announced
Company Client Project/Facility Location Services Value (A$m)Commodity/
Sector
28-Sep-18 CIMIC Group Victorian Government Metro Tunnel VIC Design and construction 400 Infra.
18-Sep-18 CIMIC GroupNew Zealand Government
Waikeria Corrections and Treatment
Facility PPPNZ Design and construction NZ$750 Infra.
17-Sep-18 CIMIC Group Antofagasta Minerals Encuentro Chile Mining services 420 Copper
13-Sep-18 Decmil Group QGC Various QLDConstruction, logistics and
maintenance150 Gas
10-Sep-18 CIMIC Group BHP Nickel West Leinster WA Mining services 190 Nickel
7-Sep-18 Ausdrill (Barminco) AngloGold Ashanti Sunrise Dam WAUnderground mining
services700 Gold
5-Sep-18 Downer EDIMillmerran Power
PartnersCommodore QLD Mining services 286 Coal
4-Sep-18 Decmil GroupMajor Road Project
AuthorityDrysdale Bypass VIC Design and construction 86 Infra.
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
28-Aug-18 CIMIC Group NLEX CorporationNorth Luzon Expressway
Philippines Construction 140 Infra.
21-Aug-18 WorleyParsons Woodside EnergyNorth West Shelf
projectWA EPCM n/a Oil & Gas
21-Aug-18 Pacific Energy Mineral Resources Wodgina WA EPC (power station) 30 Lithium
21-Aug-18 WorleyParsons ChevronChina Manufacturing
Plant Project
Zhejiang Province,
ChinaEPC n/a Oil & Gas
21-Aug-18 GR Engineering Services Saracen Carosue Dam WA EPC 18 Gold
17-Aug-18 WorleyParsons PT PertaminaRefinery
Development Master Plan
Balikpapan, Indonesia
Project management consultancy
n/a Oil & Gas
13-Aug-18 Ausdrill (AUMS) Roxgold Bagassi South Burkina FasoUnderground mining
servicesUS$160 Gold
9-Aug-18 WorleyParsons CNOOC Buzzard Phase II UK EPC n/a Oil & Gas
7-Aug-18 Watpac Queensland HealthRoma Hospital
RedevelopmentQLD Construction 74 Infra.
MAJOR CONTRACT AWARDS
The second half of FY2018 saw a reasonable amount of contract activity. There was a long list of small to medium sizeawards to the ASX-listed companies as well as a number of much larger contract wins, including MACA’s recent $700million life-of-mine contract with Chinese-owned Carabella Resources.
8
Contract Awards (cont.)
8
Source: Company announcements.
Date Announced
Company Client Project/Facility Location Services Value (A$m)Commodity/
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
9-Jul-18Southern Cross
Electrical EngineeringCPB Dragados Samsung Westconnex NSW Electrical Installation 55 Infra.
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
15-Jun-18 Visionstream NBN Co NBNVIC, QLD,
NSWConstruction 390 Infra.
15-Jun-18 CIMIC Group BHP South Flank WA Mining Infrastructure 260 Iron Ore
15-Jun-18 Decmil GroupNew Zealand
Department of Corrections
n/a NZ Construction 125 Infra.
14-Jun-18 Watpac Adelaide AirportAdelaide Airport
Terminal ExpansionSA Construction Management n/a Infra.
12-Jun-18 Pacific Energy Beacon Minerals Jaurdi Gold Project WA Electricity supply n/a Gold
6-Jun-18 WatpacNSW Health
InfrastructureHornsby Ku-ring-gai
HospitaNSW Building works n/a Infra.
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
30-May-18 WorleyParsons Tullow Oil South Lokichar Kenya front end engineering design n/a Oil & Gas
30-May-18 WatpacQueensland Government
North Queensland Stadium
QLD managing contractor n/a Infra.
29-May-18 NRW Holdings Coronado Curragh QLD Mining Services 210 Coal
29-May-18 Watpac Department of DefenceExplosive Ordnance
Logistics Reform Programs
NSW; VIC Construction 120 Infra.
29-May-18 Downer EDI New Century ResourcesCentury Open Pit
MineQLD Mining Services n/a Zinc
28-May-18Zenviron
(Monadelphous and ZEM Energy)
CWP RenewablesCrudine Ridge Wind
FarmNSW EPC 200 Infra.
9
Contract Awards (cont.)
9
Source: Company announcements.
Date Announced
Company Client Project/Facility Location Services Value (A$m)Commodity/
Sector
25-May-18 Ausdrill (AUMS) SEMAFOSiou Underground
MineBurkina Faso Mining Services US$211 Gold
24-May-18 CIMIC GroupSingapore’s Land
Transport Authority
North-South Transportation Corridor project
SingaporeEngineering and
construction380 Infra.
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
15-May-18 WorleyParsonsYanbu Aramco Sinopec
Refining CompanyYanbu Industrial City Saudi Arabia. General engineering service n/a Oil & Gas
14-May-18 Downer EDI First Solar Beryl Solar Farm NSW EPC 150 Infra.
1-May-18 Decmil GroupNew Zealand’s Ministry
of EducationNew NZ Schools NZ Construction NZ$24.3 Infra.
30-Apr-18 RCR Tomlinson Pacific Hydro Haughton Solar Farm QLD EPC, O&M 175 Infra.
10-Apr-18 RCR Tomlinson SynergyGreenough River
Solar FarmEPC 60 Infra.
28-Mar-18 MMA Offshore ConocoPhillips Bayu-Undan Timor Supply support services n/a Oil & Gas
28-Mar-18Global Construction
ServicesCITIC Pacific Mining Sino Iron Project WA Scaffolding services n/a Iron Ore
28-Mar-18 CIMIC Arutmin Senakin Indonesia Mining services 150 Coal
26-Mar-18 CIMIC BHP Mount Arthur NSW Mining services 185 Coal
23-Mar-18 BSALendlease Bouygues
Joint VentureNorthConnex Project NSW Fire protection n/a Infra.
20-Mar-18 WorleyParsons Kuwait Oil CompanyKuwait Environmental Remediation Program
Kuwait Project management 129 Oil & Gas
6-Mar-18 CIMICAustralian Terminal
Operations Management
BP Fuel Terminals AUS Asset management 150 Oil & Gas
5-Mar-18 RCR TomlinsonAustralian Defence
ForceJindalee Operational
Radar NetworkWA Facilities management 93 Infra.
28-Feb-18 Downer EDIBHP Billiton Mitsubishi
AllianceBlackwater QLD Mining services 600 Coal
27-Feb-18 NRW Holdings Rio Tinto Marandoo WA Civil works 37 Iron Ore
20-Feb-18Alliance Aviation
ServicesGlencore Ernest Henry Mine QLD Transport services n/a
Copper / Gold
19-Feb-18 Watpac8 South Esplanade Pty
LtdEI8HT South Esplanade
VIC Construction services 82 Real Estate
9-Feb-18 Decmil GroupVicRoads & Melton City
Council
Plenty Road Upgrade & Westwood Drive
ExtensionVIC Road construction 37 Infra.
2-Feb-18Alliance Aviation
ServicesNewmont Granites Mine NT Transport services n/a Gold
15-Jan-18Alliance Aviation
ServicesGlencore Celmont Mine QLD Transport services n/a Coal
15-Jan-18 RCR TomlinsonMetro Trains Melbourne
Melbourne Underground Rail
LoopVIC Construction services 70 Infra.
10
Corporate Activity
10
Date Announced
Status Target BusinessTarget
HQSeller Acquirer
Value (A$m)
ForumInterest
(%)Cons.
21-Aug-18 Complete Osmoflo HoldingsWater recycling
plantsSA n/a
Hitachi Zosen Corporation
n/a Private 100% Cash
15-Aug-18 Pending BarmincoUnderground mining
contractorWA
Various investors
Ausdrill 697 Private 100% Scrip
5-Jul-18 Complete CQMS Razer Mining products QLDQuadrant
Private Equity
American Industrial Partners
n/a Private 100% Cash
4-Jul-18 PendingG&S Engineering
ServicesEngineering services WA Calibre DRA Group n/a Private 100% Cash
21-Jun-18 Complete Vertech Group Engineering services WAGlobal Energy
Sonomatic n/a Private n/a n/a
12-Jun-18 Pending SRGEngineering and
construction servicesWA n/a
Global Construction Services
137 Public 100% Scrip
2-May-18 Complete HiSeisHard rock
exploration servicesWA
Curtin University
Ausdrill n/a Private n/a Cash
2-May-18 CompleteDiamond
Communications
Underground network installation
servicesWA Ausdrill Powerlines Plus n/a Private 100% n/a
30-Apr-18 Pending Fero GroupSteel manufacturing and anti-corrosion
WAFranco family
DSI Underground Australia
n/a Private 100% Cash
30-Apr-18 CompleteMatilda Equipment
HoldingsEquipment hire QLD n/a Emeco Holdings 80 Private 100% Cash
23-Mar-18 CompleteContract Power
GroupRemote power
generationWA n/a Pacific Energy 90 Private 100%
Cash and scrip
12-Mar-18 CompleteElton Consulting
GroupProfessional and advisory services
NSW n/a Veris 16 Private 100%Cash and
scrip
13-Feb-18 Pending TMM Group Mining services QLD n/a Macmahon n/a Private 100%Cash and
scrip
12-Feb-18 Pending Radco Drilling Drilling services QLD n/a Mitchell Services 5 Private 100% Cash
31-Jan-18 CompleteThe Rutherford
GroupElectrical
products/servicesNSW n/a The PBE Group n/a Private 100% Cash
31-Jan-18 Complete Alex Fraser GroupMaterials recycling
servicesVIC
John Swire & Sons
Hanson Australia 208 Private 100% Cash
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
10-Jan-18 CompleteHy-Performance
Fluid Power
Hydraulic and drive products and
servicesQLD n/a Atlas Copco AB 21 Private 100% Cash
4-Jan-18 Complete APTSPipeline
maintenance services
WA n/a Valmec Limited n/a Private 100% Cash
Source: Company announcements.
MERGERS & ACQUISITIONS
The major transactions announced during 2018 have been Ausdrill’s acquisition of Barminco which will createAustralia’s second largest mining services company, and the merger of SRG and GCS.
11
Corporate Activity (cont.)
11
Source: Company announcements.
CAPITAL RAISINGS
ACTIVE SHARE BUYBACKS
0.8 Status Company TypeAmount Raised
(A$m)
(Discount) / Premium to Last
Price (%)Purpose
28-Aug-18 Active RCR Tomlinson Limited Entitlement Offer 100 (64.3%) Strengthen balance sheet
23-Aug-18 Active Decmil Group Limited Placement 50 (12.6%)Improve cash position and
to fund strategic opportunities / tenders.
17-Aug-18 Active Ausdrill Limited Entitlement Offer 250 (14.0%) Repayment of debt
25-Jul-18 ActiveFleetwood Corporation
LimitedEntitlement Offer 60 (11.8%) Acquisition funding
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
19-Jan-18 Complete AJ Lucas Group LimitedPlacement + Entitlement
53 (11.1%) Reduce borrowings
8-Jan-18 Complete Valmec Limited Placement 5.1 (4.0%) Reduce borrowings
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
28-Feb-17 Cardno On-market Up to 10.0%Acquire shares where the Board deems the
share price to be below intrinsic value
A number of companies have tapped the market during 2018, with several entitlement offers relating to acquisitionfunding. RCR Tomlinson also announced a deeply discount $100m rights issue to strengthen its balance sheet andaddress financial impacts of the cost overruns at a solar project.
12Notes: (1) Excludes alternate appointments; (2) Internal appointment. Source: Company announcements.
Executive Movements
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
12
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
EXECUTIVE & DIRECTOR APPOINTMENTS1
EXECUTIVE & DIRECTOR RESIGNATIONS / RETIREMENTS
13
Quarterly Focus: Mining Expenditure
13
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).
While infrastructure spending has been a key feature of the market, improving activity in the mining sector has alsobeen a driver of the solid FY18 reporting season and outlook for FY19. Strengthened commodity prices have driven arebound in exploration expenditure, and there is evidence that mining capex has bottomed with the number and valueof new projects increasing over the last year.
EXPLORATION SPENDING
CAPEX SPENDING
Exploration across gold and base metals has increased significantly over the last year, particularly for brownfieldsprojects. Spending is coming from both the juniors who have enjoyed improved access to capital, and mid-tier to majorproducers seeking to efficiently replace reserves.
This has flowed through to improved activity for exploration exposed services companies. For example, Imdex recordeda 35% EBITDA increase in FY18 as its REFLEX instruments on rent reached its highest level since 2012. Testing servicescompany ALS saw its commodities division EBITDA improve 32% as sample flows improved throughout the year.
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 feasibilitystage across a range of commodities. Capex on new iron ore projects will be a major driver of work for a number of theengineering and construction companies in the coming years.
0
50
100
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Jun-
2008
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2009
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2010
Jun-
2011
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2012
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2013
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Jun-
2015
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2016
Jun-
2017
Jun-
2018
Base Metals Gold Iron Ore Coal
0
200
400
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1,000
1,200
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-20
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09
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10
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New Deposits Existing Deposits
Mineral Exploration by Commodity ($m) Mineral Exploration by Deposit Type ($m) Gold Exploration Budgets
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Jun-
2009
Feb
-20
10
Oct
-201
0
Jun-
2011
Feb
-20
12
Oct
-201
2
Jun-
2013
Feb
-20
14
Oct
-201
4
Jun-
2015
Feb
-20
16
Oct
-201
6
Jun-
2017
Feb
-20
18
Coal Oil and Gas Metal Ore
Capex by Commodity ($m) Value of Potential New Projects ($b) Major Projects
CompanyFY18($m)
FY19 Budget($m)
Newcrest 72 90-100
Northern Star
45 60
Evolution 32 40-55
Saracen 17 60
St Barbara 14 21-27
(1) Based on USD budgets converted at 0.72 AUD/USD
Company Project Capex ($m)
BHPSouth Flank (Iron ore)
US$3,400m
RioKoodaideri(Iron ore)
US$2,200m
FMGEliwana (Iron ore)
US$1,275m
Oz Minerals
Carrapeteena A$900m
Cooper Energy
Sole Gas A$355m
0
50
100
150
200
250
Publicly announced Feasibility
Oct-13 Oct-14 Oct-15 Oct-16 Oct-17
14
Gresham’s Credentials
LANDMARK MERGERS & ACQUISITIONS
TAKEOVER RESPONSE
MINING AND INFRASTRUCTURE SERVICES
Advised Fosters on its $12.3bn
takeover by SABMiller
Advisor to SCEE in relation to the
acquisition of Heyday5
Advised CHAMP and Frontenac on the sale of
H-E Parts International
Advisor to Coffey International in
relation to acquisition by
Tetra Tech
Advised Clough in relation to its
takeover by Murray & Roberts
Adviser to Barminco on its
proposed acquisition by
Ausdrill
AWARDS & ACCOLADES
2011 M&A Deal of the Year
SABMiller’s acquisition of
Foster’s Group
2009 Most Innovative Deal
Babcock & Brown
Infrastructure’s recapitalisation
Secondary Market Equity Raising of
the Year
Wesfarmers’ $2.6bn equity
raising
2007 Best M&A Deal
Wesfarmers’ acquisition of
Coles
Best M&A Deal in Australia
Wesfarmers’ acquisition of
Coles
Advised Boral on the formation of a US$1.6bn joint
venture with USG Corporation
2013
Advised First State Super on
its acquisition of the land titles and registry
functions of Land Use Victoria
2018
2011
2017 2016 2015 20132018
2013
Advised David Jones in relation to acquisition by
Woolworths
2014
Advised Bank of Queensland on
the acquisition of $2.5bn loan
portfolio from Investec
2014
Advised Wesfarmers on the sale of its
underwriting and insurance broking
businesses
2014
Excellence in Corporate
Advisory - 2012
Boutique / Independent
Lead Independent
financial adviser to the Board of BHP Billiton on
the demerger of South32
2015
Advisor to UGL in relation to its takeover by
CIMIC
2017
Advised Asciano on its takeover by a
consortium led by Canada Pension Plan Investment
Board
2016
Advised the Lonsdale
Consortium on the acquisition of
a 50-year lease of Port of
Melbourne
2016
Advised DUET Group in relation
to its $13bn takeover by a
consortium comprising CKP,
CKI and PAH
Advised Little World
Beverages on its acquisition
by Lion
2017
Adviser to Quadrant on the
sale of CQMS Razor
2017
15
Contact Details
Gresham Advisory Partners LimitedABN 88 093 611 413
Level 17, 167 Macquarie Street
Sydney NSW 2000
Telephone: +61 2 9221 5133
Facsimile: +61 2 9221 6814
Level 39, 120 Collins Street
Melbourne VIC 2000
Telephone: +61 3 9664 0300
Facsimile: +61 3 9650 7722
Level 3, 28 The Esplanade
Perth WA 6000
Telephone: +61 8 9486 7077
Facsimile: +61 8 9486 7024
www.gresham.com.au
Chris BranstonExecutive Director, PerthE: [email protected]: +61 8 9213 0290
Terms and Conditions
Information contained in this publicationThe 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. GreshamAdvisory 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 forthe purpose of making a financial decision.
To whom this information is providedThis 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 toany person who is a retail client within the meaning of section 761G of the Corporations Act 2001.
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CopyrightCopyright 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 mattersThese 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 fordetermining 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 thatjurisdiction. 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 severancealters 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 waiveGresham Advisory Partners’ right to act with respect to subsequent or similar breaches.
Michael SmithExecutive Director, PerthE: [email protected]: +61 8 9213 0290
Matt KeenanManaging Director, MelbourneE: [email protected]: +61 3 9664 0353
Charlie GrahamManaging Director, SydneyE: [email protected]: +61 2 9224 0247
Michail LagogiannisExecutive Director, MelbourneE: [email protected]: +61 3 9664 0375
Neville SpryManaging Director, SydneyE: [email protected]: +61 2 9224 0237