FEBRUARY 2015 ENGINEERING & CONSTRUCTION REPORT

Transcription

1 FEBRUARY 2015 ENGINEERING & CONSTRUCTION REPORT Executive Summary The Mining and Oil & Gas Services sector closed up 7.5% at the end of February. Bradken (18.7%), PPK Group (11.7%) and MacMahon Holdings (10.5%) saw the largest falls during the month, whilst Mastermyne increased 43.8%. NTM EV/EBITDA multiples closed at an average of 7.2x, up from January s close of 4.2x. The Construction and Maintenance sector closed up 7.1% at the end of February. Calibre Group continued heading down, with a further 20% slide during the month of February. Maca Limited closed the month up 34.1%. Sector average LTM EV/EBITDA multiples closed up at 5.6x from 4.3x at the end of January. The Engineering and Construction Management sector closed up 7.1%. Coffey (24.5%) and Ausenco (20.5%) saw the largest downward moves during the month. Sedgman increased 45.7%. Overall sector average EV/EBITDA was up over the period at 7.7x, from 5.3x at the end of January. M&A Activity ESCO is reportedly looking to acquire Bradken Walker Corporation has completed due diligence on the office and retail business of Leighton Properties Monadelphous Group is looking for acquisitions INDEXED SHARE PRICE PERFORMANCE 20.00% Last Month 30.00% Last Twelve Months 15.00% 10.00% 10.00% 10.00% 5.00% 30.00% 0.00% 50.00% 5.00% 02 Feb Feb Feb Feb % Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 VALUATION PERSPECTIVES (EV/EBITDA) 14.0x Last Month 16.0x Last Twelve Months 12.0x 14.0x 10.0x 12.0x 8.0x 10.0x 8.0x 6.0x 6.0x 4.0x 4.0x 2.0x 02 Feb Feb Feb Feb x Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 EAC Partners has constructed a market capitalisation weighted index for the Mining and Oil & Gas Services, Construction and Maintenance and Engineering and Construction Management sub sectors: The charts shown are the indexed share price performance for the constituent companies of the EAC coverage group and the ASX200 Industrials Index. ASX 200 Industrial Index Mining, Oil & Gas Services Construction & Maintenance Engineering & Construction Management 1

2 CONSTITUENTS Mining and Oil & Gas Services ASX Ticker Closing Price Monthly Movement Austin Engineering Ltd. ANG % Ausdrill Ltd. ASL % Bradken Limited BKN 2.22 (18.7%) Boart Longyear Limited BLY % Emeco Holdings Limited EHL % Imdex Limited IMD % MacMahon Holdings Ltd. MAH 0.05 (10.5%) Matrix Composites & Engineering Limited MCE % Monadelphous Group Limited MND % Mastermyne Group Limited MYE % NRW Holdings Limited NWH 0.27 (5.3%) PPK Group Limited PPK 0.53 (11.7%) RCR Tomlinson Limited RCR % Swick Mining Services Limited SWK 0.18 (7.9%) UGL Limited UGL 1.74 (3.3%) WDS Limited WDS % Market Cap EV EV / EBITDA EV / EBITDA P / E P / E ND / EBITDA Div Yield (AUD) (AUD) (LTM) (NTM) (Trailing) (Forward) (Trailing) (Trailing) x 6.6x NM 17.2x 5.8x NM x 3.6x NM 6.1x 2.4x 5.2% x 5.1x NM 7.7x 2.5x NM x 54.2x NM NM 33.0x NM x 6.0x NM NM 4.5x NM NM 5.2x NM 16.7x NM NM x 1.0x NM 6.4x 0.4x NM x 2.2x 10.5x 8.7x NM 5.7% x 4.4x 7.4x 9.0x NM 12.8% x 4.3x NM 12.6x 0.2x 7.0% x 1.3x NM 9.3x 0.3x NM x NM 10.3x NM 6.4x 6.6% x 4.6x 8.2x 8.5x 0.7x 4.0% x 2.3x 17.2x 9.2x 1.0x 2.3% NM 4.9x NM 11.8x 9.5x NM x 2.0x NM 12.5x NM 81.4% Average 6.6% 13.5x 7.2x 10.7x 10.4x 5.6x 15.6% Construction and Maintenance AJ Lucas Group Limited AJL % BSA Limited BSA % Calibre Group Limited CGH 0.24 (20.0%) Downer EDI Limited DOW % Leighton Holdings Limited LEI % MACA Limited MLD % Programmed Maintenance Services Ltd. PRG % Saunders International Limited SND 0.73 (5.2%) Service Stream Limited SSM % Southern Cross Electrical Engineering Limited SXE 0.38 (15.6%) Transfield Services Limited TSE % x NM NM NM NM NM x 4.3x NM 13.3x 1.7x NM x 2.3x NM 4.8x 0.0x NM 1, , x 4.1x 9.8x 9.6x 0.0x 5.4% 7, , x 6.1x NM 14.8x 1.5x 5.0% x 1.7x 4.0x 4.3x NM 13.6% x 5.0x 10.7x 8.9x 0.7x 7.0% x NM 9.1x NM NM 8.2% x NM 12.8x NM 0.8x 4.8% x 1.8x 10.9x 9.0x NM 7.1% , x 5.3x 13.2x 9.1x 2.6x NM Average 3.7% 5.6x 3.8x 10.1x 9.2x 1.1x 7.3% Engineering and Construction Management Ausenco Limited AAX 0.33 (20.5%) Cardno Limited CDD % Coffey International Limited COF 0.20 (24.5%) Logicamms Limited LCM % Lycopodium Ltd. LYL % Sedgman Limited SDM % WorleyParsons Limited WOR % NM 4.9x NM 8.6x NM NM x 6.6x 8.2x 8.2x 1.6x 10.9% x 5.5x 15.5x 20.0x 2.3x NM x 2.2x 7.5x 6.0x NM 7.2% x NM NM NM NM 4.3% x 3.3x 45.8x 17.2x NM 5.2% 2, , x 6.5x 10.3x 11.0x 1.0x 8.5% Average 5.8% 7.7x 4.8x 17.4x 11.8x 1.6x 7.2% Coverage Group Average 5.5% 9.5x 5.8x 12.4x 10.4x 3.6x 10.6% Source: ASX, Company Websites, Capital IQ, Reuters, Bloomberg 2

3 AJ Lucas Group Limited announced consolidated earnings results for the first half year ended December 31, For the period, the company reported total revenue of AUD 79,429,000 against AUD 119,872,000 a year ago. Loss from operating activities was AUD 5,195,000 against AUD 69,920,000 a year ago. Ausdrill Ltd. announced the appointment of Mark Hine as a non executive director. Mr. Hine is a mining engineer, who has extensive mining experience with more than 25 years of senior management roles in both surface and underground mining operations. Ausdrill Ltd. reported consolidated earnings results for the half year ended December 31, For the period, the company reported revenue from continuing operations of AUD 414,665,000 against AUD 424,181,000 a year ago. Loss before income tax was AUD 200,385,000 against profit before income tax of AUD 13,966,000 a year ago. Ausenco Limited reported earnings results for the year ended December 31, For the period, the company reported revenue from continuing operations of AUD million against AUD million a year ago. Underlying EBITDA was AUD 1.4 million against AUD 27.1 million a year ago. Austin Engineering Ltd. reported consolidated earnings results for the half year ended December 31, For the half year, the company reported revenue of AUD 102,051,000 compared to AUD 106,414,000 a year ago. Loss before income tax was AUD 42,597,000 compared to profit before income tax of AUD 1,154,000 a year ago. Boart Longyear Limited announced changes to its Board of Directors. Barbara Jeremiah and Roy Franklin will be retiring from the Board, and Marcus Randolph and Bret Clayton will be joining the Board following the recent completion of the recapitalisation transactions. Mr. Randolph also will assume the responsibilities of Board Chair from Ms. Jeremiah at the time of his appointment. All of the changes will take effect on 25 February Mr. Randolph will join the company as its new Chair of the Board after serving more than 35 years in the mining industry in a variety of global, senior executive roles. Most recently, he was Chief Executive of BHP Billiton's Ferrous and Coal business from July 2007 to September 2013, located in Melbourne, and was a member of BHP's Group Management Committee. Mr. Clayton comes to the Board after a career at Rio Tinto, where he worked for 20 years and served on the Executive Committee for seven years. Boart Longyear Limited reported consolidated earnings results for the year ended December 31, The company reported revenue of $867 million compared to $1,223 million in 2013 and statutory EBITDA of $83 million compared to $337 million in Bradken Limited reported consolidated earnings results for the half year ended December 31, For the period, the company reported revenue from continuing operations was AUD 495,375,000 against AUD 563,571,000 a year ago. Underlying EBITDA was AUD 72.3 million compared to AUD 86.2 million a year ago. BSA Limited announced earnings results for the half year ended December 31, The company reported an EBITDA profit for the half year ended 31 December 2014 of AUD 6.7 million against AUD 13.8 million loss a year ago. The Group reported an increase in first half revenues of 7.1% to AUD million against AUD million a year ago. The company reaffirmed its target to achieve full year revenue guidance of AUD 500 million. Calibre Group Limited announces a share repurchase program. Under the program, the company will repurchase up to 7,000,000 shares, representing 2% of its issued share capital. Calibre Group Limited reported consolidated earnings and operating results for the half year ended December 31, For the period, the company reported revenue of AUD compared to AUD million and a loss before tax of AUD million compared to profit before tax of AUD 13.2 million. Cardno Limited announced earnings results for the December 2014 half year. For the period, the company reported a net profit after tax of AUD 31.5 million for the December 2014 half year. Gross revenue was AUD million against AUD million, last year. Source: ASX, Company Websites, Capital IQ, Reuters, Bloomberg 3

4 Coffey International Ltd. announced earnings results for the six months ended December 31, For the period, the company reported net profit fell 52% to $965,000 in the six months to December 31 from $2.02 million for the first half last year. Revenue was down 9% to $ million from $ million. EBITDA fell 18% to $10.39 million from $12.61 million. Devine Limited reported unaudited consolidated earnings results for the year ended 31 December The company has posted a pre tax profit of AUD 10 million for the 12 months ending 31 December Downer EDI Limited announced consolidated earnings results for the six months ended December 31, For the six months, the company made a profit of AUD 94.7 million, down 4.4% from AUD 99.1 million compared with the corresponding time in Revenue was AUD 3.4 billion, down 10.2% from AUD 3.8 billion a year ago. Downer EDI Limited announced that it had been awarded an expanded contract to perform mining services for Fortescue Metals Group Limited at the Christmas Creek open cut iron ore mine in Western Australia. Downer's new contractual arrangement with Fortescue, which runs until the end of September 2016, is valued at approximately $720 million. The new contract includes an option for an additional year. Downer EDI Limited announced that it had signed a locomotive maintenance agreement with Pacific National Pty Ltd. (Pacific National) valued at approximately $1 billion. The term of the agreement is ten years. Under the agreement, Downer will provide a full suite of asset management services for over 300 Pacific National locomotives. Emeco Holdings Limited announced consolidated financial results for the six months ended December 31, For the period, the company reported revenues from ordinary activities of AUD million against AUD million a year ago. Loss from ordinary activities after tax attributable to members Of the company was AUD 53.6 million against AUD million a year ago. Bradken Limited ESCO is reportedly looking to acquire Bradken Limited (ASX:BKN). US equipment manufacturers along with ESCO are reportedly watching Bradken closely and considering a bid for parts or all of the company. Downer EDI Limited From August 5, 2014 to December 31, 2014, the company has repurchased 2,716,761 shares, representing 0.62% for AUD million. Worley Parsons Huu ay aht First Nations and Steelhead LNG announced they have signed a contract with WorleyParsons for the provision of environmental, engineering, geotechnical and regulatory services at their proposed LNG project at Sarita Bay on Vancouver Island. The contract could be worth in excess of $30 million. Imdex Limited reported unaudited combined earnings results for the first half year ended December 31, For the period, the company reported statutory revenue of AUD million compared to AUD 92.2 million a year ago. EBITDA was AUD 20.7 million compared to AUD 24.2 million a year ago. Leighton Holdings Limited is likely to be carved up by separate buyers as the Spanish conglomerate that controls Leighton Holdings launched a fresh sales process this week allowing for a split of the commercial and residential development units. Leighton Holdings Ltd. announced consolidated earnings results for the full year December 31, For the year, the company reported revenue of $16,875.8 million compared to $16,258.7 million a year ago. Loss before tax was $90.7 million compared to profit before tax of $358.0 million a year ago. Leighton Holdings Walker Corporation Pty Ltd. completed due diligence of the office and retail development business of Leighton Properties Pty Limited to acquire it from HOCHTIEF Australia Holdings Limited. The office and retail development business is valued at $7.6 billion. The business was put on sale in June last year. Logicamms Limited reported earnings results for the half year ended December 31, For the period, the company's revenue from ordinary activities was AUD 69,250,000 against corresponding revenue from ordinary activities of AUD 67,344,000. EBITDA was $6.3 million against $3.0 million. 4

5 Lycopodium reported unaudited earnings results for the half year ended December 31, For the half year, the company reported profit of $1,626,946 against $6,273,057 for the same period a year ago. Profit before income tax expense was $1,532,599 against $9,728,986 for the same period a year ago. Revenues were $59,865,567 against $95,843,322 for the same period a year ago. MACA Limited reported earnings results for the half year ended December 31, For the period, the company reported revenue iof $319.7 million against $306.2 million a year ago. EBITDA was $80.5 million against $72.9 million a year ago. Macmahon Holdings Ltd. provided revenue guidance for the full year of The company has warned that its revenue forecast for the full year is now in the range of $600 million to $700 million. This follows the decision by Fortescue Metals Group Ltd. to consolidate its two Christmas Creek Mines in Western Australia and engage a single contractor to manage both operations. MacMahon Holdings Ltd. reported earnings results for the half year ended December 31, For the period, Revenue was $384.3 million, down 30% from $550 million. Underlying EBITDA from continuing operations was $55.9 million. Underlying net profit after tax was $11.3 million. Mastermyne Group Limited announced that Chairman and Mastermyne founder, Mr. Darren Hamblin has stepped back into a Non Executive Director s role to make way for the appointment of current MYE Non executive Director, Mr. Colin Bloomfield to the Chairman s role. Mr. Bloomfield brings to the Chairman s role over 27 years of mining experience in technical, operations, management and corporate roles. In Mr. Bloomfield s previous role he led BHP Billiton s Illawarra Coal Group as President Illawarra Coal, a role he was appointed to in The Company also advised that Mr. Bill Lyne has resigned from the role of Company Secretary and Mr. Chris Kneipp has been appointed as Company Secretary. Mastermyne Group Limited reported earnings results for the half year ended December 31, For the period, the company reported revenue from ordinary activities was $77,739,000 against $77,270,000 a year ago. Net loss after tax from ordinary activities was $5,750,000 against net profit after tax from ordinary activities of $0.772 million a year ago. Matrix Composites & Engineering Limited announces a share repurchase program. Under the program, the company will repurchase up to 9,455,542 shares, representing 10% of its issued share capital. Matrix Composites & Engineering Limited reported consolidated earnings results for the first half ended December 31, The company reported EBITDA of $13.6 million, an increase of 76.7% over the previous corresponding period. First half revenue was $78.5 million, an increase of 20.7% over the previous corresponding period. Monadelphous Group Limited announced unaudited consolidated earnings results for the first half year ended December 31, For the year to date, the company s revenue from continuing operations for the period was AUD 1,054 million, down 17.6% on the near record levels achieved in the previous corresponding period of AUD 1,277 million. EBITDA was AUD million, a decline of 24.8% on an underlying basis. NRW Holdings Limited reported earnings results for the six months ended December 31, For the period, the company has posted revenue of $570 million against $520.9 million reported in the same period last year. EBITDA was $2.7 million against $64.4 million reported last year. NRW Holdings Ltd. has been awarded an extension to its Middlemount contract. Following negotiations with its client (Middlemount Coal), NRW has secured a three year extension valued around $330 million. RCR Tomlinson Ltd. reported consolidated earnings results for the six months ending December 31, EBITDA (before non recurring items) was $39.6 million against $40.7 million a year ago. Sales revenue was $ million against $ million a year ago. 5

6 Saunders International Limited reported earnings results for the half year ended December 31, For the period, the company reported revenue of AUD 24,193,000 against AUD 33,119,000 a year ago. Profit before tax was AUD 3,884,000 against AUD 3,977,000 a year ago. Sedgman Limited announced the appointment of Philippe Etienne and Bart Vogel as Independent, Non Executive Directors to the Sedgman Board effective from 26 February Sedgman Chairman Rob McDonald welcomed Philippe and Bart to the Board and said he was delighted to have appointed such high calibre Directors. Philippe has over 30 years' experience in business management, most recently as Managing Director and CEO of Innovia Security from 2010 until Service Stream Limited announced consolidated earnings results for the first six months ended December 31, For the six months, the company announced that its EBITDA was $10.7 million compared to $7.5 million for the same period a year ago. Revenue was $197.4 million compared to $215.0 million for the same period a year ago. Southern Cross Electrical Engineering Limited reported consolidated earnings results for the six months ended December 31, For the six months, the company reported contract revenue of $ million compared to $ million a year ago. Profit from operating activities was $6.235 million compared to $8.761 million a year ago. Swick Mining Services Limited reported consolidated earnings results for the half year ended December 31, For the year, the company reported revenue of AUD million against AUD million a year ago. EBITDA was AUD 8.4 million against AUD 6.8 million a year ago. Transfield Services Limited The Board of Transfield Services Limited announced the retirement of Independent Director Steve Crane. Geoff Kleemann will assume the Chair of the Risk, Audit and Compliance Committee, bringing to the role extensive experience in the global financial industry and markets. Transfield Services Limited reported earnings results for the first half of fiscal For the period, the company reported underlying EBITDA, of $112.2 million for the half, up 51% on the prior comparable period. For fiscal year 2015, the company reaffirms guidance, expecting Underlying EBITDA to be within a range from $260 million to $280 million. Sedgman Limited The company reported unaudited consolidated earnings results for the half year ended December 31, For the period, the company revenue from services was AUD 144,497,000 against AUD 138,081,000 a year ago. Underlying EBITDA was AUD 13.6 million compared to loss of AUD 0.2 million a year ago. UGL Limited announced consolidated earnings results for the half year ended December 31, For the period, revenue was $1,007,872,000 against $928,931,000 a year ago. Loss before income tax expense was $263,431,000 against $8,127,000 a year ago. UGL Limited announced that Robert Bonaccorso is stepping down as Chief Financial Officer effective 13 March UGL announced that Ray Church has been appointed as Chief Financial Officer and will commence with the company on 25 February Ray has over 25 years' experience working in the construction, engineering and oil & gas industries in Australia and internationally. Prior to UGL, Ray was the Chief Financial Officer of Tenix Pty Limited from 2009 to WDS Limited announced the appointment of Mr. Garry Gill to the role of Company Secretary. Garry is a Chartered Accountant with over 30 years experience in all facets of corporate, financial and administrative functions. He has served as company secretary and in senior executive positions for a number of listed and unlisted public companies. The Company announced that Ms. Anne Hayes has resigned as Company Secretary with effect from 27 February The Company also announced that Mr. Mark Langan has resigned as Company Secretary with effect from 27 February

7 WDS Limited reported earnings results for the six months ended December 31, For the period, the company s net loss after tax was $14.9 million. Group revenue was $113.2 million down 35.5% on prior corresponding period. WorleyParsons Ltd. announced earnings results for the half year ended December 31, For the period, the company announced net profit of $104.3 million. Revenue was $4.42 billion, down 8.4% from $4.82 billion a year ago. 7

8 EAC PARTNERS EAC Partners is an independent corporate advisory firm based in Sydney. Our services include Mergers and Acquisitions, Divestments, Corporate Finance and Capital Raisings. Below is a brief snapshot of our recent experience: Sibelco: Advised on the acquisition of an industrial minerals producer Enviropacific Services: Advised on the divestment of 44% of the shares to Adexum Capital Adani: Advised on the AUD1.25Bn refinance of Adani Abbot Point Terminal Advised on its USD150m maiden USPP issue Advised on its AUD100m 6 year AMTN issue Holcim: Strategic review of two noncore assets Freemantle Media: Advised on the takeover of a listed media business Moko: Advised in relation to an acquisition and capital raise EAC Awards EAC Partners received the 2014 award for Best Boutique Advisory Firm Australia EAC Partners received the 2014 Award for Divestment Advisory Firm of the Year Australia Contact Details: Greg Quinn Managing Director greg.quinn@eacpartners.com.au Robbie Singh Director robbie.singh@eacpartners.com.au Greg Green Associate greg,green@eacpartners.com.au EAC Partners Pty Limited Level 8, 56 Pitt St Sydney NSW 2000 Australia info@eacpartners.com.au ABN: AFSL: