- Lincoln Crowne & Company

WEEKLY
Australian Engineering & Mining Services
7 November 2014
WWW.LCC.ASIA
M&A Rumour and Activity
The Australian market continued to climb higher, posting its fourth straight week of gains as speculation increased of more stimulus in Europe. The
S&P / ASX100 finished the week 20 points higher at 4624 points. The Australian dollar finished the week 2.8 percent lower at US85.5, on the back of
growing expectations of a US interest rate hike and declining commodity prices. The spot price for iron ore fell 5.4 percent over the week to close at
$US75.5 a tonne and the RBA decided to keep the cash rate unchanged for a fourteenth consecutive month, at 2.5 percent.
Engineering, maintenance and property services provider, UGL Limited (ASX: UGL), has completed the sale of its global property services business
DTZ for $1.215 billion to a consortium comprising TPG Capital (www.tpg.com), PAG Asia Capital (www.pagasia.com) and Ontario Teacher’s Pension
Plan (www.otpp.com). Completion of the sale follows the achievement of regulatory approvals and other conditions precedent. Net proceeds from the
sale are expected to be in the range of $1.0-1.05 billion dependent on the finalisation of transaction costs and other sale adjustments including known
liabilities which will be transferred with DTZ. A capital return of up to $500 million, or $3 per share was approved by shareholders at the Company’s
AGM on 30 October 2014. The sale of DTZ will reposition UGL as an engineering and maintenance services business.
Diversified resources and infrastructure services provider, Decmil Group Limited (ASX:DCG), has agreed to acquire the business assets of SAS
Telecom Pty Limited (www.sastel.com.au). SAS is a supplier of communication systems, structured cabling and data supply to accommodation villages,
resource projects, government infrastructure and commercial buildings. The company was placed into administration on 29 August 2014 following a
contractual dispute. SAS earned FY14 revenue of circa $14 million, and had a FY14 EBITDA of circa $1 million. Subject to the satisfaction of conditions
precedents, Decmil will acquire the remaining work in hand and other business assets for an aggregate sum of circa $1 million. The transaction will be
effected as an asset acquisition with a completion date of 1 December 2014. The acquisition aligns with Decmil’s diversification strategy.
It is rumoured that discussions between Chinese infrastructure player, China Communications Construction Company Limited (SEHK:1800), and
Leighton Holdings’ (ASX:LEI), in relation to the sale of construction business, John Holland (www.johnholland.com.au) have progressed. CCCC is
believed to be competing with Samsung C&T Corporation (KOSE:A000830) to acquire John Holland. However, Samsung C&T is said to be interested in
only the infrastructure operations which represents circa 70 percent of the business. The remainder comprises John Holland rail, which is involved in
maintaining rail networks and laying tracks. As a result, Australian-based developer of rail infrastructure, ATEC Rail Group (www.ateclimited.com.au) is
rumoured to have entered the sales process.
News Headlines and Key Sector Developments
Ticker News/Event
Ticker News/Event
AJL
Announced its JV with Spiecapag Australia Pty Ltd has been
awarded a contract to construct APA Group's Eastern Goldfields
Gas Pipeline in WA. Expected to commence in Mar 2015, with
practical completion in Nov 2015
TSE
Upgraded their previous guidance on underlying EBITDA of
$240-$260M to $260-$280M
DOW
Announced that following the acquisition of Tenix, they are
increasing the target statutory NPAT for FY15 to $210M, up from
the previous target of $205M
UGL
Announced that the JV between CH2M HILL, UGL, and GE,
contracted to build the power station for the Ichthys LNG
Project, has experienced road blocks in its design and
procurement phase. The forecast project costs have increased
resulting in the JV recognising a provision of USD170M
HDX
Announced the contract extension for the provision of overburden
drilling services with Anglo American Coal at the Callide Mine.
Extended to Dec 2015
WDS
Announced the resignation of Nicola Matthew as Company
Secretary
LEI
Announced the appointment of Mr John Easy to the role of Group
General Counsel and Company Secretary. My Easy previously
held the corresponding position at Dexus Group
WOR
Rosenberg WorleyParsons has been awarded an EPCI contract
for ConocoPhillips’ capacity increase project on the Ekofisk
Complex in the Norwegian part of the North Sea. Contract value
is estimated to be $167M
VDM
Advised that it has signed a Distribution Agreement with Changlin
Company Ltd appointing VDM as sales and service distributor for
Changlin products
WTP
Announced that discussions with Pluton Resources’ new
Receivers, KordaMentha, have progessed. WTP has agreed to
complete some limited scope works on site, on a fully
indemnified basis in relation to payment for these services
Source: Capital IQ, LCC research
IMPORTANT DISCLAIMER
This report has been prepared by Lincoln Crowne & Company Pty. Limited ("LCC"). The research is based on information obtained from sources believed to
be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such information and makes no warranty,
guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation to correct or update the information. No opinion or
recommendation is made within this research. This report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report
should not be relied upon as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made.
Page 1 / 2
WEEKLY
Australian Engineering & Mining Services
7 November 2014
WWW.LCC.ASIA
Market Cap Open Price Close Price Week High Week Low
(AUD Million)
(AUD)
(AUD)
(AUD)
(AUD)
Ticker
Company Name
AJL
ASL
AAX
ANG
BLY
BKN
BYL
BOL
BSA
CDD
CGH
COF
DCG
DSB
DOW
EAL
EGN
EHL
EVZ
FWD
GCS
GNG
HDX
IMD
LEI
LCM
LYL
MLD
MAH
MYE
MIN
MCE
MND
MRM
NOD
NWH
OTC
PRG
RCR
RQL
SND
SDM
SSM
SWL
SXE
STS
SWK
TPP
TTN
TSE
UGL
VMG
WDS
WOR
WTP
AJ Lucas Group Limited
Ausdrill Limited
Ausenco Limited
Austin Engineering Limited
Boart Longyear Limited
Bradken Limited
Brierty Limited
Boom Logistics Limited
BSA Limited
Cardno Limited
Calibre Group Limited
Coffey International Limited
Decmil Group Limited
DeltaSBD Limited
Downer EDI Limited
E&A Limited
Engenco Limited
Emeco Holdings Limited
EVZ Limited
Fleetwood Corporation Limited
Global Construction Services Limited
GR Engineering Services Limited
Hughes Drilling Pty Limited
Imdex Limited
Leighton Holdings Limited
Logicamms Limited
Lycopodium Limited
MACA Limited
MacMahon Holdings Limited
Mastermyne Limited
Mineral Resources Limited
Matrix Composites & Engineering
Monadelphous Group Limited
Mermaid Marine Australia Limited
Nomad Building Solutions Limited
NRW Holdings Limited
OTOC Limited
Programmed Maintenance Services
RCR Tomlinson Limited
Resource Equipment Limited
Saunders International Limited
Sedgman Limited
Service Stream Limited
Seymour Whyte Limited
Southern Cross Electrical Engineering
Structural Systems Limited
Swick Mining Services Limited
Tempo Australia Limited
Titan Energy Services Limited
Transfield Services Limited
UGL Limited
VDM Group Limited
WDS Limited
WorleyParsons Limited
Watpac Limited
187
172
78
84
112
633
52
70
29
870
129
84
308
5
2,020
72
31
103
5
101
72
108
27
123
7,373
54
63
272
115
35
1,528
85
1,097
632
14
190
51
324
329
53
67
107
70
128
77
37
42
10
21
966
893
31
42
3,191
142
0.70
0.60
0.50
1.12
0.24
3.87
0.45
0.15
0.12
5.60
0.37
0.30
1.78
0.10
4.76
0.53
0.11
0.19
0.03
1.74
0.44
0.80
0.13
0.59
22.00
0.77
1.60
1.34
0.10
0.54
8.50
0.90
12.52
1.86
0.05
0.77
0.20
2.59
2.74
0.17
0.87
0.50
0.18
1.53
0.52
0.60
0.27
0.05
0.44
1.89
6.96
0.01
0.27
13.53
0.82
0.70
0.55
0.47
1.00
0.23
3.70
0.42
0.15
0.11
5.31
0.37
0.33
1.83
0.11
4.64
0.55
0.10
0.18
0.03
1.66
0.43
0.72
0.13
0.57
21.78
0.77
1.60
1.17
0.09
0.46
8.16
0.90
11.80
1.72
0.05
0.68
0.21
2.73
2.38
0.17
0.85
0.47
0.18
1.46
0.48
0.58
0.26
0.06
0.41
1.89
5.46
0.01
0.29
12.89
0.75
0.77
0.65
0.51
1.13
0.25
3.91
0.45
0.15
0.12
5.62
0.38
0.33
1.83
0.11
4.85
0.57
0.11
0.19
0.03
1.74
0.43
0.86
0.13
0.60
22.44
0.78
1.62
1.36
0.10
0.54
8.51
0.92
12.54
1.86
0.05
0.79
0.21
2.76
2.74
0.18
0.87
0.50
0.18
1.55
0.52
0.60
0.27
0.06
0.44
1.93
7.00
0.01
0.30
13.75
0.82
0.68
0.52
0.47
1.00
0.22
3.60
0.41
0.15
0.10
5.23
0.37
0.31
1.70
0.10
4.59
0.53
0.10
0.18
0.02
1.66
0.42
0.66
0.12
0.55
21.51
0.77
1.60
1.17
0.09
0.45
7.90
0.88
11.69
1.71
0.05
0.67
0.20
2.50
2.25
0.16
0.85
0.44
0.18
1.43
0.48
0.58
0.26
0.05
0.38
1.78
5.25
0.01
0.26
12.65
0.71
EV/
EV/
%
Change
Weekly Volume
Trend EBITDA
EBIT
—
▼
▼
▼
▼
▼
▼
▼
▼
▼
—
▲
▲
▲
▼
▲
▼
▼
—
▼
▼
▼
▲
▼
▼
—
—
▼
▼
▼
▼
—
▼
▼
▼
▼
▲
▲
▼
—
▼
▼
—
▼
▼
▼
▼
▲
▼
▼
▼
▼
▲
▼
▼
0.0%
-8.3%
-6.0%
-10.7%
-6.2%
-4.4%
-6.7%
-1.7%
-4.3%
-5.2%
0.0%
10.0%
2.5%
10.0%
-2.5%
3.8%
-9.1%
-2.7%
0.0%
-4.6%
-3.4%
-10.0%
4.0%
-3.4%
-1.0%
0.0%
0.0%
-12.7%
-6.1%
-14.0%
-4.0%
0.0%
-5.8%
-7.8%
-3.8%
-11.7%
2.5%
5.4%
-13.1%
0.0%
-2.3%
-6.0%
0.0%
-4.3%
-8.7%
-3.3%
-3.8%
9.8%
-8.0%
-0.3%
-21.6%
-9.1%
9.4%
-4.7%
-8.5%
NM
3.4x
NM
11.2x
17.1x
6.7x
2.1x
3.9x
4.2x
7.9x
2.6x
6.2x
3.2x
77.0x
3.5x
6.8x
8.3x
6.0x
NM
5.8x
4.9x
5.4x
3.6x
NM
5.0x
11.2x
3.3x
1.9x
1.1x
3.0x
2.9x
4.0x
4.2x
6.6x
6.9x
1.9x
4.2x
6.1x
4.8x
12.6x
5.1x
2.9x
6.4x
5.0x
2.3x
2.0x
3.6x
15.7x
1.2x
6.7x
20.7x
NM
0.7x
7.1x
0.4x
NM
8.4x
NM
41.8x
NM
11.9x
3.5x
11.8x
16.1x
9.7x
5.1x
9.5x
3.5x
NM
6.1x
8.4x
NM
NM
NM
15.1x
8.5x
6.2x
7.1x
NM
9.6x
18.6x
4.0x
3.0x
2.6x
7.4x
5.2x
10.0x
4.8x
9.7x
NM
3.2x
5.9x
7.4x
6.6x
NM
5.4x
NM
10.4x
5.7x
3.9x
8.2x
17.9x
19.9x
1.6x
10.4x
48.8x
NM
1.3x
8.3x
0.9x
So urce: Capital IQ, LCC research
IMPORTANT DISCLAIMER
This report has been prepared by Lincoln Crowne & Company Pty. Limited ("LCC"). The research is based on information obtained from sources believed to
be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such information and makes no warranty,
guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation to correct or update the information. No opinion or
recommendation is made within this research. This report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report
should not be relied upon as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made.
Page 2 / 2