Perenti Limited · ASX:PRN
Perenti — Merger or Acquisition (August 2018)
56 slides from Perenti's merger presentation, Aug 15, 2018
Slide 1: Acquisition of Barminco and equity raising
Acquisition of Barminco and equity raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 15 August 2018
Slide 2: Important notice and disclaimer
Important notice and disclaimer This presentation and these materials (together, the “Presentation”) have been prepared by Ausdrill materially from those expressed in the forward looking statements in this Presentation. No Limited ABN 95 009 211 474 (ASX:ASL) (“Ausdrill”) in connection with the prop
Slide 3: Important notice and disclaimer (cont'd)
Important notice and disclaimer (cont’d) Not for release or distribution in the United States and does not and will not form any part of any contract for the acquisition of entitlements or New This Presentation may not be released or distributed in the Unites States. Shares. Each recipient of this P
Slide 4: Important notice and disclaimer (cont'd)
Important notice and disclaimer (cont’d) Investors should be aware that certain financial measures included in this presentation are ‘non-IFRS To the maximum extent permitted by law, Ausdrill, the Underwriters and their respective advisers, financial information’ under ASIC Regulatory Guide 230: ‘Di
Slide 5: Table of contents
Table of contents Slide Transaction summary 6 Barminco overview 12 Strategic rationale 17 Financial impact 26 Entitlement Offer 33 Appendices 36 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 6: Transaction summary
Transaction NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES summary
Slide 7: A compelling acquisition for Ausdrill
A compelling acquisition for Creates Australia’s clear #2, and leading listed pure-play, mining services company Ausdrill … Pro forma FY18 underlying EPS(A) accretion of over 28% (excluding synergies) 1 … strategically Strengthens market leading position in international underground hard-rock
Slide 8: Transaction summary
Transaction summary Leading provider of underground hard-rock contract mining in Australia and Africa with FY18 Barminco proportionately consolidated underlying EBITDA1 of $167.3m and EBIT(A) of $91.5m overview Barminco has been Ausdrill’s 50% joint venture partner in AUMS since 2007 Ausdrill
Slide 9: Transaction summary (cont'd)
Transaction summary (cont’d) Underwritten Concurrent with the acquisition announcement, Ausdrill is undertaking a fully underwritten 1 for 2.13 Accelerated Non-Renounceable Entitlement Offer (“Entitlement Offer”) to raise equity raising $250m (before costs) at $1.47 per new share (10% discount to
Slide 10: The acquisition is expected to be financially positive
The acquisition is expected to be Underlying TERP adj. Underlying3 Underlying3 financially positive1 EPS(A) (cents)2 EBITDA margin (%) EBIT(A) margin (%) +28% +190bps +130bps 10.6% 15.8 20.1% 9.3% 12.3 18.3% 1 New Ausdrill metrics are pro forma including Ausdrill, Barminco and AUMS (100%) post-conso
Slide 11: Timetable and process
Timetable and process Event Date/Time (AEST)1 Announcement Wednesday, 15 August 2018 Trading halt Wednesday, 15 August 2018 Institutional Entitlement Offer closes Thursday, 16 August 2018 Trading halt lifted Friday, 17 August 2018 Announcement of results of Institutional Entitlement Offer and Friday
Slide 12: Barminco overview
Barminco NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES overview
Slide 13: Barminco is one of the world's leading underground hard-rock contract miners
Barminco is one Overview 2018 revenue by geography1 of the world’s leading Founded in 1989, Barminco provides underground hard-rock contract mining services underground under its own brand in Australia, Egypt and India Australia 68% Africa 30% hard-rock India 2% Headquartered in Perth with 1,800
Slide 14: Barminco service offering
Barminco service (50% JV with offering1 Ausdrill) Underground contract mining Diamond drilling/Other3 AUMS Leading underground hard- Offers a complete suite of Provides comprehensive rock mining services underground diamond underground mining and provider operating across drilling services inc
Slide 15: Barminco and AUMS have a diverse international portfolio of contracts
Barminco and AUMS have a Africa Asia Project Australia Client Geog. Comm. diverse Burkina Faso Egypt Sukari Sunrise Dam AngloGold Ashanti WA Gold international Siou Yaramoko Ghana Subika Tanzania Rampura Agucha Dugald River MMG QLD Zinc Mt Colin Round Oak Minerals QLD Copper portfolio of Nyankanga S
Slide 16: Barminco has evidenced a solid track record through the mining cycle
Barminco has Revenue ($m) Underlying EBITDA ($m) and margin (%) evidenced a 22.4% 22.9% 732 20.7% solid track 671 607 691 19.4% 17.0% 585 167 record through 130 126 131 117 the mining cycle and has delivered strong 2 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 earnings growth AUMS Barminco Bar
Slide 17: Strategic rationale
Strategic NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES rationale
Slide 18: The acquisition positions Ausdrill as the clear #2 Australian mining services provider
The acquisition Revenue ($m)1 positions Ausdrill 3,578 as the clear #2 Australian mining services provider (and 1,764 2 largest listed 1,307 1,033 1,107 pure-play) 732 747 555 648 319 402 1 Ausdrill based on sales revenue. Proportionately consolidated revenue for Ausdrill and Barminco. FactSet conse
Slide 19: A more balanced and diverse revenue portfolio
The acquisition delivers a more Revenue by business activity – pre transaction2 Revenue by business activity – post balanced and transaction (pro forma) diverse revenue Underground mining3 46% Surface mining 49% portfolio1 Drilling services 21% Surface mining 29% Underground mining 14% 2 Drilling se
Slide 20: A more diverse project portfolio
A more diverse project portfolio Revenue by commodity – pre transaction1 Revenue by commodity – post transaction (pro forma) Gold/copper 73% Gold/copper 82% Nickel 12% Iron 6% Zinc 6% Coal 6% Iron 3% Manganese 4% Coal 3% Other 3% Manganese 2% Other 1% Expanded portfolio of leading mining clients2 1
Slide 21: Consolidation of AUMS – a high margin, high growth business
Consolidation of AUMS – a high Ausdrill and Barminco have been joint venture partners since 2007 margin, high growth business Facilitates 100% ownership of AUMS, the fastest growing, highest margin and highest return on capital business of Ausdrill1 and Barminco 50% 50% Streamlines current gov
Slide 22: Business rationalisation provides a clear go to market strategy
Business rationalisation Current brands New brand strategy provides a clear “go to market” strategy Non-core NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 15 August 2018 Acquisition of Barminco and equity raising 22
Slide 23: Integration guiding principles
Integration guiding An orderly and well resourced integration plan developed to ensure a successful principles acquisition Unique opportunity ─ One-time chance to meld best of both cultures to shape culture Focus on Leadership ─ High level of authentic employee touch and communications culture ─
Slide 24: Organisational structure
Organisational structure Proposed new roles MD ASL Proposed new role – Transition only GROUP GROUP GROUP GROUP CEO CEO CEO CEO GROUP GROUP ASSET PEOPLE & GROWTH & MANAGER BARMINCO AMS AUSDRILL BTP CFO CTO MGMT. SAFETY STRATEGY TRANSITION Rationale Organisational structure designed for growth under
Slide 25: Foundation for pursuing global underground mining growth opportunities
Creates a Target markets in underground mining1 foundation for pursuing global NORTH ASIA underground NORTH AMERICA 47 27 TIER 1&2 TIER 3 mining growth TIER 1&22 targets: 114 57 TIER 1&2 TIER 3 opportunities 313 WEST TIER 33 targets: AFRICA SOUTH 12 1 EAST ASIA AFRICA 171 TIER 1&2 TIER 3 20 2 20 2 S
Slide 26: Financial impact
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Financial impact
Slide 27: Pro forma FY18 earnings per share impact
Pro forma FY18 EPS(A) (cents) earnings per share impact1 +28.5%3 15.5 15.8 (1.5) 14.1 1.7 12.8 12.3 3.3 1 Pro forma transaction impacts are illustrative only. EPS(A) is calculated excluding transaction costs, synergies and amortisation of intangibles. It includes discontinued operations, the impact
Slide 28: Pro forma FY18 income statement
Pro forma FY18 A A B C H Underlying income $Million Ausdrill Barminco Elim. of assoc. AUMS Trans. adj. New Ausdrill Adj. New Ausdrill statement Revenue 887.31 586.1 - 290.4 - 1,763.8 - 1,763.8 Margin EBITDA 177.4 139.6 (45.7) 99.0 - 370.2 (14.9) 355.3 20.1% EBIT(A) 102.9 82.4 (45.7) 61.9 - 201.5 (14
Slide 29: Pro forma FY18 income statement (notes)
Pro forma FY18 income statement The New Ausdrill pro forma FY18 income statement has been derived from the FY18 audited financial statements of Ausdrill and Barminco, and adjusted to reflect the impact of the acquisition and Entitlement Offer as if both had occurred (notes) on 30 June 2017. As a res
Slide 30: Pro forma June 2018 balance sheet
Pro forma 30 June 2018 A Ausdrill A Barminco B AUMS C AUMS adj. Trans. adj. New $Million Ausdrill FY18 balance Cash and cash equivalents 137.3 80.3 33.3 - (110.4) D 140.4 sheet Receivables 230.5 83.5 44.5 - - 358.4 Inventories 212.6 20.7 50.1 - - 283.4 Property, plant and equipment 664.3 124.9 90.6
Slide 31: Pro forma FY18 balance sheet (notes)
Pro forma FY18 The New Ausdrill pro forma 30 June 2018 balance sheet has been derived from the FY18 audited financial statements of Ausdrill and Barminco, and adjusted to reflect the impact of the acquisition and Entitlement Offer as if both had occurred on 30 June 2018 balance sheet A – Presented o
Slide 32: Pro forma FY18 capitalisation
Pro forma FY18 30 June 2018 Trans. New capitalisation1 $Million Ausdrill Barminco AUMS adj. Ausdrill Ausdrill Notes 405.0 - - (405.0) - 1 This represents a statement of current intentions. Ausdrill will make final decisions on which debt Barminco Notes - 468.0 - (17.8)2 450.3 instruments are repaid
Slide 33: Entitlement Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Entitlement Offer
Slide 34: Overview of the equity raising
Overview of the equity raising Fully underwritten 1 for 2.13 Accelerated Non-Renounceable Entitlement Offer to raise Offer $250m before costs structure 170.0m New Shares to be issued (equivalent to 46.9% of existing shares excluding any shares to be issued to Barminco vendors) Entitlement Offe
Slide 35: Equity raising timetable
Equity raising timetable Event Date/Time (AEST)1 Trading Halt, announcement of acquisition, Institutional Entitlement Wednesday, 15 August 2018 Offer and opening of Institutional Entitlement Offer Institutional Entitlement Offer closes Thursday, 16 August 2018 Announcement of results of Institutiona
Slide 36: Appendices
Appendices NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 37: Definitions and basis of preparation of key FY18 financials
Definitions and EBITDA EBIT(A) Other/comments basis of Includes “share of associates net profit after As reported in statutory accounts. NPAT (and preparation of EBITDA / EBIT tax” from AUMS and excludes profit from discontinued operations NPAT(A)) includes profit from discontinued operations ke
Slide 38: Ausdrill earnings reconciliation: statutory to underlying
Ausdrill earnings FY18 Sales EBIT/ reconciliation: $Million revenue EBITDA1 EBIT(A)1 NPAT1 statutory to Reported earnings 887.3 177.4 102.9 61.1 underlying Less: Share of associates profits - (22.3) (22.3) (22.3) Standalone earnings - 155.0 80.5 38.7 Realised foreign exchange gain - (9.6) (9.6) (9.6
Slide 39: Barminco earnings reconciliation: statutory to underlying
Barminco earnings FY18 EBIT / reconciliation: $Million Revenue EBITDA EBIT(A) NPAT statutory to Reported earnings 586.1 139.6 81.4 50.7 underlying Less: Share of associates profits - (23.4) (23.4) (23.4) Add: Redundancy costs - 1.1 1.1 “Trading” earnings - 117.4 59.2 Less: Redundancy costs - (1.1) (
Slide 40: Indicative goodwill and intangibles
Indicative goodwill Intangible assets and goodwill of approximately $765m1 in the acquisition arises from and intangibles Total intangibles ─ difference between total purchase consideration and Barminco fair value of identifiable assets acquired and liabilities assumed ─ the re-measurement of Ausd
Slide 41: Key risks – Ausdrill and New Ausdrill risks
Key risks – Ausdrill and New Ausdrill risks As Ausdrill and Barminco operate in the same industry, and are joint venture partners in AUMS, many Contracts are at risk of termination or non-renewal due to the client having no further need for the of the key risks that apply to Ausdrill apply equally t
Slide 42: Key risks – Ausdrill and New Ausdrill risks (cont'd)
Key risks – Ausdrill and New Ausdrill risks (cont’d) The achievement of production targets depends on many factors, many of which are outside of there is a risk that Ausdrill and Barminco may not compete as successfully in the future as they have Ausdrill’s and Barminco’s control. These factors incl
Slide 43: Key risks – Ausdrill and New Ausdrill risks (cont'd)
Key risks – Ausdrill and New Ausdrill risks (cont’d) Purchasing of equipment by clients: Some of Ausdrill’s and Barminco’s mining services contracts not generally hedge its normal operating foreign exchange exposures. However, Ausdrill does give the client an option (exercisable on default or, in th
Slide 44: Key risks – Ausdrill and New Ausdrill risks (cont'd)
Key risks – Ausdrill and New Ausdrill risks (cont’d) Dependence upon key personnel: Ausdrill and Barminco depend substantially on their directors, maintained for employees, as well as professional indemnity, product liability, third party liability, and senior management and key personnel to oversee
Slide 45: Key risks – Ausdrill and New Ausdrill risks (cont'd)
Key risks – Ausdrill and New Ausdrill risks (cont’d) Environment: Environmental management and compliance is an important part of a number of the the products and services of Ausdrill and Barminco. businesses of Ausdrill’s and Barminco’s clients. These clients’ operations are subject to numerous Saf
Slide 46: Key risks – Ausdrill and New Ausdrill risks (cont'd)
Key risks – Ausdrill and New Ausdrill risks (cont’d) Level of indebtedness: Ausdrill and Barminco have a significant amount of indebtedness. After the Anti-corruption laws: Ausdrill and Barminco operate in a number of countries, including some repayment of Ausdrill’s Senior Unsecured Notes due Novem
Slide 47: Key risks – Barminco and acquisition risks
Key risks – Barminco and acquisition risks As noted above, as Ausdrill and Barminco operate in the same industry, and are joint venture partners activities may provide downside risk protection for Barminco, it is also possible that such activities may in AUMS, many of the key risks that apply to Aus
Slide 48: Key risks – Barminco and acquisition risks (cont'd)
Key risks – Barminco and acquisition risks (cont’d) Financial capacity and recourse to vendors and warranty and indemnity insurance: Ausdrill has Key risks – equity raising and general risks purchased warranty and indemnity insurance for the Transaction. If the Transaction completes and if a Market
Slide 49: Key risks – Equity raising and general risks
Key risks – Equity raising and general risks • Ausdrill or a material subsidiary of Ausdrill is or becomes insolvent; the United States. • Ausdrill withdraws all or any part of the Equity Raising; • trading in all securities quoted or listed on ASX, New York Stock Exchange or London Stock • a direct
Slide 50: Key risks – Equity raising and general risks (cont'd)
Key risks – Equity raising and general risks (cont’d) Interest rate risk: Changes in interest rates will affect borrowings which bear interest at floating rates to the extent Ausdrill and Barminco have not hedged against this interest rate risk. An increase in interest rates will affect the costs of
Slide 51: International selling restrictions
International selling restrictions This document does not constitute an offer of entitlements (“Entitlements”) and offer of New Shares of Statutory rights of action for damages and rescission: Securities legislation in certain of the Ausdrill in any jurisdiction in which it would be unlawful. In par
Slide 52: International selling restrictions (cont'd)
International selling restrictions (cont’d) Certain Canadian income tax considerations: Prospective purchasers of the New Shares should Monetary and Financial Code (Code monetaire et financier) and Articles 211-1et seq. of the General consult their own tax adviser with respect to any taxes payable i
Slide 53: International selling restrictions (cont'd)
International selling restrictions (cont’d) The contents of this document have not been reviewed by any Hong Kong regulatory authority. You • in compliance with all relevant Italian securities, tax and exchange controls and any other are advised to exercise caution in relation to the offer. If you a
Slide 54: International selling restrictions (cont'd)
International selling restrictions (cont’d) Malaysia: No approval from, or recognition by, the Securities Commission of Malaysia shall not be deemed to constitute an offer to the public in Norway within the meaning of the Norwegian (“Commission”) has been applied for or will be obtained in relation
Slide 55: International selling restrictions (cont'd)
International selling restrictions (cont’d) Sweden: This document has not been, and will not be, registered with or approved by United Kingdom: Neither this document nor any other document relating to the offer has been Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, t
Slide 56: Thank you
Thank you Follow us at ausdrill.com.au NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES