Archive | Downer EDI

Downer discloses negative equity at Hawkins on acquisition

Downer EDI Ltd said in its annual report, out yesterday, it paid a gross consideration of $A55.4 million to buy Hawkins Construction Ltd from the McConnell family.

But in that figure there was $A2.8 million of cash balances and, “at the date of acquisition, the net asset value of Hawkins was negative $A16.3 million due to negative working capital of the business, resulting in $A71.7 million of goodwill being recognised”.

In other words, Downer paid $A52.6 million for $A71.7 million of business.

Downer announced the deal on 8 March and said it was to be completed on 31 March. However, it paid for Hawkins in 2 instalments, the first in March and the second in June.

Downer reported a provisional purchase price allocation in its June accounts because the identification of intangible assets on acquisition hadn’t been completed due to the proximity of the transaction to year end.

Downer’s own results were a mixture – net profit after tax up by less than $AA1 million, ebit also unchanged, but very low gearing and $AA2 billion of cash & facilities available to continue the growth path it’s taken in acquiring Spotless Group Holdings Ltd (offer finally closed on Monday when Downer held 87.8% of Spotless, so it can’t continue to compulsory acquisition).

Excluding Spotless earnings and any costs or synergies related to the acquisition, Downer is targeting net profit after tax of about $A190 million for the 2018 financial year, a 5% increase.

Spotless, in its target’s statement in April, provided earnings guidance of $A85-100 million net profit after tax for the 2018 financial year.

Result highlights, with no contribution from Spotless:

  • Net profit after tax up 0.5% to $A181.5 million ($A180.6 million in 2016)
  • Total revenue up 5.7% to $A7.8 billion ($A7.39 billion)
  • Earnings before interest & tax (ebit) up 0.3% to $2A77.8 million ($A276.9 million)
  • Operating cashflow of $A441.6 million, representing cash conversion of 103.1% of earnings before interest, tax, depreciation & amortisation (ebitda)
  • Work in hand $A22.5 billion ($A21.1 billion at 31 December 2016)
  • Gearing, including Spotless, 14.7% – 17.7% including off-balance sheet debt, with available liquidity of $A2 billion comprising cash of $A844.6 million & undrawn committed facilities of $A1.2 billion
  • Basic earnings/share up 5.8% to A35.8c (A38c)
  • Diluted earnings/share up 2.5% to A35c (A35.9c)
  • Net tangible asset backing/ordinary share down 54.8% to A119c (A263.3c)

Division results:

Transport:

  • Total revenue $A2.2 billion, up 16.4%
  • Ebit $A124.6 million, up 20.2%
  • Work in hand $A6.3 billion

Utilities:

  • Total revenue $A1.5 billion, up 19.1%
  • Ebit $A84.1 million, up 17.8%
  • Work in hand $A3.6 billion

Rail:

  • Total revenue $A850.2 million, up 2.9%
  • Ebit $A30.3 million, up 110.4%
  • Work in hand $A8.0 billion

Engineering, construction & maintenance:

  • Total revenue $A2.0 billion, up 6.2%
  • Ebit $A52.3 million, up 8.5%
  • Work in hand $A2.6 billion

Mining:

  • Total revenue $A1.3 billion, down 18.5%
  • Ebit $A83.4 million, down 35.8%
  • Work in hand $A2 billion

New Zealand & Pacific:

  • Total revenue $A1.54 billion ($A1.3 billion)
  • Segment assets $A687 million ($A546 million)
  • Acquisition of segment assets $A102 million ($A20.5 million)

Earlier story:
9 March 2017: McConnells follow up Harker deal with Hawkins sale to Downer
Attribution: Downer annual report & release.

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McConnells follow up Harker deal with Hawkins sale to Downer

Downer EDI Ltd has signed an agreement to acquire the construction, infrastructure & project management businesses of the Hawkins Group from the McConnell family.

In a separate transaction, the McConnell family sold the Harker Underground business to Australian company Abergeldie Complex Infrastructure and the Harker family 5 weeks ago. That transaction was due to be completed on 28 February.

The Downer transaction, announced on Wednesday, is due to be completed on 31 March. Downer chief executive Grant Fenn said Hawkins would continue to operate under its current brand.

Mr Fenn said Downer had become a leading provider of services in a range of markets, including transport, telecommunications & water. In Australia it has a major focus on the mining sector.

In New Zealand & the Pacific, Mr Fenn said Hawkins’ construction & infrastructure divisions would complement Downer’s engineering, construction & maintenance capabilities and provide a platform for growth: “It is estimated that over $50 billion will be invested in non-residential construction in New Zealand over the next 5 years.”

Mr Fenn said Downer would fund the acquisition through existing debt facilities and it would be earnings-accretive in its first year. He didn’t put a price on the transaction.

Hawkins has a number of high profile projects underway, including the construction of Auckland’s Park Hyatt Hotel in the Wynyard Quarter in a joint venture with China Construction for the Fu Wah International Group. Other Hawkins projects are the State Highway 16 Lincoln-Westgate upgrade, the pier B extension at Auckland Airport, the Rongotai control tower at Wellington Airport, Wellington City Council’s Arlington housing project, the Christchurch Town Hall and the Avon River precinct.

Both groups have long NZ histories

Downer has a New Zealand history dating back to 1933 though it’s based in Australia now, and Hawkins’ history dates back to 1946, when Fred Hawkins formed his building company in the Waikato.

McConnell Dowell Corp (MacDow), headed by Malcolm “Buck” McConnell & Jim Dowell, was backed into Hawkins Construction in a reverse takeover in 1982. MacDow went on to become an international business and international ownership, and is now owned by South African company Aveng Ltd.

From 1994-2000, the McConnell family – Buck McConnell’s sons David & John and daughter Nancy – bought back control of Hawkins Construction, then added an infrastructure division in 2007 and the underground drilling business, Harkers, in 2012.

On 2 February, Hawkins sold Harker Underground Ltd to Australian shaft & tunnelling company Abergeldie Complex Infrastructure and the family of former owner Graeme Harker.

Abergeldie Harker Ltd will be 80% owned by Abergeldie, 20% by Graeme Harker’s son Mike. Mike’s brother Phillip will also remain a key staff member.

Abergeldie founder & executive chair Mick Boyle said the purchase would strengthen tunnelling & shaft capabilities in both New Zealand & Australia “and make us leaders in both countries”. Abergeldie Harker would also bring to the New Zealand market some niche capabilities that Abergeldie has developed, such as shaft sinking by blind boring, pipe relining, excavation by blasting and capabilities in the water & rail sectors.

Harker national manager Matt Mules has been appointed general manager of Abergeldie Harker.

Links:
Downer Group NZ
Hawkins
Abergeldie Harker
MacDow

Attribution: Company releases, Companies Office.

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Downer rejigs infrastructure divisions

Published 2 May 2012

Downer EDI Ltd announced a reorganisation yesterday for its 2 infrastructure businesses, Downer Australia & Downer NZ, to form Downer Infrastructure.

It will consist of 5 operational divisions (Australia East, Australia West, New Zealand, Resources & Specialist Services). Downer Australia chief executive David Cattell has been appointed chief executive of the new entity.

Chief executive Grant Fenn said the group would consist of 3 businesses – Downer Infrastructure, Downer Mining & Downer Rail.

“In both Australia & New Zealand, Downer operates in the transport infrastructure, water, communications & power markets. Bringing our core businesses together will ensure we leverage our existing expertise more broadly and improve our performance. It will also enhance our ability to capitalise on growth opportunities…. and provide greater career opportunities.”

Downer Infrastructure had $8.4 billion of work in hand at 31 December.  It employs 14,000 people and contributes about half of Downer Group’s revenue & earnings before interest & tax.

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Downer says council & Auckland Transport contracts worth at least $224 million

Published 30 April 2012

Downer EDI Ltd said on Friday the Auckland Council & Auckland Transport had awarded it a series of contracts worth at least $224 million for road maintenance, open space management & facilities maintenance.

Under the road maintenance contract, valued at $130 million over 4 years, Downer will provide road maintenance services in Auckland Transport’s south-western region. The contract term can be extended for 2 years plus a further 2 years, giving the contract a potential value of $260 million.

The Auckland Council has awarded Downer open space management contracts covering all park, playground & sportsfield maintenance for South Auckland rural & urban areas. These contracts are worth $70 million over 5 years and have extensions of 3 years plus a further 2 years, giving a total potential value of $140 million.

The facilities maintenance contract from the Auckland Council is worth a total potential value of $24 million over 3 years, with the option to extend for a further 4 years. It incorporates electrical, plumbing, carpentry & mechanical services and includes air-conditioning for a wide range of buildings, from council offices to community facilities & residential properties.

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Downer EDI plans NZ debt offer

Published 25 May 2009

Downer EDI Ltd said on Friday it was considering a public offering in New Zealand of fixed interest, unsubordinated, unsecured bonds, maturing in September 2012. The issuer would be its wholly owned subsidiary, Works Finance (NZ) Ltd.

The offer will be restricted to New Zealand residents. Downer EDI is an Australian top-100 company that provides comprehensive engineering & infrastructure management services to the public & private transport, energy, infrastructure, communications & resources sectors across Australia, New Zealand, the Asia Pacific region & the UK.

 

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Downer EDI’s Duffill Watts buys Tse & Glasson Potts Fowler

Published 20 April 2007


Engineering services group Downer EDI Ltd’s New Zealand-based engineering consultancy business, Duffill Watts Consulting Group, has acquired 2 consulting businesses – Tse Group Ltd of Wellington & Glasson Potts Fowler Ltd of Christchurch.


The addition of the 2 businesses almost doubles the size of Duffill Watts to about 360 staff and substantially increases the company’s consulting capability & geographic presence in New Zealand. Downer EDI managing director Stephen Gillies said the addition of Tse Group (120 staff), operating primarily from Wellington, Auckland & Vietnam, would enhance Duffill Watts’ core competencies in architecture, engineering, land surveying & resource planning, and in valuations through the specialist subsidiary Tse Wall Arlidge.Glasson Potts Fowler (40 staff), operating primarily from Christchurch with other offices in Palmerston North, Rotorua & Queenstown, has core competencies in resource management, environmental sciences, environmental engineering & land surveying. Mr Gillies said it would enhance Duffill Watts’ capability out of Christchurch and the company’s service offerings in environmental engineering & science services, as an adjunct to the specialist services offered by Duffill Watts in wastewater treatment.He said the “bolt-on” additions to Duffill Watts were in line with Downer EDI’s strategy to further strengthen the company’s capability in providing value-adding services to clients at the front end through consulting & design engineering services. “The skill-set, capabilities & market presence we see within Duffill Watts mirror & complement those we have in Asia through our Singapore-based CPG Corp, and will enable us to further build our presence in the Asia-Pacific region.”Duffill Watts chief executive Doug Troon said the Duffill Watts business was experiencing increased demand for its consulting services, especially in the areas of infrastructure design & management for local government and new land & building development projects. “The addition of Tse Group & Glasson Potts Fowler provides us with a bigger footprint in New Zealand, a broader range of services and enhances our ability to cross-sell our services to clients.” Downer EDI is an Australian top-150 company which provides comprehensive engineering & infrastructure management services to the transport, energy, communications & resources sectors in Australia, New Zealand & Asia. Duffill Watts’ services cover civil, structural & mechanical engineering; transport planning, management & engineering; marine engineering & naval architecture; and a range of environmental & waste management services. Tse Group, a privately owned multi-disciplined consultancy established in New Zealand in 1963, has as its core activities architectural services, engineering consultancy, interior design, land surveying, resource planning & property consultancy services. It also provides property & valuation consultancy services through its wholly owned subsidiary, Tse Wall Arlidge Ltd, and has a 50% share in Duffill Watts & Tse Ltd, which undertakes local authority infrastructure works in Wellington & its surrounding regions and in Vietnam.Glasson Potts Fowler was formed in December 2000 as a privately owned consultancy following the merger of Glasson Potts Group Ltd & Miles Fowler Fear Ltd.


Websites: Downer EDI


Duffill Watts


Glasson Potts Fowler


Tse Group 



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Attribution: Company statement, story written by Bob Dey for this website.

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Downer EDI seeks $A165 million in placement & share plan to support 3 acquisitions

Published 13 April 2006


Engineering services group Downer EDI Ltd has raised $A125 million through a placement of 14.9 million shares to Australian & offshore institutions at $A8.40/share.The company will now implement a share purchase plan for eligible Australian & New Zealand shareholders to take up to $A5000 of shares at the placement price, for a maximum $A40 million.The record date for determining entitlements to receive an offer under the plan is Wednesday 19 April.


The capital-raising follows completion of the acquisition of Emoleum and Downer EDI’s investment in 2 more bolt-on acquisitions in its mining & infrastructure divisions.Downer EDI completed the acquisition of the Emoleum business from Rinker & ExxonMobil in the first quarter. Emoleum is an Australian pavement & road surfacing company with a national road maintenance footprint and long-term contracts for road services in place in all states.Managing director Stephen Gillies said the combined operations of Emoleum & Works Infrastructure provided Downer EDI with the largest road business in Australia: “This acquisition completes the Works Infrastructure platform in Australia as we look to replicate the success of the New Zealand business. When integrated with the existing Australian operations, there are significant opportunities to expand revenues and generate higher margins in the Australian road business. We would expect revenue of the combined Works Infrastructure business (in Australia & New Zealand) to grow to $A1.5 billion in 2 years.”The other 2 bolt-ons are leading global earthmover tyre maintenance & consulting services supplier Otraco Pty Ltd and Downer EDI’s first European acquisition, DMQA Ltd. DMQA Rail specialises in trackside maintenance & renewals and DMQA Utilities primarily undertakes projects with roading & water authorities. “Our total investment in these 3 recent acquisitions to facilitate further growth is expected to be $A180 million.”


Mr Gillies said they would contribute minimally in 2006 but should deliver $A500 million in sales & $A30 million ebit in 2007 as the benefits of integration and further investment begin to flow through.He said the placement would enable Downer EDI to maintain gearing within its 42-66% target range and close to its preferred gearing level of 50%.


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Attribution: Company statements, story written by Bob Dey for this website.

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