Ann: Response to media speculation, page-9

Its worth looking at, but the overall Downer mining division is much lower margin than that of Macas, particularly when you normalise for the one-offs Maca have had this year. They EBITDA margin in the 2nd half of the year (normalised for Impairments), and when you normalise H1 for the discontinued Brazil loss making business, their EBITDA margins are back up towards 20%. Downers entire division is at 13% so hopefully we are aiming to pick off the best bits, we obviously won't take on the entire mining division (about $1.5bn in revenue and $80m PBT), but if the reports around a $200m acquisition are true then maybe we are just taking the bits we want.

That could work and be highly value accretive once you account for synergies that are likely to be generated. I assume they won't be overly interested in International operations and more looking at strengthening the Domestic business. If they focus mainly on Iron Ore and Gold and away from Coal then that would be the best option IMO. I doubt there is much margin in coal mining services any longer. We have certainly seen the impact over the last few years with resources companies that have struggled to make profits, with all sorts of creative measures taken to recover cash with loans to clients like Beadell (I think) and Carrabella. I'd assume we wouldn't want to take too much risk heading down that route again with looking at currently low priced commodities.

The closure of Brazil and the impairments of Carrabella certainly hurt the result not just in FY20, but the underlying result for FY20 was excellent especially when you break it down. It was by far and away the best result in Civil since the expansion a few years ago, it was a return to much better profitability for the year in Mining and with an underlying EBITDA margin of 19% it was a good result and bodes well for the future. Underlying EPS would be somewhere around 16c which is a great platform for growth. If they can continue to grow the base business and also grow through value accretive acquisition then we could be looking at a very positive 2021.