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#New Contracts and Extensions
Added 4 months ago

16-Mar-2020:  SRG Global secures $70m Drill & Blast contract with Saracen (ASX:SAR)

Saracen is Australia's 4th largest gold miner, and that is one industry that should suffer minimal disruption during this pandemic.  I hold both SRG & SAR.  SRG promised that further new contract awards were close when they reported in February, and this is the second $70m+ contract they've announced since then, so it seems they were right.

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#New Contracts and Extensions
Added a week ago

7-7-2020:  NZ$25m Transport Infrastructure Maintenance Contract Secured

In their Market Update last Thursday (2-7-2020), SRG Global (SRG) mentioned that there were a number of imminent new contract award announcements coming soon.  Here is the first of those.  [I hold SRG shares]

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#ASX Announcements
Added 2 weeks ago

SRG bringing forward dividend of 0.5c share, and have reduced costs, with future growth projects committed with infrastructure and mining contracts. Shares up 31% so far today on news. See report for details.

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#New Contracts and Extensions
Added 5 months ago

27 February 2020  -   SRG Global awarded $72m Integrated Construction Package in Perth, WA


  • SRG Global has been awarded a significant $72m integrated construction package with Multiplex for the One The Esplanade project at Elizabeth Quay, in Perth’s Central Business District
  • The scope of works includes the complete concrete structure and the design, supply and installation of engineered curtain wall facade for the 29-level tower development
  • Continues SRG Global’s long-term relationship with Multiplex

On Tuesday, when SRG reported their first half results, they said that further contract awards were "imminent".  Today, they announced the first of these.  This $72m contract is significant for a small company like SRG.

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Added 5 months ago

25-Feb-2020:  SRG Global's FY2020 H1 Results were disappointing - with record work-in hand and higher revenue, but lower earnings (reduced profit margins).  They did however mention a couple of times that they are expecting to be awarded some new contracts very shortly.  One positive is that circa ~70% of their record $737m work-in-hand (confirmed order book, up +42% in 12 months) is now recurring revenue, rather than one-off shorter-term contracts.  Moving to a greater percentage of longer-term recurring revenue contracts bodes well for their future.  If the new contract awards that their management is expecting actually happen - that improves their situation even further.  I do hold SRG shares, and their performance has been disappointing to date, but they keep telling us that things will get better, and I think they proably will.

Half Year Results - Announcement

Half Year Results - Presentation

Appendix 4D & Half Year Report

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#New Contracts and Extensions
Added 6 months ago

29-Jan-2020:  $90.0m Multi-disciplinary Asset Services with Alcoa Executed


  • SRG Global has now executed a new $90.0 million multi-disciplinary asset services contract with Alcoa of Australia Limited (‘Alcoa’)
  • The scope of services includes heavy mechanical and electrical maintenance, specialist rope access and scaffold services at Alcoa’s alumina refinery in Kwinana, Western Australia
  • Site mobilisation is well advanced with contract services to commence in February 2020.  

SRG Global Limited (SRG) announced in December 2019 that the Company had been awarded preferred tenderer status for a new $90.0 million multi-disciplinary asset services contract with Alcoa.  SRG is pleased to advise that the contract has now been executed.

The services will be provided at Alcoa’s Kwinana Alumina Refinery in Western Australia with a contract duration of five years.  Site mobilisation is well advanced with contract services to commence in February 2020.

SRG Global Managing Director, David Macgeorge said, “We are very pleased to have now executed this contract.  This is a very significant contract award for SRG Global in our Asset Services division and showcases our ability to deliver multi-disciplinary integrated solutions for tier one customers.  We look forward to building a long-term partnership with Alcoa to deliver value-engineered maintenance and access services that drives value for their operations.”


Disclosure:  I hold SRG shares.

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#Business Update
Last edited 2 weeks ago

02-July-2020:  Market Update & Interim Dividend Payment Brought Forward

This was some positive news from SRG Global at long last.  In fact, I remember that the last time David Macgeorge said that some new contract awards were imminent, he was correct, and we got a steady flow of new contract award announcements over the next few weeks.  That was too long ago however.  The market had all but written SRG off before this morning.  They closed at 19c yesterday, -68% below their 60c year-high almost 12 months ago.  While they're up around +30% today on this update, it's clearly off a low base and they've got a lot more work to do.  However, it's a start, and it will hopefully be a positive turning point.

Market Update & 1H Dividend payment brought forward

SRG Global Ltd (ASX: SRG) provides the following market update, including the impact of COVID-19 during which the Company implemented a number of actions to ensure the safety and wellbeing of its people, continued delivery of services to customers and cost mitigation initiatives to ensure the Company remains in a robust financial position. These actions have resulted in a more simplified business with a reduced fixed cost base and a focus on core business, core clients and core geographies.

Pleasingly, the Company has withstood the short-term challenging market conditions and is now well positioned for long-term sustainable growth, with high levels of annuity earnings, strong exposure to growth industry sectors and the fast tracking of Government stimulus in Infrastructure Construction.


  • FY20 Underlying EBITDA1 expected to be $20m - $21m
  • FY21 EBITDA growth expected to be ~50% from FY20 Underlying EBITDA(*1) 
  • Significant liquidity with available funds of $73m, with net debt reduced in 2H to $8m
  • 1H Interim Dividend payment of 0.5 cents per share brought forward to 30 July 2020

COVID-19 Impact

  • FY20 EBITDA(*1) results impacted by a number of key drivers related to COVID-19, including:
    • New Zealand Government imposed complete shutdown of operations for a six week period
    • Deferral of non-essential maintenance and major shutdown work in Australia and NZ
    • Productivity and commercial issues in the Building divisions as a result of COVID-19 driven compliance measures and industry pressures
    • Disruption on international projects due to reduced access to sites and labour
  • Credit loss positions are anticipated due to the economic challenges caused by COVID-19 and as a result a provision of ~$5m within the Building divisions is expected to be recognised
  • Restructuring costs incurred in 2H FY20 of $2.5m, taking the total annual cost for FY20 to $4m

Business Outlook

  • Work in Hand (‘WIH’) of $707m and an opportunity pipeline of $6.2b
  • Imminent / near-term contract wins in Asset Services, Specialist Civil and Specialist Facades
  • Asset Services expected to return to normal levels of activity in Q1 FY21
  • Mining Services operating in high quality growth commodities, ie. gold and iron ore
  • Positive exposure to fast tracked Government stimulus programs in Infrastructure Construction
  • Continued transition of business mix towards recurring revenue with SRG Global’s earnings profile expected to be two thirds annuity / recurring in nature and one third project based

Note 1 (*1): Pre-adoption of AASB 16 and before restructuring costs & COVID-19 related credit loss provisions (all subject to audit)


David Macgeorge, Managing Director said, “SRG Global’s focus has and will remain the safety and wellbeing of our people and accordingly we proactively implemented a range of safety, supply chain and cost mitigation measures to manage the company through the uncertainty caused by COVID-19.

“SRG Global’s strategy has been to shift towards a greater proportion of annuity / recurring earnings versus project-based earnings. COVID-19 came at a very challenging time as we were starting to build strategic momentum in the business. The uncertainty caused by COVID-19 made us reflect on what we needed to focus on in the future. We have now simplified the business, changed the way that we operate and reduced the fixed cost base, fast tracked what we were not going to do moving forward and focused on core business, core clients and core geographies.

“With the actions we have now taken, we expect FY21 EBITDA growth to be circa 50% from underlying FY20. We have a strong pipeline of opportunities in excess of $6b, with positive exposure to Government backed Infrastructure investment, high quality commodities, diverse industries and a tier one client base. This has us well positioned for long-term sustainable growth.”


SRG Global has implemented a number of cost mitigation initiatives to ensure the Company remains in a robust financial position through the uncertainty of the COVID-19 pandemic. The outcome is a more simplified business moving forward with a reduced fixed cost base. This has resulted in the implementation of significant restructuring initiatives including:

  • Reduced Board positions from seven to four
  • Reduced Executive positions from eight to six
  • Reduced fixed cost base within both the corporate and business unit overhead bases
  • Exited fixed cost base in the US
  • Scaling back of the Building division, specifically Structures Victoria and Building Post Tensioning in both Australia and the Middle East

SRG Global is in a strong liquidity position with available funds of $73m, banking facilities not due for renewal until early FY22 and access to additional equipment finance facilities. The Company continued to invest in growth capital in 2H FY20 including the commencement of five-year contracts with both Alcoa and Saracen Minerals, the latter requiring new drill rig purchases of $6m (funded through equipment finance debt). Despite the above investment, the Company’s net debt position improved in the second half to $8m (inclusive of $26m of equipment finance debt).

On 31 March 2020 the Company announced a deferral of its 1H FY20 interim dividend of 0.5 cents per share to 29 October 2020 which was part of a prudent approach to cash management due to the uncertainty of COVID-19. However, with a positive outlook and a strong liquidity position, the Board has resolved to bring forward the payment of the interim dividend to 30 July 2020.

As part of the annual reporting and audit process SRG Global will undertake a review of its intangible asset base in the Construction Segment. As part of this review and in relation to a scaled back approach to the Building division, a non-cash impairment of goodwill may be recognised.

Segment Update

SRG Global provides the following update on the business activities and conditions across the company’s operating segments.

Asset Services Segment

  • Experienced significant growth in FY20 through multiple contract wins
  • 2H FY20 activity levels impacted by COVID-19 through the deferral of non-essential maintenance and major shut-down work across Australia and New Zealand
  • New Zealand experienced a Government imposed 6-week shut down of operations
  • Asset Services operations expected to return to normal levels of activity in Q1 of FY21
  • Excellent contract mobilisation with Alcoa for five-year multi-disciplinary contract
  • Continue focus on innovation and technology as a market differentiator
  • Imminent / near term contract wins expected in both Australia and New Zealand

Mining Services Segment

  • Continued to perform strongly through the COVID-19 period
  • A number of early and proactive operational measures were implemented to ensure continuity of service delivery across all operations
  • Minimal financial impact in production drill and blast as a result of the above
  • COVID-19 had some financial impact in Geotech through deferral of non-essential work to FY21
  • Excellent start up with new five-year contract with Saracen Minerals
  • Key commodity exposure remains in gold and iron ore sectors
  • Focus is on innovation and selective growth in high quality commodities

Construction Segment – Specialist Building

  • Specialist Facades business largely unaffected due to differentiated business / operating model with a number of imminent / near term contract wins expected
  • COVID-19 significantly impacted productivity in Structures Victoria and Building Post-Tensioning businesses along with a challenging operating environment. Moving forward these businesses will be scaled back and focused on key tier one clients only
  • Structures West now commenced major Multiplex project addressing the known carrying cost issue with a number of good opportunities in the pipeline

Construction Segment – Specialist Civil and Engineering

  • Civil operations in Australia performing strongly and largely unaffected by COVID-19
  • Positive exposure to a pipeline of opportunities being fast tracked through Government stimulus
  • Engineered product sales are continuing to grow with a positive pipeline of opportunities
  • COVID-19 impacted International operations and access to the US, Middle East and South Africa
  • A reduced fixed cost base business model has been implemented including managing future US opportunities from Australia and scaling back operations in the Middle East
  • Will continue to target specialist projects in dams, bridges and tanks globally from Australian base
  • Imminent / near term contract wins expected in Australia 

Work in Hand

The Company has work in hand of $707m as at 30 June 2020 with approximately two thirds of work in hand annuity / recurring in nature. SRG Global has a strong pipeline of opportunities in excess of $6b, with positive exposure to Government backed Infrastructure investment, high quality commodities, diverse industries and a tier one client base.


SRG Global is very well positioned for sustainable growth in FY21 and beyond underpinned by a solid work in hand position, a strong opportunity pipeline with a number of imminent and near term contract wins expected and a future earnings profile of two thirds annuity / recurring in nature and one third project based.

SRG Global expects FY21 EBITDA growth to be ~50% from FY20 EBITDA of $20m - $21m.

– ends –

Disclosure:  I hold SRG Global shares.  I've been very patient with them, and I'm hoping that patience is now going to be repaid.  There are a lot of positives in this update, however words are cheap, and it's actual results that matter.  I'm hopeful now (based on available information of course, not just based on hope) that the results that myself and other shareholders have been waiting for are now on the way.  I think SRG is well positioned and well managed and I particularly like their recurring (annuity-style) revenue focus for two thirds of their revenue, allowing them to be very selective with the work they take on in shorter-term construction projects.  In the conference call today, David Macgeorge made it clear that they don't need to take on high-risk or low-margin construction work, and they won't be doing that.  That's what I wanted to hear.  That one-third-of-revenue construction segment work might be lumpy but it WILL be profitable.  That's the story they're telling today, and I'm inclined to believe them.

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#Company Presentations
Added 4 months ago
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#COVID-19 Update
Added 4 months ago
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