CARDNO FINDS ITS PERFECT MATCH
Written on the 13 September 2012
THE acquisition of a US-based resources advisor has increased the reach of Queensland’s biggest infrastructure consultancies says managing director, Andrew Buckley (pictured).
When Brisbane infrastructure experts Cardno wanted a resources-focused suitor, the firm was willing to travel the extra mile.
A 20,000km soul-mate search took managing director Andrew Buckley across the Pacific ocean to Bluefield, in the Virginian ‘state of lovers’. There, Cardno finally met its $30 million perfect match – Marshall Miller & Associates (MM&A).
“We tried to fi nd suitable companies in Australia, but it was hard to put together a successful deal at reasonable multiples in such a limited market,” says Buckley.
“There were so many more businesses in the north American market and it was easier to find one that ticks all the boxes, including reasonable price, complementary fit and organic growth.”
MM&A advises the mineral resource, environmental and carbon management industries on mining engineering, mine reserve evaluation, oil and gas exploration, feasibility studies and project due diligence services.
Its client base includes Peabody, BHP Billiton, Rothschild, ArcelorMittal, Rey Resources, CNX Gas Company, Asian
Buckley reveals the high Australian dollar helped in the acquisition of MM&A.
“The Aussie currency helped us in the issuing of shares for the transaction, but we still borrowed funds in US dollars to ensure we were naturally hedged,” he says.
“Although our company does not suffer huge blows from currency movements, most of MM&A’s revenue stream is in US dollars and we would like it if the Aussie dollar fell to 70 US cents.”
Cardno’s decision to consolidate was partly driven by organic growth opportunities in carbon sequestration.
“The carbon tax and issue of climate change has increased the need for us to service enquiries. We have responded to this trend by appointing environmental experts and acquiring MM&A will provide a focal point to pull it all together,” says Buckley.
“MM&A advises coal, shale gas and coal-seam gas companies about carbon sequestration, so there are opportunities for us to engage with clients in north America, South America, Asia, europe and Australia.”
The enlarged entity will also have better odds of entering the Asian market, analysts say.
“China is a difficult market and we have not had much luck in fi nding a way to directly enter apart from acquiring a business due to the risks of non-paying clients and intellectual property loss,” says Buckley.
“MM&A has clients in China and we want to find other business partners in Hong Kong or South Korea, where there is a strong regulatory framework. We want to engage with China from a low-risk base.”
Cardno, based in Fortitude Valley, has set aggressive targets for revenue, profit, people and entry to overseas markets. However, when the company achieved its 2005-2010 goals two years ahead of schedule, Buckley had to raise the bar.
“Our new targets have been set for greater representation as a world leader in professional services while helping the environment,” he says.
“We are on-track and once again surpassing our goal to create better communities though planning, design and delivery of physical and social infrastructure.”
Buckley motivates his team through giving real ownership of the business. About 40 per cent of Cardno shares are owned by its staff, who represent the biggest block of company shareholders.
“As an incentive for continued loyalty to the company, we give staff $1000 of shares each year. Some people who have worked at the company have been able to build up a fairly decent nest egg,” says Buckley.
“We also tell the staff about where the company is going and ask for their engagement. It provides a good tax incentive and an easy way to keep people focused at work.”
Cardno managing director Andrew Buckley is no stranger to the pick and shovel.
He brings to the company resources experience as a regional manager of mining engineering firm KBR, Queensland mining and minerals manager at Kinhill Engineering and project manager of Minpro Mining and Engineering.
“There are few top business leaders who have resources experience like I do,” he says.
“I not only have 30 years’ experience in managing executives, designing and implementing, engineering and developing projects, but also managed, designed and constructed mining, engineering and infrastructure projects in Australia, Africa, Asia and the US.”
When Buckley takes time out from the resources rat race, he enjoys watching rugby union with his teenage sons. he is also interested in sailboarding, windsurfing and boating.
“In business, you need to learn to relax and it is very important to get away from it all,” he says.
“I am very focused on making sure i spend time with the kids and have a bit of time off on weekends and holidays. if you can learn to relax away from work, you get a better perspective when you are back on the job.”
Cardno employs 700 people in Queensland and a further 6400 in more than 270 offices spanning Australasia, Africa, the Americas, Middle East and European Union.
Buckley predicts the firm’s net profit after tax (NPAT) for the 2012 financial year will be in the $71-74 million range, representing a 21-26 per cent jump in the previous fiscal period’s NPAT of $58.8 million.
This growth was primarily driven by the firm’s acquisition of South Perth-based BEC Engineering (Cardno BEC).
“Cardno BEC has achieved good run-rates since we completed the merger. It was attractive as we had a desire to provide broader disciplines like mechanical processes and mining engineering. The financial multiples are also very high,” says Buckley.
Since Cardno’s market capitalisation exceeded the $1 billion mark, it has received considerable US investor interest.
“We did a few US road shows and our high market-cap certainly encouraged American investors to look at us. The level of interest from the US has multiplied,” says Buckley.
However, he is neither interested in purchasing public US companies nor listing on the New York Stock Exchange or NASDAQ.
“Apart from the capital markets benefits, there are no real advantages in listing over there. We have enjoyed great success in raising money in Australia for our overseas expansion and already have some US-based investors,” he says.
However, expansion to the United Kingdom and Europe will be put on hold due to the region’s ongoing sovereign debt crisis.