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Media Release FOR IMMEDIATE RELEASE

Mining services operators – manage disruption or fail 25 June 2014: Australia’s mining services sector is confronting disruption head-on, as shifts in the mining landscape and cost pressures drive diversification and innovation – or failure. Deloitte’s new Mining Services Index points to a range of issues impacting the sector. The Index is based on the market capitalisation of companies which generate a significant portion of their revenue from the mining services sector. Compared to the last quarter of 2013: • The Index declined by 2.05 points over the first quarter of 2014 to 85.62 (a total market capitalisation of

$940 million) – a negative result mitigated by a surge in the share price of Leighton Holdings • By comparison, the benchmark ASX200 increased by 1.04 points to 131.8. Deloitte Mining Services Index – Q1 2014

According to Deloitte Financial Advisory Services partner Nicholas Harwood, the mining services sector continues to grapple with strong and disruptive market pressures. “March 2014 quarter Index performance was characterised by interim results announcements from many participants, nearly half of whom reported profitability below guidance or market expectations,” he said. “Many participants who reported earnings above expectations either benefited from a diversified contract portfolio including projects outside the resources sector or they service niche sub-sectors. “Cost agility has become a key to preserving growth, as the competitive tendering environment continues to depress margins and increase project lead times despite a solid pipeline of opportunities. A number of

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corporate failures in the sector may also lead to financiers reviewing the structure of performance guarantee facilities. Cash-backed guarantees may emerge and create working capital pressures.” Deloitte Access Economics partner Stephen Smith said a range of macroeconomic factors are also disrupting Australia’s miners and, by extension, the mining services sector. “Prices and export volumes for both iron ore and coking coal are certainly an issue, as is the well documented infrastructure construction cliff,” he said. “Deloitte Access Economics’ Investment Monitor tracks major investment projects around Australia, including the resources sector, and data for the March 2014 quarter shows mining investment has softened over the last year, while investment intentions are well down on the highs reached in mid-2011.” The Index focuses on a number of current (and former) sector participants including: • Leighton Holdings – market capitalisation increased by 24 per cent over Q1 2014, with the Company

comprising 18.1 per cent of the Index (up from 13.5 per cent at the end of Q4 2013) • Monadelphous Group Limited – experienced an improvement in market capitalisation during the quarter

after announcing $680 million and $250 million worth of new contracts, highlighting the benefits of diversification into markets outside mining

• Fleetwood Corporation – experienced a 25.7 per cent fall in market capitalisation to $153 million after softening workforce accommodation demand expectations caused the Company to abandon plans to build a 1,000-person transient workers accommodation village at Gladstone in Queensland.

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NB: See our media releases and research at www.deloitte.com.au

Follow us – @DeloitteNewsAU For further information: Nick Harwood Partner, Financial Advisory Services T: 07 3308 7136 nharwood@deloitte.com.au Stephen Smith Partner, Deloitte Access Economics T: 02 6175 2079

Simon Rushton Corporate Affairs & Communications M: 0450 530 748 T: 02 9322 5562 srushton@deloitte.com.au

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stephensmith1@deloitte.com.au About Deloitte

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