WHILE IPO listings have been littered with Western-Australian resource companies in 2010, Brisbane-based infrastructure developer Seymour Whyte presents a very different offering. At Brisbane Business News we speak with CEO Brian Riggall about leading the transition and why he thinks the opening share price of $1.10 was undervalued.
Brian Riggall and his employees each clocked up an extra 10 to 20 hours work a week since Christmas, as the company prepared to divest a quarter of its ownership to the will of the ASX.
“Everyone is taking it as a positive step but it’s hard work, as there’s always the little snake bites you didn’t expect coming out of ASIC, you’ve got to dot the Is and cross the Ts, but we’re floating on profit not promises,” he says.
“We’re already established with profitability and cash flow, so we’re not asking the shareholders to trust the blue sky.
“The reaction from our customers has been very positive, they like the idea of a Queensland company making good and taking on the big boys.”
Seymour Whyte is tendering for 10 projects a month on average and recently received a boost when the State Government shortlisted its joint venture for the Port of Brisbane Motorway.
“It’s a potential $450 million job in a joint venture with BMD Group, and the early works packages with the Gold Coast rapid transit are being bid currently so hopefully we can get one of those. It’s in our sights, but a lot of my time is focused on acquiring new projects and increasingly with time I will be going more into New South Wales to boost our presence there.”
The listing will help support the company’s reputation in New South Wales, along with increased financial strength to tackle bigger projects.
“When you are listed it shows your internal controls are rigorous, whereas with a private company they may or may not be,” says Riggall.
“You are giving disclosure and it lets people know who we are, especially in New South Wales where we’re not so well known.”
He sees Seymour Whyte at the bottom of an upswing, but is adamant that the company’s success does not depend on the Port of Brisbane Motorway and Gold Coast rapid transit projects.
“If one or a couple of these projects are delivered it will have a big impact on the share price, and that could be this side of Christmas. But are these our last jobs in Queensland? The answer is no,” he says.
“And when you look at the price-earnings ratio for our company, compared to say McMillan or Leightons, there’s a discrepancy there, we’re quite low.”
As one of Brisbane’s top private businesses, founded by John Seymour and Garry Whyte in 1987, the company recorded just under $200 million in revenue last year.
Recent projects include a 14 per cent share in the $1.65 billion Ipswich Motorway upgrade, a third share in a $300 million road upgrade at Banora Point and $340 million worth of road upgrades in Townsville.
Leading with unity
On the topic of leadership, Riggall says it is important to hold a shared vision with employees.
“You’ve got heroic leaders who go out to the front and you see them in the press all the time, but in my experience leadership is a shared vision and enrolling as many staff members in that vision as you can, to get them excited about it.”
When he was appointed CEO seven years ago the company knew it would need a succession plan, but there were many different ways to pass on that vision.
“It was clear that the company would need to make a decision about its future and succession planning, so we decided we would always act as if we were going to float in terms of meeting international accounting standards.
“It’s a very difficult thing to implement, because we didn’t want to sell to a bigger company – we have a good culture here but if we did it through some other mechanism we would have traded the culture.”
“If you sell to a bigger company generally they want 100 per cent control, like when Bilfinger took over Baulderstone – I was with Baulderstone at the time, I’ve studied what went on and decided a sale wouldn’t be in the shareholders’ best interests.”
The other option was to engage in an employee shareholder plan, but the process of ownership among so many people would have been ‘unwieldy’.
“In a partnership the partners often try to transfer some of the business down to the younger partners, but that can make things very difficult,” explains Riggall.
“In the past when we’ve needed to make decisions we’ve needed 20 people to sign-off on it.
“It hasn’t been a problem but it could have been in the future if that number were to increase, if you had 100 people negotiating on a decision.”
Now that the company has listed Riggall is optimistic for its ability to win the bigger contracts it wants, hinting that further offerings could be on the table.
“There’s no doubt over the years as the company develops then shareholders might want further floats, or we might even decide in the future to raise capital, whether it be for an acquisition or PPP or something like that.”
For now it’s time to see if the market shares Riggall’s vision too.
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