DURATEC LIMITED — Interim / Quarterly Report 2024

Feb 22, 2024

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DURATEC LIMITED 1H FY24 RESULTS PRESENTATION 23 FEBRUARY 2024

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SPEAKERS

EXECUTIVE TEAM MEMBERS

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CHRIS OATES
Managing Director
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OLLIE MCKEON
Executive Manager - Corporate,
Strategy & Investor Relations
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ASHLEY MUIRHEAD
Chief Financial Officer
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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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1H FY 24 WHAT NEXT HIGHLIGHTS

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CORPORATE SNAPSHOT

NATIONAL LEADER WITH EXPERIENCED BOARD AND MANAGEMENT

Share Price and Volume – 1H FY24

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Duratec Limited Board

Martin Brydon	Non-Executive Chairman
Chris Oates	Managing Director
Phil Harcourt	Non-Executive Director
Gavin Miller	Non-Executive Director
Krista Bates	Non-Executive Director
Dennis Wilkins	Company Secretary

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3,000,000 $1.80
2,500,000 $1.60
2,000,000 $1.40
1,500,000 $1.20
1,000,000 $1.00
500,000 $0.80
0 $0.60
Volume (M shares)
Close Price ($)
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		Volume Close
	Capital Structure
	ASX code	DUR
	Shares on issue	248.0m
	Share price as at 21 February 2024	$1.46
	Market capitalisation as at 21 February 2024	$361m
	Cash as at 31 December 2023	$58.5m

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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BUSINESS OVERVIEW

LEADING AUSTRALIAN ENGINEERING, CONSTRUCTION AND REMEDIATION CONTRACTOR

Specialist technical expertise in upgrading and extending the life and use of infrastructure in multiple market segments

WPF Duratec Pty Ltd (WPF)

(wholly owned subsidiary) – leading Energy remediation and fabrication company based in Western Australia and the Northern Territory.

Key business drivers:

• Aged infrastructure

• Asset capacity expansion

• Growing asset markets 1,944 1207 25 Projects Employees Office undertaken locations in FY23 nationally Key market segments supporting long-term growth: • Defence • Building & Facade Duratec locations • Mining & Industrial • Energy

• Other – Marine, Transport and Water Infrastructure

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MEnD Consulting Pty Ltd

(wholly owned subsidiary) – leading Technical consultant with a focus on protection and rehabilitation of the built environment.

DDR Australia Pty Ltd

(associate investment) – leading majority Aboriginal-owned contractor in Defence and Resources (IPP-funded opportunities)​.

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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BUSINESS HISTORY

STRONG HISTORICAL GROWTH

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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FINANCIAL HIGHLIGHTS

CONSISTENT GROWTH & PROFITABILITY

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Revenue [1] EBITDA [2] NPAT
$292.7m $23.9m $12.2m
Up from $228.5m in PCP Margin 8.2% Margin 4.2%
Order Book
Tenders
Cash
$387.8m
$1.02b
$58.5m
Down from $411.2m at
$1.02b at 24 November 2023
24 November 2023
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EPS
4.96 cents per share
Interim Dividend
1.5 cents
Per share, fully franked
Pipeline
$3.7b
Up from $3.28b at
24 November 2023
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Note 1 : Revenue excludes DDR Australia Pty Ltd (49% share). Note 2 : Normalisation of EBITDA accounts for tax effect from Duratec Limited’s 49% investment in DDR Australia Pty Ltd.

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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FINANCIAL RESULTS

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1H FY24 FINANCIAL RESULTS

PRIOR COMPARATIVE PERIOD MOVEMENT

• Record revenue result for Mining & Industrial – up 161%

• Improved EBITDA and NPAT margins

• Solid EPS and dividend declared

1H FY24 1H FY23 PCP Movement PCP Movement	1H FY24 1H FY23 PCP Movement PCP Movement	1H FY24 1H FY23 PCP Movement PCP Movement	1H FY24 1H FY23 PCP Movement PCP Movement	1H FY24 1H FY23 PCP Movement PCP Movement
$'000 $'000 $'000 %
Revenue	292,737	228,532	64,205	28%
Reported EBITDA	23,741	15,605	8,136	52%
Normalised EBITDA	23,988	16,253	7,735	48%
NPAT	12,225	7,846	4,379	56%
KEY OPERATING METRICS
Normalised EBITDA %	8.19%	7.11%	1.08%	15%
NPAT %	4.18%	3.43%	0.74%	22%
Earnings per share (basic) - cents	4.96	3.25	1.71	53%
Interim Dividend (per share fully franked) - cents	1.50	1.00	0.50	50%

Note 1 : Normalisation of EBITDA accounts for tax effect from Duratec Limited’s 49% investment in DDR Australia Pty Ltd.

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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BALANCE SHEET

SUMMARY

• Strong balance sheet position

• Net assets up 13%

• Investment in plant, equipment & vehicles

• High confidence in the collectability of receivables due to reputable client base

• Well supported with debt providers

• Headroom on Bank Guarantees and Bond facilities for future growth

Consolidated Entity	Consolidated Entity
Financial Position as at 31 December 2023 Dec-23	Jun-23
$'000 $'000
ASSETS
Cash and cash equivalents 58,539 66,187
Trade and other receivables 46,181 66,119
Contract assets 38,646 25,185
Property,plant and equipment 31,499 25,962
Intangible assets 14,162 14,711
Investments accounted for usingthe equitymethod 5,112 4,536
Tax assets 5,212 4,573
Other assets 8,995 5,159
TOTAL ASSETS 208,346 212,432
LIABILITIES
Trade and otherpayables 81,276 85,436
Contract liabilities 28,637 35,727
Borrowings 27,116 15,308
Contingent considerationpayable - 9,000
Provisions 10,635 11,798
Other current liabilities 8,471 9,100
TOTAL LIABILITIES 156,135 166,369
NET ASSETS 52,211 46,063

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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1H FY24 FINANCIAL RESULTS

1H FY24 CASHFLOW

Working Capital and Borrowings used to support project cashflow requirements

Final earnout payment for the acquisition of WPF FY23 final dividend of 3 cps

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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OPERATIONAL HIGHLIGHTS

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1H FY24 OPERATIONAL HIGHLIGHTS

KEY PROJECTS

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Western Sydney
Central Park RAAF Base Tindal HMAS Stirling Oxley BHP Berth HMAS Coonawarra
Airport Fuel Ring
Building Recladding Fuel Facility Wharf Extension C&D Remediation Harbour Works
Main
$63m $110m $72m $42m $55m $100m
84% Complete 74% Complete 90% Complete 96% Complete 48% Complete 42% Complete
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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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OPERATIONAL HIGHLIGHTS

SECTOR PERFORMANCE – TOTAL REVENUE $292.7m

DEFENCE	MINING & INDUSTRIAL	BUILDINGS & FACADES	ENERGY (includes WPF)	OTHER (including Marine, Transport and Water Infrastructure)
Revenue $124m From $112m in FY23	Revenue $84m From $32.2m in FY23	Revenue $52.9m From $38.1m in FY23	Revenue $23.3m From $26.8m in FY23	Revenue $8.4m From $19.3m in FY23
• ECI Parkes Wharf extension award • Major projects works continue • Award of several medium size project works	• Record levels of revenue achieved • Strong growth in MSA/annuity revenue • Recently signed 3-year MSA with Roy Hill • Largest 3D reality model delivered to Rio Tinto	• Award of 3 medium sized contracts (ECI) • Central Park project on target	• WSA fuel ring main on target with additional works awarded • WPF growth and expansion	• Identified growth targets with ECI content

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For comparative purposes, the previous charts have been readjusted.

Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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WPF

GEOGRAPHIC GROWTH AND INVESTMENT IN TECHNOLOGY

• WPF undertook a rebranding to support the Company’s strategic plan to align more closely to Duratec group brand

• Completed the business purchase acquisition of A&B Welding Pty Ltd in Dawin, NT for $1.5m

• New Darwin branch has doubled WPF fabrication capacity

• Purchased and took delivery of the Novarc Technologies SWR-F Dual Torch Spool Welding Robot which is currently being integrated into operations

1H FY24 Highlights

• Solid growth in 1H FY24

• Outlook remains optimistic with a strong pipeline of stable, recurring revenue projects

• Investment in workforce to support growth with 126 employees

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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MEND CONSULTING

EXPERIENCE IN DELIVERING QUALITY OUTCOMES

• Duratec’s in-house technical service is MEnD Consulting (wholly owned subsidiary)

• Data processing has improved as to our ability to deliver our models onto our clients existing digital platforms

• Laboratory services are seeing an increasing demand for specialized materials characterization services, including XRD, XRF and SEM.

• Strategically targeting opportunities for ECI through our technical services in the Defence, Asset Management and Infrastructure sectors

1H FY24 Highlights

• Recently delivered our largest reality model ever using 1,000,000 images of an export wharf for Rio Tinto at Cape Lambert

• Successfully captured and delivered reality models at over 800 school sites across WA for the Department of Finance, demonstrating ability to scale our service offering.

• Works have commenced on the new office and purpose-built laboratory facility

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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DDR AUSTRALIA

OUTLOOK REMAINS POSITIVE

• Equity accounted investment owned by Duratec (49%) and Hutcheson & Co Holdings Pty Ltd (51%)

• Provides meaningful work and training opportunities to Aboriginal and Torres Strait Islander peoples

• Dedicated leadership team strengthened by additional key appointments

• The forecast is strong, bolstered by a portfolio of projects that ensure steady revenue streams

• Current work-on-hand of $39.3m (excludes RC Construction) and $479.4m of identified opportunities

• RCC work-on-hand of $35M

RC Construction Acquisition

• DDR Australia completed 100% Share Sale acquisition of RC Construction WA Pty Ltd

• RC Construction is a specialist civil and structural construction contractor across industry sectors

• In FY23 RC Construction had revenue of $29m and forecast for FY24 showing strong growth

Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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1H FY24 OPERATIONAL HIGHLIGHTS

MASTER SERVICES AGREEMENTS

Represents 6-month actuals

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• MSA and annuity style projects represents approximately 24% of revenue currently

• Annuity style contracts are more profitable than Duratec’s average gross profit percentage

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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OPERATIONAL HIGHLIGHT

HSECQ OVERVIEW

Safety & Wellbeing

Learning & Development

• Continuous improvement and working towards best practice

• Roll out of Supervisor Leadership Program

• No Lost Time Injuries recorded

• Development and roll out of Scaffold Awareness Training

• 46% reduction in TRIFR from end of FY23

• Abrasive Blast and Paint training facility established for Verification of Competency assessments

• Significant HSE improvement with subcontractor performance

• Continued commitment to team culture with the CareFactor Program

Period	LTIFR	TRIFR	AIFR	Hours Worked
FY21	0.00	6.07	55.76	1,811,255
FY22	0.98	7.81	72.71	2,048,952
FY23	0.00	7.39	64.88	2,435,345
1H FY24	0.00	4.07	62.56	1,868,688

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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OUTLOOK

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OUTLOOK

ORDER BOOK, TENDERS AND PIPELINE

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Order Book
Tenders Pipeline
$3.74
$387.8 $1.02
billion
million billion
from $411.2m from $1.02b from $3.28b
at 24 Nov 2023 at 24 Nov 2023 at 24 Nov 2023
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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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OUTLOOK

TOTAL ADDRESSABLE MARKET (TAM) – BY SECTOR (AUSTRALIA)

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¹ Duratec achieved FY23 Defence sector revenue of $229m. Defence TAM sourced from Department of Defence sustainment spend detailed in the Department of Defence 2020 Strategic Update

² Duratec achieved FY23 Mining & Industrial sector revenue of $86.4m. Mining TAM sourced from Australia Bureau of Statistics Actual Expenditure by Type of Asset and Industry February 2020 and Industrial TAM sourced from IBIS World Industry Report. Infrastructure Maintenance Services in Australia February 2020

³Duratec achieved FY23 Buildings & Facades sector revenue of $78.4m. Buildings & Facades TAM sourced from Australian Facilities Management Services report and information published ⁴Duratec achieved FY23 Energy and WPF sector revenue of $74.1m. Energy TAM sourced from BIS Oxford Economics, ABS (August 2023)

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OUTLOOK

2H FY24 AND BEYOND

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AUKUS $8 billion expansion of Perth's naval base

Duratec well positioned to capitalise on accelerated Defence spend in key regions such as the NT, WA

Duratec well positioned to secure further ECI procurement packages as they come to market

Annuity contracts with key repeat strategic clients continue to provide strong growth into the future

Technical ECI contract modelling services, which is leading to long-term opportunities through our MEnD business

Proven track record and growing revenue allowing access to larger scale projects

Solid revenue growth expected in FY24

Utilisation of the ECI model to perform investigatory work on buildings across Australia

Overall pipeline supports Duratec growth objectives

WPF expansion into the Northern Territory through acquisition of A&B Welding

Focus on strategic growth opportunities with existing clients with potential for expansion geographically

Disciplined evaluation of potential acquisition opportunities​

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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QUESTION SESSION

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CHRIS OATES
Managing Director
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OLLIE MCKEON
Executive Manager - Corporate,
Strategy & Investor Relations
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ASHLEY MUIRHEAD
Chief Financial Officer
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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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APPENDICES

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IMPORTANT NOTICE AND DISCLAIMER

This presentation has been prepared by Duratec Limited (ACN 141 614 075) ("Duratec", "Duratec Group" and the "Company"). The information contained in this presentation is for information T purposes only.

The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Please note that, in providing this presentation, Duratec has not considered the objectives, financial position or needs of any particular recipient. Duratec strongly suggests that investors consult a financial advisor prior to making an investment decision.

No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Duratec, its respective related bodies corporates, shareholders, directors, officers, employees, agents or advisors, nor any other person accepts any liability, including, without limitation, any liability for any loss arising from the use of information contained in this presentation or otherwise arising in connection with this presentation.

This presentation may include "forward-looking statements". Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and This presentation is to be read other factors, many of which are beyond the control of Duratec and its respective officers, employees, agents or associates, that may cause actual results to differ materially from those expressed or in conjunction with the Duratec implied in such statement. Actual results, performance or achievements may vary materially from any projections and forward-looking statements and the assumptions on which those statements are based. Duratec assumes no obligation to update such information. Recipients of this presentation are strongly cautioned not to place undue reliance on forward-looking statements. Limited half year statutory

financial statements. This presentation is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this presentation nor anything contained in it forms the basis of any contract or commitment.

The distribution of the presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities of Duratec have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (Securities Act] or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws.

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INVESTMENT CASE

NATIONAL LEADER WITH EXPERIENCED BOARD AND MANAGEMENT

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Strong Historical Growth and Guidance for FY24
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Share Price and Volume – 1H FY24
3,000,000 $1.80
2,500,000 $1.60
2,000,000 $1.40
1,500,000 $1.20
1,000,000 $1.00
500,000 $0.80
0 $0.60
Volume Close
Capital Structure
ASX code DUR
Shares on issue 248.0m
Share price as at 21 February 2024 $1.46
Market capitalisation as at 21 February 2024 $361m
Cash as at 31 December 2023 $58.5m
Volume (M shares)
Close Price ($)
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EPS 4.96 centsper share		Focus On Strategic Growth Prospects		Strong Financial Position To Support Growth
Interim Dividend		Strong		Strategically
1.5 cents		Addressable		Positioned For
per share, fully		Markets Across All		Accelerated
franked		Sectors		Defence Spend

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Duratec Limited – 1H FY24 Results Presentation – 23 February 2024

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MARINE REMEDIATION

WHARF REMEDIATION PROJECT AT BHP BERTH C&D

Duratec was engaged by BHP WA Iron Ore to undertake a $48 million wharf remediation project at Finucane Island, off Port Hedland in WA. More specifically, the project involves works to Berth C&D and consists of the following objectives:

• Repairs to steel piles and steel members

• Replacement of steel ladders

• Concrete remediation

• Repairs to pile wrapping

• Installation of pile jackets

• Fabrication and installation of a new raw-water line and hose connection points

• Repairs to jetties at Berth D

• Demolition of two access landings

Work began on-site in March 2023, and will continue until February 2025.

Works on the remediation project are progressing well with milestones including:

• Completion of initial pre-shutdown works

• Completion of eight non-shutdown periods of works

• Completion of the six shutdowns (three to each berth) out of a scheduled total of 12 shutdowns.

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ASSET MANAGEMENT

SYDNEY HARBOUR FEDERATION TRUST REPAIRS AND ASSET MAINTENANCE PROGRAM

Duratec was appointed Managing Contractor of the prestigious $13 million Sydney Harbour Federation Trust's repairs and asset maintenance program in February 2022.

SCOPE

• Condition audit of the Harbour Trust’s assets and provision of project management services in the delivery of high-priority repairs and maintenance works

• Six sites – Cockatoo Island, Sub Base Platypus, Headland Park, North Head Sanctuary, Macquarie Lightstation and Woolwich Dock

• Assets include sea walls, commercial buildings, accommodation, campgrounds, search light towers, memorials, cafes and restaurants

• The condition audit part of the project involves assessing the fixed plant and equipment, building fabric, grounds and reticulated infrastructure within each precinct

• Determining a scope of works, as well as costs involved with current and future repairs and maintenance to assist with the prioritisation, tender and management of the works

• The project management portion requires Duratec to take the completed asset condition audit and put together design briefs and schedules, which can then be developed into work packages

• Tender for and engage sub-contractors and oversee the delivery of the works

HIGHLIGHTS

• Duratec showcases its technical expertise, experience with Defence, Commonwealth and heritage projects, and the ability to deliver multiple services across a variety of sectors

• Duratec brings proficiencies in working on occupied buildings; managing subcontractors and consultants, and delivering projects on time and within budget

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ROBOTIC WELDING

WPF ACQUIRES NOVARC ROBOT

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• Labour shortages are the number one problem faced in the welding sector, with only 20% of the sector approaching to solve this issue with technology-based solutions.

• Situated within this industry, WPF identified the opportunity to invest in technology prior to competitors to support their continued growth.

• The key to WPF’s growth stems from two key areas in the workshop being, physical capacity and resourcing.

• In 2023, WPF engaged Novarc Technologies, a Vancouver based robotics company specializing in the design and commercialisation of cobots and AI systems for robotic welding applications.

• Novarcs' SWR Dual Torch Spool Welding Robot – F offered a solution for both key areas. From a physical capacity perspective, the robot is effectively four welding bays in the footprint of one bay, increasing efficiency and dramatically boosting productivity rates.

• WPF are now proud to be the first company in Western Australia to adopt this technology.

• Entering 2024, WPF have commenced in-depth training with Novarc operators to become equipped in using this new and advanced technology that will ultimately change day-to-day workshop operations.

• The robot provides various key benefits such as; improved weld quality, advanced welding features, x-ray quality welds, whilst improving WPF’s bottom line.

• Although, the most valuable benefit this addition brings to the WPF operations is that the robot can be scaled up quickly by easily training junior welders, creating more excitement and opportunities for those entering the industry.

• Increasing service capabilities to exceed precision and most importantly – improve welder ergonomics, WPF are leading the way in innovation and championing safety, productivity, and quality in the industry.

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