DURATEC LIMITED — Investor Presentation 2022

Aug 21, 2022

==> picture [960 x 411] intentionally omitted <==

DURATEC LIMITED FY22 RESULTS PRESENTATION 22 AUGUST 2022

==> picture [211 x 33] intentionally omitted <==

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 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 is to be read

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 in conjunction with the Duratec 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 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 Limited half year statutory 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, particularly in financial statements. light of uncertainty and disruption caused by any outbreak of COVID-19.

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.

==> picture [134 x 22] intentionally omitted <==

2

Duratec Limited – FY22 Results Presentation – 22 August 2022

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

• Key business drivers :

• Aged infrastructure,

• Poor original construction (defects),

• Asset capacity expansion,

• Growing asset market, and

• Stricter building codes.

• Key market segments supporting long-term growth:

• Defence – increased presence on bases nationally,

• Building & Façade,

• Mining & Industrial, and

• Other – Power & Energy, Marine, Transport and Water Infrastructure

• National presence with local teams

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

==> picture [398 x 376] intentionally omitted <==

----- Start of picture text -----

1664 857 20
Projects Employees Office
undertaken in locations
FY22 nationally
Duratec locations
----- End of picture text -----

==> picture [134 x 22] intentionally omitted <==

3

Duratec Limited – FY22 Results Presentation – 22 August 2022

BUSINESS HISTORY

Duratec’s Historic Growth

==> picture [750 x 394] intentionally omitted <==

==> picture [134 x 22] intentionally omitted <==

4

Duratec Limited – FY22 Results Presentation – 22 August 2022

FY22 SUMMARY

Well positioned to deliver strong growth in FY23

A year of contrasting halves

• Four months of COVID-19 lockdowns in H1 FY22 presented challenges and impacted on the H1 FY22 financial performance

• With more normal operating conditions in H2 FY22, Duratec recovered to deliver a strong financial result

• Duratec demonstrated resilience. State-based teams successfully navigated challenges

• Company has grown to 857 employees and strategically expanded its geographic footprint

Gross margin of 15.6%

• Impacted by COVID-19, higher proportion of some historical lower margin projects and increased costs of doing business

Strong balance sheet

• $58.3m in cash and continuing low-debt levels

Dividend

• FY22 final dividend of 1.5 cents per share (total of 2.0 cents per share for FY22), fully franked

Outlook

• High work-on-hand and tendered-works position underpins strong growth prospects; expected to be in line with historical year-on-year growth rates

==> picture [390 x 486] intentionally omitted <==

==> picture [134 x 22] intentionally omitted <==

5

Duratec Limited – FY22 Results Presentation – 22 August 2022

CORPORATE SNAPSHOT

National leader with experienced board and management

==> picture [882 x 320] intentionally omitted <==

----- Start of picture text -----

||||||
|---|---|---|---|---|
|Capital Structure|Share Price and Volume – FY22|
|ASX code|DUR|7,000,000|$0.60|
|6,000,000|$0.50|
|Shares on issue|240.5m|
|5,000,000|
|$0.40|
|4,000,000|
|Share price as at 19 August 2022|39.0c|$0.30|
|3,000,000|
|$0.20|
|Market capitalisation as at 19 August 2022|$93.8m|2,000,000|
|1,000,000|$0.10|
|Net cash as at 30 June 2022|[1]|$43.5m|0|$-|
|Board and Senior Management|
|Martin Brydon|Chairman|Volume|Close|
|Phil Harcourt|Managing Director|
|Substantial Shareholders|
|Chris Oates|Executive Director|
|James Robert Giumelli and related entities, including Ertech|
|23.8%|
|Gavin Miller|Non-Executive Director|(19.9%)|
|Dennis Wilkins|Company Secretary|Directors and senior management|39.0%|

----- End of picture text -----

Note 1 : Comprises cash less lease and interest-bearing liabilities

==> picture [134 x 22] intentionally omitted <==

6

Duratec Limited – FY22 Results Presentation – 22 August 2022

Financial Results

==> picture [134 x 22] intentionally omitted <==

FY22 FINANCIAL HIGHLIGHTS

Resilient result in a challenging year

==> picture [907 x 326] intentionally omitted <==

----- Start of picture text -----

EPS
Revenue [1] EBITDA [2] NPAT
3.2 cents per share
Dividend [3]
$310.0m $19.3m $7.8m
Up from $235.7m in FY21 Margin 6.2% Up from $7.1m in FY21 2.0 cents
Per share, fully franked
Cash Order Book Tenders Pipeline [3]
$58.3m $458.2m $701.0m $1.72b
Net cash position of $43.5m Up from $236.2m in FY21 Up from $657.2m in FY21 Down from $2.2b in FY21
----- End of picture text -----

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 Note 3 : Interim dividend of 0.5 cents per share and final dividend of 1.5 cents per share, fully franked

==> picture [134 x 22] intentionally omitted <==

8

Duratec Limited – FY22 Results Presentation – 22 August 2022

FY22 FINANCIAL RESULT COMPARISON

Very strong H2 FY22 compared with H1 FY22

==> picture [905 x 149] intentionally omitted <==

----- Start of picture text -----

Revenue H2 EBITDA H2 NPAT H2 Final Dividend
$180m $14.3m $7.1m 1.5 cents
Up 38% Up 186% Up $6.4m Total 2 cents p/s
Revenue H1 EBITDA H1 NPAT H1 Interim Dividend
$130m $5.0m $0.7m .5 cents
----- End of picture text -----

==> picture [907 x 149] intentionally omitted <==

----- Start of picture text -----

Cash H2 Order Book H2 Tenders H2 Strong Pipeline H2
$58.3m $458.0m $701.0m $1.72b
Up $22.1m Up $8m Up $43.8m Up $120m
Cash H1 Order Book H1 Tenders H1 Strong Pipeline H1
$36.2m $450m $657.2m $1.6b
----- End of picture text -----

==> picture [134 x 22] intentionally omitted <==

9

Duratec Limited – FY22 Results Presentation – 22 August 2022

FY22 FINANCIAL RESULT

Strong result brought about by record H2

• FY22 was a financial year of two halves.

• First half (H1)

• Financial performance adversely affected by COVID-19 and lockdowns, particularly on the East Coast

• Second half (H2)

• Strong recovery in financial performance and a return to normal market conditions

• DDR Australia (associated investment) provided a solid contribution with revenue and earnings up from FY21

• Strong balance sheet with $58.3m cash and strong cash flows from operations (net cash $43.5m)

	FY22	FY21	Variance
Revenue	$310.0m	$235.7m	31.5%
Reported EBITDA	$17.8m	$15.9m	11.9%
Normalised EBITDA1	$19.3m	$18.8m	2.6%
Statutory NPAT	$7.8m	$7.1m	9.8%
Normalised NPAT1	$7.8m	$8.6m	(9.3%)
Key operating metrics
Reported EBITDA margin	5.7%	6.8%	(16.1%)
Normalised EBITDA margin1	6.2%	8.0%	(22.5%)
Statutory NPAT margin	2.5%	3.0%	(16.6%)
Normalised NPAT margin1	2.5%	3.7%	(32.4%)

Note 1 : Prepared on a normalised basis which excludes one-off IPO costs and Fortec contribution

==> picture [134 x 22] intentionally omitted <==

10

Duratec Limited – FY22 Results Presentation – 22 August 2022

DDR AUSTRALIA PTY LTD (DDR)

Significant contributor in FY22

• 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

• Delivered $72.6m in Supply Nation-certified project works in FY22

• Spent $7.7m with Supply Nation-certified suppliers

• Dedicated leadership team strengthened by additional key appointments

• Diverse workforce with 27% Aboriginal staff and 48% women

• Increased focus on project pipeline forecasts and diversification of services

• Safety and quality focus DDR Revenue ($m) (100% of business)

==> picture [402 x 155] intentionally omitted <==

----- Start of picture text -----

$80.0 FY22 $72.6
$70.0
$60.0 FY21 $50.7
$50.0
FY20 $33.4
$40.0
$30.0
FY19 $10.0
$20.0
$10.0
$-
FY19 FY20 FY21 FY22
Millions ($)
----- End of picture text -----

FY22 Highlights

• Strong FY22 performance with NPAT increasing 30%, delivering $1.5m dividend to Duratec

• Current work-on-hand of $41.3m and $286m of identified opportunities

• Outlook remains very positive, expectation of sustained financial performance

==> picture [134 x 22] intentionally omitted <==

11

Duratec Limited – FY22 Results Presentation – 22 August 2022

Operational Highlights

==> picture [134 x 22] intentionally omitted <==

FY22 PROJECTS DELIVERY

Key sector and project overview

Core Service Offerings

==> picture [269 x 102] intentionally omitted <==

==> picture [271 x 102] intentionally omitted <==

FY22 Projects

Defence

RAAF Base Richmond works, Fisherman's Bend building refurbishment, Gallipoli Barracks fuel installation works, HMAS Stirling works, Oakey fire safety, RAAF Pearce building & electrical, RAAF Williamtown building & civil, RAAF Point Cook building works, ACT Cadets Accommodation Refurbishment.

Building & Facade

Woolworths Building Sydney, QV Building Melbourne and Central Park Facade refurbishment.

Mining & Industrial

Boddington blast & paint services, Yandi structural works, Yara fertiliser plant maintenance and MIM concrete repairs.

Power & Energy

Mt Piper Power Station, Western Sydney Airport Aviation Fuel Hydrant Line

Marine Infrastructure

Flinders Ports and TasPorts remediation works.

==> picture [271 x 102] intentionally omitted <==

----- Start of picture text -----

Specialist technical
services
----- End of picture text -----

Transport Infrastructure

Cockle Creek Bridge refurbishment and Dunbogan Bridge rehabilitation.

Water Infrastructure

Roof replacement for Power and Water Corporation, Mugga Reservoir roof replacement and repair, and Gold Coast Desalination corrosion mitigation.

==> picture [134 x 22] intentionally omitted <==

13

Duratec Limited – FY22 Results Presentation – 22 August 2022

HSECQ OVERVIEW

Continuous improvement and working towards best practice

• 2 Lost Time Injury (LTI) recorded in FY22

• Established Safety Culture Committee to escalate and address issues across the business

• Mental Health First Aid Training ongoing to better equip team leaders

• Federal Safety Accreditation

• Implementation of new systems to improve efficiency and effectiveness

• Introduced a Safe Start initiative to the workforce supporting personal risk assessments

Period	LTIFR	TRIFR	AIFR	Hours Worked
FY19	0.71	3.55	46.22	1,406,142
FY20	0.00	6.33	49.59	1,895,400
FY21	0.00	6.07	55.76	1,811,255
FY22	0.98	7.81	72.71	2,048,952

==> picture [266 x 486] intentionally omitted <==

==> picture [134 x 22] intentionally omitted <==

14

Duratec Limited – FY22 Results Presentation – 22 August 2022

SECTOR OPERATIONAL OUTLOOK

Strong activity across key sectors

Defence

• Sustainment spending forecast to increase to $24b by FY30

Mining & Industrial

• Teams well positioned nationally to meet increasing demand for remediation and life extension of ageing infrastructure

• Clients increasingly focused on infrastructure integrity which is critical to their processes and production output

Building & Facade

• Good momentum with increasing demand for Duratec’s Technical team and ECI in projects

• Flammable cladding replacement programs continue to gain momentum nationally

• Duratec is currently carrying out 17 building facade projects nationally (5 west, 12 east)

Other infrastructure

• Increased activity in energy, water & wastewater, & transport ports infrastructure

DDR

• Outlook supported by federal and state government along with corporate IPP initiatives

People

• Has grown employee base to capitalise on and execute growth opportunities

==> picture [477 x 364] intentionally omitted <==

==> picture [134 x 22] intentionally omitted <==

15

Duratec Limited – FY22 Results Presentation – 22 August 2022

==> picture [960 x 540] intentionally omitted <==

----- Start of picture text -----

Outlook
----- End of picture text -----

ORDER BOOK AND PIPELINE

Diversified across industry sector and geographies, and growing

==> picture [842 x 376] intentionally omitted <==

==> picture [134 x 22] intentionally omitted <==

17

Duratec Limited – FY22 Results Presentation – 22 August 2022

POSITIVE BUSINESS OUTLOOK

Well positioned for growth in FY22

• Key macro themes and demand drivers that support Duratec’s organic growth continue in all market segments and geographical locations

• People

• Duratec’s employees are integral to our success

• Attracting and retaining employees of a diverse workforce is important to our productivity

• High work-on-hand and pipeline of tangible opportunities

• Well diversified to further capitalise on identified opportunities

• Robust balance sheet and operational capability to support growth strategy and operational leverage

• Focus on disciplined evaluation of potentially complementary acquisition targets

• Continued focus on safety, systems and disciplined tendering (based on ECI)

• Continued low capital expenditure model

• Normalised operating conditions are expected to lead to strong year on year growth, underlying profit and cash generation growth

==> picture [340 x 491] intentionally omitted <==

==> picture [134 x 22] intentionally omitted <==

18

Duratec Limited – FY22 Results Presentation – 22 August 2022

==> picture [960 x 540] intentionally omitted <==

----- Start of picture text -----

Case Studies
----- End of picture text -----

Central Park Project - Perth

Building & Facade refurbishment underway

==> picture [6 x 10] intentionally omitted <==

Scope

• Full facade enhancement by way of removal of circa 26,000sqm of facade panels from the spandrel, columns, parapets and lift overrun zones.

• Replacement of all facade panels introducing tonal colour variations of metallic warm grey that will diffuse a golden hue to the spandrel, column, parapets and lift overrun.

• Introduce new lighting to the structural elements of the tower.

• Additional structural strengthening to the facade.

• Curtain wall system including new insulation and sarking.

• Works to be completed by installing temporary access decks above the podium to allow unimpeded access and egress for the building operations.

• Use of multiple mast climbers working concurrently across all elevations of the project to remove and install the cladding system.

==> picture [458 x 364] intentionally omitted <==

==> picture [134 x 22] intentionally omitted <==

Duratec Limited – FY22 Results Presentation – 22 August 2022

20