EXCELSIOR CAPITAL LTD — AGM Information 2015

Nov 24, 2015

Annual General Meeting Presentation

25 November 2015 SYDNEY

Disclaimer

• This document, and any constituent or associated presentation, information or material (collectively, the Material ), is not (and does not form part of) an offer, solicitation, invitation or recommendation in respect of any securities and neither the Material nor any part of it will form the basis of, or be relied upon in connection with, any contract, commitment or investment decision.

• No representation or warranty is or will be made by any person (including CMI Limited and its officers, directors, employees, advisers and agents ( CMI )) in relation to the accuracy or completeness of all or part of the Material, or the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in, or implied by, the Material or any part of it. To the maximum extent permitted by law, CMI does not accept any responsibility, and disclaims any liability (including, without limitation any liability arising from fault or negligence), for any loss arising from any use of or reliance upon all or any part of the Material or otherwise arising in connection with it or for any action taken by the recipients of the Material on the basis of such Material.

• The Material contains certain forward-looking statements with respect to the financial condition, results of operations and business of CMI and certain plans and objectives of the management of CMI. All such forward-looking statements involve known and unknown risks, significant uncertainties, assumptions, contingencies and other factors, many of which are outside the control of CMI, which may cause the actual results or performance of CMI to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of the Material. Factors that could cause actual results or performance to differ materially include without limitation the following: fluctuations in interest and currency exchange rates, basis risk and credit risk; levels of supply and demand and market prices; legislation or regulations throughout the world that affect CMI's business; legal defense costs, insurance expenses, settlement costs and the risk of an adverse decision or other outcome relating to governmental investigations, class actions or other claims; growth in costs and expenses; risk of adverse or unanticipated market, financial or political developments (including without limitation in relation to commodity markets).

• The Material is provided for informational purposes only and is subject to change without notice. Subject to any obligations under applicable laws, regulations or securities exchange listing rules, CMI disclaims any obligation or undertaking to release any updates or revisions to the Material to reflect any change in expectations or assumptions. Nothing in the Material should be interpreted to mean that future earnings per share of CMI will necessarily match or exceed its historical published earnings per share, or that there has been no change in the affairs of CMI since the date of the Material.

• Nothing contained in the Material constitutes investment, legal, tax or other advice. The information in the Material does not take into account the investment objectives, financial situation or particular needs of any recipient. Before making an investment decision, each recipient of the Material should make its own assessment and take independent professional advice in relation to the Material and any action taken on the basis of the Material.

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CMI Limited Overview

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CMI Electrical specialises in the design and manufacture of specialty plugs and couplers, electrical cables, sourcing and supply of niche electrical cables, high voltage cables, flexible cables and flameproof junction boxes.

This division services the mining sector, construction and infrastructure industries, electrical wholesalers and gas, petroleum and other hazardous industries.

This division specialises in designing, manufacturing, wholesaling and retailing of vehicle accessories for the 4WD, SUV & Trade vehicle markets. Market penetration is achieved through 58 TJM branded Australian aftermarket retail distribution stores, supply to major original equipment manufacturers and direct export to a distribution network covering most continents.

World class products, strong balance sheet, long operating history, skilled people Page 3

FY15 Earnings Summary

$m	FY15	FY14	Change
Revenue	66.9	92.4	(28%)
EBITDA	8.5	6.8	26%
EBITDA Margin	13%	7%
Depreciation & Amortisation	(1.3)	(1.8)	27%
Tax	(1.7)	(1.3)	(34%)
Interest expense	(0.1)	(0.2)	63%
NPAT	5.4	3.5	54%
NPAT Margin	8%	4%
EPS (cents)	15.77	10.29	53%

• Electrical ‐ performance was down largely due to poor market conditions in the coal mining sector and reduced infrastructure and construction activity resulting in 12% decrease in revenues

• • TJM – Performance improved to be EBITDA positive which was around a $4m before tax profit turnaround from the previous year.

• • EBITDA margin was significantly better due to impact of the reduction in the TJM losses.

• Additionally there were “one‐off” contributions to profit of $869k from the CMI Industrial loan recovery and $467k write‐up from the sale of TJM

• Impact of subdued economic conditions and TJM losses were more pronounced in first half.

• ⁻ EBIT $7.2m – 1H15 $2.8m; 2H15 $4.4m

• • NPAT – up 54% to $5.4m from $3.5m

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FY15 Divisional & Half on Half Summary

	Electrical	TJM	Corp	FY15
	$m	$m	$m	$m
Revenue	44.6	21.9	0.4	66.9
EBITDA	8.3	0.7	(0.5)	8.5
EBITDA margin %	19%	3%		13%
EBIT	8.1	(0.4)	(0.5)	7.2
Operating PBT	8.1	(0.4)	(0.6)	7.1
Tax				(1.7)
Reported NPAT				5.4

Revenue

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EBIT*

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• Before Net Interest, Impairment & Discontinued Operations

Balance Sheet & Dividend Policy

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• Strong balance sheet and capacity to generate cash

• Net cash $34.2m

• Net Tangible Assets $1.49 per share

• Dividends

• Payout ratio policy allows up to 60% of profits to be paid out

• 3 cent fully franked dividend paid March 2015 and 6 cent fully franked dividend paid September 2015

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• Increased dividend payment to 9 cents from 6

cents

Balance Sheet Summary

$m	FY15	FY14
Total Assets	66.8	68.4
Total Shareholder Funds	60.6	56.9
Net Cash/(Debt)	34.2	6.6
Operating cashflows	9.6	6.0

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Quarterly Update & Outlook

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September 2015 Quarter

• Group revenue is down on the September quarter of the prior year largely due to the sale of the TJM division.

• Group margin overall has improved compared to Q1FY14 generally due to the removal of the TJM losses.

• Continued difficult trading conditions for the electrical division including the mining, resources, construction and infrastructure sectors, with margins continuing to be under pressure.

• We are currently assessing opportunities to diversify the CMI Electrical markets and products, both organically within the business and through consideration of suitable M&A opportunities.

• Performance for the September quarter is above last year largely due to the removal of TJM losses but expectation of overall performance for FY16 is tempered by FY15 one-off contributions.

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Market Analysis ‐ Electrical • Mining and Resources sector
–
Challenges expected to continue in the
medium term
–
CMI mining product is a market leader and a
safety related product that has an overhaul
life cycle of 4 years which often leads to new
sales
–
Continued product development of
flameproof products for resources industry
with some products now on the market
–
Maintaining capacity for recovery of coal
sector whilst controlling costs
–
Australian black coal revenues are forecast
to grow at an annualised rate of 4.3% over
the 5 years through 2020-2021 after a small
fall in the current year (IBIS, Black Coal
Mining in Australia Industry Report 2015)
•
Construction and infrastructure
–
Sector showing continued weakness
–
Aggressive pricing
–
Potential for some improvement in latter
stages of FY16
•
Flameproof
–
First products are now on the market
•
Page 9 Other potential acquisitions being explored
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TJM Sale
•
TJM sale achieved in difficult
circumstances with a great overall result
for CMI shareholders
•
Final price achieved was $22.2m plus cash
of around $1.5m
•
Good terms achieved with normal sale
warranties and minimal risk for CMI
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Capital Return

• Shareholder approval is being sought at today’s AGM for a Capital Return of $0.30 per share, approximately $10.5m in total.

• Draft ruling has been received from the ATO indicating that they will treat the payment as a capital return rather than a dividend.

• However shareholders are advised to seek their own taxation advice in regard to the capital return.

• Formal ruling will be issued after the payment is approved and made.

• Should the capital return be approved by shareholders:

• The record date for participation in the capital return will be 8 December 2015

• The payment date of the capital return will be 22 December 2015

• After payment of the $10.5m capital return (if approved), CMI will have cash of around $22m available for growth initiatives.

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Group Outlook for 2016FY and Beyond

• Mining and resources conditions remain very tough with no improvement expected this financial year.

• Infrastructure markets in East coast Australia may improve slightly later this financial year.

• CMI’s balance sheet remains strong with cash of approximately $22m after capital return if approved.

• Cash is available to be utilised for working capital and suitable growth opportunities if identified, or for further future capital management initiatives.

• Andrew Buckley will not continue in the Executive Chairman role following the AGM based on the reduction in overall activity within the business after the sale of TJM.

• Mr. Buckley will also be resigning as a director of CMI Ltd by the end of December.

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AGM Formal Business

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Formal Business

Financial Report

To receive and consider the financial report of the Company and the reports of the Directors and Auditors for the year ended 30 June 2015.

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Formal Business

Remuneration Report

Resolution 1.

To consider and, if thought fit, pass the following as a non-binding ordinary resolution:

‘That the Company’s Remuneration Report for the financial year ended 30 June 2015 is approved.’

Proxies Received	Voted	%
For	9,177,283	97.59
Against	112,689	1.20
Open	114,118	1.21
Abstain	13,797	N/A

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Formal Business

Re‐Election of Director

Resolution 2.

To consider and, if thought fit, pass the following as an ordinary resolution:

‘That Ms Leanne Catelan, a non-executive Director retiring by rotation in accordance with the Constitution and ASX Listing Rules, and being eligible for reelection, is re-elected as a Director.’

Proxies Received	Voted	%
For	22,608,715	98.07
Against	330,270	1.43
Open	114,118	0.50
Abstain	19,097	N/A

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Formal Business

Capital Return

Resolution 3.

To consider and, if thought fit, pass the following as an ordinary resolution:

‘That, for the purposes of Part 2J.1 of the Corporations Act 2001 (Cth) and for all other purposes, approval is given for the Company to reduce its share capital by $0.30 per share, a total of approximately $10.5 million, by way of an equal capital reduction, subject to the Australian Taxation Office issuing a class ruling confirming that any such payment will not be treated as a dividend for Australian income tax purposes. The reduction of capital is to be effected by the Company paying $0.30 per share to each registered holder of fully paid ordinary shares in the Company, as at a date and time to be specified by the board of the Company.’

Proxies Received	Voted	%
For	22,741,422	98.57
Against	227,028	0.98
Open	103,393	0.45
Abstain	357	N/A

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Formal Business

Renewal of Performance Rights Plan

Resolution 4.

To consider and, if thought fit, pass the following as an ordinary resolution:

‘That for the purposes of Listing Rule 7.2, Exception 9, and for all other purposes, Shareholders approve the Performance Rights Plan and the grant of Performance Rights and the issue of Shares under such Performance Rights Plan, which Performance Rights Plan is summarised in the Explanatory Memorandum.’

Proxies Received	Voted	%
For	21,809,789	96.72
Against	626,371	2.78
Open	112,118	0.50
Abstain	25,310	N/A

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Formal Business

Adjustment to Performance Rights

Resolution 5.

To consider and, if thought fit, pass the following as an ordinary resolution:

‘That, for the purposes of ASX Listing Rule 6.23.3 and for all other purposes, approval is given for the Company to adjust the terms of all performance rights issued under CMI’s Performance Rights Plan in the manner set out in the Explanatory Notes accompanying this Notice of Meeting.’

Proxies Received	Voted	%
For	21,788,743	96.64
Against	563,448	2.50
Open	194,149	0.86
Abstain	27,248	N/A

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Thank you for your attendance.

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