FOS CAPITAL LTD — AGM Information 2022

Nov 29, 2022

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AGM Presentation 2022

ASX:FOS

FOS Lighting Overview

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• FOS was established April 2019

• FOS designs, manufactures and distributes quality LED lighting solutions to the commercial construction industry with sectors including offices, hospitals, schools, warehouses, railway, galleries & museums

• FOS is led by an experienced management team with a proven industry track record

• FOS has completed 4 acquisitions since inception to create an ANZ operation

• FOS is profitable, cashflow positive, debt free and has built the foundations to launch the business into its next expansion phase

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• FOS paid a fully franked dividend of 0.5c per share in its first year as a listed company.

• FOS’s medium term stated intentions are to grow organically and by acquisition to create a +$50M revenue group that can produce net profit margins in excess of 10%

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FY22 Highlights

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$ 13.5M $0.35M Sales +66% NPAT

0.5c per share Fully franked dividend

$6.2M Order book +62%

Ecopoint NZ Acquisition

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$0.7M Aura Lighting WA Operating cashflow Appointed distributor

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$56M Quote pipeline

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FY22 Operational Update

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• Impressive sales growth to $13.5M +66%

• Record Order Book $6.2M +62% (increasing pipeline)

• NPAT $0.35M

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• Declared maiden fully franked Dividend 0.5 cents per share

• Acquired Ecopoint Lighting New Zealand

• Integration complete, additional sales resources added

• Rationalized product ranges from 16 to 14

• Operational efficiencies resulted in staff levels reducing from a high of 59 to 50

• FOS appointed exclusive distributor for iCore Smart poles

• Aura Lighting appointed as FOS exclusive distributor in WA

• Expanded FOS VEKTA range, now our biggest selling product line

• Have exited the last of JSB property’s (Melb & Sydney)

• Successfully navigated covid disruptions and supply chain issues

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Hawko Lighting Acquisition

• Hawko Lighting Group

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• Established over 30 years, based on Sunshine Coast, Queensland

• Manufactures an extensive range of LED linear lighting

• Services the Australian market through distributors

• 14 employees

• FY22 Sales $3.3M

• FY22 normalised EBIT $300K

• Synergy benefits $500K (previously announced $250K) (to be realised over 12 months)

• Purchase price $1M cash upfront $300K deferred 12 months linked to sale of stock

• FOS Capital raised $1.5M via a sophisticated investor placement @20c per share

• Hancock & Gore (ASX:HNG) and associated entities subscribed to $1M of the placement

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Acquisition Rationale

• Hawko linear lighting range similar to FOS Vekta

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• Expands FOS’s market share in linear lighting

• Linear lighting is FOS’s fastest growing product range

• Hawko has products and tooling that fills gaps in FOS’s range

• Significant synergies available through shared manufacturing with FOS Brisbane facility

• Increases production capacity

• Hawko will benefit from FOS distribution network in Australia and NZ

• Continues consolidation of lighting manufacturing sector

• Earnings per share accretive

• Continues FOS’s stated objectives of growth through acquisition

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FOS Group Inclusive of Hawko

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3
+$20M 6 7
Manufacturing &
Annualized Sales Sales offices Distributors
Warehousing facilities
15
64 $7M $60M
Product ranges Employees Order Book
Quote pipeline
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FY22 Financials

P&L ($m)	FY22	FY21		Balance Sheet ($m)	June 22	Dec 21	June 21
				Cash & Receivables	3.7	3.9	5.3
Sales	13.5	8.1
Gross Profit	5.7	3.3		Stock, P&E, Other	8.1	8.7	5.7
Other income	0.4	1.4		Total Assets	11.8	12.6	11
Expenses	5.7	3.9		Payables	1.8	1.6	1.6
PBT	0.41	0.79		Other	2.4	3.5	2.4
NPAT	0.35	0.74		Total Liabilities	4.2	5.1	4.1
Operating cashflow	0.7	(0.9)		Net Assets	7.6	7.5	6.9
Dividends per share	0.5c	0

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FY22 Comparative analysis

Orders on Hand

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6.1M 6.2M
ACTIVE QUOTES
Sales
$13.5M
3.8M
$8.1M $7.4M
$5.5M
1.5M 1.5M $4.2M
$2.8M
$6.1M
$3.9M
$2.7M
JUN 2020 D EC 20 20 JUN 2021 DEC 2021 JUN 2022 Jun 2020 Dec 2020 Jun 2021 Dec 2021 Jun 2022 FY2020 FY2021 FY2022
1H 2H
56.0M
50.0M
42.0M
25.1M
15.0M
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Outlook & trading update

• Q2 sales forecast approximately $5M up 43% (Hawko contribution $350K)

• 1H sales forecast approximately $8m up 31%

• Significant momentum in all sales locations with increasing order book

• ANZ operation with 64 staff now in place well poised for further growth

• Acquisition of Hawko represents significant manufacturing synergies and increased manufacturing capacity.

• New revenues streams from expanded geographical presence with the addition of 6 new distributors

• Growing pipeline of projects with active quotes now at $60m

• Commercial construction industry robust and benefiting from Gov’t stimulus

• Continued focus on product development and rationalisation

• Strong balance sheet, debt free, no material capex requirements

• Actively pursuing multiple value accretive acquisition opportunities

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FOS Timeline

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FOS at a glance

Capital Structure	ASX:FOS	Directors	Directors
Shares on Issue*	53.8m	Non-Executive Chairman	Sandy Beard
Share price (29/11)	19.5c	Managing Director	Con Scrinis
Market Cap	$10.5m	Executive Director	Michael Koutsakis
Dividends/share	0.5c	Non-Executive Director	Michael Monsonego
Cash (June 2022)	$1.9m	Employees	64
Net Assets	$7.6m	Brands	15
NA per share	16c	Offices	6
EPS	0.76c	Manufacturing plants	2
Major Shareholders:SKM Investment Group (associated with executive directors) 57% :Hancock & Gore Ltd 16.95% * Includes shares to be issued subject to shareholder approval

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