MONADELPHOUS GROUP LIMITED — AGM Information 2016

Nov 21, 2016

ANNUAL GENERAL MEETING 2016 Tuesday 22 November

2016 AGM

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Company Profile

Monadelphous Group Limited (ASX:MND) is an S&P/ASX 200 company that provides construction, maintenance and industrial services to the resources, energy and infrastructure sectors.

At 30 June 2016
People	4,438
Market Capitalisation*	$950m
Net Cash	$186m

• As at 18 Nov 2016

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ENGINEERING CONSTRUCTION

MAINTENANCE AND INDUSTRIAL SERVICES

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Board of Directors

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Agenda

1. Chairman’s Address

2. Managing Director’s Address

3. Items of Business

4. Other Business

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1. Chairman’s Address

JOHN RUBINO

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Chairman’s Address

JOHN RUBINO

• Significant change in industry over recent years

• Positioned the business for long term growth

• Focused on maximising returns in core markets

• Targeted entry into new customer and service markets

• Strong balance sheet provides opportunity to advance market growth strategy

• Helen Gillies appointed as non-executive director

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2. Managing Director’s Address

ROB VELLETRI

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Group Highlights

FINANCIAL

• Sales Revenue $1.36b

• EBITDA $113.6m

• NPAT $67.0m

• EPS 72c

• DPS 60c, fully franked

• Operating cashflow $78m

• Net cash $186m

OPERATING

• $1.1b new contracts and contract extensions

• Three new long-term oil and gas contracts

• Strengthened position in upstream CSG and water infrastructure

• Solid operational performance

• Record safety performance - TCIFR 2.45

• Maintenance division wellpositioned for growth

STRATEGIC

• Secured Shell Australia Prelude FLNG services

• • Established presence in the US

• Secured new work in overseas markets

• Expansion of industrial services into access solutions and mine dewatering services

• • Established renewable energy business (July ’16)

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Financial Performance

YEAR ENDED 30 JUNE

		FY16	FY15	CHANGE
Sales Revenue	$m	1,364.7	1,865.0	(26.8%)
EBITDA	$m	113.6	168.0	(32.4%)
EBITDA Margin	%	8.33	9.01	(0.68pp)
NPAT	$m	67.0	105.8	(36.7%)
NPAT Margin	%	4.90	5.67	(0.77pp)
EPS	cps	71.8	113.9	(37.0%)
DPS (Fully Franked)	cps	60.0	92.0	(34.8%)
Operating Cash Flow	$m	78.0	117.8	(33.8%)
Cash Flow Conversion	%	83.2	87.7	(4.50pp)
Cash at Bank	$m	203.5	209.8	(3.0%)

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Safety Scorecard

INJURY FREQUENCY RATES[*]

• Record safety performance

• 22% improvement

• TCIFR of 2.45

• Focus on safety leadership and culture underpins continued improvement

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People

EMPLOYEE NUMBERS

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• Labour availability continues to improve

• Decreasing construction workforce offset by increasing maintenance activity

• Key talent retention remains strong

EMPLOYEES BY DIVISION AT 30 JUNE 2016

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• Consolidated and rationalised support services

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Contracts Secured

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Sales Revenue Summary

DIVISIONAL HIGHLIGHTS

	FY16	FY15	CHANGE
	$m	$m	%
Engineering Construction	757.6	1,245.5	(39.2)
Maintenance and Industrial Services	608.4	621.2	(2.1)
Internal Eliminations	(1.3)	(1.7)
Total	1,364.7	1,865.0	(26.8)

• Lower demand for construction work combined with delays to some existing project work

• Higher levels of activity in maintenance; volume increase offset by reduced costs and pricing

REVENUE BY DIVISION

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Engineering Construction

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Inpex-led Ichthys Project Onshore LNG Facilities, Darwin, Northern Territory

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Engineering Construction (cont’d)

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Ashburton Lyndhurst Irrigation Scheme (ALIS), South Island, New Zealand

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Engineering Construction (cont’d)

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Well head separator skids, pipework and one of five welding cells commissioned at SinoStruct in China

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Engineering Construction (cont’d)

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Relocating gas export pipeline ‘string’ at the Inpex-led Ichthys Project Onshore LNG Facitlities, Darwin, Northern Territory

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Maintenance and Industrial Services

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QGC plant, Curtis Island, Queensland

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Maintenance and Industrial Services (cont’d)

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Woodside-operated Karratha Gas Plant, Karratha, Western Australia (image courtesy of Woodside Energy Ltd.)

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Maintenance and Industrial Services (cont’d)

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CITIC Pacific Mining’s Sino Iron Project, Cape Preston, Western Australia

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Maintenance and Industrial Services (cont’d)

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Oil Search Limited’s Central Production Facility, Southern Highlands Province, Papua New Guinea

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Australian Market Conditions

TOTAL RESOURCES (A$B)

Source BIS Shrapnel - Mining in Australia (released May 2016)

TOTAL INFRASTRUCTURE (A$B)

Source BIS Shrapnel - Value of work done Constant (released May 2016)

TOTAL ENERGY (A$B)

Source BIS Shrapnel - Mining in Australia (released May 2016)

TOTAL MAINTENANCE (A$B)

Source BIS Shrapnel - Maintenance in Australia (November 2016)

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Markets and Growth Strategy

MAXIMISE POSITION IN CORE MARKETS

• Secured a number of long-term maintenance contracts

• New facilities maintenance contract on Barrow Island

• Formed EPC JV Mondium

• Access Solutions and mine dewatering services

• Acquired protective coatings business – Arc West

PRIORITIES

• Retain and grow existing contracts through relationship and innovative solutions

• Secure additional oil and gas maintenance contracts

• Secure EPC package

NEW SERVICES/MARKETS

• Secured Shell Australia Prelude FLNG services

• Secured NZ irrigation contracts

• Established Zenviron

• Selected for Sydney Water South Region Delivery Contract works

PRIORITIES

• Secure opportunities in renewable energy

• Grow water infrastructure business in Australia and NZ

• Pursue opportunities in new infrastructure sectors

EXPAND CORE SERVICES OVERSEAS

• Developing position in US, Monaro

• Sinostruct enters US market

• Actively bidding in Mongolia – Oyu Tolgoi

PRIORITIES

• Monaro to secure and execute construction contracts

• Convert overseas supply opportunities for SinoStruct

• Secure package on Oyu Tolgoi

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INCORPORATED JOINT VENTURE BETWEEN MONADELPHOUS AND ZEM ENERGY

Zenviron is a full service balance-of-plant (BoP) contractor providing engineering, procurement and construction services to the renewable energy sector in Australia and New Zealand.

• Based in Newcastle, NSW, currently has workforce of over 20

• Pursuing a number of opportunities in wind-farm and large-scale solar installations

• Zenviron selected as preferred tenderer for BoP associated with CWP’s Sapphire Wind Farm in NSW

• Key milestone in strategy to extend services into new infrastructure markets

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INCORPORATED JOINT VENTURE BETWEEN MONADELPHOUS AND LYCOPODIUM

Mondium brings together the complementary strengths, resources and experience of Monadelphous’ multidisciplinary engineering and construction capabilities with Lycopodium’s technical expertise and minerals project delivery.

• Mondium will provide a new EPC offering to the minerals market both locally and overseas

• Well placed to take advantage of increasing customer demand for lump sum turnkey/EPC style contracts

• Currently pursuing tender opportunities in the minerals processing sector

• Key milestone in the Company’s growth and diversification strategy

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Outlook

• Australian market conditions in resources and energy to remain challenging

• Capex required to sustain increased production levels

• Monadelphous in strong position to capitalise on new maintenance opportunities

• Forecast increase in infrastructure investment

• Monadelphous’ position in infrastructure expected to strengthen

• First half revenue on par with second half of 2015/16

• Margins likely to remain under pressure

• Diversification strategy providing new platforms for revenue growth

• Strong balance sheet to pursue investment opportunities

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Shareholder Questions

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CITIC Pacific Mining’s Sino Iron Project, Cape Preston, Western Australia

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3. Items of Business

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Oxley Creek Sewage Treatment Plant, Rocklea, Queensland

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Annual Reports

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To receive and consider the Financial Report, Directors’ Report and Auditor’s Report for the year ended 30 June 2016.

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Resolution 1: Re-election of Director

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To re-elect a Director: Mr John Rubino who, being eligible, offers himself for re-election.

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Resolution 1: Re-election of Director

The total of valid proxies received for Resolution 1 is 33,167,518 being:

27,872,936

3,649,062

1,577,292

68,228

FOR the resolution AGAINST the resolution OPEN to proxy ABSTAIN

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Resolution 2: Re-election of Director

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To re-elect a Director: Ms Helen Gillies who, being eligible, offers herself for re-election.

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Resolution 2: Re-election of Director

The total of valid proxies received for Resolution 2 is 33,166,518 being:

31,372,272

98,676

1,598,036

97,534

FOR the resolution AGAINST the resolution OPEN to proxy ABSTAIN

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Resolution 3: Fees to Non-Executive Directors

To consider that for the purposes of ASX Listing Rule 10.17 and Clause 11.15 of the Company’s Constitution, the maximum aggregate amount of directors’ fees that may be paid to the Company’s non-executive directors per annum is increased by $150,000, from $600,000 per annum to $750,000 per annum.

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Resolution 3: Fees to Non-Executive Directors

The total of valid proxies received for Resolution 3 is 33,167,518 being:

29,256,082

1,916,670

1,588,395

406,371

FOR the resolution AGAINST the resolution OPEN to proxy ABSTAIN

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Resolution 4: Adoption of Remuneration Report

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To consider and adopt the Remuneration Report for the year ended 30 June 2016.

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Resolution 4: Adoption of Remuneration Report

The total of valid proxies received for Resolution 4 is 33,162,518 being:

27,707,043

2,515,588

1,577,175

1,362,712

FOR the resolution AGAINST the resolution OPEN to proxy ABSTAIN

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Poll

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4. Other Business

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For more information:

Investor Relations Telephone: +61 8 9315 7312 Email: investor_relations@monadel.com.au www.monadelphous.com.au

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Important Notice

DISCLAIMER

Information, including forecast financial information, in this presentation, should not be considered as a recommendation in relation to holding, purchasing or selling shares, securities or other instruments in Monadelphous Group Limited or any other company. Due care and attention has been used in the preparation of forecast information, however, actual results may vary from forecast and any variation may be materially positive or negative.

Forecasts, by their very nature, are subject to uncertainty and contingencies may occur which are outside the control of Monadelphous Group Limited. Before making or varying any decision in relation to holding, purchasing or selling shares, securities or other instruments in Monadelphous Group Limited, investors should consider the appropriateness of that investment in light of their individual investment objectives and financial situation and should seek their own independent professional advice.

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Appendix - Notes to Financials

NON-IFRS FINANCIAL INFORMATION

EBITDA RECONCILIATION

Monadelphous Group Limited results are reported under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The Company discloses certain nonIFRS measures that are not prepared in accordance with IFRS and therefore are considered non-IFRS financial measures. The non-IFRS measures should only be considered in addition to and not as a substitute for, other measures of financial performance prepared in accordance with IFRS.

Profit before income tax Interest expense Interest revenue Depreciation expense Amortisation expense EBITDA	FY16 $’000 FY15 $’000 95,610 147,041 1,025 1,701 (4,164) (4,478) 21,094 22,932 65 779
	113,630 167,975

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