OLDFIELDS HOLDINGS LIMITED — AGM Information 2017

Nov 29, 2017

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OLDFIELDS HOLDINGS LIMITED ANNUAL GENERAL MEETING

30[TH] NOVEMBER 2017

1

Board & Executives

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• Lewis (William) Timms, Chairman

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• Steve Hooper, Non Executive Director

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• Richard Abela, Managing Director & CEO

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• Greg Park, Executive Director, Co Sec. & CFO

Slide 2

Order of Business

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• Welcome and Introductions

• Chairman’s Address

• Chief Financial Officer’s Address

• Non-Executive Director’s Address

• Chief Executive’s Officer’s Address

• Items of Business

• Open Discussion

Slide 3

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CHAIRMAN’S ADDRESS

CHAIRMAN’S LEWIS TIMMS

Slide 4

2017 Financial Results

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		2017 $k		2016 $k		Change %
Group Revenue (Net)		26,721		28,420		-6.0%
				R
Net Profit (Loss) after Tax		312		(722)		+143.2%
Interest & DSLN Debt Revaluation Depreciation & Amortisation Income Tax Expense Foreign Exchange Gain		590 803 315 11		634 1,434 352 (37)
EBITDA		2,031		1,661		+22.3%

Slide 5

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COMPANY SECRETARY & CFO & CFO GREG PARK

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Slide 6

FY17 EBITDA Movements Against Prior Year

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EBITDA Improvement +22.3%

$2,031k

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+$372k
Net Revenue Decline -6.0%
Operations
$1,661k Volume Savings
+$209k
-$947k Volume
+$286k
Logistics
Savings
COGS +$264k
Savings
+$186k
Net +$495k
Net -$497k
Salaries &
FY16 Consumer Division Scaffold Division
Other SG&A
Slide 7
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Salaries & Other SG&A

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FY17

Review of Revenue (before trading terms)

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	FY14	FY15	FY16	FY17	17 v 16	Mov’t %
Sheds	3,371	2,726	1,839	1,807	-32	-1.7%
Paint	9,473	9,018	9742	6,751	-2,991	-30.7%
Consumer	12,842	11,744	11,587	8,558	-3,023	-26.1%
Scaffold	15,898	17,088	18,308	19,061	+753	+4.1%
Total Group	28,740	28,725	29,848	27,602	+2,246	-7.5%
	FY14	FY15	FY16	FY17	17 v 16	Mov’t %
M10House Brand	866	748	931	1111	+180	+19.3%
M10Oldfields Brand	918	938	927	894	-33	-3.6%
Masters	2,172	2,374	2,841	274	-2,567
Specialists	5,517	4,958	5,043	4472	-571	-11.3%
Total Paint	9,473	9018	9742	6751	-2991	-30.7

Slide 8

2017 Cash Generation & Application

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		2017 $k		2016 $k
EBITDA		2,031		1,661
Workingcapital &provision movements		552		924
Interest & Finance Costs Income Tax Paid		(166) (273)		(255) (189)
Cash Provided by Operating Activities		2,144		2,141
Investing Activities (Net Purchase/Sale PP&E) Financing Activities (Net Repayment of Debt)		(736) (1,136)		(626) (1,080)
Net Increase in Cash		272		435

Slide 9

Deferred Senior Loan Note (DSLN)

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• Instrument with Westpac created Dec. 2012

• Expires Dec 2022 (10 year agreement)

• Group swapped $8.0m of Westpac debt for $2.4m DSLN

• DSLN is interest & debt instalment free till Dec 2022

• DSLN comes with restrictions & impacts:

• Implicit interest rate of 12% pa compound

• Reapply each year for bank facilities ie Core Debt & O/Draft

• – Annual negotiation of 12 months debt repayment plan

• Limit set on fixed asset acquisitions

Slide 10

DSLN – Interest Calculations

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• Years 1–5 : Interest at 12% pa compound

• At Dec 2017 provision approx $1.8m

Interest calculation used for determining “payout” figure if extinguished inside first 5 years

• Years 5–10 : Redemption premium replaces interest calc.

• Sliding scale premium determined by share price (15day VWAP)

Share Price Premium 10.0 c & below (collar price) Nil 11.0 cents ie +1.0 cent $250,000 17.3 cents $1,820,000 30.0 c & above (cap price) $5,000,000

Redemption Date Impact to P&L W/back of all accrued interest W/back $1.8m less $250k No back of interest ($1.8m-$1.8m)

Additional $3.2m ($5.0m=$1.8m+$3.2m)

[Slide 11 ]

DSLN Planning & Options

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• See out remaining 5 years. i.e. pay Westpac $2.4m +Redemption Premium on 21 Dec 2022

…. Carries funding implications to pay lump sum on 21 Dec 2022

• Seek new financiers to payout DSLN

• …. Appetite of Lenders? … Requires approx $5.0m to Payout / Facilities

• Capital raising approx $2.5m to payout DSLN

… Amt may vary subject to upwards movements in share price

… Requires balance of bank facilities to be renegotiated

• Capital raising approx $5.0m to payout DSLN & all Bank Facilities

• … Amt may vary subject to upwards movement in share price

Slide 12

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SUPPLY & LOGISTICS REVIEW: STEVE HOOPER Non - Executive Director

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Slide 13

Operational Focus in 2017-2019

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• Strategic engagement of key suppliers as business partners – international and local

• Focus on quality, product development and new product research – Pro Series Brushes

• • Rationalisation of suppliers, sku’s and processes to reduce product and overhead costs

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• Warehouse consolidation in Sydney to support changes in consumer products and scaffolding

• Identification of key business processes that require enhancement – warehouse management, inventory control and equipment maintenance

Slide 14

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CHIEF EXECUTIVE OFFICER RICHARD ABELA & CFO

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Slide 15

Performance Summary – FY17

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Slide 16 FY15 FY14 FY17 vs FY16 FY17 FY16	Net Revenue	Net Profit After Tax	EBITDA	SG&A Sales, General & Admin’ Exp’s	Core Debt Net Borrowings excluding DSLN
	+3.8% $26.7m $28.4m $27.4m $27.2m	+143.2% $0.3m $(0.7)m $(1.1)m $(2.6)m	+22.3% $2,031k $1,661k $1,165k $777k	Reduc’n 5.0% 26.4% 27.8% 30.6% 34.2%	Repay $1.2m $0.9m $2.1m $3.5m $4.6m

Strategic Direction

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• Continuing to build on our Brand foundations and Company values

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Accountability – Customer Service – Innovation – Integrity – Passion – Safety & Sustainability
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Slide 17

Key strategic planks - Scaffolding

• Developed a deeper understanding of our market position

• Development of counter cyclical revenue streams

• Focus on channels to market that will diversify income streams.

• Liberate the collective knowledge and goodwill around cross border customers.

• Open up new opportunities / capacity by installing cross hire strategy.

• Focus on further developing international channels

• Focus on key data including pipeline, win/loss analysis and strategic targeting.

• Reintroduction of innovation.

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Key strategic planks - Paint

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• Homogenised market -true differentiation opportunity

• Focus on trade – Respect quality and rebuild brand loyalty

• Restructure the revenue base to improve margins

• Key leadership – drive team and industry !

• Focus on innovation

• Return to true product life cycle management

• Launch the best brush for painters on the market

• Re-engage painters

• Gain critical mass + profit margins

• Rationalised the number suppliers

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Key strategic planks - Sheds

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• Simplified offer

• No custom sizes, popular colour options only

• On-line strategy

• Move to a direct sales strategy being a predominantly on line model

• Strip out costs by redeploying staff that can be returned to production on a batch basis

• Produced for stock not to order

• Re-establish critical mass

• Remove unprofitable distributor network and reclaim margins

• FY18 evaluation period

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People & Culture – Stronger as One !

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• Critical appointments 2017

• Critical success factors 2018 & beyond

–

Business Analyst

– Leveraging pool of talent

• Focus – Clarity & data modelling for critical decision making

• Build internal network – sharing of ideas, expertise & project management.

• Scaffolding Engineer

• Building the correct mix of talent

• Focus – Innovation leadership t

  • Organic and new opportunities

• Paint industry sales leadership

• Focus – trade engagement

• National HR manager

• Focus – the right people in the right seats

• – Establishment of a full time digital marketing resource

• Opportunity seekers as well as account managers

– Establishing skills matrix / review

• Individual development plans

• Establish weak points

• Training, & development

• End user engagement using formal and informal communications strategies

• Begin building e commerce capability

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Slide 21

Events – Pro series launch… “Oldfields is Back!!”

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Sydney: October 31, 2017 Melbourne: November 2[nd] , 2017

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Targets: Trade painters & store owners Paint buying groups Industrial buying groups Major painting firms Trade press Master painters NSW & VIC TAFE NSW & VIC

Opportunities for 2018

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1. Finding a lender that will support growth.

2. Re establishing Oldfields as the No.1 trade paint supplier …

3. Evolving our scaffold business into a true national network servicing both local and national clients in counter cyclical revenue streams

4. Allowing Treco to be established as a true on line business.

5. International opportunities – Predominantly Asia.

6. Leverage capabilities from improved analytics and greater insights

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Slide 23

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FY18 - CURRENT YEAR PROGRESS: RICHARD ABELA

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Slide 24

First Half Guidance

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• Restructure consumer revenue base (no sales to Masters, termination of M10 warehouse supply, commence sheds on-line)

• National scaffold strategy to leverage network

• Invest in key roles & activity to drive future growth

• Continued debt reduction with focus on exiting DSLN

Key Financials	H1 FY18 Guidance	H1 FY17 Actual	Growth
Net Revenue	Circa $13,700k	$14,344k	-5% Scaf +10% / Cons -35%
EBITDA	Circa $0.9m - $1.0m	$1.1m	-20%
Slide 25 NPAT	Circa $0k	$360k

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ITEMS OF BUSINESS

Slide 26

Financial Statements & Reports

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To receive and consider the following reports in respect of the financial year of the company ended 30 June 2017;

– The Financial Report (which includes the Statement of Financial Position, Statement of Comprehensive Income, Cash Flow Statement and Director’s Declaration); and

– The Director’s Report and Auditor’s Report

Slide 27

Resolution 1.

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Re-election of Gregory John Park as a Director “That Gregory John Park, who retires by rotation in accordance with the Company’s Constitution and being eligible offers himself for re-election as a Director, be re-elected as a Director”

”
Totalproxies received	57,310,622
Shareholder exclusions	75,000
Votes received FOR(incl. Open to Chair)	57,310,622
Votes received AGAINST	NIL
Abstentions	NIL

Slide 28

Resolution 2.

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Remuneration Report

“That the Remuneration Report be adopted”

Totalproxies received	17,749,560
Shareholder exclusions	39,516,062
Votes received FOR(incl. Open to Chair)	17,749,650
Votes received AGAINST	NIL
Abstentions	45,000

Slide 29

Other Business

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Slide 30

Disclaimer and Notes

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• The purpose of this presentation is to provide general information about Oldfields Holdings Limited (Company). It is not recommended that any person makes any investment decision in relation to the Company based solely on this presentation. This presentation does not contain all information which would be material to the making of a decision in relation to the Company. Any investor should make its own independent assessment and determination as to the Company’s prospects prior to making any investment decision, and should not rely on the information in this presentation for that purpose.

• This presentation does not involve or imply a recommendation or a statement of opinion in respect of whether to buy, sell or hold securities in the Company.

• This presentation contains certain statements which may constitute “forward-looking statements”. Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward-looking statements. No representation or warranty, express or implied, is made by the Company that the matters stated in this presentation will be achieved or prove to be correct.

• Except for statutory liability which cannot be excluded, the Company, its officers, employees and advisers expressly disclaim any responsibility for the accuracy or completeness of the material contained in this presentation and exclude all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission therefrom. The Company accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information made available to a person nor any obligation to furnish the person with any further information.

End Notes

Earnings Before Interest Tax Depreciation and Amortisation. The reference to EBITDA is unaudited and unreviewed however is based on amounts extracted from the audited financial statements and reconciles to the profile before and after income tax as reported in the Consolidated Statement of Profit or Loss and other Comprehensive Income contained within the Company’s Financial Report and Appendix 4E.

Slide 31