SAFEROADS HOLDINGS LIMITED — AGM Information 2017

Oct 18, 2017

SAFEROADS HOLDINGS LIMITED

2017 Annual General Meeting

19 October 2017

Contents

• Chairman's Welcome and Address
• CEO's Address on Product and Market Developments
• Questions to Board and Management
• Formal Resolutions
• Questions and Close
• Refreshments

Chairman's Address – Mr. David Ashmore

Innovative Road Safety Solutions IMPROVING PUBLIC SAFETY

Continuation of sustainable business transformation

Operating Performance for FY2017

• Ongoing Revenue from product sales and rentals up 18% on FY16, with greater market penetration in our core market segments, with a particular focus on highlighting our service offering differentiators
• This was despite the loss of the Omni EA bollard license at the start of the financial year. The YoY revenue increase as reported is still 6.3%
• Continued growth in our Public Lighting solutions portfolio (up 10%), further enhanced by our new solar lighting offering
• Our IronmanTM Hybrid rental barrier offering had strong utilisation levels - we have commenced hiring out our proprietary VMS trailer offering
• International sales of $467k from USA, NZ, Malaysia and Belgium; with a further $325k order for USA delivered first quarter FY18

* Excludes Omni EA bollards and royalty income

Innovative Road Safety Solutions IMPROVING PUBLIC SAFETY

Continuation of sustainable business transformation

Operating Performance for FY2017

• Generated profit before tax of $154k
• EBITDA of $800k, up 58% on prior FY
• Margins down slightly due to very competitive markets
• Continued cost rationalization, including focus on supply chain sourcing (domestic and overseas)

* Excluding relocation costs (FY16)

IMPROVING PUBLIC SAFETY

Continuation of sustainable business transformation

Maintained adequate working capital

Generated over $1.0 million in operating cashflows during the year, maintaining adequate cash reserves to support current working capital needs

Continued investment in new product development

• Invested $0.4 million in R&D activities during the year
• This included the new HV2 temporary barrier system, next generation High security Omni-stopTM bollard, and portable solar pole solution
• Received FY16 R&D tax cash rebate of $237k during the year

IMPROVING PUBLIC SAFETY

Continuation of sustainable business transformation

Financing

• Further reduction in core bank debt by $0.5 million, or 20%, during the year
• Gearing ratio reduced to 20%
• Post financial year end we have secured revised banking facility with CBA
• Main benefits include:
  • Extension of 3 years (to Sep 2020)
  • Significantly reduced principal repayments
  • Better interest rates
  • Overdraft line to manage expanding working capital needs as business grows

IMPROVING PUBLIC SAFETY

FY2018 Outlook

• We have budgeted continued growth in revenue and PBT for FY18
• We have generated a profit in the first quarter of FY18
• This includes our second major overseas order to USA and we anticipate further orders
• We currently have $2.7 million of secured work in hand, up 16% for the same time last year
• Full year forecasting remains difficult however if we continue to deliver on our targets, then we anticipate a positive PBT for the full year.
• Growth is top-line driven – operating expenses are projected to be relatively stable
• This is supported by the funds committed to major Australian transport infrastructure projects over the next 5 years

IMPROVING PUBLIC SAFETY

"Australia is on the cusp of the biggest wave of public infrastructure spending in

at least three decades" - Australian Financial Review (23-24 Sep 2017)

Four Key Strategies

• 1. Continued domestic growth
• 2. Rental fleet expansion
• 3. International growth
• 4. Continued product innovation

CEO's Address – Mr Darren Hotchkin

IMPROVING PUBLIC SAFETY

1. Continued Domestic Growth

• Maintain domestic sales focus through a management structure dedicated to our various customer bases (local government, civil construction companies, equipment hire companies, electrical contractors)
• Enhanced distribution channels into new and existing markets
• Increase cross-selling opportunities where possible
• Improve marketing and business development activities and better utilise industry association alliances
• Maintain and identify further supply chain and other operational efficiencies

IMPROVING PUBLIC SAFETY

2. Rental fleet expansion

• With the anticipated increase on road infrastructure, we will look to expand our workzone rental fleet
• We commenced hiring out our proprietary VMS to enhance our temporary barrier solution
• We are looking at other workzone product rental opportunities, to enhance our overall workzone rental offering

CEO's Address – Mr Darren Hotchkin

IMPROVING PUBLIC SAFETY

3. International Growth

• What we have achieved to date
  • Generated $467k in sales from offshore customers in FY17
  • This included our first major overseas order of IronmanTM barriers to USA ($325k)
  • A second order ($325k) shipped in July 2017
  • Regular orders from Belgium for flexible signage
  • Commenced export of portable solar light poles to NZ

3. International Growth

Plans for FY2018 and beyond

• Increase sales from existing distributors – NZ, USA, Europe
• Expand the number of distributors worldwide
• Plan to conduct MASH crash testing in the USA of our new HV2 barrier in the first half of CY2018
• Partner with major barrier providers to provide distribution channels for new product launch into the USA following successful testing and submissions for regulatory approval – estimated lead-time to market is 2 years
• Timing is right as USA temporary barrier standards changing from December 2020, requiring all barriers to be tested to new MASH standards
• Concurrently look to launch product in Australia and NZ with regulatory approval following successful crash testing in the USA (Australia and NZ relies on US safety standards - MASH)

IMPROVING PUBLIC SAFETY

4. Continued product innovation

• Ensure we remain at the forefront of public safety product development through R&D, creating our own patented products for domestic and international markets.
• Initial success in proof of concept for HV2
• Have recently commercialised our portable solar pole
• Currently working on a new bollard range

IMPROVING PUBLIC SAFETY

Public Safety Initiatives

• Solar Lighting – permanent solutions
  • Communities increasingly calling for improved lighting in areas not well suited to gridded lighting solutions
  • Cheaper installation than gridded alternative with no need for trenching or cabling; powered naturally by the sun and cleverly stored by the inbuilt Tesla battery kit
  • Installations to date have included foreshore areas, parks and gardens, urban laneways and carparks

IMPROVING PUBLIC SAFETY

Public Safety Initiatives

• Solar Lighting – portable solutions
  • We have developed a more flexible Portable range of solar lighting solutions
  • Easily repositioned wherever there is a need for lighting
  • Uses to date have included workzones, public events, and portable security for storage yards
  • Currently trialling CCTV capabilities to create a more comprehensive public safety and security solution

IMPROVING PUBLIC SAFETY

Public Safety Initiatives

Bollards

• Increased public concerns with errant vehicles accidentally or sometimes deliberately entering pedestrian zones
• Few products on the market that will comply with new impact standards
• We have developed a variety of Omni-stopTM bollards to meet these standards

IMPROVING PUBLIC SAFETY

Public Safety Initiatives

Omni-StopTM Bollards

• There is an increasing trend in the proportion of larger passenger and commercial vehicles compared to smaller vehicles on the roads today *
• This means that some crash-tested bollard products available in the market now will only stop around half of new passenger vehicles on the road today
• Our newly developed Omni-stopTM Super-Duty bollard will stop a vehicle up to 2.3 tonne, which includes the majority of Australia's SUV's, 4WD's and other light commercial vehicles

* Source: ABS – Sales of New Motor Vehicles (Aug 17)

IMPROVING PUBLIC SAFETY

Public Safety Initiatives

Portable Bollards

• Recent global concerns for public safety in highvolume pedestrian corridors
• Authorities have responded with basic (untested) temporary solutions which are unsightly and not designed to blend into the urban environment
• We are looking at alternate solutions that will be crash tested in accordance with relevant new standards in this area
• Our Finite Element Analysis (FEA) software tool assists us in modelling solutions for optimal outcomes (example below)

IMPROVING PUBLIC SAFETY

QUESTIONS