SAFEROADS HOLDINGS LIMITED — AGM Information 2018

Oct 22, 2018

SAFEROADS HOLDINGS LIMITED

2018 Annual General Meeting

23 October 2018

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

FY2018: Significant improvement in profitability

Operating Performance

• Revenue from product sales and rentals up 13% on FY17, through continued organic growth and a significant increase in International sales, particularly from USA
• Continued growth in our Public Lighting solutions portfolio with growth mainly in the area of solar lighting solutions
• Our Rental portfolio performed well with strong utilisation of our IronmanTM Hybrid rental barrier solution and proprietary VMS trailer offering
• International sales of $872k sourced from USA, NZ, Middle East and Belgium

* Excludes discontinued civil services revenue (FY15) and royalty income

Innovative Road Safety Solutions IMPROVING PUBLIC SAFETY

FY2018: Significant improvement in profitability

Operating Performance

• Generated profit before tax of $713k
• EBITDA of $1.371 million, up 71% on prior FY
• Margins improved with continued focus on cost rationalization in increasingly competitive markets

* Excluding relocation costs (FY16)

IMPROVING PUBLIC SAFETY

FY2018: Significant improvement in profitability

Maintained adequate working capital

Generated $1.5 million in operating cashflows during the year, maintaining adequate cash reserves to support current working capital needs

Continued investment in new product development

• Invested $758k in R&D activities during the year
• This included the new HV2TM temporary barrier system, and next generation Omni-stopTM bollard system
• Received FY17 R&D tax cash rebate of $281k during the year and have lodged our claim for eligible R&D for FY18

IMPROVING PUBLIC SAFETY

FY2018: Significant improvement in profitability

Financing

• We secured a revised banking facility with CBA in September 2017
• 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
• CBA granted us a temporary Overdraft extension during the year to facilitate two major orders and have subsequently enhanced our facility with an increase in the Overdraft line in September 2018
• Gearing ratio reduced to 16%
• We will look to utilise debt to facilitate our Rental fleet expansion

IMPROVING PUBLIC SAFETY

FY2019 Outlook

• We have budgeted for growth in revenue and PBT for FY19
• The first quarter of FY19 has been impacted by some customer deferrals but we anticipate a stronger second quarter with the delivery of a significant IronmanTM Hybrid barrier order to a major equipment hire company
• Internationally, we have delivered another IronmanTM barrier order to USA during the first quarter
• We currently have $4.1 million of secured work in hand, up 53% from the same time last year
• Full year forecasting remains difficult however if we continue to deliver on our targets, then we anticipate another positive PBT for the full year.
• Growth continues to be top-line driven focus remains on tightly managing operating expenses to adequately support the growth

IMPROVING PUBLIC SAFETY

Managing to our four Key Strategies

• Our key strategies have paid off in ensuring we delivered strong profit growth in FY2018
• They remain the key to delivering continued profit growth for FY2019 and beyond:
  • 1. Continued domestic growth
  • 1. Rental fleet expansion
  • 1. International growth
  • 1. Product innovation and development
• We are formalising the terms of a Dividend Reinvestment Plan to allow shareholders to reinvest in the Company whilst receiving benefits of past franking credits

1. Continued Domestic Growth

• Our domestic business generated 11% revenue growth in FY2018
• Our management structure is aligned to our various customer bases (local government, civil construction companies, equipment hire companies, electrical contractors)
• We continue to promote ourselves as a solutionfocused brand rather than just a product shop
• This creates greater cross-selling opportunities and repeat business

1. Continued Domestic Growth

• Improved marketing and business development activities (including the pending launch of our new website) and better utilisation of industry association alliances is increasing new customer enquiries
• We focus on maintaining and identifying supply chain and other operational efficiencies to improve profitability – operating expenses were up only 7% on FY2017, but profit was up almost five-fold

IMPROVING PUBLIC SAFETY

2. Rental fleet expansion

• With the increase in road infrastructure spend, we have expanded our workzone rental fleet to meet demand
• This now includes our steel (IronmanTM Hybrid) and concrete (T-LokTM) temporary barrier systems, and Variable Messaging Sign (VMS) trailers
• To accommodate this demand, we have procured a new site to manage our Rental business
• We have launched a new brand Road Safety Rental

IMPROVING PUBLIC SAFETY

2. Rental fleet expansion

• We are looking at other workzone product rental opportunities, to enhance our overall workzone rental offering, including portable light towers, CCTV solar lighting, temporary rumble strips (RoadQuakeTM), and our new OmniStopTM portable bollard system
• Our market focus is Victoria, specialising in tier 2 and 3 workzone requirements, where customers require the most support as they lack specialist expertise in workzone matters

IMPROVING PUBLIC SAFETY

3. International Growth

What we achieved in FY2018

• Generated $872k revenue from offshore customers in FY18 (up from $467k in FY17)
• This included further major overseas orders for IronmanTM barriers to USA ($653k)
• Regular orders for solar lighting and Traffic calming products from NZ
• Further orders from Belgium for flexible signage

3. International Growth

• International trade shows create sales opportunities and generate new ideas
  • We were one of 800 exhibitors at the biennial Intertraffic Trade Show in Amsterdam in March this year
  • It's an opportunity to display our new products, meet with our International partners, and discover what other countries are developing to address ever increasing road safety and traffic management issues
  • We also recently exhibited at the American Public Works Expo in Kansas City
  • We believe International opportunities will become an increasingly significant portion of our business going forward

IMPROVING PUBLIC SAFETY

3. International Growth

Plans for FY2019 and beyond

• We have just received regulatory approval from FHWA for the new HV2TM barrier system in USA
• Already in discussions with major barrier providers in USA and Canada to distribute HV2TM
• Official American launch of HV2TM planned for the annual ATSSA* Traffic Expo in February 2019
• Have high level interest from municipal authorities in USA for our OmniStopTM bollard range (both permanent and temporary systems)
• Continue sales of IronmanTM barriers with existing US customer
• Continue to identify potential distributors worldwide
• Maintain and build on NZ sales opportunities through existing distribution channels

* American Traffic Safety Services Association (ATSSA)

4. Product innovation and development

• We remain at the forefront of public safety product development through R&D, creating our own patented products for domestic and international markets.
• We have received formal regulatory approval of our HV2TM temporary barrier system from FHWA in USA and are awaiting approval from ASBAP for Australia
• We are also looking at adding more end terminal options and anchored options

IMPROVING PUBLIC SAFETY

4. Product innovation and development

• From Concept to Reality we have developed an OmniStopTM portable bollard system, crash tested to 60 kph with a 2,270 kg vehicle
• Our Finite Element Analysis (FEA) software tool continues to deliver simulated results that reinforce our concepts and give us a high level of confidence of successful physical crash test outcomes
• Possible future R&D activities include a lane closure crash absorber, and a water-filled base temporary light with CCTV
• These projects usually come from customer requirements for new and improved solutions to issues they presently experience