SERVICE STREAM LIMITED — AGM Information 2014

Oct 21, 2014

==> picture [842 x 17] intentionally omitted <==

Service Stream Limited Managing Director’s AGM Presentation

Leigh Mackender 22 October 2014

==> picture [842 x 17] intentionally omitted <==

==> picture [107 x 30] intentionally omitted <==

----- Start of picture text -----

Agenda
----- End of picture text -----

1. Results overview 2. Strategy & outlook

==> picture [841 x 238] intentionally omitted <==

==> picture [842 x 17] intentionally omitted <==

Results Overview

Leigh Mackender Managing Director

==> picture [842 x 17] intentionally omitted <==

Highlights (1 of 2)

FY14 Financials

• EBITDA of $16.6 million in line with revised guidance

• Operating Cashflow before Interest & Tax of $50.7 million

• Successful capital raise nets $18.9 million proceeds

• Year-end net debt down to $10.4 million

• Payments to Syntheo JV of $20.4 million to finalise liability ahead of schedule

• Refinancing of banking facilities out to September 2016 on improved terms

==> picture [252 x 295] intentionally omitted <==

4

==> picture [842 x 17] intentionally omitted <==

Highlights (2 of 2)

• Fixed Communication restores profitability and operational effectiveness

• Safety performance improves with LTIFR of 2.93

• Group completes Strategic Plan

• Key Contracts renewed across all three Business Units:

• NBN Co. for New Developments and Customer Connections (FSD)

• Telstra Wireless Construction

• Energy & Water metering service contracts in SA, WA, VIC, QLD

==> picture [257 x 343] intentionally omitted <==

5

==> picture [842 x 17] intentionally omitted <==

Key financial trends

==> picture [391 x 154] intentionally omitted <==

----- Start of picture text -----

Revenue ($m)
700 Revenue of $389.6m, down
600 from prior period primarily due
500 to cessation of contracts not yet
offset by NBN related ramp up.
400
300
200
100
0
FY10 FY11 FY12 FY13 FY14
----- End of picture text -----

==> picture [193 x 154] intentionally omitted <==

----- Start of picture text -----

Net Debt ($m)
70
60
50
40
30
20
10
0
FY10 FY11 FY12 FY13 FY14
----- End of picture text -----

Net debt reduced to $10.4m, a reduction of $41.6m over the year.

==> picture [192 x 145] intentionally omitted <==

----- Start of picture text -----

EBITDA ($m)
50
40
30
20
10
0
FY10 FY11 FY12 FY13 FY14
-10
-20
----- End of picture text -----

Returning to profitability with EBITDA of $16.6m

==> picture [203 x 152] intentionally omitted <==

----- Start of picture text -----

Operating Cashflow
30 ($m)
25
20
15
10
5
-
FY10 FY11 FY12 FY13 FY14
----- End of picture text -----

Strong cash flow performance with an operating cashflow of $24.9m, after payments of $20.4m to finalise Syntheo JV liability.

6

==> picture [842 x 17] intentionally omitted <==

BU Overview: Fixed Communications Recovery in line with expectations

• More effective operating structure implemented

• Focus on fixed-cost reduction to reduce exposure to volume variability with contractor workforce

• Continue to work closely with NBN & Telstra to meet emerging network demand

• NBN New Developments contract renewed in May 2014 - Initial two-year term

• NBN Field Services Delivery contract renewed in June 2014 – Initial two-year term

==> picture [372 x 143] intentionally omitted <==

“Service Stream has been NBN Co’s leading partner in providing Greenfield New Development design and construction services for the past few years. This new agreement further cements Service Stream’s ongoing relationship with NBN Co and shows our continued commitment to one of the nation’s leading infrastructure projects.”

Service Stream Managing Director, 19 May 2014

7

==> picture [842 x 17] intentionally omitted <==

BU Overview: Mobile Communications Meeting customer infrastructure plans

 We are focussed on:

• increasing market-share and providing expanded service offering to telecommunications customers

• broadening work mix to include design and construction services within electricity, road infrastructure and other infrastructure sectors

• Telstra Wireless Construction contract renewed in June 2014 - two-year extension

• Currently in discussions with Vodafone on the extension of our agreement for design and construction of wireless services

==> picture [374 x 144] intentionally omitted <==

“The [wireless construction] extension represents a continuation of the very strong working relationship between Service Stream and Telstra as this is now the third consecutive renewal of this important contract”

Service Stream Managing Director, 13 June 2014

8

==> picture [842 x 17] intentionally omitted <==

BU Overview: Energy & Water

Successfully secured contract renewals and extensions

• Secured renewals and extensions of core metering contracts during the year, and continues to be a metering service provider of choice across key regions and clients:

• Western Power: Three-year initial term with two one-year extension options to 2019

• APA Gas: Five-year term to 2019 in QLD, VIC & SA

• SA Power Networks: Five-year term to 2019

• Secured renewal of solar PV contract with Origin Energy, as well as new deployment opportunities with other solar market participants

• Positioned well to capitalise on emerging opportunities in asset inspection works and the roll-out of AMI (smart meters) nationally

==> picture [386 x 136] intentionally omitted <==

“The renewal of these [metering] contracts affirms Service Stream as the major provider of meter reading and field services to utility distribution businesses throughout Australia. Renewed contracts provide a foundation for recurring revenue of approximately $140 million over their respective terms, and their renewal continues to strengthen our position as the provider of choice in Western Australia, South Australia, Victoria and Queensland”

Service Stream Managing Director, 21 July 2014

9

==> picture [842 x 17] intentionally omitted <==

Strategy & Outlook

Leigh Mackender Managing Director

==> picture [842 x 17] intentionally omitted <==

Focused strategy going forward to underpin sustainable profitability and to grow shareholder value

• Retention of key contracts

• Negotiate improved pricing and commercial terms

• Renewed focus on operational delivery & contract execution

• Improved Contract and Commercial Management disciplines

• Variable direct cost structures implemented where possible

• Reduction of business overheads & delivery of ‘cost-out’ opportunities

• Establishment of Business Support Services

• Increased capabilities across Commercial Management, Market & Business Development and OHSE

• Implementation of common business frameworks and processes

• Realignment of remuneration and recognition schemes to drive long term shareholder value

• Identify and secure organic ‘Value Add’ opportunities

• Extension of core capabilities across known markets / existing customers

• Pilot / seed opportunities across all three Business Units

• Growth in revenues expected at a Group level

11

==> picture [842 x 17] intentionally omitted <==

Positive outlook

with each segment positioned well to take advantage of opportunities

• Fixed Communications

Australian government’s investment in the NBN will present new opportunities on the back of its mixed technology strategy as well as in areas of proven competence such as New Estates and Customer Connections

• Mobile Communications

Increasing demand for mobile data will continue to drive the development and augmentation of the necessary supporting infrastructure

• Energy & Water

Energy network owners, retailers and governments will continue to pursue better demand side management, use of consumption data and distributed generation presenting significant opportunities in smart metering, in-home services and asset maintenance

==> picture [279 x 330] intentionally omitted <==

12

==> picture [842 x 17] intentionally omitted <==

Questions?