SERVICE STREAM LIMITED — AGM Information 2015

Oct 20, 2015

Service Stream Limited

Managing Director's AGM Presentation

Leigh Mackender

21 October 2015

Agenda

• 1. FY15 Results Overview
  • Financial, Commercial & Operational Highlights
• 2. Business Unit & Strategy Update
• 3. Business Outlook

Financial Highlights FY15

Revenue up from $389.6m FY14

$25.4m EBITDA up from $16.6m FY14

$11.7m NPAT up from $2.3m FY14

$14.8m

Net Cash v (Net Debt) of ($10.4m) at 30.6.14

• Increase in revenue driven by growth in Fixed Communications associated with a ramp-up in nbn-related activities
• Offset by declines in Energy & Water in line with expectation due to conclusion of smart meter rollout in Victoria
• 2H15 is the fourth consecutive half-year delivering EBITDA growth
• EBITDA margin of 6.2% for FY15 continues to improve
• Strong NPAT growth due to increased EBITDA and lower D&A and financing costs
• Declaration of final (fully-franked) dividend of 1.0 cent per share taking total dividends for year to 1.5 cents
• Focus on working capital in 2H15 produced strong OCFBIT1 for year of $34.0m
• Cash-on-hand of $14.8m and zero debt at year-end

3

Key Financial Measures

Key financial measures
$ million	FY15	FY14	Change
Revenue	411.3	389.6	21.7	6%
EBITDA	25.4	16.6	8.8	53%
EBITDA %	6.2%	4.3%	1.9%
Net profit after tax	11.7	2.3	9.4	408%
Earnings per share (cents)	3.03	0.76	2.28	301%
Operating cashflow	32.3	24.9	7.5	30%
Net cash / (Net debt)	14.8	(10.4)	25.2	(242%)
Total dividends declared (cents)	1.50	0.00	n/a	n/a

4

Safety Highlights

Strong focus on safety is driving improvements across the business

• Continued focus on safety has resulted in improved performance across all key metrics:

  • Lost Time Injury Frequency Rate of 1.2 (down from 2.9)
  • Total Recordable Injury Frequency Rate of 17.34 (down from 26.51)
  • Lost Time Injury Severity Rate of 4.78 (down from 18.44)

• Strong leadership from executive, senior management team and the wider business to drive continuous improvement during FY16

  • Leadership Safety Walks
  • Serious safety incident reviews
  • 'Towards Zero Harm' focus

Re-secured agreements expiring in FY15

Operational Highlights

• Increase in revenue driven by ramp-up in nbn-related activities, most notably customer connections & activations
• Successfully undertook FTTN trials for nbn and Telstra (22 SAMs equating to ~60,000 premises)
• Maintained a steady focus on managing productivity & cost control as operations have grown
• Expanded our multi-skilled contractor workforce across our operations by 1,000+ additional resources
• Launched talent identification and succession program

Business Units Update

Fixed Communications

FY16 Priorities

• Successful mobilisation to support the new 5 year MIMA agreement with nbn to construct broadband infrastructure
• Secure additional nbn-related work programs including those associated with nbn's new multi-technology deployment model
• Secure renewal/extension of New Developments contract with nbn
• Continued focus on the recruitment, training and deployment of a multi-skilled workforce to support field operations

Mobile Communications

FY16 Priorities

• Build on recent customer diversity and work to secure future volumes:
  • Crown Castle;
  • NSW Telco; and
  • Nokia Networks
• Enhancement and expansion of centralised national design team
• Secure renewal of Telstra wireline contracts
• Worked closely with major customers to improve visibility across future works and flow of volumes

Energy & Water Update

FY16 Priorities

• Work with Active Stream to maximise year 1 work volumes under the new metering field services contract
• Work with Origin Energy to maximise volume under the renewed Solar PV installation contract
• Successful renewal of smaller metering service contracts which expire during the year
• Seek further customer and work type diversity
• Continue to build credentials and work with customers to accelerate the commercialisation of disruptive technology offerings e.g. battery solar grid systems

Group Strategy & Outlook

Delivered against our strategic plan

Continued execution against the strategic plan in FY15

UNLOCK	Retention of contracts proceeding to marketImprovecontract and commercial management disciplinesImplement variable directcost structures to reduce risks ofvolume fluctuation	Retained 100% of all major contracts that expired during theyearImproved works-to-cashprocesses developed and beingmanagedCentralised commercial division establishedIncreased the use of contractor resources across fieldoperations
RECONFIGURE	Increased capabilityand focus on HSE performanceImplement common business frameworks and processesRemuneration and recognition schemesInvestment in our valued people	HSE team transformedSignificant improvement in safety performanceGroup level bid management framework implementedExecutive team transitioned to share-basedincentiveprograms, aligned with shareholder interestsTalent identification and succession program launched
EXTEND	Secure organic 'Value Add' opportunitiesSecure new contract growth opportunities across businessExtension of core capabilities across known marketsBuild pipeline to support future growth	New contract opportunities secured in Energy & WaterSuccessful delivery ofFTTN pilot programsSecured new 5 year MIMA Construction Agreement with nbnExpandedcustomer base across Mobile telecommunicationprovidersExpanded our variablecontractor workforce by 1,000+

resources

Group Strategy

Underpinning sustainable profitability and growing shareholder value in FY16

• Extension of core capabilities across known markets
  • Investment in business development to maintain a healthy growth pipeline

UNLOCK value from existing core businesses

• Retention of key contracts on improved pricing & commercial terms

• Continual improvement in group EBITDA margins

• Further improvement on 'works-to-cash' cycles

• Strengthen customer relationships through closer engagement

• scalable business frameworks and processes

• A measured increase in 'enterprise level' IT infrastructure to support growth

• Continued investment in our people through talent identification, succession and development planning

FY16 Outlook

• The Group is targeting further earnings growth in FY16, subject to successfully expanding existing operations and securing new contract works across key clients
• Q1 FY16 is 'on target'
• Board is considering optimal means of returning value to shareholders due to the recent exhaustion of franking credits
• FY16 Key priorities:
  • Successful mobilisation of new contracts recently secured across the business
  • Securing additional works associated with nbn's new deployment and operating models
  • Achieving further customer and work type diversification across utilities market
  • Investment in enhanced IT platforms and applications to improve efficiency and effectiveness of operations

Questions?