SERVICE STREAM LIMITED — AGM Information 2021

Oct 19, 2021

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Managing Director’s AGM Presentation

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Leigh Mackender 20 October 2021

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Key Messages

• Transformational acquisition of Lendlease Services announced in July 2021, providing a strong platform for future growth and enhances the Group’s capabilities and addressable markets

• Group met FY21 guidance within a challenging year marked by a reduction in telecommunications works and an unpredictable COVID-19 setting

• Maintained strong focus on the delivery of operations and support of key clients:

• Successfully re-secured major contractual agreements, supporting a strong core earnings base into the future

• Pro-active cost response to align with renewed contract revenues, and disciplined investment in systems to drive operating efficiencies

• Continued to deliver industry leading safety performance

• Industry sector fundamentals remain strong, and enhanced by significant private and public investment which will support increased infrastructure services into the longer term

• Continue to monitor and respond to the changing COVID-19 landscape

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2021 Annual General Meeting October 2021

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FY21 Group Highlights

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Financial

• EBITDA from Operations of $80.1m, in line with guidance provided

• Strong cash flow generation, conversion of 99.0% and net cash position retained

• Balance sheet in robust position to support Lendlease Services transaction

 Delivered HSE performance improvements across key metrics

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• Utility (Comdain) operations experiencing growth phase associated with gas and water infrastructure upgrades

 Re-secured all major telecommunications agreements over multi-year terms

O erational p

• Strong foundation with future contracted revenues in excess of $2bn (excluding extension options)

• Announced the acquisition of Lendlease Services in July, supporting the Group’s diversification and growth strategy

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• Acquisition is highly complementary to Service Stream’s current operations

• Creates a broader portfolio of businesses by expanding operations across the wider infrastructures services market

• Significant business separation and integration planning undertaken ahead of anticipated Completion in November

Strate ic g

• Released enhanced Sustainability Report, supporting improved disclosure and performance across key ESG matters

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FY21 Financial Headlines

Revenue EBITDA from Operations

$804.2m

$80.1m

13.4% v FY20

25.9% v FY20

Adjusted NPAT (NPAT-A)

$38.9m

33.8% v FY20

Net Cash

$15.6m

-$3.9m v FY20

Dividend

2.5 cps

FY21 interim dividend only

• EBITDA from Operations, down from $108.1m in FY20

• Group Revenue down by $124.9m from FY20

• Excludes M&A and restructuring costs of $5.0m

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Revenue ($m) EBITDA from Operations ($m)
1,000 929.1 120 108.1
804.2
800 100
80.1
80
600
60
400
40
200
20
0 0
FY20 FY21 FY20 FY21
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NPAT-A down from $58.8m  Strong EBITDA to OCFBIT  Final FY21 dividend not
in FY20 conversion rate of 99.0% declared to assist with
funding the Lendlease
Services acquisition
Statutory NPAT of $29.3m is
net of non-operational costs
and amortisation of  Resumption of dividends
customer contracts from expected for full year
historical acquisitions FY22, subject to business
performance
NPAT-A ($m) Net cash ($m) Dividend (cps)
80 30 15
58.8
60 19.5
20 10 9.0
15.6
38.9
40
10 5
20 2.5
0 0 0
FY20 FY21 FY20 FY21 FY20 FY21
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• NPAT-A down from $58.8m in FY20

• Statutory NPAT of $29.3m is net of non-operational costs and amortisation of customer contracts from historical acquisitions

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Safety Performance

Maintaining our focus on the safety of our people, our customers and the community

Total Recordable Injury Frequency Rate

• Safety is a core value at Service Stream; we continue to deliver industry leading safety performance:

• TRIFR recorded annual reduction of 26% over FY21

• MTIFR improved by 50% on prior year, and

• LTIFR has remained below 1.0x for six consecutive years

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5.00
4.61
3.36
3.06
2.50 2.32
2.07
1.53
0.00
FY16 FY17 FY18 FY19 FY20 FY21
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• Strong safety culture that engages proactively with our stakeholders to reduce risk through improved work practices and enhanced controls

Lost Time Injury Frequency Rate

• Particular emphasis on implementing improved controls across higher risk work activities including; working from heights, asset strikes, vehicle / plant, electrical works, slips and trips

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1.00
0.83
0.71 0.68
0.64
0.50
0.34 0.35
0.00
FY16 FY17 FY18 FY19 FY20 FY21
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COVID-19

Positive exposure to essential network infrastructure and pro-active management of evolving issues enabling continuation of operations

• Exposure to essential infrastructure networks has provided a steady revenue base and sustained resilience through the COVID-19 pandemic

• Comprehensive COVID-19 response plan maintained across all aspects of the Group’s national operations

• Strong engagement with clients to ensure safe operations within agreed guidelines

• COVID-19 related effects which have negatively impacted operations during FY21 include:

• deferral of discretionary and non-critical programs of work

• border restrictions and various state-based lock downs impacting work delivery and resource movement

• continuing moratoriums on electricity and gas disconnections (and subsequent reconnections)

• increased costs to support specific safety-related protocols across business operations

• The Victorian Stage 4 COVID-19 restrictions significantly reduced TechSafe’s Victorian services with $1.1m of JobKeeper assistance received in relation to this issue

• The business continues to monitor and adapt to the changing COVID-19 landscape and circumstances. The recent outbreaks across NSW and Victoria have interrupted some of our operations, however the business has been able to mitigate any impact to date.

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2021 Annual General Meeting

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Sustainability: Our Approach

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As a leading service provider Service Stream recognises Service Stream is a people delivering a range of the long-term importance of business, with a diverse essential services through a building a reputation as an workforce exceeding 5,000 predominantly field-based environmentally responsible employees and contractors. workforce, workplace health organisation. We are Our people are our greatest and safety is critical to committed to managing the asset and critical to our business success and our impact of our operations in ongoing success. long-term sustainability. order to prevent The business strives to be environmental harm and The safety of our people, our an employer of choice and improve resource efficiency clients and the communities implement policies and in a balanced and with whom we engage is our practices which support the economically responsible first priority. identification, engagement manner. and development of our valued people.

Governance Community The Service Stream Board is Service Stream recognises responsible for setting and the importance of implementing corporate maintaining supportive governance practices and relationships with all oversees the business on stakeholders, and the behalf of shareholders. positive impact that it brings not only to our business and Day-to-day management of industry, but to the the company’s operations communities in which we are delegated to the work and live. Managing Director and Executive Management Team.

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Sustainability: FY21 Highlights

Committed to long-term sustainable practices which support and enhance the economic, social, and environmental performance for the Company and our expansive stakeholder groups

<16%

Reduction in High Potential Incident Frequency (HPIFR) rates

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Completed a Stakeholder materiality assessment to identify key ESG issues, priorities and risks

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Commenced trial of battery / hybrid vehicles

74%

Employee engagement score, marking 5% improvement

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Progressed initiatives across the Sustainability, Diversity & Inclusion Committees (Gender, First People, Inclusion & Environment)

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Enhanced governance frameworks and released Service Stream’s Modern Slavery Statement

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Acquisition of Lendlease Services

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Lendlease Services Acquisition Consistent with Service Stream’s strategy, the acquisition of Lendlease Services will diversify revenues, enhance current capabilities and expand the Combined Group’s addressable markets

	Diversifies Service Stream's operations, creating a multi-network essential service provider Creates a broader portfolio of operations across the wider infrastructure services market Enhances the Combined Group’s capabilities and expands addressable markets Builds deeper capabilities across electricity, water & waste-water, industrial and transportation sectors supporting an expansion of addressable markets Complementary client base across known and familiar markets Enhances the Group’s portfolio of blue-chip clients, further reducing reliance on a small number of customers Compelling synergy realisation and business combination benefits The acquisition will generate significant cost synergies of ~$17 million, with further potential opportunities to be reviewed during the integration program1	Diversifies Service Stream's operations, creating a multi-network essential service provider Creates a broader portfolio of operations across the wider infrastructure services market	Diversifies Service Stream's operations, creating a multi-network essential service provider Creates a broader portfolio of operations across the wider infrastructure services market	Diversifies Service Stream's operations, creating a multi-network essential service provider Creates a broader portfolio of operations across the wider infrastructure services market	Diversifies Service Stream's operations, creating a multi-network essential service provider Creates a broader portfolio of operations across the wider infrastructure services market	Diversifies Service Stream's operations, creating a multi-network essential service provider Creates a broader portfolio of operations across the wider infrastructure services market
1 - Please refer to the separate ASX Market Presentation released on 21 July 2021 for further information. Financially attractive acquisition, highly accretive to earnings FY22PF EPS-A accretion of ~30%, before one-off transaction and implementation costs1 2021 Annual General Meeting October 2021 10	Financially attractive acquisition, highly accretive to earnings FY22PF EPS-A accretion of ~30%, before one-off transaction and implementation costs1
			Financially attractive acquisition, highly accretive to earnings	FY22PF EPS-A accretion of ~30%, before one-off transaction and implementation costs1

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1 - Please refer to the separate ASX Market Presentation released on 21 July 2021 for further information.

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Lendlease Services: Acquisition Update

• Positive feedback received from Lendlease Service’s clients to the acquisition, and strong support for the change of control requirements

• Anticipated Completion in November 2021

• Strong interaction with Lendlease Services personnel in readiness to support Day 1 operations

• Service Stream provided with oversight across YTD trading and material new business opportunities

• Significant progress across integration and synergy programs:

• Dedicated integration team resourced and mobilised

• Focus on business continuity to support Day 1 operations

• Planning well progressed on separation activities to remove dependency on transitional services from Lendlease Group

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• Further validation and confidence on value of estimated synergies, with benefits expected to ramp up

• from H2 FY22

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Service Stream Going Forward

Post-acquisition, Service Stream reflects a leading Australian essential networks services business operating across the Telco, Utilities and Transport sectors, underpinned by a core earnings base and positioned for significant and sustainable long-term growth

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T r a n s p o r t a t i o n
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T e l e c o m m u n i c a t i o n s

U t i l i t i e s

• Road Infrastructure

• Tunnel Infrastructure  ICT

• Fixed line

• Electricity

• Gas  Water/ Waste Water

• Mobile / Wireless

• Satellite

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Pro forma FY22
combined Group Pro forma FY22 EBITDA
revenue from Operations
Combined backlog of Combined Group FY22
contracted works revenue secured
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Network owners and operators, regulators and government organisations

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 Industrial Maintenance
FY21 Revenue
FY21 Revenue
$0.7bn $0.7bn
42% 42%
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FY21 Revenue
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Diversified multi-network service provider supporting critical infrastructure networks

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supporting critical infrastructure networks
$0.3bn
16%
Employees and
Offices and warehouse
pool of skilled
nationally
sub contractors
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Australian Maintenance Sector

The Acquisition enhances Service Stream’s exposure to Australia’s growing Infrastructure Sector

Annual Expenditure ($ billion)[1]

• Strong industry fundamentals will continue to drive sustained demand and growth for maintenance of critical infrastructure services:

• Large base of existing infrastructure assets in Australia requiring continued maintenance

• New pipeline of projects benefitting from increased Government stimulus and private sector investment requiring maintenance over the long term

• Continued trend towards outsourcing of maintenance to the private sector

• Ageing infrastructure requiring increased maintenance and/or replacement

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R o a d s T e l e c o m m u n i c a t i o n s
+5%
8.4 Excludes nbn’s recently
7.9 announced capital upgrade
programs
+1%
2.2 2.2
FY20 FY25 FY20 FY25
U t i l i t i e s
Electricity Water Gas Industrial
+6%
7.2 7.6
+11%
+9%
3.4 3.7
2.7 2.9 +7%
0.5 0.5
FY20 FY25 FY20 FY25 FY20 FY25 FY20 FY25
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2021 Annual General Meeting

October 2021

Source: BIS Oxford Economics 2021, ‘Maintenance in Australia’ 2021 Edition. Excludes capital expenditure forecast.

1.

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Trading update and group outlook

• Service Stream YTD trading has been in line with expectations

• Stronger Telecommunications volumes has offset lower contribution across Utilities primarily due to COVID-19 related challenges

• Full year post acquisition pro forma FY22 EBITDA from Operations (as if the transaction had completed on 1 July 2021) inclusive of full run rate of synergies of $17m, of $120-125m guidance maintained

• Service Stream’s FY22 standalone earnings are expected to rebase below FY21, in line with the Telecommunication contracts secured during FY21

• Lendlease Services has experienced slower ramp up of new projects, but full year FY22 earnings expectations maintained

• Contribution from integration & synergy program to progressively ramp up from H2

• Actual FY22 consolidated group results will include approximately 8 months contribution from Lendlease Services and realised synergies

• The current outbreak of COVID-19 is interrupting some of the Group’s operations. Given the unpredictable nature of this pandemic and the associated response, any impact to the full year outlook is currently difficult to predict

• Financial impacts to date have been successfully mitigated through overperformance across the broader business

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• Whilst the business expects there will continue to be intermittent interruptions, it has not forecast for major lockdowns to continue throughout the year

• We expect lockdowns should diminish, and are encouraged by increasing vaccination rates across the country

2021 Annual General Meeting

October 2021

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