SERVICE STREAM LIMITED — Capital/Financing Update 2014

Jan 23, 2014

Capital Raising and Shareholder Update

Peter DempseyChairman

Terry SinclairManaging Director

January 2014

Important Notices

This Presentation has been prepared by Service Stream Limited (ACN 072 369 870) ("Service Stream" or "Company").

Summary information

This Presentation contains summary information about Service Stream and its activities current as at 24 January 2014. The information in the Presentation is of a general nature and does not purport to be complete or comprise all information which a shareholder or potential investor may require in order to determine whether to deal in Service Stream shares. It should be read in conjunction with Service Stream's other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au.

Not financial product advice

This Presentation is for information purposes only and is not a prospectus, disclosure document, product disclosure statement or other offering document under Australian law (and will not be lodged with the Australian Securities and Investments Commission) or under any other law. This Presentation does not constitute financial product, investment, legal, taxation or other advice or a recommendation to acquire Service Stream shares and has been prepared without taking into account the objectives, financial situation or needs of individuals.

Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek financial, legal and taxation advice appropriate to their jurisdiction. Service Stream is not licensed to provide financial product advice in respect of Service Stream shares. Cooling off rights do not apply to the acquisition of Service Stream shares.

Financial data

All dollar values are in Australian dollars ($) unless stated otherwise.

Past performance

Past performance information, including past share price performance, given in this Presentation is given for illustrative purposes only and should not be relied upon as an indication of future performance.

Future performance

This presentation contains certain "forward-looking statements" including statements regarding our intent, belief or current expectations with respect to Service Stream's business and operations, market conditions, results of operations and financial condition, and risk management practices. The words "likely", "expect", "aim", "should", "could", "may", "anticipate", "predict", "believe", "plan" and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.

Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This Presentation contains such statements that are subject to risk factors associated with an investment in Service Stream. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially.

Future performance (ctd)

Forward-looking statements involve known and unknown risks, uncertainties and assumptions and other important factors that could cause the actual results, performances or achievements of Service Stream to be materially different from future results, performances or achievements expressed or implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Presentation.No representation or warranty, expressed or implied, is made as to the fairness or correctness of the information, opinions and conclusions contained in this Presentation. To the maximum extent permitted by law, none of Service Stream and its related bodies corporate, or their respective directors, employees or agents, nor any other person accepts liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability from fault or negligence on the part of Service Stream, its related bodies corporate, or any of their respective directors, employees or agents.

Investment risk

An investment in Service Stream shares is subject to investment and other known and unknown risks, some of which are beyond the control of Service Stream. Service Stream does not guarantee any particular rate of return or the performance of Service Stream shares.

Not an offer

This Presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this Presentation nor anything contained in it shall form the basis of any contract or commitment. In particular, this Presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities in the proposed offering have not been and will not be registered under the U.S. Securities Act of 1933, or under the securities laws of any state or other jurisdiction of the United States. Accordingly, thesecurities in the proposed offering may not be offered or sold, directly or indirectly, in the United States, except in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This document may not be distributed or released in the United States.

Disclaimer

The underwriter and its affiliates, officers, employees, agents and advisers have not authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of this Presentation and do not take any responsibility for, nor make or purport to make any statements, representations, warranties or undertakings in this Presentation and there is no statement in this Presentation which is based on any statement by any of them.

Service Stream, its related bodies corporate, the underwriter and their respective affiliates, officers, employees, agents and advisers to the maximum extent permitted by law, expressly disclaim all liabilities in respect of any expenses, losses, damages or costs incurred by you as a result of the information in this Presentation being inaccurate or due to information being omitted from this Presentation, whether by way of negligence or otherwise, and make no representation or warranty, express or implied, as to the fairness, currency, accuracy, reliability or completeness of information.

The information in this Presentation remains subject to change without notice.

Contents

• Overview and Company Update
• Offer Overview
• Details of the Capital Raising
• Indicative Timetable
• Impact of the Offer on Debt Facilities
• Underwriting Arrangements

Overview and Company Update

• Service Stream is a provider of essential network services to the telecommunications, energy and water distribution industries, operating out of over 25 locations Australia-wide, with around 3,000 employees and contractors
• The Board recently received a proposal to inject funds into the Company. The Directors considered the proposal and reached the conclusion that undertaking a capital raising on agreed terms would be advantageous to the Company as it:
  • strengthens the Company's balance sheet;
  • accelerates the lowering of the Company's net debt and bank guarantee utilisation;
  • improves the Company's ability to access working capital; and
  • enables the Company to explore new growth opportunities
• The capital raising of $20m is fully underwritten by Wilson HTM Corporate Finance, comprising a placement of $9.35m to Thorney Opportunities Ltd, Thorney International Pty Ltd and other sophisticated and professional investors, and a non-renounceable prorata rights issue of $10.7m, partly sub-underwritten by Thorney Opportunities and Thorney International. The placement shares are eligible to participate in the rights issue
• Service Stream previously provided the market with guidance that FY14 EBITDA was anticipated to be approximately $20m, with abias to the second half. The Company confirms this guidance. Service Stream's unaudited gross debt as at 31 December 2013 was $50m in line with the debt repayment profile in the Company's banking facilities, and its bank guarantees were $32.6m. The Company had cash of $11.9m. The capital raising is expected to reduce the Company's current Leverage Ratio (Net Debt and Banking Guarantees divided by expected FY14 EBITDA) from 3.5 to 2.6
• The placement and rights issue are both subject to shareholder approval and a Notice of Meeting together with an independent expert's report is expected to be dispatched on Friday, 21 February 2014. Shareholder approval is required because the capital raising will result in certain investors having voting power (as defined in the Corporations Act) in the Company exceeding 20%

Capital Raising Overview

Service Stream announces a fully underwritten capital raising of $20 million, comprising a Placement and Rights Issue, subject to Shareholder approval

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Details of the Placement

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Details of the Rights Issue

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Indicative Timetable

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Notes:

• 1. Shareholders will be asked to approve the Placement and the Rights Issue in accordance with Section 611(7) of the Corporations Act and ASX Listing Rule 7.1
• 1. The Company reserves the right to change the timetable

Reducing Leverage Ratio

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$NDbdBkG()ttteeananuaraneesm	0.77			51.7
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$G()()NDbdBkAttteeananaraneesmu	70.7			51.7
$G()()FY14EBITDAidBancemu	20.0			20.0
LRi()(A/B)teverageaox	3.5x			2.6x

Banking Facilities

• The Company has a multi-option syndicated banking facility with Australia and New Zealand Banking Group Limited and Westpac Banking Corporation
• The facility includes a general security agreement over all the Company's property
• Key terms of the facility are:
  • provides cash advance, bank guarantee and overdraft facilities totaling $90.5m
  • contains certain negative pledges and undertakings given due to the Company's financial position as at 30 June 2013
  • contains a number of financial covenants and requirements including required shareholder funds, tangible net worth, value of qualifying assets against which borrowing may occur, fixed charges coverage ratio and quarterly EBITDA relative to the Company's FY14 operating budget
  • expires 31 August 2014
• At 31 December 2013, the cash advance facility was fully drawn at $50m and the bank guarantee facility was drawn to $32.6m. With cash on hand of $11.9m, net debt (borrowings net of unrestricted cash) was $38.1m. In addition the Company has a $5m overdraft facility which is totally undrawn
• Since 30 June 2013, the Company has complied with the facility obligations and made repayments totalling $10m

Underwriting Arrangements

• The Placement and the Rights Issue are fully underwritten by Wilson HTM pursuant to an underwriting agreement dated 23 January 2014
• The Underwriting Agreement contains standard conditions precedent for a transaction of this nature, including the requirement to obtain shareholder approval in respect of the Capital Raising
• The Company has provided representations and warranties, and an indemnity in favour of Wilson HTM
• Wilson HTM is also entitled to terminate the Underwriting Agreement in certain circumstances, including if:
  • the Company fails to lodge the prospectus in connection with the Rights Issue by a specified date;
  • a disclosure in the Rights Issue prospectus is misleading or deceptive (including by omission) in a material particular;
  • the Company breaches the Underwriting Agreement and fails to remedy the breach within a specified period of time;
  • the Takeovers Panel makes a declaration of unacceptable circumstances in respect of the Capital Raising;
  • the ASX closes for 3 consecutive trading days at a level that is more than 15% lower than the level on 22 January 2014;
  • there is an event which gives rise to a material adverse effect on the Company's prospects

Contacts

For further details contact:

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About Service Stream Limited:

Service Stream is a public company listed on the Australian Securities Exchange (Code: SSM) with annual revenue in excess of $500 million. The Service Stream Group is a provider of essential network services to the telecommunications, energy and water industries. Service Stream operates out of more than 25 locations nationwide and maintains a workforce of around 3,000 employees and contractors. For more information please visit www.servicestream.com.au