SIMONDS GROUP LIMITED — Interim / Quarterly Report 2015

Feb 25, 2015

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Simonds Group Limited 1H 2015 Results Briefing

26 February 2015

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FIRST HALF FY15 SNAPSHOT
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Revenue EBITDA $299m $15.8m up 8.6%[1] up 149.3%[1]

FTE employees 535

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1,217 Home starts 1H15[2]

$425m Sales pipeline

105 Display Homes Locations 57

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2,773 287 702 Active Average course Completed participants[3] enrolments participants

• All figures relate to the 6 month period ending 31 Dec 2014, or as at 31 Dec 2014 unless otherwise stated

• 1. 1H2015 Pro-forma variance to 1H2014 Actual

• Simonds Homes Residential site starts (excluding Madisson Projects)

• Comprises Registered and Enrolled Participants

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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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Delivering on our promises

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Strong financial performance

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Positive outlook

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Prospectus forecast re-affirmed
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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DELIVERING ON OUR PROMISES
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Successfully listed on ASX on 17 November 2014

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Strong 1H15 and pipeline provides confidence to deliver prospectus pro-forma NPAT of at least $20.4m for FY15

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Revenue up 8.6% to $299.2m

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Pro-forma EBITDA of $15.8m Pro forma EBITDA Margin of 5.3%

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Simonds Homes growth in QLD and NSW on track

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Continued strong revenue and margins in Vic and S.A.

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Expansion of Builders Academy Australia (“BAA”) footprint into QLD and NSW through acquisition announced 9 January 2015

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Commitment to technology-led productivity with $3.3m project started addressing pre-construction and operational improvements

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Prospectus forecast re-affirmed
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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Delivering on our promises

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Strong financial performance

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Positive outlook

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Prospectus forecast re-affirmed
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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GROWTH ACROSS ALL FINANCIAL METRICS
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Profit and loss (Pro-forma) ($m)	1H15 Pro-forma Actual1	1H14 Actual	Variance	FY15 Prospectus pro-forma forecast	FY15 Prospectus pro-forma forecast
Revenue	299.2	275.4	+8.6%	638.2
Gross Profit	68.0	59.6	+14.1%	140.7
EBITDA	15.8	6.3	+149.3%	34.0
EBITDA Margin	5.3%	2.3%	+300bps	5.3%
EBIT	13.7	4.4	+214.6%	29.9
NPAT	9.2	2.9	+217.8%	20.4
EPS (c)	6.4	2.1	+207.6%	13.5

NOTE:

1. Refer Appendix for reconciliation between statutory loss of $20.8m to pro-forma profit of $9.2m.

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All financial metrics tracking well against FY15 Prospectus
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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CAPITAL LIGHT MODEL
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	Balance sheet ($m) 1H15 FY14 Assets Cash / cash equivalents 12.2 15.9 Trade & receivables 31.7 43.1 Inventories 53.5 64.0 PP&E 6.5 6.8 Intangibles 1.9 1.9 Other assets 8.2 4.0 Total assets 114.0 135.7 Liabilities Trade and otherpayables 62.5 82.8 Borrowings 2.0 2.9 Provisions 17.9 17.4 Income in advance 10.0 7.2 Other liabilities 7.2 10.5 Total liabilities 99.6 120.8 Equity 14.4 14.9

• Strong cash reserves

• Minimal bank debt - $2m asset finance

• Capital light model provides substantial return on equity

Key metrics	1H15	1H15
Workingcapital	$17.0m
Current ratio	1.20
Liquidity~~1~~	$30.0m

1. Comprises cash of $12.2m and facility of $25m less $2m asset finance and $5.2m bank guarantees

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Low debt with $25m facility in place
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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STATEMENT OF CASH FLOWS
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	Cash flow	1H2015
	A$m	Statutory Actual1
	EBITDA	(15.7)
	Movement in working capital	(17.3)
	Net interest paid	(0.4)
	Income taxes paid	(5.4)
	Share based payments	26.9
	Non-cash items	(0.2)
	Net cash flow from operating activities	(12.1)
	Capital expenditure	(1.4)
	Net cash used in investing activities	(1.4)
	Repayment of borrowings	(1.1)
	Proceeds from issue of share capital	12.8
	Net pre-IPO dividends and related party loans	(2.0)
	Net cash flow from financing activities	9.7
	Net cash flow	(3.7)

• 1H2015 net cash flow shows the impact of $20m reduction in trade payables compared to 30 June 2014 (Christmas period timing difference)

• $26.9m non-cash sharebased payments

• Planned Cap Ex of $1.4m

• $12.8m share issue includes net $3.5m pre-IPO issue

• Refer Appendix for statutory to pro-forma reconciliation

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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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Delivering on our promises

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Strong financial performance

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Positive outlook

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Prospectus forecast re-affirmed
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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SIMONDS HOMES
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Good growth in all states Year-on-Year

• 8.0% growth in site starts in Victoria

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• 12.2% growth in site starts in Queensland

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• 7.2% growth in site starts in SA

• 12.9% growth in site starts in NSW

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Key statistics – Residential & Land 1H15

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Site starts commenced[1] 1,217 Revenue[2] $288.3m

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Growth based on 1H14 to 1H15

1. Simonds Homes Residential site starts (excluding Madisson Projects)

2. Simonds Homes Residential and Land Development

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Sustainable strong sales in all Simonds Homes regions
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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MARKET CONDITIONS FAVOURABLE
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Dwelling commencements

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50,000 Forecast
40,000
30,000
20,000
10,000
-
NSW VIC QLD SA
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
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• Very low interest rates

• Population continues to grow with strong overseas migration

• NSW and Queensland expected to be strong coming off extended downturns

Source: HIA Economics

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All regions expected to have solid trading conditions
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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RECORD SALES PIPELINE
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Simonds Homes revenue pipeline

• On track to meet FY15 forecast of 2,433 site starts

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3,196
Sales accepts – 2,433 2,433 [1] [2]
1,010 contract being
Sales prepared
Pipeline
1,979
Contract signed –
969
awaiting site start
1,217 Site started [3]
as at 31 Dec 2014 Forecast site starts
(FY15)
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• Sales pipeline of $425m[1] strongest in company history

• Extremely strong base for building activity during 2H15

• • Pipeline provides strong stimulus for FY16

• as at 31 Dec 2014

• 1. 1,010 Sales Accepts & 969 awaiting contract at average SSV $214.8k 2. Simonds Homes Residential site starts (excluding Madisson Projects)

• Site started refers to the commencement of construction

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Sustainable strong sales pipeline for FY15 & FY16
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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EXPANDING DISPLAY HOME FOOTPRINT
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Victoria - regional

Victoria - metropolitan

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Wollert
Mernda
Sunbury
Morang
Plumpton Lalor
Coburg
Echuca Melton
Wodonga Truganina Melbourne
Wangaratta Point Cook Springvale
Bendigo Shepparton Pakenham
Warragul
Geelong Cranbourne
Alfredton
Ballarat
Drouin
Melbourne Bairnsdale Armstrong Creek
Warrnambool
Traralgon
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• 105 display homes across 57 display centres

• Display home expansion program aligned to population growth and underlying demand for homes

South Australia

Queensland

• Increasing presence in QLD and SA markets

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Blakeview
Adelaide Mt Barker
Seaford Meadows
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Display home Business centre Express centre

• Land secured for first 4 display centres in NSW

Peregian Springs Sunshine Coast

Caboolture

Bellbird Park Brisbane South Ripley Rochedale Yarrabilba Ormeau Ridge Coomera

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Strategic display locations growing in all states
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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BUILDERS ACADEMY AUSTRALIA
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• Revenue up 119.3% Year-on-Year

• 702 participants successfully completed their course during 1H15

Builders Academy revenue pipeline

• Average of 287 enrolments per month

• On track to exceed FY15 forecast of 2,800 enrolments

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2,773 2,800
Registered
participant [1]
1,212
Enrolled
participant [2]
1,561
Forecast participants
(FY15)
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• Current 2,773 active participants (registered and enrolled participants)

• Still enrolling students for 2H15

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Key statistics – Registered Training 1H15
1,561
Average monthly enrolments 287
Revenue $10.9m
as at 31 Dec 2014
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1. Registered participant – participant registration paperwork has been completed and participant has committed to their course start date

2. Enrolled participant – participant has enrolled and commenced their course

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Builders Academy will exceed forecast 2,800 participants
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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BUILDERS TRAINING BUILDERS
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• Focused solely on building and construction training – “builders training builders”

• Training delivery not “auspiced”

• Builders Academy affiliation with a leading trade partner continues to enable real job outcomes

• Brand equity being built via targeted marketing campaign to drive students directly to Builders Academy

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[INSERT IMAGE]
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‘Builders Training Builders’ is a unique selling proposition
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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SECTOR CHANGES WELCOMED
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Topic: VET FEE-HELP (“VFH”) and the increasing debt to government

VET

FEE-HELP

• Proposed changes to VFH payment terms mirror BAA’s current operating model

• BAA well-positioned for transition to anticipated VFH reforms (if application is successful)

Topic: Appropriate training for the student’s needs

Outcomes

• BAA does not deliver “lifestyle” courses (for example, beauty courses)

• Singularly focused on courses in the building and construction industry

• BAA focused on providing job and career progression outcomes

Topic: Private RTO’s place in VET sector

Public v Private

• Private providers are more effective in employment outcomes (79% v 74%)

• Private RTO’s operate more cost-effectively

• Suppliers prefer students from private providers

• Flexible training facilities & delivery provide significant efficiencies

• Price does not always equate to quality

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BAA positioned well for sector reform
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BAA GROWTH OPPORTUNITIES
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• Continued growth in VIC with more flexible course offering to traditional providers (e.g. TAFE)

Interstate Expansion

• Organic and acquisitive expansion across Australia

• Grow City-Wide Building and Training Services (CWBTS) post acquisition

• Adding more certificate level training courses

Cert II to Advanced Diploma

• Cert II – migrants, job-seekers and youth

• Cert III – trade qualifications

• Cert IV – other Cert IV in the building and construction vertical

• Diploma course – converting current Cert IV participants

• Advanced Diploma

• Development of online course offerings

Funding Options

• Offering VET FEE-HELP funded courses - i.e. diploma level courses (essentially government loan to student)

Employment Outcomes

• Developing robust employment link between graduates, employers and Simonds

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Geographic and product expansion strategy on-track
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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IN SUMMARY
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Confidence in delivering at least FY15 pro forma prospectus forecast NPAT of $20.4m Strong national dwelling starts forecasted National display home footprint expanding rapidly Builders Academy Australia executing on growth plan Strong financial position with growth headroom Targeting 65% dividend payout ratio for 2H15

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Prospectus forecast re-affirmed
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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APPENDIX

Background Statutory to Pro-forma Reconciliation

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BACKGROUND
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Started by Gary Simonds in 1949 ASX Listing on 17 November 2014 Simonds Group (ASX: SIO) comprises:

a leading Australian residential homebuilder (“Simonds Homes”), a Registered Training Organisation (“RTO”), Builders Academy Australia (“BAA”)

Gary Simonds and senior management hold 37% and 4% in Simonds Group respectively

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Successful IPO provides the platform for national growth
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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SIMONDS GROUP
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Simonds Homes is the number one homebuilder in Victoria with expanding operations in QLD, NSW and SA.

• Unique brand value built over 65 years

• Over 10,500 homes built in the past 5 years

• • 6 brands covering each of the major buyer categories

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Builders Academy Australia is a Vocational Education and Training (“VET”) provider that aims to be Australia’s number one provider of accredited Building & Construction training.

• Registered by Federal regulator, ASQA, to Feb 2020

• • State-based funding contracts in Victoria, NSW and Queensland

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Strong brands, geographic expansion, earnings growth
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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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STATUTORY TO PRO-FORMA RECONCILIATION
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(A$m)	Revenue	EBITDA	EBIT	NPAT	Cashflow
1H2015 Statutory Results	299.2	(15.7)	(17.7)	(20.8)	(3.7)
Equity Settled Executive payments		26.8	26.8	26.8	-
IPO Costs		4.1	4.1	4.1	4.8
IPO Restructure Costs		0.6	0.6	0.6	-
Tax				(1.4)	-
Pre-IPO Net Divs Paid (Loans Repaid)					2.0
Other IPO Related transactions					(10.3)
1H2015 Pro forma Results	299.2	15.8	13.7	9.2	(7.2)

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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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IMPORTANT NOTICE & DISCLAIMER
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Some of the information contained in this presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Simonds Group Limited’s current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside the control of Simonds Group Limited.

Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Because actual results could differ materially from Simonds Group Limited’s current intentions, plans, expectations, assumptions and beliefs about the future, you are urged to view all forward-looking statements contained herein with caution.

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SIMONDS GROUP LIMITED | 1H 2015 Results Briefing | 26 February 2015
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