SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — AGM Information 2011

Nov 27, 2011

AGM Presentation

28 November 2011

Simon High CEO

Presentation overview

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• Financial Summary of 2010/11

• Company Achievements 2010/11

• Operational Review

• Strategy and Outlook

• Summary

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FY11 financial overview – profit & loss

	6 months to	6 months to		Full Year
($m)	Dec 2010	Jun 2011	Change	FY11
Sales Revenue	47.3	54.5		101.8
Gross profit	2.3	13.9		16.2
EBITDA	(5.4)	6.1		0.6
Statutory NPAT	(4.8)	3.1		(1.7)
Statutory NPAT Margin	(10.1)%	5.7%		(1.6)%
Return on Equity	(12.9)%	4.6%		(2.3)%
Operating Cash Flow	(4.4)	4.6		0.2

2

To December 2010; H1 FY11 Issues

• Low volume of work-in-hand ($27M)

• BD efforts not focussed sufficiently on “short term” prospects

• High overheads (retained in anticipation of work volume increase)

• Continuing negotiations on financial outcome of Pluto

• Volatile and competitive contracting environment – many bidders and low margins

3

Company Achievements

• Board revitalisation

• Recruitment of new project management talent

• 7[th] consecutive LTI free year

• Full review and implementation of bidding processes, capacity and competency

• Greater focus on project management reporting, peer reviews and risk management of contracts

• Review and upgrading of project management systems (SCEEtrak)

• Integration of previous acquisitions to maximise benefits to group and

subsidiaries

• New training centre and facilities activated

• Increased apprentice intake West Coast and East Coast

• Established international recruitment pipeline

Creating a solid foundation for growth

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4

Five lines of business

Minerals and Processing - Australia

Oil & Gas – Australia Infrastructure – Australia

Minerals and Processing - International

Operational Support and Maintenance

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FY11 revenue
Mining
Oil&Gas
Australia
33%
36%
Infrastructure
7%
Mining
Operations International
Support 7%
17%
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5

 Minerals and Processing - Australia Iron ore to underpin business over the next 5 years on the West Coast and entry into coal projects on the East Coast

Major upcoming opportunities

• Secured long term framework agreements :

• RTIO 333mtpa

• RTIO MSA

• Sino Iron

Sino Iron Rio Tinto expansion projects BHP RGP6 Roy Hill (Est. Capex value $45B)

Current major projects and opportunities

• Cadia East (NSW), Sino Iron (WA), Rio Tinto (WA)

• Mt Keith (WA) complete

• Coal handling prospects with Thiess Sedgman JV progressing very positively (QLD)

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6

Rio Tinto framework agreement

SCEE enters into a preferred contractor agreement with Rio Tinto

• Provides SCEE with preferred contractor status for the next five years at Cape Lambert and potential minesites for Electrical & Instrumentation works

• Further highlights the strength of relationship with Rio Tinto built upon since 2005

• First package of work expected to commence in FY12

• Long term nature of the contract provides greater certainty in planning

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7

Sino Iron

SCEE awarded seventh E&I contract for Sino Iron project

• Seventh Sino Iron contract awarded to SCEE for Electrical and Instrumentation work

• Combination of lump sum and reimbursable contracts

• Framework agreement now providing additional orders

SCEE Headcount at Sino Iron project:

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250
200
150
100
50
0
March May July Sept Oct Nov F/cast
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8

 Oil & Gas - Australia

Established credibility - in strong contention for CSG projects

• Pluto project achieved a successful completion and satisfactory commercial result – market credibility established

• Oceanic Industries acquisition now fully integrated as SCEE East Coast - positions SCEE for upcoming CSG projects

Current projects and opportunities

• Origin contract – East Coast

• QGC LNG early works – East Coast

• APLNG early works – East Coast

• Relationship with Thiess for QGC “Early” and

• “Main” works developing well

Major upcoming opportunities

East Coast West Coast QGCLNG Wheatstone GLNG Macedon APLNG Ichthys Browse Pluto 2/3 Gorgon (Est. capex value $200B)

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 Infrastructure - Australia

Strong bounce-back

• Substantial growth expected in FY12 off the back of increased mining investment. Current order book for H2FY12 > $25M

Major upcoming opportunities

Rio Tinto BHP Sino Iron FMG East Coast coal prospects

• KJJ acquisition fully integrated and performing well

Current major projects

• Sino Iron – North West WA

• BHP Area C – North West WA

• Rio Tinto Tom Price Feeder – North West WA

• Rio Tinto Cape Lambert power lines – North West WA

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 Minerals and Processing - International

Focus to be Peru

• Expect activity in Peru to increase

• Undertake at least one major project each year

• Pueblo Viejo project tracking in line with expectations

• Close Denver office and provide support for international ops from Perth

Current major projects

• Pueblo Viejo gold project (Dominican Republic)

• Yanacocha power line (Peru)

• Antapaccaya power line (Peru)

Major upcoming opportunities

Minas Congas Cerro Verde Constancia Torromocho (Est. capex value > US$10B)

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 Operational Support and Maintenance

Building recurring revenues

Major upcoming opportunities

• Growing a recurrent revenue base to provide a consistent baseline of revenues

• Expansion of line of business driven by acquisition of Oceanic Industries and Hindle Group

• Long term objective to grow to a substantial and sustainable line of business

Expansions of: RTIO agreement BP framework agreement Caltex framework agreement Sino Iron (MCC)

Current major clients

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Systems Map

TENDERS

Estimating (WINEst) Scheduling (Primavera) Document Control (DocTracer) Reporting (SQLator)

OPS SUPPORT

PROJECTS

Scheduling Procurement (Primavera) Document Control Materials Management (DocTracer) Reporting Material Control (SQLator) HR Management Timekeeping (STEMS) Asset Management Reporting (SQLator) (STEMS) OHSE Management OHSE Management (STEMS) (STEMS) HR Management (STEMS) Asset Management (STEMS) Completions Management (SQL database) Quality Management (Excel) Production Reporting (Excel)

FINANCE

Payroll (Levesys) Accounts (Levesys) General Ledger (Levesys) Reporting (SQLator)

KEY

Existing legacy system (to be retained)

SCEEtrak Module completed/in progress Planned SCEEtrak Module (existing system)

Strategic objectives

Over the next 3 years, it is management’s objective to organically grow with a core focus on East and West Coast Australian resources projects and focus internationally on opportunities with major clients in Peru. This will enable us to:

• Grow revenues to over $200m pa

• Achieve EBITDA margins to 15 – 20%

• Create a baseline of recurring income streams to manage troughs in revenues and profits

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Orders – lead indicator of revenues

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160
140
Objective
120 Recent
Awards
New orders New orders
100 Mining Australia
FY11 from from
revenue existing existing Mining International
80
contracts contracts Operational Support
$75m $75m $75m
Infrastructure
60
Oil & Gas
40
20
$27m
0
June 2010 June 2011 October 2011 November 2011
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N.B Does not include Rio 333mtpa preferred status

15

Employee numbers over the past 12 months

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1000
900
FY 2011 FY 2012
800
700
600
500 Australian Employees
Overseas Employees
400
Total Employees
300
200
100
0
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16 November 2011

Delivery of strategy – on track

Strong domestic fundamentals are platform to deliver strategic goals

• Focus on organic growth in domestic market:

• iron ore miners looking to accelerate investment plans

• LNG and CSG projects ramping up

• Entry into coal projects

• SCEE well positioned for additional contracts

  • Strengthened capital position

• Significant Board appointments of non‐executive directors Dr John Hamilton and Mr Peter Forbes

• Employee recruitment initiatives

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Summary

Growing orders, revenue and margins into FY12 and beyond

• Positioned well with a strong order book

• momentum building with seventh Sino contract

• Rio Tinto preferred contractor status

• Significant new project awards

• Internal capability strengthened

• Exceptional number of major resource projects in Australia and overseas that provide a strong basis for growth over a 5+ year time frame

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Disclaimer

Some of the information contained in this presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forwardlooking statements reflect Southern Cross Electrical Engineering 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 Southern Cross Electrical Engineering 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 Southern Cross Electrical Engineering 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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