SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Capital/Financing Update 2011

Apr 17, 2011

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Southern Cross Electrical Engineering
(ASX: SXE)
Capital Raising Presentation
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“Creating a Platform for Growth”
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Southern Cross Electrical Engineering
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www.scee.com.au

Southern Cross Electrical Engineering Limited ABN 92 009 307 046 (SCEE) has prepared this presentation based on information available to it. This Presentation contains summary information about SCEE and its subsidiaries (Group) and their activities current as at the date of this presentation. The information in this presentation is of general background and does not purport to be a complete description of the Group and/or its various business activities. No representation or warranty, express or implied, is or will be made by any person including SCEE and its directors, officers, employees, advisers, agents or affiliates as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this document and discussed in the presentation, or as to the reasonableness of any assumption, forecasts, prospects or returns contained in, or implied by, this presentation or any part of it.

All dollar values are in Australian dollars (A$) unless stated otherwise and financial data is presented based on a financial year end of 30 June unless stated otherwise.

This presentation should be read in conjunction with SCEE’s 2010 annual report lodged with the Australian Securities Exchange (ASX) on 30 September 2010, its financial report for the half year ended 31 December 2010 lodged with the ASX on 21 February 2011, and other periodic and continuous disclosure announcements that have been lodged by SCEE with the ASX.

Except for statutory liability which may not be excluded, no responsibility is accepted by SCEE or any of its directors, officers, employees, advisers, agents or affiliates, nor any other person, for any loss or damage howsoever occurring resulting from the use of or reliance on this presentation by any person. Past performance is not indicative of future performance and no guarantee of future returns is implied or given.

This presentation is not a prospectus or a product disclosure statement under the Corporations Act and has not been lodged with the Australian Securities and Investments Commission. This presentation does not constitute an offer to issue securities and is not investment, legal, taxation or other advice and the presentation does not take into account your investment objectives, financial situation or particular needs. You are responsible for forming your own opinions and

conclusions on such matters and should make your own independent assessment of the information contained in this document and discussed in the presentation and seek independent professional advice in relation to such information and any action taken on the basis of the information.

This presentation has been prepared for publication in Australia and may not be released or distributed in the United States. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any securities described in this presentation have not been, and will not be, registered under the US Securities Act of 1933 (as amended) and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

Euroz Securities Limited (the Lead Manager) has not authorised, permitted or caused the issue, lodgement or submission of this presentation. When this presentation has been distributed by the Lead Manager, it is distributed solely on behalf of SCEE. You acknowledge and agree that there is no statement in this presentation which has been made by or is based on any statement made by the Lead Manager and that none of the Lead Manager or its affiliates, officers and employees, make any representation, warranty or endorsement as to the currency, accuracy, reliability or completeness of information or the success of the offer and whether you should participate. The Lead Manager and its affiliates, officers and employees, to the maximum extent permitted by law, expressly disclaim all liabilities in respect of, make no representations regarding, and take no responsibility for any part of this presentation or in relation to the offer and exclude and disclaim all liability for any expense, losses, damages or costs that may be incurred by you as a result of that information being inaccurate or incomplete in any way for any reason.

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The statements in this presentation regarding the future and commercial prospects of SCEE are forward looking and actual results could be materially different from those expressed or implied by such forward looking statements as a result of various risk factors. This presentation contains certain "forward‐looking statements". Forward looking words such as, "expect", "anticipate", "believe", "likely", "intend", "should", "could", "may", "plan", "will", "forecast", "estimate", "target", "aim" 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. 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. The forward‐looking statements involve known and unknown risks, uncertainties, and other factors, many of which are outside the control of SCEE, and its directors, officers, employees, advisers, agents and affiliates.

Forward‐looking statements only speak as to the date of this presentation and SCEE assumes no obligation to update or revise such information or to reflect any change in management's expectations, from the date of this presentation, with regard to any change in events, conditions or circumstances on which any forward‐looking statement is based.

The forward‐looking statements included in this presentation involve subjective judgment and analysis and are subject to significant business, economic and competitive uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, SCEE. Given these uncertainties, you are cautioned to not place undue reliance on such forward‐looking statements. There can be no assurance that actual outcomes will not differ materially from such forward‐looking statements.

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Executive Summary ■ SCEE is a leading provider of international electrical and instrumentation services to h l d l	Executive Summary ■ SCEE is a leading provider of international electrical and instrumentation services to h l d l	Executive Summary ■ SCEE is a leading provider of international electrical and instrumentation services to h l d l	Executive Summary ■ SCEE is a leading provider of international electrical and instrumentation services to h l d l
		■ SCEE is a leading provider of international electrical and instrumentation services to h l d l
	Overview	te minera resources an Oi & Gas sectors ■ Excellent growth prospects in key markets over the near to medium term
	Project pipeline	■ Growing orderbook with work in hand currently at $65 million ■ Strong tendering activity continues with SCEE well placed for continued growth in FY2012 and beyond with in excess of $1 billion of projects in tender / negotiation phase
		i lki i illi i iil l
	Equity raising	■ SCEE s oong to rase $30 mon va an Insttutona Pacement ■ Euroz Securities Limited is acting as Lead Manager ■ SCEE is also offering a Share Purchase Plan to eligible shareholders capped at $5m
	Use of proceeds	■ Growth capital required to strengthen SCEE’s balance sheet for current and future negotiations with:  Blue chip clients on large scale schedule of rates contract opportunities; and 
		Financiers in relation to project bonding and contract guarantees for upcoming contracts

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Recognised industry leader in a specialised high growth market Exposure to high growth project markets such as Oil & Gas, iron ore and gold sectors Long term relationships with blue‐chip client base (Rio Tinto, Woodside, BHP, FMG, QGC) Typical contract length of current large tenders growing from 9 to 18+ months Reputation for high quality service, ethical behaviour and safety focus Ongoing growth anticipated from new contracts, contract extensions and increased scope of services

High level of tender activity in both Western Australia, Queensland and selected international markets

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• Established in 1978 as a privately owned Electrical and Instrumentation Contractor (E&I)

• Listed on the ASX November 2007

• Founder Frank Tomasi, will participate in the raising and remains a committed major shareholder with a 40.0% shareholding post the capital raising

• Safety record, almost 7 years LTI free

• Multiple safety awards, clients, state and national (NECA)

• Long track record of involvement in major resource projects:

• 174 Gold Plant Globally

• Iron Ore (RIO, BHP, FMG)

• LNG (Pluto, WEL/FWW)

• 3 Acquisitions performing strongly:

• Oceanic Industries (Now SCEE East Coast) – February 2010

• KJ Johnson (Infrastructure) – August 2009

• Hindle Offshore Services (Offshore O&M) – July 2009

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Our Performance

• Core values, Our Customers Our Performance • Proven track record with blue‐chip customers over 32 years • Proven ability to set‐up and perform in remote

• key locations

• Our People

• strengths • A deeply experienced team across all levels of the business Our Experience • Significant experience in the resource sector

• Our Reputation • Our Flexibility Ability to complete a project safely, on time and at the highest level of quality • Ability and experience completing diverse projects in

• • countries throughout the world Ability to maintain strong reputation for ethical contractual behaviour

• Quality client base(1) Bulwer Island

• Quality EPC / engineer relationship base(1) Kellogg Joint Venture-Gorgon

(1) SCEE Group clients and engineers

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Approx $1 billion of projects in the tender/ negotiation phase for work to be executed over the next 3 – 5 years:‐

• Gorgon underground E&I work

• Rio Tinto 333mtpa programme

• QGC upstream

• Sino Iron / MCC various packages

• FMG upgrades

Forward order book currently sitting at $65m, including $43m for FY12.

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Target For Growth $100m $250m+	Target For Growth $100m $250m+	Target For Growth $100m $250m+	Target For Growth $100m $250m+	Target For Growth $100m $250m+	Target For Growth $100m $250m+
	FY11 FY12 FY13 FY14 FY15
	FY11	FY12	FY13	FY14	FY15

• Targeting aggressive organic growth (30% + compound growth)

• Grow the top line revenue figure

• Grow the bottom line EBITDA/NPAT in absolute and in % terms

• International (DR/Peru/PNG/Mongolia) expected to be up in 10‐15% overall revenue range

• 85‐90% Revenue expected in Australia (WA & Queensland)

• Increase operations and maintenance penetration – recurring earnings

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Southern Cross Electrical Engineering is well positioned to achieve its growth target from future global Minerals and Metals projects from its long term relationships, reputation for delivery, quality and safety.

CAPEX Estimate* ($bn)

... and future projects • Rio Tinto (333mtpa) $14.8bn • BHPB (RGP6) $8.46bn ...with current • Fortescue $8.4bn projects ... • Sino Iron $3.5bn • Rio Tinto • Hancock Prospecting $7.2bn • Sino Iron Project (MCC) • Tropicana $0.74bn Strong relationships and • Barrick Gold (PVDC) • Xstrata (Africa and Peru) $6.47bn previous contracts ... • Newmont (Africa and Peru) $2.5bn • Rio Tinto • BHPB • Sino Iron • Fortescue Total CAPEX Estimate* ($bn) $50.9bn • Barrick Note: not all project CAPEX is at FID • Newmont E&I CAPEX Estimate @3.5% ($bn) $1.8bn** 10

Southern Cross Electrical Engineering

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Southern Cross Electrical Engineering is well positioned to achieve its Oil and Gas market growth target from future projects through the sound project delivery at Pluto and from its CSG contracts

CAPEX Estimate* ($bn) Source Client Data

			... and future projects •Gorgon •QGC LNG • GLNG $43bn ~$15bn ~$16bn	... and future projects •Gorgon •QGC LNG • GLNG $43bn ~$15bn ~$16bn
			• PNGLNG	~$15bn
		...with current	• Wheatstone onshore	~$12.6bn
		projects ...	• Browse (onshore)	~$7bn
Strong relationships		• Woodside	• Pluto 2/3	~$20bn
and previous		• QGC	• Macedon	~$1.5bn
contracts ...		• BP Australia	• Ichthys	~$3bn
• Woodside		• Caltex	• APLNG	~$35bn
• QGC
• Origin Energy
• Arrow Energy
• Santos	*Note:	not all project CAPEX is
• Epic Energy	at FID	Total CAPEX Estimate* ($bn)		~$168bn
• BP Australia
• Offshore drilling	companies	E&I CAPEX Potential* @2% ($bn)		~$3.3bn

Southern Cross Electrical Engineering

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www.scee.com.au

• Strengthened balance sheet via capital raising

• Board Changes & highly experienced MD appointed

• Retention/Expansion of Capacity (people strategy)

• Doubled our apprentice intake FY09‐FY11, will further increase FY12 onwards

• Increase indigenous employees across the company

• Greater focus on Integrated suite of project management systems, especially for schedule of rates contracts

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Strengthened balance sheet capacity to participate in unprecedented pipeline of near – medium term committed projects

• Growth capital required to strengthen balance sheet for current and future negotiations with:

• Blue chip clients on large scale schedule of rates contract opportunities; and

• Financiers in relation to project bonding and contract guarantees

• Contracting trends in the E&I industry has seen a shift towards new contracts being negotiated on a schedule of rates basis away from lump sum contracts.

• This has required an increase in upfront working capital to fund larger scale mobilisation and contract start‐up activities

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Overview of the Placement Placement ■ $30 million institutional placement via 2 tranches: ■ Tranche 1: 18.5 million new shares at $0.90 per share to raise approximately $16.6 million	Overview of the Placement Placement ■ $30 million institutional placement via 2 tranches: ■ Tranche 1: 18.5 million new shares at $0.90 per share to raise approximately $16.6 million	Overview of the Placement Placement ■ $30 million institutional placement via 2 tranches: ■ Tranche 1: 18.5 million new shares at $0.90 per share to raise approximately $16.6 million	Overview of the Placement Placement ■ $30 million institutional placement via 2 tranches: ■ Tranche 1: 18.5 million new shares at $0.90 per share to raise approximately $16.6 million
	Placement	■ $30 million institutional placement via 2 tranches: ■ Tranche 1: 18.5 million new shares at $0.90 per share to raise approximately $16.6 million
	Offer size	■ Tranche 2: 14.9 million new shares at $0.90 per share to raise approximately $13.4 million subject to shareholder approval at EGM to be held on or around 26 May 2011
	Placement offer price	■ Fixed offer price of $0.90 per share 14.2% discount to closing price of $1.05 on Wednesday 13 April 2011 12.6% discount to 10 day VWAP of $1.03 (includes special crossing of 5.7 million shares at $1.025 on 7 April; 10 day VWAP of $1.05 excluding special crossing)
	Timing	■ Book opens 10am Thursday, 14 April 2011 ■ Book closes 3pm EST Friday, 15 April 2011 ■ Tranche 1 settlement on Wednesday, 27 April 2011 ■ Tranche 2 settlement post EGM to approve placement to be held on or around 26 May 2011
	Ranking	■ New shares issued pursuant to the Placement and the SPP (New Shares) will rank equally with SCEE’s existing shares on issue
	Lead Manager	■ Euroz Securities Limited is acting as Sole Lead Manager for the Placement
	Other	■ Subject to shareholder approval, Frank Tomasi will subscribe for approximately 4m shares in Tranche 2 to retain a 40% shareholding post the capital raising

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	Overview of the Share Purchase Plan Eligible ■ Open to eligible Australian and New Zealand shareholders registered at the record date of	Overview of the Share Purchase Plan Eligible ■ Open to eligible Australian and New Zealand shareholders registered at the record date of	Overview of the Share Purchase Plan Eligible ■ Open to eligible Australian and New Zealand shareholders registered at the record date of
	Eligible	■ Open to eligible Australian and New Zealand shareholders registered at the record date of
	Shareholders	Friday 15 April 2011
	Application Amount	■ Subscriptions may be for up to a value of approximately $15,000 in SCEE shares
	Size	■ SPP proceeds are capped at $5 million ■ SCEE will apply an appropriate scale back policy should valid applications exceed $5 million
	SPP Offer price	■ SPP offer price to be equal to the Placement price of $0.90 per share
	Timing	■ SPP offer opens Wednesday, 20 April 2011 ■ SPP offer closes 5pm Perth time/ 7 pm Sydney time Monday 23 May 2011
	Other	■ No brokerage or transaction costs applicable ■ Further details will be sent to shareholders shortly

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Southern Cross Electrical Engineering

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Indicative timetable Key dates – Placement Trading halt Thursday, 14 April 2011	Indicative timetable Key dates – Placement Trading halt Thursday, 14 April 2011	Indicative timetable Key dates – Placement Trading halt Thursday, 14 April 2011	Indicative timetable Key dates – Placement Trading halt Thursday, 14 April 2011	Indicative timetable Key dates – Placement Trading halt Thursday, 14 April 2011
	Key dates – Placement
	Trading halt	Thursday, 14 April 2011
	ASX Announcement and SCEE share recommence trading on ASX	Monday, 18 April 2011
	Tranche 1 Placement settlement	Wednesday, 27 April 2011
	Tranche 1 New Placement Shares commence trading	Thursday, 28 April 2011
	EGM to approve Placement	On or around 26 May 2011
	Tranche 2 Placement settlement	On or around 27 May 2011
	Tranche 2 New Placement Shares commence trading	On or around 30 June 2011
	Key dates – SPP
	Record Date for determining entitlement to participate in SPP		Friday, 15 April 2011
	ASX Announcement of SPP		Monday, 18 April 2011
	SPP offer opens & SPP offer materials despatched to eligible shareholders		Wednesday, 20 April 2011
	SPP offer closes		Monday 23 May 2011
	Expected allotment of New SPP shares		Tuesday 31 May 2011

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Appendices – Current contracts
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SCEE East Coast ‐ Coal Seam Gas
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Pueblo Viejo Project – Dominican Republic
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KJ Johnson
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Hindle Offshore Services
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