SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Interim / Quarterly Report 2020

Mar 10, 2020

Euroz Rottnest Island Conference 2020

11 March 2020

1

About SCEE

E&I Contractor Southern Cross Electrical Engineering (SCEE) is an ASX listed electrical, instrumentation, communication and maintenance services company recognised for our industry leading capabilities

==> picture [270 x 317] intentionally omitted <==

Combination

Established in 1978 in WA, the combination in 2016 with Datatel Communications (established 1998) and in 2017 with East Coast-based Heyday5 (business established 1978) has created a national group

Markets

SCEE now operates across five sectors: Resources, Commercial, Public infrastructure and defence, Telecommunications and datacentres, and Industrial, energy and utilities

People

Over 1,200 employees including over 140 electrical apprentices and telecommunications trainees

Safety

Original SCEE business 15.2 million man-hours and over 15 years Lost Time Injury free in Australia

2

Highlights

Highlights
Financial	Operational	Outlook
Record half year revenue of $230.3m	Commercial and infrastructure remain	On track to exceed FY20 revenue
up 27% on PCP	as largest revenue contributors	forecast of over $420m
EBITDA of $10.9m up 21%, EBIT of	Resources activity at low levels in	Expecting stronger H2 profitability
$8.4m up 22% and NPAT of $5.5m up	period but over $90m of recent wins,
24% on PCP due to continuing	including Kemerton Lithium Plant and	Order book of $440m at similar level
growth in infrastructure and	Rio Tinto Gove, will generate growth	to start of period despite record
commercial activity		amount of activity
	Ongoing activity at Westconnex M5
Balance sheet remains strong with	tunnels, Parramatta Square, RAAF	Order book includes over $250m of
total cash of $53.3m and no debt	Tindal, Westmead Hospital and the	work already secured for FY21
	NBN roll-out
No interim dividend declared while		Strong business development
conserving cash to pursue	Substantial progress in period of	pipeline particularly NSW
acquisition opportunities	commercial resolution of resources	commercial and infrastructure
	projects completed in early 2019
		Awarded $40m Sydney Metro Pitt
	Integration initiatives ongoing across	Street Station development
	group businesses
		Actively pursuing acquisition
		opportunities

3

Record half year revenues

Revenue of $230.3m a record for half year and up 26.7% on PCP

Significant contributors included Westconnex M5 tunnels, various Parramatta Square buildings and fit outs, RAAF Tindal, Westmead Hospital and NBN roll-out in various states

On track to exceed FY20 revenue forecast of over $420m

Gross margins up 11.8% on PCP although average gross margin percentages lower than PCP because of taking prudent positions whilst negotiating changes on infrastructure projects Overheads as a percentage of revenue continued to reduce from 7.1% in HY19 to 5.7% in HY20

EBITDA up 20.7% driven by volume and assisted by positive impact of new leasing standard but EBIT also up 21.5% as depreciation and non-leasing amortisation reduced from PCP NPAT up 24.3% on PCP

Summary financials:

	HY20	HY19	Chg. %
	$m	$m
Revenue	230.3	181.8	26.7%
Gross Profit	23.8	21.3	11.8%
Gross Margin %	_10.3% _	11.7%	-
Overheads	13.2	12.8	2.7%
EBITDA	10.9	9.0	20.7%
EBITDA %	4.7%	5.0%	-
EBIT	8.4	6.9	21.5%
EBIT %	3.6%	3.8%	-
NPAT	5.5	4.5	24.3%
NPAT %	2.4%	2.4%	-

4

Revenue by sector

Infrastructure still largest sector followed by commercial

Resources declined as forecast but starting to grow again with recent significant project wins

HY19 HY20 $182m $230m

==> picture [786 x 238] intentionally omitted <==

----- Start of picture text -----

$12m $7m
$9m
$53m
$20m
$88m
Commercial
$20m
Public infrastructure & defence
Resources
Telecommunications & data centres
$61m Industrials, energy & utilities
$93m
$49m
----- End of picture text -----

5

Revenue by geography

New South Wales remains very strong

Western Australia and Queensland fallen back with resources decline but now growing again

HY19 HY20 $182m $230m

==> picture [499 x 225] intentionally omitted <==

----- Start of picture text -----

$2m $4m
$9m
$10m
$9m
$31m
$80m $40m
$60m
$167m
----- End of picture text -----

New South Wales & ACT Western Australia Queensland Northern Territory Victoria & Tasmania

6

Strong balance sheet

Cash remained at same level in period with $53.3m at 31 December 2019 (30 June 2019: $53.3m)

No debt

New leasing standard AASB 16 adopted on 1 July 2019 Resulted in recognition of $5.6m of right of use assets and $5.6m of lease liabilities in respect of operating leases Franking account balance of $14.2m

Balance sheet summary:

	Dec 19	Jun 19
	$m	$m
Current assets 183.6 161.2
Non current assets 91.9 88.6
TOTAL ASSETS 275.5 249.8
Current liabilities 107.8 93.4
Non current liabilities 14.3 8.7
TOTAL LIABILITIES 122.1 102.1
EQUITY 153.4 147.7

7

Operating cash inflows

Cash remained at same level in period with small working capital outflow and $6.5m paid to Heyday vendors for final earn out payment

FY19 final dividend paid with underwritten Dividend Reinvestment Plan

No interim dividend declared while conserving cash to pursue acquisition opportunities

==> picture [569 x 352] intentionally omitted <==

8

Order book by sector

Order book of $440m remains at similar level to start of period despite record amount of activity

Includes over $250m of work already secured for FY21

Resources component of order book starting to grow again following recent project announcements

Order book included $40m Sydney Metro Pitt Street Station development at 31 December as in advanced stage of negotiation

Jun 19 Dec 19 $450m $440m

==> picture [195 x 217] intentionally omitted <==

----- Start of picture text -----

$10m
$30m
$60m
$260m
$90m
----- End of picture text -----

==> picture [224 x 214] intentionally omitted <==

----- Start of picture text -----

$5m
$20m
$110m
$250m
$55m
----- End of picture text -----

Commercial

Public infrastructure & defence Resources Telecommunications & data centres Industrials, energy & utilities

9

Strategy and sector outlooks

10

Leading national diversified electrical contractor

WA

Rio Tinto - Cape Lambert, Dampier EIR, Tom Price, Paraburdoo, Brockman 2, Yandi BHP – Newman, Port Hedland, Mt Whaleback, South Flank Sino Iron Boddington Gold Talison Greenbushes Lithium MARBL JV Kemerton Lithium NorthLink Central Section Forrestfield Airport Link UWA, City of Belmont, Health Services maintenance Causarina Prison Woodman Point Waste Water Treatment NBN construction and maintenance Wireless networks construction Carrier networks construction Minor commercial works and services Agnew Windfarm

NT

RAAF Tindal Rio Tinto Gove ERA Ranger Mine MSA

VIC & TAS

NBN construction and maintenance

QLD

Commercial

Rio Tinto Amrun Arrow MSA Ergon Energy Agreement NBN construction Carrier networks construction

Resources

Public Infrastructure & defence Telecommunications & data centres Industrials, energy & utilities

NSW & ACT

Parramatta Square 3 & 4 and fit-outs Wynyard Place Australian Technology Park Building 4 231 Elizabeth Street

Sovereign Resort Expansion Edmondson Park Ribbon Project 32 Smith Street Greenland Tower Republic Sandstone Precinct City 7 Development The Parade Westmead Hospital Westconnex M5 University of Canberra Public Hospital Australian National University RU Data Centre

11

Strategy

SCEE primarily sees itself as an electrical contractor

Historically focussed in resources, over the last four years we implemented a strategy to diversify into commercial,

infrastructure, defence, telecommunications, industrial, energy and utilities work

Our growth strategy continues so as to realise further sector and geographic diversity including targeting maintenance and recurring earnings

Resources activity having been at a low point is increasing again across multiple commodities

We are actively pursuing acquisition opportunities

==> picture [330 x 425] intentionally omitted <==

12

Public infrastructure and defence

Infrastructure SCEE’s largest sector for revenue in FY19 and remains so in this period

Sector primarily driven by government expenditure. Significant investment sanctioned, with peak activity to come and electrical work generally later in cycle

Work continuing at RAAF Tindal in Northern Territory and completed at RAAF Townsville in Queensland. Significant pipeline of defence base work

Ongoing transport projects at Westconnex M5 in NSW and at Forrestfield Airport Link on Metronet rail program in WA. Completed at Northlink in WA. Actively bidding multiple opportunities at Sydney Metro

Continuing at Westmead Hospital in Sydney and Australian National University in ACT. Other hospital opportunities presenting in NSW

Ongoing maintenance programs at Curtin University and UWA

Infrastructure revenue:

	HY20	HY19
	$m	$m
Revenue	92.5	48.6

==> picture [245 x 327] intentionally omitted <==

13

Pitt Street Station

Sydney Metro is Australia's biggest public transport project SCEE’s first award is for $40m of electrical services from CPB Contractors at Pitt Street Station

Completion due second quarter 2023

Scope is for design and construction of electrical services for the station boxes, concourses, platforms and other infrastructure

Also assisting CPB Contractors and Oxford Properties Group working towards design and construction of two high-rise buildings above station which would be further and separate award

==> picture [308 x 317] intentionally omitted <==

14

Commercial

Commercial largest component of SCEE order book

Multiple base-builds and fit-outs in Sydney and Canberra with eleven projects contributing at least $4m of revenue each in period.

Most significant contributors were Parramatta Square 3 & 4, Edmondson Park and Wynyard Place

NSW activity forecast to remain at high level and targeting commercial developments related to Sydney Metro

Bidding first commercial projects in Brisbane

Commercial revenue:

	HY20	HY19
	$m	$m
Revenue	88.0	52.6

==> picture [247 x 319] intentionally omitted <==

15

Resources

As forecast resources activity at low level in period as Wheatstone LNG completed in H2 FY19 and no other significant construction opportunities replaced it

Significant resources wins announced at end of period particularly at Kemerton Lithium Plant and Rio Tinto Gove mean activity forecast to grow again

Ongoing sustaining capital and maintenance projects at multiple Rio Tinto and BHP facilities and mine sites and continuing MSA work at Boddington Gold and Sino Iron

Pursuing other opportunities particularly in iron ore

Resources revenue:

	HY20	HY19
	$m	$m
Revenue	20.1	61.2

==> picture [246 x 321] intentionally omitted <==

16

Telecommunications and data centres

Sector revenue increased as data centre projects awarded in May 2019 ramped up

NBN construction roll-out passing peak nationally but works continued in WA, QLD and VIC

Commenced first NBN maintenance and upgrading contracts Bidding on 5G related works but volumes still low

Telco revenue:

	HY20	HY19
	$m	$m
Revenue	20.3	12.1

==> picture [246 x 315] intentionally omitted <==

17

Industrials, energy & utilities

Sector stable and tendering variety of industrial projects

Agnew wind farm electrical works performing successfully in WA

Still pipeline of opportunities for SCEE for electrical construction portion of renewables projects

Ergon Energy Service Agreement in northern QLD ongoing and tendering further works

Industrials revenue:

	HY20	HY19
	$m	$m
Revenue	9.4	7.4

==> picture [246 x 324] intentionally omitted <==

18

Conclusion and outlook

• Record half year revenue of $230.3m up 27% on PCP

• EBITDA of $10.9m up 21%, EBIT of $8.4m up 22% and NPAT of $5.5m up 24% on PCP due to continuing growth in infrastructure and commercial activity

• Balance sheet remains strong with total cash of $53.3m and no debt

• On track to exceed FY20 revenue forecast of over $420m

• Expecting stronger H2 profitability

• Order book of $440m

• Strong business development pipeline particularly NSW commercial and infrastructure

• Significant resources wins at Kemerton Lithium Plant and Rio Tinto Gove

• Actively pursuing acquisition opportunities

19

Corporate summary

Capital Structure
ASX Code	SXE
Share Price(20 February2020)	62.0c
No. of ordinaryshares	247.6m
Market Capitalisation(20 February2020)	$153.5m
Number ofperformance rights	3.8m
Total Cash(31 December 2019)	$53.3m
Debt(31 December 2019)	Nil
Enterprise Value(20 February2020)	$100.2m

Shareholders at 31 January 2020	Shareholders at 31 January 2020
ThorneyInvestments	18.5%
First Sentier Investors	8.4%
Other Institutions	29.7%
Frank Tomasi	18.9%
Others(Retail,Private,Employees,Directors)	24.5%
Total	100.0%

20

Disclaimer

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 the current intentions, plans, expectations, assumptions and beliefs of Southern Cross Electrical Engineering Limited (“SCEE”) about future events and are subject to risks, uncertainties and other factors, many of which are outside the control of SCEE.

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 SCEE's current intentions, plans, expectations, assumptions and beliefs about the future, you are urged to view all forward-looking statements contained in this presentation with caution and not to place undue reliance on them. No representation is made or will be made that any forward looking statements will be achieved or will prove to be correct.

SCEE does not undertake to update or revise any forward looking statement, whether as a result of new information, future events or otherwise. Past performance information

given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

This presentation is for information purposes only. It is not financial product or investment advice or a recommendation, offer or invitation by SCEE or any other person to subscribe for or acquire SCEE shares or other securities. The presentation has been prepared without taking into account the objectives, financial situation or needs of the reader. 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 the appropriate professional advice.

Statements made in this presentation are made as at the date of the presentation unless otherwise stated. The information in this presentation is of a general background nature and does not purport to be complete. It should be read in conjunction with SCEE's other periodic and continuous disclosure announcements.

21