SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Investor Presentation 2011

Feb 20, 2011

Investor Presentation February 2011

Presentation Overview

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• December financial overview

• Strategy / Opportunity

• Lines of business

• Safety and people

• Summary

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Financial Overview

($ millions) Dec 10 Dec 09 Change	($ millions) Dec 10 Dec 09 Change	($ millions) Dec 10 Dec 09 Change	($ millions) Dec 10 Dec 09 Change
Sales revenue	47.3	39.2	8.1
Gross Profit	2.3	13.7	(11.4)
Overheads	(7.6)	(6.3)	(1.3)
EBITDA	(5.3)	7.4	(12.7)
Business combination expenses	(0.1)	(0.8)	0.7
D&A	(0.8)	(1.6)	0.8
Net interest	(0.4)	0.1	(0.5)
Tax	1.8	(1.8)	3.6
NPAT	(4.8)	3.3	(8.1)

• June 11 half expected to be profitable.

• Subject to completing Pluto final negotiations successfully and some near term contract awards, FY11 should record a full year profit.

• Forward order book is currently $46m.

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Gross Profit Overview

($ millions) Pluto Other Total	($ millions) Pluto Other Total	($ millions) Pluto Other Total	($ millions) Pluto Other Total
Revenue	21.4	25.9	47.3
Cost of sales	(24.0)	(21.0)	(45.0)
Gross profit	(2.6)	4.9	2.3
Gross margin	(12.2%)	18.9%	4.9%

• Pluto has been impacted by access issues which adversely affected efficiency. Contract has moved to cost plus and currently finishes in March 2011. Negotiating with FWW and Woodside to recover additional hours.

• Other contracts are below long run average due to competitive pricing to retain capacity for expected FY12 – FY15 growth.

• Margins expected to improve during FY12.

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Overhead Cost Overview

($ millions) Dec 10 Dec 09 Change	($ millions) Dec 10 Dec 09 Change	($ millions) Dec 10 Dec 09 Change	($ millions) Dec 10 Dec 09 Change
Overhead expenses	(7.6)	(6.3)	(1.3)
Variance represented by:
Change in SCEE			(0.0)
Full six months of Oceanic			(0.8)
Full six months of KJJ			(0.3)
Final KJJ incentive payment			(0.2)
Total			(1.3)

• SCEE overheads have remained unchanged across this period.

• Oceanic acquisition was finalised in February 2010 and therefore no costs included in pcp.

• KJJ acquisition was finalised in August 2009 and therefore pcp only had 4 months overhead costs.

• Final KJJ payment is non-recurrent.

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Strategy / Opportunity

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Major Minerals and Energy Projects (2010 – 2015)

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Energy projects
Energy projects
$52.9bn
$6.2bn
Coal projects
Iron ore projects
$2.6bn
$14.5bn
Port projects
$3.3bn
Port projects
$8.6bn
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E & I spend ranges between 3% and 5% TIC which represents a market opportunity for SCEE of between $2.6bn and $4.4bn over a 5 year period

Source: BISShrapnel

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Forecast WA Project Timeline

Project Description	Estimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015	Estimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015	Estimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015
Port Projects Port at Cape Preston (iron ore) Gorgon shipping facilities (2 loading facilities, dredging, 9 transporters) Deep water port at Oakajee Cape Lambert expansion (+100Mtpa - part of 320 Project) Chichester optimisation (Stage 2) RGP6 - Port component (expansion to 200Mtpa)	400.0 Underway Late 2010 810.0 Early 2011 Late 2013 1,440.0 Early/mid 2011 Early 2014 3,000.0 Early 2012 Late 2017 900.0 Early 2012 Early 2014 2,000.0 Late 2012 Early2016 8,550.0 11,475.0 Underway Early 2016 6,750.0 Underway Early 2014 6,750.0 Late 2010 Late 2014 6,750.0 Early 2011 Early 2016 1,800.0 Early 2010 Late 2013 750.0 Late 2011 Early 2013 5,400.0 Early 2014 Early 2018 12,600.0 Early 2014 Early 2018 630.0 Late 2013 Late 2015 52,905.0 954.0 Underway Mid 2011 937.0 Underway Early 2012 630.0 Late 2010 Mid 2012 2,700.0 Early 2012 Late 2014 630.0 Late 2011 Mid 2013 720.0 Late 2011 Late 2013 1,350.0 Early 2012 Late 2014 2,430.0 Early 2012 Late 2015 1,260.0 Early 2013 Early 2015 1,297.0 Late 2012 Late 2015 1,134.0 Late 2012 Early 2015 540.0 Late 2012 Early2014 14,582.0
Total WA Ports
Energy Projects Gorgon LNG - offshore gasfield development Gorgon LNG - 1st Production Train Gorgon LNG - 2nd Production Train Gorgon LNG - 3rd Production Train Gorgon LNG - Geosequestration Plant Macedon gasfield Wheatstone LNG - offshore gasfield development Wheatstone LNG - 2 x 4.3 Mtpa Trains Devil Creek gas processing plant (Stage 2)
Total Energy Projects
Iron Ore Projects Sino Project Karara (magnetite) Brockman Syncline 4 - Phase B Christmas Creek & Cloudbreak (Chichester optimisation) Hope Downs 4 Weld Range (haematite) Jack Hills Stage 2 RGP 6 Western Turner Syncline Extension Hill (magnetite) Southdown (magnetite) Wiluna West Stage 1
Total Iron Ore Projects
Total Estimated Engineering Construction Cost E & I revenue opportunity @ 3% E & I revenue opportunity @ 5%	76,037.0 2,281.1 3,801.9

Projects > $1bn Projects < $1bn

Source: BISShrapnel

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Forecast Queensland Project Timeline

Project Description	Estimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015	Estimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015	Estimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015
Port Projects Port of Brisbane: new wharves & ground improvement at Berths 11 and 12 Wiggins Island Coal Terminal (WICT) Balaclava Bay Coal Terminal Weipa bauxite mine upgrade: port component Urangan Boat Harbour Port of Abbot Point: Stage 3 expansion (X50 project) Hay Point: Stages 3 & 4 Port of Abbot Point: Stage 4 expansion (X75 project)	300.0 Underway Early 2014 550.0 Late 2012 Late 2015 500.0 Early 2013 Early 2015 120.0 Mid 2013 Late 2014 200.0 Mid 2013 Early 2015 614.0 Underway Late 2011 350.0 Late 2012 Late 2013 700.0 Late 2012 Late 2015 3,334.0 130.0 Underway Early 2013 240.0 Mid 2010 Early 2014 560.0 Mid 2011 Late 2014 5,250.0 Late 2013 Mid 2017 6,180.0 312.0 Underway Late 2010 840.0 Underway Late 2012 375.0 Early 2010 Early 2012 200.0 Early 2010 Late 2011 635.0 Late 2010 Early 2013 1,600.0 Early 2011 Late 2013 448.0 Early 2012 Late 2014 650.0 Early 2012 Late 2014 350.0 Mid 2012 Mid 2014 1,235.0 Early2012 Early2015 2,683.0
Total Port Projects
Energy Projects Talinga Coal Seam Methane Development Various Arrow Energy Coal Seam Methane Developments Fishermans Landing LNG Project (2 stages; 1.5mtpa each) Curtis LNG Project
Total Energy Projects
Coal Projects Carborough Downs Longwall Kestrel extension Daunia coal mine Curragh mine - expansion Eagle Downs mine Caval Ridge (Peak Downs expansion) Ellensfield Mine Grosvenor coking coal Sarum Wandoan coal mine (thermal)
Total Coal Projects
Total Estimated Engineering Construction Cost E & I revenue opportunity @ 3% E & I revenue opportunity @ 5%	12,197.0 365.9 609.9

Source: BISShrapnel

Projects > $1bn Projects < $1bn

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Forecast SCEE Tracked Peruvian Project Timeline

Project Description - Peru Projects Esimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015	Project Description - Peru Projects Esimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015	Project Description - Peru Projects Esimated Engineering Construction ($m) Expected Commenc- ement Expected Completion Date 2010 2011 2012 2013 2014 2015
Antapaccay 1,470.0 Late 2010 Late 2012 Minas Conga 1,500.0 Current Mid 2012 Toromocho 2,152.0 Early 2011 Late 2012 Los Quechuas 490.0 Mid 2011 Late 2012 Cerro Corona 90.0 Early 2011 Late 2012 Las Bambas 4,200.0 Mid/late 2011 Mid 2014 El Galeno 2,500.0 Early 2012 Late 2013 Tia Maria 600.0 Mid/ late 2010 Late 2012 Nitrate plant 500.0 Early 2011 Late 2011 No Project name yet 1,000.0 Early 2012 Late 2013 Constancia Project 846.0 Late 2011 Mid 2013 Mina Justa 576.0 Current Mid 2012 Los Chancas 1,200.0 Early 2012 Late 2013 SPC Expansions 900.0 Early 2011 Mid 2013 Canariaco 145.0 Early 2011 Late 2011 La Granja 3,500.0 Early 2013 Late 2015 Rio Blanco 1,440.0 Early 2011 Late 2011 Michiquillay 700.0 Early 2014 Late 2016 Pampa Congo 3,000.0 Early 2013 Late 2015 Gas Pipe Line 1,200.0 Mid 2011 Late 2012 Quellaveco 3,000.0 Early 2014 Late 2015
Total Estimated Engineering Construction Cost 31,009.0 E&I revenue opportunity @1.1% 341.1		Projects >$1bn Projects <$1bn
E&I revenue opportunity @1.6% 496.0 Source: SCEE Research

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Key Points

• SCEE focus is Peru and parts of Africa (Ghana and Tanzania)

• Most projects are being designed and managed by EPCM’s in Chile.

• SCEE has operated successfully from Lima, Peru for the past 15 years.

10 August 2010

Forecast E&I Construction Spend 2010 - 2015

($ billions) Labour Only Labour & Materials	($ billions) Labour Only Labour & Materials	($ billions) Labour Only Labour & Materials
Australia - WA	2.3	3.8
Australia – East Coast	0.4	0.6
International	0.3	0.5
Total	3.0	4.9

• Expressions of interest/direct negotiations have already commenced with several project owners seeking to secure construction contractors.

• Recent international wins in the Dominican Republic and Peru.

• FY12 revenue expected to be substantially greater than FY11.

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The Project Construction Cycle

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Source: Euroz
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E & I (SCEE) industry is here
Construction industry is here
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SCEE – an E&I Market Leader

Core values, key strengths

Our Customers

• Proven track record with blue-chip customers over 32 years

• Our People

• A deeply experienced team across all levels of the business

• Our Reputation

• Ability to complete a project safely, on time and at the highest level of quality

Our Performance

• Proven ability to set-up and perform in remote locations

• Our Experience

• Significant experience in the resource sector

• Our Flexibility

• Ability and experience completing diverse projects in countries throughout the world

• Ability to maintain strong reputation for ethical contractual behaviour

Quality client base[(1)]

Quality EPC / engineer relationship base[(1)]

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Bulwer Island
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Kellogg Joint Venture-Gorgon

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(1) SCEE Group clients and engineers

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Lines of Business

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Australian Minerals and Processing

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International Minerals and Processing

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Oil & Gas - Australia

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Infrastructure - Australia

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Australia Minerals Processing

• Major projects included Mt Cattlin lithium project, Mt Keith talc redesign project and Rio Tinto ops & mtce

• Awarded Cadia above ground E & I installation contract with work beginning late February 2011

• Expanding operations and maintenance services to key clients to maintain site presence, work crews and build a recurrent revenue stream

• Commenced advanced capacity discussions with major mining companies

• Major upcoming projects include: – Sino Iron

• Rio Tinto expansion projects

• BHP RGP6

• Fortescue Mining Group

• Roy Hill

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Oil & Gas

• Re-entry into the oil & gas space with award of Pluto off-take and storage E & I contract

• Gorgon underground cabling

negotiations are ongoing – contract runs to 2012

• First QGC upstream LNG bid submitted

• Safety performance recognised by NECA with the 2010 WA NECA Excellence in Safety Award on Pluto

• Key clients include Woodside, QGC, Chevron, Caltex ,BP and Santos

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Major Upcoming Oil & Gas Projects

• Major upcoming oil & gas projects include:

• Gorgon on-shore (Trains 1/2 & 3)

• – CSG east coast

• Wheatstone

• Macedon

• – Browse

• – Gorgon 4/5

• – Pluto 2/3

• – Scarborough

• – Ichthys

• • PNG LNG

• Not included in our previous project forecasts.

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Infrastructure

• Major projects completed in FY10 include Brockman 4 and Sino Iron

• Tender awarded by Rio Tinto in January 2011

• Likely to benefit from advanced capacity discussions with major mining companies

• Large greenfield minerals and oil & gas projects will see strong demand from resource sector

• Infrastructure revenue pipeline included in minerals processing and oil & gas TICs

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International Minerals Processing

• Contracts won in the Dominican Republic and Peru with work commencing in June 2011 half

• Power line tender awarded in

• February 2011

• Pipeline in South America and Africa has improved with award decisions expected over coming months

• Major international clients include:

• Barrick

• Newmont

• Goldfields

• Long term presence in Lima (Peru) with known skilled labour force and supervision regarded as key to our International Strategy

• TIC value of projects currently being tracked by SCEE is approx $31bn

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Safety and People

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Safety Performance

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SCEE TRCFR FY04 - FY10
50
40
30
20
10
0
FY04 FY05 FY06 FY07 FY08 FY09 FY10
TRCFR/million manhours
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Average Frequency and Incidence Rates 2006-07 to 2008-09 (preliminary)

	Frequency Rate Average	Incidence Rate Average
SCEE	0.0	0.0
Mining industry	7.3	1.7
Construction industry	14.9	3.2

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• 0 LTI’s recorded for last 6 years

• 2007 national NECA award winner for excellence in safety

• 2009 national NECA award winner for excellence in safety

• 2010 state NECA award winner for excellence in safety which qualifies SCEE for national nomination

• Numerous client sponsored safety awards at projects such as Pluto and Cape Lambert

• Source Department of Commerce; Worksafe.

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Our Team

Permanent employees	90
Permanent staff retention	90%
Total employees	397
Apprentices	30
Indigenous trainees	12

Organisational development

• Appointed Simon High as MD with over 30 years engineering and construction experience

• Recruited a number of key people with substantial oil & gas experience

• International recruitment program underway

• Commenced 13 apprentices over last 12 months

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Indigenous Training and Employment Strategy

• November 2009 - Strategy to facilitate sustainable Indigenous employment opportunities within SCEE

• 2010 Implemented traineeships – 12 employed

• 6 traineeships completed by end of November 2010

• Incorporated into Traineeships are life skills training courses – Money Matters, Cultural Awareness

• Introduced Cultural Awareness training for all SCEE staff

• Developed close relationships with the Aboriginal Development Corporation, Wirrpanda Foundation and Kooya Enterprises

• Intent is to provide meaningful and long term employment opportunities through structured career pathways

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Summary & Outlook

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Summary & Outlook

• New MD with over 30 years experience in the engineering and construction industry

• Recruited a number of key people with substantial oil & gas experience

• December results impacted by Pluto and competitive pricing

• Expect to generate a profit in the second half

• Subject to completing Pluto final claims successfully and some near term contract awards, FY11 should record a full year profit

• Forward order currently standing at $46m

• Momentum building with recent awards at Cadia, the Dominican Republic, Peru and Rio Tinto power line

• FY12 revenue expected to be substantially higher and margins expected to improve

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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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