SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Investor Presentation 2013

Oct 6, 2013

==> picture [720 x 133] intentionally omitted <==

Investor Presentation Results Roadshow

7 October 2013

Highlights

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Best financial result in SCEE’s 35 year history

Revenue up 26% to $278.0m

NPAT up 27% to $17.3m

Strong balance sheet with $40.9m of cash

Fully franked dividend up 20% to 2.70 cps

Significant investment in systems and assets KSJV formed to target LNG construction works KSJV secures first award on Australia Pacific LNG project Continue to see opportunities for growth in both capex and opex phases

==> picture [247 x 352] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

1
----- End of picture text -----

About SCEE

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Emerging Tier One provider of specialised electrical and instrumentation services

Deliver life-of-project services to large-scale resource projects across Australia and overseas

Strong reputation for safety and excellence

Established in 1978 and listed on the Australian Securities Exchange under the code SXE

==> picture [212 x 318] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

2
----- End of picture text -----

Project life cycle support

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

==> picture [643 x 186] intentionally omitted <==

Early phase capex Capex Opex

==> picture [720 x 38] intentionally omitted <==

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

3
----- End of picture text -----

FY13 projects

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

==> picture [573 x 366] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

4
----- End of picture text -----

Key FY13 and FY14 contract wins

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Rio Tinto Cape Lambert Port B Phase A

• Largest contract in Company’s history at over $100m

• Manning peaked at over 500

AngloGold Ashanti Tropicana Gold Project

• Contract value over $40m

• Manning peaked at over 200

Rio Tinto Yandi Expansion Project

• Contract value over $29m

• Largest contract performed by SCEE Infrastructure

New framework agreements

• Rio Tinto Services

• BHP Sustaining Capital

Bechtel Australia Pacific LNG

• KSJV to perform electrical installation services on Curtis Island

==> picture [211 x 315] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

5
----- End of picture text -----

Full year financial results

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

	FY13 $m	FY12 $m	Change %	Significant revenue increase driven by key project wins
Revenue	278.0	220.0	26%	Ramp up in second half delivers H2 NPAT
				of $13m
Gross profit	61.3	43.4	41%
Gross margin (%)	22.1	19.7		Operating at annualised turnover of over
EBITDA	31.2	22.2	41%	$400m in final quarter
EBIT	25.3	19.4	30%	Overhead base grown to support this
NPAT	17.3	13.7	27%	level of activity
Net Margin (%)	6.2	6.2

Commercial close out of QCLNG and Lake Vermont claims progressing and expected to be resolved at levels at or above current provisions. Risk for FY14 remains until close out achieved

==> picture [720 x 38] intentionally omitted <==

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

6
----- End of picture text -----

Revenues by operating division

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

SCEE Infrastructure

Revenue ($m)

Main contributors:

• Rio Tinto Coastal Waters

==> picture [316 x 212] intentionally omitted <==

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

22.5
69.7
185.8 SCEE Infrastructure
SCEE Construction
SCEE Services
----- End of picture text -----

• Rio Tinto Yandi Expansion

• Rio Tinto Cape Lambert 33kV

SCEE Construction

Main contributors:

• Rio Tinto Cape Lambert Port B

• AngloGold Ashanti Tropicana

• MCC Sino Iron

SCEE Services

Main contributors:

• Rio Tinto Services

• Tuckabianna Gold Project

==> picture [720 x 38] intentionally omitted <==

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

7
----- End of picture text -----

Balance sheet

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

	Jun 13	Jun 13	Jun 12
		$m	$m
Current assets		106.7	91.9
Non current assets		51.0	34.7
Total assets		157.7	126.6
Current liabilities		43.8	33.4
Non current liabilities		12.6	6.4
Total liabilities		56.4	39.8
Equity		101.3	86.9

Entered FY14 with a strong balance sheet

Cash over $40m and minimal debt

Advance payments from half-year unwound

$22.4m of capex spend on systems and plant and equipment in FY13. $33.1m spent in past two years.

Bonding capacity increased from $60m to $90m post year end

==> picture [720 x 38] intentionally omitted <==

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

8
----- End of picture text -----

Cashflow

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

==> picture [506 x 321] intentionally omitted <==

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

80
70
6.5
60 18.5
50
31.2 5.4 0.9
3.6
$m 40
30
20 40.9
31.6
10
0
Opening Cash EBITDA Working Capex Tax, Interest, Repayment of Dividends Closing Cash
July 2012 Capital Other Borrowings June 2013
----- End of picture text -----

==> picture [720 x 38] intentionally omitted <==

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

9
----- End of picture text -----

Historical results summary

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

	2011	2012	2013
	$m	$m	$m
Revenue	101.8	220.0	278.0
Gross profit	16.2	43.4	61.3
Gross margin (%)	15.9	19.7	22.1
EBITDA	0.6	22.2	31.2
EBIT	(1.1)	19.4	25.3
NPAT	(1.7)	13.7	17.3
Net margin (%)	(1.6)	6.2	6.2
Dividends (cps)	nil	2.25	2.70
Net Cash	22.8	30.0	36.3
Net Assets	72.7	86.9	101.3

==> picture [720 x 38] intentionally omitted <==

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

10
----- End of picture text -----

Financial trends

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

==> picture [201 x 157] intentionally omitted <==

==> picture [204 x 159] intentionally omitted <==

==> picture [205 x 159] intentionally omitted <==

==> picture [201 x 157] intentionally omitted <==

==> picture [204 x 159] intentionally omitted <==

==> picture [205 x 160] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

11
----- End of picture text -----

Increasing shareholder returns

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Earnings per share up 26% to 10.74 cents

Fully franked dividend up 20% to 2.70 cents per share with payment date of 17 October 2013

Franking account balance at 30 June 2013 of $9.3m

FY13 dividend strikes a balance between providing returns to shareholders and retaining cash to support continued growth

==> picture [209 x 163] intentionally omitted <==

==> picture [209 x 163] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

12
----- End of picture text -----

Investment in systems and assets

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Over $20m invested in systems and fixed assets in FY13 with over $30m invested over past two years

Expansion and renewal of plant and equipment fleet

Benefitting financially from reduction in hired equipment

Progressed systems upgrades and ERP went live in October with full implementation of SCEEtrak in 1H 14

Taking occupancy of additional corporate office accommodation in October 2013 to support managed growth

==> picture [220 x 330] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

13
----- End of picture text -----

Health and safety

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Lost Time Incident free in the year (1.6 million man hours)

Ninth consecutive year LTI free in Australia

Reflects the emphasis placed on safety from the Board through to our project teams

We place a priority on creating a proactive safety culture across the whole of SCEE

==> picture [217 x 326] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

14
----- End of picture text -----

Training

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

SCEE’s dedicated training centre expanded during the year

Cost effective and flexible training schedules to ensure efficient mobilisation of project teams

Successfully delivered more than 2,000 individual training events over a four month period as activity ramped up at Cape Lambert Port B and Tropicana

Growth in FY13 would not have been possible without these facilities having been in place and functioning well

==> picture [211 x 323] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

15
----- End of picture text -----

Growth of our people

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Employee numbers peaked at over 1,200 in June 2013

Indicative of high levels of activity at year end

Recruitment handled by in-house capability

Apprenticeship program continued to grow with a record 78 apprentices in FY13 and SCEE apprentices won the 2013 NECA Excellence and Apprentices Awards in the 1[st] , 2[nd] and 4[th] year apprentice categories

Continued commitment to indigenous employment, 6.5% of Rio Tinto Cape Lambert Port B workforce were indigenous

==> picture [220 x 171] intentionally omitted <==

==> picture [220 x 171] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

16
----- End of picture text -----

Outlook

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

==> picture [704 x 287] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

17
----- End of picture text -----

Order book

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

==> picture [374 x 267] intentionally omitted <==

Order book excludes work under recurring framework agreements

Order book at 30 June 2013 of $91.5m and at 31 August 2013 of $78.8m. Revenue of $53m for the two months to 31 August with approximately $40m of new orders added from Australia Pacific LNG, framework agreements and growth of existing projects.

Ongoing works:

• Rio Tinto Cape Lambert Phase A

• AngloGold Ashanti Tropicana Gold Project

• Rio Tinto Coastal Waters

• Rio Tinto Yandi Expansion

• BHP Sustaining Capital

• BP Framework Agreement

KSJV to perform electrical installation services at the Australia Pacific LNG project

Work continuing on further significant tenders including large scale LNG projects being tendered by KSJV

==> picture [720 x 38] intentionally omitted <==

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

18
----- End of picture text -----

Changing operating environment

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Commodity price weakness has led to some high profile project deferrals and cancellations

Clients becoming more commercially focussed and looking to transfer risk

Increased competition to win work

Anticipate changes to client contracting model But we continue to see a solid pipeline of opportunities

==> picture [214 x 322] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

19
----- End of picture text -----

Exposure to five sectors

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

LNG

==> picture [182 x 121] intentionally omitted <==

Minerals & metals

==> picture [181 x 133] intentionally omitted <==

Iron ore

==> picture [190 x 134] intentionally omitted <==

CSG

==> picture [184 x 128] intentionally omitted <==

Coal

==> picture [185 x 133] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

20
----- End of picture text -----

Sector outlook

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

LNG

• KSJV formed with Kentech in December 2012

• Aims to capitalise on unprecedented Australian LNG activity

• Targeting onshore LNG plant construction

• Up to $7bn of E&I works available in LNG sector in next 3-5 years

• KSJV to perform electrical installation services at the Australia Pacific LNG project

• Currently tendering for work on large scale construction projects

• Growth in long-term maintenance and operations opportunities

CSG

• CSG element to East Coast LNG projects

• Gas required to provide throughput to plants

• Potential revenue stream for duration of plants 25+ year life

• Demonstrated capability on QGC early works

==> picture [211 x 318] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

21
----- End of picture text -----

Sector outlook

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Iron ore

• Remains a core business for SCEE

• Framework agreements with Rio Tinto and BHP

• Expansion of existing projects at Cape Lambert and Sino

• Potential new projects such as Roy Hill and Rio Tinto Yandi

Gold

• Viewed as a spot market

• Proven capability and will tender work as it arises, including international

Coal

• Market currently deflated but expected to ultimately return

• Positioned to win future work having executed Lake Vermont

==> picture [212 x 320] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

22
----- End of picture text -----

Growing recurring revenues

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Growth of services business fundamental to long term growth SCEE Services brand established from 1 July 2012

Achieved significant revenue growth during the year

Making good progress in growth of recurring iron ore work with framework agreements in place with Rio Tinto and BHP Billiton

Potential LNG and CSG workflow over long-term

Looking to increase revenues considerably over three to five years through organic growth and exploration of acquisition opportunities

==> picture [198 x 321] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

23
----- End of picture text -----

Conclusion

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

Record result for the second consecutive year

Entered FY14 operating at historically high activity levels

Significant progress towards achieving Tier One goal

KSJV positioned to capitalise on unprecedented levels of E&I work and secured first award on Australia Pacific LNG

Strong balance sheet and increased bonding capacity to support continued growth

Operating in a more challenging commercial environment

We continue to see growth opportunities in both the capex and opex phases

==> picture [214 x 321] intentionally omitted <==

==> picture [720 x 38] intentionally omitted <==

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

24
----- End of picture text -----

Non-IFRS financial information

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

SCEE’s results are reported under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The Company discloses certain non-IFRS measures that are not prepared in accordance with IFRS and therefore considered non-IFRS financial measures. The non-IFRS measure should only be considered in addition to, and not as a substitute for, other measures of financial performance prepared in accordance with IFRS.

EBIT and EBITDA are a non-IFRS earnings measure which do not have any standard meaning prescribed by IFRS and therefore may not be comparable to EBIT and EBITDA presented by other companies. EBIT represents earnings before interest and income tax. EBITDA represents earnings before interest, income tax, depreciation and amortisation.

EBIT and EBITDA Reconciliations:

Profit before tax Finance expense Finance income EBIT Depreciation Amortisation EBITDA	2011 2012 2013 $m $m $m (1.9) 19.7 25.0 1.0 0.8 1.2 (0.2) (1.1) (0.9)
	-1.1 19.4 25.3 1.6 2.7 5.8 0.1 0.1 0.1
	0.6 22.2 31.2

==> picture [720 x 38] intentionally omitted <==

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

25
----- End of picture text -----

Disclaimer

==> picture [182 x 80] intentionally omitted <==

==> picture [720 x 25] intentionally omitted <==

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 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.

==> picture [720 x 38] intentionally omitted <==

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

26
----- End of picture text -----