SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Investor Presentation 2021

Oct 25, 2021

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Annual General Meeting 2021 Managing Director’s Presentation

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Highlights
Financial FY21	Operational	Outlook
Full year revenue of $370.2m down 10.8%	Work mix changed as resources activity	Targeting FY22 revenues of circa $500m
on prior year	increased and transport infrastructure	and EBITDA in range of $29m-$33m -
Second half a record half of activity up 73.4% on first half	declined Workforce doubled in year to a record	subject to impact of coronavirus developments on East and West Coasts
Trivantage acquisition outperformed earn- out targets	1,800 employees Successful project close-outs at Parramatta	Order book of $430m includes over $350m of work secured for FY22
EBITDA* of $29.6m up 37.0% on prior year	Squares 3 and 4, Westmead Hospital and Wynyard Place	Significant growth opportunities presenting in resources sector although
NPAT of $13.8m up 26.6% on prior year	Rio Tinto Gudai-Darri and Albemarle	labour availability may constrain some
Result included $1.6m acquisition costs	Kemerton Lithium Plant fully mobilised in	growth in near term
and $1.7m intangibles amortisation for	second half	In commercial sector many opportunities
Trivantage	Supermarkets electrical expenditure	in developments around transport hubs
Strong balance sheet with cash of $51.0m	continuing at high levels	Infrastructure strong with Sydney Metro,
and no debt at 30 June 2021 Increased fully franked 4.0 cents per share dividend declared and to be paid on 9 November 2021	First internal supply of Trivantage Manufacturing switchboards secured Decmil arbitration at discovery phase with hearing expected next calendar year SCEE Electrical business 16.8 million man- hours and over 18 years Lost Time Injury free in Australia	Western Sydney Airport and multiple “soft” infrastructure opportunities – hospitals, government buildings, datacentres, education Continuing to pursue acquisitions Co-locating SCEE, Datatel and Trivantage WA businesses into new Perth CBD head	AGM 26 October 2021
		office commenced

* EBITDA is a non-IFRS financial measure, for a reconciliation to statutory results see Appendix

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H2 FY21 record half of revenue

Second half revenue of $234.8m, up 73.4% on first half

Second half revenue of $234.8m, up 73.4% on first half Workforce doubled in FY21 including recruiting net 400 further employees in second half to meet client requirements to ramp up on large-scale mining projects Resources revenue more than doubled on prior year while infrastructure revenue reduced as large transport infrastructure projects were completed in FY20 Significant projects in FY21 included Albemarle Kemerton Lithium Plant, Multiplex Wynyard Place, Rio Tinto Gudai-Darri Mine Phase 1, Rio Tinto Gove and Mirvac Locomotive Workshops Overhead increase of 25.6% includes a six-month contribution from Trivantage FY21 result includes $1.6m acquisition costs and $1.7m intangibles amortisation for Trivantage EBITDA* of $29.6m up 37.0% and NPAT of $13.8m up 26.6%

AGM 26 October 2021 FY21 FY20 Chg. % $m $m Revenue 370.2 415.1 (10.8)% Gross Profit 58.2 44.5 30.8% Gross Margin % 15.7% 10.7% - Overheads 29.5 23.4 25.6% EBITDA 29.6 21.6 37.0% EBITDA % 8.0% 5.2% - EBIT 22.3 16.4 36.0% EBIT % 6.0% 3.9% - NPAT 13.8 10.9 26.6% NPAT % 3.7% 2.6% - Summary financials

* EBITDA and EBIT are non-IFRS financial measures, for a reconciliation to statutory results see Appendix

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Coronavirus

FY21

Construction continued to be designated an essential service in all states throughout FY21

Operations generally continued as planned but coronavirus continued to have impacts throughout year including:

• Inter-state travel restrictions

• Some projects delayed mobilisation

• Unproductive time although largely recoverable under contract terms

• Additional recruitment requirements

• Changes to methodologies

• Additional cleaning and PPE costs

Costs in FY21 offset by JobKeeper payments to certain components of Group although JobKeeper greatly reduced and then ceased in H2

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Post-FY21

Post 30 June lockdowns on East Coast resulted in total Sydney construction shutdown for part of July and later shutdowns in Victoria

Industry reopened but significant although lessening disruption throughout first quarter as part of workforce remain locked down

Costs minimised as workforce stood down and works are delayed rather than lost

On West Coast where significant new growth opportunities are presenting in resources sector interstate labour travel restrictions may constrain ability to maximise them in near term

On balance full year forecasts unaltered but may be a split between halves as delayed works not caught up until second half

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Strong balance sheet and debt free

Balance sheet summary

Cash decreased slightly in year by $4.3m to $51.0m at 30 June 2021 (30 June 2020: $55.3m) despite funding Trivantage acquisition with net cash outflow of $22.2m and $7.2m FY20 final dividend

	Jun 21	Jun 20
	$m	$m
Current assets 201.6 170.8
Non-current assets 135.6 90.9
TOTAL ASSETS 337.2 261.7
Current liabilities 138.2 90.2
Non-current liabilities 27.9 13.2
TOTAL LIABILITIES 166.1 103.4
EQUITY 171.2 158.4

Cash result particularly pleasing given high levels of activity at year-end have significant working capital requirements

Remain debt free

Acquisition of Trivantage resulted in $3.4m of net tangible assets, $13.5m of intangible assets (customer contracts and relationships to be amortised over 5 years) and $29.3m of goodwill consolidated onto balance sheet

$66.9m of bank guarantees and surety bonds on issue out of a total group capacity of $100m leaving a headroom of $33.1m

Franking account balance of $23.8m

Fully franked 4.0 cents per share dividend declared

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Strategy and sector outlooks

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Strategy

SCEE primarily sees itself as an electrical contractor diversified across the resources, commercial and infrastructure sectors

Our growth strategy continues to be to deepen our presence in those sectors and broaden our geographic diversity

This includes particularly targeting maintenance and recurring earnings. The acquisition of Trivantage substantially increases SCEE’s exposure to service and maintenance style work

We continue to pursue further acquisition opportunities

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Integration

Trivantage acquisition offers considerable cross-selling opportunities and there is now a focus on realising integration synergies across the group

Integration initiatives already commenced include combined insurance programs, IT functions and admin processes

Marketing refresh across the group in progress to create a “family of brands”

A “SCEE Group” brand has been created for communicating about the whole group and a “SCEE Electrical” brand for the original SCEE operating business

SCEE Group is relocating its head office to 225 St Georges Terrace in the Perth CBD next week with all the Group’s WA based business branches – SCEE Electrical, Datatel, SJ Electric, SEME Solutions - moving to the same location

Co-location will encourage increased integration and collaboration between the businesses in targeting opportunities and delivering works

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Resources sector

Resources activity more than doubled on prior year as major mining projects ramped up – added net 400 workers in period to service projects

Significant revenue contributors included Albemarle Kemerton Lithium Plant, Rio Tinto Gudai-Darri and Rio Tinto Gove – some of these projects have significant potential to expand with extra trains sanctioned

Pipeline continues to increase where new growth opportunities are presenting in resources sector across multiple commodities – iron ore, lithium, LNG, fertilizers, nickel and bauxite

Interstate labour travel restrictions may constrain ability to maximise growth in near term but expected to ease with vaccination rollout and workarounds

Near term tendering on safety and lighting upgrade projects at BHP mine sites – requires a cross-group response with inputs from SCEE, Datatel and Trivantage SEME businesses

Geoff Baudains has commenced in the newly created position of “Chief Executive Officer - SCEE Electrical”

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AGM 26 October 2021
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Resources decarbonisation

AFR, 1 September 2021: “…investment required to decarbonise the planet is estimated to be more than…$41 trillion”

Decarbonisation impacts resources sector two-fold:

• Decarbonisation of operations – initiatives under way by multiple mining companies including Rio, BHP and FMG for battery, solar and wind projects

• Demand for commodities for global decarbonisation - energy and raw materials availability driving Australian developments – lithium, copper, nickel, hydrogen, fertilisers, urea

SCEE positioned to offer electrical and instrumentation, powerline, network and communications services - at 2021 NECA WA Awards SCEE’s Agnew Hybrid Renewable project team won the Medium Industrial Award

SCEE already leveraged across many aspects of decarbonisation chain including:

• NSW solar farms – Parkes, Griffiths, Dubbo and Narromine

• lithium and copper projects

• metal recycling plants

• supermarket refrigeration power efficiencies

• green buildings design optimisation

• Trivantage manufacture underground mine electric vehicle fast charging systems and remote mine site solar boom gates

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Infrastructure sector

Wide sector for SCEE, primarily driven by governmental expenditure although some areas have varying levels of private investment

Includes transport, road, rail, utilities, defence, and telco, but also “softer” sectors such as health and aged care, education, prisons, datacentres and agriculture facilities

In FY21 infrastructure revenue declined for SCEE as large FY20 road projects not repeated, and Westmead Hospital finished

However record levels of transport investment sanctioned with peak activity still to come representing a medium-term opportunity for SCEE both in NSW and WA

In short-term Pitt Street Metro Station project will start to ramp up in second half and Trivantage Manufacturing is supplying a package of medium and low voltage switchboards for the Westgate Tunnel Project in Melbourne’s western suburbs.

Sydney Metro presenting multiple further packages being tendered now and flowing on into commercial opportunities going forward – such as recently announced Pitt Street South Tower project

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Infrastructure sector (continued)

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Other East Coast infrastructure opportunities are strong – NSW hospitals programme, government buildings and datacentres all being actively bid

Western Sydney International Airport terminal being tendered now

Further packages at airport which is centrepiece of significant infrastructure and commercial developments in the Western Sydney region

In the water and sewage sector a range of electrical works and switchboard supplies secured in Queensland and Tasmania at water treatment plants

Ergon Energy Service Agreement in northern QLD ongoing

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Commercial sector

Commercial remained largest sector by revenue in FY21

The Sydney CBD office construction market quieter than in recent times but there are still significant targets being tendered there

Recently announced Pitt Street South Tower, Bankstown City Campus, and in the ACT the Queanbeyan Civic and Cultural Precinct

Further commercial developments around Sydney transport infrastructure hubs are anticipated to be a growing revenue stream

Also bidding on mixed commercial-residential and retail opportunities in Canberra, Adelaide and Perth

First internal supply of Trivantage Manufacturing switchboards to a Heyday commercial project underway

Sector now includes a contribution from Trivantage’s resilient supermarket services business with nationwide coverage

The acquisition has substantially increased SCEE’s exposure to recurring and services maintenance style work

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AGM 26 October 2021
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Supermarkets investing heavily in IT and store renewals and in new store formats/fit out options

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Conclusion and outlook

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• FY21 profits ahead of target with EBITDA* of $29.6m up 37.0% and NPAT of $13.8m up 26.6% on prior year

• Balance sheet remains strong with cash of $51.0m and no debt at 30 June 2021

• Increased fully franked 4.0 cents per share dividend declared

• Trivantage acquisition exceeded expectations with all businesses outperforming forecasts and earn-out targets

• Workforce doubled in year to a record 1,800 employees

• Order book at 30 June of $430m included over $350m of work secured for FY22

• Targeting FY22 revenues of circa $500m and EBITDA in range of $29m-$33m

• Significant growth opportunities in resources and infrastructure sectors

• Commercial activity picking up again and supermarkets business very resilient

* EBITDA is a non-IFRS financial measure, for a reconciliation to statutory results see Appendix

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Corporate summary

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Capital Structure	Capital Structure		Shareholders at 30 September 2021	Shareholders at 30 September 2021
ASX Code	SXE		ThorneyInvestments	17.1%
Share Price(21 October 2021)	70.0c		First Sentier Investors	8.9%
No. of ordinaryshares	256.7m		Perennial Value Management	5.7%
Market Capitalisation(21 October 2021)	$179.7m		Other Institutions in Top 30 Shareholders	11.2%
Cash(30 June 2021)	$50.1m		Frank Tomasi 18.3%
Debt(30 June 2021)	Nil		Others(Retail,Private,Employees,Directors)	38.8%
Enterprise Value(21 October 2021)	$129.6m		Total 100.0%

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Appendix – IFRS reconciliation

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SCEE’s results are reported under International Financial Reporting Standards (IFRS). SCEE discloses certain non-IFRS measures that are not prepared in accordance with IFRS. The non-IFRS measures 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 non-IFRS measures which do not have any standard meaning prescribed by IFRS and therefore may not be always 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. A reconciliation of profit before tax to EBIT and EBITDA is presented in the table on this slide.		FY21	FY20
		$m	$m
	Contract revenue	370.2	415.1
	Contract expenses	(312.0)	(370.6)
	Gross Profit	58.2	44.5
	Other income	0.9	0.5
	Overheads	(29.5)	(23.4)
	EBITDA	29.6	21.6
	Depreciation and amortisation	(7.3)	(5.2)
	EBIT	22.3	16.4
	Net finance expense	(1.5)	(0.9)
	Profit before tax	20.8	15.5
	Income tax expense	(7.0)	(4.6)
	Profit from continuing operations	13.8	10.9

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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 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 forwardlooking statement, whether as a result of new information, future events or otherwise. Past performance information

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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 considering 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.

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