SOUTHERN CROSS ELECTRICAL ENGINEERING LTD — Investor Presentation 2021

Aug 24, 2021

Full Year Results Presentation Year Ended 30 June 2021

Full Year Results 2021

About SCEE

Electrical

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

Contractor

Diversification Established in 1978 in WA, and primarily servicing the resources sector, the combination in 2016 with Datatel Communications and in 2017 with NSW & ACT-based Heyday created a national group. The acquisition of the Trivantage Group in 2020 brought further diversification into the retail sector, security services and switchboard design and manufacturing, with a significant geographic presence in Victoria and SA

Markets

SCEE operates across three broad sectors of Infrastructure, Commercial and Resources

People Over 1,800 employees, including nearly 170 electrical apprentices and trainees

Safety

Original SCEE business 16.8 million man-hours and over 18 years Lost Time Injury free in Australia

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Full Year Results 2021

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Highlights

Financial

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 - declined assumes no repeat of JobKeeper in FY22 Although revenue fell short of target and subject to impact of coronavirus second half was a record half of activity up Workforce doubled in year to a record developments on East and West Coasts 73.4% on first half 1,800 employees Order book of $430m includes over $350m Trivantage acquisition exceeding Successful project close-outs at Parramatta of work secured for FY22 expectations with all businesses Squares 3 and 4, Westmead Hospital and outperforming forecasts and earn-out Wynyard Place Significant growth opportunities targets presenting in resources sector although Rio Tinto Gudai-Darri and Albemarle labour availability may constrain some Profits ahead of target with EBITDA* of Kemerton Lithium Plant fully mobilised in growth in near term $29.6m up 37.0% and NPAT of $13.8m up second half 26.6% on prior year In commercial sector many opportunities Supermarkets electrical expenditure in developments around transport hubs Result includes $1.6m acquisition costs and continuing at high levels $1.7m intangibles amortisation for Infrastructure strong with Sydney Metro, First internal supply of Trivantage Trivantage Western Sydney Airport and multiple Manufacturing switchboards secured “soft” infrastructure opportunities – Strong balance sheet with cash of $51.0m Decmil arbitration at discovery phase with hospitals, government buildings, and no debt at 30 June 2021 hearing expected early next calendar year datacentres Increased fully franked 4.0 cents per share Continuing to pursue acquisitions dividend declared Co-locating SCEE, Datatel and Trivantage WA businesses in new Perth CBD head office in October 2021

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

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H2 record half of revenue

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

Summary financials:

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

Significant revenue contributors in FY21 included Albemarle Kemerton Lithium Plant, Multiplex Wynyard Place, Rio Tinto GudaiDarri Mine Phase 1, Rio Tinto Gove and Mirvac Locomotive Workshops

Gross margin percentage of 15.7% increased from 10.7% in prior year primarily due to:

• more profitable project mix, including no repeat of lower margin FY20 transport infrastructure projects • FY21 contract expenses included $8.1m Jobkeeper, primarily in H1, versus $2.9m in FY20

Overhead increase includes a six-month contribution from Trivantage

	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%	-

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%

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

Full Year Results 2021

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Coronavirus impacts

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

Post-FY21

Post 30 June lockdowns on East Coast resulted in Sydney construction shutdown for part of July

Costs minimised as workforce stood down and works are delayed rather than lost. July results for Group on budget as Sydney shortfall made up for by extra activity in WA

Industry has reopened but still some disruption as part of workforce remain locked down

However as restrictions loosen accelerated catch-up of many delayed works is anticipated

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

Therefore on balance forecasts unaltered but circumstances still volatile and conditions may change

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Revenues by sector

Resources activity more than doubled as major projects ramped up – FY21 $130m vs. FY20 $46m

Commercial activity remained steady – FY21 $165m vs. FY20 $173m

Infrastructure reduced as large transport infrastructure projects completed in prior year – FY21 $76m vs. FY20 $196m

FY20 FY21 $415m $370m

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$46m
$173m
$130m $165m Commercial
Infrastructure
Resources
$196m
$76m
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Strong balance sheet and debt free

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

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

Balance sheet summary:

	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

Fully franked 4.0 cents per share dividend declared

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Good cash collection

Cash result of $51.0m particularly pleasing given high levels of activity at year-end have significant working capital requirements

Trivantage meeting deferred consideration earn-out targets and Board having declared a 4.0 cents per share FY21 final dividend will mean cash outflows in FY22 of $10.0m in September 2021 and $10.4m in November 2021 respectively

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Order book

Order book of $430m includes over $350m of work secured for FY22

Balanced across the three sectors

Jun 20 $440m

Jun 21 $430m

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$110m
$142m $156m
Commercial
Infrastructure
Resources
$200m
$130m
$132m
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Strategy and sector outlooks

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Leading national diversified electrical contractor

WA

MARBL JV Kemerton Lithium Plant Rio Tinto Gudai-Darri

Rio Tinto - Cape Lambert, Tom Price, Paraburdoo BHP – Newman, Port Hedland, Mt Whaleback, South Flank Sino Iron Boddington Gold Security works Major supermarkets and retail Forrestfield Airport Link Causarina Prison CBH Esperance grain terminal Health, education and government panel works NBN

Department of Justice security works

Resources

Commercial

Infrastructure

NT

Rio Tinto Gove ERA Ranger Mine MSA

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VIC & TAS

SA

Major supermarkets and retail

Major supermarkets and retail NBN

Bryn Estyn Water Treatment Plant Westgate Tunnel Switchboards

QLD

Arrow MSA

Major supermarkets and retail Energy Queensland Services Agreement Water projects NBN

Goodna, Kalkie and Commbabah Treatment Plants

NSW & ACT

Parramatta Square 3, 4, 5 & 7 Wynyard Place Edmondson Park Ribbon Project 32 Smith Street Greenland Tower Republic Sandstone Precinct Locomotive Sheds 6 Hassall Street

Aspen & Establishment apartments Major supermarkets and retail WestConnex M5

Sydney Metro Pitt Street Station Australian National University RUData SYD053 datacentre NextDC S3 datacentre University of Western Sydney campus

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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

Trivantage further offers considerable cross-selling opportunities and there will be a focus on realising integration synergies across the group

We continue to pursue further acquisition opportunities

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Sector outlooks

Commercial remained largest sector by revenue in FY21 and now includes a contribution from Trivantage’s supermarket services business

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

Commercial developments around transport infrastructure hubs are commencing and anticipated to be a growing revenue stream

Infrastructure activity declined in FY21 as FY20 road projects not repeated and Westmead Hospital finished

However Sydney Metro and Western Sydney Airport presenting multiple packages being tendered now and will flow on into commercial opportunities going forward

“Softer” infrastructure opportunities are strong – NSW hospitals programme, government buildings and datacentres all being actively bid

Record levels of transport investment sanctioned with peak activity still to come representing a medium-term opportunity for SCEE

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Resources sector

Resources activity more than doubled on prior year as major mining projects ramped up

Significant revenue contributors included Albemarle Kemerton Lithium Plant, Rio Tinto Gudai-Darri and Rio Tinto Gove

Pipeline continues to increase where significant new growth opportunities are presenting in resources sector across multiple commodities

Interstate labour travel restrictions may constrain ability to maximise growth in near term

Near term tendering on safety lighting upgrade projects at BHP mine sites

Decarbonisation of resources sector commencing with renewable power projects under development

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

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Full Year Results 2021

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Trivantage

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

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

Since acquisition notable developments include:

• In the supermarkets sector nationwide electrical expenditure continues at high levels

• In the water and sewage sector a range of electrical works or switchboard supplies secured in Queensland at the Goodna, Kalkie and Commbabah Treatment Plants and in Tasmania at the Bryn Estyn Water Treatment Plant

• In the transport sector Trivantage Manufacturing will supply a package of medium and low voltage switchboards for the Westgate Tunnel Project in Melbourne’s western suburbs.

• First internal supply of Trivantage Manufacturing switchboards secured

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Full Year Results 2021

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Conclusion and outlook

• Record half of revenue up 73.4% on first half

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

• 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

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

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

• Order book of $430m includes over $350m of work secured for FY22

• Significant growth opportunities in resources sector

• Continuing to pursue acquisitions

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

Full Year Results 2021

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Corporate summary

Capital Structure	Capital Structure		Shareholders at 5 August 2021	Shareholders at 5 August 2021
ASX Code	SXE		ThorneyInvestments	17.8%
Share Price(23 August 2021)	50.7c		First Sentier Investors	9.2%
No. of ordinaryshares	248.1m		Perennial Value Management	6.2%
Market Capitalisation(23 August 2021)	$125.8m		Other Institutions in Top 30 Shareholders	11.8%
Number ofperformance rights	4.2m		Frank Tomasi 18.9%
Total Cash(30 June 2021)	$50.1m		Others(Retail,Private,Employees,Directors)	36.1%
Debt(30 June 2021)	Nil		Total 100.0%
Enterprise Value(23 August 2021)	$74.9m

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Appendix – IFRS reconciliation

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

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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