VERBREC LIMITED — Annual Report 2017

Sep 6, 2017

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2017 FULL YEAR RESULTS INVESTOR BRIEFING SEPTEMBER 2017

FY17 OPERATIONAL HIGHLIGHTS

RESPONDING TO A CHALLENGING MARKET

• Fifteen new MSAs signed during the year including QGC, IPL, JLL, Holcim, Santos, OZ Minerals – bringing the total to 50 MSAs with approximately 35 actively generating work

• Continued diversification of revenue with infrastructure representing 16% of revenue including significant volume of new work in water infrastructure in SA and WA and a new transport project in NSW with Northconnex

• New management team appointed in Feb 2017

• Technology investments reaching maturity with first commercial contract for AIDE and development of StacksOn

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PERFORMANCE SUMMARY FY17

AGAINST PREVIOUS CORRESPONDING PERIOD

Revenue EBITDAI NPAT $81.1m ($8.1m) ($23.6m) FY16: $108.2m FY16: ($8.4m) FY16: ($38.1m)

• No major one-off projects in FY17 as clients continued to focus on sustaining capex and opex spending (FY16 benefited from $31m Roy Hill project)

• FY17 cost base set for $100m+ revenue budget – anticipated projects were deferred into FY18

• Highly competitive market also impacted on sell rates and gross margins

• New CEO/CFO removed $10.5m annualised costs in second half to reset operating cost base for FY18. Restructure costs of $2.1m fully recognised in FY17 while savings will be realized in FY18

• Closed low margin Hunter Valley and Petromod businesses freeing up $1.5m of working capital

• Tightly managed working capital by reducing WIP and debtors aging

• Increased bank finance facility limit and term, to support working capital and order book growth

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TECHNOLOGY AND INNOVATION PROJECTS

• Continued investments in new technology solutions and commercialisation strategies to create higher margin revenue streams in FY19 and beyond

• FY18 focus on continued development and commercialisation

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FY17 FY18
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FY17 FY18	FY17 FY18	FY17 FY18	FY17 FY18
Automated Infrastructure Design Engine	Reduces design time and costs for linear infrastructure projects	First commercial contract with blue-chip CSG client	Finalise commercialisation strategy
Stacks On in-feld data capture and tracking	Optimises materials stockpiles	Proof of concept trials with blue chip ASX client	First commercial contract targeted FY18

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FY18 OUTLOOK

• Under new CEO and CFO, organisation restructure has re-balanced client-facing resources and corporate overhead costs

• Removed $8.8m in labour and $1.7m in other costs to benefit FY18 and beyond

• Closed low margin Hunter Valley and Petromod businesses

• Increasing client spending in core market segments is converting into order book momentum:

• Work in Hand $25.1m at 30 June 2017 – equates to 33% of forecast FY18 engineering consulting revenue

• More than $13m in new contract wins in FY18

• Recruiting specialist engineering and technology resources to support order book growth

• Noting strong pipeline, Board expects similar level of revenue in FY18 as compared to FY17, at EBITDA margins in mid-single digits

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INVESTMENT HIGHLIGHTS

• New management focused on profitable revenue/growth

• Portfolio of MSAs underpin core engineering services revenue

• Valuable end-to-end service offering from environmental consulting through engineering design, project management and commissioning, to competency training

• Increasing commodity prices leading to growing client spend to unlock productivity gains and catch

• up on deferred capex on brownfield assets

• Increasing infrastructure investment by Government and third parties

• Strategic partnerships signed to create new revenue opportunities in new markets for LogiCamms (Dassault)

• Significant client interest in LogiCamms technology products leading to commercialisation of multiple higher margin, value based revenue streams

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FURTHER INFORMATION

INVESTOR RELATIONS

OUR VALUES

Flora Furness Chief Executive Officer Tel. +61 7 3058 7000

REGISTERED OFFICE

200 Mary Street Brisbane Queensland 4000 Tel. +61 7 3058 7000

WEB

Teamwork Commitment to people Can do approach Integrity Delivering quality results

www.logicamms.com.au

MEDIA ENQUIRIES

Alasdair Jeffrey Rowland Tel. +61 7 3229 4499

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