Southern Cross Electrical Engineering Limited · ASX:SXE
Southern Cross Electrical Engineering — Merger or Acquisition (February 2017)
30 slides from Southern Cross Electrical Engineering's merger presentation, Feb 28, 2017
Slide 1: Transformational acquisition and Half Year ended 31 December 2016 results
For personal use only Transformational acquisition and Half Year ended 31 December 2016 results 28 February 2017
Slide 2: Overview
Overview For personal use only SCEE has agreed to acquire leading east coast electrical contractor Heyday5 Pty Ltd (“Heyday5”) for an enterprise value of up to $54.1m The transaction is a key milestone in SCEE’s strategy to diversify and grow into adjacent and Acquisition of complementary sectors an
Slide 3: Contents
Contents For personal use only 1 Strategic rationale and acquisition overview 2 Overview of Heyday5 3 Combined Group profile 4 SCEE Half Year ended 31 December 2016 results 5 Group guidance and outlook Appendix: Detailed transaction terms SCEE Half Year ended 31 December 2016 Statutory and Underlyin
Slide 4: 1. Strategic rationale and acquisition overview
For personal use only 1. Strategic rationale and acquisition overview 3
Slide 5: SCEE strategy
SCEE strategy For personal use only Having recognised the cyclical nature of our historically predominant resources-construction market, whilst wishing to retain a resources focus as a pillar of the business, we have implemented a strategy to: • transition to a sustainable resources business through
Slide 6: Transaction highlights
Transaction highlights For personal use only SCEE to acquire 100% of Heyday5, a leading east coast electrical contractor servicing commercial and infrastructure markets Total consideration of up to $54.1m on an enterprise value basis, with $18m cash paid on completion, $2.25m after release of FY
Slide 7: Transaction overview
Transaction overview For personal use only SCEE has entered into a Share Purchase Deed to acquire 100% of Heyday5 for an enterprise value of up to $54.1m, comprising: • $18m cash payable on completion, which is expected to be 9 March 2017, and $2.25m cash payable after the FY17 full year results are
Slide 8: Transaction overview (continued)
Transaction overview (continued) For personal use only Provides SCEE with diversification across sectors and geographies, delivering immediate exposure to growing east coast commercial and infrastructure markets Potential to further leverage combined Group’s customer relationships and skills into al
Slide 9: 2. Overview of Heyday5
For personal use only 2. Overview of Heyday5 8
Slide 10: Heyday5
Heyday5 For personal use only Heyday5 is a leading east coast electrical contractor in the commercial and infrastructure markets Company overview Revenue by sector (FY17B) Business originally established in 1978 as a specialist electrical contractor 21% Heyday5 is a leading provider of 27% Commercia
Slide 11: Target markets
Target markets For personal use only Heyday5’s core markets are large and growing Commercial: growth over the next five years driven by new developments and major upgrades: • Commercial market in NSW and ACT currently estimated at c. $1.1b, expected to exceed c. $1.3b by 2020/21 Infrastructure: expe
Slide 12: Services portfolio
Services portfolio For personal use only Core competencies Engineering & design services Documentation & site drafting services Project management services Building information modelling (BIM) Installation, commissioning and warranty ESD and green star solutions Maintenance support programs 24/7 nat
Slide 13: Customers and projects
Customers and projects For personal use only Heyday5 has established relationships with some of Australia’s largest construction and property groups Clients Selected completed projects Commercial Transport Infrastructure • Heyday5’s reputation is built on a philosophy of 50 Martin Place, NSW Stat Ea
Slide 14: Strong management team
Strong management team For personal use only Heyday5 has an experienced management team who will continue to manage the business: • Four of the five vendors, pictured below, continue employment as key executives under SCEE ownership • Founding vendor, Tony Borg, will continue his ongoing advisory ro
Slide 15: 3. Combined Group overview
For personal use only 3. Combined Group overview 14
Slide 16: A leading national electrical contractor
A leading national electrical contractor For personal use only The combined Group will have a diversified portfolio of projects across Australia and over 900 employees Commercial Telecommunications and data centres Public Infrastructure and defence Mining Oil and gas Industrials, energy & utilities
Slide 17: Revenue diversification
Revenue diversification For personal use only The Group’s revenue will be balanced across major industry sectors, with east coast operations comprising more than 50% of Group revenue FY2017B SCEE standalone Merged Group (Pro-forma) 2% 17% 13% Commercial 7% Telecommunications & data centres 26% Reven
Slide 18: 4. Half Year ended December 2016 results
For personal use only 4. Half Year ended 31 December 2016 results 17
Slide 19: Underlying half year financial performance
Underlying half year financial performance For personal use only Key contributors in period included Sustaining Capital and Maintenance work in mining, Bechtel Wheatstone LNG, Western Power works and NBN construction Activity in the period negatively impacted by delayed mobilisation to key projects,
Slide 20: Reconciliation of underlying to statutory H1 FY17 results
Reconciliation of underlying to statutory H1 FY17 results * For personal use only 1. Organisation restructuring represents the costs incurred as management took further actions to ensure an efficient operating structure in a strongly cost focused market 2. Acquisition, integration and diversificatio
Slide 21: Balance sheet
Balance sheet For personal use only Strong balance sheet throughout the period Cash of $28.5m and debt free at 31 December Reduction in current liabilities in period as FY16 works closed out 20
Slide 22: Cashflow
Cashflow For personal use only Investment in acquisition and growth initiatives including Heyday5 transaction and Datatel east coast expansion Costs incurred to restructure the business and drive future savings Working capital required for mobilization on LNG works and reduction in current liabiliti
Slide 23: Health, safety and people
Health, safety and people For personal use only Performed our operations in the period without a lost time injury Now over twelve years LTI free in Australia Further restructuring of the organisation during the period to ensure efficient operating structure in cost focussed market Continued transiti
Slide 24: Order book
Order book For personal use only Whilst SCEE remains a major supplier, flow of work SCEE order book from large iron ore clients continues to be subdued in the short term and will be dependent on clients’ view of the commodity cycle SCEE order book over $130m including estimates of framework, reimbur
Slide 25: 5. Group guidance & outlook
For personal use only 5. Group guidance & outlook 24
Slide 26: Guidance and outlook
Guidance and outlook For personal use only Expected increase in H2 FY17 revenue in SCEE’s existing business based on current order book and tendering activity H2 FY17 result dependent on winning and timing of award of certain construction projects in defence and public infrastructure sectors Heyday
Slide 27: Appendices
For personal use only Appendices 26
Slide 28: Detailed transaction terms
Detailed transaction terms For personal use only Acquisition of 100% of Heyday5 Pty Ltd Acquisition Due diligence has been finalised Completion expected to occur on 9 March 2017 Up to a total of $54.1m payable as follows: 1. Initial Cash Consideration: $18m in cash at completion (expected 9 March 20
Slide 29: Non-IFRS financial information
Non-IFRS financial information For personal use only 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 there
Slide 30: Disclaimer
Disclaimer For personal use only 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 belief
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