Southern Cross Electrical Engineering Limited · ASX:SXE
Southern Cross Electrical Engineering — Shareholder Meeting (October 2017)
37 slides from Southern Cross Electrical Engineering's shareholder meeting presentation, Oct 31, 2017
Slide 1: AGM Presentation
For personal use only AGM Presentation 31 October 2017
Slide 2: About SCEE
About SCEE For personal use only Southern Cross Electrical Engineering (SCEE) is an ASX listed electrical, instrumentation, communication and maintenance services company recognised for our industry leading capabilities Established in 1978 in Western Australia, the combination in 2016 with Datatel C
Slide 3: Highlights
Highlights For personal use only Statutory revenue $199.9m, EBITDA $6.3m and NPAT loss of $0.4m Activity in H1 negatively impacted by slower award of work in several sectors Strong H2 turnaround with Underlying H2 EBITDA of $8.2m* and Underlying H2 NPAT Financial profit of $4.1m* in line with guidan
Slide 4: Underlying full year financial performance
Underlying full year financial performance For personal use only Activity in first half slow due to delayed mobilisation to projects, lower than anticipated release of work in iron ore sector and NBN delays In second half strong turnaround with impact of acquisition of Heyday, expansion of Datatel i
Slide 5: Reconciliation of underlying to statutory FY17 results
Reconciliation of underlying to statutory FY17 results * For personal use only 1. Organisation restructuring represents the costs incurred, primarily redundancies, as management took actions to ensure an efficient operating structure in a strongly cost focused market 2. M&A costs represents external
Slide 6: Revenue - Diversification by sector
Revenue -Diversification by sector For personal use only Sector diversification has begun in FY17 as resources-derived revenues in WA and Queensland declined from FY16 to be replaced with commercial, telco and infrastructure work. Order book indicates those declining sectors will turn around in FY18
Slide 7: Revenue - Diversification by geography
Revenue -Diversification by geography For personal use only Geographic diversification also has begun in FY17 as revenues in WA and Queensland declined from FY16 to be replaced mainly with work in NSW and ACT. Order book indicates WA decline will halt in FY18 with strong growth elsewhere. Revenue: $
Slide 8: Balance sheet
Balance sheet For personal use only Strong balance sheet throughout the period Cash of $40.6m and negligible debt at 30 June Further $9.25m of cash due to Heyday vendors in September 2017 Available bank guarantee and surety bond facilities of $75.5m of which $42.9m used. 7
Slide 9: Cashflow
Cashflow For personal use only $5.9m cash expended on restructuring the business to drive future savings, investing in growth and expansion initiatives and on M&A activity Capex remained low at $2.0m and forecast to remain at these levels for time being Payment of final FY16 dividend made in H1 FY17
Slide 10: Health, safety and people
Health, safety and people For personal use only Workforce increased from 600 employees in June 2016 to currently over 1400 and recruitment is continuing Thirteen years LTI free in Australia Ongoing commitment to indigenous participation Restructuring of the organisation during the year to ensure eff
Slide 11: Leading national diversified electrical contractor
Leading national diversified electrical contractor For personal use only The combined Group will have a diversified portfolio of projects across Australia and over 1400 employees Commercial Public Infrastructure and defence Resources – mining, oil & gas Telecommunications and data centres Industrial
Slide 12: Strategy
Strategy For personal use only Recognising the cyclical nature of the resources construction market, and primarily seeing ourselves as an electrical contractor, from early 2016 we implemented a strategy to: • transition to a sustainable resources business through exposure to sustaining capital and m
Slide 13: Order book by sector
Order book by sector For personal use only Transformational growth in order book from $55m at end FY16 to over $480m end FY17. Grown in all sectors including resources. Organic diversification into infrastructure, defence, renewables and utilities. Acquisitive entry into commercial, telecommunicatio
Slide 14: Order book by geography
Order book by geography For personal use only Order book grown from $55m at end FY16 to over $480m end FY17. Held steady in WA and grown in Queensland. Organic entry into NT and acquisitive entry into NSW and ACT. Order book: $55m Order book: $480m 13
Slide 15: Projects - Resources: Amrun Bauxite Project
Projects –Resources For personal use only Amrun Bauxite Project – QLD SCEE has subcontracts with Civmec and Decmil to perform electrical and instrumentation works on the process facility and mine infrastructure area at Rio Tinto’s Amrun project near Weipa in North Queensland. 14
Slide 16: Projects - Resources: Wheatstone LNG Project
Projects –Resources For personal use only Wheatstone LNGProject –WA SCEE’s LNG focused joint venture KSJV has a subcontract from Bechtel to deliver electrical and instrumentation services on the Chevron operated Wheatstone Project near Onslow, Western Australia. 15
Slide 17: Sector outlook - Resources
Sector outlook -Resources For personal use only Record exports in many commodities driving sustaining capital and maintenance expenditure Whilst SCEE remains a major supplier, flow of work from iron ore clients remains subdued in the short term but now commenced early works on upcoming replacement t
Slide 18: Projects - Public infrastructure & defence: Westmead Hospital
Projects –Public infrastructure & defence For personal use only Westmead Hospital -NSW Early Contractor Involvement with Multiplex. Heyday’s scope expected to include the engineering design and installation of specialty electrical and communication services including patient information technology,
Slide 19: Projects - Public infrastructure & defence: RAAF Base Tindal
Projects –Public infrastructure & defence For personal use only RAAF Base Tindal -NT SCEE has a subcontract with Lendlease for the design, supply, installation, testing and commissioning of the electrical component of the upgrade of the existing facilities at Royal Australian Airforce Base Tindal. 1
Slide 20: Sector outlook - Public infrastructure & defence
Sector outlook – Public infrastructure & defence For personal use only Sector primarily driven by government expenditure Progressing $30m of work at RAAF Tindal base in Northern Territory Positioning for significant defence opportunities in WA, NT and VIC Infrastructure seeing strengthening growth d
Slide 21: Projects - Commercial: Tower Darling Park
Projects -Commercial For personal use only Tower 2 Darling Park – NSW Heyday are performing the Insurance Australia Group fitout including the design finalisation and construction of electrical and communication services across 33,000 square metres of commercial space. 20
Slide 22: Projects - Commercial: Duo Central Park
Projects -Commercial For personal use only Duo Central Park – NSW Heyday is installing the electrical and communication services under a design and construct contract with Multiplex for a two tower development comprising a hotel, apartments and commercial space. 21
Slide 23: Sector outlook - Commercial
Sector outlook – Commercial For personal use only Strong commercial sector growth forecast over the next five years particularly in NSW and ACT with construction activity at record levels Office developments and fit-outs and shopping centre refurbishments driven by population growth Potential to lev
Slide 24: Projects - Telecommunications & data centres: NBN Construction
Projects –Telecommunications & data centres For personal use only NBN Construction Datatel are performing NBN construction works across Australia under framework agreements for a variety of clients. 23
Slide 25: Projects - Telecommunications & data centres: Global Switch Data Centre
Projects –Telecommunications & data centres For personal use only Global Switch Data Centre – NSW Heyday has performed all major electrical installations to Global Switch’s Sydney campus. 24
Slide 26: Sector outlook - Telecommunications & data centres
Sector outlook – Telecommunications & data centres For personal use only Datatel has fifteen framework agreements with Telcos, OEMs and Tier 1 contractors across five states in the NBN, wireless and telco infrastructure segments Commenced program of construction of mobile network towers for OEM and
Slide 27: Projects - Industrials, energy & utilities: Solar Farm Projects
Projects –Industrials, energy & utilities For personal use only Solar Farm Projects -NSW The scope of SCEE’s work includes the design and construction of all photovoltaic (PV) electrical packages downstream of the delivery stations at four solar farms located at Parkes, Griffiths, Dubbo and Narromin
Slide 28: Projects - Industrials, energy & utilities: Ergon Energy Service Agreement
Projects –Industrials, energy & utilities For personal use only Ergon Energy Service Agreement - QLD SCEE has entered into a three year service agreement for the provision of asset inspection and maintenance services on the Ergon Energy electricity distribution network in the Northern Region of Quee
Slide 29: Sector outlook - Industrials, energy & utilities
Sector outlook – Industrials, energy & utilities For personal use only Industrials market in low growth phase but SCEE continues to win projects on ad hoc basis Entered utilities market with first award from Western Power in WA and now Ergon Energy in Queensland Commenced our first renewable energy
Slide 30: Business Development pipeline
Business Development pipeline For personal use only Tendering at high level with over $400m of submitted tenders with clients pending decision Business development pipeline strong with immediate prospects of further $900m currently being estimated in tendering departments Order book and pipeline ind
Slide 31: Immediate strategic actions
Immediate strategic actions For personal use only SCEE will build on the organic and acquisitive diversification achievements of the last year to create depth and capability for the next growth period: • the enhanced scale of the group unlocks the opportunity to pursue upcoming large scale infrastru
Slide 32: Conclusion and outlook
Conclusion and outlook For personal use only • Transformational year for SCEE • Activity in H1 impacted by slow award of work but strong H2 turnaround with result of Underlying H2 EBITDA of $8.2m and Underlying NPAT profit of $4.1m* in line with guidance • Incurred significant restructuring, M&A and
Slide 33: Appendices
For personal use only Appendices Appendix 1-Underlying to statutory results FY16 reconciliation Appendix 2-Underlying to statutory results H2 FY17 reconciliation Appendix 3-Heyday transaction terms 32
Slide 34: Appendix 1 - FY16 Underlying to statutory results reconciliation
Appendix 1–FY16 Underlyingto statutory results reconciliation 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
Slide 35: Appendix 2 - H2 FY17 Underlying to statutory results reconciliation
Appendix2–H2 FY17Underlying to statutory resultsreconciliation * For personal use only 1. Organisation restructuring represents the costs incurred, primarily redundancies, as management took actions to ensure an efficient operating structure in a strongly cost focused market 2. M&A costs represents
Slide 36: Appendix 3 - Heyday transaction terms
Appendix 3– Heyday transaction terms For personal use only Acquisition of 100% of Heyday5 Pty Ltd Acquisition Completed on 9 March 2017 Up to a total of $54.1m payable as follows: 1. Initial Cash Consideration: $18m in cash paid at completion on 9 March 2017 2. Further Consideration: $2.25m in cash
Slide 37: 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
Southern Cross Electrical Engineering — Shareholder Meeting (October 2017) on 6ix