Southern Cross Electrical Engineering Limited · ASX:SXE
Southern Cross Electrical Engineering — Investor Presentation (November 2017)
42 slides from Southern Cross Electrical Engineering's investor presentation, Nov 16, 2017
Slide 1: Equity Raising Presentation
For personal use only Equity Raising Presentation 14 November 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: Corporate snapshot
Corporate snapshot For personal use only Capital Structure1 Share Price History ASX Code SXE $0.90 Share Price $0.825 $0.80 Share Price (A$) Market Capitalisation (pre-issue) $154.4m $0.70 No of ordinary shares (pre-issue) 187.1m $0.60 No of ordinary shares (post-issue) 231.4m Number of performance
Slide 4: Equity raising
Equity raising For personal use only Placement of approximately 44.25 million new fully paid ordinary shares to institutional and sophisticated investors to raise approximately $33.2m (before costs) under SCEE’s Offer available 25% placement capacity pursuant to ASX Listing Rules 7.1 and 7.1A Shareh
Slide 5: Highlights
Highlights For personal use only In FY17 achieved transformational milestones in SCEE’s strategy to diversify and grow into adjacent and complementary sectors and geographies: • Organically diversified original SCEE business into defence, transport, renewables and utilities sectors Strategic • Expan
Slide 6: Underlying FY17 full year financial performance
Underlying FY17 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 Data
Slide 7: FY17 Revenue - Diversification by sector
FY17 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 i
Slide 8: FY17 Revenue - Diversification by geography
FY17 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. Reve
Slide 9: Balance sheet – June 2017
Balance sheet – 30 June 2017 For personal use only Strong balance sheet throughout the year Cash of $40.6m and negligible debt at 30 June Further $9.25m of cash has now been paid to Heyday vendors in September 2017 Available bank guarantee and surety bond facilities of $75.5m of which $42.9m used. 8
Slide 10: FY17 Cashflow
FY17 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 * * Results presented on an underlying tr
Slide 11: 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 12: 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 13: 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 14: Order book by sector – June 2017
Order book by sector – 30 June 2017 Transformational growth in order book from $55m at end FY16 to over $480m end FY17. Grown For personal use only in all sectors including resources. Organic diversification into infrastructure, defence, renewables and utilities. Acquisitive entry into commercial, t
Slide 15: Order book by geography – June 2017
Order book by geography – 30 June 2017 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 14
Slide 16: 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. 15
Slide 17: Projects – Resources: Wheatstone LNG Project
Projects – Resources For personal use only Wheatstone LNG Project – 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. 16
Slide 18: Sector outlook - Resources
Sector outlook - Resources For personal use only Record exports in many commodities driving sustaining capital and maintenance expenditure SCEE remains a major supplier to the iron ore sector and is positioning for the upcoming large scale replacement tonnage projects at Rio Tinto Koodaideri, FMG Fi
Slide 19: 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 20: 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.
Slide 21: 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 22: 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. 21
Slide 23: 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. 22
Slide 24: 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 25: 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. 24
Slide 26: Projects – Telecommunications & data centres: Global Switch
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. 25
Slide 27: 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 28: 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 Narrom
Slide 29: Projects – Industrials, energy & utilities: Ergon Energy
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 Que
Slide 30: 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 31: Business Development pipeline
Business Development pipeline For personal use only Pipeline outlook positive: • four out of five of SCEE’s market sectors in or entering growth phase • NSW and ACT buoyant with WA and QLD returning to growth Tendering at high level with over $500m of submitted tenders with clients pending decision
Slide 32: Immediate strategic actions
Immediate strategic actions For personal use only Growth strategy has been reaffirmed to achieve further sector and geographic diversity through organic activity and acquisitions. SCEE will build on the organic and acquisitive diversification achievements of the last year: • the enhanced scale of th
Slide 33: Conclusion and outlook
Conclusion and outlook • For personal use only FY17 transformational year for SCEE - achieved key milestones in diversification and growth strategy including acquisition of Heyday with a strong presence in the East Coast commercial and infrastructure markets, geographic and sector expansion in telec
Slide 34: Appendices
For personal use only Appendices Appendix 1 - Underlying to statutory results FY17 reconciliation Appendix 2 - Underlying to statutory results FY16 reconciliation Appendix 3 – ASIC Letter Appendix 4 – Key risks Appendix 5 – Foreign selling restrictions Appendix 6 - Disclaimer 33
Slide 35: Appendix – FY17 Underlying to statutory results reconciliation
Appendix 1 – FY17 Underlying to statutory results reconciliation 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 – FY16 Underlying to statutory results reconciliation
Appendix 2 – FY16 Underlying to 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
Slide 37: Appendix – ASIC Letter
Appendix 3 – ASIC Letter For personal use only As part of its regular financial reporting surveillance program, ASIC has reviewed the financial report of SCEE for the year ended 30 June 2017. SCEE has received a letter from ASIC’s Financial Reporting and Audit department dated 8 November 2017 reques
Slide 38: Appendix – Key risks
Appendix 4 – Key risks For personal use only Risks associated with SCEE’s business • Contract termination: If SCEE does not perform its obligations under a contract in accordance with the terms and conditions of the contract, SCEE is at risk that the contract will be terminated. Any such performance
Slide 39: Appendix – Key risks contd.
Appendix 4 – Key risks contd. For personal use only Risks associated with SCEE’s business • Industrial accidents: The services provided by SCEE involve risk both to property and persons. A serious accident may occur, causing damage, injury or death which may have operational and financial implicatio
Slide 40: Appendix – Foreign selling restrictions
Appendix 5 – Foreign selling restrictions For personal use only International Offer Restrictions This document does not constitute an offer of new shares of SCEE in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares m
Slide 41: Appendix – Foreign selling restrictions
Appendix 5 – Foreign selling restrictions For personal use only Singapore This document and any other materials relating to the New Shares have not been, and will not be, or registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this document and any other document or mate
Slide 42: Appendix - Disclaimer
Appendix 6 - Disclaimer Forward Looking Statements 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, pla
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