Slide 1: Orbital
7] ORBITAL Peter Cook Chief Executive Officer April 2005
Slide 2: Contents
8 ORBITAL Contents * Orbital’s Vision & Principles * Orbital’s Business Sectors * Strategy » Understanding our Markets = Powertrain Engineering Services = Synerject’s Markets =» Licences & Royalties from OCP
Slide 3: Contents
8 ORBITAL Contents « Financial Summaries « Technology Update * Base Technology * Alternate Fuels * Mechanical Solutions * Combustion Solutions « Outlook by Business Sector » Summary
Slide 4: Orbital's Vision
8 ORBITAL Orbital’s Vision A global force in innovative powertrain solutions = Providing customer focussed services « Supplying and developing systems and components = Creating and applying intellectual property to enhance customers products
Slide 5: Powertrain
8 ORBITAL Powertrain ¢ The powertrain is the locomotion portion of a vehicle as distinct from , steering, suspension, chassis including crash/safety, interiors and instrumentation. ¢ Orbital’s focus within powertrain is combustion control
Slide 6: Orbital's Principles
8 ORBITAL Orbital’s Principles > Integrity in dealing with all stakeholders > Profitable and cash generating business > Acreative and motivated workforce > Creating value for our customers > Valuing the individual through their team contribution
Slide 7: Business Sectors: Powertrain Engineering Services
8 ORBITAL Business Sectors 1. Powertrain Engineering Services * Providing services to OEMs, suppliers and regulators, globally. Typical clients: GM, Ford, Mercedes, Renault-Nissan, Environment Australia, Yamaha, Honda, etc. = This is a fee for service business that operates much like an accounting,
Slide 8: Business Sectors: Licence and Royalties from OCP
8 ORBITAL Business Sectors 2. Licence and Royalties from Orbital’s unique combustion technology (OCP). * Licences are usually upfront, lump sum payments, for access to the technology: Royalties are payments made, usually quarterly in arrears, on units actually built or sold, typically horse power ba
Slide 9: Business Sectors: Licensees
8 ORBITAL Business Sectors 2. Licence and Royalties from OCP. Licensees: GM, Ford, BRP, Mercury Marine, Tohatsu, Piaggio (inci. Aprilia), Peugeot Moiorcycles, Bajaj, Hirth, Kymco Manufacturing Licensees: Synerject, UCAL
Slide 10: Business Sectors: 50% JV Owner of Synerject
8 ORBITAL Business Sectors 3. 50% JV Owner of Synerject with Siemens-VDO. Synerject manufacture and supply fuel components and fuel systems to the non-automotive markets. They have: * Exclusivity to SV’s automotive components and know how for non automotive applications « Exclusive manufacturing rig
Slide 11: Strategy
8 ORBITAL Strategy " Achieve sustainable profit and positive cash flows by: e Growth of Powertrain Engineering Services e Extend OCP applications into niche growth markets eg. most recently Bajaj, Hirth e Growth of Synerject e Suitable acquisition
Slide 12: Understanding Our Markets
8 ORBITAL Understanding Our Markets
Slide 13: Powertrain Engineering Services
8 ORBITAL Powertrain Engineering Services Are outsourced services, required by OEMs, who need > Skill they don’t have > Immediate resources not available in house > Sources of advanced technologies Orbital provides such services on a fee per hour basis (people and facilities) on a project by project
Slide 14: Powertrain Engineering Services
8 ORBITAL Powertrain Engineering Services * Not all OEMs need these services all the time, so balancing demand against supply, is a key aspect of achieving profit from this business. For example, the US auto indusiry is currently struggling, more recently, so is Europe and Australia. China and India
Slide 15: Market Drivers of Powertrain Engineering Services
8 ORBITAL Market Drivers of Powertrain Engineering Services The outsourcing market volume increases by 5,6% p.a. to 4,2 bn Euro’s in 2008 12.4 bn € ES Vier 7 lariat votume (ber €) CEM 2003 2008 Source: Interviews, Werer Analysis CcaGce Os-08 @ 4,3%e Save B 6,8% 5.7% 3.7%
Slide 16: Market Drivers of Powertrain Engineering Services
8 ORBITAL Market Drivers of Powertrain Engineering Services Strongest growth in simulation followed by Integration, Application and New Component . Integration : Engine Engineering Service Market (on €, ESC, Tier 1) CAGR 04-08 & & E,E% Market volume Concept 35% {lore €) Development New Component 6.2
Slide 17: Synerject's markets
8 ORBITAL Synerject’s markets Activity: Location: Competes for non-automotive electronic fuel systems and related fuel parts globally. Manufactures in US, to support its principal customer Mercury Marine. European customers include Rotax, Piaggio and Peugeot. Outsource many of the components it uses
Slide 18: Licences and Royalties from OCP
8 ORBITAL icences and Royalties from OCP Technology adoption is driven almost exclusively by legislative change on emissions or fuel economy standards Early adoption occurred with ‘niche’ markets, eg. outboards, PWCs, 50 cc scooters, where OEMs were unprepared to mount any legislative challenge Auto
Slide 19: Licences and Royalties from OCP
8 ORBITAL Licences and Royalties from OCP Actual fleet fuel economy has deteriorated over the last 10 years, principally through the consumer support of SUVs, 4WDs and use of ‘light trucks’ for sedan use Social change (driven by radically high fuel prices) or legislative change, similar to events in
Slide 20: Key Features - Profit & Loss Account
8 ORBITAL Key Features — Profit & Loss Account * Loss after taxation of $1.5 million for the half year ¢ $1.5 million of extraordinary / non-recurring income in comparative period * Operating revenue down 43% to $4.6 million, principally PES * Expense down 11% to $7.8 million * Continued improvement
Slide 21: Financial Summary - Profit & Loss
8 ORBITAL Financial Summary - Profit & Loss Full Year - Ended
Slide 22: Notes
8 ORBITAL Notes No LP. carried on Balance Sheet $19.0 non-interest loan. Repayable 2014
Slide 23: Half Year - Ended Full Year - Ended
8 ORBITAL Half Year - Ended Full Year - Ended Dec-04 Dec-03
Slide 24: Technology Update
8 ORBITAL Technology Update Orbital’s basic OCP * Low pressure, air assisted direct injection with stratified charge capability = Offers: Fuel economy and improved emissions * Current Market Application: niche two stroke engines, e.g. outboards, PWCs and motor scooters
Slide 25: Intake port: Carburettor, PFI or EFI, Direct Injection
8 ORBITAL intake port Carburettor PFI or EFI Direct Injection (DI)
Slide 26: Wall Guided / Air Guided / Jet Guided
Wall Guided Charge Motion/Air Guided Spray/Jet Guided
Slide 27: Technology Update
8 ORBITAL Technology Update To date, commercial applications of OCP have been restricted to 2 stroke engines Competitive technology HPDI, also delivers improved emissions, but not fuel economy Vehicles with HPDI systems are available, limited success Increased interest in OCP DI4S because of the att
Slide 28: Technology update: Alternative Fuels - Diesel
8 ORBITAL Technology update Alternative Fuels * Diesel — Powertrains using diesel heavily developed over past decade — Diesel is attractive only because of preferential tariff treatment, particularly in Europe. Taxed on calorific value diesel is not more efficient than petrol — although engines usin
Slide 29: Technology update: CNG
8 ORBITAL Technology update * CNG Large surplus globally including as semi-solid hydrate in the ocean, much wasted at source Few engines have been designed to utilise the fuel, most are back yard conversions of diesel engines Fuel present durability problems to mechanical parts Distribution difficul
Slide 30: Technology update: Hydrogen
8 ORBITAL Technology update * Hydrogen — Much vaunted solution, but a long way off — Key difficulties . . Availability. Most cost effective source is petroleum Other sources, eg electrolysis of water, consume electricity also in scarce supply Transport. The lightest element difficult to store and tr
Slide 31: Technology update: Mechanical solutions
8 ORBITAL Technology update * Mechanical solutions to improve fuel economy / emissions — Improve vehicle weight and drag. Smaller and lighter is better — Down size engine — Supercharge the engine — Full VVT / Cylinder out strategies — Hybrids (IC plus electric)
Slide 32: Technology update: Combustion Solutions
8 ORBITAL Technology update * Combustion Solutions to improve fuel economy & emissions DI stoichiometric Limited applications today Di Stratified (or lean) Second Generation DI DI Stratified with High EGR - See Susuki, Honawa & Susuki | (Honda), SAE April 2005 Controlled Auto Ignition (CAI) < Third
Slide 33: Technology update: 3C integration
8 ORBITAL Technology update * Acombination of mechanical features (VVT, downsizing and turbo charging) plus advanced combustion control (using DI to supply fuel) will lead to significant benefits on fuel and emissions without high investment in infrastructure + Orbital call this integration of cycle
Slide 34: Outlook by Business Sector: Powertrain Engineering Services
8 ORBITAL Outlook by Business Sector Powertrain Engineering Services Automotive = Some OEMs under pressure eg. GM, including Holden, Mitsubishi, Mercedes *Our focus has been on Asia Pacific — including Ford in the region, China and India *China market is strong and needs external services while its
Slide 35: Outlook for Business Sector: Non Automotive
8 ORBITAL Outlook for Business Sector Non Automotive * Mercury active with 3 star upgrades * Hirth will add base load * India active with in adoption of electronic controls
Slide 36: Outlook by Business Sector: Licences and Royalties
8 ORBITAL Outlook by Business Sector Licences and Royalties * 50cc European scooter market stabilising after acquisition of Aprilia by Piaggio. Peugot Motor Cycies continues to be unprofitable. New models are being launched including Kymco. New lower cost OCP systems being developed to meet future n
Slide 37: Outlook by Business Sector
8 ORBITAL Outlook by Business Sector * Mercury Marine anticipate greater focus on Optimax over future years, to maintain margin contribution. 3 star upgrades planned * Heavy Fuel alternatives both on Tohatsu and Mercury engines developed. Expected to contribute to royalties * New licensee in Bajaj t
Slide 38: Outlook by Business Sector: Synerject
8 ORBITAL Outlook by Business Sector Synerject * Two major customers, Rotax and Mercury both showing growth * Conversion of carburettored engines to EMS is creating a number of opportunities — particularly in Asia = New CEO in place, briefed to focus on quality and service * Financial targets includ
Slide 39: Summary
8 ORBITAL Summary = Prospects generally improving in F2006 = Growth in royalties likely from Mercury and Bajaj * Growth in PES from China and India — although a risk that automotive malaise at GM becomes more widespread = Synerject on plan and two lead customers identifying growth
Slide 40: Thank You
Thank You 4 ORBITAL