2015 Annual General Meeting Simon Thomas Chief Executive Officer - - PowerPoint PPT Presentation

2015 annual general meeting
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2015 Annual General Meeting Simon Thomas Chief Executive Officer - - PowerPoint PPT Presentation

2015 Annual General Meeting Simon Thomas Chief Executive Officer 17 November 2015 Disclaimer This Document should not be considered as an offer or invitation to subscribe for or purchase any securities in OTOC Limited (OTOC or The


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2015 Annual General Meeting

Simon Thomas Chief Executive Officer 17 November 2015

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This Document should not be considered as an offer or invitation to subscribe for or purchase any securities in OTOC Limited (“OTOC” or “The Company”) or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in OTOC should be entered into on the basis of this Document. This Document contains high level information only and does not purport to be all inclusive or to contain all information which its recipients may require in order to make an informed assessment of OTOC and its prospects. Any forecasts and forward looking information contained in this Document are subject to risks and uncertainties and are not a guarantee of future performance. Actual performance will almost certainly differ from those expressed or implied. OTOC makes no representation or warranty, express or implied, as to the accuracy, currency or completeness of the information presented herein. Information contained in this Document may be changed, amended or modified at any time by OTOC. OTOC is under no obligation to update any information or correct any error or omission which may become apparent after this Document has been issued. To the extent permitted by law, OTOC and its officers, employees, related bodies corporate and agents (‘Associates’) disclaim all liability, direct, indirect or consequential (and whether or not arising out of the negligence, default or lack of care of OTOC and/or its Associates) for any loss or damage suffered by recipients of this Document or other persons arising out of, or in connection with, any use of or reliance on this Document or information contained herein. By accepting this Document, the recipient agrees that it shall not hold OTOC or its Associates liable in any such respect for the provision of this Document or any other information provided in relation to this Document. Recipients of this Document must make their own independent investigations, consideration and evaluation of the information contained herein. Any recipient that proceeds further with its investigations, consideration or evaluation of the information described herein shall make and rely solely upon its own investigations and inquiries and will not in any way rely upon this

  • Document. Recipients of this Document should not act or refrain from acting in reliance on material in this Document.

Disclaimer

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1. Introduction 2. Business Lines 3. Securing the Future 4. Summary and Outlook

Agenda

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Company Overview

Corporate Snapshot Share Price Performance – from 1 July 2014 Board & Management Share Price (ASX: OTC) $0.175 Ordinary Shares 264m Market Capitalisation $46m Enterprise Value $51m Derek La Ferla Non-Executive Chairman Adam Lamond Executive Director Tom Lawrence Non-Executive Director Karl Paganin Non-Executive Director Simon Thomas Chief Executive Officer Brian Mangano Chief Financial Officer Lisa Wynne Company Secretary Substantial Shareholders Directors 23.4% Acorn Capital 9.2% Paradice Investment 7.1% Reindeer Investments 5.2%

OTOC provides surveying, town planning and infrastructure services throughout Australasia. OTOC delivers quality service to clients across a range of industries and is an emerging leader in the provision of professional consulting and innovative spatial solutions.

$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 OTC All Ordinaries Index +90%

  • 3%
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2015 – Highlights

FINANCIAL OPERATIONAL STRATEGIC

  • FY2015 Underlying EBITDA of $4.3m
  • FY2015 Pro-Forma Survey EBITDA of ~$10m
  • Strong balance sheet with cash of $10.2m at 30 June 2015
  • New commercial bill facility established with Commonwealth Bank of Australia
  • 100% LTI free
  • Creation of a national Surveying, Town Planning & Design Division
  • Restructured WA businesses and reduced overhead costs
  • Infrastructure division awarded new projects at Nauru and DeGrussa Mine
  • Created sustainable operating and financial platform
  • Implemented first stage of national surveying strategy
  • Completed acquisitions of Bosco Jonson, Geo-Metric and THG
  • Evaluating future surveying acquisitions and growth pathways
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2015 – Creating a Sustainable Platform for Growth

Underlying Objectives – Setting a Base for Sustainability

  • Transition from declining WA resources sector
  • Leverage our strengths and experience in surveying, town planning and infrastructure services
  • Develop a national business with exposure to multiple industries
  • Structure our earnings to be recurring, predictable and sustainable
  • Build a corporate profile with investors and clients – simple strategy, well executed
  • Ensure a strong balance sheet to underpin growth and shareholder returns

Surveying Infrastructure Corporate

 National surveying strategy  Platform for growth  Value-accretive acquisitions  Diverse client portfolio  Service offerings to key markets nationally – property, commercial, infrastructure, resources  Government and civil infrastructure success  FY16 order book secured  Restructured WA business  Reduced overhead costs  Focus towards sustaining capital programs  Board aligned with growth strategy  Strong leadership team aligned to deliver performance targets  Capacity to manage growth  Strong balance sheet – $10m equity raising completed, CBA facility in place  Increased institutional ownership

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Business Lines

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VIC Land and Urban September 2014 NSW, QLD, VIC & WA Infrastructure, Resources December 2014 QLD Land and Urban, Infrastructure, Resources May 2015 WA Land and Urban, Resources 2010

Professional Services – Surveying, Town Planning and Design

Location: Industry Focus: Acquired:

 Professional services business model: recurring revenue, solid earnings margins, low capital expenditure  Diversified end-user exposure: property, land and urban development, civil infrastructure, government, resources  National roll-up strategy underway: fragmented marketed – acquisition targets identified, revenue & cost synergies  Strong and consistent earnings: Q1 FY2016 EBITDA $3.1m

OTOC is Creating a National Surveying, Town Planning & Design Business

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 Advance National Surveying Strategy

  • Targeting acquisitions that enhance geographic market

presence and service capability

  • Sydney land and urban development markets are a priority
  • Strategic geographic bolt-on opportunities

 Realise Synergies

  • Significant progress with revenue and cost synergies
  • Revenue: national service offering for property developers,

“cross-state tenders”, specialist laser scanning equipment

  • Cost: developing centralised Finance, IT and HR, realised

insurance and procurement savings  Grow Earnings

  • First full year ownership of acquired businesses,

performing in-line with budget

  • Q1 FY2016 EBITDA $3.1m

5.1x 5.3x 6.8x 7.9x 9.4x 0.0 2.0 4.0 6.0 8.0 10.0 IMF SGH SHJ CDD GXL

EV : EBITDA (FY16)

Sydney Light Rail 7,500 Lot Development Continued upward dwelling approval rates Ellenbrook Services Extension Tanami Road upgrade 64 Square Kilometre Array

Professional Services – Surveying, Town Planning and Design

FY2016 Actions Professional Services Valuation Multiples Project Association

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Infrastructure Division – Construction

 Excellent Project Execution

  • On-time and budget delivery for key clients Canstruct, BMA,

Rio Tinto and Air Services Australia

  • Lost Time Injury (LTI) free

 Implemented Strategic Review Outcomes

  • Re-based business plan focussed on civil and government

infrastructure provides a lower risk profile

  • Reduced overhead and fixed cost base
  • New General Manager – Simon Lukan (formerly with

Monadelphous)

  • Positive FY2015 EBITDA $0.8m

 Secured FY2016 Order Book

  • Canstruct: installation of permanent settlement village,

hospital and school at Nauru Island

  • Juwi: installation of 10.6MW solar power system at Degrussa
  • Air Services Australia: procurement, installation &

commissioning of fibre optic ring at Perth Airport  Deliver Order Book

  • FY2016 work in hand circa ~$43m
  • Equates to 100% of FY2016 budgeted revenue
  • EBITDA expected to cover OTOC Limited corporate costs

and group overhead  Targeting Projects with Strategic Clients

  • Government infrastructure
  • Civil infrastructure
  • Renewable energy
  • Resources Sustaining Capital
  • Infrastructure projects that meet strict criteria

 Grow Earnings

  • Q1 FY2016 EBITDA $1.4m

FY2015 Achievements FY2016 Actions

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Securing the Future

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Earnings Update

EBITDA for Quarter Ended 30 September 2015

Q1 2016 ($m) Q1 2016 (%) Professional Services – Surveying, Town Planning and Design $3.1m 70% Infrastructure Services $1.4m 30% Operations $4.5m 100% Corporate costs ($0.8m) Total $3.7m

OTOC Market Valuation - November 2015

Share Price (ASX: OTC) $0.175 Ordinary shares on issue 264m Market capitalisation $46.2m Cash (30-Sep) $10.0m Debt (30-Sep)1 $15.3m Enterprise Value $51.5m

Source: unaudited management accounts Note 1: CBA Debt ($6.75m) and Hire Purchase ($8.5m)

 Strong start to FY2016

  • Q1 FY16 EBITDA $3.7m vs FY15 $4.3m (full-year)
  • EBITDA margin ~14%
  • First period ownership of acquired Survey businesses

and strong performance from Infrastructure Division  Attractive Valuation Metrics

  • Annualised FY16 EBITDA multiple ~3.5-3.7x
  • ASX-listed professional services multiples +6x EBITDA
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Diversified Revenue Base

50% 15% 2% 4% 28% 39% 17% 4% 12% 28%

Revenue by location - Q1 FY2016

OTOC has developed a national customer base, providing diversification against any geographic or industry specific macro weakness

Revenue by location - FY2015

VIC WA NSW QLD International VIC WA NSW QLD International

 Diversification across geographic markets

  • Rebalanced revenue away from historic concentration in WA
  • East Coast Australia ~33% revenue in Q1 FY2016, expected to increase in future periods

 Diversification across national industry sectors

  • Property
  • Infrastructure – commercial and government
  • Town Planning
  • Resources
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Page | 14 Revenue

Transitioning to a Professional Services Business Model

OTOC has developed a sustainable financial model Diversified markets, consistent revenue, higher margins, strong free cash flow

$0 $5 $10 $15 $20 $25 $30 $35 $40 $0 $5 $10 $15 $20 $25 $30 $35 $40 FY11 FY12 FY13 FY14 FY15 Q1 16 Net Assets (LHS) Market Cap (RHS)

Market Capitalisation & Net Assets

$0 $2 $4 $6 $8 $10 $12 $14 $16 $0 $20 $40 $60 $80 $100 $120 $140 $160 FY11 FY12 FY13 FY14 FY15 Q1 16 Revenue (LHS) EBITDA (RHS) $0 $2 $4 $6 $8 $10 $12 $14 $16 $0 $2 $4 $6 $8 $10 $12 $14 $16 FY11 FY12 FY13 FY14 FY15 CF from Operations (LHS) Cash (RHS)

Improved Conversion to Cash and Liquidity Targeting Recurring Revenue, Higher Earnings Margins  Improved quality of earnings

  • Moved from contracting (high revenue, low margins) to

professional services revenue model

  • Consistent fee revenue
  • Higher earnings margins, without execution risk
  • Low capex, strong free cash flow

 Grown market cap and net assets through bottom of resource cycle; strong platform for growth through a national professional services business

EBITDA Net Assets Market Cap CF from

  • perations

Cash

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Summary and Outlook

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Summary and Outlook

FY2016 Outlook  Surveying, Town Planning & Design

  • Continue to implement national strategy - Growth
  • Integration and synergies
  • Value-accretive acquisitions

 Infrastructure Services

  • FY16 infrastructure order book $43m
  • Earnings underpin growth strategy
  • Focus towards sustaining capital and infrastructure

works programs

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Summary and Outlook

Investment Highlights  Fast-growing professional services company  Growth platform - National surveying strategy  Diversified revenue base – national clients and industry exposure  Targeting recurring, predictable and sustainable earnings  Robust balance sheet to underpin growth  Strong earnings growth anticipated in FY2016  Attractive valuation multiples

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Simon Thomas Chief Executive Officer Brian Mangano Chief Financial Officer Tel (08) 9317 0628