Financial Year 2013 Results Presentation August 2013 1 Disclaimer - - PowerPoint PPT Presentation

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Financial Year 2013

Results Presentation August 2013

Disclaimer

Summary information This presentation contains summary information of TOX Solutions Limited (“TOX”) and is dated August 2013. The information is this presentation does not purport to be complete or comprehensive, and does not purport to summarise all information that an investor should consider when making an investment decision. It should be read in conjunction with TOX’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (“ASX”), which are available at www.asx.com.au Not investment advice This presentation is not a prospectus or a product disclosure statement under the Corporations Act 2001 (Cth) and has not been lodged with the Australian Securities and Investment Commission (“ASIC). The information provided in this presentation is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking into account the recipient’s investment objectives, financial circumstances or particular needs. Those individual objectives, circumstances and needs should be considered, with professional advice, when deciding if an investment is appropriate. Financial data All dollar values are in Australian dollars (A$) and financial data is presented within the financial year end of 30 June unless otherwise stated. Risks of investment An investment in TOX shares is subject to investment and other known and unknown risks, some of which are beyond the control of TOX. Tox does not guarantee any particular rate of return or the performance of TOX nor does it guarantee the repayment of capital from TOX or any particular tax treatment. You should have regard to (among other things) the risks outlined in this presentation. Forward looking statements This presentation contains certain forward – looking statements. The words ‘anticipate’, ‘believe’, ‘expect’, ‘project’, ‘forecast,’ ‘estimate’, ‘likely’,’ intend’, ‘should’, ‘could’, ‘may’, ‘target’, ‘plan’, and other similar expressions are intended to identify forward-looking statements. Indication of, and guidance on, future earnings and financial position and performance are also forward – looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of TOX, that may cause actual results to differ materially from those expressed

• r implied in such statement. There can be no assurance that actual outcomes will both differ materially from these statements. You should not place undue reliance on

forward-looking statements and neither TOX nor any of its directors, employees, servants, advisers or amend assume any obligation to update such information. Not for distribution or release in the United States This presentation has been prepared for publication in Australian and may not be distributed or released on United States. This presentation does not constitute an offer or shares for sale in the United States or in any other jurisdiction in which such an offer would be illegal.

Agenda

Contents 1 Capital Structure 2 Company Profile 3 FY13 Key Highlights 4 FY13 Results Summary 5 FY13 Operational Review 6 Outlook

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Capital Structure

ASX CODE – TOX Shares on issue 132,529,859 Unlisted options 2,307,500

• No. of shareholders

3,500 (approx) Market Capitalisation $450 m (approx) Substantial shareholders JP Morgan Nominees Australia Limited 14.48% National Nominees Limited 13.23% HSBC Custody Nominees (Australia) Limited 10.56% Australian Foundation Investment Company Limited 8.04% Australian Executor Trustees SA Ltd > TEA Custodians Limited 5.72%

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Company Profile

• One of the largest industrial service and waste

management businesses in Australia

• Strategically located operations throughout Australia
• Unique licenses and specialist technologies
• Provide diverse range of industrial and waste services

to all market sectors

• Regional resource sector and hazardous waste focus
• Competitive advantage through safety, service

delivery, sustainable waste management practices, treatment licenses and total waste management service offering

• Growth through a combination of acquisition, green

field and organic

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Rockhampton Gladstone Coopers Plains SA NT QLD NSW WA VIC Mackay Yatala Industrial Services Hazardous Waste Waste Services Wanless

TAS

Cairns Townsville Northgate Toowoomba Hobart Launceston Ulverstone Oxley

Toxfree locations – creating Australia’s leading Waste Management and Industrial Services Company

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Darwin Broome Port Hedland Karratha Tom Price Kalgoorlie Henderson Kwinana Adelaide Sunshine Mulgrave St Marys Beresfield Laverton Derby Kununurra

A diversified business – revenue by market sector

Industry Segmentation (FY2012)

Oil and Gas 28% Mining 18% Manufacturing 9% Government 20% Infrastructure 13% Commercial 12%

Pro-Forma Industry Segmentation post Wanless (FY2012)

• Post Wanless Toxfree’s earnings were further diversified across a broader range of industry

sectors

Note

• 1. Includes retail, agriculture, hospitality & leisure, hospitals, education, and other waste

companies

Commercial 25% Government 18% Infrastructure 10% Oil and Gas 22% Mining 14% Manufacturing 12%

(1) (1)

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Corporate Strategy

• Best Technologies
• Best Licences
• Best People
• High barriers to entry
• Servicing all industry sectors
• 2. Leader in Hazardous

Waste Management Nationally

• Mining
• Oil and Gas
• Infrastructure
• Heavy manufacturing
• Government
• 3. Provide a broad range of

Industrial Services to Blue Chip clients under long term contract

• Regional focus - WA, QLD and NT
• Total waste management services
• Municipal
• Commercial
• Industrial / Construction
• 1. Provide all waste

services in all regional resource hubs of Australia

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FY13 Financial Highlights

• Revenue up 37% to $284.7M (FY12 = $207.9M)
• Underlying EBITDA up 29% to $58.0M* (FY12 = $45.0M)
• Underlying EBIT up 24% to $35.7M* (FY12 = $28.9M)
• Underlying NPAT up 26% to $21.7M* (FY12 = $17.2M)
• Statutory NPAT of $13.6 (FY12 = 15.7M)
• Underlying EPS up 13% to 18.41* cents (FY12 = 16.3cents)
• Dividend increased by 25% to 5 cents per share

*Non-IFRS Financial Information (refer to slide 10 for detailed information)

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FY13 Financial Highlights

• Solid cash flow from operations = $47.8M, 98% of EBITDA
• Net debt to equity = 41%
• FY2013 Non-recurring adjustments to reflect the underlying

performance of the business were as follows:

– Acquisition costs including advisor, consultant, legal and rebranding costs of $3.696M – Stamp duty associated with the Wanless acquisition in Queensland of $4.1M. – SSAA impairment of patent and assets and royalty write back $2.231M. – Milperra branch closure costs $0.502M – Reduction in the contingent consideration for the acquisition of MMS $(1.267)M.

• These adjustments resulted in an increase in underlying NPAT after

tax purposes of $8.099M (before tax of $9.262M).

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FY13 Strategic Highlights

Waste Services

• Significant expansion of services within Queensland and Western Australia
• Acquisition of Wanless Enviro Services, Smart Skip and Racelog in Queensland -

complementing Toxfree’s Total Waste Management Strategy

• Expansion of services in Tasmania through the acquisition of Jones Enviro Services

Industrial Services

• Significant expansion of Industrial Services in the Surat Basin and Gladstone, Qld
• Acquisition of Absolute Liquid Waste in Toowoomba – servicing Coal Seam Gas (CSG)
• Award of an industrial services contract with Queensland Alumina - revenue of $30

million over three years

• Expansion of services in Western Australia to the oil and gas, mining and commercial

sector Technical and Environmental Services

• Integration of DMX assets - Developing Toxfree “Centres of Excellence”
• Award of household hazardous waste contracts with Sustainability Victoria and

NSW Department of Environment and Conservation.

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FY13 Operational Highlights

• Reduction in All Injury Frequency Rate of 35%
• Winner in the prestigious Environmental Sustainability category of “The

Australian Business Awards 2013”

• Finalists in the 2013 APPEA Health & Safety Awards for safety innovation for

the development of Confined Space i-Watch-Surveillance

• Extension of both Rio Tinto Iron Ore and Toll Energy contracts
• Major contracts and operations linked to the resource sector were the best

performing areas within the period

• Waste and Industrial Services in Western Australia and Central Queensland

were best performing areas

• Technical and Environmental Services in Queensland performed well
• All major contracts meeting customer and company expectations

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FY13 Results

Group Results FY13($’000) FY12 ($’000) % Change Revenue 284,723 207,963 37% Underlying EBITDA * 58,037 45,003 29% Depreciation and Amortisation (22,262) (16,121) 38% Underlying EBIT * 35,775 28,882 24% Finance expenses (5,454) (4,171) 31% Profit before tax * 30,321 24,711 23% Income tax expense * (8,618) (7,503) 15% Underlying NPAT * 21,703 17,208 26% Statutory NPAT 13,604 15,726 (13%) EPS * 18.41 16.30 13%

Number of shares on issue

132,530 115,321 15%

* Non-IFRS financial information

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Cash Flow

Group Cash Flow 30 June 2013 ($’000) 30 June 2012 ($’000) % Change

Cash generated from operations 47,870 38,531 24% Net interest paid (4,886) (3,517) 39% Income taxes paid (13,045) (6,010) 117% Net operating cash flows 29,939 29,004 3% Net purchases of PP&E (24,754) (21,682) 14% Net payments for businesses and intangibles acquired (94,988) (73,053) 30% Net investing cash flows (119,742) (94,735) 26% Net proceeds from borrowings/(repayment of borrowings) 46,729 36,632 28% Proceeds from the issue of share capital (net of capital raising costs) 51,499 36,405 41% Dividends paid (4,613) (2,895) 59% Net financing cash flows 93,615 70,142 33% Net increase/(decrease) in cash 3,812 4,411 (13)% Cash at the beginning of the half year 18,924 14,513 30% Cash at the end of the half year 22,736 18,924 20% 14

Statement of Financial Position

Balance Sheet 30 June 2013 ($’000) 30 June 2012 ($’000) % Change

Cash 22,736 18,924 20% Trade and other receivables 85,468 54,996 55% Inventories 204 314 (35)% Tax assets 11,414 8,076 41% Property, plant and equipment 129,904 96,673 34% Intangibles 151,495 93,826 61% Total assets 401,221 272,809 47% Trade and other payables 43,854 28,714 52% Loans and borrowings 113,169 66,605 70% Employee benefits 6,842 4,158 65% Tax liabilities 4,054 7,447 (46)% Provisions 9,820 5,221 88% Total liabilities 178,557 112,145 60% Total equity 222,664 160,664 39% NET DEBT 90,433 47,681 90% NET DEBT TO EQUITY 41% 30% 15

FY13 Segment Result

Revenue FY2013 $’000 Revenue FY2012 $’000 Variance % EBIT FY2013 $’000 EBIT FY2012 $’000 Variance %

Industrial Services 76,894 70,812 9% 9,702 9,986 (3)% Waste Services 147,055 94,051 56% 32,366 21,994 47% Tech and Env Services 60,774 43,100 41% 16,401 12,951 27% Corporate

• (22,694)

(16,049) 41% Total Group 284,723 207,963 37% 35,775 28,882 24% Comments Waste Services – strong organic growth from Pilbara , Kimberley regions and total waste management contracts Industrial Services performed well in Roma, Gladstone, West Coast, Gold Coast, Pilbara and Victoria Business has grown by over 30% in revenue - Corporate expense include additional regional overheads. 8% of total revenue Wanless trading to date has met expectations 16

FY13 Segment EBIT Margin Analysis

Comments Waste Services margins reduced slightly reflecting initial integration costs with Wanless Industrial Services impacted by one off costs of QAL mobilisation and poor performance within Sydney and Brisbane infrastructure markets Higher hazardous waste processing costs in Port Hedland associated with incinerator mechanical failure

H1 2013 % H2 2013 % Full year 2013 % H1 2012 % H2 2012 % Full year 2012 % Industrial Services 14% 12% 13% 17% 12% 14% Waste Services 23% 22% 22% 24% 23% 23% Tech & Env Services 28% 26% 27% 33% 28% 30% Consolidated Group 14% 12% 13% 14% 14% 14%

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Acquisition of Wanless - Key Highlights

• Acquisition of Wanless, a leading Queensland and Tasmanian waste services

business for $85 M

• Specialist provider of waste services to customers within the commercial and

industrial sector

• Pro forma revenue for FY13 of $62 M and EBITDA of $14.6M**
• Strong market share in South East Queensland industrial growth corridor and

key regional hubs

• Platform to enable Toxfree to expand its total waste services offering
• Highly complementary to Toxfree's strategy and existing Queensland
• perations and its regional growth strategy
• Diversification of Toxfree earnings and significant increase in addressable

market opportunity

• Highly experienced management team and an excellent cultural fit

**Adjusted for non recurring and private group items. Excludes rebranding costs

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Operations – Waste Services

• Revenue up 56% to $147.1M
• EBIT up 47% to $32.4M
• Major contracts performing well
• Central Queensland, Kimberley and Pilbara regions performed solidly
• Wanless trading in line with expectations
• Toll Energy contract extended
• APLNG waste volumes increasing

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Operations – Industrial Services

• Revenue up 9% to $76.9M
• EBIT down 3% to $9.7M*
• Industrial Services in Western Australia, Roma and Gladstone were highlights
• Major contracts performing well
• Sydney and Brisbane services to infrastructure sector performed poorly – margins

impacted as a result. Sydney closed and Brisbane downsized with assets relocated to regional growth areas

• Awarded contract with QAL in Gladstone - $30M in revenue over three years
• Expect margins to return to historical levels in FY14

* Non-IFRS financial information

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Operations – Technical and Environmental Services

• Hazardous waste revenue up 41% to $60.8M
• EBIT up 27% to $16.4M*
• Full year of DMX earnings – integration going well
• Performed well considering the challenging economic climate particularly in the

manufacturing sector

• Creation of Toxfree ‘Centre's of Excellence’ for various waste streams to improve

treatment efficiencies

• Hazardous waste margins reduced due to higher processing costs at Port Hedland

* Non-IFRS financial information

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Outlook

• Organic growth and revenue synergies being developed as Wanless and Toxfree services

align in Queensland and Tasmania – full year addition of earnings in FY14

• Queensland - Surat basin expected to continue to perform strongly
• Gladstone – commenced services at QAL. $30 M revenue over 3 years, outlook very

positive

• North West – focus on efficiencies as some capital contraction from mining sector is

evident

• Hazardous waste volumes from manufacturing have stabilised
• WA Industrial Services performing well
• Available waste market is large and Toxfree is confident on continuing to build its market

share through organic growth, contract award and strategic acquisition

• Contracted Waste Services to the mining sector is expected to be approximately 8-10% of

group revenue in FY14, all from Tier 1 producing assets.

• A number of contracts pending award / renewal

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Questions

Steve Gostlow Managing Director Email: s.gostlow@toxfree.com.au Tel: +61 8 6216 7000 Mob: +61 (0) 419 197 155 Jason Dixon Executive General Manager – Corporate and Risk Email: j.dixon@toxfree.com.au Tel: +61 3 9541 4700 Mob: + 61 (0) 419 310 792 Michael Constable Chief Financial Officer Email: m.constable@toxfree.com.au Tel: +61 3 9541 4700 Mob: + 61 (0) 419 504 003

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