For personal use only 1H 2012: Earnings and Operations Review - - PowerPoint PPT Presentation

OTOC Limited

1H 2012: Earnings and Operations Review

For personal use only

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

Disclaimer

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

• ther 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.

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HY 2012 HIGHLIGHTS

• Reverse takeover of Emerson Stewart Group Limited completed
• Group rebranded OTOC Limited (ASX: OTC)
• Strengthened Board and Management following the appointment of

new Chairman Derek La Ferla and Adam Lamond as Group CEO

• Strong progress made on the sale of Emerson Stewart Consulting

Corporate

• Continued OTOC’s stellar reputation for delivery in iron ore sector
• First oil & gas contract for OTOC (BHP – Macedon)
• Record order book of $87 million

Operational

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• Record order book of $87 million
• Introduced business improvement initiatives
• Outstanding safety performance

Operational

• Group operating revenue of $70.5 million
• EBIT from continuing operations of $1.8 million1
• NPAT from continuing operations $2.1 million2
• Group restructure to deliver improved margins
• Refinancing of facilities positions OTOC for solid growth in 2H FY2012

Financial

Note 1: Before allocation of corporate overhead Note 2: Includes a non-cash gain of $2.0 million

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OTOC Transaction Completed

• Acquisition of OTOC Group Pty Ltd (OTOC) completed on 13 October 2011
• Established in 2003, OTOC is a direct construction lead (not a sub-contractor) specialising in the installation
• f mine site accommodation and non-process infrastructure (‘NPI’) in north west Western Australia
• OTOC acquired for total consideration of $28 million;
• $20 million in cash and scrip
• $8 million of performance shares subject to FY2012 EBIT of between $5.5 million and $6.5 million
• OTOC is the dominant operating business of the Group along with Whelans, a leading consultancy in the

provision of surveying, mapping and town planning services

• Strengthened Board and Management following the appointment of Derek La Ferla as Chairman and

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• Strengthened Board and Management following the appointment of Derek La Ferla as Chairman and

Adam Lamond (founder of OTOC) as CEO

OTOC Limited (ASX: OTC) 100% 100% 100% 250 staff 140 staff 40 staff Capital Structure

Last close (13-Mar-12) 13c Ordinary shares on issue 153.1m Performance shares 20.0m Market cap (undiluted) $19.9m Net cash/(debt) (31 Dec) $11.8m Enterprise value $29.4m

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1H 2012 Financial Results

$000's Consolidated Group 2011 2010 Revenue 70,492 18,679 EBIT 820 1,856 Net financial income/(costs) 1,4112

• 375

Profit before income tax 2,231 1,481 Income tax (expense)/benefit

• 83
• 490

NPAT from continuing operations 2,148 991 Loss from discontinued operations3

• 402
• Statutory Accounts

Loss from discontinued operations3

• 402
• NPAT for the Period

1,746 991 $000's OTOC Whelans Revenue 64,785 12,435 EBIT before corporate costs 782 1,039 EBIT margin 1.2% 8.4%

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Note 1: Due to the reverse acquisition accounting required for the OTOC transaction, 2010 reflects only OTOC pre acquisition and the statutory accounts of the Company only reflect the performance of Whelans for the period 1 October 2011 to 31 December 2011 Note 2: Includes a non-cash gain of $2.0 million on the revaluation of contingent consideration relating to Performance Shares on the OTOC acquisition Note 3: Emerson Stewart Consulting business is classified as held for sale as at 31 December 2011 Note 1: Note that due to the reverse acquisition accounting required for the OTOC transaction, the statutory accounts of the Company only reflect the performance of Whelans for the period 1 October 2011 to 31 December 2011

Segment Report

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OTOC – 1H Highlights

• Revenue $64.8m; EBIT $0.8m
• Record revenue reflects the strong demand for

non-process infrastructure and accommodation services

• Continued strong exposure to the iron ore sector with

work carried out for BHP, Rio Tinto, FMG and Hancock Prospecting

• First contract in the oil & gas sector: $22m contract for

BHP’s Macedon project

Major Clients 1H Highlights

6 BHP’s Macedon project

• EBIT margin significantly below forecast and historic

performance due to cost overruns at two projects

• Significant business improvement initiatives

undertaken to deliver improved margins:

• Group wide implementation of Jobpac system
• Introduction of further experienced contract

administrators

• Full review of contracts and identification of

likely cost recoveries

• Integration of OTOC and Whelans

Outlook

• Record order book of $77 million
• Estimated $66 million to be delivered in

H2 FY2012 with capacity to exceed this

• Significant pipeline of iron ore opportunities
• Oil & gas market a strategic priority
• Improved management controls and margins
• Expand maintenance capability to capture

greater share of recurring work

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OTOC Projects

Macedon (Complete)

Client: BHP Petroleum/Technip Job/camp size: 330 man camp - including EPCM Office and infrastructure 1st oil & gas project Contract value (approx): $22 million

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Contract value (approx): $22 million

Extension Hill (Complete)

Client: Asia Iron Job/camp size: 160 man camp - including utility infrastructure Contract value (approx): $10 million

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OTOC Projects

Client – Rio Tinto, Calibre Rail Location – Weelumurra, Pilbara region Job/Camp Size – 140 buildings complete turnkey package Contract Value – $6.5 million

Christmas Creek, Pilbara (Complete)

Client: Fortescue Metals Group Job/camp size: 900 man camp - including infrastructure upgrades and new kitchen diner Contract value: $20 million

Weelumurra, Pilbara (Complete)

Client: Rio Tinto / Calibre Rail Job/Camp Size: 140 man camp - complete turnkey package Contract Value: $6.5 million

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Whelans – 1H Highlights

• Revenue $12.4m; EBIT $1.04m
• EBIT margin below forecast due to margin

pressure both external and internal

• Restructuring of Karratha office to be better

placed to take advantage of the increasing pipeline of work in both oil & gas and mining

• Expanded presence includes 110 professional

staff and offices in Perth, Karratha, Broome, Whelans Surveying

• Land development
• Engineering

surveys

• Cadastral surveys
• Exploration and

mining surveys

Whelans Mapping

• Operations

1H Highlights

9 staff and offices in Perth, Karratha, Broome, Kununurra and Kalgoorlie

• Aerial mapping
• Ortho processing
• Mine mapping

Town Planning

• Land use planning
• Strategic and

community

• Statutory planning
• Development

management

Outlook

• Robust order book with $10m of work in hand to

be completed in 2H 2012

• Historically a further $2-$3m revenue is

generated each half from recurring work streams

• Well positioned to capitalise on the record

investment in oil & gas

• Significant cross selling opportunities between

Whelans and OTOC following integration

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Safety Performance

Outstanding Growth and HSE Performance

• Substantial increase of personnel hours over

the past two years

• Zero Lost Time Injuries recorded
• TRIFR is below industry standards

SAI Global Certification

• AS/NZS 4801:2001
• ISO 14001:2004

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Continuous Improvement Initiatives

• Supervisor HSE Enabling Program
• Site HSE Systems Alignment
• Injury Management Process defined

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Restructure of Emerson Stewart Consulting

• As previously announced, OTOC has embarked on a review of the Emerson Stewart Consulting business
• Following this review, the Company commenced a sales process for Emerson Stewart Consulting
• Book value of the business is $1.4 million
• The Company is currently negotiating with a party interested in acquiring Emerson Stewart Consulting
• Given the level of interest being expressed and commitment being shown by parties interested in

acquiring the business, the Company is confident that a transaction will be completed in a relatively short time frame 11 short time frame

• The Company expects to realise significant corporate overhead savings following the sale:
• Overheads of Emerson Stewart Consulting c. $1m, including rent of $390k
• Corporate costs relating to the OTOC acquisition were c. $900k
• Strategic direction of OTOC reaffirmed: to be a leading provider of resources and infrastructure services

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New Finance Facilities

• Improved balance sheet flexibility and liquidity
• Refinanced banking and finance facilities now include:
• $5.00m Debtor Finance Facility over the Whelans business
• $0.71m Bank Guarantee Facility
• $0.65m Loan Facility
• $3.50m Asset Finance Facilities
• $13.00m Surety Bonding Facility

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• $4.5 million becoming available as of end of May 2012
• Strength and quality of the Whelans order book used to fund growth of the business
• Financial platform for solid growth in 2H FY2012

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1H Achievements

The half was a period of transition for OTOC. The Company is now setup to realise its ambition to be a leading ASX listed provider of resources and infrastructure services

Completed OTOC acquisition Experienced Board and Management installed Record revenue and order book

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

13 First contract completed by OTOC in oil & gas sector Improved contract controls and management systems Restructuring to reduce corporate overheads Strong progress made on sale of Emerson Stewart Consulting Balance sheet positioned for growth

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

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