For personal use only - ASX · 2015-11-16 · Corporate Snapshot Share Price Performance ......
Transcript of For personal use only - ASX · 2015-11-16 · Corporate Snapshot Share Price Performance ......
2015 Annual General Meeting
Simon ThomasChief Executive Officer
17 November 2015For
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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 tosubscribe 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 itsrecipients may require in order to make an informed assessment of OTOC and its prospects. Any forecasts and forward lookinginformation 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 informationpresented herein. Information contained in this Document may be changed, amended or modified at any time by OTOC. OTOC isunder no obligation to update any information or correct any error or omission which may become apparent after this Documenthas been issued.
To the extent permitted by law, OTOC and its officers, employees, related bodies corporate and agents (‘Associates’) disclaim allliability, direct, indirect or consequential (and whether or not arising out of the negligence, default or lack of care of OTOC and/orits Associates) for any loss or damage suffered by recipients of this Document or other persons arising out of, or in connectionwith, any use of or reliance on this Document or information contained herein. By accepting this Document, the recipient agreesthat it shall not hold OTOC or its Associates liable in any such respect for the provision of this Document or any other informationprovided in relation to this Document.
Recipients of this Document must make their own independent investigations, consideration and evaluation of the informationcontained herein. Any recipient that proceeds further with its investigations, consideration or evaluation of the informationdescribed herein shall make and rely solely upon its own investigations and inquiries and will not in any way rely upon thisDocument. 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.
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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
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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%
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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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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
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CF from Operations (LHS)
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Improved Conversion to Cash and LiquidityTargeting 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 operations
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 multiplesFor
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Simon Thomas Chief Executive Officer
Brian ManganoChief Financial Officer
Tel (08) 9317 0628
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