RCR Tomlinson Ltd A lg ti g 2011 Annual Generall M Meeting 3 November 2011 Integrated Engineering Solutions Sol tions For further information please visit our website: www.rcrtom.com.au 1
Chairman s Address Roderick Brown RCR Tomlinson Limited 2011 Annual General Meeting 3 November 2011 2
FY2011: Chairman s Report Year in Review FY 11 was one of considerable achievement for RCR Generated record revenue and earnings Successfully acquired AE&E Australia a leading Energy Solutions provider Significantly strengthened Senior Management at all levels throughout the company Safety Keeping our people safe remains one of our top priorities Strengthened our commitment to safety and ongoing development of safety systems Strategy Growing our order book with larger contracts that will ultimately result in improved security of earnings Pursuing both organic and acquisitive growth by sector and geographically to increase our capabilities in key areas We have emerged as a more clearly-focussed and optimistic company 3
Managing Director s Address Dr Paul Dalgleish RCR Tomlinson Limited 2011 Annual General Meeting 3 November 2011 4
Agenda FY11 Highlights RCR Businesses Financial Performance Review of Operations Acquisition of AE&E business Sustainability Major Projects Strategy and Outlook Replacement of boiler furnace and primary and secondary air and heater system. 5
FY11 Highlights Record net profit after tax of $19.5 million - increased by 12% Earnings before interest and tax improved 80% to $26.1 million Net debt reduced from $23.1 million to $6.5 million Record revenue increased 11% to $607 million Order book healthy at $300 million Dividend increased by 25% to 3.75cents per share Underlying operating margins improved from 3.2% to 4.6% Positioned as Tier 1 in Energy through the acquisition of AE&E Signed our largest ever single contract of $57 million Total Shareholder Return (TSR) for FY11 102% Revenue Increased 11% NPAT Increased 12% Net Debt Reduced 72% 6
RCR Businesses Mining Mining Power Energy Resources Power Leaders in mining equipment design and manufacture. Technology leader in power generation and energy plants Engineering and construction for SMP in Resource projects. Engineering and construction for EI&C projects Key Activities: Materials handling equipment Apron feeders, Belt feeders Radial Stackers Belt Reelers, Dozer Traps Scrubbers, Screening Mobile mining equipment Off-site repair Specialist manufacturing and machining Key Activities: Power and energy plants Combined Cycle Power Plants Biomass and Cogeneration Plants Key Activities: Turnkey Plant Construction SMP construction Underground d Construction ti Key Activities: Electrical Construction EI&C for Mining Process HV Infrastructure t Projects Steam Boilers, Package Boilers HSRGs Conventional and renewable fuels Burners, heaters and combustion systems Servicing and maintenance Laser cutting Mechanical installation Shutdowns Dragline Maintenance Mining Process Maintenance Oil & Gas Maintenance Heat treatment Electrical maintenance, E&I control systems HV specialist Manufactured electrical product Substations and switchboards Underground installations 7
Financial Performance Summary FY11 FY10 % Change Revenue - $M 607.2 545.6 11.3% EBIT - $M 26.1 14.5 80% RCR delivered record revenue and profit while reducing net debt by 72% NPAT - $M 19.5 17.5 12% Net Debt - $M (6.5) (23.1) 72% Order Book - $M 300.1 300.0 0% Dividend cents per share 3.75 3.0 25% Earnings Per Share - cents 14.8 13.3 11.3% Net Tangible Assets Per Share - cents 93.7 88.3 5.8% 140% 120% 100% RCR Total Shareholder Return compared to S&P/ASX 300 Industrials RCR TSR S&P/ASX 300 Industrials Index RCR TSR S&P/ASX 300 Industrials Index 80% 60% 40% 20% 0% 20% 9
Revenue and Order Book Revenue for FY11 up 11% from FY10 Recurring revenues maintained at approximately 50% total revenues Order Book consistent with FY 10 Revenue Revenue - $M- $M Operations Revenue Contribution Revenue by Contribution Business Unit 545.6 607.2 Order Book - $M 300.0 300.1 300.0 32% 8% 28% RCR Mining RCR Energy RCR Resources 32% RCR Power FY10 FY11 FY10 FY11 (Order Book as at 30 June) 10
Cash and Net Debt $M Net Debt reduction well Highlightahead of plan Long-term debt facility extended to March 2014 Capacity for growth with available contract guarantee facility of $80m 11
Dividend and Earnings Earnings per share up 11.3% to 14.8 cents Fully franked dividend increased to 3.75 cents per share - Meets medium term payout ratio (25% to 35% of net earnings) 2.50 Dividend Cents Per Share 3.00 3.75 Earnings Cents per Share 11.1 13.33 14.8 09 10 11 09 10 11 12
Total Shareholder Return (TSR) RCR TSR vs Peer Group TSR (01 July 2009 27 October 2011) 13
Review of Operations 14 EPC Steam Boiler RCR Energy provided the design and supply of a biomass-fired steam boiler plant including backup boiler (LNG-fired) and all ancillary plant for Nestle s operation in Orsorno, Chile.
RCR Mining Radial Stackers and Transfer Conveyors Design, manufacture, supply, electrical and mechanical installation of eleven radial stackers and transfer conveyors. Large Apron Feeder Design, manufacture, supply of 30 metre / 220 tonne apron feeder. Belt Feeders Design and supply of 15 belt feeders. Heavy Machining Dedicated machining and fabrication workshop for off-site repairs. 15
RCR Mining 2011 Performance Activity focused on core business of materials handling equipment, primarily for iron ore industry Supplied 11 radial stackers for POAGS at Utah Point in Port Hedland Continued servicing of Resources sector for materials handling equipment Second consecutive win at WA Engineers Australia Excellence Awards for second generation mobile mining equipment Prospects and Outlook Strong forward order book for FY12 Service offerings to be focused on the expanding capital works programs in iron ore industry Opportunities developing to supply In Pit Crushing & Conveying (IP2C) equipment to iron ore, coal and mineral sands industries both domestically and off-shore Well positioned to further leverage Intellectual Property, engineering expertise and IP2C opportunities Mobile mining equipment Revenue $M EBIT $M 166.5 180.9 181.0 10.4 8.0 7.2 5.7% FY10 FY11 FY10 FY11 Revenue Contribution 28% 16
RCR Energy Steam Boiler Plant Engineer, procure and construct of biomass-fired steam boiler plant and all ancillary plant. Boiler Furnace Replacement Boiler replacement construction works. Babcock & Wilcox Package Boiler Engineer, procure, construct and commissioning gpackage for two 90T/Hr (steam) natural gas fired package boilers and supporting plant. Cogeneration Plant Co-generation plant including a bottom supported 102 tonne boiler with Bubbling Fluid Bed (BFB) technology. 17
RCR Energy 2011 Performance Acquisition of AE&E positions RCR Energy as a tier-one Energy solutions provider Completed commissioning of a state-of-the-art biomass fired steam boiler plant in Chile Delivered a co-generation plant in Victoria Prospect and Outlook Uniquely placed in Australia, New Zealand and Asia as a leading provider of engineering services for power generation projects Acquisition of AE&E has significantly broadened the range of energy technologies RCR can offer to resources, industrial and utility sectors Business is targeting embedded power projects for the resource industry, and biomass energy projects in Australia and SE Asia Revenue $M EBIT $M 204.9 204.8 159.0 159.3 5.3 5.5 2.7% FY10 FY11 FY10 FY11 Revenue Contribution 32% 18
RCR Energy AE&E Acquisition 140MWe CCPP Plant AE&E carried out design, supply, erection and commissioning of a 140MWe Combined Cycle Power Plant in Southern Queensland consisting of 2x Gas Turbine Generators, 2xHRSGs, 1x Steam Turbine Generator and all associated mechanical and electrical BOP, earthworks, civils and buildings. 19
RCR Energy AE&E Capability RCR completed the acquisition of the business and nominated assets of AE&E Australia Pty Ltd on 30 June 2011 (as announced on 24 May 2011). The acquisition includes the technology, know how, Intellectual Property, systems and processes that were developed and owned by AE&E Australia or under license. RCR now holds all major industrial sized boiler technologies and steam cycle plant IP, know how and licenses to design and supply steam and power generation projects in Australia, New Zealand and Asia Pacific. RCR now has a technology base suitable for coal, biomass, oil and gaseous fuels Integration into RCR progressing 140MWe CCPP Plant About AE&E AE&E Australia s business included design, supply, installation, commissioning, servicing and upgrading systems for thermal power generation, including combined cycle power plants, steam and power generation plants, heat recovery steam generators and industrial boilers in Australia, a, New Zealand a and South East Asia. Its technology base is suitable for coal, biomass, liquid and gaseous fuels. 20
Sino Iron Project Project: Client: Location: Combined Cycle Power Plant Sino Iron Western Australia As an example of AE&E s capability: Prior to RCR s acquisition of the business of AE&E Australia (AE&E), AE&E designed, supplied, and built a turnkey 450MWe Combined Cycle Power Plant comprising: 7 Gas Turbine Generators 6 Dual Pressure HRSGs 3 Steam Turbine Generators All associated mechanical and electrical Balance of Plant, earthworks, civils and buildings AE&E Capability Example p Projects 21 Note: Refer Slide 39 Disclaimer
Condamine Power Station Project: Client: Location: Combined Cycle Power Plant BG Energy Holdings Ltd Southern Queensland As an example of AE&E s capability: Prior to RCR s acquisition of the business of AE&E Australia (AE&E), AE&E designed, supplied, built & commissioned a turnkey 140MWe Combined Cycle Power Plant comprising: 2 Gas Turbine Generators 2 HRSGs 1 Steam Turbine Generator (SST-400 57MW STG) All associated mechanical and electrical Balance of Plant, earthworks, civils and buildings AE&E Capability Example p Projects 22 Note: Refer Slide 39 Disclaimer
RCR Resources Underground structural, mechanical and piping installation Fabrication and construction services for materials handling system and mine infrastructure. Rotary Kiln Port Shutdown RCR Crew Shutdown services for the Bunbury Port Upgrade. RCR s involvement at the Port spans 30 years. Dragline Outages 23
RCR Resources 2011 Performance Awarded SMP contract for Newcrest at Cadia East which now has increased to around $80m Continued successful delivery of tie-in and SMP work at Worsley Efficiency & Growth site, with additional work scopes awarded Successful year for Heat Treatment division with steady growth in services to the drilling & exploration industry Conducted site services to numerous oil & gas projects and power industry shutdowns Prospect and Outlook Recurring work from existing contracts provide a good foundation for future growth Strategic placement of operations in Western Australia (Pilbara region) & Queensland (Bowen Basin) positions the business to capitalise on increasing workload across resources industries Business will focus on servicing iron ore, coal, mineral processing, LNG and oil & gas industries Revenue $M EBIT $M 208.2 188.1 10.9 10.9 62 6.2 5.2% FY10 FY11 FY10 FY11 Revenue Contribution 32% 24
RCR Power Power Station Maintenance, Wallerawang, NSW. RCR has over 9 years service at Wallerawang with Zero Lost Time Injuries. Electrical Equipment and Component Manufacture RCR s dedicated manufacturing facility provides MCC's, switchboards, high voltage substations and transformers. 25 Port Shutdown Electrical installation of power and communications cabling between RCR s equipment, trucks unloaders and MCCs. Electrical Construction Construction, testing and commissioning of four gas turbines.
RCR Power 2011 Performance Business impacted by competitive market, resulting in revenue of $52 million Focus on cost base and management changes saw earnings increase to $1.9 million Continued focus on provision of electrical services as part of RCR s integrated equipment, mechanical and electrical packages Successful provision of services during businesses ninth year of service at Wallerawang Power Station in NSW Switchboard manufacture Revenue $M EBIT $M 1.9 Prospects and Outlook Continued focus on internal development of vertically integrated 0.4 0.1 3.6% work packages Increased opportunity for projects in Pilbara, New South Wales FY10 FY11 FY10 FY11 and Queensland in LNG, coal and power generation industries Positive outlook for growth in recurring and new work in Revenue Contribution 8% 74.7 52.5 52.4 26
Safety and Our People Performance Major emphasis on safety improvements Appointed full-time auditor for systems improvement initiatives LTIFR decreased 30% Our People 2,254 employees 5% increase in Apprentices to a total of 141 Focus on training and development Maintained stable industrial relations environment and continued renewal of industrial agreements Commitment to Indigenous participation on major projects Increased the number of women in the workforce by 5% as part of RCR s equal employment opportunity strategy 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 RCR Lost Time Injury Frequency Rate - 2006-2011 Jul-06 Jun-06 Jun-07 Jul-07 Jul-08 Jun-08 Jul-09 Jun-09 Jun-10 Jul-10 Jun-11 Achievements Safety milestones achieved with over 80% of RCR s reporting sites recording zero LTIs for FY11. 2000 LTI free tie-ins at the Worsley Alumina Refinery in 2011 Significant milestones included 5,000 days LTI free at Resources heat treatment facility in Perth. 28
29 Major Projects
Belt Feeders & Apron Feeders Client: Location: BHP Billiton Pilbara, Western Australia RCR Mining supplied 15 Belt Feeders and 4 Apron Feeders under a strategic supply agreement. 30 RCR Mining
Boiler Upgrade Client: Bluescope Steel (AISO) Pty Ltd Location: Port Kembla, NSW Duration: 2010-2011 RCR received an EPC and commissioning package for two 90 Tonne/Hour (Steam) natural gas fired boilers built under licence from Babcock & Wilcox, and the supporting plant. Our in-house engineering team in Australia and New Zealand eaa completed petedthe work within strict design requirements. The project team provided the support necessary to manufacture and deliver the complete plant for testing in Q3 2011. RCR Energy 31
Cadia Project SMP Works Financials Project: Location: Duration: Underground Structural, Mechanical and Piping installation Cadia Valley, New South Wales Oct 2010 - Ongoing RCR Resources is the primary construction contractor for the underground scope of Newcrest Mining s Cadia East Project. The scope of works comprises the materials handling system and mine infrastructure. Additional works awarded include the installation of the tailings thickener tank, pipe and mechanical equipment. The work is ongoing. g The contract t is currently valued at $80M and involves 170 people. Safety is our highest priority, and underpins all activities with the pleasing result of zero lost time injuries on the project to date. RCR Resources 32
Pluto LNG Project Financials Project: SMP/EI Location: Western Australia Duration: 2008 March 2012 RCR continues involvement at Woodside s Pluto LNG Project, in joint venture (JV) with Freo Machinery. On completion of the contract the JV will have completed over $100 million in works. RCR Power provided electrical and instrumentation works associated ated with the main storage and condensate tanks and underground cable installation in the off-plots and utilities areas. RCR Resources 33
Worsley SMP Works Project: Structural, Mechanical and Piping Works Location: Collie, Western Australia Duration: 2008 March 2012 RCR provided structural, mechanical and piping works for an alumina refinery in Western Australia. On completion of the contract RCR will have completed over $70 million in works. The scope has been primarily piping and structural works including the manufacture, fabrication and installation of tie-ins with electrical and civil activities. The contract t was extended d to include pre-commissioning activities and works associated with an upgrade of the client s Bunbury Port operations. The works are supported by RCR s Bunbury facility and feature 90 per cent local employment. In 2011, RCR achieved 2000 tie-ins on the expansion project without a Lost Time Injury (LTI). RCR Resources 34
Strategy and Outlook 36 Radial Stackers & Conveyors RCR Completed the design, manufacture, fabrication and installation of eleven 60 metre/52 tonne radial stackers and eleven transfer conveyors. Photograph courtesy of POAGS.
Strategy and Outlook Achievement of Strategic Goals Organic growth through larger project opportunities Delivering three projects in excess of $70 million Tendering larger Energy projects by leveraging AE&E IP Significant increase in average project size in Power business Geographical and Sector expansion Belt feeder supply to Africa and Middle East Delivering two Energy projects in South America Completed first Renewable Energy project in Malaysia Leveraging our IP-Rich businesses Delivery of turnkey solutions Development of In-Pit Crushing & Conveying (IP2C) equipment for iron ore and coal Growth through Mergers & Acquisitions Strategically and financially successful acquisition of AE&E Outlook Strong capital expenditure from blue chip companies Significant opportunities for companies with skilled trades and labour Future growth in energy predominately from high efficiency gas plants Second phase of commodities projects following on from current plans * Port shutdown services 37
A Milestone in RCR s Growth Major Contract Awarded Awarded from Fortescue Metals Group our largest single contract, valued at approx $600 million (as announced 2 Nov 2011) Encompasses Engineering, Procurement, Construction and precommissioning of Kings Ore Processing Facility and Firetail Ore Processing Facility at Fortescue s Solomon Ore Project Scope of work includes Structural, Mechanical, Piping and Electrical (SMPE) works Fortescue, like RCR, has a history of innovation and a record of delivering on promises Building on success Contract award follows Fortescue equipment orders for apron and belt feeders awarded to RCR s Mining business totalling $30 million Reflects RCR s focus on building on strategic relationships Demonstrates ability to secure larger projects Provides greater security around RCR Order book for FY12 and FY13 38
Disclaimer This presentation and any oral presentation accompanying it has been prepared by RCR Tomlinson Ltd ( RCR or the Company ). It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation. This presentation contains forecasts and forward looking information, including estimations of contract t values. Such forecasts, projections and information are not a guarantee of future performance, involve unknown risks and uncertainties. Actual results and developments will almost certainly differ materially from those expressed or implied. RCR has not audited or investigated the accuracy or completeness of the information, statements and opinions contained in this presentation. Accordingly, to the maximum extent permitted by applicable laws, RCR makes no representation and can give no assurance, guarantee or warranty, express or implied, as to, and take no responsibility and assume no liability for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information, statement or opinion contained in this presentation. You should not act or refrain from acting in reliance on this presentation material. This overview of RCR 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 the Company s prospects. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation before making any investment decision. Slide 21 Project: Sino Iron Ore, Combined Cycle Power Plant Note: The final stages of construction and commissioning were completed by a third party. The project was not acquired by RCR as part of its acquisition of the business of AE&E Australia Pty Ltd. Slide 22 Project: Condamine Power Station, Combined Cycle Power Plant Note: The projectwasnotacquiredbyrcraspartof its acquisition of the business of AE&E Australia Pty Ltd. 39