Spotless Group Holdings Limited

Transcription

1 Spotless Group Holdings Limited FY16 Results Presentation Presenters: Martin Sheppard Chief Executive Officer and Managing Director Nigel Chadwick Chief Financial Officer 24 August 2016

2 IMPORTANT NOTICES Important notice and disclaimer This document is a presentation of general background information about the activities of Spotless Group Holdings Limited (Spotless) current at the date of the presentation, (24 August 2016). The information contained in this presentation is of general background and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate. Spotless is not licensed to provide financial product advice in relation to Spotless securities or any other financial products. Accordingly, Spotless, its related bodies corporate and any of their respective officers, directors and employees (Spotless Parties), do not warrant the accuracy or reliability of this information, and disclaim any responsibility and liability flowing from the use of this information by any party. To the maximum extent permitted by law, the Spotless Parties do not accept any liability to any person, organisation or entity for any loss or damage suffered as a result of reliance on this document. Forward looking statements This document contains certain forward looking statements and comments about future events, including Spotless expectations about the performance of its businesses. Forward looking statements can generally be identified by the use of forward looking words such as, expect, anticipate, likely, intend, should, could, may, predict, plan, propose, will, believe, forecast, estimate, target and other similar expressions within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings or financial position or performance are also forward looking statements. Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward looking statements will not be achieved. Forward looking statements are provided as a general guide only, and should not be relied on as an indication or guarantee of future performance. Forward looking statements involve known and unknown risks, uncertainty and other factors which can cause Spotless actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements and many of these factors are outside the control of Spotless. As such, undue reliance should not be placed on any forward looking statement. Past performance is not necessarily a guide to future performance and no representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward looking statements, forecast financial information or other forecast. Nothing contained in this presentation nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of Spotless. Pro forma financial information Spotless uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are referred to as non-ifrs financial information. Spotless considers that this non-ifrs financial information is important to assist in evaluating Spotless performance. The information is presented to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. Non-IFRS information has not been subject to audit or review in accordance with Australian Auditing Standards. All dollar values are in Australian dollars (A$) unless otherwise stated. 2

3 HIGHLIGHTS Result Highlights Results in line with guidance Significant growth in underlying revenue and EBITDA of 17% and 6% respectively Reported revenue growth of 10.6% with EBITDA down 1.5% on last year Reported result includes items communicated to the market in December 2015 the business has absorbed integration and one-off costs during FY16 Operating cash flow used to fund acquisitions and working capital requirements of acquired businesses Facility Services business (92% of revenue) maintained underlying EBITDA margin of 10.2% Final dividend of 5.0 cents partly franked (1.5 cents) representing a payout ratio of 71% Short term issues outlined in the December trading update and reflected in this result have been resolved Strategy Reset Strategy reset is complete. Strategy focused on extending the breadth of Spotless offer, unlocking value and repositioning our brand and employee value proposition to enable and facilitate our growth agenda After careful consideration of the potential growth in the Laundries business, and resolution of the acquisition integration issues that impacted performance in FY16, Spotless has determined that the best value for Spotless shareholders will be achieved by retaining this business Outlook We are confident in the strength of the underlying business and the pipeline of opportunities will drive organic growth The pace of the growth will however depend on the success and pace of delivery of the initiatives arising from our strategy reset, in particular our recent investment in business development resources Renewals strong and win rates improving Management capability building Contestable market growing 3

4 CONTENTS 1 PERFORMANCE UPDATE - FY16 RESULTS 2 STRATEGY RESET 3 DETAILED FINANCIALS 4 OUTLOOK 5 APPENDICES 4

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6 1.1 BUSINESS ACHIEVEMENTS Delivery of FY16 result in line with guidance reflects the strong operational and financial focus from the new team Management team capabilities expanded with new appointments. Investment in business development resources important in leveraging the strength of our core Strategy reset provides a clear vision, purpose and strategy with benefits to flow through in the coming year and beyond Integration of acquisitions now complete, with full year contribution expected in FY17 Underlying EBITDA margin for Facility Services maintained in line with previous year Renewal rates strong, reflecting key account and strength of integrated service offering 6

7 1.2 FY16 FINANCIAL SUMMARY Underlying result in line with guidance Strong growth in underlying sales and EBITDA Underlying result 1 (2) Revenue 17% increase EBITDA 6% increase NPAT (4%) decrease 2, , Acquisition contribution Acquisition contribution FY15 FY16 FY15 FY16 FY15 FY16 Reported result Revenue EBITDA NPAT 2,873 3, % (1.5%) (14.4%) FY15 FY16 FY15 FY16 FY15 FY16 Note (1): Reported result impacted by a number of one-off items outlined on slide 3.2 Note (2): Normalised for pass-through revenue of $37m in FY16 (FY15 $180m) 7

8 1.3 PERFORMANCE BY SECTOR Sector performance was strong and includes benefit from acquisitions Underlying Revenue 1 Health, Education & Gov. 2 Commercial & Leisure Base & Township 2 Laundries & Linen 7% increase 35% increase 10% increase 6% increase 1,004 1, , FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16 Commentary Health, Education & Gov. Commercial & Leisure Base & Township Laundries & Linen Strong contribution from commencement of new PPPs Healthcare remained steady Revenue increase driven by acquisitions full year impact of UASG and part year benefit of AE Smith and TGS Partially offset by lower sales within Sports & Leisure due to lower stadium and event activity Defence sector delivered strong growth Partially offset by reduced revenue in the Resources sector Growth driven by contribution of acquisitions (Aladdin, ILS & Prime Laundry) Integration issues affected performance of existing business Note (1): Includes intersegment revenue of $29m in FY16 (FY15 $28m) Note (2): Excludes pass-through revenue of $37m in FY16 (FY15 $180m) 8

9 1.4 PERFORMANCE BY SECTOR Underlying EBITDA and margin 1 EBITDA growth across Facility Services Laundries impacted by acquisition integration issues Health, Education & Gov. Commercial & Leisure Base & Township Laundries & Linen 8% increase 3% increase 30% increase (17%) decrease EBITDA Margin FY15 Commentary FY16 FY15 FY % 10.8% 8.8% 6.7% 13.6% 16.0% 31.0% 24.2% Health, Education & Gov. Commercial & Leisure Base & Township Laundries & Linen FY15 FY16 FY15 FY16 Strong earnings growth from PPPs Steady earnings contribution from Education and Government Growth driven by acquisitions Partially offset by lower activity within Sports & Leisure and Business & Industry sectors Margin decline reflects business development costs and lower margin acquisition (AE Smith) Strong earnings contribution from Defence sector Partially offset by reduced revenue and margins within Resources Result adversely affected by acquisition integration related issues which have been resolved Note (1): Segment EBITDA and margins exclude unallocated corporate overheads of $39m in FY16 (FY15 $39m) 9

10 1.5 MARGINS EBITDA margin in Facility Services business remains strong Margins in Laundries impacted by acquisition integration issues Underlying Margins 1 Commentary Facility Services (~92% of revenue) EBITDA margin declined reflecting acquisition of businesses with lower than Group margin 10.6% 10.2% 9.8% 9.0% New contract wins on comparable margins to historical experience FY15 FY16 FY15 FY16 EBITDA EBITA Decrease in EBITA margin reflects impact of acquisitions and higher capex in previous periods impacting depreciation Laundries (~8% of revenue) 31.0% 24.2% 16.3% 7.8% FY15 FY16 FY15 FY16 EBITDA EBITA EBITDA margin adversely impacted by acquisition integration issues Acquisitions now fully integrated EBITA margin decline driven by lower EBITDA and higher depreciation as a result of acquisitions and higher rental stock capex to support these acquisitions Note (1): Segment margins exclude unallocated corporate overheads of $39m in FY16 (FY15 $39m) 10

11 1.6 WIN AND RENEWAL RATES Our win rate across the portfolio remains strong but has been impacted by several large value contract losses Win rates and renewal rates Excluding Rio Tinto & Immigration All opportunities By number By revenue By number By revenue Win rates FY14A 34% 27% FY15A 45% 36% 1 FY16A 50% 17% 2 34% 27% 44% 20% 50% 12% Renewal rates FY14A 63% 75% FY15A 78% 91% FY16A 83% 83% 3 63% 75% 78% 91% 83% 73% Commentary Investment in business development resources across Government, Aged Care and Tertiary Education sectors important to improving win rates. Focus is on fewer but larger opportunities High return, low capital intensive sectors and services are the priority Enhancing key account to focus on renewals by implementing a customer centricity program focused on top 200 existing accounts Note (1) Excluding onshore and offshore immigration losses (2) Excludes Rio Tinto new business loss (3) Excludes Rio Tinto renewal loss 11

12 1.7 BALANCE SHEET POSITION Credit metrics comfortably within covenants Debt facilities maturity profile Net debt position ($m) June 2016 Dec 2015 June Cash (54) (40) (105) Debt (1)(2) Net debt Net debt position is as expected and reflects acquisitions during the year, 3 working capital requirements of acquired businesses and incremental laundry stock purchases FY17 FY18 FY19 FY20 FY21 Debt covenants Drawn amount Committed facilities ND / EBITDA 3.5x Interest cover 10.3x Debt headroom of $220m 2.4x 8.8x Weighted average committed debt facility maturity of approximately 2.6 years 1.8x 3.0x FY15 FY16 FY15 FY16 Note (1): Debt is net of unamortised borrowing costs of $4m at Jun-16 and $4m at Jun-15 and includes $8m derivatives (FY15: $8m) Note (2): Depreciation of AUD against the NZD between Jun-15 and Jun-16 increased debt by $11m Note (3): Acquisitions include UASG (July 2015) and Prime Laundry (August 2015) 12

13 1.8 OPERATING CASH FLOW Operating cash flow utilised to fund acquisitions Operating cash flow movements Commentary A Investment in working capital and onerous contract impacts relating to recently acquired businesses 53 B One-off impact from large national food and beverage supply contract Non-recurring C Timing of payment cycles 188 A B C Operating cash flow before interest and tax Working capital & onerous contract impacts Exit of supply contract Payment cycles FY16 underlying operating cash flow FY15 underlying operating cash flow 13

14 1.9 SAFETY Safety of our employees is paramount Safety initiatives: Work stream risk profiling to assist in identifying actions and tailoring programs to manage safety risks Pulse Assessment program to verify level of understanding of systems and processes Safety Survey to obtain feedback and initiatives on what we can introduce to assist in improving safety culture system certification against AS4801 Initiatives translating to improved performance for FY16: 41% reduction in lost time injury frequency rate 8% reduction in total recordable injury frequency rate (all injuries) 14

15 2 Strategy Reset

16 2.1 CORPORATE OBJECTIVES Deliver business growth greater than GDP growth by: growing revenue with existing customers (contract inflators and cross-sell) winning new customers Spotless Group Objectives winning new business in growing outsourcing markets entry into new markets / development of new offerings Drive customer value through long-dated, expandable, multi-service contracts which leverage our scale, geographical footprint and breadth of capabilities customer benefits from scale include geographic reach, superior operational controls, counterparty financial strength, and superior back office / support service capabilities customer benefits from breadth include delivery of complex total solutions, adoption of operational risk and lower overhead 16

17 2.2 STRATEGY RESET COMPLETE The centrepiece of the Spotless strategy involves focus areas that support organic growth 17

18 2.3 STRATEGY RESET COMPLETE (CONT.) Strategy reset provides a clear vision and purpose 18

19 2.4 UNLOCK VALUE REVIEW OF CORE Spotless has reviewed the performance of each sector and the role it plays in the company portfolio FY16 ROIC EBITA / Adjusted assets (%) 1 80 High return sectors 60 Represents adjusted assets of c.$100m Strategy reset prioritises these services and markets 0 (20) Lower return, low growth sectors Growth equal to or less than GDP growth Growth up to 5 ppt higher than GDP growth High growth, high return acquisition opportunities Growth more than 5 ppt higher than GDP growth Partnerships Market growth / potential Health, Education and Government Commercial and Leisure Base and Township Laundries Facility Services Note (1): Adjusted assets is calculated as total assets less cash, inter-company loans, goodwill, intangibles and deferred tax 19

20 2.5 UNLOCK VALUE PARTNER WITH CUSTOMERS Spotless will drive value by strategically partnering with customers and focusing on multiservice contracts Spotless business value hierarchy Single Service Line Businesses Contracts are typically single-service, of limited scale and shortdated Competition is fragmented or operations are capital intensive 2-3 Service Line Businesses Contracts are typically large scale, multiservice and long-term Strong relationships enable partnerships on innovation Spotless is willing to take high perceived risks Multi-service Partnerships Contracts are very long term (e.g. up to 30 years) Spotless takes full responsibility for an operation / asset and has an obligation to deliver an outcome over the life of the contract Single service line AE Smith Business & Industry Laundries UASG Leisure, Sport & Entertainment Education Resources Government Health Defence PPP 4+ service lines 20

21 Mobilising Operational 2.6 PPP s 16 AND BUILDING Name Contract Term 0% 100% Total Life (yrs) Annual Revenue (A$m) Life of Contract Revenue (A$m) NSW Schools 1 28 $ Headquarters Joint Operations Command 30 $$ Southbank Tafe 34 $$ NSW Schools 2 28 $ Orange Hospital 25 $$$ South Australia Schools 30 $ Royal Children s Hospital 25 $$ Queen Elizabeth II Carpark 25 $ Wiri Prison 25 $ Sydney Convention Centre 25 $$$ Sunshine Coast University Hospital 25 $$$ New Royal Adelaide Hospital 30 $$$ Bendigo Hospital 25 $$$ Victoria Schools 26 $ Western Australia Schools 30 $$ Australia National University 30 $ Key for annual revenue: = A$0 10m = A$10 30m = A$30+m Key for life of contract revenue: $ = A$0 250m $$ = A$ m $$$ = A$750+m 21

22 2.7 REPOSITION - BRAND AND INNOVATION A smarter Spotless leveraging technology to drive growth in new services and markets, and to enhance the customer experience Bluetrack Digital Cleaning Tracker Customer Feedback Kiosks Nudge Health and Lifestyle Program Automated Guided Vehicles Food Ordering App Smart Pipe 22

23 2.8 REPOSITION - NEW MANAGEMENT TEAM There has been significant focus on building the capability within the Spotless leadership team CEO & Managing Director Martin Sheppard Investor relations Mergers & Acquisitions (1) Geoff Bryant Chief Financial Officer Nigel Chadwick Risk & Compliance & Legal Paul Morris Chief Operating Officer Dana Nelson Brand, Innovation & Technology Julian Fogarty Markets & Growth Agi Luczak People, Performance & Culture Catherine Walsh Sectors Government, Education & Transport Infrastructure, Comms & Utilities (AES and UASG) Township (Resources & Defence) PPP s and Health Business, Hospitality, Leisure & Security New Zealand Laundries Subject Matter Experts / Sales Executive / Business Development Food & Catering Cleaning Maintenance / Construction PPP / Government / Education Resources Facilities Management Security New to organisation and role New to role Scope increased Note (1): Effective 1 October

24 3 Market Detailedposition, Financials strategy and outlook

25 3.1 REPORTED P&L RESULTS $m FY16 FY15 Var Reported Sales Revenue 3,176 2, % Underlying Revenue 3,139 2, % Reported EBITDA (1.5%) Underlying EBITDA % Commentary Revenue growth underpinned by stable performance of existing business and acquisition contribution Acquired revenue and EBITDA of $588m (FY15 $185m) and $34m (FY15 $8m) respectively Depreciation (88) (65) +35.4% Facility Services (34) (19) +78.9% Laundries (48) (41) +17.1% Corporate (6) (5) +20.0% Amortisation (16) (13) +23.0% Customer contracts (10) (8) +25.0% Other (SAP amortisation) (6) (5) +20.0% Net finance costs (40) (34) +17.4% Income tax expense (46) (61) (25.3%) Reported NPAT (14.4%) Underlying NPAT (4.0%) Excluding acquisitions, revenue and EBITDA includes benefit from contract wins and renewals offset by impacts from: acquisition integration issues, particularly within Laundries loss of pass through revenue contract within Health, Education & Government sector (low margin) reduced stadium and event activity in current year Underlying profit affected by materially increased depreciation (largely due to increases from acquired businesses), mobilisation costs and bid costs Increase in finance costs reflects higher net debt Tax rate of 27% reflects effective tax rate of 30% adjusted for deferred tax accounting movements 25

26 3.2 REPORTED TO UNDERLYING RECONCILIATION $m FY16 FY15 Commentary Reported Sales Revenue 3,176 2,873 Pass-through revenue (37) (180) Underlying Sales Revenue 3,139 2,693 Reported EBITDA One-off items 1 Tender write-off 9 - Small bid costs 5 - Re-measurement of provisions 2 - (9) Underlying EBITDA FY16 EBITDA negatively impacted by a number of significant items including: Large tender bid costs on two unsuccessful bids ($9m) Treatment change on bid costs ($5m) The items outlined above are considered oneoff and have been resolved FY15 EBITDA was impacted by the positive impact of the $9m re-measurement of property make good provisions ($7.6m) and Long Service Leave ($1.5m) provisions Acquisition integration issues relating to Laundries and AE Smith outlined to the market in December have been included in both reported and underlying EBITDA Reported NPAT One-off items 1 14 (9) Income tax (5) 3 Underlying NPAT Note (1): Items greater than $5m Note (2): Disclosed on page 58 of the 2015 annual report 26

27 3.3 CASH FLOW $m FY16 FY15 Var Underlying operating cash flow before interest and tax Working capital and onerous contact impacts (2.2%) (53) Exit of supply contract (14) Timing of payment cycles (15) Net interest and tax (46) (29) 58.6% Operating cash flow (42.6%) Investing cash flows Acquisition of businesses (103) (99) 3.5% Facility Services (86) (78) 9.7% Laundries (17) (21) (19.2%) Net investment in PPE, IT systems and capitalised contract costs (142) (151) (5.6%) Facility Services PP&E 1 (64) (83) (23.0%) Laundries PP&E 1 (14) (10) 37.3% Laundries Rental Stock (46) (41) 13.3% Corporate PP&E and IT systems (21) (24) (14.5%) Other 3 7 (65.8%) Total investing cash flows (245) (250) (2.0%) Commentary Underlying operating cash flow lower than previous year after taking into account: One-off items Working capital funding and onerous contract impacts relating to recently acquired businesses Exit of a national food & beverage supply contract which resulted in a one-off $14m net outflow Timing of year end payment cycles Underlying EBITDA conversion was 83% (FY15 90%): FY16 FY15 Underlying EBITDA Underlying operating cash flow before interest and tax Underlying EBITDA conversion % 90% Moving forward there will be a greater focus on free cash flow Free cash flow (103) (3) >100% Note (1): Includes capitalised contract costs 27

28 3.4 BALANCE SHEET $m FY16 FY15 Var Commentary Current assets (0.5%) Non-current assets 1,708 1, % Goodwill 1, % PP&E and other % Current liabilities (6.4%) Balances impacted by acquisition accounting Goodwill largely relates to PEP acquisition ($827m), with remainder relating to recent acquisitions Net working capital movements outlined on the operating cash flow slide (slide 1.8) Non-current liabilities % Net current assets % Net assets % Net debt % Gearing 48.8% 41.0% 28

29 3.5 NET DEBT MOVEMENT Net debt bridge Commentary Net debt as at 30 June 2016 of $790m 2.4x Net debt / EBITDA vs. 1.8x at 30 June Change since FY15 driven by: Reinvestment in the business including capital expenditure $142m and acquisition cost of $103m (1) Reinvestment in the business Dividends paid (final and interim) of $99m Other movements include foreign exchange impact on New Zealand dollar debt and impact of finance leases June 2015 net debt Operating cash flow Capex Business acquisitions Dividends paid Other movements June 2016 net debt Note (1): Operating cash flow includes certain non-recurring items as per slide

30 4 Outlook

31 4.1 OUTLOOK We are confident in the strength of the underlying business and that the pipeline of opportunities support re-stimulation of organic growth. The rate of growth will be driven by the success and timing of the strategy reset initiatives, particularly the returns from the recent investment in business development resources. For FY17 and beyond, growth and attractive returns are expected through: Improved performance of the Laundries business; Driving growth from our recently acquired businesses; Commencement of recently won PPPs, with seven PPPs currently mobilising; Price escalations in existing contracts; Greater focus on free cash flow conversion; New wins in a steadily growing contestable market; and Conversion of the current pipeline of more than $1.3 billion of opportunities. There are no significant contract renewals that will materially impact FY17. 31

32 5 Appendices

33 Win Wins Renewals 5.1 SIGNIFICANT CONTRACT WINS AND RENEWALS $130m contract wins and over $480m renewals in FY16 1 Customer Services Quarter won / renewed Clipsal 500 Integrated 1Q16 Central Alliance Health NZ Integrated 1Q16 SA Health Integrated 3Q16 Brisbane Domestic Terminal (retail outlets) Cleaning / Food 2Q16 Ergon Energy Asset Inspection 2Q15 NSW Land and Housing Corporation Maintenance 1Q16 QGC Township Management 3Q16 Anglo American Township Management 4Q16 Ausco Maintenance 4Q16 Rio Tinto Hail Creek Township 1Q16 Vic Schools PPP 2Q16 WA Schools PPP 2Q16 Australian National University PPP 1QFY17 Greater than 25yr Greater than $30m pa Note (1): Annual revenue 33

34 5.2 DIVERSIFIED OFFERING SERVICE Facility Venue Accommodation Fleet Car park Concierge & mailroom Event Patient Security services Venue Food service solutions Cleaning & hygiene solutions Laundry, linen & uniforms Security services Asset and building maintenance Waste Grounds & garden care services Pest control services Concierge HVAC services Refrigeration BIM (Building Information Modelling) Prefabrication / Modularisation Engineering design Commissioning (NEBB Certified) Electrical, plumbing, drainage Asset maintenance Mechanical & electrical services Retail fitouts Building trades services Painting services Grounds & gardens Pest control Building systems Fire & emergency services Energy & water Handyman services Asset installation & maintenance Meter installation & replacement Meter reading Energy conservation Pole reinstatement Asset inspection & monitoring Street light maintenance & globe replacement Electrical construction & maintenance Vegetation Stadia, venue & event catering Dining rooms & cafés Functions Corporate hospitality Retail food & beverage Venue Cafeterias Canteens, cafés Retail food & beverage Resident dining Aged care Schools & colleges Mining camps & defence sites Hospital patient meals Functions & boardrooms Meals on wheels Venue, event & precinct cleaning Waste & recycling Commercial, retail & industrial cleaning Waste & recycling Hygiene & washroom services Window cleaning Concierge & mailroom Crowd control Event Close circuit television (CCTV) Alarm systems Access control 24 hour alarm monitoring People tracking Risk Mail screening Duress systems First aid response Patrols Concierge services Linen supply, laundering & Accommodati on Hospitality Healthcare Sterilising Workwear laundering, rental & Workwear supply & design Floor care & washroom services SECTORS Business & Industry Defence Education Government Health Laundries Leisure, Sports & Entertainment PPP Resources Utilities Leisure, Sports & Entertainment Business & Industry Defence Education Government Health Laundries Leisure, Sports & Entertainment PPP Resources Business & Industry Defence Education Health Government Leisure, Sports & Entertainment Resources Business & Industry Defence Education Government Health Laundries Leisure, Sports & Entertainment PPP Resources Utilities Business & Industry Leisure, Sports & Entertainment Business & Industry Defence Education Health Government Resources Leisure, Sports & Entertainment Business & Industry Defence Education Health Government Resources Business & Industry Education Government Health Leisure, Sports & Entertainment Resources Business & Industry Defence Education Government Health Laundries Leisure, Sports & Entertainment Resources SERVICE LINE INTEGRATED SERVICES ENGINERING SERVICES AND ASSET MAINTENANCE UTILITIES SERVICES FOOD SOLUTIONS CLEANING SECURITY LAUNDRY 34

35 Latest Australia and NZ revenue (A$bn) 5.3 LEVERAGE STRONG CORE Spotless is the largest, most diversified essential services provider in Australia and New Zealand. The company provides services that are essential to our clients and their customers 1. Largest facility services provider in ANZ 1,2,3 2. High quality and diverse customer base Largest 150 contracts = c.60% revenue Revenue contracted 5 = c.87% revenue Largest single contract = c.5% revenue Weighted average contract tenure = c.4.8 years Spotless Compass Broadspectrum Serco ISS Programmed Skilled Sodexo FY16 FY15 FY FY15 FY Gov t backed contracts = c.50% revenue % of revenue due for renewal in FY17 = c.7% 3. Favourable end market exposure Only 8% resource exposure 19% 9% 37% 35% Health, Educ. & Gov't Commercial & Leisure Base & Township Laundry & Linen Facility Mgt. Catering & Food Cleaning Laundry & Linen Security 4. Embedded price growth mechanism 6 100% % with no price growth mechanism 80% 60% 40% 20% 0% % with embedded price growth mechanism 35 Note (1): The market is defined by reference to the services Spotless currently provides to the four endmarket customer sectors that Spotless currently serves, and includes both Facility Services and Laundries services. It does not include potential revenue from adjacent customer sectors that Spotless does not currently serve but that may be regarded as part of a broader facility services industry Note (2): Estimate of revenue derived from Australian and New Zealand public filings. New Zealand dollar revenues have been converted to Australian dollars using the RBA daily rate of 1.07 as at 12 August 2016 Note (3): On 27 June, Ferrovial Group completed its takeover of Broadspectrum Note (4): Based on top 150 identified contracts by FY17 Forecast revenue Note (5): Revenue that is contracted through FY17 as percentage of FY16 revenue. Note (6): Based on identified contracts greater than $1 million annual revenue