AusGroup : SGX 10-in-10 Feature Article – Supporting Green Energy Projects

1 December 2021

10 in 10 - AusGroup (SGX Code: 5GJ)

10 Questions in 10 Minutes with SGX-listed companies

10 Questions for AusGroup

Company Overview

AusGroup is a leading integrated service solutions provider, with over 30 years of experience and operations across Australia and Southeast Asia. The Group has over 1,400 employees and eight strategically located facilities. The suite of services that AusGroup provides include specialist fabrication, mechanical & piping works, industrial insulation, painting and fireproofing, electrical and instrumentation, and access services, amongst others. Link to StockFacts company page

SGX Code: 5GJ BBG: AUSG SP	RIC: AUSG.SI
Market cap on 29 Nov (S$m)	70.5
Price on 29 Nov (S$)	0.023
52 wk high/low (S$)	0.042 - 0.020
12m ADTV (S$)	547,463
Shares Outstanding (m)	3,063
Float	47.7%
P/E (LTM)	69.5
P/B (LTM)	1.9
Dividend Yield	--

Source: Bloomberg (29 Nov 2021)

1. Please elaborate on AusGroup's revenue segments and business model.

• AusGroup provides planning, maintenance and construction services across a number of sectors including Energy, Resources and Industrial. We also own and operate a port in Australia.
• Our clients include major energy and resources companies such as Chevron, Shell, Woodside, Rio Tinto, BHP, Fortescue Metals Group, Wesfarmers Chemicals, Energy & Fertilisers, Tianqi and Acciona.

AusGroup's market sectors

AusGroup's latest revenue split by sectors

Industrial,

10%

Resources,

30%

Energy,

60%

Source: AusGroup

1

2. How has the Group's order book grown over the years? How do you plan to sustain this growth

going forward?

• The Group has had a significant increase in our order book in Mar 2021, when we announced a 10-year maintenance contract with Chevron. Our six years of delivering services to Chevron was critical in securing this contact win, which was longest maintenance master contract awarded to date in the Australian oil and gas market.
• Our order book reached above A$1 billion in Mar 2021, which is the highest in our 30 years of operations and maintained close to A$1 billion since then. It represents a healthy book-to-bill ratio of five times based on FY21 revenue.

1.2

1.0

0.8

0.6

0.4

0.2

0.0

AusGroup Orderbook (A$ Billion)

5 x book to bill ratio

Mar-21Sep-21

• Going forward, we are focused on securing a mix of multi-year maintenance contracts and larger construction contracts to continually replenish the order book.
• We see potential organic growth in our order book arising from the work and contracts already completed from customers in the iron ore and lithium sectors.
• • Iron ore market outlook - Iron ore prices remained strong due to supply disruptions. Exports expected to grow from 874 million tonnes to 996 million tonnes between 2019 and 2025 from productions at large new Western Australian mines. (Source: Office of the Chief Economist Australia)
  • Lithium market outlook - The lithium market is expected to triple in the next five years as the world embraces electric vehicles (EVs). Australia has 30% of the world's lithium resources, with the majority located in Western Australia. (Source: Office of the Chief Economist Australia)

3. Recently, the Group secured A$32 million worth of new contracts in resources and energy sectors, how will this affect the projected financials and capacity needed for operations?

• The Group has seen quarter-on-quarter revenue growth as the business returned to pre-COVID-19 levels. The quarterly revenue growth of 9% is shown in the chart on the right.

Revenue Profile 1QFY21 to 1QFY22 (A$M)

9% cumulative quarterly growth

70.0				56.1	60.4
60.0			50.7
43.2	45.0
50.0

▪ We believe that the Group has the capacity to deliver the 40.0
contracts and sustain our growth. However, there are 2030..00
challenges, particularly in the Western Australian region, 10.0
brought about by competition for labour resources to 0.0	1QFY21	2QFY21	3QFY21	4QFY21	1QFY22
meet these client's demands.

4. Does the Group have active plans in place to expand geographical reach within Australia?

• Our operations span across Southeast Asia and Australia but is predominantly focused on Australia. Due to the growth in new resources projects, particularly in projects which focus on decarbonisation (e.g., lithium, hydrogen and nickel), we believe that the Group has significant opportunities to expand our revenue base and reach in Australia.
• Beyond Australia, we also signed a Memorandum of Understanding (MoU) in May 2021 with the wholly owned subsidiary of Singapore's Jurong Engineering Limited (JEL) - JEL Maintenance (JML) - to jointly pursue maintenance contract opportunities in Singapore.

2

5. AusGroup diversified its services beyond just the oil and gas sector in recent years. What are some key focus areas? Are there plans to continue this diversification strategy?

• We have intentionally focused on building long term relationships with our clients. We see ourselves as partners to some of these clients as the Group is highly integrated into their operations.
• The sectors we service span across energy (e.g., liquefied natural gas (LNG)), resources (e.g., iron ore, gold, lithium, nickel, industrial salt), industrial (e.g., chemical producers) and renewables (e.g., waste-to-energy plants and hydrogen production). The services we provide are scalable and transferrable across these sectors, providing opportunities for diversification as new energy sectors grow.

6. What do you think are some key drivers or trends in the various sectors the Group service?

• There is a significant push for decarbonisation globally. The construction and maintenance services that AusGroup provides are critical in building and maintaining such decarbonisation projects in the coming decades. LNG continues to make up a large element of energy requirements and will remain a key driver for decades to come. AusGroup signed a 10-year maintenance contract with Chevron to maintain its onshore and offshore LNG production facilities in Mar 2021. These facilities have an expected lifespan of at least 40 to 50 years. These services are scalable and transferable to support new decarbonisation projects (e.g., lithium and hydrogen).
• The trend to electrify transport solutions is also a significant and structural growth that can provide opportunities for AusGroup. Australia is emerging as a leader in the lithium market which is the critical component for lithium batteries.

• Renewable energy market outlook - At the end of 2020, 76 large-scalewind and solar projects were under construction in Australia, representing more than 8 GW of new capacity and employing over 9,000 workers. A total of A$19 billion is invested into large-scalerenewable energy projects across Australia with A$2 billion in Western Australia. (Source:Clean Energy Council Australia)
• Waste-to-energymarket outlook - Global waste-to-energymarket is expected to reach US$41.7 billion by 2025 and will grow at a healthy growth rate of more than 5.1% over 2018 to 2025. AusGroup is currently working with Acciona on two waste-to-energyprojects in Kwinana and Rockingham, Western Australia. (Source:Industry Research)

Renewable energy projects in Australia

(Source: CEC Clean Energy Council)

7. What are the key focus areas for AusGroup in the next 3 to 5 years?

• AusGroup has implemented a phased approach for growth over the medium-term (3 to 5 years) which aligns with our current operating model and long-term strategic objective to diversify across sectors and regions.

AusGroup's Phased Growth Approach

Phase I	Phase II	Phase III	AusGroup
Organic	Growth from	Growth in New	An Asset
Growth in Core	Synergistic	Services'
Sectors
Sectors	Opportunities	Market Leader
2021	2022	2022/3	2025
Secure new work by leveraging	Secure new work by	Secure new work in geographies	AusGroup to successfully
on current Australian	leveraging on interests into	and sectors supporting sustainable	manage a diverse national
relationships and technology	new sectors and segments in	power generation and supply	portfolio that provides asset
partners, focused on the LNG	Australia; grow 'In-House'	solutions organically or through	services to sectors which
and Resources' sectors	capability and capacity	strategic acquisition	promote energy conservation

3

8. How does the Group plan to expand your focus on the renewables and new energy markets? Any developments in this areas?

• The services we provide to our current customers are transferrable to clients in the renewable and new energy markets.
• We are constructing two waste-to-energy plants in Western Australia. We believe that with the expected growth trajectory in this sector with multiple plants planned for construction over the coming years, coupled with the Group's experience in constructing such facilities, AusGroup will be able to tap on these future opportunities.
• We have experience in constructing lithium infrastructure and maintaining lithium processing plants (lithium hydroxide plants). We believe that there is significant growth in the lithium market due to the electrification of transport solutions to meet decarbonisation targets.
• We are also in discussions to assess the viability of supporting the construction of a green hydrogen plant that would utilise the export capability of our port facility in Northern Australia.

1. Does the Group have an investment and divestment strategy? If so, could you elaborate?

• We will continue to look at both investment and divestment opportunities that provide commercial returns and expand our capability or capacity. This includes opportunities in different geographical regions.
• We are also increasingly focused on providing integrated technological solutions to help our clients manage their operations and drive efficiencies.

1. Why should investors take a closer look at AusGroup?

• The Group has a clear focus on delivering value to our clients safely.
• In addition, the partnership that we have with Chevron places AusGroup in a unique position to further leverage our technical knowledge built over the past six years to service other clients across other sectors. Our technical knowledge, technology systems and data driven efficiencies also places AusGroup in a strong position to utilise this knowledge to service other clients.
• Our heathy book-to-bill ratio of over five times is a strong indicator of AusGroup's position in the market.

10 in 10 - 10 Questions in 10 Minutes with SGX-listed companies

Designed to be a short read, 10 in 10 provides insights into SGX-listed companies through a series of 10 Q&As with management. Through these Q&As, management will discuss current business objectives, key revenue drivers as well as the industry landscape. Expect to find wide-ranging topics that go beyond usual company financials.

This report contains factual commentary from the company's management and is based on publicly announced information from

the company.

For more, visit sgx.com/research.

For company information, visit www.ausgroupltd.com

Click herefor the 1QFY22 Financial Results

4

Notes

Contact Us

For more information, please contact [e-mail]

sgx.com/research

This document/material is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such

distribution, use or action would be contrary to applicable laws or regulations or would subject Singapore Exchange Limited ("SGX") and/or its affiliates (collectively with SGX, the "SGX Group Companies") to any registration or licensing requirement. This document/material is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This document/material has been published for general circulation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. Use of and/or reliance on this document/material is entirely at the reader's own risk. Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products is not indicative of their future performance. Any forecast, prediction or projection in this document/material is not necessarily indicative of the future or likely performance of the product. Examples (if any) provided are for illustrative purposes only. While each of the SGX Group Companies have taken reasonable care to ensure the accuracy and completeness of the information provided, each of the SGX Group Companies disclaims any and all guarantees, representations and warranties, expressed or implied, in relation to this document/material and shall not be responsible or liable (whether under contract, tort (including negligence) or otherwise) for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind, including without limitation loss of profit, loss of reputation and loss of opportunity) suffered or incurred by any person due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information, or arising from and/or in connection with this document/material. The information in this document/material may have been obtained via third party sources and which have not been independently verified by any SGX Group Company. No SGX Group Company endorses or shall be liable for the content of information provided by third parties (if any). The SGX Group Companies may deal in investment products in the usual course of their business and may be on the opposite side of any trades. Each of SGX, Singapore Exchange Securities Trading Limited and Singapore Exchange Bond Trading Pte. Ltd. is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore. The information in this document/material is subject to change without notice. This document/material shall not be reproduced, republished, uploaded, linked, posted, transmitted, adapted, copied, translated, modified, edited or otherwise displayed or distributed in any manner without SGX's prior written consent. Please note that the general disclaimers and jurisdiction specific disclaimers found on SGX's website athttp://www.sgx.com/terms-useare also incorporated into and applicable to this document/material.

Singapore	Exchange	2 Shenton Way
		#02-02 SGX Centre 1
		Singapore 068804
		[phone]	sgx.com
Singapore | Beijing | Chicago | Hong Kong | London | Mumbai | New York | San Francisco | Shanghai | Tokyo