Babylon Pump & Power : Quarterly Update and Appendix 4C

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31 January 2022

Babylon Quarterly Update and Appendix 4C

Highlights1

• Record first half revenue of $13.7M up 33% over corresponding H1 FY21
• Cash receipts of $15.4 for H1 FY22 up 59% over corresponding H1 FY21
• 54% improvement in first half operating cashflow on corresponding H1 FY21
• Receivables of $4.9M due from blue-chip client base

Specialist resources services provider Babylon Pump & Power Limited ("Babylon" or "the Company"), (ASX: BPP), is pleased to present a quarterly update and quarterly cash flow report for the quarter ended 31st December 2021.

The Board is pleased to report cash receipts of $7.5m for the quarter and record YTD cash receipts of $15.4M which represents 59% growth over the corresponding H1 FY21. First half revenue of $13.7M is an increase of 33% over the corresponding H1 FY21. Work in progress (WIP) across the company's workshops has risen 32% to $3.6M during the first half of the year.

After two consecutive quarters of positive operational cash flow, net cash from operating activities for the reporting period has dipped to negative $1.49M. The negative operating cashflow for the quarter is directly attributable to the 23% increase in WIP ($0.7M) and the 20% ($0.8M) increase in receivables over the reporting period. The increase in receivables reflects increased turnover. Average debtor days have risen slightly to 63 which is within the industry norm. Operating cash flow for H1 FY22 has improved 54% over the corresponding first half of the previous year.

The Company holds $2.5 million of cash and undrawn debt facilities at the end of December.

Effects of COVID-19

Delays in supply chain during the quarter have resulted in project delays pushing forecast rental and maintenance revenue into later reporting periods. The Company is continually evaluating short to medium term risks and working with clients to manage timelines as well as increasing stock and inventory of strategic items. These disruptions and delays in supply chain are wide ranging in the resource service sector and not believed to be unique to the Company.

There is further uncertainty in future site works in the specialty services segment. Potential for delays and cancellations of works exist if COVID-19 outbreaks cause clients to limit or cancel site access to contractors.

1 All revenue and financial figures provided in this announcement are unaudited.

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Operations Update

Babylon continues to pursue its business model which is focussed on three complementary areas in high demand in the resources sector:

• Rental of specialty equipment;
• Maintenance and rebuild services for large diesel driven equipment; and
• Speciality services including high pressure water and abrasive blasting and ancillary services to the resources sector

Diesel Maintenance

As previously announced, Babylon secured multi-year contracts for maintenance services during the reporting period:

• Alcoa of Australia Limited - three-year contract extension
• Rio Tinto Services Limited - three-year contract with two-year extension period
• Premier Cola Limited - three-year contract with one-year extension option

These customer commitments show demand for the Company's services and provide a pipeline of expected future work to underpin the new Perth workshop, currently under development and slated to be in operation in 2022. The new workshop will provide extra capacity and capability for future rental and maintenance projects to support continued company growth.

Specialty Rental

Utilization of rental assets increased in Q2 FY22 with works continuing on Barrow Island during the quarter and water management projects beginning with new client Citic Pacific and at new sites with BHP. Worldwide supply chain disruptions are delaying availability of new assets and the Company is receiving increased levels of enquiry for rental solutions.

Specialty Services

Ausblast has taken delivery of a new vacuum truck during the reporting period which has mobilised for short term project work in the Pilbara. Additionally, an order was placed for a long lead high pressure water blasting unit. At 1000HP the new water blasting unit will provide Ausblast with increased capabilities allowing management to confidently engage new clients and expand into new mineral sectors outside of our traditional iron ore base requiring higher horsepower pumps. During the reporting period works were completed in the lithium and iron ore sectors.

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Summary and Outlook

The Company's Board is confident in the ongoing growth in current service offerings and strategy across its Speciality Rental, Diesel Maintenance and Specialty Services divisions. Structural and management changes to date have improved profitability whilst maintaining growth and maintenance capabilities. The Company is focused on growing more the profitable specialty services and rental revenue streams whilst conducting an ongoing evaluation on improving operational efficiencies and profitability.

Commenting on the results Executive Chairman Michael Shelby said, "The Company expects the strong growth in H1 FY22 to continue into H2 FY22 and deliver record performance and improvement in profitability."

The Company's Appendix 4C follows for the quarter ended 31 December 2021.

For more information, please contact:

Michael Shelby

Executive Chairman

[phone] [e-mail]

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Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

Babylon Pump & Power Limited
ABN	Quarter ended ("current quarter")
47 009 436 908	31 December 2021

Consolidated statement of cash flows	Current quarter	Year to date
			$A'000	(…3...months)
				$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	7,520	15,421
1.2	Payments for
	(a)	research and development
	(b) product manufacturing and operating	(5,952)	(10,725)
		costs
	(c)	advertising and marketing	(12)	(23)
	(d)	leased assets
	(e)	staff costs	(2,330)	(4,405)
	(f) administration and corporate costs	(570)	(1,077)
1.3	Dividends received (see note 3)
1.4	Interest received
1.5	Interest and other costs of finance paid	(156)	(475)
1.6	Income taxes paid	16	-
1.7	Government grants and tax incentives	(1)	-
1.8	Other (provide details if material)	(1)	(1)
1.9	Net cash from / (used in) operating	(1,486)	(1,285)
	activities
2.	Cash flows from investing activities
2.1	Payments to acquire or for:
	(a)	entities
	(b)	businesses	-	(474)
	(c) property, plant and equipment	(830)	(1,258)
	(d)	investments
	(e)	intellectual property
	(f) other non-current assets

ASX Listing Rules Appendix 4C (17/07/20)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.

For personal use only

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter	Year to date
			$A'000	(…3...months)
				$A'000
2.2	Proceeds from disposal of:
	(a)	entities
	(b)	businesses
	(c)	property, plant and equipment		198
	(d)	investments
	(e)	intellectual property
	(f)	other non-current assets
2.3	Cash flows from loans to other entities
2.4	Dividends received (see note 3)
2.5	Other (provide details if material)
2.6	Net cash from / (used in) investing	(830)	(1,534)
	activities

3. Cash flows from financing activities

1. Proceeds from issues of equity securities (excluding convertible debt securities)
2. Proceeds from issue of convertible debt securities

3.3 Proceeds from exercise of options

3.4 Transaction costs related to issues of equity securities or convertible debt securities

3.5	Proceeds from borrowings	3,771	4,721
3.6	Repayment of borrowings	(491)	(1,407)

3.7 Transaction costs related to loans and borrowings

3.8 Dividends paid

3.9 Other (provide details if material)

3.10 Net cash from / (used in) financing	3,280	3,314
activities

4. Net increase / (decrease) in cash and cash equivalents for the period

4.1 Cash and cash equivalents at beginning of

	period	563	1,032
4.2	Net cash from / (used in) operating	(1,486)	(1,285)
	activities (item 1.9 above)
4.3	Net cash from / (used in) investing activities	(830)	(1,534)
	(item 2.6 above)

ASX Listing Rules Appendix 4C (17/07/20)	Page 2
+ See chapter 19 of the ASX Listing Rules for defined terms.