Service Stream : FY22 Appendix 4D and Half Year Report

For personal use only

Service Stream Limited

ABN 46 072 369 870

Appendix 4D (rule 4.2A)

Half-Year Ended 31 December 2021

(Previous corresponding period:

Half-year ended 31 December 2020)

Results for announcement to the market

	Half-Year To	31 Dec 21	% change	31 Dec 20
		$'000		$'000
	$1.00
	Revenue from ordinary activities	560,364	36.7%	409,902
	$1.00
	Profit from ordinary activities after tax	5,338	(67.1%)	16,241
	$1.00
	Net profit attributable to members	5,338	(67.1%)	16,241
	$1.00
	EBITDA from Operations 1	39,284	(2.3%)	40,211
	$1.00
	NPAT-A2	16,357	(18.6%)	20,099
	1

1. Earnings before interest, tax, depreciation and amortisation and non-operational costs.
2. Net profit after tax before amortisation of customer contracts and non-operational costs. Refer to Note 4 for details on non-operational costs.
   $1.00
   No interim dividend has been declared by the Directors with respect to the half-year period ending 31 December 2021 (2021 interim: 2.50 cents per fully paid share).
   $1.00

Net Tangible Asset Backing	31 Dec 21	31 Dec 20
	cents	cents
$1.00
Consolidated net tangible assets per share 1	0.14	2.56

1 Consolidated net tangible assets per share has been calculated to include right-of-use assets.

The Appendix 4D should be read in conjunction with Service Stream Limited's most recent annual financial report.

For personal use only

Service Stream Limited ABN 46 072 369 870

Interim Report

for the half-year ended 31 December 2021

Contents
Directors' report	Page 1
Auditor's independence declaration	Page 4
Interim financial report
Consolidated statement of profit or loss and other comprehensive income	Page 5
Consolidated balance sheet	Page 6
Consolidated statement of changes in equity	Page 7
Consolidated statement of cash flows	Page 8
Notes to the consolidated financial statements	Page 9
Directors' declaration	Page 15
Independent auditor's review report to the members	Page 16

These financial statements are the consolidated interim financial statements of the consolidated entity consisting of Service Stream Limited and its subsidiaries. The interim financial statements are presented in Australian dollars.

Service Stream Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 4, 357 Collins Street Melbourne VIC 3000.

A review of operations for the relevant period is included in the Directors' report on page 1, which is not part of the interim financial report.

The interim financial statements were authorised for issue by the Directors on 23 February 2022. The Directors have the power to amend and reissue the interim financial statements.

Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All media releases, financial reports and other information are available on our website: www.servicestream.com.au.

For personal use only

Service Stream Limited

Directors' Report

Directors' Report

The following persons were Directors of the Company during the whole of the half-year and up to the date of this report, unless otherwise stated:

Brett Gallagher (Chairman)

Leigh Mackender (Managing Director)

Greg Adcock

Tom Coen

Peter Dempsey

Deborah Page AM

Elizabeth Ward (appointed 6 September 2021)

Review of Operations

Information in the Operating and Financial Review is based on the Consolidated Interim Financial Statements. Non-IFRS measures presented are used internally by management to assess the performance of the business and make decisions on the allocation of resources.

A full review of operations of the Group is contained in the Australian Securities Exchange announcement dated 24 February 2022.

Key financial highlights for the half-year ended 31 December 2021 include:

• Revenue of $560.4m, an increase of $150.5m (36.7%) compared to first half FY21, primarily due to the acquisition of Service Stream Maintenance Pty Ltd (formerly Lendlease Services Pty Ltd) and its controlled entities ("LLS"), which was completed 1 November 2021. This was partially offset by lower revenue in the legacy Telecommunications segment, which was expecting revenue reduction during FY22 due to a decrease in nbn activation and assurance volumes per nbn's strategic plan and contract awards in FY21.
• EBITDA from Operations was $39.3m, largely flat on last year. This included two months' earnings contribution from LLS, partially offset by reduction in the Telecommunications segment based on revenue drivers outlined above.
• Statutory NPAT was $5.3m, down $10.9m compared to last year. This was driven by a higher depreciation charge and non-operational costs incurred in relation to the acquisition of LLS.
• Operating cash flow for the period of $78.9m, up $58.6m from last year. This was driven by a strong cash conversion rate, favourable timing of receipts from customers, and a one-off benefit from the release in working capital built up in LLS prior to Completion from recent mobilisations.

Impact to the Group from COVID-19 pandemic

Service Stream provides essential infrastructure services to utility, telecommunications and transport network owners and operators nationally.

The Group has been able to maintain operations throughout the pandemic but has continued to be impacted. Impacts are most notably associated with reduced preventative or discretionary work volumes across utility operations, restrictions on movement across state borders and the point-in-time construction based lockdowns across Sydney and Melbourne in late 2021, which impacted the progress of projects.

Throughout the first half of FY22 the COVID-19 outlook progressively improved as vaccination rates increased and restrictions were lifted. Although utility related work volumes have not yet returned to their pre-COVID levels, the overall financial impact to the business in the first half is not considered to be material.

The business continues to monitor and adapt to the changing COVID-19 outlook and circumstances, particularly with regard to the current Omicron variant.

1

Service Stream Limited

Directors' Report

Review of Operations (continued)

$'000

FY22		FY21
1st half		1st half

Change

Revenue

EBITDA from Operations 1

Non-operational costs

Depreciation & amortisation

Amortisation of customer contracts / relationships

EBIT

Net financing costs

Income tax expense

Net profit after tax

$1.00

Cashflow & Capital Management:

Operating cashflow

Net cash / (debt) 2

Statutory basic EPS (cents)

Dividends declared per share (cents)

$1.00

560,364
39,284
(8,850)
(14,625)
(4,327)
11,482
(2,419)
(3,725)
5,338

78,864

(47,051)

0.93

-

409,902
40,211
(1,085)
(9,685)
(4,426)
25,015
(1,820)
(6,954)
16,241

20,277

10,481

3.97

2.50

150,462	36.7%	▲
(927)	(2.3%)	▼
(7,765)	715.7%	▼
(4,940)	51.0%	▼
99	(2.3%)	▲
(13,533)	(54.1%)	▼
(599)	32.9%	▼
3,229	(46.4%)	▲
(10,903)	(67.1%)	▼

58,587	288.9%	▲
(57,532)	(548.9%)	▼
(3.04)	(76.6%)	▼
(2.50)	(100.0%)	▼

Adjusted Profitability 3:

EBITDA from Operations	39,284	40,211
EBITDA from Operations %	7.0%	9.8%
Adjusted NPAT (NPAT-A)	16,357	20,099
Adjusted EPS (cents)	2.84	4.92

1Earnings before interest, tax, depreciation and amortisation and non-operational costs.

(927)	(2.3%)	▼
(2.8%)		▼
(3,742)	(18.6%)	▼
(2.08)	(42.3%)	▼

For personal use only

2Net cash / (debt) excludes lease liabilities.

3Adjusted to exclude relevant non-operational expenditure and amortisation of customer contracts / relationships. For further details, refer to the reconciliation between IFRS and non-IFRS financial information on page 3.

2

For personal use only

						Service Stream Limited
						Directors' Report
Review of Operations (continued)
Reconciliation between IFRS and non-IFRS financial information
		$'000		FY22		FY21
				1st half		1st half
		EBITDA from Operations		39,284		40,211
		$1.00
		- Depreciation and amortisation		(18,952)		(14,111)
		- Non-operational costs (before tax)		(8,850)		(1,085)
		- Financing costs		(2,419)		(1,820)
		- Tax expense		(3,725)		(6,954)
		NPAT		5,338		16,241
		$1.00
		Add-back:
		- Customer relationships (tax effected)		3,029		3,098
		- Non-operational costs (after tax)		7,990		760
		NPAT-A		16,357		20,099
		$1.00
		Avg number of shares on issue (millions)		576.6		408.9
		$1.00
		Statutory basic EPS (cents)		0.93		3.97
		Adjusted EPS (cents)		2.84		4.92

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 4.

Rounding of amounts

The Company is of the kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts in the Directors' Report and financial report. Amounts in the Directors' Report and financial report have been rounded off to the nearest thousand dollars in accordance with that Instrument.

Signed in accordance with a resolution of the Directors made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Directors,

Brett Gallagher	Leigh Mackender
Chairman	Managing Director
23 February 2022	23 February 2022

3