FY24 Results Presentation 29 August 2024 IMPORTANT NOTICE AND DISCLAIMER Authorisation of Release: This ASX Announcement has been approved for release by the Board of Bhagwan Marine Limited. Important Notice: This presentation and these materials (together the “presentation”) have been prepared by Bhagwan Marine Limited ABN 81 009 154 349 (ASX code: BWN) (“Bhagwan”) as a summary of Bhagwan’s operations and results for the purposes of a presentation to existing or potential investors in Bhagwan. By participating in this presentation or reviewing or retaining these materials, you acknowledge and represent that you have read, understood and accepted the terms of this important notice and disclaimer. This presentation should be read in conjunction with Bhagwan’s prospectus dated 28 June 2024, FY24 Annual Report, and other continuous disclosure announcements that have been lodged by Bhagwan with the ASX. Financial data: all dollar values are in Australian dollars unless stated otherwise. Non-IFRS information: Bhagwan’s financial reporting complies with Australian accounting standards and international financial reporting standards (“IFRS”). This presentation includes material that contains nonIFRS measures that are not subject to audit. The non-IFRS information has not been audited. Bhagwan believes this non-IFRS financial information provides useful information to users in measuring the financial performance and conditions of Bhagwan. The non-IFRS financial information does not have a standardised meaning prescribed by Australian accounting standards and therefore may not be comparable to similarly titled measures presented 2 by other entities, nor should it be construed as an alternative to other financial measures determined in accordance with Australian accounting standards. Investors are therefore cautioned not to place undue reliance on any non-IFRS financial information and ratios included in this presentation. Such non-IFRS financial information is unaudited. Forward-looking statements and risks: This presentation may contain forward-looking statements concerning activities that are or may be undertaken, and outlook or other matters. Any such forward-looking statements are based on assumptions that may differ materially from the actual circumstances which may arise. Actual results may differ from projections and such variations may be material. You should not place undue reliance on any projections which are based only on information currently available to Bhagwan. Bhagwan undertakes no obligation to update any forward-looking statements for events or circumstances that occur subsequent to the date of this presentation or to keep current any of the information provided. Past performance is no guarantee of future performance. Forward-looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that those predictions, forecasts and other forward-looking statements will not be achieved. Forward looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. This presentation contains statements that are subject to risk factors associated with Bhagwan’s industry as well as unknown risks and uncertainties (both general and specific), many of which are outside the control of Bhagwan. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables, some of which are outside Bhagwan’s control, which could cause actual results or trends to differ materially, including but not limited to earnings, capital expenditure, cash flow and capital structure risks and general business risks. Given this, recipients are strongly cautioned not to place undue reliance on any projections and forward-looking statements. Disclaimer: Other than as required by law, neither Bhagwan nor any other person (including any director, officer or employee of any member of the group) gives any representation, warranty or assurance (express or implied) in relation to the accuracy or completeness of any forward-looking statement or that the occurrence of any event, results, performance or achievement will actually occur. Except as required by applicable laws or regulations, Bhagwan expressly disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statements in this presentation to reflect any change in expectations in relation to any forwardlooking statements or any change in events, conditions or circumstances on which any such statement is based. Bhagwan Marine is a leading marine solutions provider operating in the oil & gas, resources, civil construction, marine logistics, offshore wind and defence industries. 3 PRESENTATION OVERVIEW 1. Company Overview 2. FY24 Highlights 3 FY24 Financial Performance 4. FY25 Outlook & Focus Areas 5. Appendices 4 Company Overview 5 BHAGWAN MARINE AT A GLANCE Supplied by fit for purpose owned and leased vessels Bhagwan delivers four core services Operating under stringent compliance C. OFFSHORE SERVICES PORT SERVICES SUBSEA SERVICES 100 NEARSHORE SERVICES VESSELS Powered by a strong workforce across strategic locations Delivering to a range of blue-chip customers DARWIN C. DAMPIER BRISBANE EMPLOYEES NATION-WIDE PERTH (HQ) MELBOURNE 6 830 • PORT AUTHORITIES • GOVERNMENT ORGANISATIONS • OIL AND GAS MAJORS • LARGE MINING COMPANIES • LARGE CONSTRUCTION COMPANIES SUCCESSFUL INITIAL PUBLIC OFFERING & LISTING ON ASX Raised $80m and Delevered Balance Sheet Australia’s largest ASX listed Marine Services Company New Shares Issued 127.0m Listing Date 30 July 2024 Offer Share Price $0.63 ASX Code BWN Funds Raised $80m Share Price at 28 August 2024 $0.645 Use of Funds Strengthen balance sheet Pursue growth initiatives Shares on Issue 275.2m Public Shareholders 51% of ISC Director Shareholders 49% of ISC Professional Advisors 7 Euroz Hartleys KPMG Azure Capital Clayton Utz FY24 Highlights 8 STRONG FY24 RESULTS AND OUTPERFORMS PROSPECTUS FORECASTS RECORD REVENUE EBITDA NET CASH FROM OPERATIONS NET DEBT2 $303.1 MILLION $41.3 MILLION $29.0 MILLION $65.1 MILLION Up 79% on FY23 $169.0 million Up 14% on FY23 $36.4 million Up 1% on FY23 $28.9 million Improved 4% from $68.1 million at 30 June 2023 4% above Prospectus forecast1 6% above Prospectus forecast1 Notes: 1. Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform. Please see Appendix for a reconciliation from Pro Forma to statutory results 2. Excluding capitalised leases 9 Pro Forma net debt $12.4 million at 30 June 2024 FY 24 OPERATIONAL HIGHLIGHTS ENHANCED SAFETY PERFORMANCE DIVERSIFIED GROWTH WITHIN CORE BUSINESS PROVEN SERVICE DELIVERY IN HIGH-GROWTH SECTOR TRIFR1 7.65 - Improved from 9.35 in FY23 LTIFR2 0.90 -Improved from 1.89 in FY23 Strong performance across all industries and areas of operation nationally – maintained excellent service delivery Transitioned oil & gas decommissioning project services to the demobilisation phase – >800K offshore working hours LTI free SUCCESSFUL ASX LISTING STRONG GOVERNANCE ABILITY TO PURSUE GROWTH STRATEGY Commenced trading on ASX 30 July 2024 Welcomed Andrew Wackett as Executive Director – Finance and Tracey Horton AO as Non-Executive Director Delevered balance sheet provides greater optionality to pursue compelling growth initiatives Notes: 1. Total Recordable Injury Frequency Rate (TRIFR) per million hours worked 2. Lost Time Injury Frequency Rate (LTIFR) per million hours worked 10 FY24 Financial Performance 11 RECORD REVENUE AND STRONG EARNINGS • Increased demand across diversified business nationally • Entry into high-growth decommissioning sector • Pro Forma net revenue up 59% on FY23 and 1% above Prospectus Forecast1 • Pro Forma EBITDA up 14% on FY23 and 6% above Prospectus Forecast1 Notes: 1. Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform Please see Appendix for a reconciliation from Pro Forma to statutory results 12 NET REVENUE ($m) 169 264.8 268.7 FY23 FY24 Prospectus 1 FY24 PRO FORMA EBITDA ($m) 36.4 38.8 41.3 FY23 FY24 Prospectus 1 FY24 REVENUE DIVERSIFICATION & DECOMISSIONING SUMMARY FY22 to FY24 ACTUAL BREAKDOWN SUMMARY 264.8 FY24 ACTUAL REVENUE SPLIT (%) 60.7 268.7 Decommissioning revenue 65.4 Other 9 Civil Construction 7 32 Offshore & Inshore Services Core revenue 204.1 203.2 69.0 71.2 32%* Gross Profit 30.2 29.9 14%* 3.2 6.0 Administrative Expense & Other 35.6 35.3 FY24 Prospectus 2 FY24 Actual 17 Subsea 169.0 10 Port Services 134.7 24 Decommissioning Offshore 40.2 18.8 21.5 1 FY22 Notes: 1. FY22 EBITDA excludes other income of $3.7m in relation to the gain on the sale of vessels 2. Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform *Percentage of core revenue. Small variances may exist due to rounding 13 57.4 34%* 21.0 12%* 36.4 22%* 30%* 14%* 16%* FY23 17%* Decommissioning EBITDA Core EBITDA CASH CONVERSION • Operating cash flow of $29.0m, 5% ahead of Prospectus forecast1 • Free cash flow of $17.0m, 1% ahead of Prospectus forecast1 • FY25 Capex to increase due to dry docking of major asset and general cost inflation Statutory Cash Flow $ Million EBITDA Interest and finance costs Tax Paid Working capital (and other) Cash generated from operations Net capital expenditure Free cash flow Lease repayments Debt repayments and other financing cash flows Net cash flow Notes: 1. Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform Small variances may exist due to rounding 14 FY24 FY23 Change FY24 Change Actual 39.7 (4.9) (5.8) 29.0 (12.1) 17.0 (13.2) (2.4) 1.3 Actual 37.6 (4.9) (3.8) 28.9 (11.3) 17.6 (10.6) (7.5) (0.5) % 6% Prospectus 37.4 (7.7) (2.1) 27.6 (10.8) 16.8 (13.3) 8.9 12.4 % 6% 1% 7% -3% 25% 5% 12% 1% 0% DELEVERED BALANCE SHEET Net debt $ Million FY23 Actual H1 FY24 Actual FY24 Actual Change vs H1 FY24 Change YOY Cash 0.0 0.5 1.4 0.9 1.3 Non current financial assets 10.0 10.8 11.0 0.2 1.0 Current portion of term debt facility Bank overdraft Other loans Current liabilities 4.0 16.9 11.3 32.2 3.3 18.3 11.9 33.5 1.6 18.8 12.4 32.8 (0.7) 0.6 Commercial advance facility Term debt facility Shareholder loan Non-current liabilities 32.1 1.3 12.6 46.0 32.1 12.7 44.9 32.1 12.6 44.7 (0.2) (1.3) • Net debt reduced by $3.0m to $65.1m in FY24 • Lease liabilities down by $4.3m to $16.3m in FY24 • Debt substantially repaid post year end with $69.0m of IPO proceeds Net debt 68.1 67.1 65.1 (2.0) (3.0) Lease liabilities 20.6 19.8 16.3 (3.6) (4.3) Pro Forma Dec 2023 net debt of $19.7m stands at $12.4m pro forma in June 2024 Total Debt 88.7 86.9 81.4 (5.6) (7.3) • Notes: Small variances may exist due to rounding Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform 15 FY25 Outlook & Focus Areas 16 GLOBAL OFFSHORE VESSEL (OSV) MARKET Global vessel utilisation and rates continue to improve with limited newbuild activity Forecasts subject to further revision. Projections highly subject to assumptions on future demand estimates, orderbook non-delivery and vessel removals. 40% 2024 2022 2020 2016 2026 (f) 2025 (f) 2024 (f) 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 0 Notes: Source: Clarksons Research, ‘Offshore Supply Vessel Monthly’, August 2024. Platform supply vessels (PSV). Anchor handling tug vessels (AHT). Anchor handling tug / supply vessels (AHTS). 17 100 30% 2013 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Jan 2005 = 100 2014 80 40 200 50% 2010 100 300 Data at start year 2008 60% 2006 120 PSV/Supply 400 2004 140 70% AHTS/AHT 500 80% 160 60 PSV > 1,000 DWT 2002 180 AHTS 4,000+ BHP 90% 2000 PSV No. Units 1998 AHTS 200 600 2018 100% 1996 Av. AHTS/PSV day rates 220 OSV NEWBUILD CONTRACTING ACTIVITY OSV GLOBAL UTILISATION 2012 CLARKSONS OSV RATE INDEX FY25 OUTLOOK • Industry fundamentals driving core business remain strong • Prospects for key growth markets are compelling: • 18 • Substantial portfolio of decommissioning projects within oil & gas industry • Australian Government has committed to development of offshore wind projects • Australian Government has increased defence budget including port upgrades Bhagwan is in a stronger position to leverage core and new growth opportunities FY25 FOCUS AREAS • Strengthening core business to deliver high-quality services and project outcomes • Expanding in growth sectors including decommissioning, offshore wind and defence • Disciplined and targeted M&A • Fleet upgrades – including green energy and automation • Longer-term contracts that ensure higher vessel utilisation and stable revenue streams 19 CONCLUSION Founder-led business with a 25-year operating history and outstanding reputation 20 Buoyant market conditions, with industry tailwinds and tightening vessel supply Delivered record FY24 revenue Start of growth cycle in decommissioning, offshore wind, defence and maintenance • $80m IPO to de-gear balance sheet, and position the Company to pursue growth opportunities. • No founder sell down and 100% voluntary escrow for 12 months Growth thematic: • • • • Focused fleet investment / renewal Disciplined and targeted M&A Sustainable dividend policy Renewed capital capability and flexibility Appendix 21 Statutory to Pro Forma Reconciliation 22 RECONCILIATION OF PROFIT OR LOSS Pro Forma Profit or Loss $ Million Gross revenue Pass through revenue Net revenue Net cost of sales Gross profit Administrative expense Impairment of assets Other income (portion included in EBITDA) EBITDA Depreciation and amortisation expense EBIT Other income (portion not included in EBITDA) Finance income Finance costs Profit before income tax benefit Income tax benefit / (expense) Net profit after tax (NPAT) FY24 Actual 303.1 (34.4) 268.7 (197.5) 71.2 (29.8) (0.3) 0.2 41.3 (23.6) 17.8 (0.2) 0.2 (2.1) 15.7 (4.7) 11.0 FY23 Actual 169.0 169.0 (111.6) 57.4 (20.7) (0.3) 0.0 36.4 (21.0) 15.4 0.1 0.0 (2.5) 13.1 7.3 20.4 Gross Profit Margin Administrative expense/net revenue EBITDA Margin 26% 11% 15.4% 34% 12% 21.5% Notes: Small variances may exist due to rounding Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform 23 Change % 79% 59% 77% 24% 44% 14% 12% 16% 20% -46% FY24 Prospectus 291.7 (26.9) 264.8 (195.8) 69.0 (30.3) (0.1) 0.2 38.8 (23.0) 15.8 0.5 0.1 (1.7) 14.8 (4.4) 10.4 26% 11% 14.7% Change % 4% 28% 1% 1% 3% -2% 6% 3% 12% 6% 6% RECONCILIATION OF EBITDA • • Administrative expense has been increased in FY23 by $1.2 million and in FY24 by $1.1 million to reflect the estimated extra costs that Bhagwan will incur as a result of being a listed company. These costs include Directors’ fees, share registry costs, ASX listing fees, Directors’ and officers’ insurance premiums and audit and legal fees Reconciliation of Statutory EBITDA to Pro Forma EBITDA $ Million FY23 Actual Change % FY24 Prospectus Change % 6% 37.4 6% Statutory EBITDA Less: Additional listed company administrative expenses 39.7 37.6 (1.1) (1.2) (1.2) Add: Transaction costs Total Pro forma adjustments 2.7 1.6 (1.2) 2.7 1.4 Pro Forma EBITDA 41.3 36.4 Administrative expense for FY24 has been reduced by $2.7 million to reflect the total non-contingent transaction costs related to the Company’s initial public offer (IPO), comprising of corporate advisory, legal and accounting fees Notes: Small variances may exist due to rounding Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform 24 FY24 Actual 14% 38.8 6% RECONCILIATION OF NPAT Reconciliation of Statutory NPAT to Pro Forma NPAT FY24 Actual FY23 Actual Statutory NPAT 5.5 17.3 Less: Additional listed company administrative expenses (1.1) (1.2) (1.2) Add: Transaction costs Add: Finance cost savings Less: Impairment reversal Less: Tax effect of the above Total Pro Forma adjustments 2.7 7.3 (1.2) (2.3) 5.4 4.3 0.0 3.0 2.7 8.0 0.0 (2.8) 6.6 Pro Forma NPAT 11.0 20.4 $ Million Notes: Small variances may exist due to rounding FY23 NPAT increased by first-time recognition of tax losses totalling $7.3m Replacement Prospectus dated 28 June 2024, available on the ASX announcements platform 25 Change FY24 % Prospectus -68% -46% 3.8 10.4 Change % 48% 6% Growth Segments 26 GROWTH SEGMENTS Decommissioning Maturing of Australia’s offshore oil and gas industry • Movement to reduce emissions and reduce reliance on fossil fuels • • Mobilisation of construction barge, with crane and accommodation • Environmental surveys • • Anchor handling support • • Crew transfer • Delivered Bhagwan’s first oil and gas decommissioning project, the largest undertaken by an Australian-owned service provider • Growth Drivers Services Examples Bhagwan’s Current Activity 27 Offshore Wind • Defence Nascent and growing market across the APAC region • Construction and maintenance services are highly vessel intensive Renewed focus on marine logistics, security and offshore surveys • Increasing naval infrastructure spend Geotechnical support • Construction support • • Inspection, maintenance and repair • Currently supporting initial survey work for offshore wind farms Maintenance • Ageing offshore assets and marine / port infrastructure • Impetus to maintain production levels and optimise asset utilisation Geophysical and geotechnical surveys • Inspection, maintenance and repair Construction support • Subsea engineering • Infrastructure maintenance • Infrastructure maintenance • Ongoing service delivery for border force contracts • Ongoing maintenance work across Bhagwan’s core service portfolio Board and Management 28 THE BOARD Anthony Wooles Chairman and Non-Executive Director Loui Kannikoski Managing Director and Chief Executive Officer Tracey Horton AO Independent Non-Executive Director Andrew Wackett Executive Director Finance Appointed Chair on 8 March 2012 Founded and managed Bhagwan since 2000 Appointed as Independent Non-Executive Director on 5 June 2024 Appointed as Executive Director of Finance on 1 May 2024 Expertise: Financial and capital markets and strategic marketing Expertise: Extensive operational and management experience within the marine and oil & gas industries Expertise: Corporate governance and strategy, economics, finance and accounting Expertise: Investment banking, securities management, finance and corporate governance. Other ASX Directorships: IMDEX Limited since 2016 High Peak Royalties since 2012 29 Other ASX Directorships: IMDEX Limited since 2023 IDP Education since 2022 GPT since 2019 THE MANAGEMENT TEAM Kerren Kannikoski General Manager, Corporate Services Cheryl Williams CFO and Company Secretary Andy Cowan General Manager, QHSE Grant Bedford General Manager Commercial Co-founder of the business and commenced in 2000 Joined in 2018 Joined in 2008 Joined in 2023 Expertise and Qualifications: Human Resources, Crewing, Payroll, Information Systems and Marketing. Expertise and Qualifications: Financial planning, analysis, reporting, and management. Certified Chartered Accountant Holds a BA (Hons) in Accounting and Human Resource Management Certificate in Corporate Governance Practice Expertise and Qualifications: Quality Management, Occupational Health & Safety Management. Formal qualifications in Shipbuilding Expertise and Qualifications: Commercial management, business development. Graduate of the Australian Institute of Company Directors Certified Public Accountant (Australia) Holds an MBA and Bachelor of Commerce (BCom) – Accounting. Notes: The Management Team also includes Loui Kannikoski – Managing Director and Chief Executive Officer and Andrew Wackett – Executive Director of Finance. 30 THE MANAGEMENT TEAM Peter Carmichael General Manager, West Coast Operations Kevin Clifford General Manager, East Coast Operations Gregory Standish General Manager, Subsea Tom Kannikoski General Manager, Corporate and Strategic Development Luke Morand General Manager, Northern Territory Joined in 2006 Joined in 2014 Joined in 2021 Joined in 2014 Joined in 2014 Expertise and Qualifications: AMSA Qualified Marine Master and Engineer Expertise and Qualifications: AMSA Qualified Marine Master and Engineer Expertise and Qualifications: BEng (Hons), Civil Engineering. Expertise and Qualifications: AMSA Qualified Marine Master Expertise and Qualifications: AMSA Qualified Marine Master Notes: The Management Team also includes Loui Kannikoski – Managing Director and Chief Executive Officer and Andrew Wackett – Executive Director of Finance. 31 Diversified Services & Fleet 32 OFFSHORE SERVICES • Decommissioning • Dive and ROV1 support • Oilfield support services • Anchor handling • FPSO2 offtake assist Notes: 1. Remotely Operated Vehicles 2. Floating production, storage and offloading 33 PORT SERVICES • “Hotshots”1 for shipping agents • Survey support • Navigational aid maintenance • Habour towage • Port logistics Notes: 1. “Hotshot” services refer to quick, on-demand operations catering to urgent requirements 34 SUBSEA SERVICES • Inspection, maintenance and repair • Commercial diving (Air) • Integrated ROV1 • Decommissioning and light construction Notes: 1. Remotely Operated Vehicle 35 NEARSHORE • Wharf, jetty and bridge construction and deconstruction • Coastal towage • Cargo and crew transfers • Supply of specialised marine plant and equipment 36 DIVERSE FLEET Vessels Owned by Bhagwan Multi Cats Tugboats Number # 12 Number # 7 Value $m 35.1 Value $m 20.8 Dive Support Vessels • Bhagwan has access to a fleet of c. 100 vessels, 68 owned, 26 under lease • Wide range of fit for purpose owned and leased vessels • The aggregate value of the Bhagwan-owned fleet is c. $116.8m1 Barges Number # 2 Number # 13 Value $m 28.9 Value $m 10.8 Crew Transfer Vessels Utility Vessels Number # 14 Number # 10 Value $m 6.3 Value $m 14.7 Total Owned Vessels Other Vessels2 Number in fleet Value # 10 Number # 68 $m 0.3 Value $m 116.8 Notes: 1. Value of fleet per Company’s Statement of Financial Position as at 30 June 2024, based on latest independent valuation of certain vessels plus written down value of remaining vessels. 2. Tenders and other small support vessels. 37 Operations & Infrastructure 38 Bhagwan Facility Melbourne INFRASTRUCTURE • Strategically positioned locations support volume spot market work over the long term • Network facilitates vessel fleet to be mobilised across Australia as demand requires 39