SRJ Technologies Group PLC · ASX:SRJ
SRJ Technologies — Merger or Acquisition (July 2024)
58 slides from SRJ Technologies's merger presentation, Jul 24, 2024
Slide 1: Proposed Acquisition of Air Control Entech and Capital Raising
For personal use only SRJ TECHNOLOGIES GROUP PROPOSED ACQUISITION OF AIR CONTROL ENTECH AND CAPITAL RAISING ADVANCING ASSET INTEGRITY: Air Control Entech - Where Robotics & Drones Merge with Deep Industry Expertise for Smarter, Faster, and Safer Solutions. 1
Slide 2: Notice & Disclaimer
NOTICE & DISCLAIMER This document is issued on a confidential basis by SRJ Technologies Group plc (”SRJ” or ”the To the maximum extent permitted by law, no Party guarantees or makes any representations or Miscellaneous Company”) for information purposes only. It is intended only for those persons to
Slide 3: Today's Presenters
TODAY’S PRESENTERS For personal use only ALEXANDER WOOD KIERAN HOPE STEFAN McGREEVY SRJ Executive Director and ACE Chief SRJ Chief Chief Executive Officer Operating Officer Financial Officer 3
Slide 4: Executive Summary & Transaction Overview
01 For personal use only EXECUTIVE SUMMARY & TRANSACTION OVERVIEW 4
Slide 5: Executive Summary
EXECUTIVE SUMMARY The business combination creates a world-class asset integrity company, delivering state-of-the-art Advanced Robotics & Specialised Drone Technology with cutting-edge repair and integrity maintenance solutions. • SRJ Technologies Group Plc ("SRJ") has entered into a Share Purchase
Slide 6: A Combination to Forge a Significant Player in Asset Integrity Management
A COMBINATION TO FORGE A SIGNIFICANT PLAYER IN ASSET INTEGRITY MANAGEMENT The strategic combination of SRJ Technologies and Air Control Entech creates a robotically enabled technology platform leveraged to the high growth asset integrity and power generation industries. KEY HIGHLIGHTS: For personal
Slide 7: The Asset Integrity Market
THE ASSET INTEGRITY MARKET The asset integrity market, which covers the oil & gas, power generation, marine and aerospace industries, is large, growing and primed for technological advancement Key Drivers • Stricter safety regulations and compliance requirements. • Aging infrastructure needing caref
Slide 8: Acquisition Strategic Rationale
ACQUISITION STRATEGIC RATIONALE The acquisition of ACE places the Combined Group in two of the three life cycle sectors Inspection Defect Management Repair & Maintenance 1 2 3 For personal use only • Remote inspection services • Analytics for defect classification and • Innovative online repair tech
Slide 9: SRJ & ACE Combined Financial Highlights
SRJ & ACE COMBINED FINANCIAL HIGHLIGHTS The combination of ACE and SRJ capitalises on synergistic strengths and opportunities, promising unparalleled service EBITDA offerings, expansive market reach, and sustained innovation. $4.0m $3.2m (£1,7m) $2.0m AUD$ (‘000,000) For personal use only $.0m -$.6m
Slide 10: ACE Overview
For personal use only ACE 02 OVERVIEW 10
Slide 11: Overview of ACE
OVERVIEW OF ACE ACE is a UK business that provides remote inspection services to the Oil & Gas industry with advanced robotics and custom UAV technology. ACE’s growth and tier 1 customer base is a result of the cost efficiencies and safety improvements its services provide for the Oil & Gas industry
Slide 12: ACE Financial Overview
ACE FINANCIAL OVERVIEW EBITDA COMMENTARY: $3.2m $3.5m (£1.6m) • Revenue growth driven in FY24F by existing clients looking to roll out solutions $3.0m in other jurisdictions AUD$ (‘000,000) $2.5m • EBITDA has improved YoY as revenue growth has outpaced the overheads $2.0m For personal use only incre
Slide 13: Legacy Industry Challenges – ACE Solutions
LEGACY INDUSTRY CHALLENGES – ACE SOLUTIONS ACE’s advanced robotic solutions solve the safety, efficiency and cost challenges of the incumbent technology PROBLEM – OLD TECHNOLOGY ACE SOLUTION • Increasing government regulation on critical energy infrastructure increases compliance • Automated inspect
Slide 14: ACE – Key Competitive Advantage
ACE – KEY COMPETITIVE ADVANTAGE ACE is the only advanced technology company offering services certified by all 5 main class societies, significantly enhancing its ability to win tenders for FPSOs. UNMATCHED CLASS CERTIFICATIONS A ship classification society or ship classification organisation is a n
Slide 15: Air Control Entech - Solutions
AIR CONTROL ENTECH - SOLUTIONS ACE’s custom drone technologies perform remote inspections on Floating Production Storage & Offloading vessels (FPSOs). TECHNOLOGIES USED: CUSTOM REMOTE INSPECTION TECHNOLOGY SOLUTIONS Emissions monitoring by ENGINEERED ROBOTICS AND UAVS Crane UAV (engine exhausts, str
Slide 16: ACE Product, Services & Revenue Model
ACE PRODUCT, SERVICES & REVENUE MODEL Through proprietary and class certified technology, ACE solutions for FPSO operators provide a full suite of solutions with flexible pricing structures to fit client needs Technology & Certifications • Utilizes advanced robotics and custom UAV technology for rem
Slide 17: ACE Case Study: In Service Internal Tank Inspections
ACE CASE STUDY: In Service Internal Tank Inspections Utilizing an Elios 2 internal inspection drone ACE performed a full visual tank inspection satisfying the vessels class society and saving ~£80k per tank inspected vs. conventional inspection techniques Project • Scope of Work: Internal cargo oil
Slide 18: ACE Market Opportunity and Growth Strategy
ACE MARKET OPPORTUNITY AND GROWTH STRATEGY CURRENT MARKET: OIL & GAS, FPSO GROWTH OPPORTUNITY: MARITIME SHIPPING MARKET • As of 2024, there are approximately 220 floating production storage and offloading • Capabilities developed in the Oil & Gas sector are directly transferable to the Maritime (FPS
Slide 19: ACE Growth Strategy Leveraging Key Industry Relationships
ACE GROWTH STRATEGY LEVERAGING KEY INDUSTRY RELATIONSHIPS Air Control Entech continues to develop commercial relationships with large industry TotalEnergies SE ENI S.p.A (BIT:ENI) Repsol, S.A (BME:REP) (NYSE:TTE) players across the oil and gas and marine Company sectors which will drive future growt
Slide 20: ACE – Ongoing Research & Development of Industry Leading Technologies
ACE – ONGOING RESEARCH & DEVELOPMENT OF INDUSTRY LEADING TECHNOLOGIES ACE’s industry leading technologies continue to enhance its position as a world leader in UAV technology for the Oil & Gas market Emissions Monitoring: ATEX Zone 1 – Optical Gas Imaging (OGI) unmanned aerial vehicle (UAV) For pers
Slide 21: SRJ Overview
For personal use only SRJ 03 OVERVIEW 21
Slide 22: Overview of SRJ
OVERVIEW OF SRJ SRJ’s vision is to become a global leader in asset integrity solutions for the energy industry, providing solutions to ensure efficient, productive and compliant operations. For personal use only • SRJ delivers a range of asset integrity solutions for the short term and long-term int
Slide 23: SRJ Financial Overview
SRJ FINANCIAL OVERVIEW Revenue EBITDA $5.0m $4.6m $.0m (£2.4m) -$.3m $4.5m -$1.0m $4.0m (-£0.1m) -$2.0m $3.5m $2.9m -$2.0m (£1.6m) -$3.0m AUD$ ('000) For personal use only (-£1.1m) AUD$ ('000) $3.0m -$4.0m $2.5m $1.7m -$5.0m $2.0m (£0.9m) $1.5m -$6.0m -$5.4m $.7m -$7.0m (-£3.0m) $1.0m (£0.4m) $.5m -
Slide 24: SRJ - Repair & Maintenance Solutions
SRJ - REPAIR & MAINTENANCE SOLUTIONS SRJ provides a solutions led, end to end service utilizing proprietary technology Machinery vibration Integrity management strategic troubleshooting services advice and governance Fitness-for-Service & Remaining Life Assessments For personal use only (vessels, pi
Slide 25: Transaction Strategic Rationale
04 For personal use only TRANSACTION STRATEGIC RATIONALE 25
Slide 26: The Combined Group - Strong Cross Selling Opportunities
THE COMBINED GROUP - STRONG CROSS SELLING OPPORTUNITIES The combined strengths Strengthened Customer Relationships of ACE and SRJ create By leveraging their strong existing relationships, ACE and SRJ aim to cross-sell their respective offerings, effectively expanding market penetration and creating
Slide 27: Strategic Expansion of Geographic Footprint
STRATEGIC EXPANSION OF GEOGRAPHIC FOOTPRINT Geographic expansion to drive follow on business with existing global operators in the Oil & Gas sector Strategic Expansion • ACE and SRJ have established commercial relationships with For personal use only global operators in the Oil & Gas sector, includi
Slide 28: Board and Management
BOARD AND MANAGEMENT SRJ established governance structures will support growth of combined SRJ and ACE business SRJ ACE For personal use only Robin Alexander Roger Stefan Giles Kieran Murray Marc Blair Pinchbeck Wood Smith McGreevy Bourne Hope Stewart Whitton Nichols Non-Executive Executive Managing
Slide 29: Financial Information & Transaction Overview
05 For personal use only FINANCIAL INFORMATION & TRANSACTION OVERVIEW 29
Slide 30: Combined Group Profit & Loss
COMBINED GROUP PROFIT & LOSS Combined Group Pro Forma Profit and Loss represented in Australian Dollars Equivalent FY21A FY22A FY23A FY24F FY24F Revenues has increased between FY21A-Fy24F, supported by increased activity from a A$'000 Pro forma Pro forma Pro forma Pro forma Statutory recurring custo
Slide 31: Pro Forma FY24F Combined Group Financial Metrics
PRO FORMA FY24F COMBINED GROUP FINANCIAL METRICS Revenue EBITDA A$7.7m A$12.3m $3.5m A$3.2m 167% increase in revenue (£4.0m) (£6.4m) (£1.8m) (£1.7m) A$4.6m For personal use only (£2.4m) -A$.3m Impact of (-£0.1m) SRJ Standalone Combined Group Pro forma ACE Standalone Impact of SRJ Standalone Combined
Slide 32: Pro Forma Balance Sheet
PRO FORMA BALANCE SHEET The following transactions and events which are to take place on or before completion of the SRJ Dec-23 Dec-23 Pro Dec-23Pro Offer and the Acquisition are presented as if they, together with the Offer and the Acquisition, Subsequent Acquisition had occurred on or before 31 De
Slide 33: Funding Summary
FUNDING SUMMARY Transaction Funding Sources of Funds GBP£m A$m • The conditional acquisition of ACE for consideration amount of GBP£4.5 million (~A$8.64m) in cash and the balance by the issue of 175,249,279 CDIs (with an implied value of ~A$9.6m at the Offer Price).1 Capital Raising 7.29 14.00 For p
Slide 34: Offer Summary
OFFER SUMMARY SRJ is seeking to raise up to ~A$14.0m* via a capital raise (Offer) comprising of: • A conditional Placement of new fully paid ordinary CDIs (New CDIs) to sophisticated and professional investors to raise up to approximately $13.5m (before costs); • New CDIs under the Placement will be
Slide 35: Capital Structure
CAPITAL STRUCTURE The maximum number of securities which may be issued under the Offer is set out below % of CDIs at % of CDIs at % of CDIs at Announcem % % of total 6 months 12 months 24 months % For personal use only Securities No of securities Completion Completion (fully ent Date Total CDIs on C
Slide 36: Offer Summary - Indicative Timetable
OFFER SUMMARY - INDICATIVE TIMETABLE Timetable Date 2024 SRJ goes into trading halt to complete capital raising Monday, 22 July 2024 SPP Record Date Tuesday, 23 July 2024 For personal use only Capital raising trading halt lifted Wednesday, 24 July 2024 ASX announcement regarding proposed acquisition
Slide 37: Key Risks & International Offer Restrictions
06 For personal use only KEY RISKS & INTERNATIONAL OFFER RESTRICTIONS 37
Slide 38: Offer Summary – Key Risks
OFFER SUMMARY – KEY RISKS BUSINESS RELATED RISKS The funds to be raised under the Offer are considered sufficient to meet the current objectives of the Group. However, additional funding will be required if further opportunities arise for capital Additional requirements expenditure, acquisitions or
Slide 39: Offer Summary – Key Risks
OFFER SUMMARY – KEY RISKS BUSINESS RELATED RISKS (Continued) The success of the Group’s business relies on its ability to attract new business from existing customers and attract new customers. The capacity to attract new customers and attract new business from existing customers will be dependent o
Slide 40: Offer Summary – Key Risks
OFFER SUMMARY – KEY RISKS BUSINESS RELATED RISKS (Continued) The Group has operations in Australia, the United Kingdom, the United States and various other foreign jurisdictions and corporate and head office functions in Jersey, with the Group deriving revenue from operations in foreign countries. A
Slide 41: Offer Summary – Key Risks
OFFER SUMMARY – KEY RISKS BUSINESS RELATED RISKS (Continued) The Group will be subject to OH&S risks associated with operating within an environment of high-pressure gas and oil infrastructure with technology and Health and safety risk machinery that are potentially dangerous. Incidents may not be s
Slide 42: Offer Summary – Key Risks
OFFER SUMMARY – KEY RISKS BUSINESS RELATED RISKS (Continued) The Group may seek to expand into new energy markets in the future. However, there is a risk that the Group’s current technology will not be fully Inability to develop products compatible with these future energy infrastructures. Although
Slide 43: Offer Summary – Key Risks (Acquisition Related)
OFFER SUMMARY – KEY RISKS ACQUISITION RELATED RISKS The Acquisition will be subject to certain conditions including the Group obtaining shareholder approval to the issue of the consideration shares to vendors under the acquisition agreement and the Company undertaking an equity capital raising and r
Slide 44: Offer Summary – Key Risks (Acquisition Related, continued)
OFFER SUMMARY – KEY RISKS ACQUISITION RELATED RISKS (continued) As part of its growth strategy, the Group may make further acquisitions of complementary businesses or enter into strategic alliances with third parties. The Group may from time to time, in accordance with its disclosure requirements, a
Slide 45: Offer Summary – Key Risks (General Investment Risks)
OFFER SUMMARY – KEY RISKS GENERAL INVESTMENT RISKS General domestic and global economic conditions may adversely impact the price of the Company’s CDIs for reasons outside the Company’s control. Exposure to general economic This includes credit conditions, increases in unemployment rates, negative c
Slide 46: Offer Summary – International Offer Restrictions
OFFER SUMMARY – INTERNATIONAL OFFER RESTRICTIONS Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commiss
Slide 47: Offer Summary – International Offer Restrictions
OFFER SUMMARY – INTERNATIONAL OFFER RESTRICTIONS United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services an
Slide 48: Appendix
For personal use only 07 APPENDIX 48
Slide 49: Financial Information Overview
FINANCIAL INFORMATION OVERVIEW The Financial Information of the Combined Group includes the following: The Statutory historical profit & loss has been derived from the following: a. Historical Financial Information for the financial years ended 31 December 2021 (FY21A), a. Audited historical consoli
Slide 50: Basis of Preparation of Forecast Information
BASIS OF PREPARATION OF FORECAST INFORMATION • No material changes in key personnel and the Combined Group maintains its ability to The Forecast Financial Information is based on various specific and general assumptions.. In recruit and retain the personnel required to support future growth; prepari
Slide 51: Combined Group Profit & Loss
COMBINED GROUP PROFIT & LOSS Combined Group Statutory Historical Profit and Loss represented in in Great British Pound Combined Group aggregated income statement - FY21A Combined Group Statutory historical income statement - FY23A £'000 SRJ audited ACE audited Combined Group Revenue 371 479 850 £'00
Slide 52: Combined Group Profit and Loss
COMBINED GROUP PROFIT AND LOSS Combined Group Pro Forma Profit and Loss represented in in Great British Pound FY21A FY22A FY23A FY24F FY24F £'000 Pro forma Pro forma Pro forma Pro forma Statutory Revenue 850 1,826 3,027 6,406 4,732 Cost of sales (374) (679) (650) (1,425) (997) For personal use only
Slide 53: Pro Forma Adjustments to the P&L
PRO FORMA ADJUSTMENTS TO THE P&L Pro forma adjustments summary • NPAT impact of ACE refers to the impact of financial performance of £'000 Ref FY21A FY22A FY23A FY24F ACE for the period from FY21A up to completion of the proposed acquisition being 20 August 2024. This has been allocated across For p
Slide 54: Sensitivities to FY24F
SENSITIVITIES TO FY24F Sensitivity summary Impact on FY24F Pro forma EBITDA Impact on FY24F Pro forma Revenue • In determining the impact of the changes in assumptions made to £'000 Base Impact Sensitised Base Impact Sensitised sales revenue and EBITDA, we note the these amounts have been Revenue qu
Slide 55: Key Terms and Conditions of Share Purchase Agreement
KEY TERMS AND CONDITIONS OF SHARE PURCHASE AGREEMENT Term Summary Acquisition Under the terms of the SPA the agreed purchase price is GBP15 million (~A$28.8m) subject to customary working capital and net debt adjustments comprising a cash payment of GBP£4.5 million (~A$8.64m) and the consideration i
Slide 56: Summary of Options
SUMMARY OF OPTIONS Type of Option Summary 10,000,000 options (5,000,000 Adviser Options to be issued to the Joint Lead Managers and 5,000,000 Adviser Options to be issued to the Corporate Adviser) which vest immediately, are exercisable for 2 years after issue at an exercise price of a 20% premium t
Slide 57: Summary of Underwriting Agreement
SUMMARY OF UNDERWRITING AGREEMENT The Company has entered into an Underwriting Agreement with the Joint Lead Managers who have agreed to manage and underwrite the Offer up to the Underwritten Amount, being A$11.1 million. The Company is required to pay the Joint Lead Managers the following fees for
Slide 58: Summary of Underwriting Agreement (cont.)
SUMMARY OF UNDERWRITING AGREEMENT (cont.) • ASIC or any government agency commences, or gives notice of intention to commence, a hearing or investigation in relation to the Offer; • the Company is insolvent or there is an act or omission, or a circumstance arises, which is likely to result in the Co
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