Kentz

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Kentz Corporation Limited
Kentz Presentation on Kentz Corporation
Limited January 2008
FY 2007 Preliminary Results
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• Operational Review
• Dr Hugh ODonnell, Chief Executive Officer

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Results Highlights

• Strong revenue growth in FY 2007 47.2 over FY
  2006 to US545m
• Profit before tax in 2007 increased by 36.9 over
  2006 to US34.3m from US25.1m
• PBT 111.4 on a 2005/06 average profit before
  tax of US16.2m
• FY 2007 PBT margins improved to 6.3 from a
  2005/6 average of 4.8
• Strong cash generation with US123.7m of net cash
  at end of 2007
• Backlog at the end of 2007 increased by 9.7 to
  US596.4m
• Demand for engineering construction services in
  core markets remains strong

Based on two year averages between 2005/2006
2006 earnings were enhanced by a deferral of
profits from 2005 due to our conservative profits
recognition policy. The effect of the deferral of
profits produced a lower margin in 2005 than
would otherwise have been the case and a
correspondingly higher figure in 2006
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Company Overview

• Origins date back to 1919
• Flotation in February 2008 on London AIM at 115p
  per share
• Specialist solutions provider principally in oil
  services sector with c. 8,100 staff worldwide
• Key regions of operation include Middle East Sub
  Saharan Africa the Arctic New Areas
• Wide range of engineering and construction
  services bringing global reach to areas of the
  market where competition is local and regional
• Strong client relationships with major industry
  players
• Kentz continues to experience strong organic
  growth and has a structured plan to increase its
  value chain offering through strategic
  acquisition(s)
• Long term buoyancy in the oil gas market

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Visibility of Future Work
Jan 08
3-6 months
6-12 months
12-18 months
Backlog US682m (c.70 to be executed in 2008)
Letters of Intent
Prospects
Strategic Prospects
Includes new contracts c.US100m
LOIs received c.US250m
Potential prospects up to US850m
Potential prospects up to US650m
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Progress since IPO

• Kentz is set to deliver upon its IPO promises
• Record backlog of US682m as at 31 January 2008
• Strong bidding pipeline in excess of US1 billion
  
• Exceptional HSE standards continue to be upheld
• 18.5 increase in man-hours worked from 21
  million in 2006 to 24.9 million in 2007
• Reduction in Total Incident Rate from 1.04 in
  2006 to 0.31 in 2007
• Good market conditions in all Kentz sectors
• Current backlog, Letters of Intent (LOI), and
  prospects gives the Board confidence in the
  Companys future outlook

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Company Highlights
Backlog (USm) Up 9.7 as at 31 Dec 2007
Revenue (USm) Up 47.2 for Y/E 31 Dec 2007
PBT (USm) Up 36.9 for Y/E 31 Dec 2007

• Strong backlog, and including Letters of Intent,
  figure at end 31 March 2008 is in excess of
  US900 million
• Strong organic revenue growth in 2007
  year-on-year
• PBT becoming less lumpy due to smoothing out
  effect of expanded portfolio of services

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Industry Revenue Split
Revenue by Industry Based on FY 2007 US544.6m
Revenue by Industry Based on FY 2006 US370.1m

• Demand for Engineering Construction skills in
  the Oil Gas and Mining sectors has been strong
  and is set to continue
• Oil, Gas Petrochemicals US358 billion of
  industrial projects have been recently completed
  by the Gulf Coast Countries (GCC) and a further
  US1,100 billion of industrial projects planned
  over next five years. Of these, US344 billion
  are oil, gas and petrochemicals projects
• Mining metals Pace of industrial and economic
  growth in developing countries, particularly the
  growing economies of Brazil, Russia, India and
  China (BRIC), driving price of raw materials.
  E.g. world steel consumption forecast to grow by
  c. 7 in 2007 and in 2008 versus the BRIC
  countries where consumption set increase by 12.8
  and 11.1 respectively

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Geographic Revenue Split
Currency US m
Up 54.0 on 2006
Up 49.7 on 2006
Up 3.4 on 2006
Up 51.5 on 2006
Not including share of Thiess Pty Ltd JV
Revenues 2006, 30m 2007, 54.9m
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Revenue by Client Type
Revenue by Client Type Based on FY 2006
Revenue by Client Type Based on FY 2007
Revenue by Client Type Based on average FY 2004
to FY 2007
A stronger focus on Specialist EPC and Technical
Support Services in 2007 resulted in a higher
proportion of revenues from End User clients (vs.
engineering and project management companies)
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Revenue by Business Line
Specialist EPC Controls Automation
(TSI) Telecommunications Systems Power Projects
Services Turnkey Temporary Facilities Turnkey
Port Facilities
Construction Structural, Mechanical
Piping Electrical Instrumentation
Technical Support Services Pre-EPC award
(FEED) Integrated Project Management Commission
ing Maintenance Turnaround Offshore Services
Engineering, Procurement and Construction
Total Systems Integration Front End
Engineering and Design
Revenue by Business Line Based on FY 2007
US544.6m
Revenue by Business Line Based on FY 2006
US370.1m
Strategy of growth in margin enhancing business
lines of specialist EPC and support services has
been successful
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Acquisition Positioning Strategy Adding Process
EPC to Current Specialist EPC, Constr. Services
Mix
mining
Upstream
Midstream
Downstream
Slide layout source AMEC
Current space
Future space Process EPC
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Acquisition Targets Shortlist
Activities

• Several targets currently being evaluated for
  acquisition
• Ranging in value from c. US10m - US75m
• Generating revenues in the range of c. US25m -
  US140m
• Located in a variety of regions including North
  America and Europe
• Operating across a range of post wellhead
  activities (see right)

Early Production Modular Production Plants
On-shore Production Facilities (OPF/GOSP)
Water Injection Plants
Mooring Transfer Systems
Post Wellhead Facilities
Gathering Centres
Gas Desulphurisation Process Plant
Oil Gas Terminals
LNG Processing
LNG Receiving Terminals
FPSO Topsides
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• Financial Review
• Ed Power, Chief Financial Officer

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Profit Loss

• 2007 Revenues up 47.2 on 2006 levels reflecting
  continued strong growth
• PBT up 36.9 to US34.3m representing 6.3 of
  sales (2005/6 average 4.8 of sales)
• 2006 earning enhanced by deferral of profits from
  2005 to 2006 - conservative profit recognition
  policy for lump sum contracts
• Effective tax rate of 23.4 for 2007 compares
  with 22.1 for 2005/6 average
• Profit after tax up 22.6 to US26.3m
  representing 4.8 of sales (2005/6 average 3.7
  of sales)

Profit for the period after discontinued
operations
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Cashflow

• Net cash and cash equivalents up 115.9 or by
  US66.4m at US123.7m (2006 US57.3m) reflecting
  strong trading performance and improved cash flow
  profile across operations
• Cash balance at December 2007 includes advance
  payments from clients
• US45m potential cash currently available for
  acquisitions

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Balance Sheet

• Working Capital up 17.7 to US55.2m (2006
  US46.9m)
• Cash at December 2007 includes advance payments
  from clients
• Trade and other payables also include advance
  payments from clients
• Shareholders Funds up 21.9 to US62.3m (2006
  US51.1m)
• Net assets up 22.3 to US62.7m

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Conclusion Outlook
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Strategy

• Expansion of regional presence with core clients
• International oil companies (IOCs)
• National oil companies (NOCs)
• Major engineering and project management
  companies
• Develop key strategic projects through regional
  capability, targeting large multi-million
  projects with major IOCs and NOCs
• Complete an acquisition to enable delivery of
  solutions in 3 new areas
• Marginal fields development including early
  production facilities
• Offshore deepwater solutions in delivering FPSOs
  topsides
• Deliver small process plants both onshore and
  offshore
• Enter into further JVs and alliances to
• Reduce and diversify risk
• Increase opportunities
• Enable better cost efficiencies

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Conclusion and outlook

• Continued excellent organic growth year-on-year
• Backlog up 9.7
• Revenue up 47.2
• PBT up 36.9
• Completion of successful IPO with committed
  management team holding approx 24 post float
• Potential to follow existing core clients into
  new regions
• Continue relative growth of margin enhancing
  business lines
• Acquisition in upstream oil gas sector
• Continued backlog growth with exciting prospects
• Long term buoyancy in the oil gas and mining
  markets demand for engineering construction
  skills in these sectors set to remain high

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Future Financial Calendar

• Final accounts published May 2008
• AGM (Jersey) 10 June 2008
• H1 Interim 30 June 2008
• Interim results September 2008
• Interim dividend payment September/ October
  2008
• Year end 31 December 2008

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Appendices
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Kentz Organisation
Board of Directors Key Executives
Non-Executive Directors David Beldotti, Razali
Abdul Rahman (Chairman), Hans Kraus, Hassan Abas,
Brendan Lyons
Chief Executive Officer Hugh ODonnell
Group Development Noel Kelly
Chief Financial Officer Ed Power
Middle East Eamonn OHanlon
Africa Eoin Hurley
Australasia, Europe Caribbean Dave Ross
Arctic Region New Areas Mike Murphy
Group Contract, Commercial Risk Adrian
Griffin
Structure has been regionally organised to
provide capacity for growth
Executive Directors
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Kentz Clients
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Operational highlights EPC

• Rasgas Common Offplot Project
• EPC services for mixed use accommodation and
  industrial development, including
• Site preparation
• Buildings for housing facilities
• Utilities for power, water, waste water, fire
  fighting and telecoms
• Infrastructure for roads, fencing, car parks,
  workshops, etc.
• Key facts
• Peak manpower 1,220
• Approximate value to Kentz US83.5 million
• Location, Ras Laffan Industrial City, Ras Laffan,
  State of Qatar

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Operational highlights Construction

• Rio Tinto Madagascar Minerals Ilmenite Project
• Structural steelwork, piping, mechanical and
  electrical and instrumentation (SMEIP) works
  associated with
• Installation of floating concentrator plant,
  reclamation and drying plant, dry mill feed
  conveyors and ship loading facilities
• Electrical infrastructure works for complete
  plant
• Calibration and installation of site wide
  instrumentation
• Supply of all construction equipment including
  diesel generators, cranes and transport
• Key facts
• Peak manpower 680
• Approximate value to Kentz US37 million
• Location Madagascar

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Operational highlights Services

• Project ExxonMobil Facilities at Sakhalin Island
• Electrical Instrumentation, construction and
  commissioning and project management support
• The Onshore Production Facility (OPF) was
  constructed in Modular units in Korea and
  shipped directly to site in 2005 and 2006
• The Oil Terminal was commissioned in two phases
  with initial focus on early export systems with
  balance of systems completed post hydrocarbon
  introduction
• Key facts
• Peak manpower 830
• Owner Exxon Neftegas Ltd
• Location Sakhalin Island

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