Announcement PDF ASX Announcement 29 November 2024 CEO Address to Shareholders at Verbrec’s 2024 Annual General Meeting Verbrec Limited (ASX : VBC) (Verbrec or the Company) issues the following address script delivered by Verbrec’s Chief Executive Officer, Mark Read at the Company’s 2024 Annual General Meeting. CEO Address to Shareholders I would like to start by acknowledging the traditional owners of the land on which we are meeting today and pay my respects to Elders past and present. As the Chairman has noted in his address: • The Board and management of Verbrec has worked extremely hard over the past financial year to set a new foundation for profitability and growth. • The outcome is self-evident with the highest profits since FY2015 and the highest profit margins since the merger of OSD and LogiCamms in 2019. • We’ve repaired our balance sheet and have optimised our operations to produce revenues at dramatically reduced cost of sales. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com • Our strategy is in place and active, and we are now able to grow our revenues and profits in FY2025. A substantial proportion of revenues is reliable and recurring, fuelled through long term contracts. • Our growth targeted business units, including asset management, operations & maintenance and competency training are performing strongly, and we anticipate that trend to continue. I’d like to spend some time today demonstrating why Verbrec is different from its peers, how we create value and provide further insight into our long-term contracts and sustainable focus areas. Verbrec’s Partnership Model Verbrec’s strength is in its ability to form strong client relationships that continue through the entire life cycle of an asset. A one stop shop – a true partner. We engage with our clients at the earliest stages of project development to select the optimum solution. Moving on to engineering, we can support our clients with multi-disciplinary engineering services, adding value to reduce their capital investment costs and maximising their assets returns. We provide our clients with Asset Management services to increase efficiency, reduce asset costs and improve productivity. Where it makes sense, we partner for construction, providing turn-key construction services or acting as owners’ engineers to support our clients throughout the construction phase. Verbrec often operates our client’s assets over the long term, providing uninterrupted and efficient operations in line with legislative and regulatory requirements. We also provide a range of training services for our client’s electrical trades. When an asset comes to the end of its useful life, Verbrec is there to work with our clients to repurpose the asset or support them in the decommissioning process. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com How we Create Value Through strong relationships built on trust Verbrec enables a sustainable future for our clients and their customers. By adding value across the entire life of our client’s assets, we forge strong long-lasting relationships with our clients. A substantial proportion of our revenues is generated through multi-year operations and maintenance contracts and panel agreements. Growth In FY2025 we expect to grow our revenues and profits. It is through a combination of organic growth, including geographic expansion, where we will maximise the revenues, we achieve from our panel agreement and operations and maintenance contracts. The energy transition is the other major pillar of our growth strategy, I’ll get to this point a little later in the presentation. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com Add Value, Reduce Risk Whilst we have a strong focus on growing our revenues, we’re not taking on additional risks in our expansion efforts. I’m pleased to report that in FY2024, we’ve significantly increased the proportion of our revenues from Reimbursable, Operations & Maintenance and Training contracts. These contracts have a lower risk profile. Fixed and mixed contracts, contrastingly, are higher risk for us, hence we’re being more selective in the contracts we take on and their economic attractiveness. Our Valued Relationship Clients This slide shows many of our blue-chip relationship clients all of whom are responding to the evolving energy landscape. It is by deeply understanding our clients' sustainability journeys and responding to their needs, Verbrec will increase its share of the revenue generated with our relationship clients. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com Revenue from Panel / O&M Agreements From these graphs, you can see that we have increased the proportion of our revenues generated from multi-year panel agreements and multi-year operations and maintenance contracts from 47% in FY2023 to 54% in FY2024. This is a good indicator that our ‘Relationship Client’ approach is working and gaining traction from the market. Verbrec Outlook This outlook slide demonstrates our full forward pipeline and the pipeline for the remainder of FY2025. We’ve placed great emphasis on improving our win rate, which averaged 36% in FY2024. Our expectation is that we will equal or better this throughout this financial year. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com Verbrec – Repeatable Revenues Operations & Maintenance Agreements Verbrec’s Operations and Maintenance business derives the bulk of its revenues from Multi-Year Pipeline and Process Plan operations contracts. We operate over 1,800KM of gas pipelines across Australia. It’s a great business, which we added to in 2021 by acquiring Energy Infrastructure Management. The business’ revenues in FY2024 are over 94% higher than in FY2021. For each $1.00 in contracted services under these multi-year agreements, Verbrec in FY2024 secured $1.14 in additional ad-hoc revenues. We consider these additional services as ‘repeatable revenue’ as we have a clear correlation between contracted services and additional services, and thus can reasonably estimate this additional revenue. Verbrec Panel Agreements Verbrec also has 43 multi-year panel agreements in place with relationship clients. In FY2024, 43% of Verbrec’s revenues were derived from these panel agreements. The trend of revenues that come in from these agreements is well documented, thus, we take a view based on historic norms to predict these repeatable revenues. Sustainable Focus Areas We have four sustainable focus areas at Verbrec. These are the areas where we see ourselves best fitting into the evolving energy landscape and our client’s sustainability journeys. It’s the sweet spot where our in-house capability is well suited to adapt to our client’s changing goals and assets. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com Sustainable Focus Areas Electrification & Energy Storage The first of our four focus areas is Electrification & Energy Storage. This is core business for Verbrec. We are already working in this space providing innovative solutions in the areas of system modelling, battery technologies, geo-thermal energy and hydro-energy solutions, and actively pursuing opportunities to more meaningfully contribute to the solar and wind energy sectors. Gas Market Transition A particular area of focus for Verbrec is the Gas Market Transition. This fully aligns with Verbrec’s current core capabilities and client base. It is a critical area where Verbrec can maximise its offering as we transition from gas as a base load fuel to a firming / peaking fuel. Verbrec is already well established in this area, undertaking services for clients on their peaking gas plants, along with biogas, hydrogen, carbon capture and storage and other emerging technologies. Sustainable Mining Along with providing engineering and asset management support to key mining clients throughout Australia, Verbrec’s digital twin product, StacksOn, enables our mining clients to deliver on-spec product, in challenging conditions, whilst increasing throughput and reducing downtime, contributing to more profitable / sustainable stockyard management. Water Security Verbrec is also an important contributor to water security throughout Australia and New Zealand. We provide our expertise to water authorities and other partners in this critical industry by designing, constructing and maintaining water assets, including traditional water infrastructure, desalination plants and water treatment facilities. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com The Evolving Energy Landscape, Market Opportunity Allow me to provide a little more context. The graphs on this page, as detailed in AEMO’s 2024 Integrated System Plan, demonstrate the magnitude of the additional capacity and investment required for the evolving energy landscape in Australia. • Energy storage will need to increase more than 15-fold by 2050 • Gas peaking plant capacity will need to significantly increase whilst much of the traditional gas market assets will need to be decommissioned or retrofitted and repurposed • Electricity consumption is predicted to nearly double by 2050. AEMO predicts that the optimal development path will require a net present value of $122 billion in annualised capital costs, whereas, the Australian Industry Energy Transitions Initiative has placed the investment closer to a staggering $625 billion. It’s a similar story in New Zealand where we also have a strong presence. The truth is, that nobody really knows exactly how the transition will play out, or what the overall investment will be. But Verbrec is working with our clients and their advisers, developing the right strategies to deal with it. Verbrec is already Capturing the Opportunity We are already well on our way. This chart shows that of our three main core markets, more than 33% of our project portfolio comes from our Sustainable Focus Areas. We expect this to grow over time as the industry continues its transition to a more sustainable future. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com Verbrec Project Highlights Now I’d like to talk to you about some of the really exciting projects that we’ve been delivering. Broadlands Biogas Upgrade On 6 November 2024, First Renewables announced that the First Renewables Biogas to Pipeline Upgrade Facility at Ecogas’ Organics processing facility in Reporoa, New Zealand is now in production. James Irvine (General Manager of Future Fuels at Clarus) hailed this as a historic milestone for New Zealand’s gas pipeline infrastructure. Verbrec provided the front-end and detailed design engineering services for this landmark project which transforms kerbside waste into a valuable source of renewable gas, ultimately contributing to a reduction in reliance on fossil fuels and providing cleaner energy for New Zealand homes and businesses. It is through a collaborative, relationship client approach that has enabled Verbrec to provide innovative engineering services to Clarus for over 15 years. Verbrec is tremendously proud of the part it has played in enabling the renewable gas flow at the First Renewables Biogas facility. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com First major long-term Operations & Maintenance contract in WA Verbrec operates over 1,800 KM of gas pipelines across Australia. Near the end of the financial year, we secured our first multi-year pipeline operations and maintenance contract in Western Australia. Pipeline operations is a core service offering of our Infrastructure Services team and provides a predictable, multi-year baseline of revenues for the group. Western Australia is served by relatively few competitors in this space, so breaking into this market is a real achievement for Verbrec and gives us the opportunity to introduce our competitive offering into this region and secure greater market-share. Through this O&M contract, we will provide CITIC Pacific Mining with operational assurance and ensure pipeline integrity through continuous performance monitoring and Right of Way surveillance. Australia’s Largest Onshore Gas Pipeline FEED Project Verbrec specialises in innovative engineering and project delivery solutions to clients – through our technical specialities, including Automation & Control, Power, Process Plant and Pipelines. Verbrec’s engineering team has been recently awarded the Front-End Engineering for one of Australia’s largest pipeline development projects. The pipeline is poised to be a crucial asset in enhancing energy security for New South Wales. By improving the reliability of the gas supply, this pipeline will contribute to stabilising and reducing the gas and electricity prices for households, manufacturers and businesses across the region. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com Competency Training’s Growing International Presence Our Competency Training group specialises in delivering courses and providing qualifications for clients in areas such as hazardous operations, high voltage, electrical and renewable energy. It is interesting to note that we are seeing growing demand from international customers looking for better training and competency assessment to meet the stringent electrical standards required by the Australian market. It’s Competency Training’s impressive reputation in the market which has secured greater market share, and it’s growing rapidly. And it’s not just internationally. Competency Training has increased its domestic operating footprint from 6 to 11 locations in FY2024 as the demand for qualified electrical trades continues to grow. Efficiency for BHP with StacksOn StacksOn is a digital twin software package for mine stockyards enabling on-spec product in challenging conditions, whilst increasing throughput and reducing downtime. Revenues are generated through a blend of software license fees, ongoing support and consulting services. Growth in the StacksOn business requires expansion into more of the iron ore market, both in Western Australia and globally as well as maximising it’s utility and introducing new features to keep the product sticky and increase annual license fees from each stockyard. Expanding into other commodity markets and stockyards is another area of focus to achieve revenue growth for StacksOn. Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com - ends – Authorised for release by the Board of Directors of Verbrec Limited. Company Enquiries Investor Relations Media Enquiries Mark Read Joel Voss Joel Voss Chief Executive Officer Company Secretary Company Secretary Mark.Read@verbrec.com Investors@verbrec.com Investors@verbrec.com About Verbrec Limited Verbrec Limited (ASX : VBC) (Verbrec or the Company) a leading engineering, asset management, project delivery, operations & maintenance, training and mining technology service provider that supports customers across Australia, New Zealand, Papua New Guinea and beyond. The Company serves the energy, infrastructure, and mining industries through their technical specialties; asset management, automation and control, pipelines, power, process plant and training, with capabilities that span across the entire life cycle of an asset. Verbrec is an Australian Securities Exchange listed company (ASX:VBC). Verbrec Limited Share Registry ASX : VBC ACN: 127 897 689 Computershare Investor Services Pty Ltd Ph: +61 3 9415 4000 Verbrec.com computershare.com