136 Cockburn Road Western Australia 6166 Email: … · 2008. 11. 24. · 136 Cockburn Road North Coogee Western Australia 6166 Phone: +61 8 9432 3200 Facsimile: +61 8 9432 3222 Email:

136 Cockburn Road

North CoogeeWestern Australia 6166Phone: +61 8 9432 3200Facsimile: +61 8 9432 3222Email: [email protected]: www.quickstep.com.au

24 November 2008

CompanyAnnouncementsOfficeAustralian Stock ExchangePO Box H224Australia SquareSydney NSW 2000

CHAIRMAN AND MANAGING DIRECTOR ADDRESSES - 2008 AGM

Please find attached the addresses to be delivered by the Chairman, Mr Mark Jenkins, andManaging Director, Mr Philippe Odouard, at today’s Annual General Meeting of shareholders.

Yours faithfully

Kim Hogg

Company Secretary

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CHAIRMAN’S ADDRESS – 2008 ANNUAL GENERALMEETING

5.00pm (WDT): Monday, 24 November 2008

Good afternoon ladies and gentlemen. As Chairman of Quickstep Holdings Limited it is mypleasure on behalf of my fellow directors to welcome you to the 2008 Quickstep HoldingsLimited Annual General Meeting.

2008 has been a year of significant activity for your company, as we put in place the finalbuilding blocks necessary for our all-important transition from a Research & Developmentcompany to a full-scale advanced composites component manufacturer.

Over the course of the year we have seen extraordinary tumult in global markets, which has hada significant effect on the value of almost all ASX-listed companies. While Quickstep has beenaffected by this global financial volatility, we are continuing to move forward with our efforts tobecome a full-scale advanced composites component manufacturer.

It is a great testament to the hard work and commitment of our team – both in Australia andabroad - that we remain on track to achieve full-scale manufacturing capabilities by February2009 despite the challenging economic conditions which have arisen.

AAppppooiinnttmmeenntt ooff nneeww CCEEOO aanndd CCFFOO

This year saw the retirement of Quickstep’s founding Managing Director, Mr Nick Noble. UnderNick’s stewardship, we developed from an idea in 2001, through an IPO in 2005 and expandedto gain entry into the key markets of Europe and North America. We are now positioned, throughthis facility, to become a significant Australian aerospace composites manufacturer.

Nick remains a significant shareholder and is present here today. All of us at Quickstep wish himwell for the future and we look forward to his continued involvement with the Company as asignificant shareholder.

On behalf of the Quickstep board and the Quickstep team, I would invite shareholders heretoday to thank Nick.

As a result of Nick’s departure we conducted a search with international search firm Heidrick &Struggles to identify a suitable Managing Director to lead Quickstep forward into thecommercialisation and manufacturing stage.

In October Mr Philippe Odouard was appointed Chief Executive Officer of Quickstep. Philippe isa well-known industry executive with significant management experience within the globalaerospace and defence sectors – both of which are primary target markets for Quickstep’stechnology. He has an impressive track record in managing innovation developments andtechnology transfers, and negotiating and managing long term contracts.

Philippe is an outstanding addition to the Quickstep team and brings invaluable experience andknowledge to the Company in the areas of sourcing and securing sales contracts with majoraerospace and defence customers.

We look forward to the Company making the successful transition to full-scale advancedcomposites manufacturing under his leadership.

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In addition Quickstep appointed Mr Peter Williams as the Company’s Chief Financial Officer.

Peter is a senior finance professional with almost 30 years commercial experience gained bothdomestically and internationally. He comes to Quickstep after two years as Finance Director andCompany Secretary of an ASX listed company and with considerable experience spanning theFinance to Mining industries.

I would like to welcome both Philippe and Peter to the Quickstep executive team and lookforward to taking the Company to the next level with them.

Business presentation and outlook

I would now like to hand over to our CEO, Philippe, to provide a presentation on the business.

Thank you.

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Annual General Meeting

Managing Director’s Presentation

24 November 2008

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Main Facts

• Quickstep is ASX listedcompany on the Australianstock exchange

• Set up in 2002 to developpatented Quickstep fluidheating technology incomposites

• Teamed up with VCAMM andthe University of Deakin inVictoria

• Teamed up with ManchesterUniversity and QS EuropeanCentre of Excellence in NorthWest Composites Centre,Manchester UK

• Focussed on developing anddelivering more efficientcomposite manufacturingtechnologies to a rapidlygrowing composite market

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The Market

Commercial Aircraft

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(source: Prof. A. Walker, University of Manchester).

DemandEstimated Carbon Fibre in Demand in Aerospace will grow from 5,100

tonnes last year to over 46,000 tonnes by 2020Drivers– All new commercial aircraft are composite intensive - existing

autoclave capacity insufficient to meet rapidly growing demand– At US$60 per barrel of oil, aircraft operations lost US$6.2Bn in 2005 –

need to fly lighter– Airbus and Boeing have backorder in excess of 5,000 aircraft.

Estimated average of US$5.3M of Carbon Fibre parts per aircraft fora global value of the Aerospace composite market in excess ofUS$25Bn

– Little capacity is existing to date to produce this compositerequirement

– Carbon Fibre price will be driven down as quantities are rapidlyincreasing, itself increasing adoption in more parts and markets

– Design is not mature. Still done by designers trained in metal designthat do not integrate the full potential of composite, especially itsmanufacturing• This is the market of Quickstep

Aerospace Industry – Rapidly GrowingF

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Boeing 787 Dreamliner

More than 50% composite aircraft

Entry into service 2009 – more than 700 sold (USD 120 billion)

(source: Prof. A. Walker, University of Manchester).

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Single AisleSingle Aisle ((sectorsector 15,00015,000 aircraftaircraft 20052005--20242024))

100-200 Seats

Boeing Y1 Project (2010-2014)

scaled version of 787composite airframehigher aspect ratio wing design

Airbus A320 successor (2014)

higher bypass enginesextended wingspanreduced rear stabilisers

(source: Prof. A. Walker, University of Manchester).

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Opportunity for Quickstep

• Composite based aircraft carry up to 50% more paying load than traditionalaircraft

• When they enter into service, they will make the entire existing fleet ofaircraft uncompetitive, especially at the high cost of fuel we experience

• The demand for composite aircraft will increase substantially supporting theComposite industry very fast growth

• This will happen independently from the finance crisis and the recessionthat might follow. It will accelerate the movement towards the mosteconomical aircraft: The composite aircraft

• This provides an opportunity of investment in composite technology that iscounter cyclical in the present finance environment

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Quickstep in commercial aerospace

• Quickstep is in discussion with the different parts of Airbus and Eurocopterto develop out of autoclave technology and qualify its process formanufacturing parts out of autoclave.

• Quickstep is in discussion with primary and secondary structure Tier 1suppliers to provide autoclave and out of autoclave parts in Germany, theUK, Spain and the US

• Quickstep has placed a number of bids for autoclave parts that can startlarge series manufacture in the near future

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The Market

Military Aircraft

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All composite new generation stealthaircraft - JSF

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Joint Strike Fighter

• Multi role new generation all composite aircraft to achieve stealth and highperformance

• First military all composite aircraft shared by the US with the world andestablishing new standards of performance for the industry

• Australia participates in the development and is very likely to buy 75 to 100units

• Developed by Lockheed Martin for the US Air force and a number of othercountries participating in the development including the UK and Australia

• Several thousand aircraft on order• Because Australia is part of the development team, we have access to

development and manufacturing packages including composite work• Quickstep is the second biggest aerospace grade composite manufacturer

in Australia should give it access to substantial packages of work:– Especially as the first, Boeing Hawker de Havilland is Lockheed biggest

competitor and is exclusively focussed on the 787 aircraft

• Advanced discussions are being held with government and industry toposition Quickstep in this process, in Australia as well as in the US and theUKF

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Access to the World

Dayton

Manchester

Perth Geelong

New Delhi

Dayton

Manchester

Perth

Geelong

Munich

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USA

• Establishment of NorthAmerican QuickstepCentre of Excellence– Located in Dayton, Ohio, the

heart of the USmanufacturing industry

– Supported by the NationalComposite Center, a leadingadvocate for new compositemanufacturing technologies

– Trials underway with GEAviation, Sikorsky,Lockheed Martin and others

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Europe

• Establishment of newtesting andmanufacturing facility inGermany– Work to be carried our

under a Cooperation andDevelopment Agreementwith Eurocopter

– Officially opened inOctober 2007

– Manufacturing trialsunderway for Eurocopterand Airbus which shouldlead to orders next year

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Business model

• Selling the Quickstep process to partners as a supply of a systemwith technical support, maintenance and royalty or as a JV withthem

• Subcontracting parts to aircraft manufacturers or tier 1 suppliers asa build to print contract or as Design, Build in cooperation withdesigners as partners

– This strategy lead us to invest in a production facility in Freemantle.

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Quickstep ProcessBusiness Model

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Quickstep Curing Vs Oven Curing

25-30 % time saving due to faster heating and cooling rates

Time [min]

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ture

[°C

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0

1000

2000

3000

4000

AutoclavePrepreg

QuickstepPrepreg

OvenInfusion

QuickstepInfusion

Cost Comparison for Different Processes

Cost Study - TestpartF

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Benefits of Quickstep

• Reduced investment in machine compared to autoclave

• Reduced investment in moulds

• Reduced time to cure

• Reduced energy consumption – The green compositemanufacturing process

• Overall reduced cost to produce parts

– Leading to substantial market share

– Further uptake of composite technology

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Prevision

• Quickstep is targeting a market share of 20% of thesystems sold worldwide in the next five 5 years.– This is based on the markets and technology segments where

the technology is providing the most benefits

• This represents a potential turnover of $75m to $100mp.a. depending on services supplied.

• The company is completing production design of theQuickstep machine which may be sold from early 2009.

• Our presence in all substantial markets should mean arapid uptake of the technology and proper support of theequipment and technical support to the implementationof the process next to our clients

• Several clients have undertaken tests to validate theiruse of Quickstep and should be in production in 2009.

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Streamlined manufacturing of parts for aerospace usingautoclave and out of autoclave technology

The Western Australia Manufacturing Centre

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Western Australia Manufacturing centre

• Quickstep is investing $8m to construct a state of the artcomposite manufacturing centre

• It is the second biggest composite facility in Australia

• It will offer a one stop shop to manufacture compositeparts using either the Quickstep technology or traditionalautoclave technology

• The team driving the facility is composed of ex Airbusengineers and technicians that have years of experienceof composite manufacturing for Aerospace

• It has a capacity to generate AUD50m to AUD100mturnover per yearF

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QS team Australia key personnel aerospace experience

25 years of Project and Management in Defence and Aerospace inAustralia, in international companies including undertaking andcommercialising R+D programs

CEOPhilippe Odouard

Responsible for composite primary structure manufacture onAMCAPS, TANGO, HILE, A400M and A350 development projects

Composite cleanRoom Team Leader

Keith Brand

Working on composite primary structure manufacture on AMCAPS,TANGO, HILE, A400M and A350 development projects

Senior CompositeCharge Hand

Sean Scammell

Ex Bombardier Shorts level 3 composite NDT specialistNDT SpecialistTom Cairnduff

Design Team Leader for A400M wing root joint teamSenior DesignerKevin Niven

Production lead for FAC A330/340 spoiler redesign inc jig and tooldesign, A400M productionisation work with AIM

ProductionEngineering TeamLeader

Michael Keaferboeck

Airbus UK Procurement Manufacturing Manager,Global Supplier industrialisation – A380: Saab Mid and outer Leading Edge, EADSOttobrun Bath tub assy, BAE SYSTEMS Inboard leading edge ,

Single Aisle China Wing Box. Transfer and start up programme

Low cost sourcing and supplier training / development

Senior manufacturing engineer – Textron packages

Head of Production &QMS implementation

Woodie Beckles

Product Engineering Leader Airbus A330/340 wing structure, DBTLeader for A340-500/600 thermoplastic composite leading edge,composite design specialist, composite manufacturing signatory,aircraft level two signatory, BAe materials engineer Eurofighter

Head of Engineering/COO Australia

Drew Myers

Aerospace ExperiencePositionName

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16

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p

Western Australia Manufacturing Centre

4

5

12

8 6

7

9

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10

2

15

1

3

14

13

1 Office and administration2 NC and Quality office3 Engineering / Planning Office4 Stores / Bonded store5 Assembly Area6 5 axis machining centre7 Fabrication Shop8 Pattern making shop9 Nitrogen generator10 Paint Preparation11 Paint Shop12 Autoclaves13 Manual Trim Shop14 Quickstep Plant15 Clean room16 NC ply cutter17 NDT area

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Breton 5 Axis machineF

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Leica Laser TrackerF

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Quickstep MachineF

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Autoclaves

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Facility Update

• Team of experts is complete and ready to start• ISO 9001/AS9100 implementation underway currently, approval

expected Feb 2009• Autoclaves completed and shipped, commissioning due Jan 2009

• 5 axis machine completed and shipped, due to be assembled andcommissioned Jan 2009

• Ground works, machine foundations, power upgrades and buildingerections all underway

• Other equipment has been ordered for facility completion endFebruary 2009 and opening for business shortly thereafter

• Bidding on a number of projects is in progress with good prospect ofsuccess for next year

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Turn key solutions to Aerospace Manufacturers

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Teaming to propose complete solutions

• Aircraft manufacturers and Tier 1 Suppliers are subcontracting moreand more parts looking for complete turn key solutions– These involve design of parts, qualification, production

engineering, tooling and manufacturing• Quickstep has proposed such complete solutions teaming with a

designer, a toolmaker and a testing house• Allows to propose full composite structures that can take advantage

of the Quickstep process when most aircraft are still designed withmetallic structures with composite panels on top

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Commercial aircraft movablesurface development

•Monolithic carbon structure

•Discretely stiffened skin panel design

•Multiple pieces are co-cured into panelassemblies with integrated ribs and tophat stiffeners

•Assembly philosophy to allow accessfor NDT and inspection through buildand in service

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Joint venture opportunities in other sectors

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JV opportunities in other industries

• Quickstep offers numerous opportunities in differentbusiness areas– Quickstep has signed a JV agreement with Vortex, an ASX listed

company specialising in piping solutions to develop andcommercialise out of autoclave solutions in pipes

– The technology has the following benefits:• Light weight pipes cheaper to transport• Joints can be “melded” together to provide a “joint less” pipe

ensuring continuous non leaking pipes, the major reason preventinglarge growth of GRP pipes

• Melding is cheaper to undertake compared to steel welding• The potential to use a blanket of material rather than a spirally

wound process allows the use of more exotic weaves, thusproviding for potentially higher properties

• Overall a cheaper solution through life for large diameter pipes inwater, oil and slurry applicationsF

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Progress to date

• Phase 1 – Proof of concepts

– Melding – successful

– Use woven prepreg material – successful

– Pipe cured on a mandrel using portableQuickstep Process – successful

Carbon Fibre “meld”prototype

Woven prepreg curedon mandrel

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Conclusion

• Quickstep is a leader in the technology of compositeproduction

• It brings solutions to utilise composites in the mosteffective way for the aerospace industry

• This market is in a considerable growth due to therupture it represents in terms of fuel efficiency andsavings, putting it in one of the fastest growing market inthe world

• It is less vulnerable to the finance crisis and therecession that is looming because even if the air traffic isaffected, the most efficient aircraft will always be usedfirst

• Many other industries can benefit from the technologyFor

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