2017 morgans conference final - alsglobal.com · richard stephens –chief financial officer, als...

Right Solutions • Right Partner||

Right Solutions • Right Partner

www.alsglobal.com

Morgans Queensland Conference 2017

Brisbane

11 October 2017

Richard Stephens – Chief Financial Officer, ALS Limited


• This presentation has been prepared by ALS Limited, (ALS or the Company). It contains general information about the Company’s

activities as at the date of the presentation. It is information given in summary form and does not purport to be complete. The

distribution of this presentation in jurisdictions outside Australia may be restricted by law, and you should observe any such

restrictions.

• This presentation is not, and nothing in it should be construed as, an offer, invitation or recommendation in respect of securities, or an

offer, invitation or recommendation to sell, or a solicitation of an offer to buy, securities in any jurisdiction. Neither this document nor

anything in it shall form the basis of any contract or commitment. This presentation is not intended to be relied upon as advice to

investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor.

All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment

is appropriate.

• The Company has prepared this presentation based on information available to it, including information derived from public sources

that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness,

accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein.

• This presentation includes forward-looking statements within the meaning of securities laws. Any forward-looking statements involve

known and unknown risks and uncertainties, many of which are outside the control of the Company and its representatives. Forward-

looking statements may also be based on estimates and assumptions with respect to future business decisions, which are subject to

change. Any statements, assumptions, opinions or conclusions as to future matters may prove to be incorrect, and actual results,

performance or achievement may vary materially from any projections and forward-looking statements.

• Due care and attention should be undertaken when considering and analysing the financial performance of the Company.

• All references to dollars are to Australian currency unless otherwise stated.

2

IMPORTANT NOTICE AND DISCLAIMER

2017 Morgans Conference


Business streams

3 2017 Morgans Conference


Grow scalable

businesses

through organic

and geographic

expansion

Invest in

New Core

(Testing)

Business

Streams

Improve

Current

Performance

Divest or close

all non-core

(non-testing)

Businesses

Business stream strategy



Vision 2022: Our Everest (excluding significant acquisitions)


Assumes no material adverse change in market conditions


Strategic priorities


Brand recognition

Operational excellence

Client focused

Leverage services across business streams

Target: non-resource

business to be > 50%

of the company EBIT at

the top of the mineral

cycle through:

Business

service

Delivering

infrastructure to

support the business

Existing market share growth

New business streams

Geographic expansion

Strategic business development

Integrated business services across all business streams

Technology and LIMS

Talent and staff development

Transparency and communication

Balanced

portfolio

One ALS

Strategic priorities Focus (Testing as our Core)


Acquisitions completed during FY2018 to date


Total investment

$30 m

FOOD TRIBOLOGY PHARMACEUTICAL

Marshfield (USA) Oilcheck (Brazil) Mikrolab / Toxicon (Sweden)*

* completed since end of September half-year


Global operations map



USD86%

CAD

14%

Debt Denomination

USD,

119

AUD, 62

EUR, 9

GBP, 11

Other, 48

Cash Holdings AUD$m

Debt Metrics – March 2017


Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

STATISTICS

Gearing Ratio (comfort 45%) 29% 34% 38% 27% 29%

Leverage (net debt/ EBITDA; max 3.00) 1.0 2.2 2.5 1.7 2.1

EBITDA interest cover (min 3.75) 21.0 12.2 9.1 7.7 8.5

BALANCE SHEET MEASURES

Total Equity (AUD mn) 997 1419 1228 1186 1185

Net Debt (AUD mn) 400 722 762 438 485

17.2%

29.5%

23.6%

29.7%

0

50

100

150

200

250

300

350

2016 2017 2018 2019 2020 2021 2022

AUD$

million

DEBT MATURITY & CAPACITY PROFILE

as at 31 March 2017

Long Term Debt - USPP Notes

Bank Debt - Undrawn Capacity

% Total Debt Capacity


Debt Facilities – September 2017 following bank debt re-financing


5.0% 6.6%

31.2%

25.8%

31.4%

0

50

100

150

200

250

300

350

2016 2017 2018 2019 2020 2021 2022

AUD$

million

DEBT MATURITY & CAPACITY PROFILE

as at 30 September 2017

Long Term Debt - USPP

Notes

Bank Debt - Undrawn

Capacity

% Total Debt Capacity

USD86%

CAD

14%

Debt Denomination:


Cash flow FY17


Full year FY16 AUD mn FY17 AUD mn

Underlying operating profit (EBIT) 177.9 171.6

Depreciation & Amortisation 86.4 78.8

Working capital (6.3) 13.8

CAPEX (73.7) (58.7)

Other 5.1 3.5

Free cash flow 189.4 209.0

Acquisitions (22.8) (106.4)

Dividends paid (72.0) (58.0)

Borrowings - movement (183.2) -

Equity Issued 317.0 -

Interest and Tax (73.5) (68.3)

Restructuring costs (13.9) (19.1)

Net increase/(decrease) in cash 141.0 (42.8)

Opening net cash 163.0 297.9

Effect of FX on cash held (6.1) (6.2)

Closing net cash 297.9 248.9

Analysis includes both continuing and discontinuing operations


Full Year FY17 Financial summary


Full Year

FY16 ($mn) Full Year FY17 ($mn)

Underlying* Underlying*Discontinued

Operations

Impairment

Charges

Restructuring &

other one off items

Amortisation of

Intangibles

Statutory

Results

Revenue 1,239.0 1,272.3 93.3 - - - 1,365.6

EBITDA 258.0 253.1 (2.7) - (19.1) - 231.3

Depreciation & amortisation (69.1) (67.0) (11.8) - - (1.5) (80.3)

EBIT 188.9 186.1 (14.5) - (19.1) (1.5) 151.0

Interest expense (34.5) (27.3) - - - - (27.3)

Tax expense (45.0) (44.9) 0.2 - 3.8 - (40.9)

Non-controlling interests (1.0) (1.2) - - - - (1.2)

NPAT 108.4 112.7 (14.3) - (15.3) (1.5) 81.6

EPS (basic – cents per share) 23.7 22.4 16.2

Dividend (cents per share) 13.5 13.5

* continuing operations

Right Solutions • Right Partner||13

Geochemical markets – strong recovery maintaining momentum


0

3

6

9

12

15

18

21

24

Jan-06

Apr-06

Jul-06

Oct-0

6

Jan-07

Apr-07

Jul-07

Oct-0

7

Jan-08

Apr-08

Jul-08

Oct-0

8

Jan-09

Apr-09

Jul-09

Oct-0

9

Jan-10

Apr-10

Jul-10

Oct-1

0

Jan-11

Apr-11

Jul-11

Oct-1

1

Jan-12

Apr-12

Jul-12

Oct-1

2

Jan-13

Apr-13

Jul-13

Oct-1

3

Jan-14

Apr-14

Jul-14

Oct-1

4

Jan-15

Apr-15

Jul-15

Oct-1

5

Jan-16

Apr-16

Jul-16

Oct-1

6

Jan-17

Apr-17

Jul-17

Oct-1

7

Glo

bal Exp

lo

ration

Sp

en

d U

S$

bn

Relative G

old

Price in

U

SD

Averag

e W

eekly Sam

ple Flo

w

Week

ALS Global Mineral Sample Flow

(twelve month running average)

201420092006 2007 20102008 2011 2012 2013 2015 2016 2017

Q1FY18

Samples

+39%

pcp

Revenue

+33%

pcp

EBIT

+69%

pcp

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan-06

Apr-06

Jul-06

Oct-0

6

Jan-07

Apr-07

Jul-07

Oct-0

7

Jan-08

Apr-08

Jul-08

Oct-0

8

Jan-09

Apr-09

Jul-09

Oct-0

9

Jan-10

Apr-10

Jul-10

Oct-1

0

Jan-11

Apr-11

Jul-11

Oct-1

1

Jan-12

Apr-12

Jul-12

Oct-1

2

Jan-13

Apr-13

Jul-13

Oct-1

3

Jan-14

Apr-14

Jul-14

Oct-1

4

Jan-15

Apr-15

Jul-15

Oct-1

5

Jan-16

Apr-16

Jul-16

Oct-1

6

Jan-17

Apr-17

Jul-17

Oct-1

7

DELT

A (last 2

w

eeks sam

ple flo

w

Versu

s sam

e 2

w

eeks last year)

Week

201420092006 2007 20102008 2011 2012 2013 2015 2016 2017

ALS Global Mineral Sample Flow

(two week growth trend)

Right Solutions • Right Partner||14

Geochemical markets – junior / intermediate capital raisings, gold drilling


Gold Exploration Drilling Activity

distribution by region


Margin Strong at the Bottom of the Commodities Cycle

EBITDA Margin for Core Labs, SGS, Intertek,

Bureau Veritas, Eurofins, Applus, & Exova is for

previous Calendar Year and Mistras year ending

May previous year.

ALS EBITDA includes all Oil & Gas operations.

EBITDA is underlying EBITDA for all companies.

6%

12%

18%

24%

30%

36%

0

300

600

900

1,200

1,500

2014 2015 2016 2017

EBITDA Margin

ALS R

even

ue A

UD

$ m

illio

n

ALS Financial Year Ending March

ALS

Core Labs

SGS

Bureau Veritas

Intertek

Eurofins

Mistras

Applus

Exova

2017 Morgans Conference15


12

8

6

4

2.4

2.8

3

2.3

1.8

2.1

1.2

1.1

0 5 10 15

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Group LTIFR

(as at March 31)

Safety Performance

Key Performance Indicators

• ALS Group LTIFR of 1.1 is a historical all time low.

• Overall score of 90% for PPI Scorecard

• 97% close out of incident report corrective actions

across all divisions

• 100% of all employee safety training completed

Historical

Record

Low

Injury

Rates

2017 Morgans Conference16


Sustainability Program



Final H2FY17 Dividend


9

13

1921

19

11

7.55.5

11

15

26

27

20

10

68

0

10

20

30

40

50

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

AUD

cents

Interim Dividend Final Dividend

H2FY17 Dividend

• 8.0 cps

• Payout ratio 60% (full year)

• Franked to 40%

• Paid on 3 July 2017

• Dividend Reinvestment

Plan


Full Year

Revenue

FY17

ALS Segments and Business Streams


Environmental

Food

Pharmaceutical

Consumer Products

LIFE SCIENCES

Asset Care

Tribology

INDUSTRIAL

COMMODITIES

Geochemistry

Trade Inspection

Metallurgy

Coal

Oil & Gas (Laboratories)

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