imdex limited for personal use only paul evans chief ... · imdex limited 1h12 results presentation...

Imdex Limited

1H12 results presentation20 February 2012

Providing Innovative Drilling Fluids and Advanced Down Hole Instrumentation Worldwide

11H12 Results - February 2012

20 February 2012

Bernie Ridgeway Managing DirectorPaul Evans Chief Financial Officer

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Today’s agenda

Bernie Ridgeway

Managing Director

Overview Bernie Ridgeway

1H12 financial

performance

Paul Evans

Operational review Bernie Ridgeway

Strategy & outlook



Paul Evans

Chief Financial Officer /

Company Secretary

Strategy & outlook

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Record first-half performance

� Record revenue, EBITA and NPAT

� Record Minerals division revenue

� Strong balance sheet, comfortable gearing

� Strategic acquisitions enhance global footprint

� Record number of Reflex instruments on rent – likely to be exceeded in 2H12

� Significant progress towards strategy to grow Oil & Gas revenue



� Significant progress towards strategy to grow Oil & Gas revenue

� Strong growth in interim dividend

� Positive outlook for 2H12

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Continued strong financial performance

($m) 1H12 1H11 Var.

Statutory revenue 138.5 95.9 �44%

Combined revenue* 139.9 95.9 �46%

EBITA 38.3 21.2 �81%

NPAT 22.7 12.1 �88%

Pre-tax operating cash flow 33.2 15.0 �121%



*Includes 50% of DHS JV revenue

Pre-tax operating cash flow 33.2 15.0 �121%

Gearing (ND / (ND + E)) 11.5% 18.4% �38%

Interest cover 54 times 16 times �

Interim DPS (fully franked) 3.25 cps 1.75 cps �86%

Number of employees 445 310 �44%

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Record revenueCombined revenue*

($m)� �46% on 1H11

� 1H12 above FY10

� Minerals

� 89% of total revenue

� strong performance in all regions

� Oil & Gas69.1

72.980.3

75.9

96.0

109.2

139.9

134.3



* Includes 50% of DHS JV revenue

� Oil & Gas

� 11% of total revenue

� exciting DHS JV opportunity (post 1H12 results)

O&G

Min

era

ls

Minerals division

Oil & Gas division

45.9

57.9

69.172.9

56.758.4

1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12

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Record EBITA

EBITA * ($m)

� �81% on 1H11

� Strong Minerals performance in all major mining regions

� 1H12 in line with pre GFC FY08 performance

� EBITA margin of 27.4% on combined revenue

� JV

19.819.0

20.021.2

26.9

38.3

38.8



*Includes equity accounted DHS JV result

� JV

� equity accounted

� will make a positive profit contribution in FY12

10.1

12.2

4.5

7.5

13.2

1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12

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Profit & loss

($m) 1H12 1H11 Var. %

Revenue 138.5 95.9 �44%

EBITDA 41.6 23.8 �75%

Depreciation (3.3) (2.6) �24%

EBITA 38.3 21.2 ��81%

Amortisation (2.9) (3.5) �14%

Net interest expense (0.7) (1.3) �45%



Net interest expense (0.7) (1.3) �45%

Tax expense (12.0) (4.3) �175%

Statutory NPAT 22.7 12.1 ��88%

EPS (cents) 11.14 6.17 �81%

Pre-tax cash flow from operations 33.2 15.0 �121%

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Strong balance sheet

� Strong cash position

� Net debt at 31 December 2011: $18m

� Pro-forma gearing post DHS JV acquisition comfortable at 23.7%

� Controlled working capital growth

� JV comprises loan + investment

($m) Dec 11 Jun 11

Net cash 20.3 18.4Receivables 50.7 50.2Inventory 49.4 40.6

Investment in SEH 8.8 16.1

DHS JV 4.3 -Fixed assets 19.2 17.3Intangibles 55.8 55.9Other assets/deferred tax 33.0 20.6



Other assets/deferred tax 33.0 20.6Total assets 241.5 219.1Payables 37.0 32.8Bank loans 37.4 33.8Vendor finance - 2.8HP Finance 0.9 1.3Provisions and current tax 27.5 23.0Total equity 138.7 125.4

(CA – Inventory)/CL 1.08 1.04

CA/CL 1.77 1.62Gearing (ND / (ND + E)) 11.5% 13.4%For

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Minerals division

Revenue($m)

� �52% on 1H11

� Record Reflex fleet numbers

� Integration of ADS

� Integration of System Mud (Brazil) enhances geographic reach

� Outlook for 2H12

� strong mining and mineral exploration spending

61.463.6

68.464.8

81.5

96.2

124.0

Europe 4%

Americas 30%

Africa 18%



exploration spending

� exciting solids removal technology

� further Reflex rental fleet records

� continued organic growth in all major mining regions

42.6

54.1

40.4

46.5

1H07* 2H07* 1H08* 2H08* 1H09* 2H09* 1H10* 2H10 1H11 2H11 1H12

*Comparative purposes only. Regional structure adopted 1 July 10

Europe 4%

Asia Pac 48%

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Record Reflex rental fleet



� Reflex rental fleet continued to win market share and created new records in 1H12� Seasonal low in Dec 11 above pre GFC peak. Strong bounce back followed

MAY 08 AUG 08 NOV 08 FEB 09 MAY 09 AUG 09 NOV 09 FEB 10 MAY 10 AUG 10 NOV 10 FEB 11 MAY 11 AUG 11 NOV 11 FEB 12

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Solids Removal Units (SRUs)

Technology

� Previously known as Solids Control Units

� Unique technology for the diamond drilling industry

� Provisional patents lodged

Advantages

� Low environmental footprint



� Reduced water usage & operating costs:

� low wear & tear

� simple mob/demob

� Significant market demand globally

� Rental model to ensure greater economic return

� Australian roll-out to begin in 2H12, global roll-out thereafter

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Oil & Gas divisionCombined revenue*

($m) � �10% on 1H11

� Includes $1.4m from DHS JV

� AMC Europe building expertise and planning for growth

� Outlook for 2H12

� Vaughn acquisition to support growth and make a positive profit contribution9.3

11.8

16.2

11.911.1

14.4

13.1

15.9



positive profit contribution

� continued development of instrumentation

� opportunities for growth of AMC Europe with large tender volume across Europe

3.33.9

7.7

9.3

1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12

*Includes 50% of DHS JV revenue

DHS JV revenueFor

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Integrating ADS & System Mud

Australian Drilling Specialities (ADS)

� Purchase price ~$12.0m, effective date 1 July 2011

� Immediately EPS accretive and provided additional benefits such as:

� product formulations and intellectual property, key polymer technology

� increased control over the supply chain and additional manufacturing expertise

System Mud (Brazil)



� Purchase price ~$9.0m, effective date 1 August 2011 (completion outstanding)

� Immediately EPS accretive

� Benefits to the Imdex Group:

� access to expanding Brazilian market

� strengthen position in South America

� in country manufacturing, product formulations and intellectual property

� strategically placed to service global customers operating in Brazil

� platform for growth of Reflex brand and cross-sellingFor

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Vaughn Energy Services (Vaughn)

� Oil & gas services business in US onshore market

� Acquired 100% effective 1 Jan 12

� CY11 revenue of US$39m

Purchase price (US$m)

� $38m cash on settlement ($19m Imdex share)

DHS JV acquisition of Vaughn Energy Services



� $12m cash in 2 EBITDA earn outs over next 12 months (funded by JV)

� $50m equity in combined DHS entity

� Vaughn shareholders to retain 40% ownership of the JV and remain with the business

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� Immediately earnings accretive for Imdex

� Becomes 3rd largest global provider in the US$400m-US$500m oil & gas down hole survey market

� Substantive entry into US onshore oil & gas market, representing approximately one third of the global market

� Diversifies the geographical footprint, range of technologies and customer base of the DHS JV, and introduces new technologies to the Group

DHS JV acquisition of Vaughn



� Expected to generate revenues of approximately US$70m in CY12

� Co-ordinated technology development

� Supports Imdex’s strategy to generate 30 - 40% of revenues from the oil & gas market within the next 3 - 4 years

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11%

89%

28%

Medium term 1H12

On track with strategyPast

En

d m

ark

et

2P

rofi

t 1 Instruments

Fluids

Oil & Gas

Minerals



70%30%

72%Pro

fit

Re

nt

/ S

ell

mix

2

¹ Based on actual or anticipated EBITA 2 Based on actual or anticipated combined revenue

Sales

Rentals

Fluids

Services

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Estimated global exploration spend (non-ferrous) (US$Bn)

7.5

10.4

13.2

7.7

11.5

18.219.0

20.4

19.3

17.118.0

20.8

22.5



� CY11 � 58% on CY10 to highest level ever

� Due to industry capacity constraints in C2011, likely flow into subsequent years

� Future levels expected to be maintained above this peak

Source: Metals Economics Group (1993-2011); Mckinsey analysis (2012-2018). Reproduced with permission from Boart Longyear

2.5 2.93.5

4.65.2

3.72.8 2.6 2.2 1.9

2.4

3.5

5.1

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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Key business drivers

Mineral exploration spendRobust commodity pricesExploration activity levels and spending at record levels and expected to continue

Client rig utilisation % Current high utilisation levels expected to continue

Level of Reflex rentals New record fleet levels in 1H12 to continue in 2H12



Development of new instrumentation

New releases expected in 2H12 and beyond

Key growth strategyIncreasing # of preferred supplier agreementsGrowth in the JV & integration of VaughnContinued investment in product development

Revenue & cost synergies

2 global brands in mining industry (AMC & Reflex) Regional structure for more effective cross selling

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Summary

1H12 – Another set of record results

� Record revenue, EBITA & NPAT

� Record operating cash flow

� Strong balance sheet with comfortable gearing after DHS JV acquisition of Vaughn

� FY12 interim dividend of 3.25 cps, fully franked

2H12 – Positive outlook with continued growth expected



2H12 – Positive outlook with continued growth expected

� Underlying fundamentals of key industry segments positive

� Vaughn acquisition to support JV growth

� Exciting instrumentation releases in 2H12

� Solids removal technology initial roll out in Asia Pacific

� Further organic growth expected across all global regions

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Disclaimer

This presentation has been prepared by Imdex Limited (“the Company”). It contains general background informationabout the Company’s activities current as at the date of the presentation. It is information given in summary form anddoes not purport to be complete. The distribution of this presentation in jurisdictions outside Australia may be restrictedby law and you should observe any such restrictions.

This presentation is not (and nothing in it should be construed as) an offer, invitation, solicitation or recommendation withrespect to the subscription for, purchase or sale of any security in any jurisdiction, and neither this document noranything in it shall form the basis of any contract or commitment. The presentation is not intended to be relied upon asadvice to investors or potential investors and does not take into account the investment objectives, financial situation orneeds of any particular investor. These should be considered, with or without professional advice, when deciding if an



investment is appropriate.

The Company has prepared this presentation based on information available to it, including information derived frompublicly available sources that have not been independently verified. No representation or warranty, express or implied,is made as to the fairness, accuracy, completeness, correctness or reliability of the information, opinions andconclusions expressed.

Any statements or assumptions in this presentation as to future matters may prove to be incorrect and differences maybe material. To the maximum extent permitted by law, none of the Company, its directors, employees or agents, nor anyother person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part ofany of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arisingin connection with it.For

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imdex limited for personal use only paul evans chief ... · imdex limited 1h12 results presentation...

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