ALS LIMITED — Interim / Quarterly Report 2015

Nov 23, 2014

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September 2014 Half Year Results

24 November 2014

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Important notice and disclaimer

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• 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 may include 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.

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September 2014 Half Year Summary

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	H1 FY14 ($mn)	H1 FY14 ($mn)	H1 FY15 ($mn)	H1 FY15 ($mn)	H1 FY15 ($mn)	H1 FY15 ($mn)
half year	Underlying1		Underlying1	Discontinued Operations & Impairment Restructuring Costs		Amortisation of Intangibles
Revenue	684.6		710.3		58.8 - -
EBITDA	181.4		149.8		(0.6) (2.2) -
Depreciation & amortisation	(34.6)		(40.8)		(0.3) - (6.0)
EBIT	146.8		109.0		(0.9) (2.2) (6.0)
Interest expense	(9.7)		(16.6)		- - -
Tax expense	(36.3)		(24.7)		- 0.7 -
Non-controlling interests	(0.8)		(0.7)		(0.2) - -
NPAT	100.0		67.0		(1.1) (1.5) (6.0)
EPS (basic – cents per share)	27.7		16.9
Dividend (cents per share)	19		11

1 Excludes Reward Distribution which was divested on 31st October 2014

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September 2014 Half Year Trend

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Average USD:AUD (cents) REVENUE 103 104 94 91 92 30[th] September 2014 4% 800 250 $710mn pcp 640 200 EBITDA 17% 30[th] September 2014 480 150 pcp $150mn 320 100 NPAT 160 50 33% 30[th] September 2014 pcp $67mn 0 0 H1FY13 H2FY13 H1FY14 H2FY14 H1FY15 Revenue EBITDA NPAT

Underlying financial data excluding discontinued businesses

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Revenue Growth

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800
ALS Group Revenue Growth 700 65 92 2
60
600
• Organic Growth -9% 500
400
• Divestments (see note) -8% 745 710 710
680
300 620 620
•
Acquired Growth +12%
200
•
Currency Impact -0.2% 100
0
Note: Reward Distribution divested in Oct-14 but shown as divested in H1 FY5
Revenue Growth H1 FY15 Vs H1 FY14
Industrial
Energy
Life Sciences
Minerals
-30% -10% 10% 30% 50% 70% 90%
Organic Acquired FX Movement
Revenue (AUD$mn)
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Operating Profit (EBIT) Historical

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200
150
100
50
0
Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14
First Half Ending
Minerals Life Sciences Energy Industrial Reward + Chemical
EBIT ($ million)
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Note: Chemical Division (“Chemical”) divested during Sep-12 half year

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Laboratory revenue - journey over the last decade?

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H1 FY2015

Revenue has approximately tripled every five years with significant diversification of market sectors

revenue $710mn

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H1 FY2010

revenue $265mn

H1 FY2005

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revenue $80 mn

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Environmental Food/Pharma Consumer Products Geochemistry Metallurgy Inspection Engineering Oil & Gas Coal Asset Care Tribology

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Laboratory revenue - journey over the last decade?

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Significant geographical diversification

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H1
FY2010
revenue
H1 $265mn
FY2005
revenue
$80 mn
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H1
FY2015
revenue
$710mn
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Africa Asia Australia Europe Middle East North America South America

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Global Location Map – genuine global footprint

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CAPEX and Depreciation

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25
CAPEX remains tightly controlled in line with current operating environment
BUT
assets maintained in prime condition for inevitable market upswing
20
15
10
5
0
Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14
Quarter
CAPEX (AUD$ million)
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Approved CAPEX (exl. property purchases) Depreciation & Amortisation

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Cash Flow and Funding

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	Sep-14	Sep-13
Cash Flow
EBITDA(excl Reward write-down )	$149mn	$179mn
Operating cash flow	$133mn	$147mn
Conversion	89%	82%

		**Oct-14 ***	Mar-14
Funding statistics
Gearing ratio	Comfort 45%	34.2%	33.9%
Leverage (net debt / EBITDA)	Max 3.00	2.5	2.2
EBITDA interest cover	Min 3.75	9.0	12.2

• At 31 October 2014 following sale of Reward Distribution

Debt Maturity after October 2014 re-financing

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AUD$m
350 30%
26%
23%
300
21%
250
200
150
100
50
0
2014 2015 2016 2017 2018 2019 2020 2021 2022
Bank Debt - Drawn Bank Debt - Undrawn USPP Notes
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Energy Division

	H1 FY15	H1 FY14
Revenue	$152mn	$91mn
EBITDA	$28mn	$28mn
EBIT	$17mn	$23mn
EBIT Margin	11.4%	25.3%

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Overview

• Coal

• Australian exploration down 33% pcp and exports up 8% pcp

• ALS market share in Australia at +60% following recent contract wins

• Prices and margins remain under pressure

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Coal Oil & Gas

• Tavan Tolgoi (Mongolia) lab built on time and on budget

• Oil & Gas

• CSG activity in Australia increasing as projects move to production phase

• Service development skewed towards production cf. exploration

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ALS Oil & Gas – financial journey

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30 30% ALS ownership 25 25% 20 20% 15 15% 10 10% 5 5% 0 0% Coring Surface Logging Specialty Well Services Laboratories Down Hole Tools EBITDA Margin • Revenues stable despite downturn in coring • EBITDA margin in September and October returning to more historical levels prior to full benefit of restructuring and cost reduction initiatives

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ALS Oil & Gas – operational journey

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• All business stream (coring, surface logging, specialty well services, laboratories, down hole tools) global managers relocated to Houston Texas – effective September 2014

• Reservoir Group Corporate office in Aberdeen rationalised– effective December 2014

• Reservoir Group Corporate office in Houston closed - effective November 2013

• Previous CEO of ALS Oil & Gas exited – effective August 2014

• North American support services integrated into ALS resources – effective October 2014

• • Global Mobility Policy in place – effective August 2014

• Rationalised facilities in USA and S.E. Asia – effective October 2014

• Relocated Surface Logging business into new 40,000 sq. ft. building in Houston – effective January 2014

• Control Room built in Houston for remote control surface logging initiative – July 2014

• • Four acquisitions completed in calendar 2014

• Expect to sign contract to purchase 40,000 sq. ft. building in Houston to house hub laboratory – November 2014

• Oil & Gas laboratory LIMS & Client Portal 30% completed – October 2014. Full completion by July 2015

• Five key technical staff recruited for Houston laboratory – September 2014

• Global ALS financial portal customised and fully adopted by all business streams – effective April 2014

• All sites on ALS global IT network – completed August 2014

• New strategic development three year plans in place for all business streams – effective November 2014

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Minerals Division

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|||||
|---|---|---|---|
|H1 FY15|H1 FY14|Change|
|Revenue|$182mn|$232mn|-22%|
|EBITDA|$48mn|$76mn|-38%|
|EBIT|$36mn|$64mn|-44%|
|EBIT Margin|19.8%|27.5%|-770 bps|
|Geochemistry|
|Metallurgy|
|Inspection|
|Mine Site Services|

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Overview

• Geochemistry

• Geochemistry revenues down 25% in line with global exploration spend of USD$14.2

  • bn in CY2013 versus USD$10.7 bn forecast in CY2014

• EBIT margin at 22% - below target range

• 2 new minesite laboratories commissioned in H1 with an additional 2 expected in H2

• Metallurgy

• Revenue down 20% - lower activity levels and pricing

• Underlying cost base reduced by 10%

• Santiago (Chile) facility expected to be at breakeven through the second half

• New column leaching and piloting added to Santiago facility

• Inspection

• China expansion tracking in advance of plan

• EBIT margin improved 350bps pcp to 24%

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Geochemical Markets – global perspective

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• Global exploration budgets down 47% from actual spend in CY2012

• Commodity mix and geographical activity consistent with previous years

• Focus on minesite and late stage remains

Source: SNL Metals and Mining report

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Geochemical Market – ALS perspective

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Global Geochemical Sample Flow

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2012
2013
2014
Traditional Field Season
7-Jan 7-Feb 7-Mar 7-Apr 7-May 7-Jun 7-Jul 7-Aug 7-Sep 7-Oct 7-Nov 7-Dec
Weekly Sample Flow
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• CY2012 – activity stalled halfway through the field season as the industry went into decline

• CY2013 – sample flow decrease through most of the field season – underlying market decline

• CY2014 – sample flow increasing through the field season – more normal pattern

• Current sample flow similar to same time last year – bottom of cycle? &/or market share increase

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Life Sciences Division

	H1 FY15	H1 FY14
Revenue	$276mn	$272mn
EBITDA	$66mn	$69mn
EBIT	$51mn	$54mn
EBIT Margin	18.4%	19.9%

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Environmental Food - Pharma Electronics Consumer Products

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Overview

• Environmental

• Organic revenue growth in USA, Asia, Europe and South America

• Volume increases in Australia and Canada but revenue and margin decreases due to pricing pressure

• New facilities in Brazil, Chile, Peru, China and Indonesia

• Cost management initiatives to improve margin through H2

• Successful in Southern Water long-term contract in United Kingdom (+5 years)

• Implemented key strategies to combat pricing pressures and increase market share

• Technology leader in the industry

• Expect 1% to 2% growth in global market

• Key market drivers (outsourcing, clean environment and consolidation) will continue to drive the business

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Life Sciences Division

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Life Sciences - Europe
30 40%
35%
25
30%
20
25%
15 20%
15%
10
10%
5
5%
0 0%
Quarter
Revenue EBITDA Margin 4 per. Mov. Avg. (Revenue)
millions
EBITDA Margin
Revenue per Quarter (Euro)
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Life Sciences - Europe

• Strong revenue growth despite very mature market

• EBITDA margins in excess of competitors despite strong competition

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Overview

• Food/Pharma

• Food/Pharma organic growth of 12% pcp

• New Food Chemistry buildings completed in England and Denmark

• Consolidated market leadership position in United Kingdom

• Infrastructure for global food business developed and implemented

• Continued execution of global Food Strategy

• Entry into key markets and strategic positioning

• Global market estimated to be growing at 8% per annum

• Increasing demand for testing “Farm to Fork”

• Increasing regulations on food quality from governments

• New products create need for additional testing

• Market demand for high quality international laboratories

• Business growth due to new opportunities and investment in facilities

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Industrial Division

	H1 FY15	H1 FY14
Revenue	$100mn	$89mn
EBITDA	$20mn	$16mn
EBIT	$17mn	$14mn
EBIT Margin	16.6%	15.3%

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Asset Care Tribology

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Overview

• Asset Care

• Strong outage program and peak Gladstone LNG construction in H1

• Weakening Australian revenues in H2 as construction activity ramps down

• Well positioned in CSG and LNG maintenance sectors

• AIT acquisition performing to expectation

• Targeting further expansion in the USA via <USD$20mn acquisition in H2

• Tribology

• Revenue up 20% pcp and EBIT margin up 160bps

• New Perth facility to be commissioned in December (doubling capacity)

• Next generation WebTrieve[TM] client portal in beta testing

• Oilcheck fully integrated and delivering desired outcomes

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LNG Construction Revenue

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12
10
8
QCLNG
6 GLNG
APLNG
4
2 QCLNG
GLNG
0
H1 FY15 H1 FY14
AUD (mn)
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Wheatstone project commencing H2 FY15 ($22mn)

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Asset Care Market Analysis – Australia

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$350 Source: Company estimates
$300 Welding & Fabrication
Mining
$250
O&G
Power
$200
$150
$100
ALS Market Share
$50
42%
$0
Total Australian ALS Revenue
Market
Sector Driver Market Demand
−
Power Production
--
Oil & Gas Construction > Production ↑
Mining Production ↑
Welding & Fabrication Construction ↓
AUD (million)
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