ALS LIMITED — Investor Presentation 2016

Nov 28, 2016

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First Half Results FY2017 Investor Presentation

29th November 2016

All figures stated in AUD unless otherwise stated

Right Solutions • Right Partner www.alsglobal.com

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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 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.

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ALS Business Streams

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LIFE SCIENCES
INDUSTRIAL
H1FY17
Revenue
COMMODITIES
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Environmental Food Pharmaceutical Consumer Products Asset Care Tribology Geochemistry Mine Site Metallurgy Trade Inspection Coal Oil & Gas

First Half Year Results FY2017

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One ALS – example of end market business focus

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How we want our end markets to interact with ALS

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H1 FY17 Financial Summary

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Half year	H1FY16 ($mn)	Half Year FY17 ($mn)	Half Year FY17 ($mn)	Half Year FY17 ($mn)	Half Year FY17 ($mn)	Half Year FY17 ($mn)
	Underlying	Underlying	Impairment Charges	Restructuring & other one off items	Amortisation of Intangibles	Statutory Results
Revenue	712.1	672.0	-	-	-	672.0
EBITDA	150.4	127.1	-	(2.9)	-	124.2
Depreciation & amortisation	(43.8)	(39.4)	-	-	(0.7)	(40.1)
EBIT	106.6	87.7	-	(2.9)	(0.7)	84.1
Interest expense	(17.2)	(14.1)	-	-	-	(14.1)
Tax expense	(26.2)	(21.9)	-	0.9	-	(21.0)
Non-controlling interests	(1.3)	(0.3)	-			(0.3)
NPAT	61.9	51.4	-	(2.0)	(0.7)	48.7
EPS (basic – cents per share)	15.2	10.2	-			9.7
Dividend (cents per share)	7.5	5.5	-			5.5

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Interim H1FY17 Dividend

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AUD
cents H1FY17 Dividend
50
•
5.5cps
Interim Dividend
•
Payout ratio 54%
•
Franked to 60%
40 Final Dividend
•
Record date of
6 December 2016
27
•
26 Dividend
30 Reinvestment
20
Plan
20 15
10
11
10 21 6
19 19
13
11
9
7.5
5.5
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
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Debt Metrics

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Debt Metrics
	Sep-14	Mar-15	Sep-15	Mar-16	Sep-16
STATISTICS
Leverage (net debt/ EBITDA; max 3.00)	2.7	2.5	2.7	1.7	1.8
EBITDA interest cover(min 3.75)	8.8	9.1	9.1	7.7	7.7
BALANCE SHEET MEASURES
Total Equity(AUD mn)	1445	1228	1254	1186	1189
Net Debt (AUD mn)	787	762	833	438	434

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Debt Denomination Cash Holdings AUD$m
GBP
Other
CAD
9 46 USD
14%
100
EUR
USD 81
86% AUD
59
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AUD$ DEBT MATURITY &
million
CAPACITY PROFILE
350
as at 30 September 2016
300
29.6%
29.5%
250
23.7%
200
17.2%
150
100
50
0
2016 2017 2018 2019 2020 2021 2022
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Cash Flow

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Half year	H1FY16 AUD mn	H1FY17 AUD mn
Underlying operating profit (EBIT)	106.6	87.7
Depreciation & Amortisation	43.8	39.4
Working capital	(33.7)	(10.2)
CAPEX	(36.9)	(28.3)
Other(1)	2.7	3.4
Free cash flow	82.5	92.0
Acquisitions	(8.3)	(20.9)
Dividends paid	(41.3)	(30.2)
Borrowings - movement	-	-
Equity Issued	-	-
Interest and Tax	(41.6)	(34.8)
Restructuring costs	(3.5)	(2.9)
Net increase/(decrease) in cash	(12.2)	3.2
Opening net cash	162.9	297.9
Effect of FX on cash held	4.8	(2.2)
Closing net cash	155.5	298.9

1 divestments and sale of assets

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ALS global locations – a strategic asset

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Life Sciences Industrial Commodities

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REVENUE

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Acquisition pipeline

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Life Sciences Business Streams

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OVERVIEW

Environmental

Food

• Revenue growth

(in AUD)

• Margin improvement in Asia, Australia and Middle East

• Achieved revenue growth of 9% pcp

• Asia (+17%), USA improved revenue and margin Australia (+4%), (+221 bps) Europe (+4%), Middle East (+23%), • Canada and South America North America (-2%), underperforming but coming right

• South America (-13%)

Influenced by UK impact of weaker British Pound

• UK growth 17% expressed in GBP versus 2% expressed in AUD

Underlying results (AUD)	H1 FY17	H1 FY16	Change
Revenue	$321mn	$318mn	+1%
EBITDA	$73mn	$76mn	-5%
EBIT Margin	17.3%	18.5%	-120 bps
EBIT	$56mn	$59mn	-5%

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Life Sciences Business Streams

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Strong Severn Trent Labs
acquisition acquired Feb-13
record
ACQUISITION JOURNEY
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
H1FY14 H2FY14 H1FY15 H2FY15 H1FY16 H2FY16 H1FY17
EBITDA %
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Food Safety geographical reach to expand further

Remediation contracts in South America

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OUTLOOK
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Focus on leveraging Hub & Spoke model

Global LIMS rollout continuing

New client portal released

Opportunities in new technologies e.g. molecular biology

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Food Strategy – the journey continues

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Commodity Business Streams

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OVERVIEW

Geochemistry

Metallur gy

Inspection

Coal

• Sample volumes up 13% pcp

• Revenue down 34% pcp

• Impacted by weaker GBP

• Revenue down 10% pcp

• Contribution margin 23.2% versus 21.2% pcp

• Slowdown in African work

• Contribution margin up 76 bps

• Marginally profitable

  • New hub laboratory in United Kingdom

• Pricing and volume pressure

• Mine Site contracts Revenue +13% pcp EBIT margin >26%

Underlying results (AUD)	H1 FY17	H1 FY16	Change
Revenue	$204mn	$214mn	-5%
EBITDA	$52mn	$53mn	-2%
EBIT	$40mn	$40mn	-
EBIT Margin	19.5%	18.6%	+90 bps

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Commodity Business Streams

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Geochemistry markets growing strongly consistently through the season

Geochemical sample volume up 16% FYTD pcp currently, and growth expected to be maintained

Metallurgy activity starting to improve

OUTLOOK

Stronger demand for high end services – hyperspectral scanning, surface geochemistry, ICPMS packages

Inspection business to improve with new UK hub laboratory and stronger market focus

Pricing pressure for coal services abating but market remaining challenging

New innovative coal processing technologies to drive down costs and improve margin

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Geochemical markets recovering

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ALS Global Mineral
Sample Flow
(two week growth trend)
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strong
sample flow
mine site
growth being
…..but the mix is biased to
maintained late stage
brown field
through the grassroots
season…..
generic innovative
SERVICE
value
DOLLARS
price
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Geochemical markets recovering

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Eastern Canada
West Africa
South
America
Australia
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The Hub and Spoke Model in Action

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• global operating control

• • continental scope

• • scalable spokes

• • capable hubs

• • reduced quality risk

• • focused capabilities

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Industrial Business Streams

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OVERVIEW

Asset Care

Tribolo gy

• Strong power generation outage programs

• Softer first half in USA

• LNG projects transitioning to maintenance programs

• Maverick in USA fully integrated

• Strong investment in new technologies to support maintenance contracts (e.g. Oil & Gas)

• Significant contract wins in Canada

• Australia continues to perform strongly

Underlying results (AUD)	H1 FY17	H1 FY16	Change
Revenue	$100mn	$95mn	+6%
EBITDA	$17.6mn	$16.4mn	+7%
EBIT	$14.5mn	$13.5mn	+7%
EBIT Margin	14.5%	14.3%	+20 bps

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Industrial Business Streams

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27
Tribology
revenue
24 growth
21
18
15
12
9
6
3
0
H1FY12 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17
Global
Revenue (AUD$mn)
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Well positioned to support LNG maintenance programs in Australia

Expected growth in downstream markets in Gulf States (USA)

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OUTLOOK
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Revenue growth in civil construction and water infrastructure (e.g. Sydney Water)

Release of Tribology app

Tribology growth via bolt on acquisitions

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Oil & Gas Division

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Underlying results (AUD)	H1 FY17	H1 FY16	Change
Revenue	$47.3mn	$86.2mn	-45%
EBITDA	-$6.3mn	$9.3mn	-
EBIT	-$13.3mn	-$0.3mn	-
EBIT Margin	-28.1%	-0.3%

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Second Half FY17 guidance (excl. Oil & Gas)

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ALS expects that underlying NPAT (excl. Oil & Gas) for the second half of FY2017 will be in the range of AUD $50 million to AUD $60 million

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NPAT (AUD$mn)
for the second half of FY2017 will be in the range of
AUD $50 million to AUD $60 million
70
60
50
40
30
20
10
0
H1 FY16 H2 FY16 H1 FY17 H2 FY17
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