ALS LIMITED — Investor Presentation 2016

May 29, 2016

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one
ALS
Life Sciences
Commodities
Industrial
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Full Year Results FY2016

Investor Presentation 30[th] May 2016

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All figures stated in AUD unless otherwise stated

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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 forwardlooking 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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Environmental
FY2016 Revenue
Food
Pharmaceutical
Life Sciences
Consumer Products
Geochemistry
Minerals
Mine Site
Metallurgy
Industrial
Trade Inspection
Asset Care
Energy
Environmental Food Tribology
Pharmaceutical Consumer Products
Geochemistry Mine Site Coal
Metallurgy Trade Inspection
Oil & Gas
Asset Care Tribology
Coal Oil & Gas
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Note: the majority of Mine Site work is geochemistry

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New Business – structure and end market focus

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• •Environmental

• •Food

• •Pharmaceutical

• •Industrial Hygiene

Life Sciences •Consumer Products

How do our end markets want to interact with ALS?

“One ALS” Project

• promoting a broad range of services to an end market

• packaging services

• cross business stream ALS portal

• •Geochemistry

• •Metallurgy

• •Coal

•Oil & Gas Commodities •Trade Inspection

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Industrial
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•Asset Care

•Tribology

• improve and simplify B2B interaction

• leveraging clients across business streams

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FY 2016 Financial Summary

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	FY15 ($mn)	Full Year FY16 ($mn)	Full Year FY16 ($mn)	Full Year FY16 ($mn)	Full Year FY16 ($mn)	Full Year FY16 ($mn)
Full year	Continuing Underlying	Continuing Underlying	Impairment Charges	Restructuring & other one off items	Amortisation of Intangibles	Statutory Results
Revenue	1422.2	1364.9				1364.9
EBITDA	305.4	264.3	(317.9)	(13.9)		(67.5)
Depreciation & amortisation	(83.4)	(86.4)			(15.2)	(101.6)
EBIT	222.0	177.9	(317.9)	(13.9)	(15.2)	(169.1)
Interest expense	(33.1)	(34.5)				(34.5)
Tax expense	(52.6)	(42.9)	3.9	2.9		(36.1)
Non-controlling interests	(1.6)	(1.0)				(1.0)
NPAT	134.7	99.5	(314.0)	(11.0)	(15.2)	(240.7)
EPS (basic – cents per share)	31.7	21.7				(52.5)
Dividend (cents per share)	21.0	13.5				13.5

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Revenue Waterfall (AUD$ million)

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+24 +1
-10 +5 +2 -9
-7
+52 -3 -101
flat
flat
Industrial
Minerals
performance
performance
strong -11
Life Sciences
growth
severe
Oil & Gas
contraction
$1,422 million $1,365 million
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ALS global locations – a strategic asset

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Life Sciences Industrial Minerals Energy Revenue

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Margin Strong at the Bottom of the Cycle

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1,500 30%
1,200 Core Labs 24%
SGS
Exova
Bureau Veritas Intertek
Eurofins
900 18%
Applus
600 12%
Mistras
300 6%
0 0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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ALS Financial Year Ending March

ALS EBITDA Margin ALS Revenue

EBITDA Margin for Core Labs, SGS, Intertek, Bureau Veritas, Eurofins, Applus, & Exova is for Calendar Year 2015 and Mistras year ending May 2015. EBITDA Margin & Revenue for ALS includes all corporate expenses. Data for Financial Year ending March 2016 based on current forecasts. EBITDA is underlying EBITDA for all companies.

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Group Taxable Earnings – franking capacity

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Australian versus Off-shore Taxable Profits

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Australian Profits Off-shore Profits
100%
80%
60%
40%
59%
20%
30%
0%
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
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Debt Metrics

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Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
Statistics
Gearing Ratio comfort 45% 29% 29% 34% 38% 27%
Leverage (net debt/EBITDA) max 3.00 1.0 1.0 2.2 2.5 1.7
EBITDA interest cover min 3.75 23.9 21.0 12.2 9.1 7.7
Balance Sheet Measures
Total Equity (AUD mn) 930 997 1,419 1,228 1,186
Net Debt (AUD mn) 370 400 722 762 438
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Debt Maturity & Capacity Profile as at March 2016

Debt Denomination Cash Holdings AUD mn

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Long Term Debt - USPP Notes Bank Debt - Undrawn Capacity

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Other
CAD
46
14%
USD
122
EUR
84
USD
86% AUD
46
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400
350
300 29.6%
29.5%
250
23.8%
200
17.1%
150
100
50
0
2016 2017 2018 2019 2020 2021 2022
Calendar Year
AUD $million
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Cash Flow

Full year	FY15 AUD mn	FY16 AUD mn
Underlying operating profit (EBIT)	223.3	177.9
Depreciation & Amortisation	83.7	86.4
Working capital	2.7	(6.3)
CAPEX	(76.5)	(73.7)
Other(1)	22.8	5.1
Free cash flow	256.0	189.4
Acquisitions	(30.2)	(22.8)
Dividends paid	(77.9)	(72.0)
Borrowings - movement	(57.0)	(183.2)
Equity Issued	27.2	317.0
Interest and Tax	(89.4)	(73.5)
Restructuring costs	(6.8)	(13.9)
Net increase/(decrease) in cash	21.9	141.0
Opening net cash	136.2	163.0
Effect of FX on cash held	4.9	(6.1)
Closing net cash	163.0	297.9

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• Cash Flow

• free cash flow down $ 66.6mn

• EBITDA cash conversion 97.1%

• CAPEX $ 73.7mn – 5% of revenue

• 5 acquisitions - $ 22.8mn

• Effective Tax Rate

• 29.9%

1 divestments and sale of assets

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Strategic mix of revenue

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Revenue FY16

FY16 end-customer sector mix

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Other
Cyclical Non-Cyclical Mineral
Manufacturing 5%
Exploration
8%
15%
Engineering
Inspection Government
Metallurgy 7%
Geochemistry
Oil & Gas:
exploration &
Infrastructure
Coal production
Environmental & Property
17%
Development
Oil & Gas
11%
Utilities:
Water
Asset
Care Food/Pharma 7%
Utilities:
Mining:
Tribology Power
Oil & Gas: processing &
3%
downstream trading
5% 22%
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Strategic mix of revenue

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Revenue

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1,600
1,400
1,200
1,000
800
600
400
200
-
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Life Sciences Tribology Asset Care (downstream) Mineral Inspection Cyclicals
$ millions
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• Multi-year strategy of growing the non-cyclicals to provide reliable underlying earnings

• Maintain geographical scale and market position in cyclicals to provide leverage and outperformance during top of the cycle

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Life Sciences Division

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	2016	2015	Change
Revenue	$634mn	$557mn	+14%
EBITDA	$145mn	$130mn	+12%
EBIT	$110mn	$98mn	+12%
EBIT Margin	17.4%	17.6%	-20bps

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700
600 CAGR 16.6%
500
400
300
200
100
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16
Asia Australia Europe
Middle East North America South America
Revenue (AUD$mn)
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Overview

• revenue and EBIT growth in all regions

• Life Sciences revenue up by 14%, with Food/Pharma revenue up 34%

• strong recovery in margin in Australia due to increased market share and cost control initiatives

• new chemistry hub in Chatteris (UK) commissioned and new pharmaceutical hub in Ely (UK) close to completion

• three acquisitions completed during the year

• controlVet acquisition successfully integrated – Iberian Hub

• acquired outstanding 20% shareholding in Latin America Life Science business in January 2016

Outlook

• continuing organic growth

• bolt on acquisitions in Europe and USA

• investment in South America in anticipation of further market growth

• global cost initiatives to drive margin improvement

• further development in “gate to plate” food strategy

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Note:- EBIT and EBITDA are underlying measures

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Industrial Division

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	2016	2015	Change
Revenue	$186mn	$190mn	-2%
EBITDA	$31mn	$34mn	-10%
EBIT	$25mn	$28mn	-11%
EBIT Margin	13.5%	14.9%	-140bps

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200
160
120
80
40
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16
Australia North America South America
Revenue (AUD$mn)
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Overview

• solid organic tribology growth across all regions

• Tribolab acquisition in Brazil performed in line with expectation for first six months of ownership

• Maverick integration complete and new site opened in Louisiana to expand Gulf Coast footprint

• further decline in Australian welding and fabrication revenue

• severe price pressure in mining, oil & gas and power

• new long term maintenance contracts secured in mining and oil & gas

Outlook

• continued contraction of the Australian market due to completion of LNG construction projects

• Australian business well positioned to secure additional maintenance contracts in mining and oil & gas

• Maverick acquisition positioning North American business for diversification into downstream oil & gas, petrochemical and power

• market share growth remains the key focus in all regions

Note:- EBIT and EBITDA are underlying measures

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Minerals Division

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	2016	2015	Change
Revenue	$343mn	$367mn	-7%
EBITDA	$82mn	$97mn	-15%
EBIT	$59mn	$73mn	-19%
EBIT Margin	17.2%	20.0%	-280bps

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600
500 stabilising
400
300
200
100
0
FY12 FY13 FY14 FY15 FY16
Geochemistry Metalurgy Inspection Other
Revenue (AUD$mn)
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Overview:

• Geochemistry underlying EBIT margin 19%

• Metallurgy Markets challenging in all regions

• Inspection EBIT margin improved to 27% - some price pressure realised in H2

• Mine Site pipeline continued to grow however project timeline extensions delayed awards.

Outlook:

• focus remains on Cost Base and Market Share Growth

• cost base improvements have facilitated price positioning and expect to generate further market share growth

• new emphasis on Productivity and Efficiency with both incremental and step change programs in place

• price pressure easing in some Geochemistry markets in line with increased seasonal activity, but remains in Metallurgy sector and is increasing in Inspection.

• closer operational relationship between coal and mineral Inspection Service lines expected to deliver growth opportunities via expanded footprint.

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Note:- EBIT and EBITDA are underlying measures

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Global Mineral Exploration Market

Market Trends

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400 20
350
300 15
250
200 10
18%
150
100 5
50
0 0
$ Grassroots $ Late STage $ Minesite
Grassroots Late Stage Minesite
USD$ billion
Expenditure rebased to 100
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Source: SNL Data

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Analytical Spend Drivers

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generic innovative
SERVICE
value
DOLLARS
price
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• ALS continued investment to maintain technical capabilities and feed innovation to high end value added services

• ALS focus on systems, productivity and cost base to maintain volume in generic services market sector

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Global Exploration Market

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18%
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SNL Data

• calendar years 2014 and 2015

• ten best intersections reported for gold, copper, lead, zinc, silver and nickel per quarter

• 387 reported intersections analysed

• ALS estimate of analyzing laboratory for each reported intersection

• • number of reports per region

• North America – 167

• Asia & Pacific – 88

• South America – 58

• Africa – 50

• Europe – 23

• Middle East - 1

ALS leveraged to inevitable market recovery

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Energy Division

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	2016	2015	Change
Revenue	$203mn	$307mn	-34%
EBITDA	$14mn	$59mn	-77%
EBIT	-$8mn	$37mn	-123%
EBIT Margin	-4.1%	12.0%	-1610bps

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stable
FY11 FY12 FY13 FY14 FY15 FY16
ALS - Australian Coal Business
Revenue (AUD$mn)
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Overview – Oil & Gas

• global Oil & Gas markets remain volatile

• pricing pressure and delayed projects

• new products introduced and gaining market acceptance

• Cedar Turbine

• QuickCapture V2

• Houston laboratory fully commissioned and gaining market traction

• changed coring operating model to reduce fixed cost base

• continuing efforts to “right size” all business streams

• consolidating locations globally

Overview - Coal

• solid performance in Australia – revenue flat pcp

• revenue growth in Production and Superintending services with stable margin

• Bore Core (exploration) further decline with significant pricing pressure

• market leader in Australia in

• coal technology

• exploration

• production

• shipping services

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Note:- EBIT and EBITDA are underlying measures

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