ALS LIMITED — Investor Presentation 2017

Nov 19, 2017

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Half Year Results FY2018 Investor Presentation

20 November 2017 Raj Naran, Managing Director and CEO, ALS Limited

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.

2 | Investor Presentation. Half Year Results FY2018

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Half Year FY18 Financial Summary

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Guidance met

$70.1m

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NPAT growth
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18%

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EBITDA growth
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11%

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Revenue growth
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*EPS growth Share buyback

18%

14.5%

Up to $175m

Full year guidance

*NPAT $135m to $145m

* Underlying result from continuing operations.

Investor Presentation. Half Year Results FY2018

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ALS Segments and Business Streams Revenue split

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LIFE SCIENCES Environmental Food Pharmaceutical Consumer Products

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COMMODITIES & INDUSTRIAL

Geochemistry Metallurgy Trade Inspection Coal Oil & Gas (Laboratories) Asset Care Tribology

Investor Presentation. Half Year Results FY2018

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Half Year FY18 Financial Summary

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Half Year	H1FY17 ($ mn)	Half Year FY18 ($mn)	Half Year FY18 ($mn)	Half Year FY18 ($mn)	Half Year FY18 ($mn)	Half Year FY18 ($mn)	Half Year FY18 ($mn)
	Underlying*	Underlying*	Discontinued Operations	Divestment & Impairment Charges	Restructuring & other one off items	Amortisation of Intangibles	Statutory Results
Revenue	630.2	721.6	39.8	-	-	-	761.4
EBITDA	131.0	144.8	3.8	(73.2)	(6.7)	-	68.7
Depreciation & amortisation	(33.1)	(34.6)	(3.5)	-	-	(1.2)	(39.3)
EBIT	97.9	110.2	0.3	(73.2)	(6.7)	(1.2)	29.4
Interest expense	(14.1)	(13.1)	-	-	-	-	(13.1)
Tax expense	(23.9)	(26.1)	(0.1)	-	1.9	-	(24.3)
Non-controlling interests	(0.3)	(0.9)	-	-	-	-	(0.9)
NPAT	59.6	70.1	0.2	(73.2)	(4.8)	(1.2)	(8.9)
EPS (basic – cents per share)	11.8	13.9					(1.8)
Dividend (cents per share)	5.5	8.0

* continuing operations

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Interim H1FY18 Dividend

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AUD cents

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50
Interim Dividend H1FY18 Dividend
 8.0 cps
40 Final Dividend
 Payout ratio 58%
(HY18 underlying NPAT)
27
26  Franked to 40%
30
20  Record date of 30th November 2017
20 15
10
11
10 21 6
19 19 8
13
11
9
7.5 8
5.5
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
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Debt Metrics

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Debt Metrics
	Mar-14	Mar-15	Mar-16	Mar-17	Sep-17
STATISTICS
Gearing Ratio(comfort 45%)	34%	38%	27%	29%	27%
Leverage (net debt/ EBITDA; max 3.00)	2.2	2.5	1.7	2.1	1.6
EBITDA interest cover(min 3.75)	12.2	9.1	7.7	8.5	10.3
BALANCE SHEET MEASURES
Total Equity($ mn)	1419	1228	1186	1185	1176
Net Debt ($ mn)	722	762	438	485	428
USD 618 CAD 104 Debt AUDm USD, 186 AUD, 36 EUR, 8 SEK, 9 GBP, 8 Other, 47 Cash Holdings AUDm 11.6% 31.2% 25.8% 31.4% 0 100 200 300 2017 2018 2019 2020 2021 2022 $ million DEBT MATURITY & CAPACITY PROFILE as at 30 September 2017 Long Term Debt - USPP Notes Bank Debt - Undrawn Capacity % Total Debt

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Cash Flow

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Analysis includes both continuing and discontinuing operations

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Half year	H1FY17 $ mn	H1FY18 $ mn
Underlying operating profit (EBIT)	87.7	110.5
Depreciation & Amortisation	40.1	39.3
Working capital	(11.4)	(51.5)
CAPEX	(28.3)	(39.2)
Other	3.9	4.3
Free cash flow	92.0	63.4
Acquisitions	(20.9)	(17.9)
Divestments	-	79.5
Dividends paid	(30.2)	(40.3)
Borrowings - movement	-	-
Interest and Tax	(34.8)	(34.0)
Restructuring costs	(2.9)	(6.7)
Net increase/(decrease) in cash	3.2	44.0
Opening net cash	297.9	248.9
Effect of FX on cash held	(2.2)	0.4
Closing net cash	298.9	293.3

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On-market Share Buy-Back

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Amount

Up to $175 million

Time period

To commence mid-December 2017 For up to twelve months

Shares

Based on 17 Nov 2017 closing share price of $8.05 buyback would represent 4.3% of ALS shares on issue

Capital management

On-market buy-back provides the most efficient and flexible method of returning excess capital to investors

Follows divestment of Oil & Gas business and review of ongoing capital requirements Conservative view of leverage

Future

Funded from existing cash balances and free cash flow Will not impact existing dividend policy

ALS retains strong balance sheet and flexibility to pursue growth opportunities

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Global Operations Map

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Business streams

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Sustainability Program

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Acquisitions completed during FY2018 to date (on plan)

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Total investment $30 m

FOOD TRIBOLOGY Marshfield (USA) Oilcheck (Brazil)

PHARMACEUTICAL

Mikrolab / Toxicon (Sweden)*

• completed since end of September half-year

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Life Sciences. Overview

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Environmental

Food & Pharma

• Revenue growth (in AUD) Asia (+15.3%) Australia (+5.0%) Europe & ME (+18.4% *)

• Continued cost management focus to offset competitive pressures in the UK and US

• New contract wins in South America and solid organic growth in Australia and Asia will contribute positively for the remainder of the year

• Canada and South America continue to see turnaround in performance and stronger margins. Impact from flooding in the USA

• Revenue up 64% pcp driven by recent Marshfield (US) and Alcontrol (UK) acquisitions

• Cost and process optimisation initiatives on-going within the UK Alcontrol sites – completion March 2018

* includes acquired growth

Underlying results	H1FY18	H1FY17	Change
Revenue	$366 mn	$321 mn	+13.9 %
EBITDA	$75 mn	$73 mn	+3.2 %
EBIT	$56 mn	$56 mn	+0.5 %
EBIT Margin	15.3 %	17.3 %	-200 bps

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Life Sciences. Outlook

Latin America

EBITDA % of Revenue

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16%
EBITDA Recovery
14%
12%
10%
8%
6%
4%
2%
0%
H1FY17 H2FY17 H1FY18
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

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





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Continued focus on bolt on acquisitions for food business

Food strategy will deliver target revenue of $200m this fiscal year

Improvement in performance from the environmental businesses in the Americas and Europe

Global strategy now focused on building pharmaceutical business

New greenfield pharmaceutical business in India

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Commodities. Overview

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Geochemistry

Metallurgy

Inspection

Coal

• Sample volumes  Revenue down 1.9% pcp  Revenue up 8.7% pcp  Revenue down 1.3% pcp. up 34% pcp Impact from Cyclone  Contribution margin  Contribution margin Debbie

• Revenue up 31% records improved down 100 bps pcp performance due to  Contribution margin cost base reductions  New UK hub 13.5% versus 13.0% pcp

• Contribution laboratory focused on margin 27% versus  Pricing and volume cost minimisation  Superintending and Bore 23% pcp outlook improving initiatives Core revenues flat

• Revenue down 1.3% pcp. Impact from Cyclone Debbie

Underlying results	H1FY18	H1FY17	Change
Revenue	$256 mn	$209 mn	+22.3 %
EBITDA	$68 mn	$49 mn	+37.7 %
EBIT	$56 mn	$37 mn	+51.8 %
EBIT Margin	21.7 %	17.5 %	+420 bps

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Geochemistry – The Recovery looks real

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ALS Global Mineral Sample Flow (trailing 52 week running average) and Global Exploration Spend

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and Global Exploration Spend — Relative Gold Price in USD 24
21
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
18
Average Weekly Sample Flow
15
12
9
6
3
0
DELTA (last 2 weeks sample flow Versus
same 2 weeks last year) ALS Global Mineral Sample Flow
100% (two week growth trend)
90%
80%
70% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Week
-50%
Global Exploration Spend US$bn
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
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Geochemical markets

(junior / intermediate capital raisings, gold drilling)

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Source: S&P Global Intelligence Monthly Market Monitor – August 2017

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Exploration Budgets

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Exploration budgets by location by amount budgeted, 2008-2017

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6,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
5,000
4,000
3,000
2,000
1,000
0
Australia Canada US Africa Latin America Pacific / SE Asia Rest of the world
Exploration budgets by region, 2017 Exploration budgets by target, including iron ore, 2017
(1,535 companies budgeting $7.95 billion) (1,581 companies budgeting $8.38 billion)
United States, Pacific / SE Asia,
Other, $997.6M, 12.6%
$611M, 8% $302M, 4%
PGM, $56.1M, 0.7%
Canada, Diamonds, $207.6M, 2.6%
$1, 101M, 14% Latin America,
Uranium, $255.7M, 3.2%
$2,384M, 30%
Nickel, $244.9M, 3.1%
Gold,
Australia, Zinc, $489.4M, 6.2% $4,050.0M,
$1, 078M, 13% Copper, 50.9%
Base metals $1,649.0M,
$2,383.3M 20.7%
Rest of the world, 30%
Africa, $1, 387M, 17%
$1,085M, 14%
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Data as of Sept. 28. 2017 | US$m | Source: S&P Global Market Intelligence

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Commodities. Outlook

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[Increased demand for pilot plant metallurgical services]

[Optimistic market conditions for geochemistry]

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Increased capacity and improved efficiency in geochemistry

• [Demand for coal will continue but so will pricing pressures]

• [Inspection business focused on cost-based management]

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Industrial. Overview

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Asset Care

Tribology

• Business to be retained following review of strategic options.

• Mining and Oil & Gas maintenance programs offsetting revenue from final stage of LNG construction in Australia

• Smaller FY18 power generation outage program compared to FY17, largely due to outage timing

• US Asset Care operations affected by continued weak activity levels in Oil & Gas sector

• Continued investment in new technologies to support maintenance contracts

• Contribution margin remains above 24%

• Australia continues to perform strongly

• Revenue up 10.1% driven largely by OILCHECK acquisition in Brazil (completed May 2017)

• Continued investment in enhanced client mobile and web apps

• Market remains highly price sensitive

Underlying results	H1FY18	H1FY17	Change
Revenue	$100 mn	$100 mn	-(0.1) %
EBITDA	$18.0 mn	$17.6 mn	+2.3 %
EBIT	$15.0 mn	$14.5 mn	+3.5 %
EBIT Margin	15.0 %	14.5 %	+50 bps

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Industrial. Outlook

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

Well positioned to support mining, O&G and power generation maintenance programs in Australia

Expected slow recovery of downstream O&G activity in Gulf States (USA) 



Lab automation and data management solutions driving increased efficiency and improved quality

Tribology growth via bolt- on acquisitions 

 Asset Care growth via greenfield start-up in Thailand

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Half Year FY18 Summary

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Guidance met

$70.1m

*NPAT growth

18%

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EBITDA growth
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11%

*Revenue growth

14.5%

*EPS growth Share buyback

18%

Up to $175m

Full year guidance

*NPAT $135m to $145m

* Underlying result from continuing operations.

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