ALS LIMITED — Investor Presentation 2018

Dec 3, 2018

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Raj Naran, Managing Director and CEO, ALS Limited

4-5 December 2018

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IMPORTANT NOTICE AND DISCLAIMER

• 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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2 ALS Asia Investor Presentation

Global Operations Map

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70+ 350+ 40+ 14,000+ Countries Locations Years of strong Staff worldwide business performance

20+ million $1.6+ billion Processed samples Global revenue (annualized) per year

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Business streams

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Sustainability Program

People

Health & Safety Training & Safety as a Priority development investing in talent development

Diversity & equality Respecting differences

Human rights Worker’s rights upheld

Environment

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Operational Waste reduction Environmental Reduce, reuse, recycle

Performance

Water conservation Managing a scarce resource

Management of adverse environmental emissions

Climate Change

Energy management The pursuit of energy efficiency

Estimating CO2 emissions and its economic impact

Society

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Economic Employment Contributions creation Paying our fair share of tax Creating jobs in the local community

Local investment

Investing in the local community

• 53% female new hires

• Record Low Injury Rates

• Global employee survey completed

• 44,000 training sessions completed >50%  Hazard observations >50%

• Energy Intensity reduced by average of 7%

• No uncontrolled releases  >2500 kg Extra glass diverted from landfill

• 1300 new employees

• Support of science education programs

• $47M taxes

Governance

Financial performance Honesty & Maximise return for shareholders integrity An ALS core value

Anti-bribery &

Regulatory compliance

corruption

Zero tolerance for bribery and corruption

Systems to maintain legal compliance

• Modern slavery statement published

• 9500 Code of Conduct training sessions completed

• Re- invigorated whistle-blower program & hotline

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Half Year FY19 Financial Summary Underlying performance from continuing operations

NPAT (guidance exceeded)

$93.3m

NPAT growth 29.8% EBITDA growth 21.9% Revenue growth

15.2%

EPS growth

33.6%

Share buyback progress

$121.7m

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Full year guidance
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NPAT $170m to $175m

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ALS Segments and Business Streams Revenue split

LIFE SCIENCES Environmental Food Pharmaceutical Consumer Products

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COMMODITIES & INDUSTRIAL

Geochemistry Metallurgy Trade Inspection Coal Asset Care Tribology

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Revenue waterfall H1 FY18 vs H1 FY19 – continuing operations

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Strong
Life Sciences Flat
growth Industrial
performance
Strong
Commodities
performance
$716.8 million
$826.1 million
H1 FY18 Environmental Food Pharma Consumer Products Asset Care Tribology Mineral Inspection Geochemistry Metallurgy Coal H1 FY19
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Cash Flow

	Half year	H1 FY18 AUD mn	H1 FY19 AUD mn
Analysis includes both continuing and discontinued operations FREE CASH FLOW 24.6 million CAPEX 45.8 million = 5.5% of revenue 17% on H1 FY18 SHARES BOUGHT BACK 14.9million ON MARKET H1 FY19	Underlying operating profit (EBIT)	110.5	141.4
	Depreciation & Amortisation	38.1	35.8
	EBITDA	148.6	177.2
	Working capital	(50.3)	(43.7)
	CAPEX	(39.2)	(45.8)
	Other	4.3	0.3
	Free cash flow	63.4	88.0
	Acquisitions	(17.9)	(17.1)
	Divestments	79.5	-
	Dividends paid	(40.3)	(44.5)
	Issued capital bought back	-	(14.9)
	Borrowings - movement	-	(0.4)
	Interest and Tax	(34.0)	(39.8)
	Restructuring costs	(6.7)	(6.1)
	Net increase/(decrease) in cash	44.0	(34.8)
	Opening net cash	248.9	187.2
	Effect of FX on cash held	0.4	0.5
	Closing net cash	293.3	152.9

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Capital management

Share Buyback Dividend Program

• Buyback extended  Half Year for 12 months to underlying a total of payout ratio $225 million 57.4%

• $225 million through to December 2019

• (interim dividend 11.0c per share)

• Existing dividend policy remains unchanged

Buyback Progress

 17.5 million shares

• (representing 3.5% of the original base) have been bought back on-market for an overall consideration of

$121.7 million

• The Company will continue to use its existing cash balances and free cash flow to fund the buy-back program

Balance Sheet

• Company retains strong balance sheet and flexibility to pursue opportunities (leverage 1.8 times at 30 September 2018)

• Positive market environment will support generation of additional free cash flow to fund the buy-back

• Company will also pursue its growth agenda through bolt-on targeted acquisitions

• New 3 year USD300 million revolving multi-currency bank facilities finalised in October provide funding liquidity and flexibility

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Life Sciences. Overview

Environmental

Food & Pharma

• Revenue growth (in AUD) 10%

• Revenue growth (in AUD)  Margin improvements in 10% Europe and Canada offset by declines in USA and Asia

• Ongoing cost controls and procurement synergies  Organic revenue growth introduced in the Americas remains strong throughout the improving H1 FY19 ROS Australian, Asian and Canadian markets and new contract wins in Latin America

• Revenue growth (in AUD) 17%

• Acquisition of Truesdail (US) and Labfor (Brazil) increase platform within the Americas for further expansion in the sector

Underlying results (AUD)	H1 FY19	H1 FY18	Change
Revenue	$406.0 mn	$365.7 mn	+11.0 %
EBITDA	$81.7 mn	$74.9 mn	+9.1 %
EBITDA Margin	20.1 %	20.5 %	-40 bps
EBIT	$61.2 mn	$55.9 mn	+9.5 %

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5 year growth story – Food/Pharmaceutical

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LABFOR and
Truesdail
50 Marshfield
40 AlControl
ALS Microlab
ControlVet
Food/Pharma 30
20
10
0
2018
1H FY2019
Revenue growth
17%
2013
FY2019
Revenue target
AUD 200m
Revenue AUD$ millions
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
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Life Sciences. Outlook



Focus on operational efficiency is ongoing with workflow consolidation through Hub and Spoke effort to improve future margins

Food safety and pharmaceutical acquisition strategy will continue with  pipeline of opportunities identified

Environmental business in the Americas demonstrating strong organic  revenue growth capturing market share

EMENA EBIT growth driven by continued UK improvement as well as recent  bolt on acquisitions in Mainland Europe



Improvement in performance through new efficient laboratories, improving work flows, operational efficiencies and margin

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Life Sciences. Strategy



Continued focus on bolt on acquisitions for food business ($17m spent YTD). Solid pipeline



Food strategy on target to deliver $200m in revenue this fiscal year



New unique service offerings to provide market differentiator



Global strategy now focused on building pharmaceutical business



New greenfield start ups globally in food, pharmaceutical and environmental

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Commodities. Overview

• Geochemistry Metallurgy Inspection Coal  Sample volumes  Revenue up 63% pcp  Revenue up 33% pcp  Revenue up 13% pcp up 14% pcp  Contribution margin  Contribution margin up  Contribution margin up

• Market share up from 6% to 22% from 18% to 30% from 14% to 17% increases evident from new contract  Pricing and volume  Continued capitalisation  Increased market share wins outlook improving on capacity upgrade in in bore core and UK hub laboratory, with superintending services

• Contribution significant sample lines margin up from volume increases 27% to 31%

Underlying results (AUD)	H1 FY19	H1 FY18	Change
Revenue	$313.8 mn	$251.4 mn	+24.8 %
EBITDA	$94.6 mn	$69.5 mn	+36.1 %
EBITDA Margin	30.2 %	27.7 %	+250 bps
EBIT	$83.8 mn	$57.9 mn	+44.7 %

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Geochemistry

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H1 FY19 Highlights

Strategic Focus

Outlook

• Financial performance

• Growth in all regions

• Innovative Productivity

• Technical Development

• Continued sample volume growth in H2 FY19, circa 8-10%

• Mine site start ups (awarded)

• Increased sample volumes

• Cost base

• Work mix

• Investment & Expansion

• Market share

• Capacity

• Hub laboratories

• Geographies

• Mine site laboratories

• Mine site services

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Global Mineral Exploration Market

Market Activity

Analytical Spend Drivers

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18%
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• Global spend on exploration activities continues to rebound across a broad base of commodities both traditional and nontraditional (i.e. rare earths)

• ALS’ focus on systems, productivity and innovation enable superior quality and turnaround outcomes relative to its competitors within this sector

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Geochemistry – Market

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“The global nonferrous exploration budget has increased for the second time since 2012, by almost 20% year over year.”

“We… expect the global exploration budget to increase again in 2019, although likely by a smaller percentage than this year.”

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Geochemistry – Market

Exploration Dollars – AUST Growth pcp (excl. Iron Ore and Coal)

(i.e. quarter v equivalent quarter the previous year)

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Exploration budgets by stage of development, 2018 (US$M)

(1.651 companies budgeting US$9.62 billion)

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Grassroots 2,509.8M (26.1%)
Late stage 3,769.7M (39.2%)
Minesite 3,345.2M (34.7%)
Data as of Oct. 29, 2018.
Source: S&P Global Market Intelligence
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Geochemistry – The Recovery continues

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

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24
Average Weekly Sample Flow
21
Global Exploration Spend US$bn
18
Relative Gold Price in USD
15
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12
9
6
3
0
Week
100%
90%
ALS Global Mineral Sample Flow
80% (two week growth trend)
70%
60%
50%
40% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
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-18 Apr-18 Jul-18 Oct-18
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-18 Apr-18 Jul-18 Oct-18
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DELTA (last 2 weeks sample flow Versus same 2 weeks last year)

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Week
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Commodities. Outlook

Geochemistry expects current market conditions to continue  with growth levels on pcp basis to slightly moderate

Geochemistry market share gains to translate into improved  FY19 performance

Metallurgy experiencing strong increases in activity in  traditional gold, iron ore, and base metal projects, alongside new revenues from battery related materials

Demand for coal services increasing underpinned by both  growing market demand and significant market share gains

Strategic expansion program actively in progress to broaden  the Inspection global footprint whilst market conditions remain very supportive

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Industrial. Overview

Asset Care

Tribology

• Maintenance contracts wins in Australia generate increased revenues albeit this work is being undertaken in some cases at lower margins

• Revenue growth delivered in all regions – Australasia, North America and South America and strong margins maintained

• New business development plans help to deliver 15% pcp increase in revenues in US market

• Improved sales and marketing efforts creating new contract wins and increased volumes

• Market remains highly price sensitive

• Automation of lab workflow processes together with data management continues to be a key focus

Underlying results (AUD)	H1 FY19	H1 FY18	Change
Revenue	$106.3 mn	$99.7 mn	6.6 %
EBITDA	$15.7 mn	$18.0 mn	(12.8) %
EBITDA Margin	14.7 %	18.1%	-340 bps
EBIT	$12.6 mn	$15.0 mn	(16.0) %

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Geographic Footprint

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Industrial. Outlook

Well positioned to support mining, oil & gas and power generation maintenance  programs in Australia

Construction projects and recently introduced maintenance-related service lines in  the US to drive organic growth

Increasing client interest in online monitoring and data management solutions 

Strategic focus on expanding geographic reach in key markets – North America,  South America, South East Asia and Europe

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Confidence in Assets

Compliance —

• adherence to regulations

Performance:

• minimising maintenance cost

• • optimising production

Assurance —

providing confidence in safe operation

• extending asset life

HOLISTIC INTEGRITY & RELIABILITY ENGINEERING SERVICES

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Engineering Tribology Assessment Mechanical Testing Integrated Condition RBI / Fitness For Service / Monitoring Non-Destructive Remaining Life Testing (NDT) Maintenance Training Academy Planning & Review Quality Assurance / Inspection Materials Non-Intrusive Inspection Engineering / Advanced NDT Balancing & Alignment

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Next generation TIC, Innovation and Technology

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• [Robotics]

• [Client Software Platforms]

• [Artificial Intelligence and Deep Learning]

• [Deeper Supply Chain Engagement]

• [Global ERP]

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Half Year FY19 Financial Summary Underlying performance from continuing operations

NPAT (guidance exceeded)

$93.3m

NPAT growth 29.8% EBITDA growth 21.9% Revenue growth

15.2%

EPS growth

33.6%

Share buyback progress

$121.7m

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Full year guidance
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NPAT $170m to $175m

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ALS Asia Investor Presentation

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Financial appendix

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Half Year FY19 Financial Summary

Half Year	FY18 ($mn)**	Half Year FY19 ($mn)	Half Year FY19 ($mn)	Half Year FY19 ($mn)	Half Year FY19 ($mn)	Half Year FY19 ($mn)	Half Year FY19 ($mn)
	Underlying*	Underlying*	Discontinued Operations	Divestment & Impairment Charges	Restructuring & other one off items	Amortisation of Intangibles	Statutory Results
Revenue	716.8	826.1	4.0	-	-	-	830.1
EBITDA	146.4	178.5	(1.3)	-	(6.1)	-	171.1
Depreciation & amortisation	(34.0)	(35.0)	(0.8)	-	-	(1.3)	(37.1)
EBIT	112.4	143.5	(2.1)	-	(6.1)	(1.3)	134.0
Interest expense	(13.1)	(14.9)	-	-	-	-	(14.9)
Tax expense	(26.5)	(35.0)	0.4	-	1.3	-	(33.3)
Non-controlling interests	(0.9)	(0.3)	-	-	-	-	(0.3)
NPAT	71.9	93.3	(1.7)	-	(4.8)	(1.3)	85.5
EPS (basic – cents per share)	14.3	19.1					17.5
Dividend (cents per share)	8.0	11.0

* continuing operations ** restated

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Debt Metrics

	Mar-15	Mar-16	Mar-17	Mar-18	Sep-18
STATISTICS
Gearing Ratio(comfort 45%)	38%	27%	29%	31%	35%
Leverage (net debt/ EBITDA; max 3.00)	2.5	1.7	1.9	1.7	1.8
EBITDA interest cover(min 3.75)	9.1	7.7	9.2	11.3	11.6
BALANCE SHEET MEASURES
Total Equity(AUD mn)	1228	1186	1185	1122	1099
Net Debt (AUD mn)	762	438	485	506	585

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AUD$
DEBT MATURITY &
million
Debt Denomination Cash Holdings AUD$m 450 Long Term Debt - USPP Notes CAPACITY PROFILE
Bank Debt - Undrawn Capacity
CAD
300
15% 35.5% 35.7%
Other, 61 USD, 52 28.8%
150
USD
GBP, 7
85% AUD, 21
0
EUR, 12
2019 2020 2021 2022
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* Adjusted for October 2018 bank refinancing

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? Questions & Discussion

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