ALS LIMITED — Investor Presentation 2018

Oct 9, 2018

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Morgans Queensland Conference – Brisbane Richard Stephens, Chief Financial Officer, ALS Limited

10 October 2018

Right Solutions • Right Partner www.alsglobal.com

Right Solutions • Right Partner

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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TIC Markets

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Business streams

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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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Full Year FY18 Financial Summary Underlying performance from continuing operations

NPAT Guidance met

$142.2m

NPAT growth

21.1%

EBITDA growth

Revenue growth

12.3% 14.7%

EPS growth

21.9%

Share buyback progress

$106.8m [Additional $14.9 m in FY19]

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Revenue waterfall FY17 vs FY18 – all operations

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+80 +1 +2 -56
Strong +4
Life Sciences
growth
+54 -1 -3 +5 +5 Oil & Gas
discontinued
operation
Strong
Flat
Commodities
Industrial
performance
performance
+39
$1,365.6 million $1,495.1 million
FY17 Environmental Food Pharma Consumer Products Asset Care Tribology Mineral Inspection Geochemistry Metallurgy Coal Oil & Gas Other FY18
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Cash Flow

	Cash Flow
		Full year	FY17 AUD mn	FY18 AUD mn
	Analysis includes both continuing and discontinued operations ^ Based on statutory EBITDA	Underlying operating profit (EBIT)	171.6	216.7
		Depreciation & Amortisation	78.8	72.9
		EBITDA	250.4	289.6
		Working capital	12.3	(16.1)
		CAPEX	(58.7)	(73.4)
		Other	5.0	7.6
		Free cash flow	209.0	207.7
		Acquisitions	(106.4)	(31.8)
		Divestments	-	79.5
		Dividends paid	(58.0)	(80.8)
		Issued capital bought back	-	(106.8)
		Borrowings - movement	-	(38.4)
		Interest and Tax	(68.3)	(73.5)
		Restructuring costs	(19.1)	(14.2)
		Net increase/(decrease) in cash	(42.8)	(58.3)
		Opening net cash	297.9	248.9
		Effect of FX on cash held	(6.2)	(3.4)
		Closing net cash	248.9	187.2

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Margin strong post bottom of the cycle

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ALS Revenue
AUD$ million ALS EBITDA Margin EBITDA
ALS Revenue Margin Intertek
1,500 30% SGS
Eurofins
Bureau Veritas
1,200 24% Applus
Mistras
900 18%
Bottom of
the cycle
Eurofins, Applus
600 12%
300 6%
0 0%
'12 '13 '14 '15 '16 '17 '18
ALS Financial Year Ending March
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EBITDA Margin for SGS, Intertek, Bureau Veritas, Eurofins, Applus & Mistras is for Calendar Year 2017. EBITDA Margin & Revenue for ALS includes all corporate expenses. EBITDA is underlying EBITDA for all companies

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Final H2 FY18 Dividend

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AUD
cents FY18 Final Dividend
50 Interim
Dividend  9.0 cps (Full Year 17.0 cps: up 25.9%)
40 Final Dividend  Payout ratio 60% (full year)
 Franked to 40%
27
26  Paid on 2 July 2018
30
20
 DRP on hold during share Buyback
20 15
10
11
9
10 19 21 19 6 8
13
11
9 7.5 8
5.5
0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
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Commodities. Overview

Geochemistry  Sample volumes up 26% pcp  Revenue up 27% pcp  Contribution margin 27% versus 24% pcp	Metallurgy  Revenue up 2.5% pcp  Contribution margin records improved performance due to cost base reductions  Pricing and volume outlook improving	Inspection  Revenue up 16.7% pcp  Contribution margin up 0.8% pcp  UK hub laboratory processing increasing sample volumes benefiting from recent capacity upgrades	Coal
			 Revenue up 3.6% pcp  Contribution margin 14.5% versus 13.3% pcp  New mine site operations providing increased revenues

Underlying results (AUD)	FY18	FY17	Change
Revenue	$518.9 mn	$427.2 mn	+21.5 %
EBITDA	$146.3 mn	$109.8 mn	+33.2 %
EBITDA Margin	28.2 %	25.7 %	+250 bps
EBIT	$123.5 mn	$86.1 mn	+43.5 %

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Geochemistry – The Recovery looks real

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

Average Weekly Sample Flow

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400,000 24
Global Exploration Spend US$bn
350,000 21
Relative Gold Price in USD
300,000 18
250,000 15
200,000 12
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
150,000 9
100,000 6
50,000 3
0 0
Week
100% ALS Global Mineral Sample Flow
90% (two week growth trend)
80%
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%
Week
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
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DELTA (last 2 weeks sample flow Versus same 2 weeks last year)

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Commodities. Outlook

Continuation of positive market sentiment and improved  market conditions for geochemistry

Geochemistry market share gains globally to translate into  improved FY19 performance

Gradual but sustained improvement in Metallurgy  expected to carry on throughout FY19

Demand for coal services remains and will be underpinned  by recent new contract wins

Inspection business benefiting from capacity upgrade and  is focused on cost-based management

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Life Sciences. Overview

Environmental

Food & Pharma

• Revenue growth (in AUD)  Focus on developing new greenfield  Revenue growth (in AUD) Asia (+16.7%) opportunities within selected Asian and Europe (+33.1%) Australia (+5.2%) European markets to deliver new growth Australia (+7.3%) – all organic Europe & Middle East (+20.1%) prospects  New Marshfield (US)

• Ongoing cost reduction  Organic growth remains strong acquisition creates the initiatives introduced in the throughout the Australian and Asian beachhead for further North Americas and UK markets to markets and new contract wins in South American food expansion improve FY19 ROS America reinforce optimistic outlook

• Revenue growth (in AUD) Europe (+33.1%) Australia (+7.3%) – all organic

Underlying results (AUD)	FY18	FY17	Change	H2FY18	H2FY17	Change
Revenue	$734.1 mn	$641.6 mn	+14.4 %	$368.4 mn	$320.6 mn	+14.9 %
EBITDA	$140.7 mn	$134.3 mn	+4.8 %	$65.8 mn	$61.7 mn	+6.6 %
EBITDA Margin	19.2 %	20.9 %	-169 bps	17.9 %	19.2 %	-130 bps
EBIT	$102.1 mn	$99.8 mn	+2.3 %	$46.2 mn	$44.2 mn	+4.5 %

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Life Sciences. Outlook



Focus on automation and workflow centralisation to improve future operating margins



Food safety and pharmaceutical strategy will continue expansion via targeted acquisitions

The environmental businesses in the Americas and Europe continue to  demonstrate improved revenue performance

EMENA revenue growth driven by UK improvement following integration  restructure and recent acquisition in Sweden

[New greenfield life science business in India to be operational in H2FY19]

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Industrial. Overview

Asset Care

Tribology

• In Australia, growth in Mining maintenance services offset smaller FY18 power generation outage program and O&G maintenance services

• Revenue growth and margin improvement delivered in all regions – Australasia, North America and South America

• Continued investment in technologies to support maintenance contracts

• OILCHECK acquisition in Brazil delivering in line with expectations (completed May 2017)

• Market remains highly price sensitive

• Continued investment in laboratory automation and data management

Underlying results (AUD)	FY18	FY17	Change
Revenue	$193.9 mn	$192.7 mn	0.6 %
EBITDA	$32.1 mn	$32.7 mn	(1.8) %
EBITDA Margin	16.6 %	17.0 %	-40 bps
EBIT	$26.2 mn	$26.5 mn	(1.2) %

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Industrial. Outlook





Despite headwinds, well positioned to support mining, O&G, and power generation maintenance programs in Australia. Market to remain highly price sensitive Mobilisation of US construction projects in FY19 H1 to underpin FY19 regional growth

Lab automation, online monitoring and data management solutions driving  increased efficiency and improved quality

 Tribology expansion of Prague operations in FY19 H1, creating a footprint in Europe

 Asset Care greenfield start-up established in Thailand in FY19 Q1

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First Half FY19 guidance

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NPAT (AUD$mn)
100
H1FY19
80 Guidance
$85-90m
60
40
20
0
H1 FY17 H2 FY17 H1 FY18 H2 FY18 H1 FY19
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ALS expects that underlying NPAT from continuing operations for the half year ending 30 September 2018 will be in the range of AUD $85 million to AUD $90 million

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Acquisitions completed during FY2019 to date

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Total investment
AUD18m
PHARMACEUTICAL ENVIRONMENTAL FOOD / PHARMA
Labfor (Brazil) Felsilab (Italy) Truesdail (USA)
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Global Operations Map

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50+ 300+ 40+ 13,000+ 20+ million $1.4+ billion Countries Locations Years of strong Staff worldwide Processed samples Global revenue business per year performance

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Debt Metrics

	Mar-14	Mar-15	Mar-16	Mar-17	Mar-18
STATISTICS
Gearing Ratio(comfort 45%)	34%	38%	27%	29%	31%
Leverage (net debt/ EBITDA; max 3.00)	2.2	2.5	1.7	1.9	1.7
EBITDA interest cover(min 3.75)	12.2	9.1	7.7	9.2	11.3
BALANCE SHEET MEASURES
Total Equity(AUD mn)	1419	1228	1186	1185	1122
Net Debt (AUD mn)	722	762	438	485	506

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AUD$ DEBT MATURITY &
Debt Denomination Cash Holdings AUD$m million
CAPACITY PROFILE
350 Long Term Debt - USPP Notes
as at 31 March 2018
Bank Debt - Undrawn Capacity
CAD 33.0% 33.2%
250
15%
Other, 67 26.8%
USD, 73
150
USD 7.0%
GBP, 10 50
85% AUD, 29 52.1
EUR, 8 2018 2019 2020 2021 2022
-50
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Sustainability Program. 2017-18 Achievements

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 (Group LTIFR = 1.0)

• 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 Maximise return for shareholders

Anti-bribery & corruption

Zero tolerance for bribery and corruption

Honesty & integrity An ALS core value

Regulatory compliance

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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Vision 2022: Our Everest (excluding significant acquisitions)

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