IMDEX LIMITED — Interim / Quarterly Report 2014

Feb 16, 2014

1H14 Results Presentation

17 February 2014 1

Today’s Agenda

Overview

1H14 financial performance

Operational review

Summary & outlook

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Bernie Ridgeway Managing Director

Bernie Ridgeway Paul Evans Bernie Ridgeway Bernie Ridgeway

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Paul Evans

Chief Financial Officer / Company Secretary

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
Welcome

Chairman’s Address

Managing Director’s Address

Resolutions & Voting

Close of Meeting
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Overview

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1H14 Summary

• 1H14 performance impacted by:

• Cyclical slowdown in minerals sector & early seasonal shutdown

• Continued investment in innovative products & leading technologies

• Continued positioning for substantial growth – Oil & Gas sector

• One-off write downs ($2.4m)

• Strong VES JV EBITDA

• Partial sale of SEH investment at $20.1m profit

• Continued diversification to offset cyclical slowdowns in med/longterm

• Healthy Balance Sheet with comfortable gearing

• Banking facilities refinanced out to December, 2016

• Covenants rebased on EBITDA from EBITA

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Key Metrics

Key Metrics
($m)	1H14 1H13 Var.
Statutory revenue Combined revenue* EBITDA EBITA EBITA (exc SEH profit) NPAT EPS (cents)	92.2 127.6 28% 101.9 135.6 25% 24.2 29.6 18% 20.0 26.2 24% (0.1) 26.2 100% 15.3 16.6 8% 7.3 7.9 8%
Pre-tax operating cash flow Gearing (ND / (ND + E)) Interest cover Interim DPS (fully franked)	4.2 35.9 88% 12.9% 23.1% - 14 Times 14 Times - 0.00 cps 2.50 cps N/m
Net assets	207.1 186.7 11%
Number of employees	561 597 6%

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• Includes 30% of VES International JV revenue

Revenue of $101.9m

Combined revenue*

($m)

• ~  25% on pcp

• Minerals – 62% of combined revenue

• Growth opportunities:

• Underpenetrated mining regions

• Non-mining business

• SRUs & new technologies

• Oil & Gas – 38% of combined revenue

• Growth opportunities:

• Continued expansion of fluids & VES JV

• Share of VES JV revenue $9.7m

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• Includes 30% of VES International JV revenue

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EBITA

EBITA ($m)*

• ~  24%m on pcp

• EBITA (exc SEH) ~ 26.3m on pcp

• Gross profit margins remain robust

• One-off write downs $2.4m

• VES JV:

• Strong EBITDA performance

• Equity accounted result impacted by tax, depreciation & amortisation charges

*Includes equity accounted VES International JV result but excludes the gain arising on the disposal of Sino Gas & Energy Holdings Limited (SEH) during the period.

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1H14 Financial Review

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Balance sheet

($m)	Dec 13	Jun 13
Net cash Receivables Inventory Investment in SEH	14.9	10.0 45.2 53.4 26.5
	36.0
	56.2
	24.4
VES International JV Fixed assets Intangibles Other assets/deferred tax	25.8	25.6 40.7 67.4 17.1
	40.3
	67.0
	13.4
Total assets	278.0	285.9
Payables Bank loans HP Finance Provisions and current tax	17.5	25.8 63.5 0.5 7.6
	45.1
	0.4
	7.9
Total equity	207.1	188.5
(CA – Inventory)/CL CA/CL Gearing (ND / (ND + E))	1.98	1.35 2.49 22%
	3.87
	13%

• Prudent working capital management

• Inventory reductions in Minerals - increases in O&G to support growth

• 31 Dec 13 net debt $30.6m - Reduced from proceeds of SEH sale

• Comfortable gearing 13%

• SEH investment at market value

• • Reduction in net deferred tax position as tool fleet depreciates

*Current Assets (CA) excludes investment in Sino Gas & Energy Holdings Limited (SEH).

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Solid working capital management

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* EBITA excludes the gain arising on the disposal of Sino Gas & Energy Holdings Limited (SEH) during the period.

• $6.4m of cash generated from operations

• Working capital release due to improved stock and debtor management

• Reduction in minerals inventories offset by investment in oil & gas

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Operational Review

Operational Review

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Minerals Division

Revenue ($m)

• ~  38% on pcp

• Continued subdued activity

• Early seasonal shutdown

• Growth opportunities identified:

• SRUs & new technologies

• Underpenetrated mining regions

• Non-mining business

• Outlook for FY14:

• Customer focus on efficiencies

• Growing need for technologies

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• REFLEX platform for industry change

• Pipeline of product developments

• ^Comparative purposes only. Regional structure adopted 1 July 10

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Diversified Revenue

1H14 Minerals Revenue

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Non-Mining
Junior
7%
15%
Exploration Others
Production 22% 27% Gold
20%
41%
Iron
Intermediate/Major Development
12%
85% 51% Copper
20%
Customer Type Drilling Phase Commodity
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*See slide 27 for additional information

• 1H14 saw very little change to 4Q13 composition:

• ~60% from gold and copper

• ~70% from development & production with growing proportion from non-mining

• ~85% from major & intermediate customers

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Reflex Rental Fleet

Number of instruments on rent

• Decline from July 2012 peak reflects cyclical slowdown

• 2H14 - anticipate return to Sept / Oct 2013 levels

• Market share maintained

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Oil & Gas Division

Combined revenue*

($m)

• Revenue ~ 14% on pcp

• Includes $9.7m from VES JV

• Strong growth in Asia Pac

• CBM strong in Australia

• Investment in personnel & equipment

• Greater management depth

• Positioning for med / long-term growth

*Includes 30% of VES International JV revenue

VES International JV revenue AMC O&G

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Substantial growth opportunities

• Strong markets:

• Conventional oil & gas, Geothermal, Shale gas/Tight gas

• Gas and CO2 storage, Environmental, Civil

• Focus on East African/Middle East, European and Asia/Pacific markets

• Organic growth AMC & VES JV

2012 Drilling & Completion Fluids market size US$11.1bn, 2014 ~ US$13.5bn

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2012 Solids Control & Waste Management market size US$3.7bn, 2014 ~ US$4.3bn

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Reference Spears & Associates – Oilfield Market Report (September 2013)

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VES JV - 30% interest

• 3[rd] largest provider of downhole survey services in global oil & gas market

• Main competitors are Scientific Drilling International (SDI) & Gyrodata

• Both SDI & Gyrodata supply directional drilling services

• Currently focused on US land based market, Middle East & Latin America

• Robust business model due to increase in directional drilling & focus on maximising recovery from existing fields

• Active technology development program

• Positioning for med / long-term growth

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VES JV

(m) unaudited	1H14 1H13
Revenue (100%) USD	29.9 27.6
EBITDA (100%) USD Depreciation (100%) USD	10.9 7.8 (3.8) (2.5)
EBITA (100%) USD	7.1 5.3
Interest (100%) USD Amortisation (100%) USD Tax (100%) USD	(0.5) (0.2) (3.8) (7.0) (2.4) (4.1)
NPAT (100%) USD	0.4 (6.0)
Imdex 30% share USD Imdex 30% share AUD Other * AUD	0.1 (1.8) 0.1 (1.7) 0.2 3.1
Share of associate profits AUD	0.3 1.4

• Continued strong EBITDA

• Acquisition accounting finalised in FY13 with additional $3.3m non-cash amortisation & $1.5m tax charge included in 1H13

• One-off $3.0m profit on dilution from 50% to 30% in 1H13

• Future growth expected in all current key markets: USA, Middle East and Latin America

* 1H13includes $3.0 million profit on dilution

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Summary and Outlook

Summary and Outlook

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Summary – 1H14

• Cyclical downturn and early seasonal shutdown in minerals

• Challenging minerals market conditions led to lower revenues

• Earnings impacted

• Focused on costs and efficiencies

• Continuing to reinvest for growth – people and technologies

• Substantial opportunities in oil & gas

• Healthy balance sheet with debt further reducing

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Outlook

• Continued subdued activity in Minerals industry

• Global rig utilisation circa 20% - 30%

• REFLEX rental fleet – expected to increase & stabilise around Sept /Oct 2013 levels

• Market conditions present opportunities for REFLEX HUB & new technologies

• Robust activity in Oil & Gas sector, including CBM & Shale

• Organic growth expected in AMC Oil & Gas – expect Division to gain further momentum in 2H14

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– Key Priorities FY14

• [•][ Strong focus on prudent working capital management, cost ] structures, efficiency & productivity improvements

• Actively focusing on 3 broad initiatives:

• Pursuing market share growth in Minerals Division: underpenetrated markets, non-mining business, SRU’s & new technologies

• Continuing to develop oil & gas business – now in a stronger position to capitalise on opportunities

• Continuing to develop innovative technologies – Minerals and Oil & Gas – to satisfy growing customer demand for productivity & operational efficiencies.

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Questions

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Appendix

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On Track with Strategy

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Past 1H14 Medium term
Oil & Gas
Minerals 38%
100%
62%
Asia Pacific
100% 54% 46%
Other
Sales 33%
100%
Rentals 67%
End market
reach
Geographic
mix
Rent / Sell
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Note: All numbers based on actual or anticipated combined revenue

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Minerals Product Offering

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Diversified Revenue Criteria

• Customer Type – defined as annual revenue:

• Major – greater than US$500m

• Intermediate – Greater than US$50m

• Junior – Less than US$50m

• Drilling Phase defined as follows:

• Exploration – Pre-inferred resource / greenfields

• Development – Post-inferred resource moving towards indicated and measured resource

• Production – in-pit / underground drilling , mine life extension drilling programs, resource delineation drilling, grade control, dewatering, etc.

• Non-mining – drilling in the construction/civil industry, non-mining water well and non-mining HDD

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Reflex HUB

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Europe
Europe AFRICA
Chile
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Disclaimer

This presentation has been prepared by Imdex Limited (“the Company”). It contains general background information about the Company’s activities current 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, solicitation or recommendation with respect to the subscription for, purchase or sale of any security in any jurisdiction, and neither this document nor anything in it shall form the basis of any contract or commitment. The 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 particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.

The Company has prepared this presentation based on information available to it, including information derived from publicly available sources that have not been independently verified. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, correctness or reliability of the information, opinions and conclusions expressed.

Any statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. To the maximum extent permitted by law, none of the Company, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

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