IMDEX LIMITED — Investor Presentation 2011

Aug 14, 2011

Imdex Limited

FY11 Results Presentation 15 August 2011

Bernie Ridgeway – Managing Director Paul Evans – Chief Financial Officer

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.

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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.

Today’s presenters

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Bernie Ridgeway
Managing Director
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Paul Evans
Chief Financial Officer /
Company Secretary
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FY11 Results Presentation – 15 August 2011 3
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Today’s agenda

• Overview

• FY11 financial performance

• Operational review

Bernie Ridgeway Paul Evans Bernie Ridgeway

• Minerals Division

• Oil & Gas Division

• Strategy and outlook

Bernie Ridgeway

Imdex’s best ever results

• Record revenue and EBITA

• Record financial performance in all major mining regions

• Record number of Reflex instruments on rent

• Business structured to enable immediate response to increased demand

• Exciting technology development and new product pipeline

• Strong balance sheet with low gearing even after acquisitions

• Record operating cash flow

• Strategic bolt-on acquisitions add to margin and geographic footprint

• New growth initiatives to drive revenue and EBITA higher

Exceptional financial performance

Key indicator	FY10	FY11	Change
Revenue	$134.3m	$205.2m	�53%
EBITA (excl non-operational items)	$20.7m	$48.1m	�132%
NPAT (excl non-operational items)	$9.8m	$29.0m	�196%
Operating cash flow	$5.7m	$35.9m	�530%
Gearing (net debt / capital)	19.6%	13.4%	�
Interest cover	27 times	17 times	-
Total dividend (fully franked)	-	4.5 cents per share	-
Number of employees (incl part time)	300	399	�33%

Record revenue

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Revenue
205.2 �� 53% on FY10
($m)
��
revenue of $142m
142.0 �
137.0 134.3 Minerals
�
103.8
�
�
Oil & Gas
52.8
�
�
O&G
FY06 FY07 FY08 FY09 FY10 FY11
Minerals
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• �� 44% on pre GFC record revenue of $142m

• 87% of total revenue

• Strong performance

• 13% of total revenue

• Solid performance given floods impact in central and north eastern Australia

• excludes other income & discontinued operations

Record EBITA

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EBITA
($m)
48.1
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38.8
24.5
22.3
20.7
7.4
FY06 FY07 FY08 FY09 FY10 FY11
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• �� 132% on FY10

• Strong minerals performance in all major mining regions drove EBITA growth

• �� 24% on pre GFC record of $38 . 8 m

• � EBITA margins continued to improve to 23.5%

• excludes discontinued operations and nonoperational items

Profit & loss

Profit & loss
($millions)	FY10	FY11	Var %
Revenue(excl interest income)	134.3	205.2	53%�
EBITDA	24.9	53.8	116%�
Depreciation	(4.2)	(5.7)	37%�
EBITA	20.7	48.1	132%�
Amortisation	(6.4)	(6.8)	7%�
Net interest expense	(0.7)	(2.8)	260%�
Tax expense	(3.8)	(9.5)	154%�
NPAT before non recurring items	9.8	29.0	196%�
Impairment	(34.0)	-	-
Forex on SEH loan	(0.7)	-	-
Tax effect of non recurringitems	3.4	-	-
Statutory NPAT	(21.5)	29.0	-
NPAT / Weighted av shares on issue (cents)	(11.05)	14.69	-
Cash flow from operations	5.7	35.9	530%�
FY11 Results Presentation – 15 August 2011				9

Strong balance sheet

($millions) Jun 10 Jun 11 Net cash 9.0 18.4 Receivables 41.2 50.2 Inventory 28.6 40.6 Investment in SEH 6.8 16.1 Fixed assets 13.6 17.3 Intangibles 50.0 55.9 Other assets / Deferred tax 14.2 20.6	Jun 10	Jun 11
Total Assets 163.4 219.1
Payables 25.7 32.8 Commercial bills 19.5 25.9 Bank loan – Canada 5.7 6.9 Bank loan – Sweden 2.9 1.0 Vendor finance - 2.8 HP Finance 3.9 1.3 Provisions and current tax 11.2 23.0
Total Equity 94.5 125.4
(CA – Inventory)/CL * 1.03 1.05 CA/CL * 1.58 1.62 Gearing(net debt / capital) 19.6% 13.4%

� Strong cash position

� Invested in working capital to support increased sales/rentals

• Investment in SEH remains non core

• Deferred tax on unrealised instrumentation profits

� Interest cover of 17 times (EBITA over net interest income) � Low gearing

• Net Debt of $19.5m

• using CIBC and Westpac assumed repayment terms not statutory disclosure

Minerals Division

• �� 60% on FY10

• Record mining Reflex fleet numbers

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177.7
Revenue
($m) Africa � Reflex continues to gain market
17%
share
�
125.0 AMC brand rolled out globally Americas
Americas 26%
�
108.9 111.2 26% Regional structure delivering cross
96.6 selling advantages
Europe
3%
�
Seamless integration of Fluidstar
into AMC
Asia �
Pacific Subject to no deterioration in end
Asia
54% markets, upward trend in revenue/
Pacific
margin expected to continue 55%
•
Proposed acquisition of ADS
•
Proposed acquisition of System
FY07 FY08 FY09 FY10 FY11
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• Proposed acquisition of System Mud (Brazil)

NB: Regional structure adopted 1 July 10 – Comparatives have been reconstructed using assumptions for illustrative purposes

• Organic growth in all major mining regions

• excludes other income & discontinued operations

Record Reflex rental fleet

� Reflex rental fleet at June 2011 � 79% on previous peak in July 2008 � Seasonal slowdowns over December/January - highlighted � New records set in July and August 2011

Acquisition of Australian Drilling Specialties (ADS)

• Purchase price $12.0m, $6.0m cash and $6.0m shares on settlement

• Will be immediately earnings accretive

• Effective date 1 July 2011

• Unaudited results for FY11

• Turnover $9.3m

• EBITA $2.4m

• Benefits to the Imdex Group

• Enhance drilling fluids manufacturing capability

• Increase margin by vertical integration

• Access to IP and product formulations

• Ownership of polymer technology

• Expansion of product offering

• Increased control over supply chain

• Increase oil & gas expertise

Acquisition of System Mud (Brazil)

• Purchase price ~$9.0m

• ~$4.0m cash and ~$3.9m shares on settlement (@ $2.40 per share)

• ~$1.1m in cash/shares after 2 years (@ $3.50 per share)

• Will be immediately EPS accretive

• Effective date 1 August 2011

• Forecast CY11 results

• Turnover $7.5m

• • EBITA $1.4m

• Benefits to the Imdex Group

• Access to expanding Brazilian market and strengthen position in Latin America

• Strategically placed to service global customers

• Platform for growth of Reflex brand and cross selling

Oil & Gas Division

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Revenue
($m)
28.0
27.5
23.1
17.0
7.2
FY07 FY08 FY09 FY10 FY11
excludes other income & discontinued operations
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• �� 19% on FY10

• Fluids & chemicals impacted by floods in Australia

• Instrumentation services growth via DHS JV (oil & gas globally)

• Continued product development on existing/new instrumentation

• Integration of Mud-Data into AMC brand complete

• Sub j ect to no deterioration in end markets, upward trend in revenue / margin expected to continue

• DHSO JV effective 1 July 2011

• Expansion of Mud-Data in European market

• Drilling fluids and completion/production chemicals

On track with strategy

Oil & Gas Minerals 87% Instruments 32% Fluids 68% Services Sales 31% Rentals 69% ¹ Based on actual or anticipated EBITA 2 Based on actual or anticipated Revenue

Increasing estimated global exploration spend (non-ferrous) (US$Bn)

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22.5
20.8
20.4
19.0 19.3
18.0
17.1
16.0
13.2
11.5
10.4
7.5 7.7
5.1
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Metals Economics Group (2005-2011); Mckinsey analysis (2012-2018)
Reproduced with permission from Boart Longyear
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�� 40% on CY10 to highest level ever

• Due to industry capacity constraints, likely flow into subsequent years

• Future levels expected to be maintained above this peak

Key business drivers and outlook

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record levels
Client rig utilisation % Current high utilisation levels expected to continue
subject to no material deterioration in end markets
Level of Reflex rentals Reflex rental fleet records set in FY11
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Development of new R&D and product development spending continued
instrumentation on both mining and oil & gas instrumentation
Further releases expected in FY12 and beyond
Key growth strategy Increasing # of preferred supplier agreements
Revenue and cost 2 global brands (AMC and Reflex)
synergies Regional structure = more effective cross selling
FY11 Results Presentation – 15 August 2011 18
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Summary

• FY11 – Imdex’s best ever results

• Record revenue and earnings

• Record Reflex rental numbers

• Strong balance sheet

• Record operating cash flows

• Full year dividend of 4.5 cents per share

• Attractive growth opportunities to drive further growth

• Mud-Data acquisition drives il & as fluids & equipment growth in Europe O G

• DHSO joint venture drives Oil & Gas instrumentation/services growth

• ADS acquisition assists margin growth, control over supply chain and IP/technology ownership

• System Mud acquisition increases representation and presence in Brazil

• New technology/products in mining and oil & gas, including solids control

• Further organic growth across all global regions

• FY12 expected to be higher than FY11