IMDEX LIMITED — Investor Presentation 2012

Aug 19, 2012

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Imdex Limited

FY12 results presentation 20 August 2012

Bernie Ridgeway - Managing Director Paul Evans - Chief Financial Officer

Providing Innovative Drilling Fluids and Advanced Down Hole Instrumentation Worldwide

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FY12 Results - August 2012

Today’s agenda

Overview

FY12 financial performance

Operational review

Strategy & outlook

Bernie Ridgeway Managing Director

Bernie Ridgeway Paul Evans Bernie Ridgeway Bernie Ridgeway

Paul Evans Chief Financial Officer / Company Secretary

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Providing Innovative Drilling Fluids and Advanced Down Hole Instrumentation Worldwide

2

FY12 Results - August 2012

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Overview

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FY12 Results - August 2012

Record performance across all key metrics

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• Combined revenue (36%), EBITA (56%) and NPAT (58%)

• Minerals division revenue (36%)

• Strong balance sheet

• Low gearing

• Strong pre-tax operating cash flows (29%)

• Record number of Reflex instruments on rent

• Substantial increase in total dividend (61%)

• Positive FY13 outlook

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FY12 Results - August 2012

Growth across all financial metrics

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($m)	FY12	FY11	Var.
Statutory revenue	269.6	205.2	31%
Combined revenue*	278.9	205.2	36%
EBITA	75.2	48.1	56%
NPAT	45.8	29.0	58%
Pre-tax operating cash flow	56.9	44.0	29%
Gearing (ND / (ND + E))	22.3%	13.4%	
Interest cover	43 times	17 times	
Final dividend (fully franked)	4.00 cps	2.75 cps	45%
Total dividend (fully franked)	7.25 cps	4.50 cps	61%
Number of employees	543	399	36%

*Includes Imdex share of DHS JV revenue

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FY12 Results - August 2012

Record revenue

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Combined revenue*

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($m) 278.9
205.2
142.0
137.0 134.3
103.8
O&G
FY07 FY08 FY09 FY10 FY11 FY12
Minerals
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36% on FY11

• 2H12 27% on 2H11

• Minerals:

  • 87% of total revenue

  • Strong performance in all regions

• Oil & Gas:

  • 13% of total revenue

  • Strong start to 1H13

  • Share of DHS JV revenue - $9.3m

• Includes Imdex share of DHS JV revenue

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FY12 Results - August 2012

Strength through geographic diversification

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Americas	30%
				49%
Africa	17%
Europe	6%
				26%
Asia Pacific	47%			8%
				17%
FY12 Combined			FY12 YoY Growth
	Revenue		($73.6m or 36%)
	($278.9m)

• Increasingly diversified business by geographic region

• ~50% of FY12 growth came from Americas

• 80% of FY12 growth was offshore

• Future offshore growth rate expected to outstrip Asia Pac growth rate

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FY12 Results - August 2012

Record EBITA

**EBITA ***

($m)

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75.2
48.1
38.8
24.5
22.3
20.7
FY07 FY08 FY09 FY10 FY11 FY12
Includes equity accounted DHS JV result
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• 56% on FY11

• 2H12 37% on 2H11

• Strong Minerals performance in all major mining regions

• Investment in O&G business in FY12 to generate profits in FY13 and beyond

• EBITA margin of 27% on combined revenue

• DHS JV:

• Equity accounted

• $1.5m loss for FY12 (1H12 - $1.2m; 2H12 - $0.3m)

• FY13 will be profitable

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FY12 Results - August 2012

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FY12 Financial Performance

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FY12 Results - August 2012

Profit & loss

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($m)	FY12	FY11	Var. %
Combined revenue *	278.9	205.2	36%
EBITDA (incl equity accounted DHS JV result)	82.0	53.8	52%
Depreciation	(6.8)	(5.7)	18%
EBITA	75.2	48.1	56%
Amortisation	(6.0)	(6.8)	12%
Net interest expense	(1.7)	(2.8)	37%
Tax expense	(21.7)	(9.5)	126%
Statutory NPAT	45.8	29.0	58%
EPS (cents)	22.3	14.7	52%
Pre-tax cash flow from operations	56.9	44.0	29%

*Includes share of DHS JV

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FY12 Results - August 2012

Strong balance sheet

($m)	Jun 12	Jun 11
Net cash	11.2	18.4
Receivables	59.7	50.2
Inventory	52.1	40.6
Investment in SEH	21.4	16.1
DHS JV	24.3	-
Fixed assets	19.7	17.3
Intangibles	61.1	55.9
Otherassets/deferred tax	25.1	15.0
Total assets Payables	274.6 33.4	213.5 32.8
Bank loans	58.9	33.8
Vendor finance	-	2.8
HP Finance	0.5	1.3
Provisions and current tax	13.7	17.4
Total equity	168.1	125.4
(CA – Inventory)/CL	1.40	1.14
CA/CL	2.29	1.76
Gearing (ND / (ND + E))	22.3%	13.4%

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• Good cash position

• Net debt of $48.2m

• Low gearing of 22.3%

• Investing in inventory to support increased revenue and future growth

• Fixed asset growth includes SRU fleet to meet global demand

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FY12 Results - August 2012

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Operational Review

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FY12 Results - August 2012

Minerals division

Revenue ($m) Europe 3% Africa 19%

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Americas
31%
Asia Pacific
47%
FY07 * FY08 * FY09 * FY10 * FY11 FY12
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Comparative purposes only. Regional structure adopted 1 July 10
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• 36% on FY11

• 2H12 22% on 2H11

• Record Reflex fleet numbers

• Integration of ADS

• Integration of System Mud (Brazil) enhances geographic reach

• SRU roll-out commenced late in 2H12 in Australia

• Outlook for FY13:

• Strong exploration and development spending by Majors/Intermediates

• Ongoing SRU roll-out

• Further Reflex rental fleet growth – new products

• Higher revenue per customer

• Grow market share - all regions

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FY12 Results - August 2012

Sustainable revenue base

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FY12 Minerals Revenue

Majority of minerals revenue from development and production by major/intermediate companies

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Others
Junior
16%
Production 19%
Exploration
24%
29%
Iron
Gold
14%
49%
Major / Intermediate
Development 81%
Copper 47%
21%
Commodity Stage Customer
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• ~70% from gold and copper where prices are above long term averages

• ~70% from development, production and non-mining sources

• ~80% from major and intermediate customers

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FY12 Results - August 2012

Record Reflex rental fleet

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Number of instruments on rent

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JUN 10

OCT 10 FEB 11 JUN 11

OCT 11 FEB 12 JUN 12

• New and updated instrumentation to generate market share gains

• Record instrumentation fleet numbers expected in FY13

Providing Innovative Drilling Fluids and Advanced Down Hole Instrumentation Worldwide

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FY12 Results - August 2012

Oil & Gas division

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Combined revenue
($m)
37.2
28.0
27.5
23.0
17.0
7.2
FY07 FY08 FY09 FY10 FY11 FY12
Includes share of DHS JV revenue
DHS JV
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36% on FY11

• 2H12 64% on 2H11

• Includes $9.3 from DHS JV

• Outlook for FY13:

• Significant revenue and profit growth within DHS JV

• DHS is one of the largest global providers of down hole survey services in O&G market of US$400-US$500m

• Post Vaughn acquisition, DHS JV has full suite of instrumentation

• AMC Oil & Gas projected to substantially increase revenue in FY13. Profitable in July, 2012.

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FY12 Results - August 2012

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Outlook

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FY12 Results - August 2012

On track with strategy

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Past FY12 Medium term
Oil & Gas 13%
Minerals
100%
87%
Asia Pacific
Other 100% 53% 47%
32%
Sales
100%
Rentals
68%
End market
reach
Geographic
mix
Rent / Sell
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Note: All numbers based on actual or anticipated combined revenue Providing Innovative Drilling Fluids and Advanced Down Hole Instrumentation Worldwide

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FY12 Results - August 2012

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22.5
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Estimated global exploration/development spend (non-ferrous) (US$Bn) (non-ferrous) (US$Bn) 20.0[[20.4]] 19.3

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20.8
spend (non-ferrous) (US$Bn) (non-ferrous) (US$Bn) 20.0 [[20.4]] 19.3
18.2 18.0
17.1
13.2
11.5
10.4
7.5 7.7
4.6 [5.2] 5.1
2.5 [2.9] [3.5] 3.7 2.8 2.6 2.2 2.4 3.5
1.9
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Metals Economics Group (1993-2012); Mckinsey 2011 analysis (2013-2018). Reproduced with permission from Boart Longyear
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• CY12 excludes iron ore spend of US$2.5bn

• ‘Exploration/Development’ spend is 33% greenfields and 67% brownfields/development

• 70-75% of non-ferrous spend on gold and copper

• Gold discoveries not keeping pace with production

• Long lead times from discovery to production, ore body complexity, increased costs

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FY12 Results - August 2012

Solids Removal Units (SRUs)

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Technology

• Unique technology for diamond drilling industry

• Surface and underground

• Provisional patents to protect IP

• First mover advantage

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Previously - drilling fluid sumps
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Now - fully enclosed system
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FY12 Results - August 2012

Solids Removal Units (SRUs)

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Advantages

• Low environmental footprint

• Reduced operating costs:

• Low wear & tear

• Better water management

• Simple mob/demob

• Significant global demand (mostly from majors)

• Rental model for greater economic return

• Global application

• Global roll-out commenced

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FY12 Results - August 2012

Comprehensive product offering

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	SRU
	Fluids
	Core Orientation
	Gyro Down Hole Survey
	Magnetic Down Hole Survey
	Directional Equipment
Exploration	Development	Production
29% revenue	47% revenue	24% revenue

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FY12 Results - August 2012

Key business drivers and outlook

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Driver	FY13 Outlook
Exposure to Majors/Intermediates	Medium to long term project horizons Spend through the cycle 80% of FY12 Minerals revenue from Major and Intermediate companies
Exploration drilling activity	MEG forecast robust exploration and development spending in CY13
Commodity prices	Robust commodity prices drive exploration, production and mine development 70% of FY12 Minerals revenue generated from production and development
Instruments on rent	Record Reflex rental fleet levels expected via new/updated instruments Underpenetrated in Latin America, Africa and Europe
Technology leadership	Product development spending to continue New products (SRU and new/updated instrumentation) to generate market share gains in potentially contracting markets
Client rig utilisation	Drilling contractors are reporting robust rig utilisation Increased product offering to generate greater revenue per rig/customer

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FY12 Results - August 2012

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Record results across all key financial metrics

FY12 – Record results

• Record revenue, EBITA & NPAT

• Record operating cash flow

• Strong balance sheet with low gearing

• Substantial increase in dividend

• FY13 – Positive outlook for sustainable growth

• Underlying fundamentals of key industry segments still positive

• High exposure to Majors and Intermediates with long term projects

• High exposure to late stage exploration/development and production projects

• DHS JV generating growth with increasing global footprint

• Ongoing R&D to maintain technology leadership

• Solids removal technology global roll out

• Organic growth expected in all major mining regions

• Continued geographic diversification

• AMC Oil & Gas to significantly grow revenue and profit in FY13

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FY12 Results - August 2012

Disclaimer

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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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FY12 Results - August 2012