IMDEX LIMITED — Investor Presentation 2013

Aug 18, 2013

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FY13 results presentation 19 August 2013

Bernie Ridgeway - Managing Director Paul Evans - Chief Financial Officer

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Today’s Agenda

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Overview Bernie Ridgeway FY13 financial performance Paul Evans Operational review Bernie Ridgeway Strategy & outlook Bernie Ridgeway

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Bernie Ridgeway Managing Director

Paul Evans Chief Financial Officer / Company Secretary

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Overview

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FY13 Summary

• Combined revenue 11%

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• O&G revenue 79% to new record high

• Minerals revenue 24%

• EBITA 53% (including $3.0m of one off restructuring costs, the majority in 4Q13)

• Revenue and earnings impacted by cyclical slowdown in minerals sector

• Minerals slowdown reduced Reflex fleet utilisation and drilling fluids revenue

• Success of diversification strategy demonstrated by strong growth in oil & gas revenues

• Stringent working capital management driving significant improvement in operating cash-flows

• Strong balance sheet and commitment to paying fully franked dividends maintained

• Acquisition of ioGlobal (effective 1 Nov 2012) further diversifies revenue streams

• Significant progress towards strategy of 30-40% of revenue from Oil & Gas

• Continued product development and introduction of new technologies – exciting initiatives to drive future growth

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Key metrics
($m)	FY13	FY12	Var.
Statutory revenue	232.8	269.6	14%
Combined revenue*	249.4	278.9	11%
EBITA	35.2	75.2	53%
NPAT	19.4	45.8	58%
EPS (cents)	9.2	22.3	59%
Operating cash flow	39.0	27.1	44%
Gearing (ND / (ND + E))	22.3%	22.3%	-
Interest cover	10 Times	43 times	-
Final DPS (fully franked)	0.40 cps	4.00 cps	90%
Total DPS (fully franked)	2.90 cps	7.25 cps	60%
Number of employees**	604	543	11%

• Includes 30% of VES International JV revenue

** Reflects investment in Oil & Gas personnel

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Revenue of $249.4m

Combined revenue*

($m)

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• ~ 11% on FY12 (record level)

• Minerals

  • 73% of combined revenue

  • Cyclical slowdown in 1H13: more pronounced in 2H13

  • Growth available in underpenetrated mining regions

• Oil & Gas

  • 27% of combined revenue

  • Year on year growth since FY10

• Includes 30% of VES International JV revenue

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• Continued expansion of VES International JV via acquisition and organic growth

• Share of VES JV revenue $16.6m (FY12: $9.3m)

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EBITA of $35.2m

EBITA ($m) EBITA ($m)

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• EBITA ~ 53% on FY12 (record level)

• Restructured operations to reduce costs: $3.0m one off restructuring costs

• Disciplined investment approach:

  • Oil & Gas strategy

  • Skilled employees

  • Product development

• Project delays in 4Q13 caused small AMC O&G EBITA loss (normalised <$1m)

• VES International JV:

  • Strong EBITDA performance

• *Includes equity accounted VES International JV result

• Impacted by amortisation, depreciation and tax charges. (including acquisition accounting finalisation)

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FY13 Financial Review

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Strong balance sheet with conservative gearing

($m)	Jun 13	Jun 12
Net cash Receivables Inventory Investment in SEH	10.0	11.2 59.7 52.1 21.4
	45.2
	53.4
	26.5
VES International JV Fixed assets Intangibles Other assets/deferred tax	25.6	24.3 19.7 61.1 25.1
	40.7
	67.4
	17.1
Total assets	285.9	274.6
Payables Bank loans HP Finance Provisions and current tax	25.8	33.4 58.9 0.5 13.7
	63.5
	0.5
	7.6
Total equity	188.5	168.1
(CA – Inventory)/CL CA/CL Gearing (ND / (ND + E))	1.35	1.40 2.29 22%
	2.49
	22%

• Strong working capital management

• Inventory reductions in Minerals. Increases in O&G to support growth

• Net debt at 30 Jun 13 of $54.0m

• Gearing comfortable at 22%

• Fixed asset growth from SRUs and O&G equipment business

• SEH investment at market value

• Reduction in net deferred tax position as tool fleet depreciates

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Solid working capital management

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• $39.0m of cash generated from $35.2m of EBITA

• Working capital release due to improved stock and debtor management

• Investment in O&G inventories during the period offset Minerals release

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Operational Review

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Minerals division

Revenue ($m)

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• ~ 24% on FY12 (record level)

• Revenues impacted by cyclical slowdown, particularly in 2H13

• Integration of ioGlobal

• Global introduction of SRUs

• Further product development

• Outlook for FY14

• Resource companies remain in cost cutting, expenditure reduction phase

• Organic growth opportunities in under penetrated markets

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• Expanded Reflex (ex ioGlobal) provides platform for substantial industry change

• Marketing SRUs globally

^Comparative purposes only. Regional structure adopted 1 July 10

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Diversified revenue base

Q413 Minerals Revenue

Customer

Drilling Phase

Commodity

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Non Junior
Junior
Mining 18%
15% Production7% Exploration Others
Production22% 22% 27% Gold
41%
20%
Intermediate/ Iron
Major Development 12%
51% Major / IntermediateCopper
85% Development
20% 82%
47%
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• ~60% from gold and copper

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

• ~85% from major and intermediate customers

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 programmes, resource delineation drilling, grade control, dewatering, etc. 13 Non-Mining - Drilling in the Construction/Civil Industry, Non-Mining Waterwell and Non-Mining HDD.

Reflex rental fleet

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Number of instruments on rent

• Decline from July 2012 peak reflects cyclical slowdown

• Market share maintained

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Innovation/development of market leading technologies

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Europe
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Solids removal technology

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USA
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• Industry changing technology – many advantages:

• Lower costs in remote areas

• Lower water usage

• Lower drilling fluid costs

• Effectively no ground disturbance

• Reduced wear and tear on bottom hole assembly

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Africa
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• FY13 targets not met due to cyclical slowdown/cost cutting

• Units deployed in each target region: Europe, Africa, Asia/Pacific, North America, South America

• Well positioned for the cyclical upswing

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Chile
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Australia
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PNG
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Strong growth in Oil & Gas division

Combined revenue* ($m)

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• ~ 79% on FY12

• Year on year growth since FY10

• Includes $16.6m from VES International JV

• Strong growth in Europe and Asia Pac, CBM strong in Australia

• Additional management depth to support growth

• Outlook for FY14:

• Improving VES International JV performance

• Targeted fluids and equipment strategy for Europe, Middle East and Asia Pacific

*Includes 30% of VES International JV revenue

VES International JV revenue

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VES International JV

(30% interest)

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	(m) unaudited		FY13	FY12*
	Total JV Revenue(100%)	USD	56.9	28.9
	Total JV EBITDA(100%)	USD	17.8	6.4
	Imdex share of associate profits / (losses)**	AUD	1.3	(1.5)

• *50% ownership to 31 Dec 11 and 30% thereafter

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

• Continued strong EBITDA primarily from US based operations

• Imdex share of NPAT impacted by $5m non cash depreciation and amortisation and $2m tax charge

• Acquisition accounting finalised with additional Imdex share of $1m noncash amortisation and $0.6m tax charge

• One off $3.0m profit on dilution from 50% to 30%

• **FY13 includes $3.0 million profit on dilution

• Future growth expected; organic and bolt on acquisitions

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Summary and Outlook

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Summary – FY13

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• FY13 financial result impacted by cyclical slowdown in minerals sector. More pronounced in 2H13

• Success of diversification strategy demonstrated by strong growth in oil & gas division FY13 revenues

• Strong balance sheet and cash flows

• Imdex cost structure re-aligned in 2H13

• Product development and innovation continued

• Commitment to paying fully franked dividends maintained

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Outlook – FY14

Fundamentals point to continued subdued activity in Minerals, however, robust activity in Oil & Gas

• Minerals industry in cyclical slowdown. Resource companies are reducing expenditure, cutting costs, increasing productivity and looking at innovation

• Despite expenditure/cost reductions by the Majors and Intermediates, a certain amount of spending will continue on long term projects

What is Imdex doing?

• Increasing exposure to development and production projects

• Further geographic expansion and diversification

• Pursuing market share growth in Minerals Division from previously underpenetrated markets

• Substantial organic growth expected in O&G division – profitable in FY14

• Innovation: development of new products and technologies – Minerals and Oil & Gas

• Imdex has been responding to market conditions with a strong focus on prudent working capital management, cost structures, efficiency and productivity improvements

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Our Strategy

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On track with strategy

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Past FY13 Medium term
Oil & Gas
27%
Minerals
100%
73%
Asia Pacific
Other 100% 54% 46%
Sales 29%
100%
Rentals
71%
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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Comprehensive product offering

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Exploration Production
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Key business drivers and outlook

Driver	FY14 Outlook
Exposure to Majors/Intermediates	Medium to long term project horizons 85% of 4Q13 Minerals revenue from Major and Intermediate companies. Similar exposure expected in FY14. Subdued activitydue to cyclical slowdown
Exploration drilling activity	Global rig utilisation approximately 30%
Commodity prices	Commodity prices remain under pressure. ~70% of 4Q13 Minerals revenue generated from production and development with growing non mining portion. Similar exposure expected in FY14
Instruments on rent	Reflex rental fleet levels expected to remain flat or slightly down in FY14
Technology leadership	Product development spending to continue New products (SRU and new/updated instrumentation) to generate market share gains in FY14 and beyond

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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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