LASERBOND LIMITED — AGM Information 2012

Nov 14, 2012

15 November 2012

2012 Annual General Meeting Executive Director’s Address and Financial Update

Good morning ladies and gentlemen. Welcome and thank you for attending the Annual General Meeting. On behalf of the Board, I would like to take the opportunity to provide an update on the performance, recent developments and the financial outlook for the company.

Results for FY2012

The last financial year, continuing into the current financial year, has been a time of expansion for the company, in particular for our NSW division. In recent years growth has been achieved whilst running the business overly lean in management and facilities. The Board recognised the importance in FY2012 to invest further in the business to ensure future growth continues similar to the levels experienced from FY2009 through to FY2011. The consolidated entities historical results have shown revenue growth of 48% from FY2009 to FY2012, with a corresponding increase in profit after tax of 97% for the same period.

With the recent expansion and investment the business will be positioned well to continue the growth in revenue and profit over the coming three to five years minimum.

LaserBond (NSW)

As discussed in the 2012 Annual Report, revenue in NSW increased by 20% in FY2012 compared with FY2011, continuing growth from previous years. Continued future growth can only be achieved based on the expansion and investment initiatives put in place in NSW throughout FY2012 and leading into FY2013.

These initiatives have resulted in continuing additional costs on the business moving forward and will therefore have an effect on short term profitability. The initial investments throughout FY2012 impacted the profits despite the increase in revenue. FY2013 is expected to achieve some continued revenue growth, however initially little profit growth is expected based on the increasing costs.

The most significant additional costs affecting FY2013 for NSW are the increase in rent and other related on-costs related to the move to new, larger premises in Smeaton Grange, NSW and the increase in wages and related on-costs based on the restructuring of the sales and estimating team. Both of these investment initiatives provide the NSW division the ability to double our production capacity over the next three to five years, thus significantly increasing revenue and providing the continued and required growth in profits.

LaserBond (Qld)

As detailed in the 2012 Annual Report, LaserBond’s original intention on purchasing the Qld division was to develop the company into a precision surface engineering company, in line with the NSW division’s (or parent entity’s) business strategies, technologies and experience. Since the initial marketing of the LaserBond cladding technology in Qld, sales in Queensland for laser cladding in FY2012 grew by 56%. This was despite the Qld division having no effective sales team promoting the surface engineering capabilities.

With improvements beginning to show from the placed in FY2012 in production efficiency and gross margins, the s for Qld in FY2013 will be on increasing the client base throughout Queensland. Historically the business has concentrated on Gladstone, which has long been an industrial centre, particularly in alumina and aluminium production. With the restructuring of the consolidated group’s sales team throughout the last quarter of FY2012, the Qld division has the increased ability for presenting the value of our technologies and techniques to more clients and industry sectors throughout Queensland and in particular, the greater Central Queensland region.

FY2013 Expectations

LaserBond has a proven track record of saving businesses costs through increased efficiencies, in particular from increased production, reduced down time and lower costs. The restructuring of the consolidated sales team only occurred through the last quarter of FY2012, and the development of the client base takes time. In particular, it takes time for trials to prove the performance our precision surface engineering capabilities to new, often conservative customers. As briefly mentioned in a recent market update, the sales team activity has resulted in a significant increase in quoting, with positive feedback from initial trials received, and ongoing trials continuing.

However there has been some weakening in client spending by some of our large existing clients due to weakening in their industry sectors, particularly mining and minerals processing. For the NSW division, this has compounded with the increased costs from expansion and investment activities over the last twelve to eighteen months, and will impact on results for the December 2012 half year in comparison to the previous corresponding period.

LaserBond remains confident of stronger results for the second half of FY2013, due essentially to the considerable increase in sales team and production capacity, and is confident of continuing to meet and exceed growth expectations for the future.

Expansion of Operations

LaserBond has previously announced its intention to extend our reach into South Australia or Western Australia, with the successful completion of a share placement to new professional and sophisticated investors in May 2012 raising $2 million in preparation.

Initial discussions with existing and potential clients in both locations, combined with both the cost of living and the cost of doing business within these states, it has been determined by the Board the ideal location for the next expansion to be South Australia. Note the recent media attention in regards to the delayed Olympic Dam project in South Australia does not affect these opportunities.

Pre-due diligence of potential opportunities for acquisitions in both states has initially shown available businesses do not necessarily fit with all requirements for space for surface engineering technology, supporting engineering skill and equipment or management ability.

After reviewing confirmed client requirements in South Australia, and weighing up the cost of set-up and managing the location, it appears that a greenfield expansion may provide the best return for shareholders. The Board is currently reviewing various options in South Australia.

Conclusion

The Board would like to thank all shareholders for their continued support and look forward to increasing revenue and subsequent profits from our expansion and investment activities as we move forward.

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