Imdex Ltd · ASX:IMD
Imdex — UBS Emerging Companies Conference 2008
38 slides from Imdex's conference presentation, Oct 23, 2008
Slide 1: ASX cover letter for UBS Emerging Companies Conference
For personal use only 23 October 2008 Company Announcements Office Australian Stock Exchange Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2001 Dear Sir/Madam UBS Emerging Companies Conference Please find attached a copy of the Imdex Limited presentation being made at the UBS Emerging Companie
Slide 2: Imdex Limited UBS Emerging Companies Conference
For personal use only Imdex Limited UBS Emerging Companies Conference Sydney, 23 October 2008 1
Slide 3: Imdex Snapshot agenda
For personal use only Imdex Snapshot Fluids & Chemicals Down Hole Instrumentation FY08 Results Summary Post 30 June 2008 Highlights Strategy & Outlook Appendices 22
Slide 4: Imdex Snapshot
Imdex Snapshot For personal use only Core business - the manufacture, supply and distribution of high quality drilling fluids and down hole instrumentation Attractive end markets – mining & primarily late stage exploration and oil & gas Global Reach – nine acquisitions in 3 years have created
Slide 5: Fluids & Chemicals
For personal use only Imdex Snapshot Fluids & Chemicals Down Hole Instrumentation FY08 Results Summary Post 30 June 2008 Highlights Strategy & Outlook Appendices 44
Slide 6: Fluids & Chemicals – Overview
Fluids & Chemicals – Overview For personal use only Drilling Fluids and Chemicals (DFC) Main uses: Cool and lubricate the drill bit, keep the drill hole open and return cuttings to the surface Primarily servicing the global resources industries – diamond drilling (late stage exploration/develo
Slide 7: DFC – Revenue Growth
DFC – Revenue Growth For personal use only Fluids and Chemicals Revenue 90 ($m) 85.7 Strong organic growth 80 Ç 37% Balanced global presence 70 60 Facilities being upgraded and expanded to 50 reduce costs and meet demand: 40 Samchem (Africa) 30 20 Southernland (Latin America) 10 Growth e
Slide 8: Down Hole Instrumentation
For personal use only Imdex Snapshot Fluids & Chemicals Down Hole Instrumentation FY08 Results Summary Post 30 June 2008 Highlights Strategy & Outlook Appendices 77
Slide 9: Down Hole Instrumentation – Overview
Down Hole Instrumentation – Overview For personal use only Down Hole Instrumentation (DHI) Types of tools Down hole survey Steering Core orientation Unique/leading technology in resources sector globally Entering oil & gas industry Manufacture and rent/sell Differentiating factors
Slide 10: DHI – Revenue Growth
DHI – Revenue Growth For personal use only Entry into oil & gas market with industry specific Down Hole Instrumentation Revenue down hole instrumentation ($m) 70 Continuing to grow rental business 62.9 Ç 12% Maintained technology leadership: 60 Digital down hole survey instrumentation 50 E
Slide 11: Our Customers
Our Customers For personal use only And a broad range of medium to smaller sized clients globally 10 10
Slide 12: Our Skill Set
Our Skill Set For personal use only Quality people Industry respected operational personnel Experienced locally based management Customer service Strong brands IP ownership Own manufacture = control of supply Scalability Low labour component High revenue per employee Drilling flu
Slide 13: FY08 Results Summary
For personal use only Imdex Snapshot Fluids & Chemicals Down Hole Instrumentation FY08 Results Summary Post 30 June 2008 Highlights Strategy & Outlook Appendices 12 12
Slide 14: FY08 – Results Highlights
FY08 – Results Highlights For personal use only Normalised Revenue by Division Normalised EBITA ($m) ($m) 45 160 148.6 40.1 40 140 Ç 25% 35 Ç 62% 120 30 25 100 20 80 15 60 10 40 5 0 20 -5 0 -10 FY04 FY05 FY06 FY07 FY08 FY04 FY05 FY06 FY07 FY08 Fluids and Chemicals Down Hole Instrumentation Minerals
Slide 15: FY08 strong revenue growth across all geographies
FY08 strong revenue growth across all geographies For personal use only Europe Ç 62% $8.2m Asia Pacific Ç 19% $92.6m Americas Ç 41% $19.1m Africa Ç 26% $28.7m 14 14
Slide 16: FY08 – EPS, DPS and ROE Growth
FY08 – EPS, DPS and ROE Growth For personal use only Normalised Earnings & Dividends Return on Equity 50% (EBITA/Equity) 14.0 c per Share 12.0 c 40% 10.0 c 30% 8.0 c 6.0 c 20% 4.0 c 10% 2.0 c 0% 0.0 c FY04 FY05 FY06 FY07 FY08 -2.0 c -10% -4.0 c -20% FY04 FY05 FY06 FY07 FY08 Interim Div Final Div Ear
Slide 17: How We Compare?
How We Compare? For personal use only Forced ranking by EBIT margin, FY08A 30% 25% 20% 15% 10% 5% 0% AAX MRM MAH SDM JHX BLY NMS IMD ABC MND EAL AJL BKW DOW TBG CLO HST ORI LEI CPB TSE NFK NWH BKN CSR NOD CDD WOR BLD RCR GRD IDL EHL BOL TOL UGL Source: ABN AMRO Construction & Engineering Sector Rese
Slide 18: Strong Balance Sheet
Strong Balance Sheet For personal use only Strong cash position ($13.2m) June 08 June 07 % $000’s $000’s Change Growth in assets due to acquisitions and organic business growth Current Assets 86,008 73,196 18% Goodwill/intangible assets due to Non-Current Assets 7,140 13,207 (46%) acquisitions
Slide 19: Low Gearing
Low Gearing For personal use only Total debt as at 30 June 08 of Composition of Debt at 30 June 2008 $35.6m (30 June 07 - $40.4m) Deferred Payments Gearing down to 25% (30 June 07 $5.4m (15%) – 35%) Bank Loan Gearing reduced further to 24% on $13.2m (37%) 31 July 08 with the repayment of $2.3
Slide 20: Post 30 June 2008 Highlights
For personal use only Imdex Snapshot Fluids & Chemicals Down Hole Instrumentation FY08 Results Summary Post 30 June 2008 Highlights Strategy & Outlook Appendices 19 19
Slide 21: Post June 2008 Highlights – Wildcat Chemicals
Post 30 June 2008 Highlights For personal use only Acquisition of Wildcat Chemicals (effective 1 September, 2008) Cost $1.8m paid in cash at settlement FY08 revenue was $2.8m and EBIT of approximately $300,000 Provides manufacturing of drilling fluids & chemicals on the east coast of Austral
Slide 22: Post June 2008 Highlights – Australian Drilling Specialities
Post 30 June 2008 Highlights For personal use only Acquisition of Australian Drilling Specialities (scheduled for 1 January, 2009) Cost $12m ($6m cash and the issue of 5.45m Imdex shares at $1.10 per share) FY08 revenue approximately $10m generating pre tax profit of around $2m Increases con
Slide 23: Strategy & Outlook
For personal use only Imdex Snapshot Fluids & Chemicals Down Hole Instrumentation FY08 Results Summary Post 30 June 2008 Highlights Strategy & Outlook Appendices 22 22
Slide 24: What makes Imdex different?
What makes Imdex different? For personal use only Industry Exposure Operational Strength Labour costs ABN AMRO research shows Focus on late Majority of Imdex business is with Imdex as having one of the lowest stage late stage operators and oil & gas labour components and highest exploration clients.
Slide 25: Strategy
Strategy For personal use only Core Strategy – two divisions supplying drilling fluids and down hole instrumentation to two end markets: Mining and Oil & Gas, incl. CBM Imdex will continue to focus on: Revenue and earnings growth Operating cash flow Sound treasury and financial management
Slide 26: Resources – Exposure to Long Term Growth Industries
Resources – Exposure to Long Term Growth Industries For personal use only Record minerals exploration spend Increased production activity US$14.0B in 2008 - up 33% on US$10.5B in 2007 Robust demand for drilling fluids and down hole instrumentation – essential components of exploration and de
Slide 27: Resources – Low Discovery Rates Driving Greater Reliance on Exploration
Resources – Low Discovery Rates Driving Greater Reliance on Exploration For personal use only Major/World Class Deposit Discoveries Worldw ide Exploration Spending Worldwide Exploration Spending (Billions $US) 12 16 11 14 10 Number of Discoveries 9 12 8 10 7 6 8 5 6 4 3 4 2 2 1 0 0 80 82 84 86 88 90
Slide 28: Oil & Gas - market outlook for growth in global exploration spend
Oil & Gas - market outlook for growth in global exploration spend For personal use only Strong investment into exploration and development of new reserves Oil & Gas Exploration Spend Significant uplift in exploration spend 30,000 Exploration spend as a % of total E&P spend 30% over past 4 years
Slide 29: Major Growth Initiative
Major Growth Initiative Down hole instrumentation – oil & gas industry For personal use only Penetrate oil & gas down hole instrumentation market (Estimated market size US$500m p.a.) Major service providers are Scientific Drilling and Gyrodata who use their proprietary technology (not available
Slide 30: 1Q09 Highlights (unaudited)
1Q09 Highlights (unaudited) For personal use only 1Q09 revenue up 12% to $43.2 million (1Q08: $38.6 million) EBITA margins were in line with expectations DFC performed strongly 1Q09 revenue up 25% to $25.7 million exceeded budget (1Q08: $20.5 million) Trading conditions robust in the Asia
Slide 31: Looking forward – what will Imdex look like in the medium term
Looking forward – what will Imdex look like in the medium term For personal use only Strong relationships, leading technology, sustainable growth and attractive end-markets Medium Term Objective Past Present (3-5 years) 9% Greater penetration into 1% End-market Early Stage oil & gas markets. expos
Slide 32: Appendices
For personal use only Imdex Snapshot Fluids & Chemicals Down Hole Instrumentation FY08 Results Summary Post 30 June 2008 Highlights Strategy & Outlook Appendices 31 31
Slide 33: Appendix – FY08 Results Overview
Appendix – FY08 Results Overview For personal use only FY08 FY07 $000’s $000’s Change Fluids and Chemicals Revenue 85,711 62,353 Ç 37% Down Hole Instrumentation Revenue (incl Surtron) 62,882 56,139 Ç 12% Normalised Revenue 148,593 118,492 Ç 25% EBITA (incl Surtron trading, excl profit on disposal) 4
Slide 34: Appendix – FY08 Revenue Growth
Appendix – FY08 Revenue Growth For personal use only Normalised Revenue Growth ($m) 25% revenue growth – 20% organic growth 160 Ç 5% 148.6 and 5% acquisition growth Ç 20% 140 Organic growth - all geographic areas 118.5 120 Highest organic growth - AMC and Reflex 100 The growth in AMC was dri
Slide 35: Appendix – FY08 EBITA Growth
Appendix – FY08 EBITA Growth For personal use only Normalised EBITA Growth ($m) 62% EBITA growth – 57% organic growth 45 and 5% acquisition growth Ç 57% Ç 5% 40.1 40 Growth in margins achieved by: 35 30 Growing economies of scale 24.7 25 Controlling back office costs, 20 particularly in newl
Slide 36: Appendix – Senior Management – breadth and depth
Appendix – Senior Management – breadth and depth For personal use only Strong operational management Gary Weston Group GM – founder of AMC and over 30 years experience, Imdex and Baroid Derek Loughlin Divisional Manager – Instrumentation – 19 years experience, Boart Longyear and others Paul Mander D
Slide 37: Appendix – Board of Directors
Appendix – Board of Directors For personal use only Non Executive Chairman, Ian Burston AM Appointed Chairman 2000 Experienced leader of many mining and exploration companies including Hamersley Iron, Kalgoorlie Consolidated Gold Mines, Aurora Gold Ltd and Portman Limited Current Chairman of
Slide 38: Disclaimer
Disclaimer For personal use only 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. Th