Als Ltd. · ASX:ALQ
Als — Merger or Acquisition (July 2013)
47 slides from Als's merger presentation, Jul 16, 2013
Slide 1: Acquisition of Reservoir Group and Entitlement Offer
For personal use only Acquisition of Reservoir Group and Entitlement Offer INVESTOR PRESENTATION NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only This presentation may not be distributed or released in the United States. This presentation has been prepared by ALS Limited ABN 92 009 657 489 (ALS). This presentation has been prepared, in part, in relation to a pro-rata accelerated renounceab
Slide 3: Important notice and disclaimer (cont'd)
Important notice and disclaimer (cont’d) For personal use only Investment risk An investment in ALS shares is subject to known and unknown risks, some of which are beyond the control of ALS. ALS does not guarantee any particular rate of return or the performance of ALS nor does it guarantee any part
Slide 4: Important notice and disclaimer (cont'd)
Important notice and disclaimer (cont’d) For personal use only Forward-looking statements may include indications, projections, forecasts and guidance on sales, earnings, dividends and other estimates. Forward-looking statements are provided as a general guide only and should not be relied upon as a
Slide 5: Agenda
Agenda For personal use only Executive summary 5 Overview of Reservoir Strategic rationale Combined group overview Trading update Funding considerations Entitlement Offer details Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 6: Executive summary
Executive summary For personal use only • ALS Limited (“ALS” or the “Company”) has agreed to acquire Reservoir Group (“Reservoir”) from SCF Partners, Reservoir management and other shareholders for a total consideration of US$533mn1 (AU$579mn2) – Reservoir generated revenue of US$223mn and EBITDA of
Slide 7: Executive summary (cont'd)
Executive summary (cont’d) For personal use only • The Reservoir acquisition is expected to be EPS accretive in FY2014 (pre-synergies)1 EPS accretive • Synergies are expected to be realised over time as ALS integrates Reservoir’s business into its existing platform • The acquisitions will be funded
Slide 8: Agenda
Agenda Executive summary For personal use only Overview of Reservoir 8 Strategic rationale Combined group overview Trading update Funding considerations Entitlement Offer details Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 9: Reservoir snapshot
Reservoir snapshot For personal use only Global provider of specialist oil and gas reservoir evaluation, development and optimisation solutions Revenue by segment (FY2013)1 • Provides high margin coring, laboratory analysis, surface logging, specialist well services and downhole tool products Specia
Slide 10: Product and service overview of Reservoir
Product and service overview of Reservoir For personal use only Coring Laboratory Analysis Surface Logging Downhole Tools Specialist Well Services % FY2013 FY2013 pro forma FY2013 pro forma FY2013 pro forma FY2013 pro forma FY2013 pro forma revenue revenue: US$109mn revenue: US$10mn revenue: US$63mn
Slide 11: Reservoir operates across the oil and gas exploration and production lifecycle
Reservoir operates across the oil and gas exploration and production lifecycle For personal use only Exploration and Development and Production and Completion Abandonment Appraisal Optimisation Evaluation of reservoir formation in exploration Coring Coring and enhanced recovery phases Analysis o
Slide 12: Reservoir financials
Reservoir financials For personal use only Reservoir revenues (US$mn)1 Reservoir EBITDA and EBITA (US$mn)1 EBITDA EBITA 223 223 155 68 57 55 47 39 44 FY2011 FY2012 FY2013 FY2011 FY2012 FY2013 • Pro forma revenue growth has been historically driven by • Operating margins have historically been impact
Slide 13: Global presence with operational infrastructure covering key oil and gas provinces
Global presence with operational infrastructure covering key oil and gas provinces For personal use only Approximately 40 sites and over 900 employees globally, with management hubs in Aberdeen, Dubai, Houston and Edmonton Canada Europe 214 rigs 124 rigs Africa Asia 124 rigs Pacific Middle 249 rigs
Slide 14: Long-term relationships with global oil and gas and services companies
Long-term relationships with global oil and gas and services companies For personal use only • Reservoir has a strong customer base of national and international oil companies, independent oil companies and global service providers to the oil and gas industry • Reservoir has a long history of workin
Slide 15: The oil and gas services sector is expected to exhibit strong growth
The oil and gas services sector is expected to exhibit strong growth For personal use only Reservoir activity drivers Global oil and gas production Million barrels of oil equiv. per day Market fundamentals Conventional Unconventional % share of unconventional • Resilient non-OECD demand growth – Tig
Slide 16: Supply and demand dynamics are expected to continue to drive growth
Supply and demand dynamics are expected to continue to drive growth For personal use only The deficit between oil demand and supply is expected to increase – wells drilled and total spend growth is expected to continue Global oil demand vs. supply Global spend and well activity Supply Demand Spend W
Slide 17: Experienced and capable management team
Experienced and capable management team For personal use only • Highly experienced, longstanding track record in the oil and gas sector • Strong and long-term customer relationships • The eight senior managers of Reservoir have all committed to continue in the business post acquisition through custo
Slide 18: Agenda
Agenda Executive summary For personal use only Overview of Reservoir Strategic rationale 18 Combined group overview Trading update Funding considerations Entitlement Offer details Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 19: Strategically compelling acquisition consistent with ALS' strategy
Strategically compelling acquisition consistent with ALS’ strategy For personal use only Reservoir’s platform, combined with ALS’ proven laboratory testing capabilities, is expected to, over time, generate significant revenue synergies in a relatively fragmented and large market • Specialised servic
Slide 20: Reservoir will complement ALS' existing energy business
Reservoir will complement ALS’ existing energy business For personal use only Laboratory Well Monitoring Logging Coring Downhole Tools Analysis and Intervention Baker Hughes CoreLabs Key players Halliburton Schlumberger Weatherford Reservoir completes ALS’ end-t
Slide 21: Agenda
Agenda Executive summary For personal use only Overview of Reservoir Strategic rationale Combined group overview 21 Trading update Funding considerations Entitlement Offer details Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 22: Combined group overview
Combined group overview For personal use only Reservoir and Earth Data will be combined with ALS’ Energy Division NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 22
Slide 23: ALS pro forma financials
ALS pro forma financials For personal use only Pro forma for the Reservoir acquisition, the combined ALS group generated revenue of AU$1,672mn and EBITDA of AU$456mn in FY20131 ALS FY2013 pro forma profit and loss (AU$mn)1 ALS Reservoir Revenue 1,456 216 1,672 EBITDA 402 54 456 EBITA 348 43 390 The
Slide 24: Divisional and geographic revenue and EBITDA
Divisional and geographic revenue and EBITDA For personal use only The acquisition of Reservoir materially increases ALS’ exposure to the oil and gas sector and further diversifies the company’s geographic exposure FY2013 revenue by division – pre & post FY2013 revenue by geography – pre & post Mine
Slide 25: Agenda
Agenda For personal use only Executive summary Overview of Reservoir Strategic rationale Combined group overview Trading update 25 Funding considerations Entitlement Offer details Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 26: Trading update and outlook
Trading update and outlook For personal use only FY2014 first half guidance • ALS expects that underlying NPAT for the half year ending 30 September NPAT (AU$mn) 2013 will be in the range of AU$95mn to AU$105mn, including between 160 AU$4mn and AU$5mn from the acquisitions of Reservoir and Earth Dat
Slide 27: Agenda
Agenda Executive summary For personal use only Overview of Reservoir Strategic rationale Combined group overview Trading update Funding considerations 27 Entitlement Offer details Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 28: Acquisition funding details
Acquisition funding details For personal use only Equity Sources and uses of funds • 1 for 11 pro-rata accelerated renounceable entitlement offer (with Sources AU$mn retail entitlements trading), at an issue price of $7.80 per share, to raise approximately AU$246mn Entitlement Offer 246 – 16% discou
Slide 29: ALS pro forma balance sheet
ALS pro forma balance sheet For personal use only ALS Acquisitions and Entitlement Offer Payment of FY2013 ALS pro forma AU$mn 31 March 2013 pro forma adjustments1 final dividend and DRP 31 March 2013 BALANCE SHEET Cash and cash equivalents 116 (8) (58) 50 Trade and other receivables 257 65 - 322 Pr
Slide 30: ALS pro forma debt profile
ALS pro forma debt profile For personal use only ALS is committed to maintaining a conservative capital structure to retain flexibility to pursue value-adding opportunities Overview Pro forma debt maturity3 Drawn bank debt • ALS has secured a committed short-term US$275mn debt facility to Existing U
Slide 31: Agenda
Agenda Executive summary For personal use only Overview of Reservoir Strategic rationale Combined group overview Trading update Funding considerations Entitlement Offer details 31 Appendix NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 32: Details of the Entitlement Offer
Details of the Entitlement Offer For personal use only • 1 for 11 pro-rata accelerated renounceable entitlement offer (with retail entitlements trading) to raise gross proceeds of approximately AU$246mn – Entitlement Offer to eligible institutional shareholders (“Institutional Entitlement Offer”) an
Slide 33: Details of the Entitlement Offer (cont'd)
Details of the Entitlement Offer (cont’d) For personal use only • Institutional Entitlement Offer open from 10:00am Tuesday, 16 July to 11:00am Wednesday, 17 July Institutional • Entitlements not taken up by eligible institutional shareholders, and entitlements that would otherwise have been offered
Slide 34: Entitlement Offer timetable
Entitlement Offer timetable For personal use only Key Events Date Announcement of Entitlement Offer and trading halt Tuesday, 16 July Institutional Entitlement Offer 10:00am Tuesday, 16 July to 11:00am Wednesday, 17 July Institutional shortfall bookbuild Wednesday, 17 July to Thursday, 18 July Tradi
Slide 35: Agenda
Agenda Executive summary For personal use only Overview of Reservoir Strategic rationale Combined group overview Trading update Funding considerations Entitlement Offer details Appendix 35 • Key risks • International offer restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 36: Key risks
Key risks For personal use only This section discusses the key risks attaching to an investment in shares in ALS, which may affect the future operating and financial performance of ALS and the value of ALS shares (before and after the proposed acquisition of Reservoir and Earth Data). Before investi
Slide 37: Key risks (cont'd)
Key risks (cont’d) For personal use only • Acquisition activities – ALS regularly examines new acquisition opportunities, where the acquisitions would complement or enhance ALS’ existing operations. When and whether acquisitions are made will depend on a number of factors, including availability of
Slide 38: Key risks (cont'd)
Key risks (cont’d) For personal use only • Country risk – The financial performance of each of ALS’ foreign operations may be adversely impacted by current or future fiscal or regulatory regimes, local laws and regulations or changes to the economic, political, judicial, administrative and/or securi
Slide 39: Key risks (cont'd)
Key risks (cont’d) For personal use only Acquisition risks • Completion risk – The acquisitions of Reservoir and Earth Data are subject to the satisfaction of limited conditions, including U.S. antitrust approval and no material adverse change in Reservoir and/or Earth Data, which if not satisfied,
Slide 40: Key risks (cont'd)
Key risks (cont’d) For personal use only • Integration risk – The acquisitions involve the integration of the Reservoir and Earth Data businesses, which had previously operated independently from ALS. As a result, there is a risk that the integration of Reservoir and/or Earth Data may be more comple
Slide 41: Key risks (cont'd)
Key risks (cont’d) For personal use only General risks1 • Market – The market price of ALS shares will fluctuate due to various factors, many of which are non-specific to ALS, including recommendations by brokers and analysts, Australian and international general economic conditions, inflation rates
Slide 42: Key risks (cont'd)
Key risks (cont’d) For personal use only • Interest rates – While ALS takes reasonable steps to protect itself through the use of hedges, rising interest rates may nonetheless adversely impact ALS’ interest payments on its floating rate borrowings and inflation in underlying input costs may also adv
Slide 43: Key risks (cont'd)
Key risks (cont’d) For personal use only Risks associated with renouncing rights under the Retail Entitlement Offer • Prices obtainable for retail entitlements may rise and fall over the entitlement trading period. If you sell your entitlements at one stage in the retail entitlement trading period,
Slide 44: Agenda
Agenda Executive summary For personal use only Overview of Reservoir Strategic rationale Combined group overview Trading update Funding considerations Entitlement Offer details Appendix 44 • Key risks • International offer restrictions NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 45: International offer restrictions
International offer restrictions For personal use only This document does not constitute an offer of Entitlements or New Shares in any jurisdiction in which it would be unlawful. Entitlements and New Shares may not be offered or sold in any country outside Australia except to the extent permitted be
Slide 46: International offer restrictions (cont'd)
International offer restrictions (cont’d) For personal use only Korea ALS is not making any representation with respect to the eligibility of any recipients of this document to acquire the Entitlements or the New Shares under the laws of Korea, including, without limitation, the Foreign Exchange Tra
Slide 47: International offer restrictions (cont'd)
International offer restrictions (cont’d) For personal use only Switzerland The Entitlements and the New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This docume