Slide 1: H1FY16 Results and Entitlement Offer
H1FY16 Results and Entitlement Offer INVESTOR PRESENTATION 26 November 2015 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES RIGHT SOLUTIONS | RIGHT PARTNER 1
Slide 2: Important notice and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer 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
Slide 3: Important notice and disclaimer (Cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer (Cont’d) Financial data All dollar values are in Australian dollars (AU$ or AUD) unless otherwise stated. Investors should be aware that certain financial data included in this presentation are “non-IFRS financial m
Slide 4: Important notice and disclaimer (Cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer (Cont’d) Past performance Investors should note that past performance, including past share price performance and pro forma historical information are included for illustrative purposes only, and cannot be relied up
Slide 5: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda Summary 1H FY16 results FY16 outlook Entitlement Offer Appendix Appendix A: Key risks Appendix B: International offer restrictions Appendix C: Company strategy and overview RIGHT SOLUTIONS | RIGHT PARTNER 5
Slide 6: Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Summary • Underlying NPAT1 of AU$61.9 million for H1FY16, 7.6% below the prior corresponding period (pcp) • Statutory NPAT2 of AU$57.1 million, down 2.2% compared with the pcp • Revenue of AU$712.1 million and underlying EBIT3 of AU$106.6 million,
Slide 7: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda Summary H1 FY16 results FY16 outlook Entitlement Offer Appendix Appendix A: Key risks Appendix B: International offer restrictions Appendix C: Company strategy and overview RIGHT SOLUTIONS | RIGHT PARTNER 7
Slide 8: September 2015 Half Year Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES September 2015 Half Year Summary H1 FY15 (AU$mn) H1 FY16 (AU$mn) Restructuring Amortisation Half year Underlying1 Underlying & Other One- off Items 2 of Intangibles Revenue 710.3 712.1 - - EBITDA 149.8 150.4 3.9 - Depreciation & amortisation (40.8
Slide 9: September 2015 Half Year Trend
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES September 2015 Half Year Trend Average USD:AUD (cents) REVENUE 94 91 92 81 75 30 September 2015 -% pcp 800 200 AU$712mn EBITDA & NPAT (AU$ million) Revenue (AU$ mAU$ion) 150 720 Underlying EBITDA1 -% pcp 30 September 2015 100 AU$150mn 640 50 Under
Slide 10: Interim H1FY16 Dividend
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Interim H1FY16 Dividend AU$ cents 50 H1FY16 Dividend • 7.5cps 40 27 • Payout ratio 50% of underlying NPAT 30 26 20 • Franked to 25% 20 15 • Record date of 7 December 2015 10 10 11 • Dividend Reinvestment Plan suspended 10 19 21 19 13 for the inter
Slide 11: Earnings and Leverage Profile
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Earnings and Leverage Profile Australian versus Off-shore Profits1 Sep-14 Mar-15 Sep-15 Funding statistics (pre-Entitlement Offer) Australian Profits Off-shore Profits Gearing ratio2 Comfort 45% 35.5% 38.3% 39.9% Leverage (net debt / EBITDA) Max 3
Slide 12: Life Sciences Division
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Life Sciences Division Underlying1 Overview results (AU$) H1 FY16 H1 FY15 Change • Environmental − Grew revenue by 13% over H1 FY15 Revenue $318mn $276mn +15% − Gains in all regions EBITDA $76mn $66mn +16% − Improved margin performance in Australi
Slide 13: Life Sciences historical growth 2007 to 2015
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Life Sciences historical growth 2007 to 2015 2007 2015 LOCATIONS REVENUE EBITDA EBITDA% LOCATIONS REVENUE EBITDA EBITDA % 34 AU$165mn AU$37mn 22% 145 AU$557mn AU$125mn 22% Revenue 16.4% CAGR over 8 years to FY15 RIGHT SOLUTIONS | RIGHT PARTNER 13
Slide 14: ALS Current Food and Environmental Market Share
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ALS Current Food and Environmental Market Share Canada Europe (Nordic Region, Eastern Europe, and Iberia) 11% 20% 19% 25% 5% Asia 10% 10% UK USA 35% 25% 60% 30% Latin America Australia Note – Company estimates of ALS market share of commercially a
Slide 15: Environmental Strategy
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Environmental Strategy Environmental Revenue by Quarter 160 32% AU$ millions 140 28% EBIT margin (ave 12 mths) 120 24% 100 20% 80 16% 60 12% 40 8% 20 4% - 0% Environmental EBIT margin Note – EBIT margin inclusive of abnormals RIGHT SOLUTIONS | RIG
Slide 16: Food Strategy – the journey has begun
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Food Strategy – the journey has begun Existing ALS Food Operations Near-term target expansion for ALS Food operations RIGHT SOLUTIONS | RIGHT PARTNER 16
Slide 17: Food Strategy – building blocks in place
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Food Strategy – building blocks in place Achievements to date • Multi-language LIMS built and being rolled out globally • Client portal built –version 3 (ALSolutions) released in October 2015 • MIS built and rolled out • Global instrument standard
Slide 18: Industrial Division
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Industrial Division Underlying1 Overview results (AU$) H1 FY16 H1 FY15 Change • Asset Care Revenue $95mn $100mn -5% − Revenue down 11% compared with H1 FY15 − Decline in the capital expenditure-exposed EBITDA $16mn $20mn -16% major construction pr
Slide 19: ALS Asset Care Market Analysis (H1FY16)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ALS Asset Care Market Analysis (H1FY16) Revenue by Market Sector Australia Other Power Welding & 2% Generation Fabrication 14% 12% Revenue by Type of Spend Capital Expenditure 27% Operating Oil & Gas Expenditure 31% 73% Mining 41% • ALS Australian
Slide 20: ALS Asset Care Market Environment – Australia
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ALS Asset Care Market Environment – Australia Mining Industry Capital Expenditure Resource and Energy Export Earnings - 30 Australia 25 20 AU$ billion 15 10 5 0 Source: Australian Bureau of Statistics Source: Australian Bureau of Statistics • Clie
Slide 21: ALS Tribology Market Environment
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ALS Tribology Market Environment ALS Tribology Revenue (H1FY16) by Market Sector Defence 6% Other 6% Lubricant Mining Branded Service 20% 24% On-highway Transport Power 12% Generation 4% Rail 4% Oil & Gas 10% Equipment Source: American Trucking As
Slide 22: Energy Division
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Energy Division Underlying1 H1 FY16 H1 FY15 Change Overview results (AU$) • Coal Revenue $117mn $152mn -23% − Performed above expectations in Australia − Lower volumes and pricing pressures in other EBITDA $15mn $28mn -47% regions, especially Cana
Slide 23: Oil & Gas Laboratory – Houston strategic asset
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Oil & Gas Laboratory – Houston strategic asset Houston Oil & Gas Laboratory officially opened November 2015 – USD$13 million dollar investment Comments received from +170 potential clients at opening: Great facility and very good presentations
Slide 24: Minerals Division
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Minerals Division Underlying1 H1 FY16 H1 FY15 Change results (AU$) Overview • Geochemistry Revenue $183mn $182mn +1% − Sample volumes remained flat EBITDA $47mn $48mn - − Contribution margin maintained at 21% of revenue • Metallurgy EBIT $36mn $36
Slide 25: The Hub and Spoke Model in Action
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES The Hub and Spoke Model in Action • Global operating control • Continental scope • Scalable spokes • Capable hubs • Reduced quality risk • Focused capabilities Hub laboratory Analytical laboratory Preparation laboratory On-site laboratory RIGHT SO
Slide 26: Geochemistry – market share leveraged to upturn
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Geochemistry – market share leveraged to upturn Laboratory Service Provider used for SNL Top Ranked Assay Drill Intersection Announcements 62% 38% Sep15 31 19 50% 50% Quarter Jun15 25 25 56% 44% Mar15 28 22 0 20 40 60 ALS Other Source: SNL Top 10
Slide 27: The Market - Mineral Cycles (Australia)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES The Market - Mineral Cycles (Australia) Australian Mineral Exploration Spend (excluding iron ore & coal) in March 2015 AU$ equivalent 700 58% 37% decrease decrease 600 500 54% AU$ million (March 2015 AU$ equivalent) 44% decrease decrease 54% decre
Slide 28: ALS Geochemistry Revenue CY2015YTD
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ALS Geochemistry Revenue CY2015YTD RIGHT SOLUTIONS | RIGHT PARTNER 28
Slide 29: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda Summary H1 FY16 results FY16 outlook Entitlement Offer Appendix Appendix A: Key risks Appendix B: International offer restrictions Appendix C: Company strategy and overview RIGHT SOLUTIONS | RIGHT PARTNER 29
Slide 30: Strategy and 3QFY16 Guidance
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strategy and 3QFY16 Guidance • Continue to diversify the business and grow non-cyclical earnings • Focus on growth of Life Sciences Division − Fragmented and growing global market with consolidation opportunities − ALS has built a presence and sys
Slide 31: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda Summary H1 FY16 results FY16 outlook Entitlement Offer Appendix Appendix A: Key risks Appendix B: International offer restrictions Appendix C: Company strategy and overview RIGHT SOLUTIONS | RIGHT PARTNER 31
Slide 32: Overview of Entitlement Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of Entitlement Offer • Fully underwritten accelerated pro-rata non- renounceable entitlement offer to raise approximately AU$325 million • Net proceeds used to: − Strengthen the balance sheet and reduce net leverage; and − Accelerate grow
Slide 33: Details of the Entitlement Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Details of the Entitlement Offer • Fully underwritten 5-for-21 accelerated pro-rata non-renounceable entitlement offer to raise gross proceeds of approximately AU$325 million – Entitlement Offer to eligible institutional shareholders (Institutiona
Slide 34: Entitlement Offer timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Entitlement Offer timetable Key Events Date Announcement of Entitlement Offer and trading halt Thursday, 26 November Institutional Entitlement Offer opens Thursday, 26 November Institutional Entitlement Offer closes Friday, 27 November Institution
Slide 35: Rationale for Entitlement Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Rationale for Entitlement Offer Strengthen the balance sheet and improve ALS’ capital structure for the current environment Create additional covenant headroom to allow for future market and / or earnings volatility Provide funding flexibili
Slide 36: Pro forma balance sheet / Sources & Uses
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pro forma balance sheet / Sources & Uses Sources of funds AU$mn Uses of funds AU$mn Entitlement Offer 324.8 Repayment of outstanding bank facilities 67.4 Total 324.8 Cash retained on balance sheet to reduce net leverage 124.6 Funding for future gr
Slide 37: Strengthens the balance sheet
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strengthens the balance sheet Net leverage1 3 3.25x 2.7x • Reduction in net leverage considered prudent in current environment 1.8x • Entitlement Offer strengthens the balance sheet Pre Pro forma 2 Covenant Entitlement Offer for Entitlement Offer
Slide 38: ALS debt maturity profile post Entitlement Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ALS debt maturity profile post Entitlement Offer AU$ mn Bank facilities (drawn) USPP Bank facilities (undrawn) 315 282 283 249 39 - - - CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 Note: Pro forma maturity profile as at 30 September 2015. Refer slide 3
Slide 39: Funding flexibility to accelerate growth in Life Sciences
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Funding flexibility to accelerate growth in Life Sciences Overview of Life Sciences Opportunity Revenue (AU$mn) • Largest and fastest growing division of ALS 557 527 − 51% of group EBITDA in H1FY16 454 361 − Revenue growth of 15% in H1FY16 over pc
Slide 40: Funding flexibility to accelerate growth in Life Sciences (cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Funding flexibility to accelerate growth in Life Sciences (cont’d) Overview of Food Strategy Food/Pharma revenue by quarter • In 2012, ALS developed a strategy to build a AU$200m pa integrated food analytical business 30 25% • Significant achievem
Slide 41: Global food safety testing market size and ALS presence
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Funding flexibility to accelerate growth in Life Sciences (cont’d) Global food safety testing market size (in AU$bn) and ALS presence 20 Europe CAGR – 7.3% 15 AUD$ billion North America CAGR – 7.4% 10 $1.6 $5.8 $4.2 5 $2.9 Rest of world 0 CAGR – 5
Slide 42: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda Summary H1 FY16 results FY16 outlook Entitlement Offer Appendix Appendix A: Key risks Appendix B: International offer restrictions Appendix C: Company strategy and overview RIGHT SOLUTIONS | RIGHT PARTNER 42
Slide 43: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks This section discusses a non-exhaustive list of 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 investing in ALS shares, yo
Slide 44: Key risks (cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont’d) • 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 fact
Slide 45: Key risks (cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont’d) • 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, judicia
Slide 46: Key risks (cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont’d) • 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 unde
Slide 47: Key risks (cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont’d) Risks associated with an investment in shares There are general risks associated with investments in equity capital. The trading price of ALS shares may fluctuate with movements in equity capital markets in Australia and interna
Slide 48: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions 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 ex
Slide 49: International offer restrictions (cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (cont’d) New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The Entitlements and New Shar
Slide 50: International offer restrictions (cont'd)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (cont’d) United Arab Emirates Neither this document nor the Entitlements and the New Shares have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates, the Emirates Secu
Slide 51: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda Summary H1 FY16 results FY16 outlook Entitlement Offer Appendix Appendix A: Key risks Appendix B: International offer restrictions Appendix C: Company strategy and overview RIGHT SOLUTIONS | RIGHT PARTNER 51
Slide 52: Company Profile
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Company Profile ALS Limited (ASX:ALQ) is an ASX 100 company that provides professional technical services to the global Mineral and Energy Resources (exploration, extraction, processing and trading), Life Sciences (environmental, food and pharmace
Slide 53: Compliance and Sustainability
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Compliance and Sustainability RIGHT SOLUTIONS | RIGHT PARTNER 53
Slide 54: Health Safety and Environment
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Health Safety and Environment RIGHT SOLUTIONS | RIGHT PARTNER 54
Slide 55: Strategic Goal
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strategic Goal in a nut shell…… To be the market leader in any geography or market sector we operate by creating an enduring competitive advantage. what does that look like…… • Technical leadership • Innovative services • Continually evolving serv
Slide 56: Group Strategy – geographies & markets
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Group Strategy – geographies & markets Note: Pie charts on a revenue basis RIGHT SOLUTIONS | RIGHT PARTNER 56
Slide 57: Strategic mix
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strategic mix RIGHT SOLUTIONS | RIGHT PARTNER 57
Slide 58: ALS Strategic Assets
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ALS Strategic Assets Network Brand Systems Technology Culture ALS Strategic Assets • 400+ sites • quality • LIMS • state-of-the-art • people • 70+ countries • timeliness • MIS • innovators • training • 6 continents • service • standardisation • st
Slide 59: Global Location Map – Genuine Global Footprint
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Global Location Map – Genuine Global Footprint RIGHT SOLUTIONS | RIGHT PARTNER 59