Imdex Limited. FY09 Half Year Results 16 February Bernie Ridgeway Managing Director Paul Evans Chief Financial Officer

Transcription

1 Imdex Limited FY09 Half Year Results 16 February 2009 Bernie Ridgeway Managing Director Paul Evans Chief Financial Officer

2 Presentation overview Overview FY09 Half Year Results Operational review Outlook Mining & Mineral exploration Oil & Gas What this means for Imdex

3 Overview Bernie Ridgeway Managing Director

4 Overview financial Revenue from continuing operations up 16% to $81.4m (1H08 $70.2m) EBITA from continuing operations up 1% to $20.0m (1H08 $19.8m) NPAT before non operational items down 15% to $10.1m (1H08 $11.9m) Cash flow from operations up 109% to $6.6m (1H08 $3.2m) Low gearing at 22% (Jun 08 17%) with EBITA interest cover of 30x Focus on cost reductions & increased efficiencies Rolled bank facilities out to 2014 Interim fully franked dividend of 1.00 cent (1H cents)

5 Overview operational Drilling Fluids & Chemicals (DFC) Division Acquisition of Wildcat Chemicals manufactures oil & gas chemicals Commissioning of polymer plant at Samchem, South Africa Successful trials of solids control equipment for diamond drillers Down Hole Instrumentation (DHI) Division Segmentation of brands (Reflex Mining, Flexit Oil & Gas) Further development of oil & gas down hole instrumentation Successful trialling of new core orientation tool Further strengthening of management team, particularly oil & gas Decision to relocate mining DHI manufacturing to Australia

6 Growth in revenue and EBITA Normalised Revenue by Division ($m) Normalised EBITA ($m) % % H05 1H06 1H07 1H08 1H09 Fluids and Chemicals Instrumentation Minerals Processing Normalised revenue excludes other income and discontinued operations H05 1H06 1H07 1H08 1H09 Normalised EBITA excludes discontinued operations and non operational items

7 Actively managing the market downturn Rolled bank facilities out to 2014 Reviewing all internal procedures across control margins, inventory, debtors and expenses Deferred Dec 08 salary reviews until Jun 09 Implemented redundancies of 13% of global work force without impacting growth plans Relocating UK based manufacturing to Australia to obtain efficiencies Continuing to invest in R&D

8 FY09 Half Year Results Paul Evans Chief Financial Officer

9 Profit & loss Half Year Ended Half Year Ended 31 Dec Dec 2007 $ 000 $ 000 Revenue from continuing operations 81,356 70,205 Revenue from discontinuing operations 6,584 Total Revenue incl Interest Income 81,356 76,789 Change in percentage Total Revenue 6% Operating Profit before Interest, Tax, Depreciation and Amortisation 21,830 21,222 Depreciation (1,808) (1,433) Earnings before Interest, Tax & Amortisation (EBITA) 20,022 19,789 EBITA margin 25% 26% Change in percentage EBITA margin (1%) Amortisation (3,581) (2,547) Net interest expense (659) (325) Income tax expense (5,716) (5,023) Operating Profit after Tax from continuing operations 10,066 11,894 Change in percentage Net trading result of Surtron after tax 1,001 Non operational items Foreign exchange gain on the revaluation of SGE loan 2,120 Profit on sale of Surtron business 11,950 Tax effect thereon (636) (2,828) Net Profit after tax for the Half Year 11,550 22,017 Change in percentage (15%) (48%)

10 Strong balance sheet December 08 $000 s June 08 $000 s Cash (net of overdraft) 4,769 13,276 Receivables 30,781 32,079 Inventory 33,132 21,716 Investment in SGE 20,615 17,508 Property, plant & equipment 11,269 7,140 Goodwill & intangible assets 89,776 79,915 Other assets 1,526 1,429 Total Assets 191, ,063 Payables 25,529 25,314 Commercial bills 16,000 17,000 Bank loan 12,017 13,148 Vendor finance Flexit 8,500 Vendor finance Chardec 2,403 5,404 Provisions / Deferred tax 7,324 6,554 Total Equity 120, ,643 Quick ratio (CA Inventory)/CL Current ratio CA/CL Healthy liquidity & gearing ratios Low capital intensity Bank debt down $2.1m from Jun 08 to Dec 08 $8.5m Flexit liability extinguished 10m shares; potential cash top up deferred to 2012 SGE Investment $4.5m Secured $16.1m receivable

11 Low gearing Net Cash ($000 s) Debt ($000 s) Equity ($000 s) Dec 08 Jun 08 4,769 38, ,095 Gearing drops to 18% post Flexit variation Total debt Dec 08 $38.9m (16 Feb 09 $30.4m) Cash flow from operations 1H09 $6.6m (1H08 $3.2m) Low interest rate exposures 13,276 35, ,643 Net Debt to Equity 22% 17% EBITA / Interest Cover 30 times 61 times Composition of Debt 31 Dec 08 Deferred Payment (Flexit) $8.5m (22%) Bank Loan $12m (31%) Interest cover : EBITA remains very high at 30x Deferred Payment (ITUK) $2.4m (6%) Comm Bills $10.0m (25%) Comm Bills $6.0m (16%) Nil interest rate Floating interest rate Capped interest rate

12 Operational review Bernie Ridgeway Managing Director

13 Imdex s business Drilling Fluids & Chemicals Key Markets Consumable item Keep drill holes open and lubricate moving parts while removing cuttings to the surface Environmental focus Manufacture & supply Sell Mining & Mineral Exploration Oil & Gas Down Hole Instrumentation Core orientation Survey tools Magnetic and non magnetic World class technology Rental model Manufacture & supply Rent/ Sell Other markets Coal Bed Methane (CMB) Water well Horizontal directional drilling / Civil Global Reach

14 Drilling Fluids & Chemicals (DFC) Revenue ($m) 1H05 1H06 1H07 1H08 1H09 DFC 63% % 42.3 DHI 37% H09 Divisional Revenue Split 3% acquisition + 16% organic = 19% growth Strong organic growth to Nov 08 Decline in world markets since Nov 08 Continued to support global alliances Polymer plant commissioned at Samchem, Johannesburg Wildcat (acquired 1 Sept 08), positive contribution Australian Drilling Specialties (ADS) acquisition terminated

15 DFC growth initiatives 2H09 & beyond Continued focus on global alliances Manufacturing plant commissioned in Chile, Jan 09 Expansion in under penetrated geographic markets Canada Latin America Further expansion in niche oil & gas markets & coal bed methane Successful trials of solids control units (rentals)

16 Down Hole Instrumentation (DHI) Revenue ($m) % H05 1H06 1H07 1H08 1H09 DHI 37% 6% acquisition + 5% organic = 11% growth Growth excludes Surtron Instrument rentals peaked in Jul 08 Dec 08 low point with increases in Jan 09 Rental model proved resilient Continued to support global alliances DFC 63% 1H09 Divisional Revenue Split

17 DHI growth initiatives 2H09 & beyond Continued focus on global alliances Further expansion into oil & gas market globally onshore & offshore Market new/improved instruments Continued development of oil & gas instruments Focus on rental model Market segmentation of brands: Reflex mining & mineral exploration Flexit oil & gas Internal restructure to move mining DHI manufacturing to Australia

18 Outlook Mining & Mineral exploration Bernie Ridgeway Managing Director

19 Few discoveries support ongoing exploration Worldwide Exploration Spend. (US$ Bn) Number of Discoveries 1 new world class discovery in 8 years Source: Metals Economics Group & UBS Higher costs, deeper & more complicated ore bodies Longer to bring into production Supply issues unaddressed May lead to a cyclical misalignment in supply/demand

20 Current downturn likely to be higher than previous peak 15 Worldwide Mineral Exploration Expenditure 3 (US$Billion) Uranium Exploration Nonferrous Exploration Relative Copper Price Relative Gold Price Source: Metals Economics Group review of exploration strategies 25 Nov expenditure will be lower than 2008 Likely to be higher than top of previous peak Principal drivers gold, copper & uranium Relative Gold and Copper Prices (1989=1)

21 Outlook Oil & Gas Bernie Ridgeway Managing Director

22 Growth in global exploration spend Exploration spend as a % of total E&P spend 30% 25% 20 20% $Bn Top 25 IOC exploration spend (excluding national oil companies) 15% 10% 5% Oil & Gas Exploration Spend Source: SEB Enskilda Significant uplift in spend over past 4 years failed to arrest reserve decline 2007 worldwide exploration spend was ~ US $332 billion Currently, significant reductions in exploration spend due to global financial crisis Post this crisis, substantial increases in spend due to long term supply / demand imbalance Easy oil gone complex exploration needs sophisticated DHI technology Imdex supplies this technology E 0%

23 Significant exploration spend required over the longer term Newbuild Drilling Rigs Oil Price year underinvestment Source: Douglas Westwood Global Oil and Gas Briefing 28 Oct Two decades of low oil prices resulted in underinvestment Ageing drilling and production base Oil & gas industry needs to spend $10 trillion by 2030 (Onshore & offshore)

24 Outlook What this means for Imdex Bernie Ridgeway Managing Director

25 Robust business model & strategy End market exposure¹ Early Stage Minerals Late Stage Minerals Oil & Gas 49% Past 1% 50% Management s best estimate FY 08 9% 27% 64% Management s best estimate Medium Term Objective (3 5 years) Greater penetration into oil & gas markets for both DFC & DHI Minerals exploration: majority of Imdex business derived from late stage Divisional Profit 1 Fluids Downhole Instrumentation Services 50% 19% 31% 39% 3% 58% Move away from Services to reduce fixed costs, capital investment and high labour component Margin benefit from growing DHI Rent / Sell mix 2 Sell Rent 100% 80% 20% Growing DHI rental business ¹ Based on actual or anticipated EBITA contribution 2 Based on actual or anticipated Revenue contribution

26 Resilient business with long term growth opportunities Strategy is solid. Built around medium to long term objectives Rental model success Delivers sustainable income Rental fleet fully paid for Global business Alliances with world s largest drilling companies DFC & DHI Attractive end markets with supply / demand balance likely to recur Under penetrated markets Strong balance sheet with low gearing Experienced & industry respected management team

27 Growth opportunities Market penetration Oil & gas DHI and DFC Coal bed methane Underexploited geographic markets Canada, Caspian Sea & Latin America Product development Down hole instrumentation for oil & gas industry Solids control equipment for global diamond drilling industry Operational efficiencies simplification of DHI manufacture & supply

28 Appendices

29 Statutory profit and loss statement Half Year Ended Half Year Ended 31 Dec Dec 2007 $ 000 $ 000 Continuing operations Sale of goods and operating lease rental 80,274 69,139 Interest income and other operating revenue 1,082 1,066 Total revenue 81,356 70,205 Other income 4, Raw materials and consumables used (33,956) (28,449) Employee benefit expense (13,506) (9,436) Depreciation expense (1,808) (1,433) Amortisation expense (3,581) (2,547) Finance costs (1,741) (1,331) Other expenses (13,270) (10,187) Profit before tax 17,902 16,917 Income tax expense (6,352) (5,023) Profit from continuing operations 11,550 11,894 Profit from discontinued operations 10,123 Profit for the period 11,550 22,017 Attributable to: Equity holders of the parent 11,550 21,965 Minority interest 52

30 Statutory Balance sheet 31 Dec Jun 2008 $ 000 $ 000 Current Assets Cash and Cash Equivalents 8,188 13,276 Trade and Other Receivables 30,781 32,079 Inventories 33,132 21,716 Other Financial Assets 16,115 13,237 Other 1,526 1,200 89,742 81,508 Non Current Assets classified as held for resale 4,500 4,500 Total Current Assets 94,242 86,008 Non Current Assets Property, Plant and Equipment 11,269 7,140 Goodwill 64,893 52,626 Other Intangible Assets 24,883 27,289 Total Non Current Assets 101,045 87,055 Total Assets 195, ,063 Current Liabilities Trade and Other Payables 16,163 16,522 Borrowings 11,582 13,016 Current Tax Payables 9,366 8,792 Provisions 1, Other Current Liabilities 10,903 2,687 Total Current Liabilities 49,232 41,989 Non Current Liabilities Borrowings 19,854 17,132 Deferred Tax Liabilities 5,528 5,024 Provisions Other Non Current Liabilities 2,717 Total Non Current Liabilities 25,960 25,431 Total Liabilities 75,192 67,420 Net Assets 120, ,643 Equity Contributed Capital 65,260 64,883 Foreign Currency Translation Reserve 954 (4,863) Employee Equity Settled Benefits Reserve 3,416 2,573 Retained Profits 50,465 43,050 Total Equity 120, ,643

31 Statutory cash flow statement Half Year Ended Half Year Ended 31 Dec Dec 2007 $ 000 $ 000 Cash Flows From Operating Activities Receipts from customers 88,514 77,410 Payments to suppliers and employees (75,078) (64,188) Interest and other costs of finance paid (1,512) (1,273) Income tax paid (5,301) (8,774) Net cash provided by Operating Activities 6,623 3,175 Cash Flows From Investing Activities Interest and bill discounts received Payment for property, plant and equipment (4,044) (4,114) Proceeds from sale of Surtron net of cash disposed 14,778 Payment for the acquisition of the shares of Poly Drill (899) Payment for the acquisition of the shares of Suay (500) (232) Payment for the acquisition of the shares of Southernland (1,446) Payment for the acquisition of the shares of Imdex Technology (UK) (3,106) (5,088) Payment for the acquisition of the shares of Wildcat (1,901) Deferred acquisition payments (28) Amounts advanced to Sino Gas & Energy Ltd (86) Net cash (used in)/provided by Investing Activities (9,455) 3,086 Cash Flows From Financing Activities Cash received on exercise of options Dividend paid (4,135) (2,723) Convertible note interest paid (464) Hire purchase and lease payments (575) Proceeds from hire purchase financing 805 Proceeds from borrowings 5,000 Repayment of borrowings (3,061) (7,261) Net cash used in Financing Activities (7,105) (4,893) Net (decrease) / increase in Cash and Cash Equivalents Held (9,937) 1,368 Cash and Cash Equivalents At The Beginning Of The Period 13,276 15,271 Effects of exchange rate changes on the balance of cash and cash equivalents held in foreign currencies 1,430 (25) Cash and Cash Equivalents At The End Of The Period 4,769 16,614

32 Disclaimer 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.

33 Imdex Limited FY09 Half Year Results 16 February 2009 Q&A Session