I am pleased to provide you IMDEX’s Annual Report for the financial year ending 30 June 2019 (FY19). FY19 was a successful year and we are looking forward to FY20 with great excitement.
During FY19, activity within the global minerals market continued to increase across all regions of our operations.
Drilling activity moderated early in calendar 2019, principally due to concerns regarding the global macro environment, which had a short-term impact on capital expenditure and exploration plans.
Despite these concerns, 4Q19 was the second strongest quarter on record for IMDEX and we remain confident the major and intermediate resource companies are increasing their exploration and development expenditure.
It was a positive year with particularly strong first and fourth quarters. The 12% uplift in revenue was due to increased activity within the global minerals market and the improving quality of our rental fleet, which provides additional value to clients and generally commands higher rental rates.
Pleasingly, our EBITDA result of $52.3m exceeded FY18 by 23%. The result reflected higher revenue and improving margins due to market adoption of our integrated solutions and cloud-connected technologies via IMDEXHUB-IQ™. These solutions allow our clients to drill smarter and faster, obtain accurate subsurface data and critical information in real-time.
As reported in our 1H19 results, we are streamlining our operations for the long-term. This focus on operational efficiencies, together with our internal digital transformation program, achieved an improvement in our cost base, which was particularly evident in 2H19.
We also continued to invest in our ongoing core R&D and new drilling productivity and mining technologies in line with our growth strategy.
Our cash from operations improved significantly and we achieved a working capital investment ratio of 34 cents for every incremental dollar of revenue for the full year. This aligned with expectations and we anticipate a similar ratio for FY20.
Our balance sheet strength improved, and the strong cash generation was reflected in our net cash position, which was up 194% on the prior corresponding period. At the same time, we recommenced our dividend and continued to invest in leading technologies to drive future growth for shareholders.
IMDEX Drilling Productivity Technologies
As announced to the market in January 2018, we entered into an exclusive option agreement to acquire New Zealand based companies Flexidrill Limited and Flexidrill Construction Limited (together “Flexidrill”) and its patent protected technologies – the COREVIBE™ and MAGHAMMER™.
Since then, we have been progressing the development of these technologies based on strong demand from drilling contractors and resource companies.
We undertook successful trials at our test site in New Zealand, which concluded that COREVIBE™ generated a productivity gain of 33% over conventional coring.
These results were also validated by SGS, the world’s leading inspection, verification, testing and certification company.
More recently, we conducted client trials with COREVIBE™ in New South Wales, Queensland and Western Australia. These trials were successful and supported the results achieved at our test site.
The company has now commenced pilot production of COREVIBE™ and the first units are on commercial rent.
Development of the MAGHAMMER™ at our test site in New Zealand is progressing well and we intend to commence client trials in 2H20.
The first iteration of the MAGHAMMER™ will be targeting high speed pre-collar drilling through barren rock to the coring zone. This eliminates the need for multiple drill rigs at site and accordingly, the MAGHAMMER™ will significantly reduce the cost of drilling these targets. Additional development of the MAGHAMMER™ will provide geological samples.
Given continued positive development of the drilling productivity technologies and COREVIBE™ units on commercial rent, IMDEX anticipates exercising its Option to acquire Flexidrill in mid-December 2019.
IMDEX Mining Technologies
Our development of mining solutions for Drill & Blast applications, leveraging its
existing expertise and technologies, is advancing and remains on track to increase mine to mill efficiency for clients globally. Further extension into the larger adjacent mining market, has the potential to generate significant non-cyclical revenue streams.
We are conducting BLAST DOG™ trials in precious and base metals, together with bulk commodities, with global resource companies. To date, successful trials have been undertaken in Nevada in the United States and Queensland, Australia. Additional trials are planned in Chile and Australia in 1H20.
Our company continues to have strong support from industry partners including: Anglo American; Teck Resources; Orica; and METS Ignited and expects to generate revenue from the Drill & Blast technologies in 2H20.
Internal Digital Transformation Program
During the year we continued to progress our digital transformation program, which is being undertaken to enhance our systems and processes and enrich our client experience. Key achievements included:
- Global implementation of Office 365;
- Global digital rentals implemented within Asia Pacific;
- Global implementation of Concur expense management system;
- Global implementation of People HUB – our human resource information system;
- Additional training modules and tools within IMDEX Academy – our in-house digital training platform;
- Global implementation of iAuditor – our digital safety management tool; and
- The launch of our Customer Care Portal to optimises the way we provide product support to our clients and collect important data for input to future product development.
In mid-calendar 2018 we initiated a transition from being a product-focussed organisation to a market focussed one, enabling our teams of highly specialised AMC, REFLEX and IMDEXHUB-IQ™ personnel to deliver end-to-end IMDEX solutions to our client base.
Organisationally this transition was completed in FY19 and we are seeing growth in our solutions business.
During FY20 we will continue to invest in the capability of our teams, via IMDEX Academy and by attracting the best talent in the market to bring our solutions to our clients.
Positive Outlook for FY20
Mining production levels and commodity prices support investment in the industry, which is positive for IMDEX:
- The major and intermediate resource companies are increasing their expenditure to replace diminishing reserves;
- The discovery of new mines requires more drilling and is likely to have longer development times;
- New discoveries are likely to be under cover and at depth; and
- Resource companies are embracing innovation and new technologies to lower costs, increase safety and achieve greater productivity.
In relation to the junior companies, conditions have improved due to the stronger gold price and as reported by Bloomberg, there has been a recent uplift in capital raisings globally.
At a company level, IMDEX has had a positive start to FY20. The increase in activity that was evident in 4Q19 has continued and is reflected in the company’s growing instrument fleet.
Similarly, demand for IMDEX’s cloud-connected technologies is increasing. As at June 2019, 43% of the company’s connected devices were actively pushing data to IMDEXHUB-IQ™, which represents a 25% uplift on the previous corresponding period.
A Great Team
My sincere thanks to all IMDEX employees for another successful year – it is always a pleasure working with a diverse and dedicated team of talented people. Together we made excellent progress with the execution of our growth strategy for our valued shareholders.
On behalf our senior leadership team, I would also like to thank our Board for its professionalism, commitment and guidance. Each member brings unique value and expertise to our strategic direction and always contributes 'beyond the call of duty.'
IMDEX Managing Director