I am pleased to provide a review of our operations for the 2021 financial year, my first twelve months as IMDEX CEO.
FY21 was truly challenging, and ultimately a rewarding year. I am often asked what I enjoy most about my role as CEO. My response has always been, ‘because it’s fun’. This would not be so, if it were not for the multitude of talented people around me. Their innovation, commitment, and intricate knowledge of orebodies and data platforms astounds me every day.
RECORD FINANCIAL PERFORMANCE
Our results were a highlight. We generated record revenue of $264.4m and our EBITDA of $75.5m was up 38.8%. On a constant currency basis, revenue and earnings grew 18% and 50% respectively, highlighting the real strength in the underlying business.
Our strong uplift in earnings reflected the increasing percentage of revenue coming from our higher-margin sensors and software business. At the close of FY21, rentals and subscriptions represented 55% of revenue. Our focus on streamlining operations and the benefits of our digital transformation - Digital 1.0 - were evident.
The investment we have made in Digital 1.0 to improve the cost to serve, and the quality of service, is delivering leverage in gross and net margins. This leverage allows us to spend more time engaging with clients and building a pipeline of new and next generation technologies.
In a year when balance sheet management was critical for most organisations, we outperformed. And we did so in all the jurisdictions we operate.
It may be easy to attribute our strong results with the overall strength of the market, but that would take away from the true underlying performance of our business. Our objective has always been to outperform our market proxies. In FY21 we achieved this in an exceptional way.
I would like to echo the comments by Anthony regarding our safety performance. Many organisations have experienced an increase in HSE incidents as both the pressure and change of work practices under COVID-19 impact their teams. Pleasingly, we have seen the opposite. It has taken a lot of attention and engagement, and it is a testament to our team.
Safety is more than just the incidents that we report. It is the way we look after ourselves and each other. At work and at home.
There are a number of other achievements I would like to highlight:
- Our joint development agreements (JDAs) to support new product development and delivery in partnership with our clients;
- Our record number of rock knowledge sensors on rent and the growth of our IMDEXHUB-IQ™ connected revenue; and
- Our ability to respond to changing client needs.
JDAs to support new product development and delivery
Our conscious step to build JDAs to bring new products to market has been a success in its first year. With three agreements signed and four in the works, we are excited by this model.
Increasingly, the solutions that we are designing benefit multiple players within the mining value chain. The JDA model ensures that any of these players come together in a structured manner.
Throughout the year we made great progress in soliciting client feedback. We have developed multiple user communities that play a key role in shaping the products and technologies we build. In one case, we have a group comprising 33 resource companies that provide critical insights. The power of this engagement is that a 500-person company like IMDEX, can be a 5000-person company contributing to better technologies and better outcomes.
Record Sensors on Rent and Growth of our IMDEXHUB-IQ™ Connected Revenue
Demand for our sensors was reflective of our leading technologies and strong market conditions. We had a record December 2020 and a strong uptake in January 2021. At the close of FY21, we had achieved the highest number of sensors on hire, and revenue from all regions was near to, or exceeded pre-COVID-19 levels.
Over the same period, our recurring IMDEXHUB-IQ™ connected revenue was up 30% and connected metres drilled was up 60%. This uplift on the previous year, is more than our revenue growth, and highlights that our technologies enable better workflows for clients. This is a true measure of success.
Responded to Increasing Demand for Remote Working Solutions
I am immensely proud of how everyone in our business amended their priorities and helped clients navigate COVID-19.
Our ability to be flexible and redirect resources to meet changing needs is a highlight of our results and culture.
Two examples include the upgrade of IMDEXHUB-IQ™ and the release of IMDEX ioGAS 7.3™ geochemistry data analysis software.
Enabling clients to work remotely, efficiently, securely, and safely are key components of our customer value proposition.
INDUSTRY AND MARKET UPDATE
Activity recovered throughout 1H21, boosted by strong industry fundamentals and a keen willingness by clients to sustain and increase operations.
This positive momentum continued into 2H21. The pace of growth was tempered due to supply chain pressures, and short-term labour and rig shortages – notably in Australia, Canada, and the USA.
COVID-19 increased industry pressure on our supply chain, particularly delivery times and freight charges. Fortunately, we have multiple supply chain contingencies and continue to support clients without material disruption.
In most of our jurisdictions, mining operations are considered essential to economic recovery and are exempt from hard lockdowns. Pleasingly, the implementation of COVID-19 vaccination programs began to support greater mobility, particularly in the USA.
We will continue to closely monitor risks and leverage positive industry structural changes, together with increasing demand for technologies and software that enable remote operations.
Although COVID-19 impacted our market and business, our underlying strategy remains unchanged:
- Growth of our core business by enhancing technical leadership and embedding value for clients; and
- Expansion within the larger production stage of the mining value chain, which is a larger market and less subject to cyclical impact.
To deliver, we are committed to targeted R&D, providing end-to-end IMDEX solutions, and leveraging our core competencies throughout the mining value chain. The strength of our balance sheet and net cash position also enables us to make on-strategy acquisitions as they present. To be on-strategy, these acquisitions must complement our product offering, have unique IP, and accelerate our development roadmap to deliver real-time orebody knowledge.
FOCUS AREAS FOR FY22
For the balance of FY22 our people will remain front and centre. Concurrently, we will focus on four key operational initiatives:
- Prosecuting our R&D roadmap to accelerate growth and build scale;
- Securing additional joint development agreements to engage with resource companies and drilling clients for new product development and delivery;
- Building key account management capabilities to embed value for clients and enhance IMDEX solution selling; and
- Commencing our digital Transformation 2.0 to further streamline costs and enhance client experience.
At all times we will ensure a high level of discipline and a relentless execution to be best-in-class.
CULTURE AND PEOPLE
There is a well known phrase that culture will eat strategy for breakfast. The reason it is well known is that it is true. The culture that we are building to take that next step as a growth company made great strides this year. We have expanded on these achievements on pages 45 - 47 of this Report and within our first Sustainability Report, which we are proud to release in September 2021.
Later in the year we will also launch our refreshed IMDEX brand and values in line with our 40th Anniversary. Key themes include:
Our global thinking;
- An awareness that the work we do has a direct impact on efficient and sustainable mining practices
- Innovation to solve industry challenges
- The importance of collaboration.
A REMARKABLE TEAM AND A POSITIVE OUTLOOK
This year I can say confidently, despite travel restrictions, the distance between the Board Room and our front-line teams has been shorter than it has ever been.
The pride I feel in how our people around the world have responded to overcome barriers between families, colleagues and clients has been truly remarkable.
Against this backdrop the outlook remains brighter than at any time in our past. The underlying fundamentals for our industry are excellent. The pipeline of our technologies that has been put together with input from our clients is long. And the team we have assembled both to build and deliver those products has never been stronger.
My sincere thanks to our Board members, Paul Evans, our XCo, and everyone at IMDEX for your guidance and positive contributions.
We have the talent, the network and the balance sheet to respond to market needs and opportunities as they present. We look forward with great excitement to FY22 and what the years that follow will bring to IMDEX’s team, its clients and ultimately its shareholders.
The pride I feel in how our people around the world have responded to overcome barriers between families, colleagues and clients has been truly remarkable
PAUL HOUSE, IMDEX CEO