Imdex Limited (IMD) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the IMDEX Sustainability Update. [Operator Instructions] I would now like to turn the conference over to Mr. Paul House, CEO. Please go ahead.

Thank you, Melanie. Good morning, and welcome to IMDEX Limited's inaugural Corporate Sustainability Report. Joining me today is Paul Evans, our Chief Financial Officer; Kiah Grafton, our Global Head of Human Resources, Culture and Organizational Development; Shaun Southwell, our Chief Operations Officer, responsible for our operations and supply chain teams in all facilities around the world; and Kym Clements, our Head of Investor Relations and the lead in pulling together our inaugural report. Each will speak in detail on the various corporate sustainability initiatives that IMDEX has been embedding into its business practices around the world. We are very proud of the role that IMDEX plays in the mining value chain and its contribution to sustainable business practices, not just in its own operations, but in supporting the ESG and corporate sustainability objectives of our clients and the industry as a whole, in every corner of the world where mining activities are undertaken. Today, we look forward to sharing with you just some of that work. Skipping through Slide 2 to Slide 3. For those who do not know us well, IMDEX is a globally positioned leading mining tech company. And turning to Slide 4, I'll elaborate briefly on why. On Slide 4, our core capabilities involve research and development that in turn drives changes to mining practices, workflows and operations. We design and build products that add value to all participants in the mining value chain and drive improvements in safety, productivity, efficiency and environmental impact. We see great opportunities through our R&D capability to support our customers in addressing current and future ESG-related needs. Our business is defined by being capital light, people light, but our reach and therefore, our impact is across 70% of drilling projects around the world. Expanding on our product offering in Slide 5, you can see in detail that our product offerings are grouped into 3 broad areas: being drilling optimization products that improves -- that enhance drilling productivity and efficiency and safety and can have a direct impact on their environmental footprint; our rock knowledge sensors, which gain a greater understanding of the key properties of any rock and enable a more efficient and environmentally friendly process of extraction; and our real-time data and analytics that ensure that decisions can be made faster upstream than where they are made in the mining workflows today and, therefore, have a positive impact on mining's efficiency and footprint overall. Every product we choose to build undergoes a disciplined stage gate process that includes, amongst other things, a rigorous business case that is inclusive of assessing the ESG impact of that product on our own business and our clients' business. As a result, our business model is characterized by having a portfolio of products and services that are designed to add value to clients, inclusive of their ESG considerations. By its nature, therefore, we have a very low footprint in diesel consumption, power consumption and water consumption, 3 of the things that are often most highlighted in corporate sustainability initiatives. Later on, Shaun Southwell will expand on some of the initiatives we have, both on our own business and our clients'. Turning to Slide 6. I wish to elaborate briefly on how we have approached embedding corporate sustainability principles into the IMDEX business. And on Slide 7, I'd like to share our journey so far. IMDEX first established our ESG Committee in FY '20. A number of notable milestones took place in that year that I would like to draw your attention to. First, we upgraded our stage gate process for new product development to include appropriate steps to assess the ESG impact of any and all IMDEX products that we were choosing to invest in. Second, we initiated our first gap analysis work to measure our current business against the framework outlined in the Task Force on Climate-related Financial Disclosures. Over subsequent years, we've responded to that gap analysis by selecting the target areas that are included in today's report that we have released, and we have built policies around supporting our development in those target areas. Looking forward, in the years ahead, we aim to put in place additional systems, processes and measures to further embed our targeted ESG practices and measure the outcomes of that work with the intent that we can report back to our investor community and our clients, both. In all of these activities and throughout the journey, we've enjoyed the support of the Board and the exec team, both, all of whom are fully committed to our corporate sustainability purpose. Slide 8 elaborates on the focus areas we have selected that are most relevant to the IMDEX business model and our operations around the world. The 4 broad areas are: supporting economic development in the communities in which we operate; driving the sustainability of the global minerals industry, and much of my earlier commentary around our business model and products speaks directly to this; ensuring a safe and inclusive workplace encompassing both physical and policy-driven initiatives; upholding ethical and sustainable business practices, recognizing the complexity of operating a business with sales in over 100 countries around the world. The icons that you can see across the bottom of Slide 8 are drawn from the 17 sustainable development goals as defined by the UN, the 7 that we have selected within the 4 broader categories represent goals most applicable to the IMDEX business today. Turning to Slide 9. We engaged Morrow Sodali, a leading advisory firm in corporate sustainability consulting, to assist us in defining the material topics that were important to the IMDEX business and our clients and industry collectively. Each of these will be elaborated upon further by Paul, Shaun and Kiah in the slides that follow. Turning to Slide 10 and how we govern sustainability. We have a strong team that's assembled in our ESG Committee. It includes Board representation through Sally-Anne Layman, who has championed our journey so far, plus other stakeholders within the IMDEX business that represent the key materiality areas and have the ability to be accountable for and directly influence our objectives. Turning to Slide 12. I will now hand over to Shaun Southwell to walk through our initiatives and our progress in the environment space.

Thank you, Paul. If we could move to Slide 13, our operational emissions. So IMDEX have mapped out the areas of our business that have potential impact to the creation of greenhouse gases. And as mentioned previously by Paul, IMDEX is not a large contributor to the creation of greenhouse gases. So our initial focus is going to be on Scope 1 and 2, and our material areas of impact, our purchased electricity, both through owned and leased facilities all over the world. Our company vehicles, this covers our sales, service and logistical transportation of products to customer sites and as well as our equipment diesel use, which is one of our lower usage of diesel products. If we move to Slide 14, please. Slide 14 is our climate resistance. As mentioned by Paul, IMDEX is engaged in environmental consultancy business to conduct our gap analysis. The gap analysis is done in line with the Task Force on Climate-related Financial Disclosures framework. And this is our initial report. The ESG Committee will continue to develop our approach with focus on the material topics as that business grows and evolves. And as on the previous slide, our initial metrics are focused on Scope 1 and 2 and the material impact to areas listed. On the right side of this page, you will see an extracted summary from the gap analysis done by the consulting firm, identifying risks and opportunities that have been identified and that we're focusing to improve on. On Slide 15, the land disturbance and rehabilitation. All of IMDEX products enable significant enhancement to operational efficiency. This is a direct result in reduction of operational time of a drill rig or a reduction in exploration drilling requirements with real-time data ensuring clients next activity is executed with the best possible knowledge available. IMDEX has a strong focus on reuse biodegradable recycled and recyclable material and has implemented this in all parts of our business. We have some additional dedicated programs coming through that will continue to minimize any waste produced by IMDEX packaging. Slide 16. Water and effluents. The manufacture of products do not require material amount of water, and no disposal of water is required for many of these manufacturing processes. Our drilling fluids contain natural products like flour, seeds, banana peel and vegetable oils to name a few, and no petroleum products are used in our manufacturing processes. This is something we're rather proud of. The largest percentage of our fluid are produced in a powder form or liquid concentrate, which are able to be added to drilling water to produce the correct concentration, thus, reducing transportation costs and greenhouse gas emissions from transportation of bulk products. On Slide 17 is the first of our case studies. So SRUs are an innovative solution that IMDEX has introduced into the exploration mining industry. This equipment has significant impact on reducing the footprint of the exploration site. Some key areas listed, reduction in water consumption and therefore, the cartage required. It eliminates the requirement to dig sumps and the remediation after completion, and improved productivity of the rig, therefore, reducing significant diesel use. We have specific examples where our SRUs have made huge benefits to a project on the right-hand side of the screen. And working with our clients, there are certain projects where an IMDEX SRU is a prerequisite to any drilling activity based on the summarized benefits. If we move to Slide 18, IMDEX mining technology. IMDEX has introduced its innovative solution focus into the production mining area with a focus on improving mining efficiency. As you can see on this slide, it's through the whole workflow from the drilling right through into the downstream area. IMDEX BHS, BLASTDOG, HUB-IQ and the newly acquired MinePortal are all key tools in enabling the mine to make significant efficiency improvements, thus, ensuring optimized blast, which has a significant downstream impact to energy use. And as you can see in the bottom right-hand corner, approximately 4% of the world energy is used in processing at the mill. This will have a huge impact on reducing the environmental impact from the current inefficiency created from the blast. Society. If we go to Slide 20, please. Slide 20, our local engagement. So IMDEX has a strong connection to our local communities all over the world. In FY '21, we had a large number of engagement with local communities, and we have a list of some examples on the left-hand side. And we encourage our team to identify these opportunities that align with our company values and with the team's values, where we can make a significant contribution. In FY '22, we have a focus to formalize and establish our Global Employee Volunteering Policy and sponsorship guidelines and intend to further enhance our local community engagement. Slide 21. Thought leadership and association. So IMDEX has many industry associations as you can see by the list on the right-hand side of this slide. And part of this -- it's really part of IMDEX's DNA, creating solutions to enable mining to be more efficient, and the 2 focus areas are critical to enable this to form, enabling identification of key areas of improvement from our clients in the industry and getting feedback from our clients that have engaged in our solutions to ensure that the positive effects have been obtained by all. I'd like to hand it over to Paul Evans, who will cover governance. Thank you, Paul.

Thank you, Shaun. Looking at Slide 23, I want to touch on our approach to governance. Paul House spoke earlier to how we govern sustainability. The following 2 slides expand on the governance framework and policies that sit below this. The policies and framework are reviewed regularly in light of the ever-changing requirements and best practice. In the list on the left, you can see a number of the achievements made in FY '21 to bolster this area. Of particular note is the publishing of our first modern slavery statement, the increasing of our internal capability in this area and the introduction of a new system and process for compliance risk management. In the list on the right, you can see a number of supporting codes and policies that are also in place to support this governance framework. For IMDEX to operate a global business with facilities in 22 countries and selling into over 100 countries, it is very important to have clear policies and frameworks in place to manage the risk of operating in these different global regions and jurisdictions. Clear codes of conduct for employees and suppliers, our clear anti-bribery and corruption policy and established processes for escalation by our speak-up policy are critical. Moving to Slide 24. IMDEX invests heavily in cyber and data security. During the year, there continues to be considerable focus on building the capability and training in the team to support this and our ISO 27001 accreditation. The accreditation was obtained in FY '20 and is an international information security standard recognized in 161 countries. Our certification demonstrates we operate an information security management system that is compliant with mandatory requirements, have systematic processes for managing information security risks and have implemented controls mandated by the standard. Our focus in FY '22 is to continue to build on our capability, maturity and systems in this area. I'll now hand over to Kiah to talk about our people.

Thank you, Paul. Turning now to Slide 26, on health, safety and well-being. Our QHSE standards are central to our occupational health and safety management system, and they cover all our employees at all of our locations globally. Everyone is required to adhere to our QHSE management system. And our 6 largest facilities around the world are independently service to ISO 9001 and ISO 45001. Notable achievements throughout the year included increased safety engagement and improved safety performance. Our safety engagement rate increased from 12% to 17.6% over FY '21. This rate is measured in our iAuditor platform and records the number of safety activities per employee. Pleasingly, our lost time and total recordable injury frequency rate reduced by half. During FY '21, there were 3 recordable injuries relating to sprains, strains and minor lacerations, and all into workers made a full recovery. The safety and well-being of our team is critical to our success and influences the value we deliver to our customers. Our goals are to have zero harm and enhance our safety performance through increased safety engagement. This year, we designed and refreshed safety and wellness-relating training modules on IMDEX Academy and launched these across all of our regions. We also had our global peer supporters participate in peer-supported training. We gave them the tools and techniques to encourage health-seeking behaviors in our employees as well as understanding mental health conditions. Our peer supporters continue to meet in their regions on a quarterly basis and act as champions for workplace focus on employee well-being. The mental, physical and social health of our people was a key focus over FY '21 and will remain a key focus over the next few years. Building workforce resilience, coupled with strong focus on holistic well-being, as we come out of COVID-19, will become the cornerstone to our success as we deliver the platform for growth at IMDEX. Turning now to Slide 27. In terms of diversity and inclusion, our ways of thinking, culture and background are core to our ability to innovate and connect with customers in our regions. IMDEX's progress in this area is being supported by our work on more inclusive work practices, including the launch of our working remote policy to encourage flexibility while keeping arrangements fluid and open to review as circumstances evolve and change. As a global company, we acknowledge there is no one-size-fits-all approach to remote working and work flexibility. However, we wish to support our people as best we can to balance the demand of their roles with family and personal commitments. Hybrid work is more than likely to stay long term and is a key component for our employee value proposition. Our global parental leave policy became available to employees recently and supports our people strategy by providing benefits to both primary and secondary partners, ensuring both parents can participate in the birth and early weeks of their child's life. IMDEX now provides 12 weeks paid leave for the primary parent and 2 weeks paid leave for the secondary parent. Our global family and domestic violence leave policy was introduced in 2021 to ease the psychological, physical and financial impacts on affected employees. This policy provides specific support to people at a critical time in their life, and we're dedicated to providing healthy, engaging, inclusive workplace for all of our staff. These policies are just another step in making that commitment clear. In terms of FTE, at the end of June, FTE was 521, up from 487 at FY '20 year-end. And attrition decreased from 20% at year-end FY '20 to 16% at year-end FY '21. Female representation has remained consistent at 23% at FY '21 year-end. As we refresh our leadership composition, we are working to increase our women in leadership ratio. We're currently appointing around 1/4 of leadership roles with female talent, which is nearly double our existing workforce composition. Overall, this is a healthy shift in the right direction and remains a key focus for us. In order to make meaningful progress, we continue to boost diversity, and we're addressing the areas of attraction, retention and promotion. These are the 3 critical areas for increasing women's representation across our talent pipeline. Turning now to Slide 28. IMDEX refreshed values. We've embarked on a cultural transformation journey last year in response to our engagement survey feedback, which created a platform for change. This led to the investment of our valued reset project to revise our organizational values. We invited all of our employees to complete a value survey assessment in January with an overwhelming 67% response rate achieved. Within each region, we selected representatives to participate in the value workshops. And during that discovery phase, we also collected data from customer surveys. As a result of this process, we've defined our core values, which are the principles that empower our people to make decisions and take actions. We know that we want to shape the future of mining, and we will do that by changing the industry globally and that we have global game changers. Forever curious is driven by our desire to always be innovative and encourage our people to challenge the status quo to solve problems for our clients. Go beyond demonstrates our passion for creating positive customer experiences and delivering value through the collaboration leading to efficient solutions. We work hard to understand customer needs across the mining value chain. Together we thrive talks on how we harness the diverse strength of each team member. IMDEX is a business with strong capabilities in engineering, sales, product development, geoscience, technology and commercial. We strive to support each other across our global network so we can be successful in every role for every client. We seek people from diverse background to help understand and connect with our customers in each region and local culture in which we operate. Turning now to Slide 29. Our employee value proposition is not just about what we offer our people, but how we make them feel connected to IMDEX. How we deliver autonomy and flexibility for our people as we grow will be critical to continue to attract and retain talent. Our value proposition defines how we support our people and what IMDEX represents for internal employees to the external marketplace and prospective employees. The pillars of our employee value proposition are: workplace where we're dedicated to providing safe, inclusive and enjoyable workplace environments globally. For example, last year, we made major steps in workplace flexibility and support for families. Recognition is where we provide regular formal and informal recognition for teams and individuals, including quarterly awards for outstanding achievements and values awards for living our values through demonstrating the right behaviors. In terms of career development, we have engaged teams with strong technical and business capabilities that are key to our success. We have strong career pathways in place, coaching, mentoring and global opportunities within IMDEX. We promote internal mobility as our employees are looking for different work experiences and variety in what they do. We also partner with academic institutions to offer internships and graduate positions to students, including working through university liaison team to gain access to diverse talent, including indigenous, disability and gender inclusion teams. We continue to research talent hub where they reside globally and provide recommended solutions as IMDEX addresses skill shortages in regions. In terms of total rewards, we provide above-market pay for above-market capability. We provide bonus payments. When IMDEX wins, our people wins. And all employees have the opportunity to be shareholders in IMDEX. In terms of benefits, we provide a range of benefits from educational assistance, health and wellness to financial lunch and learn. Plus, we have recently expanded our leave and remote working benefits. Lastly, thank you. We believe mining is essential to every aspect of modern life. We're a global team driven by an unwavering determination to make mining more efficient and in the process, reduce its impact on this planet we call home because tomorrow matters. I would now like to hand back to Paul House for closing comments.

Thanks, Kiah, and I trust that gives listeners some insight into our progress and our ambitions, both. And so on the final Slide 30, you can see where we've shared a quote from my message in our corporate sustainability report, emphasizing that at IMDEX, we have an opportunity and an obligation, both with the capabilities that we have to provide very real sustainable value to the mining industry at large for the betterment of society, both today and tomorrow. We firmly believe in our purpose as a business, a belief in which we acknowledge that tomorrow matters. We're very happy to be on our way in our ESG journey. Thank you for joining us, and I'll now hand it back to Melanie to open up for questions.

[Operator Instructions] There are no questions at this time. I'll now hand back to Mr. House for any closing remarks.

Thank you, Melanie, and my thanks to the colleagues that have joined me today and our teams around the world for their engagement on our corporate sustainability initiatives, it will be impossible to embed these goals into our business without their full support and engagement, which indeed we have. To everyone else who's dialed in, thank you for your attendance. And at all times, myself, Paul Evans, Kym Clements remain very available to answer any further questions you may have. Thank you for joining us today.

That does conclude our conference for today. Thank you for participating. You may now disconnect.