Imdex boss takes swipe at investors
Imdex managing director Bernie Ridgeway has accused institutional investors of misunderstanding his company and being too hasty in dumping its stock.
The drilling products provider's shares are worth about half of what they were six months ago after nervous investors jumped ship at the prospect of mining and exploration cutbacks.
Mr Ridgeway yesterday said institutions - who dominate the company's share register - were too impatient with Imdex's growth strategies dragging on profit margins. "We have a mismatch between our shareholder base and where the company's going," he said. "They're very short-term focused whereas we're building a business for the medium to long term.
"Sometimes the institutional market here in Australia gets a little disenchanted with that and really would like to and really would like us to maximise margins in the short term."
Mr Ridgeway made the comments after telling shareholders at Imdex's annual meeting that institutions had put the company in the "mining services bucket" with earthmovers and drilling contractors.
"They're people intensive, they're capital intensive and we're in fact the opposite," he said. "We have some of the best technologies in the world and I believe that we don't get rewarded for that."
Imdex's shares closed up 10 per cent yesterday after first-quarter figures showed revenue from its oil and gas division had doubled from a year earlier. Mr Ridgeway said the growing business had broken even in the quarter after losing about $5 million last year.
"The jury's out in terms of our ability to grow our business in the oil and gas sector," Mr Ridgeway said. "We performed poorly throughout FY12 but we were making investments in that sector for which we are now starting to get the benefit in FY13."
While group revenue was up 2 per cent, earnings before interest, tax and amortisation were down 19 per cent because of a drop-off in miners' drilling activity.
"What we think is happening is we're in a cyclical slowdown. We're not seeing a drop-off like we saw in the GFC. There's still work out there, there's still the ability for us to grow our business."
That included further bolt-on acquisitions such as its $8 million takeover of Perth-based mining data manager ioGlobal announced yesterday.
Imdex will pay geologist founders Stephen Winter and Dave Lawie $4.8 million in cash and $3.2 million in shares for the 12-year-old business. Both will stay on as managers.
"We formed ioGlobal to solve the data management issues of the resources sector," Mr Winter said. "The deal with Imdex is a great opportunity for us to take what we've developed to a larger market. We can really scale up now."
