Industrea's trading performance in FY 2011 underscored the growing resilience and risk adverse profile of our business model and the benefits flowing from our diversification strategy.

We also strengthened our platform for strong and consistent profit growth through penetrating new markets, investing in research and development of new and improved products, and broadening our services offering.

Despite subdued trading and adverse weather conditions impacting on some market sectors in the first half, a stronger second half performance and improved margins enabled the company to meet its guidance on all financial targets.

Building on existing client relationships to win new business remained at the forefront of our strategy in FY 2011. We have strong and established relationships with many major global mining companies around the globe, including BHP Billiton, Rio Tinto Coal, Anglo Coal, Vale and Xstrata, and with numerous large, Chinese mining groups. These relationships represent an ever widening new sales channel, and an opportunity where appropriate, to cross sell our market offerings, including our recently formed gas management services.

Importantly, our business model has now evolved to the point where around 50% of revenue is derived from stable services contracts from across our group. Adding to this revenue stability is an increasing contribution of recurring annuity income from sales of spares and servicing of Industrea Mining Equipment and Industrea Mining Technology products installed at mine sites around the globe.

In FY 2011 we successfully broadened and strengthened our market offerings, with $7.0 million invested in new product research and development, which resulted in the launch of five new products, including an underground flame-proof gas drainage drill rig, Tier 3 low emission Mine Cruiser personnel carrier and 70 tonne flame-proof Mine Dozer.

Financial results

Strong global sales of Mining Technology products and expansion of the Mining Services division's mine contracting agreements combined to push group revenue 14% higher than the prior year, to a record $357 million, and EBITDA up 10% to $123.5 million.

Underlying or adjusted net profit after tax (NPAT) increased 15% to $51.5 million. Reported NPAT of $47.9 million included non-cash items relating to amortisation and non- recurring costs related to material acquisition processes. These costs have been excluded from adjusted NPAT to provide a clearer indication of the underlying earnings of the company and to better enable comparison year on year on a like to like basis.

Directors declared a final fully franked dividend of 3.0 cents per share lifting the full year ordinary dividend to 4.0 cents per share fully franked (2010: 3.9 cents). The record date for the dividend is 14 October 2011 with payment scheduled for 7 November 2011.

The final date set for participation in the Industrea Dividend Reinvestment Plan is 14 October 2011.

In light of the strong trading outlook for the company the board resolved to adjust its dividend policy by allowing payment of up to 30% (FY 2010 up to 25%) of annual adjusted NPAT as annual dividends.

Stronger financial position

In FY 2011 we simplified and strengthened the company's capital structure and balance sheet to further underpin our growth strategy.

As part of this process, in September 2010, $35.8 million of outstanding convertible bonds were repaid, and the remaining $4.6 million in bonds converted into Industrea shares. Our existing debt facilities were extended out to July 2013.

In addition, an oversubscribed institutional share placement in October 2010 raised $50.0 million, providing further capital to ensure we remain well placed to sustain our forward growth ambitions.

The company's operating cash flow also strengthened in FY 2011, increasing 41% to $92.0 million.

Senior management bolstered

The commitment, dedication and experience of our senior management team are instrumental to the company's on-going success.

During FY 2011 we further strengthened the quality and depth of our senior management team following a number of new appointments and promotions.

Jeff Watson joined our executive leadership team in February 2011 as Chief Financial Officer, bringing extensive experience in change management, acquisitions integration and capital markets.

In recognition of the increasingly key role played by Dale McNamara in our key market of China and Australia, he was promoted to Deputy CEO.Trevor Mole, who has been with Industrea for 35 years, was appointed General Manager of the enlarged Mining Equipment division in June 2011.

In late August 2011 we also welcomed Tabatha Kattau as new Group Human Resources Manager.

Market review

The considerable time invested in Australia on expanding and diversifying our Mining Services division and unlocking new business opportunities for our Mining Equipment and Mining Technology businesses was reflected in the company's Australian trading performance in FY 2011, with revenue up 40% over the prior year to $248.4 M.

Industrea Mining Services benefited from a more buoyant domestic resource market, winning new contracts and extending existing ones. Operations at Cockatoo Coal's Baralaba mine site were suspended as a result of unseasonally heavy rain, which impacted on the division's margins.

An increased volume of new mine approvals and mine extensions also created heightened domestic demand for Industrea Mining Equipment underground flame-proof and explosion proof vehicles and Industrea Mining Technology's collision avoidance systems.

In China, demand remained strong for our market leading gas drainage and drill guidance systems. There was, however, a slowing of sales of diesel mining equipment during the first half of FY 2011. As forecast, the advent of the Chinese New Year saw our order book rebound strongly to more historical levels, as evidenced by the $22.0 million of contracts signed during the last quarter of FY 2011.

Sales and enquiry levels during the first quarter of the new financial year for Mining Equipment products remained bouyant, and given the underlying and unchanged dynamics of China's coal mining sector, a more robust trading performance is expected in FY 2012.

While Industrea's two dominant markets remain Australia and China, we are continuing to identify high growth opportunities in other emerging markets with a specific need for our mine safety and productivity enhancing products and services, which remain compulsory areas of expenditure for mining groups around the globe.

Russia's deep and gaseous coal mines remain a highly prospective, yet largely untapped market for Industrea. Reinforcing this market's underlying potential, in FY 2011 we finalised our largest single sale to date into Russia with a contract finalised for 10 gas drainage and directional drilling systems.

During the year additional export opportunities were also identified in Indonesia, which again holds significant growth potential for many of our products and services in FY 2012 and beyond. In 2005 Indonesia overtook Australia as the largest exporter of thermal coal and is forecast to account for 40% of the world's thermal coal exports by 2015.

Sales of Industrea Mining Technology's CAS-CAM/RF® collision avoidance systems were also made into South Africa and South America.

Gas Management division

By the close of the financial year we were well progressed on the transition of the underground in-seam (UIS) gas drilling business acquired from AJ Lucas in March 2011, into a fully integrated, end-to-end gas management market offer.

While this new division represents a healthy and highly profitable diversification for Industrea, it is clearly aligned with our market focus on mining safety and productivity, and offers decided synergies for our numerous underground coal mining customers both here in Australia and overseas.

We are significantly broadening the core proficiencies of AJ Lucas (UIS) with a range of specialist proprietary products, such as our own drill rig manufactured by Industrea Mining Equipment, along with the associated manpower required to capture further elements of the entire value chain in underground gas management.

One of the key benefits flowing from this new division, is that it will generate a significant level of future revenue from mining related human capital, which will diversify our future earnings base outside the current focus on manufactured mining equipment and heavy capital equipment.

Outlook

We have started FY 2012 on an extremely strong footing, with a large number of long-standing customers in place, and significant new business opportunities apparent for each of our four divisions based on the underlying dynamics of each of the key mining markets we trade in.

In Australia we are seeing an accelerated investment in new mines and mine extensions, with minerals and energy production forecast to increase by 30% from FY 2011 to FY 2016.

Meanwhile, the continued rapid expansion of China's coal production is forecast to increase demand for mining equipment by 22% per annum to 150 Rmb billion by 2015.

We are confident the current financial year will deliver further strong revenue growth in Australia. The continued expansion of Australia's underground coal mining sector will again propel sales for the Mining Equipment, Mining Technology and Gas Management divisions.

The ramp-up of new and ever-larger underground and open- cut mines, and significant extensions to existing projects, present major growth opportunities which our Mining Technology collision avoidance systems and Mining Services' upgraded capital fleet, are strongly positioned to capitalise on.

The Mining Services business will also benefit from the resumption of full production at Cockatoo Coal's Baralaba mine, and combined with opportunities to renegotiate contract rates in a more buoyant trading environment, we expect its margins will strengthen further throughout FY 2012.

We are confident that following the $22 million in new sales of diesel equipment into China finalised in the last quarter of FY 2011, that revenue growth in the current financial year from this source will be much stronger, and in line with historical growth trends. We expect that the launch of our first China manufactured flame-proof and explosion proof personnel vehicle in October 2011, will add impetus to our sales effort in China in FY 2012.

We are planning for the aquisition in October 2011 of new, larger premises in Rutherford in the Hunter Valley for our Mining Equipment service facility. The relocation of the service facility to the new premises, which are three times larger than the existing one, will result in the centralisation of all our Hunter Valley Mining Equipment service and support operations.

The current financial year will see a first full year contribution from our broadened Gas Management division, and we are budgeting for significant growth to occur over coming years, not only in China and Australia through our established coal mining distribution channels, but also into our emerging Russian market.

Based on the strong start made by the company in the first quarter of FY 2012, we are well placed to achieve at least 20% top line revenue growth for the full year.

Robin Levison

Managing Director and Chief Executive Officer

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