IGO Interactive Annual Report 2018

DIRECTORS’ REPORT 30 JUNE 2018 Cash outflows from investing activities decreased to $105.0 million for the year, compared to $273.3 million in FY17. This was primarily a result of the construction of the Nova Operation being largely completed in FY17, with commercial production being declared from 1 July 2017. The Company spent $114.5 million on development expenditure, with the majority of that being waste stripping at the Tropicana Operation ($54.4 million) and underground mine development at the Nova Operation ($47.9 million). During the year, IGO divested the Jaguar Operation to CopperChem, with the Company receiving the first cash payment of $25.0 million. Total consideration was $73.2 million, with three future cash payments of $16.1 million scheduled for the anniversaries of the completion date. During the year, IGO became a substantial shareholder in Orion Minerals NL (Orion) via a $5.0 million share placement to secure preferential rights to joint venture or purchase Orion’s nickel projects in the highly prospective Areachap Belt located in the Northern Cape, South Africa. Cash flows from financing activities during the financial year included two semi-annual repayments of borrowings totalling $57.1 million, and dividends paid totalling $11.7 million. As at 30 June 2018, the Company’s outstanding debt was $142.9 million. During the financial year, the Company renegotiated its syndicated debt facilities, resulting in the Company’s $200 million revolving credit facility being voluntarily cancelled. During discussions of the operating results of its business, the Group’s Board and management monitor a measure commonly understood as Underlying EBITDA. The Board considers this measure to be important to the Group and investors alike, as it represents a useful proxy to measuring an operation’s cash generating capabilities. Underlying EBITDA is calculated as profit before tax adjusted for finance costs, interest income, asset impairments, gain on sale of subsidiaries, retention and redundancy costs, depreciation and amortisation. Underlying EBITDA increased relative to the previous financial year to a record level as can be seen in the following chart: 200 150 100 50 0 -50 196 $M 141 106 24 32 27 (41) (3) 0 (17) (17) 50 (24) (1) 4 12 FY18 $339M FY17 $151M Nova Operation Tropicana Operation Long Operation Jaguar Operation Exploration & Growth expense Corporate expenses Investment revaluation Gain on sale of royalty Share-based payment expense (non-cash) 36 — IGO ANNUAL REPORT 2018