Slide 1: Capital Raising – Future Growth
CAPITAL RAISING – FUTURE GROWTH 16 AUGUST 2021 Not for release to US wire services or distribution in the United States 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER This investor presentation has been prepared by Mitchell Services Limited (ACN 149 206 333) (“Mitchell Services”). Information in this Disclaimer presentation is of a general nature and does not purport to be complete, nor does it contain all of the information which would be To the maxim
Slide 3: Disclaimer
DISCLAIMER Market and industry data Certain market and industry data used in connection with this presentation may have been obtained from research, surveys or studies You are strongly cautioned not to place undue reliance on forward-looking statements, particularly in light of the current economic
Slide 4: Disclaimer
DISCLAIMER Not an offer in the US This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or in any jurisdictions where it would be illegal. This presentation may not be distributed or released in the United States. The securities
Slide 5: Executive Summary
EXECUTIVE SUMMARY • Mitchell Services Limited (“Mitchell Services”) is seeking to raise approximately $10.5m to assist in funding a material organic growth strategy which amongst other things will include the funding of capital expenditure to fulfil current and expected contract pipeline requirement
Slide 6: Significant Growth Opportunity
SIGNIFICANT GROWTH OPPORTUNITY 6 www.mitchellservices.com.au
Slide 7: MSV's Demonstrated Ability to Deliver Growth
MSV’S DEMONSTRATED ABILITY TO DELIVER GROWTH Annual Average Operating Rig Count vs Revenue $200-$220m $191.4m $175.56m $120.21m Average Operating Rig Count Average Operating Rig 71.6 Count $72.69m Average 67.7 Operating Rig Count $40.30m 48.9 $32.97m Average Operating $25.17m Rig Count 37.4 $15.02m
Slide 8: MSV's Demonstrated Ability to Deliver Growth: EBITDA
MSV’S DEMONSTRATED ABILITY TO DELIVER GROWTH EBITDA Over the Past 8 Years $40-$44m $35.0m $35.7m $24.1m $6.3m $2.2m $0.5m FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21* FY22F^ * FY21 EBITDA is underlying and excludes items as disclosed on slide 17. ^ Assumes anticipated levels of work from existing custom
Slide 9: Organic Growth Strategy
ORGANIC GROWTH STRATEGY • Mitchell Services has a material capital investment program underway. • This investment includes the purchase of 9 LF160 drill rigs that are expected to be delivered by 31 December 2021 and includes an option for an additional 3 rigs. • The proposed timing allows Mitchell S
Slide 10: Opportunity to Leverage the Cycle
OPPORTUNITY TO LEVERAGE THE CYCLE • Significant increase in demand in the gold and base metals sectors with a positive long-term industry outlook. • Global government stimulus and subsequent investment into infrastructure and other projects will drive demand for copper and other base metals. • In a
Slide 11: Leverage in an Improving Market
LEVERAGE IN AN IMPROVING MARKET STAGE 1: AVERAGE OPERATING RIG COUNT INCREASES • More rigs start working Gross Margin STAGE 2: PRODUCTIVITY IMPROVES AS UTILISED RIGS WORK MORE SHIFTS • Seasonality impact reduces as rigs work through the wet season • More rigs work 24 hours a day 7 days a week versus
Slide 12: Significant Barriers to Entry
SIGNIFICANT BARRIERS TO ENTRY • Access to funding for new mining services providers is challenging given limited lender appetite to the mining services sector. • Complex and highly regulated industry. • Increasing lead time in relation to the supply of rigs, ancillary equipment and consumables. • Si
Slide 13: Business Development
BUSINESS DEVELOPMENT Majority of $1.2B revenue opportunity pipeline is surface drilling • Mitchell Services is highly focused on lead generation Revenue opportunity pipeline by client and drilling Type • Mitchell Services has a national footprint and can pursue opportunities across all of Australia
Slide 14: Business Overview
BUSINESS OVERVIEW 14 www.mitchellservices.com.au
Slide 15: Mitchell Services Market Profile
MITCHELL SERVICES MARKET PROFILE ASX Information Major Holders ASX Stock Symbol MSV Mitchell Group 18.4% Shares Issued 199,954,290 Dream Challenge Pty Ltd 7.2% Share Price (at 11/08/2021) A$0.505 Market Capitalisation A$100.98m Washington H Soul Pattinson 6.0% Board of Directors Executive Management
Slide 16: FY21 Un-Audited Results Overview
FY21 UN-AUDITED RESULTS OVERVIEW 42,633 shifts in FY21 650+ Industry leading safety ↑ 20% from FY20 performance driven by critical risk control verification program experienced employees Total revenue of $191m $29.6m gross bank debt Underlying* FY21 EBITDA of $35.7m at 30 June 21 representing a 25%
Slide 17: FY21 EBITDA Reconciliation
FY21 EBITDA RECONCILIATION $0.2m $3.0m • FY21 reported EBITDA includes a $6.6m trade receivable impairment $6.6m in relation to SMS Innovative Mining Pty Ltd. The $6.6m reflects the gross receivable at 30 June 2021 of $9.6m less $3m being the $35.7m first tranche received pursuant to a $5m settlemen
Slide 18: Revenue Quality and Diversity
REVENUE QUALITY AND DIVERSITY FY21 Revenue by State and Commodity Revenue by Drilling and Client Type ◼ Surface Drilling 30.0% ◼ Underground Drilling 50% 46.3% 44% 45% 5.4% 55% 56% 50% 16.8% 63% 55% 1.6% 65% 45% 75% 39% 92% 93% 34% QLD SA NSW WA VIC FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 F ◼ T
Slide 19: Offer Structure
OFFER STRUCTURE 19 www.mitchellservices.com.au
Slide 20: Equity Offer Overview
EQUITY OFFER OVERVIEW The fully underwritten Offer consists of the following components: • A 1 for 8 pro-rata accelerated non-renounceable Entitlement Offer to raise approximately $10.5m at $0.42 per New Share. • The Entitlement Offer will comprise an accelerated Institutional Entitlement Offer and
Slide 21: Financial Position
FINANCIAL POSITION 30 Jun 21* Capital Raise^ SMS Settlement Post-Raise $000’s $000’s $000’s $000’s Cash and cash equivalents 4,236 10,000 3,000 17,236 Other current assets 43,193 - (3,000) 40,193 Property, plant and equipment 69,739 - - 69,739 Other non-current assets 9,585 - - 9,585 Total assets 12
Slide 22: Debt Profile Overview
DEBT PROFILE OVERVIEW Seek to maintain leverage at below 1 x EBITDA Facility 30 June 21* 30 June 22^ Movement $000’s $000’s $000’s Revolving equipment finance 11,300 24,500 13,200 Other equipment finance 7,400 3,700 (3,700) Corporate/Acquisition loan 10,900 7,800 (3,100) $10m overdraft/working capit
Slide 23: Offer Timetable
OFFER TIMETABLE Activity Date Trading halt and announcement of Offer Monday, 16 August 2021 Institutional Entitlement Offer Opens Monday, 16 August 2021 Institutional Entitlement Offer Closes Tuesday, 17 August 2021 Trading resumes on an ex-Entitlement Offer basis Wednesday, 18 August 2021 Record da
Slide 24: Shares Outstanding
SHARES OUTSTANDING Current Shares on issue 199,954,290 Entitlement Offer ratio 1 for 8 New Shares issued under the Entitlement Offer 24,994,286 New Shares on issue post Offer 224,948,576 24 www.mitchellservices.com.au
Slide 25: Summary
SUMMARY • Mitchell Services vision is to be Australia’s leading provider of drilling services to the global exploration, mining and energy industries. • $1.2b revenue opportunity pipeline is at record levels requiring primarily surface drilling services. Significant anticipated increase in demand in
Slide 26: Appendix
APPENDIX • Appendix 1 – Board and Management • Appendix 2 – Cash Benefit of Organic Growth Strategy • Appendix 3 – Investment Risks • Appendix 4– Definitions • Appendix 5 – International Offer Restrictions • Appendix 6 – Underwriting Agreement Summary 26 www.mitchellservices.com.au
Slide 27: Appendix 1 - Board and Management
APPENDIX 1 - BOARD AND MANAGEMENT NATHAN MITCHELL – Executive Chairman NEAL O’CONNOR (LLB, GAICD) – Non Executive Director With a career spanning almost 30 years, Mr Mitchell has a proven track record as an industry Mr O’Connor was formerly General Counsel and Company Secretary and an Executive lead
Slide 28: Appendix 2 - Cash Benefit of Organic Growth Strategy
APPENDIX 2 - CASH BENEFIT OF ORGANIC GROWTH STRATEGY Federal budget accelerated instant asset write off. Businesses with aggregated turnover of less than $5 billion will be able to deduct the full cost of eligible capital assets acquired from 7 October 2020 and first used or installed by 30 June 202
Slide 29: Appendix 3 – Investment Risks
APPENDIX 3 – INVESTMENT RISKS Investors should carefully consider the risk factors described below, in addition to the other information in Industrial Accidents this document and publicly available information of Mitchell Services, before making an investment decision. Industrial accidents may occur
Slide 30: Appendix 3 – Investment Risks (cont.)
APPENDIX 3 – INVESTMENT RISKS (CONT.) Operational risks Environmental incidents and claims Mitchell Services and its customers are exposed to a range of operational risks relating to both current and Mitchell Services operates in an industry where environmental issues, including inclement weather, m
Slide 31: Appendix 3 – Investment Risks (cont.)
APPENDIX 3 – INVESTMENT RISKS (CONT.) Forecast dividends Concentration of shareholding No assurances can be provided in relation to the payment of future dividends. Future determination as to Entities associated with the Mitchell Group are expected to hold approximately 20% of the issued shares in y
Slide 32: Appendix 3 – Investment Risks (cont.)
APPENDIX 3 – INVESTMENT RISKS (CONT.) Impact of Coronavirus (COVID-19) Equity raising and underwriting risk The events relating to COVID-19 have recently resulted in unprecedented restrictions and lockdowns, including in Mitchell Services has entered into an underwriting agreement under which Morgan
Slide 33: Appendix 4 – Definitions
APPENDIX 4 Definitions CAGR Compound Annual Growth Rate Capex Capital expenditure Earnings before interest, tax, depreciation and amortisation; calculated as NPAT plus income tax expense plus finance charges EBITDA plus depreciation expense plus amortisation of intangibles Total principle balances o
Slide 34: Appendix 5 – International Offer Restrictions
APPENDIX 5 International Offer Restrictions New Zealand United States This document has not been registered, filed with or approved by any New Zealand regulatory This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in authority under the Financial Mark
Slide 35: Appendix 6 – Underwriting Agreement Summary
APPENDIX 6 – UNDERWRITING AGREEMENT SUMMARY Underwriting Agreement Summary • any member of Mitchell Services group is Insolvent or there is an act or omission, or a circumstance arises, which is likely to result in Mitchell Services or a material subsidiary becoming insolvent; Mitchell Services has
Slide 36: Appendix 6 – Underwriting Agreement Summary
APPENDIX 6 – UNDERWRITING AGREEMENT SUMMARY • ASIC commences certain actions, investigations or hearings in relation to the Entitlement Offer, the issue In addition, the Lead Manager may terminate the Underwriting Agreement without any cost or liability if of the Shares under the Entitlement Offer o
Slide 37: Appendix 6 – Underwriting Agreement Summary
APPENDIX 6 – UNDERWRITING AGREEMENT SUMMARY • a new circumstance arises which is a matter adverse to investors in Shares issued under the Entitlement Offer and which would have been required by the Corporations Act to be included in the cleansing notice had the new circumstance arisen before the cle