Master Drilling Group Ltd. · JSE:MDI
Master Drilling — FY2018 Earnings Presentation
35 slides from Master Drilling's earnings presentation, March 2019
Slide 1: Master Drilling
m _ MASTER DRILLING
Slide 2: Audited Annual Results for the Year Ended 31 December 2018
AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2018 2
Slide 3: Presented by Danie Pretorius, CEO and Andre van Deventer, CFO
PRESENTED BY DANIE PRETORIUS, CEO ANDRE VAN DEVENTER, CFO 3
Slide 4: Agenda
Who we are Business overview Operational overview Financial overview Commodity In Closing AGENDA 4
Slide 5: Who We Are
• Established in 1986, listed on JSE in 2012 • Design, manufacture, operate and maintain boring technology • Operations in 23 countries in Africa, South America, North America, Europe and Asia • Motivated by tailor-made solutions, that in turn support our diversification strategy • Trusted partner t
Slide 6: Business Overview
BUSINESS OVERVIEW 6
Slide 7: Technology Strategy
Client Innovative tailor Challenges made drilling • Safety solutions • Increased costs Non-Blasting environment • Productivity • Mobile Tunnel Borer decline • Blind Shaft Boring System • Net present • Horizontal Raise Boring value hurdles • Automation/Autonomous drilling • Accessibility • Geotechnic
Slide 8: Revenue Geographic Diversification
2018 2017 12% 0% Other Countries 2018 2017 12% 12% Central and North America 2018 2017 2018 2017 42% 43% 34% 45% Africa South America Current Operations New Operations REVENUE GEOGRAPHIC DIVERSIFICATION 8
Slide 9: Revenue Mining Activity Diversification
2018 2017 2% 1% Exploration Exploration 82% 95% 4% Production d ti Production d ti 16% C Capital Capital REVENUE MINING ACTIVITY DIVERSIFICATION 9
Slide 10: Revenue Commodity Diversification
2018 2017 Other Other Othe Iron Ore 4% Otherr 1% Otherr 13% Iron Ore 12% FFeffEEe 26 26 Au A u Au Au 79 27% 79 34% Gold Gold Commodity Commodity 32% Cu Cu 29 30% 29 2% Copper Copper Platinum 4% 78 0% Coal Platinum 2% 2% Coal C Chrome 0% Chrome 2% 82 5% d Diamonds 18% Diamonds Silver / Lead / Zinc Si
Slide 11: Revenue Business Sector Diversification
2018 2017 0% 0% Civil & Construction C Civil & Construction C 1% <1% Hydro-energy d Hydro-energy d Mining Sector Mining Sector 99% 99% REVENUE BUSINESS SECTOR DIVERSIFICATION 11
Slide 12: Operational Review
“OPERATIONAL REVIEW 12
Slide 13: Lost Time Injury Frequency Rate
2018 2017 2.06 LTIFR 2.31 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Oct-18 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Nov-18 Dec-18 LOST TIME INJURY FREQUENCY RATE 13
Slide 14: Financial Overview
FINANCIAL OVERVIEW 14
Slide 15: Highlights for the Period
• USD Revenue increased by 14.2% • Two business combinations and one associate • Improved working capital cycle - improved from 126.3 to 119.1 days • Strong order book of USD203.6 million • Healthy cash balance - geared for future growth HIGHLIGHTS FOR THE PERIOD 15
Slide 16: Headline Earnings Per Share
HEPS (ZARc) HEPS (USDc) 250 15 200 12 150 9 100 6 50 3 0 0 2018 2017 2016 2015 2018 2017 2016 2015 HEADLINE EARNINGS PER SHARE 16
Slide 17: Pipeline (USD Million)
151.5 2020 85.6 2019 2021 2020 2022 and Total 2021 Beyond 2022 and Beyond 57.6 2019 283.9 Total 578.6 Million 300 250 200 150 100 50 0 Awarded 2019 2020 2021 2022 And Beyond Awaiting adjudication Enquiry received/ possible lead PIPELINE (USD ‘ MILLION) 17
Slide 18: Committed Orders (USD Million)
Chrome 24 Cr Cr 2.1 Nickel 28 Ni 5.2 9.6 6.8 1.0 Coal 1.4 Null Null 1.4 Copper 29 Cu Cu 20.9 10.4 2.5 Platinum 78 8.2 7.2 Diamonds 3.6 Polymetallic Polymetal 26.1 4.2 0.6 Gold Au A 79 u 22.2 8.9 6.2 Salt NaCI 6.5 1.1 Hydroelectric 1.0 Silver 3.1 Infrastructure 0.8 Water H 2.7 Iron Ore 26 6 FffE Fe E
Slide 19: EBITDA (USD Million)
2018 22.3% EBITDA (USD’m) Revenue (USD’m) 35 150 30 120 25 20 90 15 60 10 30 5 0 0 2018 2017 2016 2018 2017 2016 30.9 31.0 32.8 138.7 121.4 118.1 EARNINGS BEFORE INTEREST TAX DEPRECIATION AMORTISATION (USD ‘ MILLION) 19
Slide 20: ARPOR Summary per Annum
2018 2017 2016 Total Raise bore rigs 149 107 105 Utilization % 61% 69% 73% ARPOR* (USD) 121 531 110 937 111 040 Total Slim rigs 30 34 33 Utilization % 68% 77% 55% ARPOR* (USD) 70 430 63 597 74 280 * Average Revenue Per Operating Rig per month ARPOR SUMMARY PER ANNUM 20
Slide 21: Profit After Tax (USD Million)
25 20 15 10 5 0 2018 201 2017 2016 PROFIT AFTER TAX (USD ‘ MILLION) 21
Slide 22: Statement of Financial Position
2018 2017 Comment USD 'million USD 'million Assets Total non-current assets 157.7 133.2 Two new business combinations Total current assets 108.7 103.7 Working capital ratio improved from 126.3 to 119.1 Total assets 266.4 236.9 Equity Equity 155.1 153.0 Non-controlling interest 9.0 8.3 Total equity 1
Slide 23: Statement of Comprehensive Income
2018 2017 USD 'million USD 'million Revenue 138.7 121.4 Cost of sales (95.1) (76.8) Gross profit 43.6 44.6 Other operating income 5.9 3.7 Other operating expenses (25.8) (23.4) Operating profit 23.7 24.9 Investment revenue 0.7 0.5 Finance costs (2.8) (2.9) Share of profit from equity accounted inves
Slide 24: Impact of Currency on Profit Before Taxation
2019 Revenue Costs 100% 80% 49% 60% 67% 40% 51% 20% 33% 0% USD Emerging Currencies USD’ million Negative impact on profit before taxation (1.19) IMPACT OF CURRENCY ON PROFIT BEFORE TAXATION 24
Slide 25: Statement of Cash Flows
2018 2017 Comment USD 'million USD 'million Net cash from operating activities 19.4 25.0 Addition of new geographies and client base Net cash from investing activities (33.0) (15.3) Two new business combinations Net cash from financing activities 9.7 9.4 USD20 million drawn down on facility Total ca
Slide 26: Revenue Waterfall Breakdown (USD Million)
150 120 90 60 (USD’m) 20 0 2017 Forex Fleet Acquisition Fleet mix & 2018 -20 expansion utilization Revenue - 2017 121.4 Forex 0.1 Fleet Expansion 2.5 Acquisition 13.2 Fleet Mix and Utilisation 1.5 Revenue - 2018 138.7 REVENUE WATERFALL BREAKDOWN (USD ‘ MILLION) 26
Slide 27: Working Capital Breakdown (USD Million)
Working Capital Breakdown 2018 2017 Movement Inventory 25.8 23.9 (1.9) Trade and Other Receivables 48.2 38.6 (9.6) Trade and Other Payables 28.7 20.1 8.6 WORKING CAPITAL BREAKDOWN (USD ‘ MILLION) 27
Slide 28: Balance Sheet Ratios
2018 2017 Return on Capital Employed (EBITDA) 14.6% 14.9% Working Capital Ratio (Days) 119.1 126.3 Gearing Ratio (Net of Cash) 16.2% 2.4% BALANCE SHEET RATIOS 28
Slide 29: Cash Flow Waterfall (USD Million)
40 35 30 25 20 15 10 (USD’m) 5 0 -5 -10 -15 -20 2018 Cash at beginning of period 40.2 Cash from operation activities 19.4 Net acquisition of property, plant & equipment (16.0) Dividends paid (3.1) Acquisition of subsidiary (14.7) Acquisition of associate (2.6) Net movement in Financial Liabilities 1
Slide 30: Capital Spend
90.3% 9.7% Expansion Sustainable Plant and Machinery 96% Buildings 1% Motor Vehicles 2% IT Equipment 1% CAPITAL SPEND 30
Slide 31: Slide 31
Slide 32: In Closing
• Healthy pipeline of USD578.6 million • Stable orderbook of USD203.6 million • Geographical footprint expansion • Opportunities beyond mining industry • Mobile Tunnel Borer • Blind Shaft Boring System IN CLOSING 31
Slide 33: Disclaimer
This document has been compiled from information provided by the Directors of Master Drilling Group Limited (“Master Drilling”, “Master Drilling Group” or the “Company”) and from publicly available sources, and involves elements of subjective judgment and analysis, which may or may not be correct, a
Slide 34: Corporate Information
MASTER DRILLING GROUP LIMITED COMPANY SECRETARY Registration number: 2011/008265/06 Andrew Beaven Incorporated in the Republic of South Africa 6 Dwars Street JSE share code: MDI Krugersdorp ISIN: ZAE000171948 1739 REGISTERED AND CORPORATE OFFICE South Africa 4 Bosman Street PO Box 158, Krugersdorp,
Slide 35: Corporate Information
INVESTOR RELATIONS CONTACTS Monica Ambrosi Instinctif Partners Telephone: +27 11 050 7506 Mobile: +27 83 307 8286 E-mail: MasterDrilling@instinctif.com GENERAL E-MAIL QUERIES info@masterdrilling.com Master Drilling website www.masterdrilling.com Company Secretarial E-mail Companysecretary@masterdril