Slide 1: Half-Year Results Presentation
For personal use only HALF-YEAR RESULTS PRESENTATION December 2018 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER For personal use only This investor presentation has been prepared by Mitchell Services Limited (“the Company”). Information in this presentation is of a general nature only and should be read in conjunction with the Company’s other periodic and continuous disclosure announcements to the
Slide 3: Mitchell Services Market Profile
MITCHELL SERVICES MARKET PROFILE For personal use only ASX Information Major Shareholders Shares Issued (ASX:MSV) 1,738,673,346 Mitchell Group 20.4% Share Price (at 25/02/2019) A$0.054 Market Capitalisation A$93.9m Washington H Soul Pattinson 9.9% 1H19 EBITDA A$14.0m CVC Limited 6.1% Net Debt (at 31
Slide 4: Safety Update
SAFETY UPDATE For personal use only • Finishing each day without harm is a core Mitchell Services value • Continued year on year reduction in recordable incident occurrence and severity • Focus on training to attract, retain and further develop our own drillers in an improving market • Mitchell Serv
Slide 5: 1H19 Business Overview
1H19 BUSINESS OVERVIEW For personal use only Revenue of $63.29m EBITDA of $14.23m Net Debt of ↑ 91% from 1H18 ↑ 431%from 1H18 $2.6m 83% reduction from Dec 2017 Strong balance sheet provides flexibility 400+ experienced employees Total recordable injury frequency rate continues to reduce 5 www.mitche
Slide 6: Impact of Increased Utilisation on Revenue
IMPACT OF INCREASED UTILISATION ON REVENUE For personal use only $72.70m • Average operating $63.29m revenue per rig continues to increase due to improved 2nd Half productivity and pricing $40.30m • Mitchell Services $32.97m 1st Half anticipates further 2nd Half $25.17m increases in operating 2nd Ha
Slide 7: Revenue Diversity
REVENUE DIVERSITY For personal use only Revenue by Commodity 1H19 63.6% 11.2% 14.7% • Demand for drilling services continues to strengthen across all commodities 1H18 52.9% 20.0% 13.2% 9.4% 1H17 51.1% 26.5% 7.2% 13.2% • Entry into the underground coal sector has driven the increase in coal and Coal
Slide 8: High Quality Revenue Streams
HIGH QUALITY REVENUE STREAMS For personal use only Revenue by Client Type • Tier 1 Clients are large / multinational mining & energy companies • Tier 1 Clients generally operate long life, low cost mine sites 93.0% 88.9% 91.3% • A majority of Mitchell Services revenue comes from Tier 1 Clients at op
Slide 9: Stages of the Cycle
STAGES OF THE CYCLE For personal use only • STAGE 1: UTILISATION INCREASES (THIS IS HAPPENING) • More rigs start working • STAGE 2: PRODUCTIVITY IMPROVES AS UTILISED RIGS WORK MORE SHIFTS (THIS IS HAPPENING) • Seasonality impact reduces as rigs work through the wet season • More rigs work 24 hours a
Slide 10: Profit and Loss
PROFIT AND LOSS For personal use only Unprecedented earnings growth Profit & Loss 1H19 1H18 Change $000's $000's % • 431% improvement in EBITDA on pcp driven by increased utilisation, quality operational delivery Revenue 63,291 33,215 91% EBITDA 14,229 2,678 431% and improving market conditions EBIT
Slide 11: Balance Sheet
BALANCE SHEET For personal use only Strong balance sheet provides flexibility 31 Dec 19 30 Jun 18 Change • Significant reduction in debt paid from operating cash $000’s $000’s % flow provides a solid foundation for future growth Balance Sheet Summary Current assets 23,779 27,519 (14%) • ROIC of 24.3
Slide 12: Cash Flow
CASH FLOW For personal use only Improved operating cash flows and Cash Conversion Ratio Operating Cash Flow Summary 1H19 1H18 Change $16m $000's $000's % $12m Receipts from customers 63,807 28,741 122% Payments to suppliers / employees (47,342) (30,174) 57% $8m 1st Half Cash generated from operation
Slide 13: Net Debt
NET DEBT For personal use only MSV can move forward with confidence and certainty Net Debt Summary 31 Dec 18 30 Sep 18 30 Jun 18 • The $8.5m Shareholder Loans were repaid in full from $000's $000's $000's operating cash flows approximately 18 months earlier than the expiry date of July 2020 with no
Slide 14: Capital Expenditure
CAPITAL EXPENDITURE For personal use only Higher level of growth Capex expected in 2H19 Maintenance Capex $4m $3m 2nd Half • 1H19 total Capex spend demonstrates the capital discipline within the business $2m 2nd Half 1st Half • Maintenance Capex typically trends in line with P&L $1m 1st Half 1st Hal
Slide 15: Outlook
OUTLOOK For personal use only • Pipeline of identified opportunities remains strong Revenue ($M) and demand continues to increase for drilling $120m services particularly from Tier 1 clients $100m 2nd Half – At current conversion rates, rigs required $80m exceed rigs available $60m 2nd Half $40m 2nd
Slide 16: Capital Management
CAPITAL MANAGEMENT For personal use only • Debt reduction was determined to be the most efficient use of cash generated in 1H19 and has strengthened the balance sheet creating a platform for further growth • Mitchell Services will continue to invest in organic growth opportunities where they meet in
Slide 17: Summary
SUMMARY For personal use only • Mitchell Services’ vision is to be Australia’s leading provider of drilling services to the global exploration, mining and energy industries • Mitchell Services has a diversified revenue stream by different drilling types and commodities • Mitchell Services has a high
Slide 18: Definitions
DEFINITIONS For personal use only Capex Capital expenditure Cash Conversion Ratio The ratio of A to B; where A is the reported cash flows from operating activities and B is the reported EBITDA Earnings before interest, tax, depreciation and amortisation; calculated as NPAT plus income tax expense pl