Slide 1: Full Year Results Presentation
FULL YEAR RESULTS PRESENTATION Financial Year 2020 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER 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 ASX, which are availab
Slide 3: Mitchell Services Market Profile
MITCHELL SERVICES MARKET PROFILE ASX Information Major Shareholders ASX Stock Symbol MSV Mitchell Group 17.9% Scott Tumbridge 7.2% Shares Issued 199,238,740 Other Directors & Management 3.4% Share Price (at 10/08/2020) A$0.62 Institutions 21.0% Market Capitalisation A$123.5m Other Shareholders 50.5%
Slide 4: COVID Response
COVID 19 RESPONSE • Detailed response and contingency plans • 10% of our workforce relocated temporarily to keep rigs operational • 20% of our workforce changed rosters on a temporary basis to keep rigs operational • Credit to our entire team who have continued to deliver safe and efficient services
Slide 5: People and Community
PEOPLE AND COMMUNITY • The health and safety of our people and the well being of our communities are essential • We are focused on creating sound value to grow shareholder value and returns • Social value protects our business today and positions us to take advantage of future opportunities • The Mi
Slide 6: FY20 Business Overview
FY20 BUSINESS OVERVIEW Revenue of $175.5m EBITDA of $35m Net Debt of $27.6m ↑ 46% from FY19 ↑ 45% from FY19 ↑ 28% reduction from Dec 19 Quality of business Fully franked special Strong balance sheet model proven during dividend provides flexibility global pandemic paid July 2020 6 www.mitchellservic
Slide 7: Impact of Increased Utilisation on Revenue
IMPACT OF INCREASED UTILISATION ON REVENUE Annual Average Operating Rig Count vs Revenue • Average operating $175.56m revenue per rig continued to increase due to improved productivity, pricing and drilling mix $120.21m • Mitchell Services Average Operating Rig anticipates further Count increases in
Slide 8: Operational Highlights
OPERATIONAL HIGHLIGHTS • Achieved revenue and EBITDA guidance during a global pandemic proving the quality of the business model • Rig utilisation has been marginally impacted by Covid-19 but utilisation is now increasing again. • Revenue diversity continues to improve by commodity, geography and dr
Slide 9: Revenue Diversity
REVENUE DIVERSITY Diversity in revenue streams sets Mitchell Services apart from competitors Revenue by Commodity Revenue by Drilling Type FY20 44.5% 33.9% 12.8% FY20 45.2% 54.3% FY19 62.0% 14.3% 13.6% FY19 55.1% 43.7% FY18 55.6% 14.9% 17.8% 6.0% FY18 60.3% 38.5% Coking Coal Gold Copper Lead/Zinc/Si
Slide 10: High Quality Revenue Streams
HIGH QUALITY REVENUE STREAMS Revenue by Client Type • Tier 1 Clients are large / multinational mining & energy companies • A significant majority of Mitchell Services revenue comes from Tier 1 Clients operating on long life, low cost mine sites 89.7% 91.8% 86.2% • Approximately 90% of revenue is at
Slide 11: Profit and Loss
PROFIT AND LOSS Expect FY21 EBITDA to continue to grow EBITDA $40m • Significant revenue and EBITDA growth driven by $30m increased utilisation, increased production and seven months Deepcore contribution $20m $10m • Strong EBITDA margin of 20% maintained in FY20 - FY18 FY19 FY20 • Lower EBIT a func
Slide 12: Balance Sheet
BALANCE SHEET Strong balance sheet provides flexibility 30 Jun 20 30 Jun 19 Change $000’s $000’s % • MSV’s strong balance sheet allowed the entire cash Balance Sheet Summary component of the Deepcore Acquisition to be funded Current assets 58,553 29,717 97% using debt whilst maintaining appropriate
Slide 13: Cash Flow
CASH FLOW Strong operating cash flow will provide capital management opportunities Operating Cash Flow Summary FY20 FY19 Change $40m $000's $000's % $30m Receipts from customers 173,205 111,535 55% Payments to suppliers / employees (140,136) (90,729) 54% $20m Cash generated from operations 33,069 20
Slide 14: Net Debt
NET DEBT Well positioned to capitalise on growth opportunities Net Debt Summary • 28% reduction in net debt since 31 Dec 19 30 Jun 20 31 Dec 19 30 Jun 19 $000's $000's $000's • Net Debt to EBITDA well under one times Equipment finance 25,323 29,750 9,792 Acquisition loan 14,169 15,781 - • Based on t
Slide 15: Capital Expenditure
CAPITAL EXPENDITURE Disciplined capital management framework $30m • Maintenance capex continues to trend in line with P&L depreciation multiplied by utilisation rates $25m • Maintenance capex in FY20 ($11.1m) represented $20m 66% of FY20 P&L depreciation ($16.9m) vs 80% in FY19 $15m • Increased grow
Slide 16: Outlook
OUTLOOK • Pipeline of identified opportunities remains strong as does the demand for drilling services particularly from Tier 1 clients • Demand for drilling services in gold is very strong and gold as a percentage of revenue will increase in FY21 • Based on current market conditions, commodity pric
Slide 17: Capital Management
CAPITAL MANAGEMENT • Mitchell Services implemented various capital management initiatives during FY20 including: – The use of operating cashflows to reduce net debt from $38.5m to $27.6m – The payment of a special dividend of $2.1m – The continuation of an on market share buyback • Mitchell Services
Slide 18: Summary
SUMMARY • 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 quality client base w
Slide 19: Definitions
DEFINITIONS 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 The acquisition by Mitchell Services Limited (the Company) of 100% of the equity of Deepcore Holdings Pty Ltd as announced by the