Slide 1: Half Year Results Presentation
personal use only HALF YEAR RESULTS PRESENTATION December 2020 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER 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 ASX,
Slide 3: Mitchell Services Market Profile
MITCHELL SERVICES MARKET PROFILE ASX Information Major Shareholders personal use only 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 23/02/2021) A$0.415 Institutions 21.0% Market Capitalisation A$82.68m Other
Slide 4: People, Risk and Sustainability
PEOPLE, RISK AND SUSTAINABILITY personal use only • Implemented critical risk management program. Infield program designed to verify the presence and effectiveness of critical control measures to prevent life changing injuries and fatalities. • Covid 19 has continued to present logistical changes bu
Slide 5: 1H2021 Business Overview
1H2021 BUSINESS OVERVIEW personal use only Revenue of $100m Underlying EBITDA of $19.8m Net Debt of $23.4m ↑ 37% from 1H2020 ↑ 40% from 1H2020 ↑ 39% reduction from Dec 19 Underlying EBITDA guidance FY2021 Significant Revenue guidance FY2021 improvement in $190m-$200m $38m-$42m key operating Statutor
Slide 6: Operational Highlights
OPERATIONAL HIGHLIGHTS personal use only • Strong underlying performance excluding impairment loss on trade receivables. Solid operating base to move forward on in a strong market. • Rig utilisation was marginally impacted by COVID-19 but utilisation is now increasing again. • Revenue diversity cont
Slide 7: Impact of Increased Utilisation on Revenue
IMPACT OF INCREASED UTILISATION ON REVENUE personal use only • Revenue guidance $175.56m FY2021 $190m-$200m • Average operating 2nd Half revenue per rig continued to increase due to $120.21m 2nd Half improved productivity, pricing and drilling mix 2nd Half • Mitchell Services $72.69m anticipates fur
Slide 8: Revenue Diversity
REVENUE DIVERSITY Diversity in revenue streams sets Mitchell Services apart from competitors personal use only Revenue by Commodity Revenue by Drilling Type 1H2021 31.9% 48.6% 11.8% 4.3% 1H2021 44.2% 55.7% 1H2020 50.0% 26.5% 14.7% 4.2% 1H2020 50.5% 48.5% 1H2019 63.5% 11.2% 14.7% 5.0% 1H2019 60.8% 38
Slide 9: High Quality Revenue Streams
HIGH QUALITY REVENUE STREAMS personal use only Revenue by Client Type • Tier 1 Clients are large / multinational mining & energy companies. • A majority of Mitchell Services revenue comes from Tier 1 Clients operating on long life, low cost mine sites. Approximately 80% of revenue is at the mine sit
Slide 10: SMS Update
SMS UPDATE personal use only • Whilst entities controlled by the Mitchell family (collectively the Mitchell Group) have a shareholding in the company that owns the Kirkalocka Gold Project of approximately 18%, it has no shareholding in SMS nor any liabilities to SMS. • Failure to recover amounts inv
Slide 11: Profit and Loss
PROFIT AND LOSS Strong underlying EBITDA performance personal use only Underlying Profit & Loss 1H2020 1H2021 Change • At an underlying level, revenue and EBITDA have $000's $000's % continued to grow due to improved utilisation, Revenue 72,983 100,035 37% productivity, pricing and drilling mix. EBI
Slide 12: Balance Sheet
BALANCE SHEET Strong balance sheet provides flexibility personal use only 31-Dec-20 30-Jun-20 Change $000’s $000’s % • The $7.3m impairment of trade debtors has seen the current ratio reduce from 1.18 to 1.05 and Balance Sheet Summary Current assets 42,765 58,553 (27%) Net Working Capital reduce by
Slide 13: Cash Flow
CASH FLOW Strong operating cash flows and Cash Conversion Ratio personal use only Operating Cash Flow Summary 1H2019 1H2020 1H2021 $35m $000's $000's $000's $30m Receipts from customers 63,807 74,502 104,196 $25m 2nd Half Payments to suppliers / employees (47,342) (59,624) (85,333) $20m Cash generat
Slide 14: Net Debt
NET DEBT Net debt to EBITDA approximately 0.7 times personal use only Net Debt Summary 31-Dec-20 30-Jun-20 • Despite provision for impairment, Net Debt $000's $000's reduced by 15% from 30 June 2020 and 39% Equipment finance 20,422 25,323 from 31 December 2019. Acquisition loan 12,556 14,169 Gross d
Slide 15: Capital Expenditure
CAPITAL EXPENDITURE Accelerated innovation program maximises tax benefit personal use only Growth Capex • Maintenance Capex typically trends in line with $18m $16m P&L depreciation multiplied by utilisation rates. $14m 2nd Half $12m $10m • 1H2021 maintenance capex represents $8m approximately 45% of
Slide 16: Industry Overview
INDUSTRY OVERVIEW Significant increase in demand in the gold and base personal use only metals sectors with a positive long-term industry outlook. Government stimulus and subsequent investment into infrastructure and other projects will drive demand for copper and other base metals. In a world
Slide 17: Outlook
OUTLOOK personal use only • 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 has increased in FY2021. • Based on current market cond
Slide 18: Capital Management
CAPITAL MANAGEMENT personal use only • The $7.3m impairment of trade receivables has created uncertainty in regard to the capital management strategy. • A final decision on potential dividends and share buy backs in the short term will be made once this uncertainty is resolved. • Debt reduction will
Slide 19: Summary
SUMMARY 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 q
Slide 20: Appendix A: Definitions
APPENDIX A Definitions personal use only Capex Capital expenditure The ratio of A to B; where A is the reported cash flows from operating activities (excluding interest and income tax paid) and B is the Cash Conversion Ratio reported EBITDA Earnings before interest, tax, depreciation and amortisatio
Slide 21: Appendix B: Reconciliation of Statutory to Underlying Results
APPENDIX B 1H2020 and 1H2021 reconciliation of statutory to underlying results personal use only 1H2020 EBITDA EBIT NPBT NPAT $000's $000's $000's $000's Statutory Results 14,140 7,063 6,371 4,290 Impairment of trade receivables 1 - - - - 2 Acquisition related amortisation of customer contracts - 82