Mitchell Services Limited · ASX:MSV
Mitchell Services — Merger or Acquisition (November 2019)
23 slides from Mitchell Services's merger presentation, Nov 14, 2019
Slide 1: Acquisition - Deepcore Drilling
MITCHELL SERVICES ACQUISITION - DEEPCORE DRILLING November 2019 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER This 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 available at: ww
Slide 3: Table of Contents
TABLE OF CONTENTS Transaction Summary 4 Deepcore Drilling Overview 9 Strategic Rationale 12 Strength Through the Cycle 19 Financial Impact 20 Summary 23 3 www.mitchellservices.com.au
Slide 4: Transaction Summary
TRANSACTION SUMMARY The acquisition of Deepcore Holdings Pty Ltd (“Deepcore Drilling”) will make Mitchell Services Deepcore Drilling is Limited (“MSV”) one of the largest and most diversified pure play drilling services companies in Australia a compelling acquisition for The acquisition is expec
Slide 5: Transaction Summary (cont)
TRANSACTION SUMMARY (CONT) Deepcore Drilling Overview • Leading provider of specialist underground and surface drilling • 32 rigs to service Eastern Australia with strong exposure to gold and to Victoria Transaction Summary • MSV to acquire 100% equity of Deepcore Drilling (excludes Papua New Guinea
Slide 6: Transaction Summary (cont)
TRANSACTION SUMMARY (CONT) Deepcore Drilling • At acquisition completion, Deepcore Drilling vendors will own approximately 12.5% of Shareholding post-acquisition MSV shares • Consideration shares will be escrowed for periods of between 6 and 12 months • Scott Tumbridge will be invited to join MSV’s
Slide 7: Transaction Summary (cont)
TRANSACTION SUMMARY (CONT) Conditions Precedent • Acquisition subject to customary conditions precedent including no material adverse change to Deepcore Drilling or MSV, required change of control consents and MSV obtaining necessary funding to complete the transaction Financial Impact • The acquisi
Slide 8: Transaction Summary (cont)
TRANSACTION SUMMARY (CONT) Pro forma financials demonstrate strong financial position post-acquisition Pro forma Revenue Pro forma EBITDA Per Pro forma Net Profit Share $190m $14.2m 1.84c $120m 1.38c $9.0m MSV FY19 Post-Acquisition MSV MSV FY19 Post-Acquisition MSV MSV FY19 Post-Acquisition MSV Theo
Slide 9: Deepcore Drilling Overview
DEEPCORE DRILLING OVERVIEW Overview FY20 Revenue by Commodity FY20 Revenue by Drilling Type FY20 Revenue by Geography 5% 10% 17% 17% 37% Gold QLD Surface Copper VIC Underground Other NSW 63% 78% 73% • Founded in 2005, Deepcore Drilling provides surface, underground and specialised acoustic drilling
Slide 10: Deepcore Drilling Overview (cont)
DEEPCORE DRILLING OVERVIEW (CONT) Unique Client Offering • 32 rigs including latest generation mobile underground rigs • Underground and surface operations • Operations in Victoria, Tasmania, New South Wales and Queensland • Long term clients • Extensive capacity and experience, yet flexible and res
Slide 11: Deepcore Drilling Overview (cont)
DEEPCORE DRILLING OVERVIEW (CONT) % of Client Client Type Commodity State Consolidated Pro forma* Client 1 Other Gold VIC 4% Client 2 Tier 1 Gold NSW 4% Client 3 Tier 1 Copper/Zinc QLD 2% Client 4 Tier 1 Gold VIC 18% Client 5 Tier 1 Copper/Zinc QLD 4% Client 6 Other Other VIC 2% Cl
Slide 12: Strategic Rationale
STRATEGIC RATIONALE The acquisition will make MSV one of the largest and most diversified pure play drilling services companies in Australia Stronger Product Offerings • Adds: geotechnical / infrastructure • Adds: further mobile underground capacity • Adds: surface acoustic (noise suppression) • Add
Slide 13: Strategic Rationale (cont)
STRATEGIC RATIONALE (CONT) MSV FY19 Actual Revenue by Pro forma Revenue by Commodity: $120m Commodity: $190m 4.4% 2.8% 5.7% 5.5% 14.3% Deepcore Drilling FY20 Forecast Revenue: $70m 37.5% 13.6% 39.5% 62.0% 14.8% Gold Copper Coking Coal Lead/Zinc/Silver Other Gold Copper Coking Coal Lead/Zinc/Silver O
Slide 14: Strategic Rationale (cont)
STRATEGIC RATIONALE (CONT) MSV FY19 Actual Revenue by Pro forma Revenue by Drilling Type: $120m Drilling Type: $190m 1.2% 0.8% Deepcore Drilling FY20 Forecast Revenue: $70m 43.7% 48.6% 55.1% 50.7% Surface Underground Non-Drilling Surface Underground Non-Drilling Maintains diversity by drilling type
Slide 15: Strategic Rationale (cont)
STRATEGIC RATIONALE (CONT) Increase in revenue diversity by geography MSV FY19 Actual Revenue by Pro forma Revenue by Geography: $120m Geography: $190m 2.4% 1.5% 7.8% 8.6% Deepcore Drilling FY20 Forecast Revenue: $70m 9.2% 14.5% 54.0% 26.6% 75.3% QLD VIC SA WA NSW QLD VIC SA WA NSW Increased exposur
Slide 16: Strategic Rationale (cont)
STRATEGIC RATIONALE (CONT) Tier 1 client base increase in size and diversity MSV FY19 Actual Revenue by Pro forma Revenue by Client Type: $120m Client Type: $190m 8.2% 13.5% Deepcore Drilling FY20 Forecast Revenue: $70m 91.8% 86.5% Tier 1 Clients Other Clients Tier 1 Clients Other Clients Tier 1 Cli
Slide 17: Strategic Rationale (cont)
STRATEGIC RATIONALE (CONT) Current brands Future brand strategy Mitchell Services Mitchell Services Radco Technologies Radco Technologies Deepcore Drilling Leverage of brands to maintain strong nimble relationships with customers and employees while taking advantage of consolidation synergies 17 www
Slide 18: Strategic Rationale (cont)
STRATEGIC RATIONALE (CONT) Existing Roles CEO New Roles General General General General General General CEO CFO & General Manager: Manager: Manager: Integration Manager: Manager: Manager: Deepcore Company Counsel1 People & Commercial Assets & Manager3 Surface Underground Mining Drilling2 Secreta
Slide 19: Strength Through the Cycle – Our Plan on a Page
STRENGTH THROUGH THE CYCLE – OUR PLAN ON A PAGE Be Sure. Be Safe. To be Australia’s leading provider of drilling services to OUR VISION the global exploration, mining and energy industries OUR PROMISE Our People are Your Success. Find a Better Way. SAFETY & SUSTAINABILITY PEOPLE OPERATIONAL PERFORMA
Slide 20: Financial Impact
FINANCIAL IMPACT Pro forma Profit & Loss MSV Deepcore MSV Post- New MSV Pro forma EBITDA ($M) $40m FY19 FY20 Forecast Acquisition $000's $000's $000's $30m Revenue 120,205 69,916 190,121 $20m EBITDA 24,112 12,573 36,685 $10m EBITDA % 20.1% 18.0% 19.3% - EBIT 13,894 8,214 22,108 FY16 Actual FY17 Actu
Slide 21: Financial Impact (cont)
FINANCIAL IMPACT (CONT) Pro forma Balance Sheet The impact of the Purchase Price Accounting 30-Sep-19 MSV Deepcore Trans. Adj New MSV (PPA) has not been completed, pro forma $000’s $000’s $000’s $000’s transaction adjustments are illustrative only Cash and cash equivalents 2,242 338 2,580 subject to
Slide 22: Financial Impact (cont)
FINANCIAL IMPACT (CONT) Pro forma Capitalisation • MSV to utilise strong balance sheet and fund the $15 million cash consideration through debt. • This will bring consolidated net debt to $40.7 million representing approximately 1.1 x EBITDA on a pro forma basis. 30-Sep-19 MSV Deepcore Trans. Adj Ne
Slide 23: Summary
SUMMARY • Mitchell Services’ vision is to be Australia’s leading provider of drilling services to the global exploration, mining and energy industries • Earnings per share accretive for shareholders • Acquisition increases diversity by commodity and geography • Post acquisition a larger and more div
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