Slide 1: Full Year Results Presentation Financial Year 2019
FULL YEAR RESULTS PRESENTATION Financial Year 2019 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 si 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 Shares Issued (ASX:M SV) 1,742,382,681 Mitchell Group 20.4% Share Price (at 23/08/2019) A$0.068 Market Capitalisation A$118.2m Washington H Soul Pattinson 9.78% FY19 EBITDA A$24.1m CVC Limited 6.1% Net Debt (at 30/06/2019) A$8.2m Bo
Slide 4: Safety Update
SAFETY UPDATE • Finishing each day without harm is a core Mitchell Services value • Zero lost time incidents in FY19 • Focus on training to attract, retain and further develop our own drillers in an improving market • Mitchell Services’ safety culture was recognised during the year with the followin
Slide 5: FY19 Business Overview
FY19 BUSINESS OVERVIEW Revenue of $120.2m EBITDA of $24.1m Net Debt of $8.2m ↑ 65% from FY18 ↑ 286% from FY18 54% reduction from June 2018 Zero Lost Special Strong balance sheet Time Injuries dividend provides flexibility in FY19 with 400+ employees declared in FY19 5 www.mitchellservices.com.au
Slide 6: Impact of Increased Utilisation on Revenue
IMPACT OF INCREASED UTILISATION ON REVENUE Annual Average Operating Rig Count vs Revenue • Average operating $120.21m revenue per rig continued to increase due to improved productivity, pricing and drilling mix $72.70m • Mitchell Services anticipates further Av erage Operating Rig increases in opera
Slide 7: Revenue Diversity
REVENUE DIVERSITY Revenue by Commodity • Demand for drilling services remains FY19 62.0% 14.3% 13.6% strong across all commodities FY18 55.6% 14.9% 17.8% 6.0% • Entry into the underground coal sector FY17 51.1% 28.6% 6.3% 12.3% (through the acquisition of Radco Drilling in 2018) has driven the incre
Slide 8: 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 93.4% 89.7% 91.8% • Approximately 90% of revenue is at
Slide 9: Stages of the Cycle
STAGES OF THE CYCLE 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 day 7 days a week versus
Slide 10: Profit and Loss
PROFIT AND LOSS Unprecedented earnings growth Profit & Loss FY19 FY18 Change • 286% improvement in EBITDA on pcp driven by $000's $000's % increased utilisation, quality operational Revenue 120,205 72,700 65% EBITDA 24,112 6,254 286% execution and improving market conditions EBIT 13,894 (1,361) (1,1
Slide 11: Balance Sheet
BALANCE SHEET Strong balance sheet provides flexibility 30 Jun 19 30 Jun 18 Change $000’s $000’s % • Significant reduction in debt paid from operating cash Balance Sheet Summary flow provides a solid foundation for future growth Current assets 29,717 27,519 8% Non-current assets 40,480 30,773 32% •
Slide 12: Cash Flow
CASH FLOW Improved operating cash flows and Cash Conversion Ratio Operating Cash Flow Summary FY19 FY18 Change Operating Cash Flow $000's $000's % $20m Receipts from customers 111,535 64,343 73% $15m Payments to suppliers / employees (90,729) (63,697) 42% Cash generated from operations 20,806 646 3,
Slide 13: Net Debt
NET DEBT MSV can move forward with confidence and certainty Net Debt Summary • The $8.5m Shareholder Loans were repaid in full from operating cash flows approximately 18 months earlier 30 Jun 19 30 Jun 18 $000's $000's than the expiry date of July 2020 with no fees or penalties associated with the e
Slide 14: Capital Expenditure
CAPITAL EXPENDITURE Organic growth delivering strong returns $14m • Growth capex in FY19 (primarily in the underground sector) was a function of significant contract wins, extensions and $12m scope increases including: - 5 year contract award in Western Australia with $10m Kalgoorlie Consolidated Go
Slide 15: Outlook
OUTLOOK • Pipeline of identified opportunities remains strong as does the demand for drilling services particularly from Tier 1 clients • At current conversion rates, rigs required exceed rigs available • Based on current market conditions, commodity prices, current contracts, and strong opportunity
Slide 16: Capital Management
CAPITAL MANAGEMENT • Mitchell Services implemented various capital management initiatives during FY19 including: – The use of operating cashflows to reduce gross debt from $19.6m to $9.8m – Initiation of an on market share buyback – The payment of a special dividend of approx. $1.8m • Mitchell Servi
Slide 17: 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 18: 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 Earnings before interest, tax, depreciation and amortisation; calculated as NPAT plus income tax expense plus finance charges plu