Master Drilling Group Ltd. · JSE:MDI
Master Drilling — H1 2021 Earnings Presentation
40 slides from Master Drilling's earnings presentation, 2021
Slide 1: Master Drilling
= __ MASTER DRILLING
Slide 2: Interim Consolidated Results
INTERIM CONSOLIDATED RESULTS for the six months ended 30 June 2021
Slide 3: Presented By
PRESENTED BY Danie Pretorius CEO Koos Jordaan Director Roelof Swanepoel COO Andre van Deventer CFO
Slide 4: Agenda
Business overview Technology overview AGENDA Operational overview Financial overview Q&A and closing
Slide 5: Business Overview
BUSINESS OVERVIEW DANIE PRETORIUS, CEO
Slide 6: Highlights
HIGHLIGHTS Stellar safety performance Strong revenue growth in 2021H1 Achieved ROCE target MTB awarded a contract Record pipeline Improved utilisation INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 6
Slide 7: Delivering Our Group Strategy
DELIVERING OUR GROUP STRATEGY VALUES OUR PURPOSE STRATEGIC PILLARS “We Challenge the status quo to provide OPTIMISATION SUSTAINABLE our clients with PEOPLE & PROFITABILITY TECHNOLOGY GROWTH R Respect specialised, adaptive one-stop-service drilling solution” • Create a high • Operational excellence •
Slide 8: Technology Overview
TECHNOLOGY OVERVIEW KOOS JORDAAN, DIRECTOR ROELOF SWANEPOEL, COO
Slide 9: Technology for a Changing World
TECHNOLOGY FOR A CHANGING WORLD Macro trends • Local communities • Water scarcity • Decarbonization and alternative energy • Land ownership and sustainability • Communication • Remote and complex orebodies Responses • Digitized information processing for decision making • Fewer, less exposed multisk
Slide 10: Technology Diversification
TECHNOLOGY DIVERSIFICATION Tunnelling • First MTB (Mobile Tunnel Borer) • Project onboarding underway • Start decline excavation YE 2021 • Turnkey operation • MTB Gen II • Study two MTB’s working in parallel for even quicker orebody access • Build technical and operational skills • Competitive relev
Slide 11: Technology Diversification
TECHNOLOGY DIVERSIFICATION Non-explosive mining • Development projects in a phased approach • Partnership with mining companies • Different orebodies dictates different mining systems • Two existing projects in development • Conceptual study work completed • Experimental work ongoing • PGM and multi
Slide 12: Technology Diversification
TECHNOLOGY DIVERSIFICATION Raise boring • Manufacturing second RD6 rig • Directional drilling • Remote operation and semi autonomous control • Training simulator • Mobile small to medium raise boring system Exploration drilling • New generation core drilling rig • Geophysics INTERIM CONSOLIDATED RES
Slide 13: Technology Diversification
TECHNOLOGY DIVERSIFICATION Digitization AVA Solutions • Initial investment January 2021 • Data-driven mine management solutions • Load and haul tracking and monitoring • Extension to dispatch planning and transport control • Growth into Brazil, Peru, Central Africa, Indonesia and Malaysia A&R Group
Slide 14: Operational Review
OPERATIONAL REVIEW ROELOF SWANEPOEL, COO
Slide 15: Our People and Safety
OUR PEOPLE AND SAFETY LTIFR 3 2,50 2,06 2,02 2 Workforce ~2 000 1,11 1,08 1 0 2017 2018 2019 2020 2021 LTIFR – Lost Time Injury Frequency Rate INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 15
Slide 16: Geographic Revenue Diversification
GEOGRAPHIC REVENUE DIVERSIFICATION 2021H1 14% 2020H1 17% 2019H1 Central 14% 2021H1 & North America 21% 2020H1 26% 12% Other countries 2019H1 2021H1 19% 26% 2020H1 19% 14% 2019H1 South 2021H1 34% America 39% 13% 2020H1 38% Africa 2019H1 31% 33% Operating profit margin 2021H1 INTERIM CONSOLIDATED RESU
Slide 17: Mining Activity Revenue Diversification
MINING ACTIVITY REVENUE DIVERSIFICATION 2021H1 2020H1 2019H1 Exploration Exploration Exploration Capital 1% 1% Capital 2% Capital 11% 11% 16% Production Production Production 83% 87% 88% INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 17
Slide 18: Commodity Revenue Diversification
COMMODITY REVENUE DIVERSIFICATION 2021H1 2020H1 2019H1 Gold Copper Copper 33% 34% 33% Copper Gold Gold 30% 33% 29% Polymetallic Polymetallic Polymetallic 20% 19% 17% Platinum Other Iron Ore 6% 4% 13% Other Iron Ore Other 3% 4% 4% Diamonds Platinum Platinum 3% 3% 2% Iron Ore Diamonds Diamonds 2% 2% 2
Slide 19: ARPOR Summary per Annum
ARPOR SUMMARY PER ANNUM 2021H1 2020 2019 Total Raise bore rigs 148 145 143 Utilization % 69% 60% 64% Fleet Mix ARPOR (USD) 109 238 105 715 111 135 > Large Raise bore rigs 88 86 84 Utilization % 78% 69% 69% ARPOR (USD) 135 328 119 191 126 103 < Large Raise bore rigs 60 59 59 Utilization % 55% 45% 57%
Slide 20: Pipeline
PIPELINE USDm Total pipeline Remainder Remainder USD602m 92 8 25 of 2021 of 2021 2022 2022 96 24 107 2023 and 2023 and 44 20 186 beyond beyond Total Total 232 52 318 0 50 100 150 200 250 300 350 400 450 500 550 600 650 Awarded (100% committed orders) Awaiting adjudication (≥70% probability) Enquiry
Slide 21: Order Book Comparison
ORDER BOOK COMPARISON USDm 400 231 350 300 250 232 (138) (6) 200 145 150 100 50 0 Orderbook - 30 June 2020 New orderbook Revenue up to Foreign exchange Orderbook - 30 June 2021 30 June 2021 (12 month) differences INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 21
Slide 22: Awarded Orders
AWARDED ORDERS USDm Platinum 21% Gold 20% Polimetalic 17% Copper 17% Nickel 8% Infrastructure 6% Diamond 3% Coal 3% Tin 2% Manganese 1% Iron Ore 1% Energy 1% 0% 5% 10% 15% 20% 25% INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 22
Slide 23: Financial Overview
FINANCIAL OVERVIEW ANDRE VAN DEVENTER, CFO
Slide 24: Highlights for the Period
HIGHLIGHTS FOR THE PERIOD USD REVENUE USD HEPS ZAR HEPS PIPELINE HEALTHY CASH UP BY 25% UP BY 88% UP BY 63% USD 602m BALANCE Geared for ramp-up and future growth INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 24
Slide 25: Headline Earnings Per Share
HEADLINE EARNINGS PER SHARE HEPS (ZARc) HEPS (USDc) 2021H1 87,2 2021H1 6,0 2020H1 53,3 2020H1 3,2 2019H1 76,7 2019H1 5,4 0 20 40 60 80 100 0 2 4 6 8 INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 25
Slide 26: EBITDA
EBITDA EBITDA (USDm) REVENUE (USDm) 2021H1 16,3 2021H1 72,0 EBITDA % 2020H1 10,8 22.7% 2020H1 57,4 2019H1 15,4 2019H1 70,0 0 5 10 15 20 0 20 40 60 80 INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 26
Slide 27: Profit After Tax
PROFIT AFTER TAX USDm 2021H1 9,1 2020H1 4,6 2019H1 8,3 0 2 4 6 8 10 INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 27
Slide 28: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 2021 2020 USDm USDm Comment Assets Total non-current assets 165.5 166.7 Limited capex spent – mainly on maintenance capital Total current assets 94.1 98.4 Total assets 259.6 265.1 Equity Equity 161.5 166.4 Non-controlling interest 9.8 9.7 Total equity 171.3 176.1 Liab
Slide 29: Statement of Comprehensive Income
STATEMENT OF COMPREHENSIVE INCOME 2021H1 2020H1 2019H1 USDm USDm USDm Comment Higher utilization resulted in increased Revenue 72.0 57.4 70.0 revenue; higher ARPOR on larger machines Increase aligned with the increase Cost of sales (50.2) (40.3) (45.7) in revenue Gross profit 21.8 17.1 24.2 Other op
Slide 30: Impact of Currency on Profit Before Taxation
IMPACT OF CURRENCY ON PROFIT BEFORE TAXATION 100% Positive impact on 80% profit before 48% taxation 65% USD 0.3m 60% 40% 52% 20% 35% 0% Costs Revenue USD Emerging currencies INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 30
Slide 31: Statement of Cash Flows
STATEMENT OF CASH FLOWS 2021H1 2020H1 USDm USDm Comment Net cash from operating activities 11.2 11.1 Net cash from investing activities (5.6) (4.3) Capex spent mainly on maintenance capital Net cash from financing activities (6.9) (6.1) Repayment on ABSA facility Total cash movement for the year (1.
Slide 32: Revenue Waterfall Breakdown
REVENUE WATERFALL BREAKDOWN USDm 80 8.1 72.0 70 5.1 1.4 60 57.4 50 40 30 20 10 0 Revenue 2020H1 Forex Fleet expansion Fleet mix & utilisation Revenue 2021H1 INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 32
Slide 33: Working Capital Breakdown
WORKING CAPITAL BREAKDOWN USDm 2021H1 2020 Movement Inventory 24.1 24.6 0.5 Trade and other receivables 45.4 43.8 (1.6) Trade and other payables 25.6 26.9 (1.3) Trade receivable ageing 3 and more months due 4% 2 months past due 10% 1 month past due 22% Normal terms 64% INTERIM CONSOLIDATED RESULTS F
Slide 34: Balance Sheet Ratios
BALANCE SHEET RATIOS USDm 2021H1 2020H1 2019H1 Return on capital employed (EBITDA) 17.1% 10.4% 12.7% Return on capital employed (EBIT) 12.3% 6.9% 9.7% Working capital ratio (Days) 112 153 135 Gearing ratio (Net of cash) 9.1% 18.8% 18.9% INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2
Slide 35: Cashflow Waterfall
CASHFLOW WATERFALL USDm Cash at beginning of period 24.8 Cash from operational activities 11.2 Net acquisition of property, plant & equipment (5.0) Acquisition of associate (0.6) Net movement in financial liabilities (7.0) Other (1.6) Cash at end of period 22.0 INTERIM CONSOLIDATED RESULTS FOR THE S
Slide 36: Capital Spend
CAPITAL SPEND Expansion 34% USD5m Maintenance 66% USDm 2021H1 Land and buildings 1% Plant and machinery 96% Motor vehicles 2% IT equipment 1% INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 36
Slide 37: Salient Features
SALIENT FEATURES Healthy pipeline Continued focus on working capital management Continued focus on geographical expansion Increased diversification Technology development to remain relevant Remain vigilant to address future challenges and economic ramp up INTERIM CONSOLIDATED RESULTS FOR THE SIX MON
Slide 38: Closing and Q&A
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Slide 39: Disclaimer
DISCLAIMER This document has been compiled from information provided by the Directors of Master Drilling Group Limited(“Master Drilling”, “Master Drilling Group” or the “Company”) and from publicly available sources, and involves elements of subjective judgment and analysis, which may or may not be
Slide 40: Corporate Information
CORPORATE INFORMATION MASTER DRILLING GROUP LIMITED Registration number: 2011/008265/06 COMPANY SECRETARY Incorporated in the Republic of South Africa Andrew Beaven JSE share code: MDI 6 Dwars Street ISIN: ZAE000171948 Krugersdorp 1739 REGISTERED AND CORPORATE OFFICE South Africa 4 Bosman Street PO
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