audited annual results - master drilling

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Page 1: AUDITED ANNUAL RESULTS - Master Drilling

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Page 2: AUDITED ANNUAL RESULTS - Master Drilling

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AUDITED ANNUAL RESULTSFOR THE YEAR ENDED 31 DECEMBER 2020

Page 3: AUDITED ANNUAL RESULTS - Master Drilling

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PRESENTED BY

DANIE PRETORIUS, CEO KOOS JORDAAN, DIRECTOR ROELOF SWANEPOEL, COO ANDRE VAN DEVENTER, CFO

Page 4: AUDITED ANNUAL RESULTS - Master Drilling

Business overview

Technology overview

Operational overview

Financial overview

Q&A and Closing

4

AGEN

DA

Page 5: AUDITED ANNUAL RESULTS - Master Drilling

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BUSINESS OVERVIEWDANIE PRETORIUS, CEO

Page 6: AUDITED ANNUAL RESULTS - Master Drilling

Commodity Bull Cycle and shift in

type of Commodities

Green Economy and ESG

Geopolitical landscape: Biden & China relationships

Economy Recovery Expected

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MA

RK

ET O

VER

VIEW

Page 7: AUDITED ANNUAL RESULTS - Master Drilling

• High Performance

• Culture

• Organisational structure optimisation

• Fit for future

• Safe working environment

• Geographic expansion

• Brand building and marketing focus

• Diversify industry exposure

• Appropriate M&A and JVs

• Responsible leadership

• True shareholder value

WE CHALLENGE THE STATUS QUO TO PROVIDE OUR CLIENTS WITH SPECIALISED, ADAPTIVE AND INTEGRATED DRILLING SOLUTIONS.

People Growth

• Automisation and digitisation

• Remote operations

• DID projects

• Disruptive technology in rock cutting

• Bolt on services

• Big Data

• Optimize ROI

Technology

• Continuous improvement on operational and commercial efficiencies.

• Quality revenue

• Key focus on cost control

• Fleet utilization / modernisation

• Increase ROI

Optimisation

DELIVERING OUR GROUP STRATEGY

1 23 4

7

Page 8: AUDITED ANNUAL RESULTS - Master Drilling

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TECHNOLOGY OVERVIEWKOOS JORDAAN, DIRECTOR

Page 9: AUDITED ANNUAL RESULTS - Master Drilling

Technology for a changing world:• Mines of the future.

• Opencast mines going underground.

• Longer and deeper access to underground orebodies.

• Projects in remote and harsh geographies.

• Environmental, Social and Governance sustainability (ESG).

• Big Data, Digitized information and control, informed decision-making

• Innovation and future relevance through competitiveness and aligned resources.

• Quality of solutions through:

• SHERQ (Safety, Health, Environmental, Risk and Quality)

• Increased Productivity

• Competitive Cost

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TEC

HN

OLO

GY

O

VER

VIEW

Page 10: AUDITED ANNUAL RESULTS - Master Drilling

Drilling:• Competitiveness.

• RD6 launch.

• LP 100 development.

• Remote operation.

• Semi – Autonomous control.

• Directional Drilling excellence.

• Mobility of equipment.

• Raise Boring up to 10m diameter.

• Difficult geotechnical conditions.

• A world record in the making:

• 5m diameter x 1380m deep single lift Raise Bore shaft under construction.

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TEC

HN

OLO

GY

O

VER

VIEW

Page 11: AUDITED ANNUAL RESULTS - Master Drilling

Tunnelling:• Fast access to underground orebodies.

• The Mobile Tunnel borer (MTB)

• 2017 designed, 2018 manufactured, 2019 performance tested.

• 2020 contract cancelled due to COVID-19 uncertainty.

• Maintenance, improvements and recommissioning underway.

• Experienced operational and engineering crew retained.

• Awaiting potential award of turnkey infrastructure project in Q2 2021.

• Future expansion considering successful implementation of current resources.

• Competitive technologies and solutions for related infrastructure.

• Maintaining novel and innovative intellectual property (IP).

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TEC

HN

OLO

GY

O

VER

VIEW

Page 12: AUDITED ANNUAL RESULTS - Master Drilling

Shaft Sinking:• IDC joint shareholding.

• Phased project development for implementation risk.

• IP for sinking large dia. shafts (14m) to small dia. shafts (4m) over 2km developed over the past 6 years.

• Phase 1 successful Q4 2019.

• Cash and Capital conservation due to COVID-19 uncertainty in2020.

• Rescoping for smaller lower cost funded project completed.

• Intent for an infrastructure project at reduced scope received. (Phase 5)

• Phase 2-4 (Manufacturing and Experimental Commissioning.) funding under review.

• Implementation on low risk infrastructure, with future scalable expansion for critical infrastructure.

• Maintaining novel and innovative intellectual property (IP).

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TEC

HN

OLO

GY

O

VER

VIEW

Page 13: AUDITED ANNUAL RESULTS - Master Drilling

Mining:• Non-Explosive Mechanised mining.

• Non-Explosive

• Continuous

• Industrialized process.

• Fever exposed personal in safer environments.

• Approach

• Client focused solutions and collaboration.

• Study/Experimentation – Product supply/support – Production Service – Concession throughput.

• Projects

• Currently two projects for clients in development through a phased approach.

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TEC

HN

OLO

GY

O

VER

VIEW

Page 14: AUDITED ANNUAL RESULTS - Master Drilling

Digital:• General Themes:

• Big Data.

• Resource positioning.

• Resource information.

• Management reporting.

• Optimized decision making and Planning.

• Solutions.

• AVA: Data driven Mine Management.

• π4S: Platform based reporting.

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TEC

HN

OLO

GY

O

VER

VIEW

Page 15: AUDITED ANNUAL RESULTS - Master Drilling

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OPERATIONAL REVIEWROELOF SWANEPOEL, COO

Page 16: AUDITED ANNUAL RESULTS - Master Drilling

0.0 0.5 1.0 1.5 2.0 2.5 3.0

2016

2017

2018

2019

2020

2.51

2.50

2.06

2.02

1.11

LTIFR1.112020

2.022019

16

LOST

TIM

E IN

JUR

Y

FREQ

UEN

CY R

ATE

Page 17: AUDITED ANNUAL RESULTS - Master Drilling

Central and North America

18%

21%

17%

34%

39%

34%

22%

15%

20202019KEY

South AmericaAfrica

Other Countries

Operating profit margin

Central and North America

5.63%

South America

(17.72%)

Other Countries

20.35%

Africa

30.12%

17

REV

ENU

E G

EOG

RA

PHIC

D

IVER

SIFI

CAT

ION

Page 18: AUDITED ANNUAL RESULTS - Master Drilling

Production

85%

Exploration

5%

Capital

10%2020

Production

82%

Exploration

3%

Capital

15%2019

18

REV

ENU

E M

ININ

G A

CTI

VITY

D

IVER

SIFI

CAT

ION

Page 19: AUDITED ANNUAL RESULTS - Master Drilling

2020

24%24%Gold Platinum

78 9%Coal

2%Chrome

0%Diamonds

1%

30 30%Silver / Lead / Zinc

20%20%Copper

11%11%Iron Ore OtherOther

3%

2019

79 30%30%Gold Platinum

78 2%Coal

2%Chrome

2%Diamonds

3%

30 19%Silver / Lead / Zinc

29 28%28%Copper

12%12%Iron Ore OtherOther

2%

19

REV

ENU

E C

OM

MO

DIT

Y D

IVER

SIFI

CAT

ION

Page 20: AUDITED ANNUAL RESULTS - Master Drilling

2020 2019 2018

Total Raise bore rigs 145 143 149

Utilization % 60% 64% 61%

ARPOR (USD) 105 715 111 135 107 530

Total Slim rigs 58 30 30

Utilization % 48% 70% 68%

ARPOR (USD) 30 237 69 292 70 430

20

AR

POR

SU

MM

AR

Y

PER

AN

NU

M

Page 21: AUDITED ANNUAL RESULTS - Master Drilling

2532021

1732022

1142023 And Beyond

540Million

0 50 100 150 200 250 300

2021

2022

2023 And Beyond

Awarded Awaiting adjudication Enquiry received / Possible lead

21

PIPE

LIN

E

(USD

‘ M

ILLI

ON

)

Page 22: AUDITED ANNUAL RESULTS - Master Drilling

0 50 100 150 200 250

2021

2021131

53

29

Total: 213

2022

2023and beyond

GrandTotal

Civils / Infrastructure

Coal

Copper

Diamonds

Energy

2Fluorite

Gold

Iron Ore

Manganese MMMMMMMnMMMMMMMnnnnMMMMMMMMMMMMMMMMMMMMMMMMMMMMn

Nickel Ni28

Platinum 78

Polymetallic Polymetal

Silver

Water H2O22

Zinc

TotalPer Year

2022

2023 and Beyond

22

AWA

RD

ED O

RD

ERS

(USD

‘ M

ILLI

ON

)

Page 23: AUDITED ANNUAL RESULTS - Master Drilling

Awaiting Adjudication Enquiry received / Possible leadAwarded

203

142

213

2019

2020

2021103

91

271

63

99

228

GrandTotal

2021

540

296

577

2020

2019

23

YOY

CO

MPA

RIS

ON

(U

SD ‘

MIL

LIO

N)

Page 24: AUDITED ANNUAL RESULTS - Master Drilling

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FINANCIAL OVERVIEWANDRE VAN DEVENTER, CFO

Page 25: AUDITED ANNUAL RESULTS - Master Drilling

USD Revenue decreased by

17%

USD HEPS decreased by

74.8%

ZAR HEPS decreased by

71.4%

Healthy cash balance -

geared for future growth

25

SALI

ENT

FEAT

UR

S

FOR

TH

E PE

RIO

D

Page 26: AUDITED ANNUAL RESULTS - Master Drilling

HEPS (ZARc)

HEPS (USDc)

0 30 60 90 120 150

0 2 4 6 8 10 12

2020

2018

2019

2020

2018

2019

26

HEA

DLI

NE E

AR

NIN

GS

PE

R S

HA

RE

Page 27: AUDITED ANNUAL RESULTS - Master Drilling

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35

0

30

60

90

120

150

EBITDA (USD’m)

2020 20182019

2020 20182019

Revenue (USD’m)

17.7%

2020

2020

21.8

29.9

2019

30.9

2018

2020

123.1

148.3

2019

138.7

2018

27

EAR

NIN

GS

BEF

OR

E IN

TER

EST

TAX

DEP

REC

IATI

ON

AM

OR

TISA

TIO

N

(USD

‘ M

ILLI

ON

)

Page 28: AUDITED ANNUAL RESULTS - Master Drilling

2020

2018

2019

0 5 10 15 20

2020

3.2

2019

15.4

2018

17.5

28

PRO

FIT A

FTER

TAX

(U

SD ‘

MIL

LIO

N)

Page 29: AUDITED ANNUAL RESULTS - Master Drilling

2020 2019 CommentUSD

'millionUSD

'millionAssetsTotal non-current assets 166.7 176.7 Strict capital management

Total current assets 98.4 99.5 Healthy current ratio

Total assets 265.1 276.2EquityEquity 166.4 165.2Non-controlling interest 9.7 10.0Total equity 176.1 175.2Liabilities

Total non-current liabilities 40.4 56.9 Repayment of ABSA facility Gearing ratio of 10.3%

Total current liabilities 48.6 44.2Total liabilities 89.0 101.0Total equity and liabilities 265.1 276.2

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STA

TEM

ENT

OF

FI

NA

NC

IAL

POSI

TIO

N

Page 30: AUDITED ANNUAL RESULTS - Master Drilling

2020 2019USD 'million USD 'million

Revenue 123.1 148.3 Cost of sales (95.2) (104.2)Gross profit 28.0 44.1 Other operating income 2.3 3.1 Other operating expenses (20.0) (24.8)Operating profit 10.3 22.4 Investment revenue 0.3 1.2 Finance costs (3.0) (4.6)Share of profit from equity accounted investment (0.2) 0.0 Profit before taxation 7.5 19.0 Taxation (4.3) (3.6)Profit for the year 3.2 15.4

CommentRevenue Negatively effected by COVID19

Cost of Sales Costs limited to mitigate the COVID19 effectOther operating expenses Costs limited to mitigate the COVID19 effectTaxation Higher due to deferred taxationProfit for the year Lower due to the combined effect of the above

30

STA

TEM

ENT

OF

CO

MPR

EHEN

SIVE

INC

OM

E

Page 31: AUDITED ANNUAL RESULTS - Master Drilling

CostsRevenue

2020

0%

20%

40%

60%

80%

100%

USD Emerging Currencies

48%

52%

63%

37%

USD’ millionPositive impact on profit before taxation 1.34

31

IMPA

CT

OF

CU

RR

ENC

Y O

N

PRO

FIT B

EFO

RE

TAXA

TIO

N

Page 32: AUDITED ANNUAL RESULTS - Master Drilling

2020 2019 Explanation\Comment

USD 'million USD 'millionNet cash from operating activities 25.5 14.8 Improvement by 74.7% from 2019

Net cash from investing activities (9.0) (17.2) Strict control over capital expenditure

Net cash from financing activities (10.7) (11.2) Repayment of ABSA facility

Total cash movement for the period 5.8 (13.7)Cash at the beginning of the period 19.5 33.3 Effect of exchange rate movement on cash balances (0.5) (0.1)

Total cash at the end of the period 24.8 19.5 Sufficient cash for operations and investments

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STAT

EMEN

T OF

CA

SH F

LOW

S

Page 33: AUDITED ANNUAL RESULTS - Master Drilling

Revenue - 2019 148.3Forex (4.5)Fleet Expansion 1.0Acquisition 4.6Fleet Mix and Utilisation (26.3)Revenue - 2020 123.1

(US

D’m

)

2019 Forex Fleet mix & utilization

Fleet Expansion

Acquistion 2020-30

0

30

60

90

120

150

33

REV

ENU

E W

ATER

FALL

BR

EAK

DO

WN

(U

SD ‘

MIL

LIO

N)

Page 34: AUDITED ANNUAL RESULTS - Master Drilling

Working Capital Breakdown 2020 2019 MovementInventory 24.6 27.9 3.3Trade and Other Receivables 43.8 50.7 6.9 Trade and Other Payables 26.9 26.9 0

Normal Terms

63%

1 month past due

24%

2 months past due

9%

3 and more months past due

4%

Trade receivable ageing

34

WO

RK

ING

CA

PITA

L BR

EAK

DO

WN

(U

SD ‘

MIL

LIO

N)

Page 35: AUDITED ANNUAL RESULTS - Master Drilling

2020 2019Return on Capital Employed (EBITDA) 9.1% 12.9%Return on Capital Employed (EBIT) 5.7% 9.7%Working Capital Ratio (Days) 123.2 127.5Gearing Ratio (Net of Cash) 10.3% 22.5%

35

BA

LAN

CE

SHEE

T

RAT

IOS

Page 36: AUDITED ANNUAL RESULTS - Master Drilling

(US

D’m

)

-15

-10

-5

0

5

10

15

20

25

30

Cash Flow Waterfall 2020Cash at beginning of period 19.51 Cash from operation activities 25.51 Net acquisition of property, plant & equipment (7.85)Dividends paid (0.02)Investment in associate/subsidiary (1.23)Net movement in Financial Liabilities (10.41)Other (0.72)Cash at end of period 24.79

36

CA

SH FL

OW

WAT

ERFA

LL

(USD

‘ M

ILLI

ON

)

Page 37: AUDITED ANNUAL RESULTS - Master Drilling

Expansion

52.9%

Maintenance

47.1%

Land and Buildings 2%Plant and Machinery 94%Motor Vehicles 2%IT Equipment 2%

37

CA

PITA

L SPE

ND

Page 38: AUDITED ANNUAL RESULTS - Master Drilling

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Q&A SESSION

Page 39: AUDITED ANNUAL RESULTS - Master Drilling

SALIENT FEATURES FOR THE PERIOD• Healthy pipeline of USD539.9 million

• 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 possible pandemics

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IN C

LOSI

NG

Page 40: AUDITED ANNUAL RESULTS - Master Drilling

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 correct, and have not been independently verified. Accordingly, Master Drilling and its Advisors accept no responsibility for the correctness or otherwise of the content set out herein and no representation or warranty, express or implied, is being made or given as to the accuracy or completeness of the information set out herein. The information contained in this document is subject to completion, revision, verification and amendment without prior notice and without liability to compensate or reimburse any party. No representation or warranty, express or implied is, or will be, given by Master Drilling or its Directors, Partners, Employees or Advisors or any other person as to the accuracy, completeness or fairness of this document and, so far as permitted by law and except in the case of fraud by the party concerned, no responsibility or liability whatsoever is accepted for the accuracy or sufficiency thereof or for any errors, omissions or misstatements negligent or otherwise relating thereto. Master Drilling shall only be bound by those particular representations and warranties set forth in definitive written transaction documents, when and if such transaction documents are executed and subject to such restrictions and limitations as may be contained therein. This document may include certain statements, estimates, targets, forecasts and projections provided by Master Drilling. Such statements, estimates, targets, forecasts and projections reflect significant assumptions and subjective judgments and analysis by Master Drilling’s management concerning anticipated future events which may or may not prove to be correct and there can be no assurance that any estimates, targets, forecasts or projections are attainable or will be realised. Nothing contained in this document is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Accordingly, (subject as aforesaid) neither Master Drilling nor its Directors, Partners, Employees or Advisors nor any other person, shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or omission from this document and any such liability is expressly disclaimed. In particular, but without limitation, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any estimates, targets, forecasts or projections contained in this document (or otherwise provided by or on behalf of Master Drilling with respect to the subject matter of this document). In all cases, interested parties should conduct their own investigation and analysis of Master Drilling and the information contained in this document before making any decisions. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of an offer to purchase or subscribe for, any securities of the Company or any other entity, nor shall the information contained in this document or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or investment decision in relation thereto. The document is not an offer of securities in the United States. The securities of the Company have not been and will not be registered under the US Securities Act of 1933, as amended (the “US Securities Act”), and may not be offered or sold in the United States absent registration under, or an exemption from the registration requirements of, the US Securities Act. The distribution of this document may be restricted by law and persons into whose possession the Information comes should inform themselves about and observe any relevant restrictions. This document is not intended to provide, and should not be relied upon for, or as, accounting, legal, tax advice or investment recommendations. You should consult your tax, legal, accounting or other professional advisors about the issues presented in the Information. This presentation and the documents provided with this presentation are confidential and may not be

disclosed to any third party without the prior written consent of Master Drilling.40

DIS

CLA

IMER

Page 41: AUDITED ANNUAL RESULTS - Master Drilling

MASTER DRILLING GROUP LIMITEDRegistration number: 2011/008265/06 Incorporated in the Republic of South AfricaJSE share code: MDIISIN: ZAE000171948REGISTERED AND CORPORATE OFFICE4 Bosman StreetPO Box 902Fochville, 2515South AfricaDIRECTORSExecutiveDaniël (Danie) Coenraad Pretorius

Chief executive officer and founder

André Jean van Deventer

Financial director and chief financial officer

Barend Jacobus (Koos) Jordaan

Executive director

Gareth (Gary) Robert Sheppard #

Chief operating officer

Non-executiveHendrik (Hennie) Roux van der Merwe

Chairman and independent non-executive

Akhter Alli Deshmukh Independent non-executive

Andries Willem Brink Independent non-executive

Octavia Matshidiso Matloa Independent non-executive

Hennie Faul Independent non-executive

Shane Trevor Ferguson Non-executive# Resident in Peru

COMPANY SECRETARYAndrew Beaven6 Dwars StreetKrugersdorp1739South AfricaPO Box 158, Krugersdorp, 1740South AfricaJSE SPONSORInvestec Bank Limited(Registration number: 1969/004763/06)100 Grayston Drive, SandownSandton, 2196South AfricaINDEPENDENT AUDITORSBDO South Africa Incorporated52 Corlett DriveIllovo2196South AfricaSHARE TRANSFER SECRETARIESComputershare Investor Services Proprietary Limited(Registration number: 2004/003647/07)Rosebank Towers, 15 Biermann Avenue,Rosebank,South Africa

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INVESTOR RELATIONS CONTACTSFrederic CornetInstinctif PartnersTelephone: +27 11 050 7506E-mail: [email protected] E-MAIL [email protected] Drilling websitewww.masterdrilling.comCompany Secretarial [email protected]

Master Drilling posts information that is important to investors on the main page of its website at www.masterdrilling.com and under the “investors” tab on the main page. The information is updated regularly and investors should visit the website to obtain important information about Master Drilling.

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