Capital Drilling Limited Corporate Presentation November 2015 - PowerPoint PPT Presentation

Capital Drilling Limited  Corporate Presentation  November 2015

Disclaimer IMPORTANT NOTICE  This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Capital Drilling Ltd. (the “Company”), nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company.  This document is being supplied to you solely for your information. No reliance may be placed for any purposes whatsoever on the information or opinions contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of its directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted by the Company or any of its members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith.  This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. This document is only addressed to and directed at persons in member states of the European Economic Area who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (“Qualified Investors”). In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). This document must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this document relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons.  Neither this document nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions or distributed, directly or indirectly, in the United States of America, its territories or possessions. Neither this document nor any copy of it may be taken or transmitted into Australia, Canada, Japan or the Republic of South Africa or to any securities analyst or other person in any of those jurisdictions. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese or South African securities law. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.  The securities mentioned herein have not been, and will not be, registered under the US Securities Act of 1933 (the “Securities Act”), or under the applicable securities laws of Canada, Australia, Japan or the Republic of South Africa, and may not be offered or sold in the United States (as such term is defined in Regulation S under the Securities Act) unless they are registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and, subject to certain exceptions, may not be offered or sold within Canada, Australia, Japan or the Republic of South Africa or to any national, resident or citizen of Canada, Australia, Japan or the Republic of South Africa. No public offer of securities in the Company is being made in the United States, Canada, Australia, Japan or the Republic of South Africa.  Certain statements, beliefs and opinions in this document are forward-looking, which reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document.  By attending the presentation to which this document relates or by accepting this document you will be taken to have represented, warranted and undertaken that: (i) you are a relevant person (as defined above); (ii) you have read and agree to comply with the contents of this notice; and (iii) you will use the information in this document solely for evaluating your possible interest in the Company and for no other purpose.

Trading Update

Challenging trading conditions … GOLD AND COPPER SPOT RATES 1 MACRO PRESSURES REMAIN 2,000 12,000 1,800  Industrial metals continue to test mutli-year lows 10,000 1,600  Golds relative resilience under threat from rising US interest rates 1,400 Copper - US$/tonne 8,000  1,200 Sector access to capital remains challenging, albeit 2015 showing Gold - US$/oz 1,000 6,000 improvement on prior years 800 4,000  Clients remain focused on stringent cost management and 600 400 constrained CAPEX 2,000 200  Industry utilisation rates remain at historic lows of 30 to 35% 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 » Drilling rates continue to be under pressure 1. Source: Bloomberg (as at 11 November 2015) Copper Spot Gold Spot REVENUE vs UTILISATION SIGNS OF STABILISATION, DESPITE THE HEADWINDS 45 90% 40.92 38.91  38.34 Utilisation rates at historical lows, with exploration & delineation 40 80% 34.35 80% 35 70% drilling the weakest segments 76% Revenue - US$ million 27.68 30 60% 66%  26.12 Capital Drilling’s strategic focus on production drilling provides a 62% 23.63 Utilisation 25 50% 21.73 21.85 21.41 20.85 19.83 solid base to Group revenue, representing c70% of total revenue 19.12 20 40% 46% 46% 45% 44% 44%  Production contracts range between 2 and 5 years in duration 38% 15 30% 34% 34% 33%  10 20% Quarterly revenue increases in 2015 driven by recent exploration 5 10% contract wins 0 0% Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 4

… but Capital Drilling performing well GROSS PROFIT AND MARGINS  Early decisive actions taken in 2012/2013 to manage the cost base US$m 30.0 50% 41.1% 35.2% 36.3%  38.6% 25.0 Operating margins back to 7 year trend levels despite the fall in 34.5% 34.5% 31.4% 40% 32.6% 33.3% 32.0% revenue 20.0 28.1% 32.6% 30% 15.0  20% 23.3% Further savings being achieved in 2015 through head office, supply 10.0 chain and travel 10% 5.0 0.0 0%  Enhanced operational “ownership” through training, accountability H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 GP (USDm) GP (%) Avg Margin and monitoring at the project level OPERATING CASH FLOW / FREE CASH FLOW 20  Entered the downturn with a well capitalized business, including over 15 90 rigs and $23 million in inventory 10 5  Stringent discipline around cost management and capital spending 0 reflected in positive Group cash flow (5) (10)  (15) Record cash generation for the Group, despite the poor demand (20) environment Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Cash Generated from Operations Free Cash Flow NET CASH (NET DEBT)  Margins and CAPEX discipline driving significant improvement in the $6 6% balance sheet $4 4% Millions $2 2%  Net cash of $3.6 million at September 30, 2015 $0 0% » Repaid $8 million of the Company’s debt facility in the September -$2 -2% quarter -$4 -4% » Paid a maiden dividend in May 2015 of US1.9cps (US$2.5 million) -$6 -6% » Paid a H1 2015 dividend in October 2015 of US1.1cps (US$1.5 5 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 Aug 15 Sep 15 million) Net Cash (Net Debt) Net Cash (Net Debt) %