DDH1 : Delivers Record FY22 Performance

ASX Announcement

26 July 2022

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DDH1 DELIVERS RECORD FY22 PERFORMANCE

Leading global specialist drilling company, DDH1 Limited (ASX: DDH1) ("DDH1" or "the Company") is pleased to release its preliminary full year unaudited results for the 2022 financial year (FY22) ended 30 June 2022. The unaudited pro-forma results released, include Swick Mining Services' Drilling Division ("Swick") for all current and comparative reporting periods. Unaudited statutory results include Swick from 1 February 2022. DDH1 is continuing to perform strongly and is delivering on its organic and inorganic growth strategy.

FY22 Pro-Forma Operational Highlights (percentages compared to FY21 unless indicated otherwise)

• Strong safety performance with TRIFR1 decreasing 21.4% to 8.65 (FY21 - 11.01)
• Added 15 quality rigs to end the year with 183 rigs, a further 11 are on order or under build
• 87% of revenue generated from production and resource definition projects
• Shifts increased 10.2% to 91,228
• Rig utilisation of 77.4%, up 2.4 percentage points
• Annualised revenue per rig of $2.9m, up 6.9%
• Annual revenue per shift of $5,556, up 3.4%
• Above average industry Return on Invested Capital of 27%
• Post year end, announced share buy-back program of up to 34,280,468 shares, which will commence after this results release
• Completed transformative Swick Mining Services transaction, creating a global scale mineral drilling company and an international platform for expansion

Preliminary Unaudited FY22 Financial Highlights

					Pro-Forma (unaudited)			Statutory (unaudited)
			FY22		FY21		YoY %	FY22		FY21		YoY %
Revenue ($m)
506.9		444.7		14.0	415.5		294.6		41.0
Underlying EBITDA ($m)2		113.6		103.3		10.0	97.2		74.6		30.3
Underlying EBITDA (%)		22.4%		23.2%		(0.8)	23.4%		25.3%		(1.9)
Operating EBITDA ($m)3
111.3		103.3		7.7	94.9		74.6		27.2

1. Total Recordable Injury Frequency Rate
2. Underlying FY22 EBITDA equals Statutory EBITDA adjusted for acquisition costs for Swick, profit on the sale of assets, non-cash revaluation of listed investments, redundancy costs and amounts provisioned for outstanding amounts owed by Wiluna Mining Corporation and equity holding in Wiluna Mining Corporation
3. Operating FY22 EBITDA equals Statutory EBITDA adjusted for acquisition costs for Swick, profit on the sale of assets, non-cash revaluation of

listed investments and redundancy costs

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Operating EBITDA (%)	22.0%	23.2%	(1.2)	22.8%	25.3%	(2.5)
Net (Debt) / Cash ($m)	(16.8)	(2.2)	($15.0m)	(16.8)	9.6	($26.4m)

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Commenting on the FY22 results, DDH1 Managing Director and CEO Sy van Dyk said:

"All of our operational teams should be acknowledged for their tireless dedication to our business and each other, and for delivering on our growth strategy. Our can-do culture and the team's willingness to meet the requirements of our broad customer base is exceptional.

Demand for our Company's specialised services from mine producers and explorers continued at record levels across our four brands - DDH1, Ranger, Strike and Swick. This was reflected in our metres drilled, a record for the company at 3.49 million metres.

We achieved record results notwithstanding increases in underlying costs, particularly related to managing headcount in light of COVID requirements. Pleasingly we are successfully managing to meaningfully increase rates as contract renewals roll over, although the timing difference between immediate cost increases and our strategy of rate increases at renewal or with new tenders has temporarily reduced operating margin. Our EBITDA margins are still remarkable.

The successful and transformative acquisition of Swick was a highlight. Importantly, Swick's underground capabilities complement our service offering and provide opportunities for expansion into the North American and Western European markets for our surface drilling operations."

DDH1 Chairperson Diane Smith-Gander highlighted the strength of the underlying business and its diversified revenue profile:

"DDH1 has again delivered to expectation during FY22 reflecting the strength and commitment of the managerial and operational teams. This performance is noteworthy considering the operating environment of employee mobility challenges due to travel restrictions, COVID absenteeism and the inflationary environment.

The Board is especially pleased that the business has improved safety performance whilst growing organically and inorganically. The business is well set to pursue it's growth aspiration and deliver significant free cash flows for capital management purposes.

On behalf of the Board, I thank our staff for their contribution."

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Capital Management

DDH1 announced an on-market share buy-back program on 1 July 2022. The proposed number of shares to be acquired over a 12-month period is up to 34,280,468 shares, or approximately 8% of DDH1's current share capital. The program will commence following this release of the Company's preliminary unaudited results.

The Board considers the price for DDH1 shares significantly undervalues the Company given its strong performance. DDH1 has a sustainable dividend policy with a payout ratio of 30% - 50% of operating NPATA. The buy-back program should not impact this policy due to the Company's robust operating cash flows.

Operational Overview

Demand for DDH1's full suite of services from mine producers and explorers continued at record levels across its four brands. Accordingly, DDH1 added 15 rigs, which increased the fleet size to 183 at the end of FY22. A further 11 rigs are currently on order or under build.

FY22 revenue per shift increased by 3.4%. FY22 rig utilisation of 77.4% was up on FY21 by 2.4 percentage points (FY21 75.0%). Rig utilisation was however impacted due to labour movement restrictions and COVID related absenteeism. The easing of mobility restrictions has alleviated staffing pressure for entry level roles during 4Q FY22. Skilled operators remain in high demand within the drilling industry. DDH1 is confident it has the right operating environment, best-in-class equipment, customer exposure and growth opportunities to continue to attract and retain the most skilled operators within the drilling industry.

During FY22 inflationary pressures were evident, notably on wages, repairs and maintenance and consumables. The Company is working to offset input costs and has a history of diligently managing all aspects of its business. Concurrently, DDH1 is working with clients to increase drilling rates in a tight supply market.

DDH1 continued to drive a financially disciplined strategy of organic and inorganic growth. DDH1 successfully completed its acquisition of Swick (Drilling Division) on 16 February 2022, a leading international underground diamond drilling provider. Swick complements and extends DDH1's service offering. Importantly, Swick provides established access to the highly prospective international markets in North America and Western Europe. DDH1 is imposing its capital discipline to Swick's strong market position to ensure EBITDA manifests into strong cash flows.

Focus for FY23 and Outlook

For the balance of FY23 DDH1 will remain focused on:

• Increasing margins with continued focus on rate increases

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• Cash flow generation
• Integration of Swick and extracting synergies from the transaction
• Being a leader at the forefront of renewable transition given such a high correlation of DDH1's focused commodities and their criticality in the transition from fossil fuels
• Disciplined investing in any additional capacity

The outlook for FY23 is positive. Despite the macroeconomic factors that are currently impacting market sentiments, the fundamentals driving demand for DDH1's services remain compelling.

Key drivers are summarised below:

• The majority of DDH1 revenue is derived from production and resource definition drilling programs. In FY22 87% of revenue was generated from this segment
• Exploration and resource companies remain well-funded and have strong balance sheets to undertake drilling programs
• There is a strong need for exploration to maintain diminishing mining reserves
• Increasing demand for battery metals, which require commodities that DDH1 drill for and are found in abundance in Australia, and
• The need for deeper drilling is resulting in larger drilling programs and an increasing demand for specialist drilling

DDH1 will provide a further operational update with the release of its audited full year results on 30 August 2022.

Investor Presentation

An Investor Presentation titled "Preliminary FY22 Unaudited Results" is attached with this announcement that provides additional information. Accordingly, this announcement should be read in conjunction with the presentation.

Investor Briefing

DDH1 will be holding an investor briefing on Tuesday, 26 July 2022 at 9:30am AWST / 11.30 AEST. See below for the Pre-RegistrationLink:

https://s1.c-conf.com/diamondpass/10024033-pdslfsh772.html

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HEAD OFFICE	CONNECT WITH US
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ABN: 48636677088

This announcement has been approved for lodgement by the Board of Directors.

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For further information, please contact:
Sy Van Dyk	Ben MacKinnon
Managing Director & CEO	CFO
DDH1 Limited	DDH1 Limited
[phone]	[phone]
[e-mail]	[e-mail]
About DDH1 Limited
DDH1 is a quality global drilling company.

The Company has four strong and well-established brands: DDH1 Drilling, Ranger Drilling, Strike Drilling and Swick Mining Services. Together they create a global scale mineral drilling company with operations throughout Australia, North America and Western Europe.

The Company has 183 rigs and one of the top five largest fleets globally (approx. 60% surface and 40% underground). DDH1 maintains a modern fleet with best-in-class technology to deliver optimal productivity, value and safety for clients.

The Company offers a broad range of specialty drilling services across the mining value chain and has a reputation for quality and service delivery. Approximately 80% of DDH1's clients are repeat business.

The Company revenue is predominately derived from the production and resource definition phase, which is less cyclical. DDH1's drilling services are commodity agnostic and it has exposure to a diverse range of commodities including gold, iron ore, nickel, copper and other critical metals. DDH1 has no exposure to coal.

DDH1 prioritises safety and is investing in automation and rigs of the future to minimise perceived high-risk operations and impact on the environment.

The Company has an experienced leadership team and a best-in-class workforce. Together they maintain a quality-focused culture and are driving its organic and inorganic growth strategy for shareholders.

For more information, please visitwww.ddh1.com.au

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HEAD OFFICE	CONNECT WITH US
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ABN: 48636677088