DDH1 : Half Year Financial Report

For personal use only

ACN 636 677 088

Consolidated Interim Financial Report

For the Half Year Ended 31 December 2021

DDH1 Limited

ACN 636 677 088

Consolidated Interim Financial Report

For the Half Year Ended 31 December 2021

For personal use only

Contents
Directors' Report.................................................................................................................................................	3
Auditor's Independence Declaration ................................................................................................................	7
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income .......................	8
Condensed Consolidated Statement of Financial Position ...........................................................................	9
Condensed Consolidated Statement of Changes in Equity.........................................................................	10
Condensed Consolidated Statement of Cash Flows ....................................................................................	11
Notes to the Condensed Consolidated Financial Statements .....................................................................	12
Directors' Declaration ......................................................................................................................................	22
Independent Auditor's Review Report ...........................................................................................................	23

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DDH1 Limited

ACN 636 677 088

Consolidated Interim Financial Report

For the Half Year Ended 31 December 2021

For personal use only

Directors' Report

The Directors present their report on DDH1 Limited (the "Company") and its subsidiaries (the "Group") for the half year ended 31 December 2021.

Directors

The names of Directors of the Company at any time during, or since the end of the six month period are:

Name

Diane Smith-Gander AO (Chairperson)

Alan Broome AM

Andrea Sutton

Murray Pollock

Byron Beath

Sy Van Dyk (Managing Director and CEO)

The Directors of the Company have been in office since the start of the financial period to the date of this report unless otherwise stated.

Company Secretaries

Ben MacKinnon

Darryl Edwards

Principal Activities

The principal activities of the Group during the financial period were to provide a range of specialised surface and underground drilling services to mining and exploration clients in Australia. The Group is headquartered in Canning Vale, Western Australia.

No significant change in the nature of these activities occurred during this half year period.

Review of Operations

The Group's financial performance for the half year period has been robust, despite the continued impacts of the Covid-19 pandemic. Whilst our operations have been affected by the various state border closures that occurred during the review period, the Group has managed to deliver a strong result. Demand for the Group's drilling services has remained strong throughout the review period, with rig utilisation and productivity at high levels.

Safety and Training

The Group has invested significant time and costs in safety training programs and initiatives. The result of this investment is that the rolling 12-month total recordable injury frequency rate (TRIFR) at 31 December 2021 was 8.02, which was an improvement on June 2021, when the TRIFR was 9.00.

Capital Expenditure

During the review period, the Group added 5 surface rigs and 1 underground rig into the fleet. These additions underpin the continued investment in the Group's current and future operations.

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DDH1 Limited

ACN 636 677 088

Consolidated Interim Financial Report

For the Half Year Ended 31 December 2021

For personal use only

Directors' Report (continued)

Review of Operations (continued)

Utilisation

At 31 December 2021, the Group's fleet totalled 104 drill rigs. This comprised of 11 underground and 93 surface drill rigs. Utilisation remained strong throughout the 6 month period, with utilisation rates increasing to 79.3% in the current period (1H FY21: 73.9%). Pleasingly the underground division has had a significant increase in utilisation to 76.5% (1H FY21: 33.9%).

Metres Drilled

During the review period, the Group has drilled 1,165,904 metres (1H FY21: 1,090,621).

Financial Results

	FINANCIAL RESULTS			1H FY22			Comparative			% Change
	(NON-IFRS)			$'000			$'000
	PROFIT & LOSS
	Revenue	168,669		141,490		19.2%
	EBITDA	41,156		32,549		26.4%
	Operating EBITDA1	42,783		33,539		27.6%
	EBIT	28,408		21,057		34.9%
	Operating EBIT2	30,035		22,047		36.2%
	NPAT	19,700		13,406		47.0%
	CASH FLOW
	Net cash from operating activities	30,419		25,846		17.7%
	Net cash from investing activities	(26,450)		(23,607)		12.0%
	Operating cash flow before interest and taxes	37,581		38,755		(3.0%)
	AT BALANCE DATE
	Cash	10,094		14,591		(30.8%)
	Debt (Excluding right of use liabilities)	3,592		4,988		28.0%
	Net Cash (cash less debt excluding right of use	6,502		9,603		(32.3%)
	liabilities)

1. Operating EBITDA is calculated by adding back IPO and acquisition costs to EBITDA. $990k was included in legal and consultants costs for the IPO of DDH1 Limited in the comparative period. In the current period $1,627k was included in the Statutory EBITDA for costs associated with the Swick transaction.
2. Operating EBIT is calculated by adding back IPO and acquisition costs to EBIT. $990k was included in legal and consultants costs for the IPO of DDH1 Limited in the comparative. In the current period $1,627k was included in the Statutory EBITDA for costs associated with the Swick transaction.

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DDH1 Limited

ACN 636 677 088

Consolidated Interim Financial Report

For the Half Year Ended 31 December 2021

For personal use only

Directors' Report (continued)

Review of Operations (continued)

	FINANCIAL RESULTS			1H FY22			Comparative			% Change
	(NON-IFRS)			$'000			$'000
	RATIOS
	EBITDA Margin %	24.4%		23.0%		1.4%
	Operating EBITDA Margin %	25.4%		23.7%		1.7%
	EBIT Margin %	16.8%		14.9%		1.9%
	Operating EBIT Margin %	17.8%		15.6%		2.2%
	Basic EPS - cents per share	5.75		4.60		25.0%

Profit

The Group generated a 47.0% increase in Net Profit After Tax (NPAT) for the six months to 31 December 2021, compared to the prior half year ended 31 December 2020. Revenue increased 19.2% compared to 31 December 2020, due to an increase in rigs and fleet utilisation.

Balance Sheet

Total assets have increased by $7,947k to $289,269k primarily due to the continued investment into our fleet and inventory. $26,517k was invested in CAPEX during the half year ended 31 December 2021.

Total liabilities decreased by $5,241k to $42,394k primarily as a result of lower business activity in December compared to June due to our shut down period. This resulted in a reduction in trade payables of $4,584k with an ending balance of $24,173k.

Cash flow

Operating cash flows for the period ended 31 December 2021 increased by 17.7% to $30,419k (31 December 2020: $25,846k) due to an increase in rigs and fleet utilisation.

Cash outflows from investing activities were 12% higher primarily as a result of increased capital investment, these cash flows underpin the continued investment in the Group's current and future operations.

Financing cash flows for the period resulted in a net outflow of $8,466k (H1 2021: $3,730k), due to the dividend that was paid during the review period.

Significant Changes in the State of Affairs

There was no significant change in the state of affairs of the Group during the reporting period.

Dividends

During the half year period the Group declared a fully franked dividend of $7,466k (H1 2021: nil) at 2.18 cents per share. The Directors have declared an interim fully franked dividend of 2.51 cents per share for the half year. The strong balance sheet position, positive Group cash flows and positive outlook for the drilling market have supported the declaration of this dividend. It is anticipated that this dividend will be paid out on 8 April 2022.

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