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CAPD - Capital News Story

63p -1.5  -2.3%

Last Trade - 28/10/20

Sector
Basic Materials
Size
Small Cap
Market Cap £88.4m
Enterprise Value £71.9m
Revenue £95.9m
Position in Universe 989th / 1802

Capital Limited - H1 Results

Thu 20th August, 2020 7:00am
RNS Number : 6846W
Capital Limited
20 August 2020
 

For Immediate Release

20 August 2020

 

 

 

 

 

Capital Limited

("Capital", the "Group" or the "Company")

 

H1 Results

 

Capital Limited (CAPD:LN), a leading mining services company focused on the African markets, today announces half year results for the period 1 January to 30 June 2020 (the "Period"). 

 

HALF YEAR RESULTS FOR THE PERIOD ENDED 30 JUNE 2020*

 

 

H1 2020

H1 2019

Average Fleet Size (No. of drill rigs)

99

91

Fleet Utilisation (%)

57

52

ARPOR ($)

170,000

183,000

 

 

 

Capex ($ m)

7.0

6.4

 

 

 

Revenue ($ m)

65.1

54.8

EBITDA1 ($ m)

15.4

12.7

EBIT1 ($ m)

9.6

7.9

Investment Gains ($ m)

9.9

0.1

Net Profit After Tax ($ m)

13.6

5.1

Cash From Operations ($ m)

7.0

10.5

 

 

 

Earnings per Share

 

 

Basic (cents)

10.0

3.7

Diluted (cents)

9.9

3.7

 

 

 

Interim Dividend per Share (cents)

0.9

0.7

 

 

 

Net Asset Value per Share1 (cents)

72.4

58.3

 

 

 

Return on Capital Employed (ROCE) (%)2

17.9

19.5

Return on Total Assets (ROTA) (%)2

12.5

15.6

Net Cash1 ($ m)

-0.1

8.5

Net Cash/Equity (%)

-0.1

10.7

 

*All amounts are in US dollars unless otherwise stated

(1) EBITDA, EBIT, Net Asset Value per share and Net Cash are non-IFRS financial measures and should not be used in isolation or as a substitute for Capital Limited financial results presented in accordance with IFRS.

(2) ROCE and ROTA calculated utilising 12 months EBIT.

 

 

Financial Overview

 

·    H1 2020 revenue of $65.1 million, up 18.8% on H1 2019 ($54.8 million) and 8.5% on H2 2019 ($60.0 million);

·    EBITDA of $15.4 million, up 21.3% on H1 2019 ($12.7 million) and 5.5% on H2 2019 ($14.6 million);

·    EBITDA margins increased from 23.2% in H1 2019 to 23.7% in H1 2020, despite higher labour costs associated with the management of COVID-19, reflecting the sustained focus on cost management;

·    Net gains from equity investments (unrealised) of $9.9 million in H1 2020, increasing the value of Group strategic investments to $23.2 million as of 30 June 2020 (31 December 2019: $12.5 million);

·    Net Profit After Tax (NPAT) $13.6 million (including investment gains), a material increase of 166.7% on H1 2019 ($5.1 million);

·    Capex of $7.0 million (H1 2019: $6.4 million) relating to sustaining capex, upgrading of support equipment and the purchase of an additional underground drill rig;

·    Net cash generated from operations of $7.0 million (H1 2019: $10.5 million), with the decrease attributable to asset prepayments, increased inventory and receivables timing;

·    Net cash of -$0.1 million (FY 2019: $4.4 million) reflecting working capital movements including fixed asset prepayments for mining equipment relating to H2 2020 capex;

·    Earnings per share (including investment gains) improved by 170.5% to 10.0 cents (H1 2019: 3.7 cents);

·    Successfully renewed and increased the value of the Group RCF facility to $15 million (previously $12 million) with a three-year term with Standard Bank; and

·    Declared an interim dividend of 0.9 cents per share, to be paid on 25 September 2020 to shareholders registered on 4 September 2020 (up 28.6% on 2019 interim dividend 0.7 cents per share).

 

 

Operational and Strategic Review

 

·      Stable ARPOR result from drilling operations of $170,000, consistent with H2 2019 ($170,000), driven by the strong performance of core long-term contracts, with no material production interruptions due to COVID-19;

·      Increased activity levels at a number of existing operational sites, driving an increase in fleet utilisation to 57%, up 9.6% on H1 2019 and 1.8% on H2 2019;

·      COVID-19 impact remains limited to people movement and slower supply chain movement due to travel restrictions, increased Rostered Days Off (RDO's) for fatigue management, delayed tendering activity and curtailment of exploration activity;

·      Commissioned a further underground rig during Q2, bringing total rig fleet to 100;

·      Previously announced world class safety achievements:

-     Sukari Gold Mine (Egypt) achieved three years LTI free in January

-     North Mara Gold Mine (Tanzania) achieved four years LTI free in March

-     Geita Gold Mine (Tanzania) achieved three years LTI free in March

-     Tasiast Gold Mine (Mauritania) achieved three years LTI free in June

-     Syama Gold Mine (Mali) achieved four years LTI free in June

·      Strong performance underpinned by operations across the Group's long-term mine site contracts, including: Tasiast (Kinross) in Mauritania, Syama (Resolute) and Yanfolila (Hummingbird) in Mali, Bonikro (Allied) in Côte d'Ivoire, Sukari (Centamin) in Egypt, North Mara (Barrick) and Geita (AngloGold Ashanti) in Tanzania and Jabal Sayid (Barrick) in Saudi Arabia;

·      Previously announced new contract awards include a two-year contract with Hummingbird (Mali), together with exploration contracts with Allied Gold (Egypt), Altus Strategies (Mali) and Barrick Bulyanhulu (Tanzania);

·      Contract extensions (previously announced) include Perseus Mining (Côte d'Ivoire), Resolute (Mali), Barrick North Mara (Tanzania) and AngloGold Ashanti (Tanzania);

·      Encouragingly, exploration activity increased with the resumption of exploration projects in June and July, specifically Altus Strategies (Mali) and Arrow Minerals (Burkina Faso);

·      Commenced drilling for Awale (Côte d'Ivoire) in August;

·      Revenue from the West African region continued to increase, contributing 31% of Group revenues in H1 2020;

·      Continued the asset relocation strategy into West Africa, with the rig count now 42, up from 15 rigs in January 2018 (42% of the fleet now in the region);

·      Growth of non-drilling revenue to 11% of total revenue for H1 2020, compared with H1 2019 (5%), of which MSALABS contributed 50%, the balance attributed to mining services and maintenance services;

·      MSALABS footprint increased in Africa with the acquisition of the ELAM laboratory in Yamoussoukro (Côte d'Ivoire), commissioning of a laboratory in Nouakchott (Mauritania) and signing of a binding agreement for on-site laboratory construction and management with Thor Explorations, at its Segilola Project (Nigeria);

·      Continued recruitment of key positions within the Mining business, including Chief Development Officer, Commercial Manager, Contracts and Legal Manager and Maintenance Manager; and

·      Progressively building mining fleet via existing cash flow and balance sheet, better positioning the business to actively engage in the tendering market.

 

 

Outlook

 

·      Despite the uncertainty and disruptions caused by the impact of COVID-19, the business has continued to perform strongly;

·      The gold price has continued to strengthen throughout Q2, reaching all-time highs early in Q3, a positive indicator for Capital given over 90% of revenue is derived from the gold sector;

·      Improving gold markets have positively impacted cash flows of mining companies, which is expected to contribute to an increase in demand for services from existing customers;

·      The strong gold price has seen a surge of activity in equity markets during Q2, a leading indicator for demand;

·      Substantial increase in activity pipeline across all business units;

·      Strong demand for drilling services anticipated following the completion of the West African wet season;

·      Capital Mining engaging in a number of large tendering opportunities, with an improved tendering pipeline across all business units;

·      COVID-19 continues to provide a level of uncertainty, however the current impact on Capital remains limited and positive recent developments include the easing in COVID-19 related travel restrictions, together with the resumption of smaller exploration projects in Burkina Faso and Côte d'Ivoire;

·      Capital continues to closely monitor the situation in Mali, which has seen President Ibrahim Boubacar Keita resign and announce the dissolution of parliament. The safety of personnel at our operations and offices remains our utmost priority and focus; and

·      Capital remains committed to its strategy of maintaining a strong balance sheet and providing returns to its shareholders.

 

The Group reinstates its revenue guidance, with expected revenue of $130 - $140 million for 2020 (versus $114.8 million in 2019).

 

 

 Commenting on the results, Jamie Boyton, Executive Chairman of Capital Limited, said:

 

"Capital delivered a strong first half performance despite the unprecedented challenges presented by the global COVID-19 pandemic. I would like to thank our staff and management team for their ongoing efforts in ensuring we continued to operate safely and efficiently during this uncertain time. It is encouraging to see some signs of improvement, however we must remain vigilant to the evolving situation, ensuring we adjust and manage our business accordingly.

 

We posted very strong revenue growth during the half year period, up 18.8% on the prior corresponding period, primarily driven by an increase in assets at many of our long-term projects. In addition, activity undertaken during 2018 and in particular 2019 to build the pipeline and relocate assets into West Africa ensured we were well placed to start the year contributing further to this outstanding result, with the region contributing 31% of total revenues during the period.

 

A robust increase in EBITDA and earnings per share reflects the ongoing strong performance at our underlying operations. Our long-term contract portfolio strengthened further with the award of a two-year contract with Hummingbird in Mali. Additionally, we were awarded extensions at three existing long-term contracts with Resolute (Mali), Barrick North Mara (Tanzania) and AngloGold Ashanti (Tanzania), a positive reflection of our performance delivery at these sites.

 

MSALABS, our laboratory business, continued to perform well. During the half year period it significantly increased its West African presence through the establishment of new laboratories in Côte d'Ivoire and Mauritania. The region now contributes more than 50% of MSALAB's revenue and is shifting the geographic focus for the business.

 

Importantly, our commitment to operating safely has seen the achievement of outstanding LTI results during the half, with safety milestones achieved across many of our existing long-term contract sites including Geita and North Mara in Tanzania, Sukari in Egypt, Syama in Mali and Tasiast in Mauritania.

 

A key contributor to our strong result for the half has been returns from our equity investments. These have been a business development tool for several years with Capital completing direct investments into exploration and mining companies. This strategy has been successful, both in securing preferred contractor status with multiple companies and the provision of equity returns. During Q2, these investments delivered material unrealised returns of $9.9 million.

 

While the COVID-19 pandemic still provides a level of uncertainty for the future, the gold price has reached record highs, and we anticipate strong demand for our services following the West African wet season in Q4. This is encouraging for Capital due to our high gold sector exposure and established presence in the West African region. We have now filled key positions within our mining division, and the mining business is seeing increased tendering activity, providing further optimism of higher activity levels in the second half and into 2021."

 

 

 

Capital Limited will be hosting a live webcast presentation at 09:00 BST on Thursday 20 August 2020, where questions can be submitted through the platform.

 

The webcast presentation link:

https://webcasting.buchanan.uk.com/broadcast/5f33fd15b14d872626436e41 

 

Participants may join the webcast approximately five minutes before the commencement time. A copy of the Company's presentation will be available on www.capdrill.com.

 

- ENDS -

 

For further information, please visit Capital Limited's website www.capdrill.com or contact:

 

Capital Limited                                                                 +230 464 3250

Jamie Boyton, Executive Chairman                                investor@capdrill.com

André Koekemoer, Chief Financial Officer

Rick Robson, Executive - Corporate Development

 

Berenberg                                                                          +44 20 3207 7800

Matthew Armitt

Jennifer Wyllie

Detlir Elezi         

 

 

 

Tamesis Partners LLP                                                       +44 20 3882 2868

Charlie Bendon

Richard Greenfield

 

Buchanan                                                                            +44 20 7466 5000

Bobby Morse                                                                     capital@buchanan.uk.com

Kelsey Traynor

James Husband

            

 

About Capital

 

Capital Limited is a leading mining services company providing a complete range of drilling, mining, maintenance and geochemical laboratory solutions to customers within the global minerals industry, focusing on the African markets. The Company's services include: exploration, delineation and production drilling; load and haul services; mining equipment hire and maintenance; and geochemical analysis. The Group's corporate headquarters are in Mauritius and it has established operations in Botswana, Burkina Faso, Côte d'Ivoire, Egypt, Mali, Mauritania, Nigeria, Saudi Arabia and Tanzania.

 

 

 

 

Cautionary note regarding forward looking statements

 

Certain information contained in this report, including any information on Capital Limited's plans or future financial or operating performance and other statements that express management's expectations, or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. Capital Limited cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Capital Limited to be materially different than the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements. These factors include the inherent risks involved in exploration and development of mineral properties, changes in economic conditions, changes in the worldwide price of commodities and project execution delays, many of which are beyond the control of Capital Limited. Nothing in the report should be construed as either an offer to sell or a solicitation to buy or sell Capital Limited securities.

 

 

 

INDEPENDENT REVIEW REPORT TO CAPITAL LIMITED

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2020 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related notes 1 to 16.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs).  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ''Interim Financial Reporting''.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of half-yearly financial reporting in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

 

 

 

BDO LLP

Chartered Accountants

London, UK

19 August 2020

 

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 

 

 

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2020

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

Six months ended

 

 

 

 

 

 

Notes

 

30 Jun 2020

 

30 Jun 2019

 

 

 

$

 

 $

 

 

 

 

 

 

 

 

 

 

 

Revenue

5

 

 65,089,372

 

             54,832,471

Cost of sales

 

 

 (39,431,925)

 

            (33,409,735)

Gross profit

 

 

 25,657,447

 

             21,422,736

Administration expenses

 

 

 (10,276,703)

 

              (8,772,356)

Depreciation, amortisation and impairments

 

 

 (5,732,201)

 

              (4,729,080)

Operating profit

 

 

 9,648,543

 

               7,921,300

Share of loss from associate

 

 

 -  

 

                 (227,904)

Interest income

 

 

 179,637

 

                   168,966

Finance charges

 

 

 (566,691)

 

                 (391,899)

Loss on disposal of FVTPL Investments

 

 

 (114,663)

 

                 (141,240)

Fair value gain on FVTPL Investments

 

 

 9,978,513

 

                   259,262

Profit before taxation

 

 

 19,125,339

 

               7,588,485

Taxation

3

 

 (5,509,895)

 

              (2,492,887)

Profit for the period

 

 

 13,615,444

 

               5,095,598

 

 

 

 

 

 

Other comprehensive (loss) income:

 

 

 

 

 

Other comprehensive (loss) income to be reclassified to profit or loss in subsequent periods:

 

 

 

 

 

 

 

 

 

 

 

Cumulative gain reclassified to profit and loss on sale of fair value through other comprehensive income shares

 

 

 

-

 

26,267

Total other comprehensive income /(loss) for the period

 

 

-

 

                     26,267

 

 

 

 

 

 

Total comprehensive income for the period

 

 

 

13,615,444

 

               5,121,865

 

 

 

 

 

 

Profit attributable to:

 

 

 

 

 

Owners of the parent

 

 

 13,673,957

 

5,095,598

Non-controlling interest

 

 

 (58,513)

 

-

 

 

 

 13,615,444

 

5,095,598

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic (cents per share)

6

 

10.0

 

                            3.7

Diluted (cents per share)

6

 

9.9

 

                            3.7

                         
 

 

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June 2020

 

 

 

 

 

 

 

 

Unaudited 

 

Audited

 

 

 

 

 

 

Notes

 

30 Jun 2020

 

31 Dec 2019

ASSETS

 

 

 $

 

 $

Non-current assets

 

 

 

 

 

Property, plant and equipment

8

 

 54,163,390

 

52,862,017

Right of use assets

 

 

 550,954

 

                   679,991

Goodwill

4

 

 1,181,103

 

1,252,348

Intangible assets

 

 

 311,105

 

303,191

Total non-current assets

 

 

 56,206,552

 

55,097,547

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventory

 

 

 18,753,273

 

17,544,401

Trade and other receivables

 

 

 19,634,785

 

18,619,228

Prepaid expenses and other assets

 

 

 12,807,469

 

6,624,827

Current tax receivable

 

 

 376,083

 

289,139

Investments at fair value

 

 

 23,239,631

 

12,537,105

Cash and cash equivalents

 

 

 15,535,741

 

17,620,623

Total current assets

 

 

 90,346,982

 

73,235,323

 

 

 

 

 

 

Total assets

 

 

146,553,534

 

128,332,870

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

9

 

 13,698

 

13,625

Share premium

9

 

 22,953,954

 

22,495,287

Reserves for own shares/ Share repurchase reserve

 

 

 1,109,379

 

974,118

Other reserve

 

 

 190,056

 

                   261,301

Retained earnings

 

 

 74,719,433

 

62,004,344

 

 

 

 98,986,520

 

85,748,675

Non-controlling interest

 

 

 1,141,168

 

1,199,681

Total equity

 

 

 100,127,688

 

86,948,356

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Loans and borrowings

10

 

 2,382,112

 

2,899,754

Lease liabilities

 

 

 232,997

 

367,039

Deferred tax

 

 

 55,290

 

31,481

Total non-current liabilities

 

 

 2,670,399

 

3,298,274

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade payables

 

 

 10,720,814

 

8,520,241

Other payables

 

 

12,696,870

 

14,600,917

Current tax payable

 

 

 6,778,534

 

4,335,388

Loans and borrowings

10

 

 13,213,442

 

10,294,456

Lease liabilities

 

 

 345,787

 

335,238

Total current liabilities

 

 

 43,755,447

 

38,086,240

 

 

 

 

 

 

Total equity and liabilities

 

 

146,553,534

 

128,332,870

 

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

30 June 2020

 

 

 

 

 

 

 

 

 

Reserves

 

 

 

 

 

 

 

 

 

 

Share capital

 

Share premium

 

 

 

Total share capital

 

Reserves for own shares/ Share repurchase reserve

 

Other reserve

 

 

 

 

 

Total reserves

 

Retained earnings

 

 

Total attributable to equity holders of the Group

 

Non-controlling interest

 

Total equity

 

 

 

 

 

 

 $

 

 $

 

 

 

 $

 

 $

 

 

 

 $

 

 

 

 $

 

 $

Restated balance at 31 December 2018 -Audited

 

 

 13,581

 

 

 22,231,662

 

 

22,245,243

 

 

        409,995

 

 

  (26,267)

 

 

383,728

 

 

4,624,202

 

 

77,253,173

 

 

-

 

 

77,253,173

Issue of shares

 

       44

 

   263,625

 

263,669

 

(263,669)

 

                  -  

 

(263,669)

 

                  -  

 

-

 

                     

 

                   -  

Recognition of share-based payments

 

-  

 

                    -  

 

                    -

 

  511,614

 

                  -  

 

511,614

 

                         -  

 

511,614

 

                -  

 

       511,614

Total comprehensive income (loss) profit for the period

 

          -  

 

                 -  

 

 

-

 

                -  

 

           

26,267

 

26,267

 

 

5,095,598

 

         

 5,121,865

 

  

 -

 

 

5,121,865

-

Profit for the period

 

           -  

 

                 -  

 

-

 

                -  

 

                  -  

 

-

 

 5,095,598

 

5,095,598

 

                 -  

 

5,095,598

-

Other comprehensive loss for the period

 

              

  -  

 

                  

 -  

 

 

-

 

           

        -  

 

 

26,267

 

 

26,267

 

                

  -  

 

 

26,267

 

 

-

 

 

 26,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid (1.5 cents per share) - Note 7

 

                   -  

 

               

     -  

 

 

                    -  

 

 

                    -  

 

                  -  

 

                    -  

 

 

(2,043,734)

 

(2,043,734)  

 

 

 

(2,043,734)

Restated balance at 30 June 2019 (Unaudited)

 

 

13,625

 

 

22,495,287

 

 

22,508,912

 

 

   657,940

 

        

-

 

        657,940

 

 

57,676,066

 

         80,842,918

 

 

-

 

 

80,842,918

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2019 - Audited

 

13,625

 

22,495,287

 

22,508,912

 

974,118

 

261,301

 

1,235,419

 

62,004,344

 

85,748,675

 

1,199,681

 

86,948,356

Issue of shares

 

73

 

458,667

 

458,740

 

(458,667)

 

                  -  

 

(458,740)

 

                 -  

 

-

 

                 -  

 

                  -  

Recognition of share-based payments

 

                  -  

 

                    -  

 

-

 

594,001

 

                  -  

 

594,001

 

                   -  

 

594,001

 

                 -  

 

594,001

Allocation of other reserves against goodwill

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(71,245)

 

 

(71,245)

 

 

-

 

 

(71,245)

 

 

-

 

 

(71,245)

Total comprehensive income for the period

 

                   -  

 

 

                    -  

 

 

-

 

 

                    -  

 

                   -  

 

 

-

 

 

13,673,957

 

 

13,673,957

 

 

(58,513)

 

 

13,615,444

-

Profit for the period

 

          -  

 

                -  

 

-

 

                -  

 

                  -  

 

-

 

13,673,957

 

13,673,957

 

  (58,513)  

 

13,615,444

-

Other comprehensive income for the period

 

                   

 -  

 

            

       -  

 

 

-

 

               

    -  

 

                 

  -  

 

 

-

 

           

       -  

 

 

-

 

  

  -

 

       

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid (0.7 cents per share) - Note 7

 

                   -  

 

 

                    -  

 

 

                    -  

 

 

                    -  

 

                   -  

 

                    -  

 

 

(958,868)

 

 

(958,868)

 

 

 

(958,868)

Balance at 30 June 2020 (Unaudited)

 

13,698

 

22, 953,954

 

22,967,652

 

1,109,379

 

190,056

 

1,299,435

 

74,719,433

 

98,986,520

 

1,141,168

 

100,127,688

                                                       

 

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

Six months ended

 

 

 

 

 

 

Notes

 

30 Jun 2020

 

30 Jun 2019

 

 

 

 $

 

 $

 

 

 

 

 

 

Cash flow from operating activities

 

 

 

 

 

 

 

 

 

 

 

Cash generated from operations

11

 

 7,024,547

 

10,464,047

Interest income received

 

 

 179,637

 

168,966

Finance costs paid

 

 

 (566,691)

 

(370,974)

Tax paid

 

 

 (3,129,884)

 

(2,225,440)

Net cash from operating activities

 

 

 3,507,609

 

8,036,599

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

8

 

 (7,046,887)

 

(6,383,879)

Proceeds from disposal of property, plant and equipment

 

 

 19,917

 

227

Acquisition of intangible assets

 

 

 (7,914)

 

-

Acquisition of investments

 

 

 (967,202)

 

(2,132,667)

Proceeds on disposal of investments

 

 

 1,447,800

 

465,980

Net cash from investing activities

 

 

 (6,554,286)

 

 (8,050,339)

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

 

 

 

 

 

Repayment of loans

10

 

 (598,656)

 

(2,000,000)

Proceeds from new loans

10

 

 3,000,000

 

-

Dividend paid

7

 

 (958,868)

 

(2,043,734)

Repayment of lease

 

 

 (179,850)

 

(40,781)

Net cash from financing activities

 

 

 1,262,626

 

(4,084,515)

 

 

 

 

 

 

Total cash movement for the period

 

 

(1,784,051)

 

(4,098,255)

 

 

 

 

 

 

Cash at the beginning of the period

 

 

17,620,623

 

19,888,764

Effect of exchange rate movement on cash balances

 

 

(300,831)

 

(252,142)

Total cash at the end of the period

 

 

15,535,741

 

15,538,367

                       
 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

1.

Basis of presentation and accounting policies

 

 

 

Preparation of the condensed consolidated interim financial statements

 

The condensed consolidated interim financial statements of Capital Limited and Subsidiaries ("Capital" or the "Group") as at and for the six months ended 30 June 2020 (the "Interim Financial Statements"), which are unaudited, have been prepared in accordance with International Accounting Standard ("IAS") No. 34, "Interim Financial Reporting". This condensed interim report does not include all the notes of the type normally included in an Annual Report. They should be read in conjunction with the annual consolidated financial statements and the notes thereto in the Group's Annual Report for the year ended 31 December 2019 which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Interim Financial Statements have been reviewed in terms of International Standard on Review Engagements (ISRE) 2410.

 

 

 

Accounting policies

 

 

 

The condensed consolidated interim financial statements have been prepared under the going concern basis under the historical cost convention, except for certain financial instruments which are measured at fair value.  The same accounting policies, presentation and methods of computation have been followed in these condensed consolidated financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2019.

 

The preparation of financial statements in conformity with IFRS recognition and measurement principles requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management reviews its estimates on an on-going basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates.

 

 

 

Going concern

 

 

 

At the end June 2020, the Group had a robust Balance Sheet, with significant financial resources at its disposal. The Group had a low debt gearing, with equity of $100.1 million and loans and borrowings of $15.6 million. Cash at 30 June 2020 was $15.5 million, with net debt of $0.1 million. Additional investments in listed entities provided additional flexibility as it could easily be converted into cash.

 

 

 

The Group had a $12 Million facility with Standard bank which was due to expire in October 2020. The facility was renewed on 31 July for a further three years at an increased amount of $15 Million.

 

 

 

This robustness is underpinned by stable revenues generated on long term contracts. Revenues generated on mine sites and longer-term contracts make up over 90% of Group revenues. Revenues continued to perform strongly in H1 2020 with increased revenue compared to both H1 2019 and H2 2019.

 

 

 

The Board and Group acknowledge the significant current and future impact of COVID-19 on the global economy and have undertaken a thorough investigation into the potential risk it may have on going concern and working capital.

 

 

 

Although the pandemic continues to create uncertainty globally, mining and production activity have continued uninterrupted at all the Group's operations.

 

 

 

The strong H1 revenue was in line with expectations and demonstrates that the Group has been largely unaffected during the period, however global travel restrictions have impacted expat employee roster rotations with those on site working extended rosters;

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

1.

Basis of presentation and accounting policies (Cont'd)

 

 

 

Going concern (Cont'd)

 

 

 

In response to extended rosters for both expats and nationals, fatigue management policies have been implemented on-site in the form of shortened weekly rosters which reduced on-site activity in the period;

 

 

 

Greenfield exploration activity is marginally affected at the moment as global travel restrictions are limiting the ability to start new projects. The current record gold price is also driving renewed interest in exploration activities.

 

 

 

The Group's portfolio of eight long-term mine-site based contracts provides a level of revenue stability against the global risk exposure created by the COVID-19 pandemic, as mines continue to operate with gold exports continuing;

 

 

 

The Board have considered the potential risks and impact of COVID-19 on the business and note that:

 

 

 

·      90% of the Groups revenue originate in the gold mining sector, a sector that has been very resilient to the impact of the pandemic due to the strict control and containment measures implemented by the active mines;

 

 

 

·      Revenues from gold mines are critical for the support of the economies in which the mines operate, especially in the current macro-economic environment. There is therefore significant industry support from the relevant governments;

 

 

 

·      Gold is currently trading at record levels, creating significant industry interest;

 

 

 

·      The primary client base of the business is predominantly producing gold mining companies, which the Board considers are appearing to be operating in line with expectation.  This opinion is supported by the various market announcements made by the companies;

 

 

 

·      The primary client base is distributed across the African continent, including Tanzania, Egypt and West Africa;

 

 

 

·      To date, despite the pandemic, no client mines have seen a reduction in operations.

 

 

 

As a result, the Board considers that the downside scenario presented by COVID-19 to largely be limited to a temporary reduction in the exploration market, with a fairly minimal impact on the Group. This position is reinforced by the H1 performance and related market announcement.

 

 

 

Despite the above, and to test the robustness of the business to withstand a situation much worse than anticipated, the Board also considered a scenario, which acts as a reverse stress test, where turnover would be severely reduced by up to 42% (to model the situation where, in addition to reduction in the exploration market, major client operations became closed for a sustained period). The Board noted that the model showed that even without taking any other protective steps, other than to reduce planned future capital expenditure and related variable costs, to address the downside, that this could prevail for a sustained period of over eight months without impacting expected facilities and covenants.

 

 

 

As a result, the Board considers the business to be a going concern.

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

2.

Operations in the interim period

 

 

 

Capital Limited is incorporated in Bermuda. The Group provides drilling services including but not limited to exploration, development, grade control and blast hole drilling services to mineral exploration and mining companies located in emerging and developing markets. The Group also provides some equipment rental, information technology services to mining and mining related companies and laboratory analysis of drilling samples related to sample analysis by MSA laboratories.

 

 

 

During the six months ended 30 June 2020, the Group provided drilling services in Egypt, Mauritania, Mali, Tanzania, Burkina Faso, Saudi Arabia and Ivory Coast.

 

 

3.

Taxation

 

 

 

Capital Limited is incorporated in Bermuda. No taxation is payable on the results of the Bermuda business. Taxation for other jurisdictions is calculated in terms of the legislation and rates prevailing in the respective jurisdictions.

 

 

 

The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. In certain of these jurisdictions, the Group has taken income tax positions that management believes are supportable and are intended to withstand challenge by tax authorities. Some of these positions are inherently uncertain and include those relating to transfer pricing matters and the interpretation of income tax laws. The Group periodically reassesses its tax positions. Changes to the financial statement recognition, measurement, and disclosure of tax positions is based on management's best judgement given any changes in the facts, circumstances, information available and applicable tax laws. Considering all available information and the history of resolving income tax uncertainties, the Group believes that the ultimate resolution of such matters will not likely have a material effect on the Group's financial position, statements of operations or cash flows.

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 $

 

 

 

 

 

 

 

 

 

 

 

4.

Goodwill

 

 

 

 

 

 

 

At 31 December 2019

 

 

 

 

 

 

 

Cost

 

 

 

 

 

1,252,348

 

Accumulated amortisation and impairment

 

 

 

 

 

-

 

Net book amount

 

 

 

 

 

  1,252,348

 

 

 

 

 

 

 

 

 

Half year ended 30 June 2020

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

At 01 January 2020

 

 

 

 

 

1,252,348

 

Adjustment to opening balance

 

 

 

 

 

(71,245)

 

At 30 June 2020

 

 

 

 

 

  1,181,103

 

 

 

 

 

 

 

 

 

Accumulated amortisation and impairment

 

 

 

 

 

 

 

At 01 January 2020

 

 

 

 

 

                                   -

 

Amortisation charge

 

 

 

 

 

-

 

At 30 June 2020

 

 

 

 

 

  -

 

 

 

 

 

 

 

 

 

Net book amount

 

 

 

 

 

 

 

At 30 June 2020

 

 

 

 

 

1,181,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

5.

Revenue

 

30 Jun 2020

 

30 Jun 2019

 

 

 

 

 

 

 

 

 $

 

 $

 

Revenue from the rendering of services comprises:

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilling and associated revenue

 

 

             60,256,642

 

             53,926,977

 

Revenue from Surveying

 

 

1,505,718

 

223,400

 

Information technology revenue

 

 

32,138

 

682,094

 

MSALABS revenue

 

 

3,294,874

 

                  -

             

 

 

 

 

 

 

 

 

65,089,372         

 

54,832,471  

 

 

 

 

 

 

6.

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

The profit and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period used in the calculation of basic earnings per share

 

      13,673,957

 

        5,095,598

 

 

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

 

136,639,059

 

        136,027,158

 

 

 

 

 

 

 

Basic earnings per share (cents)

 

                10.0

 

                    3.7

 

 

 

 

 

 

                                             
 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

 

 

 

 

 

 

 

30 Jun 2020

 

30 Jun 2019

 

 

 

 

$

 

$

 

6.

Earnings per share (continued)

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

The profit used in the calculations of all diluted earnings per share measures are the same as those used in the equivalent basic earnings per share measures, as outlined above.

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares used in the calculation of basic earnings per share

 

 136,639,059

 

   136,027,158

 

-  Dilutive share options #

 

         1,675,427

 

350,476

 

Weighted average number of ordinary shares used in the calculation of diluted earnings per share

 

138,314,486

 

136,377,634

 

 

 

 

 

 

 

Diluted earnings per share (cents)

 

9.9

 

3.7

 

 

 

 

 

 

 

# For the purposes of calculating diluted earnings per share, the share options of 2.16 million (2019:  2.16 million) were excluded as they are anti-dilutive as the exercise price is higher than the current share price.

 

 

 

 

7.

Dividends

 

 

 

 

 

During the six months ended 30 June 2020, a dividend of 0.7 cents per ordinary share, totalling $958,868 (six months ended 30 June 2019: 1.5 cents per ordinary share, totalling $2,043,734) was declared and paid.

 

 

 

 

 

 

 

                             

 

 

 

8.

Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

During the six months ended 30 June 2020, the Group acquired $7.0 million (2019: $6.4 million) of drilling rigs and other assets to expand its operations and for the replacement of existing assets.

 

The Group disposed of property, plant and equipment with a net carrying amount of $0.2 million (2019: $0.2 million) during the period. A loss of $0.2 million (2019: $0.2 million) was incurred on the disposal of property, plant and equipment.

 

At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets may be impaired. As at 30 June 2020, there was no indication of impairment.

                                                                                                                               

             

 

 

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

 

 

 

 

 

 

As at

 

 

 

 

 

 

 

 

30 Jun 2020

 

31 Dec 2019

 

 

 

$

 

$

9.

Issued capital and share premium

 

 

 

 

 

 

 

 

 

 

 

Authorised capital

 

 

 

 

 

2,000,000,000 (2019: 2,000,000,000) ordinary shares of 0.01 cents (2019: 0.01 cents) each

 

                200,000

 

                    200,000

 

 

 

 

 

 

 

Issued and fully paid:

 

 

 

 

 

136,980,903 (31 December 2019: 136,248,953) ordinary shares of 0.01 cents (31 December 2019: 0.01 cents) each

 

                     13,698

 

                     13,625

 

 

 

 

 

 

 

Share premium:

 

 

 

 

 

Balance at the beginning of the period

 

22,495,287

 

 22,231,662

 

Issue of shares

 

       458,667

 

     263,625

 

Balance at the end of the period

 

  22,953,954

 

22,495,287

 

 

 

 

 

 

 

On 26th March 2020, the Company issued 731,950 new common shares (valued at $ 458,740) pursuant to the Company's employee incentive scheme. The shares rank pari passu with the existing ordinary shares.  Fully paid ordinary shares which have a par value of 0.01 cents, carry one vote per share and carry rights to dividends.

 

 

10.

Long term liabilities

 

 

 

 

 

 

 

 

 

 

 

Long term liabilities consist of:

 

 

 

(a) $12 million revolving credit facility ("RCF") provided by Standard Bank (Mauritius) Limited

 

The Facilities Agreement was renewed for 15 million on 31 July 2020. The interest rate on the RCF is the prevailing three-month US LIBOR (payable in arrears) plus a margin of 5.75%, and an annual commitment fee of 1.5% of the undrawn balance. The amount utilised on the RCF is $12 million as at 30 June 2020. 

 

 

 

Under the terms of the RCF, the group is required to comply with certain financial covenants relating to:

 

·      Interest coverage

 

·      Gross debt to EBITDA ratio

 

·      Debt to equity ratio

 

·      Tangible net worth

 

 

 

Security for the Standard Bank (Mauritius) Limited facility comprises:

 

> Upward corporate guarantees from Capital Drilling (T) Limited, Capital Drilling (Botswana) Proprietary Limited and Capital Limited.

 

> A negative pledge over the assets of Capital Drilling (T) Limited and Capital Limited.

 

 

 

As at the reporting date and during the period under review, the Group has complied with all covenants attached to the loan facilities.

 

 

 

(b) $ 3.8 million credit facility provided by Epiroc Financial Solutions AB for the purchase of five rigs.

 

The loan will be repaid in 46 monthly payments in arrears at a fixed rate of interest of 8.47% annually. The first instalment was paid in January 2020.

 

 

 

 

                             
 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

 

 

$

 

$

10.

Long term liabilities (continued)

 

 

 

(c) $ 0.2 million hire purchase agreement with Ma'aden Barrick Copper Company for the purchase of 1 rig.

 

The lease is repayable by a fixed monthly instalment over 24 months. The first instalment was paid in April 2020.

 

 

 

 

 

 

 

Balance at 1 January

 

     13,194,210

 

      9,029,884

 

Amounts received during the 6-month period/year

 

3,000,000

 

2,000,000

 

Credit facility received for the purchase of rigs

 

-

 

3,971,650

 

Interest accrued during the 6-month period/year

 

         522,470

 

851,968

 

Interest paid during the 6-month period/year

 

        (522,470)

 

(659,292)

 

Principal repayments during the 6-month period/year

 

     (598,656)

 

     (2,000,000)

 

 

 

      15,595,554

 

      13,194,210

 

Less: Current portion included under current liabilities

 

       (13,213,442)

 

       (10,294,456)

 

Due after more than one year

 

2,382,112

 

2,899,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

11.

Cash from operations

 

30 Jun 2020

 

30 Jun 2019

 

 

 

 

 

 

 

Profit before taxation

 

 19,125,339

 

         7,588,485

 

Adjusted for:

 

 

 

 

 

-     Depreciation

 

 5,546,806

 

          4,729,080

 

-     Loss on disposal of property, plant and equipment

 

 

178,790

 

            

198,999

 

-     Realised gain on FVTOCI shares

 

 114,663

 

                          -  

 

-     Fair value adjustment on financial assets through profit and loss

 

 

(9,978,513)

 

 

          (259,262)

 

-     Share based payment expense

 

 594,001

 

             511,615

 

-     Interest income

 

 (179,637)

 

            (168,966)

 

-     Finance charges

 

 566,691

 

               391,899

 

-     Share of loss from associate

 

 -  

 

               227,904

 

-     IFRS 16 depreciation on rights of use assets

 

 185,395

 

                 49,821

 

-     Unrealised foreign exchange loss on foreign currency held

 

 

 300,831

 

      

        252,142

 

Operating profit before working capital changes

 

 16,454,366

 

         13,521,717

 

 

 

 

 

 

 

Adjustments for working capital changes:

 

 

 

 

 

-    Decrease in inventory

 

 (1,208,872)

 

           1,406,768

 

-    Decrease / (Increase) in trade and other receivables

 

 

 (8,517,473)

 

 

         (4,029,566)

 

  Decrease in trade and other payables

 

 296,526

 

           (434,872)

 

 

 

 7,024,547

 

        10,464,047

 

 

 

 

 

 

                                 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

12.

Segmental analysis

 

 

 

 

 

 

 

 

 

 

 

Operating segments are identified on the basis of internal management reports regarding components of the Group. These are regularly reviewed by the Chairman in order to allocate resources to the segments and to assess their performance. Operating segments are identified based on the regions of operations. For the purposes of the segmental report, the information on the operating segments have been aggregated into the principal regions of operations of the Group. The Group's reportable segments under IFRS 8 are therefore:

 

-   Africa:

Derives revenue from the provision of drilling services, surveying, IT support services and mineral assaying.

 

-   Rest of world:

Derives revenue from the provision of drilling services, surveying, IT support services and mineral assaying.

 

 

 

 

 

Segment revenue and results:

 

 

For the six months ended 30 June 2020

Africa

 

Rest of World

 

Consolidated

 

 

$

 

$

 

$

 

External revenue

   63,158,081

 

1,931,291

 

65,089,372

 

 

 

 

 

 

 

 

Segment profit (loss)

   20,046,732

 

(9,464,201)

 

10,582,531

 

 

 

 

 

 

 

 

Central administration costs and depreciation, net of other income

 

 

 

 

(933,988)

 

Profit from operations

 

 

 

 

9,648,543 

 

Realised loss on disposal of FVTPL shares

 

 

 

 

(114,663)

 

Fair Value gain on FVTPL Investments

 

 

 

 

9,978,513

 

Interest income

 

 

 

 

179,637

 

Share of losses from associate

 

 

 

 

-

 

Finance charges

 

 

 

 

(566,691)

 

 

 

 

 

 

   19,125,339

                     

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

12.

Segmental analysis (continued)

 

 

 

 

 

 

 

 

 

 

 

For the six months ended 30 June 2019

Africa

 

Rest of World

 

Consolidated

 

 

$

 

$

 

$

 

External revenue

   54,317,249

 

515,222

 

54,832,471

 

 

 

 

 

 

 

 

Segment profit (loss)

15,744,899

 

(7,131,884)

 

8,613,015

 

 

 

 

 

 

 

 

Central administration costs and depreciation, net of other income

 

 

 

 

      (691,715)

 

Profit from operations

 

 

 

 

      7,921,300

 

Realised loss on disposal of FVTOCI shares

 

 

 

 

       (141,240)

 

Fair value adjustment on financial assets through profit and loss - Share Options

 

 

 

 

         

259,262

 

Interest income

 

 

 

 

         168,966

 

Share of income from associate

 

 

 

 

       (227,904)

 

Finance charges

 

 

 

 

       (391,899)

 

Profit before tax

 

 

 

 

7,588,485

 

 

 

 

 

 

 

 

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 1. Segment profit/(loss) represents the profit/(loss) earned by each segment without allocation of central administration costs, depreciation, interest income, share of losses from associate, finance charges and income tax. This is the measure reported to the Chairman for the purpose of resource allocation and assessment of segment performance.

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

 

 

 

 

30 Jun 2020

 

31 Dec 2019

 

 

 

$

 

$

 

Segment assets:

 

 

 

 

Africa

 214,767,498

 

184,635,830

 

Rest of world

 33,176,380

 

          29,823,155

 

Total segment assets

 247,943,878

 

214,458,985

 

Head office companies

 155,102,281

 

138,073,761

 

 

 403,046,159

 

352,532,746

 

Eliminations *

 (256,492,625)

 

(224,199,876)

 

Total assets

 146,553,534

 

128,332,870

 

 

 

 

 

 

Segment liabilities:

 

 

 

 

Africa

 110,384,672

 

85,462,428

 

Rest of world

 25,638,315

 

28,745,632

 

Total segment liabilities

 136,022,987

 

114,208,060

 

Head office companies

 160,547,594

 

145,304,748

 

 

 296,570,581

 

259,512,808

 

Eliminations *

 (250,144,735)

 

(218,128,294)

 

Total liabilities

 46,425,846

 

41,384,514

                               
 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

 

 

12.

Segmental analysis (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the purposes of monitoring segment performance and allocating resources between segments the Chairman monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable segments with the exception of property, plant and equipment used by the head office companies, certain amounts included in other receivables, and cash and cash equivalents held by the head office companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Eliminations include inter-group accounts receivable, inter-group accounts payable and inter-group investments.

 

 

 

 

 

Other segment information:

 

 

 

Six months ended

 

 

Non-Cash items included in profit or loss:

30 Jun 2020

 

30 Jun 2019

 

 

 

$

 

$

 

 

Depreciation

 

 

 

 

 

Africa

4,798,213

 

4,037,365

 

 

Rest of world

382,842

 

24,361

 

 

Total segment depreciation

5,181,055

 

4,061,725

 

 

Head office companies

551,146

 

667,355

 

 

 

 

 

 

 

 

 

5,732,201

 

4,729,080

 

 

 

Loss on disposal of property, plant and equipment

 

 

 

 

 

Africa

160,966

 

194,574

 

 

Rest of world

2,660

 

4,425

 

 

Total segment loss on disposal

163,626

 

198,999

 

 

Head office companies

15,164

 

-

 

 

 

          178,790

 

          198,999

 

Impairment on Inventory

 

 

 

 

Africa

 

 

 

 

Stock Provision

403,494

 

452,942

 

Stock Write Offs

177,369

 

28,426

 

 

580,863

 

481,368

 

Rest of world

 

 

 

 

Stock Provision

  (347,345)

 

  -

 

Stock Write Offs

 1,086

 

 850

 

 

(346,259)

 

850

 

Total segment impairment

234,604

 

482,218

 

Head office companies

 -

 

 -

 

234,604

 

482,218

                         
 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

 

 

 

 

 

 

 

Six months ended

 

 

 

 

 

 

 

 

30 Jun 2020

 

30 Jun 2019

 

 

 

$

 

$

12.

Segmental analysis (continued)

 

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

 

 

Africa

6,557,062

 

5,162,793

 

Rest of world

678,737

 

-

 

Total segment additions

7,235,799

 

           5,162,793

 

Head office companies

(188,912)

 

           1,221,086

 

 

7,046,887

 

           6,383,879

 

 

 

 

 

 

Information about major customers

 

 

 

 

 

 

 

 

 

Included in revenues arising from the Africa segment are revenues of approximately $35.4 million (2019: $41.0 million) which arose from sales to customers that represent more than 10% of the Group's revenue. 

 

 

 

 

 

 

 

 

 

 

 

13.

Commitments

 

 

 

 

 

 

 

 

 

 

The Group has the following capital commitments at 30 June:

 

 

 

 

 

 

 

 

 

Committed capital expenditure

11,617,926

 

            5,248,512

 

 

 

 

 

 

The Group has outstanding purchase orders amounting to $13.9 million (including committed capital expenditure as disclosed above) at 30 June 2020 (30 June 2019: $7.2 million).

 

14.

Contingencies

 

Zambia Tax:

 

As disclosed in the prior year Financial Statements, Capital Drilling (Zambia) Limited is a party to various tax claims made by the Zambian Revenue Authority for the tax years 2007 to 2013. On 30 April 2015, the Company received a tax assessment from the Zambian Revenue Authority totalling ZMW 144.1 million ($ equivalent: $13.1 million), inclusive of penalties and interest. The claims relate to various taxes, including income tax, value added tax, payroll tax and withholding tax. Since the assessment date, Management has responded in detail to these claims, providing the Zambian Revenue Authority with detailed analysis and arguments justifying the Company's tax position. No amount has yet been paid in this regard and no additional communication or actions were received from the Zambian Revenue Authority during the 2020 financial year regarding this matter. Capital Drilling (Zambia) Limited is currently dormant with no drilling revenue since November 2014. An amount of $1.6 million was raised in 2015 relating to certain areas of the claim, however the Directors are of the opinion that a significant portion of the tax claim by the Zambian Revenue Authority is without merit.

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

14.

Contingencies (continued)

 

 

 

Tanzania tax:

 

 

 

As disclosed in the prior year Financial Statements, Capital Drilling (T) Ltd is party to a payroll tax claim made by the Tanzanian Revenue Authority (TRA) for the tax years 2009-2015. During the financial year ended 31 December 2016, the company received an immediate demand notice from the TRA for Tanzanian Shillings (TZS) of 18.6 billion ($8.4 million), inclusive of penalties and interest. Management objected to the assessment raised by the TRA and requested the calculations of the notice. In order to object, according to Tanzanian Tax Law Sections 51(1) and (5) of the TAA 2015, a taxpayer is required to pay the tax amount not in dispute or one third of the assessed tax whichever is greater. It is prudent to note that the Finance Act in 2016 added a further subsection (9) in Section 51 regarding tax objections and assessments. The said amendment provides: "Where the taxpayer fails to pay the amount stated under subsection (5) within the time provided therein, the assessed tax decision shall be confirmed as final tax assessment in terms of section 15(1) (a) of the Tax Revenue Appeals Act." In accordance with the above-mentioned legislation, Management reached an agreement with the TRA to pay TZS1.5 billion ($0.7 million) in lieu of the one third of the assessed value. This amount was fully provided for in the 2016 Annual Financial Statements. In June 2017 the TRA provided their workings to Capital Drilling (T) Ltd. Capital Drilling (T) Ltd identified differences with the TRA on both the specific merits and methodology used to determine the value. In order to  continue the discussions and negotiations with the TRA, Capital Drilling (T) Ltd has, at the request of the TRA, paid an additional amount of TZS1.1 billion ($0.4 million), increasing the total amount paid to TZS2.6 billion ($1.1 million) as at 31 December 2018. This is in line with the aforementioned Tanzanian Tax Law. The company is of the position that the $1.1 million provided and paid as the full liability. On 3 February 2020, the TRA issued an updated assessment of TZS22.5 billion ($9.8 million) which comprises of a principal amount of TZS7.3 billion ($3.2 million) and interest TZS15.2 billion ($6.6 million). As per Section 48 quoted in the assessment, the company is entitled to appeal and has already done so - the matter is currently on the roll of the TRAAB (Tanzanian Revenue Authority Appeals Board) awaiting a date. Capital Drilling (T) Ltd is confident with the position presented to the TRA and continues its engaging relationship to find closure and resolution to this matter.

 

 

 

Mauritania tax:

 

 

 

Capital Drilling Mauritania SARL is a party to various tax claims made by the Mauritanian Revenue Authority (MRA) for the tax years 2016-2018. On 20 February 2020, the company received a tax assessment totalling MRU105.0 million, inclusive of penalties and interest ($2.8 million). The claims relate to various taxes, including Minimum Income Tax, VAT, Corporate Income Tax, Securities Tax and Apprentice Tax. Management has responded to these claims in detail, strongly refuting the position taken by the MRA. An amount of MRU 68 million ($1.8 million) has been provided. A number of follow up meetings have occurred where additional information has been provided, but to date no Final assessment has been received to date and negotiations are ongoing.

 

 

15.

Events post the reporting date

 

 

 

The directors proposed that an interim dividend of 0.9 cent per share be paid to shareholders on 25 September 2020. This dividend has not been included as a liability in these condensed consolidated interim financial statements. The proposed dividend is payable to all shareholders on the Register of Members on 04 September 2020. The total estimated interim dividend to be paid is $1.2 million (2019: $1.0 million). The payment of this dividend will have no tax consequences for the group.

 

 

 

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

For the six months ended 30 June 2020

 

 

 

 

 

 

15.

Events post the reporting date (Cont'd)

 

 

 

 

 

 

 

In order to supplement MSA's growth in West Africa and to service significant customers in CDI, MSALABS acquired a 100% shareholding in ELAM on 1 July 2020, a laboratory in Yamoussoukro, Côte d'Ivoire. ELAM is a mineral assay laboratory capable of providing Fire, BLEG and ICP-OES assaying, with plans to increase its capabilities in the near future. The purchase consideration is US$1.9 million payable in tranches, pending conditions subsequent. At the time of approving the interim financial statements, the purchase price allocation, fair value of consideration payable and goodwill assessments has not yet been completed by management. Therefore, the related disclosures in this regard are not made within these interims.

 

 

 

 

 

 

 

The RCF provided by Standard Bank (Mauritius) Limited to Capital Drilling (Mauritius) Ltd was renewed for 15 million on 31 July 2020. The interest rate on the RCF is the prevailing three-month US LIBOR (payable in arrears) plus a margin of 5.75%, and an annual commitment fee of 1.5% of the undrawn balance. The facility will expire in July 2023.

 

 

 

 

 

 

16.

Financial instruments

 

 

 

 

 

 

(a)

Fair value hierarchy

 

 

 

 

 

 

 

Financial instruments that are measured in the consolidated statement of financial position or disclosed at fair value require disclosure of fair value measurements by level based on the following fair value measurement hierarchy:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1:

quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

 

 

Level 2:

inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

 

 

 

Level 3:

inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

 

 

 

 

30 Jun 2020

 

31 Dec 2019

 

 

 

 

 

 

 

 $

 

 $

 

Fair Value investment through profit and loss

 

 

 

 

 

Level 1 - Listed shares

 

11,978,780

 

6,695,958

 

Level 3 - Unlisted shares

 

 

 

10,540,851

 

5,483,947

 

Financial instruments at amortised cost

 

720,000

 

357,200

 

23,239,631

 

12,537,105

 

 

 

 

The reconciliation of the investment valuations from 1 January 2020 to 30 June 2020 is as follows:

 

 

 

 

Level 1

 

Level 3

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2020

 6,695,958

 

 5,841,147

 

 12,537,105

 

 

 

Additions

 967,202

 

 1,319,274

 

2,286,476

 

 

 

Disposal

 (864,186)

 

 (698,277)

 

 (1,562,463)

 

 

 

Fair value gain

 5,179,806

 

 4,798,707

 

 9,978,513

 

 

 

At 30 June 2020

 11,978,780

 

 11,260,851

 

 23,239,631

 

 

 

 

 

                                     
 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

16.

Financial instruments (continued)

 

 

(a)

Fair value hierarchy (cont'd)

 

 

Level 1

 

Level 3

 

Total

 

 

 

 

 

 

 

 

At 1 January 2019

 2,961,491

 

 2,743,622

 

 5,705,113

 

Additions

 6,682,412

 

 3,000,000

 

 9,682,412

 

Disposal

 (1,844,411)

 

 -  

 

 (1,844,411)

 

Fair value (loss)/gain

 (1,103,534)

 

 97,525

 

 (1,006,009)

 

At 31 December 2019

 6,695,958

 

 5,841,147

 

 12,537,105

 

 

(b)

Fair value information

 

 

 

Level 1 shares

 

Market approach - Listed share price.

 

 

 

The Company's interests in various listed shares are valued at the 30 June 2020 closing prices. No secondary valuation methodologies have been considered as all the Company's investments are listed on active markets.

 

 

 

Level 3 shares

 

Market Approach - Market Comparables applying Directors' estimate.

 

 

 

The Directors considered the most appropriate valuation methodology is a multiples-based approach based on comparing the enterprise values of a peer group with their respective mineral reserves and resources.

 

 

 

The average multiple from peer analysis was applied to the reserves and resources of each level 3 company to arrive at an estimated enterprise value. An adjustment was then made to arrive at an estimated equity valuation from which the value of the level 3 shareholding was determined.

 

 

 

For the level 3 investments in exploration-phase companies, the Directors considered a peer group of mines of junior exploration companies with West African assets. An average multiple of enterprise values to mineral resources (comprising resources in each of measured, indicated and inferred categories) of USD13/oz was used in the valuation.

 

 

 

For the level 3 investments in companies with a portfolio of assets (including production, development and exploration phases), the Directors considered a peer group comprising of mid-sized, producing companies with primarily West African assets. Average multiples of enterprise value to mineral reserves and enterprise value to mineral resources (comprising resources in each of measured, indicated and inferred categories) of USD311/oz and USD126/oz, respectively, were used in the valuation.

 

 

 

For the purposes of the disclosures required by IFRS 13, if the reserves and resources increased by 25% across all the level 3 companies, with all other indicators unchanged, in aggregate the level 3 investment value included in the balance sheet would increase from USD9.6 million to USD11.8 million. The related fair value increase of USD2.2 million would be recognised in profit and loss. Alternatively, if the average multiples used decrease by 25%, with all other indicators unchanged, in aggregate the level 3 investment value included in the balance sheet would decrease from USD9.6 million to USD7.4 million. The related fair value decrease of USD2.2 million would be recognised in profit and loss.

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020

 

 

16.

Financial instruments (continued)

 

 

(c)

Transfers between levels 1 and 3

 

 

 

There were no transfers between the levels of the fair value hierarchy in the six months to 30 June 2020.

 

 

(d)

Fair values of other financial instruments

 

 

 

The group also has other financial instruments which are not measured at fair value in the statement of financial position. The directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements are approximately equal to their fair values.

 

 

 

 

CAPITAL LIMITED

STATEMENT OF DIRECTORS' RESPONSIBILITY

For the six months ended 30 June 2020

 

 

 

 

The directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the condensed consolidated interim financial statements and related information. 

 

The directors are also responsible for the Group's systems of internal financial control.  These are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain accountability for the Group's assets, and to prevent and detect misstatement and loss.  Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the six months under review.

 

 

 

 

 

 

 

We confirm that to the best of our knowledge:

 

 

 

a)

the condensed set of consolidated interim financial statements, which has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Boards gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group as required by FCA's Disclosure and Transparency Rules DTR4.2.4R;

 

b)

the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR4.2.8R; and

 

c)

there has been no significant individual related party transactions during the first six months of the financial year and nor have there been any significant changes in the Group's related party relationships from those reported in the Group's annual financial statement for the year ended 31 December 2019.

 

 

The condensed consolidated interim financial statements have been prepared on the going concern basis since the directors believe that the Group has adequate resources in place to continue in operation for the foreseeable future.

 

The condensed consolidated interim financial statements were approved by the board of directors on 19 August 2020.

 

 

 

 

 

 

 

 

 

 

 

 

ON BEHALF OF THE DIRECTORS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jamie Boyton

 

 

 

 

 

 

 

Chairman of the Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brian Rudd

 

 

 

 

 

 

 

Executive Director

 

 

 

 

 

 

                           
 

 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties

 

The Group operates in environments that pose various risks and uncertainties. Aside from the generic risks that face all businesses, the Group's business, financial condition or results of operations could be materially and adversely affected by any of the risks described below.

These risks should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties, nor are they listed in order of magnitude or probability. Additional risks and uncertainties that are not presently known to the Directors, or which they currently deem immaterial, may also have an adverse effect on the Group's operating results, financial condition and prospects.

The principal risks associated with the business are:

Area

Description

Mitigation

Fluctuation in levels of mining activity

The Group is highly dependent on the levels of mineral exploration, development and production activity within the markets in which it operates.   A reduction in exploration, development and production activities, or in the budgeted expenditure of mining and mineral exploration companies, will cause a decline in the demand for drilling rigs and drilling services, as was evident in the 2014 and 2015 financial years.

The Group is seeking to balance these risks by building a portfolio of long-term drilling contracts and expanding into new geographic areas. The focus on long-term contracts is evidenced by the award of three new multi-year contracts in 2020, together with post period-end contract extensions at Syama, North Mara and Geita Gold Mines. Expansion in West Africa has further diversified our revenue streams. With the acquisition of a Mineral Assay business that operates in both the Americas and Africa, we have further diversified the risk.

Reliance on key customers

The Group's revenue is reliant on a small number of key customers. The loss of a key customer, or a significant reduction in the demand for drilling provided to a key customer will have a significant adverse effect on the Group's revenues.

The Group has entered into long-term contracts with its key customers for periods between 2 to 5 years. Contract renewal negotiations are initiated well in advance of expiry of contracts to ensure contract renewals are concluded without interruption to drilling services.

The Group has and continues to monitor projects closely and invest a significant amount of time into client relationship and service level monitoring at all levels of the business. A key part of this process is the quarterly project steering committee meetings with key client stakeholders that provide a forum for monitoring and reporting on project performance and performance indicators, contractual issues, pricing and renewal. The West Africa expansion is intended to negate the customer concentration risk. During 2020, of the 11 new exploration contracts, eight are with new clients and a further three long-term contracts were added to the portfolio.

Key personnel and staff retention

The Group's ability to implement a strategy of pursuing expansion opportunities is dependent on the efforts and abilities of its Executive Directors and senior managers. In addition, the Group's operations depend, in part, upon the continued services of certain key employees. If the Group loses the services of any of its existing key personnel without timely and suitable replacements or is unable to attract and retain new personnel with suitable experience as it grows, the Group's business, financial condition, results of operations and prospects may be materially and adversely affected. In addition, business may be lost to competitors which members of senior management may join after leaving their positions with the Group.

 

The Group has expanded capabilities in the areas of business development, supply chain, finance, training and health and safety and continues to do so through the recruitment of senior managers in the various fields, implementing comprehensive training programmes and providing employees with international exposure in their fields.

The Group has also implemented remuneration and incentive policies that seeks to recruit suitable talent and to remunerate talent at levels commensurate with market levels.

Operating risks

Operations are subject to various risks associated with drilling including, in the case of employees, personal injury, malaria and loss of life and in the Group's case, damage and destruction to property and equipment, release of hazardous substances into the environment and interruption or suspension of drill site operations due to unsafe drill operations. The occurrence of any of these events could adversely impact the Group's business, financial condition, results of operations and prospects, lead to legal proceedings and damage the Group's reputation. In particular, clients are placing an increasing focus on occupational health and safety, and a deterioration in the Group's safety record may result in the loss of key clients.

The Executive Chairman, Executive Leadership Team and managers provide leadership to projects on the management of these risks and actively engage with employees at all levels. The Group have implemented and continue to monitor and update a range of health and safety policies and procedures including equipment standards and standard work procedures. Employees are provided with training regarding risks associated with their employment, policies and standard work procedures.

Health and Safety statistics and incident reports are monitored throughout our projects and the various management structures of the Group, including the HSSE committee. Where necessary policies and procedures are updated to reflect developments and improvement needs.

The Executive - HSEQ monitors high risk events in areas of operation and distributes warnings and guidance as required.

The Group acknowledges it has a business risk due to the global outbreak of COVID-19. The primary direct risk factors are closure of mine sites due to an outbreak/preventative measures and the inability of expatriates (both the Group and its clients) to travel to and from site. The Group is in regular contact with its clients to manage this risk. Business continuity measures have already been implemented including limiting all non-essential business travel, monitoring and issuing regular updates on measures taken by governments and institutions to limit the spread and re-enforcing appropriate hygiene measures as per the guidance of medical professionals.

Currency fluctuations

The Group's contract pricing is in US dollars. However, in certain markets the funds are received in local currency and some of the Group's costs are in other currencies in the jurisdictions in which it operates.   Foreign currency fluctuations and exchange rate risks between the value of the US dollar and the value of other currencies may increase the cost of the Group's operations and could adversely affect the financial results.  As a result, the Group is exposed to currency fluctuations and exchange rate risks. 

 

To minimise the Group's risk, the Group tries to match the currency of operating costs with the currency of revenue. Funds are pooled centrally in the head office bank accounts to the maximum extent possible. The Group have implemented procedures to allow for the repatriation of funds to the Group's Head Office bank accounts from jurisdictions where exchange control regulations are in effect. Despite the improved repatriation achieved in 2019, there is continuous focus on improvement. The Treasury Manager has also implemented new procedures to minimise foreign exchange risks.

Political, economic and legislative risk

The Group operates in a number of jurisdictions where the political, economic and legal systems are less predictable than in countries with more developed industrial structures.  Significant changes in the political, economic or legal landscape in such countries may have a material effect on the Group's operations in those countries.  Potential impacts include restrictions on the export of currency, expropriation of assets, imposition of royalties or other taxes targeted at mining companies, and requirements for local ownership.  Political instability can also result in civil unrest, industrial action and nullification of existing agreements, mining permits or leases.  Any of these may adversely affect the Group's operations or results of those operations. 

The Group has invested in a number of countries thereby diversifying exposure to any single jurisdiction.

The Group monitors political and regulatory developments in the jurisdictions it operates through a number of service providers and advisors.

The Group engages specialist consultants to ensure tax compliance is maintained at the highest levels and to provide assistance where tax audits are performed by the Tax Authorities.

Senior management regularly reports to the Board on any political or regulatory changes in the jurisdictions we operate in.

Where significant events occur, we work closely with our clients, advisors and other stakeholders to address these events.

 

Technological risk

New Innovation has the possibility of changing an industry with regards to methods and equipment, giving a cost or productivity advantage.

Representatives from the Executive are constantly in contact with the OEMs and attend all major trade and industry trade shows. The ELT team consist of significant experience and knowledge in the operational field and are aware of all new industry developments. The Group's rigs are outfitted with the latest safety equipment as the technology is proven, providing a competitive advantage.

 

 

 

CAPITAL LIMITED

APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

The following terms and alternative performance measures are used in the half year results release for the six months ended 30 June 2020.

 

 

 

ARPOR

Average revenue per operating rig

 

EBITDA

Earnings before interest, taxes, depreciation, amortisation and fair value gain/loss

 

NET CASH (DEBT)

Cash and cash equivalents less short term and long-term debt

 

NET ASSET VALUE PER SHARE (CENTS)

Total equity/ Weighted average number of ordinary shares

 

RETURN ON CAPITAL EMPLOYED

EBIT/Total assets-current liabilities

 

RETURN ON TOTAL ASSETS

EBIT/Total assets

 

 

 

 

Reconciliation of alternative performance measures to the financial statements:

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

 

 

 

 

 

 

 

 

30 Jun 2020

 

30 Jun 2019

 

 

 

 

 

 

 

 

 

 

$

 

$

 

ARPOR can be reconciled from the financial statements as per the below:

 

Revenue per financial statements ($)

 

 

65,089,372

 

 54,832,471

 

Non-drilling revenue ($)

 

 

           (7,376,450)

 

    (2,753,339)

 

Revenue used in the calculation of ARPOR ($)

 

 

           57,712,922

 

     52,079,132

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly Average active operating Rigs

 

 

                          57

 

                    48

 

Monthly Average operating Rigs

 

 

                          99

 

                    91

 

ARPOR (rounded to nearest $'000)

 

 

                170,000

 

          183,000

 

 

 

 

EBITDA can be reconciled from the financial statements as per the below:

 

 

 

Profit for the period

 

 

 

 

 

13,615,444

 

5,095,598

 

Depreciation

 

 

5,732,201

 

   4,729,080

 

Taxation

 

 

5,509,895

 

    2,492,887

 

Share of losses (gain) from associate

 

 

-

 

227,904

 

Interest income

 

 

(179,637)

 

    (168,966)

 

Finance charges

 

 

566,691

 

       391,899

 

Fair value adjustments

 

 

 

 

 

(9,863,851)

 

     (118,022)

 

EBITDA

 

 

15,380,744

 

 12,650,380

 

 

 

 

 

 

 

 

Operating profit (EBIT)

 

 

 9,648,543

 

 7,921,300

 

Depreciation, amortisation and impairments

 

 

 5,732,201

 

 4,729,080

 

EBITDA

 

 

 15,380,744

 

 12,650,380

 

 

 

 

 

 

 

 

Gross profit

 

 

 25,657,447

 

 21,422,736

 

Administration expenses

 

 

 (10,276,703)

 

 (8,772,356)

 

EBITDA

 

 

 15,380,744

 

 12,650,380

 

Net cash (debt) can be reconciled from the financial statements as per the below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 Jun 2020

 

31 Dec 2019

 

 

 

 

 

 

 

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

            15,535,741

 

17,620,623

 

Long-term liabilities

 

 

           (2,382,112)

 

   (2,899,754)

 

Current portion of long-term liabilities

 

 

        (13,213,442)

 

 (10,294,456)

 

Net cash (debt)

 

 

               (59,813)

 

    4,426,413

 

 

CAPITAL LIMITED

APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNREVIEWED) (Continued)

 

 

 

 

 

Net Asset Value per share (cents) can be calculated as per the below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 Jun 2020

 

31 Dec 2019

 

 

 

 

 

 

 

 

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Equity

 

 

98,986,520

 

85,748,675

 

 

Weighted average number of ordinary shares used in the calculation of basic earnings per share

 

 

           136,639,059

 

    136,138,967

 

 

Net Asset Value per share (Cents)

 

 

                       72.44

 

              62.99

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

EBITDA represents profit or loss for the year before interest, income taxes, depreciation & amortisation and fair value adjustments on financial assets at fair value through profit and loss and realised gain (loss) on FVTOCI shares.

 

EBITDA is non-IFRS financial measures that is used as supplemental financial measures by management and external users of financial statements, such as investors, to assess our financial and operating performance. These non-IFRS financial measures will assist our management and investors by increasing the comparability of our performance from period to period.

 

We believe that including EBITDA assists our management and investors in: -

i.      understanding and analysing the results of our operating and business performance, and

ii.     monitoring our ongoing financial and operational strength in assessing whether to continue to hold our shares. This is achieved by excluding the potentially disparate effects between periods of depreciation and amortisation, income (loss) from associate, interest income, finance charges, fair value adjustment on financial assets at fair value through profit and loss and realised gain (loss) on FVTOCI shares, which may significantly affect comparability of results of operations between periods.

 

EBITDA has limitations as analytical tools and should not be considered as alternatives to, or as substitutes for, or superior to, profit or loss for the period or any other measure of financial performance presented in accordance with IFRS. Further other companies in our industry may calculate these measures differently from how we do, limiting their usefulness as a comparative measure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
                                                       

 

 

Net cash (debt)

 

Net cash (debt) is a non-GAAP measure that is defined as cash and cash equivalents less short term and long-term debt.

Management believes that net cash (debt) is a useful indicator of the Group's indebtedness, financial flexibility and capital structure because it indicates the level of borrowings after taking account of cash and cash equivalents within the Group's business that could be utilised to pay down the outstanding borrowings. Management believes that net debt can assist securities analysts, investors and other parties to evaluate the Group. Net cash (debt) and similar measures are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. Accordingly, caution is required in comparing net debt as reported by the Group to net cash (debt) of other companies.

 

 

CAPITAL LIMITED

APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNREVIEWED) (Continued)

 

Net Asset Value per share (cents)

 

Net Asset Value per share (cents) is a non-financial measure taking into consideration the total equity over the weighted average number of shares used in the calculation of basic earnings per share.

 

Management believe that the net asset value per share is a useful indicator of the level of safety associated with each individual share because it indicates the amount of money that a shareholder would get if the Group were to liquidate. Management believes that net asset value per share can assist securities analysts, investors and other parties to evaluate the Group.

 

Net asset value per share and similar measures are used by different companies for different purposes and are often calculated in ways that reflect the circumstances of those companies. Accordingly, caution is required when comparing net asset value per share as reported by the Group to net asset value per share of other companies.

 

 

Average revenue per operating rig

ARPOR is a non-financial measure defined as the monthly average drilling specific revenue for the period divided by the monthly average active operating rigs. Drilling specific revenue excludes revenue generated from shot crew, a blast hole service that does not require a rig to perform but forms part of drilling.  Management uses this indicator to assess the operational performance across the board on a period by period basis even if there is an increase or decrease in rig utilisation.

 

 

 


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