REG - Capital Limited - Interim Results
18/08/2022 07:00
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RNS Number : 3886W Capital Limited 18 August 2022
For Immediate Release 18 August 2022
Capital Limited
("Capital", the "Group" or the "Company")
H1 Results
Capital Limited (CAPD:LN), a leading mining services company, today announces
half year results for the period 1 January to 30 June 2022 (the "Period").
HALF YEAR RESULTS FOR THE PERIOD ENDED 30 JUNE 2022*
H1 2022 H1 2021 % change
Revenue ($ m) 138.1 98.7 39.9%
EBITDA(1) ($ m) 41.4 28.4 45.8%
EBIT(1) ($ m) 28.0 20.2 38.6%
Adjusted net profit(2) ($ m) 19.9 12.7 56.7%
Investment (Losses) / Gains ($ m) (10.3) 5.7 (280.7)%
Net Profit After Tax ($ m) 9.7 18.4 (47.3)%
Cash From Operations ($ m) 34.9 5.4 546.3%
Capex(3) ($ m) 22.6 35.0 (35.4)%
Earnings per Share
Basic (adjusted)(2) (cents) 10.5 6.7 56.7%
Basic (cents) 4.7 9.8 (52.0)%
Interim Dividend per Share (cents) 1.3 1.2 8.3%
Adjusted ROCE (%) (4) 24.6 22.5 9.4%
Net cash / (debt) ($m) (36.4) (32.8) 11.0%
Net Debt/Equity (%) 16.3 20.1 (18.9)%
Investments ($m) 47.3 31.0 52.6%
Adjusted Net Cash (Including Investments) ($ m) 10.9 (1.8) (12.2)%
*All amounts are in US dollars unless otherwise stated
((1)) EBITDA, EBIT 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)) Adjusted net profit and adjusted earnings per share are pre investment
losses and gains.
((3)) Capital expenditure (Capex) consists of purchase of PPE for cash,
prepayments for PPE and financed capex.
((4)) Adjusted ROCE is calculated utilising annualised half year EBIT and
excludes investments at fair value from assets.
Financial Overview
· H1 2022 revenue of $138.1 million, up 39.9% on H1 2021 ($98.7
million);
· Full year revenue guidance increased to $280 - $290 million (from
$270 - 280 million);
· Non-drilling revenue contributed 28% of total revenue for H1
2022, compared with H1 2021 (17%), driven by growth YoY in mining services and
MSALABS;
· H1 2022 EBITDA of $41.4 million, up 45.8% on H1 2021 ($28.4
million);
· EBITDA margins increased to 30.0% from 28.8% in H1 2021;
· Net losses from equity investments of $10.3 million in H1 2022
(unrealised), decreasing the value of Group strategic investments to $47.3
million, net of cash proceeds, as of 30 June 2022 (31 December 2021: $60.2
million);
· Adjusted Net Profit After Tax (NPAT) $19.9 million (adjusted for
changes in investments), an increase of 56.7% on H1 2021 ($12.7 million);
· Capex of $22.6 million (H1 2021: $35.0 million) including
prepayments and financed capex;
· Cash generated from operations of $34.9 million (H1 2021: $5.4
million), a significant increase YoY and stronger cash conversion despite a
further build in working capital with inventory of $51.5 million, up 35% on
FY21 ($37.9 million) to accommodate larger revenues and supply chain
constraints;
· Net debt of $36.4 million (H1 2021: $32.8 million and year end
2021 $31.9 million);
· Adjusted Net cash (including investments) of $10.9 million (H1
2021: adjusted net debt (including investments) of $1.8 million);
· Adjusted ROCE of 24.6% (H1 2021: 22.5%); and
· Declared an interim dividend of 1.3 cents per share, to be paid
on 3 October 2022 to shareholders registered on 2 September 2022 (up 8.3% on
2021 interim dividend 1.2 cents per share).
Operational & Strategic Review
· Rig fleet utilisation was 83% in H1 2022, an increase of 13.7% on
H1 2021 (73%) and 17.8% on H2 2021 (77%);
· Rig count increased from 110 to 116 through Q2 2022, net of
depletion;
· Safety performance remains world-class with the Group TRIFR at
1.8 in H1 2022. Capital's target is zero harm across the Group;
· Previously announced contracts:
· A three-year comprehensive drilling services contract with
AngloGold Ashanti at the Geita gold mine: Our Tanzanian subsidiary company,
CMS (Tanzania) Limited, has been awarded a contract to provide a full range of
drilling services including development (diamond & reverse circulation),
grade control, blast hole and underground drilling. Capital will utilise the
existing fleet, which now has a total of 25 rigs on site. It is anticipated to
generate ~$150 million over the three-year contract term, making it the second
largest award of new business in the Company's history.
· First contract with B2Gold Corporation at the Fekola Gold mine in
Mali, one of largest gold mines in Africa: Capital has been awarded a
reverse circulation drilling services contract.
· Capital Mining continues to perform strongly
· Sukari Gold Mine (Egypt) waste mining contract continues to
perform well;
· Capital remains active in the tendering pipeline.
· MSALABS: Growth outlook improved through expanded relationship
with Chrysos
· Expanded relationship with Chrysos Corporation:
o MSALABS recently announced an expansion of its global partnership with
Chrysos, now guiding to deploying 21 Chrysos PhotonAssay units by 2025;
o Rollout of initial six units by year end 2022 on track: In addition to
four units already announced at Bulyanhulu Gold Mine (Tanzania), the Morila
Gold Mine (Mali), the Kibali Gold Mine (DRC) and Val d'Or (Quebec, Canada):
o A fifth unit will arrive imminently at Yamoussoukro, Côte d'Ivoire, with
facility preparations well advanced;
o A sixth unit is due to begin installation in Timmins, Canada, by the end
of 2022;
· MSALABS has been awarded a two-year extension to the existing
three-year onsite laboratory services contract with Kinross at the Tasiast
Gold Mine, Mauritania, subject to final terms and conditions.
· Capital Direct Investments (Capital DI): Impacted by general
market conditions but strong business development performance
· The portfolio recorded investment losses (unrealised) of US$10.3
million. The total value of investments (listed and unlisted) was US$47.3
million as of 30 June 2021, versus US$60.2 million at the end of 2021;
· Over the period Capital continued to rationalize the breadth of
holdings and realized cash proceeds from the portfolio, generating net sales
after investments of US2.6million, with the proceeds directed toward group
capital expenditures.
· Contract revenues from investee companies again contributed
strongly to Group revenues, totalling US$26.4mn over the H1 period.
Outlook
· Revenue guidance for 2022 increased to $280 - $290 million (from
$270 - 280 million);
· EBITDA margins are expected to remain in a range of 25-30% going
forward;
· Capital expenditure is now expected to be approximately $50-55
million in 2022. The increase in capex includes additional rig purchases, as
well as higher sustaining capex driven by higher than anticipated utilisation
of the expanded fleet;
· Drill rig fleet size forecast to increase to 120 rigs by the end
of 2022, net of depletion;
· The Sukari earth moving contract continues to perform well at
full run rates;
· MSALABS's growth trajectory is now underpinned over the next 2-3
years by the expanded partnership with Chrysos. Revenue guidance for 2022
remains $30 million, and is expected to grow to over $80 million per annum
from 2025 following the rollout of 21 Chrysos units in conjunction with growth
in the traditional laboratories business;
· Tendering activity across all business units remains robust, with
a number of opportunities progressing.
Commenting on the results, Jamie Boyton, Executive Chairman of Capital
Limited, said:
"We have been very pleased with the performance of the Group through the first
half of 2022, not only because we've again delivered another strong half year,
but we have also taken decisive steps to ensuring a stronger company in the
years to come, particularly in our drilling business and in MSALABS.
In drilling we have taken advantage of the strength we have seen in underlying
demand to focus on contract selection and rotate our portfolio. Through the
period we have commenced operations at two more of Africa's largest gold
mines, Kibali and Fekola, that are well positioned to operate consistently
throughout the cycle. In addition, we have increased operations at Tier-1 gold
and non-gold deposits with strong growth potential including Predictive
Discovery's Bankan project, Goulamina (lithium) and Kabanga (nickel). This
focus on growing long term contracts and partnerships with blue-chip customers
remains core to the business model at Capital, irrespective of levels of
activity across the market, delivering lower volatility in earnings and
sustainability of the business through the cycles.
Similarly, MSALABS has now secured a multi-year growth trajectory driven
primarily by the rollout of the revolutionary Chrysos PhotonAssay units. The
expanded relationship with Chrysos means MSALABS will now deploy 21 units into
the market into 2025. In addition to growth in its existing geochemistry
business, this should drive annual revenues in excess of $80 million by 2025,
an impressive outlook for a business that generated just $3 million at the
time of the controlling interest acquisition in 2019.
The underlying demand in the market continues to be encouraging, as is evident
from the high utilisation rates the Group delivered in the first half. While
there will be some seasonal slowdown through the third quarter, the tender
pipeline remains buoyant across drilling, mining and laboratories and as a
result of this strong demand, we are raising our revenue guidance for 2022 to
$280-290 million. We have also lifted our capex guidance to $50-55 million,
which includes higher sustaining capex on the expanded fleet, and additional
rigs to replace expedited rig replacements. In the strong demand environment
we are currently experiencing, we have decided to further replenish our fleet
to ensure both high reliability as well as a peer leading safety performance
which remains core to our operations.
Our capital allocation strategy continually targets the best returns for our
shareholders. We are excited by the outlook and the market backdrop and will
continue to target new opportunities while maintaining a strong balance sheet
and a balanced capital allocation policy. Therefore, in addition to funding
further growth, given the strength of the underlying business, we announced a
buyback at the beginning of the year and we have today also announced an
interim dividend to shareholders of 1.3 cents per share.
Capital Limited will be hosting a live webcast presentation at 09:00 BST on
Thursday 18 August 2022, where questions can be submitted through the
platform.
The webcast presentation link:
https://www.lsegissuerservices.com/spark/CapitalDrillingLtd/events/db8bbc58-599b-4a60-aa07-abc49d7d187d
(https://www.lsegissuerservices.com/spark/CapitalDrillingLtd/events/db8bbc58-599b-4a60-aa07-abc49d7d187d)
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 (http://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
Giles Everist, Chief Financial Officer
Conor Rowley, Investor Relations & Corporate Development Manager
Tamesis Partners LLP
+44 20 3882 2868
Charlie Bendon
Richard Greenfield
Stifel Nicolaus Europe Limited
+44 20 7710 7600
Ashton Clanfield
Callum Stewart
Rory Blundell
Berenberg
+44 20 3207 7800
Matthew Armitt
Jennifer Wyllie
Detlir Elezi
Buchanan
+44 20 7466 5000
Bobby
Morse
capital@buchanan.uk.com
George Cleary
About Capital Limited
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; maintenance; and geochemical
analysis. The Group's corporate headquarters are in Mauritius and it has
established operations in Burkina Faso, Côte d'Ivoire, Canada, Egypt, Guinea,
Kenya, 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
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 2022 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
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 2022 which comprises the condensed consolidated statement of
comprehensive income, condensed consolidated statement of financial position,
condensed consolidated statement of changes in equity, condensed consolidated
statement of cash flows, and notes to the condensed consolidated interim
financial statements.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). 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.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards. 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".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of 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.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of 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, United Kingdom
17 August 2022
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 2022
Unaudited
Six months ended
Notes 30 June 2022 30 June 2021
$ $
Revenue 4 138,128,602 98,683,980
Cost of sales (77,010,453) (56,028,630)
Gross profit 61,118,149 42,655,350
Administration expenses (19,738,178) (14,281,383)
Depreciation, amortisation, and impairments (13,417,448) (8,210,759)
Operating profit 27,962,523 20,163,208
Interest income 112,808 49,997
Finance charges (2,670,575) (1,606,618)
Fair value (loss)/gain on investments at fair value 14 (10,265,388) 5,706,322
Profit before taxation 15,139,368 24,312,909
Taxation 3 (5,456,706) (5,903,119)
Profit and total comprehensive income for the period 9,682,662 18,409,790
Profit attributable to:
Owners of the parent 8,849,651 18,490,700
Non-controlling interest 833,011 (80,910)
9,682,662 18,409,790
Earnings per share:
Basic (cents per share) 5 4.7 9.8
Diluted (cents per share) 5 4.5 9.6
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Unaudited Audited
Notes 30 June 2022 31 December 2021
ASSETS $ $
Non-current assets
Property, plant and equipment 7 153,190,469 143,598,399
Right of use assets 9,762,686 9,851,343
Goodwill 1,252,348 1,252,348
Intangible assets 1,673,374 1,282,269
Other receivables 6,460,000 6,460,000
Total non-current assets 172,338,877 162,444,359
Current assets
Inventory 51,510,590 37,935,112
Trade and other receivables 43,329,113 42,212,147
Prepaid expenses and other assets 20,222,327 17,681,623
Investments at fair value 14 47,278,117 60,151,667
Current tax receivable 121,916 499,361
Cash and cash equivalents 22,735,408 30,577,249
Total current assets 185,197,471 189,057,159
Total assets 357,536,348 351,501,518
EQUITY AND LIABILITIES
Equity
Share capital 8 19,287 19,006
Share premium 8 62,664,091 60,900,119
Treasury (2,462,651) -
shares
Equity-settled employee benefits reserve 2,832,103 3,185,450
Other reserve 190,056 190,056
Retained income 159,121,253 154,879,201
222,364,139 219,173,832
Non-controlling interest 4,600,600 3,767,589
Total equity 226,964,739 222,941,421
Non-current liabilities
Loans and borrowings 9 40,296,241 45,567,668
Lease liabilities 6,968,276 7,354,745
Deferred tax 34,196 34,196
Total non-current liabilities 47,298,713 52,956,609
Current liabilities
Trade and other payables 54,354,899 46,500,122
Current tax payable 8,238,790 9,979,250
Loans and borrowings 9 18,151,949 16,887,692
Lease liabilities 2,527,258 2,236,424
Total current liabilities 83,272,896 75,603,488
Total equity and liabilities 357,536,348 351,501,518
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 30 June 2022
Share capital Share premium Treasury share reserve Total share capital Equity-settled employee benefits reserve Other reserve Total reserves Retained earnings Total attributable to equity holders of the Group Non-controlling interest Total equity
$ $ $ $ $ $ $ $ $ $ $
Balance at 31 December 2020 -Audited 18,878 60,169,426 - 60,188,304 1,926,994 190,056 2,117,050 84,384,101 146,689,455 1,389,315 148,078,770
Total profit and comprehensive income - - - - - - - 18,490,700 18,490,700 (80,910) 18,409,790
for the period
Contributions by and distributions to owners
Share options exercised 128 730,693 - 730,821 (730,821) - (730,821) - - -
-
Recognition of share-based payments - - - - 802,435 - 802,435 - 802,435 - 802,435
Dividends paid (1.30 cents per share) - Note 6 - - - - - - - (2,470,713) (2,470,713) - (2,470,713)
Total transactions with owners 128 730,693 - 730,821 71,614 - 71,614 (2,470,713) (1,668,278) - (1,668,278)
Balance at 30 June 2021 (Unaudited) 19,006 60,900,119 - 60,919,125 1,998,608 190,056 2,188,664 100,404,088 163,511,877 1,308,405 164,820,282
Balance at 31 December 2021 - Audited 19,006 60,900,119 - 60,919,125 3,185,450 190,056 3,375,506 154,879,201 219,173,832 3,767,589 222,941,421
Total profit and comprehensive income for the period - - - - - - - 8,849,651 8,849,651 833,011 9,682,662
Contributions by and distributions to owners
Share options exercised 281 1,763,972 - 1,764,253 (1,764,253) - (1,764,253) - - - -
Share buy back - - (2,462,651) (2,462,651) - - - - (2,462,651) - (2,462,651)
Recognition of share-based payments - - - - 1,410,906 - 1,410,906 - 1,410,906 - 1,410,906
Dividends paid (2.4 cents per share) - Note 6 - - - - - - - (4,607,599) (4,607,599) - (4,607,599)
Total transactions with owners 281 1,763,972 (2,462,651) (698,398) (353,347) - (353,347) (4,607,599) (5,659,344) - (5,659,344)
Balance at 30 June 2022 (Unaudited) 19,287 62,664,091 (2,462,651) 60,220,727 2,832,103 190,056 3,022,159 159,121,253 222,364,139 4,600,600 226,964,739
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
Unaudited
Six months ended
Notes 30 June 2022 30 June 2021
$ $
Cash flow from operating activities
Cash generated from operations 10 34,932,913 5,443,214
Interest income received 112,808 49,997
Finance costs paid (2,432,005) (1,225,930)
Tax paid (6,819,720) (5,897,973)
Net cash from operating activities 25,793,996 (1,630,692)
Cash flow from investing activities
Purchase of property, plant and equipment 7 (10,168,688) (27,698,736)
Proceeds from disposal of property, plant and equipment - 47,626
Acquisition of intangible assets (391,105) (23,115)
Acquisition of investments (5,891,493) (3,551,255)
Proceeds on disposal of investments 8,499,654 5,375,201
Cash paid in advance for property, plant and equipment (6,389,092) -
Net cash from investing activities (14,340,724) (25,850,279)
Cash flow from financing activities
Repayment of loans 9 (9,295,897) (1,764,440)
Proceeds from new loans 9 - 16,950,000
Arrangement fees paid for new financing - (383,705)
Dividend paid 6 (4,607,599) (2,470,713)
Repayment of lease (1,483,881) (208,727)
Advance payments on lease arrangements (230,705)
Share buy back (2,462,651)
Net cash from financing activities (18,080,733) 12,122,415
Total cash movement for the period (6,627,461) (15,358,556)
Cash at the beginning of the period 30,577,249 35,701,894
Effect of exchange rate movement on cash balances (1,214,380) (392,627)
Total cash at the end of the period 22,735,408 19,950,711
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2022
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 2022 (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
2021 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.
All accounting policies, presentation and methods of computation which have
been followed in these condensed consolidated financial statements were
applied in the preparation of the Group's financial statements for the year
ended 31 December 2021.
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
As at 30 June 2022, the Group had a robust balance sheet with a low debt
gearing with equity of $227.0 million and loans and borrowings of $59.1
million. Cash as at 30 June 2022 was $22.7 million, with net debt of $36.4
million. Investments in listed entities at the end of June 2022 amounted to
$35.8 million which provided additional flexibility as these investments could
be converted into cash.
This robustness is underpinned by stable revenues generated on long term
contracts. Revenues generated on mine sites and longer-term contracts make up
over 85% of Group revenues. Revenues continued to perform strongly in H1 2022
with increased revenue of 40% compared to H1 2021.
Commercially, the Group continues to secure and extend long term mining
contracts with high quality customers, including the latest significant
contract wins and extensions at Geita Gold Mine. Given the Group had minimal
operational impacts from COVID-19 over the past two years, the Directors do
not view it as a going concern risk.
In determining the going concern status of the business, management has
considered the principal risks of the business and considered those most
relevant to the going concern assessment and reverse stressed the model,
alongside the Group's capacity to mitigate, to identify the magnitude of
sensitivity required to cause a breach in covenants or risk the going concern
of the business. The most relevant of which was considered to be loss of
EBITDA through loss of contract wins, with no redeployment of equipment.
EBITDA would need to fall over 75% for a 12-month period to breach the
covenant test.
Given the strong market demand from existing clients and across a large
tendering pipeline, management consider the risk of a deep demand correction
to be low.
Given the Group's exposure to high quality mine site operations, we consider a
decrease of such magnitude to be remote. Overall, the analysis strongly
underpins the going concern status and as a result the Board considers the
business to be a going concern.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
2. Operations in the interim period
Capital Limited (the "Company") is incorporated in Bermuda. The Company and
its subsidiaries (the "Group") provide drilling services including but not
limited to exploration, development, grade control and blast hole drilling
services, mining services including but not limited to earthmoving, fleet
management and mine management, mineral analytical services including but not
limited to geochemical analysis and laboratory management, maintenance
services, including but not limited to fleet maintenance and distribution of
specialist mining supplies and rig site technology services including but not
limited to equipment rental, survey and geophysical logging and borehole
management software services for mining and mining exploration companies.
2.1 Use of estimates and judgements
The preparation of both annual and interim financial statements usually
requires the use of estimates and judgements. There has been no change in the
Group's estimates and judgements since the year end.
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 (CONT'D)
For the six months ended 30 June 2022
Six months ended
4. Revenue 30 June 2022 30 June 2021
$ $
Revenue from the rendering of services comprises:
Drilling and associated revenue 100,230,452 79,168,981
Revenue from Mining 23,678,570 10,355,723
MSALABS revenue 11,814,696 6,502,128
Revenue from Surveying 2,404,884 2,657,148
138,128,602 98,683,980
5. 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 8,849,651 18,490,700
Weighted average number of ordinary shares for the purposes of basic earnings 189,451,637
per share
189,470,658
Basic earnings per share (cents) 4.7 9.8
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 189,451,637
earnings per share
189,470,658
- Dilutive share options (#) 6,847,322 3,011,156
Weighted average number of ordinary shares used in the calculation of diluted 196,298,959
earnings per share
192,481,814
Diluted earnings per share (cents) 4.5 9.6
(#) For the purposes of calculating diluted earnings per share, no share
options (2021: 6.34 million) were excluded based on being anti-dilutive as the
exercise price is lower than the current share price.
( )
( )
6. Dividends
During the six months ended 30 June 2022, a dividend of 2.4 cents per ordinary
share was declared on 10 March 2022, totalling $4,607,599 (six months ended 30
June 2021: 1.3 cents per ordinary share, totalling $2,470,713) and paid on 10
May 2022.
( )
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
7. Property, plant and equipment
Cost Drilling rigs Mining equipment Associated Drilling & mining equipment Vehicles and trucks Camp and associated equipment Computer software Leasehold improvements Total
At 1 January 2021 103,540,898 26,511,913 20,326,737 21,979,021 12,037,844 38,361 1,653,952 186,088,726
Additions 23,814,358 29,918,725 7,009,849 12,439,323 2,483,930 - - 75,666,185
Disposal (3,103,550) (19,520) (831,773) (824,132) (644,637) - - (5,423,612)
Transfers - 2,183,654 (2,183,654) - - - - -
At 31 December 2021 124,251,706 59,224,772 23,691,159 33,594,212 13,877,137 38,361 1,653,952 256,331,299
Additions 14,799,612 1,997,294 1,680,862 1,420,569 1,963,251 - - 21,861,588
Disposal (2,075,903) (51,516) (1,834,700) (161,737) (54,722) (4,178,578)
At 30 June 2022 136,975,415 61,170,550 23,537,321 34,853,044 15,785,666 38,361 1,653,952 274,014,309
Accumulated Depreciation
At 1 January 2021 70,806,074 - 7,159,802 12,641,891 6,407,935 5,042 97,299 97,118,043
Depreciation 7,959,524 7,451,803 2,022,454 1,870,873 1,207,651 4,179 - 20,516,484
Transfers - 528,416 (528,416) - - - - -
Disposal (2,940,714) - (700,176) (751,640) (509,097) - - (4,901,627)
At 31 December 2021 75,824,884 7,980,219 7,953,664 13,761,124 7,106,489 9,221 97,299 112,732,900
Depreciation 4,802,699 3,755,717 1,436,690 1,403,951 639,281 2,089 - 12,040,427
Disposal (1,939,094) (42,709) (1,833,055) (116,069) (18,560) - - (3,949,487)
At 30 June 2022 78,688,489 11,693,227 7,557,299 15,049,006 7,727,210 11,310 97,299 120,823,840
Carrying amount at:
31 December 2021 48,426,822 51,244,553 15,737,495 19,833,088 6,770,648 29,140 1,556,653 143,598,399
30 June 2022 58,286,926 49,477,323 15,980,022 19,804,038 8,058,456 27,051 1,556,653 153,190,469
During the six months ended 30 June 2022, the Group acquired $21.9 million
worth of property, plant and equipment (HY 2021: $51.2 million). Out of the
$21.9 million additions, $6.0 million (HY 2021: $7.3 million) was acquired
through supplier credit agreements - see Note 9.
The Group disposed of property, plant and equipment with a net carrying amount
of $0.2 million (HY 2021: $0.1 million) during the period. A loss of $0.2
million (2021: $0.1 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 2022, there was no indication of
impairment.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
As at
30 June 2022 31 December 2021
$ $
8. Issued capital and share premium
Authorised capital
2,000,000,000 (31 December 2020: 2,000,000,000) ordinary shares of 0.01 cents 200,000 200,000
(2020: 0.01 cents) each
Issued and fully paid:
192,864,738 (31 December 2021: 190,054,838) ordinary shares of 0.01 cents (31
December 2021: 0.01 cents) each
19,287 19,006
Share premium:
Balance at the beginning of the period 60,900,119 60,169,426
Issue of shares 1,763,972 730,693
Balance at the end of the period 62,664,091 60,900,119
During the period, the Company issued 2,143,105 new common shares (valued at $
1,764,253) pursuant to the Company's employee short term incentive plan. 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.
9. Loans and borrowings
Loans and borrowings consist of:
(a) $15 million revolving credit facility ("RCF") provided by Standard Bank
(Mauritius) Limited.
The interest rate on the RCF is the prevailing three-month US LIBOR (payable
in arrears) plus a margin of 6.5%, and an annual commitment fee of 2.275% is
charged on any undrawn balance. The amount utilised on the RCF is $15 million
as at 30 June 2022.
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
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
9. Loans and borrowings (Cont'd)
In addition, CAPD (Mauritius) Limited is also required to comply with the
Total Tangible Net Worth covenant.
Security for the Standard Bank (Mauritius) Limited facility comprises:
The RCF is secured by various pledges over the shares and claims of the
Group's entities in Cote d'Ivoire and Tanzania together with the assignment of
material contracts and their collection accounts in these jurisdictions and a
debenture over the rigs in Tanzania.
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
The facility was signed on 6 September 2019 and drawn down against the
purchase of five rigs. The term of the facility is four years repayable in 46
monthly instalments. Interest is charged at a with a fixed rate of 8.47% per
annum (payable monthly in arrears). As at 30 June 2022, an amount of $1.3
million remained outstanding under this facility.
(c) $2.6 million credit facility by Epiroc Financial Solutions AB
The facility was signed on 26 November 2020 and drawn down against the
purchase of three rigs. The term of the facility is 4 years repayable in 46
monthly instalments. Interest is charged at a fixed rate of 8.25% per annum
(payable monthly in arrears). As at 30 June 2022, an amount of $1.6 million
remained outstanding under this facility.
(d) $2.5 million credit facility by Epiroc Financial Solutions AB
This new facility was signed on 01 May 2021 and drawn down against the
purchase of three rigs. The facility is repayable in 46 monthly instalments.
The interest rate is the prevailing three-month US LIBOR plus a margin of
4.8%. As at 30 June 2022, an amount of $2 million remained outstanding under
this facility.
(e) $2.68m million credit facility by Epiroc Financial Solutions AB
This new facility was signed on 21 January 2022 and drawn down against the
purchase of three rigs. The facility is repayable in 46 monthly instalments.
The interest rate is the prevailing three-month US LIBOR plus a margin of
4.8%. As at 30 June 2022, an amount of $2.54 million remained outstanding
under this facility.
(f) $1.115 million credit facility by Epiroc Financial Solutions AB
This new facility was signed on 9 February 2022 and drawn down against the
purchase of one rigs. The facility is repayable in 46 monthly instalments. The
interest rate is the prevailing three-month US LIBOR plus a margin of 4.8%. As
at 30 June 2022, an amount of $1.02 million remained outstanding under this
facility.
(g) $3.08 million credit facility by Epiroc Financial Solutions AB
This new facility was signed on 26 April 2022 and drawn down against the
purchase of three rigs. The facility is repayable in 46 monthly instalments.
The interest rate is the prevailing three-month US LIBOR plus a margin of
4.80%. As at 30 June 2022, an amount of $3.08 million remained outstanding
under this facility.
(h) $8.5 million term loan facility with Sandvik Financial Services AB (PUBL)
On 19 November 2020, the Group entered into a new term loan facility agreement
with Sandvik Financial Services AB (PUBL). The facility is for up to $8.5
million for the purchase of equipment from Sandvik AB, available in not more
than four tranches until 31 December 2021. Each tranche is repayable over a
period of five years. Interest is payable quarterly in arrears at 5.45% per
annum on the drawn amount. As at 30 June 2022 $8.3 million of the facility was
used and $0.2 million of the facility remained undrawn.
(i) $37.7 million term loan provided by Macquarie Bank Limited (London Branch)
On 25th September 2020, the Group entered into a senior secured, asset backed
term loan facility with Macquarie Bank Limited. The term of the loan is three
years repayable in quarterly instalments with an interest rate on the facility
of the prevailing three-month US LIBOR plus a margin of 7.75% per annum
(payable quarterly in arrears). The loan is secured over certain assets owned
by the Group and currently located in Egypt and Cote d'Ivoire together with
guarantees provided by Capital Limited, Capital Drilling Egypt LLC and Capital
Mining Services SARL. The facility was fully drawn as at 30 June 2022.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
9. Loans and borrowings (Cont'd)
As at the reporting date and during the period under review, the Group has
complied with all covenants attached to the term loan.
As at
30 June 2022 31 December 2021
$ $
Balance at 1 January 62,455,360 30,693,713
Amounts received during the 6-month period/year - 27,669,435
Credit facility received for the purchase of rigs 6,029,900 10,834,144
Interest accrued during the 6-month period/year 1,990,634 3,217,253
Interest paid during the 6-month period/year (2,082,649) (2,967,733)
Commitment fees paid during the 6-month period/year - (17,531)
Principal repayments during the 6-month period/year (9,295,897) (6,973,921)
Unamortised debt arrangement costs (649,158) -
Balance at 30 June/31 December 58,448,190 62,455,360
Less: Current portion included under current liabilities (18,151,949) (16,887,692)
Due after more than one year 40,296,241 45,567,668
At the reporting date, the Group's loans and borrowings total $59.1 million
(2021: $62.5 million), offset by unamortised debt costs of $0.6 million. $0.4
million of the debt costs have been classified as current and $0.2 million as
non-current.
Six months ended
10. Cash from operations 30 June 2022 30 June 2021
$ $
Profit before taxation 15,139,368 24,312,909
Adjusted for:
- Depreciation 12,040,427 8,022,935
- Loss on disposal of property, plant and equipment 229,091 71,528
- Fair value loss/(gain) on investments at fair value 10,265,388 (5,706,322)
- Share based payment expense 1,410,906 802,435
- Interest income (112,808) (49,997)
- Finance charges 2,670,575 1,606,618
- IFRS 16 depreciation on rights of use assets 1,377,021 194,505
- Unrealised foreign exchange loss on foreign currency held 1,214,380 392,627
- Other non-cash items 492,000 -
Operating profit before working capital changes 44,726,348 29,647,238
Adjustments for working capital changes:
- Increase in inventory (13,575,478) (6,879,834)
- Increase in trade and other receivables (2,278,530) (20,837,067)
- Increase in trade and other payables 6,060,573 3,512,877
34,932,913 5,443,214
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
11. Segmental analysis
Operating segments are identified on the basis of internal management reports
regarding components of the Group. These are regularly reviewed by the board
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, mining 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. The segment relates to jurisdictions which
contribute a relatively small amount of external revenue to the Group. These
include Saudi Arabia and Canada.
Information regarding the Group's operating segments is reported below. At 30
June 2022, management reviewed the composition of the Group's operating
segments and the allocations of operations to the reportable segments.
Segment revenue and results:
The following is an analysis of the Group's revenue and results by reportable
segment:
For the six months ended 30 June 2022 Africa Rest of World Consolidated
$ $ $
External revenue 128,924,789 9,203,813 138,128,602
Segment profit (loss) 44,394,623 (15,675,189) 28,719,434
Central administration costs and depreciation, net of other income
(756,911)
Profit from operations 27,962,523
Fair value gain on investments at fair value (10,265,388)
Interest income 112,808
Finance charges (2,670,575)
15,139,368
The following customers from the Africa segment contributed 10% or more to the
Group's revenue:
30 June 2022 30 June 2021
% %
Customer A 38% 32%
Customer B 14% 14%
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
11. Segmental analysis (continued)
For the six months ended 30 June 2021 Africa Rest of World Consolidated
$ $ $
External revenue 92,259,049 6,424,931 98,683,980
Segment profit (loss) 35,035,384 (14,014,262) 21,021,122
Central administration costs and depreciation, net of other income (857,914)
Profit from operations 20,163,208
Fair value gain on investments at fair value 5,706,322
Interest income 49,997
Finance charges (1,606,618)
Profit before tax 24,312,909
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
board for the purpose of resource allocation and assessment of segment
performance.
As at
30 June 2022 31 December 2021
$ $
Segment assets:
Africa 458,253,106 421,186,192
Rest of world 65,995,470 75,429,655
Total segment assets 524,248,576 496,615,847
Head office companies 242,623,490 278,034,723
766,872,066 774,650,570
Eliminations * (409,335,718) (423,149,052)
Total assets 357,536,348 351,501,518
Segment liabilities:
Africa 207,853,214 226,314,805
Rest of world 28,723,201 28,407,677
Total segment liabilities 236,576,415 254,722,482
Head office companies 282,099,314 269,589,374
518,675,729 524,311,856
Eliminations * (388,104,120) (395,751,759)
Total liabilities 130,571,609 128,560,097
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
11. Segmental analysis (continued)
For the purposes of monitoring segment performance and allocating resources
between segments the board 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 intra-group accounts receivable, intra-group accounts
payable and intra-group investments.
Other segment information:
Six months ended
Non-Cash items included in profit or loss: 30 June 2022 30 June 2021
$ $
Depreciation
Africa 12,638,195 7,352,845
Rest of world 585,085 448,291
Total segment depreciation 13,223,280 7,801,136
Head office companies 194,168 409,623
13,417,448 8,210,759
Loss on disposal of property, plant and equipment
Africa 225,384 52,692
Rest of world 3,707 18,836
Total segment loss on disposal 229,091 71,528
Head office companies - -
229,091 71,528
Six months ended
30 June 2022 30 June 2021
$ $
Impairment on Inventory
Africa
Stock Provision 696,950 529,104
Stock Write Offs 11,198 98,077
708,148 627,181
Rest of world - -
Total segment impairment 708,148 627,181
Head office companies - -
708,148 627,181
Additions to property, plant and equipment
Africa 19,398,646 50,586,372
Rest of world 1,698,190 302,880
Total segment additions 21,096,836 50,889,252
Head office companies 764,752 318,557
21,861,588 51,207,809
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
11. Segmental analysis (continued)
Segmental reporting summary by region:
Revenue Non-Current Assets
Six months ended As at
30 June 2022 30 June 2021 30 June 2022 31 December 2021
$ $ $ $
Middle East/North Africa 57,627,212 33,845,591 76,783,549 75,919,256
South and East Africa 32,979,498 24,345,551 39,742,198 34,338,287
West Africa 39,661,597 36,282,893 40,974,810 39,508,301
Others 7,860,295 4,209,945 14,838,320 12,678,515
138,128,602 98,683,980 172,338,877 162,444,359
The business has considered this segmental distribution to be appropriate as
it represents the discrete areas of operations that make up the Group's
revenue stream.
12. Commitments As at
30 June 2022 30 June 2021
The Group has the following capital commitments at 30 June: $ $
Committed capital expenditure 33,225,972 12,543,098
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
13. Contingencies
Zambia Tax:
Capital Drilling (Zambia) Limited ("CDZ"), a subsidiary of Capital Limited, is
a party to various tax claims made by the Zambian Revenue Authority (ZRA) for
the tax years 2007 to 2013.
On 30 April 2015, CDZ received a tax assessment from the ZRA totalling Zambian
Kwacha 150m ($8.2 million), inclusive of penalties and interest. The claims
relate to various taxes, including income tax, value added tax, payroll tax
(PAYE) and withholding tax. CDZ responded in detail to these claims, and no
amount has yet been paid. No subsequent communication has been received from
the ZRA regarding this matter since June 2016.
As Capital has ceased to operate in Zambia, CDZ is being liquidated. This
process is expected to be completed during 2022.
Tanzania tax:
2009-15 tax audit
Capital Drilling (T) Ltd ("CDT"), was party to a payroll tax claim made by the
Tanzanian Revenue Authority ("TRA") for the tax years 2009-2015. A final
settlement was agreed with the TRA for a final payment of $0.6 million, with
interest and penalties being waived in full.
2016-18 tax audit
The TRA issued an initial assessment of $4.5 million for 2016-18 in December
2019. Through negotiation, this was reduced to $2.4 million in May 2020 and
a total of $0.7 million was paid by CDT in order to proceed with lodging
formal objections. These were lodged in June 2020 and responses finally
received a year later in June 2021. A number of CDT's positions were
accepted and a further round of correspondence entered into which is ongoing.
$0.7 million (2021: $0.7 million) remains in line with Management's estimate
of the potential tax and penalties due and, as this amount has already been
paid, no further amounts have been provided on the balance sheet.
Ivory Coast tax:
2018-19 tax audit
A tax audit of CDCI for the two years ended 31 December 2019 is currently
underway which focuses on the tax outcomes resulting from the local SYSCOA
accounting reporting requirements. The main area where the Ivorian tax
authorities are seeking additional tax relates to securities tax (IRVM) that
they claim is payable on an intercompany balance. Through negotiations, the
total tax claimed has been reduced from $1.5 million to $0.4 million. No
provision has been made at the end of the period (31 December 2021: $ nil) on
the basis that negotiations are ongoing, and the underlying facts would not
trigger any additional securities tax liability.
Customs duty
An initial exchange of correspondence has taken place between the Ivorian
customs duty authority and Capital Mining Services (CMS) relating to the
availability of certain customs duty exemptions under CMS' client's Mining
Convention. CMS submitted a written challenge of this position in July 2021
and no further correspondence has been to date. No assessments have been
issued by the authority, no amounts are due and payable, and no provision has
been made (31 December 2021: $ nil).
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
13. Contingencies (continued)
Mali tax:
2016-18 tax audit
In July 2019, the Mali Tax Authorities (DGE) commenced a routine tax audit of
Capital Drilling Mali for the periods 2016-18. No final assessments or
requests for payment have been issued in respect of any of the three years
under audit and the audit process has not yet formally concluded. No
correspondence has been received since January 2022.
Across the three years, the maximum potential tax claim including penalties is
approximately $3.8 million. Following a detailed review by the Group's
in-country advisers, the potential exposure has been calculated as $0.2
million, including penalties and provided a comprehensive response to the tax
authorities supporting this position.
14. 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 June 2022 31 December 2021
$ $
Level 1 - Listed shares 35,778,929 51,958,649
Level 3 - Unlisted shares and derivative financial assets 11,499,188 8,193,018
47,278,117 60,151,667
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
14. Financial instruments (Continued)
The reconciliation of the investment valuations from 1 January 2022 to 30 June
2022 is as follows:
Level 1 Level 3 Total
At 1 January 2022 51,958,649 8,193,018 60,151,667
Additions 5,594,176 297,317 5,891,493
Disposal (8,268,081) - (8,268,081)
Fair value gain/(loss) (13,505,815) 3,008,853 (10,496,962)
At 30 June 2022 35,778,929 11,499,188 47,278,117
Level 1 Level 3 Total
At 1 January 2021 16,233,516 10,933,579 27,167,095
Additions 9,025,943 124,141 9,150,084
Disposal (6,377,163) - (6,377,163)
Fair value (loss)/gain 31,042,850 (831,199) 30,211,651
Transfer from level 3 2,033,503 (2,033,503) -
At 31 December 2021 51,958,649 8,193,018 60,151,667
(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
2022 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 have reviewed the methodology at 30 June 2022 in the valuation
of Allied and considered the most appropriate valuation methodology is a
multiples-based approach based on comparing the enterprise values of a peer
group with their respective EBITDA (EV/EBITDA) across 2022 and 2023. The peer
average for 2021 used was 3.4x and the average used in 2022 was 3.9x.
For the purposes of the disclosures required by IFRS 13, if the EBITDA
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 USD10.9 million to USD13.8 million. The related fair
value increase of USD2.9 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 USD10.9 million to USD8.1 million. The
related fair value decreases of USD2.9 million would be recognised in profit
and loss. An adjustment to forecast gold prices would have an impact on the
Enterprise Values of the peer companies. The Directors do not have the
resources available to accurately determine the impact such a change would
have on the valuation of the level 3 companies.
The Directors also considered suitability of peers, specifically the impact
that different mine lives would have across the peers. A full comparison of
the same peer group of West African producing peers was performed and noted
that mine lives were comparable and took into account recent additions in
mining portfolio.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2022
14. Financial instruments (cont'd)
(c) Fair values of other financial instruments
Level 3 derivative financial assets
The Group's derivative financial assets consist of call options to acquire
additional shares in a non-listed entity. The financial assets have been
valued using the Black Scholes option pricing model by comparing the key
assumptions in the model to a peer group.
15. Events post the reporting date
The directors proposed that an interim dividend of 1.3 cent per share be paid
to shareholders on 3 October 2022. 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
2 September 2022. The total estimated interim dividend to be paid is
$2.5million (2021: $2.3 million). The payment of this dividend will have no
tax consequences for the Group.
CAPITAL LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITY
For the six months ended 30 June 2022
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 have 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 2021.
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 17 August 2022.
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 and emerging risks associated with the business have not changed
since the year end and are detailed below:
Area Description Mitigation
Reduction in The Group is highly dependent on the levels of mineral exploration, The Group is seeking to balance these risks by building a portfolio of
levels of mining development and production activity within the markets in which it long-term mine-site contracts, expanding its services offering into mine-site
activity operates. A reduction in exploration, development and production based
activities, or in the budgeted expenditure of mining and mineral exploration
activities such as load and haul mining, and also expanding both its customer
companies, will cause a decline in the demand for drilling rigs and drilling
and geographic reach.
services, as was evident in the 2014 and 2015 financial years.
Risk of Contracts can be terminated for convenience by the client at short notice and Contract renewal negotiations are initiated well in advance of expiry of
Termination without penalty. Guidance is partly based on current contracts in hand, and
contracts to ensure contract renewals are concluded without interruption
the Group derives a significant proportion of its revenue from providing
to services. There are also a wide range of termination clauses across the
services under large contracts. As a result, there can be no assurance that
Group's contracts depending on the size, nature and client involved (i.e., not
work in hand will be realised as revenue in any future period. There could be
all contracts can be terminated for convenience, and some contracts must be
future risks and costs arising from any termination of contract. While the terminated with notice).
Group has no reason to believe any existing or potential contracts will be
terminated, there can be no assurance that this will not occur.
In addition, it's important that the Group maintains its project pipeline and
win rate. Any failure by the Group to continue to win new contracts will
impact its financial performance and position.
Risk of Default The Group has financing facilities with external financiers. A default under The Group has a robust system of analysing and forecasting cash and debt
any of these facilities could result in withdrawal of financial support or an positions. The Group is continuing to develop a stronger facilities management
increase in the cost of financing. system, in addition to strengthening and broadening its banking relationships.
Supply chain Disruption to border crossings; equipment being held up in customs. The Group ensures a continual monitoring of movement of goods at all
disruption
relevant borders and assesses back-up options regularly. Inventory levels are
set to allow for a period of disruption. The Group also ensures a local
supplier early bulk purchasing strategy.
Adverse change in local tax laws, regulations and practice. Unforeseen changes to local tax regulations leading to new or higher tax The Group carries out enhanced tax due diligence on incorporation with
charges; unpredictable tax audit processes. identification of strong and well-connected local tax advisers. The Group
obtains written confirmation from local tax authorities in advance of
undertaking major transactions. The Group ensures supporting documentation for
all tax filings are complete and accurate.
Risk to Cash Restrictive currency controls which impact ability to repatriate cash from The Group has multiple bank accounts in multiple currencies and seeks to move
Repatriation countries of operation. cash out of restrictive or high-risk jurisdictions as soon as possible. The
import documentation process is being improved and the process increasingly
automated.
Decline in Minesite production levels The Group's activity levels and results are to a certain extent dependent on A significant proportion of the Group's revenue is derived from mines which
production levels at clients' mines while revenues are linked to the are already in production. The Group focuses on ensuring execution of work to
production volumes and not to the short-term price of the underlying a high standard and improving its operation to increase its value proposition
commodity. to clients. Application of the Group tender work procurement and approval
processes maximises the likelihood of achieving margins and earnings. In
addition, the Group's diversification of service offering limits the exposure
to one specific area of the business.
Reliance on Key The Group's business relies on a number of individual contracts and business The Group has entered into long-term contracts with its key customers for
Customers alliances and derives a significant proportion of its revenue from a small periods between two to five years. Contract renewal negotiations are initiated
number of key long-term customers and business relationships with a few well in advance of expiry of contracts to ensure contract renewals are
organisations. In the event that any of these customers fails to pay, reduces concluded without interruption to services. The Group has historically had a
production or scales back operations, terminates the relationship, defaults on strong record of completing contracts to term and securing contract
a contract or fails to renew their contract with the Group, this may have an extensions. The Group is selective in the contracts that it enters into to
adverse impact on the financial performance and/or financial position of the allow for options to extend where possible to maximise the contract period and
Group. the return on capital. The Group focuses on ensuring execution of work to a
high standard and improving its operation to increase its value proposition to
clients. Application of the Group tender work procurement and approval
processes maximises the likelihood of securing quality work with commensurate
returns for the risks taken. The Group maintains a work portfolio diversified
by geography, market, activity and client to mitigate the impact of emerging
trends and market volatility. 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.
Labour costs and The Group is exposed to increased labour costs and retention constraints in The Group's labour costs are typically protected by rise and fall mechanisms
availability markets where the demand for labour is strong. Changes to labour laws and
within client contracts, which mitigate the impact of rising labour costs.
regulations
may limit productivity and increase costs of labour. If implemented and
enforced, these types of changes to labour laws and regulations could
adversely impact revenues and, if costs increase or productivity declines,
operating margins.
Risk of poor performance due to lack of equipment The Group has a significant fleet of equipment, and has a substantial ongoing The Group continues to focus on supplier relationships including maintaining
availability requirement for consumables, including tyres, parts and lubricants. If the payment terms and identifying alternative sources.
Group cannot secure a reliable supply of equipment and consumables, there is a
risk that its operational and financial performance may be adversely affected.
Deterioration in Health & Safety record Operations are subject to various risks associated with mining including, in The Executive Chairman, Executive Leadership Team and managers provide
the case of employees, personal injury, malaria and loss of life and in the leadership to projects on the management of these risks and actively engage
Group's case, damage and destruction to property and equipment, with employees at all levels.
release of hazardous substances into the environment and interruption or
The Group has implemented and continue to monitor and update a range of health
suspension of site operations due to unsafe operations. The occurrence of any and safety policies and procedures including equipment standards and standard
of these events could adversely impact the Group's business, financial work procedures. Employees are provided with training regarding risks
condition, results of operations and prospects, lead to legal proceedings and associated with their employment, policies and standard work procedures.
damage the Group's reputation. In particular, clients are placing an Health and Safety statistics and incident reports are monitored throughout our
increasing focus on occupational health and safety, and a deterioration in the projects and the various management structures of the Group, including the HSE
Group's safety record may result in the loss of key clients. 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 is also closely engaged with its clients to ensure
workplace safety and containment measures are adhered to.
Risk of Mispricing The Group is reliant on its ability to price contracts accurately. Contract The Group goes through a rigorous process to determine a price to submit as
Contracts prices are generally set at the-outset of a customer contract following a part of the tender submission based on a bottom-up costing analysis with a
competitive tender process.
mark-up. The Group makes use of its extensive historical statistics and its
in-house knowledge base, combined with site visits to obtain contract specific
data. Where contracts are of significant scope, independent cost estimators
are
appointed, with their findings verified by in-house modelling. Some contracts
include pricing protections by way of mechanisms that allow for annual pricing
reviews and/or the application of annual CPI adjustments. Many contracts also
contain mechanisms to allow the Group to end the contract with minimal notice
if continued performance is financially burdensome.
Adverse Movements in Commodity Prices Adverse movements in commodity prices may reduce both exploration budgets and The Group focuses on mine-site low-cost operations where activity is less
the pipeline of mine-site work in the mining sector, which in turn could
susceptible to adverse commodity price movements. In addition, the Group is
reduce the level of demand for the Group's drilling and mining services. This implementing a diversification strategy which is focused on developing new
could have a material impact on the Group's operating and financial service offerings, developing a finance/capital strategy that provides balance
performance. sheet strength and allows for organic and inorganic growth in the business,
and also diversifying through M&A opportunities.
Over exposure to Gold Gold is an important commodity contributing to the Group's order book and The Group is in the process of implementing a diversification strategy in
tender pipeline. If the gold industry were to suffer, it would have a material terms of developing new service offerings, developing a finance/capital
adverse effect on the Group's revenues and profitability. strategy that allows for organic and inorganic growth in the business, and
diversifying through M&A opportunities.
Exposure to currency The Group's contract pricing is in US dollars. However, in certain markets the To minimise the Group's risk, the Group tries to match the currency of
fluctuations funds are received in local currency and some of the Group's costs are in operating costs with the currency of revenue. Funds are pooled centrally in
other currencies in the jurisdictions in which it operates. Foreign currency the head office bank accounts to the maximum extent possible. The Group has
fluctuations and exchange rate risks between the value of the US dollar and significantly improved processes for the repatriation of funds to the Group's
the value of other currencies may increase the cost of the Group's operations Head Office bank accounts from jurisdictions where exchange control
and could regulations are in effect, and this remains a key focus area.
adversely affect the financial results. As a result, the Group is exposed to
currency fluctuations and exchange rate risks.
Higher levels of Inflation Increases in cost of goods and in labour/salary costs related to higher levels The Group ensures accurately pursuing contractual rights under existing rise
of inflation.
and fall mechanisms. It ensures to price contracts with known inflationary
pressures and negotiates robust rise and fall mechanisms.
Reduction in values of Investments held The Group holds investments in a portfolio of both publicly traded and private The Group holds a portfolio of investments in various companies, mitigating
companies. The accounting value of these investments is marked to market at the risk of single company weakness. The investments are actively monitored
each reporting date and the fair value adjustment is accordingly recorded in and proactively managed.
the profit and loss account as an unrealised gain or loss. The value of the
New investments are required to satisfy a number of criteria with
investments will change and could materially alter both the Group's reported non-Executive oversight. In the event of fair value investments becoming an
net assets and net profit position. unrealised loss, while this would affect the company's net assets and
profitability, it would not affect going concern or cash flow.
Risk of noncompliance with climate related reporting regulations Non-physical risks arise from a variety of policy, regulatory, legal, The Group has recognised the need for the appointment of a Sustainability
financing and investor responses to the challenges posed by climate change. Manager. It has engaged with expert consultants in this field to establish
emissions reporting, guidance and publications. Additionally, it has
established a separate Sustainability Committee to drive the ESG process
forward.
Communicable A large-scale outbreak in one of our operating jurisdictions may lead to The Group undertakes extensive planning to facilitate the mobility of its
disease outbreaks, including COVID-19 interruptions in operations, closures at mine sites, inability to source international and regional expatriate workforce as the Company manages
supplies or consumables, higher volatility in the global capital and commodity international flight cancellations and COVID-19 travel restrictions. The Group
markets, adverse impacts on investment sentiment and economies. Ongoing also monitors other communicable disease outbreaks relevant to the location of
restrictions on travel could significantly impair the Group's ability to the Group's operations in order to implement its planned response strategy
manage its businesses effectively. when needed. The Group's key priorities on COVID-19 are: • protecting our
people with a focus on their wellbeing
• to play our role in limiting the spread of the virus
• delivering value for our clients and stakeholders
• maintaining the strongest possible financial position.
CAPITAL LIMITED
APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
The Group presents various Alternative Performance Measures (APMs) as
management believes that these are useful for users of the financial
statements in helping to provide a balanced view of, and relevant information
on, the Group's financial performance in the period.
The following terms and alternative performance measures are used in the half
year results release for the six months ended 30 June 2022.
ARPOR Average revenue per operating rig
EBIT Earnings before interest, taxes and fair value gain/loss
EBITDA Earnings before interest, taxes, depreciation, amortisation and fair value
gain/loss
ADJUSTED NET PROFIT AFTER TAX Net profit after tax before fair value gain/loss
ADJUSTED EPS Net profit after tax before fair value gain/loss over weighted average number
of ordinary shares
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
ADJUSTED RETURN ON CAPITAL EMPLOYED Annualised EBIT/Total assets-current liabilities excluding investments at fair
value
Reconciliation of alternative performance measures to the financial
statements:
Six months ended
30 Jun 2022 30 Jun 2021
$ $
ARPOR can be reconciled from the financial statements as per the below:
Revenue per financial statements ($) 138,128,602 98,683,980
Non-drilling revenue ($) (41,617,602) (20,338,011)
Revenue used in the calculation of ARPOR ($) 96,511,000 78,345,969
Monthly Average active operating Rigs 93 73
Monthly Average operating Rigs 112 99
ARPOR (rounded to nearest $10,000) 173,000 180,000
EBIT and EBITDA can be reconciled from the financial statements as per the
below:
Profit for the period 9,682,662 18,409,790
Taxation 5,456,706 5,903,119
Interest income (112,808) (49,997)
Finance charges 2,670,575 1,606,618
Fair value adjustments 10,265,388 (5,706,322)
EBIT 27,962,523 20,163,208
Gross profit 61,118,149 42,655,350
Administration expenses (19,738,178) (14,281,383)
Depreciation (13,417,448) (8,210,759)
EBIT 27,962,523 20,163,208
Profit for the period 9,682,662 18,409,790
Depreciation 13,417,448 8,210,759
Taxation 5,456,706 5,903,119
Interest income (112,808) (49,997)
Finance charges 2,670,575 1,606,618
Fair value adjustments 10,265,388 (5,706,322)
EBITDA 41,379,971 28,373,967
CAPITAL LIMITED
APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
Adjusted net profit and adjusted EPS can be reconciled from the financial
statements as per the below:
30 Jun 2022 31 Dec 2021
$ $
Operating profit (EBIT) 27,962,523 20,163,208
Depreciation, amortisation and impairments 13,417,448 8,210,759
EBITDA 41,379,971 28,373,967
Gross profit 61,118,149 42,655,350
Administration expenses (19,738,178) (14,281,383)
EBITDA 41,379,971 28,373,967
Operating profit (EBIT) 27,962,523 20,163,208
Interest income 112,808 49,997
Finance charges (2,670,575) (1,606,618)
Taxation (5,456,706) (5,903,119)
Adjusted net profit 19,948,050 12,703,468
Profit for the period 9,682,662 18,409,790
Fair value adjustments 10,265,388 (5,706,322)
Adjusted net profit 19,948,050 12,703,468
Adjusted net profit 19,948,050 12,703,468
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
189,451,637 189,470,658
Adjusted EPS (cents) 10.53 6.70
Adjusted Return on Capital Employed
Annualised EBIT 55,925,046 40,326,416
Total assets excluding investments less current liabilities 226,985,335 179,121,621
Adjusted ROCE (%) 24.6 22.5
Net cash (debt) can be reconciled from the financial statements as per the
below:
Cash and cash equivalents 22,735,408 30,577,249
Long-term liabilities (40,525,159) (45,567,668)
Current portion of long-term liabilities (18,572,189) (16,887,692)
Net cash (debt) (36,361,940) (31,878,111)
Net Asset Value per share (cents) can be calculated as per the below:
Total Equity 222,364,139 219,173,832
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
189,451,637 189,765,149
Net Asset Value per share (Cents) 117.37 115.50
CAPITAL LIMITED
APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNREVIEWED)
(Continued)
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 fair value
through profit and loss investments.
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 fair value through profit and loss
investments, 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.
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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