Capital Limited - Full Year Results
18/03/2021 08:41
RNS Number : 7011S Capital Limited 18 March 2021
| For Immediate Release | 18 March 2021 |
| 2020 | 2019 | % change | ||
| Average Fleet Size (No. of drill rigs) | 98 | 92 | 6.5 | |
| Fleet Utilisation (%) | 59 | 54 | 9.3 | |
| ARPOR ($) | 171,000 | 176,000 | (2.8) | |
| Capex ($ m) | 48.7 | 19.8 | 145.7 | |
| Revenue ($ m) | 135.0 | 114.8 | 17.5 | |
| EBITDA1 ($ m) | 33.8 | 27.3 | 24.0 | |
| EBIT1 ($ m) | 21.6 | 16.6 | 29.9 | |
| Investment Gains (Losses) ($ m) | 13.6 | (1.1) | N/A | |
| Net Profit After Tax ($ m) | 24.8 | 10.4 | 138.6 | |
| Cash From Operations ($ m) | 36.0 | 28.7 | 34.6 | |
| Earnings per Share | ||||
| Basic (cents) | 17.8 | 7.7 | 130.6 | |
| Diluted (cents) | 17.6 | 7.6 | 130.9 | |
| Final Dividend per Share (cents) | 1.3 | 0.7 | 85.7 | |
| Total dividend for FY (cents) | 2.2 | 1.4 | 57.1 | |
| Net Asset Value per Share1 (cents) | 106.0 | 63.0 | 68.3 | |
| Return on Capital Employed (ROCE) (%)2 | 12.4 | 18.4 | (32.8) | |
| Adjusted ROCE (%) 3 | 22.2 | 18.4 | 20.3 | |
| Net Cash1 ($ m) | 5.0 | 4.4 | 13.1 | |
| Net Cash/Equity (%) | 3.4 | 5.2 | (34.5) | |
| *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 calculated utilising 12 months EBIT. (3) Adjusted ROCE excludes Mining Assets and Prepayments, Net Equity Raise proceeds and Sukari prepayment from Capital Employed. | ||||
| Reported | 2020 | 2019 |
| $'m | $'m | |
| Revenue | 135.0 | 114.8 |
| EBITDA | 33.8 | 27.3 |
| EBITDA (%) | 25.1 | 23.8 |
| EBIT | 21.6 | 16.6 |
| PBT | 34.1 | 14.6 |
| NPAT | 24.8 | 10.4 |
| Basic EPS (cent) | 17.8 | 7.7 |
| Diluted EPS (cent) | 17.6 | 7.6 |
| Reported | 2020 $'m | 2019 $'m |
| Non-current assets | 91.1 | 55.1 |
| Current assets | 135.2 | 73.2 |
| Total assets | 226.3 | 128.3 |
| Non-current liabilities | 26.5 | 3.3 |
| Current liabilities | 51.8 | 38.1 |
| Total liabilities | 78.3 | 41.4 |
| Shareholders' equity (1) | 146.7 | 85.7 |
| Reported | 2020 $'m | 2019 $'m |
| Opening equity | 87.0 | 77.3 |
| Net proceeds from Equity raise | 37.2 | - |
| Share based payments | 1.4 | 0.8 |
| Total comprehensive income | 24.7 | 10.7 |
| Dividends paid | (2.2) | (3.0) |
| NCI ex Business Combination | - | 1.2 |
| Closing equity | 148.1 | 87.0 |
| Reported | 2020 $'m | 2019 $'m |
| Net cash from operating activities | 28.3 | 24.7 |
| Net cash used in investing activities | (60.7) | (23.6) |
| Net cash generated from/(used in) financing activities | 50.1 | (3.3) |
| Net (decrease)/increase in cash and cash equivalents | 17.7 | (2.2) |
| Opening cash and cash equivalents | 17.6 | 19.9 |
| Translation of foreign currency cash | 0.4 | 0.03 |
| Closing cash and cash equivalents | 35.7 | 17.6 |
| Reported | 2020 $'m | 2019 $'m |
| Net cash at the beginning of the year | 4.4 | 10.9 |
| Net (decrease)/increase in cash and cash equivalents | 17.7 | (2.2) |
| Decrease/(increase) in long term liabilities | (17.5) | (4.2) |
| Translation of foreign currency cash | 0.4 | 0.03 |
| Net cash at the end of the year | 5.0 | 4.4 |
| H1 2018 | FY 2018 | H1 2019 | FY 2019 | H1 2020 | FY 2020 | |
| Declaration | 16 Aug 2018 | 14 Mar 2019 | 22 Aug 2019 | 19 Mar 2020 | 20 Aug 2020 | 18 Mar 2021 |
| Cents per share | 0.6 | 1.5 | 0.7 | 0.7 | 0.9 | 1.3 |
| Dividend amount ($'m) | $0.81 | $2.04 | $0.95 | $0.96 | $1.23 | $2.47 |
| 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 mining 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 contracts, expanding its services into mine-site based activities and expanding into new geographic areas. The focus on long-term contracts is evidenced by the award of five new multi-year contracts in 2020, together with contract extensions at Sukari and Yanfolila. Through the expansion in West Africa and extension of services into earth moving services, together with the acquisition of a Mineral Assay business that operates in both the Americas and Africa, we have further diversified the risk. |
| Fluctuations in value of Investments held | The Group holds investments in a portfolio of both publicly traded and private companies. The accounting value of these investments is marked to market at each reporting date and the fair value adjustment is accordingly recorded in the profit and loss account as an unrealised gain or loss. The value of the investments will change and could materially alter both the Group's reported net assets and net profit position. | The group holds a portfolio of investments in various companies, mitigating the risk of single company weakness. The investments are actively monitored and proactively managed. New investments are required to satisfy a number of criteria with non-executive oversight. In the event of fair value investments becoming an unrealised loss, while this would affect the company's net assets and profitability, it would not affect going concern or cash flow. |
| 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 services 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 two to five years. Contract renewal negotiations are initiated well in advance of expiry of contracts to ensure contract renewals are concluded without interruption to 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 (which includes one extension), five are with new clients, a further four are new sites with existing clients and an additional two long-term contracts were also added to the portfolio. |
| Contract Risk | The Group is reliant on its ability to price contracts accurately Contract -prices -are -generally -set -at -the outset -of -a- customer -contract- following -a competitive- tender -process | -The -Group -goes -through -a -rigorous -process -to- determine- a -price -to -submit as -part -of -the -tender- submission- based -on -a -bottom-up -costing -analysis -with -a 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. |
| 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 mining 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 site operations due to unsafe 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 HSE 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. The Group is also closely engaged with its clients to ensure workplace safety and containment measures are adhered to. |
| 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. While there were continued improvements throughout 2019 and 2020 this remains a key focus area. |
| 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 industry trade shows and conferences. The ELT team members have significant experience and knowledge in their operational field and are aware of all new industry developments. For example, the Group's rigs and Heavy Mining Equipment are outfitted with the latest safety equipment as the technology is proven. |
| Financial Results | |||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME | |||||||||||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||||||||||
| CONSOLIDATED | |||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||||
| Revenue | 134,961,874 | 114,826,796 | |||||||||||||||||||||||
| Cost of sales | (80,065,718) | (69,543,841) | |||||||||||||||||||||||
| Gross profit | 54,896,156 | 45,282,955 | |||||||||||||||||||||||
| Administration expenses | (21,074,206) | (18,003,234) | |||||||||||||||||||||||
| Depreciation | (12,197,072) | (10,637,057) | |||||||||||||||||||||||
| Profit from operations | 21,624,878 | 16,642,664 | |||||||||||||||||||||||
| Share of losses from associate | - | (227,904) | |||||||||||||||||||||||
| Interest income | 256,557 | 182,035 | |||||||||||||||||||||||
| Finance charges | (1,364,222) | (891,750) | |||||||||||||||||||||||
| Fair value gain/(loss) on investments at fair value | 13,574,332 | (1,111,456) | |||||||||||||||||||||||
| Profit before tax | 34,091,545 | 14,593,589 | |||||||||||||||||||||||
| Taxation | 4 | (9,328,357) | (4,215,970) | ||||||||||||||||||||||
| Profit for the year | 24,763,188 | 10,377,619 | |||||||||||||||||||||||
| Other comprehensive income: | |||||||||||||||||||||||||
| Items that will not be reclassified to profit or loss: | |||||||||||||||||||||||||
| Movement in other reserve | - | 287,568 | |||||||||||||||||||||||
| Total other comprehensive income for the year | - | 287,568 | |||||||||||||||||||||||
| Total comprehensive income for the year | 24,763,188 | 10,665,187 | |||||||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||||
| Basic (cents per share) | 5 | 17.76 | 7.7 | ||||||||||||||||||||||
| Diluted (cents per share) | 5 | 17.55 | 7.6 | ||||||||||||||||||||||
| Profit (loss) attributable to: | |||||||||||||||||||||||||
| Owners of the parent | 24,571,452 | 10,416,669 | |||||||||||||||||||||||
| Non-controlling interest | 191,736 | (39,050) | |||||||||||||||||||||||
| 24,763,188 | 10,377,619 | ||||||||||||||||||||||||
| Other comprehensive income (loss) attributable to: | |||||||||||||||||||||||||
| Owners of the parent | - | 288,651 | |||||||||||||||||||||||
| Non-controlling interest | - | (1,082) | |||||||||||||||||||||||
| - | 287,568 | ||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||||
| As at 31 December 2020 | ||||||||||||
| Notes | 2020 | 2019 | ||||||||||
| $ | $ | |||||||||||
| ASSETS | ||||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 7 | 88,970,683 | 52,862,017 | |||||||||
| Right-of-useassets | 629,657 | 679,991 | ||||||||||
| Goodwill | 1,252,348 | 1,252,348 | ||||||||||
| Intangibleassets | 276,248 | 303,191 | ||||||||||
| Total non-current assets | 91,128,936 | 55,097,547 | ||||||||||
| Current assets | ||||||||||||
| Inventory | 10 | 24,689,102 | 17,544,401 | |||||||||
| Trade and other receivables | 18,903,656 | 18,619,228 | ||||||||||
| Prepaid expenses and other assets | 28,394,850 | 6,624,827 | ||||||||||
| Investments at fair value | 27,167,095 | 12,537,105 | ||||||||||
| Taxation | 359,970 | 289,139 | ||||||||||
| Cash and cash equivalents | 35,701,894 | 17,620,623 | ||||||||||
| Total current assets | 135,216,567 | 73,235,323 | ||||||||||
| Total assets | 226,345,503 | 128,332,870 | ||||||||||
| EQUITY AND LIABILITIES | ||||||||||||
| Equity | ||||||||||||
| Share capital | 8 | 18,878 | 13,625 | |||||||||
| Share premium | 8 | 60,169,426 | 22,495,287 | |||||||||
| Equity-settled employee benefits reserve | 1,926,994 | 974,118 | ||||||||||
| Other reserve | 190,056 | 261,301 | ||||||||||
| Retained earnings | 84,384,101 | 62,004,344 | ||||||||||
| 146,689,455 | 85,748,675 | |||||||||||
| Non-controllinginterest | 1,389,315 | 1,199,681 | ||||||||||
| Total equity | 148,078,770 | 86,948,356 | ||||||||||
| Non-current liabilities | ||||||||||||
| Loans and Borrowings | 9 | 26,112,602 | 2,899,754 | |||||||||
| Leaseliabilities | 337,233 | 367,039 | ||||||||||
| Deferred tax liabilities | 13,755 | 31,481 | ||||||||||
| Total non-current liabilities | 26,463,590 | 3,298,274 | ||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) | |
| As at 31 December 2020 | |
| 2020 | 2019 | |||
| $ | $ | |||
| Current liabilities | ||||
| Trade and other payables | 39,711,217 | 23,121,158 | ||
| Taxation | 7,174,749 | 4,335,388 | ||
| Loans and Borrowings | 4,581,111 | 10,294,456 | ||
| Lease liabilities | 336,066 | 335,238 | ||
| Total current liabilities | 51,803,143 | 38,086,240 | ||
| Total equity and liabilities | 226,345,503 | 128,332,870 | ||
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||
| For the year ended 31 December 2020 | ||||||||||||||||||||||
| Share capital | Share premium | Equity settled employee benefits reserve | Other reserve | Retained earnings | Non-controlling interest $ | Total | ||||||||||||||||
| Note | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||
| CONSOLIDATED | ||||||||||||||||||||||
| Balance at January 1, 2019 | 13,581 | 22,231,662 | 409,995 | (26,267) | 54,624,202 | - | 77,253,173 | |||||||||||||||
| Issue of shares | 44 | 263,625 | (263,669) | - | - | - | - | |||||||||||||||
| Recognition of share-based payments | - | - | 827,792 | - | - | - | 827,792 | |||||||||||||||
| Total comprehensive (loss) income for the year | - | - | - | 287,568 | 10,377,619 | - | 10,665,187 | |||||||||||||||
| Profit for the year | - | - | - | - | 10,377,619 | - | 10,377,619 | |||||||||||||||
| Other comprehensive (loss) income for the year, net of tax | - | - | - | 287,568 | - | - | 287,568 | |||||||||||||||
| Dividends paid | - | - | - | - | (2,997,477) | - | (2,997,477) | |||||||||||||||
| Business Combinations | - | - | - | - | 1,199,681 | 1,199,681 | ||||||||||||||||
| Balance at 31 December 2019 (Audited) | 13,625 | 22,495,287 | 974,118 | 261,301 | 62,004,344 | 1,199,681 | 86,948,356 | |||||||||||||||
| Issue of shares | 5,253 | 40,743,147 | (458,740) | - | - | - | 40,289,660 | |||||||||||||||
| Expenses paid on equity raise | (3,069,008) | - | - | - | - | (3,069,008) | ||||||||||||||||
| Recognition of share-based payments | - | - | 1,411,616 | - | - | - | 1,411,616 | |||||||||||||||
| Purchase of shares from minority | - | - | - | - | - | (2,102) | (2,102) | |||||||||||||||
| Movement to intangible assets | (71,245) | - | - | (71,245) | ||||||||||||||||||
| Total comprehensive income for the year | - | - | - | - | 24,571,452 | 191,736 | 24,763,188 | |||||||||||||||
| Profit for the year | - | - | - | - | 24,571,452 | 191,736 | 24,763,188 | |||||||||||||||
| Other comprehensive income for the year, net of tax | - | - | - | - | - | - | - | |||||||||||||||
| Dividends paid | 6 | - | - | - | - | (2,191,695) | - | (2,191,695) | ||||||||||||||
| Balance at 31 December 2020 | 18,878 | 60,169,426 | 1,926,994 | 190,056 | 84,384,101 | 1,389,315 | 148,078,770 | |||||||||||||||
| CONDENSED STATEMENT OF CASH FLOWS | |||||
| For the year ended 31 December 2020 |
| CONSOLIDATED | |||||||||
| Notes | 2020 | 2019 | |||||||
| $ | $ | ||||||||
| Operating activities: | |||||||||
| Cash generated from operations | 11 | 35,987,566 | 28,690,964 | ||||||
| Interest received | 256,557 | 182,035 | |||||||
| Finance charges paid | (1,340,098) | (659,292) | |||||||
| Taxation paid | (6,577,555) | (3,541,389) | |||||||
| Net cash generated from operating activities | 28,326,470 | 24,672,318 | |||||||
| Investing activities: | |||||||||
| Purchase of property, plant and equipment | 7 | (42,232,001) | (15,849,548) | ||||||
| Net cash from MSA acquisition | - | 166,255 | |||||||
| Purchase of investments | (6,398,269) | (9,682,412) | |||||||
| Proceeds from sale of investments at fair value | 6,562,856 | 1,738,964 | |||||||
| Proceeds from disposal of property, plant and equipment | 42,990 | 6,754 | |||||||
| Purchase of intangible asset | (44,302) | - | |||||||
| Cash paid for asset acquisition | (716,752) | - | |||||||
| Cash paid in advance for property, plant and equipment | (17,933,019) | - | |||||||
| Net cash used in investing activities | (60,718,497) | (23,619,987) | |||||||
| Financing activities: | |||||||||
| Proceeds from new loans | 16,000,000 | 2,000,000 | |||||||
| Repayment of loans | (1,062,766) | (2,000,000) | |||||||
| Repayments of leases - principal | (453,611) | (289,537) | |||||||
| Dividend paid | 6 | (2,191,695) | (2,997,477) | ||||||
| Gross proceeds on equity raise | 40,289,660 | - | |||||||
| Expenses paid on equity raise | (2,486,602) | - | |||||||
| Net cash generated from/(used in) financing activities | 50,094,986 | (3,287,014) | |||||||
| Net increase/(decrease) in cash and cash equivalents | 17,702,959 | (2,234,683) | |||||||
| Cash and cash equivalents at the beginning of the year | 17,620,623 | 19,888,764 | |||||||
| Effect of exchange rate movement on cash balances | 378,312 | (33,458) | |||||||
| Cash and cash equivalents at the end of the year | 35,701,894 | 17,620,623 | |||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | ||||||||||||||
| For the year ended 31 December 2020 | ||||||||||||||
| 1. | Basis of preparation | |||||||||||||
| The preliminary condensed consolidated financial statements are prepared on the going concern basis under the historical cost convention, except for certain financial instruments which are measured at fair value. The directors are responsible for the preparation of the preliminary announcement. | ||||||||||||||
| The condensed consolidated financial statements included in this preliminary announcement has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with the disclosure requirements of IFRS. The Group's 2020 Annual Consolidated Financial Statements have been prepared in accordance with IFRS. The preliminary announcement does not constitute a dissemination of the annual financial reports. A separate dissemination announcement in accordance with Disclosure and Transparency Rules (DTR) 6.3 will be made when the Annual Report and audited consolidated Financial Statements are available on the Company's website. The accounting policies are in terms of IFRS and consistent with those of the prior year. | ||||||||||||||
| The financial information for the years ended 31 December 2020 and 2019 does not constitute the annual financial statements. The annual consolidated financial statements for the year ended 31 December 2019 and 2020 were completed and received an unmodified audit report from the Company's Auditors. | ||||||||||||||
| 2. | Operations during the year | |||||||||||||
| 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. During the year ended 31 December 2020, the Group provided drilling services in Botswana, Burkina Faso, Cameroon, Côte d'Ivoire, Guinea, Egypt, Mauritania, Mali, Saudi Arabia and Tanzania. The Group's administrative office is located in Mauritius. | ||||||||||||||
| 3. | Segment 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: | ||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||||||||||
| 3. | Segment analysis (continued) | ||||||||||||||||||||||||
| · Africa: | Derives revenue from the provision of drilling services, equipment rental, IT support services and mineral assaying. | ||||||||||||||||||||||||
| · Rest of world: | Derives revenue from the provision of drilling services, equipment rental, IT support services and mineral assaying. | ||||||||||||||||||||||||
| The following is an analysis of the Group's revenue and results by reportable segment: | |||||||||||||||||||||||||
| Africa | Rest of world | Consolidated | |||||||||||||||||||||||
| $ | $ | $ | |||||||||||||||||||||||
| 2020 | |||||||||||||||||||||||||
| External revenue | 118,892,158 | 16,069,716 | 134,961,874 | ||||||||||||||||||||||
| Segment profit (loss) | 42,983,120 | (19,213,658) | 23,769,462 | ||||||||||||||||||||||
| Central administration costs and depreciation | (2,144,584) | ||||||||||||||||||||||||
| Profit from operations | 21,624,878 | ||||||||||||||||||||||||
| Interest income | 256,557 | ||||||||||||||||||||||||
| Finance charges | (1,364,222) | ||||||||||||||||||||||||
| Fair value gain on investments at fair value | 13,574,332 | ||||||||||||||||||||||||
| Profit before tax | 34,091,545 | ||||||||||||||||||||||||
| The total revenue of $118.9m from the Africa segment includes $70.6m (2019: $70.5m) from customers that represent more than 10% of the Group's revenue. | |||||||||||||||||||||||||
| 2019 Audited | |||||||||||||||||||||||||
| External revenue | 110,621,737 | 4,205,059 | 114,826,796 | ||||||||||||||||||||||
| Segment profit (loss) | 36,501,271 | (18,112,362) | 18,388,909 | ||||||||||||||||||||||
| Central administration costs and depreciation | (1,746,245) | ||||||||||||||||||||||||
| Profit from operations | 16,642,664 | ||||||||||||||||||||||||
| Interest income | 182,035 | ||||||||||||||||||||||||
| Share of losses from associate | (227,904) | ||||||||||||||||||||||||
| Finance charges | (891,750) | ||||||||||||||||||||||||
| Net loss on financial assets at fair value through profit and loss | (1,111,456) | ||||||||||||||||||||||||
| Profit before tax | 14,593,589 | ||||||||||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | ||||||||||||
| For the year ended 31 December 2020 | ||||||||||||
| CONSOLIDATED | ||||||||||||
| 2020 | 2019 | |||||||||||
| $ | $ | |||||||||||
| 3. | Segment analysis (continued) | |||||||||||
| Segment assets and liabilities: | ||||||||||||
| The following is an analysis of the Group's assets and liabilities by reportable segment: | ||||||||||||
| Segment assets: | ||||||||||||
| Africa | 276,239,160 | 184,635,830 | ||||||||||
| Rest of world | 48,615,789 | 29,823,155 | ||||||||||
| Total segment assets | 324,854,949 | 214,458,985 | ||||||||||
| Head office companies | 209,060,235 | 138,073,761 | ||||||||||
| 533,915,184 | 352,532,746 | |||||||||||
| Eliminations | (307,569,681) | (224,199,876) | ||||||||||
| Total Assets | 226,345,503 | 128,332,870 | ||||||||||
| Segment liabilities: | ||||||||||||
| Africa | 150,572,691 | 85,462,428 | ||||||||||
| Rest of world | 37,338,422 | 28,745,632 | ||||||||||
| Total segment assets | 187,911,113 | 114,208,060 | ||||||||||
| Head office companies | 189,124,661 | 145,304,748 | ||||||||||
| 377,035,774 | 259,512,808 | |||||||||||
| Eliminations | (298,769,041) | (218,128,294) | ||||||||||
| Total Liabilities | 78,266,733 | 41,384,514 | ||||||||||
| Revenue | Non-current assets | ||||
| 2020 | 2019 | 2020 | 2019 | ||
| MiddleEast/NorthAfrica | 44,620,151 | 37,955,032 | 41,357,995 | 10,563,547 | |
| South & East Africa | 43,448,759 | 47,484,365 | 12,246,215 | 14,319,439 | |
| West Africa | 39,699,664 | 23,917,494 | 24,682,269 | 15,072,028 | |
| Others | 7,193,300 | 5,469,905 | 12,842,457 | 15,142,533 | |
| 134,961,874 | 114,826,796 | 91,128,936 | 55,097,547 | ||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||
| 4. | 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 relates to 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 judgment 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. Refer to Note 14 (Contingencies) for more detail on Tanzania, Zambia and Mauritania. | |||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | ||||||||||||||||||
| For the year ended 31 December 2020 | ||||||||||||||||||
| CONSOLIDATED | ||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||
| $ | $ | |||||||||||||||||
| 5. | Earnings per share | |||||||||||||||||
| Basic earnings per share | ||||||||||||||||||
| The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: | ||||||||||||||||||
| Earnings for the year, used in the calculation of basic earnings per share | 24,571,452 | 10,416,669 | ||||||||||||||||
| Weighted average number of ordinary shares for the purposes of basic earnings per share | 138,367,746 | 136,138,967 | ||||||||||||||||
| Basic earnings per share (cents) | 17.8 | 7.7 | ||||||||||||||||
| Diluted earnings per share | ||||||||||||||||||
| The earnings 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 | 138,367,746 | 136,138,967 | ||||||||||||||||
| Shares deemed to be issued for no consideration in respect of: | ||||||||||||||||||
| - Dilutive share options # | 149,023 | 639,688 | ||||||||||||||||
| - Effect of STIP and LTIP shares | 1,478,469 | 856,104 | ||||||||||||||||
| Weighted average number of ordinary shares used in the calculation of diluted earnings per share | 139,995,238 | 137,634,759 | ||||||||||||||||
| Diluted earnings per share (cents) | 17.6 | 7.6 | ||||||||||||||||
| # For the purposes of calculating diluted earnings per share, the share options of 2.16 million were excluded as they are anti-dilutive as the exercise price is higher than the average share price. | ||||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6. | Dividends | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends paid: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Final dividend in respect of the year | 2,191,695 | 2,997,477 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total dividends paid | 2,191,695 | 2,997,477 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| During the 12 months ended 31 December 2020, a dividend of 0.7 cents (2019: 1.5 cent) per ordinary share, totalling to $958,866 (2019:$2,043,734) was declared as the final dividend for 2019 and paid to the shareholders on 04 May 2020 (2019: 03 May 2019) followed by a further dividend of 0.9 cents (2019: 0.7 cents) per share which was declared as interim dividend for 2020 totalling $1,232,828 (2019: $953,743) and paid on 25 September 2020 (2019: 27 September 2019). The total dividend paid is $2,191,695 (2019: $2,997,477). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In respect of the year ended December 31, 2020, the Directors propose that a final dividend of 1.3 cents (2019: 0.7 cents) per share be paid to shareholders on 04 May 2021 (2019: 04 May 2020). This final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these Consolidated Financial Statements. The proposed final dividend is payable to all shareholders on the Register of Members on 9 April 2021 (2019: 14 April 2019). The total estimated final dividend to be paid is $2.5 million (2019: $0.96 million). The payment of this final dividend will not have any tax consequences for the Group. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7. | Property, plant and equipment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the year ended 31 December 2020, the Group spent $46.9 million (2019: $19.8 million) on drilling rigs and other assets to expand its operations, safety upgrades and for the replacement of existing assets. An additional $1.8m was acquired through the purchase of ELAM. The Group disposed of property, plant and equipment with a net book value of $0.8 million (2019: $0.5 million) during the year. A loss of $0.8 million (2019: $0.4 million) was incurred on the disposal of property, plant and equipment. Not reflected in the Cash Flow is a $2.6 million asset finance facility obtained from Epiroc Financial Solutions for the purchase of 3 Rigs and $2 million of assets purchased on credit. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8. | Share capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Authorised | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,000,000,000 (2019: 2,000,000,000) ordinary shares of 0.0001 cents (2019: 0.0001 cents) each | 200,000 | 200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of ordinary shares issued | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 188,780,903 (2019: 136,248,953) ordinary shares of 0.0001 cents (2019: 0.0001 cents) each | 18,878 | 13,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share premium | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at the beginning of the year | 22,495,287 | 22,231,662 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share issue | 37,674,139 | 263,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at the end of the year | 60,169,426 | 22,495,287 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On 26 March 2020, the Company issued 731,950 new common shares 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 0.0001 cents, carry one vote per share and carry rights to dividend. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8. | Share capital (Cont'd) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On 21 December 2020, the Company issued 51,800,000 new common shares as part of an equity raise to finance the purchase of mining equipment and working capital for the Group's expansion of its mining activities in Egypt. These shares rank pari passu with the existing ordinary shares, have a par value of 0.0001 cents and carry one vote per share and carry rights to dividend. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9. | Loans and Borrowings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long term liabilities consist of (a) $15 million revolving credit facility ("RCF") provided by Standard Bank (Mauritius) Limited | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The RCF was renewed on 30 July 2020 for a further term of three years. The interest rate on the RCF is the prevailing three month US LIBOR plus a margin of 6.5% (payable quarterly in arrears) and an annual commitment fee of 2.275% of the undrawn balance. 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. The facility was fully drawn as at 31December 2020. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 31 December 2020, an amount of $2.7 million remained outstanding under this facility. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (c) $ 0.2 million Hire purchase agreement with Ma'aden Barrick Copper Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The agreement was entered into for the purchase of one rig and is repayable over two years in fixed monthly instalments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (d) $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). The facility was fully drawn as at 31 December 2020. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (e) $10 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 31 December 2020. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| During the year under review, the Group has complied with all covenants that attached to both the RCF and the term loan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9. | Loans and Borrowings (Cont'd) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On 19 November 2020, the Group entered into a 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 31 December 2020, the facility remained undrawn and fully available. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at the beginning of the year | 13,194,210 | 9,029,884 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amounts received during the year | 18,649,798 | 5,971,650 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest accrued during the year | 1,196,504 | 851,968 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest paid during the year | (1,098,963) | (659,292) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitment fees expensed/paid | (185,070) | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principal repayments during the year | (1,062,766) | (2,000,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30,693,713 | 13,194,210 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Current portion included under current liabilities | (4,581,111) | (10,294,456) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Due after more than one year | 26,112,602 | 2,899,754 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10. | Inventory | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The cost of inventories recognised as an expense in the current year amounts to $9.8m (2019: $10.1m). During the year, the Group wrote off $385k (2019: $524k) of inventory. An additional provision of $102k (2019: $110k) was made during the year, resulting in an increase in the carrying amount of the provision. Refer to Note 4 for details of the amount of write-down of inventories recognised as an expense in the period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the year ended 31 December 2020 | ||||||||||||||||||||||||||||||||||||
| CONSOLIDATED | ||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||||
| 11. | Cash generated from operations | |||||||||||||||||||||||||||||||||||
| Profit before tax | 34,091,545 | 14,593,589 | ||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||
| - Depreciation | 11,778,170 | 10,372,879 | ||||||||||||||||||||||||||||||||||
| - Loss on disposal of property, plant and equipment | 778,847 | 448,495 | ||||||||||||||||||||||||||||||||||
| - Depreciation of Right of use assets | 418,902 | 264,178 | ||||||||||||||||||||||||||||||||||
| - Share based payment expense | 1,411,616 | 827,792 | ||||||||||||||||||||||||||||||||||
| - Fair value gain/(loss) on investments at fair value | (13,574,332) | 1,111,456 | ||||||||||||||||||||||||||||||||||
| - Interest income | (256,557) | (182,035) | ||||||||||||||||||||||||||||||||||
| - Share of loss from associate | - | 227,904 | ||||||||||||||||||||||||||||||||||
| - Finance charges | 1,364,222 | 891,750 | ||||||||||||||||||||||||||||||||||
| - Unrealised foreign exchange loss/(gain) on foreign cash held | (378,312) | 33,458 | ||||||||||||||||||||||||||||||||||
| Operating cash flows before working capital changes | 35,634,101 | 28,589,466 | ||||||||||||||||||||||||||||||||||
| Adjustments for working capital changes: | ||||||||||||||||||||||||||||||||||||
| - (Increase)/Decrease in inventory | (7,074,833) | 1,594,687 | ||||||||||||||||||||||||||||||||||
| - Increase in trade and other receivables | (5,170,082) | (5,023,468) | ||||||||||||||||||||||||||||||||||
| - Increase in trade and other payables | 12,598,380 | 3,530,279 | ||||||||||||||||||||||||||||||||||
| 35,987,566 | 28,690,964 | |||||||||||||||||||||||||||||||||||
| CONSOLIDATED | ||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||||
| 12. | Commitments | |||||||||||||||||||||||||||||||||||
| The Group has the following commitments: | ||||||||||||||||||||||||||||||||||||
| Committed capital expenditure | 35,647,233 | 745,238 | ||||||||||||||||||||||||||||||||||
| The Group had outstanding purchase orders amounting to $40.2 million (2019: $1.1 million) at the end of the reporting period of which $35.6 million [2019: $0.7 million] were for capital expenditure. $32.2 million of the increase relates to the order of assets for the Sukari waste stripping and drilling contracts. | ||||||||||||||||||||||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||
| For the year ended 31 December 2020 | |||||||||
| 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 for the tax years 2007 to 2013. | |||||||||
| Following an integrated audit completed by the ZRA between 1 and 19 September 2014, on 30 April 2015, CDZ received a tax assessment from the Zambian Revenue Authority totalling Zambian Kwacha 149,978,783 ($8.3 million), inclusive of penalties and interest. The claims relate to various taxes, including income tax, value added tax, payroll tax (PAYE) and withholding tax. Since the assessment date, the management of CDZ has responded in detail to these claims, providing the Zambian Revenue Authority with detailed analysis and arguments justifying CDZ'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 regarding this matter since June 2016. | |||||||||
| Tanzania tax: | |||||||||||||||||
| 2009-15 tax audit | |||||||||||||||||
| Capital Drilling (T) Ltd ("CDT"), a subsidiary of the Company, 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 18.6 billion Tanzanian Shillings ("TZS") (US$8.0 million), inclusive of penalties and interest. The management of CDT objected to the assessment raised by the TRA and requested the calculations of the notice. In order to object, according to Tanzanian tax law, a taxpayer is required to pay the tax amount not in dispute or one third of the assessed tax whichever is greater. CDT's management reached an agreement with the TRA and paid TZS 1.5 billion (US$0.7 million) in lieu of one third of the assessed value. | |||||||||||||||||
| In June 2017 the TRA provided its calculations to CDT, in which CDT identified differences with the TRA on both the facts and methodology used to determine the tax payable. In order to continue the discussions and negotiations with the TRA, CDT has, at the request of the TRA, paid an additional amount of TZS 1.1 billion (US$0.4 million), increasing the total amount paid to TZS 2.6 billion (US$1.1 million) as at 31 December 2018. | |||||||||||||||||
| CDT is of the view that the US$1.1 million already paid represents the maximum potential tax liability. However, on 3 February 2020, the TRA issued an updated assessment of TZS 22.5 billion (US$9.8 million) which comprises a principal amount of TZS 7.3 billion (US$3.2 million) and interest of TZS 15.2 billion (US$6.6 million). CDT has lodged an appeal at the Tanzania Revenue Appeals Board (TRAB), which was dismissed on a technicality on 25th September 2020. Since then, CDT has lodged a Notice of Intention to Appeal against the decision of the TRAB at the Tanzania Revenue Appeals Tribunal. The appeal will be lodged within the statutory timeframes that procedurally commence once the TRAB issues CDT with copies of proceedings and the full text of the Ruling, both of which are required in order to lodge the appeal. CDT remains confident that its appeal will be successful. | |||||||||||||||||
| CDT is confident with the position presented to the TRA and, concurrent with the ongoing formal TRAB appeal procedure, continues to engage with the TRA to seek a negotiated resolution. | |||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||
| 13. | Contingencies (Continued) | ||||||||||||||||
| Tanzania tax: (Cont'd) | |||||||||||||||||
| 2016-18 tax audit | |||||||||||||||||
| The TRA issued an initial assessment of $4.5m for 2016-18 in December 2019. Through negotiation, this was reduced to $2.4 million in May 2020. | |||||||||||||||||
| In the year ended 31 December 2020, a total of $0.7 million was paid in order to allow CDT to proceed with lodging formal objections. These were lodged in June 2020 and have been acknowledged by the TRA. No other communication on this matter has been forthcoming. | |||||||||||||||||
| $0.7m is also 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. | |||||||||||||||||
| Mauritania tax: | |||||||||||||||||
| 2016-2018 tax audit | |||||||||||||||||
| On 20 February 2020, Capital Drilling Mauritania SARL ("CDM") received a tax assessment from the Mauritanian Revenue Authority ("MRA") for the tax years 2016-2018. The assessment totalled $2.8m inclusive of penalties and interest. CDM's management responded to these claims in detail, strongly refuting the position taken by the MRA. An amount of $1.8m was provided for in the Group's accounts as at 30 June 2020. | |||||||||||||||||
| With additional interest, the total assessment increased from $2.8m to $3.2m. Through discussions with the Director of the MRA, the tax assessment was reduced to $1.8m, which was paid in full by 31 December 2020. | |||||||||||||||||
| The 2016-18 audit is now closed and the MRA has indicated that withholding tax credits of $0.6m paid during the period will be refunded to CDM. No asset has been recognised for these withholding tax credits. | |||||||||||||||||
| 2019 tax audit | |||||||||||||||||
| On 25 November 2020, CDM received notification that the MRA has commenced a routine tax audit into the 2019 tax year and, on 21 December 2020, the MRA issued a payment demand for a total of $1.9m including penalties. | |||||||||||||||||
| Management considers that the maximum exposure is $0.7m, including penalties. A payment of $0.3m was made before the end of 2020, leaving $0.4m payable based on management's analysis. However, in February 2020 CDM was required to sign a payment plan for $1.7m, including an additional $0.1m penalties, in order for the case to proceed to a full technical review by the MRA. As at 31 December 2020, $1.0m has been provided but the final negotiated position is expected to be significantly closer to Management's estimate of the remaining exposure. | |||||||||||||||||
| NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS | |||||||||||||||||
| For the year ended 31 December 2020 | |||||||||||||||||
| 14. | Glossary | ||||||||||||||||
| A description of various acronyms is detailed below: | |||||||||||||||||
| ARPOR CAPEX | Average Revenue Per Operating Rig Capital Expenditure | ||||||||||||||||
| EBIT | Earnings (Loss) Before Interest and Taxes | ||||||||||||||||
| EBITDA | Earnings (Loss) Before Interest, Taxes, Depreciation and Amortisation | ||||||||||||||||
| EPS | Earnings (Loss) Per Share | ||||||||||||||||
| ETR | Effective Tax Rate | ||||||||||||||||
| HSSE | Health, Safety, Social and Environment | ||||||||||||||||
| KPI | Key Performance Indicator | ||||||||||||||||
| LTI | Lost Time Injury | ||||||||||||||||
| LTM | Last Twelve Months | ||||||||||||||||
| NPAT | Net Profit (Loss) After Tax | ||||||||||||||||
| PBT | Profit (Loss) Before Tax | ||||||||||||||||
| YOY | Year On Year | ||||||||||||||||
| Return on capital employed | LTM EBIT / (Equity) | ||||||||||||||||
| Return on total assets | LTM EBIT / Total Assets | ||||||||||||||||