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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Capital Limited | LSE:CAPD | London | Ordinary Share | BMG022411000 | COMM SHS USD0.0001 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 5.50 | 5.64% | 103.00 | 101.50 | 103.00 | 102.50 | 98.00 | 98.00 | 108,785 | 16:35:14 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Oil And Gas Field Expl Svcs | 318.42M | 36.74M | 0.1897 | 5.40 | 198.54M |
TIDMCAPD
RNS Number : 3948H
Capital Drilling Limited
17 August 2016
Hot Features
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For Immediate Release 17 August 2016
Capital Drilling Limited
("Capital Drilling", the "Group" or "the Company")
Half-year Results
For the period ended 30 June 2016 and Interim Dividend
Capital Drilling Limited (LSE: CAPD), the emerging and developing markets focused drilling company, today announces its half year results for the period ended 30 June 2016.
HALF YEAR RESULTS FOR THE PERIODED 30 JUNE 2016*
H1 2016 H1 2015
$m $m
Average Fleet
Size (No. of drill
rigs) 94 97
Fleet Utilisation
(%) 40 34
ARPOR ($) 175,000 189,000
Revenue 41.7 39.0
EBITDA 7.3 7.9
EBIT 0.2 0.6
Net (Loss) Profit
After Tax (0.8) (3.2)
Cash from operations 7.7 10.3
Earnings per share
Basic (cents) (0.6) (2.4)
Diluted (cents) (0.6) (2.4)
Interim Dividend
per share (cents) 1.5 1.1
Net Asset Value
per share (cents) 54.5 63.2
Return On Capital
Employed (%)(**) (6.4) 0.5
Return on Total
Assets (%)(**) (5.1) 0.4
Net Cash 7.0 2.2
Net Cash to Equity
(%) 9.5 2.5
---------------------- -------- --------
* All amounts are in USD unless otherwise stated
** Twelve months rolling average
Financial Overview
-- First half revenue 5.0% higher at $41.7 million compared to H2 2015 of $39.7 million (H1 2015: $39.0 million)
-- Continued strength in net cash generated from operations of $7.7 million -- Operating cash flow margin of 18.6% (H1 2015: 26.5%)
-- Cash reserves increased to $14.2 million at 30 June 2016 from $13.4 million at 31 December 2015
-- Net cash of $7.0 million compared to $8.3 million at 31 December 2015 (H1 2015: $2.2 million)
-- Final dividend in relation to the 2015 financial year of $3.4 million paid during H1 2015 (H1 2014: $2.6 million)
-- Interim dividend up 36% to 1.5 cents per share to be paid on 7(th) October 2016 (2015: Interim dividend of 1.1 cents per share paid on 9 October 2015)
Operational & Strategic Overview
-- New contracts awarded in H1 2016 include: >> Alexander Nubia, Egypt: 1 diamond rig, commenced March >> Algold, Mauritania: 1 multi-purpose rig, commenced May >> OreCorp Limited, Mauritania; 1 diamond rig, commenced March >> Tanga Resources, Tanzania: 1 multi-purpose rig, commenced April -- H1 utilisation of 40%, up from 34% in H1 2015, on an average fleet size of 94 rigs
-- H1 Average Revenue per Operating Rig (ARPOR) fell to $175,000 (H1 2015: $189,000) due to the increase in RC drilling
-- Contracts awarded after period end:
>> RAKITA Exploration (part of the Freeport McMoran Company), Serbia: 4 deep hole exploration directional drilling rigs, commenced early August
>> Ascom Mining, Ethiopia: 2 diamond rigs, commenced July >> Resolute, Mali: 1 diamond rig, commenced July -- Purchase and delivery of two new deep hole exploration rigs to support the RAKITA contract
Outlook
-- Trading conditions continue to show positive signs of improvement, resulting in increased tendering
-- Strengthening gold price and increasing interest in the resources sector by global capital markets
-- Long-term core production and grade control contracts in Egypt and Tanzania continue to diversify and underpin performance
-- Increasing exploration activity for new contracts and success with the Lean Operating Model generated additional revenue in Q2 and improving exploration fleet utilisation
Health & Safety
-- Previously announced World Class Achievement for Tanzania (Geita Gold Mine) which achieved 9 Years LTI free in April 2016, and other achievements of world class safety milestones, including:
>> Tanzania (Mwanza Support Facility) achieved 8 years LTI free in January 2016 >> Mauritania (Tasiast Project) achieved 5 years LTI free in February 2016 >> Botswana (Cupric Project) achieved 1 year LTI free in March 2016
Financials
Statement H1 FY Statement of Cash Flow H1 H1
of Financial 2016 2015 Data 2016 2015
Position Data $m $m $m $m
--------------------- ------ ------ --------------------------- ------- -------
$m $m $m $m
--------------------- ------ ------ --------------------------- ------- -------
Operating cash flows
Non-Current before working capital
Assets 46.6 49.7 changes 8.1 8.1
--------------------- ------ ------ --------------------------- ------- -------
Adjustments for working
Current Assets 46.3 45.7 capital changes (0.3) 2.2
--------------------- ------ ------ --------------------------- ------- -------
Total Assets 92.9 95.4 Cash from operations 7.8 10.3
--------------------- ------ ------ --------------------------- ------- -------
Non-Current
Liabilities 7.4 5.2 Finance charges (0.1) (0.5)
--------------------- ------ ------ --------------------------- ------- -------
Current Liabilities 12.1 13.5 Taxation (1.3) (0.2)
--------------------- ------ ------ --------------------------- ------- -------
Net cash generated
Total Liabilities 19.5 18.7 from operating activities 6.4 9.6
--------------------- ------ ------ --------------------------- ------- -------
Equity 73.4 76.7 Investing Activities
--------------------- ------ ------ --------------------------- ------- -------
Net cash used in investing
Cash 14.2 13.4 activities (3.8) (4.3)
--------------------- ------ ------ --------------------------- ------- -------
Debt 7.2 5.1 Financing Activities
--------------------- ------ ------ --------------------------- ------- -------
Movement in long term
Net Cash 7.0 8.3 liabilities 2.0 (2.0)
--------------------- ------ ------ --------------------------- ------- -------
Dividend paid (3.4) (2.6)
--------------------------- ------- -------
Net cash used in financing
activities (1.4) (4.6)
--------------------------- ------- -------
Net increase (decrease)
in cash 1.2 0.7
--------------------------- ------- -------
Opening cash balance 13.4 13.4
--------------------------- ------- -------
FX on cash (0.4) (0.4)
--------------------------- ------- -------
Closing cash balance 14.2 15.2
--------------------------- ------- -------
Commenting on the results, Mark Parsons, CEO of Capital Drilling, said:
"The increasing interest from the mining industry, particularly over the last few months, to invest in assets combined with the firming of selected metal pricing, has injected some momentum in tendering for new contracts as well higher demand from existing clients for the Group's drilling solution services.
The combination of deploying our Lean Operating Model in a steadily improving market environment, particularly the gold industry, our largest market segment, has seen utilization of our exploration rigs improve in line with our growth strategy. Our focus on geographic expansion has also been successful with projects awarded and mobilized in Mali, West Africa, Serbia in Europe, and re-entry into Ethiopia.
For the balance of FY16 we will continue to focus on: further geographic and underground expansion in emerging markets; building on our operational capability to ensure we are appropriately resourced to manage increasing activity levels; diligently managing our costs and providing excellence across a full range of drilling services.
We have a highly competitive operational model, diversified long-term contracts, a strong balance sheet, and a progressive dividend policy - Capital Drilling remains confident that it can continue to leverage its position in what appears to be a sustainable upswing in our core markets."
Capital Drilling will host a conference call on Wednesday 17 August at 9am (London, UK time) to update investors and analysts on its results. Participants may join the call by dialling one of the following numbers, approximately 10 minutes before the start of the call. A copy of the Company's presentation will be available on www.capdrill.com.
UK and International dial in: +44 (0)203 043 2014
ID Number: 832337
For further information, please visit Capital Drilling's website www.capdrill.com or contact:
Capital Drilling Limited +230 464 3250 Jamie Boyton, Chairman investor@capdrill.com
Mark Parsons, Chief Executive Officer
finnCap +44 (0)20 7220 0500
Christopher Raggett, Corporate Finance
Joanna Scott/Tim Redfern, Corporate Broking
Buchanan +44 (0)20 7466 5000
Bobby Morse capitaldrilling@buchanan.uk.com
Gemma Mostyn-Owen
About Capital Drilling
Capital Drilling provides specialised drilling services to mineral exploration and mining companies in emerging and developing markets, for exploration, development and production stage projects. The Company currently owns and operates a fleet of 94 drilling rigs with established operations in Botswana, Chile, Egypt, Ethiopia, Mali, Mauritania, Serbia and Tanzania.
Chief Executive Officer Review
Market conditions over the first half of 2016 remain encouraging for Capital Drilling and suggest a sustained cyclical upswing. Improved conditions are generating additional exploration drilling project opportunities, which are expanding both in size and duration. Mining companies have also begun to allocate budget expenditure to new brownfield exploration programs. These developments can largely be attributed to the continued confidence in the sustainability of the recovery of the gold price, together with positive movements for copper, nickel and zinc. Capital Drilling also has begun to see the benefits of increased activity as new exploration contracts extend into longer term programs.
Improvement in the sector has seen the Company experience half-yearly revenue growth since 2014. A marginal increase was reported in the second half of 2015 as the business stabilized from the historical lows of the industry downturn, with a further 3.4% increase in the first half of this financial year. Group revenue for 1H16 was $41.7 million, up from $39.7 million (2H15) and $39.0 million in 1H15 (up 7.0% on 1H15).
Similarly, Capital Drilling has seen incremental increases in its average rig utilization. Utilization for this half was 40%, up from 34% in the first half of 2015 and 35% in the second half. Indeed, Q2 alone this year saw a sharp 22% increase in rig utilisation from Q1 as Capital Drilling delivered on contracts won late in that quarter. All production rigs are fully utilized and focus remains on improving utilization of the exploration fleet. Recently the Company has been successful in a number of tenders for exploration and delineation projects.
Average revenue per operating rig (ARPOR) was down on the previous half due to an increase in reverse circulation (RC) drilling. This type of exploration drilling traditionally yields intermittent revenues due to the stop/start nature through the month resulting in lower overall revenue than production or diamond drilling, in turn negatively impacting ARPOR. Despite this decrease, gross profit margins were successfully maintained due to the Lean Operating Model.
As a result of the upswing of the market, the Group has been preparing its stacked exploration fleet to meet its stringent Drilling Equipment Standard (DES) and ensuring it is operationally ready. The DES provides minimum standards to consistently improve productivity and ensure safe operating conditions on site. Greater exploration activity has also increased expenditure on mobilization, customs and duties in the first half.
Operational Delivery
In the first quarter of 2015, the Group implemented its Lean Operating Model to combat the competitive exploration and delineation markets. This approach continues to deliver benefits, with the award of several new contracts in 1H16 increasing utilization of the exploration fleet. New contracts awarded over the period include:
-- Contracts awarded in H1 2016: >> Alexander Nubia, Egypt: 1 diamond rig, commenced March >> Algold, Mauritania: 1 multi-purpose rig, commenced May >> OreCorp Limited, Mauritania; 1 diamond rig, commenced March >> Tanga Resources, Tanzania: 1 multi-purpose rig, commenced April -- Contracts awarded after period end:
>> RAKITA Exploration (part of the Freeport McMoran Company), Serbia: 4 deep hole exploration directional drilling rigs, commenced early August
>> Ascom Mining, Ethiopia: 2 diamond rigs, mobilised on June, commenced in July >> Resolute, Mali: 1 diamond rig, mobilised in June, commenced in July
Capital Drilling's long-term core production contracts in Egypt (Centamin's Sukari Gold Mine) and Tanzania (AngloGold Ashanti's Geita Gold Mine) continue to underpin performance, providing a stable revenue base for the Group. Additionally, the new Blast Hole and Grade Control contract at Acacia's North Mara Gold Mine is performing well and has diversified the long-term core production contract portfolio.
The Company is operating a fleet of 94 rigs, a significant investment that positions it well to capitalize on improving market conditions. All production rigs are fully utilized on long term contracts - focus for the remainder of 2016 will be on improving utilization of the exploration fleet using the Lean Operating Model. We are already seeing the rewards of this and a benefit from the upswing in the mining industry as a whole as the Company won four new exploration contracts in H1 and three more post-period end.
Quality, Health and Safety
Capital Drilling continues to focus on developing an overarching safety culture throughout the organization. Driven by the Executive Leadership Team (ELT), visible safety leadership across the company is considered of paramount importance.
Capital Drilling is also pleased to report there were no lost time injuries (LTIs) or significant incidents during the start-up of its production contract in North Mara or its other lean operating projects in Mauritania, Egypt, Ethiopia and Mali.
Other significant health and safety achievements for the half as previously announced include:
-- Nine years LTI free at the Geita Gold Mine in Tanzania, April 2016; -- Eight years LTI free at the Mwanza Support Facility in Tanzania, January 2016; -- Five years LTI at the Tasiast Gold Mine in Mauritania, February 2016; and -- One year LTI at the new Khoemacau Copper Project in Botswana, March 2016.
Capital Drilling is continually upgrading its fleet to ensure it meets the company's DES to enable consistently high productivity and safe operating conditions and to mitigate potential risks to employees or other personnel on site.
Dividends
The Directors have declared an increased interim dividend of US1.5 cents per share for the first half of 2016 versus US1.1 cents per share in H1 2015, a rise of over 36%. This interim dividend will be paid on 7(th) October 2016 to shareholders on the Record Date of 9(th) September 2016. The Company's shares will be ex-dividend on 8(th) September 2016.
As announced to the market previously, the company paid a final dividend of US2.5 cents per share for the 2015 financial year on 6(th) May 2016.
Outlook
The increased gold price is expected to generate additional exploration opportunities and it is encouraging that these opportunities are traditionally larger in size and longer in duration. Capital Drilling's exploration rig utilization is expected to continue its gradual upward trend of 1H16 as a result of anticipated growth in the exploration market.
New contracts awarded in the first half and delivered in Q2 and Q3 are expected to have a positive impact on revenue in the current half of the year. Capital Drilling forecasts an incremental uplift in FY16 revenue to $88.0 - $90.0 million, together with a material increase in EBITA in the second half despite the increased capital expenditure anticipated during the period as we gear up for projects in 2017.
For the balance of the 2016 financial year, Capital Drilling will continue to focus on growing its existing exploration projects throughout their lifecycles into prefeasibility, delineation and potential production. The Company also expects to grow its production contracts as expansion projects come on line and budgets are approved.
Maturing open pit mines continue to trend towards underground operations, therefore Capital Drilling's strategy of expanding its underground capacity remains sounds. The Company's agreement with Pybar, a leading underground service provider, to co-market their services for underground hard rock mining contracts in Africa aligns with this strategy.
Geographically, the Company will continue to focus on expansion in West Africa and Serbia to position it for potential copper price increases.
It will also remain focused on disciplined cost management across its operations, generating solid cash flows and maintaining a strong balance sheet.
Capital Drilling's strong balance sheet, diversified long-term contracts, highly competitive operating model and expanding capabilities place the Company in an excellent position to benefit from improving market conditions. The Company remains committed to rewarding shareholders through its dividend policy while maintaining a strong balance sheet.
Mark Parsons
Chief Executive Officer
17 August 2016
Cautionary note regarding forward looking statements
Certain information contained in this report, including any information on Capital Drilling'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, which remain unchanged from those disclosed in our Prospectus. Capital Drilling 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 Drilling 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 Drilling. Nothing in the report should be construed as either an offer to sell or a solicitation to buy or sell Capital Drilling securities.
Independent review report on the condensed consolidated interim financial statements
To the members of Capital Drilling Limited
We have been engaged by the Capital Drilling Limited ("Company") to review the condensed consolidated set of interim financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the condensed consolidated statement of financial position as of 30 June 2016 and the related condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six month period then ended, and related notes 1 to 15. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated set of interim financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the International Auditing and Assurance Standards Board ("IAASB"). Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (the "IASB"). The condensed consolidated interim financial statements included in this half-yearly financial report have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" issued by the IASB.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed consolidated set of interim financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by Independent Auditor of the Entity" issued by the IAASB. A review of interim financial information consists of making inquiries, 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 and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of interim financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as issued by the IASB and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte & Touche
Registered Auditors
Per: H. Loonat
Partner
17 August 2016
Deloitte & Touche Buildings 1 and Riverwalk Office
Registered Auditors 2 Park,
Audit - Gauteng Deloitte Place Block B
The Woodlands 41 Matroosberg
www.deloitte.com Woodlands Drive Road
Woodmead Sandton Ashlea Gardens
Private Bag X6 X6
Gallo Manor 2052 Pretoria, 0081
South Africa PO Box 11007
Docex 10 Johannesburg Hatfield 0028
South Africa
Tel: +27 (0)11 Docex 6 Pretoria
806 5000
Fax: +27 (0)11 Tel: +27 (0)12
806 5111 482 0000
Fax: +27 (0)12
460 3633
National Executive: *LL Bam Chief Executive Officer *TMM Jordan Deputy Chief Executive Officer *MJ Jarvis Chief Operating Officer *GM Pinnock Audit *N Sing Risk Advisory *NB Kader Tax TP Pillay Consulting S Gwala BPaaS *K Black Clients & Industries *JK Mazzocco Talent & Transformation *MJ Comber Reputation & Risk *TJ Brown Chairman of the Board
A full list of partners and directors is available on request *Partner and Registered Auditor
B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code
Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
For the six months ended 30 June 2016
Reviewed Reviewed
Notes 30 June 30 June
2016 2015
------------- ------------------- ------------------
$ $
Revenue 41,714,801 38,952,636
Cost of sales (28,982,615) (25,523,338)
-------------------------------- --------------------------------
Gross profit 12,732,186 13,429,298
Administration costs (5,402,327) (5,550,683)
Depreciation (7,089,799) (7,302,353)
Profit from operations 240,060 576,262
Net gain on financial assets 745,426 -
at fair value through profit
or loss
Interest income 6,763 51,140
Share of income (losses)
from associate 9,587 (101,109)
Finance charges (253,477) (491,025)
Profit before taxation 748,359 35,268
Taxation 3 (1,588,416) (3,231,984)
Loss for the period (840,057) (3,196,716)
================================ ================================
Other comprehensive (loss)
income:
Other comprehensive (loss)
income to be reclassified
to profit or loss in subsequent
periods:
Exchange differences on
translation
of foreign operations (186) (138,749)
Net fair value income (loss)
on available-for-sale financial
assets 780,605 (58,305)
Total comprehensive loss
for the period (59,638) (3,393,770)
================================ ================================
-
Loss per share:
Basic (cents per share) 4 (0.6) (2.4)
================================ ================================
Diluted (cents per share) 4 (0.6) (2.4)
================================ ================================
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2016
Reviewed Audited
Notes 30 June 31 December
2016 2015
--------------- ----------------------
$ $
ASSETS
Non-current assets
Property, plant and equipment 6 45,478,056 49,114,031
Investment in associate 537,412 528,011
Deferred taxation 592,159 59,842
-------------------------- --------------------------
Total non-current assets 46,607,627 49,701,884
-------------------------- --------------------------
Current assets
Inventory 17,258,880 17,576,970
Trade and other receivables 9,347,423 9,044,527
Prepaid expenses and other
assets 3,079,797 4,686,905
Taxation 498,487 771,551
Investments 1,965,049 222,032
Cash and cash equivalents 14,174,625 13,369,091
-------------------------- --------------------------
Total current assets 46,324,261 45,671,076
-------------------------- --------------------------
Total assets 92,931,888 95,372,960
========================== ==========================
EQUITY AND LIABILITIES
Equity
Share capital 7 13,490 13,460
Share premium 7 21,697,470 21,566,856
Equity-settled employee
benefits reserve 337,185 282,075
Foreign currency translation
reserve (35,851) (35,665)
Investments revaluation
reserve 737,055 (43,550)
Retained earnings 50,671,012 54,883,674
-------------------------- --------------------------
Total equity 73,420,361 76,666,850
-------------------------- --------------------------
Non-current liabilities
Long-term liabilities 8 7,000,000 5,000,000
Deferred taxation 378,567 201,389
-------------------------- --------------------------
Total non-current liabilities 7,378,567 5,201,389
-------------------------- --------------------------
Current liabilities
Trade and other payables 10,278,522 12,176,822
Taxation 1,652,233 1,231,898
Current portion of long-term
liabilities 8 202,205 96,001
-------------------------- --------------------------
Total current liabilities 12,132,960 13,504,721
-------------------------- --------------------------
Total equity and liabilities 92,931,888 95,372,960
========================== ==========================
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
30 June
2016
Reserves
-----------------------------------------------
Equity-settled Foreign
employee currency Investments
Share Share Retained benefits translation revaluation Total
capital premium earnings reserve reserve reserve equity
------------- -------- --------- --------------- ------------ ------------ ---------
$ $ $ $ $ $ $
Balance at 31
December
2014 - Audited 13,459 21,561,190 69,089,299 205,146 138,749 - 91,007,843
Issue of shares 1 5,666 - (5,667) - - -
Recognition of
share-based
payments - - - 36,255 - - 36,255
Total
comprehensive
loss
for the period - - (3,196,716) - (138,749) (58,305) (3,393,770)
Dividends paid
(1.9 cents
per share) - Note
5 - - (2,557,470) - - - (2,557,470)
------- ----------- ------------ ---------- ---------- --------- ------------
Balance at 30 June
2015
- Reviewed 13,460 21,566,856 63,335,113 235,734 - (58,305) 85,092,858
======= =========== ============ ========== ========== ========= ============
Balance at 31
December
2015 - Audited 13,460 21,566,856 54,883,674 282,075 (35,665) (43,550) 76,666,850
Issue of shares 30 130,614 - (130,644) - - -
Recognition of
share-based
payments - - - 185,754 - - 185,754
Total
comprehensive
loss
for the period - - (840,057) - (186) 780,605 (59,638)
Dividends paid
(2.5 cents
per share) - Note
5 - - (3,372,605) - - - (3,372,605)
------- ----------- ------------ ---------- ---------- --------- ------------
Balance at 30 June
2016
- Reviewed 13,490 21,697,470 50,671,012 337,185 (35,851) 737,055 73,420,361
======= =========== ============ ========== ========== ========= ============
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2016
Reviewed Reviewed
Notes 30 June 30 June
2016 2015
-------- ----------- ------------
$ $
Operating activities:
Cash from operations 9 7,743,863 10,333,878
Interest received 6,763 51,140
Finance charges paid (147,273) (518,136)
Taxation paid (1,250,156) (242,624)
------------ ------------
Net cash generated from
operating activities 6,353,197 9,624,258
------------ ------------
Investing activities:
Purchase of property, plant
and equipment (4,099,402) (3,446,116)
Proceeds from disposal of
property, plant and equipment 541,238 30,468
Investments (216,986) (290,102)
Investment in associate - (607,188)
------------ ------------
Net cash used in investing
activities (3,775,150) (4,312,938)
------------ ------------
Financing activities:
Long-term liabilities raised 8 2,000,000 -
Long-term liabilities repaid 8 - (2,000,000)
Dividend paid 5 (3,372,605) (2,557,470)
------------ ------------
Net cash used in financing
activities (1,372,605) (4,557,470)
------------ ------------
Net increase in cash and
cash equivalents 1,205,442 753,850
Cash and cash equivalents
at the beginning of the
period 13,369,091 14,743,976
Translation of foreign currency
cash and cash equivalent
adjustment (399,908) (248,565)
------------ ------------
Cash and cash equivalents
at the end of the period 14,174,625 15,249,261
============ ============
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2016
1. Basis of presentation and accounting policies
Preparation of the condensed consolidated
interim financial statements
The condensed consolidated interim financial
statements of Capital Drilling Limited and
Subsidiaries ("Capital Drilling" or the "Group")
as at and for the six months ended 30 June
2016 (the "Interim Financial Statements")
have been prepared in accordance with International
Accounting Standard ("IAS") No. 34, "Interim
Financial Reporting". 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 2015 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 ISRE 2410.
Accounting policies
The Interim Financial Statements have been
prepared on a historical cost basis, except
for certain financial instruments which are
measured at fair value. The Group has adopted
a number of new standards and interpretations
effective on or before 1 January 2016, which
were described in note 2 of the consolidated
financial statements for the year ended 31
December 2015. The adoption of these standards
and interpretations did not have a material
impact on the financial statements. The same
accounting policies, presentation and methods
of computation have been followed in these
condensed consolidated interim financial statements
as were applied in the preparation of the
consolidated financial statements for the
year ended 31 December 2015.
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.
2. Operations in the interim period
Capital Drilling Limited is incorporated in
Bermuda. The Group provides drilling services
including but not limited to exploration,
development, grade control and blast hole
drilling services to mineral exploration and
mining companies located in emerging and developing
markets. The Group also provides some equipment
rental and information technology services
to mining and mining related companies.
During the six months ended 30 June 2016,
the Group provided drilling services in Botswana,
Chile, Egypt, Mauritania and Tanzania.
The seasonality of the Group's operations
has no significant impact on the condensed
consolidated interim financial statements.
3. Taxation
The tax expense for the period is based on
an estimated annual effective tax rate, which
requires management to make its best estimate
of annual pre-tax income for the year, in
the various tax jurisdictions in which the
Group operates. During the year, management
regularly updates its estimates based on changes
in various factors such as operating profits,
plant operating performance and cost estimates,
including labour, raw materials, energy and
other variable costs.
Due to the tax charge calculations in certain
countries in which the Group operates being
based on revenues instead of profits, the
consolidated taxation expense for the period
is not directly linked to profits and losses.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2016
Reviewed Reviewed
30 June 30 June
2016 2015
---------------------
$ $
4. Loss per share
Basic loss per share:
The loss and weighted average
number of ordinary shares
used in the calculation of
basic loss per share are
as follows:
Loss for the period used
in the calculation of basic
loss per share (840,057) (3,196,716)
===================== =====================
Weighted average number of
ordinary shares for the purposes
of basic loss per share 134,753,539 134,602,839
===================== =====================
Loss earnings per share (cents) (0.6) (2.4)
===================== =====================
Diluted loss per share:
The loss used in the calculation
of all diluted loss per share
measures are the same as
those used in the equivalent
basic loss per share measures,
as outlined above.
Weighted average number of
ordinary shares used in the
calculation of basic loss
per share 134,753,539 134,602,839
Shares deemed to be issued
for no consideration in respect
of:
- Dilutive share options
# 149,326 17,051
--------------------- ---------------------
Weighted average number of
ordinary shares used in the
calculation of diluted loss
per share 134,902,865 134,619,890
===================== =====================
Diluted loss per share (cents) (0.6) (2.4)
===================== =====================
# For the purposes of calculating loss per
share, diluted weighted average shares outstanding
excludes 5.34 million (2015: 5.34 million)
potential ordinary shares from share options
and share grants, because such potential ordinary
shares are anti-dilutive.
5. Dividends
During the six months ended 30 June 2016 a
dividend of 2.5 cents per ordinary share, totaling
$3,372,605 (six months ended 30 June 2015:
1.9 cents per ordinary share, totalling $2,557,470)
was declared and paid.
6. Property, plant and
equipment
During the six months ended 30 June 2016, the
Group acquired approximately $4.1 million (2015:
$3.4 million) of drilling rigs and other assets
to expand its operations and for the replacement
of existing assets.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2016
6. Property, plant and equipment
(continued)
The Group disposed of property, plant and equipment
with a net carrying amount of $0.6 million
(2015: $0.1 million) during the period. A loss
of $0.1 million (2015: $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. Due to the
poor performance of the Group's share price
in 2015 and 2016, the net asset value of the
Group exceeded its market capitalisation as
at 30 June 2016 and 31 December 2015. The Group
identified this circumstance as an indicator
of impairment for the current and prior period.
As a result, property, plant and equipment
was tested for impairment at the reporting
date. As at 30 June 2016 and 31 December 2015
management concluded that the carrying amount
of property, plant and equipment did not exceed
the value in use and therefore, no impairment
loss was recognised on that basis.
For purposes of determining the recoverable
value of tangible assets, management estimates
discount rates using pre-tax rates that reflect
current market rates for investments of similar
risk. The rate was estimated from the weighted
average cost of capital of companies, which
operate a portfolio of assets similar to those
of the Group's assets.
In validating the value in use, key assumptions
used in the discounted cash-flow model (such
as allocating all assets to a single cash generating
unit discount rates, average revenue rates,
drilling volumes and terminal growth rate)
management performed a sensitivity analysis
to test the resilience of the assumptions used
in determining the value in use for the impairment
test. Management believe that reasonable movements
in key assumptions would not result in an impairment
loss to be recognized.
Reviewed Reviewed
30 June 30 June
2016 2015
$ $
7. Issued capital and share
premium
Authorised capital
2,000,000,000 (2015:
2,000,000,000)
ordinary shares of 0.01
cents
(2015: 0.01 cents) each 200,000 200,000
============================== ============================
Issued and fully paid:
134,903,396 (30 June 2015:
134,603,681) ordinary shares
of 0.01 cents (31 December
2015: 0.01 cents) each 13,490 13,460
Share premium:
Balance at the beginning
of the period 21,566,856 21,561,190
Share premium on issue of
shares 130,614 5,666
------------------------------ ----------------------------
Balance at the end of the
period 21,697,470 21,566,856
============================== ============================
On 1 April 2016, the Company issued 299,715
new common shares pursuant to the Company's
employee incentive scheme. The shares rank
pari passu with the existing common shares.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2016
8. Long term liabilities
Long term liabilities consist of an initial
$25 million revolving credit facility ("RCF")
provided by Standard Bank (Mauritius) Limited.
The RCF has an annual interest rate of 5.25%
above the prevailing three month US$ LIBOR
(payable in arrears), and has an annual commitment
fee of 1% of the undrawn balance and is available
for utilisation up to 2 February 2018 less
an annual amortisation of $5 million. In accordance
with the terms of the facility, the available
amount under the facility reduced by $5 million
on 2 February 2016 to $20 million.
Security for the Standard Bank (Mauritius)
Limited facilities comprise:
-- Upward corporate guarantees from Capital
Drilling Egypt (Limited Liability Company),
Capital Drilling (T) Limited and Capital
Drilling Zambia Limited.
-- A negative pledge over the assets of Capital
Drilling Ltd and Capital Drilling Egypt (Limited
Liability Company).
At 30 June 2016 $7 million was outstanding
on the RCF, with a further $13 million available
for utilisation. During H1 2016 the Group drew
down $2 million on the RCF to finance capital
expenditure.
As at the reporting date and during the six
months under review, the Group has complied
with all covenants that attaches to the loan
facility.
Reviewed Reviewed
30 June 30 June
2016 2015
$ $
9. Cash from operations
Profit before taxation 748,359 35,268
Adjusted for:
- Depreciation 7,089,799 7,302,353
- Loss on disposal of property,
plant and equipment 104,340 111,441
- Share based payment expense 185,754 36,225
- Exchange differences on
translating foreign operations - (138,697)
- Net gain on financial assets
at fair value through profit
and loss (745,426) -
- Interest received (6,763) (51,140)
- Finance charges 253,477 491,025
- Share of (gains) losses
from associate (9,587) 101,109
- Unrealised foreign exchange
loss (gain) on foreign exchange
held 399,908 248,565
------------- ------------------
Operating profit before working
capital changes 8,019,861 8,136,149
Adjustments for working capital
changes:
- Decrease in inventory 318,090 881,712
- Decrease (increase) in
trade and other receivables (302,896) (270,442)
- Decrease in prepaid expenses
and other assets 1,607,108 2,669,294
- Decrease in trade and other
payables (1,898,300) (1,082,835)
------------- ------------------
7,743,863 10,333,878
============= ==================
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2016
10. Segmental analysis
Operating segments are identified on the basis
of internal management reports about components
of the Group that are regularly reviewed by
the chief executive officer, in order to allocate
resources to the segments and to assess their
performance. Information reported to the Group's
chief executive officer for the purposes of
resource allocation and assessment of segment
performance is focused on the region of operation.
For the purposes of the segmental report, the
information on the operating segments has 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.
- Rest Derives revenue from the provision of
of world: drilling services and related logistic,
equipment rental and information technology
support services.
Information regarding the Group's operating
segments is reported below. At 31 December 2015,
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 Africa Rest of Consolidated
months ended World
30 June 2016
------------------------ -------------------------------- ---------------------------
$ $ $
External revenue 40,361,890 1,352,911 41,714,801
======================== ================================ ===========================
Segmental gross
profit 14,128,643 (1,396,457) 12,732,186
Administration
costs
and
depreciation,
net
of other income (10,557,569) (1,208,812) (11,766,381)
------------------------ -------------------------------- ---------------------------
Segment profit
(loss) 3,571,074 (2,605,269) 965,805
======================== ================================
Central
administration
costs and
depreciation,
net of other
income - (725,745)
---------------------------
Profit from
operations 240,060
Net gain on
financial
assets at fair
value
through profit
and loss 745,426
Interest income 6,763
Share of losses
from
associate 9,587
Finance charges (253,477)
---------------------------
Profit before
tax 748,359
===========================
For the six Africa Rest of Consolidated
months ended World
30 June 2015
------------------------ -------------------------------- ---------------------------
$ $ $
External revenue 38,226,314 726,322 38,952,636
======================== ================================ ===========================
Segmental gross
profit 14,426,056 (996,758) 13,429,298
Administration
costs
and
depreciation,
net
of other income (10,754,617) (1,701,883) (12,456,500)
------------------------ -------------------------------- ---------------------------
Segment profit
(loss) 3,671,439 (2,698,641) 972,798
======================== ================================
Central
administration
costs and
depreciation,
net of other
income (396,536)
---------------------------
Profit from
operations 576,262
Interest income 51,140
Share of losses
from
associate (101,109)
Finance charges (491,025)
---------------------------
Profit before
tax 35,268
===========================
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2016
Reviewed Reviewed
30 June 30 June
2016 2015
$ $
10. Segmental analysis (continued)
The accounting policies of the reportable
segments are the same as the Group's accounting
policies described in note 1. Segment profit
represents the profit earned by each segment
without the allocation of central administration
costs, depreciation, other income, finance
charges, and income tax. This is the measure
reported to the Group's chief executive officer
for the purpose of resource allocation and
assessment of segment performance.
Segment assets:
Africa 121,774,887 147,658,012
Rest of world 14,801,971 78,276,508
-------------------- -------------------
Total segment assets 136,576,858 225,934,520
Head office companies 31,726,985 27,464,894
-------------------- -------------------
168,303,843 253,399,414
Eliminations * (75,371,955) (146,932,965)
-------------------- -------------------
Total assets 92,931,888 106,466,449
==================== ===================
Segment liabilities:
Africa 24,714,022 52,519,206
Rest of world 10,505,807 36,556,661
-------------------- -------------------
Total segment liabilities 35,219,829 89,075,867
Head office companies 58,214,814 77,782,321
-------------------- -------------------
93,434,643 166,858,188
Eliminations * (73,923,116) (145,484,567)
-------------------- -------------------
Total liabilities 19,511,527 21,373,621
==================== ===================
For the purposes of monitoring segment performance
and allocating resources between segments
the Group's chief executive monitors the tangible,
intangible and financial assets attributable
to each segment. All assets are allocated
to reportable segments with the exception
of property, plant and equipment used by the
head office companies, certain amounts included
in other receivables, and cash and cash equivalents
held by the head office companies.
* Eliminations include inter-group accounts
receivable, inter-group accounts payable and
inter-group investments.
Other segment information:
Depreciation
Africa 6,105,737 6,151,593
Rest of world 833,078 901,456
-------------------- -------------------
Total segment depreciation 6,938,815 7,053,049
Head office companies 150,984 249,304
-------------------- -------------------
7,089,799 7,302,353
==================== ===================
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
For the six months ended 30 June 2016
Reviewed Reviewed
30 June 30 June
2016 2015
-------------------------------- ----------------------------
$ $
10. Segmental analysis (continued)
Additions to property,
plant and equipment
Africa 4,089,444 3,252,243
Rest of world - 15,470
-------------------------------- --------------------------
Total segment additions 4,089,444 3,267,713
Head office companies 9,958 178,403
-------------------------------- --------------------------
4,099,402 3,446,116
================================ ==========================
Information about major
customers
Included in revenues arising from the Africa segment
are revenues of approximately $35.4 million (2015:
$34.6 million) which arose from sales to customers
that represent more than 10% of the Group's revenue.
11. Commitments
The Group has the following
capital commitments at 30 June
2016:
Committed capital expenditure 294,333 541,415
================================ ==========================
The Group has outstanding purchase orders amounting
to $4.0 million at 30 June 2016 (30 June 2015:
$1.6 million).
12. Contingencies
Zambia Tax:
Capital Drilling (Zambia) Limited is a party to
various tax claims by the Zambian Revenue Authority
for the tax years 2007 to 2013. On 30 April 2015,
the Company received a tax assessment from the
Zambian Revenue Authority totalling ZMW 144.1
million (USD equivalent: $13.1 million), inclusive
of penalties and interest. The claims relate to
various taxes, including income tax, value added
tax, payroll tax and withholding tax. Management
have responded and continues to do so, in detail
to these claims, providing the Zambian Revenue
Authority with detailed analysis and arguments
justifying the Company's tax position. No amount
has yet been paid in this regard and discussions
with the Zambian Revenue Authority are ongoing.
The claims are subject to substantial uncertainties
and, therefore, the probability of loss and an
estimation of damages are difficult to ascertain.
The Directors believe that a significant portion
of the tax claim by the Zambian Revenue Authority
is without merit. On this basis, an amount of
$1.6 million has been raised in the statement
of financial position at 31 December 2015 relating
to certain areas of the claim. The Directors believe
that this amount remains appropriate at 30 June
2016. Due to the substantial uncertainties relating
to this matter, the actual results that will result
from the ultimate resolution of these proceedings
may vary from the amount provided.
13. Events post the reporting date
The directors propose that an interim dividend
of 1.5 cent per share be paid to shareholders
on 7 October 2016. This dividend has not been
included as a liability in these consolidated
interim financial statements. The proposed dividend
is payable to all shareholders on the Register
of Members on 9 September 2016. The total estimated
interim dividend to be paid is $2.0 million (2015:
$1.5 million). The payment of this dividend will
not have any tax consequences for the Group.
The directors are not aware of any other events
subsequent to 30 June 2016 that would impact on
the condensed consolidated interim financial statements.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
For the six months ended 30 June 2016
14. Going concern
The Group has set specific objectives and also
has policies and processes in place to manage
its capital and its financial, credit risk
and liquidity risks.
The Group has borrowings and debt facilities
which, together with its clients' receipts,
fund its day to day working capital requirements.
Volatile economic conditions may create uncertainty
particularly over (a) the level of demand for
the Group's services; (b) exchange rate fluctuations
against the US Dollar and thus the consequence
for the cost of the Group's direct costs; and
(c) the availability of bank financing in the
foreseeable future.
The Group's forecasts and projections, taking
into account potential changes in its performance,
show that the Group should be able to operate
within the level of its capital structure.
The Group continuously discusses its future
borrowing and / or refinancing needs with its
bankers and no matters have been drawn to its
attention to suggest that these needs may not
be met on acceptable terms.
The directors confirm that the Group has adequate
resources to continue in operational existence
for the foreseeable future. The Group continues
to adopt the going concern basis of accounting
in preparing the interim financial statements.
15. Financial instruments
Financial instruments that are measured in
the condensed consolidated statement of financial
position at fair value require disclosure of
fair value measurements by level based on the
following fair value measurement hierarchy:
-- Level quoted prices (unadjusted) in active
1: markets for identical assets or liabilities;
-- Level inputs other than quoted prices included
2: 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 inputs for the asset or liability that
3: are not based on observable market data
(that is, unobservable inputs).
The Group's available-for-sale financial assets,
with a fair value of $1.2 million (31 December
2015: $0.2 million) are listed equity securities
in the mining industry that measured at fair
value at the end of each reporting period.
The available-for-sale investments are designated
as level 1 in the fair value hierarchy. Their
fair value is determined using quote bid prices
in an active market. The Group's held-for-trading
financial assets, with a fair value of $0.7
million (31 December 2015: $0) are options
and warrants to acquire shares in listed equity
securities that are not traded in an active
market. The held-for-trading financial assets
are designated as level 3 in the fair value
hierarchy. Their fair value is determined using
a binominal tree model valuation technique
based on observable market data that includes
the value of the underlying security, the exercise
price, volatility and risk free rate of return.
The fair values of financial assets and liabilities,
other than the available-for-sale and held-for-trading
financial assets carried at fair value, that
are not traded in an active market are determined
using standard valuation techniques. These
valuation techniques maximise the use of observable
market data where available and rely as little
as possible on Group specific estimates. The
directors consider that the carrying value
amounts of financial assets and financial liabilities
recorded at amortised cost in the consolidated
financial statements are approximately equal
to their fair values. The fair values disclosed
for the financial assets and financial liabilities
are classified in level 3 of the fair value
hierarchy and have been assessed to approximate
their carrying amounts based on a discounted
cash flow assessment.
CAPITAL DRILLING LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITY
For the six months
ended 30 June 2016
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 auditors are responsible for expressing a
review conclusion on the condensed consolidated
interim financial information based on their
review.
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 DTR4.2.4R;
b) the interim management report includes a fair
review of the information required by DTR
4.2.7R and DTR4.2.8; and
c) there has been no significant individual related
party transactions during the first six months
of the financial year and nor have there been
any significant changes in the Group's related
party relationships from those reported in
the Group's annual financial statement for
the year ended 31 December 2015.
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 2016.
ON BEHALF OF THE DIRECTORS
Jamie Boyton
Chairman
Mark Parsons
Chief Executive
Officer
CAPITAL DRILLING LIMITED
Principal Risks and uncertainties
The Group operates in environments that pose various risks and uncertainties. Aside from the generic risks that face all businesses, the Group's business, financial condition or results of operations could be materially and adversely affected by any of the risks described below.
These risks should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties nor are they listed in order of magnitude or probability. Additional risks and uncertainties that are not presently known to the Directors, or which they currently deem immaterial, may also have an adverse effect on the Group's operating results, financial condition and prospects.
The principal risks associated with the business are:
Area Description Mitigation
------------------ -------------------------------- ------------------------------
Fluctuation The Group is highly The Group is seeking
in levels dependent on the levels to balance these risks
of mining of mineral exploration, by building a portfolio
activity development and production of long term drilling
activity within the contracts, expanding
markets in which it into new geographic
operates. A reduction areas and implementing
in exploration, development of our Lean Operating
and production activities, Model.
or in the budgeted expenditure
of mining and mineral
exploration companies,
will cause a decline
in the demand for drilling
rigs and drilling services,
as was evident in the
2014 and 2015 financial
years.
------------------ -------------------------------- ------------------------------
Reliance The Group's revenue The Group has entered
on key customers is reliant on a small into long term contracts
number of key customers. with its key customers
A loss of a key customer, for periods between
or a significant reduction 2 to 5 years. Contract
in the demand for drilling renewal negotiations
provided to a key customer are initiated well
will have a significant in advance of expiry
adverse effect on the of contracts to ensure
Group's revenues. contract renewals
are concluded without
interruption to drilling
services.
The Group has and
continues to monitor
projects closely and
invest a significant
amount of time into
client relationship
and service level
monitoring at all
levels of the business.
A key part of this
process is the quarterly
project steering committee
meetings with key
client stakeholders
that provide a forum
for monitoring and
reporting on project
performance and key
performance indicators
("KPI's"), contractual
issues, pricing and
renewal.
------------------ -------------------------------- ------------------------------
Key personnel The Group's ability The Group has expanded
and staff to implement a strategy capabilities in the
retention of pursuing expansion areas of business
opportunities is dependent development, supply
on the efforts and abilities chain, finance, training
of its executive directors and health and safety
and senior managers. during 2015 and continues
In addition, the Group's to do so through the
operations depend, in recruiting of senior
part, upon the continued managers in the various
services of certain fields, implementing
key employees. If the comprehensive training
Group loses the services programmes and providing
of any of its existing employees with international
key personnel without exposure in their
timely and suitable fields.
replacements, or is
unable to attract and The Group has implemented
retain new personnel remuneration policies
with suitable experience that seeks to recruit
as it grows, the Group's suitable talent and
business, financial to remunerate talent
condition, results of at levels commensurate
operations and prospects with market levels.
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.
------------------ -------------------------------- ------------------------------
Currency The Group receives the To minimise the Group's
fluctuations majority of its revenues risk, the Group tries
in US dollars. However, to match the currency
some of the Group's of operating costs
costs are in other currencies with the currency
in the jurisdictions of revenue. Funds
in which it operates. are pooled centrally
Foreign currency fluctuations in the head office
and exchange rate risks bank accounts to the
between the value of maximum extent possible.
the US dollar and the The group have implemented
value of other currencies procedures to allow
may increase the cost for the repatriation
of the Group's operations of funds to the Group's
and could adversely Head Office bank accounts
affect the financial from jurisdictions
results. As a result, where exchange control
the Group is exposed regulations are in
to currency fluctuations effect.
and exchange rate risks.
------------------ -------------------------------- ------------------------------
Operating Operations are subject The Chief Executive
risks to various risks associated Officer, Executive
with drilling including, Leadership Team and
in the case of employees, managers provide leadership
personal injury, malaria to projects on the
and loss of life and, management of these
in the Group's case, risks and actively
damage and destruction engage with all levels
to property and equipment, of employees. The
release of hazardous Group have implemented
substances in to the and continue to monitor
environment and interruption and update a range
or suspension of drill of health and safety
site operations due policies and procedures.
to unsafe drill operations. including equipment
The occurrence of any standards and standard
of these events could work procedures. Employees
adversely impact the are provided with
Group's business, financial training regarding
condition, results of risks associated with
operations and prospects, their employment,
lead to legal proceedings policies and standard
and damage the Group's work procedures.
reputation. In particular,
clients are placing Health and Safety
an increasing focus statistics and incident
on occupational health reports are monitored
and safety, and deterioration throughout our projects
in the Group's safety and the various management
record may result in structures of the
the loss of key clients. Group, including the
HSSE committee. Where
necessary policies
and procedures are
update to reflect
developments and improvement
needs.
The Group maintains
adequate insurance
policies to provide
insurance cover against
operating risks.
------------------ -------------------------------- ------------------------------
Political, The Group operates in The Group monitors
economic a number of jurisdictions political and regulatory
and legislative where the political, developments in the
risk economic and legal systems jurisdictions it operates
are less predictable in through a number
than in countries with of service providers
more developed industrial and advisors.
structures. Significant
changes in the political, Senior management
economic or legal landscape regularly reports
in such countries may to the Board on any
have a material effect political or regulatory
on the Group's operations changes in the jurisdictions
in those countries. we operate in.
Potential impacts include
restrictions on the Where significant
export of currency, events occur, we work
expropriation of assets, closely with our clients,
imposition of royalties advisors and other
or other taxes targeted stakeholders to address
at mining companies, these events.
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.
------------------ -------------------------------- ------------------------------
CAPITAL DRILLING
LIMITED
APPIX: GLOSSARY AND ALTERNATIVE
PERFORMANCE MEASURES
The following terms and alternative performance
measures are used in the half year results release
for the six months ended 30 June 2016.
ARPOR Average revenue per operation
rig
EBITDA Earnings before interest, taxes,
depreciation and amortisation
EBIT Earnings before interest and
taxes (Equal to profit from operations
per the financial statements)
PBT Profit (loss) before tax per
the financial statements
NPAT Net profit (loss) after tax per
the financial statements
NET CASH (DEBT) Cash and cash equivalents less
short term and long term debt
RETURN ON CAPITAL Long Term EBIT / (Average total
EMPLOYED (%) assets - Average current liabilities)
RETURN ON TOTAL Long Term EBIT / Average total
ASSETS (%) assets
AIFR All incident frequency rate
DES Drilling equipment standards
HSSE Health, Safety, Social and Environment
KPI Key Performance Indicator
LTI Lost Time Injury
Reconciliation of alternative performance measures
to the financial statements:
30 June 30 June
2016 2015
---------------- ------------------------
ARPOR can be reconciled from the financial statements
as per the below:
Revenue per financial statements
($) 41,714,801 38,952,636
Non-drilling revenue ($) (2,123,175) (1,538,484)
---------------- ------------------------
Revenue used in the calculation
of ARPOR ($) 39,591,626 37,414,152
---------------- ------------------------
Monthly Average operating Rigs 37.7 33.0
---------------- ------------------------
ARPOR (rounded to nearest $'000) 175,000 189,000
================ ========================
EBITDA can be reconciled from the financial statements
as per the below:
Gross profit per financial
statements 12,732,186 13,429,298
Administration costs (5,402,327) (5,550,683)
---------------- ------------------------
EBITDA 7,329,859 7,878,615
================ ========================
The company news service from the London Stock Exchange
END
IR MMGMRVNRGVZG
(END) Dow Jones Newswires
August 17, 2016 02:29 ET (06:29 GMT)
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