We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.50 | 0.49% | 103.50 | 101.00 | 103.50 | 103.50 | 101.00 | 101.00 | 173,235 | 16:35:07 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Oil And Gas Field Expl Svcs | 318.42M | 36.74M | 0.1897 | 5.32 | 195.63M |
From Apr 2019 to Apr 2024
TIDMCAPD
RNS Number : 7614G
Capital Drilling Limited
19 March 2020
For Immediate Release 19 March 2020
Capital Drilling Limited
("Capital Drilling", the "Group" or the "Company")
Full Year Results
for the year ended 31 December 2019
Capital Drilling Limited (CAPD: LN), a leading mining services company focused on the African markets, today announces its full year results for the year ended 31 December 2019
FULL YEAR FINANCIAL RESULTS (UNAUDITED) FOR THE YEARED 31 DECEMBER 2019*
Hot Features
Premium
2019 2018
----------------------------------------------------------- ----------- --------
Average Fleet Size (No. of drill rigs) 92 93
Fleet Utilisation (%) 54 51
ARPOR ($) 176,000 194,000
Operational Capex(2) ($ m) 19.8 11.9
Revenue ($ m) 114.8 116.0
EBITDA(1) ($ m) 27.3 28.3
EBIT(1) ($ m) 16.6 14.8
Net Profit After Tax ($ m) 10.4 7.7
Cash From Operations(3) ($ m) 28.7 28.2
Earnings per Share
Basic (cents) 7.7 5.7
Diluted (cents) 7.6 5.7
Final Dividend per Share (cents) 0.7 1.5
Net Asset Value per Share(1) (cents) 63.0 56.9
Return on Capital Employed (%) 18.4 17.2
Return on Total Assets (%) 13.0 13.7
Net Cash(1) ($ m) 4.4 10.9
Net Cash/Equity (%) 5.2 14.1
*All amounts are in USD 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 Drilling Limited financial results
presented in accordance with IFRS
(2) 2018 Reported operational capex $11.9 million, restated
in 2019 to US$14.1 million for IAS 16 adjustment, refer Notes
7 and 14
(3) 2018 Reported Cash from Operations $28.2 million, restated
in 2019 to $30.4 million for IAS 16 adjustment, refer Notes
11 and 14
Financial Overview
-- FY2019 revenue of $114.8 million, in line with guidance of $110 - $120 million;
-- Strong year end net cash position ($4.4 million), despite significant capital expenditure focussed on building the growth platform for 2020 and 2021;
-- $19.8 million operational capex on new rigs and Heavy Mining Equipment (HME) to support long-term contracts and facilitate our entry into new business streams, increasing our service offering and earnings potential;
-- Significant increase in profitability and continued strong balance sheet; - Net Profit After Tax up 34% to $10.4 million (2018: $7.7 million);
- Basic earnings per share up 35% to 7.7c versus 2018: 5.7c (fully diluted 7.6c vs 5.7c, up 33%)
- EBITDA down 4% to $27.3 million (2018: $28.3 million); - EBIT up 12% to $16.6 million (2018: $14.8 million);
-- Operating Cash Flows marginally higher (1.7%) to $28.7 million (2018: $28.2 million), driven by unprecedented levels of fleet redeployment and new contract commencements;
-- Final Dividend of US0.7cps, (2018: US1.5cps) to be paid on 4 May 2020 which, together with the interim dividend of US0.7cps brings total dividends declared for 2019 of US1.4cps (2018: US2.1cps).
Operational and Strategic Review
-- Outstanding safety performance - 12-month rolling All Injury Frequency Rate (AIFR) result of 0.14, significantly below industry standards and a record for the Group;
-- Achieved a number of world class safety records including: - Mwanza Facility (Tanzania) achieved 11 years LTI free in January; - Sukari Gold Mine (Egypt) achieved two years LTI free in January; - North Mara Gold Mine (Tanzania) achieved three years LTI free in March; - Geita Gold Mine (Tanzania) achieved two years LTI free in March; - Tasiast Gold Mine (Mauritania) achieved two years LTI free in June; and - Syama Gold Mine (Mali) achieved three years LTI free in June.
-- Annual rig utilisation of 54% (2018: 51%), with a four-year record result of 56% in Q4 as a result of new contract commencements during the quarter;
-- Increased rig fleet from 91 to 99 rigs, acquiring new blast hole, grade control and underground rigs for long-term contracts. Four rigs were commissioned in Q4 2019 and a further 4 rigs to be commissioned in Q1 2020;
-- Expanded the Group's services to incorporate load and haul, enabling Capital Drilling to offer clients a fully integrated mining service;
-- Commissioned Capital Mining's first new Heavy Mining Equipment including three dozers, one grader and one excavator in Q4;
-- Commenced first mining services contract at Allied Gold's Bonikro Gold Mine, C ô te d'Ivoire, with current range of services including: exploration, grade control and blast hole drilling; mining equipment hire and service; and management services;
-- Robust business development activity resulting in award of 11 previously announced new exploration contracts during 2019, including:
- Allied Gold, Awale Resources and Perseus Mining in Côte d'Ivoire; - Golden Rim Resources and Arrow Minerals in Burkina Faso; - Barrick Gold in Saudi Arabia; - Compass Gold Corp, Desert Gold and Mali Lithium in Mali; - Centamin in Egypt; and - Tanga Resources in Namibia.
-- Strong performance of the Group's key long-term contracts, in line with management expectations:
- Geita Gold Mine (AngloGold Ashanti) in Tanzania; - North Mara Gold Mine (Barrick) in Tanzania; - Sukari Gold Mine (Centamin) in Egypt; - Syama Gold Mine (Resolute) in Mali; and - Tasiast Gold Mine (Kinross) in Mauritania.
-- New long term mine site contract wins during 2019 increased the portfolio of long-term contracts to nine:
- Five-year exploration drilling contract with Allied Gold Corp's Bonikro Gold Mine in Côte d'Ivoire;
- Contract for the provision of equipment hire and maintenance services with Allied Gold Corp's Bonikro Gold Mine in Côte d'Ivoire, initially until December 2020;
- Three-year on-site laboratory services contract with Kinross's Tasiast Gold Mine in Mauritania; and
- Two-year underground exploration drilling contract with Barrick's Jabil Sayid Copper Mine in Saudi Arabia.
-- West African growth strategy continues strongly with eight new exploration clients and ongoing fleet mobilisation, growing from 15 rigs in January 2018 to 44 rigs at the end Q1 2020; and
-- Full year ARPOR of $176,000 per rig (2018: $194,000), reflecting increased mobilisation of exploration rigs for new contract start-ups.
Post year-end highlights include:
-- Notification of the successful award of an exploration contract with Barrick's Bulyanhulu Gold Mine (Tanzania), which commenced drilling in February 2020:
- Significantly this is Capital Drilling's third contract with Barrick, following commencement of our recent contract in Saudi Arabia together with ongoing long-term contract at North Mara.
-- New contract and contract extension with existing long-term clients including;
- Three-year blast hole and grade control drilling services contract, with additional scope for underground drilling services, at North Mara Gold Mine (Barrick) in Tanzania, until December 2022;
- Extension of underground drilling services at Geita Gold Mine (AngloGold Ashanti) in Tanzania to December 2020; and
-- MSALABS has been awarded a six-month contract with Endeavour Mining in Cote d'Ivoire, which commenced in Q1 2020 and a further contract with Tudor Gold, commencing Q2 2020.
Commenting on the results, Jamie Boyton (Executive Chairman) said:
"The performance of Capital Drilling in 2019 was one of significant progress on a number of key aspects of our growth strategy, which saw rig utilisation increase to a four year high, a broadening of our services into load and haul, significant investment into our fleet and operations, and a further consolidation of our leading position in the rapidly growing West African market. The building of this platform for our next phase of growth was achieved alongside our focus on shareholder returns as we continued to reward shareholders with a final dividend as well delivering a 35% increase in earnings per share during this financial year.
Our key metrics remained robust - full year rig utilisation improved to 54% and, with many of the new contracts commencing in Q4, we achieved a four-year record Q4 result of 56%. ARPOR remained solid in spite of the large number of mobilisations and new contract start-ups. Additionally, we finished the year with a strong cash balance, despite an uplift in operational capex to support our expansion into load and haul services and ongoing fleet management expenditure in the second half, ensuring that Capital Drilling continues to offer its clients the most modern rig fleet available in Africa. Most pleasing was our outstanding AIFR result of 0.14, an industry-leading performance and a reflection of our entire Group's commitment to operating safely.
Capital Drilling's focus on West Africa is a key part of our growth strategy - not only will we see almost half of or rig fleet mobilised in the region, but we have also expanded our offer to include load and haul services, enabling us to provide clients a fully integrated mining solution. This will present larger revenue opportunities across a broader client base while maintaining our exposure to less cyclical, production-based activities. Of significance, during 2019, three of the four new long term contracts added were from West Africa, which has underpinned the quality and stability of our revenue.
We remain committed to our strategy for 2020 and will continue to focus on growth in West Africa, increasing our portfolio of long-term mine-site based contracts, maintaining our position of having the youngest mining fleet in the industry, expanding our mining services portfolio and maintaining strong cash flow generation to support growth initiatives and returns to our shareholders.
The gold price remains highly supportive and is a positive indicator for Capital Drilling with over 90% of revenue from the gold sector. Combined with new tendering opportunities presented by our mining services capabilities, greater West African presence and broader client base, we are uniquely positioned to leverage new opportunities in the year ahead.
The impact of the COVID-19 pandemic on our business remains unquantifiable at this stage, particularly in relation to mobilising our equipment and employees and continuity of supply chain in light of increasing travel bans currently being imposed globally. Capital Drilling will remain vigilant in implementing changes to the operation of our existing robust and flexible business model, however our principal concern remains the wellbeing and safety of our staff. We anticipate exploration activity to soften as juniors find it difficult to access capital markets. Conversely producers are likely to continue to experience increased cash flows from operations. As such, our focus on having a large proportion of our business derived from recurring mine-site revenue, particularly within the gold sector, provides reassurance during this time of uncertainty.
Given the rapidly evolving nature of the COVID-19 outbreak, and the uncertainties associated with it, we remain cautious in providing guidance and will provide an update when the situation stabilises. We are closely monitoring the global environment and its impact on our business and have accordingly taken a prudent approach and reduced our final dividend payment for the 2019 period. In this period of heightened uncertainty we remain confident in our robust operating platform and strong financial position and will keep shareholders fully informed of any changes as they develop.
Results Conference Call
Capital Drilling will host a conference call on Thursday 19 March 2020 at 0830hr (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. Participants may also wish to download the 2019 Results Presentation which is available by clicking http://www.capdrill.com/investors/presentations
Dial in (UK): 0800 358 9473 (For a list if international toll-free dial ins click here ) ID Number: 64085878#
-S -
For further information, please visit Capital Drilling's website www.capdrill.com or contact:
Capital Drilling Limited +230 464 3250 Jamie Boyton, Executive Chairman investor@capdrill.com
André Koekemoer, Chief Financial Officer
Peel Hunt LLP +44 20 7418 8900
Ross Allister
Alexander Allen
Tamesis Partners LLP +44 20 3882 2868
Charlie Bendon
Richard Greenfield
Buchanan +44 20 7466 5000
Bobby Morse capitaldrilling@buchanan.uk.com
Kelsey Traynor
James Husband
About Capital Drilling
Capital Drilling is a leading mining services business providing a complete range of drilling and mine site services to mineral exploration and mining companies, with a focus on the African markets. The company's services include: exploration, development, drill and blast and grade control drilling for surface and underground projects and load and haul services. The Group's corporate headquarters are in Mauritius and it has established operations in Botswana, Burkina Faso, Côte d'Ivoire, Egypt, Mali, Mauritania, Namibia, Nigeria and Tanzania.
CHAIRMAN'S STATEMENT
Capital Drilling delivered another strong performance in 2019. We continued to successfully execute against our strategy, delivering another outstanding year of safety performance, continuing our successful expansion into West Africa, securing further long-term mine-site based contracts and expanding the Group's service offering to include load and haul.
As a result of this shift towards becoming a whole-of-mine services provider, we are proposing to rebrand our business from Capital Drilling to Capital Limited during 2020. Accordingly, a resolution is being put to shareholders to approve this change of name at our Annual General Meeting, which we will confirm in due course. Under the rebrand of Capital Limited, Capital Drilling will be retained for all drilling-related activity, while Capital Mining will be used for load and haul services. Our portfolio also includes our well-established downhole survey business, Well Force, our mineral analytic business, MSALABS, and our newly established maintenance services business, Mine Site Maintenance (MSM).
Capital Drilling's principal commodity exposure of gold continued to be highly supportive during 2019, rallying strongly in the second half of the year, which saw a material positive impact on the operating margins of gold producers This has been beneficial for us, with the majority of our customers being gold producers, with 90% of our revenue being derived from gold mine site services, with the balance coming from exploration. The gold price has continued to strengthen in early 2020 given macro-economic volatility, which is providing a highly positive backdrop for demand over the year ahead.
We have seen profitability increase strongly in 2019 to $10.4 million (2018: $7.7 million), representing a 34% increase. Additionally, and despite substantial operational capex expenditure which grew by over 66% during the year of $19.8 million (2018: $11.9 million, adjusted 2018: $14.1 million), we maintained a strong balance sheet with a net cash at year end of $4.4 million. We continued to generate a strong return on capital, in addition to solid cash generation, allowing continued investment and maintenance of dividend payments for shareholders.
Revenue decreased 1% to $114.8 million (2018: $116.0 million), however second half revenue ($60.0 million) was 9.5% higher than H1 2019 ($54.8 million) as multiple new contract awards, predominantly in West Africa, commenced during the period. Group EBITDA decreased slightly (3.6%) to $27.3 million (2018: $28.3 million), a strong performance in view of the unprecedented levels of asset movements and new contract mobilisations.
Basic Earnings Per Share (EPS) increased to 7.7 cps (2018: 5.7 cps). The material increase in profitability reflects improving profitability at MSA Labs, lower depreciation charges and enhanced tax efficiency.
Improved working capital movements coupled with ongoing financial discipline and tight expenditure controls delivered the outstanding net cash result. Working capital was significantly stronger in the second half following first half outflows associated with asset moves and establishing our West African presence. Net cash as at 31 December was $4.4 million, down from $10.9 million at December 31, 2018, after the payment of $3.0 million in dividends in 2019.
The Board of Directors has declared a final dividend for the 2019 period of 0.7cps ($1.0 million), payable on 4 May 2020. This brings the total dividend declared in 2019 to 1.4c per share. The dividend is a result of our solid financial and operating position, however is marginally lower than dividends declared for 2018 due to the Company's prudent approach in protecting its strong balance sheet as a result of uncertainty caused by the global COVID-19 outbreak.
STRATEGIC AND OPERATIONAL UPDATE
2019 represented a watershed year for Capital Drilling in terms of activity levels, strategic direction and positioning the Company for future growth.
We have completed an unprecedented number of rig and asset moves to reposition the business geographically. We have maintained our strong presence in East Africa while deploying further assets into the large growth market of West Africa. This region represents approximately 45% of exploration spend across the whole of Africa and the strategic redeployment has enabled us to build a broader service offering across the area. Our rig fleet in West Africa has tripled since January 2018, growing from 15 rigs to 44 at the end of Q1 2020 and our footprint is now well established, with operations in Mauritania, Mali, Côte d'Ivoire, Burkina Faso and Nigeria (through MSALABS).
Our increased presence in West Africa is yielding results, with eight of the 11 new exploration contracts secured during the year coming from the region. They include: Allied Gold, Awale Resources and Perseus Mining in Côte d'Ivoire; Arrow Minerals and Golden Rim Resources in Burkina Faso; and Compass Gold Corp, Desert Gold, and Mali Lithium in Mali. Additional new exploration contracts include: Barrick Gold, Saudi Arabia; Centamin, Egypt; and Tanga Resources, Namibia.
Our focus on long-term mine-site based contracts continued. We were awarded further multi-year contracts, including: Bonikro Gold Mine (Allied Gold Corp) in Côte d'Ivoire; Jabil Sayid Copper Mine (Barrick) in Saudi Arabia (mentioned above) and a new contract for our geochemical laboratory business, MSALABS, at Tasiast Gold Mine (Kinross) in Mauritania.
As we enter 2020, we are encouraged by the award of new contracts and contract extensions with existing long-term customers, including: a three-year blast hole and grade control drilling services contract, with additional scope for underground drilling services at North Mara Gold Mine (Barrick) in Tanzania to December 2022; and an extension of underground drilling services at Geita Gold Mine (AngloGold Ashanti) in Tanzania to December 2020.
Additionally, post year-end we have received notification of the award of an exploration contract with Barrick's Bulyanhulu Gold Mine (Tanzania), with drilling commencing in February 2020. This is our third contract with Barrick, following commencement of our recent contract in Saudi Arabia, together with the ongoing long-term presence at the North Mara Gold Mine.
Consistent with our strategy to focus on growing our long-term mine-site based portfolio, new rigs were acquired to support these contracts and included blast hole, grade control and underground drilling rigs. As a result, the fleet increased from 91 to 99, with four of the new rigs commissioned in Q1 2020.
Pleasingly, and despite the higher rig count, we achieved a four-year rig utilisation record of 56% in Q4, with a full-year result of 54%, up 3% from 2018 (51%). This is consistent with the large number of new contract wins outlined above, many of which commenced in the last quarter. Full year ARPOR was $176,000 per rig (2018: $194,000), due to increased mobilisation of exploration rigs for the new contract start-ups.
Significantly, we expanded our offer to include load and haul services during 2019. This enables Capital Drilling to offer clients a fully integrated mining services solution and provides the ability to pursue growth opportunities across a broader base of mine-site based clients. Additionally, it offers larger revenue and earnings opportunities with more stable production-based activities that are less exposed to fluctuations in the cycle. We have further strengthened the mining services division with several key appointments to position the division for growth in 2020.
We commenced our first mining services contract at Allied Gold Corp's Bonikro Gold Mine in Côte d'Ivoire in Q3. To support the contract, we commissioned new equipment to supplement the client's existing heavy mining equipment fleet in December 2019, including three dozers, one grader and one excavator, together with new production rigs (blast hole and grade control).
SAFETY
At Capital Drilling, we have an uncompromising commitment to the safety of our employees and all others where we work. We expect visible safety leadership at all levels of the business, from the Executive Leadership Team to crews on site. We invest significantly in training programs to ensure our workforce is skilled, competent and can identify and mitigate hazards in the workplace.
We delivered an outstanding 12-month rolling AIFR result of 0.14, a significant reduction on the 2018 performance (0.45). This is also well below industry standards and a record for our company. This outstanding, company-wide performance reflects our team's commitment to our strong safety culture.
We also achieved a number of site records and safety milestones during 2019 including:
-- Mwanza Facility (Tanzania) achieved eleven years LTI free in January; -- Sukari Gold Mine (Egypt) achieved two years LTI free in January; -- North Mara Gold Mine (Tanzania) achieved three years LTI free in March; -- Geita Gold Mine (Tanzania) achieved two years LTI free in March; -- Tasiast Gold Mine (Mauritania) achieved two years LTI free in June; and -- Syama Gold Mine (Mali) achieved three years LTI free in June.
OUTLOOK
At the time of writing, there is widespread global uncertainly associated with the COVID-19 pandemic. Capital Drilling is closely monitoring the situation and adapting its business as required. The safety and wellbeing of our employees is paramount and will remain our first priority.
As we entered 2020 however, the gold price continued to improve with prices nearing ten-year highs. This is driving higher margins for operators which would typically drive increased levels of mining and drilling activity. Further, there remains the fundamental need to replace reserves depleted during the protracted downturn.
The heightened uncertainty as a result of the rapidly evolving nature of the COVID-19 outbreak, together with the impact of individual country's responses to it, increases the difficulty in predicting the impact on the Group's 2020 performance. In particular, uncertainty surrounds supply chain disruption and travel bans which have the potential for significant impact for Capital Drilling. Therefore we remain cautious in providing revenue guidance and will provide an update when the situation stabilises. O ur Company has also reduced our final dividend to protect the balance sheet during this time of uncertainty and ew will continue to be vigilant in monitoring the impact as a result of the COVID-19 outbreak.
Despite the backdrop of uncertainty caused by COVID-19, we are uniquely well positioned. We continue to generate strong cash from operations, have a robust balance sheet, maintaining a net cash balance at year end. We also have high exposure to recurring revenue streams from mine-site based contracts in the gold sector, from which 90% of our 2019 revenue was derived.
We have now firmly established our footprint in West Africa and can now offer a pan-African service to our customers. The addition of load and haul services to our well-established drilling and mineral analytical services, and our fledgling maintenance services business, provides a comprehensive service solution, and we are pleased to see a significantly increased business development pipeline as a result of these initiatives.
We remain committed to our strategy for 2020 and will continue to focus on growth in West Africa, increasing our portfolio of long-term mine-site based contracts, furthering our expansion into a broader mining services offering while maintaining strong cash flow generation to support growth initiatives and returns to shareholders.
I would like to take this opportunity to thank all our employees, business partners, shareholders, our Board of Directors and other stakeholders for their continued support of our Company.
Jamie Boyton
Executive Chairman
19 March 2020
CHIEF FINANCIAL OFFICER'S REVIEW
OVERVIEW
Capital Drilling delivered a solid performance in 2019 with significant levels of activity centred around positioning ourselves for further growth in 2020 and beyond.
Revenue remained flat at $114.8 million (down 1%, 2018: $116.0 million), however H2 revenue ($60.0 million) was 9.5% higher than H1 revenue ($54.8 million) as a result of new contract start-ups, particularly in the last quarter.
Our Company's geographical expansion into West Africa continued during the year, together with our strategic focus on long-term mine-site based contracts and expanding our services offering. As a result, our operational capex increased during the year in support of this to $19.8 million (2018: $11.9 million, adjusted for IAS 16: $14.1 million). Expenditure included approximately $8 million in capex for acquisition of new production drill rigs to support long-term contracts at Allied Gold Corp and Barrick, together with the purchase of new Heavy Mining Equipment (HME) to support our entry into the mining services market.
Profitability improved, with a material increase in NPAT of 34% to $10.4 million (2018: $7.7 million). Cash generated from operations was $28.7 million (2018: $28.2 million - adjusted for IAS 16: $30.4 million). Additionally, net cash of $4.4 million (2018: $10.9 million) was a positive result given the higher capex spend.
As our business is expanding its service offering, we are establishing financing options that will support this investment and growth. The current Standard Bank Revolving Credit Facility (RCF) is set for renewal on 31 October 2020. Discussions are well advanced with the lender to renegotiate and extend the facility. We are also engaging with other reputable financial institutions as well as working closely with key suppliers to establish asset financing options to obtain optimal financing solutions that offer lower costs and increased flexibility.
Our portfolio of long-term mine-site based contracts continue to underpin our cash flow and growth strategy. Mine-site based contracts represent 90% of our Company revenue and growth of this portfolio remains a focus.
On 1 July 2019, Capital Drilling acquired a controlling interest in MSALABS Ltd ("MSA"), which was previously disclosed as an associate. This valuation of the business combination has resulted in the recognition of Goodwill of $1.25 million. MSALABS generated revenue of $5.4 million for the full year 2019 and operates at a similar gross margin to the wider Capital Drilling group. The business generated a small EBITDA loss during the first half and moved into profit at the EBITDA level in the second half. The business is now showing good momentum with an improved operating performance and synergies, as well as contract wins with existing Capital Drilling clients.
In 2019, we updated the accounting treatment of two assets categories to become more compliant with IAS 2 and IAS 16.
Historically freight and customs relating to Inventory was expensed rather than capitalised due to practical challenges in the calculation of the costs. In 2019, the decision was made to account for freight and customs in Inventory, in line with IAS 2. This occurred for each of the three periods ended December 2017, December 2018 and December 2019. The adjustment has the effect of increasing inventories for all three periods as well as increasing the Retained Income by $1.5 million. There was no material impact on the Profit and Loss of 2019.
A requirement of IAS 16 is the reclassification of Capital spares from Inventory to Property, Plant and Equipment (PPE). For 2018 the reclassification increased PPE by $2.2 million, with a corresponding decrease in Inventory. For 2019 the reclassification increased PPE by $2.0 million, with a corresponding decrease in Inventory. The reclassification is performed annually and is not cumulative.
Statement of Comprehensive Income
Reported 2019 2018
--------------------
$'m $'m
-------------------- ------ ------
Revenue 114.8 116.0
EBITDA 27.3 28.3
EBITDA (%) 23.8 24.4
EBIT 16.6 14.8
PBT 14.6 12.6
NPAT 10.4 7.7
Basic EPS (cent) 7.7 5.7
Diluted EPS (cent) 7.6 5.7
Table 1: Statement of Comprehensive Income (Summary)
Average rig utilisation increased 3% to 54% (2018: 51%) on an average fleet size of 92 (2018: 93). Average revenue per operating rig (ARPOR) of $176,000 (2018: $194,000) per month is attributed to the increased mobilisation of exploration rigs for the new contract start-ups.
Earnings before interest, tax, depreciation and amortisation (EBITDA), decreased by 4% to $27.3 million (2018: $28.3 million) delivering a margin of 23.8% (2018: 24.4%).
Profit Before Tax (PBT) was impacted by Net Interest of $0.7 million (2018: $0.7 million) and loss of $1.3 million (2018: $1.6 million) on new business opportunities. These investments are expected to broaden our service offering to clients and provide greater revenue and earnings in the future. Depreciation reduced by $2.9 million to $10.6 million (2018: $13.5 million) due to the continued implementation of the Company's rebuild/schedule of works policy resulting in an increase in the useful life of certain assets, assisted by assets reaching full depreciation.
The Effective Tax Rate of 29% (2017: 39%) is partly due to the conclusion of final taxes on entities no longer contributing to Group revenues, reduced cost of cash repatriation and the conversion of Minimum Income Tax into Corporate Income Tax as profitability increases.
Earnings per share for the year increased 35% to 7.7 cents (2018: 5.7 cents). The weighted average number of ordinary shares used in the earnings per share calculation was 136,138,967 (2018:135,670,075).
Statement of Financial Position
Reported 2019 2018
$'m $'m
-------------------------- ------ ------
Non-current assets 55.1 42.5
Current assets 73.2 65.5
Total assets 128.3 108.0
Non-current liabilities 3.3 9.0
Current liabilities 38.1 21.8
Total liabilities 41.4 30.8
Shareholders' equity (1) 85.7 77.3
Table 2: Statement of Financial Position (Summary)
(1) Excludes non-controlling interest of $1.2 million
As at 31 December 2019, shareholders' equity increased by 11%. The Group distributed dividends of $3.0 million (2018: $2.4 million) to shareholders. The net profit for the year has further strengthened the Statement of Financial Position.
The total rig fleet size at the end of 2019 was 95 drill rigs (2018: 91) with an additional four rigs commissioned in Q1 2020. As mentioned above in reference to the rigs acquired for the Allied Gold project, eight new rigs have been purchased during 2019 to support long-term, mine-site based contracts.
Overall PPE increased from $41.0 million in 2018 to $52.9 million in 2019, reflecting depreciation of $10.6 million (2018: $13.5 million), assets disposed of $0.5 million (2018: $1.0 million) and additional operating capital expenditure of $19.8 million (2018: $14.1 million).
Current assets increased to $73.2 million at 31 December 2019 (2018: $65.5 million). Inventory decreased by $1.6 million to $17.5 million (2018: $19.1 million) as part of our improved utilisation of existing inventory. Trade receivables increased by $2.8 million in part due to the addition of the MSA receivables into the group results, with timing differences accounting for the balance. Cash and cash equivalents decreased by $2.3 million to $17.6 million (2018: $19.9 million). Investments held of $12.5 million (2018: 5.7 million) are the fair value of interests in loans and investments in trade investments/non-controlling interests.
As it is repayable on 31 October 2020, the $9 million utilised of the $12 million RCF moved from Non-current liabilities to Current liabilities. This, together with the asset financing the Company entered into, created debt exposure of $13.2 million at the end of the year. The $9 million RCF utilised remained static for the year. The Group was fully compliant with all debt covenants throughout the year. As mentioned above, negotiations are well advanced to renew the RCF.
Current liabilities consisted of trade and other payables, $23.1 million (2018: $18.1 million), current portion of long-term liabilities $10.3 million (2018: $0.03 million) and tax liabilities of $4.3 million (2018: $3.7 million).
Statement of changes in equity
Reported 2019 2018
$'m $'m
----------------------------- ------ ------
Opening equity 77.3 70.1
Previous period adjustment - 1.5
Share based payments 0.8 0.3
Total comprehensive income 10.7 7.8
Dividends paid (3.0) (2.4)
NCI ex Business Combination 1.2 -
Closing equity 87.0 77.3
Table 3: Statement of changes in equity (Summary)
Statement of Cash Flows
Reported 2019 2018
$'m $'m
--------------------------------------------- ------- -------
Net cash from operating activities 24.7 24.6
Net cash used in investing activities (23.6) (16.3)
Net cash generated from/(used in) financing
activities (3.3) (5.4)
Net (decrease)/increase in cash and cash
equivalents (2.2) 2.9
Opening cash and cash equivalents 19.9 16.9
Translation of foreign currency cash 0.03 0.1
Closing cash and cash equivalents 17.6 19.9
Table 4: Statement of Cash Flows (Summary)
Reconciliation of net cash (debt) position
Reported 2019 2018
$'m $'m
---------------------------------------------- ------ -----
Net cash at the beginning of the year 10.9 4.9
Net (decrease)/increase in cash and cash
equivalents (2.2) 2.9
Decrease/(increase) in long term liabilities (4.2) 3.0
Translation of foreign currency cash 0.03 0.1
Net cash at the end of the year 4.4 10.9
Table 5: Reconciliation of net cash (debt) position
Net cash generated from operating activities was $28.7 million (2018: $28.2 million - adjusted for IAS 16: $30.4 million) stable year on year. Not reflected in the Cash Flow is a $3.8 million asset finance facility obtained from Epiroc Financial Solutions for the purchase of 5 Rigs. This is aligned with our plan to establish more flexible, lower cost financing options.
The operating capital expenditure increase of $7.9 million year on year in 2019 followed on from the $1.1 million increase in 2018. This is driven by our commitment to meeting existing client requirements and the strategy of maintaining fleet operational readiness for the expansion into West Africa, which is expected to deliver long-term growth benefits.
The increase in financing activities related to the increased dividend cash payment of $3.0 million (2018: $2.4 million).
In light of the uncertainty as to the potential impact of COVID-19 during this period, the decision has been taken to protect the balance sheet and reduce the final dividend. The dividend payments will be reviewed at the interim dividend announcement.
The dividend history for the past three years is as follows:
H1 2017 FY 2017 H1 2018 FY 2018 H1 2019 FY 2019
----------------- -------- -------- -------- -------- -------- --------
Declaration 17 Aug 16 Mar 16 Aug 14 Mar 22 Aug 19 Mar
2017 2018 2018 2019 2019 2020
Cents per share 0.5 1.2 0.6 1.5 0.7 0.7
Dividend amount
($'m) $0.68 $1.63 $0.81 $2.04 $0.95 $0.96
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 dependent The Group is seeking
in levels of on the levels of mineral to balance these risks
mining activity exploration, development by building a portfolio
and production activity of long-term drilling
within the markets in which contracts and expanding
it operates. A reduction into new geographic areas.
in exploration, development The focus on long-term
and production activities, contracts is evidenced
or in the budgeted expenditure by the award of three
of mining and mineral exploration new multi-year contracts
companies, will cause a in 2020, together with
decline in the demand for post period-end contract
drilling rigs and drilling extensions at Syama,
services, as was evident North Mara and Geita
in the 2014 and 2015 financial Gold Mines. Expansion
years. in West Africa has further
diversified our revenue
streams. With the acquisition
of a Mineral Assay business
that operates in both
the Americas and Africa,
we have further diversified
the risk.
---------------------- ----------------------------------- ----------------------------------
Reliance on The Group's revenue is The Group has entered
key customers reliant on a small number into long-term contracts
of key customers. The loss with its key customers
of a key customer, or a for periods between 2
significant reduction in to 5 years. Contract
the demand for drilling renewal negotiations
provided to a key customer are initiated well in
will have a significant advance of expiry of
adverse effect on the Group's contracts to ensure contract
revenues. renewals are concluded
without interruption
to drilling services.
The Group has and continues
to monitor projects closely
and invest a significant
amount of time into client
relationship and service
level monitoring at all
levels of the business.
A key part of this process
is the quarterly project
steering committee meetings
with key client stakeholders
that provide a forum
for monitoring and reporting
on project performance
and performance indicators,
contractual issues, pricing
and renewal. The West
Africa expansion is intended
to negate the customer
concentration risk. During
2020, of the 11 new exploration
contracts, eight are
with new clients and
a further three long-term
contracts were added
to the portfolio.
---------------------- ----------------------------------- ----------------------------------
Key personnel The Group's ability to The Group has expanded
and staff retention implement a strategy of capabilities in the areas
pursuing expansion opportunities of business development,
is dependent on the efforts supply chain, finance,
and abilities of its Executive training and health and
Directors and senior managers. safety and continues
In addition, the Group's to do so through the
operations depend, in part, recruitment of senior
upon the continued services managers in the various
of certain key employees. fields, implementing
If the Group loses the comprehensive training
services of any of its programmes and providing
existing key personnel employees with international
without timely and suitable exposure in their fields.
replacements or is unable The Group has also implemented
to attract and retain new remuneration and incentive
personnel with suitable policies that seeks to
experience as it grows, recruit suitable talent
the Group's business, financial and to remunerate talent
condition, results of operations at levels commensurate
and prospects may be materially with market levels.
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.
---------------------- ----------------------------------- ----------------------------------
Operating risks Operations are subject The Executive Chairman,
to various risks associated Executive Leadership
with drilling including, Team and managers provide
in the case of employees, leadership to projects
personal injury, malaria on the management of
and loss of life and in these risks and actively
the Group's case, damage engage with employees
and destruction to property at all levels. The Group
and equipment, release have implemented and
of hazardous substances continue to monitor and
into the environment and update a range of health
interruption or suspension and safety policies and
of drill site operations procedures including
due to unsafe drill operations. equipment standards and
The occurrence of any of standard work procedures.
these events could adversely Employees are provided
impact the Group's business, with training regarding
financial condition, results risks associated with
of operations and prospects, their employment, policies
lead to legal proceedings and standard work procedures.
and damage the Group's Health and Safety statistics
reputation. In particular, and incident reports
clients are placing an are monitored throughout
increasing focus on occupational our projects and the
health and safety, and various management structures
a deterioration in the of the Group, including
Group's safety record may the HSSE committee. Where
result in the loss of key necessary policies and
clients. procedures are updated
to reflect developments
and improvement needs.
The Executive - HSEQ
monitors high risk events
in areas of operation
and distributes warnings
and guidance as required.
The Group acknowledges
it has a business risk
due to the global outbreak
of COVID-19. The primary
direct risk factors are
closure of mine sites
due to an outbreak/preventative
measures and the inability
of expatriates (both
the Group and its clients)
to travel to and from
site. The Group is in
regular contact with
its clients to manage
this risk. Business continuity
measures have already
been implemented including
limiting all non-essential
business travel, monitoring
and issuing regular updates
on measures taken by
governments and institutions
to limit the spread and
re-enforcing appropriate
hygiene measures as per
the guidance of medical
professionals.
---------------------- ----------------------------------- ----------------------------------
Currency fluctuations The Group's contract pricing To minimise the Group's
is in US dollars. However, risk, the Group tries
in certain markets the to match the currency
funds are received in local of operating costs with
currency and some of the the currency of revenue.
Group's costs are in other Funds are pooled centrally
currencies in the jurisdictions in the head office bank
in which it operates. Foreign accounts to the maximum
currency fluctuations and extent possible. The
exchange rate risks between Group have implemented
the value of the US dollar procedures to allow for
and the value of other the repatriation of funds
currencies may increase to the Group's Head Office
the cost of the Group's bank accounts from jurisdictions
operations and could adversely where exchange control
affect the financial results. regulations are in effect.
As a result, the Group Despite the improved
is exposed to currency repatriation achieved
fluctuations and exchange in 2019, there is continuous
rate risks. focus on improvement.
The Treasury Manager
has also implemented
new procedures to minimise
foreign exchange risks.
---------------------- ----------------------------------- ----------------------------------
Political, The Group operates in a The Group has invested
economic and number of jurisdictions in a number of countries
legislative where the political, economic thereby diversifying
risk and legal systems are less exposure to any single
predictable than in countries jurisdiction.
with more developed industrial The Group monitors political
structures. Significant and regulatory developments
changes in the political, in the jurisdictions
economic or legal landscape it operates through a
in such countries may have number of service providers
a material effect on the and advisors.
Group's operations in those The Group engages specialist
countries. Potential impacts consultants to ensure
include restrictions on tax compliance is maintained
the export of currency, at the highest levels
expropriation of assets, and to provide assistance
imposition of royalties where tax audits are
or other taxes targeted performed by the Tax
at mining companies, and Authorities.
requirements for local Senior management regularly
ownership. Political instability reports to the Board
can also result in civil on any political or regulatory
unrest, industrial action changes in the jurisdictions
and nullification of existing we operate in.
agreements, mining permits Where significant events
or leases. Any of these occur, we work closely
may adversely affect the with our clients, advisors
Group's operations or results and other stakeholders
of those operations. to address these events.
---------------------- ----------------------------------- ----------------------------------
Technological New Innovation has the Representatives from
risk possibility of changing the Executive are constantly
an industry with regards in contact with the OEMs
to methods and equipment, and attend all major
giving a cost or productivity trade and industry trade
advantage. shows. The ELT team consist
of significant experience
and knowledge in the
operational field and
are aware of all new
industry developments.
The Group's rigs are
outfitted with the latest
safety equipment as the
technology is proven,
providing a competitive
advantage.
---------------------- ----------------------------------- ----------------------------------
Viability Statement
The activities of the Group, together with the factors likely to affect its future development, performance, the financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in pages 20 to 36. The Directors have carried out a robust assessment of the emerging and principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. These risks and the ways they are being managed and mitigated by a wide range of actions are summarised on pages 14 to 18.
Taking account of the Group's position, emerging and principal risks, the Directors assessed the prospects of the Group by reviewing and discussing the annual forecast, the three-year strategic plan and the Group risk framework. The review is a robust consideration of all risk factors and sensitivities. The plan reviewed scenarios such as the non-renewal of key contracts within the time frame, a general reduction in turnover and the impact on the business, the possible impact of COVID-19 and possible alternatives should the Revolving Credit Facility (RCF) not be renewed. As a result of the rapidly evolving nature of the COVID-19 outbreak, together with the impact of individual country's responses to it, it is difficult to predict the impact on the Group in 2020. In particular, supply chain disruption and travel bans are uncertain and have potential for significant impact on Capital Drilling. Our Company has also reduced our final dividend to protect the balance sheet during this time of uncertainty. We will continue to be vigilant in monitoring the impact as a result of the COVID-19 outbreak but remain confident that the Group's viability is not at risk.
Throughout the year the Directors review and discuss the potential impact of each principal risk as well as the risk impact of any major events or transactions. A three-year period is considered appropriate for this assessment because:
-- It is the period covered by the strategic plan; and
-- It enables a high level of confidence, even in extreme adverse events, due to a number of factors such as:
- The Group has considerable financial resources together with established business relationships with major, mid-tier and junior mining houses and suppliers in countries throughout the world;
- High cash generation by the Group's operations; - Low level of gearing and availability of unutilised facilities with the Group's bankers; - Flexibility of cash outflows including capital expenditure and dividend payments; and - The Group's long-term contracts, equipment availability and diverse geographic operations.
Based on the results of this analysis, the Directors believe that the Group is well placed to manage its business risks successfully as the market conditions continue to improve. The Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment.
Cautionary Statement
This Business Review, which comprises the Chairman's Statement and Chief Financial Officer's Review, has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.
The Business Review contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
By order of the Board
André Koekemoer
Chief Financial Officer
19 March 2020
Financial Results
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
CONSOLIDATED
2019 2018
$ $
Unaudited Audited
Revenue 114,826,796 116,020,535
Cost of sales (69,543,841) (70,726,861)
------------- --------------
Gross profit 45,282,955 45,293,674
Administration expenses (18,003,234) (16,990,046)
Depreciation (10,637,057) (13,484,326)
------------- --------------
Profit from operations 16,642,664 14,819,302
Share of losses from associate (227,904) (869,668)
Interest income 182,035 401,020
Finance charges (891,750) (1,051,348)
Fair value loss on investments
in equity instruments designated
as FVTPL (1,111,456) (719,939)
------------- --------------
Profit before tax 14,593,589 12,579,367
Taxation 4 (4,215,970) (4,855,332)
------------- --------------
Profit for the year 10,377,619 7,724,035
Other comprehensive income
(loss):
Other comprehensive income (loss) to be reclassified to profit
or loss in subsequent periods
Exchange differences on translation
of foreign operations - 18,510
Movement in other reserve 287,568 100,322
------------- --------------
Total other comprehensive income
(loss) for the year 287,568 118,832
------------- --------------
Total comprehensive income for
the year 10,665,187 7,842,867
============= ==============
Earnings per share:
Basic (cents per share) 5 7.7 5.7
Diluted (cents per share) 5 7.6 5.7
Profit (loss) attributable to:
Owners of the parent 10,416,669 7,724,035
Non-controlling interest (39,050) -
------------- ------------------
10,377,619 7,724,035
------------- ------------------
CONDENSED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
---------------
CONSOLIDATED
Notes 2019 2018 2017
Restated Restated
$ $ $
Unaudited Audited Audited
ASSETS
Non-current assets
Property, plant and equipment 7 52,862,017 40,986,687 41,405,764
Right-of-use assets 679,991 - -
Goodwill 1,252,348 - -
Intangible assets 303,191 - -
Investment in associates - 1,482,368 2,750,295
Deferred tax assets - 9,102 7,297
------------- -------------------- ---------------
Total non-current assets 55,097,547 42,478,157 44,163,356
------------- -------------------- ---------------
Current assets
Inventory 10 17,544,401 19,139,089 23,212,747
Trade and other receivables 18,619,228 15,770,617 16,554,256
Prepaid expenses and other
assets 6,624,827 4,777,803 2,863,167
Investments at fair value 12,537,105 5,705,113 3,260,331
Taxation 289,139 253,776 136,590
Cash and cash equivalents 17,620,623 19,888,764 16,911,383
------------- -------------------- ---------------
Total current assets 73,235,323 65,535,162 62,938,474
------------- -------------------- ---------------
Total assets 128,332,870 108,013,319 107,101,830
============= ==================== ===============
EQUITY AND LIABILITIES
Equity
Share capital 8 13,625 13,581 13,524
Share premium 8 22,495,287 22,231,662 21,933,772
Equity-settled employee benefits
reserve 974,118 409,995 432,476
Other reserve 261,301 (26,267) (126,589)
Foreign currency translation
reserve - - (18,510)
Retained earnings 62,004,344 54,624,202 49,344,795
------------- -------------------- ---------------
85,748,675 77,253,173 71,579,468
Non-controlling interest 1,199,681 - -
------------- -------------------- ---------------
Total equity 86,948,356 77,253,173 71,579,468
------------- -------------------- ---------------
Non-current liabilities
Loans and Borrowings 9 2,899,754 9,000,000 12,000,000
Lease liabilities 367,039 - -
Deferred tax liabilities 31,481 9,320 -
------------- -------------------- ---------------
Total non-current liabilities 3,298,274 9,009,320 12,000,000
------------- -------------------- ---------------
CONDENSED STATEMENT OF FINANCIAL POSITION
( continued )
As at 31 December 2019
CONSOLIDATED
2019 2018 2017
Restated Restated
$ $ $
Unaudited Audited Audited
Current liabilities
Trade and other payables 23,121,158 18,064,237 19,731,133
Taxation 4,335,388 3,656,705 3,749,644
Loans and Borrowings 10,294,456 29,884 41,585
Lease liabilities 335,238 - -
------------ ------------ ------------
Total current liabilities 38,086,240 21,750,826 23,522,362
------------ ------------ ------------
Total equity and liabilities 128,332,870 108,013,319 107,101,830
============ ============ ============
CONDENSED STATEMENT OF CHANGES IN
EQUITY
For the year ended 31 December 2019
---------------------------------------------------------------------------------
Equity
settled
employee Foreign
bene currency
Share Share ts translation Retained Non-controlling
Note capital premium reserve Other reserve reserve earnings interest Total
$ $ $ $ $ $ $ $
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
CONSOLIDATED
Balance
at 31
December
2017
(Audited) 13,524 21,933,772 432,476 (126,589) (18,510) 47,823,617 - 70,058,290
Prior period
error - - - - - 1,521,178 - 1,521,178
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
Balance
at January
1, 2018
as restated 13,524 21,933,772 432,476 (126,589) (18,510) 49,344,795 - 71,579,468
Issue of
shares 57 297,890 (297,947) - - - - -
Recognition
of
share-based
payments - - 275,466 - - - - 275,466
Total
comprehensive
(loss) income
for the
year - - - 100,322 18,510 7,724,035 - 7,842,867
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
Profit for
the year - - - - - 7,724,035 - 7,724,035
Other
comprehensive
(loss) income
for the
year, net
of tax - - - 100,322 18,510 - - 118,832
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
Dividends
paid - - - - - (2,444,628) - (2,444,628)
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
Balance
at 31
December
2018
(Audited) 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
income for
the year - - - 287,568 - 10,377,619 - 10,665,187
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
Profit for
the year - - - - - 10,377,619 - 10,377,619
Other
comprehensive
income for
the year,
net of tax - - - 287,568 - - - 287,568
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
Dividends
paid 6 - - - - - (2,997,477) - (2,997,477)
Business
Combinations - - - - - 1,199,681 1,199,681
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
Balance
at 31
December
2019
(Unaudited) 13,625 22,495,287 974,118 261,301 - 62,004,344 1,199,681 86,948,356
---------------- ------------------- ----------------- ------------------- ------------------- -------------------- ---------------- --------------------
CONDENSED STATEMENT OF CASH FLOWS
For the year ended 31 December
2019
CONSOLIDATED
Notes 2019 2018
$ $
Unaudited Restated
-------------- -----------------
Operating activities:
Cash generated from operations 11 28,683,100 30,358,728
Interest received 182,035 401,020
Finance charges paid (651,428) (1,063,049)
Taxation paid (3,541,389) (5,057,943)
-------------- -----------------
Net cash generated from operating
activities 24,672,318 24,638,756
-------------- -----------------
Investing activities:
Purchase of property, plant
and equipment 7 (15,849,548) (14,095,347)
Net cash from MSA acquisition 166,255 -
Purchase of investments (9,682,412) (2,647,630)
Proceeds from sale of investments
at fair value 1,738,964 -
Proceeds from disposal of property,
plant and equipment 6,754 418,685
Net cash used in investing activities (23,619,987) (16,324,292)
-------------- -----------------
Financing activities:
Proceeds from new loans 2,000,000 -
Repayment of loans (2,000,000) (3,000,000)
Repayments of leases - principal (289,537) -
Dividend paid 6 (2,997,477) (2,444,628)
Net cash used in financing activities (3,287,014) (5,444,628)
-------------- -----------------
Net (decrease)/increase in cash
and cash equivalents (2,234,683) 2,869,836
Cash and cash equivalents at
the beginning of the year 19,888,764 16,911,383
Translation of foreign currency
cash
and cash equivalent adjustment (33,458) 107,545
-------------- -----------------
Cash and cash equivalents at
the end of the year 17,620,623 19,888,764
-------------- -----------------
NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December 2019
1. Basis of preparation
The unaudited 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 unaudited
announcement.
The unaudited 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
unaudited 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 2019 Annual Consolidated Financial Statements
will be prepared in accordance with IFRS. The unaudited 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.
As from 1 January 2019 - IFRS 16 Leases became effective
and the full impact of the new standards have been disclosed
in the full financial statements.
The accounting policies are in terms of IFRS and consistent
with those of the prior year with the exception of the adoption
of IFRS 16.
The financial information for the years ended 31 December
2019 and 2018 does not constitute the annual financial statements.
The annual consolidated financial statements for the year
ended 31 December 2018 were completed and received an unmodified
audit report from the Company's Auditors. The Annual Report
and Annual Consolidated Financial Statements for the year
ended 31 December 2019 will be finalised on the basis of
the financial information presented by the Directors in this
unaudited preliminary announcement. The audit report on the
full set of consolidated financial statements for the year
ended 31 December 2019 has not yet been issued.
2. Operations during the year
During the year ended 31 December 2019, the Group provided
drilling services in Ivory Coast, Egypt, Mauritania, Mali,
Kenya and Tanzania. The Group's administrative office is
located in Mauritius. The Group comprise of Capital Drilling
Limited and all its subsidiaries. On the first of July 2019,
Capital Drilling acquired a controlling interest in MSALABS
Ltd, which was previously disclosed as an associate. The
addition of MSA into the Group has already resulted in improved
operating performance and synergies, as well as contract
wins with existing Capital Drilling clients.
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 2019
3. Segment analysis (continued)
Derives revenue from the provision of drilling
* Africa: services, equipment rental, IT support services
and mineral assaying.
Derives revenue from the provision of drilling
* Rest of world: services, equipment rental, IT support services
and mineral assaying.
The following is an analysis of the Group's revenue and results
by reportable segment:
Rest of
Africa world Consolidated
$ $ $
------------- -------------- ------------------
2019 Unaudited
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
==================
The total revenue of $110.6m from the Africa segment includes
$70.5m (2018: $82.6m) from customers that represent more than
10% of the Group's revenue.
2018 Audited
External revenue 115,263,721 756,814 116,020,535
============= ============== ==================
Segment profit (loss) 23,177,443 (2,478,328) 20,699,115
Central administration costs
and depreciation (5,879,813)
------------------
Profit from operations 14,819,302
Interest income 401,020
Share of losses from associate (869,668)
Finance charges (1,051,348)
Net loss on financial assets
at fair value through profit
and loss (719,939)
------------------
Profit before tax 12,579,367
==================
NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December
2019
CONSOLIDATED
2019 2018
$ $
Unaudited Audited
------------------ ---------------------
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 184,635,830 183,018,762
Rest of world 29,823,155 13,855,989
------------------ ---------------------
Total segment assets 214,458,985 196,874,751
Head office companies 138,073,761 54,251,299
------------------ ---------------------
352,532,746 251,126,050
Eliminations (224,199,876) (143,112,731)
------------------ ---------------------
Total Assets 128,332,870 108,013,319
================== =====================
Segment liabilities:
Africa 85,462,428 51,040,236
Rest of world 28,745,632 9,002,688
------------------ ---------------------
Total segment assets 114,208,060 60,042,924
Head office companies 145,304,748 112,362,444
------------------ ---------------------
259,512,808 172,405,368
Eliminations (218,128,294) (141,645,222)
------------------ ---------------------
Total Liabilities 41,384,514 30,760,146
================== =====================
NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December 2019
4. Taxation
Capital Drilling 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
2019
CONSOLIDATED
2019 2018
$ $
Unaudited Audited
----------------- ----------------
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 10,416,669 7,724,035
================ ================
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 136,138,967 135,670,075
================ ================
Basic earnings per share (cents) 7.7 5.7
================ ================
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 136,138,967 135,670,075
Shares deemed to be issued for no consideration
in respect of:
* Dilutive share options (#) 639,688 271,765
* Effect of STIP and LTIP shares 856,104 -
---------------- ----------------
Weighted average number of ordinary shares
used in the calculation of diluted earnings
per share 137,634,759 135,941,840
================ ================
Diluted earnings per share (cents) 7.6 5.7
================ ================
(#) 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
2019
CONSOLIDATED
2019 2018
$ $
Unaudited Audited
--------------- ------ -------------------------
6. Dividends
Dividends paid:
Final dividend in respect of the year 2,997,477 2,444,628
----------- ----------------
Total dividends paid 2,997,477 2,444,628
=========== ================
On 3 May 2019 (2018: 18 May 2018) the 2018 final dividend of
1.5 cents per ordinary share (2018: 1.2 cents), totalling $2,043,734
(2018: $1,629,751) was paid to the shareholders. An interim
dividend for 2019 of 0.7 cents per share (2018: 0.6 cents) was
paid on 27 September 2019 (2018: 03 October 2018), totalling
$953,743 (2018: $814,876). The total dividend paid is $2,997,477
(2018: $2,444,628).
In respect of the year ended December 31, 2019, the Directors
propose that a final dividend of 0.7 cents (2018: 1.5 cents)
per share be paid to shareholders on 04 May 2020 (2018: 03 May
2019). 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 14 April 2019 (2018: 12 April 2019). The total
estimated final dividend to be paid is $0.96 million (2018:$2.04
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 2019, the Group spent $19.8 million
(2018: $14.1 million) on drilling rigs and other assets to expand
its operations, safety upgrades and for the replacement of existing
assets. An additional $2.83m was acquired through business combinations.
The Group disposed of property, plant and equipment with a net
book value of $0.5 million (2018: $1.0 million) during the year.
A loss of $0.4 million (2018: $0.6 million) was incurred on
the disposal of property, plant and equipment. Not reflected
in the Cash Flow is a $3.8 million asset finance facility obtained
from Epiroc Financial Solutions for the purchase of 5 Rigs.
8. Share capital
Authorised
2,000,000,000 (2018: 2,000,000,000) ordinary
shares of 0.01 cents (2018: 0.01 cents)
each 200,000 200,000
=========== ================
Number of ordinary shares issued
135,812,596 (2018: 135,247,159) ordinary
shares of 0.01 cents (2018: 0.01 cents)
each 13,625 13,581
=========== ================
Share premium
Balance at the beginning of the year 22,231,662 21,933,772
Share issue 263,625 297,890
----------- ----------------
Balance at the end of the year 22,495,287 22,231,662
=========== ================
On 3 April 2019, the Company issued 436,357 (2018: 565,437) new common shares
pursuant to the Company's
employee incentive scheme. The shares rank pari passu with the existing
ordinary shares.
NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December
2019
9. Loans and Borrowings
Long term liabilities consist of
(a) $12 million revolving credit facility ("RCF") provided by
Standard Bank (Mauritius) Limited following a renewal of the
Facilities Agreement on 30 October 2017. The group is in discussion
on the renewal of the RCF and expect a renewal shortly and consequently
the loan has been reclassified to current liabilities. The interest
rate on the RCF is the prevailing three-month US LIBOR (payable
in arrears) plus a margin of 5.75%, and an annual commitment
fee of 1.5% of the undrawn balance.
Security for the Standard Bank (Mauritius) Limited facility
comprises:
* Upward corporate guarantees from Capital Drilling (T)
Limited, Capital Drilling (Botswana) Proprietary
Limited and Capital Drilling Ltd.
* A negative pledge over the assets of Capital Drilling
(T) Limited and Capital Drilling Ltd.
(b) $ 3.8 million credit facility provided by Epiroc Financial
Solutions AB for the purchase of five rigs.
The loan will be repaid in 46 monthly payments in arrears at
a fixed rate of interest of 8.47% annually.
(c) $ 0.2 million Hire purchase agreement with Ma'aden Barrick
Copper Company for the purchase of one rig. The lease is repayable
by a fixed monthly instalment over 24 months.
During the year under review, the Group has complied with all
-- covenants that attaches to the loan facilities.
CONSOLIDATED
2019 2018
$ $
Unaudited Audited
--------------- ---------------
Balance at the beginning of the
year 9,029,884 12,041,585
Amounts received during the year 5,971,650 -
Interest accrued during the year 851,968 912,285
Interest paid during the year (659,292) (923,986)
Principal repayments during the
year (2,000,000) (3,000,000)
--------------- ---------------
13,194,210 9,029,884
Less: Current portion included
under current liabilities (10,294,456) (29,884)
--------------- ---------------
Due after more than
one year 2,899,754 9,000,000
=============== ===============
10. Inventory
The cost of inventories recognised as an expense in the current
year amounts to $10.1m (2018: $10.9m). During the year, the
Group wrote off $0.6m (2018: $2.4m) of inventory resulting in
a reduction in the carrying amount of the provision.
NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December
2019
CONSOLIDATED
2019 2018
$ $
Unaudited Restated
------------------------- ---- -----------------------
11. Cash generated from operations
Profit before tax 14,593,589 12,579,367
Adjusted for:
* Depreciation 10,372,879 13,484,326
* Loss on disposal of property, plant and equipment 448,495 611,412
* Amortisation of Right of use assets 264,178 -
* Share based payment expense 827,792 275,466
* Fair value loss on investments in equity instruments
designated as at FVTPL 1,111,456 719,939
* Interest income (182,035) (401,020)
* Share of loss from associate 227,904 869,668
* Finance charges 891,750 1,051,348
* Unrealised foreign exchange loss/(gain) on foreign
cash held 33,458 (107,545)
Operating cash flows before working capital
changes 28,589,466 29,082,961
Adjustments for working capital changes:
* Decrease in inventory 1,594,687 4,073,660
* (Increase) Decrease in trade and other receivables (4,551,246) (1,130,997)
* Increase (Decrease) in trade and other payables 3,050,193 (1,666,896)
------------------
28,683,100 30,358,728
========================== ==================
CONSOLIDATED
2019 2018
$ $
Unaudited Audited
---------- -------------- ------------------
12. Commitments
The Group has the following commitments:
Committed capital expenditure 745,238 722,728
The Group had outstanding purchase orders amounting to $1.1
million (2018: $2.8 million) at the end of the reporting period
of which $0.7 million [2018: $0.7 million] were for capital
expenditure.
NOTES TO THE CONDENSED ANNUAL FINANCIAL
STATEMENTS
For the year ended 31 December 2019
13. Contingencies
Zambia tax:
As disclosed in the prior year Financial Statements, Capital
Drilling (Zambia) Limited is a party to various tax claims
made by the Zambian Revenue Authority for the tax years 2007
to 2013. On 30 April 2015, the Company received a tax assessment
from the Zambian Revenue Authority totalling ZMW 144.1 million
($ equivalent: $13.1 million), inclusive of penalties and
interest. The claims relate to various taxes, including income
tax, value added tax, payroll tax and withholding tax. Since
the assessment date, Management has responded in detail to
these claims, providing the Zambian Revenue Authority with
detailed analysis and arguments justifying the Company's tax
position. No amount has yet been paid in this regard and no
additional communication or actions were received from the
Zambian Revenue Authority during the 2019 financial year regarding
this matter. Capital Drilling (Zambia) Limited is currently
dormant with no drilling revenue since November 2014. An amount
of $1.6 million was provided in 2015 relating to certain areas
of the claim, however the Directors are of the opinion that
a significant portion of the tax claim by the Zambian Revenue
Authority is without merit.
Tanzania tax:
As disclosed in the prior year Financial Statements, Capital
Drilling (T) Ltd is party to a payroll tax claim made by the
Tanzanian Revenue Authority (TRA) for the tax years 2009-2015.
During the financial year ended 31 December 2016, the company
received an immediate demand notice from the TRA for Tanzanian
Shillings (TZS) of 18,598,361,197 ($ 8,374,660), inclusive
of penalties and interest. Management objected to the assessment
raised by the TRA and requested the calculations of the notice.
In order to object, according to Tanzanian Tax Law Sections
51(1) and (5) of the TAA 2015, a taxpayer is required to pay
the tax amount not in dispute or one third of the assessed
tax whichever is greater. It is prudent to note that the Finance
Act in 2016 added a further subsection (9) in Section 51 regarding
tax objections and assessments. The said amendment provides:
"Where the taxpayer fails to pay the amount stated under subsection
(5) within the time provided therein, the assessed tax decision
shall be confirmed as final tax assessment in terms of section
15(1) (a) of the Tax Revenue Appeals Act." In accordance with
the above-mentioned legislation, Management reached an agreement
with the TRA to pay TZS1,500,000,000 ($0.7 million) in lieu
of the one third of the assessed value. This amount was fully
provided for in the 2016 Annual Financial Statements. In June
2017 the TRA provided their workings to Capital Drilling (T)
Ltd. Capital Drilling (T) Ltd identified differences with the
TRA on both the specific merits and methodology used to determine
the value. In order to continue the discussions and negotiations
with the TRA, Capital Drilling (T) Ltd has, at the request
of the TRA, paid an additional amount of TZS1,1000,000 ($0.4
million), increasing the total amount paid to TZS2,600,000
($1,129 million) as at 31 December 2018. This is in line with
the aforementioned Tanzanian Tax Law. On 3 February 2020, the
TRA issued an updated assessment of TZS22,521,897,321 ($9,782
million) which comprises of a principal amount of TZS7,313,768,612
($3,177 million) and interest TZS15,208,128,709 ($6,606 million).
As per Section 48 quoted in the assessment, the company is
entitled to appeal and has already done so. Capital Drilling
(T) Ltd is confident with the position presented to the TRA
and continues its engaging relationship to find closure and
resolution to this matter.
NOTES TO THE CONDENSED ANNUAL FINANCIAL STATEMENTS
For the year ended 31 December 2019
13. Contingencies (Continued)
Mauritania tax:
Capital Drilling Mauritania SARL is a party to various tax
claims made by the Mauritanian Revenue Authority (MRA) for
the tax years 2016 - 2018. On 20 February 2020, the company
received a tax assessment totalling MRU105.0 million, inclusive
of penalties and interest ($ equivalent: $2.8 million). The
claims relate to various taxes, including Minimum Income tax,
VAT, Corporate Income Tax, Securities Tax and Apprentice Tax.
Management has responded to these claims in detail, strongly
refuting the position taken by the MRA, apart from nominal
corrections to VAT. No amount has yet been paid as discussions
continue. An amount of MRU2,07 million ($54,494) has been
provided, relating to the aforementioned VAT invoices.
14. Prior period errors
Freight and customs capitalised to inventory
The group did not apply IAS2 Inventories correctly in previous
periods. Freight and customs on inventory purchases were not
capitalised to inventory. This was done with the aim of being
prudent, but is in contravention of IAS 2. The cost should
have been capitalised as they were part of cost necessary to
bring assets into trade.
Inventory classified as PPE
A requirement of IAS 16 Property Plant and Equipment is the
reclassification of Capital spares from Inventory to Property,
Plant and Equipment. For 2018 the reclassification increases
PPE by US$ 2,167,497 and decreases inventory by US$ 2,167,497.
In 2019 the 2018 reclassification is reversed and a new adjustment
is made for 2019 with an increase in PPE by US$ 1,999,823 and
a decrease in inventory of US$ 1,999,823.
The adjustments did not have a taxation effect.
Impact of correction As previously Adjustments As restated
of error reported
1 January 2018
Inventory 21,691,569 1,521,178 23,212,747
Other assets 83,889,083 - 83,889,083
Total assets 105,580,652 1,521,178 107,101,830
----------------------------------- ----------------------------- ---------------
Total Liabilities 35,522,362 - 35,522,362
----------------------------------- ----------------------------- ---------------
Retained Earnings 47,823,617 1,521,178 49,344,795
Other Equity 22,234,673 - 22,234,673
Total equity 70,058,290 70,058,290 1,521,178 71,579,468
----------------------------------- ----------------------------- ---------------
NOTES TO THE CONDENSED ANNUAL FINANCIAL
STATEMENTS
For the year ended 31 December 2019
14. Prior period errors (Continued)
Impact of correction As previously Adjustments As restated
of error reported
31 December 2018
Inventory 19,785,408 (646,319) 19,139,089
Property, plant &
equipment 38,819,190 2,167,497 40,986,687
Other assets 47,887,543 - 47,887,543
Total assets 106,492,141 1,521,178 108,013,319
-------------------------------- ---------------------------------- ---------------
Total Liabilities 30,760,146 - 30,760,146
-------------------------------- ---------------------------------- ---------------
Retained Earnings 53,103,024 1,521,178 54,624,202
Other Equity 22,628,971 - 22,628,971
Total equity 75,731,995 1,521,178 77,253,173
-------------------------------- ---------------------------------- ---------------
NOTES TO THE CONDENSED ANNUAL FINANCIAL
STATEMENTS
For the year ended 31 December
2019
15. Glossary
A description of various acronyms is detailed below:
ARPOR Average Revenue Per Operating Rig
CAPEX 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 LTM EBIT / (Equity)
employed
Return on total LTM EBIT / Total Assets
assets
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR GPUPCWUPUUQB
(END) Dow Jones Newswires
March 19, 2020 03:00 ET (07:00 GMT)
1 Year Capital Chart |
1 Month Capital Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
