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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 1.00 | 1.00% | 101.00 | 100.00 | 101.50 | 101.00 | 101.00 | 101.00 | 119,188 | 16:35:17 |
| 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 |
TIDMCAPD
RNS Number : 3886W
Capital Limited
18 August 2022
For Immediate Release 18 August 2022
Capital Limited
("Capital", the "Group" or the "Company")
H1 Results
Capital Limited (CAPD:LN), a leading mining services company, today announces half year results for the period 1 January to 30 June 2022 (the "Period").
HALF YEAR RESULTS FOR THE PERIODED 30 JUNE 2022*
Hot Features
Premium
H1 2022 H1 2021 % change
Revenue ($ m) 138.1 98.7 39.9%
-------- -------- ---------
EBITDA(1) ($ m) 41.4 28.4 45.8%
-------- -------- ---------
EBIT(1) ($ m) 28.0 20.2 38.6%
-------- -------- ---------
Adjusted net profit (2) ($
m) 19.9 12.7 56.7%
-------- -------- ---------
Investment (Losses) / Gains
($ m) (10.3) 5.7 (280.7)%
-------- -------- ---------
Net Profit After Tax ($ m) 9.7 18.4 (47.3)%
-------- -------- ---------
Cash From Operations ($ m) 34.9 5.4 546.3%
-------- -------- ---------
Capex(3) ($ m) 22.6 35.0 (35.4)%
-------- -------- ---------
Earnings per Share
-------- -------- ---------
Basic (adjusted)(2) (cents) 10.5 6.7 56.7%
-------- -------- ---------
Basic (cents) 4.7 9.8 (52.0)%
-------- -------- ---------
Interim Dividend per Share
(cents) 1.3 1.2 8.3%
-------- -------- ---------
Adjusted ROCE (%) (4) 24.6 22.5 9.4%
-------- -------- ---------
Net cash / (debt) ($m) (36.4) (32.8) 11.0%
-------- -------- ---------
Net Debt/Equity (%) 16.3 20.1 (18.9)%
-------- -------- ---------
Investments ($m) 47.3 31.0 52.6%
-------- -------- ---------
Adjusted Net Cash (Including
Investments) ($ m) 10.9 (1.8) (12.2)%
-------- -------- ---------
*All amounts are in US dollars unless otherwise stated
(1) EBITDA, EBIT and Net Cash are non-IFRS financial measures and should not be used in isolation or as a substitute for Capital Limited financial results presented in accordance with IFRS.
(2) Adjusted net profit and adjusted earnings per share are pre investment losses and gains.
(3) Capital expenditure (Capex) consists of purchase of PPE for cash, prepayments for PPE and financed capex.
(4) Adjusted ROCE is calculated utilising annualised half year EBIT and excludes investments at fair value from assets.
Financial Overview
-- H1 2022 revenue of $138.1 million, up 39.9% on H1 2021 ($98.7 million); -- Full year revenue guidance increased to $280 - $290 million (from $270 - 280 million);
-- Non-drilling revenue contributed 28% of total revenue for H1 2022, compared with H1 2021 (17%), driven by growth YoY in mining services and MSALABS;
-- H1 2022 EBITDA of $41.4 million, up 45.8% on H1 2021 ($28.4 million); -- EBITDA margins increased to 30.0% from 28.8% in H1 2021;
-- Net losses from equity investments of $10.3 million in H1 2022 (unrealised), decreasing the value of Group strategic investments to $47.3 million, net of cash proceeds, as of 30 June 2022 (31 December 2021: $60.2 million);
-- Adjusted Net Profit After Tax (NPAT) $19.9 million (adjusted for changes in investments), an increase of 56.7% on H1 2021 ($12.7 million);
-- Capex of $22.6 million (H1 2021: $35.0 million) including prepayments and financed capex;
-- Cash generated from operations of $34.9 million (H1 2021: $5.4 million), a significant increase YoY and stronger cash conversion despite a further build in working capital with inventory of $51.5 million, up 35% on FY21 ($37.9 million) to accommodate larger revenues and supply chain constraints;
-- Net debt of $36.4 million (H1 2021: $32.8 million and year end 2021 $31.9 million);
-- Adjusted Net cash (including investments) of $10.9 million (H1 2021: adjusted net debt (including investments) of $1.8 million);
-- Adjusted ROCE of 24.6% (H1 2021: 22.5%); and
-- Declared an interim dividend of 1.3 cents per share, to be paid on 3 October 2022 to shareholders registered on 2 September 2022 (up 8.3% on 2021 interim dividend 1.2 cents per share).
Operational & Strategic Review
-- Rig fleet utilisation was 83% in H1 2022, an increase of 13.7% on H1 2021 (73%) and 17.8% on H2 2021 (77%);
-- Rig count increased from 110 to 116 through Q2 2022, net of depletion;
-- Safety performance remains world-class with the Group TRIFR at 1.8 in H1 2022. Capital's target is zero harm across the Group;
-- Previously announced contracts:
-- A three-year comprehensive drilling services contract with AngloGold Ashanti at the Geita gold mine: Our Tanzanian subsidiary company, CMS (Tanzania) Limited, has been awarded a contract to provide a full range of drilling services including development (diamond & reverse circulation), grade control, blast hole and underground drilling. Capital will utilise the existing fleet, which now has a total of 25 rigs on site. It is anticipated to generate $150 million over the three-year contract term, making it the second largest award of new business in the Company's history.
-- First contract with B2Gold Corporation at the Fekola Gold mine in Mali, one of largest gold mines in Africa: Capital has been awarded a reverse circulation drilling services contract.
-- Capital Mining continues to perform strongly -- Sukari Gold Mine (Egypt) waste mining contract continues to perform well; -- Capital remains active in the tendering pipeline. -- MSALABS: Growth outlook improved through expanded relationship with Chrysos -- Expanded relationship with Chrysos Corporation:
o MSALABS recently announced an expansion of its global partnership with Chrysos, now guiding to deploying 21 Chrysos PhotonAssay units by 2025;
o Rollout of initial six units by year end 2022 on track: In addition to four units already announced at Bulyanhulu Gold Mine (Tanzania), the Morila Gold Mine (Mali), the Kibali Gold Mine (DRC) and Val d'Or (Quebec, Canada):
o A fifth unit will arrive imminently at Yamoussoukro, Côte d'Ivoire, with facility preparations well advanced;
o A sixth unit is due to begin installation in Timmins, Canada, by the end of 2022;
-- MSALABS has been awarded a two-year extension to the existing three-year onsite laboratory services contract with Kinross at the Tasiast Gold Mine, Mauritania, subject to final terms and conditions.
-- Capital Direct Investments (Capital DI): Impacted by general market conditions but strong business development performance
-- The portfolio recorded investment losses (unrealised) of US$10.3 million. The total value of investments (listed and unlisted) was US$47.3 million as of 30 June 2021, versus US$60.2 million at the end of 2021;
-- Over the period Capital continued to rationalize the breadth of holdings and realized cash proceeds from the portfolio, generating net sales after investments of US2.6million, with the proceeds directed toward group capital expenditures.
-- Contract revenues from investee companies again contributed strongly to Group revenues, totalling US$26.4mn over the H1 period.
Outlook
-- Revenue guidance for 2022 increased to $280 - $290 million (from $270 - 280 million); -- EBITDA margins are expected to remain in a range of 25-30% going forward;
-- Capital expenditure is now expected to be approximately $50-55 million in 2022. The increase in capex includes additional rig purchases, as well as higher sustaining capex driven by higher than anticipated utilisation of the expanded fleet;
-- Drill rig fleet size forecast to increase to 120 rigs by the end of 2022, net of depletion; -- The Sukari earth moving contract continues to perform well at full run rates;
-- MSALABS's growth trajectory is now underpinned over the next 2-3 years by the expanded partnership with Chrysos. Revenue guidance for 2022 remains $30 million, and is expected to grow to over $80 million per annum from 2025 following the rollout of 21 Chrysos units in conjunction with growth in the traditional laboratories business;
-- Tendering activity across all business units remains robust, with a number of opportunities progressing.
Commenting on the results, Jamie Boyton, Executive Chairman of Capital Limited, said:
"We have been very pleased with the performance of the Group through the first half of 2022, not only because we've again delivered another strong half year, but we have also taken decisive steps to ensuring a stronger company in the years to come, particularly in our drilling business and in MSALABS.
In drilling we have taken advantage of the strength we have seen in underlying demand to focus on contract selection and rotate our portfolio. Through the period we have commenced operations at two more of Africa's largest gold mines, Kibali and Fekola, that are well positioned to operate consistently throughout the cycle. In addition, we have increased operations at Tier-1 gold and non-gold deposits with strong growth potential including Predictive Discovery's Bankan project, Goulamina (lithium) and Kabanga (nickel). This focus on growing long term contracts and partnerships with blue-chip customers remains core to the business model at Capital, irrespective of levels of activity across the market, delivering lower volatility in earnings and sustainability of the business through the cycles.
Similarly, MSALABS has now secured a multi-year growth trajectory driven primarily by the rollout of the revolutionary Chrysos PhotonAssay units. The expanded relationship with Chrysos means MSALABS will now deploy 21 units into the market into 2025. In addition to growth in its existing geochemistry business, this should drive annual revenues in excess of $80 million by 2025, an impressive outlook for a business that generated just $3 million at the time of the controlling interest acquisition in 2019.
The underlying demand in the market continues to be encouraging, as is evident from the high utilisation rates the Group delivered in the first half. While there will be some seasonal slowdown through the third quarter, the tender pipeline remains buoyant across drilling, mining and laboratories and as a result of this strong demand, we are raising our revenue guidance for 2022 to $280-290 million. We have also lifted our capex guidance to $50-55 million, which includes higher sustaining capex on the expanded fleet, and additional rigs to replace expedited rig replacements. In the strong demand environment we are currently experiencing, we have decided to further replenish our fleet to ensure both high reliability as well as a peer leading safety performance which remains core to our operations.
Our capital allocation strategy continually targets the best returns for our shareholders. We are excited by the outlook and the market backdrop and will continue to target new opportunities while maintaining a strong balance sheet and a balanced capital allocation policy. Therefore, in addition to funding further growth, g iven the strength of the underlying business, we announced a buyback at the beginning of the year and we have today also announced an interim dividend to shareholders of 1.3 cents per share.
Capital Limited will be hosting a live webcast presentation at 09:00 BST on Thursday 18 August 2022, where questions can be submitted through the platform.
The webcast presentation link:
https://www.lsegissuerservices.com/spark/CapitalDrillingLtd/events/db8bbc58-599b-4a60-aa07-abc49d7d187d
Participants may join the webcast approximately five minutes before the commencement time. A copy of the Company's presentation will be available on www.capdrill.com
-S -
For further information, please visit Capital Limited's website www.capdrill.com or contact:
Capital Limited +230 464 3250 Jamie Boyton, Executive Chairman investor@capdrill.com
Giles Everist, Chief Financial Officer
Conor Rowley, Investor Relations & Corporate Development Manager
Tamesis Partners LLP +44 20 3882 2868
Charlie Bendon
Richard Greenfield
Stifel Nicolaus Europe Limited +44 20 7710 7600
Ashton Clanfield
Callum Stewart
Rory Blundell
Berenberg +44 20 3207 7800
Matthew Armitt
Jennifer Wyllie
Detlir Elezi
Buchanan +44 20 7466 5000
Bobby Morse capital@buchanan.uk.com
George Cleary
About Capital Limited
Capital Limited is a leading mining services company providing a complete range of drilling, mining, maintenance and geochemical laboratory solutions to customers within the global minerals industry, focusing on the African markets. The Company's services include: exploration, delineation and production drilling; load and haul services; maintenance; and geochemical analysis. The Group's corporate headquarters are in Mauritius and it has established operations in Burkina Faso, Côte d'Ivoire, Canada, Egypt, Guinea, Kenya, Mali, Mauritania, Nigeria, Saudi Arabia and Tanzania.
Cautionary note regarding forward looking statements
Certain information contained in this report, including any information on Capital Limited's plans or future financial or operating performance and other statements that express management's expectations, or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. Capital Limited cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Capital Limited to be materially different than the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements. These factors include the inherent risks involved in exploration and development of mineral properties, changes in economic conditions, changes in the worldwide price of commodities and project execution delays, many of which are beyond the control of Capital Limited. Nothing in the report should be construed as either an offer to sell or a solicitation to buy or sell Capital Limited securities.
INDEPENT REVIEW REPORT TO CAPITAL LIMITED
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 which comprises the condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows, and notes to the condensed consolidated interim financial statements.
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, United Kingdom
17 August 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2022
Unaudited
Six months ended
Notes 30 June 2022 30 June 2021
-------- -------------- ------------------
$ $
Revenue 4 138,128,602 98,683,980
Cost of sales (77,010,453) (56,028,630)
-------------- ------------------
Gross profit 61,118,149 42,655,350
Administration expenses (19,738,178) (14,281,383)
Depreciation, amortisation, and
impairments (13,417,448) (8,210,759)
-------------- ------------------
Operating profit 27,962,523 20,163,208
Interest income 112,808 49,997
Finance charges (2,670,575) (1,606,618)
Fair value (loss)/gain on investments
at fair value 14 (10,265,388) 5,706,322
-------------- ------------------
Profit before taxation 15,139,368 24,312,909
Taxation 3 (5,456,706) (5,903,119)
-------------- ------------------
Profit and total comprehensive
income for the period 9,682,662 18,409,790
============== ==================
Profit attributable to:
Owners of the parent 8,849,651 18,490,700
Non-controlling interest 833,011 (80,910)
-------------- ------------------
9,682,662 18,409,790
============== ==================
Earnings per share:
Basic (cents per share) 5 4.7 9.8
============== ==================
Diluted (cents per share) 5 4.5 9.6
============== ==================
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Unaudited Audited
Notes 30 June 2022 31 December
2021
-------- ------------- --------------------------
ASSETS $ $
Non-current assets
Property, plant and equipment 7 153,190,469 143,598,399
Right of use assets 9,762,686 9,851,343
Goodwill 1,252,348 1,252,348
Intangible assets 1,673,374 1,282,269
Other receivables 6,460,000 6,460,000
------------- --------------------------
Total non-current assets 172,338,877 162,444,359
------------- --------------------------
Current assets
Inventory 51,510,590 37,935,112
Trade and other receivables 43,329,113 42,212,147
Prepaid expenses and other assets 20,222,327 17,681,623
Investments at fair value 14 47,278,117 60,151,667
Current tax receivable 121,916 499,361
Cash and cash equivalents 22,735,408 30,577,249
------------- --------------------------
Total current assets 185,197,471 189,057,159
------------- --------------------------
Total assets 357,536,348 351,501,518
============= ==========================
EQUITY AND LIABILITIES
Equity
Share capital 8 19,287 19,006
Share premium 8 62,664,091 60,900,119
Treasury shares (2,462,651) -
Equity-settled employee benefits
reserve 2,832,103 3,185,450
Other reserve 190,056 190,056
Retained income 159,121,253 154,879,201
------------- --------------------------
222,364,139 219,173,832
Non-controlling interest 4,600,600 3,767,589
------------- --------------------------
Total equity 226,964,739 222,941,421
------------- --------------------------
Non-current liabilities
Loans and borrowings 9 40,296,241 45,567,668
Lease liabilities 6,968,276 7,354,745
Deferred tax 34,196 34,196
Total non-current liabilities 47,298,713 52,956,609
------------- --------------------------
Current liabilities
Trade and other payables 54,354,899 46,500,122
Current tax payable 8,238,790 9,979,250
Loans and borrowings 9 18,151,949 16,887,692
Lease liabilities 2,527,258 2,236,424
------------- --------------------------
Total current liabilities 83,272,896 75,603,488
------------- --------------------------
Total equity and liabilities 357,536,348 351,501,518
============= ==========================
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 30 June 2022
Share Share Treasury Total Equity-settled Other Total Retained Total Non-controlling Total
capital premium share share employee reserve reserves earnings attributable interest equity
reserve capital benefits to equity
reserve holders of
the Group
------- ---------- -------- ---------- ------- ----------- ------------ --------------- --------------
$ $ $ $ $ $ $ $ $ $ $
Balance at 31
December
2020 -Audited 18,878 60,169,426 - 60,188,304 1,926,994 190,056 2,117,050 84,384,101 146,689,455 1,389,315 148,078,770
Total profit
and
comprehensive
income
for the
period - - - - - - - 18,490,700 18,490,700 (80,910) 18,409,790
Contributions
by and
distributions
to owners
------- ---------- -------- ---------- -------------- ------- --------- ----------- ------------ --------------- --------------
Share options
exercised 128 730,693 - 730,821 (730,821) - (730,821) - - - -
Recognition of
share-based
payments - - - - 802,435 - 802,435 - 802,435 - 802,435
Dividends paid
(1.30
cents per
share) -
Note 6 - - - - - - - (2,470,713) (2,470,713) - (2,470,713)
------- ---------- -------- ---------- -------------- ------- --------- ----------- ------------ --------------- --------------
Total
transactions
with owners 128 730,693 - 730,821 71,614 - 71,614 (2,470,713) (1,668,278) - (1,668,278)
------- ---------- -------- ---------- -------------- ------- --------- ----------- ------------ --------------- --------------
Balance at 30
June
2021
(Unaudited) 19,006 60,900,119 - 60,919,125 1,998,608 190,056 2,188,664 100,404,088 163,511,877 1,308,405 164,820,282
======= ========== ======== ========== ============== ======= ========= =========== ============ =============== ==============
Balance at 31
December
2021 -
Audited 19,006 60,900,119 - 60,919,125 3,185,450 190,056 3,375,506 154,879,201 219,173,832 3,767,589 222,941,421
Total profit
and
comprehensive
income for
the period - - - - - - - 8,849,651 8,849,651 833,011 9,682,662
Contributions
by and
distributions
to owners
------ ---------- ----------- ----------- ----------- ------- ----------- ----------- ----------- --------- -----------
Share options
exercised 281 1,763,972 - 1,764,253 (1,764,253) - (1,764,253) - - - -
Share buy back - - (2,462,651) (2,462,651) - - - - (2,462,651) - (2,462,651)
Recognition of
share-based
payments - - - - 1,410,906 - 1,410,906 - 1,410,906 - 1,410,906
Dividends paid
( 2.4
cents per
share) -
Note 6 - - - - - - - (4,607,599) (4,607,599) - (4,607,599)
------ ---------- ----------- ----------- ----------- ------- ----------- ----------- ----------- --------- -----------
Total
transactions
with owners 281 1,763,972 (2,462,651) (698,398) (353,347) - (353,347) (4,607,599) (5,659,344) - (5,659,344)
------ ---------- ----------- ----------- ----------- ------- ----------- ----------- ----------- --------- -----------
Balance at 30
June
2022
(Unaudited) 19,287 62,664,091 (2,462,651) 60,220,727 2,832,103 190,056 3,022,159 159,121,253 222,364,139 4,600,600 226,964,739
====== ========== =========== =========== =========== ======= =========== =========== =========== ========= ===========
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
Unaudited
Six months ended
30 June 30 June
Notes 2022 2021
------ -------------- ------------------------
$ $
Cash flow from operating activities
Cash generated from operations 10 34,932,913 5,443,214
Interest income received 112,808 49,997
Finance costs paid (2,432,005) (1,225,930)
Tax paid (6,819,720) (5,897,973)
-------------- ------------------------
Net cash from operating activities 25,793,996 (1,630,692)
-------------- ------------------------
Cash flow from investing activities
Purchase of property, plant and
equipment 7 (10,168,688) (27,698,736)
Proceeds from disposal of property,
plant and equipment - 47,626
Acquisition of intangible assets (391,105) (23,115)
Acquisition of investments (5,891,493) (3,551,255)
Proceeds on disposal of investments 8,499,654 5,375,201
Cash paid in advance for property, (6,389,092) -
plant and equipment
Net cash from investing activities (14,340,724) (25,850,279)
-------------- ------------------------
Cash flow from financing activities
Repayment of loans 9 (9,295,897) (1,764,440)
Proceeds from new loans 9 - 16,950,000
Arrangement fees paid for new financing - (383,705)
Dividend paid 6 (4,607,599) (2,470,713)
Repayment of lease (1,483,881) (208,727)
Advance payments on lease arrangements (230,705)
Share buy back (2,462,651)
-------------- ------------------------
Net cash from financing activities (18,080,733) 12,122,415
-------------- ------------------------
Total cash movement for the period (6,627,461) (15,358,556)
Cash at the beginning of the period 30,577,249 35,701,894
Effect of exchange rate movement
on cash balances (1,214,380) (392,627)
-------------- ------------------------
Total cash at the end of the period 22,735,408 19,950,711
============== ========================
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2022
Basis of presentation and accounting policies
1.
Preparation of the condensed consolidated interim financial
statements
The condensed consolidated interim financial statements of Capital
Limited and Subsidiaries ("Capital" or the "Group") as at and
for the six months ended 30 June 2022 (the "Interim Financial
Statements"), which are unaudited, have been prepared in accordance
with International Accounting Standard ("IAS") No. 34, "Interim
Financial Reporting". This condensed interim report does not
include all the notes of the type normally included in an Annual
Report. They should be read in conjunction with the annual consolidated
financial statements and the notes thereto in the Group's Annual
Report for the year ended 31 December 2021 which have been prepared
in accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards
Board ("IASB"). The Interim Financial Statements have been reviewed
in terms of International Standard on Review Engagements (ISRE)
2410.
Accounting policies
The condensed consolidated interim financial statements have
been prepared under the going concern basis under the historical
cost convention, except for certain financial instruments which
are measured at fair value.
All accounting policies, presentation and methods of computation
which have been followed in these condensed consolidated financial
statements were applied in the preparation of the Group's financial
statements for the year ended 31 December 2021.
The preparation of financial statements in conformity with IFRS
recognition and measurement principles requires the use of estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Management reviews its estimates on an
on-going basis using currently available information. Changes
in facts and circumstances may result in revised estimates and
actual results could differ from those estimates.
Going concern
As at 30 June 2022, the Group had a robust balance sheet with
a low debt gearing with equity of $227.0 million and loans and
borrowings of $59.1 million. Cash as at 30 June 2022 was $22.7
million, with net debt of $36.4 million. Investments in listed
entities at the end of June 2022 amounted to $35.8 million which
provided additional flexibility as these investments could be
converted into cash.
This robustness is underpinned by stable revenues generated on
long term contracts. Revenues generated on mine sites and longer-term
contracts make up over 85% of Group revenues. Revenues continued
to perform strongly in H1 2022 with increased revenue of 40%
compared to H1 2021.
Commercially, the Group continues to secure and extend long term
mining contracts with high quality customers, including the latest
significant contract wins and extensions at Geita Gold Mine.
Given the Group had minimal operational impacts from COVID-19
over the past two years, the Directors do not view it as a going
concern risk.
In determining the going concern status of the business, management
has considered the principal risks of the business and considered
those most relevant to the going concern assessment and reverse
stressed the model, alongside the Group's capacity to mitigate,
to identify the magnitude of sensitivity required to cause a
breach in covenants or risk the going concern of the business.
The most relevant of which was considered to be loss of EBITDA
through loss of contract wins, with no redeployment of equipment.
EBITDA would need to fall over 75% for a 12-month period to breach
the covenant test.
Given the strong market demand from existing clients and across
a large tendering pipeline, management consider the risk of a
deep demand correction to be low.
Given the Group's exposure to high quality mine site operations,
we consider a decrease of such magnitude to be remote. Overall,
the analysis strongly underpins the going concern status and
as a result the Board considers the business to be a going concern.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
2. Operations in the interim period
Capital Limited (the "Company") is incorporated in Bermuda. The
Company and its subsidiaries (the "Group") provide drilling services
including but not limited to exploration, development, grade
control and blast hole drilling services, mining services including
but not limited to earthmoving, fleet management and mine management,
mineral analytical services including but not limited to geochemical
analysis and laboratory management, maintenance services, including
but not limited to fleet maintenance and distribution of specialist
mining supplies and rig site technology services including but
not limited to equipment rental, survey and geophysical logging
and borehole management software services for mining and mining
exploration companies.
2.1 Use of estimates and judgements
The preparation of both annual and interim financial statements
usually requires the use of estimates and judgements. There has
been no change in the Group's estimates and judgements since
the year end.
3. Taxation
Capital Limited is incorporated in Bermuda. No taxation is payable
on the results of the Bermuda business. Taxation for other jurisdictions
is calculated in terms of the legislation and rates prevailing
in the respective jurisdictions.
The Group operates in multiple jurisdictions with complex legal
and tax regulatory environments. In certain of these jurisdictions,
the Group has taken income tax positions that management believes
are supportable and are intended to withstand challenge by tax
authorities. Some of these positions are inherently uncertain
and include those relating to transfer pricing matters and the
interpretation of income tax laws. The Group periodically reassesses
its tax positions. Changes to the financial statement recognition,
measurement, and disclosure of tax positions is based on management's
best judgement given any changes in the facts, circumstances,
information available and applicable tax laws. Considering all
available information and the history of resolving income tax
uncertainties, the Group believes that the ultimate resolution
of such matters will not likely have a material effect on the
Group's financial position, statements of operations or cash
flows.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Six months ended
Revenue 30 June 30 June
4. 2022 2021
-------------- --------------------
$ $
Revenue from the rendering
of services comprises:
Drilling and associated revenue 100,230,452 79,168,981
Revenue from Mining 23,678,570 10,355,723
MSALABS revenue 11,814,696 6,502,128
Revenue from Surveying 2,404,884 2,657,148
138,128,602 98,683,980
================== ====================
Earnings per share
5.
Basic Earnings per share:
The profit and weighted average number
of ordinary shares used in the calculation
of basic earnings per share are as follows:
Profit for the period used in the calculation
of basic earnings per share 8,849,651 18,490,700
============= ===============
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 189,451,637 189,470,658
============= ===============
Basic earnings per share (cents) 4.7 9.8
============= ===============
Diluted earnings per share:
The profit used in the calculations of
all diluted earnings per share measures
are the same as those used in the equivalent
basic earnings per share measures, as outlined
above.
Weighted average number of ordinary shares
used in the calculation of basic earnings
per share 189,451,637 189,470,658
* Dilutive share options (#) 6,847,322 3,011,156
Weighted average number of ordinary shares
used in the calculation of diluted earnings
per share 196,298,959 192,481,814
================== ====================
Diluted earnings per share (cents) 4.5 9.6
================== ====================
(#) For the purposes of calculating diluted earnings per share,
no share options (2021: 6.34 million) were excluded based on
being anti-dilutive as the exercise price is lower than the current
share price.
Dividends
6.
During the six months ended 30 June 2022, a dividend of 2.4 cents
per ordinary share was declared on 10 March 2022, totalling $
4,607,599 (six months ended 30 June 2021: 1.3 cents per ordinary
share, totalling $2,470,713) and paid on 10 May 2022.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Property, plant and equipment
7.
Cost Drilling Mining Associated Vehicles Camp Computer Leasehold Total
rigs equipment Drilling and trucks and software improvements
& mining associated
equipment equipment
At 1 January
2021 103,540,898 26,511,913 20,326,737 21,979,021 12,037,844 38,361 1,653,952 186,088,726
Additions 23,814,358 29,918,725 7,009,849 12,439,323 2,483,930 - - 75,666,185
Disposal (3,103,550) (19,520) (831,773) (824,132) (644,637) - - (5,423,612)
Transfers - 2,183,654 (2,183,654) - - - - -
------------ ----------- ------------ ----------- ------------ ----------- ------------- --------------
At 31 December
2021 124,251,706 59,224,772 23,691,159 33,594,212 13,877,137 38,361 1,653,952 256,331,299
Additions 14,799,612 1,997,294 1,680,862 1,420,569 1,963,251 - - 21,861,588
Disposal (2,075,903) (51,516) (1,834,700) (161,737) (54,722) (4,178,578)
------------ ----------- ------------ ----------- ------------ ----------- ------------- --------------
At 30 June
2022 136,975,415 61,170,550 23,537,321 34,853,044 15,785,666 38,361 1,653,952 274,014,309
------------ ----------- ------------ ----------- ------------ ----------- ------------- --------------
Accumulated
Depreciation
At 1 January
2021 70,806,074 - 7,159,802 12,641,891 6,407,935 5,042 97,299 97,118,043
Depreciation 7,959,524 7,451,803 2,022,454 1,870,873 1,207,651 4,179 - 20,516,484
Transfers - 528,416 (528,416) - - - - -
Disposal (2,940,714) - (700,176) (751,640) (509,097) - - (4,901,627)
------------ ----------- ------------ ----------- ------------ ----------- ------------- --------------
At 31 December
2021 75,824,884 7,980,219 7,953,664 13,761,124 7,106,489 9,221 97,299 112,732,900
Depreciation 4,802,699 3,755,717 1,436,690 1,403,951 639,281 2,089 - 12,040,427
Disposal (1,939,094) (42,709) (1,833,055) (116,069) (18,560) - - (3,949,487)
------------ ----------- ------------ ----------- ------------ ----------- ------------- --------------
At 30 June
2022 78,688,489 11,693,227 7,557,299 15,049,006 7,727,210 11,310 97,299 120,823,840
------------ ----------- ------------ ----------- ------------ ----------- ------------- --------------
Carrying
amount at:
31 December
2021 48,426,822 51,244,553 15,737,495 19,833,088 6,770,648 29,140 1,556,653 143,598,399
============ =========== ============ =========== ============ =========== ============= ==============
30 June 2022 58,286,926 49,477,323 15,980,022 19,804,038 8,058,456 27,051 1,556,653 153,190,469
============ =========== ============ =========== ============ =========== ============= ==============
During the six months ended 30 June 2022, the Group acquired $21.9
million worth of property, plant and equipment (HY 2021: $51.2 million).
Out of the $21.9 million additions, $6.0 million (HY 2021: $7.3 million)
was acquired through supplier credit agreements - see Note 9.
The Group disposed of property, plant and equipment with a net carrying
amount of $0.2 million (HY 2021: $0.1 million) during the period.
A loss of $0.2 million (2021: $0.1 million) was incurred on the disposal
of property, plant and equipment.
At the end of each reporting period, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any indication
that those assets may be impaired. As at 30 June 2022, there was no
indication of impairment.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
As at
30 June 31 December
2022 2021
--------------------------- ---------------------------
$ $
Issued capital and share premium
8.
Authorised capital
2,000,000,000 (31 December 2020: 2,000,000,000)
ordinary shares of 0.01 cents (2020:
0.01 cents) each 200,000 200,000
=========================== ===========================
Issued and fully paid:
192,864,738 (31 December 2021: 190,054,838)
ordinary shares of 0.01 cents (31
December 2021: 0.01 cents) each 19,287 19,006
Share premium:
Balance at the beginning of the period 60,900,119 60,169,426
Issue of shares 1,763,972 730,693
Balance at the end of the period 62,664,091 60,900,119
=========================== ===========================
During the period, the Company issued 2,143,105 new common shares
(valued at $ 1,764,253 ) pursuant to the Company's employee short
term incentive plan. The shares rank pari passu with the existing
ordinary shares. Fully paid ordinary shares which have a par value
of 0.01 cents, carry one vote per share and carry rights to dividends.
Loans and borrowings
9.
Loans and borrowings consist of:
(a) $15 million revolving credit facility ("RCF") provided by
Standard Bank (Mauritius) Limited.
The interest rate on the RCF is the prevailing three-month US
LIBOR (payable in arrears) plus a margin of 6.5%, and an annual
commitment fee of 2.275% is charged on any undrawn balance. The
amount utilised on the RCF is $15 million as at 30 June 2022.
Under the terms of the RCF, the group is required to comply with
certain financial covenants relating to:
* Interest coverage
* Gross debt to EBITDA ratio
* Debt to equity ratio
* Tangible net worth
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Loans and borrowings (Cont'd)
9.
In addition, CAPD (Mauritius) Limited is also required to comply
with the Total Tangible Net Worth covenant.
Security for the Standard Bank (Mauritius) Limited facility comprises:
The RCF is secured by various pledges over the shares and claims
of the Group's entities in Cote d'Ivoire and Tanzania together
with the assignment of material contracts and their collection
accounts in these jurisdictions and a debenture over the rigs
in Tanzania.
As at the reporting date and during the period under review, the
Group has complied with all covenants attached to the loan facilities.
(b) $ 3.8 million credit facility provided by Epiroc Financial
Solutions AB
The facility was signed on 6 September 2019 and drawn down against
the purchase of five rigs. The term of the facility is four years
repayable in 46 monthly instalments. Interest is charged at a
with a fixed rate of 8.47% per annum (payable monthly in arrears).
As at 30 June 2022, an amount of $1.3 million remained outstanding
under this facility.
(c) $2.6 million credit facility by Epiroc Financial Solutions
AB
The facility was signed on 26 November 2020 and drawn down against
the purchase of three rigs. The term of the facility is 4 years
repayable in 46 monthly instalments. Interest is charged at a
fixed rate of 8.25% per annum (payable monthly in arrears). As
at 30 June 2022, an amount of $1.6 million remained outstanding
under this facility.
(d) $2.5 million credit facility by Epiroc Financial Solutions
AB
This new facility was signed on 01 May 2021 and drawn down against
the purchase of three rigs. The facility is repayable in 46 monthly
instalments. The interest rate is the prevailing three-month US
LIBOR plus a margin of 4.8%. As at 30 June 2022, an amount of
$2 million remained outstanding under this facility.
(e) $2.68m million credit facility by Epiroc Financial Solutions
AB
This new facility was signed on 21 January 2022 and drawn down
against the purchase of three rigs. The facility is repayable
in 46 monthly instalments. The interest rate is the prevailing
three-month US LIBOR plus a margin of 4.8%. As at 30 June 2022,
an amount of $2.54 million remained outstanding under this facility.
(f) $1.115 million credit facility by Epiroc Financial Solutions
AB
This new facility was signed on 9 February 2022 and drawn down
against the purchase of one rigs. The facility is repayable in
46 monthly instalments. The interest rate is the prevailing three-month
US LIBOR plus a margin of 4.8%. As at 30 June 2022, an amount
of $1.02 million remained outstanding under this facility.
(g) $3.08 million credit facility by Epiroc Financial Solutions
AB
This new facility was signed on 26 April 2022 and drawn down against
the purchase of three rigs. The facility is repayable in 46 monthly
instalments. The interest rate is the prevailing three-month US
LIBOR plus a margin of 4.80%. As at 30 June 2022, an amount of
$3.08 million remained outstanding under this facility.
(h) $8.5 million term loan facility with Sandvik Financial Services
AB (PUBL)
On 19 November 2020, the Group entered into a new term loan facility
agreement with Sandvik Financial Services AB (PUBL). The facility
is for up to $8.5 million for the purchase of equipment from Sandvik
AB, available in not more than four tranches until 31 December
2021. Each tranche is repayable over a period of five years. Interest
is payable quarterly in arrears at 5.45% per annum on the drawn
amount. As at 30 June 2022 $8.3 million of the facility was used
and $0.2 million of the facility remained undrawn.
(i) $37.7 million term loan provided by Macquarie Bank Limited
(London Branch)
On 25th September 2020, the Group entered into a senior secured,
asset backed term loan facility with Macquarie Bank Limited. The
term of the loan is three years repayable in quarterly instalments
with an interest rate on the facility of the prevailing three-month
US LIBOR plus a margin of 7.75% per annum (payable quarterly in
arrears). The loan is secured over certain assets owned by the
Group and currently located in Egypt and Cote d'Ivoire together
with guarantees provided by Capital Limited, Capital Drilling
Egypt LLC and Capital Mining Services SARL. The facility was fully
drawn as at 30 June 2022.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Loans and borrowings (Cont'd)
9.
As at the reporting date and during the period under review, the
Group has complied with all covenants attached to the term loan.
As at
30 June 2022 31 December
2021
------------------------- -----------------
$ $
Balance at 1 January 62,455,360 30,693,713
Amounts received during the 6-month
period/year - 27,669,435
Credit facility received for the
purchase of rigs 6,029,900 10,834,144
Interest accrued during the 6-month
period/year 1,990,634 3,217,253
Interest paid during the 6-month
period/year (2,082,649) (2,967,733)
Commitment fees paid during the
6-month period/year - (17,531)
Principal repayments during the
6-month period/year (9,295,897) (6,973,921)
Unamortised debt arrangement costs (649,158) -
------------------------- -----------------
Balance at 30 June/31 December 58,448,190 62,455,360
Less: Current portion included
under current liabilities (18,151,949) (16,887,692)
------------------------- -----------------
Due after more than one year 40,296,241 45,567,668
========================= =================
At the reporting date, the Group's loans and borrowings total
$59.1 million (2021: $62.5 million), offset by unamortised debt
costs of $0.6 million. $0.4 million of the debt costs have been
classified as current and $0.2 million as non-current.
Six months ended
10. Cash from operations 30 June 2022 30 June 2021
$ $
Profit before taxation 15,139,368 24,312,909
Adjusted for:
* Depreciation 12,040,427 8,022,935
* Loss on disposal of property, plant and equipment 229,091 71,528
* Fair value loss/(gain) on investments at fair value 10,265,388 (5,706,322)
* Share based payment expense 1,410,906 802,435
* Interest income (112,808) (49,997)
* Finance charges 2,670,575 1,606,618
* IFRS 16 depreciation on rights of use assets 1,377,021 194,505
* Unrealised foreign exchange loss on foreign currency
held 1,214,380 392,627
492,000 -
* Other non-cash items
Operating profit before working
capital changes 44,726,348 29,647,238
Adjustments for working capital
changes:
* Increase in inventory (13,575,478) (6,879,834)
* Increase in trade and other receivables (2,278,530) (20,837,067)
* Increase in trade and other payables 6,060,573 3,512,877
------------------------- -----------------
34,932,913 5,443,214
----------------- ------------------------- -----------------
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Segmental analysis
11.
Operating segments are identified on the basis of internal management
reports regarding components of the Group. These are regularly
reviewed by the board in order to allocate resources to the segments
and to assess their performance. Operating segments are identified
based on the regions of operations. For the purposes of the segmental
report, the information on the operating segments have been aggregated
into the principal regions of operations of the Group. The Group's
reportable segments under IFRS 8 are therefore:
Derives revenue from the provision of drilling services,
* Africa: mining services, surveying, IT support services and
mineral assaying.
Derives revenue from the provision of drilling services,
* Rest of world: surveying, IT support services and mineral assaying.
The segment relates to jurisdictions which contribute
a relatively small amount of external revenue to the
Group. These include Saudi Arabia and Canada.
Information regarding the Group's operating segments is reported
below. At 30 June 2022, management reviewed the composition of
the Group's operating segments and the allocations of operations
to the reportable segments.
Segment revenue and results:
The following is an analysis of the Group's revenue and results
by reportable segment:
For the six months ended 30 June Africa Rest of Consolidated
2022 World
------------ ------------- --------------
$ $ $
External revenue 128,924,789 9,203,813 138,128,602
============ ============= ==============
Segment profit (loss) 44,394,623 (15,675,189) 28,719,434
============ =============
Central administration costs and
depreciation, net of other income (756,911)
--------------
Profit from operations 27,962,523
Fair value gain on investments at
fair value (10,265,388)
Interest income 112,808
Finance charges (2,670,575)
--------------
15,139,368
==============
The following customers from the Africa segment contributed 10%
or more to the Group's revenue:
30 June 30 June
2022 2021
-------- ---------------
% %
Customer
A 38% 32%
Customer
B 14% 14%
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Segmental analysis (continued)
11.
For the six months ended 30 June Africa Rest Consolidated
2021 of World
----------- ------------- -------------
$ $ $
External revenue 92,259,049 6,424,931 98,683,980
=========== ============= =============
Segment profit (loss) 35,035,384 (14,014,262) 21,021,122
=========== =============
Central administration costs and
depreciation, net of other income (857,914)
-------------
Profit from operations 20,163,208
Fair value gain on investments at
fair value 5,706,322
Interest income 49,997
Finance charges (1,606,618)
-------------
Profit before tax 24,312,909
=============
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 1. Segment
profit/(loss) represents the profit/(loss) earned by each segment
without allocation of central administration costs, depreciation,
interest income, share of losses from associate, finance charges
and income tax. This is the measure reported to the board for
the purpose of resource allocation and assessment of segment
performance.
As at
30 June 2022 31 December
2021
$ $
Segment assets:
Africa 458,253,106 421,186,192
Rest of world 65,995,470 75,429,655
--------------- ---------------
Total segment assets 524,248,576 496,615,847
Head office companies 242,623,490 278,034,723
--------------- ---------------
766,872,066 774,650,570
Eliminations * (409,335,718) (423,149,052)
--------------- ---------------
Total assets 357,536,348 351,501,518
=============== ===============
Segment liabilities:
Africa 207,853,214 226,314,805
Rest of world 28,723,201 28,407,677
--------------- ---------------
Total segment liabilities 236,576,415 254,722,482
Head office companies 282,099,314 269,589,374
--------------- ---------------
518,675,729 524,311,856
Eliminations * (388,104,120) (395,751,759)
--------------- ---------------
Total liabilities 130,571,609 128,560,097
=============== ===============
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Segmental analysis (continued)
11.
For the purposes of monitoring segment performance and allocating
resources between segments the board monitors the tangible, intangible
and financial assets attributable to each segment. All assets
are allocated to reportable segments with the exception of property,
plant and equipment used by the head office companies, certain
amounts included in other receivables, and cash and cash equivalents
held by the head office companies.
* Eliminations include intra-group accounts receivable, intra-group
accounts payable and intra-group investments.
Other segment information:
Six months ended
Non-Cash items included in profit or 30 June 2022 30 June
loss: 2021
------------- ----------------------
$ $
Depreciation
Africa 12,638,195 7,352,845
Rest of world 585,085 448,291
------------- ----------------------
Total segment depreciation 13,223,280 7,801,136
Head office companies 194,168 409,623
------------- ----------------------
13,417,448 8,210,759
============= ======================
Loss on disposal of property, plant and
equipment
Africa 225,384 52,692
Rest of world 3,707 18,836
------------- ----------------------
Total segment loss on disposal 229,091 71,528
Head office companies - -
------------- ----------------------
229,091 71,528
============= ======================
Six months ended
30 June 2022 30 June
2021
$ $
Impairment on Inventory
Africa
Stock Provision 696,950 529,104
Stock Write Offs 11,198 98,077
------------- ------------
708,148 627,181
Rest of world - -
Total segment impairment 708,148 627,181
Head office companies - -
------------- ------------
708,148 627,181
============= ============
Additions to property, plant and equipment
Africa 19,398,646 50,586,372
Rest of world 1,698,190 302,880
Total segment additions 21,096,836 50,889,252
Head office companies 764,752 318,557
------------- ------------
21,861,588 51,207,809
============= ============
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
Segmental analysis (continued)
11.
Segmental reporting summary by region:
Revenue Non-Current Assets
Six months ended As at
30 June 30 June 30 June 31 December
2022 2021 2022 2021
$ $ $ $
Middle East/North
Africa 57,627,212 33,845,591 76,783,549 75,919,256
South and East Africa 32,979,498 24,345,551 39,742,198 34,338,287
West Africa 39,661,597 36,282,893 40,974,810 39,508,301
Others 7,860,295 4,209,945 14,838,320 12,678,515
--------------- ------------- ------------- -------------
138,128,602 98,683,980 172,338,877 162,444,359
=============== ============= ============= =============
The business has considered this segmental distribution to be
appropriate as it represents the discrete areas of operations
that make up the Group's revenue stream.
12. Commitments As at
30 June 2022 30 June
2021
The Group has the following capital commitments $ $
at 30 June:
Committed capital expenditure 33,225,972 12,543,098
============== =============
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
13. Contingencies
Zambia Tax:
Capital Drilling (Zambia) Limited ("CDZ"), a subsidiary of Capital
Limited, is a party to various tax claims made by the Zambian
Revenue Authority (ZRA) for the tax years 2007 to 2013.
On 30 April 2015, CDZ received a tax assessment from the ZRA
totalling Zambian Kwacha 150m ($8.2 million), inclusive of penalties
and interest. The claims relate to various taxes, including income
tax, value added tax, payroll tax (PAYE) and withholding tax.
CDZ responded in detail to these claims, and no amount has yet
been paid. No subsequent communication has been received from
the ZRA regarding this matter since June 2016.
As Capital has ceased to operate in Zambia, CDZ is being liquidated.
This process is expected to be completed during 2022.
Tanzania tax:
2009-15 tax audit
Capital Drilling (T) Ltd ("CDT"), was party to a payroll tax
claim made by the Tanzanian Revenue Authority ("TRA") for the
tax years 2009-2015. A final settlement was agreed with the TRA
for a final payment of $0.6 million, with interest and penalties
being waived in full.
2016-18 tax audit
The TRA issued an initial assessment of $4.5 million for 2016-18
in December 2019. Through negotiation, this was reduced to $2.4
million in May 2020 and a total of $0.7 million was paid by CDT
in order to proceed with lodging formal objections. These were
lodged in June 2020 and responses finally received a year later
in June 2021. A number of CDT's positions were accepted and a
further round of correspondence entered into which is ongoing.
$0.7 million (2021: $0.7 million) remains in line with Management's
estimate of the potential tax and penalties due and, as this
amount has already been paid, no further amounts have been provided
on the balance sheet.
Ivory Coast tax:
2018-19 tax audit
A tax audit of CDCI for the two years ended 31 December 2019
is currently underway which focuses on the tax outcomes resulting
from the local SYSCOA accounting reporting requirements. The
main area where the Ivorian tax authorities are seeking additional
tax relates to securities tax (IRVM) that they claim is payable
on an intercompany balance. Through negotiations, the total tax
claimed has been reduced from $1.5 million to $0.4 million. No
provision has been made at the end of the period (31 December
2021: $ nil) on the basis that negotiations are ongoing, and
the underlying facts would not trigger any additional securities
tax liability.
Customs duty
An initial exchange of correspondence has taken place between
the Ivorian customs duty authority and Capital Mining Services
(CMS) relating to the availability of certain customs duty exemptions
under CMS' client's Mining Convention. CMS submitted a written
challenge of this position in July 2021 and no further correspondence
has been to date. No assessments have been issued by the authority,
no amounts are due and payable, and no provision has been made
(31 December 2021: $ nil).
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
13. Contingencies (continued)
Mali tax:
2016-18 tax audit
In July 2019, the Mali Tax Authorities (DGE) commenced a routine
tax audit of Capital Drilling Mali for the periods 2016-18. No
final assessments or requests for payment have been issued in
respect of any of the three years under audit and the audit process
has not yet formally concluded. No correspondence has been received
since January 2022.
Across the three years, the maximum potential tax claim including
penalties is approximately $3.8 million. Following a detailed
review by the Group's in-country advisers, the potential exposure
has been calculated as $0.2 million, including penalties and
provided a comprehensive response to the tax authorities supporting
this position.
14. Financial instruments
(a) Fair value hierarchy
Financial instruments that are measured in the consolidated statement
of financial position or disclosed at fair value require disclosure
of fair value measurements by level based on the following fair
value measurement hierarchy:
-- Level quoted prices (unadjusted) in active markets for identical
1: assets or liabilities;
-- Level inputs other than quoted prices included within level
2: 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 are not based
3: on observable market data (that is, unobservable inputs).
As at
30 June 31 December
2022 2021
--------------------------- --------------------------------
$ $
Level 1 - Listed shares 35,778,929 51,958,649
Level 3 - Unlisted shares and derivative
financial assets 11,499,188 8,193,018
--------------------------- --------------------------------
47,278,117 60,151,667
=========================== ================================
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
14. Financial instruments (Continued)
The reconciliation of the investment valuations from 1 January
2022 to 30 June 2022 is as follows:
Level 1 Level 3 Total
At 1 January 2022 51,958,649 8,193,018 60,151,667
Additions 5,594,176 297,317 5,891,493
Disposal (8,268,081) - (8,268,081)
Fair value gain/(loss) (13,505,815) 3,008,853 (10,496,962)
At 30 June 2022 35,778,929 11,499,188 47,278,117
====================== ====================== ===================
Level 1 Level 3 Total
At 1 January 2021 16,233,516 10,933,579 27,167,095
Additions 9,025,943 124,141 9,150,084
Disposal (6,377,163) - (6,377,163)
Fair value (loss)/gain 31,042,850 (831,199) 30,211,651
Transfer from level 3 2,033,503 (2,033,503) -
--------------- --------------- --------------
At 31 December 2021 51,958,649 8,193,018 60,151,667
=============== =============== ==============
(b) Fair value information
Level 1 shares
Market approach - Listed share price.
The Company's interests in various listed shares are valued at
the 30 June 2022 closing prices. No secondary valuation methodologies
have been considered as all the Company's investments are listed
on active markets.
Level 3 shares
Market Approach - Market Comparables applying Directors' estimate.
The Directors have reviewed the methodology at 30 June 2022 in
the valuation of Allied and considered the most appropriate valuation
methodology is a multiples-based approach based on comparing the
enterprise values of a peer group with their respective EBITDA
(EV/EBITDA) across 2022 and 2023. The peer average for 2021 used
was 3.4x and the average used in 2022 was 3.9x.
For the purposes of the disclosures required by IFRS 13, if the
EBITDA increased by 25% across all the level 3 companies, with
all other indicators unchanged, in aggregate the level 3 investment
value included in the balance sheet would increase from USD10.9
million to USD13.8 million. The related fair value increase of
USD2.9 million would be recognised in profit and loss. Alternatively,
if the average multiples used decrease by 25%, with all other
indicators unchanged, in aggregate the level 3 investment value
included in the balance sheet would decrease from USD10.9 million
to USD8.1 million. The related fair value decreases of USD2.9
million would be recognised in profit and loss. An adjustment
to forecast gold prices would have an impact on the Enterprise
Values of the peer companies. The Directors do not have the resources
available to accurately determine the impact such a change would
have on the valuation of the level 3 companies.
The Directors also considered suitability of peers, specifically
the impact that different mine lives would have across the peers.
A full comparison of the same peer group of West African producing
peers was performed and noted that mine lives were comparable
and took into account recent additions in mining portfolio.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2022
14. Financial instruments (cont'd)
(c) Fair values of other financial instruments
Level 3 derivative financial assets
The Group's derivative financial assets consist of call options
to acquire additional shares in a non-listed entity. The financial
assets have been valued using the Black Scholes option pricing
model by comparing the key assumptions in the model to a peer
group.
15. Events post the reporting date
The directors proposed that an interim dividend of 1.3 cent per
share be paid to shareholders on 3 October 2022. This dividend
has not been included as a liability in these condensed consolidated
interim financial statements. The proposed dividend is payable
to all shareholders on the Register of Members on 2 September
2022. The total estimated interim dividend to be paid is $2.5million
(2021: $2.3 million). The payment of this dividend will have no
tax consequences for the Group.
CAPITAL LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITY
For the six months ended 30 June 2022
The directors are responsible for the maintenance of adequate accounting
records and the preparation and integrity of the condensed consolidated
interim financial statements and related information.
The directors are also responsible for the Group's systems of internal
financial control. These are designed to provide reasonable, but
not absolute, assurance as to the reliability of the financial statements,
and to adequately safeguard, verify and maintain accountability for
the Group's assets, and to prevent and detect misstatement and loss.
Nothing has come to the attention of the directors to indicate that
any material breakdown in the functioning of these controls, procedures
and systems has occurred during the six months under review.
We confirm that to the best of our knowledge:
a) the condensed set of consolidated interim financial statements,
which has been prepared in accordance with International Accounting
Standard 34, Interim Financial Reporting, as issued by the
International Accounting Standards Boards gives a true and
fair view of the assets, liabilities, financial position and
profit or loss of the Group as required by FCA's Disclosure
and Transparency Rules DTR4.2.4R;
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR4.2.8R; and
c) there have been no significant individual related party transactions
during the first six months of the financial year and nor
have there been any significant changes in the Group's related
party relationships from those reported in the Group's annual
financial statement for the year ended 31 December 2021.
The condensed consolidated interim financial statements have been
prepared on the going concern basis since the directors believe that
the Group has adequate resources in place to continue in operation
for the foreseeable future.
The condensed consolidated interim financial statements were approved
by the board of directors on 17 August 2022.
ON BEHALF OF THE DIRECTORS
Jamie Boyton
Chairman of the Board of
Directors
Brian Rudd
Executive Director
CAPITAL LIMITED
Principal and Emerging Risks and Uncertainties
The Group operates in environments that pose various risks and uncertainties. Aside from the generic risks that face all businesses, the Group's business, financial condition or results of operations could be materially and adversely affected by any of the risks described below.
These risks should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties, nor are they listed in order of magnitude or probability. Additional risks and uncertainties that are not presently known to the Directors, or which they currently deem immaterial, may also have an adverse effect on the Group's operating results, financial condition and prospects.
The principal and emerging risks associated with the business have not changed since the year end and are detailed below:
Area Description Mitigation
---------------------- ----------------------------------- -----------------------------------
Reduction The Group is highly dependent The Group is seeking
in on the levels of mineral to balance these risks
levels of exploration, development by building a portfolio
mining and production activity of long-term mine-site
activity within the markets in which contracts, expanding
it operates. A reduction its services offering
in exploration, development into mine-site based
and production activities, activities such as load
or in the budgeted expenditure and haul mining, and
of mining and mineral exploration also expanding both its
companies, will cause a customer
decline in the demand for and geographic reach.
drilling rigs and drilling
services, as was evident
in the 2014 and 2015 financial
years.
---------------------- ----------------------------------- -----------------------------------
Risk of Contracts can be terminated Contract renewal negotiations
Termination for convenience by the are initiated well in
client at short notice advance of expiry of
and without penalty. Guidance contracts to ensure
is partly based on current contract renewals are
contracts in hand, and concluded without interruption
the Group derives a significant to services. There are
proportion of its revenue also a wide range of
from providing services termination clauses across
under large contracts. the
As a result, there can Group's contracts depending
be no assurance that work on the size, nature and
in hand will be realised client involved (i.e.,
as revenue in any future not
period. There could be all contracts can be
future risks and costs terminated for convenience,
arising from any termination and some contracts must
of contract. While the be terminated with notice).
Group has no reason to
believe any existing or
potential contracts will
be terminated, there can
be no assurance that this
will not occur.
In addition, it's important
that the Group maintains
its project pipeline and
win rate. Any failure by
the Group to continue to
win new contracts will
impact its financial performance
and position.
---------------------- ----------------------------------- -----------------------------------
Risk of Default The Group has financing The Group has a robust
facilities with external system of analysing and
financiers. A default under forecasting cash and
any of these facilities debt positions. The Group
could result in withdrawal is continuing to develop
of financial support or a stronger facilities
an increase in the cost management system, in
of financing. addition to strengthening
and broadening its banking
relationships.
---------------------- ----------------------------------- -----------------------------------
Supply chain Disruption to border crossings; The Group ensures a continual
disruption equipment being held up monitoring of movement
in customs. of goods at all
relevant borders and
assesses back-up options
regularly. Inventory
levels are set to allow
for a period of disruption.
The Group also ensures
a local supplier early
bulk purchasing strategy.
---------------------- ----------------------------------- -----------------------------------
Adverse change Unforeseen changes to local The Group carries out
in local tax tax regulations leading enhanced tax due diligence
laws, regulations to new or higher tax charges; on incorporation with
and practice. unpredictable tax audit identification of strong
processes. and well-connected local
tax advisers. The Group
obtains written confirmation
from local tax authorities
in advance of
undertaking major transactions.
The Group ensures supporting
documentation for all
tax filings are complete
and accurate.
---------------------- ----------------------------------- -----------------------------------
Risk to Cash Restrictive currency controls The Group has multiple
Repatriation which impact ability to bank accounts in multiple
repatriate cash from countries currencies and seeks
of operation. to move cash out of restrictive
or high-risk jurisdictions
as soon as possible.
The import documentation
process is being improved
and the process increasingly
automated.
---------------------- ----------------------------------- -----------------------------------
Decline in The Group's activity levels A significant proportion
Minesite production and results are to a certain of the Group's revenue
levels extent dependent on production is derived from mines
levels at clients' mines which are already in
while revenues are linked production. The Group
to the production volumes focuses on ensuring execution
and not to the short-term of work to a high standard
price of the underlying and improving its operation
commodity. to increase its value
proposition to clients.
Application of the Group
tender work procurement
and approval processes
maximises the likelihood
of achieving margins
and earnings. In addition,
the Group's diversification
of service offering limits
the exposure to one specific
area of the business.
---------------------- ----------------------------------- -----------------------------------
Reliance on The Group's business relies The Group has entered
Key on a number of individual into long-term contracts
Customers contracts and business with its key customers
alliances and derives a for periods between two
significant proportion to five years. Contract
of its revenue from a small renewal negotiations
number of key long-term are initiated well in
customers and business advance of expiry of
relationships with a few contracts to ensure contract
organisations. In the event renewals are concluded
that any of these customers without interruption
fails to pay, reduces production to services. The Group
or scales back operations, has historically had
terminates the relationship, a strong record of completing
defaults on a contract contracts to term and
or fails to renew their securing contract extensions.
contract with the Group, The Group is selective
this may have an adverse in the contracts that
impact on the financial it enters into to allow
performance and/or financial for options to extend
position of the Group. where possible to maximise
the contract period and
the return on capital.
The Group focuses on
ensuring execution of
work to a high standard
and improving its operation
to increase its value
proposition to clients.
Application of the Group
tender work procurement
and approval processes
maximises the likelihood
of securing quality work
with commensurate returns
for the risks taken.
The Group maintains a
work portfolio diversified
by geography, market,
activity and client to
mitigate the impact of
emerging trends and market
volatility. The Group
has and continues to
monitor projects closely
and invest a significant
amount of time into client
relationship and service
level monitoring at all
levels of the business.
A key part of this process
is the quarterly project
steering committee meetings
with key client stakeholders
that provide a forum
for monitoring and reporting
on project performance
and performance indicators,
contractual issues, pricing
and renewal.
---------------------- ----------------------------------- -----------------------------------
Labour costs The Group is exposed to The Group's labour costs
and increased labour costs are typically protected
availability and retention constraints by rise and fall mechanisms
in markets where the demand within client contracts,
for labour is strong. Changes which mitigate the impact
to labour laws and regulations of rising labour costs.
may limit productivity
and increase costs of labour.
If implemented and enforced,
these types of changes
to labour laws and regulations
could adversely impact
revenues and, if costs
increase or productivity
declines, operating margins.
---------------------- ----------------------------------- -----------------------------------
Risk of poor The Group has a significant The Group continues to
performance fleet of equipment, and focus on supplier relationships
due to lack has a substantial ongoing including maintaining
of equipment requirement for consumables, payment terms and identifying
availability including tyres, parts alternative sources.
and lubricants. If the
Group cannot secure a reliable
supply of equipment and
consumables, there is a
risk that its operational
and financial performance
may be adversely affected.
---------------------- ----------------------------------- -----------------------------------
Deterioration Operations are subject The Executive Chairman,
in Health & to various risks associated Executive Leadership
Safety record with mining 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.
and equipment, The Group has implemented
release of hazardous substances and continue to monitor
into the environment and and update a range of
interruption or suspension health and safety policies
of site operations due and procedures including
to unsafe operations. The equipment standards and
occurrence of any of these standard work procedures.
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 HSE 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 is also closely
engaged with its clients
to ensure workplace safety
and containment measures
are adhered to.
---------------------- ----------------------------------- -----------------------------------
Risk of Mispricing The Group is reliant on The Group goes through
Contracts its ability to price contracts a rigorous process to
accurately. Contract prices determine a price to
are generally set at the-outset submit as part of the
of a customer contract tender submission based
following a competitive on a bottom-up costing
tender process. analysis with a
mark-up. The Group makes
use of its extensive
historical statistics
and its in-house knowledge
base, combined with site
visits to obtain contract
specific data. Where
contracts are of significant
scope, independent cost
estimators are
appointed, with their
findings verified by
in-house modelling. Some
contracts include pricing
protections by way of
mechanisms that allow
for annual pricing reviews
and/or the application
of annual CPI adjustments.
Many contracts also contain
mechanisms to allow the
Group to end the contract
with minimal notice if
continued performance
is financially burdensome.
---------------------- ----------------------------------- -----------------------------------
Adverse Movements Adverse movements in commodity The Group focuses on
in Commodity prices may reduce both mine-site low-cost operations
Prices exploration budgets and where activity is less
the pipeline of mine-site susceptible to adverse
work in the mining sector, commodity price movements.
which in turn could reduce In addition, the Group
the level of demand for is implementing a diversification
the Group's drilling and strategy which is focused
mining services. This could on developing new service
have a material impact offerings, developing
on the Group's operating a finance/capital strategy
and financial performance. that provides balance
sheet strength and allows
for organic and inorganic
growth in the business,
and also diversifying
through M&A opportunities.
---------------------- ----------------------------------- -----------------------------------
Over exposure Gold is an important commodity The Group is in the process
to Gold contributing to the Group's of implementing a diversification
order book and tender pipeline. strategy in terms of
If the gold industry were developing new service
to suffer, it would have offerings, developing
a material adverse effect a finance/capital strategy
on the Group's revenues that allows for organic
and profitability. and inorganic growth
in the business, and
diversifying through
M&A opportunities.
---------------------- ----------------------------------- -----------------------------------
Exposure to The Group's contract pricing To minimise the Group's
currency is in US dollars. However, risk, the Group tries
fluctuations 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 has significantly
the value of the US dollar improved processes 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 where exchange control
adversely affect the financial regulations are in effect,
results. As a result, the and this remains a key
Group is exposed to currency focus area.
fluctuations and exchange
rate risks.
---------------------- ----------------------------------- -----------------------------------
Higher levels Increases in cost of goods The Group ensures accurately
of Inflation and in labour/salary costs pursuing contractual
related to higher levels rights under existing
of inflation. rise
and fall mechanisms.
It ensures to price contracts
with known inflationary
pressures and negotiates
robust rise and fall
mechanisms.
---------------------- ----------------------------------- -----------------------------------
Reduction The Group holds investments The Group holds a portfolio
in values of in a portfolio of both of investments in various
Investments publicly traded and private companies, mitigating
held companies. The accounting the risk of single company
value of these investments weakness. The investments
is marked to market at are actively monitored
each reporting date and and proactively managed.
the fair value adjustment New investments are
is accordingly recorded required to satisfy a
in the profit and loss number of criteria with
account as an unrealised non-Executive oversight.
gain or loss. The value In the event of fair
of the investments will value investments becoming
change and could materially an unrealised loss, while
alter both the Group's this would affect the
reported net assets and company's net assets
net profit position. and profitability, it
would not affect going
concern or cash flow.
---------------------- ----------------------------------- -----------------------------------
Risk of noncompliance Non-physical risks arise The Group has recognised
with climate from a variety of policy, the need for the appointment
related reporting regulatory, legal, financing of a Sustainability Manager.
regulations and investor responses It has engaged with expert
to the challenges posed consultants in this field
by climate change. to establish emissions
reporting, guidance and
publications. Additionally,
it has established a
separate Sustainability
Committee to drive the
ESG process forward.
---------------------- ----------------------------------- -----------------------------------
Communicable A large-scale outbreak The Group undertakes
disease outbreaks, in one of our operating extensive planning to
including COVID-19 jurisdictions may lead facilitate the mobility
to interruptions in operations, of its international
closures at mine sites, and regional expatriate
inability to source supplies workforce as the Company
or consumables, higher manages international
volatility in the global flight cancellations
capital and commodity markets, and COVID-19 travel restrictions.
adverse impacts on investment The Group also monitors
sentiment and economies. other communicable disease
Ongoing restrictions on outbreaks relevant to
travel could significantly the location of the Group's
impair the Group's ability operations in order to
to manage its businesses implement its planned
effectively. response strategy when
needed. The Group's key
priorities on COVID-19
are: -- protecting our
people with a focus on
their wellbeing
-- to play our role
in limiting the spread
of the virus
-- delivering value
for our clients and stakeholders
-- maintaining the strongest
possible financial position.
---------------------- ----------------------------------- -----------------------------------
CAPITAL LIMITED
APPIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
The Group presents various Alternative Performance Measures (APMs)
as management believes that these are useful for users of the financial
statements in helping to provide a balanced view of, and relevant
information on, the Group's financial performance in the period.
The following terms and alternative performance measures are used
in the half year results release for the six months ended 30 June
2022.
ARPOR Average revenue per operating rig
EBIT Earnings before interest, taxes and fair value
gain/loss
EBITDA Earnings before interest, taxes, depreciation,
amortisation and fair value gain/loss
ADJUSTED NET PROFIT Net profit after tax before fair value gain/loss
AFTER TAX
ADJUSTED EPS Net profit after tax before fair value gain/loss
over weighted average number of ordinary shares
NET CASH (DEBT) Cash and cash equivalents less short term and
long-term debt
NET ASSET VALUE PER Total equity/ Weighted average number of ordinary
SHARE (CENTS) shares
ADJUSTED RETURN ON Annualised EBIT/Total assets-current liabilities
CAPITAL EMPLOYED excluding investments at fair value
Reconciliation of alternative performance measures to the financial
statements:
Six months ended
30 Jun 2022 30 Jun 2021
------------------------------ ----------------------------
$ $
ARPOR can be reconciled from the financial statements as per the
below:
Revenue per financial statements ($) 138,128,602 98,683,980
Non-drilling revenue ($) (41,617,602) (20,338,011)
------------------------------ ----------------------------
Revenue used in the calculation of
ARPOR ($) 96,511,000 78,345,969
------------------------------ ----------------------------
Monthly Average active operating Rigs 93 73
Monthly Average operating Rigs 112 99
------------------------------ ----------------------------
ARPOR (rounded to nearest $10,000) 173,000 180,000
============================== ============================
EBIT and EBITDA can be reconciled from the financial statements
as per the below:
Profit for the
period 9,682,662 18,409,790
Taxation 5,456,706 5,903,119
Interest income (112,808) (49,997)
Finance charges 2,670,575 1,606,618
Fair value adjustments 10,265,388 (5,706,322)
------------------------------ ----------------------------
EBIT 27,962,523 20,163,208
============================== ============================
Gross profit 61,118,149 42,655,350
Administration expenses (19,738,178) (14,281,383)
Depreciation (13,417,448) (8,210,759)
------------------------------ ----------------------------
EBIT 27,962,523 20,163,208
============================== ============================
Profit for the
period 9,682,662 18,409,790
Depreciation 13,417,448 8,210,759
Taxation 5,456,706 5,903,119
Interest income (112,808) (49,997)
Finance charges 2,670,575 1,606,618
Fair value adjustments 10,265,388 (5,706,322)
------------------------------ ----------------------------
EBITDA 41,379,971 28,373,967
============================== ============================
CAPITAL LIMITED
APPIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
Adjusted net profit and adjusted EPS can be reconciled from the
financial statements as per the below:
30 Jun 2022 31 Dec 2021
$ $
Operating profit (EBIT) 27,962,523 20,163,208
Depreciation, amortisation and impairments 13,417,448 8,210,759
-------------- --------------
EBITDA 41,379,971 28,373,967
============== ==============
Gross profit 61,118,149 42,655,350
Administration expenses (19,738,178) (14,281,383)
-------------- --------------
EBITDA 41,379,971 28,373,967
============== ==============
Operating profit (EBIT) 27,962,523 20,163,208
Interest income 112,808 49,997
Finance charges (2,670,575) (1,606,618)
Taxation (5,456,706) (5,903,119)
-------------- ------------------
Adjusted net profit 19,948,050 12,703,468
============== ==================
Profit for the period 9,682,662 18,409,790
Fair value adjustments 10,265,388 (5,706,322)
-------------- ------------------
Adjusted net profit 19,948,050 12,703,468
============== ==================
Adjusted net profit 19,948,050 12,703,468
Weighted average number of ordinary shares
used in the calculation of basic earnings
per share 189,451,637 189,470,658
Adjusted EPS (cents) 10.53 6.70
============== ==================
Adjusted Return on Capital Employed
Annualised EBIT 55,925,046 40,326,416
Total assets excluding investments less
current liabilities 226,985,335 179,121,621
-------------- ------------------
Adjusted ROCE (%) 24.6 22.5
============== ==================
Net cash (debt) can be reconciled from the financial statements
as per the below:
Cash and cash equivalents 22,735,408 30,577,249
Long-term liabilities (40,525,159) (45,567,668)
Current portion of long-term liabilities (18,572,189) (16,887,692)
-------------- ------------------
Net cash (debt) (36,361,940) (31,878,111)
============== ==================
Net Asset Value per share (cents) can be calculated as per the below:
Total Equity 222,364,139 219,173,832
Weighted average number of ordinary shares
used in the calculation of basic earnings
per share 189,451,637 189,765,149
-------------- ------------------
Net Asset Value per share (Cents) 117.37 115.50
-------------- ------------------
CAPITAL LIMITED
APPIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNREVIEWED)
(Continued)
EBITDA
EBITDA represents profit or loss for the year before interest, income
taxes, depreciation & amortisation and fair value adjustments on
financial assets at fair value through profit and loss and realised
gain (loss) on fair value through profit and loss investments.
EBITDA is non-IFRS financial measures that is used as supplemental
financial measures by management and external users of financial
statements, such as investors, to assess our financial and operating
performance. These non-IFRS financial measures will assist our management
and investors by increasing the comparability of our performance
from period to period.
We believe that including EBITDA assists our management and investors
in: -
i. understanding and analysing the results of our operating and business
performance, and
ii. monitoring our ongoing financial and operational strength in
assessing whether to continue to hold our shares. This is achieved
by excluding the potentially disparate effects between periods of
depreciation and amortisation, income (loss) from associate, interest
income, finance charges, fair value adjustment on financial assets
at fair value through profit and loss and realised gain (loss) on
fair value through profit and loss investments, which may significantly
affect comparability of results of operations between periods.
EBITDA has limitations as analytical tools and should not be considered
as alternatives to, or as substitutes for, or superior to, profit
or loss for the period or any other measure of financial performance
presented in accordance with IFRS. Further other companies in our
industry may calculate these measures differently from how we do,
limiting their usefulness as a comparative measure.
Net cash (debt)
Net cash (debt) is a non-GAAP measure that is defined as cash and
cash equivalents less short term and long-term debt.
Management believes that net cash (debt) is a useful indicator of
the Group's indebtedness, financial flexibility and capital structure
because it indicates the level of borrowings after taking account
of cash and cash equivalents within the Group's business that could
be utilised to pay down the outstanding borrowings. Management believes
that net debt can assist securities analysts, investors and other
parties to evaluate the Group. Net cash (debt) and similar measures are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. Accordingly, caution is required in comparing net debt as reported by the Group to net cash (debt) of other companies. Net Asset Value per share (cents) Net Asset Value per share (cents) is a non-financial measure taking into consideration the total equity over the weighted average number of shares used in the calculation of basic earnings per share. Management believe that the net asset value per share is a useful indicator of the level of safety associated with each individual share because it indicates the amount of money that a shareholder would get if the Group were to liquidate. Management believes that net asset value per share can assist securities analysts, investors and other parties to evaluate the Group. Net asset value per share and similar measures are used by different companies for different purposes and are often calculated in ways that reflect the circumstances of those companies. Accordingly, caution is required when comparing net asset value per share as reported by the Group to net asset value per share of other companies. Average revenue per operating rig ARPOR is a non-financial measure defined as the monthly average drilling specific revenue for the period divided by the monthly average active operating rigs. Drilling specific revenue excludes revenue generated from shot crew, a blast hole service that does not require a rig to perform but forms part of drilling. Management uses this indicator to assess the operational performance across the board on a period-by-period basis even if there is an increase or decrease in rig utilisation.
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