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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 | 0.97% | 104.00 | 103.00 | 104.50 | 105.50 | 102.00 | 104.00 | 215,073 | 16:35:20 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Oil And Gas Field Expl Svcs | 318.42M | 36.74M | 0.1897 | 5.43 | 199.51M |
From Apr 2019 to Apr 2024
TIDMCAPD
RNS Number : 9356X
Capital Drilling Limited
16 August 2018
FOR IMMEDIATE RELEASE 16 August 2018
Capital Drilling Limited
("Capital Drilling", the "Group" or the "Company")
Half Year Results
For the period ended 30 June 2018 and Interim Dividend
Capital Drilling, a leading drilling solutions company focused on the African markets, today announces half year results for the period ended 30 June 2018.
HALF YEAR RESULTS FOR THE PERIODED 30 JUNE 2018*
Hot Features
Premium
H1 2018 H1 2017
Average Fleet Size (No. of
drill rigs) 94 93
Fleet Utilisation (%) 46 56
ARPOR ($) 200,000 191,000
Capex ($ m) 4.7 4.2
Revenue ($ m) 54.5 62.3
EBITDA(1) ($ m) 12.5 11.6
EBIT(1) ($ m) 5.8 5.2
Net Profit After Tax ($ m) 2.8 2.6
Cash From Operations ($ m) 7.2 13.1
Earnings per Share
Basic (cents) 2.0 1.9
Diluted (cents) 2.0 1.9
Interim Dividend per Share
(cents) 0.6 0.5
Net Asset Value per Share(1)
(cents) 52.2 50.3
Return on Capital Employed
(%)** 17.7 5.1
Return on Total Assets (%)** 11.8 3.6
Net Cash(1) ($ m) 3.4 3.3
Net Cash/Equity (%) 4.7 4.9
*All amounts are in USD unless otherwise stated
** Twelve months rolling average
(1) EBITDA, EBIT, Net Asset Value per share and Net Cash are
non-IFRS financial measures and should not be used in isolation
or as a substitute for Capital Drilling Limited financial results
presented in accordance with IFRS. For definitions and reconciliations
of these measurements to the most directly comparable financial
calculations presented in accordance with IFRS, please refer
'APPIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES'
Financial Overview
-- First half revenue of $54.5 million, 4.6% lower than H2 2017 at $57.1 million (H1 2017: $62.3 million)
-- Lower revenue driven by reduced fleet utilisation as the Group continues to redeploy assets to West Africa
-- EBITDA increased by 7.8% to $12.5 million (H1 2017: $11.6 million), with EBITDA margins expanding to 22.9% (H1 2017: 18.7%), reflecting the benefits of improved cost management
-- Net profit after tax of $2.8 million, 7.7% increase on H1 2017 (H1 2017: $2.6 million)
-- Capex increased by 11% to $4.7 million (H1 2017: $4.2 million), primarily directed to the purchase of replacement production rigs and asset improvements
-- Net cash of $3.4 million, maintaining the Group's strong balance sheet -- Earnings per share improved by 5.3% to 2.0 cents (H1 2017: 1.9 cents)
-- Final dividend in relation to the 2017 financial year of 1.2 cents per share, paid in May 2018 (FY 2016: 1.0 cent)
-- Interim dividend of 0.6 cent per share, up 20%, to be paid 05 October 2018 (2017: Interim dividend of 0.5 cents per share)
Operational and Strategic Review
-- Contracts awarded in H1 2018 include: - Aton Resources (Egypt): one rig, commenced drilling in Q3 - De Beers (Botswana): three rigs, commenced drilling in Q3 - Graphex Mining (Tanzania): one rig, commenced drilling in Q3 - Hummingbird (Mali): four rigs, commenced drilling in July
- Kinross (Mauritania): Two-year drill rig maintenance contract for two blast hole rigs, commenced in Q2
- OreCorp (Mauritania): one rig, program completed in Q1
- Resolute (Mali): Awarded a three-year surface exploration drilling contract, currently drilling with three rigs
-- Contract wins reflecting the continued improvement in the exploration drilling market
-- Long term contract wins (Resolute and Kinross) building the Group's portfolio of multi-year mine-site based contracts
-- Made significant progress expanding the Group's presence in the West Africa region, including asset mobilisations which increased our rig number to 26 rigs, with further rigs scheduled for Q3 arrival
-- Established infrastructure with offices, warehouses, workshops and accommodation in Bamako, Mali, and Yamoussoukro, Côte d'Ivoire, adding to the existing presence in Mauritania
-- Appointed a Business Development Manager, Julian Blake, initially based in Ghana
-- H1 utilisation of 46%, down from 56% in H1 2017, on an average fleet size of 94 rigs, with substantial assets redeployment to West Africa
-- H1 Average Revenue per Operating Rig (ARPOR) increased to $200,000 (H1 2017: $191,000)
-- Continued strength in ARPOR reflecting strong contract performance at major mine site contracts
Health & Safety
-- Previously announced world class achievements: - Mali (Syama Project) achieved two years LTI free in June 2018 - Tanzania (North Mara Project) achieved two years LTI free in March 2018 - Tanzania (Geita Project) achieved one year LTI free in March 2018
Outlook
-- Trading conditions continue to be supportive, with elevated levels of enquires and tendering requests
-- Capital markets activity continues to support future demand, albeit recent weakness in metal prices and economic uncertainty has lead to an easing in market sentiment since the last update
-- Cash generation from miners remain at healthy levels which is driving increased budgets and demand from the producers
-- Recent contract awards add to the Group's portfolio of long term production and mine-site based contracts
-- While activity levels in Tanzania remain subdued, recent feedback suggest constructive dialogue with the Government and progress with the newly formed Mining Commission
-- Asset deployment and infrastructure development in the key West African market has provided Capital Drilling with a solid platform to grow operations in this high growth market
-- The Group maintains a strong balance sheet and unutilised assets to capture future growth opportunities
Following a number of contract wins across existing countries of operation, including the key focus market of West Africa, the Group maintains its upgraded revenue guidance range of $105 to $115 million for 2018.
Commenting on the results, Jamie Boyton, Executive Chairman of Capital Drilling, said:
"We are pleased to report another strong half yearly result, both in terms of the Group's financial performance and strategy execution. With a supportive demand cycle and robust discipline from the management team on costs and CAPEX, the Group has continued to deliver on its financial goals, with solid free cash flow and a strong balance sheet. Particularly pleasing was the increase in key profitability measures and margins, despite the reduced fleet utilisation and revenue, driven by the strategic redeployment of assets to the key West African markets. As a result of the performance, we have today announced an interim dividend to shareholders of 0.6 cents per share, representing a 20% increase on the prior half year period.
The building of our business in West Africa has been the major focus of our growth strategy over the past 6 months. The Group has developed new operational centres in Côte d'Ivoire and Mali over the period, complementing our long established operations in Mauritania, all of which provide the infrastructure to deploy further production and exploration rigs into what is regarded as one of the fastest growing drilling markets in the industry. We ended the half year period with 26 rigs across these countries, almost doubling our capacity in the six month period, with further rigs and assets due to arrive in the third quarter.
Our increased footprint and presence in West Africa has yielded early results, with the Group announcing three new contracts in the region, with Kinross Gold (Tasiast), Resolute Mining (Syama) and Hummingbird Resources (Yanfolila). As a result of these contract wins, along with exploration contract wins in Botswana, Egypt and Tanzania, the Group expects to see an increase in utilisation rates over the second half, which fully underpins the investment we have made to target the West African market.
Outside of West Africa our core long term contracts in Tanzania and Egypt have continued to perform strongly, which was reflected in a further improvement in Average Revenue per Operating Rig for the period. We are encouraged to see early signs of improvement in the Tanzanian market, including the formation of the Mining Commission and increasingly positive feedback on Government engagement from companies operating in the country. The awarding of our first exploration contract in Tanzania in two years is particularly encouraging, as we continue to seek to utilise our substantial latent capacity in our exploration fleet.
We are pleased to have had another exceptional quarter in terms of our safety record, which remains at the heart of our strategy, with a number of new safety records at Syama, North Mara and Geita sites.
We enter the second half of 2018 in a strong position, with our traditional markets in East Africa now complemented with a substantial presence in the key West African region. Tendering & enquiry levels remain robust and we are confident of future contract wins in the period ahead."
Capital Drilling will host a conference call on Thursday 16 August at 9am (London, UK time) to update investors and analysts on its results. Participants may join the call by dialling one of the following numbers, approximately 10 minutes before the start of the call. A copy of the Company's presentation will be available on www.capdrill.com.
UK Toll-free Dial In: 08082370040
International Dial In Numbers: http://events.arkadin.com/ev/docs/FEL_Events_International_Access_List.pdf
Participant PIN Code: 41302408#
For further information, please visit Capital Drilling's website www.capdrill.com or contact:
Capital Drilling Limited +230 464 3250
Jamie Boyton, Executive Chairman investor@capdrill.com
André Koekemoer, Chief Financial Officer
finnCap Ltd +44 20 7220 0500
Christopher Raggett, Corporate Finance
Camille Gochez, Corporate Broking
Tamesis Partners LLP +44 20 3882 2868
Charlie Bendon
Richard Greenfield
Buchanan +44 20 7466 5000
Bobby Morse capitaldrilling@buchanan.uk.com
Gemma Mostyn-Owen
About Capital Drilling
Capital Drilling provides specialised drilling services to mineral exploration and mining companies in emerging and developing markets, for exploration, development and production stage projects. The Company currently owns and operates a fleet of 95 drilling rigs with established operations in Botswana, Côte d'Ivoire, Egypt, Ghana, Kenya, Mali, Mauritania and Tanzania. The Group's corporate headquarters are in Mauritius.
Cautionary note regarding forward looking statements
Certain information contained in this report, including any information on Capital Drilling's plans or future financial or operating performance and other statements that express management's expectations, or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. Capital Drilling cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Capital Drilling to be materially different than the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements. These factors include the inherent risks involved in exploration and development of mineral properties, changes in economic conditions, changes in the worldwide price of commodities and project execution delays, many of which are beyond the control of Capital Drilling. Nothing in the report should be construed as either an offer to sell or a solicitation to buy or sell Capital Drilling securities.
INDEPENT AUDITOR'S REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS
TO THE SHAREHOLDERS OF CAPITAL DRILLING LIMITED
We have been engaged by the company to review the condensed consolidated set of interim financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises the consolidated condensed statements of comprehensive income, financial position, changes in equity, the cash flow statement and related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the International Auditing and Assurance Standards Board ("IAASB"). Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (the "IASB"). The condensed consolidated set of interim financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" issued by the IASB.
Our responsibility
Our responsibility is to express to the Group a conclusion on the condensed consolidated set of interim financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by Independent Auditor of the Entity" issued by the IAASB. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of interim financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as issued by the IASB and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte & Touche
Registered Auditor
Per: H. Loonat
Partner
Johannesburg, South Africa
16 August 2018
Deloitte & Touche Buildings 1 and 2
Registered Auditors Deloitte Place
Audit & Assurance -- Gauteng The Woodlands
Woodlands Drive
Woodmead Sandton
www. deloitte.com Private Bag X6
Gallo Manor 2052
South Africa
Docex 10 Johannesburg
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2018
Six months ended
Notes 30 June 2018 30 June 2017
------ ---------------------- -------------
$ $
Revenue 54,476,675 62,332,410
Cost of sales (33,687,558) (44,898,001)
---------------------- -------------
Gross profit 20,789,117 17,434,409
Administration costs (8,281,941) (5,808,075)
Depreciation (6,714,923) (6,392,131)
---------------------- -------------
Profit from operations 5,792,253 5,234,203
Share of (loss) income from associate (246,441) 5,213
Interest income 59,866 137,264
Finance charges (533,081) (543,557)
Realised loss on disposal of fair
value through other comprehensive
income shares (49,225) (183,495)
Fair value adjustment on financial
assets through profit and loss -
Share Options (47,236) (123,989)
---------------------- -------------
Profit before taxation 4,976,136 4,525,639
Taxation 3 (2,208,150) (1,945,364)
---------------------- -------------
Profit for the period 2,767,986 2,580,275
====================== =============
Other comprehensive (loss) income:
Other comprehensive (loss) income
to be reclassified to profit or
loss in subsequent periods:
Exchange differences on translation
of foreign operations 18,510 38,454
Share of exchange differences on
translation of foreign operations
from associate (22,559) (25,932)
Fair value through other comprehensive
income shares (658,802) (369,336)
Cumulative gain reclassified to
profit and loss on sale of fair
value through other comprehensive
income shares 49,225 183,495
---------------------- -------------
Total other comprehensive loss for
the period (613,626) (173,319)
---------------------- -------------
Total comprehensive income for the
period 2,154,360 2,406,956
====================== =============
Earnings per share:
Basic (cents per share) 6 2.0 1.9
====================== =============
Diluted (cents per share) 6 2.0 1.9
====================== =============
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2018
Audited
31 December
Notes 30 June 2018 2017
------ ------------- ------------
$ $
ASSETS
Non-current assets
Property, plant and equipment 8 39,678,523 41,405,764
Investment in associate 9 2,499,805 2,750,295
Deferred taxation 26,843 7,297
------------- ------------
Total non-current assets 42,205,171 44,163,356
------------- ------------
Current assets
Inventory 20,817,422 21,691,569
Trade and other receivables 18,286,259 16,554,256
Prepaid expenses and other assets 4,518,709 2,863,167
Taxation 27,065 136,590
Investments 2,435,764 3,260,331
Cash and cash equivalents 15,380,570 16,911,383
------------- ------------
Total current assets 61,465,789 61,417,296
------------- ------------
Total assets 103,670,960 105,580,652
============= ============
EQUITY AND LIABILITIES
Equity
Share capital 10 13,581 13,524
Share premium 10 22,231,662 21,933,772
Equity-settled employee benefits
reserve 307,828 432,476
Foreign currency translation reserve (22,559) (18,510)
Investments revaluation reserve (736,166) (126,589)
Retained earnings 48,961,853 47,823,617
------------- ------------
Total equity 70,756,199 70,058,290
------------- ------------
Non-current liabilities
Long-term liabilities 11 12,000,000 12,000,000
Deferred taxation 21,952 -
------------- ------------
Total non-current liabilities 12,021,952 12,000,000
------------- ------------
Current liabilities
Trade and other payables 16,495,420 19,731,133
Taxation 4,365,026 3,749,644
Current portion of long-term liabilities 11 32,363 41,585
------------- ------------
Total current liabilities 20,892,809 23,522,362
------------- ------------
Total equity and liabilities 103,670,960 105,580,65
============= ============
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30 June 2018
Reserves
------------
Equity-settled Foreign
employee currency Investments
Share Share Retained benefits translation revaluation Total
capital premium earnings reserve reserve reserve equity
-------- ----------- -------------- --------------- ------------ ------------ ------------
$ $ $ $ $ $ $
Balance at 31
December 2016
- Audited 13,490 21,697,470 44,639,236 441,883 (38,454) (36,920) 66,790,545
Issue of shares 34 236,302 - (236,336) - - -
Recognition of
share-based payments - - - 118,314 - - 118,314
Total comprehensive
income (loss)
profit for the
period - - 2,580,275 - 12,522 (185,841) 2,406,956
-------- ----------- -------------- --------------- ------------ ------------ ------------
Profit for
- the period - - 2,580,275 - - - 2,580,275
Other
comprehensive
income (loss)
- for the period - - - - 12,522 (185,841) (173,319)
-------- ----------- -------------- --------------- ------------ ------------ ------------
Dividends paid
(1.0 cents per
share) - Note
7 - - (1,352,471) - - - (1,352,471)
-------- ----------- -------------- --------------- ------------ ------------ ------------
Balance at 30
June 2017 - Audited 13,524 21,933,772 45,867,040 323,861 (25,932) (148,921) 67,963,344
======== =========== ============== =============== ============ ============ ============
Balance at 31
December 2017 13,524 21,933,772 47,823,617 432,476 (18,510) (126,589) 70,058,290
Issue of shares 57 297,890 - (297,947) - - -
Recognition of
share-based payments - - - 173,299 - - 173,299
Total comprehensive
income (loss)
for the period - - 2,767,986 - (4,049) (609,577) 2,154,360
-------- ----------- -------------- --------------- ------------ ------------ ------------
Profit for
- the period - - 2,767,986 - - - 2,767,986
Other
comprehensive
loss for the
- period - - - - (4,049) (609,577) (613,626)
-------- ----------- -------------- --------------- ------------ ------------ ------------
Dividends paid
(1.2 cents per
share) - Note
7 - - (1,629,750) - - - (1,629,750)
-------- ----------- -------------- --------------- ------------ ------------ ------------
Balance at 30
June 2018 13,581 22,231,662 48,961,853 307,828 (22,559) (736,166) 70,756,199
======== =========== ============== =============== ============ ============ ============
CAPITAL DRILLING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2018
Six months ended
Notes 30 June 2018 30 June 2017
------ ------------- -------------
$ $
Operating activities:
Cash from operations 12 7,210,838 13,130,720
Interest received 59,866 137,264
Finance charges paid 11 (542,303) (514,202)
Taxation paid (1,480,837) (1,379,743)
------------- -------------
Net cash generated from operating
activities 5,247,564 11,374,039
------------- -------------
Investing activities:
Purchase of property, plant and
equipment 8 (5,390,068) (4,207,845)
Proceeds from disposal of property,
plant and equipment 128,505 374,938
Acquisition of FVTOCI investments - (1,752,387)
Proceeds on disposal of FVTOCI investments 311,451 370,878
Investment in associate 9 - (1,912,023)
------------- -------------
Net cash used in investing activities (4,950,112) (7,126,439)
------------- -------------
Financing activities:
Long-term liabilities raised 11 - 6,500,000
Long-term liabilities repaid 11 - (3,500,000)
Dividend paid 7 (1,629,750) (1,352,471)
------------- -------------
Net cash (used) generated in financing
activities (1,629,750) 1,647,529
------------- -------------
Net (decrease) increase in cash
and cash equivalents (1,332,298) 5,895,129
Cash and cash equivalents at the
beginning of the period 16,911,383 12,728,555
Translation of foreign currency
cash and cash equivalent adjustment (198,515) (201,026)
------------- -------------
Cash and cash equivalents at the
end of the period 15,380,570 18,422,658
============= =============
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
1. Basis of presentation and accounting policies
Preparation of the condensed consolidated interim financial
statements
The condensed consolidated interim financial statements of
Capital Drilling Limited and Subsidiaries ("Capital Drilling"
or the "Group") as at and for the six months ended 30 June
2018 (the "Interim Financial Statements") have been prepared
in accordance with International Accounting Standard ("IAS")
No. 34, "Interim Financial Reporting". They should be read
in conjunction with the annual consolidated financial statements
and the notes thereto in the Group's Annual Report for the
year ended 31 December 2017 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 on the going concern basis under the historical
cost convention, except for certain financial instruments which
are measured at fair value. The Group has adopted a number
of new standards and interpretations effective on or before
1 January 2018, which were described in note 2 of the consolidated
financial statements for the year ended 31 December 2017. The
adoption of these standards and interpretations did not have
a material impact on the condensed consolidated interim financial
statements. The same accounting policies, presentation and
methods of computation have been followed in these condensed
consolidated financial statements as were applied in the preparation
of the Group's financial statements for the year ended 31 December
2017 except for new accounting policies adopted during the
year described in Note 4 and Note 5.
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 current available
information. Changes in facts and circumstances may result
in revised estimates and actual results could differ from those
estimates.
2. Operations in the interim period
Capital Drilling Limited is incorporated in Bermuda. The Group
provides drilling services including but not limited to exploration,
development, grade control and blast hole drilling services
to mineral exploration and mining companies located in emerging
and developing markets. The Group also provides some equipment
rental and information technology services to mining and mining
related companies.
During the six months ended 30 June 2018, the Group provided
drilling services in Egypt, Mauritania, Mali, Tanzania and
Kenya.
The seasonality of the Group's operations has no significant
impact on the condensed consolidated interim financial statements.
3. Taxation
Capital Drilling Limited is incorporated in Bermuda. No taxation
is payable on the results of the Bermuda business. Taxation
for other jurisdictions is calculated in terms of the legislation
and rates prevailing in the respective jurisdictions.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
3. Taxation (continued)
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 judgment given any changes in the facts, circumstances,
information available and applicable tax laws. Considering all
available information and the history of resolving income tax
uncertainties, the Group believes that the ultimate resolution
of such matters will not likely have a material effect on the
Group's financial position, statements of operations or cash
flows.
Due to the tax charge calculations in certain countries in which
the Group operates being based on revenues instead of profits,
the consolidated taxation expense for the period is not directly
linked to profits and losses.
4. IFRS 15 'Revenue from Contracts with Customers'
In the current financial year Capital Drilling has adopted IFRS
15 'Revenue from Contracts with Customers'.
The core principle of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those
goods or services.
"IFRS 15, Revenue from Contracts with Customers", effective
from 1 January 2018 identifies performance obligations in contracts
with customers, allocates the transaction price to the performance
obligations and recognises revenue as performance obligations
are satisfied. The standard requires revenue recognition either
"over time" or at a "point in time" and additionally requires
more detailed disclosures.
A detailed review of all material contracts confirmed that IFRS
15 will not result in a material change to the timing
of revenue or profit recognition on drilling contracts or long-term
drilling contracts. This assessment reflects that Capital Drilling's
contracting arrangements, which are predominantly long-term
drilling contracts, result in the continual transfer of benefits
and corresponding revenue recognition of the Group's performance
to customers over time.
When first applying IFRS 15, entities should apply the standard
in full for the current period, including retrospective application
to all contracts that were not yet complete at the beginning
of that period. In respect of prior periods, the transition
guidance allows entities an option to either: [IFRS 15:C3].
* Option 1 - apply IFRS 15 in full to prior periods
(with certain limited practical expedients being
available); or
* Option 2- retain prior period figures as reported
under the previous standards, recognising the
cumulative effect of applying IFRS 15 as an
adjustment to the opening balance of equity as at the
date of initial application (beginning of current
reporting period).
As part of the transition guidance, management have opted for
option 2, where prior period figures are reported under the
previous standards and an adjustment to be made to the opening
balance of equity as at the date of initial application. In
view that there is no material change to the timing of revenue
or profit recognition, there is no adjustment required to the
opening balance of equity.
Capital Drilling has always adopted a prudent approach to contract
accounting. Transparent financial control processes ensure that
recognition of profits and cash flow are aligned closely with
the delivery of our services.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
Six months ended
30 June 2018 30 June 2017
--------------------------- -------------------------
$ $
4. IFRS 15 'Revenue from Contracts
with Customers' (continued)
Revenue from the rendering
of services comprises:
Drilling revenue 53,416,151 59,939,628
Equipment rental 839,718 291,800
Information technology revenue 220,805 2,100,982
--------------------------- -----------------------------
54,476,675 62,332,410
=========================== =========================
5. IFRS 9 Financial Instruments
In the current year Capital Drilling has adopted IFRS 9 Financial
Instruments effective since 1 January 2018.
The standard comprises guidance on Classification and Measurement,
Impairment Hedge Accounting and Derecognition:
* IFRS 9 introduces a new approach to the
classification of financial assets, which is driven
by the business model in which the asset is held and
their cash flow characteristics. A new business model
was introduced which does allow certain financial
assets to be categorised as 'fair value through other
comprehensive income' (FVTOCI) in certain
circumstances. The requirements for financial
liabilities are mostly carried forward unchanged from
IAS 39. However, some changes were made to the fair
value option for financial liabilities to address the
issue of own credit risk.
* The new model introduces a single impairment model
being applied to all financial instruments, as well
as an 'expected credit loss' model for the
measurement of financial assets.
* IFRS 9 contains a new model for hedge accounting that
aligns the accounting treatment with the risk
management activities of an entity, in addition,
enhanced disclosures will provide better information
about risk management and the effect of hedge
accounting on the financial statements.
* IFRS 9 carries forward the derecognition requirements
of financial assets and liabilities from IAS 39.
* Prepayment Features with Negative Compensation. The
narrow-scope amendment allows companies to measure
particular prepayable financial assets with negative
compensation at amortised cost or at fair value
through other comprehensive income if a specified
condition is met.
Capital Drilling has assessed the impact of this amendment and
found no material impact on specific or general provisions for
credit losses on its separate and consolidated financial statements
other than the additional disclosure requirements. Capital Drilling
does not have complex financial Instruments. The accounting treatment
for financial instruments under IFRS 9 and the historical accounting
treatment of Capital Drilling financial instruments does not
differ materially due to this absence of complex financial instruments.
Based on the historical loss ratios we are of the view that the
impairment of trade receivables due to the change of the impairment
model is not material. IFRS 9 did not significantly impact the
accounting treatment of inter-company loans. The company and
group does not have any hedged exposures and hedge accounting
is therefore not applicable.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
Six months ended
30 June 30 June
2018 2017
---------------------- -----------------
$ $
6. Earnings per share
Basic Earnings per share:
The profit and weighted average number
of ordinary shares used in the calculation
of basic earnings per share are as follows:
Profit for the period used in the calculation
of basic earnings per share 2,767,986 2,580,275
====================== =================
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 135,525,192 135,076,227
====================== =================
Basic earnings per share (cents) 2.0 1.9
====================== =================
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 135,525,192 135,076,227
- Dilutive share options (#) 252,006 362,813
---------------------- -----------------
Weighted average number of ordinary shares
used in the calculation of diluted earnings
per share 135,777,198 135,439,040
====================== =================
Diluted earnings per share (cents) 2.0 1.9
====================== =================
(#) For the purposes of calculating diluted earnings per share,
the share options of 2.34 million [2017: 2.34 million] were
excluded as they are anti-dilutive as the exercise price is
higher than the current share price.
7. Dividends
During the six months ended 30 June 2018, a dividend of 1.2
cents per ordinary share, totalling $1,629,750 (six months ended
30 June 2017: 1.0 cents per ordinary share, totalling $1,352,471)
was declared and paid.
8. Property, plant and equipment
During the six months ended 30 June 2018, the Group acquired
$5.4 million (2017: $4.2 million) of drilling rigs and other
assets to expand its operations and for the replacement of existing
assets.
The Group disposed of property, plant and equipment with a net
carrying amount of $0.4 million (2017: $0.5 million) during
the period. A loss of $0.3 million (2017: $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
2018, there were no indication of impairment.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
9. Investment in associate
During the six months ended 30 June 2018, the Group maintained
its 50% interest in MSA Mineral Services Analytical (Canada)
Inc. ("MSA") (formerly known as A2 Global Ventures Inc.). MSA
is headquartered in Vancouver, Canada, where it operates a central
hub laboratory, supported by feeder laboratories in Guyana,
Myanmar and Sweden, providing laboratory testing services to
the mining and exploration industries, particularly in emerging
markets. The consideration for the acquisition was $1.9 million
including transaction costs. The investment in MSA, is accounted
using the equity method.
The Group maintained the 23.75% shareholding of investment in
Stealth Global Holdings Ltd [formerly known as SAAC International
Pte. Ltd] which was initially acquired in 2015 as at 30 June
2018.
Six months ended
30 June 31 December
2018 2017
--------------------------- ------------------------------
$ $
10. Issued capital and share
premium
Authorised capital
2,000,000,000 (2017:
2,000,000,000)
ordinary shares of 0.01 cents
(2017:
0.01 cents) each 200,000 200,000
=========================== ==============================
Issued and fully paid:
135,812,596 (31 December 2017:
135,247,159)
ordinary shares of 0.01 cents
(31 December
2017: 0.01 cents) each 13,581 13,524
Share premium:
Balance at the beginning of
the period 21,933,772 21,697,470
Issue of shares 297,890 236,302
--------------------------- ------------------------------
Balance at the end of the
period 22,231,662 21,933,772
=========================== ==============================
On 1 April 2018, the Company issued 565,437 new common shares
pursuant to the Company's employee incentive scheme. The shares
rank pari passu with the existing ordinary shares. Fully paid
ordinary shares which have a par value of 0.01 cents, carry
one vote per share and carry rights to dividends.
11. Long term liabilities
Long term liabilities consist of a $12 million revolving credit
facility ("RCF") provided by Standard Bank (Mauritius) Limited
following a renewal of the Facilities Agreement on 30 October
2017. The interest rate on the RCF is the prevailing three-month
US LIBOR (payable in arrears) plus a margin of 5.75%, and an
annual commitment fee of 1.5% of the undrawn balance.
Security for the Standard Bank (Mauritius) Limited facility
comprise:
* Upward corporate guarantees from Capital Drilling (T)
Limited, Capital Drilling (Botswana) Proprietary
Limited and Capital Drilling Ltd.
* A negative pledge over the assets of Capital Drilling
(T) Limited and Capital Drilling Ltd.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
11. Long term liabilities (continued)
As at the reporting date and during the year under review, the
Group has complied with all covenants attaches to the loan facility.
Six months ended
30 June 2018 30 June 2017
----------------- -----------------
$ $
Standard Bank (Mauritius) Limited
Balance at 1 January 12,041,585 12,095,125
Amounts received during the 6-month
period - 6,500,000
Interest accrued during the 6-month
period 460,508 543,557
Interest paid during the 6-month
period (469,730) (514,202)
Principal repayments during the
6-month period - (3,500,000)
----------------- -----------------
12,032,363 15,124,480
Less: Current portion included
under current liabilities (32,363) (15,124,480)
----------------- -----------------
Due after more than one year 12,000,000 -
================= =================
Six months ended
30 June 2018 30 June 2017
----------------- -----------------
$ $
12. Cash from operations
Profit before taxation 4,976,136 4,525,639
Adjusted for:
* Depreciation 6,714,923 6,392,131
* Loss on disposal of property, plant and equipment 273,881 142,257
* Realised (gain)/loss on FVTOCI shares (49,225) 183,495
* Fair value adjustment on financial assets through
profit and loss (47,236) 123,989
* Share based payment expense 173,299 118,314
* Interest income (59,866) (137,264)
* Finance charges 533,081 543,557
* Share of loss/(income) from associate 246,441 (5,213)
* Unrealised foreign exchange loss on foreign exchange
held 198,515 201,026
----------------- -----------------
Operating profit before working capital
changes 12,959,949 12,087,931
Adjustments for working capital changes:
* Decrease (Increase) in inventory 874,147 (504,404)
* (Increase) decrease in trade and other receivables (1,732,003) 1,946,900
* (Increase) decrease in prepaid expenses and other
assets (1,655,542) 1,729,149
* Decrease in trade and other payables (3,235,713) (2,128,856)
----------------- -----------------
7,210,838 13,130,720
================= =================
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
13. Segmental analysis
Operating segments are identified on the basis of internal management
reports regarding components of the Group. These are regularly
reviewed by the Chairman in order to allocate resources to the
segments and to assess their performance. Operating segments are
identified based on the regions of operations. For the purposes
of the segmental report, the information on the operating segments
have been aggregated into the principal regions of operations
of the Group. The Group's reportable segments under IFRS 8 are
therefore:
Derives revenue from the provision of drilling services,
* Africa: equipment rental and IT support services.
Derives revenue from the provision of drilling services,
* Rest of world: equipment rental and IT support services.
Information regarding the Group's operating segments is reported
below. At 30 June 2018, 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 Africa Rest of Consolidated
June World
2018
----------- -------------------------- --------------------------
$ $ $
External revenue 53,710,022 766,653 54,476,675
=========== ========================== ==========================
Segment profit (loss) 13,667,309 (5,502,934) 8,164,375
=========== ==========================
Central administration
costs and
depreciation, net of other
income (2,372,122)
--------------------------
Profit from operations 5,792,253
Realised (loss) on disposal
of FVTOCI
shares (49,225)
Fair value adjustment on
financial
assets through profit and
loss -
Share Options (47,236)
Interest income 59,866
Share of losses from
associate (246,441)
Finance charges (533,081)
--------------------------
Profit before tax 4,976,136
==========================
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
13. Segmental analysis (continued)
For the six months ended 30 June Africa Rest of Consolidated
2017 World
----------------- ---------------- ----------------
$ $ $
External revenue 55,188,168 7,144,242 62,332,410
================= ================ ================
Segment profit (loss) 9,470,045 (2,627,305) 6,842,470
================= ================
Central administration costs and
depreciation, net of other income (1,608,537)
----------------
Profit from operations 5,234,203
Realised (loss) on disposal of FVTOCI
shares (183,495)
Fair value adjustment on financial
assets through profit and loss -
Share Options (123,989)
Interest income 137,264
Share of income from associate 5,213
Finance charges (543,557)
----------------
Profit before tax 4,525,639
================
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 Chairman for
the purpose of resource allocation and assessment of segment performance.
Six months ended
30 June 2018 30 June 2017
$ $
Segment assets:
Africa 170,241,123 138,185,655
Rest of world 14,982,961 29,162,399
------------------------- --------------
Total segment assets 185,224,084 167,348,054
Head office companies 45,510,958 39,709,123
------------------------- --------------
230,735,042 207,057,177
Eliminations * (127,064,082) (103,959,649)
------------------------- --------------
Total assets 103,670,960 103,097,528
========================= ==============
Segment liabilities:
Africa 45,658,320 31,694,352
Rest of world 7,370,827 17,712,149
------------------------- --------------
Total segment liabilities 53,029,147 49,406,501
Head office companies 105,378,810 88,215,910
------------------------- --------------
158,407,957 137,622,411
Eliminations * (125,493,196) (102,488,227)
------------------------- --------------
Total liabilities 32,914,761 35,134,184
========================= ==============
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
13. Segmental analysis (continued)
For the purposes of monitoring segment performance and allocating
resources between segments the Chairman monitors the tangible,
intangible and financial assets attributable to each segment.
All assets are allocated to reportable segments with the exception
of property, plant and equipment used by the head office companies,
certain amounts included in other receivables, and cash and cash
equivalents held by the head office companies.
* Eliminations include inter-group accounts receivable, inter-group
accounts payable and inter-group investments.
Other segment information:
Six months ended
30 June 2018 30 June 2017
------------- -------------
Non-Cash items included in profit or $ $
loss:
Depreciation
Africa 6,498,614 5,610,218
Rest of world 216,309 616,229
------------- -------------
Total segment depreciation 6,714,923 6,226,447
Head office companies - 165,684
------------- -------------
6,714,923 6,392,131
============= =============
Loss on disposal of property, plant and
equipment
Africa 328,799 115,692
Rest of world 5,082 26,565
------------- -------------
Total segment loss on disposal 333,881 142,257
Head office companies (60,000) -
------------- -------------
273,881 142,257
============= =============
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
Six months ended
30 June 2018 30 June 2017
--------------------------- ---------------------------
$ $
13. Segmental analysis (continued)
Impairment on Inventory
Africa
Stock Provision 541,983 169,410
Stock Write Offs 186,330 68,477
--------------------------- ---------------------------
728,313 237,887
Rest of world
Stock Provision 61,150 (1,069)
Stock Write Offs 11,418 7,971
--------------------------- ---------------------------
72,568 6,902
--------------------------- ---------------------------
Total segment impairment 800,881 244,789
Head office companies 374,974 -
--------------------------- ---------------------------
1,175,855 244,789
Additions to property, plant and
equipment
Africa 4,732,032 3,610,324
Transfer to Africa from Rest of
the world 319,725 -
Rest of world - 162,315
Transfer from Rest of the world
to Africa (319,725) -
--------------------------- ---------------------------
Total segment additions 4,732,032 3,772,639
Head office companies 658,036 435,206
--------------------------- ---------------------------
5,390,068 4,207,845
=========================== ===========================
Information about major customers
Included in revenues arising from the Africa segment are revenues
of approximately $40.8 million (2017: $35.7 million) which arose
from sales to customers that represent more than 10% of the Group's
revenue.
14. Commitments
The Group has the following
capital commitments
at 30 June 2018:
Committed capital expenditure 2,931,891 1,898,404
=========================== ===========================
The Group has outstanding purchase orders amounting to $5.7 million
at 30 June 2018 (30 June 2017: $6.5 million).
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
15. Contingencies
Zambia Tax:
As disclosed in the annual consolidated financial statements
for the year ended 31 December 2017, Capital Drilling (Zambia)
Limited is a party to various tax claims made by the Zambian
Revenue Authority for the tax years 2007 to 2013. On 30 April
2015, the Company received a tax assessment from the Zambian
Revenue Authority totalling ZMW 144.1 million (USD equivalent:
$13.1 million), inclusive of penalties and interest. The claims
relate to various taxes, including income tax, value added tax,
payroll tax and withholding tax. Since the assessment date, Management
have responded in detail to these claims, providing the Zambian
Revenue Authority with detailed analysis and arguments justifying
the Company's tax position. No amount has yet been paid in this
regard and no additional communication or actions were received
from the Zambian Revenue Authority to date. Capital Drilling
(Zambia) is currently dormant with no drilling revenue since
November 2014. An amount of $1.6 million has been raised relating
to certain areas of the claim, however the directors are of the
opinion that a significant portion of the tax claim by the Zambia
Revenue Authority is without merit.
Tanzania tax:
Capital Drilling (T) Ltd is party to a payroll tax claim made
by the Tanzanian Revenue Authority (TRA) for the tax years 2009-2015.
During the financial year ended 31 December 2016, the company
received an immediate demand notice from the (TRA) for Tanzanian
Shillings of 18,598,361,197 (US$ 8,374,660), inclusive of penalties
and interest. Management objected to the assessment raised by
the TRA and requested the calculations of the notice. In order
to object, according to Tanzanian Tax Law Sections 51(1) and
(5) of the TAA 2015, a taxpayer is required to pay the tax amount
not in dispute or one third of the assessed tax whichever is
greater. It is prudent to note that the Finance Act in 2016 added
a further subsection (9) in Section 51 regarding tax objections
and assessments. The said amendment provides: "Where the taxpayer
fails to pay the amount stated under subsection (5) within the
time provided therein, the assessed tax decision shall be confirmed
as final tax assessment in terms of section 15(1)(a) of the Tax
Revenue Appeals Act." In accordance with the above-mentioned
legislation, management reached an agreement with the TRA to
pay Tanzanian Shillings of 1,500,000,000 ($0.7 million) in lieu
of the one third of the assessed value. This amount was fully
provided for in the 2016 Annual Financial Statements. In June
2017 the TRA provided their workings to Capital Drilling (T)
Ltd. Capital Drilling (T) Ltd identified differences with the
TRA on both the specific merits and methodology used to determine
the value. Capital Drilling engaged PWC Tanzania and on 30 April
2018 provided updated calculations for review. Feedback from
the TRA is pending. Capital Drilling (T) Ltd has maintained an
engaging relationship with the TRA to find closure and resolution
to this matter. In order to continue the discussions and negotiations
with the TRA, Capital Drilling (T) Ltd has, at the request of
the TRA, paid an additional amount of Tanzanian Shillings of
2,600,000,000 ($1.14 million) as at 30 June 2018. This is in
line with the aforementioned Tanzanian Tax Law.
The TRA also raised a Withholding Tax liability of TZS 2,244,907,829
(US$ 1,024,268) inclusive of interest and penalties. The TRA
considered assets purchased by Capital Drilling (T) Ltd as leased.
The TRA interpreted these assets as a rental agreement rather
than permanent acquisition of these assets, which results in
no Withholding Tax liability. Management lodged an objection
on 14 November 2016 and paid an upfront payment of TZS 170,000,000
(US$ 77,564) in order to have the objection validated and acknowledged,
as is required per subsection (9) in Section 51 of the Income
Tax Act of Tanzania. Based on the above, management assessed
no further liability with regards to this assessment. As at 31
December 2017, this objection is still pending with the TRA and
no resolution has been reached as yet.
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
16. Events post the reporting date
Interim dividend declared:
The directors proposed that an interim dividend of 0.6 cent per
share be paid to shareholders on 5 October 2018. 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 7 September
2018. The total estimated interim dividend to be paid is $0.8
million (2017: $0.7 million). The payment of this dividend will
have no tax consequences for the Group.
17. Going concern
The Group has set specific objectives and also has policies and
processes in place to manage its capital and its financial, credit
risk and liquidity risks.
The Group has borrowings and debt facilities which, together
with its clients' receipts, fund its day to day working capital
requirements. Volatile economic conditions may create uncertainty
particularly over (a) the level of demand for the Group's services;
(b) exchange rate fluctuations against the US Dollar and thus
the consequence for the cost of the Group's direct costs; and
(c) the availability of bank financing in the foreseeable future.
The Group's forecasts and projections, taking into account potential
changes in its performance, show that the Group should be able
to operate within the level of its capital structure. The Group
continuously discusses its future borrowing and / or refinancing
needs with its bankers and no matters have been drawn to its
attention to suggest that these needs may not be met on acceptable
terms.
The directors confirm that the Group has adequate resources to
continue in operational existence for the foreseeable future.
The Group continues to adopt the going concern basis of accounting
in preparing the interim financial statements.
18. Financial instruments
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
1: markets for identical
assets or liabilities;
-- Level inputs other than quoted prices included
2: within level
1 that are observable for the asset or
liability, either
directly (that is, as prices) or
indirectly (that is,
derived from prices); and
-- Level inputs for the asset or liability that are
3: not based
on observable market data (that is,
unobservable inputs).
CAPITAL DRILLING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2018
18. Financial instruments (continued)
Six months ended
30 June 2018 30 June 2017
------------- -------------
$ $
FVTOCI investments carried at fair
value
Level 1 - Listed shares 1,107,132 1,124,419
Level 3 shares 1,328,632 798,104
Fair Value investment through profit
and loss
Options - Level
2 - 281,904
------------- -------------
2,435,764 2,204,427
============= =============
The Group's FVTOCI financial assets are listed equity securities
in the mining industry and measured at fair value at the end
of each reporting period. The FVTOCI investments are designated
as level 1 in the fair value hierarchy. Their fair value is determined
using quote bid prices in an active market. The Group's held-for-trading
financial assets are options and warrants to acquire shares in
listed equity securities that are not traded in an active market.
The held-for-trading financial assets are designated as level
2 in the fair value hierarchy. Their fair value is determined
using a binominal tree model valuation technique based on observable
market data that includes the value of the underlying security,
the exercise price, volatility and risk-free rate of return.
The fair values of financial instruments that are not traded
in an active market are determined using standard valuation techniques.
These valuation techniques maximise the use of observable market
data where available and rely as little as possible on Group
specific estimates. The directors consider that the carrying
value amounts of financial assets and financial liabilities recorded
at amortised cost in the consolidated financial statements are
approximately equal to their fair values. The fair values disclosed
for the financial assets and financial liabilities are classified
in level 3 of the fair value hierarchy have been assessed to
approximate their carrying amounts based on a discounted cash
flow assessment.
CAPITAL DRILLING LIMITEDSTATEMENT OF DIRECTORS' RESPONSIBILITY
For the six months ended 30 June 2018
The directors are responsible for the maintenance of adequate accounting
records and the preparation and integrity of the condensed consolidated
interim financial statements and related information. The auditors
are responsible for expressing a review conclusion on the condensed
consolidated interim financial information based on their review.
The directors are also responsible for the Group's systems of internal
financial control. These are designed to provide reasonable, but
not absolute, assurance as to the reliability of the financial statements,
and to adequately safeguard, verify and maintain accountability for
the Group's assets, and to prevent and detect misstatement and loss.
Nothing has come to the attention of the directors to indicate that
any material breakdown in the functioning of these controls, procedures
and systems has occurred during the six months under review.
We confirm that to the best of our knowledge:
a) the condensed set of consolidated interim financial statements,
which has been prepared in accordance with International Accounting
Standard 34, Interim Financial Reporting, as issued by the
International Accounting Standards Boards gives a true and
fair view of the assets, liabilities, financial position and
profit or loss of the Group as required by DTR4.2.4R;
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR4.2.8; and
c) there has been no significant individual related party transactions
during the first six months of the financial year and nor
have there been any significant changes in the Group's related
party relationships from those reported in the Group's annual
financial statement for the year ended 31 December 2017.
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 13 August 2018.
ON BEHALF OF THE DIRECTORS
Jamie Boyton
Chairman of the Board of
Directors
Brian Rudd
Executive Director
CAPITAL DRILLING LIMITED
Principal Risks and Uncertainties
The Group operates in environments that pose various risks and uncertainties. Aside from the generic risks that face all businesses, the Group's business, financial condition or results of operations could be materially and adversely affected by any of the risks described below.
These risks should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties nor are they listed in order of magnitude or probability. Additional risks and uncertainties that are not presently known to the Directors, or which they currently deem immaterial, may also have an adverse effect on the Group's operating results, financial condition and prospects.
The principal risks associated with the business are:
Area Description Mitigation
------------------ --------------------------------------- -------------------------------------
Fluctuation The Group is highly dependent The Group is seeking to balance
in levels on the levels of mineral exploration, these risks by building a
of mining development and production portfolio of long term drilling
activity activity within the markets contracts and expanding into
in which it operates. A reduction new geographic areas and the
in exploration, development implementation of its Lean
and production activities, Operating Model.
or in the budgeted expenditure
of mining and mineral exploration
companies, will cause a decline
in the demand for drilling
rigs and drilling services,
as was evident in the 2014
and 2015 financial years.
Reliance The Group's revenue is reliant The Group has entered into
on key customers on a small number of key customers. long term contracts with its
A loss of a key customer, key customers for periods
or a significant reduction between two to five years.
in the demand for drilling Contract renewal negotiations
provided to a key customer are initiated well in advance
will have a significant adverse of expiry of contracts to
effect on the Group's revenues. ensure contract renewals are
concluded without interruption
to drilling services.
The Group has and continues
to monitor projects closely
and invest a significant amount
of time into client relationship
and service level monitoring
at all levels of the business.
A key part of this process
is the quarterly project steering
committee meetings with key
client stakeholders that provide
a forum for monitoring and
reporting on project performance
and performance indicators,
contractual issues, pricing
and renewal.
Operating Operations are subject to The Executive Chairman, Executive
risks various risks associated with Leadership Team and managers
drilling including, in the provide leadership to projects
case of employees, personal on the management of these
injury, malaria and loss of risks and actively engage
life and, in the Group's case, with all levels of employees.
damage and destruction to The Group have implemented
property and equipment, release and continue to monitor and
of hazardous substances in update a range of health and
to the environment and interruption safety policies and procedures
or suspension of drill site including equipment standards
operations due to unsafe drill and standard work procedures.
operations. The occurrence Employees are provided with
of any of these events could training regarding risks associated
adversely impact the Group's with their employment, policies
business, financial condition, and standard work procedures.
results of operations and
prospects, lead to legal proceedings Health and Safety statistics
and damage the Group's reputation. and incident reports are monitored
In particular, clients are throughout our projects and
placing an increasing focus the various management structures
on occupational health and of the Group, including the
safety, and deterioration HSSE committee. Where necessary
in the Group's safety record policies and procedures are
may result in the loss of updated to reflect developments
key clients. and improvement needs.
The Group maintains adequate
insurance policies to provide
insurance cover against operating
risks.
Currency The Group receives the majority To minimise the Group's risk,
fluctuations of its revenues in US dollars. the Group tries to match the
However, some of the Group's currency of operating costs
costs are in other currencies with the currency of revenue.
in the jurisdictions in which Funds are pooled centrally
it operates. Foreign currency in the head office bank accounts
fluctuations and exchange to the maximum extent possible.
rate risks between the value The group have implemented
of the US dollar and the value procedures to allow for the
of other currencies may increase repatriation of funds to the
the cost of the Group's operations Group's Head Office bank accounts
and could adversely affect from jurisdictions where exchange
the financial results. As control regulations are in
a result, the Group is exposed effect.
to currency fluctuations and
exchange rate risks.
Political, The Group operates in a number The Group monitors political
economic of jurisdictions where the and regulatory developments
and legislative political, economic and legal in the jurisdictions it operates
risk systems are less predictable in through a number of service
than in countries with more providers and advisors.
developed industrial structures.
Significant changes in the Senior management regularly
political, economic or legal reports to the Board on any
landscape in such countries political or regulatory changes
may have a material effect in the jurisdictions we operate
on the Group's operations in.
in those countries. Potential Where significant events occur,
impacts include restrictions we work closely with our clients,
on the export of currency, advisors and other stakeholders
expropriation of assets, imposition to address these events.
of royalties or other taxes
targeted at mining companies, The Group has also increased
and requirements for local their international tax and
ownership. Political instability compliance capabilities, by
can also result in civil unrest, the appointment of a Head
industrial action and nullification of Tax and Compliance to ensure
of existing agreements, mining and monitor compliance with
permits or leases. Any of local legislation.
these may adversely affect
the Group's operations or
results of those operations.
The Group has invested in
a number of countries thereby
diversifying exposure to any
single jurisdiction.
CAPITAL DRILLING LIMITED
APPIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
The following terms and alternative performance measures are used
in the half year results release for the six months ended 30 June
2018.
ARPOR Average revenue per operating rig
Adjusted EBITDA Earnings before interest, taxes, depreciation,
amortisation and additional specific
items
NET CASH (DEBT) Cash and cash equivalents less short
term and long-term debt
NET ASSET VALUE PER SHARE Total equity / Weighted average number
(CENTS) of ordinary shares
Reconciliation of alternative performance measures to the financial
statements:
Six months ended
30 June 30 June
2017 2017
----------------------- ------------
$ $
ARPOR can be reconciled from the financial statements as per the
below:
Revenue per financial statements ($) 54,476,675 62,332,410
Non-drilling revenue ($) (2,746,461) (2,654,410)
----------------------- ------------
Revenue used in the calculation of
ARPOR ($) 51,730,214 59,678,000
----------------------- ------------
Monthly Average active operating Rigs 43 52
Monthly Average operating Rigs 94 93
----------------------- ------------
ARPOR (rounded to nearest $'000) 200,000 191,000
======================= ============
EBITDA can be reconciled from the condensed consolidated
interim financial statements as per the below:
Profit for the period 2,767,986 2,580,275
Depreciation 6,714,923 6,392,131
Taxation 2,208,150 1,945,364
Share of losses (income) from associate 246,441 (5,213)
Interest income (59,866) (137,264)
Finance charges 533,081 543,557
Fair value adjustment on financial assets
through profit and loss - Share Options 47,236 123,989
Realised (loss) on FVTOCI shares 49,225 183,495
----------------------- ------------
EBITDA 12,507,176 11,626,334
======================= ============
Six months ended
31 December
30 June 2018 2017
---------------------------- ----------------------------
$ $
Net cash (debt) can be reconciled from the condensed consolidated
interim financial statements as per the below:
Cash and cash equivalents 15,380,570 16,911,383
Long-term liabilities (12,000,000) (12,000,000)
Current portion of long-term
liabilities (32,363) (41,585)
---------------------------- ----------------------------
Net cash (debt) 3,348,207 4,869,798
============================ ============================
Net Asset Value per share (cents) can be calculated as per the below:
Total Equity 70,756,199 70,058,290
Weighted average number of ordinary
shares used in the calculation of
basic
earnings per share 135,525,192 135,076,227
---------------------------- ----------------------------
Net Asset Value per share (Cents) 52.21 51.87
---------------------------- ----------------------------
Adjusted EBITDA
Adjusted EBITDA represents profit or loss for the year before interest,
income taxes, depreciation and amortisation adjusted for share of
income (loss) from associates, interest income, finance charges,
fair value adjustments on financial assets at fair value through
profit and loss and realised gain (loss) on FVTOCI shares.
Adjusted 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 Adjusted 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
FVTOCI shares, which may significantly affect comparability of results
of operations between periods.
Adjusted 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 believe 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 believes 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 differing purposes and are often calculated in ways that reflect the circumstances of those companies. Accordingly, caution is required in 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 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR MMGMRKKDGRZM
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