TIDMCAPD
RNS Number : 4257J
Capital Limited
16 August 2023
Capital Limited
("Capital", the "Group" or the "Company")
H1 2023 Results
Capital (LSE: CAPD), a leading mining services company, today
provides its trading update for the half year period 1 January to
30 June 2023 (the "Period").
H1 2023 H1 2022 vs
H1 2022
============================================================ ============ ============ =============
Revenue ($ m) 154.3 138.1 11.7%
============================================================ ============ ============ =============
EBITDA (adjusted for IFRS 16 leases)(1,2) ($ m) 43.9 39.9 10.0%
------------------------------------------------------------ ------------ ------------ -------------
Operating profit ($ m) 28.4 28.0 1.4%
============================================================ ============ ============ =============
Investment gain / (loss) ($ m) 0.8 (10.3) -107.8%
------------------------------------------------------------ ------------ ------------ -------------
Net Profit After Tax (NPAT) ($ m) 17.6 9.7 81.4%
============================================================ ============ ============ =============
NPAT (Adjusted for investment gain/(loss) ($ m) 16.8 19.9 -15.6%
------------------------------------------------------------ ------------ ------------ -------------
Earnings per share
------------------------------------------------------------ ------------ ------------ -------------
Basic EPS (cents) 8.9 4.7 89.4%
============================================================ ============ ============ =============
Basic EPS (Adjusted for investment gain/(loss) (cents) 8.8 10.5 -16.2%
------------------------------------------------------------ ------------ ------------ -------------
Interim Dividend per Share (cents) 1.3 1.3 0.0%
------------------------------------------------------------ ------------ ------------ -------------
Cash from Operations (adjusted for IFRS 16 leases)(2) ($ m) 38.2 33.4 14.4%
------------------------------------------------------------ ------------ ------------ -------------
Capex(3) ($ m) (36.2) (22.6) 60.2%
============================================================ ============ ============ =============
Net Debt(1) ($ m) 66.5 36.4 82.7%
============================================================ ============ ============ =============
Investments ($ m) 42.1 47.3 -11.0%
------------------------------------------------------------ ------------ ------------ -------------
Margins and returns
------------------------------------------------------------ ------------ ------------ -------------
EBITDA Margin (adjusted for IFRS 16 leases)(1,2) 28.5% 28.9%
============================================================ ============ ============ =============
Operating profit margin 18.4% 20.3%
------------------------------------------------------------ ------------ ------------ -------------
NPAT Margin (Adjusted for investment gain/(loss) 10.9% 14.4%
============================================================ ============ ============ =============
*All amounts are in US dollars unless otherwise
stated
(1) EBITDA, and Net Debt 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. Alternative performance measures as detailed
on pages 33 - 34 of this results announcement
(2) Adjustment for the cash cost of the IFRS 16 lease which
amounts to $3.5 million in H1 2023 and $1.5 million in H1
2022 (see page 14).
(3) Capital expenditure (Capex) consists of purchase of
PPE for cash, prepayments for PPE and assets purchased during
the year and financed by OEM.
Financial Highlights
-- H1 2023 revenue of $154.3 million, up 11.7% on H1 2022 ($138.1 million);
-- Full year revenue guidance remains $320 - $340 million.
-- H1 2023 EBITDA (adjusted for IFRS16 leases) of $43.9 million,
up 10.0% on H1 2022 ($39.9 million);
-- EBITDA Margin (adjusted for IFRS16 leases) of 28.5% (H1 2022: 28.9%);
-- Net gains from equity investments of $0.8 million
(unrealised) in H1 2023. Alongside cash investments carried out
over the period, the value of the group strategic investments
increased to $42.1 million from $38.7 million at 31 December 2022
(30 June 2022: $47.3 million); Our valuation for our stake in
Allied Gold Corp Limited ("Allied") remains broadly in line with
our valuation from 31 December 2022, and does not yet take into
account the company's public listing plans.
-- Net Profit After Tax (NPAT) (adjusted for investment gain/
loss) of $16.8 million, a decrease of 15.6% on H1 2022 ($19.9
million);
-- Capex of $36.2 million (H1 2022: $22.6 million) including
prepayments and assets financed by OEM;
-- Cash generated from operations (adjusted for IFRS 16 leases)
of $38.2 million (H1 2022: $33.4 million);
-- Net debt of $66.5 million increased 82.7% on H1 2022 ($36.4
million) predominantly in order to fund our second material mining
services contract with Ivindo Iron SA without returning to equity
markets for funding (as required for our initial mining contract at
Sukari). Investments remained significant at $42.1 million at 30
June 2023. Adjusted Net debt (including investments) of $24.4
million;
-- Declared an interim dividend of 1.3 cents per share, to be
paid on 3 October 2023 to shareholders registered on 1 September
2023.
Operational & Strategic Review
-- Safety performance remains world-class with H1 2023 Total
Recordable Injury Frequency Rate ("TRIFR") of 1.03 per 1,000,000
hours worked (FY 2022: 1.2).
-- Capital Drilling:
-- H1 2023 average rig utilisation was 75%, a decrease of 9.6%
on H1 2022 (83%). The decrease in part driven by the temporary
shutdown of rigs at Perseus' Meyas Gold Project in Sudan following
the escalation of conflict in the country;
-- H1 2023 average monthly revenue per operating rig ("ARPOR")
remained strong at US$188,000, an 8.7% increase on H1 2022
($173,000).
-- Rig count increased from 123 to 125 through Q2 2023, net of depletion;
-- Recent Q2 2023 contracts wins (previously announced):
-- A reverse circulation exploration drilling contract with
Centamin, at the Nugrus Block in the Egyptian Eastern Desert.
-- Capital Mining continues to perform strongly securing second material contract win:
-- Capital secured a major earthmoving and crushing services
contract with Ivindo Iron SA with a term of up to 5 years. The
site, located in Gabon's northeast, is one of the world's largest
undeveloped, high-grade hematite iron ore deposits. Operations are
now already underway and once fully operational, the contract is
expected to generate an annual revenue of approximately $30
million.
-- Sukari Gold Mine (Egypt) waste mining contract continues to
perform well and remained LTI free through the period; and
-- Capital remains active in the tendering pipeline.
-- MSALABS: Growth outlook remains strong with expanded relationship with Chrysos :
-- Through the successful rollout of Chrysos' PhotonAssay(TM)
units, MSALABS now has the largest international network of Chrysos
PhotonAssay(TM) technology:
-- MSALABS now has Chrysos PhotonAssay(TM) units deployed or
under construction across Africa and Canada;
-- The expanded relationship with Chrysos will see MSALABS
deploy 21 units by 2025.
-- While the rollout of Chrysos PhotonAssay(TM) technology will
account for the majority of the growth in revenues, we continue to
expand our traditional geochemical business in tandem;
-- This year MSALABS has commissioned a mine site laboratory at
Shanta Gold's Singida mine, Tanzania, a laboratory in Bougouni,
Mali and currently has a laboratory in Marsa Alam, Egypt under
construction; and
-- MSALABS has completed a $10 million equity raise to fund the
expansion of the business. Following this Capital's shareholding in
MSALABS has increased from 77.8% to 81.8%.
-- Capital Direct Investments (Capital DI):
-- The portfolio recorded investment gains (unrealised) of
US$0.8 million. The total value of investments (listed and
unlisted) was US$42.1 million as of 30 June 2023, versus US$38.7
million at the end of 2022 ($47.3 million at 30 June 2022);
-- Our valuation for our stake in Allied Gold Corp Limited
("Allied") remains broadly in line with our valuation from 31
December 2022, and does not yet take into account the company's
public listing plans.
Outlook
-- Revenue guidance for 2023 remains $320 to $340 million;
-- EBITDA margins are expected to remain in a range of 25-30% going forward;
-- Capital expenditure guidance for 2023 is approximately
$65-$75 million. This increased $15 million from guidance at the
FY22 results to include additional equipment for the new mining and
crushing services contract at Ivindo Iron announced June 2023;
-- Capital Drilling anticipates revenue growth in H2 2023,
driven by the ramp up of two high quality contracts at Reko Diq,
Pakistan, and Ivindo, Gabon together with a potential restart of
operations at the Meyas Gold Project, Sudan;
-- Capital Mining will also see revenue growth through H2 2023
driven by the mining services and crushing contract at Ivindo,
Gabon, which has now commenced. Additionally, we expect the Sukari
earth moving contract to sustain steady performance throughout the
rest of the year;
-- MSALABS will continue its multi-year laboratory roll out, particularly focused on Chrysos PhotonAssay(TM) units, with revenue guidance for MSALABS remaining $40-50 million for 2023, another significant increase YoY (FY 2022: $27.3 million); and
-- Tendering activity remains robust across the Group with a
number of opportunities progressing.
Commenting on the interim results, Peter Stokes, Chief
Executive, said:
"We are delighted with the performance delivered across all
business divisions of the Group. Through the half we were
particularly pleased to announce our second significant mining
services contract, fortifying our position as a full-service
provider to the mining industry. This strategic move, combined with
our efforts in strengthening our drilling business and enhancing
MSALABS, sets us on a trajectory of continued growth and success in
the years to come.
In drilling we began our strategic steps, in the back end of
2022, with contract selection further towards long-term
partnerships with blue-chip clients, to maintain stability and
sustainability for our business through the cycles. It was
therefore pleasing to add world-class gold and non-gold drilling
contracts in the first half of this year, namely Ivindo in Gabon
and Barrick's Reko Diq copper-gold project in Pakistan, both of
which show tremendous growth potential.
Similarly, our mining business has also achieved a significant
milestone with the addition of a major mining services and crushing
contract with Ivindo in Gabon. This showcases both our trusted
reputation to offer a premium service to a world class mining
company and also our continued strategy to diversify our revenue
stream through an expanded service offering.
MSALABS continues to forge ahead on an impressive multi-year
growth trajectory, fuelled by the successful rollout of
revolutionary Chrysos PhotonAssay(TM) units, in conjunction with
its traditional geochemistry business. MSALABS proudly now operates
the largest international network of PhotonAssay(TM) technology,
extending its reach across Africa and Canada and our commitment to
deploying 21 Chrysos PhotonAssay(TM) units by 2025 remains
steadfast, driving revenues for the business in excess of $80
million. This remarkable trajectory is a testament to our team's
relentless dedication and strategic vision. Furthermore, the
successful equity raise in H1 2023 has provided a robust foundation
as we continue to expand our global footprint.
Despite temporary operational disruption through the period,
namely the Meyas Sand Gold Project, Sudan, the underlying demand
from our customers continues to remain strong and we remain
confident in our revenue guidance for 2023 of $320-$340 million. We
remain active in tendering across the business, with our capital
allocation strategy biased towards returns and not a singular
business division. Given the strength in the business, we have now
also announced an interim dividend of 1.3 cents per share, a
testament to our commitment to creating value for our shareholders
and our confidence in the bright future ahead for our company."
Capital Limited will be hosting a live webcast presentation at
09:00 BST on Wednesday 16 August 2023, where questions can be
submitted through the platform.
The webcast presentation link:
https://www.lsegissuerservices.com/spark/CapitalDrillingLtd/events/434c93f8-9f1d-4bae-9cab-368c13379ca3
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
Peter Stokes, Chief Executive Officer investor@capdrill.com
Rick Robson, 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
Buchanan +44 20 7466 5000
Bobby Morse capital@buchanan.uk.com
George Pope
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. The Company's services include: exploration, delineation
and production drilling; load and haul services; maintenance; and
laboratory services. The Group's corporate headquarters are in the
United Kingdom and it has established operations in Côte d'Ivoire,
Canada, Democratic Republic of Congo, Egypt, Gabon, Ghana, Guinea,
Kenya, Mali, Mauritania, Nigeria, Pakistan, Saudi Arabia, Sudan and
Tanzania.
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Unaudited
Six months ended
Notes 30 June 2023 30 June 2022
-------- -------------- ------------------
US$ US$
Revenue 3 154,270,076 138,128,602
Cost of sales (83,315,580) (77,010,453)
-------------- ------------------
Gross profit 70,954,496 61,118,149
Administration expenses (23,565,402) (19,738,178)
Depreciation, amortisation, and
impairments (19,022,777) (13,417,448)
-------------- ------------------
Operating profit 28,366,317 27,962,523
Interest income 17,441 112,808
Finance charges (5,814,411) (2,670,575)
Fair value (loss)/gain on investments
at fair value 16 843,457 (10,265,388)
-------------- ------------------
Profit before taxation 23,412,804 15,139,368
Taxation 4 (5,810,234) (5,456,706)
-------------- ------------------
Profit and total comprehensive
income for the period 17,602,570 9,682,662
============== ==================
Profit attributable to:
Owners of the parent 16,942,755 8,849,651
Non-controlling interest 10 659,815 833,011
-------------- ------------------
17,602,570 9,682,662
============== ==================
Earnings per share:
Basic (cents per share) 5 8.9 4.7
============== ==================
Diluted (cents per share) 5 8.5 4.5
============== ==================
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Unaudited Audited
Notes 30 June 2023 31 December
2022
-------- ------------- ------------
ASSETS US$ US$
Non-current assets
Property, plant and equipment 7 195,445,478 172,658,108
Right of use assets 8 24,598,696 16,652,318
Goodwill 1,296,387 1,296,387
Intangible assets 2,342,107 1,916,190
Other receivables 6,460,000 6,460,000
------------- ------------
Total non-current assets 230,142,668 198,983,003
------------- ------------
Current assets
Inventories 63,452,720 58,694,979
Trade and other receivables 44,795,858 41,541,867
Other receivables 25,114,873 20,073,008
Investments at fair value 16 42,073,556 38,727,041
Current tax receivable 109,033 399,683
Cash and cash equivalents 32,059,797 28,379,607
------------- ------------
Total current assets 207,605,837 187,816,185
------------- ------------
Total assets 437,748,505 386,799,188
============= ============
EQUITY AND LIABILITIES
Equity
Share capital 9 19,370 19,287
Share premium 9 62,390,217 62,390,217
Treasury shares - (2,474,964)
Equity-settled employee benefits
reserve 4,307,240 4,469,402
Other reserve 190,056 190,056
Retained income 178,324,115 168,725,546
------------- ------------
Equity attributable to owners of
the parent 245,230,998 233,319,544
Non-controlling interest 10 8,103,155 5,572,540
------------- ------------
Total equity 253,334,153 238,892,084
------------- ------------
Non-current liabilities
Loans and borrowings 11 77,568,244 56,864,811
Lease liabilities 17,890,623 12,127,384
Deferred tax 34,196 34,196
Total non-current liabilities 95,493,063 69,026,391
------------- ------------
Current liabilities
Trade and other payables 54,948,972 44,937,680
Provisions 791,513 2,636,640
Current tax payable 7,728,400 9,130,118
Loans and borrowings 11 19,231,504 18,036,811
Lease liabilities 6,220,900 4,139,464
------------- ------------
Total current liabilities 88,921,289 78,880,713
------------- ------------
Total equity and liabilities 437,748,505 386,799,188
============= ============
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 30 June 2023
Equity-
settled Total
Treasury employee attributable Non-controlling
Share Share share Total benefits Other Total Retained to equity interest Total
cap premium reserve share reserve reserve reserves earnings holders of equity
ital capital the Group
------ ---------- ----------- ----------- -------- ----------- ------------- ---------------- -----------
US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$
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 - - - - - - - (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
====== ========== =========== =========== =========== ======== =========== =========== ============= ================ ===========
Balance at 31
December
2022 - Audited 19,287 62,390,217 (2,474,964) 59,934,540 4,469,402 190,056 4,459,458 168,725,546 233,319,544 5,572,540 238,892,084
Total profit and
comprehensive
income for the
period - - - - - - - 16,942,755 16,942,755 659,815 17,602,570
------ ---------- ----------- ---------- ----------- ------- ----------- ----------- ----------- --------- -----------
Contributions by
and
distributions
to owners
Share options
exercised 83 - 2,474,964 2,475,047 (2,195,717) - (2,195,717) (279,330) - - -
Recognition of
share-based
payments - - - - 2,033,555 - 2,033,555 - 2,033,555 - 2,033,555
Adjustment
arising
from change in
non-controlling
interest - - - - - - - (1,963,846) (1,963,846) 1,889,357 (74,489)
Dividends paid - - - - - - - (5,101,010) (5,101,010) (18,557) (5,119,567)
------ ---------- ----------- ---------- ----------- ------- ----------- ----------- ----------- --------- -----------
Total
transactions
with owners 83 - 2,474,964 2,475,047 (162,162) - (162,162) (7,344,186) (5,031,301) 1,870,800 (3,160,501)
------ ---------- ----------- ---------- ----------- ------- ----------- ----------- ----------- --------- -----------
Balance at 30
June
2023
(Unaudited) 19,370 62,390,217 - 62,409,587 4,307,240 190,056 4,497,296 178,324,115 245,230,998 8,103,155 253,334,153
====== ========== =========== ========== =========== ======= =========== =========== =========== ========= ===========
CAPITAL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023
Six months ended
Unaudited Unaudited
30 June 30 June
Notes 2023 2022
------ -------------- --------------
US$ US$
Cash flow from operating activities
Cash generated from operations 12 41,652,161 34,932,913
Interest income received 17,441 112,808
Interest paid - other (4,031,986) (2,432,005)
Interest paid - leases 8 (857,267) -
Tax paid (6,921,303) (6,819,720)
-------------- --------------
Net cash from operating activities 29,859,046 25,793,996
-------------- --------------
Cash flow from investing activities
Purchase of property, plant and
equipment 7 (25,225,550) (10,168,688)
Proceeds from sale of property, 44,922 -
plant and equipment
Purchase of intangible assets (425,917) (391,105)
Purchase of investments at fair
value 16 (4,859,347) (5,891,493)
Proceeds on sale of investments
at fair value 16 2,356,289 8,499,654
Cash paid in advance for property,
plant and equipment (4,341,021) (6,389,092)
Net cash from investing activities (32,450,624) (14,340,724)
-------------- --------------
Cash flow from financing activities
Repayment of loans 11 (9,209,462) (9,295,897)
Proceeds from new loans 11 25,000,000 -
Arrangement fees paid - new financing (1,430,568) -
Dividend paid 6 (5,119,567) (4,607,599)
Repayment of principal portion of
leases 8 (2,634,372) (1,483,881)
Advance payments on lease arrangements (605,802) (230,705)
Repurchase of own shares - (2,462,651)
Proceeds from MSA rights issue - 1,193,302 -
non-controlling interest
Purchase of shares from minority (1,267,792) -
shareholders
-------------- --------------
Net cash from financing activities 5,925,739 (18,080,733)
-------------- --------------
Net increase/ (decrease) in cash
and cash equivalents 3,334,161 (6,627,461)
Cash and cash equivalents at the
beginning of the period 28,379,607 30,577,249
Effect of exchange rate movement
on cash balances 346,029 (1,214,380)
-------------- --------------
Cash and cash equivalents at the
end of the period 32,059,797 22,735,408
============== ==============
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2023
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 2023 (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 2022 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 2022.
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 2023, the Group had a robust balance sheet with a
low debt gearing with equity of US$253.3 million and loans and
borrowings of US$96.8 million. Cash as at 30 June 2023 was US$32.1
million, with net debt of US$66.5 million. Investments in listed
entities at the end of June 2023 amounted to US$42.1 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 2023 with increased revenue of 12% compared
to H1 2022.
Commercially, the Group continues to secure and extend long term
mining contracts with high quality customers, including the latest
significant win for mining services and crushing contract in Gabon.
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 45% 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 2023
2. Operations in the interim period
Capital Limited (the "Company") is incorporated in Bermuda. The
Company and its subsidiaries (the "Group") provide drilling services,
mining (load and haul), mineral assaying and surveying services.
The Group also has a portfolio of investments in listed and unlisted
exploration and mining companies.
During the period ended 30 June 2023, the Group provided drilling
services in Côte d'Ivoire, Guinea, Egypt, Mali, Saudi Arabia,
Sudan, Gabon and Tanzania. Mining services are provided in Egypt
and mineral analysis services are provided in Canada, Guyana,
Mauritania, Nigeria, Côte d'Ivoire, Mali, Tanzania, Kenya
and Democratic Republic of the Congo. The Group's administrative
offices are located in the United Kingdom and Mauritius.
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 with the exception of residual values for drilling
rigs and associated equipment. The residual value estimates have
been revised down to 2.5% and 0% respectively.
Six months ended
Revenue 30 June 30 June
3. 2023 2022
------------- -------------------
US$ US$
Revenue from the rendering
of services comprises:
Drilling and associated revenue 108,046,633 100,230,452
Revenue from Mining 27,152,535 23,678,570
MSALABS revenue 17,104,748 11,814,696
Revenue from Surveying 1,966,160 2,404,884
154,270,076 138,128,602
================= ===================
4. Taxation
Capital Limited is incorporated in Bermuda. No taxation is payable
on the results of the Bermuda business. Taxation for other jurisdictions
is calculated in terms of the legislation and rates prevailing
in the respective jurisdictions.
The Group operates in multiple jurisdictions with complex legal
and tax regulatory environments. In 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 2023
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 16,942,755 8,849,651
============ =============
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 191,185,152 189,451,637
============ =============
Basic earnings per share (cents) 8.9 4.7
============ =============
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. 16,942,755 8,849,651
Weighted average number of ordinary shares
used in the calculation of basic earnings
per share 191,185,152 189,451,637
* Dilutive share options (#) 8,780,924 6,847,322
Weighted average number of ordinary shares
used in the calculation of diluted earnings
per share 199,966,075 196,298,959
============ ====================
Diluted earnings per share (cents) 8.5 4.5
============ ====================
(#) For the purposes of calculating diluted earnings per share,
no share options (2022: Nil) 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 2023, a dividend of 2.6 cents
per ordinary share was declared on 16 March 2023, totalling US$
5,101,010 (six months ended 30 June 2022: 2.4 cents per ordinary
share, totalling US$4,607,599) and paid on 9 May 2023.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)
For the six months ended 30 June 2023
7. Property, plant and equipment
Cost Associated
Drilling Camp and
Heavy & mining Vehicles associated Computer Leasehold
Drilling mining equipment and trucks equipment software improvements Total
rigs equipment
At 1 January
2022 124,251,706 59,224,772 23,691,159 33,594,212 13,877,137 38,361 1,653,952 256,331,299
Additions 21,873,207 12,309,225 12,133,884 5,617,520 4,772,198 - - 56,706,034
Disposal (6,755,226) (89,983) (4,426,158) (1,425,910) (479,718) - - (13,176,995)
At 31
December
2022 139,369,687 71,444,014 31,398,885 37,785,822 18,169,617 38,361 1,653,952 299,860,338
Additions 13,806,782 7,802,362 554,006 3,929,134 13,316,261 13,601 - 39,422,146
Disposal (9,449,423) (131,442) (619,079) (1,003,873) (466,723) - - (11,670,540)
------------- ------------ ------------ ------------- ------------ ---------- -------------- -------------
At 30 June
2023 143,727,046 79,114,934 31,333,812 40,711,083 31,019,155 51,962 1,653,952 327,611,944
------------- ------------ ------------ ------------- ------------ ---------- -------------- -------------
Accumulated
Depreciation
At 1 January
2022 75,824,884 7,980,219 7,953,664 13,761,124 7,106,489 9,221 97,299 112,732,900
Depreciation 10,373,050 8,876,658 3,134,579 3,180,506 1,389,635 4,178 - 26,958,606
Disposal (6,409,664) (81,176) (4,345,182) (1,245,572) (407,682) - - (12,489,276)
------------- ------------ ------------ ------------- ------------ ---------- -------------- -------------
At 31
December
2022 79,788,270 16,775,701 6,743,061 15,696,058 8,088,442 13,399 97,299 127,202,230
Depreciation 5,317,342 5,606,564 1,482,341 2,389,168 1,096,939 3,222 - 15,895,576
Disposal (8,887,206) (151,888) (560,822) (908,875) (422,549) - - (10,931,340)
------------- ------------ ------------ ------------- ------------ ---------- -------------- -------------
At 30 June
2023 76,218,406 22,230,377 (7,664,580) 17,176,351 8,762,832 16,621 97,299 132,166,466
------------- ------------ ------------ ------------- ------------ ---------- -------------- -------------
Carrying
amount at:
31 December
2022 59,581,417 54,668,313 24,655,824 22,089,764 10,081,175 24,962 1,556,653 172,658,108
============= ============ ============ ============= ============ ========== ============== =============
30 June 2023 67,508,640 56,884,557 23,669,232 23,534,732 22,256,323 35,341 1,556,653 195,445,478
============= ============ ============ ============= ============ ========== ============== =============
CAPITAL LIMITED
Notes to the Condensed Consolidated Interim Financial Statements
(cont'd)
For the six months ended 30 June 2023
7. Property, plant and equipment (continued)
Bank borrowings are secured on the Group's drilling and mining
fleet - see Note 11.
The Group's property plant and equipment includes assets not yet
commissioned totalling US$45.5 million (HY 2022: US$22.4 million).
The assets will be depreciated once commissioned and available for
use.
During the six months ended 30 June 2023, the Group acquired
US$39.4 million worth of property, plant and equipment (HY 2022:
US$21.9 million). Out of the US$39.4 million additions, US$6.6
million (HY 2022: US$6.0 million) was acquired through supplier
credit agreements - see Note 11.
The Group disposed of property, plant and equipment with a net
carrying amount of US$0.7 million (HY 2022: US$0.2 million) during
the period. A loss of US$0.7 million (2022: US$0.2 million) was
incurred on the disposal of property, plant and equipment.
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible assets to determine whether there
is any indication that those assets may be impaired. As at 30 June
2023, there was no indication of impairment.
8. Leases (Group as lessee)
Details pertaining to leasing arrangements, where the Group is
lessee are presented below:
Land & Buildings Machinery Total
Right of use assets US$ US$ US$
At 1 January 2022 1,858,960 7,992,383 9,851,343
Additions 88,258 1,200,106 1,288,364
Depreciation (306,712) (1,070,309) (1,377,021)
---------------- ----------- ----------------
30 June 2022 1,640,506 8,122,180 9,762,686
At 31 December 2022 3,565,345 13,086,973 16,652,318
Additions 1,298,287 9,786,562 11,084,849
Depreciation (558,307) (2,580,164) (3,138,471)
---------------- ----------- ----------------
At 30 June 2023 4,305,325 20,293,371 24,598,696
================ =========== ================
Lease liabilities
At 1 January 2022 1,543,182 8,047,987 9,591,169
Additions 26,725 1,030,934 1,057,659
Interest expense 49,637 280,948 330,585
Lease payments (293,235) (1,190,646) (1,483,881)
---------------- ----------- ----------------
30 June 2022 1,326,309 8,169,223 9,495,532
At 31 December 2022 3,395,847 12,871,001 16,266,848
Additions 1,298,288 9,180,759 10,478,977
Interest expense 136,251 721,016 857,267
Lease payments (661,426) (2,830,213) (3,491,639)
---------------- ----------- ----------------
At 30 June 2023 4,168,960 19,942,563 24,111,523
================ =========== ================
The weighted average incremental borrowing rate applied to lease
liabilities during the period was 10% (2022: 7%).
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
As at
30 June 31 December
2023 2022
--------------------------- ---------------------------
US$ US$
Issued capital and share premium
9.
Authorised capital
2,000,000,000 (31 December 2022: 2,000,000,000)
ordinary shares of 0.01 cents (2022:
0.01 cents) each 200,000 200,000
=========================== ===========================
Issued and fully paid:
193,696,920 (31 December 2022: 192,864,738)
ordinary shares of 0.01 cents (31
December 2022: 0.01 cents) each 19,370 19,287
Share premium:
Balance at the beginning of the period 62,390,217 60,900,119
Issue of shares - 1,490,098
Balance at the end of the period 62,390,217 62,390,217
=========================== ===========================
Fully paid ordinary shares which have a par value of 0.01 cents,
carry one vote per share and carry rights to dividends.
Non-controlling interest
10.
Below is a summary of the movement in non-controlling interest
during the period:
CMS (Tanzania)
MSALABS Ltd IACA Limited Total
Ltd
US$ US$ US$ US$
Balance at 1 January
2023 2,688,022 2,891,202 (6,684) 5,572,540
Profit/ (loss) attributable
to NCI (722,620) 1,398,317 (15,883) 659,814
Change in ownership:
* Equity raise 365,044 - - 365,044
* Rights issue 1,828,579 - - 1,828,579
* Purchase of shares from NCI (486,271) - - (486,271)
* Other 182,006 - - 182,006
Dividends paid (18,557) - - (18,557)
---------- --------------- --------------- ----------
Balance at 30 June
2023 3,836,203 4,289,519 (22,567) 8,103,155
========== =============== =============== ==========
CMS (Tanzania)
MSALABS Ltd IACA Limited Total
Ltd
US$ US$ US$ US$
Balance at 1 January
2022 2,673,353 1,094,236 - 3,767,589
Profit/ (loss) attributable
to NCI 131,158 701,853 - 833,011
Balance at 30 June
2022 2,804,511 1,796,089 - 4,600,600
========== =============== =============== ==========
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
Loans and borrowings
11.
Loans and borrowings consist of:
(a) US$50 million revolving credit facility ("RCF") provided by
Standard Bank (Mauritius) Limited and Nedbank Limited
The Company entered into a revolving credit facility agreement
on 28 March 2023 as borrower together with Standard Bank (Mauritius)
Limited and Nedbank Limited (acting through its Nedbank Corporate
and Investment banking division) as lenders and arrangers, with
Nedbank acting as agent and security agent to borrow a revolving
credit facility for an aggregate amount of US$50 million with the
Company being able to exercise an accordion option to request an
increase of the facility under the terms and conditions of the
Facility Agreement. The interest rate on the RCF is the prevailing
three-month SOFR (payable in arrears) plus a margin of 5.5%, and
an annual commitment fee of 1.75% per annum is charged on any undrawn
balances. The amount utilised on the RCF is US$50 million as at
30 June 2023 (2022: US$25 million).
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
In addition, CAPD (Mauritius) Limited is also required to comply
with the Total Tangible Net Worth covenant.
Security for the revolving credit facility comprise various pledges
over the shares and claims of the Group's entities in Tanzania
together with a debenture over the rigs in Tanzania and the assignment
of material contracts and their collection accounts in each of
Egypt, Tanzania and Mali.
As at the reporting date and during the period under review, the
Group has complied with all covenants attached to the loan facilities.
(b) US$32.5 million term loan provided by Macquarie Bank Limited
(London Branch)
On 15 September 2022, the Group refinanced the 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
SOFR plus a margin of 6.5% per annum (payable quarterly in arrears).
The loan is secured over certain assets owned by the Group and
currently located in Egypt together with guarantees provided by
Capital Limited and Capital Drilling Egypt LLC. As at 30 June 2023,
the outstanding amount was US$24.9m (2022:US$ 31.8m).
During the year under review, the Group has complied with all covenants
attached to the term loan.
(c) Epiroc Financial Solutions AB credit agreements
The Group has a number of credit agreements with Epiroc, drawn
down against the purchase of rigs. The term of the agreements is
four years repayable in 46 monthly instalments. The rate of interest
on some of the agreements is three-month US LIBOR plus a margin
of 4.8%, with a fixed rate of interest of the remaining agreements
of 8.25%. As at 30 June 2023, the total drawn under these credit
agreements was US$15.9 m (2022: US$11.7 million).
No covenants are attached to this facility.
(d) US$8.5 million term loan facility with Sandvik Financial Services
AB (PUBL)
The Group has term loan facility agreement with Sandvik Financial
Services AB (PUBL). The facility is for the purchase of equipment
from Sandvik AB, available in not more than four tranches. Interest
is payable quarterly in arrears at 5.45% per annum on the drawn
amount. The facility is no longer available to drawn on and as
at 30 June 2023 the balance outstanding was US$5.0 million (2022:
US$5.9 million).
No covenants are attached to this facility.
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
As at
30 June 2023 31 December
2022
------------- -----------------
11. Loans and borrowings (cont'd) US$ US$
Bank loans 77,534,116 57,944,781
Supplier credit facilities 20,997,754 17,674,372
------------- -----------------
98,531,870 75,619,153
Less: Unamortised debt arrangement
costs (1,732,122) (717,531)
------------- -----------------
Total loans and borrowings 96,799,748 74,901,622
------------- -----------------
Current 19,231,504 18,036,811
Non-current 77,568,244 56,864,811
------------- -----------------
Total loans and borrowings 96,799,748 74,901,622
------------- -----------------
At the reporting date, the Group's loans and borrowings total
US$98.5 million (2022: US$75.6 million), offset by unamortised
debt costs of US$1.7 million (2022: US$ 0.7m). US$0.9 million
(2022:US$ 0.4m) of the debt costs have been classified as current
and US$0.8 million (2022:US$ 0.3m) as non-current.
Six months ended
12. Cash from operations 30 June 2023 30 June 2022
US$ US$
Profit before taxation 23,412,804 15,139,368
Adjusted for:
* Depreciation 15,895,577 12,040,427
* Loss on disposal of property, plant and equipment 694,279 229,091
* Fair value (gain)/ loss on investments at fair value (843,457) 10,265,388
* Share based payment expense 2,033,555 1,410,906
* Interest income (17,441) (112,808)
* Finance charges 5,814,411 2,670,575
* IFRS 16 depreciation on rights of use assets 3,138,471 1,377,021
* Unrealised foreign exchange (gain)/ loss on foreign
currency held (346,029) 1,214,380
* Other non-cash items 638,365 492,000
1,453,657 -
* Increase in expected credit loss provision
218,350 -
* Bad debt write offs
(721,491) -
* Release of provisions
Operating profit before working
capital changes 51,371,051 44,726,348
Adjustments for working capital
changes:
* Increase in inventory (4,899,280) (13,575,478)
* Increase in trade and other receivables (11,361,406) (2,278,530)
* Increase in trade and other payables 7,970,217 6,060,573
(1,428,421) -
* Decrease in provisions
-------------- -------------------------
41,652,161 34,932,913
---------------- -------------- -------------------------
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
Segmental analysis
13.
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 2023, 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
2023 World
------------ ------------ -------------
US$ US$ US$
External revenue 142,776,503 11,493,573 154,270,076
============ ============ =============
Segment profit (loss) 54,493,646 (9,724,702) 44,768,944
============ ============
Central administration costs and
depreciation, net of other income (16,365,127)
-------------
Profit from operations 28,403,817
Fair value gain on investments at
fair value 843,457
Interest income 17,441
Finance charges (5,851,911)
-------------
23,412,804
=============
The following customers from the Africa segment contributed 10%
or more to the Group's revenue:
30 June 30 June
2023 2022
-------------------- --------------------
% %
Customer
A 35% 38%
Customer
B 17% 14%
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
Segmental analysis (continued)
13.
For the six months ended 30 June Africa Rest Consolidated
2022 of World
------------ ------------- -------------
US$ US$ US$
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)
-------------
Profit before tax 15,139,368
=============
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 2023 31 December
2022
US$ US$
Segment assets:
Africa 555,078,022 506,043,094
Rest of world 73,712,078 59,642,347
--------------- --------------
Total segment assets 628,790,100 565,685,441
Head office companies 337,534,248 280,828,362
--------------- --------------
966,324,348 846,513,803
Eliminations * (528,575,843) (459,714,615)
--------------- --------------
Total assets 437,748,505 386,799,188
=============== ==============
Segment liabilities:
Africa 268,648,606 239,012,484
Rest of world 45,628,655 31,752,437
--------------- --------------
Total segment liabilities 314,277,261 270,764,921
Head office companies 364,979,087 315,694,862
--------------- --------------
679,256,348 586,459,783
Eliminations * (494,841,996) (438,552,679)
--------------- --------------
Total liabilities 184,414,352 147,907,104
=============== ==============
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
Segmental analysis (continued)
13.
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 2023 30 June
loss: 2022
-------------- ------------
US$ US$
Depreciation
Africa 17,580,762 12,638,195
Rest of world 1,188,018 585,085
-------------- ------------
Total segment depreciation 18,768,780 13,223,280
Head office companies 253,997 194,168
-------------- ------------
19,022,777 13,417,448
============== ============
Loss on disposal of property, plant and
equipment
Africa 687,095 225,384
Rest of world - 3,707
-------------- ------------
Total segment loss on disposal 687,095 229,091
Head office companies 7,184 -
-------------- ------------
694,279 229,091
============== ============
Six months ended
30 June 2023 30 June
2022
US$ US$
Impairment on Inventory
Africa
Stock Provision (688,935) 696,950
Stock Write Offs 316,372 11,198
------------- ------------
(372,563) 708,148
Rest of world
Stock Provision 4,779 -
Stock Write Offs 375 -
5,154 -
Total segment impairment (367,409) 708,148
Head office companies 825,712 -
------------- ------------
458,303 708,148
============= ============
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
Segmental analysis (continued)
13.
Segmental reporting summary by region:
Revenue Non-Current Assets
Six months ended As at
30 June 30 June 30 June 31 December
2023 2022 2023 2022
US$ US$ US$ US$
Middle East/North
Africa 57,518,681 57,627,212 78,683,463 77,014,240
South and East Africa 51,618,763 32,979,498 53,314,478 36,970,552
West Africa 37,255,842 39,661,597 60,567,809 56,262,245
Others 7,876,790 7,860,295 37,576,918 28,735,966
--------------- -------------- ------------- -------------
154,270,076 138,128,602 230,142,668 198,983,003
=============== ============== ============= =============
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.
14. Commitments As at
30 June 2023 30 June
2022
The Group has the following capital commitments US$ US$
at 30 June:
Committed capital expenditure 25,192,185 33,225,972
============== =============
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
15. Contingencies
As a result of the multiple jurisdictions in which the Group
operates, there are a number of ongoing tax
audits. In the opinion of Management, with the exception of
the matters identified below, none of these
ongoing audits represent a reasonable possibility of a material
settlement and as such, no contingent
liability disclosure is required.
Cote D'Ivoire tax
2018-19 tax audit
A tax audit of Capital Drilling Cote D'Ivoire (CDCI) for the
two years ended 31 December 2019 is currently
underway. Through negotiations, the total tax claimed has been
reduced from US$1.5 million to US$0.4
million.
The underlying facts would not trigger any additional tax liability
and the tax authorities verbally confirmed
they would undertake a full review. However, a demand for payment
was issued in February 2023 and
accordingly the exposure of US$0.4 million has been provided
in full as at 30 June 2023.
MSA - Democratic Republic of the Congo (DRC)
MSA DRC was incorporated in May 2022 but was not formally registered
for VAT until 20 October 2022. In May 2023, the company was assessed
for $0.9m of penalties (300%) for charging VAT on invoices before
being registered for VAT in country.
Management has sought expert advice and the exchange of information
with tax authorities is ongoing. No provision has been recognised
at 30 June 2023.
16. Financial instruments
(a) Fair value hierarchy
Financial instruments that are measured in the consolidated statement
of financial position or disclosed at fair value require disclosure
of fair value measurements by level based on the following fair
value measurement hierarchy:
-- Level quoted prices (unadjusted) in active markets for identical
1: assets or liabilities;
-- Level inputs other than quoted prices included within level
2: 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is,
derived from prices); and
-- Level inputs for the asset or liability that are not based
3: on observable market data (that is, unobservable inputs).
As at
30 June 31 December
2023 2022
---------------- ----------------
US$ US$
Level 1 - Listed shares 31,386,250 30,434,599
Level 3 - Unlisted shares and derivative
financial assets 10,687,306 8,292,442
---------------- ----------------
42,073,556 38,727,041
================ ================
CAPITAL LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONT'D)
For the six months ended 30 June 2023
16. Financial instruments (Continued)
The reconciliation of the investment valuations from 1 January
2023 to 30 June 2023 is as follows:
Level 1 Level 3 Total
At 1 January 2023 30,434,599 8,292,442 38,727,041
Additions 4,211,623 647,723 4,859,346
Disposal (2,356,288) - (2,356,288)
Fair value gain/(loss) 458,372 385,085 843,457
At 30 June 2023 32,748,306 9,325,250 42,073,556
============== =========== =============
Level 1 Level 3 Total
At 1 January 2022 51,958,649 8,193,018 60,151,667
Additions 8,713,205 297,316 9,010,521
Disposal (10,345,543) - (10,345,543)
Fair value (loss)/gain (19,891,712) (197,892) (20,089,604)
At 31 December 2022 30,434,599 8,292,442 38,727,041
=============== ============= ===============
(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 2023 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 2023 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 2023 and 2024. The peer average for 2023 used
was 3.8x and the average used in 2024 was 3.4x.
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 USD10.7
million to USD13.0 million. The related fair value increase of
USD2.3 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 USD10.7 million
to USD8.4 million. The related fair value decreases of USD2.3
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 2023
16. 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.
17. Events post the reporting date
The directors proposed that an interim dividend of 1.3 cents per
share be paid to shareholders on 3 October 2023. 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 1 September
2023. The total estimated interim dividend to be paid is US$2.5
million (2022: US$2.5 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 2023
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 2022.
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 15 August 2023.
ON BEHALF OF THE DIRECTORS
Jamie Boyton
Chairman of the Board of
Directors
Peter Stokes
Chief Executive Officer
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.
mining 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 and or require the client
believe any existing or to pay us an early termination
potential contracts will payment or demobilisation
be terminated, there can fee).
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.
---------------- ----------------------------------- --------------------------------
CAPITAL LIMITED
Principal and Emerging Risks and Uncertainties (continued)
Area Description Mitigation
--------------------- -------------------------------- ---------------------------------
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 employs a senior
in local tax tax regulations leading international tax specialist
laws, regulations to new or higher tax charges; in the head of tax role.
and practice. unpredictable tax audit The Group carries out
processes. enhanced tax due diligence
on incorporation with
identification of strong
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.
Access to a detailed
online tax technical
database (IBFD) as well
as close links with local
and multinational accounting
firms. Experienced in-house
tax and compliance resource
employed in West Africa
with significant regional
experience and a Big-4
tax background.
--------------------- -------------------------------- ---------------------------------
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.
--------------------- -------------------------------- ---------------------------------
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.
--------------------- -------------------------------- ---------------------------------
CAPITAL LIMITED
Principal and Emerging Risks and Uncertainties (continued)
Area Description Mitigation
-------------- ---------------------------------- -------------------------------
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.
-------------- ---------------------------------- -------------------------------
CAPITAL LIMITED
Principal and Emerging Risks and Uncertainties (continued)
Area Description Mitigation
------------------ ---------------------------------- ---------------------------------
Lack of equipment The Group has a significant The Group continues to
availability fleet of equipment, and focus on supplier relationships
has a substantial ongoing including maintaining
requirement for consumables, payment terms and identifying
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 senior management
in Health & to various risks associated team, led by the CEO,
Safety record with mining including, provide leadership to
in the case of employees, projects on the management
personal injury, malaria of these risks and actively
and loss of life and in engage with employees
the Group's case, damage at all levels. The Group
and destruction to property has implemented and continue
and equipment, to monitor and update
release of hazardous substances a range of health and
into the environment and safety policies and procedures
interruption or suspension including equipment standards
of site operations due and standard work procedures.
to unsafe operations. The Employees are provided
occurrence of any of these with training regarding
events could adversely risks associated with
impact the Group's business, their employment, policies
financial condition, results and standard work procedures.
of operations and prospects, Health and Safety statistics
lead to legal proceedings and incident reports
and damage the Group's are monitored throughout
reputation. In particular, our projects and the
clients are placing an various management structures
increasing focus on occupational of the Group, including
health and safety, and the HSE committee. Where
a deterioration in the necessary policies and
Group's safety record may procedures are updated
result in the loss of key to reflect developments
clients. and improvement needs.
The Group 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.
------------------ ---------------------------------- ---------------------------------
CAPITAL LIMITED
Principal and Emerging Risks and Uncertainties (continued)
Area Description Mitigation
------------------ --------------------------------- -----------------------------------
Tender and Operations not able to The Group goes through
estimating deliver on tendered margins. a rigorous process to
risk determine a price to
submit as part of the
tender submission based
on a bottom-up costing
analysis with a
mark-up. The Group makes
use of its extensive
historical statistics
and its in-house knowledge
base, combined with site
visits to obtain contract
specific data. Where
contracts are of significant
scope, independent cost
estimators are
appointed, with their
findings verified by
in-house modelling. 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.
------------------ --------------------------------- -----------------------------------
Adverse impact Risks related to the physical The Group monitors weather
of impacts of climate change patterns in countries/regions
climate change include increased incidence of operation. Fleet deployment
and severity of extreme is planned giving consideration
weather events that could to those weather patterns,
disrupt site operations as is scheduling of shift
and impact the health and work. The Group ensures
safety of our workforce. force majeure clauses
are included within its
contracts.
------------------ --------------------------------- -----------------------------------
CAPITAL LIMITED
Principal and Emerging Risks and Uncertainties (continued)
Area Description Mitigation
-------------- --------------------------------- ----------------------------------
Exposure to T he 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 also Funds are pooled centrally
in local currency or other in the head office bank
non-US dollar currencies. accounts to the maximum
Foreign currency fluctuations extent possible. The
and exchange rate risks Group has significantly
between the value of the improved processes for
US dollar and the value the repatriation of funds
of other currencies may to the Group's Head Office
increase the cost of the bank accounts from jurisdictions
Group's operations and where exchange control
could regulations are in effect,
adversely affect the financial and this remains a key
results. As a result, the focus area.
Group is exposed to currency Arrangements entered
fluctuations and exchange into with online FX broking
rate risks. platforms allow greater
visibility of market
rates for exotic currencies
as well as the major
hard currency trades
- allows more challenge
of rates being offered
by our banking partners
given the limited flexibility
to trade with other parties
that exists under the
current debt facility
agreement with Standard
Bank and NedBank.
-------------- --------------------------------- ----------------------------------
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 Group's
is marked to market at Investment Committee
each reporting date and actively monitors existing
the fair value adjustment investments for performance
is accordingly recorded and strategic alignment.
in the profit and loss New investments are required
account as an unrealised to satisfy a number of
gain or loss. The value criteria with non-Executive
of the investments will oversight. In the event
change and could materially of fair value investments
alter both the Group's becoming an unrealised
reported net assets and loss, while this would
net profit position. affect the company's
net assets and profitability,
it would not affect going
concern or cash flow.
-------------- --------------------------------- ----------------------------------
ERP system ACCPAC, the current ERP Project underway to implement
failure system is not monitored and transfer to new ERP
by Sage but by internal system.
resources, therefore minimising
downtime due to necessary
maintenance is reliant
on having the appropriate
skills internally.
-------------- --------------------------------- ----------------------------------
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
2023.
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
EBITDA (adjusted for IFRS 16 leases) EBITDA pre fair value gain/
loss on investments, net of
cash cost of the IFRS 16 leases
NPAT Net Profit After Tax
Adjusted NPAT Net profit after tax before
fair value gain/loss on investments
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
Reconciliation of alternative performance measures to the financial
statements:
Six months ended
30 June 30 June
2023 2022
-------------- --------------
US$ US$
ARPOR can be reconciled from the financial statements as per the
below:
Revenue per financial statements (US$) 154,270,076 138,128,602
Non-drilling revenue (US$) (50,061,076) (41,617,602)
-------------- --------------
Revenue used in the calculation of ARPOR
(US$) 104,209,000 96,511,000
-------------- --------------
Monthly Average active operating Rigs 93 93
Monthly Average operating Rigs 124 112
-------------- --------------
ARPOR (rounded to nearest US$10,000) 188,000 173,000
============== ==============
EBIT and EBITDA can be reconciled from the financial statements
as per the below:
Profit for the period 17,602,570 9,682,662
Taxation 5,810,234 5,456,706
Interest income (17,441) (112,808)
Finance charges 5,851,911 2,670,575
Fair value adjustments (843,457) 10,265,388
-------------- --------------
EBIT 28,403,817 27,962,523
============== ==============
Gross profit 70,954,496 61,118,149
Administration expenses (23,527,902)
Depreciation (19,022,777) (13,417,448)
-------------- --------------
EBIT 28,403,818 27,962,523
============== ==============
CAPITAL LIMITED
APPIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
Adjusted net profit and adjusted EPS can be reconciled from the financial
statements as per the below:
30 June
2023 30 Jun 2022
US$ US$
Profit for the period 17,602,570 9,682,662
Depreciation 19,022,777 13,417,448
Taxation 5,810,234 5,456,706
Interest income (17,441) (112,808)
Finance charges 5,851,911 2,670,575
Fair value adjustments (843,457) 10,265,388
--------------------------
EBITDA 47,426,594 41,379,971
============ ==========================
30 June
2023 30 Jun 2022
US$ US$
Operating profit (EBIT) 28,403,817 27,962,523
Depreciation, amortisation and impairments 19,022,777 13,417,448
-------------- ----------------
EBITDA 47,426,594 41,379,971
============== ================
Gross profit 70,954,496 61,118,149
Administration expenses (23,527,902) (19,738,178)
-------------- ----------------
EBITDA 47,426,595 41,379,971
============== ================
Operating profit (EBIT) 28,403,817 27,962,523
Interest income 17,441 112,808
Finance charges (5,851,911) (2,670,575)
Taxation (5,810,234) (5,456,706)
-------------- ----------------
Adjusted net profit 16,759,113 19,948,050
============== ================
Profit for the period 17,602,570 9,682,662
Fair value adjustments (843,457) 10,265,388
-------------- ----------------
Adjusted net profit 16,759,113 19,948,050
============== ================
EBITDA (adjusted for IFRS 16 leases)
EBITDA 47,426,594 41,379,971
Lease payments (3,491,639) (1,483,881)
-------------- ----------------
EBITDA (adjusted for IFRS 16 leases) 43,934,955 39,896,090
============== ================
CAPITAL LIMITED
APPIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
30 June 31 December
2023 2022
US$ US$
Net debt can be reconciled from the financial statements as per
the below:
Cash and cash equivalents 32,059,797 28,379,607
Long-term liabilities (78,384,246) (57,153,863)
Current portion of long-term liabilities (20,147,624) (18,465,290)
-------------- ---------------
Net debt (66,472,073) (47,239,546)
============== ===============
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 a non-IFRS financial measure that is used as supplemental
financial measure by management and external users of financial statements,
such as investors, to assess our financial and operating performance.
This non-IFRS financial measure 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.
EBITDA (adjusted for IFRS 16 leases)
EBITDA (adjusted for IFRS 16 leases) represents profit or loss for
the year before interest, income taxes, depreciation & amortisation,
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 and net of cash cost of the IFRS 16 leases.
Net cash (debt)
Net cash (debt) is a non-IFRS 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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END
IR PAMPTMTBBBFJ
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