Become a Member
  • Track your favourite stocks
  • Create & monitor portfolios
  • Daily portfolio value
Sign Up
Quickpicks
Add shares to your
quickpicks to
display them here!

Interim Results

15th Aug 2024 07:00

RNS Number : 5110A
Capital Limited
15 August 2024
 

 

FOR IMMEDIATE RELEASE    

Capital Limited

("Capital", the "Group" or the "Company")

 

H1 2024 Results (Unaudited)

 

Capital Limited (LSE: CAPD), a leading mining services company, today provides its results (unaudited) for the half-year period 1 January to 30 June 2024 (the "Period").

 

 

H1 2024

H1 2023

vs

H1 2023

Revenue ($ m)

169.4

154.3

9.8%

EBITDA (Adjusted for IFRS 16 leases)1,2($ m)

42.9

43.9

-2.3%

Operating profit ($ m)

25.0

28.4

-12.0%

Operating profit (pre-exceptional items)4 ($ m)

26.6

28.4

-6.3%

Investment gain / (loss) ($ m)

(0.5)

0.8

N/A

Net Profit After Tax (NPAT) ($ m)

9.6

17.6

-45.5%

NPAT (Adjusted for investment gain/ (loss) and exceptional items)4 ($ m)

11.8

16.8

-29.8%

Earnings per share

Basic EPS (cents)

4.7

8.9

-46.4%

Basic EPS (Adjusted for investment gain/ (loss) and exceptional items) (cents)

5.8

8.4

-30.9%

Interim Dividend per Share (cents)

1.3

1.3

-

Cash from Operations (Adjusted for IFRS 16 leases)2 ($ m)

52.3

38.2

36.9%

Capex3 ($ m)

44.3

36.2

22.4%

 

Net Debt1 ($ m)

86.4

66.5

29.9%

Investments ($ m)

47.8

42.1

13.5%

 

Margins and returns

EBITDA Margin (Adjusted for IFRS 16 leases)1,2

25.3%

28.5%

Operating profit margin (pre-exceptional items)4

15.7%

18.4%

NPAT Margin (Adjusted for investment gain/ (loss) and exceptional items)

7.0%

10.9%

*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 are detailed on pages 34-37 of this results announcement.

(2) Adjustment for the cash cost of the IFRS 16 leases which amounts to $6.0 million in H1 2024 (H1 2023: $3.5 million) (see page 17).

(3) Capital expenditure (Capex) consists of purchases of PPE for cash, prepayments for PPE and assets purchased during the year and financed by OEM.

(4) Exceptional items in this period include ERP implementation costs of $1.65 million in H1 2024 (H1 2023: nil).

 

 

 

Commenting on the interim results, Peter Stokes, Chief Executive, said:

"Capital in 2024 is undergoing a number of structural transitions that we expect will set up the business for the next wave of growth. We are soon coming to the end of our waste mining contract at Sukari and, while at the end of 2020, this contract was the largest award in the Company's history, once it concludes we will emerge as a much larger business, a credit to the business development success across the rest of the Group.

In addition, we have de-risked the Company through a significantly improved client portfolio, a more diversified service offering and, more recently, a more diversified geographical footprint adding lower-risk jurisdictions, namely USA and Canada, across our drilling and laboratories businesses. This has been made possible by the longstanding relationships we have built over the years with some of the world's leading miners.

Nevertheless, the half has not been without challenges with the ramp-ups of some of our key growth areas, namely Nevada Gold Mines, USA (Barrick-Newmont JV), Belinga, Gabon (majority owned by Fortescue Metals Group) and MSALABS, behind what we would have liked to see, impacting our results today. Despite these delays, we are confident in our ability to deliver the returns that will justify the material investment we have made.

As we look into next year, we expect to maintain the lower end of our targeted 25-30% adjusted EBITDA margins. Successful delivery of these growth projects should drive higher margins at these sites offsetting the impacts from losing economies of scale at Sukari and the anticipated margin dilution from MSALABS as it becomes a larger proportion of the total Group (a business we have guided to target lower adjusted EBITDA margins of 15-20%, albeit alongside lower capital intensity).

We have equally been in a transitionary period from a balance sheet perspective. We were pleased to recently announce the sale of our shareholding in Predictive Discovery, the proceeds of which will be the first major step in reducing our debt levels. We have now also actively begun marketing the sale of the mining fleet at Sukari which will further reduce our debt exposure. This rapid de-gearing will reset the business both by reducing our current level of interest payments and giving the business greater flexibility to move quickly on new opportunities.

We are pleased to announce an interim dividend of 1.3 cents per share, a testament to our commitment to creating value for our shareholders through shareholder returns as well as growth in the broader business.

Financial Highlights

· H1 2024 revenue of $169.4 million, up 9.8% on H1 2023 ($154.3 million);

- Full-year revenue guidance remains $355 - $375 million.

· H1 2024 EBITDA (adjusted for IFRS16 leases and exceptional items) of $42.9 million, a decrease of 2.3% on H1 2023 ($43.9 million) with H1 2024 EBITDA Margin (adjusted for IFRS16 leases and exceptional items) of 25.3% (H1 2023: 28.5%):

- Capital is undergoing a number of transitions that we expect will set up the business for the next wave of growth, including an expansion into North America. We have seen challenges in H1 2024 with the ramp-ups at Nevada Gold Mines, Belinga and MSALABS being slower than expected adversely impacting the earnings for the Group;

- Nevertheless, we remain confident in delivering strong returns across this new business and expect to achieve our previously guided 25-30% adjusted EBITDA margins, albeit towards the lower end. This incorporates an improvement in returns across Nevada Gold Mines and Belinga while being cognisant that MSALABS will continue to grow into a more significant proportion of the business and while relatively capital light, is targeting our guided adjusted EBITDA range of 15-20%.

· H1 2024 Net Profit After Tax (NPAT) (adjusted for investment gain/ loss and exceptional items) of $11.8 million, a decrease of 29.8% on H1 2023 ($16.8 million). This was driven by:

- reduction in Group EBITDA margin from new business growth, as described above;

- higher interest costs (~$2 million increase YoY) from funding investment into new growth areas, particularly in the USA, and higher tax expense (~$1 million increase YoY).

· Exceptional cost of $1.65 million in H1 2024 ($nil in H1 2023 (with certain costs previously capitalised)) relates to the costs expensed in implementing an Enterprise Resource Planning (ERP) system which will provide the business with a strong backbone for continued growth. ERP costs will continue to be incurred until the end of 2025; 

· H1 2024 Cash from Operations (adjusted for IFRS 16 leases) of $52.3 million a 36.9% increase on H1 2023 ($38.2 million) in part driven by a favourable working capital position at the end of the period, some of which will normalise in H2 2024;

· H1 2024 Capex of $44.3 million (H1 2023: $36.2 million) including prepayments and assets financed by OEM;

· In H1 2024 Capital completed a strategic investment in Eco Detection for $6.6 million acquiring a ~22% stake. As part of our strategic investment, Capital has also agreed an exclusive arrangement for the distribution of this technology to the mining industry;

· The value of the Group's direct investment portfolio increased to $47.8 million (including holding in Predictive Discovery) from $47.2 million at 31 December 2023 (30 June 2023: $42.1 million); 

· Net debt at H1 2024 of $86.4 million increased 29.9% on H1 2023 ($66.5 million) predominantly in order to fund our material new contracts with Nevada Gold Mines across both drilling and laboratory services;

- Predictive Discovery Sale: On 14th August 2024, we announced an agreement to sell our Predictive Discovery holding to Perseus Mining for a total cash consideration of ~$31.2 million which will be used predominantly to reduce debt.

· Declared an interim dividend of 1.3 cents per share, to be paid on 3 October 2024 to shareholders registered on 30 August 2024.

Operational & Strategic Review 

· Safety performance remains world-class with a Total Recordable Injury Frequency Rate ("TRIFR") of 1.1 per 1,000,000 hours worked in H1 2024 (H1 2023: 1.03).

Capital Drilling:

· H1 2024 average rig utilisation was 69%, a decrease of 8.0% on H1 2023 (75%). The decrease was primarily driven by lower utilisation in Q1 2024, which rebounded into Q2 2024 (72%) driven by increased rig counts at Belinga and the beginning of the ramp-up at Nevada Gold Mines. The Group's target average utilisation is ~75%;

· Total rig count increased to 127 by the end of H1 2024 (H1 2023: 125), with the ramp-up of the new Nevada Gold Mines drilling contract weighted to the second half. Further rigs were purchased in H1 2024 however will only contribute to total rig count once commissioned. We expect to add ~9 further rigs by the end of 2024;

· Average monthly revenue per operating rig ("ARPOR") was $204,000 in H1 2024, up 8.5% on H1 2023 ($188,000). This strengthening in ARPOR is primarily the result of the ramp-up of high-quality contracts, as well as a continued focus on efficiency at our more established sites.

· New contract win: 

- An up to two-year diamond and reverse circulation drilling services contract with Perseus Mining at its new Nyanzaga Project in Tanzania.

· H1 2024 contract wins (previously announced): 

- A one-year (with a one-year extension option) grade control drilling services contract with Barrick Gold at its Lumwana Mine in Zambia;

- A two-year extension of the exploration and delineation drilling contract with Predictive Discovery at its Bankan Gold Project in Guinea;

- An extension of open pit drilling services at Centamin's Sukari Gold Mine in Egypt for a further 5-years, starting from 1 January 2025;

- A two-year grade control drilling services contract with Perseus Mining at the Sissingué Gold Mine in Côte d'Ivoire; and

- Expanded rig count at Belinga in 2024 under our existing three-year reverse circulation and diamond drilling services contract.

 

 

Q2 2024*

Q2 2023

vs

Q2 2023

Q1 2024

vs

Q1 2024

H1 2024*

H1 2023

H1 2024* vs

H1 2023

Closing fleet size

127

125

1.6%

124

2.4%

127

125

1.6%

Average Fleet

127

124

2.4%

123

3.3%

125

124

2.4%

Fleet utilisation (%)

72

73

-1.4%

66

9.1%

69

75

-8.0%

Average utilised rigs

 91

90

1.1%

81

12.3%

86

93

-5.4%

ARPOR1($)

207,000

183,000

13.1%

202,000

2.5%

204,000

188,000

8.5%

Surveying revenue

1.3

0.9

44.4%

0.9

44.4%

2.2

2.0

10.0%

Total Drilling and

associated revenue2 ($m)

60.1

52.6

14.3%

52.2

15.1%

112.3

110.0

2.1%

*Unaudited numbers

1 Average revenue per month per operating rig

2Associated revenue refers to revenue generated from complementary services tied to our drilling operations

All amounts are in USD unless otherwise stated

 

Capital Mining:

· Sukari waste mining slight extension: Completed the 120Mt waste mining contract at the end of Q2 2024, 6 months ahead of the contract term at Sukari. As a result of this early completion, Centamin has opted to leverage our fleet further and allocated up to a further 10Mt of waste removal that we shall complete over Q3 2024.

- Capital is now actively marketing a sale of the Sukari mining fleet to occur after the contract at Sukari has been concluded.

· At Belinga, our contract mining fleet has been successfully mobilised to site. Activities in the first half were primarily focused on drill pad excavation and civils activity to support FMG's near-term focus on resource expansion.

 

MSALABS:

· In H1 2024, the business continued to focus on establishing widespread uptake of the PhotonAssayTM technology and, while the adoption cycle has been slower than expected, engagement with top-tier customers is very strong and underpins a strong long-term outlook;

· Revenues for the year will be weighted to the latter portion of the year, particularly driven by the ramp-up of our new major contract with Nevada Gold Mines. Despite a slower-than-expected start, construction of the new laboratories in Nevada has commenced with sample processing planned to begin in the second half of the year:

- MSALABS will deploy three PhotonAssayTM units in Nevada with fire assay and multi-element assaying capabilities to follow in 2025. The total contract with Nevada Gold Mines is anticipated to generate ~$140 million in revenue over the five-year term, making it the largest award of new business in the history of MSALABS;

· The three PhotonAssayTM units in Nevada marked the start of this broader partnership agreement with Barrick Gold, with the potential for a further ten PhotonAssayTM units deployed across multiple of Barrick's other operations. The fourth unit under this partnership was commissioned this quarter at the Kibali Gold Mine, DRC (the second unit on site);

· MSALABS possesses the largest international network of Chrysos PhotonAssayTM technology; and

· MSALABS's relationship with Chrysos remains strong with the total planned deployment of 21 units.

 

Capital Investments:

· Predictive Discovery Sale: On 14th August 2024, we announced an agreement to sell our Predictive Discovery holding to Perseus Mining for a total cash consideration of ~$31.2 million. Further details on the agreement with Perseus Mining are available in the separate announcement;

- Proceeds from the sale will be recycled back into the broader business, predominantly reducing Capital's debt levels.

· The total value of investments (listed and unlisted) was $47.8 million as at 30 June 2024, up from $47.2 million as at 31 December 2023;

- The portfolio recorded investment losses (realised and unrealised) of $0.5 million in H1 2024.

 

Capital Innovation: Strategic Investment in Eco-Detection

· Capital completed a $6.6 million strategic investment in Eco-Detection, acquiring a ~22% ownership stake in the company;

· Eco-Detection's Ion-Q platform is the world's first fully autonomous multiparameter laboratory-grade water analysis system. This continuously monitors water quality, transmitting proven laboratory-grade measurements in real-time directly from site, thereby eliminating the need for manual sampling;

· The cutting-edge technology holds significant growth potential across multiple sectors including the mining industry, by providing critical data for compliance and remediation reporting, monitoring down-hole water quality and delivering real-time contaminant alerts to improve response times to leaching from tailings dams and other storage facilities. Additionally, it can aid community relations through monitoring of the local environment and waterways;

- As part of our strategic investment, Capital has also agreed an exclusive arrangement for the distribution of this technology to the mining industry.

 

Outlook

· Revenue guidance for 2024 remains $355-$375 million;

· Capital expenditure guidance for 2024 remains $70-$80 million; 

· Capital Drilling anticipates revenue growth in H2 2024, driven by the ramp-up of operations, particularly at Nevada Gold Mines, as well as the commencement of operations at Lumwana and Nyanzaga

· Capital Mining will benefit from the contract extension at Sukari for up to an additional 10Mt throughout Q3 2024;

· MSALABS will continue its multi-year laboratory roll-out, with a particular emphasis on deploying Chrysos PhotonAssayTM units, further supported by our significant contract with Nevada Gold Mines. Guidance for MSALABS remains $50-$60 million for 2024, however, we see some risk to the downside should there be a delay to the ramp-up in H2 2024 of the Nevada Gold Mines contract; and

· Tendering activity remains robust across the Group with a number of opportunities progressing.

 

 

Capital Limited will be hosting a live webcast presentation at 09:00 BST on Thursday 15 August 2024, where questions can be submitted through the platform.

 

The webcast presentation link:

https://sparklive.lseg.com/CapitalDrillingLtd/events/a8c5b546-f500-4a77-b94d-7830465dd6ab/capital-limited-h1-2024-results

 

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

 

- ENDS -

 

For further information, please visit Capital's website www.capdrill.com or contact:

 

Capital Limited [email protected]

Peter Stokes, Chief Executive Officer

Rick Robson, Chief Financial Officer

Conor Rowley, Corporate Development & Investor Relations

 

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

 

Burson Buchanan +44 20 7466 5000

Bobby Morse [email protected]

George Pope

About Capital Limited

 

Capital Limited is a leading mining services company that provides 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 geochemical analysis. The Group's corporate headquarters are in the United Kingdom and it has established operations in Canada, Côte d'Ivoire, Democratic Republic of Congo, Egypt, Gabon, Ghana, Guinea, Kenya, Mali, Mauritania, Pakistan, Saudi Arabia, Tanzania, United States of America and Zambia.

 

 

INDEPENDENT REVIEW REPORT TO CAPITAL LIMITED

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 which comprises the condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows, and notes to the condensed consolidated interim financial statements.

Basis for conclusion

We conducted our review in accordance with Revised International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410 (Revised)"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting".

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410 (Revised), however future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the

Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

 

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

 

 

 

BDO LLP

Chartered Accountants

London, UK

14 August 2024

 

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 

 

 

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2024

Unaudited

Six months ended

Notes

 

30 June 2024

 

30 June 2023

 

US$'000

 

 US$'000

 

Revenue

3

169,434

154,270

Cost of sales

(94,948)

(83,316)

Gross profit

74,486

70,954

Administration expenses

(27,252)

 (23,565)

Depreciation, amortisation, and impairments

(22,255)

 (19,023)

Operating profit

24,979

 28,366

Interest income

46

 17

Finance costs

(8,202)

 (5,814)

Fair value (loss)/gain on financial assets

17

(493)

 844

Profit before taxation

16,330

 23,413

Taxation

4

(6,695)

 (5,810)

Profit and total comprehensive income for the period

 

 

9,635

 

 17,603

 

 

Profit attributable to:

 

Owners of the parent

 

9,206

 16,943

Non-controlling interest

11

429

 660

 

9,635

 

 17,603

 

Earnings per share:

 

Basic (cents per share)

5

4.7

8.9

Diluted (cents per share)

5

4.7

8.8

 

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2024

Unaudited 

 

Audited

 

Notes

 

30 June 2024

 

31 December 2023

ASSETS

 US$'000

 

US$'000

Non-current assets

 

Property, plant and equipment

7

229,023

 208,657

Right-of-use assets

8

33,169

 29,684

Goodwill

1,296

 1,296

Intangible assets

699

 572

Other receivables

9

12,082

 9,789

Investment in associate

18

6,633

-

Total non-current assets

 

282,902

 249,998

Current assets

 

Inventories

61,134

 61,922

Trade receivables

48,695

 49,567

Other receivables

9

33,261

 24,055

Investments at fair value

17

47,780

 47,154

Current tax receivable

497

 686

Cash and cash equivalents

39,915

 34,366

Total current assets

 

231,282

 217,750

Total assets

 

514,184

 

467,748

EQUITY AND LIABILITIES

 

Equity

 

Share capital

10

19

 19

Share premium

10

64,719

 62,390

Equity-settled employee benefits reserve

4,199

 5,763

Other reserve

190

 190

Retained income

198,739

 195,515

Equity attributable to owners of the parent

267,866

 263,877

Non-controlling interest

11

10,459

 9,270

Total equity

 

278,325

 

 273,147

Non-current liabilities

 

Loans and borrowings

12

95,164

 75,521

Lease liabilities

22,380

 21,109

Trade and other payables

1,643

 2,057

Deferred tax

34

 34

Total non-current liabilities

 

119,221

 98,721

Current liabilities

 

Trade and other payables

65,295

 50,685

Provisions

487

 487

Current tax payable

10,861

 9,315

Loans and borrowings

12

29,623

 27,052

Lease liabilities

10,372

 8,341

Total current liabilities

 

116,638

 95,880

 

Total equity and liabilities

 

514,184

 

467,748

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 30 June 2024

 

 

 

 

 

Share

capital

 

 

 

Share premium

 

 

Treasury share reserve

 

 

 

Total share capital

Equity-settled employee benefits reserve

 

 

 

Other reserve

 

 

 

Total reserves

 

 

 

Retained income

 

Total attributable to equity holders of the Group

 

 

Non-controlling interest

 

 

 

Total

equity

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Balance at 31 December 2022 - Audited

19

62,390

(2,475)

59,934

4,469

190

4,659

168,726

233,319

5,573

238,892

Profit for the period

-

-

-

-

-

-

-

16,943

16,943

660

17,603

Contributions by and distributions to owners

Issue of shares

-

-

2,475

2,475

(2,196)

-

(2,196)

(279)

-

-

-

Recognition of share-based payments

-

-

-

-

2,034

-

2,034

-

2,034

-

2,034

Adjustment arising from change in non-controlling interest

-

-

-

-

-

-

-

(1,964)

(1,964)

1,889

(75)

Dividends

-

-

-

-

-

-

-

(5,101)

(5,101)

(19)

(5,120)

Total transactions with owners

-

-

2,475

2,475

(162)

-

(162)

(7,344)

(5,031)

1,870

(3,161)

Balance at 30 June 2023 (Unaudited)

19

62,390

-

62,409

4,307

190

4,497

178,325

245,231

8,103

253,334

 

Balance at 31 December 2023 - Audited

19

62,390

-

62,409

5,763

190

5,953

195,515

263,877

9,270

273,147

Profit for the period

-

-

-

-

-

-

-

9,206

9,206

429

9,635

Contributions by and distributions to owners

Issue of shares

-

2,329

-

2,329

(2,329)

-

(2,329)

-

-

-

-

Recognition of share-based payments

-

-

-

-

765

-

765

-

765

-

765

Adjustment arising from change in non-controlling interest

-

-

-

-

-

-

-

(880)

(880)

792

(88)

Dividends

-

-

-

-

-

-

-

(5,102)

(5,102)

(32)

(5,134)

Total transactions with owners

-

2,329

-

2,329

(1,564)

-

(1,564)

(5,982)

(5,217)

760

(4,457)

Balance at 30 June 2024 (Unaudited)

19

64,719

-

64,738

4,199

190

4,389

198,739

267,866

10,459

278,325

CAPITAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

For the six months ended 30 June 2024

 

 

Six months ended

 

 

 

 

Unaudited

 

Unaudited

 

Notes

 

30 June 2024

 

30 June 2023

 

US$'000

 

US$'000

 

 

 

 

Cash flow from operating activities

 

Cash generated from operations

13

58,279

 41,652

Interest income received

46

 17

Finance costs paid

(6,071)

 (4,032)

Interest paid on lease liabilities

8

(1,456)

(857)

Tax paid

(4,960)

 (6,921)

Net cash from operating activities

 

 

45,838

 

29,859

Cash flow from investing activities

 

Purchase of property, plant and equipment

7

(15,963)

 (25,226)

Proceeds from sale of property, plant and equipment

-

 45

Purchase of intangible assets and cloud computing arrangements

(1,228)

 (426)

Purchase of investments at fair value

17

(5,404)

 (4,859)

Purchase of investment in associate

18

(6,633)

-

Proceeds on sale of investments at fair value

17

4,285

 2,356

Cash paid in advance for property, plant and equipment

(11,038)

 (4,341)

Advance payments on leases

(970)

 (606)

Net cash from investing activities

 

 

(36,951)

 

(33,057)

 

 

Cash flow from financing activities

 

Repayment of loans and borrowings

12

(12,463)

 (9,209)

Proceeds from new loans and borrowings

12

20,000

 25,000

Arrangement fees paid - new financing

(342)

 (1,431)

Dividends paid

6

(5,134)

 (5,120)

Repayment of principal on leases liabilities

8

(4,560)

 (2,634)

Proceeds from issuance of equity to non-controlling interests

-

 1,193

Purchase of shares from non-controlling interests

(88)

(1,268)

Net cash from financing activities

 

 

(2,587)

 

6,531

Net increase in cash and cash equivalents

 

 

6,300

 

3,333

Cash and cash equivalents at the beginning of the period

 

 

34,365

 

 28,380

Effect of exchange rate movement on cash balances

(750)

 346

Cash and cash equivalents at the end of the period

 

39,915

 

 32,059

 

Advance payments on leases has been reclassified from financing activities to investing activities in current and prior period. The impact of this change was not material to the financial statements.

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2024

1.

Basis of presentation and accounting policies

 

Preparation of the condensed consolidated interim financial statements

 

The condensed consolidated interim financial statements of Capital Limited and Subsidiaries ("Capital" or, together, the "Group") as at and for the six months ended 30 June 2024 (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 2023 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.

 

The Group Annual Financial Statements are presented in United States Dollars, which is also the Group's functional currency. Amounts are rounded to the nearest thousand, unless otherwise stated. This is a change from the 30 June 2023 Financial Statements, and the comparatives have been updated to reflect the change in presentation.

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 2023. New accounting policy during the period is summarised below:

 

 

Land & buildings

 

Land and buildings are initially recorded at cost and subsequently measured using either the cost or revaluation model. Land is not depreciated as it has an indefinite useful life while buildings are depreciated on a straight-line basis over their estimated useful life. Impairment is assessed regularly, and any impairment loss is recognized. Gains or losses on disposal are recognized in profit or loss.

 

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 2024, the Group had a robust balance sheet with a modest debt gearing with equity of US$278.3 million and loans and borrowings of US$124.8 million. Cash as at 30 June 2024 was US$39.9 million, with net debt of US$84.9 million. Investments in listed entities at the end of June 2024 amounted to US$45.4 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 the majority of Group revenues. Revenues continued to perform strongly in H1 2024 with increased revenue of 10% compared to H1 2023. While margins have declined YoY, much of this is driven by the investment made across key growth areas (Nevada, Gabon & MSALABS), which is setting the foundation for the business to continue to grow in the years ahead.

Commercially, the Group continues to secure and extend long term mining contracts with high quality customers, including the latest significant win for both drilling and laboratories services in the USA with Nevada Gold Mines. This contract with Nevada Gold Mines has only minorly contributed to Group revenue as at 30 June 2024.

 

 

 

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

 

1.

Basis of presentation and accounting policies

 

 

 

Going concern (cont'd)

 

 

 

In determining the going concern status of the business, the Board has reviewed the Group's forecasts for the 18 months to December 2025, including both forecast liquidity and covenant measurements. In the assessment, management took into consideration the principal risks of the business that are most relevant to the going concern assessment and reverse stressed the forecast model to identify the magnitude of sensitivity required to cause a breach in covenants or risk the going concern of the business, alongside the Group's capacity to mitigate. The most relevant sensitivity was considered to be a decrease in EBITDA through loss of contracts, with no redeployment of equipment. EBITDA would need to fall over 35% during the period of assessment for going concern to breach the covenant test. Given the strong market demand from existing high-quality clients and across a large tendering pipeline, the Group's increased service diversification and the limited contract expiries due during the year, management considers the risk of a deep demand reduction to be low.

 

 

 

Given the Group's exposure to high-quality mine site operations, we consider a decrease of such magnitude to be remote. Based on its assessment of the forecasts, principal risks and uncertainties and mitigating actions considered available to the Group (holding back dividends, sale of investments, capex deferment) in the event of downside scenarios, the Board confirms that it is satisfied the Group will be able to continue to operate and meet its liabilities as they fall due over the going concern period to December 2025. Accordingly, the Board has concluded that the going concern basis in the preparation of the Financial Statements is appropriate and that there are no material uncertainties that would cast doubt on that basis of preparation.

 

As disclosed in note 18, after this going concern review was conducted the Group sold certain investments on 14 August 2024 for proceeds of $31.2m. These proceeds will primarily be used to pay down Group borrowings. The net debt levels and interest service costs in the going concern forecasts and covenant reviews noted above will therefore be reduced further, providing significant additional cashflow and covenant headroom to that already noted above.

 

 

2.

Operations in the interim period

 

 

Capital is incorporated in Bermuda. The Group provides 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.

 

The Group's corporate headquarters are in the United Kingdom and it has established operations in Canada, Côte d'Ivoire, Democratic Republic of Congo, Egypt, Gabon, Ghana, Guinea, Kenya, Mali, Mauritania, Pakistan, Saudi Arabia, Tanzania, United States of America and Zambia.

 

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.

 

 

Six months ended

3.

Revenue

30 June 2024

 

30 June 2023

 

US$'000

 

US$'000

 

Revenue from the rendering of services comprises:

Drilling and associated revenue

110,142

 108,046

Revenue from Mining

36,342

 27,153

MSALABS revenue

20,772

 17,105

Revenue from Surveying

2,178

 1,966

169,434

154,270

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

 

For the six months ended 30 June 2024

 

 

 

 

 

 

4.

Taxation

 

 

 

 

 

Capital Limited is incorporated in Bermuda and tax resident in the United Kingdom and the Group operates in multiple countries jurisdictions with complex legal and tax regulatory environments. Taxation is calculated in accordance with local legislation and the prevailing tax rates.

 

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.

 

 

 

5.

Earnings per share

 

30 June 2024

 

30 June 2023

 

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 (US$'000)

9,206

16,943

Weighted average number of ordinary shares for the purposes of basic earnings per share

195,026,529

191,185,152

Basic earnings per share (cents)

4.7

8.9

 

Diluted earnings per share:

30 June 2024

30 June 2023

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. ($)

9,206

16,943

Weighted average number of ordinary shares used in the calculation of basic earnings per share

195,026,529

191,185,152

- Dilutive share options #

968,276

2,271,535

Weighted average number of ordinary shares used in the calculation of diluted earnings per share

195,994,805

193,456,687

Diluted earnings per share (cents)

4.7

8.8

# For the purposes of calculating diluted earnings per share, 968,276 share options (2023: 2,271,535) were included based on being dilutive as the vesting metrics were met at the period end.

 

 

 

6.

Dividends

 

 

 

 

During the six months ended 30 June 2024, a dividend of 2.6 cents per ordinary share was declared on 14 March 2024, totalling US$5,102,685 (six months ended 30 June 2023: 2.6 cents per ordinary share, totalling US$5,101,010) and paid on 15 May 2024.

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

7. Property, plant and equipment

Cost

 

 

 

Drilling rigs

 

 

 Heavy mining equipment

Associated Drilling & mining equipment

 

 

Vehicles and trucks

 

Camp and associated equipment

 

 

Land & Buildings

 

 

Computer software

 

 

Leasehold improvements

 

 

 

Total

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

At 1 January 2023

139,370

71,444

31,399

37,786

18,169

-

38

1,654

299,860

Additions

 27,061

 10,416

 11,884

 10,491

 9,404

-

 14

 -

 69,270

Disposal

 (18,189)

 -

 (1,906)

 (1,259)

 (530)

-

 -

 -

 (21,884)

At 31 December 2023

 148,242

 81,860

 41,377

 47,018

 27,043

-

 52

 1,654

 347,246

Additions

14,044

1,936

6,613

6,114

4,038

4,628

14

-

37,387

Disposal

(1,840)

-

(1,871)

(662)

(980)

-

-

-

(5,353)

At 30 June 2024

160,446

83,796

46,119

52,470

30,101

4,628

66

1,654

379,280

Accumulated Depreciation

At 1 January 2023

79,788

16,776

6,743

15,696

8,088

-

13

97

127,201

Depreciation

 10,521

 9,302

 4,900

 4,493

 2,595

-

 7

 -

 31,818

Impairment

 -

 -

 -

 389

 50

-

 -

 -

 439

Disposal

 (17,412)

 -

 (1,783)

 (1,157)

 (517)

-

 -

 -

 (20,869)

At 31 December 2023

 72,897

 26,078

 9,860

 19,421

 10,216

-

 20

 97

 138,589

Depreciation

5,227

5,055

2,690

2,229

1,588

115

4

-

16,908

Disposal

(1,794)

-

(1,870)

(647)

(929)

-

-

-

(5,240)

At 30 June 2024

76,330

31,133

10,680

21,003

10,875

115

24

97

150,257

Carrying amount at:

31 December 2023

75,345

55,782

31,517

27,597

16,827

-

32

1,557

208,657

 

 

 

 

 

 

 

 

 

 

30 June 2024

84,116

52,663

35,439

31,467

19,226

4,513

42

1,557

229,023

CAPITAL LIMITED

Notes to the Condensed Consolidated Interim Financial Statements (cont'd)

For the six months ended 30 June 2024

 

7. Property, plant and equipment (continued)

 

Bank borrowings are secured on the Group's drilling and mining fleet - see Note 12.

 

The Group's property plant and equipment includes assets not yet commissioned totalling US$41.9 million (2023: US$45.5 million). The assets will be depreciated once commissioned and available for use.

 

During the six months ended 30 June 2024, the Group acquired US$37.4 million worth of property, plant and equipment (HY 2023: US$39.4 million). Out of the US$37.4 million additions, US$10.7 million (2023: US$6.6 million) was acquired through supplier credit agreements, US$3.6 million through vendor financed mortgage and US$3.0 million of unpaid trade payables. Additions in the cash flow statements, US$ 16.0 million, consist of cash paid assets during the period.

 

The Group disposed of property, plant and equipment with a net carrying amount of US$0.1 million (2023: US$0.7 million) during the period. A loss of US$0.1 million (2023: US$0.3 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 2024, 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

Vehicles

Total

Right of use assets

US$'000

US$'000

US$'000

US$'000

At 1 January 2023

3,565

13,087

-

16,652

Additions

1,298

9,787

-

11,085

Depreciation

(558)

(2,580)

-

(3,138)

30 June 2023

4,305

20,294

-

24,599

At 31 December 2023

5,105

24,579

-

29,684

Additions

227

8,072

532

8,831

Depreciation

(800)

(4,494)

(52)

(5,346)

At 30 June 2024

4,532

28,157

480

33,169

 

 

Lease liabilities

At 1 January 2023

3,396

12,871

-

16,267

Additions

1,298

9,181

-

10,479

Interest expense

136

721

-

857

Lease payments

(661)

(2,830)

-

(3,491)

30 June 2023

4,169

19,943

-

24,112

At 31 December 2023

5,184

24,266

-

29,450

Additions

227

7,103

532

7,862

Interest expense

215

1,234

7

1,456

Lease payments

(925)

(5,035)

(56)

(6,016)

At 30 June 2024

4,701

27,568

483

32,752

 

The weighted average incremental borrowing rate applied to lease liabilities during the period was 10% (2023: 10%).

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

 

As at

 

30 June 2024

 

31 December 2023

 

US$'000

 

US$'000

 

 

 

9.

Other receivables

 

 

Prepayments

 

8,150

 7,529

 

Capitalised contract costs

 

8,033

 3,783

 

VAT recoverable

 

8,808

 7,561

 

Amounts due from non-controlling interest

 

5,536

 5,536

 

Accounts receivable - Sundry

 

3,640

 4,025

 

Prepayment for fixed assets

 

11,038

 5,318

 

Others

 

138

 92

 

 

 

45,343

33,844

 

 

 

 

Current

 

33,261

 24,055

 

Non-current

 

12,082

 9,789

 

 

 

45,343

33,844

 

 

 

10.

Issued capital and share premium

Authorised capital

2,000,000,000 (31 December 2023: 2,000,000,000) ordinary shares of 0.01 cents (31 December 2023: 0.01 cents) each

200,000

200,000

Issued and fully paid:

196,257,124 (31 December 2023: 193,696,920) ordinary shares of 0.01 cents (31 December 2023: 0.01 cents) each

19

19

Share premium:

Balance at the beginning of the period

62,390

62,390

Issue of shares

2,329

-

Balance at the end of the period

64,719 

62,390

Fully paid ordinary shares which have a par value of 0.01 cents, carry one vote per share and carry rights to dividends.

 

 

11.

Non-controlling interest

 

 

 

 

 

Below is a summary of the movement in non-controlling interest during the period:

 

 

 

 

 

MSALABS Ltd

CMS (Tanzania) Ltd

 

IACA Limited

 

Total

 

 

 

US$'000

US$'000

US$'000

US$'000

 

Balance at 1 January 2024

 

3,292

5,988

(10)

9,270

 

 

 

 

Profit/ (loss) attributable to NCI

 

(761)

1,218

(28)

429

 

Change in ownership:

 

 

- Equity raise

 

822

-

-

822

 

- Purchase of shares from NCI

 

(30)

-

-

(30)

 

Dividends paid

 

(32)

-

-

(32)

 

Balance at 30 June 2024

 

3,291

7,206

(38)

10,459

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

 

11.

Non-controlling interest

 

 

 

 

 

 

 

 

MSALABS Ltd

CMS (Tanzania) Ltd

 

IACA Limited

 

Total

 

 

 

US$'000

US$'000

US$'000

US$'000

 

Balance at 1 January 2023

 

2,688

2,891

(7)

5,572

 

 

 

 

Profit/ (loss) attributable to NCI

 

(722)

1,398

(16)

660

 

Change in ownership:

 

 

- Equity raise

 

365

-

-

365

 

- Rights issue

 

1,829

-

-

1,829

 

- Purchase of shares from NCI

 

(486)

-

-

(486)

 

- Other

 

182

-

-

182

 

Dividends paid

 

(19)

-

-

(19)

 

 

 

 

Balance at 30 June 2023

 

3,837

4,289

(23)

8,103

 

12.

Loans and borrowings

 

Loans and borrowings consist of:

 

(a) US$75 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 amountof 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 full accordion of US$25m was exercised and completed 26 April 2024. The total available amount of the facility is currently US$75m. The interest rate on the RCF is the prevailing three-month Secured Overnight Financing Rate (SOFR, payable in arrears) plus a margin of 5.5%, and an annual commitment fee of 1.925% per annum is charged on any undrawn balances. The amount utilised on the RCF was US$65 million as at 30 June 2024 (2023: US$50 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$40.5 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, Capital Drilling Egypt LLC. The Group drew an additional US$8.0 million in 2023. As at 30 June 2024, the amount outstanding on the term loan was US$25.0 million (2023: US$26.6 million).

 

During the period under review, the Group has complied with all covenants attached to the term loan.

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

12.

Loans and borrowings (cont'd)

 

(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 most of the agreements is three-month SOFR plus a margin of 4.8%, with a fixed rate of interest of the remaining agreements of 8.5% and 9.50%. As at 30 June 2024, the total drawn under these credit agreements was US$16.1 million (2023: US$15.8 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. As at 30 June 2024 the balance outstanding was US$3.3 million (2023: US$5 million) and the facility is no longer available to be drawn. Additionally, the Group entered into a further US$10 million facility agreement on 23 October 2023.The rate of interest on this agreement is fixed at 8.15%. As at 30 June 2024, the balance outstanding was US$6.7 million.

 

No covenants are attached to this facility.

 

 

(e) US$5.0 million facility with Caterpillar Financial Services

The Group entered into a US$5 million facility agreement with Caterpillar Financial Services Corporation on 25 July 2023. The rate of interest on this agreement is three-month SOFR plus a margin of 5.25%. The term of the agreement is 2 years repayable in 8 quarterly instalments. All repayments can be subsequently redrawn. As at 30 June 2024, the balance outstanding was US$4.4 million.

 

During the period under review, the Group has complied with all covenants attached to the facility.

 

(f) US$3.7m Mortgage with Byington Family Trust

The Group entered into US$3.7m mortgage with Byington Family Trust on 8 January 2024. The property in Elko serves as collateral for the mortgage. The rate of interest is fixed at 7.50% until maturity on 31 December 2034. As at 30 June 2024, the balance outstanding was US$3.6 million

 

No covenants are attached to this facility.

 

As at

 

30 June 2024

 

31 December 2023

 

US$'000

 

US$'000

 

 

Bank loans

92,034

78,385

Supplier credit facilities

30,637

25,813

Vendor financed mortgage

3,663

-

126,334

104,198

Less: Unamortised debt arrangement costs

(1,547)

(1,625)

Total loans and borrowings

124,787

102,573

Current

29,623

27,052

Non-current

95,164

75,521

Total loans and borrowings

124,787

 102,573

At the reporting date, the Group's loans and borrowings total US$126.3 million (2023: US$104.2 million), offset by unamortised debt costs of US$1.5 million (2023: US$1.6m). US$0.9 million (2023:US$ 0.8m) of the debt costs have been classified as current and US$0.7 million (2023:US$ 0.8m) as non-current.

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

 

For the six months ended 30 June 2024

 

 

 

13.

Note supporting the Statement of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

13.1

Cash generated from operations

 

30 June 2024

30 June 2023

 

 

 

 

US$'000

US$'000

 

 

 

 

 

 

 

Profit before taxation

16,330

23,413

 

Adjusted for:

 

- Depreciation, amortisation and impairments

16,909

15,895

 

- ERP Costs written off

676

-

 

- Loss on disposals

113

694

 

- Fair value loss/(gain) on financial assets

493

(843)

 

- Share-based payment

765

2,034

 

- Interest income

(46)

(17)

 

- Finance costs

8,202

5,814

 

- Depreciation of right-of-use assets

5,346

3,138

 

- Unrealised foreign exchange loss / (gain) on foreign cash held

1,128

(346)

 

- Other non-cash items

481

638

 

- (Decrease)/Increase in expected credit loss provision

(6)

 1,454

 

- Bad debts written off

385

 218

 

- Release of provisions

-

(721)

 

Operating profit before working capital changes

50,776

51,371

 

 

Adjustments for working capital changes:

 

- Decrease / (increase) in inventory

306

 (4,898)

 

- Increase in trade and other receivables

(5,274)

 (11,362)

 

- Increase in trade and other payables

12,471

 7,970

 

- Decrease in provisions

-

 (1,429)

 

58,279

 41,652

 

 

 

 

13.2

Reconciliation of borrowings and leases

Loans & borrowings

Lease liabilities

Total

US$'000

US$'000

US$'000

At 1 January 2024

104,198

29,450

133,648

Cash flows:

 - Drawdowns

20,000

-

 20,000

 - Interest paid

(5,577)

(1,456)

(7,033)

 - Principal repayments

(12,463)

(4,560)

(17,023)

Non-cash flows:

 - supplier credit facility received

10,665

-

10,665

Vendor financed mortgage

3,680

-

3,680

 - Interest expensed during the period

5,830

1,456

7,286

 - Unamortised debt arrangement costs

(1,546)

-

(1,546)

 - Additions to leases

-

7,862

7,862

At 30 June 2024

124,787

32,752

157,539

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

 

13.

Note supporting the Statement of Cash Flows (continued)

 

13.2

Reconciliation of borrowings and leases (Cont'd)

Loans & borrowings

Lease liabilities

Total

 

 

US$'000

US$'000

US$'000

At 1 January 2023

75,619

16,267

91,886

Cash flows

 - Drawdowns

25,000

-

25,000

 - Interest paid

(3,741)

(857)

(4,598)

 - Principal repayments

(9,210)

(2,634)

(11,844)

Non-cash flows

 - supplier credit facility received

6,613

-

6,613

 - Interest expensed during the period

4,250

857

5,107

 - Unamortised debt arrangement costs

(1,732)

-

(1,732)

 - Additions to leases

-

10,479

10,479

At 30 June 2023

96,799

24,112

120,911

 

 

14.

Segmental analysis

 

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:

- Africa:

Derives revenue from the provision of drilling services, mining services, surveying, IT support services and mineral assaying.

- Rest of world:

Derives revenue from the provision of drilling services, 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 2024, management reviewed the composition of the Group's operating segments and the allocations of operations to the reportable segments.

 

 

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

14.

Segmental analysis

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 2024

Africa

 

Rest of World

 

Consolidated

 

US$'000

 

US$'000

 

US$'000

External revenue

148,870

20,564

169,434

Segment profit / (loss)

52,939

(10,617)

42,322

Central administration costs and depreciation

(17,343)

Profit from operations

 24,979

Fair value gain on financial assets

 (493)

Interest income

46

Finance costs

 (8,202)

Profit before tax

 16,330

 

 

For the six months ended 30 June 2023

Africa

 

Rest of World

 

Consolidated

 

 

US$'000

 

US$'000

 

US$'000

 

External revenue

142,776

11,494

154,270

 

 

Segment profit / (loss)

54,494

(9,725)

44,769

 

 

Central administration costs and depreciation

(16,403)

 

Profit from operations

 28,366

 

Fair value gain on financial assets

 844

 

Interest income

 17

 

Finance costs

 (5,814)

 

Profit before tax

 23,414

 

 

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.

 

 

 

The following customers from the Africa segment contributed 10% or more to the Group's revenue:

 

30 June 2024

 

30 June 2023

 

 

 %

 

 %

 

 

 

Customer A

31%

35%

 

Customer B

15%

17%

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

14.

Segmental analysis (continued)

 

 

As at

 

30 June 2024

 

31 December 2023

 

US$'000

 

US$'000

Segment assets:

Africa

618,523

567,699

Rest of world

255,502

92,454

Total segment assets

874,025

660,153

Head office companies

364,956

338,507

1,238,981

998,660

Eliminations *

(724,797)

(530,912)

Total assets

514,184

467,748

Segment liabilities:

Africa

259,612

257,526

Rest of world

112,701

61,173

Total segment liabilities

372,313

318,699

Head office companies

394,036

373,103

766,349

691,802

Eliminations *

(530,491)

(497,201)

Total liabilities

235,858

194,601

 

 

 

 

 

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 loss:

30 June 2024

30 June 2023

 

US$'000

US$'000

 

Depreciation

 

Africa

19,118

 17,581

 

Rest of world

2,912

 1,188

 

Total segment depreciation

22,030

 18,769

 

Head office companies

225

 253

 

22,255

19,022

 

 

Loss on disposal of property, plant and equipment

 

 

Africa

100

 687

 

Rest of world

-

 -

 

Total segment loss on disposal

100

 687

 

Head office companies

13

 7

 

 

113

694

 

 

 

 

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

14.

Segmental analysis (continued)

 

 

 

 

Six months ended

 

 

30 June 2024

30 June 2023

 

 

US$'000

US$'000

 

Impairment on Inventory

 

 

Africa

 

Stock Provision

472

 (689)

 

Stock Write Offs

24

 317

 

496

(372)

 

Rest of world

 

Stock Provision

10

 5

 

Stock Write Offs

(1)

 -

 

9

5

 

Total segment impairment

505

(367)

 

Head office companies

-

826

505

459

 

 

 

15.

Commitments

As at

 

30 June 2024

30 June 2023

 

The Group has the following capital commitments at 30 June:

US$'000

US$'000

Committed capital expenditure

26,482

25,192

 

 

 

 

16.

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.

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

 

 

17.

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 1:

quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

Level 2:

inputs other than quoted prices included 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 3:

inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

 

 

As at

 

30 June 2024

 

31 December 2023

 

US$'000

US$'000

 

Level 1 - Listed shares

45,379

44,756

 

Level 3 - Unlisted shares and derivative financial assets

2,401

2,398

 

47,780

47,154

 

 

 

The reconciliation of the investment valuations from 1 January 2024 to 30 June 2024 is as follows:

 

 

Level 1

 

Level 3

 

Total

 

US$'000

 

US$'000

 

US$'000

 

At 1 January 2024

44,756

2,398

47,154

 

Additions

5,404

-

5,404

 

Disposal

(4,894)

-

(4,894)

 

Fair value gain/(loss)

113

3

116

 

At 30 June 2024

45,379

2,401

47,780

 

 

Level 1

 

Level 3

 

Total

 

US$'000

 

US$'000

 

US$'000

At 1 January 2023

30,435

8,292

38,727

Additions

7,238

2,020

9,258

Disposal

(3,313)

(1,083)

(4,396)

Fair value (loss)/gain

3,512

53

3,565

Transfer from level 3

6,884

(6,884)

-

At 31 December 2023

44,756

2,398

47,154

 

CAPITAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONT'D)

For the six months ended 30 June 2024

 

17.

Financial instruments (Continued)

 

 

(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 2024 closing prices. No secondary valuation methodologies have been considered as all the Company's investments are listed on active markets.

 

 

 

Level 3 shares

 

 

 

The Group's investments held at Level 3 are valued either on a net asset approach or cost approach.

 

 

 

Net asset approach

 

 

 

Management applied a net asset valuation methodology at 30 June 2024 for certain unlisted investments based on the Group's share ownership percentage of the unlisted company's net asset value. The unlisted company publishes some of its significant net asset value information and management then derives the investment at fair value attributable to the Group.

 

 

 

Cost approach

 

 

 

Management holds all other unlisted investments at cost where this represents the best estimate of fair value.

 

 

 

(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.

 

18.

Investment in associate

 

In H1 the Group completed a US$6.6 million strategic investment in Eco Detection Pty Ltd ("ECO"), acquiring a 22% ownership stake in the company. ECO is incorporated in Australia and produces analysis systems for monitoring water quality. Due to the percentage owned by the Group being greater than 20%, this investment has been accounted for in accordance with IAS 28, as an investment in associate rather than as an investment at fair value.

 

19.

Events post the reporting date

 

On 14 August 2024 the Group announced the sale of its entire shareholding in Predictive Discovery Limited ("PDI") (being 225,349,418 shares ("Sale Shares")) to Perseus Mining Limited ("Perseus") for total cash consideration of AU$ 47.3 million (A$ 0.21 per Sale Share), equivalent to US$ 31.2 million.

 

The agreement with Perseus includes a profit share arrangement whereby Capital and Perseus have agreed to share (on a 50/50 basis) the profit, if any, derived by Perseus from a subsequent sale by Perseus of the Sale Shares to any third party that occurs on or prior to 31 December 2025.

 

In addition, should Perseus make a takeover offer for PDI on or prior to 31 December 2025 at a price of greater than A$0.21 per ordinary share in PDI, then Capital will have a call option to acquire back from Perseus the Sale Shares for the original sale price, subject to Capital's commitment to accept the takeover offer for PDI in respect of such Sale Shares.

 

 

CAPITAL LIMITED

STATEMENT OF DIRECTORS' RESPONSIBILITY

For the six months ended 30 June 2024

 

 

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 DTR4.2.7R 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 2023.

 

 

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 14 August 2024.

 

 

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

 

Risk is inherent in our business and can manifest in many forms. Capital is committed to effective risk management to best achieve its business objectives.

The identification, management and reporting of risk uses formal risk management processes to improve decision-making and minimise the impact of an event occurring that may influence our corporate strategy, as well as operational and project activities.

By understanding and managing risk, we believe we provide greater certainty and confidence for our shareholders, employees, customers, suppliers, and for the communities in which we operate.

Our risk management approach includes:

· Establishing a standard approach to the management of risk and to the acceptable levels of risk throughout the business.

· Establishing a consistent process and methodology for identifying, assessing, and ranking risks in conducting our business activities.

· Ensuring compliance with applicable laws, regulations and governance standards in all areas of our operations.

· Regularly monitoring our major areas of risk exposure and setting requirements for our personnel to proactively identify risk.

· Responsibility and accountability for risk management is allocated at all levels of the organisation, from frontline employees up to the Board level.

Our top ranked risks are listed below and are those risks that are assessed as having a residual risk rating of high or above within Capital's ERM Framework.

Area

Description

Mitigation

General reduction in levels of activity across the mining industry

The Group is highly dependent on the levels of mineral exploration, development and production activity within the markets in which it operates.

A reduction in these activities, or in the budgeted expenditure of mining and mineral exploration companies, will cause a decline in the demand for mining services.

The Group is seeking to balance this risk by building a portfolio of long-term mine-site contracts, expanding its services offering into mine-site based activities such as load and haul mining, and also expanding both its client base and geographic reach.

The Group's operations are generally focused on mine sites, with limited exposure to exploration-only activities which can be more volatile.

Capital has strong existing relationships with our clients at both executive and operational levels which helps ensure that the Group is aware of and prepared for potential changes and well placed to identify new opportunities as they arise with our key business partners.

The Group's strategic focus is on blue-chip, high-quality clients with long term project commitments that are inherently less susceptible to industry fluctuations.

 

 

 

 

 

 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties (continued)

 

Area

Description

Mitigation

Enterprise Resource Planning (ERP) system failure

The Group's existing ERP system is monitored and supported by internal technical staff as it is no longer maintained by the publisher, SAGE.

The system requires regular downtime for routine maintenance during which time the system is unavailable to support the business.

Capital's staff are experienced in maintaining the current ERP which minimises system downtime.

The implementation of a new, modern ERP system, Microsoft Dynamics, is well progressed and expected to begin to replace the existing system during 2024.

Risk to cash repatriation

Restrictive currency controls in certainoperating jurisdictions can impact theGroup's ability to repatriate cash.

The Group maintains multiple bankaccounts in jurisdictions where cashrepatriation can prove challenging,which can provide greater access toforeign currency payments.

The Group maintains strong relationswith its key transactional bankingpartners and any new country entryprocess includes specific due diligencerequirements relating to the operation of the banking system.

Risk of key contracttermination

Some contracts can be terminated for convenience by the client without penalty.

Key contracts include agreed noticeperiods as well as demobilisation and/or termination fees where a contract is terminated for reasons beyond the Group's control.

 

Contract renewal negotiations arecommenced well in advance of theexpiry of fixed term contracts.

Strong client relationships help the Group to better understand the needs of our clients and partner with them to continue to meet their current and future needs.

 

Decline in mine-siteproduction levels

A significant proportion of the Group'srevenue is derived from producing mines which carry their own risks and can be subject to, for example, unforeseen changes in mine plans due to geological or technical challenges, changes to a client's operational budget or broader strategic objectives andchanges in global commodity prices

The producing mines which account fora significant proportion of the Group'srevenue tend to have long-term mineplans and well understood geology.

 

Many contracts include fixed fee elements which help mitigate the revenue impact of short-term reductions in activity levels.

 

The Group focuses on ensuring operational excellence and seeks continuous improvement to increase our overall value proposition as a strategic partner for our clients.

 

 

 

 

 

 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties (continued)

 

Area

Description

Mitigation

Deterioration in healthand safety record

The Group's operations are subject tovarious health and safety risks associatedwith drilling and mining including, in thecase of individuals, personal injury andpotential loss of life; and, in the Group'scase, interruption or suspension of siteoperations due to unsafe operations.

Health and Safety is an absolute priorityfor the Group.

Overseen by the Board, the HSSE Committee, the CEO and senior management team provide strategic leadership in this area and lead a programme of open and honest communication with employees at all levels and in all areas of the business.

Some of the Group's safety initiatives, including those around training and monitoring as well as the innovative Safety Risk Leadership Walk, are detailed on our website and have contributed to safety milestones such as 15 years LTI free at our Mwanza facility.

Over exposure to one commodity sector

Gold is an important commodity that contributes significantly to the Group's order book and tender pipeline.

Price and demand fluctuations in this single commodity could have a material impact on Capital's financial performance

The Group seeks to secure long termcontracts with blue-chip clients (e.g. five-year drilling extension with Centamin at Sukari, new two-year grade control contract with Perseus at Sissingue).

The Group's exposure to other commodities has increased in recent years and Capital continues to actively seek opportunities with a focus on transition materials (e.g. the Reko Diq copper/gold project).

 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties (continued)

 

Area

Description

Mitigation

Reduction in value of equity investmentportfolio

Through Capital Investments, the Group holds investments in a portfolio of both publicly traded and private companies.

The accounting value of these investments is marked to market at each reporting date and the fair value adjustment is accordingly recorded in the profit and loss account as an unrealised gain or loss.

The value of the investments will change and could materially alter both the Group's reported net assets and net profit position.

By diversifying its holding into a portfolio of investments in various companies, the Group aims to mitigate the risk from a significant devaluation of a single investment holding.

Following the listing of Allied Gold Corporation during 2023, the Group's investment in private companies is considered immaterial.

The portfolio is subject to a robust governance structure, with the Group's Investment Committee being required to include at least one Independent Non-Executive Director.

The committee actively monitors existing investments for performance and ongoing strategic alignment.

New investments are required to satisfy a number of criteria. In the event the fair value of investments gives rise to an unrealised loss, while this would affect the Company's net assets and profitability, it would not affect cashflow or give rise to any going concern implications.

Geographical risk

The Group operates in a number of jurisdictions where social unrest and resulting economic turbulence are common, both of which have the ability to significantlydisrupt operations and threaten safety and security of Capital's assets and personnel.

The Group is seeking to continue to diversify its operations geographically including, for example, recent significant new contracts in North America.

 

The Group has considerable practical experience in operating successfully in many jurisdictions and plans are in place to secure the safety of personnel in the event of significant security issues.

 

Safety and security are key considerations in the Group's due diligence processes when considering entry into new jurisdictions or significant additional investment into existing jurisdictions. Depending on the findings of the due diligence process, Board approval may be required in order to proceed.

 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties (continued)

 

Area

Description

Mitigation

Limited access to new funding sources

Inability to access bank debt and/or inability to access equity capital from the market.

Debt facilities not available in time to support the ongoing growth of the business.

Capital is focused on capital efficiency and maintaining balance sheet flexibility. The Group prioritises building and maintaining strong relationships with banks as well as our existing OEM finance providers such as CAT, Sandvik and Epiroc.

 

The Group has expanded its portfolio of bank lenders to include Nedbank, one of Africa's premier banks. The increase in the revolving credit facility from $50 million to $75 million in the period provides additional balance sheet flexibility to deliver on future growth opportunities.

 

Senior management continues to engage regularly with shareholders.

 

Energy transition

Capital is subject to both risks and opportunities associated with the global energy transition and climate change.

Traditional diesel-powered mining equipment will be replaced by more energy efficient, low-carbon alternatives.

Increasing production in the battery minerals sector is critical to support the global transition to lower carbon technologies and slow adoption of these new technologies may represent a risk to the Group's overall growth strategy.

The Group continuously assesses developments in low-carbon technology and how these developments can be appropriately introduced into our operating model and existing fleet.

 

Senior management are in regular contact with OEM manufacturers. The Executive Leadership Team (ELT) members have significant experience and knowledge in their operational field and maintain a strong awareness of industry developments.

 

Recognising the importance of seeking low-carbon alternatives to meet clientrequirements, electric underground rigs are already in use by the Group in Tanzania and a number of electric vehicles have been acquired for use as support vehicles in the Group's Nevada operations.

 

Growth in demand for battery minerals has already provided new contracts and represents a further growth and diversification opportunity for the Group.

 

We are harnessing other energy transition opportunities, which include our joint venture with Enerwhere - Mine Power Solutions, which can provide modular solar hybrid power systems to the mining sector.

 

CAPITAL LIMITED

APPENDIX: 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 2024.

ARPOR

Average revenue per operating rig

Operating profit (pre-exceptional items)

Earnings before interest, taxes, fair value gain/loss on financial assets and exceptional items

EBITDA

Earnings before interest, taxes, depreciation, amortization, fair value gain/loss on financial assets and exceptional items.

EBITDA (adjusted for IFRS 16 leases)

EBITDA 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 2024

 

30 June 2023

US$'000

 

US$'000

ARPOR can be reconciled from the financial statements as per the below:

Revenue per financial statements (US$)

169,434

154,270

Non-drilling revenue (US$)

(63,868)

(50,061)

Revenue used in the calculation of ARPOR (US$)

105,566

104,209

Monthly Average active operating Rigs

86

93

Monthly Average operating Rigs

125

124

ARPOR (rounded to nearest US$10,000)

204

188

 

Operating profit (pre-exceptional items) can be reconciled from the financial statements as per the below:

 

Profit for the period

 9,635

 17,603

Taxation

 6,695

 5,810

Interest income

 (46)

 (17)

Finance charges

 8,202

 5,814

Exceptional items: ERP implementation costs

1,654

-

Fair value adjustments

 493

 (844)

Operating profit (pre-exceptional items)

 

 

 26,633

 

 28,366

Gross profit

 74,486

 70,954

Administration expenses

 (27,252)

 (23,565)

Exceptional items: ERP implementation costs

1,654

-

Depreciation

 (22,255)

 (19,023)

Operating profit (pre-exceptional items)

 

 

 26,633

 

 28,366

 

 

 

CAPITAL LIMITED

APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)

EBITDA can be reconciled from the financial statements as per the below:

30 June 2024

30 Jun 2023

 

US$'000

US$'000

 

 

Profit for the period

9,635

 17,603

 

Depreciation

22,255

 19,023

 

Taxation

6,695

 5,810

 

Interest income

(46)

 (17)

 

Finance charges

8,202

 5,814

 

Exceptional items: ERP implementation costs

1,654

-

 

Fair value adjustments

493

 (844)

 

EBITDA

 

 

48,888

 

 47,389

 

 

 

 

 

 

 

 

Operating profit (EBIT)

 

 

24,979

 

 28,366

Depreciation, amortisation and impairments

 

 

22,255

 

 19,023

Exceptional items: ERP implementation costs

 

 

1,654

-

EBITDA

 

 

48,888

 

 47,389

 

 

 

 

 

 

 

 

 

Gross profit

74,486

70,954

Administration expenses

(27,252)

(23,565)

Exceptional items: ERP implementation costs

1,654

-

EBITDA

 

 

48,888

 

47,389

30 June 2024

30 Jun 2023

US$'000

US$'000

Adjusted net profit and adjusted EBITDA can be reconciled from the financial statements as per the below:

 

 

 

Operating profit (EBIT)

24,979

28,366

Exceptional items: ERP implementation costs

1,654

-

Interest income

46

17

Finance charges

(8,202)

(5,814)

Taxation

(6,695)

(5,810)

Adjusted net profit

 

11,782

 

16,759

 

 

 

Profit for the period

9,635

17,603

Exceptional items: ERP implementation costs

1,654

-

Fair value adjustments

493

(844)

Adjusted net profit

 

11,782

 

16,759

 

 

 

 

 

 

EBITDA (adjusted for IFRS 16 leases)

 

 

 

EBITDA

48,888

47,389

Lease payments

(6,016)

(3,492)

EBITDA (adjusted for IFRS 16 leases)

 

42,872

 

43,897

 

 

 

 

 

 

 

CAPITAL LIMITED

APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)

 

30 June 2024

 

30 Jun 2023

US$'000

 

US$'000

 

 

 

Basic EPS (Adjusted for investment gain/(loss) and exceptional items can be reconciled as per below:

 

Profit for the period attributable to owners of the parent

9,206

16,943

Fair value adjustments

493

(844)

Exceptional items: ERP implementation costs

1,654

-

Adjusted Profit for the period

 

11,353

 

16,099

 

 

 

No.

 

No.

 

 

 

Weighted average number of ordinary shares for basic earnings per share

195,026,529

191,185,152

 

 

 

Basic EPS (Adjusted for investment gain/(loss) and exceptional items (cents)

5.8

 

8.4

 

 

 

30 June 2024

 

31 December 2023

US$'000

 

US$'000

Net debt can be reconciled from the financial statements as per the below:

 

 

 

Cash and cash equivalents

39,915

34,366

Loans and borrowings - Non-current

(95,853)

(76,328)

Loans and borrowings - Current

(30,481)

(27,870)

Net debt

 

(86,419)

 

(69,832)

 

 

CAPITAL LIMITED

APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNREVIEWED) (Continued)

 

 

EBITDA

 

EBITDA represents profit or loss for the period before interest, income taxes, depreciation & amortisation, fair value gain or loss on financial assets through profit or loss and exceptional items.

 

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 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 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.

 

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 [email protected] or visit www.rns.com.RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR PIMMTMTABTTI

Related Shares:

Capital
FTSE 100 Latest
Value8,474.74
Change0.00