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%

Capex3 ($ m)

(36.2)

(22.6)

60.2%

 




Net Debt1 ($ 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™ units, MSALABS now has the largest international network of Chrysos PhotonAssay™ technology:

§ MSALABS now has Chrysos PhotonAssay™ 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™ 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 PhotonAssayâ„¢ 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 PhotonAssayâ„¢ units, in conjunction with its traditional geochemistry business. MSALABS proudly now operates the largest international network of PhotonAssayâ„¢ technology, extending its reach across Africa and Canada and our commitment to deploying 21 Chrysos PhotonAssayâ„¢ 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

 

- ENDS -

 

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

 

 


 

 

 

Share

capital

 

 

 

Share premium

 

 

Treasury share reserve

 

 

 

Total share capital

Equity-settled employee benefits reserve

 

 

 

Other reserve

 

 

 

Total reserves

 

 

 

Retained earnings

 

Total attributable to equity holders of the Group

 

 

Non-controlling interest

 

 

 

Total

equity


 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

 






Notes

 

30 June 2023

 

30 June 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, plant and equipment



 44,922


 -  

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 - non-controlling interest



 1,193,302


-

Purchase of shares from minority shareholders



(1,267,792)


-

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


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 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

3.

Revenue


30 June 2023

 

30 June 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

 








 

 

 

 

5.

Earnings per share

 








 

Basic Earnings per share:


 

 

 

 







The profit and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:












Profit for the period used in the calculation of basic earnings per share


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.

 


 

 


 

 

6.

Dividends

 

 

 

 


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

 

 

 

Drilling rigs

 

 

 Heavy mining equipment

Associated Drilling & mining equipment

 

 

Vehicles and trucks

 

Camp and associated equipment

 

 

Computer software

 

 

Leasehold improvements

 

 

 

Total










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 2023

 

31 December 2022

 



US$

 

US$

9.

Issued capital and share premium

 











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.

 

 

10.

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$

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

 

 

 

 

 

MSALABS Ltd

CMS (Tanzania) Ltd

 

IACA Limited

 

Total

 

 

 

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

 



11.

Loans and borrowings

 











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

 


-      Increase in expected credit loss provision

 1,453,657


-

 


-      Bad debt write offs

 218,350


-

 


-      Release of provisions

(721,491)


-

 


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

 


-      Decrease in provisions


 (1,428,421)


-

 




 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



13.

Segmental analysis

 


Operating segments are identified on the basis of internal management reports regarding components of the Group. These are regularly reviewed by the 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 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 2023

Africa

 

Rest of World

 

Consolidated

 


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 2023

 

30 June 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



13.

Segmental analysis (continued)

 


For the six months ended 30 June 2022

Africa

 

Rest of World

 

Consolidated

 


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



13.

Segmental analysis (continued)

 


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 2023

30 June 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



13.

Segmental analysis (continued)

 


Segmental reporting summary by region:




 

Revenue

Non-Current Assets


 

Six months ended

 

As at


 

30 June 2023

 

 

30 June 2022

 

30 June 2023

31 December 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 at 30 June:

US$

US$







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 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 2023

 

31 December 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



38,727,041

 

Additions

 4,211,623



 4,859,346

 

Disposal

 (2,356,288)



 (2,356,288)

 

Fair value gain/(loss)

 458,372



 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



 60,151,667

 

Additions

8,713,205



9,010,521

 

Disposal

(10,345,543)



(10,345,543)

 

Fair value (loss)/gain

(19,891,712)



(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 in
levels of mining
activity

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 exploration, development and production activities, or in the budgeted expenditure of mining and mineral exploration companies, will cause a decline in the demand for mining services, as was evident in the 2014 and 2015 financial years.

 

The Group is seeking to balance these risks 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 customer
and geographic reach.

Risk of
Termination

Contracts can be terminated for convenience by the client at short notice and without penalty. Guidance is partly based on current contracts in hand, and the Group derives a significant proportion of its revenue from providing services under large contracts. As a result, there can be no assurance that work in hand will be realised as revenue in any future period. There could be future risks and costs arising from any termination of contract. While the Group has no reason to believe any existing or potential contracts will be terminated, there can be no assurance that this will not occur.

In addition, it's important that the Group maintains its project pipeline and win rate. Any failure by the Group to continue to win new contracts will impact its financial performance and position.

Contract renewal negotiations are initiated well in advance of expiry of
contracts to ensure contract renewals are concluded without interruption
to services. There are also a wide range of termination clauses across the
Group's contracts depending on the size, nature and client involved (i.e., not
all contracts can be terminated for convenience, and some contracts must be terminated with notice
and or require the client to pay us an early termination payment or demobilisation fee).

Risk of Default

The Group has financing facilities with external financiers. A default under any of these facilities could result in withdrawal of financial support or an increase in the cost of financing.

The Group has a robust system of analysing and forecasting cash and debt positions. The Group is continuing to develop a stronger facilities management system, in addition to strengthening and broadening its banking relationships.



 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties (continued)

 

Area

Description

Mitigation

Supply chain
disruption

Disruption to border crossings; equipment being held up in customs.

The Group ensures a continual monitoring of movement 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 in local tax laws, regulations and practice.

Unforeseen changes to local tax regulations leading to new or higher tax charges; unpredictable tax audit processes.

The Group employs a senior international tax specialist in the head of tax role.

The Group carries out 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
Repatriation

Restrictive currency controls which impact ability to repatriate cash from countries of operation.

The Group has multiple bank accounts in multiple currencies and seeks to move cash out of restrictive or high-risk jurisdictions as soon as possible.

Decline in Minesite production levels

The Group's activity levels and results are to a certain extent dependent on production levels at clients' mines while revenues are linked to the production volumes and not to the short-term price of the underlying commodity.

A significant proportion of the Group's revenue is derived from mines which are already in production. 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 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 Key
Customers

The Group's business relies on a number of individual contracts and business alliances and derives a significant proportion of its revenue from a small number of key long-term customers and business relationships with a few organisations. In the event that any of these customers fails to pay, reduces production or scales back operations, terminates the relationship, defaults on a contract or fails to renew their contract with the Group, this may have an adverse impact on the financial performance and/or financial position of the Group.

The Group has entered into long-term contracts with its key customers for periods between two to five years. Contract renewal negotiations are initiated well in advance of expiry of contracts to ensure contract renewals are concluded without interruption to services. The Group has historically had a strong record of completing contracts to term and securing contract extensions. The Group is selective in the contracts that it enters into to allow for options to extend 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 and
availability

The Group is exposed to increased labour costs and retention constraints in markets where the demand for labour is strong. Changes to labour laws and regulations
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.

The Group's labour costs are typically protected by rise and fall mechanisms
within client contracts, which mitigate the impact of rising labour costs.



 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties (continued)

 

Area

Description

Mitigation

Lack of equipment
availability

The Group has a significant fleet of equipment, and has a substantial ongoing requirement for consumables, including tyres, parts 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.

The Group continues to focus on supplier relationships including maintaining payment terms and identifying alternative sources.

Deterioration in Health & Safety record

Operations are subject to various risks associated with mining including, in the case of employees, personal injury, malaria and loss of life and in the Group's case, damage and destruction to property and equipment,
release of hazardous substances into the environment and interruption or suspension of site operations due to unsafe operations. The occurrence of any of these events could adversely impact the Group's business, financial condition, results of operations and prospects, lead to legal proceedings and damage the Group's reputation. In particular, clients are placing an increasing focus on occupational health and safety, and a deterioration in the Group's safety record may result in the loss of key clients.

The senior management team, led by the CEO, provide leadership to projects on the management of these risks and actively engage with employees at all levels. The Group has implemented and continue to monitor and update a range of health and safety policies and procedures including equipment standards and standard work procedures. Employees are provided with training regarding risks associated with their employment, policies and standard work procedures. Health and Safety statistics and incident reports are monitored throughout our projects and the various management structures of the Group, including the HSE committee. Where necessary policies and procedures are updated to reflect developments 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 estimating risk

 

Operations not able to deliver on tendered margins.

 

The Group goes through a rigorous process to 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 in commodity prices

Adverse movements in commodity prices may reduce both exploration budgets and the pipeline of mine-site work in the mining sector, which in turn could reduce the level of demand for the Group's drilling and mining services. This could have a material impact on the Group's operating and financial performance.

The Group focuses on mine-site low-cost operations where activity is less
susceptible to adverse commodity price movements. In addition, the Group is implementing a diversification strategy which is focused on developing new service offerings, developing a finance/capital strategy that provides balance sheet strength and allows for organic and inorganic growth in the business, and also diversifying through M&A opportunities.

Over exposure to Gold

Gold is an important commodity contributing to the Group's order book and tender pipeline. If the gold industry were to suffer, it would have a material adverse effect on the Group's revenues and profitability.

The Group is in the process of implementing a diversification strategy in terms of developing new service offerings, developing a finance/capital strategy that allows for organic and inorganic growth in the business, and diversifying through M&A opportunities.

Adverse impact of
climate change

 

Risks related to the physical impacts of climate change include increased incidence and severity of extreme weather events that could disrupt site operations and impact the health and safety of our workforce.

 

The Group monitors weather patterns in countries/regions of operation. Fleet deployment is planned giving consideration to those weather patterns, as is scheduling of shift work. The Group ensures force majeure clauses are included within its contracts.

 



 

CAPITAL LIMITED

Principal and Emerging Risks and Uncertainties (continued)

 

Area

Description

Mitigation

Exposure to currency
fluctuations

The Group's contract pricing is in US dollars. However, in certain markets the funds are received in local currency and some of the Group's costs are also in local currency or other non-US dollar currencies. Foreign currency fluctuations and exchange rate risks between the value of the US dollar and the value of other currencies may increase the cost of the Group's operations and could
adversely affect the financial results. As a result, the Group is exposed to currency fluctuations and exchange rate risks.

To minimise the Group's risk, the Group tries to match the currency of operating costs with the currency of revenue. Funds are pooled centrally in the head office bank accounts to the maximum extent possible. The Group has significantly improved processes for the repatriation of funds to the Group's Head Office bank accounts from jurisdictions where exchange control regulations are in effect, and this remains a key focus area.

Arrangements entered into with online FX broking 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 of Inflation

Increases in cost of goods and in labour/salary costs related to higher levels of inflation.

The Group ensures accurately pursuing contractual rights under existing rise
and fall mechanisms. It ensures to price contracts with known inflationary
pressures and negotiates robust rise and fall mechanisms.

Reduction in values of Investments held

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.

The Group holds a portfolio of investments in various companies, mitigating the risk of single company weakness. The Group's Investment Committee actively monitors existing investments for performance and strategic alignment.

New investments are required to satisfy a number of criteria with non-Executive oversight. In the event of fair value investments becoming an unrealised loss, while this would affect the company's net assets and profitability, it would not affect going concern or cash flow.

 

ERP system failure

 

ACCPAC, the current ERP system is not monitored by Sage but by internal resources, therefore minimising downtime due to necessary maintenance is reliant on having the appropriate skills internally.

 

Project underway to implement and transfer to new ERP system.

 



 

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 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 2023

 

30 June 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

APPENDIX: 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

APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)


 



30 June

2023

 

31 December 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

APPENDIX: 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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