Capital Limited · LSE:CAPD
Capital — H1 2021 Earnings Presentation
35 slides from Capital's earnings presentation, Aug 19, 2021
Slide 1: Capital Limited H1 2021 Results Presentation
Capital Limited H1 2021 Results Presentation 19 August 2021
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Capital Limited (the “Company”), nor shall any part of it nor the fact of its distribution form par
Slide 3: Capital Limited Snapshot
Capital Limited Snapshot We provide full-service mining, drilling, maintenance and geochemical solutions to customers within the minerals industry, focusing on the African markets YEARS OF EXPERIENCE IN EMPLOYS AFRICA 1,889 P e o p l e * 15+ OPERATING IN REVENUE BY CUSTOMER 11 A f r i c a n A n d M
Slide 4: H1 2021 Financial Highlights
H1 2021 Financial Highlights Revenue EBITDA Adjusted NPAT ¹ Equity investment FINANCIAL $98.7 million $28.4 million $12.7 million gains R E S U LT S $5.7 million Up 51.6% on H1 20 Up 84.4% on H1 20 Up 239% on H1 20 Investment portfolio grown to ($65.1 million) ($15.4 million) ($3.8 million) $31.0 mi
Slide 5: H1 2021 Operational Highlights
H1 2021 Operational Highlights 250 10% 9% STRENGTHENING DRILLING BUSINESS 200 8% 7% 150 6% • Increased rig fleet utilisation to 73% (H1 2020: 57%) EXPANDING 5% • Successful expansion into West Africa, region contributing 38% to Group revenue (H1 2020: 31%) SERVICES OPENS 100 4% • Focus on mine site
Slide 6: Maintaining Industry Leading Safety Standards
Maintaining Industry Leading Safety Standards TOTAL RECORDABLE INCIDENT FREQUENCY RATE (TRIFR) TREND COMMENTARY 2020 2021 • Total Recordable Incident Frequency Rate (TRIFR) of 0.86, well below 2.29 2.50 industry peers 2.00 1.50 1.25 • Achievement of eight LTI free milestones: 1.06 1.00 0.83 0.86 0.7
Slide 7: Macro Supportive of Increased Utilisation
Macro Supportive of Increased Utilisation GOLD PRICE v. NONFERROUS EXPLORATION BUDGET FINANCINGS* AND EXPLORATION BUDGET Last price (US$/oz) Nonferrous Exploration Budget Gold financings Base/other metals financings Exploration budgets $M 2,000 10,000 1,800 8,000 1,600 6,000 Gold price (US$/oz) $(M)
Slide 8: Strongest Demand Environment in a Decade
Strongest Demand Environment in a Decade FLEET UTILISATION DRIVING REVENUE GROWTH DRLL RIG FLEET EXPANSION • Strongest demand environment for drilling services in a decade No of rigs Utilisation (Q1) 120 100% • Driving a substantial increase in rig fleet utilisation to 73% in H1 (79% Q2) 100 80% - U
Slide 9: Sukari Waste Mining Contract
Sukari Waste Mining Contract CONTRACT SUMMARY • Largest award of new business in Capital’s history – incremental revenues of $235 - $260 million expected over four years, commenced Q1 2021 • Extended and expanded blast hole drilling contract, with additional nine¹ blast hole rigs, expanding fleet to
Slide 10: MSALABS – Positioned for Strong Growth
MSALABS – Positioned for Strong Growth EXPANDING FOOTPRINT & TECHNOLOGY KEY HIGHLIGHTS • Continued strong growth, with H1 2021 revenue of $6.5 million, up 97% on H1 2020 ($3.3 million) • African operations now contributing >50% of MSALABS total revenue, demonstrating Capital’s value since acquiring
Slide 11: Direct Investments Contributing to Business Development
Direct Investments Contributing to Business Development CAPITAL INVESTMENTS – SERVING A DUAL PURPOSE KEY PORTFOLIO HOLDINGS* • Capital has selectively engaged in Direct Investment and Drill for Equity since 2015 • Investments strategy: Investments must satisfy a number of criteria: E GY PT ˗ Strateg
Slide 12: Multiple Revenue Streams, Long-term Projects
Multiple Revenue Streams, Long-term Projects MINE SITE PROJECTS:DELINEATION, PRODUCTION, UNDERGROUND, LABORATORIES Bonikro Gold Geita Gold Bulyanhulu Jabal Sayid North Mara Sukari Gold Morila Gold Yanfolila Gold Tasiast Gold Syama Gold Mine Mine Gold Mine Gold Mine Gold Mine Mine Mine Mine Mine Mine
Slide 13: Section 2 – Results
Section 2 – Results
Slide 14: H1 2021 Financial Overview
H1 2021 Financial Overview % % CHANGE CHANGE COMMENTARY DRILLING H1 H1 H2 REVENUE KPIS 2021 2020 2020 FROM FROM H1 2020 H2 2020 • Revenue US$98.7 million, a 51.6% increase on H1 2020: - Increased fleet utilisation of 73%, up 28.1% on H1 2020 Average Fleet Size 99 99 97 0% 2% - Steady average fleet s
Slide 15: Improving Margin Profile
Improving Margin Profile EBITDA AND MARGINS EBIT AND MARGINS 30.0 EBITDA (USDm) EBITDA (%) 28.8% 35% 25.0 EBIT (USDm) EBIT (%) 25% 20.4% 25.0 27.2% 30% 20.0 17.2% 20% 25.7% 26.3% 24.3% 15.6% 14.4% 14.5% 16.0% 22.9% 23.2% 25% 22.2% 20.0 15.0 11.4% 15% 10.6% 18.7% EBITDA US$m EBIT US$m 17.5% 20% 8.3%
Slide 16: H1 2021 Cash Flow
H1 2021 Cash Flow OPERATING CASH FLOW / FREE CASH FLOW COMMENTARY Cash Generated from Operations Free Cash Flow • Cash from operations of $5.4 million in H1 2021 (H1 2020 $7.0 million): 30.0 - Impacted by a substantial build in working capital 20.0 10.0 • Working capital increase attributable to - a
Slide 17: Capital Expenditure
Capital Expenditure Cash capital expenditure Other financing Prepayments on fixed assets Total H1 2021 ADDITIONS TO PPE 70 60 17.9 50 VEHICLES & TRUCKS 2.6 $5.4m 40 US$m SUPPORT 30 7.3 RODS $2.9m $1.3m 20 RIG IMPROVEMENT 10 $1.0m 8.4 19.0 26.7 30.0 4.3 13.6 7.9 12.8 10.8 11.9 19.8 42.2 27.7 0 2009 2
Slide 18: Strong Balance Sheet
Strong Balance Sheet H1 H1 H2 % % COMMENTARY 2021 2020 2020 CHANGE CHANGE BALANCE SHEET FROM FROM US$m US$m US$m H1 2020 H2 2020 • The Group moved into a net debt position of $32.8 million at the end of H1 2021 (vs H1 2020 net debt of $0.1 million) Cash and cash equivalents 20.0 15.5 35.7 29.0% -44.
Slide 19: Investments a Strong Contributor to Earnings
Investments a Strong Contributor to Earnings BACKGROUND PERFORMANCE • Capital has selectively engaged in Direct Investment and Drill for Equity since • Capital generated substantial returns from the investment portfolio over 2020 and 2015 H1 2021 • Investments must satisfy a number of criteria: • To
Slide 20: 2021 Interim Dividend
2021 Interim Dividend • Interim dividend declared for H1 2021 of US 1.2cps (2020: interim dividend of US 0.9cps) • Note: 2020 final dividend of US 1.3 cps paid in CY 2021 Return excess to Shareholders • Capital has consistently delivered shareholder value through dividends since 2014: Investment thr
Slide 21: Section 3 – Summary & Outlook
Section 3 —- Summary & Outlook ah
Slide 22: Outlook & Guidance
Outlook & Guidance Revenue guidance for 2021 increased to $200 to $210 million, representing 52% growth on 2020 ($135 million) Gold price remains at comfortably high levels, a strong tailwind for Capital with c.90% of revenue exposed to the African gold mining sector Mining equity market activity co
Slide 23: Appendices
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Slide 24: Our Strategy
Our Strategy SERVIC ES ACROSS THE MINING CYCLE D e l i v e r A N E N D - T O - E N D E X P L O R AT I O N T O MINING SERVICES solution Focus on MINE-SITE BASED CONTRACTS across multiple services to leverage established on-site infrastructure Build a SUPERIOR PORTFOLIO OF LONG- TERM CLIENTS with blue
Slide 25: Our Capabilities
Our Capabilities DRILLING MINING L A B O R AT O R Y OTHER SERVICES INVESTMENTS • Since 2005 • Since 2019 • Since 2017 WELL FORCE • Since 2015 • Provides a complete range of • Provides complete • A global provider of • Since 2010 • Investment in junior & mid drilling solutions for projects earthmovin
Slide 26: H1 2021 Revenue Diversification
H1 2021 Revenue Diversification REGION SERVICES ACTIVITY LOCATION ROW 5% NON NON- NON MINE DRILLING* DRILLING* SITE 17% WELLFORCE 17% 12% PRODUCTION MENA 3% 30% 34% WAF EXPLORATION 38% 7% UNDERGROUND 10% DRILLING TANZANIA DELINEATION MINE SITE 83% 23% 33% 88% Note: * Mining, Maintenance, Laboratory,
Slide 27: Compelling Growth Opportunities in West Africa
Compelling Growth Opportunities in West Africa 2nd TOP GOLD PRODUCING REGION SIGNIFICANT EXPLORATION ACTIVITY 11.1Moz production in 2020 (Estimated) Region features strongly in 2020 exploration budgets National Gold Production (Estimated) (Moz) 2020 Gold Exploration Budget ($M) 14,000 1,000 11.7 832
Slide 28: Capital's Fleet of Rigs and HME
Capital’s Fleet of Rigs and HME DRILL RIG FLEET: 106 RIGS* MINING AND ANCILLARY • Further eight rigs scheduled to arrive in H2 2021 • Significant increase in Heavy Mining Equipment driven by the Sukari waste mining contract award • Pre-orders for 2022 have been placed in Q3 for a further seven rigs
Slide 29: Client History
Client History Lydian Armenia Chile Antofagasta Anvil DRC APM Ethiopia Barrick Tiger BHP Billiton BHP Ethiopia Potash CMP Glencore E GY PT MMG Polar Star M A L I M A U R I T A N I A Eritrea Ghana Mozambique Namibia Andiamo Kinross Boabab Tanga Resources Aton Resources Chalice Gold Riversdale Gippsla
Slide 30: Board of Directors
Board of Directors EXECUTIVE NON-EXECUTIVE JAMIE BOYTON BRIAN RUDD DAVID ABERY ALEX DAVIDSON MICHAEL RAWLINSON EXECUTIVE CHAIRMAN EXECUTIVE DIRECTOR SENIOR NED NED NED • Over 20 years’ • Over 30 years’ • Over 20 years • Over 35 years • Over 20 years investment experience in finance experience in the
Slide 31: Corporate Snapshot
Corporate Snapshot CAPITAL STRUCTURE SHAREHOLDING BLOCK Fully paid ordinary shares 190,054,838 As at 30 June 2021 Other Share price (as at 30 June 2021) £0.74 Founders 9.0% Top 10 Market capitalisation (undiluted) $173.50m Institutions Cash and cash equivalents (as at 30 June 2021) $19.95m Directors
Slide 32: Technology & Innovation
Technology & Innovation We are INDUSTRY LEADERS IN ADOPTING THE LATEST TECHNOLGIES to improve productivity, safety and environmental performance We integrate the latest DATA CAPTURE AND TRANSMISSION TECHNOLOGIES to meet our clients needs for accurate information, more quickly We CONSISTENTLY INTEGRA
Slide 33: Capital Limited Competitors
Capital Limited Competitors Perf. Company Mkt. Cap. Cash Debt Net Cash Ent. Val. EBITDA (US$m) EV / EBITDA (x) P / Book Div. Yield (12M) (US$m) (US$m) (US$m) (US$m) (US$m) 2020a/e 2021e 2022e 2020a/e 2021e 2022e (x) (%) (%) DRILLING CONTRACTORS Boart Longyear 19.2 23.5 878.6 (855.1) 874.3 n/a n/a n/
Slide 34: Glossary
Glossary The words below used in the presentation have the following meaning: ARPOR Average Revenue Per Operating Rig LTI Loss Time Injury CAPEX Cash used on acquisition of property plant and equipment less Profit or loss after tax adjusted for non-cash items +/- the net Operating Cash flow (Capital
Slide 35: Company Contact Details
Company Contact Details CAPITAL LIMITED UK BROKERS UK PUBLIC RELATIONS Jamie Boyton Berenberg (Joh. Berenberg, Gossler & Co. KG) Buchanan Executive Chairman 60 Threadneedle Street, London EC2R 8HP 107 Cheapside, London EC2V 6DN jamie.boyton@capdrill.com Telephone: +44 20 3207 7800 Telephone: + 44 20