Capital Limited · LSE:CAPD
Capital — H1 2020 Earnings Presentation
38 slides from Capital's earnings presentation, Aug 20, 2020
Slide 1: H1 2020 Results Presentation
H1 2020 Results Presentation 20 August 2020
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: Section 1 – Summary
Section 1 – Summary
Slide 4: Capital Limited Snapshot
Capital Limited Snapshot KEY METRICS H1 2020 We provide full-service mining, REVENUE EBITDA NET PROFIT drilling, maintenance and $65.1 million $15.4 million $13.6 million geochemical analysis solutions to Up 18.8% on H1 2019 Up 21.3% on H1 2019 Up 166.7% on H1 2019 customers within the global minera
Slide 5: Our Capabilities
Our Capabilities SERVICES ACROSS THE MINING CYCLE We provide a full range of services for companies operating across the minerals mining cycle • Provides clients with a fully integrated end-to-end mining services solution • Capacity to work across all facets of a project • Deliver greater management
Slide 6: Well Established Contracts, Tier 1 Operations
Well Established Contracts, Tier 1 Operations WEST AFRICA MIDDLE EAST AND NORTH AFRICA Mauritania Mali Commenced in 2010 Commenced in 2016 • Grade control drilling Egypt Saudi Arabia • Underground, Commenced in 2005 Commenced in 2019 • Maintenance services delineation and exploration drilling • Blas
Slide 7: Gold Market
Gold Market GOLD PRICE FINANCING BY JUNIOR AND INTERMEDIATE COMPANIES Last price (US$/oz) 12M trailing average 3,500 1,800 1,700 3,000 Miner Deal Values (US$m) 1,600 2,500 1,500 2,000 1,400 1,500 1,300 1,000 1,200 500 1,100 0 Feb-18 Sep-18 Oct-18 Feb-19 Sep-19 Oct-19 Feb-20 Jan-18 Mar-18 Nov-18 Jan-
Slide 8: Our Strategy
Our Strategy STRATEGIC FOCUS AREAS DELIVERING AGAINST STRATEGY 2020 • Strong established presence in East Africa and Egypt African Focused • Continued asset relocation strategy into West Africa • Expansion into West African region • Deliver first world project execution standards in the emerging • M
Slide 9: Industry Leading Safety Standards
Industry Leading Safety Standards LTI FREQUENCY RATE TREND (2009 – H1 2020) COMMENTARY 0.41 • Industry leading safety performance • Loss Time Injury Frequency Rate (LTIFR) of 0.08 in H1 2020 • All Injury Frequency Rate (AIFR) of 0.33 0.29 0.25 • Achievement of a number of safety records including: 0
Slide 10: Section 2 – Results
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Slide 11: H1 2020 Highlights
H1 2020 Highlights STRATEGIC AND OPERATIONAL New contract wins with existing and new customers, including a Increase rig fleet utilisation to 57%, with closing fleet of 100 rigs new long-term mine-site contract ARPOR stable at $170,000, no material production interruptions Multiple LTI-free safety m
Slide 12: H1 2020 Financial Overview
H1 2020 Financial Overview % change from % change from COMMENTARY Revenue KPIs H1 2020 H1 2019 H2 2019 H1 2019 H2 2019 • Revenue US$65.1 million, an 18.8% increase on H1 2019 Average Fleet Size 99 91 92 8.8% 7.6% - Increased fleet utilisation of 57%, up 9.6% on H1 2019, with a larger fleet of 100 ri
Slide 13: Sustained Profitability
Sustained Profitability GROSS PROFIT AND MARGINS EBITDA AND MARGINS 18.0 EBITDA (USDm) EBITDA (%) Avg Margin 30% GP (USDm) GP (%) Avg Margin 27.2% 30.0 42.2% 45% 16.0 23.7% 39.1% 39.8% 23.2% 24.3% 25% 38.1% 39.4% 22.2% 22.9% 38.2% 40% 14.0 25.0 20.3% 34.5% 18.7% 35% 12.0 20% 30.5% 17.5% GP Margin %
Slide 14: Strong Cash Flow
Strong Cash Flow H1 2020 H1 2019 H2 2019 OPERATING CASH FLOW / FREE CASH FLOW Cash Flow US$m US$m US$m Cash Generated from Operations Free Cash Flow 25.0 EBITDA 15.4 12.7 14.6 Other non Cash flow adjustments 1 0.8 0.5 20.0 Operating cash flows before working capital changes 16.4 13.5 15.1 15.0 Worki
Slide 15: Capital Expenditure
Capital Expenditure US$m H1 Capex H2 Capex H1 2020 CAPEX 30.0 25.0 Rig Improvement 14.1 $1.4m 20.0 14.3 15.0 13.4 2.9 10.0 8.7 6.5 Vehicles & Trucks 15.9 6.6 12.4 * $1.2m 5.0 10.7 4.5 1.7 6.4 7.0 4.1 4.2 5.4 2.6 3.4 0.0 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY18 FY19 H1 20 Rods $2.5m • Capital e
Slide 16: Strong Balance Sheet
Strong Balance Sheet H1 2020 H1 2019 H2 2019 % change % change COMMENTARY Balance Sheet from H1 from H2 US$m US$m US$m 2019 2019 • Maintained strong balance sheet, closing the period neutral Net Cash Cash and cash equivalents 15.5 15.5 17.6 0.0% -11.9% • Investment gains substantially increased port
Slide 17: Investments
Investments BACKGROUND PERFORMANCE • Capital has selectively engaged in Drill for Equity and Direct Investment since 2015 • Capital generated substantial (unrealised) returns from the investment portfolio over H1 2020 • Investments must satisfy a number of criteria: - Strategic alignment with Capita
Slide 18: 2020 Interim Dividend
2020 Interim Dividend • Interim dividend declared for H1 2020 of US 0.9cps (2019: interim dividend of US 0.7cps) • Declared a second half interim dividend of US 0.7cps on 19 March 2020, payment date 04 May 2020 • We will continue our disciplined approach to capital management – we remain committed t
Slide 19: Section 3 – Strategy Update
Section 3 – Strategy Update
Slide 20: Growth Drivers
Growth Drivers EXPAND CAPACITY WITH EXISTING GROW ANCILLARY UTILISE IDLE ASSETS CUSTOMERS SERVICES REVENUE • Eight existing long-term contracts • Idle capacity in exploration fleet • Established range of ancillary services across mining cycle • Capital’s strategy focused on providing multiple • 2019
Slide 21: Increase Assets with Existing Customers
Increase Assets with Existing Customers LEVERAGE EXISTING INFRASTRUCTURE • Capital’s strategy focused on providing multiple services to existing clients, expanding the services as the projects develop • Leverages the existing on-site infrastructure and adds depth to the service offering • Increased
Slide 22: Increase Exploration Fleet Utilisation
Increase Exploration Fleet Utilisation IDLE EXPLORATION RIGS • H1 2020 rig utilisation of 57% (up 9.6% on H1 2019), on a fleet of 100 rigs • Production and underground fleet near full utilisation, with substantial idle capacity in existing exploration fleet • Platform for higher utilisation built in
Slide 23: Grow Non-Drilling Revenue
Grow Non-Drilling Revenue LOAD & HAUL SERVICES: CAPITAL MINING • Established the mining division, Capital Mining Services in H2 2019 • Commenced first contract for ancillary mining services at the Bonikro Mine in H2 2019 • Continue to build the core team, including Chief Development Officer, Contrac
Slide 24: Grow Non-Drilling Revenue
Grow Non-Drilling Revenue ANCILLARY SERVICES LAB SERVICES: MSALABS • Restructured management team • Increased investment in African infrastructure - Acquisition of ELAM laboratory (Cote d’Ivoire) - Commissioning of new laboratory in Nouakchott (Mauritania) • Significant increase in new clients inclu
Slide 25: Young and Expanding Fleet
Young and Expanding Fleet Our company operates one of the youngest equipment fleets in the industry, as a result of our regular maintenance and upgrades • Reputation for a quality, reliable fleet • Equipment is fitted with the latest technologies for enhanced efficiency, safety and data collection •
Slide 26: Outlook
Outlook Record gold price is a positive indicator for Capital, with over 90% of Capital Limited revenue from gold producers Surge in equity market activity during Q2 is a strong lead indicator for demand Strong industry fundamentals with improved operating cash flows for producers and a fundamental
Slide 27: Capital Limited Investment Proposition
Capital Limited Investment Proposition Tier 1 Mine-site based clients • Stable and predictable revenue streams • Diversity of services across the cycle, coupled with extension into complementary ancillary services, provides increased Business Diversification revenue security Targeted Growth • Focus
Slide 28: Appendices
Appendices
Slide 29: Our Brand Portfolio
Our Brand Portfolio Capital Drilling provides a complete range of drilling solutions for projects across the mining cycle from exploration to production Capital Mining provides complete Load and Haul services for clients from development to fully operational mine sites MSALABS are a global provider
Slide 30: Revenue Metrics
Revenue Metrics UTILISATION vs ARPOR REVENUE 65% 220 US$m 210 70.00 198 200 60% 57% 56% 56% 56% 200 65.10 189 188 60.00 62.30 61.50 55% 52% 190 60.00 177 57.11 ARPOR (US$'000) 175 191 49% 50.00 54.48 54.80 Utilisation (%) 189 180 51.60 50% 170 170 46% 183 49% 170 40.00 41.70 45% 39.00 39.70 160 30.0
Slide 31: Expansion into West Africa
Expansion into West Africa AFRICAN EXPLORATION BUDGETS BY COUNTRY, 2019 Increased Rig Count Rig count in region tripled in two years from 13 rigs at December 256 companies budgeting US$1.1 billion 2017 to 42 rigs (42% of total fleet) in West Africa by end Q2 2020 2% 2% Egypt Established Infrastructu
Slide 32: Compelling Growth Opportunities in West Africa
Compelling Growth Opportunities in West Africa STRONG EQUITY MARKET SUPPORT 2nd TOP GOLD PRODUCING REGION $4.7 B raised for West African projects 10.8Moz production in 2019 (Estimated) Financing for Gold Companies ($B) National Gold Production (Estimate) (Moz) 2009 – 2019 2019 14 12 10.5 12.2 12 10.
Slide 33: Client History
Client History Armenia Chile Antofagasta Anvil DRC APM Ethiopia Lydian Barrick Tiger BHP Billiton BHP Ethiopia Potash CMP Glencore MMG Polar Star Egypt Eritrea Ghana Kenya Mozambique Andiamo Kinross Acacia Boabab Mali Mauritania Riversdale Chalice Gold Sunridge Rio Tinto Aton Resourcs Gippsland Than
Slide 34: Board of Directors
Board of Directors EXECUTIVE Jamie Boyton • Over 20 years’ experience in finance industry Brian Rudd • Over 30 years’ experience in the mining industry in Africa and Executive Chairman • Co-founder of Capital Limited (previously Capital Drilling) Executive Director Australia • Previously Executive D
Slide 35: Corporate Snapshot
Corporate Snapshot CAPITAL STRUCTURE SHAREHOLDING BLOCKS Fully paid ordinary shares 136,980,903 Share price (as at 30 June 2020) $0.78 Top 10 Institutionals 47.3% Market capitalisation (undiluted)^ $106.30 Other Founders 14.79% Cash (as at 30 June 2020) $15.50 Debt (as at 30 June 2020)* includes ban
Slide 36: Capital Limited and Competitors
Capital Limited and Competitors Perf. Mkt. Cap. Cash Debt Net Cash Ent. Val. EBITDA (US$m) EV / EBITDA (x) P / Book Div. Yield Company (12M) (US$m) (US$m) (US$m) (US$m) (US$m) 2019a 2020e 2021e 2019a 2020e 2021e (x) (%) (%) Boart Longyear 23.7 20.2 784.3 (764.1) 787.7 87.3 135.2 - 9.0x 5.8x - n/a -
Slide 37: Glossary
Glossary The words below used in the presentation have the following meaning: ARPOR Average Revenue Per Operating Rig LTM Last Twelve Months CAPEX Cash used on acquisition of property plant and equipment less Profit or loss after tax adjusted for non-cash items +/- the net (Capital Expenditure) proc
Slide 38: 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 Telephone: +44 20 3207 7800 Telephone: + 44 20 7466 5000 André Koekemoer