Capital (LSE:CAPD) — Half Year Results

0:01 Good morning, ladies and gentlemen, welcome to the CAPITAL LIMITED Half Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab situated on the right hand corner of the screen. Just simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Before we begin, we'd like to submit the following poll. I'm sure the company will be most grateful for your participation. I'd now like to hand over to Chairman, Jamie Boyden.

0:34 Good morning. Good morning. Welcome, everyone, to CAPITAL LIMITED's first half twenty twenty three results call. With me today, I have Rick Robson as the group's CFO based in London and Connor Rowley, head of corporate development also based in London. I'm cognizant of the fact that we released these results last week. So Rick and I are gonna go through the presentation very quickly. So please do allow for that because I think, yeah, as I said, it's it's it's news from a week ago and I think most people I would assuming would be focused on the q and a session. So I'll kick off, with a financial overview.

1:23 It was a pleasing half for us. Revenue growth just shy of 12%, EBITDA growth 10%, cash flow from operations up 10%. When we released, we declared a dividend of 1.3¢ a share. That's flat, on the corresponding period in 2022, and we maintained our revenue guidance, of 320 to 340,000,000. The the business continued to generate strong returns, 23% return on capital. We've been running north of 20% return on capital for five five to six years now, so very pleased with the returns profile of the business, maintaining modest gearing at point seven times net debt to EBITDA, and we had a modest increase in our investment portfolio, but worth noting that that does not include a revaluation of our stake in the unlisted Allied Gold Corporation, which is scheduled to list in the second half of this year.

2:25 Some highlights for the first half. The drilling business, utilization in the first half was 75%. Some of you might recall from last year, we made a very deliberate strategy in the second half of last year to, pare back some of our activities at at the more marginal jobs or smaller scale jobs. We we we noted at the time that a sweet spot for utilization was 75%, bang on target in the first half of the year. Particularly pleasing was announcing our second major mining contract, which was with Vindo, which is the Bollinger iron ore deposit in Gabon. It's with a global major FMG, fourth largest iron ore company in the world, and a really strong endorsement of our mining team, particularly pleasing that we're, you know, we're in a ramp up phase now and that is being done with within our existing facilities without having to go to market, which is I know something that the market had been questioning us about, in terms of the growth of that mining business. Labs business continues, its rapid rollout. We'll we'll get to that in in another slide, but very, very, rapid rollout successfully being successfully in executed.

3:42 We increased our, credit facilities. We added Nedbank to our lending syndicate, which again is just a sharp sign of the business reaching greater maturity in terms of its profile in the capital markets and another outstanding peer industry leading performance with our safety. So very, very pleased with that. I won't dwell on the the next couple of slides. They're the maps of our operations. I think the the most pertinent point is that, if we take a look at this versus three or four years ago, just the increase in the quality of the customer base, the increase in the quality, of the projects that we're working on, it really is the absolute tier one, of projects across the Africa and or Middle Africa and Middle East.

4:32 Laboratories, look. The the the growth is is extremely rapid and very pleasing. The footprint just gets stronger and stronger. Big progress has been made particularly in Canada over the last eight months rolling out the CHRISOS photon assay units across, the Abbottabee Gold Belt and the Golden Triangle, in in BC. Macro continues to be very supportive. I'm sure those on the call have heard us talk about it before, but we still are in a an up cycle, a little bit of softness in some of activity at the junior end of the market in the second quarter. No impact on on capital. We had growth in our businesses across all operating businesses in the second quarter.

5:22 The however, exploration spend is still 40 odd percent below previous peak cycle levels. CAPITEX spend, 50% lower. So we're still operating in a very robust environment, strong tendering environment. I'll delve into the individual operating businesses. As you can see, the drilling business, modest growth in the first half. I think the most significant thing is that, a, operating at target utilization, b, starting some fairly significant jobs, Evindo iron ore that I mentioned earlier with Fortescue and Gabon. That there's two parts to that contract or two parts to that project, I should say, a drilling contract and a mining contract. The drilling contract kicked off first.

6:08 The Rico Dick copper project, that will kick off in the current half. And these are just major global world scale projects that we are that we're working on. So very, you know, very pleased again with our drilling business. And, 85% of the drilling revenues generated from activities at mine sites continuing to provide resilience to our earnings stream. Mining, Gabon covered covered it. It's gonna the the contract as we announced is a $30,000,000 per annum contract over a potential five year term, and that complements the existing very closely, follows the existing three year reverse circulation and diamond contract that we had announced.

6:57 It adds another feather in the cap for the mining team. Obviously, Sukari has been extremely successful and continues to hit all its production targets. This now brings us on stream with another customer, Sukari's large scale equipment, Gabonnie's small to medium scale equipment, broadens our portfolio and broadens our presence in the in the mining market. That project is in ramp up right now, so we'll see the benefits of that particularly in q four and q one of next year onwards. Laboratories, the top left really tells a pretty pretty strong story. The sample growth has been exceptional. We've deployed or constructed another six rigs in the first half of the year.

7:43 With the commissioning of the CHRISOS photon assay units across Canada, We're now the largest provider of these of the service globally. So we're very pleased with that, and we're on track with the for the rollout of 21 units, by 2025, and maintain our guidance this year for 40 to 50 and our longer term guidance of 80,000,000 in 2025. Investments. What is significant here? And I know there are questions in the q and a, so I'll I'll touch over this. But the portfolio has been significantly concentrated, reduced in terms of number of holdings over the last few years. And what's particularly pleasing is the model of early stage investing and working with the companies as they mature through the mining cycle phases is starting to bear fruit. We are gold, which we which we actually had a hand in creating the portfolio of assets for Weir.

8:42 They announced a maiden resource. They've now moved up up the triangle into resource develop definition and development projects, and it's looking like a very promising deposit. LEO has started to produce DSO ore, and move into full scale production in the first half of next year. And Allied, CAPITAL provided, financing back in 2019, for the purchase of their first gold mine, They now got three producing gold mines, and as I said earlier, are moving to an IPO in the second half of this year. So the investments are moving up the value chain very nicely. I'll skip over the innovation slide just for today just in the interest of time and q and a and hand over to you for financials, please, Rick.

9:31 Thanks, Jamie. So we covered off a lot of the headlines, and I think a couple of points to touch on here. So another strong, performance for the half and important across all key divisions as well as key regions within the group. EBITDA adjusted for the IFRS leases. So as a reminder for people, we are adjusting our EBITDA by the cash cost of our capitalized leases. This is primarily the Chrysos leases in the labs division. We are, consistent with the year end, presenting our EBITDA adjusted for that Of traditional EBITDA, it's adjustment of $3,500,000. That's a figure that over time will will grow as we roll out more leases within more Christoph units within that division.

10:23 So we're getting ahead of it. So, again, 43,900,000 EBITDA on the half at a margin of 28.5%, so consistent with the first half in 2022. Geared up for a strong second half with the ramp ups, as Jamie referred to at Avindo Drilling and Recodique in Pakistan, but also importantly, the Avindo Mining contract and the crushing services component in in coupon as well.

11:00 Just on the the investments, net buyer and a half, $2,500,000 invested. And at the June 30 there, we were at $42,000,000 of of mark to market value. You know, as Jamie said, concentrated portfolio, half of that value is is held in predictive. And importantly, again, just to reiterate, the allied stake is is valued at our own relative valuation as opposed to a reference to the IPO price and and plans. So potentially some some upside to to that. And then, again, this is a strategy that, you know, over time, we're we're at a net investment here of 15,000,000 with with a compelling return there of a 180 over a 180%.

11:51 Just looking at the returns. So as I said, the the EBITDA on adjusted basis, consistent level. We are seeing a little lower profitability coming through on the labs business just as a function of of the rollout and the and the ramp up of of of those laboratories. So, you know, those ramp ups will will have to take a little bit of time to get up to full capacity.

12:16 On the return side, again, consistently good return there on the ROCE. We have got slightly elevated capital employed there on the half just because of the window CapEx on the on the mining side, particularly, which, obviously, cash flows and and well, EBIT and cash flows haven't come through yet. So that will that will change into the second half and and certainly into next year. So confident that we can maintain that that high level of of ROCE. Looking at the net debt, started the year of '47, finished the half at 66. Just take you through to take you through the journey. A lot of that is wind down mining coming through, so not only on the CAPITEX where we're probably something in the order of two thirds through the CAPITEX spend.

13:08 We're also seeing working capital inventory build. We included in that working capital amount is

13:16 that we procured the crushing equipment for on sale to a window. So there's a there's a elevated component of that working cap. I think on the interest and taxes interest, particularly, we're seeing elevated finance charges in the group just because of the a, the amount of debt we've we've taken on, but, b, just the finance charges are are higher given the base rate is is elevated at the minute.

13:46 CapEx wise, we previously guided 50,000,000 to 60,000,000 for the year. We increased that to 65 to 75 basis to 15,000,000 of new CapEx for the Ubindo mining contract. 65 to 75 does sort of incorporate a higher sustaining CapEx base just given our increased scale

14:11 of the business. And on the on the half there, we've we've spent 36 of of the guided amount. Importantly, that 36 includes OEM debt financed assets.

14:28 Just looking at the balance sheet, gross debt just under a $100,000,000 of gross debt. Half of that is is a fully drawn RCF of 50,000,000. So the RCF, as Jamie mentioned, we we upsized or doubled doubled that to 50,000,000 earlier in the year, brought on Nedbank alongside our

14:49 traditional lender, Standard Bank. So the main objective of that RCF was to be able to fund larger contracts as they as they come to us, and not have to go back to market each time, to raise to raise funds. So the RCF is is is doing exactly what we intended it to do. We we are midway through that mobilization as we speak for Vindo in Gabon. So we're seeing that sort of peak debt level, which we as the cash flows come through, we hope to delever that position. Macquarie asset backed facilities are secured against the kit in in at Sukari. So at the half, it's about 26,000,000 with the residual being our OEM debt facilities with Epiroc and Samvik in respective rig purchases.

15:42 Overall, that's a net debt to EBITDA of point seven, so pretty modest level, which we which we feel comfortable And then just to finish up for me, declared the interim div of 1.3 in line with last year's interim. And I think it's you know, we we will maintain our disciplined approach to capital management here, and we we are committed to a strong balance sheet. We're paying payment date for the DIV, earmarked for early October. Back to you, Jamie. Okay. Thanks, Rick. Look. Outlook is particularly pleasing again, particularly solid, I should say.

16:30 The second half, we should see we expect to see, and we're guiding to see a resumption of decent growth.

16:40 With the first half numbers at one fifty four, that implies off our guidance about one seventy six in the second half. The drivers of that really are gonna be the ramp up of activity at Avendo and in Rick at Rico Dick. So we should start to see expect to start to see the benefits, of a lot of hard work in the first half coming through in the second half.

17:07 The sector remains very buoyant. Demand remains strong. We're seeing a lot of opportunities. So on that note, I think I'm gonna hand it over to to the moderator, O'Connor, and we can move into the q and a. That's great. Thank you, Jamie, Rick, for updating investors this morning. Ladies and gentlemen, please do continue to submit your questions using the q and a tab just situated on the right hand corner of the screen. Just while the company take a couple of moments just to review your questions submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can

17:37 be accessed via your Investor Meet company dashboard. Connor, if I may, I'll hand back to you. As you can see, you've had a number of questions from investors this morning. So thank you to everybody for your engagement. If I may, just ask you to read out the questions, and I'll pick up from you at the end.

17:53 Thanks. Alright. So I think I'll, as usual, just try and group these together. So, look, I'll start with some of the the divisional questions, and then there are some general ones to go through. So maybe start with you, Jamie. There's quite a few questions on CAPITAL DI. I guess, first of all, from a roadshow perspective and talk to our institutional investors, what is their feedback on on on this division and their understanding of it?

18:25 I would say, generally, the the we get more acceptance of the model from our institutional client base than than we seem to get from our retail sorry, client base. Our retail, institutional shareholder base than our retail shareholder base. Where it particularly resonates, is with the resources funds, because we end up finding a lot of dialogue taking place about the positions that we're invested in.

18:54 Connor, I mean, perhaps you might be as well situated to answer this given you've I I've I've not done this most recent roadshow. Obviously, you have. Yeah. I think the the view that resonates is, you know, it it's it's not seen as maybe retail does as sort of a as just sort of sitting behind the computer and picking some stocks. It it's it's much more about having a seat in the room with these companies, finding, you know, what they're looking at, what assets they're looking at. It often adds to our BD pipeline in terms of who we go speak to, etcetera. So it's that sort of

19:29 sort of secondary understanding of where this this division gets us rather than purely just, you know, sitting like a fund manager would and just investing in stocks that we like the look of. But I guess given moving on from that, I mean, from you know, the market clearly isn't giving us value. Can you talk about the investment, the net investments that we made in the first half and why? Look. I've you know, I I referenced that question earlier. I took some notes on it, but the market is not giving us value. I I think that is a valid point. But I'd also argue I wouldn't necessarily just focus in on the investments and say the market's not giving us value for the investment. I'd argue the market's not giving us value for the drilling business, the mining business, or the or the labs business.

20:18 If I go right back to 2019, 2020, at that stage, we really were a drilling business. At that stage, we were trading at discounts to the market despite a better margin profile, a better returns profile. In the ensuring period, we've grown the top line and the EBITDA line very strongly. We've, obviously had a fantastic growth story in MSA, and we've had a very good performance in investments. Argue the market's not valuing any part of our business particularly favorably. I I wouldn't just single out the investments.

20:52 In terms of the investment portfolio, specifically, it does get a lot of focus from retail, as we said earlier. I think some numbers that are worth bringing into to bear is the net investment in this strategy is $15,000,000.

21:07 The asset base of the company at the end of the first half is $440,000,000. So contextually, you're talking about 3% of the company's asset base, that is in investments. Our net investments, for the period between 2020 and the first half of twenty twenty three, net investments is 1,500,000 against the CAPITAL of just over 200,000,000. So I think, just, you know, the context around that, I think, is pretty important. In terms of the first half, we made a net investment, in it was Predictive. We first got involved with Predictive back in 2020 prediscovery after we reviewed the company and saw the potential in their portfolio in Guinea.

21:55 We've contributed capital raisings from point 80% all the way up to 18¢. Most recent was at 15¢. Share price today is 20¢. We have, 200,000,000 shares in the company. It's been an outstanding performer. And as Rick said, it represents about 50% of the portfolio.

22:14 Where we are at the moment, portfolio is heavily concentrated, predictive, LEO Lithium, Allied, constitute about 80% of the portfolio, and we're very pleased with all three of those companies because they're moving through the value chain. And that's the critical point about the portfolio. They started as quite young companies. In the case of Allied, we provided bridging to allow them to buy their first producing mine, is a bit of unusual case,

22:41 but that is going through the value chain coming to IPO, at IPO second half of this year. LEO Lithium, we provided bridging finance back in 2020. We contributed, through their life cycle. They go into production next year. Predictive, have just reported a 5,400,000 ounce, up well, upgrade to 5,400,000 ounces, scoping study due later this year, expecting permitting next year.

23:08 I don't personally think they'll be around at the end of this time next year. It's an extremely attractive asset. So, anyway, the the question I think was what did we invest in the first half? It was following our money with the capital raising with Predictive at $0.15 a share.

23:27 Okay. Thanks. Just, I guess, to follow-up on Predictive, there's a question that Predictive said we own 9.8% of Predictive JV number of shares. That is about correct, if it isn't exactly correct. What is our view? You've mentioned from an investment there, but in terms of drilling and mining opportunities at that asset as well. Well, we're currently drilling there, and we have been now for about three years. I think it's important to make this point as well to to something you said earlier, Connor. The investment committee is a separate committee to the operating business. The investment committee has a number of people, including myself and Connor and a number of independent board directors. And we look at investments on a standalone basis, as well as then the operations people will look at operational contracts.

24:17 In predictors case, we are doing the drilling. I know there's some discussions on lab mining. That's that's further out.

24:25 But, obviously, any contract that we have with one of any of our investee companies is commercial arm's length because all of our investee companies have to go through a tendering process, which which, again, has to be independent of the investment.

24:41 Okay. Thanks. And another question on another of the portfolio Allied. You mentioned everything moving up the supply up the value chain. You know, I Allied had been pretty public about an IPO happening. What is our thoughts on that investment? Well, it's done first of all, it's done spectacularly well. I mean,

25:02 based based on the published or advertised at IPO price, it it will be a very good performer for us. We're very pleased with what the team has has has achieved.

25:17 As I said earlier, we we help them with the purchase of their initial mine. They now have three operating mines, a fantastic development project called Kermik in Ethiopia, and coming to market in the second half of this year. Sorry. Kind of the other part of the question, or does that cover it? That was it covered it. And what is our plan and on that investment? Okay. So I got asked this question earlier. I mean, obviously, a lot of people are being a little more direct. What how are you gonna be selling it? Our our response to that has been we would never publicly state our position about the equities we have, whether we plan to buy them, sell them. The comment I have made is that we we're an early stage investor. That is the approach we take where we can provide assistance both financially, strategically, operationally,

26:09 and that is the the the model we followed with all our investments. With Allied early stage, we provided assistance financially. We provided assistance operationally. As the assets reach maturity, we can no longer provide the financial support. These are self sufficient companies as they move toward production coming to market. So it really it's a it's a more mature asset. We're not a natural holder of more mature assets. But a direct question, the the answer is it will depend entirely on the valuation. We we take a very systematic and peer peer based view on valuations, and, obviously, we'll take that into account when the IPO takes place. Okay. Great. Maybe we'll move on to some mining questions.

26:54 There's a couple here about Avendo. What what kind of equipment have we bought for that asset, and what is the future of that project?

27:04 And then also just so so did we move any kit from Sukari to that project? No. In terms of Sukari, Sukari's large scale in fact, what you can see on on this slide right now, that's a seven eight five hundred and fifty ton dump truck. You're talking much smaller equipment, 50 odd, 60 odd ton, ADTs articulated dump trucks. So no equipment from Sukari. It is a smaller scale operation at this stage, articulated dump trucks. We did, however, move some of the smaller excavators we had, 60 fifteens, three ninety fives. For example, we have moved the sixty fifteen from West Africa. Saqqara, we operate 60 forties.

27:50 We moved dozers and graders from West Africa. So it's a combination of new capital, and existing capital that we've used to get this job off the ground. It's starting at a pretty small scale. I'm not sure that we've disclosed the actual tonnage, so I won't go into that, but it is not at a scale that is near Sukari at the start, but it is in ramp up phase. And as I say to most investors, there's not very many cases where iron ore companies or iron ore mines run at lower volumes than gold mines. That's just not the way you do iron ore mining. So we're very excited that there will be upside, as the project reaches commissioning and settles in, we think there'll be upside. Okay. Thanks. And then on Sukari, you know, can you discuss the options of the what next for that contract and and when we might know?

28:46 We're expecting to know to hear in the next couple of months. They I think they flagged a new mine plan within a month. Options on the options, and I say this that they're they're just running through feasible options. One is the contract gets extended at the current capacity. I think highly unlikely. This was a very

29:11 definitive discrete piece of CAPITEX. I don't think Centimeters will be coming back to market and saying we're doubling down and doing it again. So I think realistic options here are an extended extend an extension on a reduced capacity or alternatively, the contract comes to a conclusion around the middle of next year. We don't know that with concrete plans yet, so we'll be we should know that with it, as I said, within the next couple of months.

29:38 Currently, just to round that out, the brokers, broker forecasts have that contract coming to an end next year, so it goes to zero. We have effectively, we've backfilled the revenue in their models by, winning the Avendo contract. So their models dropping Sakari off have now been replaced with Avendo as it ramps up. Obviously, should we get an extension, that would be an increase to their numbers and our numbers. However, in the event that we don't get an extension, there are currently,

30:10 three tendering opportunities on the table that could utilize that fleet.

30:17 Yep. Maybe it's just worth adding just on the value of that fleet as well because I think consensus have it going to zero. I mean, one or two have extending, but the majority are having it to zero. But, also, they're assuming their numbers that that kit just sort of disappears. So they don't have a sale of it or reuse in any way.

30:34 Yeah. Maybe talk about the the value of that kit in this market. Yeah. I won't be specific about the the written down value, but what what's happened since we purchased this fleet, and as I said earlier, it's a large scale fleet. There's seven eight five trucks, there's seven 17 of them, there's sixty forty excavators, there's sixty twenty. This is large scale mining equipment. The market has just gotten increasingly tight over the last three or four years, which makes a fleet like this I would think if you were to test the market now to procure this fleet, it's probably an eighteen month exercise. So it makes this fleet strategically a lot more valuable. The other question we often get asked is the life of the this kit, and that's all down to engine engine hours, frame hours.

31:21 But if properly maintained with working on three, four year cycles, you can

31:26 get up to twelve years out of it. We are obviously, the Sukari contract itself is about three and a half, four years. It was a mix of new and secondhand. So we've certainly got, you know, a good one, one and a half cycles left in this equipment. So there is a lot of value still in this fleet. Okay. Thanks, Jimmy. Moving on to a couple on labs. So there was a recent Chrisos announcement. I'm gonna assume this question was accurately copied and pasted from that r and s saying, historically, the companies, this is Chrisos have mainly been deployed to laboratory customers. Recently, the company's focus is shifting towards deployment on mine sites. Can you talk to this announcement and and how it might affect MSA Labs? So they're pivoting from, sorry, commercial to to mine site. Is that essentially the question? Yeah. Yeah. I couldn't talk to we do actually have the location of every one of their labs, And I think that's probably inaccurate when I think through where they are, that's probably an accurate statement. So, yeah, it's probably been prop properly cut and pasted.

32:39 Certainly, let me speak our own footprint. We're probably we're probably 40% mine site, 60% commercial. So we're not really seeing the skew that way. But what has what has happened, which is what they might be talking to, is as this technology has become increasingly accepted, the major mining companies are engaging to put these units on on their mine sites. Obviously, the first unit that was ever placed internationally was October 2021, which was Barrick, the Bullunhulu mine in Tanzania, we operate, and then they put one at Kibali, again, we operate. That has really led to an increase of demand from the majors because these units operate. They need about 35, 40,000 samples per month where they can process or I should say. So it's really the big minds that are interested, and and that could be the demand dynamic they're talking to.

33:42 Okay. Thanks, Jamie. The question here on the non part of the business. Can you give an outlook coming from we've clearly built some new labs that are non CRISSOS in the first half. Is that a good indication that demand is still strong for traditional, and what's the outlook for our traditional geochemistry business? The demand is still strong. Absolutely. They include some prep labs, which is smaller scale, some small fire assay labs. You know, and the and the prep labs are actually really whilst they're small, they're very important part of the business because it's effect that, you know, it's the hub and spoke model where the prep labs are effectively your collection point. You prepare the samples. You obviously, therefore, reduce a lot of the volume before they sent to the to the major labs for processing.

34:28 So the traditional side of the business is very strong. The multi element is picking up. Lithium testing to state the obvious is increasing. We actually set up a pre lab in Bulgoguni in Southern Mali. We've been doing work for in that lithium belt. So short answer is yes. There's there's strength across both the Chrysos business and the traditional labs. Okay. Thanks. And before we get to general questions, one on innovation. I mean, maybe it's worth just touching on so a reminder of what is the strategy with this business, how big a budget is there for it, what for it there, and and just generally, you know, how do we look at this from a returns basis and sort of what next of what we're looking at here?

35:13 Yeah. I'll I'll tackle I'll tackle the strategy because I think I do recall seeing some questions and feedback that there's perhaps a misunderstanding. The strategy was us investing in startup technology. The predominant basis of this strategy is to it's it's a team that reviews technologies that can be applied to our business and and potentially commercialized. And the the genesis of this idea was Chrysos. We were first to market internationally with Chrysos. We went through a two year process of testing and discussing with Chrysost, and then we're starting to roll that out through our international network.

35:58 This is a cut, paste, rinse, repeat, if you like, of that thematic. So we've now signed a joint venture with a company called Anywhere, and we're rolling out mobile power solutions across a lot of our sites in Africa, growing our Wellforce tool downhole tool business. But, again, we we're we're assessing technologies to determine their appropriateness to to roll out across our business and commercialize. That is the strategy. Now I think on the on to answer the the budget question, there are funds allocated to to that innovation strategy, but it's relatively low level. So I think in the region of low or mid single digit million dollars for for 2023.

36:51 And this is, you know, this is, you know, where we're investing in these technologies to to effectively create efficiencies and productivity gains elsewhere in the business. So there is a there is a you know, can be quite a quick benefit there for purchasing the equipment that then gets put into use pretty quickly. Okay. Thanks. I guess, come back to the general questions. I mean, lots of people have asked this in many different ways, but maybe just ask it very generally. What is your thoughts on the share price? Why do you think we are so cheap, especially in very recent, well, the last month or two? Yes. What are your thoughts? And and, you know, what is our sort of plan to sort of tackle it?

37:38 I'm gonna let you take the first part, Connor, if I could, because you've got greater sort of touch points in recent times in the market. But what we're doing about it, I'll I'll tackle. Sure. I think there's a number of points. So the one that we did see is, you know, some nervousness of I'll do it sort of chronologically. Some nervousness of some direct to selling, which we'll ask as a separate point. Or maybe, Jamie, you could just touch on on that when you respond. Yeah. The second one that really hit us was we did have a number one or two institutional sellers. Not massive. You know, a sort of a top 20 is still broadly the same. But, also, it it happened to be in a time where, you know, savvy retail guys will know that our liquidity completely dropped out of the market sort of late June, July, August, and that so, you know, when you have a persistent seller in a very low liquidity market, which isn't just us, I think it's the broader market, that hurt us. So I think, you know, there was a day when we we jumped 6% randomly on a day. I'll tell you that's because we cleared that seller and then popped straight afterwards.

38:51 And I think the third point more recently is definitely West Africa. You've seen some of our West African peers have similar more recent you know, maybe you could tackle this one as well. West Africa, it's sort stability political stability has come up a lot. It came up a lot on the road show. And, you know, I think we're sort of dragged down by that Africa risk rather than anything specific to us. And then and I think to a lesser extent, you know, some a little bit of frustration with the investment portfolio that we haven't yet sort of recycled out of that, but I think we've sort of we've we've addressed that earlier in terms of the plans there. Okay. My response on direct to selling, I actually had a phone call with one of our major shareholders at the time that I sold some shares.

39:43 His questions were pretty straightforward, which were, am I still committed to the business? The answer is yes. The reasons I was selling, which I'd shared with him at a personal level for taking some money. And the third thing most quickly said, when was the last time you sold stock? I said 2016, and I bought in 2020, and he went, fine. Got it. So that's director selling. I hope that covers it. I mean, I've not sold stock, for seven years before selling this. Insta selling, I think you've covered. West Africa political stability. Look. I harp back to us. You know, my my first involvement with West Africa dates back to 1997. At the time, there was a coup going on in the Ivory Coast. In in recent years, there's been coups in Mali, Guinea, Burkina, and most recently, Niger.

40:34 You know, this isn't unusual for the regions in which we operate, but the market is getting a lot giving it a lot more attention. And when I get asked about Africa in general, you know, our experience now spans twenty years, and we've had occasional strike action. In terms of full loss production, we've lost about one and a half days at one of our operations thirteen years ago due to extended strike action. The noy the headlines are of are obviously pretty negative. The reality on the ground is that business keeps functioning. That said, we do attract an Africa risk discount.

41:22 And I think it's important to point out that we are growing our platform in North America. When we first set up MSA Labs or first really started to grow MSA Labs, I say, the initial growth was in Africa using CAPITAL's network. Now that MSA, its revenue is about half, North or The Americas and Africa, but it's opening up opportunities for our business to look in North America. And, you know, we think having some contract wins and expanding our presence in North America will will we hope, start to appease the market a little bit about their perception about the African discount. I should also point out, you know, that a big part of our business is obviously, you know, East Africa and and and Egypt are the biggest part, which have been very stable, jurisdictions in in in recent years.

42:22 Investment portfolio, I think we've covered, Connor, but, you know, recycling of capital is absolutely, a focus, but these these things don't have happen overnight. As as I've said earlier, we invested early. Three of three of the portfolio positions, the the most significant are all reaching a maturity phase in the next eighteen months that will will have us look at them in a different lens. Other things to, you know, where we think we address the share price. I mean, I think looking at opportunities in the developed markets I've covered, second half revenue is gonna start to show some decent decent growth as the projects ramp up, recycling of capital, that I just referenced.

43:08 And I think the other important one is that this rollout of MSA Labs has taken the business from profitability in 2022 to being a loss maker in 2023. It's all part of the expansion plan. We're rolling out labs very aggressively. As that capacity utilization picks up, profitability improves. And, again, we expect MSA to inflect back to profitability over the next eighteen months. So as we look forward now, there's a number of catalysts that I think you're gonna have quite a material, difference on on the profile of the business looking forward. Okay. Thanks. And I guess one other that that many people have asked here, you know, given the share price weakness, what are your thoughts on buybacks? I think look. I think we are cheap. Look. We are cheap. On any metric, we're cheap.

43:58 I've been asked this question before, and, obviously, we've done a small buyback in the past. I've been asked this question in recent times. My my answer to it is you can see we've been through a very elevated period of capital investment. The last three and a half years, tad over 200,000,000. Where we've been investing is in projects that have the potential to be the next Sukaris and the next Gators where we've been operating for twenty years. So we need to always make that trade off between our capital investment for what will be a portfolio position that will give us runway for the next decade versus the immediate benefit of a buyback. I see the compelling logic in a buyback.

44:43 You can see what our CapEx guidance is for for for 2023. It certainly remains an option for the company, but with the current capital spend, it limits our options with respect to that. Okay. Thanks. Any more burning questions? Get them in the queue quickly. But one quick easy one maybe for Rick. Is capital innovation spend OpEx or CapEx? Yes. It's well, it's a mixture, really. So, look, as I guess, some of the very initial spend, we'll we'll look to capitalize where we can. But as we as we sort of roll those strategies out within the business, they they become a more OpEx based point and and in some cases, like an MPS or the Mindpower Solutions will hopefully generate return of its own accord, I. E, revenue, and be a, if you like, a profit center for us. So I think, you know, just to re reiterate then, I think a decent amount of the spend this year, if you like, will be more at the CAPITAL end of the scale, with with some, p and l benefits to come.

46:00 I think it's worth stressing that the the CAPITAL is in hardware predominantly. When you're talking things like downhole survey tools that we were previously renting, we have now CapEx purchased those. That's for our workforce business. It turns over about $4,000,000. The margins have been significantly improved by spending money on purchasing our own tools, increasing our margins, good returns. They're the sorts of initiatives. The NPS that Rick mentioned, that that's purchasing remote power that reduces diesel costs, for example. This isn't investments in start up software that may or may not work. These are as I said earlier, we're they're they're proven technologies that we're rolling out through our platform. That's great, Connor. As you say, that takes care of all the questions. So thank you to everybody for your engagement once again. If any further questions do come in, we'll make those available to the company post today's meeting.

46:55 Jamie, I know investor feedback is particularly important to you and to the company, and I'll shortly redirect those on the call to give you their feedback. But I wondered if I may, before doing so, just ask you for a few closing comments, and then I'll redirect investors. Well, closing comments are fairly straightforward. Just wanna thank everyone for, dialing in and taking the time, and we we appreciate the questions. We welcome the questions. Encourage you to please submit feedback and keep the questions coming, but, hopefully, the call was valuable for everyone. Thank you very much. That's great. Jamie, Rick, Connor, thank you once again for updating investors today. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of CAPITAL LIMITED, we'd like to thank you for attending today's presentation.

47:47 Good morning to you all.