Business
Full Year Financial Results
Full Year Financial Results.
About this update from Capital Limited
Capital Limited ("Capital", the "Group" or the "Company") Full Year Financial Results for the Year Ended 31 December 2024 Capital (LSE: CAPD), a leading mining services company, today provides its full year financial results for the year ended 31 December 2024. FY 2024 FY 2023 vs FY 2023 Revenue 348.0 318.4 9.3% EBITDA (adjusted for IFRS 16 leases and exceptional items) 1,2,3 80.0 91.8 (12.9%) Operating Profit 39.3 60.3 (34.9%) Operating Profit (excluding exceptional items) 4 47.3 60.3 (21.5%) Investment Gain / (Loss) 12.1 3.0 304.7% Net Profit After Tax (NPAT) 18.3 38.5 (52.5%) NPAT (excluding exceptional items and investment gain/(loss)) 4 14.3 35.5 (59.7%) Earnings per share Basic EPS (cents) 8.9 19.1 (53.5%) Basic EPS (excluding exceptional items and investment gain/(loss)) (cents) 6.8 17.5 (61.1%) Final Dividend per Share (cents) 1.3 2.6 (50.0%) Cash from Operations (adjusted for IFRS 16 leases) 2 77.1 84.3 (8.6%) Capex 5 67.2 69.0 (2.6%) Net Debt 1 75.7 69.8 8.5% Investments held at fair value 30.3 47.2 (35.8%) Margins EBITDA Margin (adjusted for IFRS 16 leases and exceptional items) 1,2,3 23.0% 28.8% Operating Profit Margin 11.3% 18.9% Operating Profit Margin (excluding exceptional items) 4 13.6% 18.9% NPAT Margin (excluding exceptional items and investment gain/(loss)) 4.1% 11.2% All amounts are in US dollar millions unless otherwise stated (1) EBITDA and Net Debt are non-IFRS financial measures and should not be used in isolation or as a substitute for Capital Limited financial results presented in accordance with IFRS. Alternative performance measures are detailed on pages 21 - 22 of this results announcement. (2) Adjustment for the cash cost of the IFRS 16 leases, which amounts to $13.1 million in 2024 and $8.2 million in 2023. (3) Exceptional items include ERP implementation costs of $2.7 million (2023: nil) and provisions against VAT receivables of $2.5 million (2023: nil). (4) Exceptional items include ERP implementation costs of $2.7 million (2023: nil), provisions against VAT receivables of $2.5 million (2023: nil) and impairments relating to MSALABS of $2.8 million (2023: nil). (5) Capital expenditure (Capex) consists of cash purchases of PPE, prepayments for PPE and assets purchased through OEM-financing. FY 2024 Financial Overview · FY 2024 revenue of $348.0 million, up 9.3% on FY 2023 ($318.4 million); · FY 2024 EBITDA (adjusted for IFRS16 leases and exceptional items) of $80.0 million, down 12.9% on FY 2023 ($91.8 million); · FY 2024 EBITDA margin (adjusted for IFRS16 leases and exceptional items) down to 23.0% (FY 2023: 28.8%); · Value of the Group's strategic investment portfolio as of 31 December 2024 decreased to $30.3 million (FY 2023: $47.2 million) including net cash disposal of $28.9 million; · Operating Profit of $39.3 million for FY 2024, down 34.9% on FY 2023 ($60.3 million). Excluding the impact of exceptional items, adjusted operating profit is $47.3 million, down 21.5% on FY 2023 ($60.3 million); - The Company has taken the decision to book non-cash provisions and impairments in 2024 primarily relating to historical VAT receivables and various laboratory assets in Mali. · Net Profit After Tax (NPAT) of $18.3 million for FY 2024, down 52.5% on FY 2023 ($38.5 million). Excluding the exceptional items and impact of investment gains, adjusted NPAT is $14.3 million for FY 2024, down 59.7% on FY 2023 ($35.5 million); · Basic Earnings Per Share (EPS) of 8.9 cents for FY 2024, down 53.5% on FY 2023 (19.1 cents). Excluding the impact of exceptional items and investment gains, adjusted EPS is 6.8 cents, down 61.1% on FY 2023 (17.5 cents); · Cash from Operations (adjusted for IFRS 16 leases) of $77.1 million for FY 2024, a decrease of 8.6% on FY 2023 ($84.3 million); · Total Capex of $67.2 million for FY 2024, a decrease of 2.6% on FY 2023 ($69.0 million). Total capex consisted of cash capex of $34.5 million (2023: $47.9 million), prepayments of $4.0 million (2023: $5.3 million) and financed capex of $28.7 million (2023: $15.8 million); · Net Debt of $75.7 million, an increase of 8.5% on FY 2023 ($69.8 million); and - Net debt excludes the investment holdings of $30.3 million. · Declared a final dividend of $1.3 cents per share, to be paid on 15 May 2025 which, together with the interim dividend of $1.3 cents per share brings the total dividends declared for 2024 to $2.6 cents per share (2023: $3.9 cents per share). Operational and Strategic Highlights · Safety performance maintains its exceptional standing on a global scale with the 2024 Total Recordable Injury Frequency Rate ("TRIFR") of 0.78 per 1,000,000 hours worked, broadly in line with FY 2023 (0.75). · Capital Drilling - Continued strength of our core business: · Recent contract awards (previously announced): - An 18-month diamond drilling services contract at the Mingomba Copper Project in Zambia owned by KoBold Metals; - A 2-year diamond drilling services contract at Perseus Mining's Yaouré Gold Mine in Côte d'Ivoire; - A 6-month reverse circulation drilling services contract with Aton Mining at its various exploration properties in Egypt; and - A 6-month diamond drilling services contract with Lotus Gold at its project site in Egypt. · Fleet utilisation for FY 2024 was 73%, compared to 73% in FY 2023; · Average monthly revenue per operating rig ("ARPOR") was $204,000 in FY 2024, up 9.7% on FY 2023 ($186,000); and · Rig count increased from 127 to 130 through FY 2024, net of depletion. FY 2024 FY 2023 vs FY 2023 Closing fleet size 130 127 2.6% Average Fleet 126 125 0.8% Fleet utilisation (%) 73% 73% (0.8%) Average utilised rigs 92 92 0.0% ARPOR 1 ($) $204,000 $186,000 9.7% Surveying revenue ($m) 5.4 3.7 45% Total Drilling and associated revenue 2 ($m) 239.1 215.2 11.1% (1) Average revenue per month per operating rig (2) Associated revenue refers to revenue generated from complementary services tied to our drilling operations. · Capital Mining - New contract award at Reko Diq · Major new contract award at Reko Diq: - As previously announced, the Company has a letter of intent from Barrick, the operators of Reko Diq, to significantly expand our service offering at their 50% owned major copper-gold project in Pakistan beyond the reverse circulation and diamond drilling geotechnical services we have provided since early 2023; - These additional works will utilise the majority of the Group's combined mining fleets and covers two components: § Early works civils focused on the construction phase of the project prior to first production. The first items of equipment are anticipated to arrive on site in H1 2025; and § Tailings storage facility ("TSF") mining services, with phased arrival of further equipment on site planned through 2025 with a gradual ramp up in operations from Q4 2025 onwards and currently envisaged to be at run rate utilisation in H2 2026. · Other mining contracts came to an end in FY 2024: - Sukari Gold Mine (Egypt) waste mining contract came to its natural end in September 2024; and - At Belinga (Gabon), the customer gave notice to conclude our mining contract early in Q4 2024, as they altered their development strategy at the project. · MSALABS - Ramping up Nevada Gold Mines contract · Nevada Gold Mines contract: - The first stage of our state-of-the-art laboratory at Nevada Gold Mines, equipped with Chrysos PhotonAssay TM technology, started receiving samples in Q4 2020 after a slower-than-expected start to the construction of the laboratory and subsequent ramp up; and - Detailed design of second-stage wet chemistry and multi-element assaying facility is underway and is expected to be commissioned in H1 2026. · New laboratory in Fairbanks, Alaska: - We have completed construction of a new laboratory in Alaska. While this is a commercial laboratory, we expect to reach strong utilisation rapidly underpinned by large scale contracts with both Northern Star and Kinross Gold. · Continued rollout of Chrysos PhotonAssay TM units: - MSALABS possesses the largest international network of Chrysos PhotonAssay™ technology; - MSALABS relationship with Chrysos Corporation remains strong with plans to deploy 21 units globally; and - MSALABS has forged a global partnership with Barrick and Chrysos to deliver PhotonAssay TM technology across Barrick mine sites. · Capital Investments - Significant returns realised · Sale of entire shareholding in Predictive Discovery to Perseus Mining for a total cash consideration of ~$31.2 million during H2 2024; · The total value of investments (listed and unlisted) was $30.3 million as at 31 December 2024 ($47.2 million as at 31 December 2023) including net cash disposal of $28.9 million; · As at 31 December 2024, the investment portfolio has realised ~$12 million more than total cumulative amounts invested. · The portfolio continues to be focused on a select few key holdings with our holdings in WIA Gold and Sanu Gold comprising over 80% of our investments. Outlook · Revenue guidance for FY 2025 of $300 - 320 million; · Capital Drilling will focus on consolidating ramp ups in key growth area, particularly in Nevada, USA, and ensuring efficiency and productivity across the Group's drilling operations; · Capital Mining will commence the Reko Diq early works civils contract during the year, pending final contract negotiations, with revenues weighted to H2 2025; · MSALABS is consolidating its existing platform in key strategic locations. We aim to deliver our robust pipeline having strengthened our business development function. Additionally, we expect full run-rate revenues from the first stage of our Nevada Gold Mines laboratory and our Fairbanks laboratory. · Capital expenditure is expected to be $45 - 55 million in FY 2025. This will fund the rebuilds and other ancillary spend relating to the new Reko Diq mining contract, typical sustaining and replacement capex across the drilling business to ensure ongoing productivity and the continued expansion of MSALABS; and · Tendering activity remains robust across the Group with a number of high-quality opportunities progressing. 2024 Final Dividend Timetable · Ex-Dividend Date: 17 April 2025 · Record Date: 22 April 2025 · Last Date for Currency Elections: 24 April 2025 · Payment Date: 15 May 2025 Dividend Currency Elections The dividend will be paid on 15 May 2025, in US Dollars ("USD") with an option for shareholders to elect to receive the dividend in Pounds Sterling ("GBP"). Currency elections should be made no later than 24 April 2025 as per the instructions detailed on the Company website ( www.capdrill.com ). Payments in GBP will be based on the USD/GBP exchange rate on 22 April 2025) and the rate applied will be published on the website thereafter. Commenting on the results, Jamie Boyton, Executive Chair, said: "2024 has been a pivotal year of transition for Capital as we establish foundations and a clear roadmap to evolve into a larger, more resilient business - one equipped to deliver consistent margins through the cycle. Nevertheless, this has not come without challenges with the ramp ups of some of our key growth areas, particularly in North America, behind expectations and negatively impacting our Group financials. In response, we have implemented a range of structural changes within our management team to better position our business to execute on the significant growth opportunities availed to the Group. As a result, we expect margins to bottom in H1 2025 and see a recovery thereafter. 2025 revenue is expected to be in the range of $300 - 320 million with revenues H2-weighted given the ramp up of new projects, predominantly in our mining business. As we look forward, we see significant growth coming on stream across MSALABS, our mining division, and through continuing to leverage our strong drilling platform. Importantly, this growth comes with reduced capital spend, largely utilising equipment we already own, following a major investment cycle over the past 4 years. This is highlighted by our 2025 capex guidance of $45 - 55 million, a significant year-on-year reduction. This allows us concentrate on successfully finalising the current ramp ups and drive cash flow and a return on our investments. Whilst we acknowledge challenges throughout the year, we remain positive about the outlook for the business and are excited by opportunity suite ahead of us. We have set a clear pathway to putting the current challenges behind us and driving positive momentum through 2025 and a resumption of growth into 2026 and beyond." Capital Limited will be hosting a live webcast presentation at 9:00am GMT on Thursday 27 th March 2025, where questions can be submitted through the platform. The webcast presentation link: Issuer Services | London Stock Exchange | Capital Limited FY 2024 Results Participants may join the webcast approximately five minutes before the commencement time. A copy of the Company's presentation will be available on www.capdrill.com - ENDS - For further information, please visit Capital's website www.capdrill.com or contact: Capital Limited [email protected] Jamie Boyton, Exectuive Chair Rick Robson, Chief Financial Officer Conor Rowley, Corporate Development & Investor Relations Tamesis Partners LLP +44 20 3882 2868 Charlie Bendon Richard Greenfield Stifel Nicolaus Europe Limited +44 20 7710 7600 Ashton Clanfield Callum Stewart Rory Blundell FTI Consulting +44 20 3727 1000 Ben Brewerton [email protected] Nick Hennis Lucy Wigney About Capital Limited Capital Limited is a leading mining services company that provides a complete range of drilling, mining, maintenance and geochemical laboratory solutions to customers within the global minerals industry. The Company's services include exploration, delineation and production drilling; load and haul services; maintenance; and geochemical analysis. The Group's corporate headquarters are in the United Kingdom and it has established operations in Canada, Côte d'Ivoire, Democratic Republic of Congo, Egypt, Gabon, Ghana, Guinea, Kenya, Mali, Mauritania, Pakistan, Saudi Arabia, Tanzania, United States of America and Zambia. CAPITAL LIMITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2024 Audited Audited Notes 2024 2023 US$'000 US$'000 Revenue 3 348,000 318,424 Cost of sales 4 (203,233) (171,524) Gross profit 144,767 146,900 Administration expenses 5 (56,945) (46,852) Depreciation, amortisation, and impairments 6 (48,562) (39,766) Operating profit 39,260 60,282 Interest income 38 65 Finance costs (16,741) (13,002) Fair value gain on financial assets 12,097 2,989 Share of loss of associate (387) - Profit before taxation 34,267 50,334 Taxation 7 (15,949) (11,804) Profit and total comprehensive income for the period 18,318 38,530 Profit attributable to: Owners of the parent 17,315 36,737 Non-controlling interest 1,003 1,793 18,318 38,530 Earnings per share: Basic (cents per share) 8 8.87 19.09 Diluted (cents per share) 8 8.85 18.82 CAPITAL LIMITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2024 Audited Audited Notes 2024 2023 ASSETS US$'000 US$'000 Non-current assets Property, plant and equipment 10 240,969 208,657 Right-of-use assets 11 32,062 29,684 Goodwill 1,296 1,296 Intangible assets 794 572 Other receivables 13 10,790 9,789 Investment in associate 6,300 - Total non-current assets 292,211 249,998 Current assets Inventories 61,912 61,922 Trade receivables 12 60,226 49,567 Other receivables 13 26,044 24,055 Investments at fair value 30,304 47,154 Current tax receivable 505 686 Cash and cash equivalents 40,526 34,366 Total current assets 219,517 217,750 Total assets 511,728 467,748 EQUITY AND LIABILITIES Equity Share capital 14 20 19 Share premium 14 64,719 62,390 Equity-settled employee benefits reserve 3,972 5,763 Other reserve 190 190 Retained income 202,674 195,515 Equity attributable to owners of the parent 271,575 263,877 Non-controlling interest 11,813 9,270 Total equity 283,388 273,147 Non-current liabilities Loans and borrowings 14 86,925 75,521 Lease liabilities 22,226 21,109 Trade and other payables 7,511 2,057 Deferred tax 3,195 34 Total non-current liabilities 119,857 98,721 Current liabilities Trade and other payables 57,821 50,685 Provisions 203 487 Current tax payable 10,640 9,315 Loans and borrowings 14 28,259 27,052 Lease liabilities 11,560 8,341 Total current liabilities 108,483 95,880 Total equity and liabilities 511,728 467,748 CAPITAL LIMITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2024 Notes 2024 2023 US$'000 US$'000 Cash flow from operating activities Cash generated from operations 15 90,133 92,532 Interest income received 38 65 Finance costs paid (12,097) (9,441) Interest paid on lease liabilities 11 (3,067) (2,081) Tax paid (11,282) (11,905) Net cash from operating activities 63,725 69,170 Cash flow from investing activities Purchase of property, plant and equipment 10 (34,469) (47,876) Proceeds from sale of property, plant and equipment 300 69 Purchase of intangible assets and cloud computing arrangements (2,352) (1,777) Purchase of investments at fair value (8,480) (9,258) Purchase of investment in associate (6,688) - Proceeds on sale of investments at fair value 37,278 4,668 Cash paid in advance for property, plant and equipment (3,970) (5,318) Advance payments on leases (1,825) (1,205) Net cash from investing activities (20,206) (60,697) Cash flow from financing activities Proceeds from loans and borrowings 14 30,000 38,000 Repayment of loans and borrowings 14 (47,262) (26,732) Repayment of principle on leases liabilities 11 (10,008) (6,152) Arrangement fees paid for new financing (392) - Dividends paid 9 (7,686) (7,637) Proceeds from issuance of equity to non-controlling interests 719 1,193 Purchase of shares from non-controlling interest (1,603) (1,404) Net cash from financing activities (36,232) (2,732) Net increase in cash and cash equivalents 7,287 5,741 Cash and cash equivalents at the beginning of the period 34,366 28,380 Effect of exchange rate movement on cash balances (1,127) 245 Cash and cash equivalents at the end of the period 40,526 34,366 Advance payments on leases has been reclassified from financing activities to investing activities in current and prior period. The impact of this change was not material to the financial statements. CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the year ended 31 December 2024 1. General information Preparation of the condensed consolidated interim financial statements Capital Limited (the "Company") is incorporated in Bermuda. The Company and its subsidiaries (the "Group") provide drilling, mining (load and haul), crushing, mineral assaying and surveying services. The Group also has a portfolio of investments in listed and unlisted exploration and mining companies. 2. Basis of presentation The condensed consolidated financial statements are prepared on the going concern basis under the historical cost convention, except for certain financial instruments which are measured at fair value. The directors are responsible for the preparation of the results announcement. The condensed consolidated financial statements included in this results announcement has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Whilst the financial information included in this results announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with the disclosure requirements of IFRS. The Group's 2024 Annual Consolidated Financial Statements have been prepared in accordance with IFRS. The results announcement does not constitute a dissemination of the annual financial reports. A separate dissemination announcement in accordance with Disclosure and Transparency Rules (DTR) 6.3 will be made when the Annual Report and audited consolidated Financial Statements are available on the Company's website. The accounting policies are in terms of IFRS and consistent with those of the prior year. The financial information for the years ended 31 December 2024 and 2023 does not constitute the annual financial statements. The annual consolidated financial statements for the year ended 31 December 2024 and 2023 were completed and received an unmodified audit report from the Company's Auditors. Going concern As at 31 December 2024, the Group had a robust balance sheet with a modest debt gearing with equity of US$284.3 million and loans and borrowings of US$116.3 million. Cash as at 31 December 2024 was US$40.5 million, with net debt of US$75.7 million. Investments at fair value at the end of December 2024 amounted to US$30.3 million which provides additional flexibility as these investments could be converted into cash. This robustness is underpinned by stable cash flows generated by a diversified service offering and diversified contract portfolio. Revenues continued to perform strongly in 2024 with increased revenue of 9% compared to 2023. Commercially, the Nevada Gold Mines contract should reach its full capacity during the year and we expect MSALABS to continue its strong revenue growth experienced in 2024. Furthermore, the Group continues to leverage its strong relationships across the mining sector with contract extensions at Perseus' Sissingué Gold Mine in Côte d'Ivoire and new contract awards at their Yaouré Gold Mine in Côte d'Ivoire and the Nyanzaga Gold Project in Tanzania. Looking forward, the Group is currently mobilising the majority of our mining equipment fleet to Barrick's world-class Reko Diq copper-gold project in Pakistan, which will involve both early works civils and longer-term tailings storage facility mining services. In determining the going concern status of the business, the Board has reviewed the Group's forecasts for the 18 months to June 2026, including both forecast liquidity and covenant measurements. In the assessment, management took into consideration the principal risks of the business that are most relevant to the going concern assessment and reverse stressed the forecast model to identify the magnitude of sensitivity required to cause a breach in covenants or risk the going concern of the business, alongside the Group's capacity to mitigate. The most relevant sensitivity was considered to be a decrease in EBITDA through loss of contracts, with no redeployment of equipment or other mitigating actions. EBITDA would need to fall by 19% during the period of assessment for going concern to breach the covenant test (interest cover) at June 2025. However, if mitigating actions (in this case the sale of investments) were undertaken, then EBITDA would need to fall by 34% during the period of assessment for going concern to breach the covenant test (interest cover) at June 2025. Given the Group's exposure to high-quality mine site operations and strong relationships with blue-chip customers, we consider a decrease of such magnitude to be remote. Based on its assessment of the forecasts, principal risks and uncertainties and mitigating actions considered available to the Group in the event of downside scenarios, the Board confirms that it is satisfied the Group will be able to continue to operate and meet its liabilities as they fall due over the going concern period to June 2026. Accordingly, the Board has concluded that the going concern basis of preparation of the Financial Statements is appropriate and that there are no material uncertainties that would cast doubt on that basis of preparation. CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 3. Revenue 2024 2023 US$'000 US$'000 Revenue from the rendering of services comprises: Drilling and associated revenue 233,678 211,552 Revenue from Mining 65,242 64,721 Laboratory services revenue 43,647 38,405 Revenue from Surveying 5,433 3,746 348,000 318,424 4. Cost of Sales 2024 2023 US$'000 US$'000 Employee costs 89,074 70,865 Consumables 25,145 24,554 Repairs and maintenance 28,819 23,250 Fuel 3,647 5,531 Camp operational cost 6,054 6,116 Other cost of sales 7,877 9,715 Landed cost - Inventory 11,622 11,757 Equipment hire 4,235 2,245 Travel and accommodation 5,707 5,704 Safety gear and equipment 3,883 3,517 Mobilisation and amortisation 7,783 1,434 Chrysos variable costs 2,154 1,754 Insurance - Equipment 2,048 1,294 Others 5,185 3,788 203,233 171,524 5. Administration Expenses 2024 2023 US$'000 US$'000 Employee costs 22,381 19,809 Professional fees 5,594 3,813 Insurance 2,216 1,986 Rental cost 1,921 1,605 Share based payment expenses 539 3,540 Bad debts written off 258 218 Expected credit loss provision (160) 1,717 Travel and accommodation 3,788 3,211 Bank charges 1,606 1,382 Foreign exchange loss / (gain) 2,107 (151) Software costs 2,039 1,933 ERP implementation costs 2,661 - Other tax 1,439 557 Provision for VAT recoverable 2,545 - Other expenses 8,011 7,232 56,945 46,852 CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 6. Profit from Operations 2024 2023 US$'000 US$'000 The following items have been recognised as expenses in determining profit from operations: Depreciation, amortisation and impairments Depreciation and amortisation: Land and buildings 231 - Right of use assets 12,025 7,510 Computer software 9 7 Drilling rigs 10,573 10,521 Associated drilling equipment 6,082 4,900 Vehicles and trucks 4,716 4,493 Camp and associated equipment 3,925 2,594 Mining equipment 7,041 9,302 Total depreciation 44,602 39,327 Impairment: Right-of-use assets 1,766 - Drilling rigs 226 - Heavy Mining equipment 907 - Vehicles and trucks - 389 Camp and associated equipment 1,061 50 Total impairment 3,960 439 Total depreciation, amortisation and impairments 48,562 39,766 Operating lease expense Short term equipment rental 6,046 3,786 Employee costs Salaries, wages, bonuses and other benefits 111,456 90,673 Share based compensation expense 539 3,540 Total employee costs 111,995 94,213 Other Loss on disposal of property, plant and equipment 594 946 Legal and professional fees 5,594 3,813 Stock write-off 686 691 Provision for inventory obsolescence 385 574 Allowance for credit losses (160) 1,716 Bad debts written off 258 218 Other taxes 1,439 558 Provision for VAT recoverable 2,545 - Increase in provisions for other taxes 44 136 7. Taxation Capital Limited is incorporated in Bermuda and tax resident in the United Kingdom and the Group operates in multiple countries jurisdictions with complex legal and tax regulatory environments. Taxation is calculated in accordance with local legislation and the prevailing tax rates. CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 7. Taxation (continued) 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. 8. Earnings per share 2024 2023 Basic Earnings per share: The profit and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: Profit for the year used in the calculation of basic earnings per share ( US$'000 ) 17,315 36,737 Weighted average number of ordinary shares for the purposes of basic earnings per share 195,112,329 192,451,358 Basic earnings per share (cents) 8.87 19.09 Diluted earnings per share: 2024 2023 The profit used in the calculations of all diluted earnings per share measures are the same as those used in the equivalent basic earnings per share measures, as outlined above. ($) 17,315 36,737 Weighted average number of ordinary shares used in the calculation of basic earnings per share 195,112,329 192,451,358 - Dilutive share options # 465,154 2,801,729 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 195,577,483 195,253,087 Diluted earnings per share (cents) 8.85 18.82 CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 9. Dividends During the 12 months ended 31 December 2024, a dividend of 2.6 cents (2023: 2.6 cents) per ordinary share, totalling to US$ 5.1 million (2023: US$5.0 million) was declared as the final dividend for 2023. This dividend was paid to the shareholders on 15 May 2024 (2023: 9 May 2023), followed by a further dividend of 1.3 cents (2023: 1.3 cents) per share which was declared as interim dividend for 2024 totalling US$ 2.6 million (2023: US$2.5 million) and paid on 3 October 2024 (2023: 3 October 2023). The total dividend paid is US$ 7.7 million (2023: US$7.6 million). In respect of the year ended 31 December 2024, the Directors propose that a final dividend of 1.3 cents (2023: 2.6 cents) per share be paid to shareholders on 15 May 2025 (2023: 15 May 2024). This final dividend has not been included as a liability in these Consolidated Financial Statements. The proposed final dividend is payable to all shareholders on the Register of Members on 22 April 2025 (2023: 19 April 2024). The total estimated final dividend to be paid is ~US$2.6 million (2023: US$5.0 million). The payment of this final dividend will not have any tax consequences for the Group. CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 10. Property, plant and equipment Cost Drilling rigs Heavy mining equipment Associated Drilling & mining equipment Vehicles and trucks Camp and associated equipment Land & Buildings Computer software Leasehold improvements Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 At 1 January 2023 139,370 71,444 31,399 37,786 18,169 - 38 1,654 299,860 Additions 27,061 10,416 11,884 10,491 9,404 - 14 - 69,270 Disposal (18,189) - (1,906) (1,259) (531) - - - (21,884) At 31 December 2023 148,242 81,860 41,377 47,018 27,043 - 52 1,654 347,246 Additions 35,785 4,350 1,672 9,895 9,906 6,348 20 - 67,976 Disposal (4,034) - (4,328) (2,029) (1,865) - - - (12,256) At 31 December 2024 179,993 86,210 38,721 54,884 35,084 6,348 72 1,654 402,966 Accumulated Depreciation At 1 January 2023 79,788 16,776 6,743 15,696 8,088 - 13 97 127,202 Depreciation 10,521 9,302 4,900 4,493 2,595 - 7 - 31,817 Impairment - - - 389 50 - - - 439 Disposal (17,412) - (1,783) (1,157) (517) - - - (20,869) At 31 December 2023 72,897 26,078 9,860 19,421 10,216 - 20 97 138,589 Depreciation 10,573 7,041 6,082 4,716 3,925 231 9 - 32,577 Disposal (3,754) - (4,100) (1,653) (1,855) - - - (11,362) Impairment 226 907 - - 1,061 - - - 2,194 At 31 December 2024 79,942 34,026 11,842 22,484 13,346 231 29 97 161,997 Carrying amount at: 31 December 2023 75,345 55,782 31,517 27,598 16,828 - 32 1,557 208,657 31 December 2024 100,051 52,184 26,879 32,400 21,738 6,117 43 1,557 240,969 CAPITAL LIMITED Notes to the Condensed Consolidated Interim Financial Statements (continued) For the year ended 31 December 2024 10. Property, plant and equipment (continued) The Group's property plant and equipment includes assets not yet commissioned totalling US$45.0 million (2023: US$41.8 million). The assets will be depreciated once commissioned and available for use. Not reflected in the Cash Flow are US$28.7 million (2023: US$ 15.8 million) asset finance facilities obtained from Epiroc, Caterpillar, Sandvik, Byington Family Trust and Northrim Bank. 11. 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$'000 US$'000 US$'000 At 1 January 2023 3,565 13,087 16,652 Additions 2,830 17,712 20,542 Depreciation (1,290) (6,220) (7,510) At 31 December 2023 5,105 24,579 29,684 Additions 778 15,391 16,169 Depreciation (1,618) (10,407) (12,025) Impairment - (1,766) (1,766) At 31 December 2024 4,265 27,797 32,062 Lease liabilities At 1 January 2023 3,396 12,871 16,267 Additions 2,830 16,506 19,336 Interest expense 331 1,750 2,081 Lease payments (1,373) (6,861) (8,234) At 31 December 2023 5,184 24,266 29,450 Additions 777 13,567 14,344 Interest expense 422 2,645 3,067 Lease payments (1,822) (11,253) (13,075) At At 31 December 2024 4,561 29,225 33,786 The weighted average incremental borrowing rate applied to lease liabilities during the period was 10% (2023: 10%). CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 2024 2023 US$'000 US$'000 12. Trade receivables Trade receivables 64,762 54,264 Less: allowance for credit losses (4,536) (4,697) Total trade receivables 60,226 49,567 Trade receivables have credit periods of between 30 to 45 days. The ageing of trade receivables is detailed below: Current 43,627 26,139 Past due 1 - 30 days 6,293 6,583 Past due 31 - 60 days 5,746 12,913 Past due 61 - 90 days 1,330 1,876 Past due over 90 days 7,766 6,753 64,762 54,264 The expected loss rates have been based on current and forward-looking information on micro and macroeconomic factors affecting the Group's customers. The Group has identified the metals and mining sector's credit loss probability rates as the key macroeconomic factor in countries where the Group operates. The lifetime expected loss provision for trade receivables is as follows: 31 December 2024 Current More than 30 days past due More than 60 days past due More than 90 days past due Total US$'000 US$'000 US$'000 US$'000 US$'000 Expected loss rate 0.21% 0.32% 0.08% 49.44% 7.12% Gross carrying amount 43,627 6,293 5,746 9,096 64,762 Loss provision 124 20 8 4,384 4,536 Movements in the impairment allowance for trade receivables are as follows: 2024 2023 US$'000 US$'000 Opening provision for impairment of trade receivables 4,697 2,981 Increase during the year 97 1,934 Receivables written off during the year as uncollectible (258) (218) At 31 December 4,536 4,697 CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 2024 2023 US$'000 US$'000 13. Other receivables Prepayments 10,474 7,529 Capitalised contract costs 7,082 3,783 VAT recoverable 6,410 7,561 Amounts due from non-controlling interest 5,685 5,536 Accounts receivable - Sundry 2,948 4,025 Prepayment for fixed assets 3,970 5,318 Others 264 92 36,834 33,844 Current 26,044 24,055 Non-current 10,790 9,789 36,834 33,844 14. Loans and borrowings Loans and borrowings consist of: (a) US$75 million revolving credit facility ("RCF") provided by Standard Bank (Mauritius) Limited and Nedbank Limited The Company entered into a revolving credit facility agreement on 28 March 2023 as borrower together with Standard Bank (Mauritius) Limited and Nedbank Limited (acting through its Nedbank Corporate and Investment banking division) as lenders and arrangers, with Nedbank acting as agent and security agent to borrow a revolving credit facility for an aggregate 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 full accordion of US$25m was exercised and completed 26 April 2024. The total available amount of the facility is currently US$75m. The interest rate on the RCF is the prevailing three-month Secured Overnight Financing Rate (SOFR, payable in arrears) plus a margin of 5.5%, and an annual commitment fee of 1.925% per annum is charged on any undrawn balances. The amount utilised on the RCF was US$60 million as at 31 December 2024 (2023: US$45 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 CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 14. Loans and borrowings (continued) In addition, CAPD (Mauritius) Limited is also required to comply with the Total Tangible Net Worth covenant. Security for the revolving credit facility comprise various pledges over the shares and claims of the Group's entities in Tanzania together with a debenture over the rigs in Tanzania and the assignment of material contracts and their collection accounts in each of Egypt, Tanzania and Mali. As at the reporting date and during the period under review, the Group has complied with all covenants attached to the loan facilities. (b) US$40.5 million term loan provided by Macquarie Bank Limited (London Branch) On 15 September 2022, the Group refinanced the senior secured, asset backed term loan facility with Macquarie Bank Limited. The term of the loan is three years repayable in quarterly instalments with an interest rate on the facility of the prevailing three-month SOFR plus a margin of 6.5% per annum (payable quarterly in arrears). The loan is secured over certain assets owned by the Group and currently located in Egypt together with guarantees provided by Capital Limited, Capital Drilling Egypt LLC. The Group drew an additional US$8.0 million in 2023. As at 31 December 2024, the amount outstanding on the term loan was US$13.1 million (2023: US$32 million). During the year under review, the Group has complied with all covenants (same as RCF) 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 most of the agreements is three-month SOFR plus a margin of 4.8%, with a fixed rate of interest of the remaining agreements of 8.5% and 9.5%. As at 31 December 2024, the total drawn under these credit agreements was US$24 million (2023: US$16.5 million). No covenants are attached to this facility. (d) US$8.5 million term loan facility with Sandvik Financial Services AB (PUBL) The Group has term loan facility agreement with Sandvik Financial Services AB (PUBL). The facility is for the purchase of equipment from Sandvik AB, available in not more than four tranches. Interest is payable quarterly in arrears at 5.45% per annum on the drawn amount. As at 31 December 2024 the balance outstanding was US$2.5 million (2023: US$4.2 million) and the facility is no longer available to be drawn. Additionally, the Group entered into a further US$10 million facility agreement on 23 October 2023. The rate of interest on this agreement is fixed at 8.15%. As at 31 December 2024, the balance outstanding was US$6.3 million (2023: Undrawn). No covenants are attached to these facilities. (e) US$5.0 million facility with Caterpillar Financial Services The Group entered into a US$5 million facility agreement with Caterpillar Financial Services Corporation on 25 July 2023. The rate of interest on this agreement is three-month SOFR plus a margin of 5.25%. The term of the agreement is 2 years repayable in 8 quarterly instalments. All repayments can be subsequently redrawn. As at 31 December 2024, the balance outstanding was US$3.2 million (2023: US$ 5.0 million). During the year under review, the Group has complied with all covenants (same as RCF) attached to the facility. (f) US$3.7m Mortgage with Byington Family Trust The Group entered into a US$3.7m mortgage with Byington Family Trust on 8 January 2024. The property in Elko serves as collateral for the mortgage. The rate of interest is fixed at 7.50% until maturity on 31 December 2034. As at 31 December 2024, the balance outstanding was US$3.6 million. No covenants are attached to this facility. CAPITAL LIMITED NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2024 14. Loans and borrowings (continued) (g) US$1.6m Business Loan Facility Agreement with Northrim Bank The Group entered into a US$1.6m Loan Facility Agreement with Northrim Bank on 27 August 2024. The property in Fairbanks, Alaska serves as collateral for this loan. The rate of interest is three-month SOFR plus a margin of 3%. As at 31 December 2024, the balance outstanding was US$0.7 million During the period under review, the Group has complied with all covenants (same as RCF) attached to the facility. 2024 2023 US$'000 US$'000 Bank loans 76,388 78,385 Supplier credit facilities 36,288 25,813 Vendor financed mortgage 3,599 - 116,275 104,198 Less: Unamortised debt arrangement costs (1,091) (1,625) Total loans and borrowings 115,184 102,573 Current 28,259 27,052 Non-current 86,925 75,521 Total loans and borrowings 115,184 102,573 15. Cash generated from operations 2024 2023 US$'000 US$'000 Profit before taxation 34,267 50,334 Adjusted for: - Depreciation, amortisation and impairments 34,771 32,256 - ERP costs expensed 676 - - Share of loss in associate 387 - - Loss on disposals 594 946 - Depreciation of right-of-use assets 13,791 7,510 - Share-based payment 539 3,540 - Fair value loss/(gain) on financial assets (12,097) (2,914) - Interest income (38) (65) - Finance costs 16,741 13,002 - Other non-cash items 339 34 - Unrealised foreign exchange (gain) / loss on foreign cash held 1,623 (246) - (Decrease)/Increase in expected credit loss provision (160) 1,716 - Bad debts written off 258 218 Operating profit before working capital changes 91,691 106,331 Adjustments for working capital changes: - Increase in inventories (375) (3,227) - Increase in trade and other receivables (13,671) (15,568) - Increase in trade and other payables 12,771 7,146 - Decrease in provisions (283) (2,150) 90,133 92,532 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 year. The following terms and alternative performance measures are used in the half year results release for the year ended 31 December 2024. ARPOR Average revenue per operating rig Operating profit (pre-exceptional items) Earnings before interest, taxes, fair value gain/loss on financial assets and exceptional items EBITDA Earnings before interest, taxes, depreciation, amortization, fair value gain/loss on financial assets and exceptional items. EBITDA (adjusted for IFRS 16 leases) EBITDA net of cash cost of the IFRS 16 leases NPAT Net Profit After Tax NPAT (excluding exceptional items and investment gains/(loss) Net profit after tax before fair value gain/loss on investments and exceptionals EPS (excluding exceptional items and investment gains/(loss) Net profit after tax before fair value gain/loss and exceptionals 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: 2024 2023 US$'000 US$'000 ARPOR can be reconciled from the financial statements as per the below: Revenue per financial statements (US$) 348,000 318,424 Non-drilling revenue (US$) (123,671) (114,249) Revenue used in the calculation of ARPOR (US$) 224,329 204,175 Monthly Average active operating Rigs 92 92 Monthly Average operating Rigs 126 125 ARPOR (rounded to nearest US$10,000) 204 186 EBITDA can be reconciled from the financial statements as per the below: US$'000 US$'000 Profit for the year 18,318 38,530 Depreciation 48,562 39,765 Taxation 15,949 11,804 Interest income (38) (65) Finance charges 16,741 13,002 Share of loss in associates 387 - Fair value adjustments on financial assets (12,097) (2,989) EBITDA 87,822 100,047 CAPITAL LIMITED APPENDIX: GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED) 2024 2023 US$'000 US$'000 Operating profit (EBIT) 39,260 60,282 Depreciation, amortisation and impairments 48,562 39,765 EBITDA 87,822 100,047 Adjusted EBITDA can be reconciled from the financial statements as per the below: Operating profit (EBIT) 39,260 60,282 Depreciation, amortisation and impairments 48,562 39,765 Cash cost of IFRS 16 leases (13,075) (8,234) Exceptional items (ERP costs and provision for VAT receivables) 5,206 - Adjusted EBITDA 79,953 91,813 Adjusted EBITDA Margin 23.0% 28.8% Operating Profit (excluding exceptional items) can be reconciled from the financial statements as per the below: Operating Profit 39,260 60,282 Exceptional items (ERP costs, provision for VAT receivables and impairment of laboratory assets) 8,032 - Operating Profit (excluding exceptional items) 47,292 60,282 Operating Profit margin (excluding exceptional items) 13.6% 18.9% Adjusted cash from operations can be reconciled from the financial statements as per the below: Cash generated from operations 90,133 92,532 Cash cost of IFRS 16 leases (13,075) (8,234) Adjusted Cash from Operations 77,058 84,298 Net cash (debt) can be reconciled from the financial statements as per the below: Cash and cash equivalents 40,526 34,366 Long-term borrowings 1 (87,268) (76,273) Current portion of long-term borrowings 1 (29,007) (27,925) Net (debt)/ cash (75,749) (69,832) 1 Excludes the unamortised debt arrangement costs