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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Capital Limited    CAPD   BMG022411000

CAPITAL LIMITED

(CAPD)
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Capital : H1 2020 Results Presentation

08/20/2020 | 02:17am EST

H1 2020

Results Presentation

20 August 2020

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 part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company.

This document is being supplied to you solely for your information. No reliance may be placed for any purposes whatsoever on the information or opinions contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of its directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted by the Company or any of its members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith.

This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. This document is only addressed to and directed at persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) ("Qualified Investors"). In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). This document must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this document relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons.

Neither this document nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions or distributed, directly or indirectly, in the United States of America, its territories or possessions. Neither this document nor any copy of it may be taken or transmitted into Australia, Canada, Japan or the Republic of South Africa or to any securities analyst or other person in any of those jurisdictions. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese or South African securities law. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

The securities mentioned herein have not been, and will not be, registered under the US Securities Act of 1933 (the "Securities Act"), or under the applicable securities laws of Canada, Australia, Japan or the Republic of South Africa, and may not be offered or sold in the United States (as such term is defined in Regulation S under the Securities Act) unless they are registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and, subject to certain exceptions, may not be offered or sold within Canada, Australia, Japan or the Republic of South Africa or to any national, resident or citizen of Canada, Australia, Japan or the Republic of South Africa. No public offer of securities in the Company is being made in the United States, Canada, Australia, Japan or the Republic of South Africa.

Certain statements, beliefs and opinions in this document are forward-looking, which reflect the Company's or, as appropriate, the Company's directors' current expectations and projections about future events. By their nature, forward- looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document.

By attending the presentation to which this document relates or by accepting this document you will be taken to have represented, warranted and undertaken that: (i) you are a relevant person (as defined above); (ii) you have read and agree to comply with the contents of this notice; and (iii) you will use the information in this document solely for evaluating your possible interest in the Company and for no other purpose.

2

Section 1 - Summary

Capital Limited Snapshot

KEY METRICS H1 2020

We provide full-service mining, drilling, maintenance and geochemical analysis solutions to customers within the global minerals industry, focusing on the African markets

  • Capital Drilling Ltd changed its company name to Capital Limited (Capital) in June 2020
  • Capital Limited better reflects the company's expanded range of services, including mineral analysis and load and haul
  • 15-yearhistory in Africa, commenced operations in 2005
  • Listed on LSE (premium listing) in June 2010
  • Operations across nine African and Middle Eastern countries
  • History of strong financial performance and investor returns

REVENUE

EBITDA

NET PROFIT

$65.1 million

$15.4 million

$13.6 million

Up 18.8% on H1 2019

Up 21.3% on H1 2019

Up 166.7% on H1 2019

STRATEGIC PRIORITIES

Grow capacity and revenue

Increase utilisation

Grow ancillary services

with existing customers

through idle fleet

revenue

MAJOR CLIENTS

REVENUE BY CUSTOMER

MINE SITE BASED REVENUE

MAJOR & MID-TIER

NINE OPERATING MINE

CLIENTS

SITES

98%

94%

Revenue derived from

Less exposed to fluctuations in the

Tier 1 and Mid-Tier clients

mining cycle

4

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 and communication efficiencies
  • Improved efficiencies enable faster identification and implementation of improvements or changes
  • Flexible, coordinated approach keeping programs on schedule

5

Well Established Contracts, Tier 1 Operations

WEST AFRICA

MIDDLE EAST AND NORTH AFRICA

Mauritania

Commenced in 2010

  • Grade control drilling
  • Maintenance services
  • Laboratory services

Mali

Commenced 2018

Mali

Commenced in 2016

  • Underground, delineation and exploration drilling

Côte d'Ivoire

Commenced 2019

Egypt

Saudi Arabia

Commenced in 2005

Commenced in 2019

Blast hole, grade

Underground exploration

control and

and delineation drilling

delineation drilling

EAST AFRICA

  • Exploration, dewatering and delineation drilling
  • Exploration, grade control and blast hole drilling
  • Equipment hire, maintenance service and management services

Current operations Previous operations Long-term contracts

Tanzania (North Mara)

Commenced in 2008

  • Blast hole and grade control drilling
  • Exploration and delineation drilling

Tanzania

Commenced in 2006

  • Blast hole, grade control, exploration, delineation and underground drilling

6

Gold Market

GOLD PRICE

1,800

Last price (US$/oz)

12M trailing average

1,700

1,600

1,500

1,400

1,300

1,200

1,100

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

Jan-19

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

Feb-20

Mar-20

Apr-20

May-20

Jun-20

Source: Bloomberg Data

FINANCING BY JUNIOR AND INTERMEDIATE COMPANIES

3,500

(US$m)

3,000

2,500

Values

2,000

1,500

Deal

1,000

Miner

500

0

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

Q1 Q2

2013

2014

2015

2016

2017

2018

2019

2020

Source: Bloomberg Article July 21, 2020

  • Highly supportive gold price, which has increased strongly since Q2 2019, reaching record highs in early Q3 2020
  • Capital generates >90% of its revenue from services to gold mining and exploration companies
  • Recent sector M&A highlights the desire to build reserve bases, however this drive is yet to meaningfully impact exploration activity
  • Recent strength in the gold price has seen a welcome surge in equity market activity
  • Increased capital raising activity is a strong lead indicator for increased activity levels, both in drilling and mining

HIGHLY SUPPORTIVE GOLD PRICE

7

Our Strategy

STRATEGIC FOCUS AREAS

DELIVERING AGAINST STRATEGY 2020

African Focused

Strong established presence in East Africa and Egypt

Continued asset relocation strategy into West Africa

Expansion into West African region

Quality Providers

Deliver first world project execution standards in the emerging

Maintained first class project performance including high

markets

availabilities and continued strong ARPOR

Industry Leading HSE

World class safety processes and procedures on every site

LTI-free milestones achieved at most long-term contracts during

H1 2020

Best in Class Fleet / Maintenance

Investment in Tier 1 on-site maintenance infrastructure

Continued active fleet management process

Maintenance and rebuild programs to maintain industry leading

Investment in new equipment to supplement and improve the

standards

existing asset base

Superior Portfolio of

Blue chip and mid-tier mining companies

Added new long-term contract to the portfolio

Contracts

Robust Balance Sheet

Strong cash generation

Strong cash flows funding new asset purchases and paying

Conservative approach to gearing

dividends

Addition of load and haul services

Increase Service Offering

Expand range of complimentary services

Growth in geochemical analysis activities

Establishment of Mine Site Maintenance subsidiary

8

Industry Leading Safety Standards

LTI FREQUENCY RATE TREND (2009 - H1 2020)

0.41

0.29

0.25

0.18

0.2

0.13

0.11

0.09

0.09

0.08

0.05

0

FY 09 FY 10 FY 11 FY 12 FY 13

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 H1 20

* LTI per 200,000 man hours worked

COMMENTARY

  • Industry leading safety performance
  • Loss Time Injury Frequency Rate (LTIFR) of 0.08 in H1 2020
  • All Injury Frequency Rate (AIFR) of 0.33
  • Achievement of a number of safety records including:

˗

Tanzania, Mwanza Facility:

12 years LTI free in January 2020

˗

Egypt, Sukari Project:

3 years LTI free in January 2020

˗ Tanzania, North Mara Project:

4 years LTI free in March 2020

˗

Tanzania, Geita Project:

3 years LTI free in March 2020

˗

Mauritania, Tasiast Project:

3 years LTI free in June 2020

˗

Mali, Syama Project:

4 years LTI free in June 2020

9

Section 2 - Results

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-termmine-site contract

ARPOR stable at $170,000, no material production interruptions

Multiple LTI-free safety milestones achieved at key long-term

contracts

Non-drilling revenue increase to 11% of total Company revenue

Further developed capability of non-drilling businesses with key

hires in the mining team and expansion of laboratory operations

FINANCIAL

Strong revenue result of $65.1 million, up 18.8% on H1 2019 ($54.8 million)

EBITDA up 21.3% to $15.4 million on H1 2019 ($12.7 million)

Material NPAT increase of 166.7% to $13.6 million (H1

2019: $5.1 million)

Gains from equity investments of $9.9 million in H1 2020

Earnings per share (EPS) up 170.5% to 10.0 cents (H1 2019:

Interim dividend of 0.9 cents per share, to be paid on 25 September

3.7 cents)

2020, up 28.6% on H1 2019 (0.7 cents per share)

11

H1 2020 Financial Overview

Revenue KPIs

H1 2020

H1 2019

H2 2019

% change from

% change from

H1 2019

H2 2019

Average Fleet Size

99

91

92

8.8%

7.6%

Fleet Utilisation (%)

57

52

56

9.6%

1.8%

ARPOR ($)

170,000

183,000

170,000

-7.1%

0.0%

Reported Earning

H1 2020

H1 2019

H2 2019

% change from

% change from

H1 2019

H2 2019

Revenue ($m)

65.1

54.8

60.0

18.8%

8.5%

EBITDA ($m)

15.4

12.7

14.6

21.3%

5.5%

EBIT ($m)

9.6

7.9

8.7

21.5%

10.3%

NPAT ($m)

13.6

5.1

5.3

166.7%

156.6%

Basic EPS (cents)

10.0

3.7

7.7

170.5%

30.0%

Diluted EPS (cents)

9.9

3.7

7.6

167.2%

30.1%

Gross Profit (%)

39.4

39.1

39.8

0.8%

-1.0%

EBITDA (%)

23.7

23.2

24.3

2.0%

-2.8%

EBIT (%)

14.7

14.4

14.5

2.4%

1.7%

NPAT (%)

20.9

9.3

8.8

124.6%

136.5%

COMMENTARY

  • Revenue US$65.1 million, an 18.8% increase on H1 2019
    • Increased fleet utilisation of 57%, up 9.6% on H1 2019, with a larger fleet of 100 rigs (H1 2019: 92 rigs)
    • Strong ARPOR of US$170,000 from H2 2019, down 7.1% on H1 2019 (US$183,000)
  • EBITDA US$15.4 million, up 21.3% on H1 2019
    • Slightly increased margins at 23.7%, H1 2019 of 23.2%, reflecting the sustained focus on cost management
  • NPAT US$13.6 million, a 166.7% increase on H1 2019
    • Strong operational performance materially boosted by investment portfolio
  • H1 2020 interim dividend declared of 0.9 cents per share, up 28.6% on H1 2019 (0.7 cents per share)

12

Sustained Profitability

GROSS PROFIT AND MARGINS

GP (USDm)

GP (%)

Avg Margin

30.0

38.1%

42.2%

39.1%

39.8%

39.4%

45%

25.0

38.2%

40%

34.5%

35%

GP

20.0

30.5%

28.0%

30%

26.4%

%Margin

US$m

15.0

25%

GP

22.4%

24.5

23.9

25.7

20%

21.8

21.4

10.0

20.8

15%

17.4

13.4

12.7

13.6

10%

5.0

8.9

5%

0.0

0%

H1 15

H2 15

H1 16

H2 16

H1 17

H2 17

H1 18

H2 18

H1 19

H2 19

H1 20

COMMENTARY

  • Continued solid performance in Gross Profit margins
    • Strong performance to maintain GP margins despite higher labour cost inputs due to the impact of COVID-19
    • Higher direct labour costs impact, 1% of margin
    • Lower other Direct Expenses contributed to margin performance
  • Improving performance at a number of sites reflecting improved disciplines with new management team

EBITDA AND MARGINS

18.0

EBITDA (USDm)

EBITDA (%)

Avg Margin

30%

27.2%

23.7%

16.0

24.3%

22.2%

22.9%

23.2%

25%

14.0

20.3%

12.0

18.7%

20%

US$mEBITDA

17.5%

14.6

%EBITDA

10.0

15%

8.0

11.2%

15.8

15.4

6.0

11.6

12.7

12.5

12.7

10%

4.0

7.9

5.0%

7.3

5.8

5%

2.0

2.0

0.0

0%

H1 15

H2 15

H1 16

H2 16

H1 17

H2 17

H1 18

H2 18

H1 19

H2 19

H1 20

COMMENTARY

  • Continued solid performance in EBITDA margins
  • Margins increased from H1 2019, despite additional management and support headcount
  • Over the period Capital established corporate offices in Perth and London and made a number of key hires in Business Development, Contracts, Legal and Finance, adding bandwidth to support our expansion plans

13

Strong Cash Flow

Cash Flow

H1 2020

H1 2019

H2 2019

US$m

US$m

US$m

EBITDA

15.4

12.7

14.6

Other non Cash flow adjustments

1

0.8

0.5

Operating cash flows before working capital changes

16.4

13.5

15.1

Working Capital Movements

-9.4

-3

3.1

Cash generated from operations

7

10.5

18.2

CAPEX and proceeds from Capex (1)

-7.0

-6.4

-9.4

Investments and cash from Business Combination

0.5

-1.7

-6.1

Finance charges and Tax Payments

-3.5

-2.4

-1.6

Free Cash Flow

-3

0

1.1

Movement in long term liabilities(1)

2.2

-2.1

1.8

Dividends paid

-1

-2

(1.0)

Net increase in cash

-1.8

-4.1

1.9

Opening Cash Balance

17.6

19.9

15.5

FX on cash

-0.3

-0.3

0.3

Closing cash balance

15.5

15.5

17.6

  1. excludes assets purchased via finance leases
  • Strong performance in operating cash flows, up 21% on H1 2019
  • Cash from operations of $7 million, due to working capital outflows:
    • Asset prepayments of $3 million
    • Receivables timing of $2 million
    • Inventory outflow $1 million
    • VAT and other tax payments $2 million

OPERATING CASH FLOW / FREE CASH FLOW

Cash Generated from Operations

Free Cash Flow

25.0

20.0

15.0

10.0

5.0

-

(5.0)

H1 15

H2 15

H1 16

H2 16

H1 17

H2 17

H1 18

H2 18

H1 19

H2 19

H1 20

H1 2020 NET CASH MOVEMENTS

14

Capital Expenditure

US$m

H1 Capex

H2 Capex

30.0

25.0

14.1

20.0 14.3

15.0

2.9

13.4

10.0

15.9

8.7

6.6

6.5

12.4

10.7

4.5

5.0

1.7

4.1

4.2

5.4

6.4

7.0

3.4

2.6

0.0

FY 11

FY 12

FY 13

FY 14

FY 15

FY 16

FY 17

FY18

FY19

H1 20

  • Capital expenditure (CAPEX) US$7.0 million
  • Acquired one further underground rig for deployment with Barrick in Tanzania (Bulyanhulu)
  • Increased investment in support equipment (vehicles, trucks, ancillary) to support expanded fleet in West Africa
  • Further investment in mining equipment (deposits on trucks and excavators) to better position the company for contract wins
    • Asset deposits reflected in working capital outflows in H1 2020 of $3 million

H1 2020 CAPEX

Rig Improvement

$1.4m

Vehicles & Trucks

$1.2m

Rods

$2.5m

Ancillary

$1.1m

Mining

New Rigs

Equipment

$0.4m

$0.4m

DISCIPLINED APPROACH TO CAPITAL MANAGEMENT

15

Strong Balance Sheet

H1 2020

H1 2019

H2 2019

% change

% change

Balance Sheet

US$m

US$m

US$m

from H1

from H2

2019

2019

Cash and cash equivalents

15.5

15.5

17.6

0.0%

-11.9%

Investments

23.2

8.9

12.5

160.7%

85.6%

Receivables

32.4

24.6

25.2

31.7%

28.6%

Inventory

18.8

18.4

17.5

2.2%

7.4%

Other assets

2.4

0.8

2.6

200.0%

-7.7%

Property, plant and equipment

54.2

40.3

52.9

34.5%

2.5%

Total Assets

146.5

108.5

128.3

35.0%

14.2%

Payables

23.4

17.6

23.1

33.0%

1.3%

Borrowings

15.6

7.1

13.2

119.7%

18.2%

Right of use liabilities (IFRS 16)

0.6

0.5

0.7

20.0%

-14.3%

Taxation

6.8

4

4.4

70.0%

54.5%

Total Liabilities

46.4

29.2

41.4

58.9%

12.1%

Total Equity

99.0

79.3

85.7

24.8%

15.5%

Less Non-Controlling Interest

1.1

0.0

1.2

N/A

-8.3%

Total Shareholders Equity

100.1

79.3

86.9

26.2%

15.2%

Net Asset Value per share (cents)

72.4

58.3

63.0

24.2%

14.9%

Net Cash ($m)

-0.1

8.5

4.4

-101.2%

-102.3%

Gearing (Net Cash to Equity in %)

-0.1

10.7

5.2

-100.9%

-101.9%

Return on Total Assets (%)*

12.5

15.6

13.0

-19.6%

-3.6%

Return on Invested Capital (%)*

17.0

18.8

17.0

-9.3%

0.3%

  • ROTA = LTM EBIT / Total assets ROIC = LTM EBIT / Invested capital

COMMENTARY

  • Maintained strong balance sheet, closing the period neutral Net Cash
  • Investment gains substantially increased portfolio value
  • Increase in receivables reflects increased revenues
  • Shareholder equity increased 15.2% from H2 2019
  • Successfully renewed and increased the value of the Group RCF facility to $15 million (previously $12 million) with a three-year term with Standard Bank

GROSS DEBT vs NET CASH (DEBT) TO EQUITY (%)

USD$

Total Debt

Net Cash (Debt) to Equity (%)

20.0

20.0%

15.0

15.0%

10.0

10.0%

5.0

5.0%

0.0

0.0%

-5.0

(5.0%)

H1 15

H2 15

H1 16

H2 16

H1 17

H2 17

H1 18

H2 18

H1 19

H2 19

H1 20

16

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 Capital's operations
    • Stand alone investment case, with investment committee oversight
    • Commercial services contract
    • Preferred or exclusive services terms
  • Creates a strategic partnership approach to contracting, helping to develop long term relationships
  • Total investments value increased from $12.5 million (December 2019) to $23.2 million (June 2020)
  • Investment gains of $9.9 million in H1 2020
    • Gains on both listed and unlisted investments, with strong contributions from Predictive Discoveries and Allied Gold Corp

Significantly increased activity in 2019, consistent with:

Cash flow inflow in H1 2020 of $0.5 million, reversing significant outflow in 2019 ($7.9

million)

-

Capital's accelerated expansion into West Africa

-

Lack of funding sources for exploration companies

Contract revenue from investee customers of $8.0 million in H1 2020

  • Depressed valuations for exploration companies, despite increasing sector M&A and supportive gold prices

SELECTED HOLDINGS

17

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 to a strong balance sheet

DIVIDEND DECLARED

2014

2015

2016

2017

2018

2019

Cents per share

1.9

3.6

2.5

1.7

2.1

1.4

Amount ($'m)

$2.56

$4.85

$3.38

$2.31

$2.86

$1.91

DIVIDEND TIMETABLE

August 20, 2020

H1 2020 Results release and dividend declaration

September 03, 2020

Ex-dividend date

September 04, 2020

Record date

September 25, 2020

Payment date

Return excess to

ShareholdersInvestment through dividends

Strong

Balance Sheet

18

Section 3 - Strategy Update

Growth Drivers

EXPAND CAPACITY WITH EXISTING

UTILISE IDLE ASSETS

GROW ANCILLARY

CUSTOMERS

SERVICES REVENUE

  • Eight existing long-term contracts
  • Capital's strategy focused on providing multiple services to existing clients, expanding the services as the projects develop
  • Numerous long-term contracts have increased assets during H1 2020
  • Idle capacity in exploration fleet
  • 2019 saw a material increase in the depth of Capital's exploration customer base
  • Exploration activity remained subdued during H1 2020, primarily due to COVID-19 restrictions
  • Anticipate surge in equity raisings will drive spike in exploration activity
  • Established range of ancillary services across mining cycle
  • Focus on building capability through people, infrastructure and equipment
  • New management teams in place for Capital Mining and MSM (Maintenance)

20

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 rig fleet utilisation in H1 2020 attributable to increased demand from

existing customers

Increased our services across multiple sites in H1 2020, including:

-

Bonikro (Allied Gold)

-

Geita (AngloGold Ashanti)

-

Syama (Resolute)

-

Yanfolila (Hummingbird)

EXISTING LONG-TERM CONTRACTS

Bonikro

Geita

Jabal Sayid

North Mara

Cote d'Ivoire

Tanzania

Saudi Arabia

Tanzania

Sukari

Yanfolila

Tasiast

Syama

Egypt

Mali

Mauritania

Mali

21

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

Air Core

Diamond Core

Reverse Circulation

POTENTIAL REVENUE CAPTURE

Approximately

H1 2020 ARPOR of

40 idle rigs

US$170,000 per rig

Revenue opportunity

H1 2020 revenue

> $80 million

US$65.1 million

  • Production and underground fleet near full utilisation, with substantial idle capacity in existing exploration fleet
  • Platform for higher utilisation built in 2019, with a record number of exploration contract wins, eight of which were in West Africa

CURRENT EXPLORATION CONTRACTS

CÔTE D'IVOIRE

TANZANIA

MALI

Project Executed

Commenced

Commenced

Q2 2020

Q4 2019

Q1 2020

BURKINA FASO

CÔTE D'IVOIRE

MALI

EGYPT

Recommenced

Commenced

Commencing

Commencing

Q3 2020

Q3 2020

Q3 2020

Q3 2020

22

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, Contracts, Legal and Head of Maintenance
  • Actively engaged on multiple tenders across a mix of existing and new customers
  • Load & haul tenders represent a larger revenue opportunity for the Group, with potential contract revenues >$40 million per annum in revenue
  • Selectively investing in mining equipment, better positioning the Group for tendering success

INCREASED CAPABILITY PROVIDES BROADER OPPORTUNITIES WITH LARGER CLIENT BASE

23

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 including Allied Gold, Endeavor Mining and

Perseus Mining

MSALABS: Laboratory services

African revenue now represents over 50% of MSALAB's revenue

Capital Mining: Load & Haul

MSM: Maintenance services

SERVICE OFFER ACROSS MINING CYCLE

MAINTENANCE SERVICES: MSM

New management team installed to grow the fledgling business

Multiple distribution agreements signed for product distribution into Africa

Actively engaged in tenders for maintenance services and hydraulics supplies

Established infrastructure in West Africa (stores and service centers)

Introduced new products delivering consumables cost savings to Capital

Began third party sales in H1 2020

24

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
  • Established drill rig fleet includes diamond core, air core, reverse circulation / grade control, blast hole and underground rigs
  • Expanding mining equipment fleet:
    • CAT D9 dozers
    • CAT 16M grader
    • CAT 6020B mining shovel
    • CAT 6040 mining shovel
    • CAT 340 excavator
    • CAT 785 haul trucks

25

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 need to replace depleted resources and reserves

West Africa continuing to attract bulk of African investment, asset movements into the region largely completed, providing strong platform to take advantage of new opportunities

Substantial increase in tendering pipeline activity across all business units

Uncertainty associated with COVID-19 pandemic continues, some positive signs of restrictions easing, monitoring and management of the situation will continue

Robust balance sheet, established infrastructure and broader management team in place to capitalise on increased demand

26

Capital Limited Investment Proposition

Tier 1 Mine-site based clients

Stable and predictable revenue streams

Business Diversification

Diversity of services across the cycle, coupled with extension into complementary ancillary services, provides increased

revenue security

Targeted Growth

Focus on high-growth West African region, with geographic concentration to drive margins

Excellence in Execution

Best-in-class project execution, fleet quality and management

Robust Balance Sheet

Capacity to fund growth initiatives and dividend payments

Exploration Fleet Capacity

Idle rig capacity provides growth upside

Executing on Strategic Priorities

Establishment of Capital Mining Services to deliver significant growth opportunities

Shareholder Returns

Focus on shareholder returns through growth, investments and dividend payments (since 2014)

27

Appendices

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 of geochemical laboratory services for the exploration and mining industries

Mine Site Maintenance (MSM) provide a broad range of maintenance services across Africa

Well Force International provides a complete rig site solution including equipment rental, on-site surveying and geophysical logging services, and HiTT, a unique software solution for borehole management

29

Revenue Metrics

UTILISATION vs ARPOR

65%

220

60%

198

200

57%

210

56%

56%

56%

200

189

188

55%

52%

190

(US$'000)ARPOR

Utilisation(%)

175

177

191

49%

189

170

170

180

50%

183

46%

40%

49%

170

45%

160

40%

150

34%

35%

140

35%

130

30%

120

H1 15

H2 15

H1 16

H2 16

H1 17

H2 17

H1 18

H2 18

H1 19

H2 19

H1 20

COMMENTS

  • Improvement in utilisation with increased assets at a number of existing operations
  • Increased fleet utilisation of 57%, up 9.6% on H1 2019
  • Stable ARPOR driven by strong performance at core long-term contracts

REVENUE

US$m

70.00

60.00

62.30

61.50

65.10

60.00

57.11

50.00

54.48

54.80

51.60

40.00

41.70

39.00

39.70

30.00

20.00

10.00

0.00

H1 15

H2 15

H1 16

H2 16

H1 17

H2 17

H1 18

H2 18

H1 19

H2 19

H1 20

30

Expansion into West Africa

AFRICAN EXPLORATION BUDGETS BY COUNTRY, 2019

256 companies budgeting

2%

US$1.1 billion

2%

Egypt

Mauritania

Mali

Niger

Senegal

1%

Burkina

Sudan

Guinea

Faso

Ghana

Côte

Nigeria

1%

d'Ivoire

Ethiopia

West Africa spent an

15%

aggregate of 45%

1%

Democratic Republic

of the Congo

5%

Tanzania

3%

1%

Angola

3%

Malawi

Zambia

1%

Namibia

3%

Madagascar

4%

Botswana

1%

9%

Date as of Mar 07, 2020

South Africa

Source: S&P Global Market Intelligence

Increased Rig Count

Rig count in region tripled in two years from 13 rigs at December 2017 to 42 rigs (42% of total fleet) in West Africa by end Q2 2020

Established Infrastructure

Offices, warehouses, workshops and accommodation in Bamako (Mali), Yamoussoukro (Côte d'Ivoire) and Nouakchott (Mauritania)

Increased Revenue Contribution

West African revenues represent 31% of Group revenue in H1 2020

Multiple Contract Wins

Altus Strategies: Mali

Graphex Mining: Mali

Arrow Minerals: Burkina Faso

Hummingbird Resources: Mali

Awale Resources: Côte d'Ivoire

Resolute: Mali

Key Business Positions Employed

Increased depth with new employee recruitment in exploration, finance and laboratories

WEST AFRICA REPRESENTS THE LARGEST REGIONAL OPPORTUNITY

31

Compelling Growth Opportunities in West Africa

STRONG EQUITY MARKET SUPPORT

$4.7 B raised for West African projects

Financing for Gold Companies ($B)

2009 - 2019

12

10.5

10

8

6.6

6

4.7

3.9

4

2

1.6

1.4

1.4

1.3

1.1

1.1

1

0

Canada

Australia

West

USA

Mexico

Ghana

Indonesia

Brazil

Burkina

Colombia Romania

Africa

Faso

SIGNIFICANT EXPLORATION ACTIVITY

Region features strongly in 2019 exploration budgets

2019 Exploration Budget (Gold)

1,200

992.7

1,000

852.8

million

800

733.2

600

557.4

461.8

US$

400

376.9

200

164.2

154.1

0

Latin America

Australia

Canada

Rest of World

West Africa

USA

Pacific/SE Asia

Rest of Africa

Source: S&P Global Market Intelligence

2nd TOP GOLD PRODUCING REGION

10.8Moz production in 2019 (Estimated)

National Gold Production (Estimate) (Moz)

14

2019

12.2

12

10.8

10.4

9.8

10

8

6.7

6.3

6

4.5

4.4

3.6

3.5

4

2

0

China

West

Australia

Russia

USA

Canada

Peru

Ghana

Mexico

South

Africa

Africa

GREATEST EXPLORATION SUCCESS

#1 global region for successful discoveries

Gold Discoveries (Moz)

2008 - 2018

45

41

40

32

35

27

30

23

20

19

25

16

20

12

11

11

11

9

9

15

8

6

10

5

0

West Africa

Canada

USA

Ecuador

Russia

Chile

China

Colombia

South Africa

Mali

Burkina Faso

Ghana

Australia

Mexico

Peru

32

Client History

Armenia

Lydian

ChileDRC

AntofagastaAnvil

BarrickTiger

Ethiopia

APM

BHP Billiton

Current Active Locations

Regional Offices (Inc Yards and Warehouses)

Previous Registered Offices and Operations

Mali

Mauritania

Aura Energy

OreCorp

Redblack

Knight Piesold

MRL

Burkina Faso

Côte d'Ivoire

Egypt

Aton Resourcs

Gippsland

Thani Dubai (AngloGold Ashanti)

Thani Stratex Resources

Namibia

Botswana

Alecto Minerals

Khoemacau Copper Mining

Eritrea

Andiamo

Chalice Gold

Sunridge

Saudi Arabia

Tanzania

Cradle

Glencore

Graphex

IMX

Liontown

Magnis

Mantra

MMG

Rift Valley

Strandline Resources

Tanga Resources

BHP

CMP

Glencore

MMG

Polar Star

GhanaKenya

KinrossAcacia

PakistanPeru

Antofagasta BHPBarrick Gold

Serbia

Dundee

Nevsun

Resources

Ethiopia Potash

Mozambique

Boabab

Riversdale

Rio Tinto

PNG

Allied Gold

Barrick Gold

Oil Search

Santa Barbara

Zambia

Albidon

Barrick Gold

Equinox

First Quantum

MMG

Omega

33

Board of Directors

Jamie Boyton

Executive Chairman

EXECUTIVE

Over 20 years' experience in finance industry

Brian Rudd

Co-founder of Capital Limited (previously Capital Drilling)

Executive Director

Previously Executive Director and Head of Asian Equity Syndication

and Corporate Broking at Macquarie Bank (HK)

NON-EXECUTIVE

  • Over 30 years' experience in the mining industry in Africa and
    Australia
  • Co-founderof Capital Limited (previously Capital Drilling)
  • Previous experience includes 6 years as operations/general manager for Stanley Mining Services Tanzania (Layne Christensen)

David Abery

Senior NED

  • Over 20 years experience in financial, commercial and strategic matters in African and UK corporate environments
  • Ex Finance Director of Petra Diamonds, Tradepoint Financial Networks (subsequently Virt-X) (AIM) and Mission Testing plc (AIM)

Alex Davidson

NED

  • Over 35 years experience in mining
  • 16 years at Barrick Gold; Executive VP of Exploration and Corporate Development
  • Ex NED for Highland Gold, now Namakwa Diamonds & NED of Yamana Gold

Michael Rawlinson

Over 20 years investment

banking experience with both

NED

private and public companies

Senior NED at Hochschild

Mining, and NED at Adriatic

Metals

Ex Director of Liberum Capital

and Talvivaara Mining

Previously Global Co-Head of

Mining and Metals with

Barclays

EXTENSIVE INDUSTRY EXPERIENCE, SOLID COMPLEMENT OF SKILLS

34

Corporate Snapshot

CAPITAL STRUCTURE

Fully paid ordinary shares

136,980,903

Share price (as at 30 June 2020)

$0.78

Market capitalisation (undiluted)^

$106.30

Cash (as at 30 June 2020)

$15.50

Debt (as at 30 June 2020)* includes bank borrowings & O/D

$15.60

Enterprise Value

$106.40

^ Share options and unvested share grants issued 7.0 million

* RCF $12.1m, October 2020. LIBOR +5.75% and Asset financing of $3.5 million

NET ASSET VALUE PER SHARE vs SHARE PRICE

1.80

NAV per share

Share Price in US$

1.60

1.40

1.20

1.00

0.72

0.80

0.66

0.69

0.71

0.68

0.69

0.67

0.63

0.63

0.59

0.55

0.57

0.54

0.57

0.58

0.60

0.52

0.52

0.50

0.52

0.52

0.50

0.40

0.20

0.00

H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H1 20

SHAREHOLDING BLOCKS

Top 10 Institutionals

47.3%

Other Founders

14.79%

Other

Directors11.1%

26.72%

DIRECTORS AND SENIOR MANAGEMENT

Jamie Boyton

Executive Chairman

Brian Rudd

Executive Director

David Abery

Senior Independent Non-Executive Director

Alex Davidson

Independent Non-Executive Director

Michael Rawlinson

Independent Non-Executive Director

André Koekemoer

Chief Financial Officer

Jodie North

Chief Operating Officer

Stuart Thomson

Chief Executive Officer, MSALABS

Jeffery Court

Chief Development Officer, Mining

David Payne

Executive, Commercial

Tony Woolfe

Executive, Assets

Rick Robson

Executive, Corporate Development

35

Capital Limited and Competitors

Mkt. Cap.

Cash

Debt

Net Cash

Ent. Val.

EBITDA (US$m)

EV / EBITDA (x)

P / Book

Div. Yield

Perf.

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

-

(82.1%)

Foraco International

35.2

16.4

147.7

(131.2)

166.4

28.0

-

-

5.9x

-

-

0.8x

-

35.8%

Geodrill

65.7

11.0

4.3

6.7

59.0

19.6

19.7

22.6

3.0x

3.0x

2.6x

0.7x

-

12.0%

Major Drilling Group

377.9

43.6

37.5

6.1

371.8

36.1

42.7

52.5

10.3x

8.7x

7.1x

0.9x

-

28.7%

Mitchell Services

84.4

13.9

33.3

(19.4)

103.8

24.5

32.4

34.8

4.2x

3.2x

3.0x

2.7x

-

(1.7%)

Orbit Garant Drilling

26.5

1.9

43.5

(41.5)

68.0

10.1

7.8

12.7

6.7x

8.7x

5.3x

0.5x

-

5.6%

Swick Mining Services

49.4

7.8

18.2

(10.4)

59.8

17.3

19.5

-

3.5x

3.1x

-

0.6x

4.3%

(9.8%)

Maca Limited

185.6

40.2

96.3

(56.1)

241.7

47.9

80.5

79.7

5.0x

3.0x

3.0x

0.7x

5.2%

7.2%

Macmahon

421.0

76.3

111.7

(35.4)

456.4

122.2

166.1

176.6

3.7x

2.7x

2.6x

0.9x

1.7%

69.7%

NRW Holdings

627.8

44.0

68.0

(24.0)

651.8

98.0

174.0

197.0

6.7x

3.7x

3.3x

3.2x

2.4%

(3.8%)

Perenti

561.4

223.5

757.4

(533.9)

1,095.3

233.0

301.0

311.0

4.7x

3.6x

3.5x

0.9x

3.8%

(37.7%)

Mean

5.6x

4.6x

3.8x

1.2x

-

-

Capital Limited

130.7

17.6

13.2

4.4

126.3

26.9

30.1

34.6

4.7x

4.2x

3.7x

1.4x

1.7%

29.7%

Footnote:

  • The share price data is as of 19 August 2020 and sourced from FactSet. Other data sourced from Factset (fiscal years) and most recent company financial reports
  • The CAPD yield is calculated using the second interim dividend of 0.7c for the year to 31 December 2019 and the interim dividend of 0.9c for the six months to 30 June 2020, translated at a GBP:USD exchange rate of 1.33 prevailing on 19 August 2020.

PRN-AU

BLY-AU

FAR-CA

GEO-CA

MDI-CA

MSV-AU

OGD-CA

SWK-AU

CAPD-GB

MLD-AU

NWH-AU

MAH-AU

100%

80%

60%

MAH-AU, 69.7%

FAR-CA, 35.8%

40%

CAPD-GB, 29.7%

20%

MDI-CA, 28.7%

GEO-CA, 12.0%

0%

OGD-CA, 5.6%

MLD-AU, 7.2%

-20%

MSV-AU,-1.7%

NRW-AU,-3.8%

-40%

SWK-AU,-9.8%

-60%

PRN-AU,-37.7%

-80%

BLY-AU,-82.1%

-100%

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

Feb-20

Mar-20

Apr-20

May-20

Jun-20

Jul-20

36

Glossary

The words below used in the presentation have the following meaning:

ARPOR

Average Revenue Per Operating Rig

CAPEX

Cash used on acquisition of property plant and equipment less

(Capital Expenditure)

proceeds on disposals of property plant and equipment

EBIT

Earnings (Loss) Before Interest and Taxes [Equal to profit (loss) from

operations per the financial statements]

EBITDA

Earnings (Loss) Before Interest, Taxes, Depreciation, Amortisation and

Fair Value Gain (Loss)

EPS

Earnings (Loss) Per Share

Enterprise value

Market capitalisation + Debt - Cash

Free Cash Flow

Operating cash flow minus capital expenditures before financing

activities (Dividends, Loan repayments/drawdowns)

Group, Company

Capital Limited and its subsidiaries

KPI

Key Performance Indicator

HSSE

Health, Safety, Social and Environment

LTI

Loss Time Injury

LTM

Last Twelve Months

Operating Cash flow

Profit or loss after tax adjusted for non-cash items +/- the net

change in working capital

Operating Cash flow Margin

Cash generated from operations / Sales

Net Asset Value Per Share (Cents)

Total equity/ Weighted average number of ordinary shares

Net Cash (Debt)

Cash and cash equivalents less short term and long term debt

NPAT

Net profit (loss) after tax per the financial statements

(Headline) Revenue

Average fleet size x Utilisation x ARPOR

Return on Capital Employed (ROCE %)

LTM EBIT / Total Assets - Current Liabilities

Return on Invested Capital (ROIC)

LTM EBIT / Invested Capital

Return on Total Assets (ROTA %)

LTM EBIT / Total Assets

Total assets

Current assets plus non-current assets

37

Company Contact Details

CAPITAL LIMITED

Jamie Boyton

Executive Chairman

André Koekemoer

Chief Financial Officer

Mauritius

9th Floor, The CORE Ébène CyberCity Mauritius

Telephone: +230 464 3250 www.capdrill.com

UK BROKERS

Berenberg (Joh. Berenberg, Gossler & Co. KG)

60 Threadneedle Street, London EC2R 8HP Telephone: +44 20 3207 7800 Matthew Armitt matthew.armitt@berenberg.com

Tamesis Partners LLP

125 Old Broad Street, London EC2N 1 AR Telephone: +44 20 3882 2868 Richard Greenfield rgreenfield@tamesispartners.com

UK PUBLIC RELATIONS

Buchanan

107 Cheapside, London EC2V 6DN Telephone: + 44 20 7466 5000 Bobby Morse capital@buchanan.uk.com

Disclaimer

Capital Drilling Ltd. published this content on 20 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 August 2020 06:17:02 UTC


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Financials (USD)
Sales 2020 137 M - -
Net income 2020 23,0 M - -
Net Debt 2020 5,09 M - -
P/E ratio 2020 5,37x
Yield 2020 2,44%
Capitalization 118 M 117 M -
EV / Sales 2020 0,90x
EV / Sales 2021 0,73x
Nbr of Employees 671
Free-Float 67,9%
Chart CAPITAL LIMITED
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Technical analysis trends CAPITAL LIMITED
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 3
Average target price 1,27 $
Last Close Price 0,86 $
Spread / Highest target 54,0%
Spread / Average Target 47,8%
Spread / Lowest Target 36,3%
EPS Revisions
Managers
NameTitle
Jamie Phillip Boyton Executive Chairman
Jodie North Chief Operating Officer
André Koekemoer Chief Financial Officer & Secretary
Brian Rudd Executive Director
Alexander John Davidson Independent Non-Executive Director