Capital Limited · LSE:CAPD
Capital — H1 2022 Earnings Presentation
32 slides from Capital's earnings presentation, Aug 18, 2022
Slide 1: Capital Limited H1 2022 Results
Capital Limited H1 2022 Results 18 August 2022
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE This document and any accompanying oral presentation (together the “Presentation”) 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”
Slide 3: H1 2022 Financial Highlights
H1 2022 Financial Highlights H1 Revenue EBITDA Adjusted NPAT ¹ Operating cash flow FINANCIAL $138.1 million $41.4 million $19.9 million $34.9 million R E S U LT S Up 40% on H1 2021 Up 46% on H1 2021 Up 57% on H1 2021 Up 546% on H1 2021 ($98.7 million) ($28.4 million) ($12.7 million) ($5.4 million) B
Slide 4: Integrated Provider - Four Key Pillars
Integrated Provider - Four Key Pillars SERVICES ACROSS THE MINING CYCLE • End-to-end drilling services for exploration and production projects • Diversified rig fleet of 116 rigs, largest in Africa • Focus on mine-site based drilling contracts • Load and Haul services for mining operations • Fleet o
Slide 5: Peer-Leading Premium Service Provider
Peer-Leading Premium Service Provider TRIFR Comparison to Competitors 2021 1 . 5 Y T D TO J U LY 14.40 Total Recordable Incident Frequency Rate (TRIFR) 9.00 LO C A L C O M M U N I T Y FO C U S 6.70 6.04 4.70 3.20 ~89% national employees. Ownership of IACA Training Academy, committed to developing sk
Slide 6: Global Footprint Concentrated in Africa and Americas
Global Footprint Concentrated in Africa and Americas TIER 1 CUSTOMERS SUKARI Since 2005 TASIAST Since 2010 JABAL SAYID Since 2019 MORILA Since 2020 FEKOLA KIBALI 87% M i n e s i t e b a s e d r e v e n u e Since 2022 Since 2022 GOULAMINA Since 2021 NORTH MARA Since 2008 O P E R AT I N G I N BANKAN S
Slide 7: Macro Supportive of Increased Exploration Activity
Macro Supportive of Increased Exploration Activity EXPLORATION BUDGET VS ANNUAL INDEXED METALS PRICE C O M M E N TA R Y Nonferrous Exploration Budget Total Annual Indexed Metals Price • Metal and gold prices trading at healthy levels, supportive of strong activity $25 $5 • Commodity prices trading w
Slide 8: Long Term Demand Requires Capex Increases
Long Term Demand Requires Capex Increases CAPEX – TOP GLOBAL MINERS COMMENTARY 120 • Long term demand outlook is very positive with metals critical for the global energy transition 100 80 • To meet this demand miners need to boost capex significantly US$ billion 60 - Global capex, similarly to explo
Slide 9: Strongest Demand Environment in Capital's History
Strongest Demand Environment in Capital’s History C O M M E N TA R Y D R I L L R I G F L E E T E X PA N S I O N • Record utilisation: Increase in rig fleet utilisation to 85% in Q2 (H1 2022 83%) 140 120 • Largest rig fleet in the Group’s history 100 - Rig fleet expanded to 116 rigs, up from 109 in J
Slide 10: Repositioning the Portfolio
Repositioning the Portfolio TOP 10 BIGGEST GOLD MINES IN AFRICA (2021) COMMENTARY 2021 2020 2019 • Increased exposure to tier-1 operating mines at the top 10 African gold mines 900,000 KIBALI FEKOLA GEITA SUKARI NORTH MARA - We have added drilling services at the Fekola Gold mine with B2Gold in Mali
Slide 11: Mining: Improved Profile and Flexibility to Grow
Mining: Improved Profile and Flexibility to Grow C O M M E N TA R Y • Successfully ramped up our first major mining contract at Sukari, amongst the largest earthmoving contracts in Africa in recent years • Capital Mining now has a greatly improved profile and operational flexibility to grow • Capita
Slide 12: Laboratories: Platform in Place for Strong Growth
Laboratories: Platform in Place for Strong Growth STRONG SAMPLE VOLUME GROWTH C O M M E N TA R Y • MSALABS continues to grow rapidly - Expansion of geographic footprint across Africa and Canada - Growth of traditional geochemistry business as well as rollout of revolutionary Chrysos PhotonAssayTM un
Slide 13: Investments: A Core Pillar of the Group Strategy
Investments: A Core Pillar of the Group Strategy PORTFOLIO UPDATE PORTFOLIO HOLDINGS* • Investments strategy: - Strategic alignment with Capital’s operations - Stand alone investment case, with investment committee oversight PRODUCER - Commercial services contracts through traditional tendering proc
Slide 14: Movement in Investments
Movement in Investments PORTFOLIO CHANGES PERFORMANCE • Over the period Capital continued to rationalize the breadth of holdings and realized • The portfolio was impacted by general market conditions cash proceeds US$2.6 million, with proceeds directed toward group capital expenditures • The portfol
Slide 15: Section 2 – Results
Section 2 – Results
Slide 16: H1 2022 Financial Overview
H1 2022 Financial Overview REPORTED % CHANGE C O M M E N TA R Y H1 2022 H1 2021 FROM EARNING H1 2021 • EBITDA/EBIT margins remain strong with asset utilization remaining at elevated levels Revenue ($m) 138.1 98.7 39.9 • Margin decline vs H2 2021 as guided at the FY21 results EBITDA ($m) 41.4 28.4 45
Slide 17: H1 2022 Net Cash Waterfall
H1 2022 Net Cash Waterfall NET CASH (DEBT) MOVEMENTS COMMENTARY 70.0 • Strong operating cash flow generation in H1 2022 • Increased capex and working capital to fund 50.0 - Increased rig count - Increased replacement capex to ensure reliable young fleet 30.0 - Increased inventory & receivables assoc
Slide 18: Capital Expenditure
Capital Expenditure CAPEX H1 2022 • Capex expected to be weighted to H2 2022 70.0 • H1 2022 capex $22.6 million (cash expenditure, OEM debt financing and prepayments 60.0 GUIDANCE 50.0 • Capex guidance raised to $50 – 55 million (up from ~$45 million previously) - Increase includes 40.0 • Additional
Slide 19: Balance Sheet
Balance Sheet BALANCE SHEET H1 2022 H1 2021 % CHANGE STRONG BALANCE SHEET Debt 59.1 52.8 11.9 • Adjusted net cash position of $10.9 million at the end of 2021 (including investments of $47.3 million) Cash 22.7 20.0 14.0 • Net debt (excluding investments) $36.4 million Net debt 36.4 32.8 10.7 - Modes
Slide 20: 2022 Interim Dividend
2022 Interim Dividend • Interim dividend declared for H1 2022 of US 1.3cps (2021: interim dividend of US 1.2cps) • Note: 2021 final dividend of US 2.4 cps paid in CY 2022 Return excess to Shareholders • Capital has consistently delivered shareholder value through dividends since 2014: Investment “Th
Slide 21: Section 3 – Outlook & Guidance
Section 3 – Outlook & Guidance
Slide 22: Outlook & Guidance
Outlook & Guidance ONGOING SUPPORTIVE MACRO CONDITIONS 2022 REVENUE GUIDANCE $280-$290 MILLION • Commodity prices still trading well above cost curves encouraging renewed exploration • 2022 revenue guidance increased to $280 – $290 million (up from $270 – $280 million) and capex spend - Drilling: gr
Slide 23: Q&A
Q&A
Slide 24: Appendices
Appendices
Slide 25: 2021 Revenue Diversification
2021 Revenue Diversification REGION SERVICES ACTIVITY LOCATION ROW NON MINE 9% SITE NON- 13% DRILLING* NON-DRILLING PRODUCTION SOUTH & 28% 29% 28% EAST AFRICA MENA 22% 42% UNDERGROUND EXPLORATION DRILLING 10% 10% 72% WAF MINE SITE 28% DELINEATION 87% 23% Note: * Mining, Maintenance, Laboratory, Equi
Slide 26: Capital's Fleet of Rigs and HME
Capital’s Fleet of Rigs and HME DRILL RIG FLEET: 116 RIGS* MINING AND ANCILLARY • Significant increase in Heavy Mining Equipment driven by the Sukari waste mining contract award • All equipment on site and commissioned during H1 2021 MINING MULTI-PURPOSE DIAMOND 10 30 REVERSE CIRCULATION 10 AIR CORE
Slide 27: Client History
Client History Armenia Lydian Chile Antofagasta Anvil DRC APM Ethiopia Barrick Tiger BHP Billiton E G Y P T BHP Ethiopia Potash CMP Glencore MMG Polar Star M A L I M A U R I T A N I A Eritrea Ghana Mozambique Namibia Andiamo Kinross Boabab Tanga Resources Chalice Gold Riversdale Algold Aton Resource
Slide 28: Board of Directors
Board of Directors EXECUTIVE NON-EXECUTIVE JAMIE BOYTON BRIAN RUDD DAVID ABERY ALEX DAVIDSON MICHAEL RAWLINSON CATHERINE (CASSIE) BOGGS EXECUTIVE CHAIRMAN EXECUTIVE DIRECTOR SENIOR NED NED NED NED • Over 20 years’ • Over 35 years’ • Over 20 years’ • Over 40 years’ • Over 25 years’ investment • Over
Slide 29: Technology & Innovation
Technology & Innovation We are INDUSTRY LEADERS IN ADOPTING THE LATEST TECHNOLGIES to improve productivity, safety and environmental performance Remote blast hole drilling Remote site internet / communications Electric underground drill rigs We integrate the latest DATA CAPTURE AND TRANSMISSION TECH
Slide 30: Capital Limited Competitors
Capital Limited Competitors Perf. Company Mkt. Cap. Cash Debt Net Cash Ent. Val. EBITDA (US$m) EV / EBITDA (x) P / Book Div. Yield (12M) (US$m) (US$m) (US$m) (US$m) (US$m) 2021a 2022e 2023e 2021a 2022e 2023e (x) (%) (%) Boart Longyear Group Ltd. 458.8 25.6 189.4 (163.9) 622.6 76.6 n.a n.a 8.1x n/a n
Slide 31: Glossary
Glossary The words below used in the presentation have the following meaning: ARPOR Average Revenue Per Operating Rig LTI Loss Time Injury CAPEX Cash used on acquisition of property plant and equipment less Profit or loss after tax adjusted for non-cash items +/- the net Operating Cash flow (Capital
Slide 32: Company Contact Details
Company Contact Details CAPITAL LIMITED UK BROKERS UK PUBLIC RELATIONS Jamie Boyton Berenberg (Joh. Berenberg, Gossler & Co. KG) Buchanan Executive Chairman 60 Threadneedle Street, London EC2R 8HP 107 Cheapside, London EC2V 6DN [email protected] Telephone: +44 20 3207 7800 Telephone: + 44 20