Capital Limited · LSE:CAPD
Capital — Capital Drilling — Investor Presentation (June 2016)
30 slides from Capital's investor presentation, Jun 8, 2016
Slide 1: Capital Drilling Corporate Presentation May 2016
Capital Drilling Corporate Presentation May 2016
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE • This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Capital Drilling Ltd. (the “Company”), nor shall any part of it nor the fact of its distribution
Slide 3: Introducing Capital Drilling
Introducing Capital Drilling • Provide the full range of mineral drilling services, including: » Exploration & delineation drilling » Grade control drilling » Blast hole drilling, including shot firing services » Underground drilling • African focused, with a history of successfully run programs for
Slide 4: Q1 2016 Trading Update
Q1 2016 Trading Update Q1 2016 Q1 2015 Q4 2015 % change % change • Stable revenue over the traditionally weak first quarter from from Q1 2015 Q4 2015 • Marginal increase in utilisation offset by a marginal decrease in ARPOR Revenue ($mn) 19.1 19.1 18.9 0.0% 1.1% • Management focus over Q1 directed t
Slide 5: 2016 Focus: Rebuild Utilisation
2016 Focus: Rebuild Utilisation IMPROVE THE BUSINESS Managing Costs STRENGTHEN THE BALANCE SHEET - Continued cost control, REBUILD margins maintained Capex Discipline - Maintain young fleet DELIVER GROWTH UTILISATION Improve Operating Strengthened Management Performance Maintain Working Te
Slide 6: Rebuilding utilization in exploration & delineation drilling
Rebuilding utilization in exploration & delineation drilling … The Lean Operating Model LEAN OPERATING MODEL CASE STUDY: KHOEMACAU COPPER, BOTSWANA • Self Sufficient Operating Units • 5 week turnaround from contract award to commencement » High performance rigs, support equipment and full contingenc
Slide 7: 2016 Contract Wins: The Lean Operating Model
2016 Contract Wins: The Lean Operating Model Egypt Mauritania Chile Mauritania Tanzania • 1 diamond rig • 1 multi-purpose rig • 1 reverse circulation rig • 1 diamond rig • 1 multi-purpose rig • Commenced March • Commenced May • Commenced April • Commenced March • Commenced April High success rate on
Slide 8: North Mara Gold Mine: Drill & Blast Mobilisation
North Mara Gold Mine: Drill & Blast Mobilisation • Contract awarded after competitive tender, late Q4, 2015 • Immediately deployed 5 rigs (replacing incumbent blast hole driller) » Capital Drilling the incumbent grade control driller since 2008 • Recruited staff in 2 months with a focus on Tanzanian
Slide 9: North Mara Gold Mine: Drill & Blast Mobilisation
North Mara Gold Mine: Drill & Blast Mobilisation METRES/SHIFT vs PENETRATION RATE • Commenced drilling with reverse circulation rigs from the existing fleet, ensuring no production disruptions for the client 180.00 25.00 160.00 • 3 new purpose built blast hole new rigs arrived on site in March and 1
Slide 10: Continued focus on a performance driven culture
Continued focus on a performance driven culture MECHANICAL AVAILABILITY QUARTERLY PERFORMANCE REVIEWS ON MAJOR PROJECTS • Participants include senior representatives of the client and Capital Drilling, 100% 99% 99% 100% 99% 99% 99% 100% 98% 96% 97% 98% 98% along with Capital’s senior management team
Slide 11: Multi-year contracts underpin the revenue
Multi-year contracts underpin the revenue … EGYPT MAURITANIA » Commenced operations in 2005 » Commenced operations in 2010 » Blast hole, grade control & delineation » Exploration & delineation drilling drilling » Contract renewed in 2015 and » Contract renewed in 2015 and runs to extended to Decembe
Slide 12: Providing the platform of the Group strategy
… Providing the platform of the Group strategy • Geographic focus on: » Africa » Strategic clients in other emerging economies • Core long term contracts to underpin the revenue base » Focus on multi-year blast hole and grade contracts and projects with expansion opportunities • Utilise base operati
Slide 13: Outlook: Some encouraging signals
Outlook: Some encouraging signals … • Macro conditions remain challenging however recent signs of improvement » Solid improvement in gold prices in 2016 » Improving levels of capital markets activity in the mining sector » Tendering enquiries picking up, particularly in the exploration sector • Enco
Slide 14: Conclusion
Conclusion • Cash generative business with net cash on the balance sheet and a strong dividend yield • Robust long term contracts, with major capital items acquired, underpin the revenue • Large fleet of well maintained assets • Stable base offering substantial upside leverage in an improving market
Slide 15: Financial Performance – Full Year 2015
Financial Performance – Full Year 2015 15
Slide 16: Financial Overview
Financial Overview FY 2015 Revenue KPIs FY 2015 FY 2014 Change % Normalised • Revenue down 20% to $78.7 million (FY 2014: $98.8 million) Average Fleet Size 97 97 96 1 » Decrease attributable to lower utilisation of the exploration and delineation rigs Fleet Utilisation (%) 34 34 43 (21) » Maintained
Slide 17: Revenue Metrics
Revenue Metrics FLEET GROWTH UTILISATION (%) 93 95 96 94 100% 100 85 90% 80 74 80% 76% 60 80% 60 49 70% 74% 60% 66% 40 25 50% 46% 19 11 40% 44% 38% 35% 20 30% 33% 34% 0 20% Jan'06 Jan'07 Jan'08 Jan'09 Jan'10 Jan'11 Jan'12 Jan'13 Jan'14 Jan'15 Jan'16 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1
Slide 18: Early movers on costs, margins maintained
Early movers on costs, margins maintained GROSS PROFIT AND MARGINS MARGINS COMMENTARY US$m 30.0 41.1% 45% • Operating margins continue to track around long term trends levels despite significantly 38.6% 36.3% 40% lower revenue in recent years 25.0 32.6% 33.3% 35.2% 31.4% 34.5% 32.0% 34.5% 35% » Refl
Slide 19: Outstanding cash generation
Outstanding cash generation FY 2015 NET CASH (DEBT) MOVEMENTS OPERATING CASH FLOW / FREE CASH FLOW 20.0 20.0 15.0 15.0 10.0 10.0 8.3 5.0 0.0 5.0 (5.0) (10.0) 0.0 -0.4 (15.0) -5.0 (20.0) Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Opening Net EBITDA Capex Worki
Slide 20: 2015 Capital Expenditure: Continued improvements
2015 Capital Expenditure: Continued improvements CAPITAL EXPENDITURE RIG REBUILDS US$m Rig 59 30.0 25.0 14.1 20.0 14.3 15.0 12.7 2.9 10.0 15.9 12.4 4.5 5.0 7.4 10.7 6.2 1.7 2.6 3.4 0.0 1.0 Before After FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 H1 Capex H2 Capex • Acquired 4 new blast hole rigs total
Slide 21: Our balance sheet is strong
Our balance sheet is strong FY 2015 FY 2014 Change • Continued deleveraging strategy: Balance Sheet $m $m % » Net Debt to Equity decreased from 0.4% in 2014 to Net Cash to Equity of 10.8% Cash and cash equivalents 13.4 14.7 (8.8) » Net cash at December 31 2015 of $8.3 million Investments 0.8 0.2 300
Slide 22: 2015 Final Dividend … a 32% increase
2015 Final Dividend … a 32% increase • Maiden final dividend of US 1.9cps declared on 17 March 2015 (for FY2014 period) • Declared a maiden interim dividend of US 1.1cps on 25 August 2015 Return excess to Strong Shareholders • FINAL DIVIDEND DECLARED FOR FY2015 OF 2.5cps, representing a 32% increase
Slide 23: Appendices
COM capita DRILLING SVeTTLEREENMIDRITUING Appendices
Slide 24: Quality Partners & Projects
Quality Partners & Projects 100% 6% 7% 4% 3% 2% 5% QUALITY CLIENTS 13% 14% 90% 23% • Exposure to major and mid tier mining houses with strong balance sheets, quality assets 80% 30% 39% 41% 41% 41% & positive cash flows 70% 35% 60% 53% • Majors contributed 49% of 2015 revenue 50% 40% 73% 30% 63% 58%
Slide 25: Capital Drilling’s Client History
Capital Drilling’s Client History EGYPT ARMENIA » Lydian » Gippsland » Thani Dubai (AngloGold Ashanti) SERBIA » Dundee MAURITANIA PAKISTAN » Antofagasta » Barrick Gold » Redblack » Knight Piesold PNG & SOLOMONS ERITREA » Allied Gold » Andiamo » Barrick Gold » Chalice Gold » Oil Search GHANA » Sunrid
Slide 26: Key Demand Drivers
Key Demand Drivers GOLD1 COPPER1 US$/troy oz US$/lb 2,000 12,000 1,600 10,000 1,200 8,000 6,000 800 4,000 400 2,000 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Gold Spot 12-Month Trailing Copper Spot
Slide 27: Management & Board
Management & Board CHIEF EXECUTIVE OFFICER CHAIRMAN EXECUTIVE DIRECTOR » Over 35 years experience » Over 20 years experience in » Over 30 years experience in Mining and the oil & finance industry in the mining industry in gas industry » Co-founder of Capital Africa and Australia » Previous executive
Slide 28: Corporate Snapshot
Corporate Snapshot CAPITAL STRUCTURE SHAREHOLDING BLOCKS Fully paid ordinary shares 134,603,681 Share price (as at 30 December 2015) USD 0.34 Founding Market capitalisation (undiluted) ^ USD 45.80m Shareholders 70% Free float Cash (as at 31 December 2015) USD 13.40m 30% Debt (as at 30 December 2015)
Slide 29: Glossary
Glossary The following words used in the presentation have the following meaning: ARPOR Average Revenue Per Operating Rig LTM Last Twelve Months Capital Cash used on acquisition of property plant and equipment Profit or loss after tax adjusted for non-cash items +/- the Expenditure less proceeds on
Slide 30: Company Contact Details
Company Contact Details CAPITAL DRILLING LIMITED UK BROKER DETAILS Jamie Boyton finnCap Chairman 60 New Broad Street, London EC2M 1JJ [email protected] Telephone: +44 (0) 207 647 2800 Christopher Raggett Mark Parsons [email protected] Chief Executive Officer [email protected] UK P