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Capital Drilling Plc

Capital Drilling Ltd Significant progress with record net cash

Commenting on the results, Jamie Boyton (Executive Chairman) said: 

“Capital Drilling enjoyed a year of significant progress with record net cash generated from our assets, a further strengthening of the balance sheet, as well as key strategic growth into West Africa.  The quality of our business mix further improved with extensions to a number of our long-term drilling contracts, ARPOR remaining consistently robust, whilst utilisation saw a further improvement in the second half of the year, particularly with our exploration rig fleet.  All of these metrics were underpinned by an exceptional safety record with zero LTIs and a halving of our AIFR to an industry leading 0.45, which demonstrates the management’s focus on our goal  of a zero harm strategy.

The outlook for 2019 remains encouraging, albeit amidst mixed market drivers, specifically supportive commodity prices, in particular gold which represents circa 90% of Group revenue, offset by continued weak capital markets that impacted the funding for exploration activity. Our significantly increased presence in the key West African markets provides optimism for further contract wins over the year ahead. We believe that the careful investments we have made in 2018, both in terms of infrastructure as well as continually maintaining a high quality and young fleet, combined with our strong focus on cost discipline and return metrics on our asset base, will reap further benefits to all of our stakeholders over the course of the current financial year.

Our stated strategy of building our long-term business, coupled with a robust balance sheet and a focus on maximising the generation of free cash, is expected to see shareholders enjoy strong dividend growth, with a final payment for 2018 of 1.5c per share”

Capital Drilling Ltd (LON:CAPD), a leading drilling solutions company focused on the African markets, today announced its full year results for the year ended 31 December 2018.

 

FULL YEAR FINANCIAL RESULTS (UNAUDITED) FOR THE YEAR ENDED 31 DECEMBER 2018*

2018

2017

Average Fleet Size (No. of drill rigs)

93

93

Fleet Utilisation (%)

51

53

ARPOR ($)

194,000

194,000

Capex ($ m)

11.9

10.8

Revenue ($ m)

116.0

119.4

EBITDA1 ($ m)

28.3

24.3

EBIT1 ($ m)

14.8

11.7

Net Profit After Tax ($ m)

7.7

5.2

Cash From Operations ($ m)

28.2

25.2

Earnings per Share

Basic (cents)

5.7

3.9

Diluted (cents)

5.7

3.8

Final Dividend per Share (cents)

 1.5

1.2

Net Asset Value per Share1 (cents)

55.8

51.8

Return on Capital Employed (%)

17.5

14.3

Return on Total Assets (%)

13.9

11.1

Net Cash1 ($ m)

10.9

4.9

Net Cash/Equity (%)

14.3

7.0

*All amounts are in USD unless otherwise stated

(1) EBITDA, EBIT, Net Asset Value per share and Net Cash are non-IFRS financial measures and should not be used in isolation or as a substitute for Capital Drilling Limited financial results presented in accordance with IFRS.

 

Financial Overview

 

·      Significant increase in profitability and net cash

·      Full year 2018 revenue of $116.0 million, marginally above the top end of the 2018 guidance of $105 to $115 million (2017: $119.4 million)

·      EBITDA up 16% to $28.3 million (2017: $24.3 million)

·      EBIT up 26% to $14.8 million (2017: $11.7 million)

·      Net Profit After Tax up 48% to $7.7 million (2017: $5.2 million)

·      Net Operating Cash Flows up 9% to $22.5 million (2017: $20.7 million)

·      Final Dividend of US1.5cps, up 25% (2017: US1.2cps) to be paid on 3 May 2019

·      Net Cash up 122% to $10.9 million (2017: $4.9 million). 

·      The Company anticipates full year 2019 revenues of between $110 and $120 million underpinned by existing contracts.

 

Operational and Strategic Review

 

·      Maintained full year ARPOR at $194,000, a significant achievement given the rig mobilisation into West Africa in H1 2018

·      Annual rig utilisation 51% in 2018 (2017: 53%) with rig utilisation of 56% in H2 2018 driven by the commencement of new contracts in West Africa

·      Purchased two new blast hole rigs in H1 2018, while disposing of four rigs during the year (sale and decommissioning), with a fleet size of 91 rigs at end of 2018

·      Continued strong performance on our long-term contracts:

–     Acacia Mining’s North Mara Gold Mine (Tanzania)

–     AngloGold Ashanti’s Geita Gold Mine (Tanzania)

–     Centamin’s Sukari Gold Mine (Egypt)

–     Resolute Mining’s Syama Gold Mine (Mali)

–     Kinross Gold’s Tasiast Mine (Mauritania)

·      Awarded extension on three long terms contracts, including:

–     Resolute Mining’s Syama Gold Mine: Awarded a three-year extension on surface drilling and delineation drilling

–     Centamin’s Sukari Mine: Awarded a five-year extension, covering our existing blast hole and grade control drilling services

–     AngloGold Ashanti’s Geita Gold Mine: Awarded a one-year extension covering our underground grade control and underground exploration drilling services

·      Awarded numerous exploration contracts over 2018, including:

–     Aton Resources (Egypt)

–     De Beers (Botswana)

–     Graphex Mining (Tanzania)

–     Hummingbird Resources (Mali)

–     OreCorp Limited (Mauritania)

–     Sama Resources (Côte d’Ivoire)

–     Strandline Resources (Tanzania)

·      Significant progress in the implementation of the West Africa strategy:

–     Established infrastructure with offices, warehouses, workshops and accommodation in Bamako, Mali, and Yamoussoukro, Côte d’Ivoire, adding to the existing presence in Mauritania

–     Doubled rig count in the region to 31 rigs during the period

–     Broadened Business Development presence

·      Successful contract awards in West Africa including:

–     Resolute Mining (mentioned above)

–     Kinross Gold (mentioned above)

–     Hummingbird Resources

–     Orecorp Limited

–     Sama Resources: commenced a 6,000m diamond drilling contract

·      Outstanding safety performance with a record achievement of zero LTI’s and 0.45 AFIR (51% decline from 2017) for the year, reflecting our uncompromising commitment to safety

·      Achievement of a number of world class safety milestones, including:

–     Mali (Syama Project) achieved two years LTI free

–     Tanzania (North Mara Project) achieved two years LTI free

–     Tanzania (Geita Project) achieved one-year LTI free

 

 

Board and Management Update

 

The Company appointed Michael Rawlinson as Non-Executive Director in August 2018, who replaced Craig Burton. Michael was also appointed chair of the Remuneration Committee.

 

We are further pleased to announce today the appointment of Jodie North as Chief Operating Officer effective March 2019. Jodie was previously the Executive for Production and is bringing significant experience into this new role.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.