London-listed Capital posted basic earnings a share of $0.178 apiece for the year ended December 31, 2020 – a 130% increase on the basic earnings of $0.077 apiece reported in the prior year.
The company’s net profit after tax was 139% higher year-on-year at $24.8-million, driven by strong operating performance and substantial realised and unrealised investment gains.
Chairperson Jamie Boyton comments that the company’s earnings were bolstered by gains across its investment portfolio.
The year-end portfolio was valued at $27.2-million, compared with $12.5-million in 2019, with investment gains predominantly unrealised for the year of $13.6-million.
“Capital undertook a significant and well-timed investment strategy in 2019 as we expanded our operations in West Africa and that strategy has worked well for the group, both in terms of investment returns and contract opportunities, with contracts from investee companies generating $18-million of revenue over 2020,” he says.
Capital declared a final dividend of 1.3c apiece, up 86% on the prior final dividend, bringing the total dividend for 2020 to 2.2c apiece.
The company says it will likely generate more revenue in 2021, driven by improved drill rig utilisation, contract extensions and expansions from existing long-term contracts and the start of load and haul waste stripping at the Sukari project, in Egypt.
For 2020, Capital had increased annual rig utilisation to 59%, compared with the prior year’s rate of 54%, on a larger average fleet of 98 rigs, compared with 92 rigs in the prior year.
“'Capital's strategy proved resilient against the challenges of 2020 and our performance was outstanding. We delivered significant revenue and profitability growth, along with the achievement of several strategic highlights.
“Not only did we achieve a transformational milestone with the award of our mining business's first major earthmoving contract with our long-term client Centamin, which is anticipated to deliver incremental revenues of $235-million $260-million over four years, but we also delivered outstanding results across all our business units,” notes Boyton.
Capital has drilling, mining, maintenance and geochemical laboratory projects in Burkina Faso, Cameroon, Egypt, Guinea, Mali, Mauritania, Nigeria, Saudi Arabia, Tanzania and Côte d'Ivoire.
Boyton further explains that the company’s geographic expansion into West Africa, a key focus over the past three years, has proven to be highly successful and resulted in Capital diversifying its regional revenue exposure beyond the traditional operations in Egypt and Tanzania.
“The team has worked tirelessly on this effort, redeploying an additional 30% of the group's rigs to the region and establishing core operations in Mali and Côte d'Ivoire, together with operations in Burkina Faso, Mauritania, Nigeria and, more recently, Guinea and Cameroon,” states Boyton.
Capital’s focus on mine-site-based activities also proved to be highly resilient in the face of the significant logistical challenges presented by Covid-19.
The stronger gold price experienced throughout 2020, being the key commodity exposure for Capital’s client base, drove an increase in demand for mine-site services.
“Our strategic focus on mine-site-generated revenue, which was 93% of our overall revenue in 2020, therefore drove 18% revenue growth for the year, in contrast to weaker revenue across the sector in exploration-driven activity.
“The tendering and exploration markets were negatively impacted, particularly in the first half of the year due to constraints caused by the global pandemic, including restricting the ability to mobilise rigs and people. However, tendering opportunities did start a strong recovery from late in the third quarter as logistical constraints eased,” says Boyton.
The company’s focus this year is on growing its full-service mining business, revenues from ancillary services, expanding capacity with existing clients and increasing utilisation through the idle fleet.