Capital Limited (CAPD) Earnings Call Transcript & Summary

Good morning, and welcome to the Capital Limited Annual General Meeting. [Operator Instructions] I'd now like to hand over to Jamie Boyton, Chairman. Good morning to you, sir.

Good morning. Thank you very much, and welcome to everyone that's dialed in today to Capital's Annual General Meeting. Thank you very much for dialing in. I will just give a brief overview of the agenda today. And really what we're going to focus on is a quick run-through of some overview slides, which includes our outlook statement. We're then going to hand over to Catherine Apthorpe, our Company Secretary, and Catherine will go through the results of the voting. And we'll then hand over to a Q&A session. Just for your reference, you're likely to hear from -- obviously, hear from myself today, Catherine. With me is Peter Stokes, our CEO; Rick Robson, our CFO; and Conor Rowley, Corporate Development and Investor Relations. So it'll be a combination of us depending on the questions that we feel today. A brief introduction to Capital for those that aren't familiar with us. But obviously, we are an integrated multi-disciplined service provider to mineral exploration, development and mining companies across Africa, the Middle East, with a growing presence in Canada. The service verticals, the main 3 service verticals of the drilling business, which is the foundation of Capital, where we operate around 125 rigs in Africa and the Middle East, making us the largest service -- or drilling company in the region. Mining, a newer business initiative for us. And we've operated 2 projects, both in Africa and Ivory Coast and Egypt. That's an earthmoving business. MSALABS, which is our very rapid growth geochem testing business, and that is focused globally in nature, with a very strong presence in Africa or in Canada, and going through a very rapid growth phase, 75% revenue growth year-on-year. So very strong growth there. Our investment portfolio which is focused exclusively at this stage on investments and exploration of mining companies that are focused in Africa. And the fifth pillar of our business is our newly created innovation division. It's been established since Peter came on board, which is in October of last year, and it's really been designed to put some structure around how we're approaching new technologies and how we can bring them into our business. The genesis of that was obviously what we did with the Chrysos technology, which has been very successful for our laboratory business. Well Force, our downhole survey business. More recently, Mine Power Solutions, remote power solutions business, which we're looking at getting off the ground. So they're the 5 key pillars to the business. We provide services across the mining cycle, all the way from exploration into production and processing. So we're an end-to-end service provider. We have a focus on Tier 1 projects, meaning long-life assets with low cost to production growth prospects and owned by top-tier customers. We have a business model to establish infrastructure at our customers' operations and grow our service offering, leveraging that infrastructure with focus on long-term contracts, and about 90% of the group's revenue is derived from the services and activities that we provide at the mine sites. The most recent update that we provided to the market was obviously the Q1 trading update, where we showed very strong growth in our first quarter revenue, 16% higher than first quarter of last year. That growth has come from predominantly from continued performance of our drilling business, particularly pleasing to see an increase in the ARPOR drilling business as we rationalize the portfolio in the second half of last year and have seen an improved performance on the remaining core portfolio, and then continued rapid growth in our laboratory business. The mining business, which is the contract we're currently operating at Sukari, continues to perform very well, providing a very good platform across all 3 of the operating businesses. Reiterating our outlook and guidance. We're guiding this year revenue of $320 million to $340 million. which is, as you can see, a very strong increase in the bottom right chart from $115 million in 2019 when we were predominantly almost exclusively a drilling business. The revenue contribution from our non-drilling activities were from our mining and laboratory activities moving in the high 20%. So we're very pleased with the growth there. Within that, revenue guidance, we're guiding the laboratory business to contribute $40 million to $50 million this year, with CapEx guidance of $50 million to $60 million. These guidance numbers are consistent with the previous guidance numbers that we've given the market. We are continuing to operate in extremely buoyant and supportive conditions. The portfolio of contracts on which we're working is as robust and strong as I've seen it in the company's history, providing a lot of growth opportunities, not only within the existing platform of projects but also new tendering opportunities. A very brief introduction. On that note, I'll hand over to Catherine to run through the resolutions, please.

Thanks, Jamie. [indiscernible] [Technical Difficulty]. The meeting has been convened to consider 12 [indiscernible] resolutions, chief provision. Resolutions 13 and 14 are special resolutions, which require 75% more of the votes cast for the voting to be carried. All other resolutions are ordinary resolutions and will be passed if more than 50% of the votes cast are in favor. The business of the meeting is provided to the consideration of the resolutions contained in the notice of the meeting dated 13th of April 2023. If there are no objections, I propose taking the notes as read. It is intended that focusing on all resolutions at this meeting will be conducted on a poll rather than a show of hands. A poll reflects a number of voting rights exercisable by each shareholder, and so the Board considers it to be a more democratic method of voting. A poll also ensures the vote of shareholders who have appointed proxies are taken into account in the final voting results. I hereby call a poll in respect of all the resolutions. As it will take some time to complete the poll procedure, the final results of voting, including the proxy votes on the resolutions will be announced through our regulatory information service and published on our website as soon as reasonably practicable. Shareholders are presented with 3 options for each resolution. You can vote for the proposed resolution, against the proposed resolution or you may withhold your votes. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting, at his or her discretion. Your proxy will vote [indiscernible] he or she with respect to remuneration and any other matter, which is before the meeting. We will now proceed to vote on the resolutions that are fully proposed in meeting. The full text of the resolutions is set out in the notice. Resolution 1. The first resolution is an ordinary resolution to receive and adopt the directors' report and accounts and the auditor's report for the year ended 31st December 2022. Prior to putting the first resolution to the meeting, I would draw your attention to the following proxies received by the company in relation to the resolution. So total votes 151,450,846, which is 78.3% of the current issued share capital. For, 151 450,846, which is 100% of the votes cast against 0, and votes withheld, 1,467.453. I now propose that the director's reporting accounts, auditor's report be received and adopted. Will you please vote now. [Voting] I declare the polls closed. As mentioned at the beginning of the meeting, it will take some time to complete the poll procedure, therefor the results of the poll will be announced through our regulatory information service and posted on the company's website at soon as practicable. Second resolution, ordinary resolution to receive and approve the directors' remuneration report for the year ended 31st of December 2022. I'd like to draw your attention to the following proxies received by the company in relation to the resolution. So the total votes are 151,417, 999, which is 78.2% of the current issued share capital. Votes in favor, 149,242,899, which was 98.56% of the votes cast by proxy, Against, 2,175,100, which is 1.44% of the votes cast by proxy, Votes withheld, 1,500,000. I propose that the director remuneration report to be received and approved. Will you please vote now. [Voting]

I declare the poll closed. The results hold will be announced through our regulatory information service after the meeting. Resolutions 3 to 9 are ordinary solutions to reelect all directors of the company being Alex Davidson, David Abery, Michael Rawlinson, Jamie Boyton, Peter Stokes, Brian Rudd and Cassie Boggs. Prior to putting regulations 3 to 9 to the meeting, I would like to draw your attention to the following proxies received by the company in relation to each resolution. So Resolution 3, Alex Davidson. Total votes 139,675,610, which is 72% of the current issued share capital. Votes in favor, 99,210,912, which is 71.03% of the votes cast. Against, 40,464,698, which is 28.9% of the votes cast by proxy. And withheld, 13,242,389. Resolution 4, David Abery. Total votes, 151,417,999, [ 78.7% ]of the current issued share capital. Votes in favor were 130,708,429, which is 86.32% fleet of the votes cast by proxy Against, 20,709,570, which is 13.68% of the votes cast. Votes withheld, 1,500,000. Resolution 5, Michael Rawlinson. Total voters were 152,917,999, which is [ 38.9% ] of the current issued share capital. Votes in favor were 145,879,275, which is 95.40% of the votes cast by proxy. Against, 7,038,724, which 4.60% of the votes cast by proxy. And no votes withheld. Next resolution, Jamie Boyton. Total votes were 152,917,999, which is 78.9% of the current issued share capital. Votes in favor were 145,042,253, which is 94.85% of the votes cast by proxy. Against, 7,875,746, which 5.15% of the votes cast by proxy, with no votes withheld. Next resolution, Peter Stokes. 152,917,999, which is 78.9% of the current issued share capital, that's the total votes. Votes in favor, 152,764,979, which is 99.90% of the votes cast by proxy. Against was 153,020, which the 0.1% of the votes cast by proxy, and no votes withheld. Next resolution, Brian Rudd. Total votes, 151,417,999, which is [ 78.73% ] of the current issued share capital. Votes in favor are 151,216,847, which is 99.87% of the votes cast by proxy. Against, 201,152, which is 0.13% of the votes cast by proxy. And 1,500,000 votes withheld. Resolution 9, Cassie Boggs. Total votes, 151,642,999, which is 78.39% of the issued share capital. Votes in favor, 147,210,052, which is 97.08% of the votes cast by proxy. Against, 4,432,947, which is 2.92% of the votes cast by proxy. And 1,275,000 votes withheld. I now propose that each of the directors stated above be reelected as a director of the company. Well you please vote on each resolution now. [Voting]

I declare the polls closed. Results of the poll will be announced through our regulatory information service posted on the company's website as soon as practicable. Resolution 10. This resolution in an ordinary resolution to reappoint BDO as auditor. Prior to this resolution, I would like to draw your attention to votes in proxies. Total votes, 152,917,999, which is 78.9% of the current issued share capital. Votes in favor, 151,308,629, which is 98.95% of the votes cast. Against, 1,609,370, which is 1.05% of the votes cast. And 0 votes withheld. I now propose that BDO be reappointed at auditor of the company. will you please vote now. [Voting]

I declare the polls closed. The results of the poll will be announced through our regulatory information service and posted on the company's website as soon as practicable. 11th resolution is an ordinary resolution to authorize the directors to agree on the auditor's remuneration. Proxies we see are, total votes, 152,917,299, which is 78.9% of the issued share capital. Votes in favor, 152,840,757, which is 99.95% of the votes cast. Against, 76,542, which is 0.05% of the votes cast, with 700 votes withheld. I now propose the directors to agree the auditor's remuneration. Will you please vote now. [Voting]

I declare the polls closed. The results of the poll will be announced through our regulatory information service. Resolution 12 is seeking to grant authority to allot and issue [Technical Difficulty]

We might have lost you there.

Catherine, if we could just ask you to continue via the dial in, that would be great.

Results of the poll will be announced afterwards. Resolution 13, special resolution relating to authorizing the Board of Directors to issue shares for cash without shares has been offered to existing shareholders in proportion to the existing [indiscernible] forwarding of this resolution set out in the notice. And votes in proxy, total votes 152,916,999, which is 78.95% of the issued share capital. Votes for, 150,452,729, which is 98.39% of the votes. Against, 2,464,270, which is 1.61% of the votes cast. Votes withheld, 1,000. I now propose the resolution is passed. Will you please vote now. [Voting]

I declare the poll closes. Results will be announced afterwards. Final resolution, resolution 14, special resolution to authorize the directors of the company to make market purchases of the common shares of the company. Full details are set out in the agenda. Proxy votes in 152,047,543, which is 78.5% of issued share capital. Votes in favor, 150,772,543, which 99.16% of votes. And against, 1,275,000, which is 0.84% of the votes cast. The votes withheld, 870,456. I now propose this resolution be passed. Will you please vote now. [Voting]

I declare the poll closed. We will make a further announcement of all final results submitting to the market through our regulatory information service and posted on our website as soon as practicable. ladies and gentlemen, that concludes the voting. That is it from me. I will now pass you over to Peter Stokes, our CEO.