Capital Regulatory News (CAPD)

Capital Limited

("Capital", the "Group" or the "Company")

PRELIMINARY FULL YEAR FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022* (unaudited)

FY 2022 Financial Overview

· FY 2022 revenue of $290.3 million, up 28.0% on FY 2021 ($226.8 million), at the upper end of revised guidance of $280-290 million (up from $270-280 million guided at our FY21 results);

· This is the third consecutive year Capital has delivered material growth in revenue, with full year revenues increasing 28%, following 68% YoY growth in 2021 and 18% YoY growth in 2020.

· FY 2022 EBITDA of $90.1 million, up 22.9% on FY 2021 ($73.3 million);

· FY 2022 EBITDA (adjusted for IFRS16 leases) of $86.4 million, up 19.4% on FY 2021 ($72.4 million);

· Introducing EBITDA (adjusted for IFRS16 leases): Our reported EBITDA does not take into account IFRS 16 lease payments, most notably the minimum lease cost payment to Chrysos. While not a material difference in 2022, this will grow as we roll out more Chrysos PhotonAssay™ units over the coming years. We will therefore report EBITDA (adjusted for IFRS 16 leases) which adjusts EBITDA to take into account the cash cost of these lease payments and is therefore more representative of the underlying profitability and more aligned with cash flows.

· FY 2022 EBITDA (adjusted for IFRS16 leases) margins remained robust at 29.8% (FY 2021: 31.9%);

· Net losses from equity investments of $19.8 million in 2022, predominantly unrealised, which in combination with proceeds from sales, decreased the value of Group strategic investment portfolio to $38.7 million, as of 31 December 2022 (31 December 2021: $60.2 million);

· Net profit after tax (NPAT) of $22.7 million, down 67.7% on FY 2021 ($70.3 million). Excluding the impact of investment losses/ gains, adjusted NPAT is $42.5 million for FY2022, up 16.2% on FY 2021 ($36.6 million); 

· Basic earnings per share (EPS) of 11.1 cents, down 70.1% on FY 2021 (37.0 cents). Excluding the impact of investment losses/ gains, basic EPS (adjusted) is 21.5 cents, up 11.9% on FY 2021 (19.2 cents);

· Cash from operations (adjusted for IFRS 16 leases) of $69.8 million, an increase of 67.5% on FY 2021 ($41.7 million);

· Total capex of $57.5 million, down 5.3% on FY 2021 ($60.7 million). Total capex consisted of cash capex of $43.0 million (2021: $46.3 million), prepayments of $5.5 million (2021: $3.5 million) and financed capex of $9.0 million (2021: $10.9 million);

· Net debt of $47.2 million an increase of 48.0% on FY21 ($31.9 million);

· Net debt including investments of $8.5 million (FY 2021: net cash including investments of $28.3 million);

· Declared a final dividend of US$2.6 cents per share, to be paid on 9 May 2023 which, together with the interim dividend of US$1.3 cents per share brings the total dividends declared for 2022 to US$3.9 cents per share (up 8% on 2021 total dividend of US$3.6 cents per share). 

Operational and Strategic Highlights

· Delivered a sector-leading safety performance with 2022 Total Recordable Injury Frequency Rate ("TRIFR") of 1.2 per 1,000,000 hours worked (2021: 0.98).

· Capital Drilling: Further material contract wins

- Average monthly revenue per operating rig ("ARPOR") in FY 2022 at US$180,000, down 0.6% on FY 2021 (US$181,000); Q4 2022 ARPOR of US$191,000, up 3.8% on Q4 2021 (US$184,000);

- FY 2022 average utilisation was 79% an increase on FY 2021 (75%); Fleet utilisation decreased to 73% in Q4 2022, compared to 79% in Q4 2021 and 77% in Q3 2022. This is the result of our active strategy to reposition the contract portfolio, reducing exposure to small scale contracts, and focusing on large scale mine sites and Tier-1 projects with significant growth potential.

- New contract wins:

§ A two-year diamond drilling services contract with Barrick at the Reko Diq copper-gold project, Pakistan; 

§ A three-year reverse circulation and diamond drilling services contract with Fortescue Metals Group at the Belinga iron ore project, Gabon;

§ A diamond drilling services contract with Kodal Minerals at the Bougouni lithium project, Mali.

- Recent Q4 2022 contract wins (previously announced):

§ A three-year surface production drilling contract with AngloGold Ashanti at the Geita gold mine, Tanzania. This contract will utilise five rigs from the existing fleet together with one new rig during 2022, and is anticipated to generate revenues of $33 million over the contract term;

§ A two-year contract extension for underground grade control drilling with Barrick at the Bulyanhulu gold mine, Tanzania;

§ A three-year contract extension (with two-year further extension option) for grade control and reverse circulation drilling with B2Gold at the Fekola gold mine, Mali;

§ An underground contract with Barrick for an additional rig at North Mara gold mine, Tanzania;

§ An extension of the exploration contract to June 2024, including additional rigs, with Tembo Mining at the Kabanga nickel project, Tanzania.

- Rig count increased to 129 from 127 through Q4 2022, net of depletion.

· Capital Mining: Consistent strong performance

- Sukari Gold Mine (Egypt) waste mining contract had another strong performance through Q4 2022 with the team exceeding their previous daily production record since the project commenced.

· MSALABS: Strong start to 2023

- Chrysos' PhotonAssay™ unit rollout is progressing well. The expanded relationship with Chrysos will see MSALABS deploy 21 units by 2025:

• MSALABS now has six units commissioned across Africa and Canada, with a mine site laboratory at Barrick's Kibali gold mine, and the commercial laboratory in Prince George, Canada successfully commissioning in recent weeks; 

• Routine copper analysis commenced at the unit at Barrick's Bulyanahulu gold mine, Tanzania;

- MSALABS has also extended into the Yukon region in Canada, where mining activity is rapidly growing, with a sample preparation laboratory at Victoria Gold's Eagle mine.

- MSALABS has also now commissioned a mine site laboratory at Shanta Gold's Singida mine, Tanzania, and a laboratory in Bougouni, Mali, which will support gold and lithium operations in southern Mali.

Outlook

· Tendering activity across all business units remains robust, with a number of opportunities progressing.

· Revenue guidance for 2023 of $320 to $340 million driven an improved contract portfolio, contract extensions and expansions from existing long-term contracts, the Sukari load & haul contract continuing at steady state and MSALABS continuing to grow through 2023;

· Laboratories is seeing strong demand for its services and the rollout of the Chrysos units, with the business expected to deliver revenues of $40-50 million in 2023, another significant YoY increase from 2022 (FY 2022 $27.3 million) and is expected to grow to over $80 million per annum from 2025;

· The Sukari earth moving contract continues to perform well and we expect the operation to continue at steady state through 2023;

· Capital expenditure is expected to be $50-60 million in 2023. This will fund a more than typical replacement of the drilling fleet to ensure ongoing youth and productivity, the expansion of MSALABS, including a number of commercial labs, as well as sustaining capex on the enlarged drill fleet and the Sukari mining contract;

· Drill rig fleet size forecast to remain broadly flat compared to the end of 2023, net of depletion.

Commenting on the results, Jamie Boyton, Executive Chairman of Capital Limited, said:

'2022 has been another outstanding year for Capital marking the business's third consecutive year of material growth, but most pleasingly Capital enters 2023 with an even stronger underlying business. The Group has made significant steps in strengthening the contract portfolio, the management and operational teams, the equipment quality and the balance sheet flexibility. The focus on our premium service and quality of our equipment remains paramount in underpinning our growth strategy across our business divisions with our ongoing sector leading safety performance an example of such focus.

Our drilling business had another strong performance in 2022 with average utilisation for the year increasing further to 79% near historic record levels. Notably however we made the strategic decision during the year to reduce exposure to small scale exploration contracts and focus on our key long-term mine site contracts and world-class development projects. It has been pleasing to see this strategy reap the benefits so quickly with major extensions at the Geita and Bulyanhulu gold mines, Tanzania, a new material mine site contract at the Fekola gold mine, Mali, expanded contracts at world class non-gold projects Goulamina (lithium) and Kabanga (Nickel) and recent new contracts at world class projects Belinga (iron ore) and Reko Diq (copper).

Our mining business, having ramped up at Sukari in 2021, has now proven, operating throughout the year at steady state and even achieving its daily production in the final quarter of the year. The Sukari waste mining contract is the first load & haul of significant scale for Capital and this exceptional operational performance has elevated Capital's reputation both in mining as we tender on further opportunities and also as a reliable end-to-end service provider.

The growth trajectory MSALABS is achieving is remarkable especially considering in 2022 the business laid the foundations for material further growth in the years to come. The expanded relationship with Chrysos means MSALABS will now deploy 21 units into the market by 2025 and having achieved a strong start in 2023 we're expecting the business to generate $40-50 million this year and in excess of $80 million per annum from 2025.

Our Direct Investments portfolio remained focused around key holdings through the year. While 2022 market volatility saw a reduction in the portfolio to $38.7 million, it has nevertheless grown significantly from the net investment to date of ~$12.5 million, but also remains a strong business development tool with contracts from investee companies generating revenue of $51 million in 2022 (17.5% of Group revenue) and remains a core pillar of our business model.

The underlying demand in the market continues to be encouraging and our tender pipeline remains equally buoyant. In addition none of our material contracts are due for renewal in 2023, providing a firm footing from which to continue to grow. We will continue to pursue our key strategic priorities during 2023, with revenues expected to reach $320-340 million in 2023.'

Peter Stokes, Chief Executive, said:

"Since joining Capital in October 2022, I've seen first hand how strong a business Capital is and through 2023 we will strive to leverage our existing platform to continue to grow our service offering, while maintaining our core values.

We are extending our geographic footprint outside Africa both through MSALABS, in Canada in particular, and now with our drilling business as we commence operations at Barrick's Reko Diq project in Pakistan. We are continuing to look at opportunities globally but will maintain the core value of prioritising local employment, with more than 90% of the Group's workforce consisting of national employees.

We have now also formalised our existing mining technology expertise within the Group with the creation of 'Capital Innovation' which will channel new technologies and business ventures to market. Having successfully become early adopters of the innovative Chrysos technology, we are now aiming to provide solar hybrid power solutions both to our mining customers and our own operations through our new 50:50 joint venture Mine Power Solutions Limited with our partner Enerwhere Limited. We are also trialling a number of other technologies that could add significant value to our customers in years to come.

Capital's focus on its mine site services, Tier 1 asset client base, and the embracing of proven and more sustainable technology in the mining sector continues to underpin our growth trajectory, of which 2023 will see yet further progress."

Capital Limited will be hosting a live webcast presentation at 09:00 BST on Thursday 16 March 2023, where questions can be submitted through the platform.

The webcast presentation link:

https://www.lsegissuerservices.com/spark/CapitalDrillingLtd/events/a575a2fd-3c6b-4e68-b1b5-fd89859ab8e0

Participants may join the webcast approximately five minutes before the commencement time. A copy of the Company's presentation will be available on www.capdrill.com

- ENDS -

For further information, please visit Capital Limited's website www.capdrill.com or contact:

Capital Limited investor@capdrill.com

Jamie Boyton, Executive Chairman

Peter Stokes, Chief Executive Officer

Rick Robson, Chief Financial Officer

Conor Rowley, Investor Relations & Corporate Development Manager

Tamesis Partners LLP +44 20 3882 2868

Charlie Bendon

Richard Greenfield

Stifel Nicolaus Europe Limited +44 20 7710 7600

Ashton Clanfield

Callum Stewart

Rory Blundell

Buchanan +44 20 7466 5000

Bobby Morse capital@buchanan.uk.com

George Cleary

About Capital Limited

Capital Limited is a leading mining services company providing a complete range of drilling, mining, maintenance and geochemical laboratory solutions to customers within the global minerals industry, focusing on the African markets. The Company's services include: exploration, delineation and production drilling; load and haul services; maintenance; and geochemical analysis. The Group's corporate headquarters are in London and it has established operations in Canada, Côte d'Ivoire, Egypt, Guinea, Kenya, Mali, Mauritania, Nigeria, Saudi Arabia, Sudan and Tanzania.

Financial Review

Capital Limited has delivered another strong performance in 2022 across all our business divisions. We have taken important steps over the past year, both operationally and financially, to ensure the business is well positioned to continue to grow.

Revenue increased by 28% to US$290.3 million (2021: US$226.8 million). H2 revenue (US$152.2 million) was 10% higher than H1 revenue (US$138.1 million) primarily due to the continued ramp up of MSALABS as well as new drilling contract wins through the year, notably the material drilling services contract at B2Gold's Fekola mine in Mali.

Profitability of Group operations remained robust with a YoY EBITDA increase of 22.9% and a YoY EBIT increase of 15%. EBITDA (adjusted for IFRS 16 leases), where we take into account the cash cost of these IFRS 16 leases, was up 19% YoY.

Our investment portfolio booked a US$19.8 million mark-to-market loss reflected in the Profit and Loss. The portfolio remains concentrated around key holdings valued at US$38.7 million at the end of 2022 (compared to a net investment to date of ~US$12.5 million). During the year we were net sellers with net proceeds of US$1.6 million.

Our cash capital expenditure remained broadly in line with 2021 at US$48.5 million (2021: US$49.9 million) as we funded both organic and inorganic growth. On top of replacement rigs which we incorporate in our sustaining capex guidance, we directly purchased a number of rigs to grow our fleet towards our initial year end 2022 guidance of 120 (up from 109 rigs at the end of 2021). We subsequently raised guidance to 130 rigs following the purchase of 10 rigs and associated equipment from African Mining Services (AMS), part of Perenti Group, to facilitate the delivery of the new contract at the Fekola mine. The remainder of the Group's growth capex funded the expansion of MSALABS.

Through 2022 we took a number of steps to improve our financial flexibility. In addition to purchasing rigs through OEM financing, we also refinanced our Macquarie asset backed loan facility, taking advantage of the excellent condition of the mining equipment at Sukari, which provided US$10.6 million of new liquidity. In addition, we renewed our corporate RCF facility with Standard Bank and increased the facility from US$15 million to US$25 million.

Cash generated from operations was notably 73% higher YoY at US$73.5 million (2021: US$42.6 million) reflective of stronger fleet utilisation and the new contract wins. Including the cash cost of lease payments, cash generated from operations (adjusted for IFRS 16 leases) was US$69.8 million, up 68% YoY (2021: US$41.7 million). This is despite a large working capital outflow primarily as a result of inventory build in connection with new contracts and a decision to hold higher inventories in view of supply chain constraints globally. Closing cash was US$28.4 million (2021: US$30.6 million) with net debt of US$47.2 million (2021: US$31.9 million).

The business remains very robust and is a testament to our continued focus on long-term mine site contracts which reduces the volatility of earnings. Nevertheless, we have evaluated a downside scenario to assess the aggregate effect of the reasonable downside short term risks and demonstrated that the business is robust to scenarios far worse than experienced or expected.

STATEMENT OF COMPREHENSIVE INCOME

1 EBITDA, EBIT Adjusted Net Profit After Tax and Basic Earnings Per Share (adjusted) are pre fair value loss/gain on investments.

2 EBITDA (adjusted for IFRS 16 leases) is pre fair value loss/ gain on investments and includes the cash cost of the IFRS 16 leases.

Average rig utilisation increased to 79% (2021: 75%) on a larger average fleet size of 118 (2021: 104). Average revenue per operating rig (ARPOR) per month remained broadly in line with the prior year at US$180,000 (2021: US$181,000).

Non-drilling revenues saw another notable increase in contribution to Group revenues in 2022, driven both by the Sukari mining contract achieving its first year of continuous steady state operations as well as the continued ramp up of MSALABS. 2022 contribution to revenue from non-drilling services was 28% (2021: 24%).

EBITDA increased 22.9% to US$90.1 million delivering a 31% margin (2021: US$73.3 million/32%). EBITDA (adjusted for IFRS 16 leases) increased 18% to US$86.4 million delivering a 30% margin (2021: US$72.4 million, 32%). Margins remained robust despite higher administration expenses of US$44.3 million (2021: US$33.0 million). The increase in administration expenses YoY was impacted by US$1.5 million of bad debts written off, US$3.0 million in expected credit loss provisions and US$2.6 million in other operational provisions.

EBIT increased 15% to US$59.7 million delivering a 21% margin (2021: US$51.9 million/23%).

Profit Before Tax (PBT) decreased by 60% to US$32.6 million (2021: US$82.0 million) however this was primarily impacted by the non-cash investment loss of US$19.8 million (2021: US$33.7 million gain). These investments, while making mark to market losses through the year, continue to be a strong business development tool for the Group with revenue from investee companies in 2022 of US$51.0 million up from US$41.0 million in 2021.

Net Profit After Tax (NPAT) decreased 68% to US$22.7 million (2021: US$70.3 million) again impacted by the non-cash investment loss of our equity investments. Adjusted NPAT (excluding the impact of these investments) was US$42.5 million in 2022 up 16% YoY (2021: US$36.6 million).

The Effective Tax Rate for 2022 was 30.2% (2021: 14.3%). The increase in ETR in 2022 is primarily due to the significant unrealised decrease in fair value of the Group's investment portfolio. Excluding the impacts of these investments our ETR in 2022 was 18.8% down from 24.3% in 2021.

The Basic Earnings Per Share (EPS) for the year decreased 70% to 11.1 cents (2021: 37.0 cents), although this is largely a result of the mark-to-market losses on the investment portfolio. Excluding this impact, the Basic EPS (adjusted) increased 12% to 21.5 cents (2021: 19.2 cents). The weighted average number of ordinary shares used in the earnings per share calculation was 189,653,369 (2021: 189,765,149).

STATEMENT OF FINANCIAL POSITION

1 Attributable to equity holders of parent

Non-current assets increased by 22% YoY to US$198.9 million (2021: US$162.4 million) reflecting a net investment in the fleet (rig size increased from 109 at the end of 2021 to 129 at the end of 2022) in addition to a 69% YoY increase in the right-of-use asset base to US$16.7 million (2021: US$9.9 million) primarily in connection with the roll out of Chrysos PhotonAssayTM units in MSALABS.

Current assets decreased to US$187.8 million (2021: US$189.1 million) primarily as a result of a 55% YoY increase in inventory offset by a 36% YoY decrease in the fair value of the investment portfolio. Inventory increased by US$20.8 million to US$58.7 million (2021: US$37.9 million) to accommodate both increased activity across the group and to provide comfort to the business while we saw supply chain constraints globally. Investments held of US$38.7 million (2021: US$60.2 million) are the fair value of the equity investment portfolio.

Non-current liabilities of US$69.0 million (2021: US$53.0 million) includes US$56.9 million (2021: US$45.6 million) of long-term loans. Total long-term debt includes US$25 million of the renewed Revolving Credit Facility, a US$35.4 million asset backed facility with Macquarie and OEM financing direct through Epiroc & Sandvik.

Current liabilities consisted of trade and other payables of US$44.9 million (2021: US$46.5 million), the current portion of long-term liabilities of US$18.0 million (2021: US$16.9 million), provisions of US$2.6 million (2021: US$ nil) and tax liabilities of US$9.1 million (2021: US$10.0 million).

STATEMENT OF CHANGES IN EQUITY

As at 31 December 2022, shareholders' equity increased by 7% driven primarily by net profit for the year of US$22.7 million. The Group distributed dividends of US$7.1 million (2021: US$4.7 million) to shareholders. At the beginning of 2022 the Group also completed a share buyback of US$2.5 million.

STATEMENT OF CASH FLOWS

RECONCILIATION OF NET CASH (DEBT) POSITION

Net cash from operating activities reflects the strong performance of the operations with cash generated of US$73.5 million (2021: US$42.6 million), an increase of 73% year-on-year, offset in part by higher finance costs. Adjusting cash generated from operations for the cash cost of the IFRS 16 leases reduces 2022 cash generated to US$69.8 million, up 68% YoY (2021: US$41.7 million).

We continued to invest through 2022 to fund the growth in the rig fleet as well as the expansion of MSALABS, although the investing cash flow have decreased slightly year-on-year.

The refinancing of the Macquarie asset backed loan facility and the renewal and upsizing of the revolving credit facility with Standard Bank provided new funds of US$4.1 million, net of overall loan amortisation in 2022.

Despite this, financing activities in 2022 were a cash outflow of US$9.9 million primarily as a result of lease payments, the dividend cash payment of US$7.1 million (2021: US$4.8 million) and the share buyback payment of US$2.5 million.

The dividend history for the past three years is as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

For the year ended 31 December 2022

1. General information

Capital Limited (the "Company") is incorporated in Bermuda. The Company and its subsidiaries (the "Group") provide drilling, mining (load and haul), mineral assaying and surveying services. The Group also has a portfolio of investments in listed and unlisted exploration and mining companies.

During the year ended 31 December 2022, the Group provided drilling services in Côte d'Ivoire, Guinea, Egypt, Kenya, Mauritania, Mali, Saudi Arabia and Tanzania. Mining services are provided in Egypt and mineral analysis services are provided in Canada, Guyana, Mauritania, Nigeria, Côte d'Ivoire, Mali, Tanzania, Kenya and Democratic Republic of the Congo. The Group's administrative office is located in Mauritius.

2. Accounting policies

This preliminary report, which is unaudited, does not include all the notes of the type normally included in an annual financial report. This condensed report is to be read in conjunction with the Annual Report for the year ended 31 December 2021, and any public announcements made by the Group during the reporting period.

The annual financial statements for the year ended 31 December 2021 was prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board and the accounting policies applied in this condensed preliminary report are consistent with the polices applied in the annual financial report for the year ended 31 December 2021 unless otherwise noted. The auditor's report on the 31 December 2021 financial statements was unqualified and did not draw attention to any matters by way of emphasis. The financial information for the year ended 31 December 2022 is unaudited.

The preliminary report has been prepared in accordance with accounting policies compliant with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board.

Going concern

As at 31 December 2022, the Group had a robust balance sheet with a low debt gearing with equity of US$239.9 million and loans and borrowings of US$75.6 million. Cash as at 31 December 2022 was US$28.4 million, with net debt of US$47.2 million. Investments in listed entities at the end of December 2022 amounted to US$30.4 million which provided additional flexibility as these investments could be converted into cash.

This robustness is underpinned by stable revenues generated on long-term contracts. Revenues generated on mine sites and longer-term contracts make up over 85% of Group revenues. Revenues continued to perform strongly in 2022 with increased revenue of 28% compared to 2021. Commercially, the Group continues to secure and extend long-term mining contracts with high quality customers, including the significant contract win at B2Gold's Fekola gold mine and major extensions at the AngloGold Ashanti's Geita gold mine and Barrick's Bulyanhulu gold mine. In addition, there are no major contracts due to expire in 2023 which provides strong support for earnings over the coming year.

In determining the going concern status of the business, the Board has reviewed the Group's forecasts for the 18 months to June 2024, including both forecast liquidity and covenant measurements. In the assessment, management took into consideration the principal risks of the business that are most relevant to the going concern assessment and reverse stressed the forecast model to identify the magnitude of sensitivity required to cause a breach in covenants or risk the going concern of the business, alongside the Group's capacity to mitigate. The most relevant sensitivity was considered to be decrease in EBITDA through loss of contracts, with no redeployment of equipment. EBITDA would need to fall over 70% for a 12-month period to breach the covenant test. Given the strong market demand from existing clients and across a large tendering pipeline, the Group's increased service diversification and the limited contract expiries due during the year, management consider the risk of a deep demand correction to be low.

NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

For the year ended 31 December 2022

2. Accounting policies (continued)

Going concern (continued)

Given the Group's exposure to high quality mine site operations, we consider a decrease of such magnitude to be remote. Based on its assessment of the forecasts, principal risks and uncertainties and mitigating actions considered available to the Group in the event of downside scenarios, the Board confirms that it is satisfied the Group will be able to continue to operate and meet its liabilities as they fall due over the going concern period to June 2024. Accordingly, the Board has concluded that the going concern basis in the preparation of the financial statements is appropriate and that there are no material uncertainties that would cast doubt on that basis of preparation.

3. Segment analysis

Operating segments are identified on the basis of internal management reports regarding components of the Group. These are regularly reviewed by the Chairman in order to allocate resources to the segments and to assess their performance. Operating segments are identified based on the regions of operations. For the purposes of the segmental report, the information on the operating segments have been aggregated into the principal regions of operations of the Group. The Group's reportable segments under IFRS 8 are therefore:

NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

For the year ended 31 December 2022

3. Segment analysis (continued)

The following is an analysis of the Group's revenue and results by reportable segment:

NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

For the year ended 31 December 2022

3. Segment analysis (continued)

The following customers from the Africa segment contributed 10% or more to the Group's revenue:

Segmental reporting summary by region:

The business has considered this segmental distribution to be appropriate as it represents the discrete areas of operations that make up the Group's revenue stream.

NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

For the year ended 31 December 2022

4. Administrative expenses

5. Profit from operations

The following items have been recognised as expenses in determining profit from operations:

NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

For the year ended 31 December 2022

6. Finance costs

7. Taxation

Capital Limited is incorporated in Bermuda. No taxation is payable on the results of the Bermuda business. Taxation for other jurisdictions is calculated in terms of the legislation and rates prevailing in the respective jurisdictions.

The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. In certain of these jurisdictions, the Group has taken income tax positions that management believes are supportable and are intended to withstand challenge by tax authorities. Some of these positions are inherently uncertain and relates to the interpretation of income tax laws. The Group periodically reassesses its tax positions. Changes to the financial statement recognition, measurement, and disclosure of tax positions is based on management's best judgment given any changes in the facts, circumstances, information available and applicable tax laws. Considering all available information and the history of resolving income tax uncertainties, the Group believes that the ultimate resolution of such matters will not likely have a material effect on the Group's financial position, statements of operations or cash flows.

Refer to Note 19 (Contingencies) for more detail on Tanzania, Zambia, Mauritania, Mali and Ivory Coast.

NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

For the year ended 31 December 2022

8. Earnings per share