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LONDON (Alliance News) - Capital Drilling Ltd Thursday said revenue fell by 20% in 2015 which caused the company's loss to balloon due to subdued exploration and development activity within the global mining industry.
Although the company has suffered from weaker market conditions like its peers, the company managed to significantly strengthen its balance sheet during the year and predicts a rise in revenue and improved profitability in 2016.
The company, which provides drilling services to commodity companies operating within emerging and developing markets, reported a net loss after tax of USD10.2 million in 2015, widening from the USD600,000 loss reported a year earlier.
That was the result of revenue dropping 20% year-on-year to USD78.7 million from USD98.8 million. Capital Drilling said it added one rig to its fleet during the year to push it up to 97, but its fleet utilisation rate dropped to 34% from 43%.
Despite that drop, average revenue per operating rig remained flat from the previous year at USD188,000.
Earnings before interest, tax, depreciation and amortisation more than halved to USD9.9 million from USD20.4 million, leading the company to swing to a loss before interest and tax of USD4.7 million from earnings of USD3.9 million in 2014.
Capital Drilling said earnings were hit by a number of non-recurring charges, on top of weaker revenue, relating to repatriation costs totalling USD1.0 million, inventory write-downs of USD5.1 million and provisions for reported tax disputes of USD2.5 million.
Adjusting for those non-recurring charges, underlying Ebitda margins returned to seven-year long-term trend levels of 22%, reflecting the strong focus on cash management during the current market downturn, the company said.
That caused the loss per share to widen to 7.6 cents per share from a 0.4 loss per share a year earlier.
"As anticipated, the 2015 financial year remained challenging due to subdued exploration and development activity within the global mining industry. The sector continued to be impacted by lower commodity prices, the deferral or cancellation of capital expenditure and the continued and heightened focus on cost reduction," said Capital Drilling.
Despite suffering from market conditions like its peers, Capital Drilling managed to reduce its gross debt by two-thirds during the year, with net cash standing at USD8.3 million at the end of 2015 compared to its net debt position of USD400,000 at the end of 2014.
"Despite these ongoing challenges, Capital Drilling anticipates a small increase in 2016 revenue, largely reflecting the recently announced contract win at the North Mara Gold Mine," said the company.
That contract for the North Mara gold mine was awarded to the company by fellow London-listed Acacia Mining PLC back in December.
"The group continues to have its existing revenue base underpinned by our established long term drilling contracts. Furthermore we expect an improved year for group profitability based on current assumptions, with the non-recurring items expensed in 2015," said Capital Drilling.
Capital Drilling shares were trading down 2.3% to 21.0 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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