17th Mar 2015 11:21
LONDON (Alliance News) - Capital Drilling Ltd Tuesday proposed its maiden dividend after it posted a swing to a pretax profit in 2014, as a decline in revenue was offset by improved margins, and reduced costs.
The emerging and developing markets focused drilling services firm proposed a maiden total dividend of USD1.9 cents per share. It is aiming to pay a yearly dividend in the range of 25% to 50% of its free cash flow going forward.
The company posted a pretax profit of USD2.5 million, compared to a pretax loss of USD1.9 million, as a decline in revenue to USD98.8 million from USD116.3 million was offset by lower cost of sales, administration expenses and depreciation charges.
Capital Drilling attributed the decline in revenue to a weaker demand environment, particularly in its second half as a number of contracts came to an end.
As a result of operations in the Solomon Islands and Papua New Guinea being prematurely terminated it opted to exit from the South East Asia region, making staff in these countries redundant and relocating assets. It also further cut head-count elsewhere, and began the relocation its head office from Singapore to Mauritius.
Capital Drilling said that market volatility it has seen since the start of 2015 suggests it will continue to be challenging, but is "slowly showing indications of improving sentiment."
"The decisive early actions taken by your management team to reduce costs, our improving operational performance across a solid base of long term contracts and our strong balance sheet, all position us well to cope with the challenges ahead. The foundations that are now in place will provide increased earnings and cash flow leverage for when markets recover," said Chairman Jamie Boyton in a statement.
Shares in Capital Drilling are trading up 4.6% at 23.00 pence Tuesday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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