28th Jan 2015 10:00
LONDON (Alliance News) - Capital Drilling Ltd on Wednesday said its 2014 revenue was dragged down by a fall in fleet utilisation over the year and by the early end to the yearly drilling programmes by a number of clients, which hit its second-half performance.
The group said its revenue for the year to December 31 was USD98.8 million, down 15% year-on-year due to a 22% fall in fleet utilisation over the year. Its average revenue per operating rig for the year rose 5% to USD188,000 and the number of rigs it operates rose to 96 from 91 last year.
But the company said it was hit by the continued pressure on mining and mining services industries in 2014, with further downward pressure on commodity prices and weak capital funding in the mining sector driving its customers to defer and cancel capital spending plans, focus on cost management and curtail exploration and development work.
The group said its second half was hit by the early conclusion to yearly drilling programmes by a number of clients, with revenue in the fourth quarter falling due to the weaker utilisation volumes.
The company said that while its weaker revenue had a negative impact on net earnings, its earnings before interest, taxation, depreciation and amortisation rose 18% owing to cost reduction plans put in place in 2012 which offset the drop in revenue.
The company also said it would make further strategic changes in 2015, including an exit from its South East Asia business, a relocation of its head office, and job cuts. Owing to the relocation of the head office, from Singapore to Mauritius, the company said Chief Financial Officer Uno Makotsvana will leave the company. He will be replaced by Jaco Brümmer, who takes on the role from his current position as chief commercial officer.
Capital Drilling said it expects revenue to fall further in 2015, but said its medium-term and long-term prospects were good due to its focus on cash generation and debt reduction. It said it expects the headwinds which hit performance in 2014 to continue, particularly in copper and iron ore markets, though it said some recent pricing moves in the gold market look encouraging.
"The last financial year was again extremely challenging for the company. Despite the continued collapse in metal prices and the curtailing of activity levels in the development and exploration of metals, Capital Drilling strengthened its balance sheet, and continued to generate free cash. In order to protect our position in a market which remains uncertain, we have taken a cautious stance and further restructured the business in order to weather the storms that are still facing our sector," said Capital Drilling Chairman Jamie Boyton.
Shares in Capital Drilling were down 3.3% to 22.00 pence on Wednesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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