Capital Drilling delivers strong half-year results

22nd August 2019 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

Aim-listed Capital Drilling on Thursday reported an 87.3% increase in earnings a share for the six months ended June 30 to $0.037, compared with the $0.02 reported for the six months to June 30, 2018.

The drilling solutions company’s net profit after tax surged 82.1% to $5.1-million, reflecting reduced depreciation and lower interest charges during the interim period.

"We are pleased to report that the group has delivered another strong performance for the first half, delivering solid financial results while continuing to pursue strategic growth plans,” said Capital Drilling executive chairperson Jamie Boyton.

Despite an increase in investment in growth during the first half of this year, earnings before interest, taxes, depreciation and amortisation edged up 1.6% to $12.7-million.

Capital expenditure was up 18.4% to $6.4-million as the group expanded its support asset base in West Africa, while investments climbed from $5.7-million as at December 31, 2018, to $7.7-million as at June 30, to align the West African business development strategy and support a number of contract wins.

During the half-year under review, margins remained stable at 23%, Boyton said, noting that this reflected the sustainability of cost management initiatives.

“Particularly pleasing is the strong cash result, despite outflows associated with establishing operations in Burkina Faso and mobilisation for a new contract in Mali,” he added.

Net cash was up 150% to $8.5-million, with an additional $2-million of long-term debt repaid, while cash from operations increased 45.8% to $10.5-million on the back of improved working capital management.

During the six months under review, Capital Drilling earned revenue of $54.8-million, 0.6% higher than the $54.5-million reported in the first half of last year.

The company has maintained its revenue guidance for the full-year at between $110-million and $120-million, with revenue expected to increase in the second half of the year, consistent with 2018.

“The recent strength in the gold price is a further positive indicator for Capital Drilling, given that the sector represents 90% of our overall business by revenue. Additionally, mining companies are generating stronger cash flows that are driving increased exploration budgets,” said Boyton.

“Our balance sheet remains robust owing to ongoing prudent cost management.

“As a result of this performance, we have today announced an interim dividend to shareholders of $0.07 a share, representing a 17% increase on the previous corresponding period,” he concluded.