One-off impairment charges and a slow down in drilling activity overseas has weighed on Imdex's bottom line with the drilling services company today reporting a net loss after tax of $24.6 million.
One-off impairment charges and a slow down in drilling activity overseas has weighed on Imdex's bottom line with the drilling services company today reporting a net loss after tax of $24.6 million.
In its interim report released today, Imdex said the mining regions of Africa, Canada and Latin America were hit hard by the global financial crisis, causing an impairment review into the company's two divisions.
As a result, one-off non-cash writedowns totalled $28.4 million, and included a $4.9 million writedown of the investment in listed company Sino Gas and Energy Holdings.
Imdex managing director Bernie Ridgeway said there was clear evidence that drilling activity was increasing in the first half of 2009/10 in Africa, Canada and Latin America, and was continuing into the second half.
"Given the significant increase in our DHI rental fleet for the mining industry and other indicators in the market, we are confident of further improvements in trading results in the coming months", Mr Ridgeway said.
Imdex reported an operating profit after tax for the six months to the end of December of $2.85 million, down from $10 million recorded in the previous corresponding period.
Total revenue dropped from $81.35 million to $58.7 million.
Separately, the Drilling Fluids and Chemicals Division booked $41 million in revenue while the Down Hole Instrumentation division's revenue was $17.4 million.
"Imdex's performance needs to be put in the context of the 2009 financial year, which was a tale of two halves," Mr Ridgeway said.
"The first half of the 2009 financial year represented an historic high in the markets in which Imdex operates, whilst the second half represented an historic low given the impact of the global financial crisis.
"Imdex's performance over the past six months demonstrates an improvement on the second half of the 2009 financial year and indicates that the low point in the cycle is behind us.
"Imdex's strategy for FY10 and beyond remains unchanged. We expect that 2H10 will see a further recovery in revenue levels and profitability as we execute our global growth strategy and expand our oil & gas market share."
An interim dividend was not declared.
Shares in Imdex shed 3.5 cents to 65c at 12:42 AEDT.
A summary of the Imdex report is below:
- Improved operating performance on the six months ended 30 June 2009 (2H09), which was the low point in the current cycle (1H09 was the high point)
- Revenue (excluding interest income) of $58.4 million (2H09: $56.7 million, 1H09: $80.3 million);
- EBITA from operations of $7.5 million (2H09: $4.5 million, 1H09: $20.0 million);
- Net profit after tax (excluding non-operational items) of $2.9 million (2H09: $1.3 million, 1H09: $10.1 million);
- $23.5 million non-cash impairment of goodwill and intangible assets due to the lower performance and longer tool development times;
- $4.9 million non-cash mark-to-market impairment of the investment in Sino Gas & Energy Holdings;
- Cash flow from operations of $4.6 million (2H09: $9.6 million, 1H09: $6.6 million);
- Continued growth in oil & gas revenues, accounting for 20% of 1H10 operational revenue;
- Increased drilling activity emerging in Africa, Latin America and Canada in late 1H10 evidencing early stages of recovery;
- Improved utilisation of DHI mining rental fleet, with fleet numbers up 90% (31 January 2010) on the low in April 2009;
- Established platform for growth and well positioned for the upturn; and
- Operating margins improving going into 2H10.
