Shares in drilling services company Imdex jumped today on news of some financial success during challenging times for the exploration sector.
Shares in drilling services company Imdex jumped today on news of some financial success during challenging times for the exploration sector.
The Balcatta-based business says it is cautiously optimistic, particularly because it has benefited from increased drilling activity on existing projects by major resources companies.
"While the cyclical downturn in the minerals industry is challenging in the short term, there are early signs of a measured recovery," Imdex managing director Bernie Ridgeway said.
However, following a diversification into the oil and gas sector, Imdex has flagged plans to restructure its AMC Oil & Gas division to respond to a crash in the oil price.
Total revenue for the six months ended December 31 2015 was up 12.3 per cent to $114.4 million, while normalised earnings before interest, tax, depreciation and amortisation rose 32.3 per cent to $8.6 million.
Imdex shares were up 7.8 per cent to 3.45 cents at 11.20am WST.
The rise was welcome news for shareholders, who have watched the business’s stocks drop more than 50 per cent in the past six months.
While Imdex reported increased revenue and underlying earnings, its net profit after tax of $9.7 million, was down 37 per cent compared with a $15.3 million recorded at the same time last year.
Mr Ridgeway said despite challenging market conditions, the company was maintaining and gaining market share by developing new technologies and diversifying its customer base.
“The minerals market is receptive and increasingly adopting our solutions driven technologies enabling customers to increase productivity and reduce costs,” he said.
“In many cases Imdex has first-mover advantage on the introduction of these technologies allowing us to be the primary beneficiary of the market upturn.
“Our balance sheet is in good shape and comfortable gearing levels (13.7 per cent) have been maintained.’’
In its minerals division, for the second half of the 2015 financial year, Mr Ridgeway said Imdex expected to make returns from an aggressive research and development spend on new technologies aimed at assisting companies spend less on drilling projects.
In its oil and gas division he said the collapse in the oil price would have a negative effect on the company’s activities.
He said the company was reviewing its operations, including staff numbers, to ensure the division could respond to operating conditions.
“In terms of financial performance, we believe the worst is behind us in the minerals industry, however challenges remain in the oil and gas sector,” Mr Ridgeway said.
“Combined with our commitment to invest in the business through the cycle, the company is well positioned for the medium to long term.”
