Swick flags $25m impairment

Drilling contractor Swick Mining Services has flagged an impairment of up to $25 million in its full-year result, on the back of troubled times in the mining services sector and the low use of its assets.

The announcement comes after Swick’s preliminary review of its assets in its fourth financial quarter, and after signalling in April that an impairment would likely be necessary.

The Kent Swick-led business pointed to market conditions and decreased equipment utilisation in its 'non-core' reverse circulation and underground drilling divisions as the main causes of the impairment.

However, the company said it still had high demand for its core underground drilling division.

Despite the impairment, Swick reaffirmed its revenue outlook for the 2015 financial year, which is expected to be in the range of $125 million to $135 million.

Over the course of the March quarter the company made a number of redundancies in a move to minimise overheads.

As the impairment is a non-cash item, Swick said it would have no impact on the company’s cash-flow or banking covenants.

The company said that its underlying earnings before interest, tax, depreciation and amortisation is expected to be in the range of 13 to 16 per cent.

Shares in Swick were unchanged at 14 cents each at 11am.