EANS-News: C.A.T. oil AG Annual Report 2015: Successful operations under
challenging market conditions, but currency and oil price stress earnings and
financial results in euro
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Corporate news transmitted by euro adhoc. The issuer/originator is solely
responsible for the content of this announcement.
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Subtitle: Results in line with guidance
Revenue in Russian roubles increased by 4.4%
Sales revenues in euros decreased by 21.8% to EUR 322.5 million
EBITDA contracted by 28.0% to EUR 81.5 million
Consolidated net profit reached EUR 20.3 million in 2015
Equity ratio improved from 44.5% to 48.3%
No dividend payment proposed to AGM to keep key financials strong as a
necessary basis for future development
Financial Figures/Balance Sheet/Publication of Annual report 2015
Operating performance of the Group
2015 was a defining year for C.A.T. oil AG, a year in which the foundation was
laid for the further development of the Group. In spite of extremely challenging
economic conditions, the C.A.T. oil Group led by a new management team developed
satisfactorily, both in terms of its operating business as well as from a
financial point of view.
The number of service jobs increased from 4,489 in 2014 to 4,975 in 2015,
comprising an increase of 10.8%. Revenue generated in Russian roubles was up by
4.4%. The consolidated financial statements expressed in euros show a
performance slightly above the original guidance and the expected results.
Revenue for the year 2015 totaled EUR 322.5 million, whereas EBITDA and EBIT
amounted to EUR 81.5 and 31.0 million respectively. Accordingly, C.A.T. oil AG
performed clearly better than its peers.
Yury Semenov, CEO, and Valeriy Inyushin, CFO, on the performance of C.A.T. oil
AG: "We are proud of our achieving an increase in the number of contract scopes
and revenues in the local currency despite the backdrop of the current market
environment featuring difficult conditions for the oil field service business in
Russia and CIS. We maintained our financial solidity by a proactive approach in
managing, by a disciplined cost control and strong balance sheet structure,
enabling us to calmly and confidently look ahead to the upcoming months. Today,
we have already marketed almost all our operation capacities across all service
segments for the year 2016."
The most important business achievements of C.A.T. oil Group in 2015 were as
follows:
- The company's market position was maintained in drilling and expanded in
the fracturing segment.
- A sufficient EBITDA margin and operating cash flow continued to be
generated.
- Capex and opex control were optimized.
- The Group business was converted to the self-financing model without the
need for external resources.
- A solid cash position was maintained during the year.
- A conversion program for intergroup debt-to-equity was launched, aiming
to improve profitability of operating units and the Group's equity structure.
Complete utilization of equipment portfolio
The entire equipment portfolio of C.A.T. oil AG was completely utilized
throughout 2015. The company currently has sufficient equipment at its disposal
in the light of the particular situation prevailing on the Russian market for
oil and gas exploration and production. Against the backdrop of restrained
customer investments and price pressure on service fees, the management of
C.A.T. oil pursued a flexible investment policy, focusing mainly on carrying out
the required replacement and maintenance investments.
Leading position in fracturing
Another highlight in the company's operating business in 2015 was the record
level of drilling in the Orenburg region. Horizontal drilling of more than 1,000
meters was successfully concluded for the customer Gazprom Neft in only 12.3
days. This unprecedented achievement was also recognized by the industry.
Moreover, the 30,000th fracturing job in the history of the company was carried
out in June/July 2015. This milestone demonstrates the leading market position
of C.A.T. oil AG in the application of this technology on the Russian market as
well as the high customer satisfaction.
Introduction of a holistic management approach
The goal of the new Management Board is to ensure the further development of
C.A.T. oil Group. In particular, the objective is to quickly and comprehensively
generate synergies in the management and administration of business operations.
Additionally, the new Management Board aims to further expand the company's
high-quality services and develop proprietary oil field service know-how in
order to secure the company's sustainable competitiveness in the future.
For this purpose, a fully-owned subsidiary of C.A.T. oil directly below the
level of the parent company was established in the fall of 2015. The company,
LLC "Petro Welt Technologies", short LLC "Pe-We-Te" headquartered in Moscow, has
the right to issue directives and intervene in the activities of the operating
subsidiaries of C.A.T. oil AG. Pe-We-Te assumed responsibility for a number of
administrative services from the operating subsidiaries such as finance,
liquidity management, human resources and above all procurement. This step is
designed to serve as the basis for generating synergies and ensuring the ongoing
further development of unified quality standards.
Revenue development
Total Group revenues measured in Russian roubles increased by 4.4% in the 2015
financial year. In contrast, revenues in the Group currency, the euro, reduced
by 21.8% to EUR 322.5 million from EUR 412.1 million in the previous year. The
high quality services rendered by C.A.T. oil AG on the basis of the top-notch
quality of the employees deployed and the high technological standards of the
technical equipment has made the company more resistant against unfavourable
market conditions.
The deteriorating economic conditions reflected in the pressure on service fees
and the changed structure of service jobs related to the cost savings programs
implemented by customers are clearly shown by the average per job revenue. This
indicator declined by 27.8% to EUR 37,400 per job in the Well Services segment
against the backdrop of a 10.8% rise in the number of service jobs. In the
Drilling, Sidetracking and IPM segment, average per job revenue fell by 31.4%,
with the number of jobs increasing by 11.2%.
Reduced costs and increased efficiency
The cost of sales declined by 15.2% or EUR 48.7 million to EUR 271.5 million
from EUR 320.2 million in the previous year. This decrease is comparable with
the devaluation of the Russian rouble during 2015 (-16.6%), showing that the
management of C.A.T. oil AG was able to successfully increase the efficiency of
the operating business and reduce costs incurred in US dollars or euros. This
improvement took place in spite of the conclusion of an investment program
designed to expand capacities. However, it was not sufficient to cover the
decrease of revenues expressed in euros based on the average exchange rate
dynamics of 2015 versus 2014.
Development of earnings
The gross profit declined by 44.6% in the financial year 2015 to EUR 51.0
million, down from 92.0 million in the previous year. The gross profit margin
equalled 15.8% (down from 22.3% in 2014), which can be considered as a
relatively comfortable level for corporate finances in such a challenging market
environment.
EBITDA development was quite successful in 2015. Firstly, its margin was
maintained at 25.3%, just marginally below the level of 27.5% in 2014. Secondly,
the EBITDA decline in Russian roubles was only 4%. Accordingly, despite the 28%
EBITDA decrease in euro terms, from 113.2 million in 2014 to 81.5 million in
2015, it had a limited impact on the company. The Group preserved its ability to
generate a robust operating cash flow and even increased it in Russian rouble
terms by 12%.
The operating result reported as earnings before interest and taxes (EBIT)
deteriorated by 54.4% in the year under review to EUR 31.0 million, down from
the prior-year level of EUR 67.9 million. This was due to the insufficient
compensation through a reduction in general and administrative expenses.
The financial result in 2015 was minus EUR 1.9 million, compared to the positive
financial result of EUR 3.2 million in 2014. This development can be mainly
attributed to exchange rate changes. The net profit before tax amounted to EUR
29.0 million.
The more pronounced drop in the net profit compared to the profit before tax
(-62.5% versus -59.1% yoy) can be primarily attributed to the increase in the
effective tax rate from 24% in 2014 to 30% in 2015. This is due to additional
tax payments in Russia and specifying taxes for previous periods. Earnings per
share equalled EUR 0.42 for the 2015 financial year, lower than the level of EUR
1.11 per share in 2014.
Dividend for the financial year 2015
In the event of attractive investment opportunities, the company is considering
to enter new geographical markets on the basis of established and new business
relationships or playing an active role in the consolidation process on the
market for service providers to the oil industry. For this reason, a solid
structure of the balance sheet is necessary. The Management Board and
Supervisory Board willl therefore propose that the Annual General Meeting
approves the intention not to distribute any dividend for the financial year
2015. The dividend for 2014 amounted to EUR 0.12 per share.
Development of equity and balance sheet structure
In 2015, the equity ratio could be increased to 48.3%, up from 44.5% in 2014.
This is mainly due to the reduction in the balance sheet total, from EUR 379.8
million to EUR 301.3 million, and debt-to-equity program launched in the
operational companies. For one thing, the valuation of assets was lower as a
result of the loss in value of the Russian rouble. In addition, the non-current
and current liabilities of C.A.T. oil were substantially reduced. Equity of the
Group fell to EUR 145.5 million as at 31 December 2015 compared to EUR 168.9
million at the end of 2014. The non-current assets of C.A.T. oil AG recognized
to the amount of EUR 156.4 million were more than offset by equity and
non-current liabilities totalling EUR 249.7 million. At the end of 2015, total
net debt amounted to EUR 104.5 million, which corresponds to a factor of 1.3
EBITDA.
Cash flow development
Based on an EBITDA of EUR 81.5 million in 2015 (2014: EUR 113.2 million), the
cash flow from operating activities amounted to EUR 67.3 million, down from the
prior-year figure of EUR 80.1 million. The negative impact of the reduction in
the profit before tax was partly compensated by the improved dynamics of working
capital (2015: EUR -985 thousand, 2014: EUR -20.1 million). The Management Board
succeeded in limiting the cash flow decline thanks to its stringent receivables
management and improved contract conditions.
Following delivery of the equipment ordered in 2014, investment activity was
considerably cut back in 2015. Capital expenditures in property, plant and
equipment totalled EUR 57.6 million, compared to EUR 134.8 million in the
previous year.
The cash flow from financing activities was minus EUR 29.7 million, down from
EUR 84.7 million in 2014. The main reason was the early total repayment of a
loan to Sberbank of Russia.
Guidance for revenues and earnings levels
Based on these general assumptions - calculating with an exchange rate of 80-82
Russian rouble for 1 euro - and assured by almost fully contracted capacities,
the management expects revenue from operations in Russian rouble to raise by 1
or 2% in 2016. The margins regarding EBIT and EBITDA are expected to keep their
satisfactory level around 12% and 25% respectively. The Management will keep a
focus on cost of sales which are expected to keep their current level in Russian
rouble.
Further inquiry note:
Bernhard Grabmayr
SCHOLDAN&Comp.
Bernhard Grabmayr
office@scholdan.com
+43-1-513 23 88-0
end of announcement euro adhoc
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company: C.A.T. oil AG
Kärntner Ring 11-13
A-1010 Wien
phone: +43(0) 1 535 23 20 - 0
FAX: +43(0) 1 535 23 20 - 20
mail: ir@catoilag.com
WWW: http://www.catoilag.com
sector: Oil & Gas - Upstream activities
ISIN: AT0000A00Y78
indexes: SDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt
language: English
