TIDMGDL
RNS Number : 7731Z
Greka Drilling Limited
12 March 2013
12 March 2013
Greka Drilling Limited
("Greka Drilling" or the "Company")
Annual results for the year ended December 2012
Revenue increases 39%, meters drilled by 67%
Greka Drilling Limited (AIM: GDL), the largest independent and
specialized unconventional oil & gas driller in China, is
pleased to announce annual results for the year ended 31 December
2012.
FINANCIAL HIGHLIGHTS
-- Revenue of US$60.9m, a 39% increase over same period last year of US$43.8m.
-- Total assets increased by US$25.7m to US$114.1m an increase of 29% year on year.
-- EPS US$0.005, compared with US$0.007 in same period last year.
-- Cash and bank deposits of US$3.1m.
-- Paid off US$12.5m working capital facility in full from
affiliate Green Dragon Gas Limited, further demonstrating the
Company's increasing operational independence.
-- Increased China based working capital facility to US$12.0m by year end.
CORPORATE HIGHLIGHTS
-- Headcount grew to 665 with a total of 106,581 hours of
training and the ability to operate crews 24/7, 365 days of the
year. Fleet increased from 16 rigs to 32 rigs over the period, an
increase of 100% year-on-year; average number of rigs in 2012 was
28 versus 14 in 2011.
-- 79 directional drillers compared with 51 a year earlier, one
of the largest team of directional drillers in China.
OPERATIONAL HIGHLIGHTS
-- 3 contracted counterparties: Green Dragon Gas, CNPC Huabei and Petroking.
-- 90 wells drilled in 2012 compared with 50 wells drilled in
2011, an increase of 80% year-on-year.
-- 147,126 meters drilled, compared to 88,224 meters drilled in 2011, a 67% increase
-- Vertical wells averaging 37 drilling days.
-- Horizontal wells averaging 51 drilling days.
-- Exploration drilling (LiFaBriC) wells at 88 days improving on
previous company guidance of 90 days.
Randeep Grewal, Chairman and Chief Executive of Greka Drilling,
commented:
"I am delighted to report that we have continued to grow the
business on time and within plan. For the full year we have
increased revenues, evaluated many unconventional basins in China,
India and South East Asia. These third party evaluations conducted
by our in house geology and engineering personnel give us a very
high degree of confidence that the LiFaBriC drilling methodology
has a significant and wider footprint in Asia as whole, in addition
to multiple opportunities within China itself. We are the one stop
shop of choice for unconventional drilling completions in
Asia."
For further information on Greka Drilling, please refer to the
website at www.grekadrilling.com or contact:
Stephen Hill, VP Corporate Communications
Greka Drilling Limited +852 3710 0108
Dr Azhic Basirov / David Jones
Nomad & Broker
Smith & Williamson +44 20 7131 4000
Jeffrey Auld / John Dwyer /
Steve Baldwin
Broker
Macquarie Capital (Europe) Limited +44 20 3037 2000
James Henderson / Nick Lambert
/
Rollo Crichton-Stuart
Investor relations
Pelham Bell Pottinger +44 20 7861 3232
CHAIRMAN'S STATEMENT
Today is the second anniversary of the Company becoming an
independent operating entity and the merits of the successful
demerger are further demonstrated by our performance this year.
I am pleased to report that 2012 saw us continue to profitably
expand as predicted. This expansion was demonstrated throughout the
Company, from rigs accepted to revenues and by year end,
customers.
Operationally we drilled more meters and more wells - with the
wells drilled being deeper and longer than ever before. We
successfully drilled 90 wells with a total of 147,126 meters
drilled which represented an increase of 80% and 67% over the
previous year, respectively. Drilling efficiencies were improved
with the fastest vertical and LiFaBriC well completions achieving
42% and 14% improvements over last year, respectively.
Total headcount grew to 665 from 520 a year earlier, in support
of the rig fleet increase to 32. The average number of operating
rigs was 28 in 2012, compared to 14 in 2011. Directional drillers
were added to the team increasing the headcount to 79 from 51 in
the previous year. The directional drilling headcount now exceeds
any other independent drilling company operating in China.
Precision of the directional drilling was further enhanced with
improvements in the Rotating Magnet Ranging Systems, allowing for
easier intersection during LiFaBric completions.
In addition to the operational expansion, our financial
performance was enhanced with local banks increasing their working
capital facilities to support our growth. As a result, the Company
successfully paid off all its affiliate working capital facility
and concluded the year without any affiliate debt. Notwithstanding
the increase in the depreciation charge resulting from the material
increase in rigs, our profitable yearend results are supported by a
strengthened balance sheet which resulted in total assets growing
to US$114 million from US$88 million in the previous year.
Third party contracts executed to drill for both of the largest
operators within China, CNPC and Sinopec, further validating the
competency embedded within the Company. Importantly, these
contracts include drilling LiFaBric wells, the Company's
proprietary methodology, as well as traditional vertical and
directional wells. The contracts are for Coal Bed Methane ("CBM")
as well as Shale reservoirs. In totality, these contracts validate
the Company's capability that extends to all facets of the
industry's drilling demands. We see a very large market that
continues to grow exponentially throughout Asia.
In accordance with the Company's business plan, we expect to
establish the corporate headquarters in Singapore, a geographically
central location to facilitate the expansion beyond China. We are
concluding our discussions with several clients and expect to
announce our expansion into India as the first step out from China
within the widened Asian expansion plans. We also look forward to
updating shareholders on the recently announced Chinese third party
contracts. The Company's proprietary LiFaBriC methodology is well
suited to various CBM basins within India and could significantly
enhance several of the CBM developers' potential in the near term.
We look forward to concluding an agreement with select clients.
While 2012 was a busy year absorbing the growth and expanding
the client base in China, we expect 2013 will see continued
profitable growth within China further complemented by an expansion
into India.
Randeep S. Grewal
Chairman & CEO
Consolidated Statement of Comprehensive Income
Year Ended Year Ended
31 December 31 December
2012 2011
Note US$"000 US$"000
----------------------------------------- ------- ------------------ -----------------
Revenue 2 60,918 43,834
Cost of sales (48,459) (34,235)
----------------------------------------- ------- ------------------ -----------------
Gross profit 12,459 9,599
Foreign exchange gains 314 671
Administrative expenses (8,047) (5,581)
----------------------------------------- ------- ------------------ -----------------
Total administrative expenses (7,733) (4,910)
Profit from operations 3 4,726 4,689
Finance income 4 53 12
Finance costs 5 (1,322) (85)
----------------------------------------- ------- ------------------ -----------------
Profit before income tax 3,457 4,616
Income tax charge 8 (1,625) (1,812)
----------------------------------------- ------- ------------------ -----------------
Profit for the year 1,832 2,804
Other comprehensive income, net of
tax:
Exchange differences on translation
of foreign operations (8) 825
----------------------------------------- ------- ------------------ -----------------
Total comprehensive income for the
year 1,824 3,629
----------------------------------------- ------- ------------------ -----------------
Profit for the period attributable
to:
- Owners of the company 1,831 2,790
- Non-controlling interests 1 14
----------------------------------------- ------- ------------------ -----------------
1,832 2,804
----------------------------------------- ------- ------------------ -----------------
Total comprehensive income attributable
to:
- Owners of the company 1,824 3,627
- Non-controlling interests - 2
----------------------------------------- ------- ------------------ -----------------
1,824 3,629
----------------------------------------- ------- ------------------ -----------------
Earnings per share
- Basic and diluted (in US dollar) 7 0.0046 0.0070
================== =================
Consolidated Statement of Financial Position
As at 31 December As at 31 December
2012 2011
Note US$'000 US$'000
------------------------------- ----- ------------------- -------------------
Assets
Non-current assets
Property, plant and equipment 93,135 43,219
Intangible assets 581 524
------------------------------- ----- ------------------- -------------------
93,716 43,743
------------------------------- ----- ------------------- -------------------
Current assets
Inventories 12,189 9,155
Trade and other receivables 5,016 28,930
Cash and bank balances 3,139 6,559
------------------------------- ----- ------------------- -------------------
20,344 44,644
------------------------------- ----- ------------------- -------------------
Total assets 114,060 88,387
------------------------------- ----- ------------------- -------------------
Liabilities
Current liabilities
Trade and other payables 22,491 8,994
Loans and borrowings 9 11,932 1,984
Current tax liabilities 234 283
------------------------------- ----- ------------------- -------------------
34,657 11,261
------------------------------- ----- ------------------- -------------------
Non current liabilities
Deferred tax liabilities 453 -
------------------------------- ----- ------------------- -------------------
453 -
------------------------------- ----- ------------------- -------------------
Total liabilities 35,110 11,261
Net assets 78,950 77,126
------------------------------- ----- ------------------- -------------------
Capital and reserves
Share capital 4 4
Share premium account 77,186 77,186
Invested capital (1,533) (1,533)
Reserve fund 917 595
Foreign exchange reserve 1,592 1,599
Retained earnings/(deficits) 1,173 (336)
------------------------------- ----- ------------------- -------------------
Total equity attributable
to owners of the Company 79,339 77,515
Non-controlling interests (389) (389)
------------------------------- ----- ------------------- -------------------
Total equity 78,950 77,126
------------------------------- ----- ------------------- -------------------
Consolidated Statement of Changes in Equity
Equity
attributable
Foreign Retained to owners
Share Share Invested Reserve exchange (deficits)/ of the Non-controlling
capital premium capital fund reserve earnings Company interests Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January
2011 - - (1,533) 102 519 (477) (1,389) (2,304) (3,693)
Profit for the
year - - - - - 2,790 2,790 14 2,804
Other
comprehensive
income:
- Exchange
difference
on
translation
of foreign
operations - - - - 837 - 837 (12) 825
--------- --------- --------- -------- --------- ------------ ------------- ---------------- --------
Total
comprehensive
income
for the year - - - - 837 2,790 3,627 2 3,629
Adjustments
arising upon
acquisition
of
additional
interests in
Greka
Mitchell
Drilling
Co. Ltd. - - - - 243 (2,156) (1,913) 1,913 -
Transfer of
reserve fund - - - 493 - (493) - - -
New issue of
ordinary
shares 4 49,996 - - - - 50,000 - 50,000
Capital
contribution
- waiver
of amounts
owed to Green
Dragon Gas
Ltd. - 27,190 - - - - 27,190 - 27,190
At 31 December
2011 4 77,186 (1,533) 595 1,599 (336) 77,515 (389) 77,126
Profit for the
year - - - - - 1,831 1,831 1 1,832
Other
comprehensive
income:
- Exchange
difference
on
translation
of foreign
operations - - - - (7) (7) (1) (8)
Total
comprehensive
income
for the year - - - - (7) 1,831 1,824 - 1,824
Transfer of
reserve fund - - - 322 - (322) - - --
--------- --------- --------- -------- --------- ------------ ------------- ---------------- --------
At 31 December
2012 4 77,186 (1,533) 917 1,592 1,173 79,339 (389) 78,950
========= ========= ========= ======== ========= ============ ============= ================ ========
The following describes the nature and purpose of each reserve
within owners' equity.
Share capital: Amount subscribed for share capital at nominal
value.
Share premium: Amount subscribed for share capital in excess of
nominal value.
Invested capital:Amount represents the difference between the
nominal value of the Company's share of the paid-up capital of the
subsidiaries acquired and the Company's cost of acquisition of the
subsidiaries under common control.
Reserve fund: The rules and regulations of the People's Republic
of China require that one tenth of profits as determined in
accordance with China Accounting Standards for Business Enterprises
in each period be reserved for making good previous years' losses,
expanding business, or for bonus issue, provided that the balance
after such issue is not less than 25% of the registered capital.
The amount is non-distributable.
Foreign exchange reserve: Foreign exchange differences arising
on translating the financial statements of foreign operations into
the reporting currency.
Retained (deficits)/earnings: Cumulative net gains and losses
recognized in profit or loss.
Consolidated Statement of Cash Flows
Year ended Year ended
31 December 31 December
2012 2011
Note US$'000 US$'000
------------------------------------------ ------ ------------- -------------
Operating activities
Profit before income tax 3,457 4,616
Adjustments for:
Depreciation 7,079 2,941
Amortization of other intangible
assets 68 37
Loss on disposal of property, plant
and equipment 435 10
Finance income (53) (12)
Finance costs 1,322 85
-------------------------------------------------- ------------- -------------
Operating cash flows before changes
in working capital 12,308 7,677
Increase in inventories (3,034) (4,801)
Increase in trade receivables (636)
Increase in other receivables (1,140) (3,396)
Increase in trade and other payables 13,497 (18,783)
-------------------------------------------------- ------------- -------------
Cash generated from/(used in) operations 20,995 (19,303)
Income tax payment (1,229) (1,976)
-------------------------------------------------- ------------- -------------
Net cash from/(used in) operating
activities 19,766 (21,279)
-------------------------------------------------- ------------- -------------
Investing activities
Payments for purchase of property,
plant and equipment (31,250) (28,671)
Transfers to restricted cash (977) -
Payments for intangible assets (123) (363)
Proceeds from disposal of property, plant
and equipment - 16
Interest received 53 12
-------------------------------------------------- ------------- -------------
Net cash used in investing activities (32,297) (29,006)
-------------------------------------------------- ------------- -------------
Financing activities
Proceeds from the issue of share,
net of issue costs - 50,000
Proceeds of short term loan 18,220 1,984
Repayment of short term loan (8,318) (1,555)
Finance costs paid (1,478) (85)
-------------------------------------------------- ------------- -------------
Net cash from financing activities 8,465 50,344
-------------------------------------------------- ------------- -------------
Net (decrease)/increase in cash
and cash equivalents (4,066) 59
Cash and cash equivalents at beginning
of the year 6,559 6,383
-------------------------------------------------- ------------- -------------
2,493 6,442
Effect of foreign exchange rate
changes (331) 117
-------------------------------------------------- ------------- -------------
Cash and cash equivalents at end
of year 2,162 6,559
================================================== ============= =============
Abridged notes to the financial information for the year ended
31 December 2012
1 GENERAL
Greka Drilling Limited (the "Company" or the "Group") was
incorporated in the Cayman Islands. The financial statements have
been prepared in accordance with IFRSs as adopted by the European
Union, that are effective for accounting periods beginning on or
after 1 January 2012. The principal accounting policies adopted in
the preparation of the financial statements are disclosed in the
Group's full annual report and accounts for the year ended 31
December 2012.
2 REVENUE AND SEGMENT INFORMATION
The Group determines its operating segment based on the reports
reviewed by the chief operating decision-makers ("CODMs") that are
used to make strategic decisions.
The Group reports its operations as a single reportable segment:
the provision of contract drilling services in the People's
Republic of China (the "PRC"). The consolidation of our contract
drilling operations into one reportable segment is attributable to
how the CODMs manage the business.
We evaluate the performance of our operating segment based on
revenues from external customers and segment profit.
Drilling services revenue and management services revenue
represent the net invoiced value of contract drilling services and
management services provided to customers in the PRC, of which 95%
is derived from one customer. The amounts of each significant
category of revenue recognised during the year are as follows:
2012 2011
US$'000 US$'000
Drilling services 60,325 43,102
Management services 593 732
---------------- --------
60,918 43,834
================ ========
All the non-current assets of the Group are located in the
PRC.
3 PROFIT FROM OPERATIONS
Profit from operations is stated after charging/(crediting):
2012 2011
US$'000 US$'000
Auditors remuneration:
Fees payable to the Company's auditors
for the audit of the annual financial
statements 119 80
Fees payable to the Company's auditors
for the review of the interim results 10 -
Fees payable to the Company's auditors
for other services - 160
Cost of inventories recognized as expense 48,459 34,235
Staff costs (note 6) 13,604 7,931
Depreciation of property, plant and equipment 7,079 2,941
Operating lease expense (property) 201 132
Amortization of intangible assets 68 37
Loss on disposal of property, plant and
equipment - 10
Government grant* (135) -
Foreign exchange gain (314) (671)
========= =========
*This mainly represents a reward received from the Henan
Government by a subsidiary. The amount was a one-off receipt and
recognized fully to profit and loss since the attaching conditions
have been fulfilled.
4 FINANCE INCOME
2012 2011
US$'000 US$'000
Bank interest 53 12
======== ========
5 FINANCE COSTS
2012 2011
US$'000 US$'000
Interest expense on short term loans 631 85
Interest expense on loans from a related 847 -
company
Less: Interest expenses capitalized* (156 -
)
1,322 85
================ ========
*Interest expenses was capitalized in
construction in progress at the following 7.22% -
rates per annum
======== ====
6 STAFF COSTS
2012 2011
US$'000 US$'000
Staff costs (including directors remuneration)
comprise:
Wages and salaries 10,969 6,756
Employer!--s national social security
contributions 2,301 912
Other benefits 334 263
----------------- --------
13,604 7,931
================= ========
7 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share
attributable to the owners of the Company is based on the following
data:
2012 2011
US$'000 US$'000
Profit for the year 1,831 2,790
Number of shares outstanding at the year
end 398,245,758 398,245,758
Weighted average number of ordinary shares
for the purposes of basic earnings per
share (thousands) 398,246 398,246
Weighted average number of ordinary shares
for the purposes of diluted earnings
per share (thousands) 398,246 398,246
===================== ===================
Basic earnings per share (US$) 0.0046 0.0070
===================== ===================
Diluted earnings per share (US$) 0.0046 0.0070
===================== ===================
There were no potentially dilutive instruments issued in 2012
and 2011.
8 TAXATION
2012 2011
US$'000 US$'000
Current tax - PRC Enterprise Income Tax
Income tax charge 1,546 1,713
Under provision of prior year 79 99
-------- --------
1,625 1,812
======== ========
The reasons for the difference between the actual tax charge and
the standard rate of corporation tax applied to the Group's
operations for the year are as follows:
2012 2011
US$'000 US$'000
Profit before income tax 3,457 4,616
================== ========
Expected tax charge based on the standard
rate of corporation tax in the PRC of
25% (2011: 25%) 864 1,154
Effect of:
Tax effect of revenue not taxable for
tax purposes - (71)
Tax effect of expenses not deductible
for tax purposes - 56
Tax losses not recognized 682 574
Under provision of prior year 79 99
------------------ --------
Income tax charge 1,625 1,812
================== ========
The Company is not subject to income tax in the Cayman
Islands.
9 LOANS AND BORROWINGS
2012 2011
US$'000 US$'000
Bank loans - secured 11,932 1,984
======== ========
Bank borrowings of RMB75,000,000 (2011: RMB12,500,000) have a
one year term, with interest rates ranging from 6.90% p.a. and
7.544% p.a. (2011: 7.544% p.a.). This amount is secured by the
Group's properties situated in Zhengzhou of the PRC.
10 WORKING CAPITAL FACILITIES
On 27 January 2012, the Company drew down the US$12,500,000
working facility loan in full from Greka China Limited, a related
company in Green Dragon Gas Group under the agreement signed on 11
February 2011. The facility had a two-year repayment period and 8%
annual interest rate. The facility was fully repaid at the year
end.
11 PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information for the years ended 31 December 2012
and 31 December 2011 set out in this announcement does not
constitute the Group's statutory financial information but is
extracted from the Company's audited financial statements for those
years. The auditors have reported on the full financial information
for both periods and their reports were unqualified and did not
include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports.
12 ANNUAL REPORT
The Company's Annual Report and copies of this announcement will
be available in due course on the Company's website at
www.grekadrilling.com and from the office of the Company's
nominated adviser, Smith & Williamson Corporate Finance Limited
at 25 Moorgate, London EC2R 6AY, United Kingdom.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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