Predictably lower oil prices have put pressure on east Africa focused oil services minnow Atlas Development & Support Services (ADSS:AIM) and the company unveils a significant profit warning this morning. The shares are down 47.9% to 1.04p.
Last time we spoke with the company a few months ago chief operating officer Lachlan Monro was keen to flag that the company was pitching for $150 million to $200 million contracts.
Today’s release paints a rather more sober picture. Pressure from its customers is impacting margins and turnover with second half revenues expected to be ‘significantly below expectations’ and the company indicating it will report a pre-tax loss for 2015 as a whole against previous expectations for a pre-tax profit of £1.57 million.
The first half – on which the company expects to report on or around 15 September – is expected to show turnover of $11 million and a pre-tax loss of $2.5 million.
The £5.2 million cap is trying to get costs under control in order to conserve its cash position of $6.1 million as at the end of June. By the end of the year the company hopes to still have at most $2.5 million left in the bank. The company points to a $500 million pipeline but it is asking a lot for investors to take much from this given the company is yet to demonstrate it can convert this into actual contracts let alone profits or cash flow.