Johannesburg, South Africa. 31 March 2016. Master Drilling Group Limited (Master Drilling, JSE: MDI) published its integrated report for the year ended 31 December 2015 today.
Extracts from the Chairman and CEO’s review in the report include:
- Growth has been accelerated in line with our strategy of entering two new geographies a year. We established operations in the USA in September 2015 – in this region we have not targeted any specific sector, but will go where the opportunities are. There is a strong likelihood of Chile, Brazil and Peru being negatively impacted by China’s economic deceleration. However, Mexico is expected to benefit strongly from improving economic conditions in the USA, which receives 80% of Mexico’s exports, underlining the business case for our decision to use our base in Mexico as an entry point into the USA. In addition, we completed the €5 million (R77 million) acquisition of a 40% shareholding in Swedish company Bergteamet Raiseboring Europe AB. The latter has a fleet of 18 raisebore drilling rigs, holds dominant market share in Sweden, Finland and Norway, and has recently secured a contract in Ireland. The equity accounted share of the Bergteamet profit after tax amounted to U$134 575 (R1.7 million), delivering an annual return on investment of 30%.
- On 22 January 2016, shortly after year end, we acquired 100% of the assets of the Chilean subsidiary of Bergteamet Latin America SpA for the sum of €4 million (R72.6 million).
- Other highlights included:
– commissioning of the RD8, one of the largest raisebore rigs in the world;
– expansion of our geographical footprint into Ecuador and Colombia;
– increased service offerings in terms of hydro energy projects; and
– progress in our drilling rig fleet automation programme to enhance safety and efficiencies.
- We cannot change the fact that our main customer base, the mining industry, is going through a tough time. However, as one of the few companies dedicated entirely to raiseboring, we can make a difference by helping our clients improve their position in difficult circumstances. In many instances,we have worked at our own risk to prove the benefits of our technology to our clients. Our understanding of our clients’ unique circumstances is based on long-standing relationships,informed by benchmarking exercises.
- We continue to focus on reducing our reliance on commodities as a revenue stream by deploying our drilling expertise in the civil, construction and hydro energy sectors. We have, for example, built up expertise in sinking inclined tunnels for hydro energy schemes. With the growing emphasis on renewable energy globally, we are well positioned for further growth in this sector.
- Growth in Latin America will continue to be a focus area. We have a long history in the region and will to continue to build on our existing structure and focus on improving our efficiencies in this region.
- We anticipate achieving growth into the rest of Africa from our solid South African base in partnership with major blue-chip mining companies.