For immediate release
MASTER DRILLING MAINTAINS STRONG MARGINS IN DIFFICULT TIMES
Johannesburg, South Africa. 6 September 2016. Master Drilling Group Limited (Master Drilling, JSE: MDI) released its results for the six months ended 30 June 2016 to shareholders today.
Highlights for the period include:
- ZAR revenue up by 15.4% (assisted by a weaker ZAR)
- US$ gross profit margin increased by 1.6% from 38.9% to 40.5%
- US$ profit after tax margin increased by 0.8% from 17.2% to 18.0%
- US$ headline earnings per share remained constant at 6.3 cents
- ZAR headline earnings per share increased by 30.1% from 75,0 cents to 97,6 cents
- Acquisition of Bergteamet Latin America assets and operations in Chile
- Steady increase in order book to US$209 million
“Although we experienced a slow start to 2016 due to delayed access to sites, postponement of project start-up, poor ground conditions and economic fluctuations, our performance during the second quarter was strengthened by improved mining activity in Latin America,” says CEO Danie Pretorius.
Revenue was down in Mexico and Africa due to delays in project start-up and lower utilisation of equipment, and the exploration business felt the impact of lower iron ore prices
Nevertheless, revenue grew by 4.4% due to the addition of four raisebore machines, bringing the fleet to 102 raiseboring and 49 slim drilling rigs. Together with the ramp-up in the second quarter, this indicates higher utilisation of equipment and improved financial performance during the second half of the year.
In the first half of 2016, Master Drilling acquired Bergteamet Latin America SpA’s assets and operations, and secured the five-year extension of a key AngloGold Ashanti contract in South America. The company’s African diversification strategy was supported by contracts awarded in Sierra Leone and Tanzania. In the United States, it secured its first blind shaft boring contract.
Diversification across regions, commodities, currencies and industries remains the key to the success of the business, Pretorius points out.
To support the growth of the business, the company has employed more people and resourced the Bergteamet Europe AB office. Comprehensive training plans have been established to improve key employee skills.
“We continue to manage cash resources stringently in order to cater for emerging opportunities,” adds Pretorius. “Continuous improvement of our technology and methods remains key to our offering of a one-stop solution for our clients to stay ahead in their markets. Mechanisation, which is of paramount importance to our mining clients, supports our focus as a business already well positioned with advanced technology.”
The company’s decision not to declare a dividend is based on the need to preserve cash resources for anticipated investment in capital projects, as determined by its strategic expansion drive. This position will be reassessed at the end of the 2016 financial year.
Telephone: +27 (0)18 771 8100
NOTE TO EDITORS
Master Drilling is an investment holding company whose subsidiary companies provide specialised drilling services to major, mid-tier and junior mining companies, as well as services for civil engineering applications in a variety of emerging markets. The company specialises in global drilling solutions, providing raiseboring and exploration (slim) drilling and specialised in-house drilling equipment design, manufacturing, training and maintenance capabilities, which support clients’ unique needs.
The company was established in South Africa in 1986 and listed on the JSE in December 2012 with its registered group head office in South Africa. Its international operations span the world. In Africa, there are operations in South Africa, the Democratic Republic of the Congo, Zambia, Mali, Sierra Leone and Tanzania. In Latin America, there are operations in Brazil, Chile, Colombia, Ecuador, Mexico, Guatemala and Peru.