12 September 2017
Master Drilling reports resilient interim results in volatile global context
Continued focussed technological innovation to drive sustained growth into the future
Master Drilling Group Limited (Master Drilling, JSE: MDI) today released its Interim Results for the six months ended 30 June 2017. Revenue increased 12.5% to USD60.5 million and operating profit decreased 9.6% to USD12.1 million. The increase in revenue was due to the contribution from two new machines compared to the same period last year and the impact of favourable foreign exchange movements.
Commenting on the interim results, Danie Pretorius, CEO of Master Drilling, said: “Despite a volatile macro-economic and political environment globally, we reported good interim results today underpinned by a solid USD revenue increase of 12.5% to USD60.5 million. The stronger emerging market currencies during the current reporting period however had an adverse impact on earnings.
“Although the extended commodity down cycle put pressure on the business, we still maintain a healthy pipeline of USD226.1 million and a committed order book of USD115.3 million. Our focus on an innovative culture that supports the customer underpins the resilience of the company’s business model throughout economic and commodity cycles.”
The decision to invest in people and capabilities to drive future growth resulted in profit before tax decreasing 9.4% to USD11.5 million. Conservative provisions for taxation in some jurisdictions during
previous years led to a decrease in taxation which supported a profit after taxation of USD10.0 million.
USD earnings per share (EPS) increased 4.8% to 6.6 cents, and ZAR EPS decreased 10,7% to 87,0 cents due to the stronger ZAR compared to the same period last year. USD headline earnings per share (HEPS) increased 4.8% to 6.6 cents, and ZAR HEPS decreased 10,7% to 87,0 cents compared to the same period last year.
The first half of 2017 saw steady market activities, lower than targeted utilisation rates and the initiation
of two new projects that supported the Group’s financial performance compared to the same period last year. The current operating environment stabilised with a healthy level of enquiries and improved operational base throughout.
A hydroelectric energy project to the value of USD1.9 million was awarded in Colombia and is expected to be completed towards the end of 2017. Once successfully completed, this technology should assist to unlock the hydroelectric energy sector for the company across geographies.
“As a technology driven company with a global footprint and the ability to customise solutions to suit specific drilling technology challenges, the current environment presents numerous opportunities beyond the mining sector. We continue to actively evaluate the environment our current and prospective clients operate in to ensure that we maintain our position as a solution driven partner across industries, regions, commodities and currencies.”
An exciting new machine with dual capability of blind shaft boring and raise bore drilling was shipped to the USA during the reporting period. The North American market is anticipated to remain strong based on enquiries received as well as the anticipated spend on infrastructure development.
Master Drilling continued to strengthen its internally developed technology service offering during the period and met several development milestones on its world-first technologies that the company is confident will gain traction within our markets.
The concept phase of our Mobile Tunnel Borer is expected to commence in September 2017. This allows for continuous mining with no blasting as part of the process, significantly enhancing mining efficiencies. We believe this is where substantial future growth shall originate from.
The Industrial Development Corporation of South Africa Limited (IDC) confirmed partial funding for the first phase of our Blind Shaft Boring System (BSBS) development. The BSBS allows cost-effective and safe access to ore bodies at great depths and situated in hard substrate. With the entire operation conducted without the need for blasting, noise or fumes are no longer a feature of the drilling process and the environmental impact is minimal.
Recent developments in Tunnel Boring Machinery have resulted in equipment that is able to bore out a suitably sized excavation at a rate that far exceeds that of conventional methods. Weighing 16 metric tons, our Gripper Machine is designed with a steering system to follow the seam as required and relies on friction and thrust to advance during drilling and to maintain its “grip” inside the hole, while preventing itself from falling down the hole.
“Our innovative tailored technology solutions, based on a proven approach spanning 30 years, continue to meet the specific conditions and drilling requirements of our clients, unlocking value across the geographies, sectors and commodities we operate in.
“Master Drilling is agile in its approach and able to mitigate critical operational risks for clients. With 80% of our income derived from production, we are well positioned to navigate the current extended commodity cycle,” concluded Pretorius.
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Instinctif Partners (Media and Investor Relations)
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