Satisfactory results for Master Drilling on the back of stable profitability

Media Release

Satisfactory results for Master Drilling on the back of stable profitability

Superior service, technological innovation and market diversification remain core of strategy

28 August 2018 – Master Drilling Group Limited (Master Drilling, JSE: MDI) today reported satisfactory results for the six months ended 30 June 2018. Revenue increased by 11.3% to USD67,4 million and operating profit by 6.0% to USD12,9 million. Strength in emerging market currencies during the first half of the year proved challenging for the business, with the ZAR accounting for a large portion of the Company’s costs. Notwithstanding this, the overall profitability remained stable.

“The macroeconomic environment remained challenging across a number of markets during the first half of the year but our ability to report stable profitability amid tough conditions suggests that Master Drilling’s strategy does not only position the business for future growth but also supports the business throughout the economic cycle”, commented Danie Pretorius, CEO of Master Drilling, following the release of the company’s interim results.

The addition of a new machine and the acquisition of the remaining shareholding in Sweden based Bergteamet Raiseboring Europe AB drove the increase in revenue in H1 2018. USD Earnings Per Share (EPS) decreased 4.5% to 6.3 cents, and ZAR EPS decreased 10,9% to 77,5 cents on the back of the stronger ZAR compared to the same period last year. USD Headline earnings per share (HEPS) decreased 10.6% to 5.9 cents, and ZAR HEPS by 16,6% to 72,6 cents.

“The uptick in the global economy and commodity cycle is bearing fruit in our business as we receive new contracts and a steady flow of new enquiries that feed into the pipeline. Our presence is growing in Central and North America as well as in Europe, following the acquisition of Bergteamet, where we have been engaged in customer projects across various countries and commodities.

We also continue to maintain our presence in the local mining sector where viable opportunities arise, while the value we can add across other exploration activities, such as water exploration, is becoming increasingly evident”, added CEO Danie Pretorius.

According to André Van Deventer, the CFO at Master Drilling, “The acquisition of Bergteamet resulted in a moderate increase in debt from USD 44,1 million to USD 45,9 million. However, the successful merger of Bergteamet’s activities into the core business of Master Drilling contributed towards the pleasing results reported for the six months ended June 2018 and has led to the expansion of our footprint in Europe, in countries such as France and Spain.

Given the recent weakening of emerging market currencies, we anticipate that the adverse effect of the stronger ZAR on our business in H1 2018 will reverse in H2 2018 which, given the strength of the pipeline and new enquiries, should bode well for Master Drilling”.

One of the key pillars of Master Drilling’s strategy is technological innovation. Being able to provide clients with advanced and effective drilling solutions and services across geographies and sectors sets the business apart from its competitors. In February 2018, Master Drilling announced the launch of the Mobile Tunnel Borer which allows for continuous mining without blasting. The machine will be unveiled and commissioned in September 2018 and subsequently rolled out worldwide. Progress also continues on Blind Shaft Boring technology, which is expected to be launched in Q1 2019.

“Our innovation journey is on-going and will remain a critical element of the growth and sustainability of our business, alongside people capacity and development, and increased profitability. We believe this strategy positions us well as we continue to look for expansion opportunities”, concluded Danie Pretorius.

ENDS

CONTACTS

Master Drilling

Su-Marie Lemmer marketcomm@masterdrilling.com +27 18 771 8100

Instinctif Partners (Media and Investor Relations)

Monica Ambrosi monica.ambrosi@instinctif.com +27 82 659 9226

Keagile Makgoba keagile.makgoba@instinctif.com +27 82 325 9063

NOTES TO EDITORS

About Master Drilling

“We challenge the status quo to provide our clients with specialised, adaptive and integrated drilling solutions.”

Master Drilling was established in 1986 and listed on the Johannesburg Stock Exchange in 2012. The company delivers innovative drilling technologies and has built trusted partner relationships with blue-chip major and mid-tier companies in the mining, civil engineering and building construction sectors across various commodities worldwide.

The Master Drilling business model of providing drilling solutions to clients through tailor-made designs coupled with a flexible support and logistics chain makes it the preferred drilling partner throughout the lifecycle of projects from exploration to production and capital stages.

www.masterdrilling.com