Wrap Text
Audited Provisional Report for Master Drilling Group Limited
MASTER DRILLING GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration No. 2011/008265/06
JSE share code: MDI / ISIN: ZAE 0001711948
("Master Drilling" or "the Company")
REPORT TO SHAREHOLDERS
AUDITED PROVISIONAL REPORT FOR MASTER DRILLING GROUP LIMITED
FOR THE PERIOD ENDED 31 DECEMBER 2012
Highlights for the period
- Listed on the JSE Limited on 20 December 2012,
the first company of its kind to be represented on the
exchange;
- Raised $41.6 million, (R352.5 million) before
expenses, in equity issues at listing;
- Signed long-term contracts with stable major
companies;
- Revenues up from $94.6 million in 2011 to $99.7 million
in 2012;
- Profit attributable to equity shareholders up by 10.2% to
$11.9 million;
- Adjusted headline earnings per share of 14.1 US cents
(115.5 South African cents);
- NAV of $96.5 million.
SHAREHOLDER INfORMATION
ISSUED CAPITAL
Category of shareholder Number % of issued
of shares share capital
Shares held by public shareholders 56,000,000 37.77
Shares held by directors and key management 92,265,491 62.23
Total ordinary shares in issue at 31 December 2012 148,265,491 100.00
Market Capitalisation at 31 December 2012: R1,319,562,870.
ABOUT MASTER DRILLING
Master Drilling is one of the leaders in the raiseboring market and
provides specialised drilling services to major, mid-tier and junior
mining and exploration companies which focus on mining a range
of different commodities and resources. It also provides services for
civil engineering applications in a variety of emerging markets.
In addition, Master Drilling provides complete project management
expertise in projects ranging from exploration stage drilling
through to production stage drilling. The Group has specialised
in-house drilling equipment design, manufacturing, training and
maintenance capabilities which allows it to tailor solutions to meet
the specific conditions and drilling requirements of its customers.
The Group's raiseboring capability offers advantages over other
conventional drilling methods including increased speed and safety.
By year-end, the Group was actively operating 152 drilling rigs
across Southern Africa, Latin America, West Africa and the Middle
East. These rigs are owned or leased by Master Drilling, with a few
operated through rentals from third parties.
NOTE FROM THE CHAIRMAN
Dear Shareholders
2012 was an historic year in the life of Master Drilling we
commenced the year as a number of privately owned companies,
and ended as a proudly South African publicly listed Group of those
companies.
Since our listing your board and the executive have been hard
at work with one primary objective that of consolidating and
expanding our current position as a leading global specialised
drilling services company.
We have held a number of workshops aimed at ensuring that our
strategy as laid out in our listing document is brought to fruition
and that key milestones are set for the next few years. We will
expand on these initiatives more fully when our Annual Report for
2012 is published in the next few months.
In the meanwhile rest assured that your company is in good hands
with a driven Executive and competent employees.
To the board of directors and the management team, I look forward
to working with you; I am confident that, together, we can deliver
value to our shareholders.
To every employee of the Master Drilling Group, it is through your
dedication that we are this very special company thank you one
and all.
To our shareholders, I thank you for your confidence in and support
of your Company.
Peter Ledger
Chairman
25 March 2013
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2012
The condensed consolidated audited provisional financial
statements of the Group for the period ended 31 December
2012 have been prepared in accordance with the recognition
and measurement principles of International Financial Reporting
Standards (IFRS) and presented in accordance with the minimum
content, including disclosures, prepared in accordance with
the JSE Limited Listings Requirements. See Presentation of
Financial Information on page 6.
These accounting policies are consistant with those used in the offering docment
as issued on 13 December 2012.
The annual financial statements of the Group have been
audited by for Grant Thornton, whose unqualified audit report
is available for inspection at the Company's registered office.
The financial statements have been prepared by the corporate
reporting staff of Master Drilling Group Limited, headed by Peet
van Coller, the Group's Senior Manager: Financial Accounting.
This process was supervised by Andre Jean van Deventer,
the Group's Chief Financial Officer (Hons B.Acc; CA(SA)).
Prior to the Reorganisation, Master Drilling comprised of seperate
business in two regions: (i) a group consisting of companies conducting
operations in Southern Africa, (including South Africa and
Botswana), including Master Drilling's raiseboring projects in the
region, the exploration activities of Master Drilling Exploration (Pty)
Limited in the region and its design, engineering, manufacturing,
customisation and maintenance support operations conducted by
Drilling Technical Services (Pty) Limited, and (ii) a group consisting
of companies conducting operations internationally, including in
Chile, Peru, Brazil, Mexico, Zambia, Burkina Faso and Saudi Arabia.
The two groups were managed independently, with experienced
management and technical personal and permanent offices in
most countries, although ownership of the two groups vested
principally with Mr DC Pretorius and/or family trusts of which he is
a beneficiary, with minority positions having been held by local and
foreign management and certain BEE entities. Following the Reorganisation,
central management is consolidated under the Company.
The merger of the local and international companies resulted in
the creation of the current Master Drilling Group. The rationale
behind the merger and reorganisation was to consolidate the
various companies under the listing entity, Master Drilling Group
Limited, to eliminate certain minority shareholdings and to renew the
empowerment of the various Master Drilling subsidiaries for the
long term under the South African Broad-Based Black Economic
Empowerment Act, No. 53 of 2003, as amended (the "BBBEE Act").
Reorganisation
The Reorganisation of the Group began in mid-2012 and was
undertaken in two separate exercises.
Firstly, Master Drilling's Southern Africa group was acquired by the the Company.
This entailed the sale of the shares and claims by shareholders of Master Drilling
Exploration (Pty) Ltd (formally Dril Corp Africa (Pty Ltd) and Drilling Technical
Services (Pty) Ltd to the Company and the sale by Master Drilling (Pty) Limited of
its business to the company.
The transactions were principally effected on a share-for-share basis.
The agreements were signed by the relevant parties during July and
August 2012, all conditions precedent in terms of the agreements
were met on 12 October 2012 for the share transactions and
1 November 2012 for the sale of business transaction respectively.
The financial results of the South African shares and claims transaction
is included into the financial results as from 12 October 2012 and
the sale of the South African business transaction is included into
the financial results as from 1 November 2012 respectively.
Secondly, the international group (comprised of Master Drilling
International Limited and MDI Exco Limited was acquired by the Company.
Agreements were entered into among the relevant parties at the end of
August 2012, and all conditions were fulfilled on 14 December 2012.
These transactions were effected on a share-for-share basis, and the
shares of the international group were delivered on fulfilment of
the last suspensive condition.
The financial results of the International shares and claims transaction
is included into the financial results as from 14 December 2012.
Comparative figures
This is the company's first year of trading therefore no comparative figures
have been presented.
The 2012 figures have been included into the
Statement of Comprehensive Income for comparative purposes only. These numbers were
prepared on the same basis as the 2011 numbers included into the
offering document, copy of which is available on the Company's
website www.masterdrilling.com.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December
2012
Audited
US$
Assets
Total non-current assets 68,771,479
Total current assets 89,214,216
Total assets 157,985,695
Equity and liabilities
Equity
Equity 89,318,105
Non-controlling interest 7,156,122
Total equity 96,474,227
Liabilities
Total non-current liabilities 10,853,021
Total current liabilities 50,658,447
Total liabilities 61,511,468
Total equity and liabilities 157,985,695
Condensed consolidated statement of At effective Full year Full year
comprehensive income date Unaudited Unaudited
Audited 2012 2011
US$(1) US$(2) US$(3)
Continuing operations
Revenue 10,822,978 99,656,608 94,631,187
Cost of Sales (7,251,698) (70,219,566) (66,164,018)
Gross profit 3,571,280 29,437,042 28,467,169
Other operating income 388,271 6,012,935 1,263,783
Other operating expenses (2,057,700) (18,198,969) (12,382,027)
Operating profit 1,901,851 17,251,008 17,348,925
Investment revenue 163,246 400,319 223,795
Finance costs (317,507) (1,934,540) (1,997,265)
Profit before taxation 1,747,590 15,716,787 15,575,455
Taxation (451,179) (3,538,609) (3,900,547)
Profit for the period 1,296,411 12,178,178 11,674,908
Discontinued operations
Loss from discontinued operations - - (630,249)
Profit for the period 1,296,411 12,178,178 11,044,659
Other comprehensive income:
Loss on property revaluation - - (292,486)
Exchange differences on translating foreign operations (286,815) 206,951 (2,122,348)
Other comprehensive (loss) income for the period net of
taxation (286,815) 206,951 (2,414,834)
Total comprehensive Income 1,009,596 12,385,129 8,629,825
Profit attributable to:
Owners of the parent
Profit for the period from continuing operations 1,229,770 11,900,259 10,835,744
Non-controlling interest
Profit for the period from continuing operations 66,641 277,919 208,915
Total comprehensive income attributable to: 1,009,596 12,385,129 8,629,825
Owners of the parent 942,955 12,107,210 8,420,910
Non-controlling interest 66,641 277,919 208,915
Earnings per share (US dollars)
Basic and diluted earnings(US cents per share) 9.4 14.5 14.0
Headline and dulited headline earnings (US cents per share) 8.9 14.1 13.3
Earnings per share (Rands)
Basic and diluted earnings (SA cents per share) 82.1 119.3 101.7
Headline and dulited headline earnings (SA cents per share) 77.3 115.5 96.6
(1) The International entities results are included into the Statement of Comprehensive Income (SOCI) for a period of 17 days. The South African entities
results are included into the SOCI for a period of three months. Further to this, the company acquired assets from Master Drilling (Pty) Limited on
1 November 2012, and the results for these assets are included in the SOCI for a period of two months.
(2) A Factual Findings Report was issued on the 2012 full year SOCI.
(3) The 2011 numbers are as presented in the Offering Document issued on 13 December 2012.
At effective Full year
date Unaudited
Audited 2012
US$ US$
Reconciliation between earnings and headline earnings
Basic earnings for the period 1,296,411 12,178,178
Deduct:
Non-controlling interest (66 641) (277,919)
Attributable to owners of the parent 1,229,770 11,900,259
(Gain) on disposal of Fixed assets (100,208) (528,696)
Tax effect on (gain) on disposal of Fixed assets 28,058 145,497
Headline Earnings for the period 1,157,620 11,517,060
Basic earnings per share (cents) 9.4 14.5
Diluted profit per share (cents) 9.4 14.5
Headline per share (cents) 8.9 14.1
Diluted headline (loss) earnings per share (cents) 8.9 14.1
Net asset value per share (cents) 738.7 110.2
Tangible net asset value per share (cents) 738.7 110.2
Dividends per share (cents)
Weighted average number of ordinary shares
Issued ordinary shares at the beginning of the period 1,000 1,000
Effect of Shares issued (Purchase of assets) 4,494,031 4,494,031
Effect of Shares issued (RSA restructuring) 4,514,100 18,106,007
Effect of Shares issued (International restructuring) 2,697,634 57,919,796
Effect of Shares issued (Listing) 1,353,151 1,353,151
Weighted average number of ordinary shares at the end of the period for the purpose of basic
earnings per share and headline earnings per share 13,059,916 81,873,985
Effect of dilutive potential ordinary shares other
Weighted average number of ordinary shares at the end of the period for the purpose of diluted
basic earnings per share and diluted headline earnings per share 13,059,916 81,873,985
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 DECEMBER 2012
Foreign Attributable Total
Equity due currency to share- Non- Share-
to change translation Total Retained holders of controlling holders'
Share in control reserve reserves income the entity interest equity
capital of interests US$ US$ US$ US$ US$ US$
-
Balance at incorporation - - - - - - -
Shares issued 146,639,163 - - - - 146,639,163 - 146,639,162
Equity due to change in
control of interests - (58,264,013) - (58,264,013) - (58,264,013) - (58,264,013)
Total comprehensive income
for the year - - (286,815) (286,815) 1,229,770 942,955 66,641 1,009,596
Shares issued to BEE partners 7,089,481 7,089,481
Total changes 146,639,163 (58,264,013) (286,815) (58,550,828) 1,229,770 89,318,105 7,156,122 96,474,227
Balance as at
31 December 2012 146,639,163 (58,264,013) (289,224) (58,550,828) 1,229,770 89,318,105 7,156,122 96,474,227
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Period ended
31 December 2012
Audited
US$
Net cash flow from operating activities 8,929,202
Net cash flow from investing activities 4,392,690
Net cash flow from financing activities 36,544,753
Total cash movement for the year 49,866,645
Cash at the beginning of the period
Effect of exchange rate movement on cash balances (293,368)
Total cash at the end of the year 49,573,277
ACCOUNTING POLICIES
1 PRESENTATION OF FINANCIAL INFORMATION
The Consolidated Annual Financial Statements have been prepared in
accordance with IAS 34: Interim Financial Reporting, International
Financial Reporting Standards, the SAICA reporting guides as issued
by the Accounting Standards Board and the requirements of the Companies
Act. The annual financial statements have been prepared on the historical
cost basis, except certain financial instruments at fair value, and incorporate
the principal accounting policies set out below. They are presented
in US Dollars.
1.1 CONSOLIDATION
Basis of consolidation
The Group Annual Financial Statements incorporates the all entities,
including special purpose entities, which are controlled by the group.
(a) The Group Annual Financial Statements have been accounted
for under the pooling of interest method as acquisition of
entities under common control is excluded from IFRS 3. The
entities have been accounted for at historical carrying values for
the periods presented.
The adjustments are made when necessary to the financial
statements of subsidiaries to bring their accounting policies in
line with those of the company.
1.2 PROPERTY, PLANT AND EQUIPMENT
The cost of an item of property, plant and equipment is recognised
as an asset when:
- it is probable that future economic benefits associated with the
item will flow to the company; and
- the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost except
for drill rods which is carried at revalued amount being the fair
value at the date of revaluation less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
Costs include costs incurred initially to acquire or construct an item
of property, plant and equipment. Cost associated with equipment
upgrades that result in increased capabilities or performance
enhancements of property and equipment are capitalised. If a
replacement cost is recognised in the carrying amount of an item of
property, plant and equipment, the carrying amount of the replaced
part is derecognised.
The initial estimate of the costs of dismantling and removing the
item and restoring the site on which it is located is also included
in the cost of property, plant and equipment, where the entity is
obligated to incur such expenditure, and where the obligation
arises as a result of acquiring the asset or using it for purposes other
than the production of inventories.
2. Segment Reporting 2012
Mining Activity
The following table shows the distribution of the
Companys Combined sales by mining activity, regardless
of where the goods were produced:
Sales Revenue by Stage of mining activity
Exploration 3,701,683
Capital 1,184,265
Production 5,937,030
10,822,978
Gross Profit by Stage of mining activity
Exploration 853,455
Capital 499,853
Production 2,217,972
3,571,280
Geographical segments:
Although the Companys major operating divisions are
managed on a worldwide basis, they operate in three
principal geographical areas of the world.
Sales Revenue by geographical market
Africa 6,990,754
Latin America 3,581,160
Other Countries 251,064
10,822,978
Gross Profit by geographical market
Africa 2,207,253
Latin America 1,188,210
Other Countries 175,817
3,571,280
Total Assets by geographical market
Africa 78,355,414
Latin America 37,326,677
Other Countries 42,303,604
157,985,695
Total Liabilities by geographical market
Africa 35,877,282
Latin America 23,716,780
Other Countries 1,917,406
61,511,468
Annual Financial Statements for the period ended 31 December 2012
3. Property, plant and equipment
Cost Accumulated depreciation Carrying value
Buildings 278,915 -113,799 165,116
Plant and Machinery 70,224,365 -15,641,371 54,582,994
Assets under construction 77,878 -11,870 66,008
Furniture & Fittings 1,363,606 -549,885 813,721
Motor vehicles 2,282,787 -1,359,752 923,035
Office equipment 144,518 -53,361 91,157
IT Equipment 665,901 -494,251 171,650
Finance lease: Plant & Equipment 6,266,801 -1,482,891 4,783,910
Computer Software 212,220 -179,691 32,529
Total 81,516,991 -19,886,871 61,630,120
Outlook and prospects
Master Drilling's strategy is to develop and grow its current
position as a leading global specialised drilling company. This will
be achieved through the continued expansion of its services; by
strengthening and consolidating its position in existing markets,
through focused organic growth and through acquisitions and joint
venture partnerships.
The recent signing of a strategic agreement with Anglo American,
together with a number of other agreements signed with major and
mid-tier companies has provided the Company and its shareholders
with a very promising step in achieving some of our strategic
objectives.
Changes to the board
During the period under review, the following appointments to the board were made:
Name Position Date appointed
RO Davey Independent Non-Executive Director 26 November 2012
AA Deshmukh Independent Non-Executive Director 26 November 2012
JP de Wet Independent Non-Executive Director 26 November 2012
ST Ferguson Non-Executive Director 1 September 2012
BJ Jordaan Executive Director and Technical Director 17 July 2012
PJ Ledger Chairman and Independent Non-Executive Director 26 November 2012
DC Pretorius Executive Director and Chief Executive Officer 17 July 2012
GR Sheppard Executive Director and Director of International Operations 26 November 2012
There has been no change to the composition of the board since year-end to date of this report.
REGISTERED OFFICE
4 Bosman Street, Fochville, South Africa
(PO Box 902, Fochville, 2515, South Africa)
Telephone +27 18 771 8100
Fax +27 18 771 5156
Email info@masterdrilling.com
DIRECTORS
Executive
Daniel (Danie) Coenraad Pretorius*
Chief Executive Officer and founder
Andre Jean van Deventer*
Financial Director and Chief Financial Officer
Gareth (Gary) Robert Sheppard*#
Director for International Operations
Barend Jacobus (Koos) Jordaan*
Technical Director
Non-Executive
Peter John Ledger*
Chairman and Independent Non-Executive
Shane Trevor Ferguson*
Non-Executive
Roger Owen Davey ^
Independent Non-Executive
Jacques Pierre de Wet*
Independent Non-Executive
Akhter Alli Deshmukh*
Independent Non-Executive
* South African ^ British # Peru
Company Secretary
Theophilus (Theo) de Wet
De Wets Incorporated
(Registration Number: 2000/003792/21)
6 Dwars Street, Krugersdorp, South Africa
(PO Box 158, Krugersdorp, 1740, South Africa)
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
(Registration Number: 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, South Africa
(PO Box 61051, Marshalltown, 2107, South Africa)
JSE SPONSOR
Sasfin Capital, a division of Sasfin Bank Limited
29 Scott Street, Waverly, Johannesburg, South Africa
(PO Box 95104, Grant Park, 2051, South Africa)
INDEPENDENT REPORTING AUDITORS
Grant Thornton Chartered Accountants (SA)
137 Daisy Street
corner Grayston Drive
Sandown 2196
South Africa
INVESTOR RELATIONS CONTACTS
James Duncan
Russell and Associates
(Registration Number: 1999/018884/23)
Tel: +27 11 880 3924
Fax: +27 11 880 3788
Mobile: +27 82 892 8052
E-mail: james@rair.co.za
General E-mail enquiries
info@masterdrilling.com
Master Drilling website
www.masterdrilling.com
Company Secretarial E-mail
companysecretary@masterdrilling.com
Forward looking statements
This Provisional Report includes statements that are, or may be deemed to
be, "forward-looking statements". Any statements about Master Drilling's
expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or
phrases such as "will", "will likely result," "are expected to," "will continue,"
"believe," "is anticipated," "estimated," "intends," "expects," "plans,"
"seek," "projection" and "outlook". They appear in a number of places
throughout this document and include, but are not limited to, statements
regarding the Company's intentions, beliefs or current expectations
concerning, among other things, the Group's results of operations, financial
position, liquidity, prospects, growth, strategies and expectations. These
statements involve estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed in them. All forward-
looking statements are qualified in their entirety by reference to the factors
discussed throughout this document. Key factors that have a direct bearing
on Master Drilling's results of operations include the general economic and
business conditions; competition in the industry in which Master Drilling
operates; industry trends and changes in demand for services in the drilling
industry; Master Drilling's ability to attract and retain skilled personnel and
employees; Master Drilling's ability to introduce new business lines, identify
and acquire new facilities and integrate future acquisitions; the impact of
new laws, regulations and standards (and the interpretation and application
thereof) in the environment, tax and health and safety; changes in business
strategy, political and economic uncertainty; and the risks resulting from
currency fluctuations. By their nature, forward-looking statements involve
risk and uncertainty because they relate to future events and circumstances.
Forward-looking statements are not guarantees of future performance and
the development of the markets and the industry, in which Master Drilling
operates, may differ materially from those described in, or suggested by, the
forward-looking statements contained in this document. Because a variety
of factors could cause actual results or outcomes to differ materially from
those expressed in any forward-looking statements made in this document
by Master Drilling or on Master Drilling's behalf, undue reliance should not
be placed on any of these forward-looking statements. Applicants should
specifically consider the factors identified in this document, which could
cause results to differ, before making an investment decision. Any forward-
looking statement in this document reflects the Company's current view with
respect to future events and is subject to risks relating to future events and
other risks, uncertainties and assumptions relating to the Group's operations
and growth strategy. Subject to the Listings Requirements, Master Drilling
undertakes no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events. New factors will emerge in
the future, and it is not possible for Master Drilling to predict such factors.
In addition, Master Drilling cannot assess the effect of each factor on Master
Drilling's business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those described in
any forward-looking statements.
REGISTERED OFFICE
JSE Share Code: MDI * ISIN Number: ZAE 0001711948 4 Bosman Street, Fochville, South Africa
Registered office: 4 Bosman Street, PO Box 902, Fochville, 2515, South Africa (PO Box 902, Fochville 2515, South Africa)
Telephone: +27 18 771 8100 * Fax: +27 18 771 5156 * Email: info@masterdrilling.com Telephone: +27 18 771 8100
Fax: +27 18 771 5156
Directors:
Email: info@masterdrilling.com
Non-executive: PJ Ledger (Chairman) * RO Davey (British) * AA Deshmukh
JP de Wet * ST Ferguson
Executive: DC Pretorius (CEO) * AJ van Deventer (CFO) * BJ Jordaan * GR Sheppard
Company Secretary: T de Wet, a partner at De Wets Incorporated
www.masterdrilling.com
Date: 26/03/2013 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
