Wrap Text
Interim Results for the period ended 30 June 2013
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")
Unaudited interim report
for the six months ended 30 June 2013
Highlights for the period
- Revenues up by 18.3%
- Profit attributable to equity shareholders up by 61.4%
- Headline earnings up by 59.4% in US$ and up by 87.3% in ZAR
- Expanding global footprint to Mali, DRC and Guatemala
- First automated machines went live at Sasol in South Africa, Peru and
Chile in May 2013
Commentary
Master Drilling Group Limited conducts three principal drilling activities: exploration-stage
drilling (principally exploration diamond-core and percussion drilling), capital project-stage
drilling (principally raiseboring) and production-stage drilling (principally raiseboring and
blast-hole drilling). In addition, the group undertakes design, engineering, manufacturing,
customisation and maintenance support of the company's drilling activities.
Master Drilling's engineering, design and manufacturing is carried out by its subsidiaries and
related parties. Preventative and corrective maintenance is carried out on site or at regional
workshop facilities in the countries where Master Drilling has subsidiaries.
During the period under review, Master Drilling commenced its five-year exploration drilling
contract at Kumba Iron Ore's Kolomela operation where it offers a "one-stop shop" solution
including reverse-circulation drilling, pilot drilling and grade control. In addition, work began
in two new regions Mali and Guatemala. In May 2013, drilling activities commenced using
the first fully automated raiseboring machines in Peru.
The Company has increased its drive towards automation with some R190 million of capital
expenditure to be spent during 2013 to acquire 10 technologically advanced machines.
The equipment is central to Master Drilling's expansion programme that will see it grow its
geographical footprint into uncharted territories.
As at 30 June 2013, the Company had committed orders totalling $213,501,149.
Unaudited condensed consolidated
financial statements
for the six months ended 30 June 2013
ACCOUNTING POLICIES BASIS OF PREPARATION
The condensed consolidated unaudited interim financial statements of Master Drilling Group
Limited have been prepared on the historical cost basis, except for certain financial instruments
that are stated at fair value. The Group Financial Statements for the six months ended 30
June 2013 have been prepared in compliance with IAS 34: Interim Financial Reporting,
International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board and the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee on Interim Financial Reporting, and presented in accordance with the
minimum content, including disclosures, prepared in accordance with the JSE Limited Listings
Requirements and the requirements of the South African Companies Act, 2008 (as amended).
The group's accounting policies used in the preparation of these financial statements
are consistent with those used in the Annual Financial Statements for the year ended
31 December 2012.
The unaudited financial statements for the six months ended 30 June 2013 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
André Jean van Deventer, the Group's Chief Financial Officer (CA (SA)).
Comparative figures
Due to the fact that the company began trading in the second half of 2012 and successfully
listed on the JSE on 20 December 2012, the current interim period represents the first full six-
month period of trade. As a result, the figures for the six months ended 30 June 2012 are not
a good comparison to the current interim period. In order to provide more useful information,
the 2012 prospectus interim figures, as included in the offering document, a copy of which is
available on the Company's website: www.masterdrilling.com, have also been included in the
Statement of Comprehensive Income.
Going concern
Based on the information available to it, the Board of Directors believe that the company
remains a going concern.
ISSUED CAPITAL
There has been no change to the issued capital since 31 December 2012.
OPERATING SEGMENTS
There are no changes to the operating segments from those disclosed at 31 December 2012.
See note 7.
Statement of comprehensive income
for the six months ended 30 June 2013
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 2013 30 June 2012 2012
Note(s) US$ US$ US$ (1)
Revenue 54,055,183 45,713,505 10,822,978
Cost of sales (34,856,225) (30,930,366) (7,251,698)
Gross profit 19,198,958 14,783,139 3,571,280
Other operating income 759,358 1,138,576 388,271
Other operating expenses (8,200,803) (9,138,283) (2,057,700)
Operating profit 11,757,513 6,783,432 1,901,851
Investment revenue 866,307 170,809 163,246
Finance costs (1,513,665) (1,131,762) (317,507)
Profit before taxation 11,110,155 5,822,479 1,747,590
Taxation (3,380,680) (1,017,198) (451,179)
Profit for the period 7,729,475 4,805,281 1,296,411
Other comprehensive income
Gains and losses on property
revaluation 23,272
Exchange differences on translating
foreign operations (9,802,981) 2,471,216 (286,815)
Other comprehensive (loss)/
income for the period net of
taxation (9,802,981) 2,494,488 (286,815)
Total comprehensive income (2,073,506) 7,299,769 1,009,596
(1)The results for the International assets are included in the Statement of comprehensive income (SOCI)
for a period of 17 days. The results for the South African assets are included in the SOCI for a period of
three months. The results from the assets acquired by the Company from Master Drilling (Pty) Limited on
1 November 2012 are included in the SOCI for a period of two months.
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 2013 30 June 2012 2012
Note(s) US$ US$ US$
Profit attributable to: 7,729,475 4,805,281 1,296,411
Owners of the parent 7,635,451 4,730,098 1,229,770
Non-controlling interest 94,024 75,183 66,641
Total comprehensive (loss)/
income attributable to: (2,073,506) 7,299,769 1,009,596
Owners of the parent (2,167,530) 7,224,586 942,955
Non-controlling interest 94,024 75,183 66,641
Earnings per share (US$) 5
Basic and diluted earnings per
share (cents) 5.1 3.2 9.4
Headline and diluted headline
earnings per share (cents) 5.1 3.2 8.9
Earnings per share (ZAR)
Basic and diluted earnings per
share (cents) 47.4 25.3 82.1
Headline and diluted headline
earnings per share (cents) 47.2 25.2 77.3
Interim consolidated statement
of financial position
for the six months ended 30 June 2013
Unaudited Audited year
six months ended
ended 31 December
30 June 2013 2012
Note(s) US$ US$
Assets
Non-current assets
Property, plant and equipment 1 62,090,218 61,630,120
Financial assets 6,129,425 7,141,359
68,219,643 68,771,479
Current assets
Inventories 12,298,688 11,980,996
Related party loans 2,865,093 1,863,712
Trade and other receivables 2 36,807,720 25,301,346
Cash and cash equivalents 14,706,788 50,068,162
66,678,289 89,214,216
Total assets 134,897,932 157,985,695
Equity and Liabilities
Equity
Share capital 146,606,020 146,639,163
Reserves (68,397,804) (58,550,828)
Retained income 8,865,221 1,229,770
87,073,437 89,318,105
Non-controlling interest 7,250,146 7,156,122
94,323,583 96,474,227
Liabilities
Non-current liabilities
Long-term interest bearing borrowings 1,573,086 3,719,518
Finance lease obligations 1,705,041 2,290,571
Deferred tax liability 4,699,065 4,842,932
7,977,192 10,853,021
Current liabilities
Current portion of interest bearing borrowings 2,926,894 3,252,379
Finance lease obligations 1,737,589 2,230,579
Related party loans 4,271,454 13,976,840
Current tax payable 5,585,617 4,955,916
Trade and other payables 3 17,332,635 25,747,848
Bank overdraft 742,968 494,885
32,597,157 50,658,447
Total liabilities 40,574,349 61,511,468
Total equity and liabilities 134,897,932 157,985,695
Statement of cash flows
for the six months ended 30 June 2013
Unaudited Audited year
six months ended
ended 31 December
30 June 2013 2012
Note(s) US$ US$
Cash flows from operating activities
Cash (utilised in)/generated from operations 6 (5,675,913) 9,562,012
Interest income 866,307 163,246
Finance costs (1,513,665) (317,507)
Tax paid (2,894,846) (478,549)
Net cash from operating activities (9,218,117) 8,929,202
Cash flows from investing activities
Purchase of property, plant and equipment (9,188,698) (2,955,224)
Sale of property, plant and equipment 980,737 1,219,656
Related party loans (10,706,767) 3,755,819
Financial assets movement 1,011,934 374,241
Equity due to change in control of interests
adjustment (43,995)
Net cash inflow on acquisition of subsidiaries 1,799,596
Net cash from investing activities (17,946,789) 4,194,088
Cash flows from financing activities
(Repayments)/proceeds of financial liabilities (2,471,917) 401,899
Repayment of financial leases (1,078,520) (852,626)
(Costs associated with)/proceeds from issue (33,143) 36,995,480
of ordinary shares
Net cash from financing activities (3,583,580) 36,544,753
Total cash movement for the period (30,748,486) 49,668,043
Cash at the beginning of the period 49,573,277
Effect of exchange rate movement on
cash balances (4,860,971) (94,766)
Total cash at end of the period 13,963,820 49,573,277
Statement of changes in equity
for the six months ended 30 June 2013
Equity due Foreign
to change currency Attributable to Non- Total
Share in control translation Total Retained shareholders controlling shareholders
capital of interests reserve reserves income of the entity interest equity
US$ US$ US$ US$ US$ US$ US$ US$
Shares issued 146,639,163 146,639,163 146,639,163
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 at 31 December 2012 146,639,163 (58,264,013) (286,815) (58,550,828) 1,229,770 89,318,105 7,156,122 96,474,227
Listing cost (33,143) (33,143) (33,143)
Equity due to change in control of
interests adjustments (43,995) (43,995) (43,995) (43,995)
Total comprehensive income for the year (9,802,981) (9,802,981) 7,635,451 (2,167,530) 94,024 (2,073,506)
Total changes 146,606,020 (58,308,008) (10,089,796) 68,397,804 8,865,221 87,073,437 7,250,146 94,323,583
Balance at 30 June 2013 146,606,020 (58,308,008) (10,089,796) 68,397,804 8,865,221 87,073,437 7,250,146 94,323,583
Notes to the unaudited condensed
consolidated financial statements
for the six months ended 30 June 2013
1. Property, plant and equipment
Unaudited Audited
six months ended 30 June 2013 year ended 31 December 2012
US$ US$
Accumulated Carrying Accumulated Carrying
Cost depreciation value Cost depreciation value
Buildings 294,759 (111,128) 183,631 278,915 (113,799) 165,116
Plant and machinery 78,493,168 (22,356,248) 56,136,920 70,224,365 (15 641,371) 54,582,994
Assets under construction 70,770 (13,325) 57,445 77,878 (11,870) 66,008
Furniture and fittings 655,723 (382,037) 273,686 1,363,606 (549,885) 813,721
Motor vehicles 2,354,117 (1,376,578) 977,539 2,282,787 (1,359,752) 923,035
Office equipment 128,536 (54,833) 73,703 144,518 (53,361) 91,157
IT equipment 509,183 (339,303) 169,880 665,901 (494,251) 171,650
Finance lease: plant and equipment 5,799,498 (1,610,756) 4,188,742 6,266,801 (1,482,891) 4,783,910
Computer software 202,768 (174,096) 28,672 212,220 (179,691) 32,529
Total 88,508,522 (26,418,304) 62,090,218 81,516,991 (19,886,871) 61,630,120
1.1 Reconciliation of property, plant and equipment
Exchange
Assets acquired difference on
through consolidation
Opening business of foreign Reclassi-
2013 balance combination Additions subsidiaries fications Disposals Depreciation Total
Buildings 165,116 37,593 (8,288) (10,790) 183,631
Plant and machinery 54,582,994 8,746,361 (4,482,031) 553,965 (882,270) (2,382,099) 56,136,920
Assets under construction 66,008 3,995 (4,934) (4,958) (2,666) 57,445
Furniture & fittings 813,721 45,216 (14,431) (540,858) (123) (29,839) 273,686
Motor vehicles 923,035 300,838 (68,219) (46,406) (131,709) 977,539
Office equipment 91,157 1,606 (5,324) (6,371) (7,365) 73,703
IT equipment 171,650 42,093 (10,853) (1,813) (1,311) (29,886) 169,880
Finance lease: Plant & equipment 4,783,910 (346,512) (248,656) 4,188,742
Computer software 32,529 10,996 (1,418) 35 (13,470) 28,672
61,630,120 9,188,698 (4,942,010) (930,110) (2,856,480) 62,090,218
Notes to the unaudited condensed
consolidated financial statements
for the six months ended 30 June 2013
Assets Exchange
acquired difference on
through consolidation
Opening business of foreign Reclassi-
2012 balance combination Additions subsidiaries fications Disposals Depreciation Total
Buildings 160,666 8,746 85 (4,381) 165,116
Plant and machinery 53,346,188 2,945,576 (190,922) (1,119,046) (398,802) 54,582,994
Assets under construction 65,478 751 (221) 66,008
Furniture & fittings 817,797 1,009 448 (5,533) 813,721
Motor vehicles 956,113 3,291 (36,369) 923,035
Office equipment 91,000 829 (672) 91,157
IT equipment 177,255 902 (175) (448) (402) (5,482) 171,650
Finance lease: plant & equipment 4,820,774 (13,539) (23,325) 4,783,910
Computer software 33,877 69 (1,417) 32,529
60,469,148 2,955,224 (198,602) (1,119,448) (476,202) 61,630,120
A register containing the information required by Regulation 25(3) of the Companies Act
Regulations, 2011 is available for inspection at the registered office of the company.
2. Trade and other receivables
Unaudited Audited Unaudited Audited
six months year ended six months year ended
ended 31 December ended 31 December
30 June 2013 2012 30 June 2013 2012
US$ US$ US$ US$
Trade receivables 21,957,901 18,836,808 Trade and other receivables past due but not impaired
Employee cost in advance 678,632 816,003 The ageing of amounts past due but not impaired is as
Pre-payments 10,604,399 2,625,741 follows:
Deposits 217,426 264,594 Outstanding on normal cycle terms 15,074,548 13,340,590
Turnover tax 82,385 93,392 1 month past due 3,613,967 3,184,354
Sundry 3,266,977 2,664,808 2 month past due 329,020 317,389
36,807,720 25,301,346 3 month past due 2,940,366 1,994,475
21,957,901 18,836,808
Unaudited Audited
six months year ended
ended 31 December
30 June 2013 2012
US$ US$
The carrying amount in US dollars of trade and other
receivables are denominated in the following currencies:
US dollar 10,252,902 7,180,644
South African rands 4,129,893 5,050,641
Brazilian reals 1,678,497 2,122,049
Mexican peso 725,768 573,848
Chilean peso 8,434,077 7,619,658
Peruvian nuevo sol 8,950,292 1,162,244
CFA franc BCEAC 775,910
Zambian kwacha 1,860,381 1,592,262
36,807,720 25,301,346
3. Trade and other payables
Trade payables 6,335,225 16,145,312
Income received in advance 2,660,049 3,278,200
VAT 1,113,359 1,633,978
Leave pay accruals 2,187,645 1,347,708
Other accruals 4,978,743 2,791,170
Debtors factoring 57,614 551,480
17,332,635 25,747,848
4. Capital Commitments
Capital expenditure authorised by the directors and
contracted for within 12 months 6,082,887 14,334,832
5. EARNINGS PER SHARE
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 2013 30 June 2012 2012
US$ US$ US$
Reconciliation between earnings
and headline earnings
Basic earnings for the period 7,729,475 4,805,281 1,296,411
Deduct:
Non-controlling interest (94,024) (75,183) (66,641)
Attributable to owners of the parent 7,635,451 4,730,098 1,229,770
Gain on disposal of fixed assets (50,627) (35,267) (100,208)
Tax effect on gain of disposal of fixed assets 12,253 9,875 28,058
Headline earnings for the period 7,597,077 4,704,706 1,157,620
Earnings per share (cents) 5.1 3.2 9.4
Diluted earnings per share (cents) 5.1 3.2 9.4
Headline earnings per share (cents) 5.1 3.2 8.9
Diluted headline earnings per share (cents) 5.1 3.2 8.9
Net asset value per share (cents) 63.5 38.7 738.7
Tangible net asset value per share (cents) 63.5 38.7 738.7
Dividends per share (cents)
Weighted average number of
ordinary shares
Issued ordinary shares at the beginning
of the period 1,000 1,000 1,000
Effect of shares issued (purchase of assets) 27,338,688 27,338,688 4,494,031
Effect of shares issued (RSA restructuring) 18,106,007 18,106,007 4,514,100
Effect of shares issued (international
restructuring) 57,919,796 57,919,796 2,697,634
Effect of shares issued (listing) 44,900,000 44,900,000 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 148,265,491 148,265,491 13,059,916
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 148,265,491 148,265,491 13,059,916
6. Cash generated from operations
Unaudited Audited
six months year ended
ended 31 December
30 June 2013 2012
US$ US$
Profit before taxation 11,110,155 1,747,590
Adjustments for:
Depreciation and amortisation 2,856,480 476,202
Profit on sale of assets (50,627) (100,208)
Interest received (866,307) (163,246)
Finance costs 1,513,665 317,507
Changes in working capital:
Inventories (317,692) 911,402
Trade and other receivables (11,506,374) 326,727
Trade and other payables (8,415,213) 6,046,038
(5,675,913) 9,562,012
7. SEGMENT REPORTING
7.1 Mining activity
The following table shows the distribution of the Company's Combined sales by mining
activity, regardless of where the goods were produced:
Unaudited Audited
six months year ended
ended 31 December
30 June 2013 2012
US$ US$
Sales revenue by stage of mining activity
Exploration 6,887,133 3,701,683
Capital 3,330,022 1,184,265
Production 43,838,028 5,937,030
54,055,183 10,822,978
Gross profit by stage of mining activity
Exploration 1,965,572 853,455
Capital 956,306 499,853
Production 16,277,080 2,217,972
19,198,958 3,571,280
7.2 Geographical segments
Although the Company's 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 16,517,278 6,990,754
Latin America 36,765,036 3,581,160
Other countries 772,869 251,064
54,055,183 10,822,978
Gross profit by geographical market
Africa 5,202,185 2,207,253
Latin America 14,312,841 1,188,210
Other countries (316,068) 175,817
19,198,958 3,571,280
The Africa market reports lower gross profit margins than the Latin America market because
it includes a significant portion of exploration drilling.
Subsequent to the reporting period
SIGNIFICANT EVENTS
There have been no significant events subsequent to 30 June 2013 which require adjustment
or additional disclosure to these interim results.
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. Master Drilling
continues to enter into strategic discussions with major and mid-tier companies, and has
provided the Company and its shareholders with a very promising step in achieving some of
its strategic objectives.
Master Drilling made progress in its drilling automation strategies. The automation process
will develop as Master Drilling advances its in-house technology, with development of the
next phases currently underway, enabling the implementation, by year-end of fully automated
insertion and removal of the drill rods and automatic remote-controlled spanners, among
others. The Company has embarked on a four-phase project to enhance site safety, increase
efficiency and lower the costs of raiseboring shafts. The initiative will bring down the number
of workers on site to a minimum, and advance and intensify upskilling of operators. The
efficiency of raiseboring is expected to be 30% higher while productivity, based on results
from the group's first live automated project in South America during 2012, could potentially
double as mechanisation and automation advance.
The condensed consolidated unaudited interim financial statements of Master Drilling Group
Limited were approved by the Board of Directors on 19 August 2013 and signed off on its
behalf by DC Pretorius.
On behalf of the board
DC Pretorius
Chief Executive Officer
Fochville
27 August 2013
Contact information
MASTER DRILLING GROUP LIMITED Company secretary
Incorporated in the Republic of South Africa/ Theophilus (Theo) de Wet
Registration No 2011/008265/06 De Wets Incorporated
JSE share code: MDI/ISIN: ZAE 0001711948 (Registration Number: 2000/003792/21)
("Master Drilling" or "the Company") 6 Dwars Street, Krugersdorp, South Africa
(PO Box 158, Krugersdorp 1740, South Africa)
REGISTERED OFFICE Email: companysecretary@masterdrilling.com
4 Bosman Street, Fochville, South Africa
(PO Box 902, Fochville 2515, South Africa)
Telephone +27 18 771 8100 TRANSFER SECRETARY
Fax +27 18 771 5156 Computershare Investor Services (Pty) Limited
Email info@masterdrilling.com (Registration Number: 2004/003647/07)
Ground Floor, 70 Marshall Street,
Board of Directors Johannesburg, South Africa
Executive directors (PO Box 61051, Marshalltown 2107, South Africa)
Daniël (Danie) Coenraad Pretorius*
Chief Executive Officer and Founder
André Jean van Deventer* JSE SPONSOR
Chief Financial Officer Sasfin Capital, a division of
Gareth (Gary) Robert Sheppard*# Sasfin Bank Limited
Chief Operating Officer 29 Scott Street, Waverley, Johannesburg
Barend Jacobus (Koos) Jordaan* South Africa
Technical Director (PO Box 95104, Grant Park, 2051, South Africa)
Non-executive directors
Peter John Ledger*
Chairman, Independent Non-Executive Director INDEPENDENT AUDTOR
Roger Owen Davey~ Grant Thornton Chartered Accountants (SA)
Independent Non-Executive Director 137 Daisy Street, corner Grayston Drive,
Akhter Ali Deshmukh* Sandown 2196, South Africa
Independent Non-Executive Director
Jacques Pierre de Wet*
Independent Non-Executive Director INVESTOR RELATIONS
Shane Trevor Ferguson* Edith Leeson
Non-Executive Director Russell and Associates
(Registration Number: 1999/018884/23)
Alternate director Tel: +27 11 880 3924
Izak Bredenkamp *Alternate Director Fax: +27 11 880 3788
*South African British #Peru
Mobile: +27 79 527 6882
General Email enquiries E-mail: edith@rair.co.za
info@masterdrilling.com
Master Drilling website
www.masterdrilling.com
Date: 27/08/2013 04:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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