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Abridged Audited Consolidated Annual Financial Statements 2015
Master Drilling Group Limited
(Incorporated in the Republic of South Africa)
Registration number 2011/008265/06
JSE share code: MDI ISIN: ZAE000171948
("Master Drilling" or "the Company")
ABRIDGED AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 2015
NATURE OF BUSINESS
Master Drilling Group Limited is an investment holding company, whose subsidiary companies provide specialised
drilling services to blue chip, major and mid-tier companies in the mining, civil engineering, building
construction and hydro energy sectors, across a number of commodities.
ACCOUNTING POLICIES
1. BASIS OF PREPARATION
The abridged audited 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 South African Companies Act,
(Act No 71 of 2008), as amended and the Listings Requirements of the JSE Limited. The abridged audited
consolidated 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 United States Dollar ("USD").
The significant accounting policies are consistent in all material respects with those applied in the previous
year, except for the adoption of new standards and amendments which became effective in the current year.
The abridged audited consolidated financial statements for Master Drilling Group Limited for the period
ended 31 December 2015 have been audited by Grant Thornton, who expressed an unmodified audit
opinion thereon. A copy of the auditor's report on the abridged audited consolidated financial statements
are available on www.masterdrilling.com. These abridged audited consolidated financial statements were
derived from the consolidated annual financial statements.
The consolidated annual financial statements for Master Drilling Group Limited (Registration number
2011/008265/06), for the period ended 31 December 2015, have been audited by Grant Thornton, the
Company's independent external auditors, whose unqualified audit report can be found on pages 8 to 9 of
the consolidated annual financial statements 2015, which are available on: www.masterdrilling.com.
The abridged audited consolidated financial statements presented have been prepared by the corporate
reporting staff of Master Drilling, headed by Elzaan Swanepoel CA(SA), the Group's Management
Accountant. This process was supervised by André Jean van Deventer CA(SA), the Group's Chief Financial
Officer.
The auditor's report does not necessarily report on all of the information contained in this abridged audited
consolidated set of financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report
together with the accompanying financial information from the issuer's registered office.
2. SIGNIFICANT ACCOUNTING POLICIES
Functional and Presentation Currency
Items included in the financial statements of each of the Group's entities are measured using the currency
of the primary environment in which the entity operates, i.e."functional currency". The consolidated annual
financial statements are presented in USD (the "presentation currency"). Management believes that USD
is more useful to the users of the consolidated financial statements, as this currency most reliably reflects
the global business performance of the group as a whole.
Basis of consolidation
The Group annual financial statements incorporate all entities which are controlled by the Group.
At inception the Group annual financial statements had been accounted for under the pooling of interest
method as acquisition of entities under common control is excluded from IFRS 3. The entities had been
accounted for at historical carrying values for the period presented.
Adjustments are made when necessary to the financial statements of subsidiaries to bring their accounting
policies in line with those of the Group.
All inter-company transactions, balances, income and expenses are eliminated in full on consolidation/
combination.
Non-controlling interests in the net assets of combined subsidiaries are identified and recognised separately
from the Company's interest therein, and are recognised within equity. Losses of subsidiaries attributable to
non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance
being recognised for non-controlling interest.
Control is considered to exist if all of the factors below are satisfied.
– The investor has power over the investee, i.e. the investor has existing rights that give it the ability to
direct the relevant activities;
– The investor has exposure, or rights to variable returns from its involvement with the investee; and
– The investor has the ability to use its power over the investee to affect the amount of the investors'
returns.
The Group assesses its control of an investee at the time of its initial investment and again if changes in facts
and circumstances affect one or more of the control factors listed above. In assessing whether the Group
has control over an investee, consideration is given to many factors including shareholding; voting rights
and their impact on the Group's ability to direct the management, operations and returns of the investee;
contractual obligations; minority shareholder rights and whether these are protective or substantive in
nature; and the financial position of the investee.
Property, plant and equipment
The cost of an item of property, plant and equipment is recognised as an asset when:
(a) it is probable that future economic benefits associated with the item will flow to the Company; and
(b) the cost of the item can be measured reliably.
Property, plant and equipment are initially measured at cost and subsequently at cost less any accumulated
depreciation and accumulated impairment losses. Patents are acquired by the Group and have an infinite
useful live. Patents are carried at cost less accumulated impairment losses. Amortisation methods, useful lives
and residual values are reviewed at each reporting date and adjusted if appropriate.
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 part is recognised in the carrying amount of an
item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
Assets under construction will be reclassified to the relevant asset category as soon as it is available for use.
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 Company 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.
Investment in associate
An associate is an entity over which the Group has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
The results, assets and liabilities are incorporated in these consolidated annual financial statements using
the equity method of accounting, except when the investment, or a portion thereof, is classified as held for
sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment
in associate is initially recognised in the consolidated statement of financial position at cost and adjusted
for thereafter to recognise the Group's share of the profit or loss in associate and other comprehensive
income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in
the associate, the Group discontinues recognising its share of further losses. Additional losses are recognised
only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf
of the associate.
An investment in associate is accounted for using the equity method from the date on which the investee
becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the
investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee
is recognised as goodwill, which is included in the carrying amount of the investment. Any excess of the
Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment,
after reassessment, is recognised immediately in profit or loss in the period in the investment is acquired.
When a Group entity transacts with an associate of the Group, profits and losses resulting from the
transactions with the associate are recognised in the Group's consolidated annual financial statements only
to the extent of interest in the associate that are not related to the Group.
Consolidated Statement of Financial Position
2015 2014
Note(s) USD USD
Assets
Non-current assets
Property, plant and equipment 3 89 532 466 94 381 855
Intangible assets 2 612 584 2 612 584
Financial assets 9 159 284 11 758 481
Deferred tax asset 1 124 233 1 318 741
Investment in associate 9 5 467 740 -
107 896 307 110 071 661
Current assets
Inventories 19 574 979 19 237 967
Related-party loans 35 755 35 965
Trade and other receivables 4 30 572 822 28 830 915
Cash and cash equivalents 22 496 770 12 477 082
72 680 326 60 581 929
Total assets 180 576 633 170 653 590
Equity and liabilities
Equity
Share capital 146 607 965 146 607 965
Reserves (97 883 624) (79 669 980)
Retained income 53 231 728 33 265 577
101 956 069 100 203 562
Non-controlling interest 16 309 067 15 474 542
118 265 136 115 678 104
Liabilities
Non-current liabilities
Interest bearing borrowings 19 096 633 7 939 220
Finance lease obligations 2 957 153 6 156 254
Share-based payment liability 706 681 754 603
Deferred tax liability 7 387 853 6 246 740
30 148 320 21 096 817
Current liabilities
Interest bearing borrowings 8 417 589 4 032 252
Finance lease obligations 2 941 002 4 478 720
Related party loans 41 317 1 048 659
Current tax payable 5 195 800 4 909 891
Trade and other payables 15 567 469 19 409 147
32 163 177 33 878 669
Total liabilities 62 311 497 54 975 486
Total equity and liabilities 180 576 633 170 653 590
Consolidated Statement of Comprehensive Income
2015 2014
Note(s) USD USD
Revenue 119 867 646 132 034 310
Cost of sales (71 989 042) (88 269 543)
Gross profit 47 878 604 43 764 767
Other operating income 1 037 888 1 782 703
Other operating expenses (19 336 260) (18 923 519)
Operating profit 29 580 232 26 623 951
Investment revenue 806 556 1 296 732
Finance costs (1 710 539) (1 506 118)
Share of profit from equity accounted investment 134 575 –
Profit before taxation 28 810 824 26 414 565
Taxation (7 695 925) (7 961 104)
Profit for the year 21 114 899 18 453 461
Other comprehensive income that will subsequently be
classifiable to profit and loss:
Exchange differences on translating foreign operations (18 378 247) (8 764 054)
Other comprehensive loss for the year net of taxation (18 378 247) (8 764 054)
Total comprehensive income 2 736 652 9 689 407
Profit attributable to: 21 114 899 18 453 461
Owners of the parent 19 966 151 16 908 412
Non-controlling interest 1 148 748 1 545 049
Total comprehensive income attributable to: 2 736 652 9 689 407
Owners of the parent 1 587 904 8 144 358
Non-controlling interest 1 148 748 1 545 049
Earnings per share (USD) 5
Basic earnings per share (cents) 13.5 11.4
Headline earnings per share (cents) 13.8 12.1
Diluted earnings per share (USD) 5
Diluted basic earnings per share (cents) 13.3 11.2
Diluted headline earnings per share (cents) 13.6 11.9
Earnings per share (ZAR)
Basic earnings per share (cents) 172.0 123.7
Headline earnings per share (cents) 175.9 131.5
Diluted earnings per share (ZAR)
Diluted basic earnings per share (cents) 169.3 121.9
Diluted headline earnings per share (cents) 173.2 129.6
Consolidated Statement of Changes in Equity
Equity due Foreign
to change currency Share-based Attributable Non- Total
Share in control of translation payments Total Retained to owners of controlling Shareholders'
USD capital interests reserve reserve reserves income the parent interest equity
Balance as at 31 December 2013 146 607 965 (58 264 013) (12 849 777) 16 211 (71 097 579) 16 357 165 91 867 551 14 250 534 106 118 085
Share-based payments - - - 191 653 191 653 - 191 653 - 191 653
Dividends declared by subsidiaries - - - - - - - (321 041) (321 041)
Total comprehensive income for the year - - (8 764 054) - (8 764 054) 16 908 412 8 144 358 1 545 049 9 689 407
Total changes - - (8 764 054) 191 653 (8 572 401) 16 908 412 8 336 011 1 224 008 9 560 019
Balance as at 31 December 2014 146 607 965 (58 264 013) (21 613 831) 207 864 (79 669 980) 33 265 577 100 203 562 15 474 542 115 678 104
Share-based payments - - - 164 603 164 603 - 164 603 - 164 603
Dividends declared by subsidiaries - - - - - - - (314 223) (314 223)
Total comprehensive income for the year - - (18 378 247) - (18 378 247) 19 966 151 1 587 904 1 148 748 2 736 652
Total changes - - (18 378 247) 164 603 (18 213 644) 19 966 151 1 752 507 834 525 2 587 032
Balance as at 31 December 2015 146 607 965 (58 264 013) (39 992 078) 372 467 (97 883 624) 53 231 728 101 956 069 16 309 067 118 265 136
Consolidated Statement of Cash Flows
2015 2014
Note(s) USD USD
Cash flows from operating activities
Cash generated from operations 6 35 327 891 31 444 452
Interest income 806 556 1 296 732
Finance costs (1 710 539) (1 506 118)
Tax paid (6 128 552) (7 389 874)
Net cash from operating activities 28 295 356 23 845 192
Cash flows from investing activities
Purchase of property, plant and equipment (18 396 693) (19 731 477)
Sale of property, plant and equipment 228 070 14 250
Financial assets movement (511 762) (763 642)
Dividend on preference shares – 265 316
Acquisition of associate (5 333 165) –
Net cash from investing activities (24 013 550) (20 215 553)
Cash flows from financing activities
Proceeds/(Repayment) of financial liabilities 15 542 750 (1 374 496)
Repayment of financial leases (4 736 819) (4 283 157)
Related party loan movement (1 007 132) (519 645)
Dividends paid to BEE partners (314 223) (321 041)
Net cash from financing activities 9 484 577 (6 498 339)
Total cash movement for the period 13 766 383 (2 868 700)
Cash at the beginning of the period 12 477 082 16 565 233
Effect of exchange rate movement on cash balances (3 746 695) (1 219 451)
Total cash at end of the period 22 496 770 12 477 082
NOTES TO THE ABRIDGED AUDITED CONSOLIDATED
ANNUAL FINANCIAL STATEMENTS
3. PROPERTY, PLANT AND EQUIPMENT
Accumulated
depreciation
and
2015 impairment Carrying
USD Cost losses value
Land and buildings 3 611 305 (38 641) 3 572 664
Plant and machinery 84 071 033 (25 120 600) 58 950 433
Assets under construction 5 505 621 – 5 505 621
Furniture and fittings 1 148 103 (360 892) 787 211
Motor vehicles 2 669 126 (985 579) 1 683 547
Office equipment 53 264 (43 439) 9 825
IT equipment 564 286 (314 746) 249 540
Finance lease: Plant and equipment 21 737 224 (4 256 153) 17 481 071
Computer software 1 877 368 (814 314) 1 063 054
Patents 229 500 – 229 500
Total 121 466 830 (31 934 364) 89 532 466
Accumulated
depreciation
2014 and impairment Carrying
USD Cost losses value
Land and buildings 3 928 551 (34 310) 3 894 241
Plant and machinery 80 900 372 (24 904 365) 55 996 007
Assets under construction 7 951 543 (7 862) 7 943 681
Furniture and fittings 1 173 654 (358 585) 815 069
Motor vehicles 3 128 981 (1 135 691) 1 993 290
Office equipment 83 059 (55 302) 27 757
IT equipment 576 474 (299 256) 277 218
Finance lease: Plant and equipment 25 717 363 (3 720 506) 21 996 857
Computer software 1 873 601 (435 866) 1 437 735
Total 125 333 598 (30 951 743) 94 381 855
Borrowing cost
Included in the cost of land and buildings are captilised borrowing cost related to the acquisition of land
to the amount of USD172 888 calculated at a capitalisation rate of 5,9%.
3.1 Reconciliation of property, plant and equipment
Exchange
difference on
consolidation Reclassifications
2015 Opening of foreign and transfer to Impairment of
USD balance Additions subsidiaries inventory Disposals Depreciation fixed assets Total
Land and buildings 3 894 241 261 581 (536 993) - (26 545) (19 620) - 3 572 664
Plant and machinery 55 996 007 15 893 937 (7 364 009) 435 994 (529 625) (5 481 871) - 58 950 433
Assets under construction 7 943 681 609 798 (27 296) (3 020 562) - - 5 505 621
Furniture and fittings 815 069 72 054 (48 375) - (8 999) (42 538) - 787 211
Motor vehicles 1 993 290 471 266 (270 120) 116 537 (323 726) (303 700) - 1 683 547
Office equipment 27 757 1 794 (13 022) - - (6 704) - 9 825
IT equipment 277 218 102 035 (32 662) (138) (5 024) (91 889) - 249 540
Finance lease: Plant and equipment 21 996 857 429 247 (3 567 469) (116 537) (12 049) (1 248 978) - 17 481 071
Computer software 1 437 735 325 481 (211 809) - - (488 353) - 1 063 054
Patents - 229 500 - - - - - 229 500
94 381 855 18 396 693 (12 071 755) (2 584 706) (905 968) (7 683 653) - 89 532 466
Exchange
difference on
consolidation Reclassifications
2014 Opening of foreign and transfer to Impairment of
USD balance Additions subsidiaries inventory Disposals Depreciation fixed assets Total
Land and buildings 181 897 3 920 988 (21 350) (124 449) (40 563) (22 282) - 3 894 241
Plant and machinery 58 720 420 8 418 482 (4 872 936) 1 480 819 - (6 552 037) (1 198 741) 55 996 007
Assets under construction 11 835 838 5 570 469 (4 806) (9 457 820) - - - 7 943 681
Furniture and fittings 871 208 104 741 (25 711) (31 064) (50 013) (54 092) - 815 069
Motor vehicles 2 195 353 429 374 (132 186) (26 301) (150 889) (322 061) - 1 993 290
Office equipment 67 914 287 (6 736) (17 898) (4 944) (10 866) - 27 757
IT equipment 217 309 170 802 (13 032) 27 449 (34 323) (90 987) - 277 218
Finance lease: Plant and equipment 11 622 183 4 542 165 (308 074) 7 667 398 - (1 526 815) - 21 996 857
Computer software 681 527 1 116 334 (52 794) - (18 045) (289 287) - 1 437 735
86 393 649 24 273 642 (5 437 625) (481 866) (298 777) (8 868 427) (1 198 741) 94 381 855
Security
Moveable assets to the value of ZAR500 million of the South African subsidiaries have been
bonded to ABSA Capital as security for an interest bearing loan.
Impairment
During 2014, the Exploration segment in our South Africa segment recognised an impairment loss of
USD1 198 741 million. The main elements were a write-down of the idle slim drilling drill rigs to their value is
use. The calculation of value in use is most sensitive to mining commodity cycles. The future cash flows of the
particular drill rigs were negatively affected by the current declining commodity prices of our customers, which
mainly comprise of mining operations. As a result our customers reduced and deferred exploration slim drilling
activities.
4. TRADE AND OTHER RECEIVABLES
2015 2014
USD USD
Trade receivables 24 157 869 24 879 385
Loans to employees 89 298 71 204
Pre-payments 2 534 712 1 824 666
Deposits 106 733 167 787
Indirect taxes 521 086 336 595
Sundry 3 163 124 1 551 278
30 572 822 28 830 915
Trade and other receivables past due but not impaired
The ageing of amounts past due but not impaired is as follows:
Outstanding on normal cycle terms 16 947 349 21 366 777
1 month past due 3 109 214 1 480 503
2 months past due 1 719 700 478 928
3 months past due 3 018 405 3 143 368
Allowance for doubtful debts (636 799) (1 590 191)
24 157 869 24 879 385
The movement in allowance for doubful depts is presented below
Balance 1 January 1 590 191 1 672 368
Exchange differences on translation of foreign operations (440 887) (199 345)
Amounts written off (578 880) (399 990)
Allowance for doubtful debts 66 375 517 158
636 799 1 590 191
2015 2014
USD USD
The carrying amount in USD of trade and other receivables are
denominated in the following currencies:
United States Dollar (USD) 16 520 399 15 649 442
South African Rands (ZAR) 3 563 917 3 063 751
Brazilian Reals (BRL) 3 794 977 2 699 429
Mexican Peso (MXN) 37 902 278 527
Chilean Peso (CLP) 3 643 250 3 096 705
Peruvian Nuevo Sol (PEN) 1 271 413 1 140 656
CFA Franc BCEAO (XOF) – 54 752
Chinese Yuan Renminbi (CNY) 148 753 91 004
Guatemalan Quetzal (GTQ) 476 351 263 019
Zambian Kwacha (ZMW)* – 2 119 279
Colombian Peso (CLP) 946 076 –
Euro (EUR) 169 784 374 351
30 572 822 28 830 915
* The pricing of the ZMW dominated contracts have been re-negotiated during the current year and are now dominated
in USD.
Trade receivables of South African subsidiaries have been ceded to ABSA Capital as security for interest
bearing loan.
5. EARNINGS PER SHARE
2015 2014
USD USD
Reconciliation between earnings and headline earnings
Basic earnings for the year 21 114 899 18 453 461
Deduct:
Non-controlling interest (1 148 748) (1 545 049)
Attributable to owners of the parent 19 966 151 16 908 412
Loss/(Gain) on disposal of fixed assets 677 898 284 529
Impairment of plant and equipment – 1 198 741
Tax effect on gain on disposal of fixed assets and impairments (217 524) (413 630)
Headline earnings for the year 20 426 525 17 978 052
Earnings per share (cents) 13.5 11.4
Diluted earnings per share (cents) 13.3 11.2
Headline earnings per share (cents) 13.8 12.1
Diluted headline earnings per share (cents) 13.6 11.9
Net asset value per share (cents) 79.8 78.0
Tangible net asset value per share (cents) 78.0 76.3
Dividends per share (cents) – –
Weighted average number of ordinary shares at the end
of the year for the purpose of basic earnings per share and
headline earnings per share 148 265 491 148 265 491
Effect of dilutive potential ordinary shares – employee share options 2 379 656 2 203 545
Weighted average number of ordinary shares at the end of
the year for the purpose of diluted basic earnings per share
and diluted headline earnings per share 150 645 147 150 469 036
6. CASH GENERATED FROM OPERATIONS
2015 2014
USD USD
Cash generated from operations
Profit before taxation 28 810 824 26 414 565
Adjustments for:
Depreciation and amortisation 7 683 653 8 868 427
Impairment – 1 198 741
Share of profit from equity accounted investments (134 575) –
Translation effect of foreign operations 605 318 (763 067)
Share-based payment – equity settled 164 603 191 653
Share-based payment – liability (47 922) 395 803
Loss/(Profit) on sale of assets 677 898 284 529
Interest received (806 556) (1 296 732)
Finance costs 1 710 539 1 506 118
Changes in working capital:
Inventories 2 247 694 (2 360 156)
Trade and other receivables (1 741 907) (1 400 952)
Trade and other payables (3 841 678) (1 594 477)
35 327 891 31 444 452
7. CAPITAL COMMITMENTS
2015 2014
USD USD
Capital expenditure authorised by the directors and contracted
for within 12 months. Capital expenditure will be funded
through cash generated from operations. 6 974 023 10 269 888
8. SEGMENT REPORTING
8.1 Mining activity
The following table shows the distribution of the Group's combined sales by mining activity,
regardless of where the goods were produced:
2015 2014
USD USD
Sales revenue by stage of mining activity
Exploration 1 664 074 6 728 725
Capital 11 804 595 16 394 012
Production 106 398 977 108 911 573
119 867 646 132 034 310
Gross profit by stage of mining activity
Exploration 779 248 2 840 393
Capital 4 984 392 5 105 520
Production 42 114 964 35 818 854
47 878 604 43 764 767
The chief decision maker of the Group is the chief executive officer. The chief executive officer manages the
activities of the Group concomitant to the inherent risks facing these activities. It is for this reason that the
activities are separated between exploration, capital and production stage drilling. The equipment and related
liabilities of the Group can be used at the multiple stages and therefore cannot be presented per activity.
8.2 Geographical segments
Although the Group's major operating divisions are managed on a worldwide basis, they operate in
four principal geographical areas of the world.
Sales revenue by geographical market
Africa 27 087 779 19 257 234
Latin America 61 844 572 65 578 798
Other Countries 207 734 2 737 817
South Africa 30 727 561 44 460 461
119 867 646 132 034 310
Gross profit by geographical market
Africa 14 232 105 11 581 420
Latin America 16 594 674 20 002 522
Other Countries 1 010 347 (352 598)
South Africa 16 041 478 12 533 423
47 878 604 43 764 767
Note: The gross profit percentages vary based on drilling ground conditions, competition in the markets and the
mix of in-country and foreign cost.
A customer in the African region, operating in the capital and production segment accounts for 17%
(2014: South African region 20%) of the Group's revenue.
2015 2014
USD USD
Total assets by geographical market
Africa 17 637 933 15 173 200
Latin America 85 986 072 82 057 976
Other Countries* 9 173 293 3 904 899
South Africa 67 779 335 69 517 515
Total assets as per statement of financial position 180 576 633 170 653 590
Total liabilities by geographical market
Africa 16 447 717 14 227 570
Latin America 26 672 085 20 499 820
Other Countries 3 628 067 1 469 643
South Africa 15 563 628 18 778 454
Total liabilities as per statement of financial position 62 311 497 54 975 487
* Assets in other countries includes the investment in associate.
9. INVESTMENT IN ASSOCIATE
On 1 December 2015, the Group purchased a 40% equity interest in Bergteamet Raiseboring Europe AB
("Bergteamet") for USD5 333 165 (SEK46 555 000). Bergteamet's operations located within Sweden,
Norway, Finland and Ireland are very similar to that of the Group and will provide the Group with a
strategic footprint into the European market.
The Group does not have control of Bergteamet via the call option it has for the remainder of the
shares in Bergteamet. The call option does not give rise to the substantive control of Bergteamet
until such time as the Group exercises the call option which expires 31 March 2019 or the put option
which expires on 31 May 2017. The put option gives the option to put the current 40% owned by
the Group back to the sellers at the original purchase price thus effectively cancelling the transaction.
Management considered the valuation of the call and put option. At year end the mark to market valuation
did not present a material impact on the initial value of the call and put option.
Associates are accounted for using the equity method in the Group's consolidated financial statements.
The financial year end of Bergteamet is 31 August. This was the reporting date established when that
company was incorporated, and a change of reporting date is not permitted. For the purpose of applying
the equity method of accounting, the financial information of Bergteamet have been used. Appropriate
adjustments were made for fair value adjustments at acquisition, 1 December 2015, differences in
accounting policies and effects of significant transactions up to 31 December 2015.
The table below summarises and also reconciles the statement of comprehensive income's financial
information from the acquisition date, 1 December 2015 to 31 December 2015.
2015 2014
USD USD
Revenue 1 878 984 –
Profit from continuing operations 336 438 –
Total comprehensive income 336 438 –
Group's share of total comprehensive income 134 575 –
Dividends received from associate – –
The table summarises and also reconciles the statement of financial position's financial information as at
31 December 2015 to the carrying amount of the Group's interest in Bergteamet.
2015 2014
USD USD
Non-current assets 5 207 473 –
Current assets 5 421 292 –
Non-current liabilities 5 768 094 –
Current liabilities 3 387 054 –
Net assets 1 473 617 –
Group's share of net assets 589 447 –
Goodwill 4 743 718 –
Share of profit from equity accounted investment 134 575 –
Investment in Bergteamet 5 467 740 –
GOING CONCERN BASIS OF ACCOUNTING
The annual financial statements have been prepared on the basis of accounting policies, applicable to a going
concern. This basis presumes that funds will be available to finance future operations and that the realisation of
assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of
business.
SHARE CAPITAL
There was no movement in the issued and unissued share capital for the financial year.
DIVIDENDS
Dividend declared
No dividends were declared or paid by Master Drilling Group Limited since the Company's incorporation.
Dividend policy
It remains the Board's intent that during the Group's initial steep growth phase, in which the Company still finds
itself, its cash resources will be used primarily for investment in the development of the Group's assets. Following
this phase, it is the current intention of the Company to declare and to pay dividends after each six-month
reporting period, maintaining a dividend cover ratio of between four to five times annual headline earnings.
However, there can be no assurance that a dividend will be paid in respect of any specific financial period,
and the declaration and payment by the Company of any dividends will depend on the results of the Group's
operations, its financial position, anticipated cash requirements, prospects, profits available for distribution, and
other factors deemed to be relevant at the time.
Any dividend unclaimed after a period of three years from the date on which the same has been declared to be
payable shall be forfeited and revert to the Company.
There are no arrangements under which future dividends are waived or agreed to be waived.
CHANGES TO THE BOARD
The following changes to the Board and the dates thereof are detailed in the table below:
Name Position Change Date
Christopher Gerald O'Neill Non-Executive director Resignation 22 July 2015
Christopher Gerald O'Neill Alternate Director Appointment 23 September 2015
Fred George Dixon Alternate Director Appointment 23 September 2015
Johan Louis Botha Non-Executive Director Appointment 12 November 2015
EVENTS SUBSEQUENT TO YEAR-END
After the financial year, the Company entered into an agreement with Bergteamet AB to acquire the Chilean
assets of Bergteamet AB, comprising a 91R raisboring machine with 400 lengths of 13 1/8 inch drill rods and the
shares in Bergteamet Latin America SpA as well as claims against Bergteamet Latin America SpA. The purchase
price for the transaction was Euro 4 million and is supported by fixed assets of an equivalent value.
ANNUAL GENERAL MEETING
The annual general meeting of Master Drilling Group Limited will be held at Grant Thornton offices,
Wanderers Office Park, 52 Corlett Drive, Ilovo, Johannesburg, on Thursday, 21 July 2016 at 09h00.
CORPORATE INFORMATION
MASTER DRILLING GROUP LIMITED
Registration number: 2011/008265/06
Incorporated in the Republic of South Africa
JSE share code: MDI
ISIN: ZAE000171948
REGISTERED AND CORPORATE OFFICE
4 Bosman Street
PO Box 902
Fochville, 2515
South Africa
DIRECTORS
Executive
Daniël (Danie) Coenraad Pretorius Chief Executive Officer and Founder
André Jean van Deventer Financial Director and Chief Financial Officer
Barend Jacobus (Koos) Jordaan Technical Director
Gareth (Gary) Robert Sheppard # Chief Operating Officer
Non-executive
Hendrik Roux Van Der Merwe Chairman and Independent Non-Executive
Akhter Alli Deshmukh Independent Non-Executive
Jacques Pierre de Wet Independent Non-Executive
Johan Louis Botha Independent Non-Executive
Shane Trevor Ferguson Non-Executive
Chistopher Gerald O'Neill Alternate Director
Fred George Dixon Alternate Director
# Resident in Peru
COMPANY SECRETARY
Andrew Beaven
6 Dwars Street,
Krugersdorp,
1739
South Africa
PO Box 158, Krugersdorp,
1740
South Africa
JSE SPONSOR
Investec Bank Limited
(Registration number: 1969/004763/06)
100 Grayston Drive, Sandown, Sandton
2196
South Africa
INDEPENDENT AUDITORS
Grant Thornton Johannesburg Partnership
South African member of Grant Thornton International Limited
52 Corlett Drive
Illovo
2196
South Africa
SHARE TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
(Registration number: 2004/003647/07)
Ground Floor, 70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107
South Africa
INVESTOR RELATIONS CONTACTS
Su-Marie Lemmer
Master Drilling Group Ltd
Telephone: +27 18 771 8100
Mobile: +27 82 570 3451
E-mail: marketcomm@masterdrilling.co.za
GENERAL E-MAIL QUERIES
info@masterdrilling.com
Master Drilling website
www.masterdrilling.com
Company Secretarial E-mail
Companysecretary@masterdrilling.com
Master Drilling posts information that is important to investors on the main page of its website at
www.masterdrilling.com and under the "investors" tab on the main page. The information is updated
regularly and investors should visit the website to obtain important information about Master Drilling.
www.masterdrilling.com
Date: 31/03/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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