Wrap Text
Unaudited Interim Financial Results for the six months ended 30 June 2025
MASTER DRILLING GROUP LIMITED
Registration number: 2011/008265/06
Incorporated in the Republic of South Africa
JSE share code: MDI
ISIN: ZAE000171948 LEI: 37890095B2AFC611E529
("Master Drilling" or "Group" or "Company")
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2025
- Revenue in USD up 4.9% from USD127.0 million to USD133.2 million
- Profit after tax* in USD increased 399.0% from USD3.6 million to USD18.1 million
- Headline earnings per share in USD up 6.7% from 9.0 cents to 9.6 cents
- Headline earnings per share in ZAR up 4,7% from 168,6 cents to 176,6 cents
- Basic earnings per share* in USD up 485.0% from 2.0 cents to 11.7 cents
- Basic earnings per share* in ZAR up 474,1% from 37,5 cents to 215,3 cents
- Net asset value per share in USD up 9.6% from 135 cents to 148 cents
- Revenue pipeline of USD515.0 million
- Committed order book of USD305.6 million
- In line with the Company's past practice the Board did not declare an interim dividend and will consider an appropriate dividend at year-end
- Dividend of 65,0 cents per share in ZAR terms relating to FY2024 was paid during June 2025
* Partial impairment reversal
REGULATORY REQUIREMENTS
The contents of the short form announcement are the responsibility of the Board of directors of Master Drilling. The information in the short-form
announcement is a summary of the full announcement available on Master Drilling's website. 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.
The full announcement can also be accessed online at https://senspdf.jse.co.za/documents/2025/JSE/ISSE/MDI/HY2025.pdf
The information in this announcement has been extracted from the unaudited consolidated interim financial statements as prepared by the corporate
reporting staff of Master Drilling, headed by Willem Ligthelm CA(SA), the Group's financial manager. This process was supervised by
Andre van Deventer CA(SA), the Group's chief financial officer.
Any investment decision by investors and/or shareholders should be based on consideration of the full announcement as available on
www.masterdrilling.com. The full announcement is also available at the Company's registered office (for inspection, at no charge, during office
hours on any business day).
COMMENTARY
About Master Drilling
Master Drilling was established in 1986 and listed on the Johannesburg Stock Exchange Limited (JSE) in 2012. The Group delivers innovative
drilling technologies and services. Master Drilling has built trusted partner relationships with blue-chip and mid-tier clients in the mining,
hydro-electric energy, civil engineering and construction sectors worldwide. The Company is exposed to various key commodities that ensure its
sustainability. The Master Drilling business model of providing drilling solutions and services to clients through tailor- made designs, coupled
with a flexible support and logistics chain, makes it the preferred partner throughout the life cycle of projects .
Commenting on the results for the six months ending 30 June 2025, Danie Pretorius, Chief Executive Officer of Master Drilling, said:
"Master Drilling is pleased to report a resilient first six months of 2025, achieving USD133.2 million in revenue, reflecting a 4.9% increase
compared to the same period in the prior year. This accomplishment comes against a backdrop of global market and economic uncertainty.
Despite some pressure on profitability, we extend our sincere gratitude for the unwavering support of our clients and business partners.
Our commitment to capital discipline remains a key driver of positive returns.
Master Drilling is dedicated to technological innovation. We are proud to see our new drilling and cutting technologies gain traction and make a
significant impact on the mining industry. Our vision of "making a difference" remains steadfast, as we strive to enhance safety, productivity,
and cost-effectiveness across the sector.
In addition to our core technologies, we have strategically invested in asset-light digital ventures. These initiatives, including proximity
detection solutions and integrated data and resource management systems tailored for mining operations, have not only improved our financial
performance but have also created new opportunities for the Group. These ventures ensure our continued relevance and solidify our position as a
leading innovator.
Leveraging our established relationships with clients and partners, alongside our global presence, has been central to achieving business growth.
By fostering these strong connections, we have been able to deliver a wider range of turnkey solutions, transforming Master Drilling into a more
comprehensive contractor.
The Company remains optimistic about the future. Nevertheless, we will continue to prioritise responsible practices, with a focus on cost control,
responsible capital allocation, and operational excellence."
Financial Overview
Revenue increased 4.9% to USD133.2 million and operating profit increased by 234.0% to USD26.6 million. These figures represent resilient results,
despite uncertain market, economic and operating conditions experienced globally.
During 2024 the Group provided for an impairment loss on the Mobile Tunnel Boring Machine, as no formal agreement was in place to project future
cash flows, due to uncertainty over commodity prices within the machine's target industry. During the first half of 2025, the Group finalised a
contract to commence operations of the Mobile Tunnel Boring Machine. This change in circumstances represents an indicator of reversal of impairment.
The Group has thus reassessed the recoverable amount of the asset and based on the contract's projected discounted cash flows, the recoverable
amount resulted in a partial impairment reversal of USD4.7 million from the impairment loss of USD7.8 million recognised in the prior year.
The balance of the impairment will be assessed on a continuous basis.
This partial impairment reversal of property, plant and equipment is the main driver in an overall increase in profit after taxation of 399.0% to
USD18.1 million.
USD earnings per share (EPS) increased 485.0% to 11.7 cents, and ZAR EPS increased 474,1% to 215,3 cents. USD headline earnings per share (HEPS)
increased 6.7% to 9.6 cents, and ZAR HEPS increased 4,7% to 176,6 cents.
Net cash generated from operations amounted to USD11.0 million. Cash resources continue to be managed diligently to cater for emerging opportunities
that require specific design, planning, and investment.
Master Drilling's total capital spend of USD13.9 million was applied as follows: 41% on expansion and 59% on sustaining the existing fleet.
Debt decreased from USD48.0 million to USD45.4 million. The gearing ratio, including cash, increased from 6.3% to 10.5% in the first six months of
the 2025 fiscal year.
Operational Overview
Safety and response to risk
Master Drilling has a comprehensive risk management program, which is managed through a collaborative platform. The company tracks the progress of
all mitigation measures, and any significant business risks are escalated to the executive team and the Board. A dedicated internal audit team
provides assurance that all actions are implemented and achieve their desired outcomes.
Our Lost Time Injury Frequency Rate for 2025 increased to 1.38 because of 2 Lost Time Injuries which occurred in the first half of the year.
The milestone is still above our tolerance level of 0.53. Detailed investigations were conducted into the incidents and specific entities were
identified for further safety intervention plans. Our priority remains to move people out of harm's way through innovative engineering solutions.
Throughout the year, the Group implemented a rigorous program in compliance with applicable ISO standards. This initiative involved a comprehensive
review of existing protocols, the implementation of new hazard identification measures, and a strong focus on upskilling and reskilling employees.
South America
The Group's operations in this region are experiencing significant growth and strategic development. The company is capitalising on a regional
transition towards underground mining and the increased focus on strategic minerals and ESG practices. Key initiatives include ongoing investments
in technological advancements and the successful deployment of new equipment. The Group is expanding its service offerings through a new strategic
joint venture and is actively pursuing new business with both existing and prospective clients, as demonstrated by strong financial performance and
a healthy pipeline of upcoming projects and tenders.
Central and North America
The Group's operations in this region are currently undergoing a significant turnaround, with particularly robust intervention plans that have
stabilised finances, resolved legacy issues, and positioned the region's profitability in recent years. The region is focused on organic growth
through technological adoptions and is actively pursuing market penetration with key industry players.
Africa
The Group's African operations are in a state of flux, with added pressure from a major project that has been placed on hold and from another
operation that has ceased as a result of diamond price pressures. However, a new contract has been awarded, prompting the mobilisation of additional
equipment. The Group anticipates strong, continued growth, with more machines being mobilised to key mines as well as a first-of-its-kind unit
successfully launched in this region. We have also been successful with a multi-year project, although this project has been deferred to 2026.
Rest of the World
This region exceeds expectations for profitability. This was achieved through efficient use of staff, cost-control measures, and successful project
execution. New contracts were awarded which provide multiple machines and services for growing clients.
Slim drilling
In the exploration sector, a research project was successfully implemented, while geotechnical drilling projects remain on schedule. The Group
has also secured a number of new contracts and is mobilising additional machines for various projects, including new contracts outside South Africa
and an expansion of underground drilling capacity at a major mine. Additionally, a new pilot micro-fracking project was successfully completed,
leading to an order for a second phase. While minor challenges exist, such as payment issues at a solar farm and a delivery delay for high-pressure
pumps, overall operations are progressing positively.
A strong emphasis is placed on technological advancements, demonstrated by the deployment, and testing of robotic drilling equipment and the
development of advanced sampling and processing systems with the commissioning of the Project Desert Elephant, our version of a surface core
drilling rig with a robotic hand which has been successfully completed. We are now in a position to finalise for production, which is in time for
upcoming proposals.
Other mining services
The Group's other mining service companies continue to out-perform expectations, with its strong focus on improving a safe working environment for
our clients' employees. The service offerings have been expanded further outside South African borders. Opportunities for global expansion will be
explored in the future.
Technology
Master Drilling is committed to continuous technological advancement as a key driver of client value and market competitiveness. To achieve this,
we have implemented a focused strategy that leverages targeted investments across our various technological divisions.
The Group is pleased to announce that the Mobile Tunnel Boring machine was successfully placed with a client in the South African region.
The contract negotiations have been finalised and operations are expected to start in the fourth quarter of 2025.
By investing in these cutting-edge technologies, Master Drilling is positioned to deliver safer, more productive, and cost-competitive solutions for
our global client base, optimising mineral recovery and information management throughout the mining lifecycle.
Operational equipment
The fleet consists of 148 raise bore, 35 slim drilling and one mobile tunnel boring rigs. The total raise boring fleet utilisation rate was around
65% while the slim drilling fleet utilisation was around 28%. The rate of new rigs coming on board will settle with a focus on larger units,
which typically generate higher income.
Our people
We prioritise building a highly motivated and engaged workforce. This commitment fuels our competitive advantage and delivers long-term value to
our stakeholders. We actively attract, develop, and retain top talent by fostering a safe and inclusive work environment. We celebrate the unique
perspectives and contributions of our diverse workforce, recognising that this synergy drives winning results.
Our commitment to fostering a thriving culture is unwavering. We continuously strive to refine our practices and ensure all employees feel valued,
empowered, and equipped to excel.
Outlook and prospects
Even in the face of global uncertainty, Master Drilling is confident in its ability to perform well. This confidence stems from several factors.
First, our long-term contracts provide a stable foundation for our business. Second, we have deliberately diversified our footprint across
various regions, commodities, currencies, and industries. This strategic approach mitigates risk and positions us for success in a complex global
environment. Proactive capital management is another key strength, ensuring we efficiently allocate resources to maximise returns. Finally,
our unwavering service orientation keeps client needs at the forefront of everything we do.
Currently, we are actively working to optimise our fleet utilisation, targeting a benchmark of 75%. Prudent capital management remains a core
principle that guides our decisions. Our diversification strategy, encompassing regions, commodities, currencies, and industries, has proven its
worth and will continue to be a central pillar of our growth plan.
The pipeline as at 30 June 2025 totalled USD515.0 million, while the committed order book totalled USD305.6 million for the remainder of 2025
and beyond. In the short to medium term, the sales pipeline is expected to stabilise and increase with further tactical acquisitions and joint
ventures supporting performance.
Looking towards the future, Master Drilling prioritises both safety and innovation. We are strong advocates for utilising advanced, mechanised
equipment, which aligns perfectly with the industry's growing focus on automation and remote operations. This commitment to cutting-edge technology
positions us competitively within this evolving landscape. Furthermore, we actively explore opportunities to expand beyond traditional drilling,
with potential applications for artificial intelligence being a key area of interest.
Investing in our people is another cornerstone of our success. We are committed to attracting and retaining top talent by fostering a positive work
environment and implementing best practices in human capital management. Finally, Master Drilling takes Environmental, Social, and Governance
initiatives very seriously. We believe that strong practices not only align with our values but also ensure long-term sustainability for our company
and contribute positively to broader industry goals.
NATURE OF BUSINESS
Master Drilling Group Limited is an investment holding company, whose subsidiary companies provide specialised drilling services and provides
solutions that enforce business rules, optimise output, safe-guard miners, protect/manage assets and locate missing persons to blue
chip major and mid-tier companies in the mining, civil engineering, construction, and hydro- electric power sectors, across a number of commodities
and geographies.
For and on behalf of the Board
DC Pretorius AJ van Deventer
Chief Executive Officer Chief Financial Officer
Sponsor
Investec Bank Limited
REGISTERED AND CORPORATE OFFICE
4 Bosman Street
PO Box 902
Fochville, 2515
South Africa
26 August 2025
Date: 26-08-2025 07:05:00
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