To view the PDF file, sign up for a MySharenet subscription.

MASTER DRILLING GROUP LIMITED - 2018 Abridged Annual Financial Results

Release Date: 26/03/2019 07:05
Code(s): MDI     PDF:  
Wrap Text
2018 Abridged Annual Financial Results

MASTER DRILLING GROUP LIMITED
Registration number: 2011/008265/06
Incorporated in the Republic of South Africa
JSE share code: MDI
ISIN: ZAE000171948
 
2018 
ABRIDGED ANNUAL FINANCIAL RESULTS
 
SALIENT FEATURES FOR THE PERIOD
- USD Revenue increased by 14.2% to USD138.7 million 
- USD Earnings per share decreased by 3.5% to 11.1 cents
- ZAR Earnings per share decreased by 3,9% to 147,1 cents
- USD Headline earnings per share decreased by 7.8% to 10.7 cents
- ZAR Headline earnings per share decreased by 8,2% to 141,8 cents
- Stable order book of USD203.6 million
- Healthy pipeline of USD578.6 million
- Focus on working capital management bearing fruit 
- Added geographies - Canada, Turkey, Ghana and Italy
 

COMMENTARY

ABOUT MASTER DRILLING
Master Drilling was established in 1986 and listed on the Johannesburg Stock Exchange in 2012. The company delivers
innovative drilling technologies and has built trusted partner relationships with blue-chip major and mid-tier companies
in the mining, hydro-energy, civil engineering and construction sectors across various commodities worldwide for
over 30 years. The Master Drilling business model of providing drilling solutions to clients through tailor-made designs
coupled with a flexible support and logistics chain makes it the preferred drilling partner throughout the lifecycle of
projects from exploration to production and capital stages.

CEO, Danie Pretorius provided an overview of the business for the past year, commenting as follows:

"Over the past year, the macroeconomic operating environment proved to be more difficult than initially anticipated,
both globally and domestically. Notwithstanding this, we remained steadfast in the pursuit and implementation of
our strategy, laying the foundation for future growth through the continued development of new, ground-breaking
technologies, the expansion of our global footprint and by nurturing our client and business relationships."

"During the second half of 2018, economic conditions were unequivocally weaker in many parts of the world in which
we operate, both in developed economies, where the slowdown was broad-based, and in emerging markets, such as
India and Turkey. Notwithstanding this, there were notable improvements in some regions, such as South America,
where growth rebounded in Brazil and Mexico."

"Commodity price movements were mixed. Geo-political pressures led to higher energy prices, while the economic
slowdown, the imposition of broad-based import tariffs and the intensification of trade wars led to a downturn in most
metal prices. In particular, tariffs on China - which has been driving commodity demand over the past two decades
- together with the country's changing structural growth dynamic, risk placing even more pressure on industrial
commodity prices in coming years."

" The variety of external risks that impact on our business highlight the importance of a strategy that seeks to mitigate
these and stabilise operations through diversification across regions and services, and the development of innovative
technologies that help the world adapt to change"

"We made progress in all these areas in 2018 by: unveiling and subsequently launching the Mobile Tunnel Borer;
exercising the option to fully acquire Bergteamet Raiseboring Europe AB (Bergteamet) in order to expand our operations
in European markets; acquiring the businesses of the Atlantis Group, thus augmenting our skills pool and global
footprint in India, Brazil and Zambia; launching TunnelPro Srl (TunnelPro), a joint venture with Ghella SpA (Ghella), to
acquire SELI Technologies (SELI), a leading manufacturer of tunnel boring machines."

"The technological innovation under way globally seeks to generate efficiency and productivity gains and improve
global supply chains to enhance the way in which we live and work. It is disruptive and evolves unbelievably fast. Master
Drilling has taken cognisance of this and has focused on delivering solutions that primarily reduce costs and increase
safety, while additionally rendering projects that were previously considered marginal, viable. The future of our industry
is increasingly about man and machine, and we are well positioned to deliver on this."

"Master Drilling is pleased that satisfactory cash generation has enabled us to declare an annual dividend of
ZAR26,0 cents per share."

FINANCIAL OVERVIEW
Revenue increased 14.2% to USD138.7 million and operating profit decreased slightly to USD23.6 million. This was
a positive result given that one of the Group's machine categories, the XX-large machines category, were utilized
only 44%. Cost of sales increased in line with the increase in revenue aligned with the new business operations.

Continuous investment in middle management human capital to support future growth, lower utilisation rates due to
adverse demand had a negative impact on the profit after tax.   

USD earnings per share (EPS) decreased 3.5% to 11.1 cents, and ZAR EPS decreased 3,9% to 147,1 cents. USD headline
earnings per share (HEPS) decreased 7.8% to 10.7 cents, and ZAR HEPS decreased 8,2% to 141,8 cents.

Net cash generation decreased to USD25.8 million. This is as a result of the worsening working capital cycle which
came on the back of slower payment from debtors due to challenging global economic conditions. Cash resources
continue to be managed stringently as market conditions improve to cater for emerging opportunities that require
specific design, planning and investment. This will result in a healthy cash resource balance that will position the
company well for future growth.

Master Drilling's capital spend was 90.3% on expansion and 9.7% on sustaining the existing fleet.

Debt increased from USD44.0 million to USD60.4 million and the gearing ratio, including cash, changed from 2.4%
to 16.2% in the 2018 financial year. This is due to an additional draw down of USD20 million from ABSA during the
year and the debt incurred to complete the Bergteamet Raiseboring Europe AB and Atlantis Group transaction. 

OPERATIONAL OVERVIEW
The past year was characterised by volatility across markets, including equity, currency and commodity markets. As
a business that generates USD revenues off an emerging currency cost base, we benefit from emerging currency
weakness. After having benefited from the change in leadership in the ruling party at the start of the year, the
USD/ZAR exchange rate weakened anew in the second half of 2018 as country risk intensified. This, together with the country-specific
developments outlined below, led to a realization of our revenue projections for the financial year.

South America
As reported at the release of our interim financial results, work in Brazil has been progressing well on the long-term
contracts that are currently under way, with nine machines deployed in the country. This is on the back of strong
operational records being achieved. Owing to this, as well as an improvement in the economic environment, the
outlook for Brazil remains positive.

Our primary client in Chile, CODELCO (a state-owned entity) moved ahead with the rollout of its planned capital
expenditure, which enabled the projects previously placed on hold to resume last year. However, we encountered
increasing cost pressures that impacted our margins negatively as well as delays on debtor payments. These are being
addressed by in-country managers in this and other regions.

Cost pressures also slowed progress in Peru, where the rigidity of labour laws continues to impact on overhead costs,
margins and overall profitability. These difficulties were encountered throughout 2018 and remain part of the operating
landscape in the country.

Meanwhile, we are gearing up for new hydro-energy sector projects in both Colombia and Ecuador, where we will be
deploying equipment in 2019, which will extend our sector diversification into the region.

Central and North America
Our activities in Central and North America are progressing well. During 2018, we mobilised five machines and shipped
two more to various project sites in Mexico for work to commence in 2019. We also secured several contracts in
Canada. Operations on one of these projects got under way in November, after we mobilised one machine and, by
the end of 2019, we expect to have initiated a total of four projects. We are also seeking to expand our product line
through a new partnership targeting water drilling in the USA.

Overall, activity in Central and North America remains strong, evident from additional enquiries and a pipeline
of projects.

Africa
Although activity in Africa remains subdued and the operating environment difficult, as it is domestically, a number of
projects are set to get under way which will enable us to maintain our footprint on the continent. For instance, we were
recently awarded a break-through contract in Ghana.

In both the DRC and Zambia operations continue to be scaled down and, although we expect the region to increasingly
account for less revenue in the coming year, we continuously remain open to new opportunities on the continent.

Such opportunities could also arise domestically in coming years, now that we have turned the corner on the Mining
Charter, following its revision in September 2018. The progress in clarifying the regulatory and policy environment,
together with the need to modernise the sector through increased mechanisation could lead to a revival of the mining
industry in South Africa, but this will require concerted effort by government, business, labour and investors. 

In the interim, we continue to work on local projects. Our slim drilling project at the Kolomela iron ore mine in the
Northern Cape is set to continue for another year, following the extension of our contract. During 2018, we were
awarded another contract by Anglo American, for its Sishen iron ore mine. We continue to make progress towards
effectively rolling out our innovative new technology in the form of the Mobile Tunnel Borer (MTB) and will begin a
pilot project on South African soil with a view to potentially securing an extended contract on this machine.

Master Drilling will continue to support its loyal domestic clients although growth will likely remain subdued.

We remain committed to expansion into appropriate African countries.

Scandinavia
The completion of the acquisition of Bergteamet Raiseboring in 2018 cemented our presence in Scandinavia, which
serves as a gateway to projects throughout Europe. Bergteamet is highly specialised in raise boring, conducts operations
throughout the world and services a mix of clients in mining, hydro-energy and infrastructure projects. As a result of
the acquisition, the Group completed projects in France, Spain and Turkey during 2018.

Our foray into this region continues. We are currently investigating opportunities to expand our service offering both in
Scandinavia and the rest of Europe.

India
India's economy showed signs of slowing during the second half of 2018, but this had no impact on our existing project
commitments in the country. Work for Vedanta Limited, a diversified natural resources company listed on the London
Stock Exchange, continued.

Through the acquisition of the businesses of the Atlantis Group, a South African headquartered, multinational mining
contracting company, Master Drilling's presence in India deepened as we assumed responsibility for the company's
existing contracts and operations.

Consequently, we have a total of seven operational machines on this project.

Australia 
In Australia, a large raise bore machine has been contracted out to Byrnecut, an internationally renowned specialist
underground mining contractor, on a polymetallic project. The rental contract, the first such agreement which sees
Master Drilling supply the machine without manpower, will run for an initial period of one year.

Technology
Technology is at the forefront of our business. In early 2018 we launched the disruptive MTB solution at the "Investing
in African Mining Indaba". The MTB is an internally conceptualised design which has been internationally patented. In
September, we unveiled the MTB and commissioned SELI Technologies to build it. The capabilities of the MTB were
subsequently tested in Italy by SELI and the first machine is in the process of being shipped to South Africa where it will
be deployed on a local pilot project. We believe that once its capabilities have been fully demonstrated we will be able
to realise returns on this significant investment through the procurement of contracts globally.

In 2018 we also made further progress in the development of Blind Shaft Boring System technology. The development
has progressed to testing phase on a site in South Africa and we hope to be able to successfully launch this new
technology soon.

Automation, remote operation and autonomous control of remote placed machines are making progress. An example
of this is a raise boring contract where the rig, 3500m underground, is operated from surface for part of the day.
Thereby reducing unproductive time related to shift changes and blasting times. These remote operated and already
automated processes set the basis for developing full autonomous control. This will Influence productivity, cost and
profitability as a result thereof and quality and safety of operations.

Plant and equipment
Five raise bore machines were added to our fleet, contributing 1.8% growth in revenue while the acquisition
of Bergteamet and Atlantis contributed to growth in revenue of 9.5%. The fleet now consists of 149 raise bore
and 30 slim drilling rigs. The rate of new rigs coming on stream will settle with a focus on larger units, which typically
generate higher income. No new slim rigs are in the pipeline at this point.

Skills development
Retaining expertise and skills development is a key priority for Master Drilling. We continue to invest in skills
development across our businesses to ensure a highly skilled and motivated work force to support our growth strategy.
Targeted interventions for management and technical training in general will remain a core focus for the business
during 2018. 

As a solution driven company delivering a fully mechanised range of services to clients, we will also continue to invest in
Research and Development as new services, of which the MTB is one, are adopted and mature.

Dividend
Since listing in 2012, the Company has achieved compound annual growth and delivered on the key strategic objectives
set out in its listing prospectus. This, coupled with significant ongoing cash generation, enables the company to strike
a balance between continued investment in capital projects to support the company's further growth and enhancing
returns to shareholders through the payment of appropriate dividends. Thus, the Board has declared a gross dividend
of ZAR26,0 cents per share on 25 March 2019 payable to shareholders recorded in the company's share register
on 17 May 2019.

The dividend is payable from distributable reserves and if subject to dividend withholding tax of 20%, a net dividend
of ZAR20,8 cents per share to shareholders will be payable subject to such dividend withholding tax. This dividend
represents a 5.5 times earnings cover. 

The number of shares in issue at date of declaration amount to 150 592 777 and the company's tax reference number
is 9797/433/15/9.

In order to comply with the requirements of Strate, the following details are provided:

Last date to trade cum dividend:                                                                 Tuesday 14 May 2019
Trading ex dividend commences:                                                                 Wednesday 15 May 2019 
Record date:                                                                                      Friday 17 May 2019
Payment date:                                                                                     Monday 20 May 2019 

Shares may not be dematerialised or re-materialised between Wednesday 15 May and Friday 17 May 2019, both
dates inclusive.

PIPELINE AND COMMITTED ORDERS
As at 31 December 2018 our pipeline totaled USD578 615 878 while the committed order book totaled
USD203 624 114 for 2019 and beyond, spread as follows:

See Website


OUTLOOK AND PROSPECTS

Diversification across regions, commodities, currencies and industries remains a key part of our long-term strategy. We
are experiencing strong demand with increased enquiries across the various regions and commodities and expect this to
continue.

With volatility and uncertainty likely to prevail in global markets in the foreseeable future, we remain cautiously
optimistic that the resolution, or the minimisation of geopolitical factors as well as a measured, rather than significant
slowdown in the global economy will create a favourable operating environment in 2019.

Various opportunities in first world countries such as Australia, Canada and USA are coming to fruition and are
expected to increase the Group's footprint across the world in the near future. 

The upswing in the commodity cycle has had a positive impact on our order book with committed orders of
USD203.6 million and a healthy pipeline of USD578.6 million. Although not immediately reflecting in our numbers, we
do expect a positive impact on our revenue during the next reporting period.

As outlined earlier, we believe that we have used the past year to solidify the foundations of our business, which will
not only help it withstand the anticipated environment but will also ensure that Master Drilling remains at the helm of
some of the rapid changes shaping our industry. We will continue with our efforts to expand our footprint in countries
where we do not yet have a presence and to look for opportunities to expand our sector and service diversification.
This, together with our existing footprint, services and the depth of our engineering and innovation capabilities position
us well to remain a leader in the sector, bearing fruit for all our stakeholders.

Master Drilling's technology and experience put the company in a strong position to continue to support its clients'
drive to improve productivity and efficiencies whilst reducing operational risk.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                    2018           2017
                                  Note(s)            USD            USD
Assets                                                                 
Non-current assets                                                     
Property, plant and equipment           3    146 215 603    119 075 667
Goodwill                                4      3 175 092      3 083 427
Financial assets                               2 734 277      3 098 512
Deferred tax asset                             2 994 311      2 010 263
Investment in associate                 5      2 605 117      6 022 115
                                             157 724 400    133 289 984

Current assets                                                        
Inventories                                   25 787 869     23 894 609
Related-party loans                              101 831        102 641
Trade and other receivables             6     48 179 847     38 191 737
Derivative financial instrument                   53 958              -
Cash and cash equivalents                     33 725 131     40 211 629
                                             107 848 636    102 400 616

Non-current assets held for sale        7        808 928      1 255 128

                                             108 657 564    103 655 744
Total assets                                 266 381 964    236 945 728
Equity and liabilities                                                 
Equity                                                                 
Share capital                                148 703 721    148 703 721
Reserves                                    (95 498 376)   (83 855 527)
Retained income                              101 837 302     88 221 320
                                             155 042 647    153 069 514                                             
Non-controlling interest                       9 002 330      8 255 315

                                             164 044 977    161 324 829

Liabilities                                                            
Non-current liabilities                                                
Interest bearing borrowings                   50 458 654     36 263 625
Finance lease obligations                      1 203 072      1 682 765
Deferred tax liability                         9 434 322      9 189 125

                                              61 096 048     47 135 515
Current liabilities                                                    
Interest bearing borrowings                    7 306 843      4 659 387
Finance lease obligations                      1 273 282      1 444 820
Related party loans                              174 720        195 483
Current tax payable                            3 385 537      2 098 947
Trade and other payables                8     28 690 020     20 086 747
Cash and cash equivalents                        410 537              -

                                              41 240 939     28 485 384

Total liabilities                            102 336 987     75 620 899
Total equity and liabilities                 266 381 964    236 945 728

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME

                                                                                      2018           2017   
                                                                    Note(s)            USD            USD   
Revenue                                                                        138 721 765    121 424 109   
Cost of sales                                                                 (95 155 229)   (76 794 271)   
Gross profit                                                                    43 566 536     44 629 838   
Other operating income                                                           5 909 368      3 674 987   
Other operating expenses                                                      (25 827 367)   (23 378 396)   
Operating profit                                                                23 648 537     24 926 429   
Investment revenue                                                                 736 169        510 325   
Finance costs                                                                  (2 858 491)    (2 850 878)   
Share of loss from equity accounted investment                                   ( 26 948)       ( 1 710)   
Profit before taxation                                                          21 499 267     22 584 166   
Taxation                                                                  9    (4 027 469)    (5 134 100)   
Profit for the year                                                             17 471 798     17 450 066   
Other comprehensive income that will subsequently be                                                        
classifiable to profit and loss:                                                                            
Exchange differences on translating foreign operations                        (11 979 325)      7 403 109   
Other comprehensive income for the year net of taxation                       (11 979 325)      7 403 109   
Total comprehensive income                                                       5 492 473     24 853 175   

Profit attributable to:                                                         17 471 798     17 450 066   
Owners of the parent                                                            16 774 334     17 202 923   
Non-controlling interest                                                           697 464        247 143   

Total comprehensive income attributable to:                                      5 492 473     24 853 175   

Owners of the parent                                                             4 795 009     24 606 032   
Non-controlling interest                                                           697 464        247 143   

Earnings per share (USD)                                                 10                                 
Basic earnings per share (cents)                                                      11.1           11.5   
Diluted earnings per share (USD)                                         10                                 
Diluted basic earnings per share (cents)                                              11.0           11.4  
Earnings per share (ZAR)                                                               
Basic earnings per share (cents)                                                     147,1          153,1   
Diluted earnings per share (ZAR)                                                                            
Diluted basic earnings per share (cents)                                             145,7          151,7   

CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                 2018                       2017   
                                                    Note(s)                       USD                        USD   
Cash flows from operating activities                                                                               
Cash generated from operations                         11.1                25 801 932                 32 843 989   
Dividends received                                                            444 540                    510 325   
Interest received                                                             291 629                              
Finance costs                                                             (2 858 491)                (2 850 878)
Tax paid                                                                  (4 854 787)                (5 497 412)                                      
Net cash inflow from operating activities                                  18 824 823                 25 006 024   

Cash flows from investing activities                                                                               
Purchase of property, plant and equipment                                (16 920 012)               (15 833 126)   
Sale of property, plant and equipment                                       1 595 764                    170 560   
Financial assets proceeds                                                     362 937                    398 460   
Acquisition of associate                                  5               (2 605 117)                          -   
Acquisition of subsidiaries                            11.2              (14 689 135)                          -   
Net cash outflow from investing activities                               (32 255 563)               (15 264 106)   

Cash flows from financing activities                                                                               
Proceeds from financial liabilities                                        20 000 000                 20 000 000   
Repayment of financial liabilities                                        (6 604 694)                (6 574 430)   
Proceeds from financial leases                                                597 942                    554 741   
Repayment of financial leases                                             (1 249 172)                (2 382 326)   
Related party loan (repayment)/proceeds                                      (19 953)                      2 706   
Issue of share capital                                                              -                  1 556 518   
Dividends paid to shareholders                                            (3 078 131)                (3 409 081)   
Dividends paid to BEE partners                                              (135 594)                  (306 140)   
Net cash inflow from financing activities                                   9 510 399                  9 441 988   

Total cash (outflow)/inflow for the period                                (3 920 341)                 19 183 906   
Cash at the beginning of the period                                        40 211 629                 20 372 573   
Effect of exchange rate movement on cash balances                         (2 976 694)                    655 150   
Total cash at end of the period                                            33 314 594                 40 211 629   


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 2016                             146 607 965     (58 264 013)   (33 374 059)      627 816  (91 010 256)    74 427 478   130 025 187   16 291 360    146 316 547   
Share-based payments                                                 -                -              -      290 858       290 858             -       290 858            -        290 858   
Issue of ordinary shares                                     1 556 518                -              -            -             -             -     1 556 518            -      1 556 518   
Issue of ordinary shares for share-based payment reserve       539 238                -              -    (539 238)     (539 238)             -             -            -              -   
Dividends declared by subsidiaries                                   -                -              -            -             -             -             -    (306 140)      (306 140)   
Dividends to shareholders                                            -                -              -            -             -   (3 409 081)   (3 409 081)            -    (3 409 081)   
Derecognition of non-controlling interest                            -                -              -            -             -             -             -  (7 977 048)    (7 977 048)   
Total comprehensive income for the year                              -                -      7 403 109            -     7 403 109    17 202 923    24 606 032      247 143     24 853 175   
Total changes                                                2 095 756                -      7 403 109    (248 380)     7 154 729    13 793 842    23 044 327  (8 036 045)     15 008 281   
Balance as at 31 December 2017                             148 703 721     (58 264 013)   (25 970 950)      379 436  (83 855 527)    88 221 320   153 069 514    8 255 315    161 324 829   
Adjustment from the adoption of IFRS 9                               -                -              -            -             -      (80 221)      (80 221)            -       (80 221)   
Contribution for non-controlling partner                             -                -              -            -             -             -             -      185 145        185 145   
Share-based payments                                                 -                -              -      336 476       336 476             -       336 476            -        336 476   
Dividends declared by subsidiaries                                   -                -              -            -             -             -             -    (135 594)      (135 594)   
Dividends to shareholders                                            -                -              -            -             -   (3 078 131)   (3 078 131)            -    (3 078 131)   
Total comprehensive income for the year                              -                -   (11 979 325)            -  (11 979 325)    16 774 334     4 795 009      697 464      5 492 473   
Total changes                                                        -                -   (11 979 325)      336 476  (11 642 849)    13 615 982     1 973 133      747 015      2 720 148   
Balance as at 31 December 2018                             148 703 721     (58 264 013)   (37 950 275)      715 912  (95 498 376)   101 837 302   155 042 647    9 002 330    164 044 977   


ABRIDGED AUDITED FINANCIAL RESULTS

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, construction and
hydro-electric power sectors, across a number of commodities and geographies.


ACCOUNTING POLICIES

1.   BASIS OF PRESENTATION 
         The abridged audited financial results 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 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 audited consolidated financial statements for Master Drilling Group Limited for the
         period ended 31 December 2018 have been audited by BDO South Africa Incorporated, who expressed
         an unmodified audit opinion thereon. A copy of the auditor's report on the audited consolidated financial
         statements are available on www.masterdrilling.com. These abridged audited consolidated financial results
         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 2018, have been audited by BDO South
         Africa Incorporated, the Company's independent external auditors, whose unqualified audit report can
         be found on pages 6 to 10 of the consolidated annual financial statements 2018, which are available
         on: www.masterdrilling.com.

         The audited consolidated financial statements presented have been 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 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 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
         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 transactions and balances between Group companies are eliminated on consolidation, including unrealised
         gains and losses on transactions between Group companies. Where unrealised losses on intra-group
         asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group
         perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary
         to ensure consistency with the accounting policies adopted by the Group.

Control is considered to exist if all of the factors below are satisfied.

(a)  The investor has power over the investee, i.e. the investor has existing rights that give it the ability to direct
     the relevant activities;
(b)  The investor has exposure, or rights to variable returns from its involvement with the investee; and
(c)  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

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 indefinite useful life as the Group's plan and ability is to renew
and maintain the patent indefinitely. It is expected that the patent will generate revenue for the Group for an
unlimited period of time. Patents are carried at cost less accumulated impairment losses. Patents are assessed
annually for possible impairment.

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.

An asset under construction will be reclassified to the relevant asset category as soon as it is available for use.
Assets under construction are not depreciated.

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted
if appropriate.

Investment in associate

The results, assets and liabilities are incorporated in these consolidated annual financial statements using the
equity method of accounting. 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.

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.

Going concern
Based on the information available to it, the Board of Directors believes that the Group remains
a going concern.

Issued capital
There was no movement in authorised ordinary or issued share capital during the financial year.

Operating segments
There were no changes made to the reporting segments during the current financial year. 

Changes to the board
The following changes to the Board and the dates thereof are detailed in the table below: 

Name                          Position                      Change                  Date
Jacques Pierre de Wet         Non-executive director        Retired                 07 June 2018
Johan Louis Botha             Non-executive director        Retired                 07 June 2018
Andries Willem Brink          Non-executive director        Appointment             07 June 2018(#)
Octavia Matshidiso Matloa     Non-executive director        Appointment             07 June 2018

(#) Effective 01 July 2018

Annual general meeting
The annual general meeting of Master Drilling Group Limited will be held at BDO South Africa Incorporated,
Wanderers Office Park, 52 Corlett Drive, Johannesburg, on Thursday, 6 June 2019 at 09h00. 

Subsequent Events
The Board approved a dividend on 25 March 2019 of ZAR26,0 cents per ordinary share payable to
shareholders recorded in the register on 17 May 2019. The dividend declared is not reflected in the financial
statements for the year ended 31 December 2018.

3. PROPERTY, PLANT AND EQUIPMENT
                                                                Accumulated
                                                               depreciation
                                                                        and
2018                                                             impairment            Carrying
USD                                         Cost                     losses               value
Land and buildings                     4 249 534                (1 041 678)           3 207 856   
Plant and machinery                  171 927 007               (50 028 352)         121 898 655   
Assets under construction             10 590 920                    (2 396)          10 588 524   
Furniture and fittings                 1 437 999                  (711 798)             726 201   
Motor vehicles                         4 194 501                (2 519 707)           1 674 794   
IT equipment                             716 754                  (448 086)             268 668   
Finance lease: Plant and equipment     7 876 916                (1 197 278)           6 679 638   
Computer software                      2 398 727                (1 467 061)             931 666   
Patents                                  239 601                          -             239 601   
Total                                203 631 959               (57 416 356)         146 215 603   

                                                                Accumulated
                                                               depreciation
                                                                        and
2017                                                             impairment            Carrying
USD                                         Cost                     losses               value
Land and buildings                     4 267 124                  (124 152)           4 142 972   
Plant and machinery                  142 393 202               (41 269 532)         101 123 670   
Assets under construction                392 338                    (2 567)             389 771   
Furniture and fittings                 1 461 158                  (382 136)           1 079 022   
Motor vehicles                         3 434 946                (1 699 685)           1 735 261   
IT equipment                             743 646                  (444 396)             299 250   
Finance lease: Plant and equipment    13 414 269                (4 560 949)           8 853 320   
Computer software                      2 591 229                (1 378 429)           1 212 800   
Patents                                  239 601                          -             239 601   
Total                                168 937 513               (49 861 846)         119 075 667   

Borrowing cost

Included in the cost of property, plant and equipment are capitalised borrowing cost related to the acquisition of land to
the amount of 2018: USD491 544 (2017: USD64 625) calculated at a capitalisation rate of 5,9%.

3.1   Reconciliation of property, plant and equipment

                                                                      Exchange       Assets  Reclassifications
                                                                 difference on     acquired      and transfers
                                                                 consolidation      through          (to)/from
2018                                     Opening                    of foreign     business   inventory/assets                           Impairment of
USD                                      balance    Additions     subsidiaries  combination      held for sale  Disposals  Depreciation   fixed assets          Total
Land and buildings                     4 142 972      168 124        (241 592)            -          (808 928)          -      (52 720)              -      3 207 856
Plant and machinery                  101 123 670    9 180 218      (6 015 418)   22 035 018            695 473   (38 301)   (5 082 005)              -    121 898 655
Assets under construction                389 771    7 134 385         (24 816)            -          3 089 184          -             -              -     10 588 524
Furniture and fittings                 1 079 022       17 415           11 068          587            (3 866)    (1 267)     (376 758)              -        726 201
Motor vehicles                         1 735 261      224 011         (52 188)       12 519            351 736  (119 366)     (477 178)              -      1 674 795
IT equipment                             299 250      121 591         (15 393)            -                  -   (55 097)      (81 683)              -        268 668
Finance lease: Plant and equipment     8 853 320       38 267      (1 040 338)    2 667 952        (2 532 740)  (432 576)     (874 248)              -      6 679 637
Computer software                      1 212 800       36 001         (69 954)       13 870                  -       (75)     (260 976)              -        931 666
Patents                                  239 601            -                -            -                  -          -             -              -        239 601
                                     119 075 667   16 920 012      (7 448 631)   24 729 946            790 859  (646 682)   (7 205 568)              -    146 215 603


                                                                      Exchange       Assets  Reclassifications
                                                                 difference on     acquired      and transfers
                                                                 consolidation      through          (to)/from
2017                                     Opening                    of foreign     business   inventory/assets                           Impairment of
USD                                      balance    Additions     subsidiaries  combination      held for sale  Disposals  Depreciation   fixed assets          Total
Land and buildings                     3 922 999       71 550          186 510            -                  -          -      (38 087)              -      4 142 972
Plant and machinery                   76 707 978   13 364 454        4 194 304            -         11 384 687  (150 381)   (4 191 694)      (185 678)    101 123 670
Assets under construction              2 395 587    1 719 392            5 548            -        (3 730 756)          -             -              -        389 771
Furniture and fittings                 1 064 063       41 214            7 049            -              3 316    (2 089)      (34 531)              -      1 079 022
Motor vehicles                         1 803 919      358 472           25 915            -           (14 971)   (75 197)     (362 877)              -      1 735 261
IT equipment                             510 658      101 639           11 017            -          (175 477)    (9 895)     (138 692)              -        299 250
Finance lease: Plant and equipment    17 439 513      147 415          977 162            -        (8 692 643)          -   (1 018 127)              -      8 853 320
Computer software                      1 242 377       18 889           48 265            -            175 793      (180)     (272 344)              -      1 212 800
Patents                                  229 500       10 101                -            -                  -          -             -              -        239 601
                                     105 316 594   15 833 126        5 455 770            -        (1 050 051)  (237 742)   (6 056 352)      (185 678)    119 075 667

Security                                                                                                         
Moveable assets to the value of ZAR1,2 billion (USD96.9 million at closing spot rate) of the South               
African subsidiaries have been bonded to ABSA Capital as security for an interest bearing loan.                  

Impairment                                                                                                       
The Exploration department in our African segment recognised an impairment loss of USD nil
(2017: USD185 678).   


4. INTANGIBLE ASSETS                                                                    

                                                                        2018        2017
                                                                         USD         USD    
Goodwill recognised from value chain business combinations         2 612 584   2 612 584   
Goodwill recognised from raisebore business combinations             562 508     470 843   
Goodwill recognised from business combinations                     3 175 092   3 083 427   

The change in goodwill from the previous financial year arose from the acquisition of Bergteamet Raiseboring
Europe AB and Atlantis Group. Refer to note 11.2 for more details.
                                                         
                                                         Note(s)                      
5. INVESTMENT IN ASSOCIATE                                                                    

Investment in associate - Bergteamet Raiseboring Europe AB   5.1           -   6 022 115   
Investment in associate - TunnelPro S.r.L                    5.2   2 605 117           -   
Total                                                              2 605 117   6 022 115   

5.1   Investment in associate - Bergteamet Raiseboring Europe AB

      On 1 December 2015, the Group purchased a 40% equity interest in Bergteamet Raiseboring
      Europe AB ("Bergteamet") for SEK46 555 000 (USD5 333 165). 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.

      On 1 March 2018, the Group excercised its option to acquire the remainder of the 60% shares
      in Bergteamet Raiseboring Europe AB to increase its shareholding to 100%. The purchase of the
      remainder of the shares amounted to SEK69 825 000 (USD8 509 222). The Group now accounts
      for the investment as a subsidiary. Refer to Note 11.2 for more details.

      The table below summarises and also reconciles the statement of comprehensive income's financial
      information as at 31 December.

                                                  2018           2017
                                                   USD            USD  
Revenue                                              -      9 873 828   
Loss from continuing operations                      -        (4 275)   
Total comprehensive loss                             -        (4 275)   
Group's share of total comprehensive loss            -        (1 710)   
Dividends received from associate                    -        104 207   


The table summarises and also reconciles the statement of financial position's financial information
as at 31 December to the carrying amount of the Group's interest.

                                                     2018                   2017
                                                      USD                    USD 
Non-current assets                                      -              9 962 208   
Current assets                                          -              6 456 978   
Non-current liabilities                                 -              4 581 086
Current liabilities                                     -              3 614 112 
Net assets                                              -              8 223 988   
Group's share of net assets                             -              3 289 595   
Goodwill                                                -              2 734 230   
Share of loss from equity accounted investment          -                (1 710)   
Investment in associate                                 -              6 022 115   

5.2 Investment in associate - TunnelPro S.r.L

On 25 January 2018, the Group entered into a shareholder agreement with Ghella SpA to establish
a new associate named TunnelPro Srl in Italy. The Group owns 49% of the shareholder rights in
TunnelPro Srl. The purchase consideration relating to the Group's share amount to EUR2 107 000
(USD2 412 963). The investment will provide the Group with a strategic footprint in the European
as well as Tunnelboring market. The effective date of the agreement is 23 October 2018.
Consideration payable at year end amounts to EUR784 000 (USD897 837).

The Group does not control TunnelPro Srl and have elected the equity accounting method for the
investment in associate.

The table below summarises and also reconciles the statement of comprehensive income's financial
information as at 31 December.

                                                        2018   2017   
                                                         USD    USD   
Revenue                                              288 214      -
Loss from continuing operations                     (54 997)      -
Total comprehensive loss                            (54 997)      -   
Group's share of total comprehensive loss           (26 949)      -   
Dividends received from associate                          -      -   

The table summarises and also reconciles the statement of financial position's financial information
as at 31 December to the carrying amount of the Group's interest.

                                                                        2018         2017
                                                                         USD          USD 
Non-current assets                                                   232 397            -   
Current assets                                                     8 604 168            -   
Non-current liabilities                                                    -            -   
Current liabilities                                                6 419 176            -   
Net assets                                                         2 417 389            -   
Group's share of net assets                                        1 184 521            -   
Goodwill                                                           1 447 545            -   
Share of loss from equity accounted investment                      (26 949)            -   
Investment in associate                                            2 605 117            -   

6. TRADE AND OTHER RECEIVABLES                                                                 
                                                                        2018         2017
                                                                         USD          USD  
Trade receivables - Normal                                        32 511 631   27 333 869   
Trade receivables - Retention                                      5 449 738    5 021 356   
Loans to employees                                                   119 777       40 636   
Pre-payments                                                         693 501    1 054 572   
Deposits                                                             827 369       82 219   
Indirect taxes                                                     3 304 990    1 691 851   
Sundry                                                             5 272 841    2 967 234   
                                                                  48 179 847   38 191 737
                                                                     
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                                 18 590 455   18 330 132   
1 month past due                                                   9 269 296    6 029 069   
2 months past due                                                  3 978 446    3 084 459   
3 months and over past due                                         7 249 989    5 413 060   
Allowance for doubtful debts                                     (1 126 817)    (501 495)   
Normal and retention trade receivables                            37 961 369   32 355 225   

Trade receivables of South African subsidiaries have been ceded to ABSA Capital as security for an interest
bearing loan. Retention receivables are collectable within a period of 12 months.

                                                                       2018         2017
                                                                        USD          USD 
The movement in allowance for doubtful debts is presented below                            
Balance 1 January                                                   501 495      136 119   
Adjustment from the adoption of IFRS 9                               80 221            -   
Exchange differences on translation of foreign operations          (57 625)        6 698   
Amounts written off                                                       -            -   
Allowance for doubtful debts provided for                           602 726      358 678   
                                                                  1 126 817      501 495   

The carrying amount in USD of trade and other receivables are denominated in the
following currencies:

                                                                       2018         2017
                                                                        USD          USD
United States Dollar (USD)                                       20 419 586   18 223 187
South African Rands (ZAR)                                         8 703 918    6 162 910
Brazilian Reals (BRL)                                             3 091 482    2 943 824
Mexican Peso (MXN)                                                   91 500      594 427
Chilean Peso (CLP)                                                7 705 700    7 558 388
Peruvian Nuevo Sol (PEN)                                            975 082      630 645
CFA Franc BCEAO (XOF)                                                 3 339      712 913
Chinese Yuan Renminbi (CNY)                                         224 476      339 833
Guatemalan Quetzal (GTQ)                                              6 906        3 175
Zambian Kwacha (ZMW)                                              1 063 825      351 527
Colombian Peso (COP)                                                102 019      594 787
Euro (EUR)                                                          512 078            -
Swedish Krona (SEK)                                               1 070 442            -
Australian Dollar (AUD)                                              41 828       32 448
Canadian Dollar (CAD)                                               289 801            -
Indian Rupee (INR)                                                3 877 865       43 673
                                                                 48 179 847   38 191 737

                                           Note(s)                
7. NON-CURRENT ASSETS HELD FOR SALE

Non-current assets held for sale - Peru        8.1                        -    1 255 128
Non-current assets held for sale - Chile       8.2                  808 928            -
Total                                                               808 928    1 255 128

7.1   Non-current assets held for sale - Peru

      In September 2016, management committed to a plan to sell the land and building owned in Peru.
      Master Drilling Peru uses the land and building to house its administrative and workshop facilities.
      Management's plan is to develop another piece of land owned in Peru into offices and workshop
      facilities. The sale of the land and building realised during May 2018 and proceeds to the value of
      USD2.08 million was received from an external buyer.

No impairment losses were recognised in profit and loss as the fair value less costs to sell exceeds
the carrying amount.

As at 31 December, the assets held for sale in Peru were comprised of the following:

                                               2018        2017
                                                USD         USD
Land and buildings                                -   1 255 128
Assets held for sale                              -   1 255 128

7.2 Non-current assets held for sale - Chile

In October 2018, management committed to a plan to sell the property owned in Chile. Efforts to
sell the property have started and a sale is expected to be finalised towards the end first quarter
of 2019.

Management's intention to sell is driven by the need for a bigger facility to cater for the expansion
of the Chilean business in the last couple of years which resulted in more workshop space to
successfully service and maintain the increased plant and machinery.

No impairment losses were recognised in profit and loss as the fair value less costs to sell exceeds
the carrying amount.

As at 31 December, the assets held for sale were comprised of the following:

                                    2018    2017
                                     USD     USD
Land and buildings               808 928       -
Assets held for sale             808 928       -

8. TRADE AND OTHER PAYABLES

                                                      2018           2017
                                                       USD            USD
Trade payables                                   7 423 846      7 956 216
Income received in advance                         822 402              -
Indirect taxes                                   3 914 138      6 654 506
Leave pay accruals                               1 983 405      2 070 242
Onerous contracts                                1 714 836              -
Business combination consideration payable       1 420 684              -
Investment in associate consideration payable      897 837              -
Employee related                                 2 971 288              -
Other accruals                                   7 541 584      3 405 783
                                                28 690 020      20 086 747

9. TAXATION

                                                                        2018            2017
                                                                         USD             USD
Current                                                                                     
Normal taxation                                                    5 524 399       6 040 830
Current taxation                                                   6 994 758       5 231 760
(Over)/Under provision                                           (1 470 359)         809 070
Deferred taxation: Temporary differences                         (1 496 930)       (906 730)
                                                                   4 027 469       5 134 100
Reconciliation of the tax expense                                                            
Accounting profit                                                 21 499 267      22 584 166
Tax at the applicable tax rate                                     6 789 872       5 502 316
(Over)/Under provision                                           (1 470 359)         809 070
Exempt income                                                    (3 439 294)     (4 371 627)
Non-deductible expenses                                            2 081 109       2 724 372
Deferred taxation: Change in tax rate                                158 810          78 771
Assessed loss not recognised                                         420 765         741 163
Assessed loss previously not recognised                            (513 434)       (349 965)
Taxation per statement of profit or loss and other
comprehensive income                                               4 027 469       5 134 100

The total unrecognised assessed loss at 31 December 2018 is
USD3 265 658 (2017: USD2 544 768 ).                                          
                
Normal taxation charge/(refund) per entity within the Group                                 
DCP Properties                                                             -          15 129
Master Drilling Exploration (Pty) Ltd                              1 055 555         409 833
Master Drilling Chile SA                                             146 827         275 577
Master Drilling Peru SAC                                             701 891       1 394 792
Master Drilling do Brasil Ltda                                       491 941         479 007
Master Drilling Mexico SA                                            174 013               -
Master Drilling Malta Limited                                      2 648 814       1 554 235
Master Drilling Guatemala SA                                           3 492               -
Master Drilling Training Services (Pty) Ltd                            1 875               -
Master Drilling DRC sprl                                                   -         389 921
Master Drilling Colombia SAS                                          76 273          80 900
Master Drilling Zambia Limited                                     (208 044)       1 232 820
Master Drilling International Ltd                                  (741 531)           2 988
Master Drilling Mali SARL                                             45 464         163 884
Master Drilling Changzhou Co Ltd                                      64 934               -
Bergteamet Latin America SpA                                         347 153               -
Bergteamet Raiseboring Europe AB                                     221 945               -
Master Drilling Madencilik Ve Ticaret Limited Sirketi                 65 212               -
Master Drilling India                                                299 173               -
Drilling Admin Services SAC                                           94 831               -
Drilling Technical Services                                          243 117           2 567
Martwick Ltd                                                            (18)              18
Master Drilling (Pty) Ltd                                          (169 360)               -
MD Drilling Services Tanzania SARL                                  (39 158)          39 159
                                                                   5 524 399       6 040 830

The impact on taxation as a result of potential future dividends is impractical to calculate as at 31 December.

10. EARNINGS PER SHARE                                                                                                                                       
                                                                                                                              
                                                                                      2018          2017
                                                                                       USD           USD  
Reconciliation between earnings and headline earnings                                                      
Basic earnings for the year                                                     17 471 798    17 450 066   
Deduct:                                                                                                    
Non-controlling interest                                                         (697 464)     (247 143)   
Attributable to owners of the parent                                            16 774 334    17 202 923   
Loss/(Gain) on disposal of fixed assets                                          (949 084)        67 183   
Impairment of plant and equipment                                                        -       185 678   
Tax effect on loss on disposal of fixed assets and impairments                     296 687      (70 801)   
Headline earnings for the year                                                  16 121 937    17 384 983   
Earnings per share (cents)                                                            11.1          11.5   
Diluted earnings per share (cents)                                                    11.0          11.4   
Headline earnings per share (cents)                                                   10.7          11.6   
Diluted headline earnings per share (cents)                                           10.6          11.5   
Net asset value per share (cents)                                                    109.0         107.6   
Tangible net asset value per share (cents)                                           106.9         105.6   
Dividends per share (cents)                                                           26.0          30.0   
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                                                             150 592 777   149 894 366   
Effect of dilutive potential ordinary shares - employee share options            1 530 000     1 603 877   
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                                            152 122 777   151 498 243   

11. CASH GENERATED FROM OPERATIONS

11.1   Cash generated from operations                                                                                                   
                                                                               2018             2017
                                                                                USD              USD
       Profit before taxation                                            21 499 267       22 584 166   
       Adjustments for:                                                                                
       Depreciation and amortisation                                      7 205 568        6 056 352   
       Impairment                                                                 -          845 891   
       Share of loss from equity accounted investment                        26 948            1 710   
       Translation effect of foreign operations                           (519 249)        2 203 374
       Share-based payment - equity settled                                 336 476          290 858   
       (Gain)/Loss on disposal of fixed assets                            (949 084)           67 183   
       Dividends received                                                 (444 540)        (321 583)   
       Interest received                                                  (291 629)        (188 742)   
       Finance costs                                                      2 858 491        2 850 878   
       Changes in working capital:                                                                     
       Inventories                                                        1 715 417          542 655   
       Trade and other receivables                                      (6 754 239)          822 927   
       Trade and other payables                                           1 118 506      (2 911 680)   
                                                                         25 801 932       32 843 989   

11.2   Net cash flow on business combinations                 
                                                          Note(s)                                         
       Acquisition of Bergteamet Raiseboring Europe AB     12.2.1         9 335 904                -   
       Acquisition of Atlantis Group                       12.2.2         5 353 231                -   
       Total                                                             14 689 135                -   


11.2.1   Acquisition of Bergteamet Raiseboring Europe AB

         On 1 March 2018, the Group excercised its option to acquire the remainder of the 60% shares
         in Bergteamet Raiseboring Europe AB to increase its shareholding to 100%. The purchase of the
         remainder of the shares amounted to SEK69 825 000 (USD8 509 222).

         The Group previously accounted for Bergteamet Raiseboring Europe AB as an investment in
         associate with equity accounting when only 40% of shareholding was held.

         The goodwill amount represents a provisional calculation on the acquisition. A detailed purchase
         price allocation is being performed and the directors currently anticipate that there will be a fair
         value revaluation of drilling equipment.

                                                                                        2018       2017
                                                                                         USD        USD 
         The fair value of assets and liabilities assumed at date of
         acquisition was:                                               
         Assets                                                                                           
         Property, plant and equipment                                            17 099 264          -   
         Current tax receivable                                                      165 517          -   
         Non-current interest bearing loans and borrowings                       (3 447 179)          -   
         Deferred taxation liability                                               (407 032)          -   
         Net working capital                                                                          -   
         Trade and other receivables                                               3 233 870          -   
         Inventory                                                                 3 608 677          -   
         Trade and other payables                                                (5 005 518)          -   
         Cash and other equivalents                                                (826 682)          -   
         Total assets and liabilities acquired                                    14 420 917          -   
         Group's share of total assets and liabilities acquired                   14 420 917          -   
         Goodwill at acquisition                                                      92 489          -   
         Total consideration                                                      14 513 406          -   
         Cash and cash equivalents on hand at acquisition                            826 682          -   
         Fair value of 40% interest held prior to acquisition                    (6 004 184)          -   
         Net cash outflow on acquisition of subsidiaries                           9 335 904          -   
         Turnover since acquisition date included in the consolidated
         results for the year                                                     10 634 299          -   
         Profit after tax since acquisition date included in the
         consolidated results for the year                                         1 360 458          -   
         Group turnover since acquisition date included in the
         consolidated results for the year                                       111 663 770          -   
         Group profit after tax since acquisition date included in the
         consolidated results for the year                                        16 390 524          -   


11.2.2   Acquisition of Atlantis Group

         On 3 September 2018, the Group acquired all the business assets and liabilities of the Atlantis
         Group. The purchase price for the entire Atlantis Group amounted to ZAR99 500 000
         (USD6 773 914)

         The Atlantis Group's operations are located in South Africa, Zambia, India and Brazil and all of the
         business assets and liabilities acquired have been accounted for in the respective segments the
         assets and liabilities relate to. Refer to Note 13.2 for more details on the segments.

         The goodwill amount represents a provisional calculation on the acquisition. A detailed purchase
         price allocation is being performed and the directors currently anticipate that there will be a fair
         value revaluation of drilling equipment.

         The fair value of assets and liabilities assumed at date of acquisition was:

                                                                                             2018       2017
                                                                                              USD        USD   
Assets                                                                                                         
Property, plant and equipment                                                           7 808 635          -   
Net working capital                                                                                            
Trade and other payables                                                              (1 058 548)          -   
Total assets and liabilities acquired                                                   6 750 087          -   
Group's share of total assets and liabilities acquired                                  6 750 087          -   
Goodwill at acquisition                                                                    23 828          -   
Total consideration                                                                     6 773 915          -   
Consideration still payable                                                           (1 420 684)          -   
Net cash outflow on acquisition of subsidiaries                                         5 353 231          -   
Turnover since acquisition date included in the consolidated                                                   
results for the year                                                                    2 550 769          -   
Profit after tax since acquisition date included in the
consolidated results for the year                                                         530 666          -   
Group turnover since acquisition date included in the
consolidated results for the year                                                      35 471 813          -   
Group profit after tax since acquisition date included in the                                                  
consolidated results for the year                                                       5 221 277          -   


12. CAPITAL COMMITMENTS

                                                                          2018        2017
                                                                           USD         USD
Capital expenditure authorised by the directors and contracted for
within 12 months. Capital expenditure will be funded through cash
generated from operations.                                           1 189 801   4 579 527


13. SEGMENT REPORTING
13.1   Mining activity

The following table shows the distribution of the Group's combined sales by mining activity,
regardless of where the goods were produced:

                                                   2018          2017
                                                    USD           USD  
Sales revenue by stage of mining activity                               
Exploration                                   3 762 574       973 412   
Capital                                      21 849 982     4 339 904   
Production                                  113 109 208   116 110 793   
                                            138 721 765   121 424 109   

Gross profit by stage of mining activity                                
Exploration                                   1 561 718       383 107   
Capital                                       7 943 321       830 043   
Production                                   34 061 497    43 416 688   
                                             43 566 536    44 629 838   


The chief operating decision maker of the Group is the chief executive officer. Information reported
to the group's chief operating decision maker for purposes of resource allocation and assessment
of segment performance is focused on geographical areas. Each reportable segment derives
its revenues from the sale of goods related services. The accounting policies of the reportable
segments are the same as the group's accounting policies.


13.2 Geographical segments

Although the Group's major operating divisions are managed on a geographical area basis, they
operate in four principal geographical areas of the world.

                                                                          2018              2017
                                                                           USD               USD 
Sales revenue by geographical market                                                               
Africa                                                              47 011 105        54 737 735   
Central and North America                                           17 437 769        14 619 849   
Other countries                                                     16 195 137                 -   
South America                                                       58 077 754        52 066 525   
                                                                   138 721 765       121 424 109   

                                                                          2018              2017
                                                                           USD               USD
Gross profit by geographical market                                                             
Africa                                                              16 641 344        24 880 016
Central and North America                                            4 739 601         4 547 869
Other countries                                                      5 921 443                 -
South America                                                       16 264 148        15 201 953
                                                                    43 566 536        44 629 838

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 segments, accounts
for 6% (2017: African region 14%) of the Group's revenue.
                                                                          2018              2017
                                                                           USD               USD
Depreciation by geographical market                                                             
Africa                                                               3 374 462         2 813 563
Central and North America                                              706 619           465 299
Other Countries                                                      1 212 791            42 009
South America                                                        1 911 696         2 735 481
                                                                     7 205 568         6 056 352

                                                                          2018              2017
                                                                           USD               USD
Investment revenue by geographical market                                                       
Africa                                                                 301 152           261 559
Central and North America                                                4 038               749
Other Countries                                                        248 373           168 101
South America                                                          182 605            79 916
                                                                       736 169           510 325

                                                                          2018              2017
                                                                           USD               USD
Finance cost by geographical market                                                              
Africa                                                               1 250 988         1 834 711
Central and North America                                              575 583           209 404
Other Countries                                                        370 205           204 635
South America                                                          661 715           602 128
                                                                     2 858 491         2 850 878

                                                                          2018              2017
                                                                           USD               USD
Taxation by geographical market                                                             
Africa                                                                 868 065         1 334 731
Central and North America                                               98 665           312 205
Other Countries                                                      1 564 038         2 203 622
South America                                                        1 496 701         1 283 542
                                                                     4 027 469         5 134 100


                                                                          2018              2017
                                                                           USD               USD
Total assets by geographical market                                                             
Africa *                                                            78 419 639        95 020 536
Central and North America                                           43 961 799        24 975 860
Other Countries                                                     50 543 357        25 208 838
South America **                                                    93 457 169        91 740 494
Total assets as per statement of financial position            266 381 964           236 945 728
Total liabilities by geographical market                                                       
Africa                                                              34 698 362        34 438 606
Central and North America                                           23 690 201         8 457 641
Other Countries                                                     16 561 972         6 535 299
South America                                                       27 386 452        26 189 353
Total liabilities as per statement of financial position           102 336 987        75 620 899

* Assets in Africa includes the investment in associate. See Note 5
** Assets in South America includes the non-current asset held for sale. See Note 7

CORPORATE INFORMATION 

REGISTERED AND CORPORATE OFFICE
4 Bosman Street
PO Box 902
Fochville, 2515
South Africa

DIRECTORS
Executive
Daniel (Danie) Coenraad Pretorius     Chief executive officer and founder
Andre 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 (Hennie) Roux van der Merwe   Chairman and independent non-executive
Akhter Alli Deshmukh                  Independent non-executive
Andries Willem Brink                  Independent non-executive
Octavia Matshidiso Matloa             Independent non-executive
Shane Trevor Ferguson                 Non-executive
Fred (Eddie) George Dixon             Alternate director
#Resident in Peru                   

COMPANY SECRETARY
Andrew Colin Beaven
6 Dwars Street
Krugersdorp
1739
South Africa
PO Box 158, Krugersdorp, 1740
South Africa

INDEPENDENT AUDITORS
BDO South Africa Incorporated
South African member of the BDO Group
52 Corlett Drive
Illovo
2196
South Africa

SHARE TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
(Registration number: 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)
South Africa

INVESTOR RELATIONS CONTACTS
Monica Ambrosi
Instinctif Partners
Telephone: +27 11 050 7506
Mobile: +27 82 659 9226
E-mail: MasterDrilling@instinctif.com

GENERAL E-MAIL QUERIES
info@masterdrilling.com

MASTER DRILLING WEBSITE
www.masterdrilling.com

COMPANY SECRETARIAL E-MAIL
Companysecretary@masterdrilling.com

JSE SPONSOR
Investec Bank Limited
(Registration number: 1969/004763/06)
100 Grayston Drive, Sandown
Sandton, 2196
South Africa 

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

26 March 2019.


Date: 26/03/2019 07:05:00 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.

Share This Story