Master Drilling benefits from diversification

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Master Drilling benefits from diversification

Published Date: 2020-03-25 | Source: Stephen Gunnion | Author: Stephen Gunnion

Master Drilling benefits from diversification

The drilling services specialist has maintained a stable order book as it develops new technology and makes complementary acquisitions.

Master Drilling says 2019 presented a challenging environment for the group due to volatile commodity, currency and equity markets. As one of the largest rock boring and drilling service providers globally it's directly impacted. However, it said it managed to maintain a stable order book of $142 million last year and a healthy pipeline of work worth $297 million as it continued to diversify its operations.

Its recent acquisition of exploration and drilling services group Geoserve Exploration Drilling has now received the Competition Commission's approval. It said Geoserve had a well-established footprint and pipeline that would reinforce its capacity and income profile through increased exploration drilling, reverse circulation drilling, geotechnical investigations and grade control drilling services, which are all key to the broader mining sector.

It said partnerships set up to help it in its quest for expansion were also yielding results. The 2018 acquisition of Scandinavian raiseboring business Bergteamet acquisition had given it access to the region and the rest of Europe.

In the meantime, it has continued developing and testing its new machines. It initiated its Mobile Tunnel Borer pilot project in SA last year and has received enquiries worldwide for the new technology which is used in the horizontal and near horizontal development of mines. It also entered the first phase of commissioning its new shaft boring system for mines and said the new systems would yield benefits for the business in coming years.

Revenue rose 6.9% to $148 million in the year to end-December and operating profit decreased by 5.1% to $22.4 million as costs rose in line with the increase in turnover from its new business operations. Profits also declined as it invested in more management to support future growth. Earnings per share (EPS) fell 9% in dollar terms to 10.1c but were down just 0.8% in rand at 145.9c. Similarly, dollar headline EPS declined 3.7% to 10.3c but rand headline EPS rose 4.9% to 148.8c. It's not paying a dividend so it can protect its cash resources due to the current global volatility and uncertain economic conditions.

Master Drilling said the global spread of Covid-19 was testing operations in many sectors, including mining. It said it was in close communication with all its clients to help them take the appropriate measures to mitigate the spread of the virus on all sites.





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