Master Drilling launches new technology as it expands offshore

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Master Drilling launches new technology as it expands offshore

Published Date: 2018-03-22 | Source: Stephen Gunnion | Author: Stephen Gunnion

Master Drilling launches new technology as it expands offshore

The drilling services specialist says its businesses should benefit from an uptick in the global economy and commodity cycle

Master Drilling is positioning itself for the uptick in the global economy and commodity cycle, which it expects to have a positive impact on its business. It says its pipeline remains strong, boosted by its entry into India and Australia which further diversifies its geographical exposure. Its recent acquisition of Bergteamet Raiseboring Europe also provides a launchpad for further expansion in Europe.

"There are many synergies between the two companies and this business complements our focus on providing innovative tailored technology solutions to our clients," CEO Danie Pretorius says in the company's 2017 results announcement."

The past year has been more challenging though, due to various political changes across the globe and a tough local macroeconomic environment. Still, it says it delivered stable operational results with its continued focus on working capital bearing fruit in the form of satisfactory cash generation.

Revenue rose 2.8% to $121.4 million in the year ended December and operating profit decreased marginally to $24.8 million. It says this was positive given that one of its machine categories, the XX-large machine, was utilised only 40%. Net cash generation increased to $32.8 million, while working capital remained flat year-on-year. While debt increased by 42% to $44 million, its gearing ratio including cash improved to 2.4% from 6.4% after it drew down $20 million from Absa. Headline earnings per share in US dollars declined 19% to 11.6c and were 27% lower in rand at 154.4c. It's paying an annual dividend of 26c.

Master Drilling says the upswing in the commodity cycle has had a positive impact on its order book with committed orders of $124.7 million and a pipeline of $228.1 million. It expects this to have a positive impact on revenue during the next reporting period.

It says it has successfully engaged with the Industrial Development Corporation (IDC) for the partial funding of its blind shaft boring system development and roll-out in 2019 has been successfully concluded. It's also exploring further opportunities with the IDC to develop home-grown technologies that support cheaper and simpler drilling systems.

Last month, the group launched its Mobile Tunnel Borer, which it says allows continuous mining and requires no blasting.

"Because it is as advantageous at the capital stage of mining projects, with quicker deployment and access to the ore body, as it is at the production stage through substantial productivity increase when opening reserves or increasing a mine's underground primary and secondary infrastructure, we believe this will open the doors to more opportunities in future," Pretorius said.

The company's shares closed 0.1% higher at R13.50 on Tuesday.



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