Major Drilling Announces Second Quarter Results
MONCTON, NB, Nov. 26, 2012 /CNW/ - Major Drilling Group International Inc. (TSX: MDI) today reported results for its second quarter of fiscal year 2013, ended October 31, 2012.
In millions of Canadian dollars Q2-13 Q2-12 YTD-13 YTD-12 (except earnings per share) Revenue $199.6 $213.9 $437.2 $378.0 Gross profit 66.7 74.1 148.0 125.6 As percentage of sales 33.4% 34.6% 33.8% 33.2% EBITDA((1)) 47.9 54.8 107.9 90.4 As percentage of revenue 24.0% 25.6% 24.7% 23.9% Net earnings 22.3 31.6 54.2 49.5 Earnings per share 0.28 0.43 0.69 0.68 (1) Earnings before interest, taxes, depreciation and amortization (see "non-GAAP financial measures") -- Net cash position (net of debt) has improved by $43 million and stands at $30 million. -- Major Drilling posted quarterly revenue of $199.6 million, down 7% from the $213.9 million recorded for the same quarter last year. -- Gross margin percentage for the quarter was 33.4%, compared to 34.6% for the corresponding period last year. -- EBITDA remained strong at 24% of revenue. -- Net earnings were $22.3 million or $0.28 per share ($0.28 per share diluted) for the quarter, compared to net earnings of $31.6 million or $0.43 per share ($0.42 per share diluted) for the prior year quarter. "As expected during the quarter, two general factors contributed to a decline in revenue. Many mining companies did not extend their activities beyond their original budgets. Last year, most senior companies continued their drilling efforts well into November and December. While revenue from senior and intermediate companies actually increased year-over-year by some $20 million, we saw a decline in our activities with junior mining companies. In fact, 78% of our revenue during the quarter came from senior and intermediate customers. Many of these projects are slated to continue and are expected to create a solid base for our operations in calendar 2013," said Francis McGuire, President and CEO of Major Drilling Group International Inc. "During the quarter, four branches faced specific challenges. Australia had many projects canceled due to high costs, the high Australian dollar and new mining taxes. Mongolia and Argentina were affected by political uncertainty, although both started to recover somewhat late in the quarter. Finally, Mexico had many projects delayed or canceled as this region has a larger proportion of junior customers." "It is important to note that we are now in our third quarter, seasonally the weakest quarter of our fiscal year, as mining and exploration companies shut down, often for extended periods over the holiday season. Holiday breaks are expected to be longer this year and November will not have the benefit of the program extensions that we had last year. This will lead to a drop in activity as compared to Q3 last year. Weather can also play an important role in affecting operations. As we have experienced in some past years, we expect to generate a seasonal loss in the upcoming third quarter before recovering to Q2 activity levels in the fourth quarter." "Looking forward, if customers go ahead with their stated plans, we see consistent levels of activity coming in calendar 2013 from both the senior and intermediate mining houses as well as junior companies with projects in development. The bidding activity in most regions has been very similar to last year with the exceptions of Australia and Argentina. We do note that the requested start date in many of these bids is slightly later than last year. Based on current customer plans, we expect demand for specialized drilling to continue in the year ahead. Specialized drilling continues to form the cornerstone of our corporate strategy. Although there has been a recent increase in junior financing activity, we have not yet seen any significant increase in their activity levels. With this in mind, we have been able to reduce our general and administrative costs by 9% over the past three months in part related to the integration of the Bradley operations," said Mr. McGuire. "In terms of our financial position, we have one of the most solid balance sheets in our industry and are now debt free net of cash. Our total net cash position, net of debt, was at $30 million at the end of the quarter, an improvement of $43 million from the previous quarter. This situation allows us to respond to well-priced opportunities as they arise." "Capital expenditures for the quarter were $17.8 million as we purchased 21 rigs while retiring 8 rigs through our modernization program. Sixteen of these rigs are specialized as we continue to foresee the need to expand our specialized fleet. We also see opportunities to expand our underground operation as more mines progress through the next stage of their mine life. In fact, 60% of our rigs are now less than five years old in an industry where rigs tend to last 20 years. Also, subsequent to quarter-end, we purchased the Canadian assets of Landdrill International Limited. Through this, we acquired 15 compatible rigs that are less than three years old, as well as ancillary equipment and inventory for a total purchase price of approximately $4.0 million. This will help reduce our capital expenditures for fiscal 2014 by some $10 million." Second quarter ended October 31, 2012 Total revenue for the quarter was $199.6 million, down 7% from the $213.9 million recorded in the same quarter last year. Reduction in revenue came mainly from four branches: Australia where projects have been canceled due to high costs and new mining taxes, Mongolia and Argentina, which were affected by political uncertainty and Mexico, which has a higher proportion of junior customers. Revenue for the quarter from Canada-U.S. drilling operations increased by 12% to $94.0 million compared to the same period last year. In Canada, operations from the Bradley acquisition accounted for the increase as our U.S. operations were relatively flat. South and Central American revenue was down 25% to $50.9 million for the quarter, compared to the prior year quarter. Almost all of this decrease is attributable to Mexico, which has a larger proportion of junior customers struggling with financing and Argentina, which is affected by political uncertainty. Australian, Asian and African operations reported revenue of $54.8 million, down 11% from the same period last year. The decrease came mainly from Australia where projects have been canceled due to high costs and new mining taxes and Mongolia, which is affected by political uncertainty. These decreases offset new or increased operations in the Philippines (Bradley), Burkina Faso and Mozambique. The overall gross margin percentage for the quarter was 33.4% compared to 34.6% for the same period last year. A higher proportion of demobilizations due to contract shutdowns was the main contributor to this slight margin decrease. General and administrative costs were $15.8 million for the quarter compared to $13.1 million in the same period last year. The increase was mainly due to the acquisition of Bradley and the addition of new operations in Burkina Faso. As compared to the first quarter just passed, general and administrative costs have decreased by 9% over the past three months. Other expenses for the quarter were $3.3 million, down $2.7 million from the $6.0 million reported in the prior year quarter, due primarily to lower incentive compensation expenses given the Company's decreased profitability compared to Q2 last year. The provision for income tax for the quarter was $11.4 million compared to $12.9 million for the prior year period. The tax expense for the quarter was impacted by differences in tax rates between regions. Non-GAAP Financial Measures In this news release, the Company uses the following non-GAAP financial measures: EBITDA and EBITDA as a percentage of revenue. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance of the Company. These measures do not have a standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with GAAP. Forward-Looking Statements Some of the statements contained in this press release may be forward-looking statements, such as, but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals industry and the demand for the Company's services, the Canadian and international economic environments, the Company's ability to attract and retain customers and to manage its assets and operating costs, sources of funding for its clients, particularly for junior mining companies, competitive pressures, currency movements, which can affect the Company's revenue in Canadian dollars, the geographic distribution of the Company's operations, the impact of operational changes, changes in jurisdictions in which the Company operates (including changes in regulation), failure by counterparties to fulfill contractual obligations, and other factors as may be set forth, as well as objectives or goals, and including words to the effect that the Company or management expects a stated condition to exist or occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements by reason of factors such as, but not limited to, the factors set out in the discussion on pages 16 to 18 of the 2012 Annual Report entitled "General Risks and Uncertainties", and such other documents as available on SEDAR at www.sedar.com. All such factors should be considered carefully when making decisions with respect to the Company. The Company does not undertake to update any forward-looking statements, including those statements that are incorporated by reference herein, whether written or oral, that may be made from time to time by or on its behalf, except in accordance with applicable securities laws. Based in Moncton, New Brunswick, Major Drilling Group International Inc. is one of the world's largest metals and minerals contract drilling service companies. To support its customers' mining operations, mineral exploration and environmental activities, Major Drilling maintains operations on every continent. Financial statements are attached. Major Drilling will provide a simultaneous webcast of its quarterly conference call on Tuesday, November 27, 2012 at 9:00 AM (EST). To access the webcast please go to the investors/webcast section of Major Drilling's website at www.majordrilling.com and click the attached link, or go directly to the CNW Group website at www.newswire.ca for directions. Participants will require Windows MediaPlayer, which can be downloaded prior to accessing the call. Please note that this is listen only mode. Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Operations (in thousands of Canadian dollars, except per share information) (unaudited) Three months ended Six months ended October 31 October 31 2012 2011 2012 2011 TOTAL REVENUE $ 199,637 $ 213,854 $ 437,202 $ 378,006 DIRECT COSTS 132,938 139,799 289,225 252,452 GROSS PROFIT 66,699 74,055 147,977 125,554 OPERATING EXPENSES General and 15,763 13,116 33,062 25,434 administrative Other expenses 3,323 6,045 8,593 8,648 (Gain) loss on disposal of property, (141) 81 (133) 681 plant and equipment Foreign exchange (112) 44 (1,481) 365 (gain) loss Finance costs 728 964 1,466 1,786 Depreciation of property, plant and 12,416 9,072 24,538 17,467 equipment Amortization of 955 294 2,020 479 intangible assets 32,932 29,616 68,065 54,860 EARNINGS BEFORE INCOME 33,767 44,439 79,912 70,694 TAX INCOME TAX - PROVISION (note 7) Current 11,394 11,303 24,903 17,287 Deferred 24 1,576 785 3,955 11,418 12,879 25,688 21,242 NET EARNINGS $ 22,349 $ 31,560 $ 54,224 $ 49,452 EARNINGS PER SHARE (note 8) Basic $ 0.28 $ 0.43 $ 0.69 $ 0.68 Diluted $ 0.28 $ 0.42 $ 0.68 $ 0.67 Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Comprehensive Earnings (in thousands of Canadian dollars) (unaudited) Three months ended Six months ended October 31 October 31 2012 2011 2012 2011 NET EARNINGS $ 22,349 $ 31,560 $ 54,224 $ 49,452 OTHER COMPREHENSIVE EARNINGS Unrealized (losses) gains on foreign currency (1,726) 5,765 5,925 7,574 translations (net of tax) Unrealized loss on (9) - (153) - interest swap (net of tax) COMPREHENSIVE EARNINGS $ 20,614 $ 37,325 $ 59,996 $ 57,026 Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Changes in Equity For the six months ended October 31, 2011 and 2012 (in thousands of Canadian dollars) (unaudited) Share-based Retained Foreign currency Share Reserves payments earnings translation Total capital reserve reserve BALANCE AS AT $ 150,642 $ - $ 10,280 $ 170,425 $ (3,662) $ 327,685 MAY 1, 2011 Exercise of 743 (78) - - 665 stock options Share issue (net of issue 76,439 - - - - 76,439 costs) Share-based payments - 1,121 - - 1,121 reserve Dividends - - - (6,242) - (6,242) 227,824 - 11,323 164,183 (3,662) 399,668 Comprehensive earnings: Net earnings - - - 49,452 - 49,452 Unrealized gains on foreign - - - - 7,574 7,574 currency translations Total comprehensive - - - 49,452 7,574 57,026 earnings BALANCE AS AT OCTOBER 31, $ 227,824 $ - $ 11,323 $ 213,635 $ 3,912 $ 456,694 2011 BALANCE AS AT $ 230,763 $ 121 $ 11,797 $ $ (1,791) $ 487,699 MAY 1, 2012 246,809 Share-based payments (93) 1,572 - - 1,479 reserve Dividends - - - (7,915) - (7,915) 230,670 121 13,369 238,894 (1,791) 481,263 Comprehensive earnings: Net earnings - - - 54,224 - 54,224 Unrealized loss on - (153) - - - (153) interest swap Unrealized gains on foreign - - - - 5,925 5,925 currency translations Total comprehensive - (153) - 54,224 5,925 59,996 earnings BALANCE AS AT OCTOBER 31, $ 230,670 $ (32) $ 13,369 $ 293,118 $ 4,134 $ 541,259 2012 Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Cash Flows (in thousands of Canadian dollars) (unaudited) Three months ended Six months ended October 31 October 31 2012 2011 2012 2011 OPERATING ACTIVITIES Earnings before $ 33,767 $ 44,439 $ 79,912 $ 70,694 income tax Operating items not involving cash Depreciation and 13,371 9,366 26,558 17,946 amortization (Gain) loss on disposal of property, (141) 81 (133) 681 plant and equipment Share-based payments 712 567 1,479 1,121 reserve Finance costs recognized in earnings 728 964 1,466 1,786 before income tax 48,437 55,417 109,282 92,228 Changes in non-cash operating 19,053 (13,468) (642) (22,301) working capital items Finance costs (729) (964) (1,464) (1,786) paid Income taxes (7,554) (6,312) (15,443) (11,325) paid Cash flow from operating 59,207 34,673 91,733 56,816 activities FINANCING ACTIVITIES Repayment of (4,071) (2,039) (5,635) (4,229) long-term debt Proceeds from - 15,000 - 25,000 long-term debt Issuance of - 77,104 - 77,104 common shares Dividends paid - - (7,123) (5,283) Cash flow (used in) from (4,071) 90,065 (12,758) 92,592 financing activities INVESTING ACTIVITIES Business acquisitions - (66,519) (813) (66,519) (net of cash acquired) Acquisition of property, plant (16,111) (16,083) (39,512) (37,493) and equipment (note 6) Proceeds from disposal of 998 863 1,266 1,547 property, plant and equipment Cash flow used in investing (15,113) (81,739) (39,059) (102,465) activities Effect of exchange rate 287 (730) (108) (1,097) changes INCREASE IN 40,310 42,269 39,808 45,846 CASH CASH, BEGINNING 36,735 19,792 37,237 16,215 OF THE PERIOD CASH, END OF THE $ 77,045 $ 62,061 $ 77,045 $ 62,061 PERIOD Major Drilling Group International Inc. Interim Condensed Consolidated Balance Sheets As at October 31, 2012 and April 30, 2012 (in thousands of Canadian dollars) (unaudited) October 31, 2012 April 30, 2012 ASSETS CURRENT ASSETS Cash $ 77,045 $ 37,237 Trade and other receivables 139,259 159,770 Income tax receivable 2,955 3,314 Inventories 93,248 95,905 Prepaid expenses 9,193 7,476 321,700 303,702 PROPERTY, PLANT AND EQUIPMENT 338,031 318,171 DEFERRED INCOME TAX ASSETS 2,280 2,859 GOODWILL 55,380 54,946 INTANGIBLE ASSETS 4,291 6,295 $ 721,682 $ 685,973 LIABILITIES CURRENT LIABILITIES Trade and other payables $ 92,660 $ 115,805 Income tax payable 12,297 3,142 Current portion of long-term debt 9,333 8,712 114,290 127,659 CONTINGENT CONSIDERATION 2,152 2,760 LONG-TERM DEBT 37,873 42,274 DEFERRED INCOME TAX LIABILITIES 26,108 25,581 180,423 198,274 SHAREHOLDERS' EQUITY Share capital 230,670 230,763 Reserves (32) 121 Share-based payments reserve 13,369 11,797 Retained earnings 293,118 246,809 Foreign currency translation 4,134 (1,791) reserve 541,259 487,699 $ 721,682 $ 685,973 MAJOR DRILLING GROUP INTERNATIONAL INC. Notes to INTERIM CONDENSED Consolidated Financial Statements FOR THE SIX MONTHS ended October 31, 2012 and 2011 (UNAUDITED) (in thousands of Canadian dollars, except per share information) 1. NATURE OF ACTIVITIES Major Drilling Group International Inc. ("the Company") is incorporated under the Canada Business Corporations Act and has its head office at 111 St. George Street, Suite 100, Moncton, NB, Canada. The Company's common shares are listed on the Toronto Stock Exchange ("TSX"). The principal source of revenue consists of contract drilling for companies primarily involved in mining and mineral exploration. The Company has operations in Canada, the United States, South and Central America, Australia, Asia and Africa. 2. BASIS OF PRESENTATION Statement of compliance These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB") and using the accounting policies as outlined in the annual notes to consolidated financial statements for the year ended April 30, 2012. Basis of consolidation These interim condensed consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of operations from the effective date of acquisition or up to the effective date of disposal, as appropriate. Intra-group transactions, balances, income and expenses are eliminated on consolidation, where appropriate. Basis of preparation These interim condensed consolidated financial statements have been prepared based on the historical cost basis except for certain financial instruments that are measured at fair value, using the same accounting policies and methods of computation as presented in the annual consolidated financial statements for the year ended April 30, 2012. 3. FUTURE ACCOUNTING CHANGES The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective: IFRS 7 (as amended in 2011) Financial Instruments: Disclosures IFRS 9 (as amended in 2010) Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement IAS 1 Presentation of Financial Statements IAS 12 (amended) Income Taxes - recovery of underlying assets IAS 19 Employee Benefits IAS 27 (reissued) Separate Financial Statements IAS 28 (reissued) Investments in Associates and Joint Ventures IAS 32 (amended) Financial Instruments: Presentation The Company is currently evaluating the impact of applying these standards to its consolidated financial statements. 4. KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGMENTS The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Significant areas requiring the use of management estimates relate to the useful lives of property, plant and equipment for depreciation purposes, the useful lives of intangible assets for amortization purposes, property, plant and equipment and inventory valuation, determination of income and other taxes, assumptions used in compilation of share-based payments, fair value of assets acquired and liabilities assumed in business acquisitions, amounts recorded as accrued liabilities, and impairment testing of goodwill and intangible assets. The Company applies judgment in determining the functional currency of the Company and its subsidiaries, determination of cash generating units ("CGUs"), the degree of componentization of property, plant and equipment, and the recognition of provisions and accrued liabilities. 5. SEASONALITY OF OPERATIONS With the exception of the third quarter, the Company exhibits comparatively less seasonality in quarterly revenue than in the past. The third quarter (November to January) is normally the Company's weakest quarter due to the shutdown of mining and exploration activities, often for extended periods over the holiday season, particularly in South and Central America. 6. PROPERTY PLANT & EQUIPMENT Capital expenditures for the three months ended October 31, 2012 were $17,815 (2011 - $16,230) and for the six months ended October 31, 2012 were $41,216 (2011 - $37,640). The Company obtained direct financing for the three and six months ended October 31, 2012 of $1,704 (2011 - $147). 7. INCOME TAXES The income tax expense for the period can be reconciled to accounting profit as follows: 2013 Q2 2012 Q2 YTD 2013 YTD 2012 Earnings before $ 33,767 $ 44,439 $ 79,912 $ 70,694 income tax Statutory 28% 29% 28% 29% Canadian corporate income tax rate Expected income $ 9,455 $ 12,887 $ $ 20,501 tax expense 22,375 based on statutory rate Non-recognition 316 265 631 313 of tax benefits related to losses Other foreign 343 236 698 287 taxes paid Rate variances 810 (190) 1,391 (488) in foreign jurisdictions Other 494 (319) 593 629 $ 11,418 $ 12,879 $ 25,688 $ 21,242 The Company periodically assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. For those matters where it is probable that an adjustment will be made, the Company recorded its best estimate of these tax liabilities, including related interest charges. Inherent uncertainties exist in estimates of tax contingencies due to changes in tax laws. While management believes they have adequately provided for the probable outcome of these matters, future results may include favorable or unfavorable adjustments to these estimated tax liabilities in the period the assessments are made, or resolved, or when the statute of limitation lapses. 8. EARNINGS PER SHARE All of the Company's earnings are attributable to common shares therefore net earnings are used in determining earnings per share. 2013 Q2 2012 Q2 YTD 2013 YTD 2012 Net earnings for $ 22,349 $ 31,560 $ 54,224 $ 49,452 the period Weighted average 79,147 74,246 79,147 73,143 shares outstanding - basic (000's) Net effect of dilutive securities: Stock options 453 662 537 901 (000's) Weighted average 79,600 74,908 79,684 74,044 number of shares - diluted (000's) Earnings per share: Basic $ 0.28 $ 0.43 $ 0.69 $ 0.68 Diluted $ 0.28 $ 0.42 $ 0.68 $ 0.67 The calculation of the diluted earnings per share for the three months ended October 31, 2012 exclude the effect of 349,252 options (2011- 313,502), and the six months ended October 31, 2012 exclude the effect of 126,820 options (2011 - 93,304) as they are anti-dilutive. The total number of shares outstanding on October 31, 2012 was 79,147,378 (2011 - 78,910,376). 9. SEGMENTED INFORMATION The Company's operations are divided into three geographic segments corresponding to its management structure, Canada - U.S., South and Central America, and Australia, Asia and Africa. The services provided in each of the reportable drilling segments are similar. The accounting policies of the segments are the same as those described in the annual consolidated financial statements for the year ended April 30, 2012. Management evaluates performance based on earnings from operations in these three geographic segments before finance costs and income taxes. Data relating to each of the Company's reportable segments is presented as follows: 2013 Q2 2012 Q2 YTD 2013 YTD 2012 Revenue Canada - U.S. $ 93,980 $ 84,151 $ 206,817 $ 145,589 South and Central 50,897 68,062 120,310 119,354 America Australia, Asia and 54,760 61,641 110,075 113,063 Africa $ 199,637 $ 213,854 $ 437,202 $ 378,006 Earnings from operations Canada - U.S. $ 20,305 $ 18,929 $ 45,776 $ 28,915 South and Central 8,622 16,591 25,373 27,190 America Australia, Asia and 9,813 13,811 18,834 24,869 Africa 38,740 49,331 89,983 80,974 Eliminations (987) (59) (466) (84) 37,753 49,272 89,517 80,890 Finance costs 728 964 1,466 1,786 General and corporate expenses* 3,258 3,869 8,139 8,410 Income tax 11,418 12,879 25,688 21,242 Net earnings $ 22,349 $ 31,560 $ 54,224 $ 49,452 *General and corporate expenses include expenses for corporate offices and stock options Depreciation and amortization Canada - U.S. $ 5,585 $ 4,054 $ 11,065 $ 7,395 South and Central 2,613 2,484 5,825 4,755 America Australia, Asia and 3,672 2,391 7,699 5,055 Africa Unallocated corporate assets 1,501 437 1,969 741 Total depreciation and amortization $ 13,371 $ 9,366 $ 26,558 $ 17,946
Canada - U.S. includes revenue of $55,582 and $45,406 for Canadian operations for the three months ended October 31, 2012 and 2011 respectively, and $122,607 and $78,631 for the six months ended October 31, 2012 and 2011 respectively.
October 31, 2012 April 30, 2012
Canada - U.S. $ 255,790 $ 252,233
South and Central America 228,887 212,861
Australia, Asia and Africa 199,021 186,442
683,698 651,536 Eliminations (1,067) (573) Unallocated and corporate assets 39,051 35,010 $ 721,682 $ 685,973
Canada - U.S. includes property, plant and equipment for Canadian operations at October 31, 2012 of $98,281 (April 30, 2012 - $87,629).
10. BUSINESS ACQUISITION
The Company has finalized the valuation of assets for the Bradley Group Limited, acquired September 30, 2011. There were no material adjustments required to values allocated to net tangible and intangible assets presented in the annual consolidated financial statements for the year ended April 30, 2012.
11. FINANCIAL INSTRUMENTS
There are no significant changes to financial instruments compared to the Company's annual consolidated financial statements for the year ended April 30, 2012 except for the following:
Fair value The carrying values of cash, trade and other receivables, demand credit facility and trade and other payables approximate their fair value due to the relatively short period to maturity of the instruments. The following table shows carrying values of long-term debt and contingent consideration which approximates their fair values, as most debts carry variable interest rates and the remaining fixed rate debts have been acquired recently and their carrying value continues to reflect fair value. The fair value of the interest rate swap included in long-term debt is measured using quoted interest rates.
October 31, 2012 April 30, 2012
Contingent consideration $ 2,152 $ 2,760
Long-term debt 47,206 50,986
Credit risk As at October 31, 2012, 86.9% of the Company's trade receivables were aged as current and 1.9% of the trade receivables were impaired.
The movement in the allowance for impairment of trade receivables during the period was as follows:
Balance as at April 30, 2012 $ 2,236
Increase in impairment allowance 317
Write-off charged against allowance (113)
Foreign exchange translation differences (6)
Balance as at October 31, 2012 $ 2,434
Foreign currency risk The most significant carrying amounts of net monetary assets that: (1) are denominated in currencies other than the functional currency of the respective Company subsidiary; (2) cause foreign exchange rate exposure; and (3) may include intercompany balances with other subsidiaries, at the reporting dates are as follows:
October 31, 2012 April 30, 2012
U.S. Dollars $ 8,189 $ 45,555
If the Canadian dollar moved by plus or minus 10% at October 31, 2012, the unrealized foreign exchange gain or loss would move by approximately $819 (April 30, 2012 - $4,556).
Liquidity risk The following table details the Company's contractual maturities for its financial liabilities.
Non-derivative financial liabilities:
1 year 2-3 4-5 years thereafter Total years Trade and $ 92,660 $ - $ - $ - $ 92,660 other payables Contingent 750 1,251 151 - 2,152 consideration Long-term 9,322 15,974 18,044 3,833 47,173 debt $ 102,732 $ 17,225 $ 18,195 $ 3,833 $ 141,985 Derivative financial liabilities: 1 year 2-3 4-5 years thereafter Total years Interest rate $ 11 $ 24 $ (2) $ - $ 33 swap Denis Larocque, Chief Financial Officer Tel: (506) 857-8636 Fax: (506) 857-9211 firstname.lastname@example.org SOURCE: MAJOR DRILLING GROUP INTERNATIONAL INC. To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/November2012/26/c3408.html CO: MAJOR DRILLING GROUP INTERNATIONAL INC. ST: New Brunswick NI: MNG ERN CONF -0- Nov/26/2012 21:02 GMT