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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.

Highlights


                                                                     

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

Identifiable assets

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 ir@majordrilling.com

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

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