Major Drilling Group International Inc. (TSX: MDI), a leading
provider of specialized drilling services to the mining sector
(“Major Drilling” or the “Company”), today reported results for its
second quarter of fiscal year 2021, ended October 31, 2020.
Highlights
- Generated revenue of $114.2 million, an increase of 28% from Q1
2021, driven by increasing momentum in gold drilling activity.
- Increased revenue from junior miners.
- Recorded net earnings of $7.0 million or $0.09 per share.
- Repaid $15.0 million of debt; well capitalized with $87 million
of total liquidity and a net cash position (1) of $7.6 million, an
increase of $9.6 million compared to Q1 2021.
- Achieved new drilling record with completion of 2,000-meter
hole of PQ size, the largest size of core sample in the
industry.
“Although the COVID-19 pandemic continues to
impact operations in certain regions, many projects resumed
operations during the quarter on the back of stronger metal prices
and a positive long-term outlook,” said Denis Larocque, President
and CEO of Major Drilling. ”Notably, junior mining companies
increased their activity levels, particularly in Canada, which is
behavior typically seen in an upcycle. We are encouraged that some
of our senior gold customers have already forecasted higher budgets
for 2021 and that junior mining companies are continuing to raise
capital to fund exploration programs. Copper prices have also
increased by more than 50% over the last eight months, as
infrastructure plans are commencing globally. Industry experts
expect the global refined copper market to hit a deficit this year,
which should lead to significant investments in copper exploration
projects. Looking forward to calendar 2021, as we enter our
seasonally slower third quarter, we are in a unique position to
react to this market dynamic as our financial strength has allowed
us to invest in safety, equipment and innovation in order to meet
the high standards of our customers.”
“I would like to salute our crews at the Oyu
Tolgoi copper project in Mongolia for their incredible
accomplishment. They achieved a new drilling record by completing a
2,000-meter hole of PQ size, which is the largest size of core
sample in our industry. This is an extremely deep hole for PQ that
required highly specialized expertise and equipment. Calendar 2020
has been a banner year for us in terms of specialized drilling,
given we also achieved the longest drill hole ever drilled in
Canada at the Windfall project for Osisko Mining, at 3,467 meters,
reaffirming our reputation as the leader in specialized drilling in
the industry.”
“The Company had a strong financial performance
in the quarter, generating $19.3 million in EBITDA (2) while
spending $8.0 million on capital expenditures,” said Ian Ross, CFO
of Major Drilling. “The bulk of the capital expenditures related to
ancillary equipment needed to support the jurisdictions where we
are seeing increased demand for our drill rigs. We also added one
rig this quarter and disposed of 13 older, inefficient rigs
bringing the total rig count to 601. We finished the quarter with
net cash of $7.6 million, reflecting our continued strategy of
maintaining a balance sheet that ensures flexibility and resilience
through the cycle.”
In millions of Canadian dollars (except earnings per share) |
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
Revenue |
|
$ |
114.2 |
|
|
$ |
121.2 |
|
|
$ |
203.6 |
|
|
$ |
238.6 |
|
Gross margin |
|
|
20.0 |
% |
|
|
20.4 |
% |
|
|
18.7 |
% |
|
|
19.3 |
% |
Adjusted gross margin (2) |
|
|
28.3 |
% |
|
|
28.1 |
% |
|
|
28.1 |
% |
|
|
27.1 |
% |
EBITDA (2) |
|
|
19.3 |
|
|
|
20.5 |
|
|
|
33.2 |
|
|
|
38.4 |
|
As percentage of revenue |
|
|
16.9 |
% |
|
|
16.9 |
% |
|
|
16.3 |
% |
|
|
16.1 |
% |
Net earnings |
|
|
7.0 |
|
|
|
7.3 |
|
|
|
9.2 |
|
|
|
13.3 |
|
Earnings per share |
|
|
0.09 |
|
|
|
0.09 |
|
|
|
0.11 |
|
|
|
0.17 |
|
(1) Net cash position (net of
debt, excluding lease liabilities reported under IFRS16 Leases)
(2) See “Non-IFRS Financial Measures”
Second Quarter Ended October 31,
2020
Total revenue for the quarter was $114.2
million, down 6% from revenue of $121.2 million recorded in the
same quarter last year. The unfavourable foreign exchange
translation impact on revenue for the quarter, when comparing to
the effective rates for the same period last year, was
approximately $2 million, with a minimal impact on net earnings as
expenditures in foreign jurisdictions tend to be in the same
currency as revenue.
Revenue for the quarter from Canada - U.S.
drilling operations increased by 8.1% to $70.6 million, compared to
the same period last year. The region saw activity levels resume to
pre-COVID-19 levels and part of the growth was related to an influx
of junior activity as a result of the increased junior equity
financings that occurred over the past six months.
South and Central American revenue decreased by
27.5% to $21.6 million for the quarter, compared to the same
quarter last year. Government or customer-imposed restrictions
regarding COVID-19 remained in place during the quarter in certain
regions, impacting activity levels.
Asian and African revenue decreased by 15.7% to
$22.0 million, compared to the same period last year as the region
continues to deal with COVID-19 related impacts.
Gross margin percentage for the quarter was
20.0%, compared to 20.4% for the same period last year.
Depreciation expense totaling $9.5 million is included in direct
costs for the current quarter, versus $9.3 million in the same
quarter last year. Adjusted gross margin, which excludes
depreciation expense, was 28.3% for the quarter, compared to 28.1%
for the same period last year. Gross margins were strong despite
some COVID-19 logistical challenges that resulted in some
additional direct costs. Margins were positively impacted by
approximately 1%, as the Company was able to take advantage of
government assistance programs available in the hardest hit
regions, however as activity is now returning to pre-COVID-19
levels, these programs will have minimal impact in the coming
quarter. Pricing in certain jurisdictions has been increased to
reflect the demand growth and some of the COVID-19 related
additional costs.
General and administrative costs were $11.6
million, a decrease of $0.5 million compared to the same quarter
last year. Reduced travel continues to drive the decrease in
general and administrative costs as compared to the previous year
and will remain in place until a time when it can be resumed in a
safe and responsible manner.
The income tax provision for the quarter was an
expense of $2.0 million compared to an expense of $3.0 million for
the prior year period. The income tax expense for the quarter was
positively impacted by the utilization of previously unrecognized
losses.
Net earnings were $7.0 million or $0.09 per
share ($0.09 per share diluted) for the quarter, compared to net
earnings of $7.3 million or $0.09 per share ($0.09 per share
diluted) for the prior year quarter.
NON-IFRS FINANCIAL MEASURES
The Company’s financial data has been prepared
in accordance with IFRS, with the exception of certain financial
measures detailed below. The Company believes these non-IFRS
financial measures are key, for both management and investors, in
evaluating performance at a consolidated level and are commonly
reported and widely used by investors and lending institutions as
indicators of a company’s operating performance and ability to
incur and service debt, and as a valuation metric. These measures
do not have a standardized meaning prescribed by IFRS and therefore
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 IFRS.
Adjusted gross profit/margin - excludes
depreciation expense:
(in $000s CAD) |
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
114,152 |
|
|
$ |
121,182 |
|
|
$ |
203,572 |
|
|
$ |
238,641 |
|
Direct costs |
|
|
91,300 |
|
|
|
96,475 |
|
|
|
165,595 |
|
|
|
192,565 |
|
Less: depreciation |
|
|
(9,468 |
) |
|
|
(9,311 |
) |
|
|
(19,175 |
) |
|
|
(18,632 |
) |
Adjusted gross profit |
|
|
32,320 |
|
|
|
34,018 |
|
|
|
57,152 |
|
|
|
64,708 |
|
Adjusted gross margin |
|
|
28.3 |
% |
|
|
28.1 |
% |
|
|
28.1 |
% |
|
|
27.1 |
% |
EBITDA - earnings before interest, taxes,
depreciation and
amortization:
(in $000s CAD) |
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
7,009 |
|
|
$ |
7,259 |
|
|
$ |
9,157 |
|
|
$ |
13,292 |
|
Finance costs |
|
|
336 |
|
|
|
204 |
|
|
|
624 |
|
|
|
423 |
|
Income tax provision |
|
|
2,006 |
|
|
|
3,020 |
|
|
|
3,237 |
|
|
|
5,014 |
|
Depreciation and
amortization |
|
|
9,975 |
|
|
|
9,972 |
|
|
|
20,195 |
|
|
|
19,689 |
|
EBITDA |
|
$ |
19,326 |
|
|
$ |
20,455 |
|
|
$ |
33,213 |
|
|
$ |
38,418 |
|
Forward-Looking Statements
This news release includes certain information
that may constitute “forward-looking information” under applicable
Canadian securities legislation. All statements, other than
statements of historical facts, included in this news release that
address future events, developments or performance that the Company
expects to occur (including management’s expectations regarding the
Company’s objectives, strategies, financial condition, results of
operations, cash flows and businesses) are forward-looking
statements. Forward-looking statements are typically identified by
future or conditional verbs such as “outlook”, “believe”,
“anticipate”, “estimate”, “project”, “expect”, “intend”, “plan”,
and terms and expressions of similar import. All forward-looking
information in this news release is qualified by this cautionary
note.
Forward-looking information is necessarily based
upon various estimates and assumptions including, without
limitation, the expectations and beliefs of management related to
the factors set forth below. While these factors and assumptions
are considered reasonable by the Company as at the date of this
document in light of management’s experience and perception of
current conditions and expected developments, these statements are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements and undue reliance
should not be placed on such statements and information.
Such forward-looking statements are subject to a
number of risks and uncertainties that include, but are not limited
to: the level of activity in the mining industry and the demand for
the Company’s services; the Canadian and international economic
environments; the Company’s dependence on key customers; the level
of funding for the Company’s clients (particularly for junior
mining companies); implications of the COVID-19 pandemic;
competitive pressures; exposure to 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; as well as other risk factors
described under “General Risks and Uncertainties” in the Company’s
Annual Information Form for the year ended April 30, 2020,
available on the SEDAR website at www.sedar.com. Should one or more
risk, uncertainty, contingency or other factor materialize or
should any factor or assumption prove incorrect, actual results
could vary materially from those expressed or implied in the
forward-looking information.
Forward-looking statements made in this document
are made as of the date of this document and the Company disclaims
any intention and assumes no obligation to update any
forward-looking statement, even if new information becomes
available, as a result of future events or for any other reasons,
except as required by applicable securities laws.
About Major Drilling
Major Drilling Group International Inc. is one of the world’s
largest drilling services companies primarily serving the mining
industry. Established in 1980, Major Drilling has over 1,000 years
of combined experience and expertise within its management team
alone. The Company maintains field operations and offices in
Canada, the United States, Mexico, South America, Asia, Africa and
Europe. Major Drilling provides a complete suite of drilling
services including surface and underground coring, directional,
reverse circulation, sonic, geotechnical, environmental,
water-well, coal-bed methane, shallow gas, underground
percussive/longhole drilling, surface drill and blast, and a
variety of mine services.
Webcast/Conference Call Information
Major Drilling Group International Inc. will
provide a simultaneous webcast and conference call to discuss its
quarterly results on Friday, December 11, 2020 at 9:00 AM (EST). To
access the webcast, which includes a slide presentation, please go
to the investors/webcast section of Major Drilling’s website at
www.majordrilling.com and click on the link. Please note that
this is listen-only mode.
To participate in the conference call, please
dial 416-340-2217, participant passcode 7929520# and ask for Major
Drilling’s Second Quarter Results Conference Call. To ensure your
participation, please call in approximately five minutes prior to
the scheduled start of the call.
For those unable to participate, a taped
rebroadcast will be available approximately one hour after the
completion of the call until midnight, Saturday, December 26, 2020.
To access the rebroadcast, dial 905-694-9451 and enter the passcode
6371337#. The webcast will also be archived for one year and can be
accessed on the Major Drilling website at
www.majordrilling.com.
For further information:Ian Ross, Chief
Financial OfficerTel: (506) 857-8636Fax: (506)
857-9211ir@majordrilling.com
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUE |
|
$ |
114,152 |
|
|
$ |
121,182 |
|
|
$ |
203,572 |
|
|
$ |
238,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECT COSTS (note
6) |
|
|
91,300 |
|
|
|
96,475 |
|
|
|
165,595 |
|
|
|
192,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT |
|
|
22,852 |
|
|
|
24,707 |
|
|
|
37,977 |
|
|
|
46,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
11,568 |
|
|
|
12,127 |
|
|
|
22,794 |
|
|
|
24,292 |
|
Other expenses |
|
|
1,584 |
|
|
|
1,575 |
|
|
|
2,479 |
|
|
|
2,733 |
|
(Gain) loss on disposal of property, plant and equipment |
|
|
67 |
|
|
|
(19 |
) |
|
|
11 |
|
|
|
(144 |
) |
Foreign exchange (gain) loss |
|
|
282 |
|
|
|
541 |
|
|
|
(325 |
) |
|
|
466 |
|
Finance costs |
|
|
336 |
|
|
|
204 |
|
|
|
624 |
|
|
|
423 |
|
|
|
|
13,837 |
|
|
|
14,428 |
|
|
|
25,583 |
|
|
|
27,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS BEFORE INCOME
TAX |
|
|
9,015 |
|
|
|
10,279 |
|
|
|
12,394 |
|
|
|
18,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX PROVISION
(RECOVERY) (note 7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
2,063 |
|
|
|
3,553 |
|
|
|
3,864 |
|
|
|
5,447 |
|
Deferred |
|
|
(57 |
) |
|
|
(533 |
) |
|
|
(627 |
) |
|
|
(433 |
) |
|
|
|
2,006 |
|
|
|
3,020 |
|
|
|
3,237 |
|
|
|
5,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
EARNINGS |
|
$ |
7,009 |
|
|
$ |
7,259 |
|
|
$ |
9,157 |
|
|
$ |
13,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
(note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
Diluted |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
EARNINGS |
|
$ |
7,009 |
|
|
$ |
7,259 |
|
|
$ |
9,157 |
|
|
$ |
13,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
EARNINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified
subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on foreign currency translations |
|
|
(2,715 |
) |
|
|
(2,383 |
) |
|
|
(10,805 |
) |
|
|
(8,139 |
) |
Unrealized gain (loss) on derivatives (net of tax) |
|
|
43 |
|
|
|
768 |
|
|
|
1,713 |
|
|
|
936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
EARNINGS |
|
$ |
4,337 |
|
|
$ |
5,644 |
|
|
$ |
65 |
|
|
$ |
6,089 |
|
|
|
Major Drilling Group International Inc. |
|
Interim Condensed Consolidated Statements of Changes in
Equity |
|
For the six months ended October 31, 2020 and
2019 |
|
(in thousands of Canadian dollars) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
earnings |
|
|
Other |
|
|
Share-based |
|
|
Foreign currency |
|
|
|
|
|
|
|
Share capital |
|
|
(deficit) |
|
|
reserves |
|
|
payments reserve |
|
|
translation reserve |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT MAY 1,
2019* |
|
$ |
241,264 |
|
|
$ |
29,020 |
|
|
$ |
(570 |
) |
|
$ |
14,503 |
|
|
$ |
78,783 |
|
|
$ |
363,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
141 |
|
|
|
- |
|
|
|
141 |
|
Stock options expired |
|
|
- |
|
|
|
3,460 |
|
|
|
- |
|
|
|
(3,460 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
241,264 |
|
|
|
32,480 |
|
|
|
(570 |
) |
|
|
11,184 |
|
|
|
78,783 |
|
|
|
363,141 |
|
Comprehensive
earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
- |
|
|
|
13,292 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,292 |
|
Unrealized gain (loss) on foreign currency translations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,139 |
) |
|
|
(8,139 |
) |
Unrealized gain (loss) on derivatives |
|
|
- |
|
|
|
- |
|
|
|
936 |
|
|
|
- |
|
|
|
- |
|
|
|
936 |
|
Total comprehensive earnings
(loss) |
|
|
- |
|
|
|
13,292 |
|
|
|
936 |
|
|
|
- |
|
|
|
(8,139 |
) |
|
|
6,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT OCTOBER
31, 2019 |
|
$ |
241,264 |
|
|
$ |
45,772 |
|
|
$ |
366 |
|
|
$ |
11,184 |
|
|
$ |
70,644 |
|
|
$ |
369,230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT MAY 1,
2020 |
|
$ |
243,189 |
|
|
$ |
(35,691 |
) |
|
$ |
(611 |
) |
|
$ |
8,519 |
|
|
$ |
81,640 |
|
|
$ |
297,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options |
|
|
41 |
|
|
|
- |
|
|
|
- |
|
|
|
(17 |
) |
|
|
- |
|
|
|
24 |
|
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
149 |
|
|
|
- |
|
|
|
149 |
|
Stock options expired |
|
|
- |
|
|
|
3,525 |
|
|
|
- |
|
|
|
(3,525 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
243,230 |
|
|
|
(32,166 |
) |
|
|
(611 |
) |
|
|
5,126 |
|
|
|
81,640 |
|
|
|
297,219 |
|
Comprehensive
earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
- |
|
|
|
9,157 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,157 |
|
Unrealized gain (loss) on foreign currency translations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10,805 |
) |
|
|
(10,805 |
) |
Unrealized gain (loss) on derivatives |
|
|
- |
|
|
|
- |
|
|
|
1,713 |
|
|
|
- |
|
|
|
- |
|
|
|
1,713 |
|
Total comprehensive earnings
(loss) |
|
|
- |
|
|
|
9,157 |
|
|
|
1,713 |
|
|
|
- |
|
|
|
(10,805 |
) |
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT OCTOBER
31, 2020 |
|
$ |
243,230 |
|
|
$ |
(23,009 |
) |
|
$ |
1,102 |
|
|
$ |
5,126 |
|
|
$ |
70,835 |
|
|
$ |
297,284 |
|
*Opening balances have been allocated to include
expired or forfeited stock options of $5,744, previously recorded
in share-based payments reserve, in retained earnings (deficit),
consistent with current year presentation.
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income
tax |
|
$ |
9,015 |
|
|
$ |
10,279 |
|
|
$ |
12,394 |
|
|
$ |
18,306 |
|
Operating items not involving
cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (note 6) |
|
|
9,975 |
|
|
|
9,972 |
|
|
|
20,195 |
|
|
|
19,689 |
|
(Gain) loss on disposal of property, plant and equipment |
|
|
67 |
|
|
|
(19 |
) |
|
|
11 |
|
|
|
(144 |
) |
Share-based compensation |
|
|
73 |
|
|
|
51 |
|
|
|
149 |
|
|
|
141 |
|
Finance costs recognized in
earnings before income tax |
|
|
336 |
|
|
|
204 |
|
|
|
624 |
|
|
|
423 |
|
|
|
|
19,466 |
|
|
|
20,487 |
|
|
|
33,373 |
|
|
|
38,415 |
|
Changes in non-cash operating
working capital items |
|
|
365 |
|
|
|
982 |
|
|
|
(12,542 |
) |
|
|
(4,632 |
) |
Finance costs paid |
|
|
(336 |
) |
|
|
(204 |
) |
|
|
(624 |
) |
|
|
(423 |
) |
Income taxes paid |
|
|
(1,541 |
) |
|
|
(2,750 |
) |
|
|
(2,865 |
) |
|
|
(4,604 |
) |
Cash flow from (used in)
operating activities |
|
|
17,954 |
|
|
|
18,515 |
|
|
|
17,342 |
|
|
|
28,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of lease
liabilities |
|
|
(488 |
) |
|
|
(544 |
) |
|
|
(798 |
) |
|
|
(844 |
) |
Repayment of long-term
debt |
|
|
(15,250 |
) |
|
|
(291 |
) |
|
|
(35,501 |
) |
|
|
(556 |
) |
Issuance of common shares due
to exercise of stock options |
|
|
24 |
|
|
|
- |
|
|
|
24 |
|
|
|
- |
|
Cash flow from (used in)
financing activities |
|
|
(15,714 |
) |
|
|
(835 |
) |
|
|
(36,275 |
) |
|
|
(1,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant
and equipment (note 5) |
|
|
(8,045 |
) |
|
|
(5,543 |
) |
|
|
(15,544 |
) |
|
|
(16,108 |
) |
Proceeds from disposal of
property, plant and equipment |
|
|
191 |
|
|
|
462 |
|
|
|
492 |
|
|
|
728 |
|
Cash flow from (used in)
investing activities |
|
|
(7,854 |
) |
|
|
(5,081 |
) |
|
|
(15,052 |
) |
|
|
(15,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes |
|
|
108 |
|
|
|
(60 |
) |
|
|
(883 |
) |
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN
CASH |
|
|
(5,506 |
) |
|
|
12,539 |
|
|
|
(34,868 |
) |
|
|
12,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF THE PERIOD |
|
|
29,071 |
|
|
|
26,841 |
|
|
|
58,433 |
|
|
|
27,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, END OF THE PERIOD |
|
$ |
23,565 |
|
|
$ |
39,380 |
|
|
$ |
23,565 |
|
|
$ |
39,380 |
|
|
|
Major Drilling Group International Inc. |
|
Interim Condensed Consolidated Balance Sheets |
|
As at October 31, 2020 and April 30, 2020 |
|
(in thousands of Canadian dollars) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2020 |
|
|
April 30, 2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
23,565 |
|
|
$ |
58,433 |
|
Trade and other receivables |
|
|
97,233 |
|
|
|
71,641 |
|
Income tax receivable |
|
|
3,874 |
|
|
|
4,350 |
|
Inventories |
|
|
91,074 |
|
|
|
99,823 |
|
Prepaid expenses |
|
|
3,782 |
|
|
|
4,497 |
|
|
|
|
219,528 |
|
|
|
238,744 |
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND
EQUIPMENT (note 5) |
|
|
155,639 |
|
|
|
165,103 |
|
|
|
|
|
|
|
|
|
|
RIGHT-OF-USE
ASSETS |
|
|
3,134 |
|
|
|
3,803 |
|
|
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX
ASSETS |
|
|
9,581 |
|
|
|
9,613 |
|
|
|
|
|
|
|
|
|
|
GOODWILL |
|
|
7,708 |
|
|
|
7,708 |
|
|
|
|
|
|
|
|
|
|
INTANGIBLE
ASSETS |
|
|
757 |
|
|
|
946 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
396,347 |
|
|
$ |
425,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
Trade and other payables |
|
$ |
62,631 |
|
|
$ |
55,858 |
|
Income tax payable |
|
|
1,604 |
|
|
|
926 |
|
Current portion of lease liabilities |
|
|
1,094 |
|
|
|
1,121 |
|
Current portion of long-term debt |
|
|
860 |
|
|
|
1,024 |
|
|
|
|
66,189 |
|
|
|
58,929 |
|
|
|
|
|
|
|
|
|
|
LEASE
LIABILITIES |
|
|
2,067 |
|
|
|
2,701 |
|
|
|
|
|
|
|
|
|
|
CONTINGENT
CONSIDERATION |
|
|
1,807 |
|
|
|
1,807 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM
DEBT |
|
|
15,148 |
|
|
|
50,333 |
|
|
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX
LIABILITIES |
|
|
13,852 |
|
|
|
15,101 |
|
|
|
|
99,063 |
|
|
|
128,871 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
Share capital |
|
|
243,230 |
|
|
|
243,189 |
|
Retained earnings (deficit) |
|
|
(23,009 |
) |
|
|
(35,691 |
) |
Other reserves |
|
|
1,102 |
|
|
|
(611 |
) |
Share-based payments reserve |
|
|
5,126 |
|
|
|
8,519 |
|
Foreign currency translation reserve |
|
|
70,835 |
|
|
|
81,640 |
|
|
|
|
297,284 |
|
|
|
297,046 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
396,347 |
|
|
$ |
425,917 |
|
MAJOR DRILLING GROUP INTERNATIONAL
INC.NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTSFOR THE THREE AND SIX MONTHS
ENDED OCTOBER 31, 2020 AND 2019 (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, Mexico, South America, Asia, Africa and
Europe.
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 Company’s annual Consolidated Financial
Statements for the year ended April 30, 2020.
On December 10, 2020, the Board of Directors
authorized the financial statements for issue.
Basis of consolidationThese
Interim Condensed Consolidated Financial Statements incorporate the
financial statements of the Company and entities controlled by the
Company. Control is achieved when the Company is exposed or has
rights to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over
the investee.
The results of subsidiaries acquired or disposed
of during the period are included in the Consolidated Statements 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 preparationThese
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 Company’s annual Consolidated Financial Statements for the year
ended April 30, 2020.
3. KEY
SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING
JUDGMENTS
The preparation of financial statements, in
conformity with International Financial Reporting Standards
(“IFRS”), requires management to make judgments, estimates and
assumptions that are not readily apparent from other sources, which
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Depending on the severity and duration of
disruptions caused by the COVID-19 pandemic, results could be
impacted in future periods. It is not possible at this time to
estimate the magnitude of such potential future impacts.
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, property, plant and equipment
and inventory valuation, determination of income and other taxes,
assumptions used in the compilation of share-based payments, fair
value of assets acquired and liabilities assumed in business
acquisitions, amounts recorded as accrued liabilities, contingent
consideration and allowance for doubtful accounts, and impairment
testing of goodwill and intangible assets.
The Company applied judgment in determining the
functional currency of the Company and its subsidiaries, the
determination of cash-generating units (“CGUs”), the degree of
componentization of property, plant and equipment, the recognition
of provisions and accrued liabilities, and the determination of the
probability that deferred income tax assets will be realized from
future taxable earnings.
4. SEASONALITY
OF OPERATIONS
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.
5.
PROPERTY, PLANT AND EQUIPMENT
Capital expenditures for the three and six
months ended October 31, 2020 were $6,376 (2019 - $5,543) and
$15,544 (2019 - $16,108), respectively. Cash payments in the
current quarter for assets previously acquired were $1,669 (2019 –
nil).
6. EXPENSES
BY NATURE
Direct costs by nature are as follows:
(in $000s CAD) |
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
$ |
9,468 |
|
|
$ |
9,311 |
|
|
$ |
19,175 |
|
|
$ |
18,632 |
|
Employee benefit expenses |
|
|
41,013 |
|
|
|
40,699 |
|
|
|
71,706 |
|
|
|
81,983 |
|
Cost of inventory |
|
|
16,297 |
|
|
|
17,730 |
|
|
|
31,452 |
|
|
|
34,745 |
|
Other |
|
|
24,522 |
|
|
|
28,735 |
|
|
|
43,262 |
|
|
|
57,205 |
|
Direct
costs |
|
$ |
91,300 |
|
|
$ |
96,475 |
|
|
$ |
165,595 |
|
|
$ |
192,565 |
|
Depreciation expense recorded in general and
administrative expenses for the three and six months ended October
31, 2020 was $507 (2019 - $661) and $1,020 (2019 - $1,057),
respectively.
7. INCOME
TAXES
The income tax provision for the period can be reconciled to
accounting earnings before income tax as follows:
|
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax |
|
$ |
9,015 |
|
|
$ |
10,279 |
|
|
$ |
12,394 |
|
|
$ |
18,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory Canadian corporate
income tax rate |
|
|
27 |
% |
|
|
27 |
% |
|
|
27 |
% |
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax provision
based on statutory rate |
|
|
2,434 |
|
|
|
2,775 |
|
|
|
3,346 |
|
|
|
4,942 |
|
Non-recognition of tax benefits
related to losses |
|
|
520 |
|
|
|
277 |
|
|
|
1,362 |
|
|
|
372 |
|
Utilization of previously
unrecognized losses |
|
|
(1,376 |
) |
|
|
(238 |
) |
|
|
(1,553 |
) |
|
|
(583 |
) |
Other foreign taxes paid |
|
|
118 |
|
|
|
154 |
|
|
|
239 |
|
|
|
322 |
|
Rate variances in foreign
jurisdictions |
|
|
(69 |
) |
|
|
(143 |
) |
|
|
(232 |
) |
|
|
(161 |
) |
Permanent differences and
other |
|
|
379 |
|
|
|
195 |
|
|
|
75 |
|
|
|
122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision recognized
in net earnings |
|
$ |
2,006 |
|
|
$ |
3,020 |
|
|
$ |
3,237 |
|
|
$ |
5,014 |
|
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 records
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 favourable or unfavourable
adjustments to these estimated tax liabilities in the period the
assessments are made, or resolved, or when the statutes of
limitations lapse.
8. EARNINGS
PER SHARE
All of the Company’s earnings are attributable
to common shares, therefore, net earnings is used in determining
earnings per share.
|
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
7,009 |
|
|
$ |
7,259 |
|
|
$ |
9,157 |
|
|
$ |
13,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (000s) |
|
|
80,638 |
|
|
|
80,300 |
|
|
|
80,636 |
|
|
|
80,300 |
|
Diluted (000s) |
|
|
80,806 |
|
|
|
80,330 |
|
|
|
80,700 |
|
|
|
80,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
Diluted |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
The calculation of diluted earnings per share
for the three and six months ended October 31, 2020 excludes the
effect of 997,774 and 1,469,096 options, respectively (2019 -
2,696,237 and 2,961,091) as they were anti‐dilutive.
The total number of shares outstanding on October 31, 2020 was
80,640,753 (2019 - 80,299,984).
9. SEGMENTED
INFORMATION
The Company’s operations are divided into the
following three geographic segments, corresponding to its
management structure: Canada - U.S.; South and Central America; and
Asia and Africa. The services provided in each of the reportable
segments are essentially the same. The accounting policies of the
segments are the same as those described in the Company’s annual
Consolidated Financial Statements for the year ended April 30,
2020. Management evaluates performance based on earnings from
operations in these three geographic segments before finance costs,
general corporate expenses and income taxes. Data relating to each
of the Company’s reportable segments is presented as follows:
|
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S.* |
|
$ |
70,617 |
|
|
$ |
65,337 |
|
|
$ |
116,662 |
|
|
$ |
126,294 |
|
South and Central America |
|
|
21,573 |
|
|
|
29,785 |
|
|
$ |
41,108 |
|
|
|
62,471 |
|
Asia and Africa |
|
|
21,962 |
|
|
|
26,060 |
|
|
$ |
45,802 |
|
|
|
49,876 |
|
|
|
$ |
114,152 |
|
|
$ |
121,182 |
|
|
$ |
203,572 |
|
|
$ |
238,641 |
|
*Canada - U.S. includes revenue of $33,642 and
$26,902 for Canadian operations for the three months ended October
31, 2020 and 2019, respectively and $51,719 and $53,867 for the six
months ended October 31, 2020 and 2019, respectively.
|
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
8,609 |
|
|
$ |
7,078 |
|
|
$ |
11,410 |
|
|
$ |
12,416 |
|
South and Central America |
|
|
(728 |
) |
|
|
1,128 |
|
|
|
(1,771 |
) |
|
|
2,986 |
|
Asia and Africa |
|
|
3,276 |
|
|
|
5,085 |
|
|
|
6,277 |
|
|
|
8,897 |
|
|
|
|
11,157 |
|
|
|
13,291 |
|
|
|
15,916 |
|
|
|
24,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
costs |
|
|
336 |
|
|
|
204 |
|
|
|
624 |
|
|
|
423 |
|
General corporate
expenses** |
|
|
1,806 |
|
|
|
2,808 |
|
|
|
2,898 |
|
|
|
5,570 |
|
Income tax |
|
|
2,006 |
|
|
|
3,020 |
|
|
|
3,237 |
|
|
|
5,014 |
|
|
|
|
4,148 |
|
|
|
6,032 |
|
|
|
6,759 |
|
|
|
11,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Earnings |
|
$ |
7,009 |
|
|
$ |
7,259 |
|
|
$ |
9,157 |
|
|
$ |
13,292 |
|
**General corporate expenses include expenses
for corporate offices and stock options.
|
|
Q2 2021 |
|
|
Q2 2020 |
|
|
YTD 2021 |
|
|
YTD 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
4,565 |
|
|
$ |
3,459 |
|
|
$ |
12,586 |
|
|
$ |
11,923 |
|
South and Central America |
|
|
584 |
|
|
|
831 |
|
|
|
784 |
|
|
|
1,573 |
|
Asia and Africa |
|
|
1,164 |
|
|
|
374 |
|
|
|
2,111 |
|
|
|
1,580 |
|
Unallocated and corporate assets |
|
|
63 |
|
|
|
879 |
|
|
|
63 |
|
|
|
1,032 |
|
Total capital
expenditures |
|
$ |
6,376 |
|
|
$ |
5,543 |
|
|
$ |
15,544 |
|
|
$ |
16,108 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
5,098 |
|
|
$ |
4,530 |
|
|
$ |
10,122 |
|
|
$ |
8,985 |
|
South and Central America |
|
|
3,042 |
|
|
|
3,762 |
|
|
|
6,400 |
|
|
|
7,439 |
|
Asia and Africa |
|
|
1,774 |
|
|
|
1,647 |
|
|
|
3,566 |
|
|
|
3,204 |
|
Unallocated and corporate assets |
|
|
61 |
|
|
|
33 |
|
|
|
107 |
|
|
|
61 |
|
Total depreciation and
amortization |
|
$ |
9,975 |
|
|
$ |
9,972 |
|
|
$ |
20,195 |
|
|
$ |
19,689 |
|
|
|
October 31, 2020 |
|
|
April 30, 2020 |
|
Identifiable assets |
|
|
|
|
|
|
|
|
Canada - U.S.* |
|
$ |
196,523 |
|
|
$ |
180,925 |
|
South and Central America |
|
|
119,226 |
|
|
|
129,748 |
|
Asia and Africa |
|
|
122,955 |
|
|
|
121,954 |
|
Unallocated and corporate assets (liabilities) |
|
|
(42,357 |
) |
|
|
(6,710 |
) |
Total identifiable
assets |
|
$ |
396,347 |
|
|
$ |
425,917 |
|
*Canada - U.S. includes property, plant and
equipment as at October 31, 2020 of $43,941 (April 30, 2020 -
$44,146) for Canadian operations.
10.
FINANCIAL INSTRUMENTS
Fair valueThe carrying values
of cash, trade and other receivables, demand credit facilities and
trade and other payables approximate their fair value due to the
relatively short period to maturity of the instruments. The
carrying value of long-term debt approximates its fair value as the
interest applicable is reflective of fair market rates.
Financial assets and liabilities measured at
fair value are classified and disclosed in one of the following
categories:
- Level 1 - quoted prices
(unadjusted) in active markets for identical assets or
liabilities;
- Level 2 - inputs other than quoted
prices included in level 1 that are observable for the assets or
liabilities, either directly (i.e., as prices) or indirectly (i.e.,
derived from prices); and
- Level 3 - inputs for the assets or
liabilities that are not based on observable market data
(unobservable inputs).
The Company’s derivatives are classified as
level 2 financial instruments. There were no transfers of amounts
between level 1, level 2 and level 3 financial instruments for the
quarter ended October 31, 2020.
The fair value hierarchy requires the use of
observable market inputs whenever such inputs exist. A financial
instrument is classified to the lowest level of the hierarchy for
which a significant input has been considered in measuring fair
value.
Credit riskAs at October 31,
2020, 91.6% (April 30, 2020 - 81.6%) of the Company’s trade
receivables were aged as current and 1.6% (April 30, 2020 - 2.0%)
of the trade receivables were impaired.
The movements in the allowance for impairment of
trade receivables during the three and twelve month periods were as
follows:
|
|
October 31, 2020 |
|
|
April 30, 2020 |
|
|
|
|
|
|
|
|
|
|
Opening
balance |
|
$ |
1,226 |
|
|
$ |
863 |
|
Increase in impairment
allowance |
|
|
298 |
|
|
|
442 |
|
Recovery of amounts previously
impaired |
|
|
(59 |
) |
|
|
- |
|
Write-off charged against
allowance |
|
|
(76 |
) |
|
|
(37 |
) |
Foreign exchange translation
differences |
|
|
(35 |
) |
|
|
(42 |
) |
Ending
balance |
|
$ |
1,354 |
|
|
$ |
1,226 |
|
Foreign currency risk As at
October 31, 2020, the most significant carrying amounts of net
monetary assets or liabilities (which may include intercompany
balances with other subsidiaries) that: (i) are denominated in
currencies other than the functional currency of the respective
Company subsidiary; and (ii) cause foreign exchange rate exposure,
including the impact on earnings before income taxes (“EBIT”), if
the corresponding rate changes by 10%, are as follows:
|
|
Rate variance |
|
MNT/USD |
|
|
IDR/USD |
|
|
USD/CLP |
|
|
USD/AUD |
|
|
USD/BRL |
|
|
USD/CAD |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net exposure on monetary
assets |
|
|
|
|
7,435 |
|
|
|
6,535 |
|
|
|
5,346 |
|
|
|
4,513 |
|
|
|
2,847 |
|
|
|
1,906 |
|
|
|
358 |
|
EBIT impact |
|
+/-10% |
|
|
826 |
|
|
|
726 |
|
|
|
594 |
|
|
|
501 |
|
|
|
316 |
|
|
|
212 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity riskThe following table details
contractual maturities for the Company’s financial liabilities:
|
|
1 year |
|
|
2-3 years |
|
|
4-5 years |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
$ |
62,631 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
62,631 |
|
Lease liabilities (interest
included) |
|
|
1,362 |
|
|
|
2,103 |
|
|
|
348 |
|
|
|
3,813 |
|
Contingent consideration
(undiscounted) |
|
|
- |
|
|
|
2,500 |
|
|
|
- |
|
|
|
2,500 |
|
Long-term debt (interest
included) |
|
|
1,327 |
|
|
|
15,932 |
|
|
|
- |
|
|
|
17,259 |
|
|
|
$ |
65,320 |
|
|
$ |
20,535 |
|
|
$ |
348 |
|
|
$ |
86,203 |
|
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