JSE-listed drilling services provider Master Drilling has overcome a challenging economic climate to secure a $208.9-million order book, while its headline earnings a share increased 30.1% year-on-year to 97.6c in the six months ended June 30.

At a presentation of the company’s interim results in Johannesburg last week, CEO Danie Pretorius said that, although the company had experienced a slow start to 2016, owing to delayed access to sites, delays in project start-ups, poor ground conditions and economic fluctuations, its performance had been strengthened in the second quarter by improved mining activity in Latin America.

Delays in project start-ups and lower use of equipment in Mexico and Africa, however, negatively impacted on revenue, while the company’s exploration business felt the impact of lower iron-ore prices.

Nevertheless, Pretorius highlighted that Master Drilling’s revenue grew by 15.4% as a result of adding four raiseboring machines, which brought the company’s fleet to 102 raiseboring and 49 slim drilling rigs.

Moreover, he pointed out that, together with the ramp-up in activity in the second quarter, this indicated higher use of equipment and improved financial performance during the second half of the year.

In the first half of 2016, Master Drilling acquired underground mining services provider Bergteamet Latin America’s assets and operations and secured the five-year extension of a key contract for gold miner AngloGold Ashanti in South America.

Pretorius noted that the company’s African diversification strategy was supported by contracts awarded in Sierra Leone and Tanzania, while, in the US, it secured its first blind shaft boring contract.

He emphasised that diversification across regions, commodities, currencies and industries remained the key to the success of the business.

Pretorius remarked that, to support the growth of the business, the company had employed more people and resourced the Bergteamet Europe office. Additionally, he said, comprehensive training plans had been established to improve key employee skills.

“We continue to manage cash resources stringently in order to cater for emerging opportunities. Continuous improvement of our technology and methods remains key to our offering of a one-stop solution for our clients to stay ahead in their markets.

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Mechanisation, which is of paramount importance to our mining clients, supports our focus as a business already well positioned with advanced technology,” he stated.

CFO Andre van Deventer pointed out that Master Drilling’s revenue in rand terms had increased by 15.4%, but that revenue in dollar terms had declined to $53.8-million from $60.3-million dollars in the first half of 2015.

He further highlighted that the company’s gross profit margin had increased to 40.5% in dollar terms, while its profit after tax margin had increased to 18%.

The company did not declare a dividend, owing to the need to preserve cash resources for anticipated investment in capital projects, as determined by its “strategic expansion drive”.

However, Van Deventer commented that this position would be reassessed at the end of the 2016 financial year.