December 4, 2018 - 5:00 PM EST
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Major Drilling Reports Profitable Second Quarter Results for Fiscal 2019

MONCTON, New Brunswick, Dec. 04, 2018 (GLOBE NEWSWIRE) -- Major Drilling Group International Inc. (TSX: MDI) today reported results for its second quarter of fiscal year 2019, ended October 31, 2018.


In millions of Canadian dollars
(except earnings (loss) per share)
Q2 2019Q2 2018YTD 2019YTD 2018
Revenue$105.5 $88.0 $204.0 $171.9 
Gross profit
  As percentage of revenue
% 21.2
% 52.3
% 37.9

  As percentage of revenue
% 9.1
% 25.7
% 14.4
Net earnings (loss) 3.3  (2.7) 0.8  (9.6)
Earnings (loss) per share 0.04  (0.03) 0.01  (0.12)
  (1)    Earnings before interest, taxes, depreciation and amortization (see “non-GAAP financial measure”)
  • Quarterly revenue was $105.5 million, up 20% from the $88.0 million recorded for the same quarter last year.
  • Gross margin percentage for the quarter was 27.4%, compared to 24.1% for the corresponding period last year.
  • EBITDA increased by 71% to $15.6 million.
  • Net earnings were $3.3 million or $0.04 per share for the quarter, compared to a net loss of $2.7 million or $0.03 per share for the prior year quarter.
  • Net cash increased $12.8 million during the quarter to $14.9 million.

“Demand for our services continued to grow in all of our regions this quarter.  Despite the recent drop in commodity prices, most senior mining companies are continuing with their original plans as they work to replace their mineral reserves,” said Denis Larocque, President and CEO of Major Drilling Group International Inc.  “The Company’s strong operational leverage was evidenced as revenue growth of 20%, combined with improved margins and flat general and administrative expenses, translated into a 71% increase in EBITDA.”

“The revenue increase was led by our international operations as South and Central American revenue was up 51% and Asian and African revenue was up 25% compared to the same quarter last year.  In Canada - U.S., our revenue grew modestly at 7%, as we continued to focus on specialized drilling due to the high level of labour utilization experienced in these operations.  Through this strategy, we have been able to triple this region’s earnings this quarter as compared to the same period last year,” stated Mr. Larocque. 

“The Company’s net cash position (net of debt) improved by $12.8 million over the last three months, to end the quarter at $14.9 million.  Capital expenditures were $7.0 million this quarter, as we added seven rigs that fit both our specialized and diversification strategies.  Two of the additional rigs are suited for surface drill and blast/grade control work, while we added three others to our computerized underground fleet of rigs.  We disposed of nine older, inefficient rigs, bringing the fleet total to 625 rigs.  We also sold a building and other assets for $7.1 million during the quarter,” added Mr. Larocque. 

“With copper reserves depleting at an accelerated rate, and grades declining, many industry experts expect the copper market will face a significant deficit position in the next few years, due to the continued production and high grading of mines, combined with the lack of exploration work conducted to replace reserves.  The same dynamic can be seen in most mining commodities, including gold, and we believe that most commodities will face an imbalance between supply and demand as mining reserves continue to decrease due to the lack of exploration.  Therefore, it is expected that at some point in the near future, the need to develop resources in areas that are increasingly difficult to access will significantly increase, at which time we expect to see a resurgence in demand for specialized drilling.”

“As part of our ongoing efforts to prepare for future increases in activity, we are continuing to make investments in innovation directed towards increased productivity, safety, and meeting customers’ demands.  We keep growing our fleet of computerized rigs, as well as retrofitting some of our newer rigs with computerized consoles.  This falls in line with the enhancement of our recruiting and training systems as we bring in a new generation of employees, while strengthening our customer service,” said Mr. Larocque.

“On December 3, 2018, the Company made the decision to close its operations in Burkina Faso.  This decision is based on the fact that this branch requires significant additional investment to reach an acceptable return on investment, at a time when competition is growing in the country, while we see growth opportunities in other regions.  Preliminary estimates indicate cash close-down costs of approximately $1.5 million with additional non-cash expenses of approximately $6.5 to $7.5 million related to differed tax assets impairment, VAT receivable write-off and impairment charges relating to property, plant and equipment and inventory.  The Burkina Faso operation represented approximately 1% of the total Company revenue for the quarter.”

“It is important to note that we are now in our third quarter, traditionally the weakest quarter of our fiscal year, as mining and exploration companies shut down, often for extended periods over the holiday season.  At this time, most senior and intermediate companies are still working through their budget process and have yet to decide on post-holiday start-up dates.  As usual, due to the time it takes to mobilize once new contracts are awarded, a slow pace of start-ups is expected in January and February.  Additionally, the Company schedules substantial overhaul and maintenance work on its equipment during this slower period.  These factors result in reduced revenue, increased costs, and reduced margins in the third quarter, and as we have experienced in previous years, we expect to generate a seasonal loss in the upcoming third quarter,” said Mr. Larocque. 

Second quarter ended October 31, 2018

Total revenue for the quarter was $105.5 million, up 20% from revenue of $88.0 million recorded in the same quarter last year. The favourable foreign exchange translation impact for the quarter, when comparing to the effective rates for the same period last year, is estimated at $2 million on revenue, with a negligible impact on net earnings.

Revenue for the quarter from Canada - U.S. drilling operations increased by 7% to $56.5 million, compared to the same period last year.   

South and Central American revenue increased by 51% to $29.2 million for the quarter, compared to the same quarter last year, due to increased activity levels in most regions, led by Mexico, the Guiana Shield, and Chile. 

Asian and African operations reported revenue of $19.8 million, up 25% from the same period last year.  This growth in revenue was driven by stronger activity in all areas, led by Indonesia and the Philippines.

The overall gross margin percentage for the quarter was 27.4%, up from 24.1% for the same period last year. While pricing continues to improve in all regions, operational efficiencies also contributed to the improvement in margins.  As well, margins benefitted from the Company’s increased focus on specialized drilling in Canada and the U.S.

General and administrative costs were flat compared to the same quarter last year at $11.2 million, while general and administrative expenses, as a percentage of revenue, decreased to 10.7% for the current quarter, compared to 12.9% for the same period last year.

Net earnings were $3.3 million or $0.04 per share ($0.04 per share diluted) for the quarter, compared to a net loss of $2.7 million or $0.03 per share ($0.03 per share diluted) for the prior year quarter.

Non-GAAP Financial Measure

The Company uses the non-GAAP financial measure, EBITDA.  The Company believes this non-GAAP financial measure is key, for both management and investors, in evaluating performance at a consolidated level. EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a company’s operating performance and ability to incur and service debt, and as a valuation metric. This measure does not have a standardized meaning prescribed by GAAP 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 GAAP.

Forward-Looking Statements

Some of the statements contained in this news 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 mining 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 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 13 to 16 of the 2018 Annual Report entitled “General Risks and Uncertainties”, and such other documents as available on SEDAR at 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.

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 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 Wednesday, December 5, 2018 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 and click on the link.  Please note that this is listen-only mode.

To participate in the conference call, please dial 416-340-2216 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, Wednesday, December 19, 2018.  To access the rebroadcast, dial 905-694-9451 and enter the passcode 9521510#.  The webcast will also be archived for one year and can be accessed on the Major Drilling website at

For further information:
David Balser, Chief Financial Officer
Tel: (506) 857-8636
Fax: (506) 857-9211
[email protected]

Major Drilling Group International Inc. 
Interim Condensed Consolidated Statements of Operations 
(in thousands of Canadian dollars, except per share information) 
  Three months ended  Six months ended 
  October 31  October 31 
  2018  2017  2018  2017 
TOTAL REVENUE $105,501  $87,992  $203,986  $171,944 
DIRECT COSTS  76,570   66,815   151,655   134,000 
GROSS PROFIT  28,931   21,177   52,331   37,944 
OPERATING EXPENSES                
General and administrative  11,244   11,343   23,642   23,324 
Other expenses  1,257   833   2,296   1,263 
(Gain) loss on disposal of property, plant and equipment  (107)  33   (286)  (139)
Foreign exchange loss (gain)  918   (144)  944   (940)
Finance costs  208   184   451   365 
Depreciation of property, plant and equipment  10,131   11,779   21,275   23,577 
Amortization of intangible assets  -   -   -   657 
   23,651   24,028   48,322   48,107 
EARNINGS (LOSS) BEFORE INCOME TAX  5,280   (2,851)  4,009   (10,163)
INCOME TAX - PROVISION (RECOVERY) (note 8)                
Current  2,821   2,370   5,577   4,854 
Deferred  (802)  (2,499)  (2,347)  (5,405)
   2,019   (129)  3,230   (551)
NET EARNINGS (LOSS) $3,261  $(2,722) $779  $(9,612)
EARNINGS (LOSS) PER SHARE (note 9)                
Basic $0.04  $(0.03) $0.01  $(0.12)
Diluted $0.04  $(0.03) $0.01  $(0.12)

Major Drilling Group International Inc. 
Interim Condensed Consolidated Statements of Comprehensive Earnings (Loss) 
(in thousands of Canadian dollars) 
  Three months ended  Six months ended 
  October 31  October 31 
  2018  2017  2018  2017 
NET EARNINGS (LOSS) $3,261  $(2,722) $779  $(9,612)
Items that may be reclassified subsequently to profit or loss                
Unrealized (loss) gain on foreign currency translations (net of tax)  (223)  8,198   2,304   (16,687)
Unrealized loss on derivatives (net of tax)  (199)  (313)  (341)  (209)
COMPREHENSIVE EARNINGS (LOSS) $2,839  $5,163  $2,742  $(26,508)

Major Drilling Group International Inc. 
Interim Condensed Consolidated Statements of Changes in Equity 
For the six months ended October 31, 2018 and 2017 
(in thousands of Canadian dollars) 
          Share-based  Retained  Foreign currency     
  Share capital  Reserves  payments reserve  earnings  translation reserve  Total 
BALANCE AS AT MAY 1, 2017 $239,751  $163  $19,250  $63,812  $86,787  $409,763 
Exercise of stock options  1,513   -   (310)  -   -   1,203 
Share-based compensation  -   -   428   -   -   428 
   241,264   163   19,368   63,812   86,787   411,394 
Comprehensive earnings:                        
Net loss  -   -   -   (9,612)  -   (9,612)
Unrealized loss on foreign currency translations  -   -   -   -   (16,687)  (16,687)
Unrealized loss on derivatives  -   (209)  -   -   -   (209)
Total comprehensive loss  -   (209)  -   (9,612)  (16,687)  (26,508)
BALANCE AS AT OCTOBER 31, 2017 $241,264  $(46) $19,368  $54,200  $70,100  $384,886 
BALANCE AS AT MAY 1, 2018 $241,264  $36  $19,721  $41,360  $70,021  $372,402 
Share-based compensation  -   -   277   -   -   277 
   241,264   36   19,998   41,360   70,021   372,679 
Comprehensive earnings:                        
Net earnings  -   -   -   779   -   779 
Unrealized gain on foreign currency translations  -   -   -   -   2,304   2,304 
Unrealized loss on derivatives  -   (341)  -   -   -   (341)
Total comprehensive earnings  -   (341)  -   779   2,304   2,742 
BALANCE AS AT OCTOBER 31, 2018 $241,264  $(305) $19,998  $42,139  $72,325  $375,421 

Major Drilling Group International Inc. 
Interim Condensed Consolidated Statements of Cash Flows 
(in thousands of Canadian dollars) 
  Three months ended  Six months ended 
  October 31  October 31 
  2018  2017  2018  2017 
Earnings (loss) before income tax $5,280  $(2,851) $4,009  $(10,163)
Operating items not involving cash                
Depreciation and amortization  10,131   11,779   21,275   24,234 
(Gain) loss on disposal of property, plant and equipment  (107)  33   (286)  (139)
Share-based compensation  128   189   277   428 
Finance costs recognized in earnings (loss) before income tax  208   184   451   365 
   15,640   9,334   25,726   14,725 
Changes in non-cash operating working capital items  (614)  (4,285)  (3,547)  (2,068)
Finance costs paid  (208)  (184)  (451)  (365)
Income taxes paid  (2,545)  (1,383)  (4,557)  (2,066)
Cash flow from operating activities  12,273   3,482   17,171   10,226 
Repayment of long-term debt  (538)  (805)  (1,273)  (1,646)
Proceeds from draw on long-term debt  -   -   -   15,000 
Issuance of common shares due to exercise of stock options  -   510   -   1,203 
Cash flow (used in) from financing activities  (538)  (295)  (1,273)  14,557 
Payment of consideration for previous business acquisition  -   (5,135)  -   (5,135)
Acquisition of property, plant and equipment (net of direct financing) (note 7)  (7,025)  (5,937)  (12,851)  (10,193)
Proceeds from disposal of property, plant and equipment  7,075   844   7,766   1,620 
Cash flow from (used in) investing activities  50   (10,228)  (5,085)  (13,708)
Effect of exchange rate changes  427   681   900   (2,733)
INCREASE (DECREASE) IN CASH  12,212   (6,360)  11,713   8,342 
CASH, BEGINNING OF THE PERIOD  20,757   40,677   21,256   25,975 
CASH, END OF THE PERIOD $32,969  $34,317  $32,969  $34,317 

Major Drilling Group International Inc. 
Interim Condensed Consolidated Balance Sheets 
As at October 31, 2018 and April 30, 2018 
(in thousands of Canadian dollars) 
  October 31, 2018  April 30, 2018 
Cash $32,969  $21,256 
Trade and other receivables  87,248   88,372 
Note receivable  505   495 
Income tax receivable  2,880   4,517 
Inventories  87,584   82,519 
Prepaid expenses  6,853   2,924 
   218,039   200,083 
PROPERTY, PLANT AND EQUIPMENT (note 7)  170,292   185,364 
GOODWILL  58,052   57,851 
  $471,219  $467,053 
Trade and other payables $59,640  $55,906 
Income tax payable  3,161   3,794 
Current portion of long-term debt  1,394   1,934 
   64,195   61,634 
LONG-TERM DEBT  16,651   17,407 
   95,798   94,651 
Share capital  241,264   241,264 
Reserves  (305)  36 
Share-based payments reserve  19,998   19,721 
Retained earnings  42,139   41,360 
Foreign currency translation reserve  72,325   70,021 
   375,421   372,402 
  $471,219  $467,053 

(in thousands of Canadian dollars, except per share information)


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.


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, 2018, except as noted in note 4.

On December 4, 2018, the Board of Directors authorized the financial statements for issue.

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 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 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 Company’s annual Consolidated Financial Statements for the year ended April 30, 2018, except as noted in note 4.


The following IASB standards, adopted as of May 1, 2018, have had no significant impact on the Company’s Consolidated Financial Statements:

  • IFRS 2 Share-based Payment
  • IFRS 9 Financial Instruments
  • IFRS 15 Revenue from Contracts with Customers

The Company has not applied the following IASB standard that has been issued, but is not yet effective:

IFRS 16 Leases (“IFRS 16”)
IFRS 16, issued in January 2016, replaces IAS 17, Leases. IFRS 16 specifies how to recognize, measure, present and disclose leases.  The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.  Lessor accounting remains substantially unchanged as they continue to classify leases as operating or finance. IFRS 16 is effective for periods beginning on or after January 1, 2019. The Company is in the process of quantifying the impact IFRS 16 will have on the Consolidated Financial Statements.  


IFRS 9 Financial Instruments (“IFRS 9”), replacing IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”), includes finalized guidance on the classification and measurement of financial assets and liabilities, impairment, and hedge accounting.    The Company adopted the new requirements on May 1, 2018 by applying the requirements for classification and measurement, including impairment, retrospectively with no restatement of comparative periods. 

Financial instruments
Under IFRS 9, financial assets are classified and measured at amortized cost, fair value through other comprehensive income (“FVTOCI”) or fair value through profit or loss (“FVTPL”) and financial liabilities are classified and measured as amortized cost or FVTPL, depending on the business model in which they are held and the characteristics of their contractual cash flows.  All of the Company’s financial assets and liabilities are measured at amortized cost.  

IFRS 9 replaces the incurred loss model in IAS 39 with a forward-looking expected credit loss (“ECL”) model.  Since the Company’s trade receivables have a maturity of less than one year, the Company utilized a practical expedient available under the standard and estimated lifetime ECL using historical credit loss experiences, resulting in a minimal impact on the Company’s financial statements.

Hedge accounting
As it was under IAS 39, hedge accounting remains optional under IFRS 9.  Under IFRS 9, the effectiveness test has been replaced with the principle of an "economic relationship". Retrospective assessment of hedge effectiveness is also no longer required. The Company’s interest rate swap and share-forward transaction hedges continue to qualify for hedge accounting under IFRS 9 and as a result, the adoption of IFRS 9 did not have a significant impact on its consolidated financial statements with respect to hedge accounting.

The three types of hedges: cash flow, fair value and net investment, remain the same under IFRS 9. All of the Company’s hedges continue to be classified as FVTOCI.


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.

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 and allowance for doubtful accounts, and impairment testing of goodwill.

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.


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.


Capital expenditures for the three months ended October 31, 2018 were $7,025 (2017 - $5,937) and $12,851 (2017 - $10,244) for the six months ended October 31, 2018.  The Company did not obtain direct financing for the three and six months ended October 31, 2018 (2017 - nil and $51 respectively).

8.            INCOME TAXES

The income tax provision (recovery) for the period can be reconciled to accounting earnings (loss) before income tax as follows:

  Q2 2019  Q2 2018  YTD 2019  YTD 2018 
Earnings (loss) before income tax $5,280  $(2,851) $4,009  $(10,163)
Statutory Canadian corporate income tax rate  27%  27%  27%  27%
Expected income tax expense (recovery) based on statutory rate  1,426   (770)  1,083   (2,744)
Non-recognition of tax benefits related to losses  489   694   1,516   1,811 
Utilization of previously unrecognized losses  (24)  (811)  (72)  (811)
Other foreign taxes paid  178   64   294   199 
Rate variances in foreign jurisdictions  (9)  201   (61)  253 
Permanent differences  37   86   548   299 
Other  (78)  407   (78)  442 
Income tax provision (recovery) recognized in net earnings (loss) $2,019  $(129) $3,230  $(551)

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.


All of the Company’s earnings are attributable to common shares, therefore, net earnings (loss) is used in determining earnings (loss) per share.

  Q2 2019  Q2 2018  YTD 2019  YTD 2018 
Net earnings (loss) $3,261  $(2,722) $779  $(9,612)
Weighted average number of shares:                
Basic (000s)  80,300   80,291   80,300   80,222 
Diluted (000s)  80,311   80,291   80,323   80,222 
Earnings (loss) per share                
Basic $0.04  $(0.03) $0.01  $(0.12)
Diluted $0.04  $(0.03) $0.01  $(0.12)

The calculation of diluted earnings per share for the three and six months ended October 31, 2018 excludes the effect of 3,495,854 and 3,530,102 options, respectively (2017 - 2,726,606 and 2,385,593) as they were anti‐dilutive.

The total number of shares outstanding on October 31, 2018 was 80,299,984 (2017 - 80,229,984).


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, 2018 and in note 4. 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 2019  Q2 2018  YTD 2019  YTD 2018 
Canada - U.S.* $56,493  $52,688  $107,806  $104,870 
South and Central America  29,173   19,394   55,913   38,268 
Asia and Africa  19,835   15,910   40,267   28,806 
  $105,501  $87,992  $203,986  $171,944 
Earnings (loss) from operations                
Canada - U.S. $6,732  $2,066  $8,047  $800 
South and Central America  (620)  (2,442)  (1,358)  (5,530)
Asia and Africa  823   249   1,694   (1,917)
   6,935   (127)  8,383   (6,647)
Finance costs  208   184   451   365 
General corporate expenses**  1,447   2,540   3,923   3,151 
Income tax  2,019   (129)  3,230   (551)
Net earnings (loss) $3,261  $(2,722) $779  $(9,612)

*Canada - U.S. includes revenue of $26,349 and $26,314 for Canadian operations for the three months ended October 31, 2018 and 2017, respectively and $51,003 and $51,341 for the six months ended October 31, 2018 and 2017, respectively.

**General corporate expenses include expenses for corporate offices and stock options.

  Q2 2019  Q2 2018  YTD 2019  YTD 2018 
Capital expenditures                
Canada - U.S. $3,054  $4,078  $6,897  $7,102 
South and Central America  1,677   464   3,451   1,096 
Asia and Africa  2,294   1,395   2,503   2,046 
Total capital expenditures $7,025  $5,937  $12,851  $10,244 

Depreciation and amortization                
Canada - U.S. $4,823  $5,349  $10,170  $11,795 
South and Central America  3,019   3,159   6,254   6,361 
Asia and Africa  2,200   2,446   4,697   5,150 
Unallocated and corporate assets  89   825   154   928 
Total depreciation and amortization $10,131  $11,779  $21,275  $24,234 

  October 31, 2018  April 30, 2018 
Identifiable assets        
Canada - U.S.* $201,214  $188,947 
South and Central America  145,174   137,153 
Asia and Africa  108,522   94,005 
Unallocated and corporate assets  16,309   46,948 
Total identifiable assets $471,219  $467,053 

*Canada - U.S. includes property, plant and equipment at October 31, 2018 of $35,400 (April 30, 2018 - $44,891) for Canadian operations.


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 carrying value of long-term debt approximates its fair value.  The fair value of the interest rate swap included in long‐term debt is measured using quoted interest rates. 

The fair value hierarchy, detailed below, 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.

  • 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).

There were no transfers of amounts between level 1, level 2 and level 3 financial instruments for the quarter ended October 31, 2018. 

Credit risk
As at October 31, 2018, 84.0% (April 30, 2018 - 84.3%) of the Company’s trade receivables were aged as current and 1.4% (April 30, 2018 - 1.3%) of the trade receivables were impaired.

The movements in the allowance for impairment of trade receivables during the six and twelve month periods were as follows:

  October 31, 2018  April 30, 2018 
Opening balance $928  $847 
Increase in impairment allowance  309   500 
Recovery of amounts previously impaired  (44)  (281)
Write-off charged against allowance  (141)  (69)
Foreign exchange translation differences  (47)  (69)
Ending balance $1,005  $928 

Foreign currency risk
As at October 31, 2018, the most significant carrying amounts of net monetary assets (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:

Net exposure on monetary assets   $4,519  $3,387  $2,452  $2,047  $1,719  $(1,154) $(3,032) $970 
EBIT impact +/-10%  502   376   272   227   191   128   337   109 

Liquidity risk
The following table details contractual maturities for the Company’s financial liabilities:

  1 year  2-3 years  4-5 years  Total 
Trade and other payables $59,640  $-  $-  $59,640 
Long-term debt (interest included)  2,026   3,128   16,128   21,282 
  $61,666  $3,128  $16,128  $80,922 


On December 3, 2018, the Company decided to close its operations in Burkina Faso.  This decision is based on the fact that this branch requires significant additional investment to reach an acceptable return on investment, at a time when competition is growing in the country, while the Company sees growth opportunities in other regions.   

Based on preliminary estimates, the Company expects that cash close-down costs will be approximately $1.5 million, which includes severance costs, leases, moving equipment, and other close-down costs.  Additionally, the Company expects to incur additional non-cash expenses between $6.5 and $7.5 million related to deferred tax assets impairment, VAT receivable write-off and impairment charges relating to property, plant and equipment and inventory. 

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Source: GlobeNewswire (December 4, 2018 - 5:00 PM EST)

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