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Press release from CNW Group

Major Drilling Announces Second Quarter Results

Monday, November 26, 2012

Major Drilling Announces Second Quarter Results16:02 EST Monday, November 26, 2012MONCTON, 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(except earnings per share) Q2-13 Q2-12 YTD-13 YTD-12Revenue $199.6 $213.9 $437.2 $378.0Gross 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 49.5Earnings 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, 2012Total 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 MeasuresIn 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 StatementsSome 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 administrative 15,763  13,116  33,062  25,434 Other expenses 3,323  6,045  8,593  8,648 (Gain) loss on disposal of property, plant and equipment (141)  81  (133)  681 Foreign exchange (gain) loss  (112)  44  (1,481)  365 Finance costs 728  964  1,466  1,786 Depreciation of property, plant and equipment 12,416  9,072  24,538  17,467 Amortization of intangible assets 955  294  2,020  479  32,932  29,616  68,065  54,860            EARNINGS BEFORE INCOME TAX  33,767  44,439  79,912  70,694            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 $0.68Diluted $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 translations (net of tax) (1,726)  5,765  5,925  7,574 Unrealized loss on interest swap (net of tax) (9)  -  (153)  -            COMPREHENSIVE EARNINGS $20,614 $37,325 $59,996 $57,026 Major Drilling Group International Inc.Interim Condensed Consolidated Statements of Changes in EquityFor the six months ended October 31, 2011 and 2012(in thousands of Canadian dollars)(unaudited)                            Share-based  Retained  Foreign currency      Share capital  Reserves  payments reserve  earnings  translation reserve  Total                   BALANCE AS AT MAY 1, 2011 $150,642 $- $10,280 $170,425 $(3,662) $327,685                    Exercise of stock options  743     (78)  -  -  665 Share issue (net of issue costs)  76,439  -  -  -  -  76,439 Share-based payments reserve  -     1,121  -  -  1,121 Dividends  -  -  -  (6,242)  -  (6,242)   227,824  -  11,323  164,183  (3,662)  399,668Comprehensive earnings:                   Net earnings  -  -  -  49,452  -  49,452 Unrealized gains on foreign currencytranslations    -    -    -    -    7,574    7,574 Total comprehensive earnings   -  -  -  49,452  7,574  57,026                   BALANCE AS AT OCTOBER 31, 2011 $ 227,824 $  - $11,323 $213,635 $3,912 $456,694                                      BALANCE AS AT MAY 1, 2012 $230,763 $  121 $  11,797 $  246,809 $ (1,791) $487,699                    Share-based payments reserve  (93)     1,572  -   -   1,479 Dividends  -   -  -  (7,915)  -   (7,915)   230,670  121  13,369  238,894  (1,791)  481,263Comprehensive earnings:                   Net earnings  -   -   -   54,224  -   54,224 Unrealized loss on interest swap  -   (153)  -   -  -   (153) Unrealized gains on foreign currencytranslations   -    -    -    -   5,925   5,925 Total comprehensive earnings   -   (153)  -   54,224  5,925  59,996                   BALANCE AS AT OCTOBER 31, 2012 $230,670 $(32) $13,369 $293,118 $4,134 $541,259Major Drilling Group International Inc.Interim Condensed Consolidated Statements of Cash Flows(in thousands of Canadian dollars)(unaudited)             Three months endedSix months ended October 31October 31             2012  2011  2012 2011            OPERATING ACTIVITIES           Earnings before income tax $33,767 $  44,439  $  79,912 $70,694Operating items not involving cash            Depreciation and amortization  13,371  9,366  26,558   17,946 (Gain) loss on disposal of property, plant and equipment (141)  81  (133)  681 Share-based payments reserve 712  567  1,479   1,121 Finance costs recognized in earnings before income tax 728  964  1,466   1,786  48,437  55,417  109,282   92,228Changes in non-cash operating working capital items  19,053  (13,468)  (642)  (22,301)Finance costs paid (729)  (964)  (1,464)  (1,786)Income taxes paid (7,554)  (6,312)  (15,443)  (11,325)Cash flow from operating activities 59,207  34,673  91,733   56,816            FINANCING ACTIVITIES           Repayment of long-term debt (4,071)  (2,039)  (5,635)  (4,229)Proceeds from long-term debt -   15,000  -   25,000Issuance of common shares -   77,104  -   77,104Dividends paid -   -  (7,123)  (5,283)Cash flow (used in) from financing activities (4,071)  90,065  (12,758)  92,592            INVESTING ACTIVITIES           Business acquisitions (net of cash acquired)  -   (66,519)  (813)  (66,519)Acquisition of property, plant and equipment (note 6) (16,111)  (16,083)  (39,512)  (37,493)Proceeds from disposal of property, plant and equipment 998  863  1,266  1,547Cash flow used in investing activities (15,113)  (81,739)  (39,059)  (102,465)            Effect of exchange rate changes 287  (730)  (108)  (1,097)            INCREASE IN CASH  40,310  42,269  39,808   45,846            CASH, BEGINNING OF THE PERIOD 36,735   19,792  37,237  16,215            CASH, END OF THE PERIOD $ 77,045 $   62,061 $  77,045  $  62,061 Major Drilling Group International Inc.Interim Condensed Consolidated Balance SheetsAs at October 31, 2012 and April 30, 2012(in thousands of Canadian dollars)(unaudited)             October 31, 2012 April 30, 2012ASSETS           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 reserve 4,134  (1,791)  541,259  487,699       $721,682 $685,973 MAJOR DRILLING GROUP INTERNATIONAL INC.Notes to INTERIM CONDENSED Consolidated Financial StatementsFOR THE SIX MONTHS ended October 31, 2012 and 2011 (UNAUDITED)(in thousands of Canadian dollars, except per share information)1. NATURE OF ACTIVITIESMajor 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 PRESENTATIONStatement of complianceThese 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 consolidationThese 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 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 annual consolidated financial statements for the year ended April 30, 2012.3.FUTURE ACCOUNTING CHANGESThe 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: DisclosuresIFRS 9 (as amended in 2010) Financial InstrumentsIFRS 10 Consolidated Financial StatementsIFRS 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 BenefitsIAS 27 (reissued) Separate Financial Statements IAS 28 (reissued) Investments in Associates and Joint VenturesIAS 32 (amended) Financial Instruments: PresentationThe Company is currently evaluating the impact of applying these standards to its consolidated financial statements.4.KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGMENTSThe 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 OPERATIONSWith 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 & EQUIPMENTCapital 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 TAXESThe income tax expense for the period can be reconciled to accounting profit as follows:  2013 Q2  2012 Q2  YTD 2013  YTD 2012            Earnings before income tax$33,767 $44,439 $79,912 $ 70,694            Statutory Canadian corporate income tax rate 28%  29%  28%  29%            Expected income tax expense based on statutory rate$9,455 $    12,887 $     22,375 $    20,501Non-recognition of tax benefits related to losses 316  265   631  313Other foreign taxes paid 343  236  698  287Rate variances in foreign jurisdictions 810  (190)  1,391  (488)Other 494  (319)  593  629 $   11,418 $ 12,879 $   25,688 $21,242The Company periodically assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. For those matters where it is probable that an adjustment will be made, the Company recorded its best estimate of these tax liabilities, including related interest charges. Inherent uncertainties exist in estimates of tax contingencies due to changes in tax laws. While management believes they have adequately provided for the probable outcome of these matters, future results may include favorable or unfavorable adjustments to these estimated tax liabilities in the period the assessments are made, or resolved, or when the statute of limitation lapses.8.EARNINGS PER SHAREAll of the Company's earnings are attributable to common shares therefore net earnings are used in determining earnings per share.  2013 Q2  2012 Q2  YTD 2013  YTD 2012            Net earnings for the period$  22,349 $31,560  $    54,224 $     49,452            Weighted average shares outstanding - basic (000's) 79,147  74,246  79,147  73,143            Net effect of dilutive securities:           Stock options (000's) 453  662  537  901Weighted average number of shares - diluted (000's) 79,600  74,908  79,684  74,044            Earnings per share:           Basic$0.28 $0.43 $  0.69 $0.68Diluted$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 INFORMATIONThe 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 America 50,897  68,062  120,310  119,354 Australia, Asia and Africa 54,760  61,641  110,075  113,063             $199,637 $213,854 $437,202 $378,006Earnings from operations            Canada - U.S.$20,305 $18,929 $45,776 $28,915 South and Central America 8,622  16,591  25,373  27,190 Australia, Asia and Africa 9,813  13,811  18,834  24,869  38,740  49,331  89,983  80,974Eliminations (987)  (59)  (466)  (84)  37,753  49,272  89,517  80,890Finance costs 728  964  1,466  1,786General and corporate expenses* 3,258  3,869  8,139  8,410Income tax 11,418  12,879  25,688  21,242Net 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 America 2,613  2,484  5,825  4,755 Australia, Asia and Africa 3,672  2,391  7,699  5,055Unallocated corporate assets 1,501  437  1,969  741Total depreciation and amortization$13,371 $9,366 $26,558 $17,946Canada - 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, 2012Identifiable 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  651,536Eliminations (1,067)  (573)Unallocated and corporate assets 39,051  35,010 $721,682 $685,973Canada - U.S. includes property, plant and equipment for Canadian operations at October 31, 2012 of $98,281 (April 30, 2012 - $87,629).10.BUSINESS ACQUISITIONThe 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 INSTRUMENTSThere 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 valueThe 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 $2,760Long-term debt 47,206  50,986Credit riskAs 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$2,236Increase in impairment allowance 317Write-off charged against allowance (113)Foreign exchange translation differences (6)Balance as at October 31, 2012$2,434Foreign currency riskThe 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, 2012U.S. Dollars$8,189 $45,555If 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 riskThe following table details the Company's contractual maturities for its financial liabilities.Non-derivative financial liabilities:                1 year 2-3 years 4-5 years thereafter Total               Trade and other payables$92,660 $- $- $- $92,660Contingent consideration 750  1,251  151  -  2,152Long-term debt 9,322  15,974  18,044  3,833  47,173 $102,732 $17,225 $18,195 $3,833 $141,985               Derivative financial liabilities:                1 year 2-3 years 4-5 years thereafter Total               Interest rate swap$11 $24 $(2) $- $33 SOURCE: MAJOR DRILLING GROUP INTERNATIONAL INC.For further information: Denis Larocque, Chief Financial Officer   Tel: (506) 857-8636 Fax: (506) 857-9211 ir@majordrilling.com