Major Drilling Reports First Quarter Results and Declares Dividend

About this update from Major Drilling Group International Inc.

MONCTON, NB , Sept. 3, 2014 /CNW/ - Major Drilling Group International Inc. (TSX: MDI) today reported results for its first quarter of fiscal year 2015, ended July 31, 2014 . Highlights       In millions of Canadian dollars (except earnings per share) Q1-15 Q1-14 Revenue $67.6 $108.2 Gross profit 16.7 35.1   As percentage of sales 24.7% 32.5% EBITDA (1) 4.8 19.6   As percentage of revenue 7.0% 18.1% Net (loss) earnings (7.3) 1.5 (Loss) earnings per share (0.09) 0.02 (1) Earnings before interest, taxes, depreciation and amortization, excluding restructuring charges (see "non-gaap financial measures") Cash on hand at quarter-end was $65.5 million while total debt was $22.6 million , for a net cash position of $42.8 million . Major Drilling posted quarterly revenue of $67.6 million , down 38% from the $108.2 million recorded for the same quarter last year. Gross margin percentage for the quarter was 24.7%, compared to 32.5% for the corresponding period last year. General and Administrative costs are down 16% from the same quarter last year and 13% from the previous quarter three months ago. Net loss was $7.3 million or $0.09 per share for the quarter, compared to net earnings of $1.5 million or $0.02 per share for the prior year quarter. Completed acquisition of Taurus Drilling effective August 1 st , 2014 Employees worldwide have worked over 12 months and 6 million hours without a lost time injury. The Board of Directors has declared a semi-annual dividend of $0.10 per share to be paid on November 3, 2014 . "In the quarter, revenue and margins reflected the impact of the lowest pricing that we have seen in 15 years. As senior mining houses focus on cutting costs, they are more likely to defer specialized drilling projects, which are more expensive by nature. The Company, therefore, finds itself competing more often on a pure price basis, and management has to find the optimum balance between price and volume.  Additionally, in a number of jurisdictions, uncertainty as to the policies of host governments or issues around land tenure continues to have an impact on activity levels," said Francis McGuire , President and CEO of Major Drilling .  "With decreasing prices, our margins continue to be affected as we struggle to improve productivity beyond all the gains we have been able to make over the last 18 months.  These levels of pricing are not sustainable beyond the medium term as it will affect the capacity of the industry to maintain the quality of its equipment.  We should note that this quarter our margins were affected by higher than normal repair costs, as we continued to prepare rigs in order to be able to respond rapidly to any customer requests." "Despite the difficult environment, Major Drilling remains debt free, with a net cash position of $42.8 million at the end of the quarter.  During the quarter our net cash decreased by $3.7 million , as we paid our semi-annual dividend of $7.9 million , which was offset by the sale of $9.7 million in equipment in Australia as the Company exited that country.  Capital expenditures for the quarter were $7.1 million , as we purchased 2 rigs and added support equipment, while retiring 20 rigs, which included 15 rigs sold in Australia .  This amount of capital expenditures is higher than usual, as the Company continued to diversify in energy, grade control and our new operation in Brazil .  These initiatives should generate revenue in coming quarters.  Subsequent to the end of the quarter the Company spent $15 million in cash as part of the purchase price in relation to the Taurus acquisition. With this acquisition, which closed on August 1 st , the Company added a new line of activity as well.  We can now provide an even wider range of complimentary services, offering both underground production drilling as well as our existing underground core drilling." "Due to the uncertainty around economic matters impacting the mining market, it is very difficult to predict customer behavior over the next twelve months, as senior customers are still very cautious about investing in future projects. In the immediate future, however, we will be adding revenue from the Taurus acquisition, and we are in a unique position to react quickly when the industry begins to recover as the Company's financial strength has allowed it to invest in safety and to maintain its equipment in excellent condition. For now the Company will continue to focus on cash generation by limiting capital expenditures as necessary, by reducing inventory and by closely managing costs. The Company continues to have a variable cost structure whereby most of its direct costs, including field staff, go up or down with contract revenue, and a large part of the Company's other expenses relates to variable incentive compensation based on the Company's profitability.  Also, during the quarter, we have been able to reduce our general and administrative costs by $1.7 million of which $0.7 million relates to the closure of our Australian operations.  As we did with Australia , we continually review the long-term viability of all our operations," said Mr. McGuire. "As a result of the Taurus acquisition the Company has invested some of its cash in building for the future. We will continue to look to take advantage of the current market conditions by using our strong balance sheet to seek out strategic opportunities to further build our business.  Based on our continuing strong balance sheet the Board of Directors has declared a semi-annual dividend of $0.10 per common share, which will be paid on November 3, 2014 to shareholders of record as of October 10, 2014 . This dividend is designated as an "eligible dividend" for Canadian tax purposes. The Board will continue to closely monitor the Company's balance sheet, and the market in general, in determining the optimal use of its cash resources between acquisitions, capital expenditures and dividends." First quarter ended July 31, 2014 Total revenue for the quarter was $67.6 million , down 38% from revenue of $108.2 million recorded in the same quarter last year. Uncertainty around economic matters impacting the mining market caused some customers to delay or cancel their exploration drilling plans, which impacted the quarter's results compared to last year.  In a number of jurisdictions, uncertainty as to the policies of host governments or issues of land tenure also had an impact on quarter results.  Also, many junior customers have scaled back or suspended drilling activities as compared to last year. Revenue for the quarter from Canada-U.S. drilling operations decreased by 32% to $36.4 million compared to the same period last year.  All of the decrease came from Canada , as our U.S. operation was able to maintain its activity at the same levels as the corresponding quarter last year. South and Central American revenue was down 35% to $14.1 million for the quarter, compared to the prior year quarter. All of the countries in this region, particularly Mexico , Chile and Argentina , were affected by a reduction in work by juniors and the cancellation or reduction of projects.  Additionally, in Colombia , geopolitical factors have slowed exploration efforts of many mining companies.  In Brazil , the Company had its first month of operations, although it is expected that it will take a few months to attain an adequate volume to become profitable. Australian, Asian and African operations reported revenue of $17.0 million , down 49% from the same period last year.  Three main factors affected the region's revenue: 1) Australia , where the Company has shut down operations, 2) Mongolia , which is affected by political uncertainty around mining laws, and 3) Mozambique , where the cancellation of one large project had a significant impact on that operation. The overall gross margin percentage for the quarter was 24.7%, down from 32.5% for the same period last year.  Margins continue to be affected by reduced pricing due to increased competitive pressures.  As well, margins were affected by higher than normal repair costs this quarter, as the Company continued to prepare rigs in order to be able to respond rapidly to any customer requests. General and administrative costs were down 16% from last year at $11.0 million for the quarter compared to $13.0 million in the same period last year.  With the decrease in activity, the Company has reduced its general and administrative costs by implementing reductions of salaried employees, restructuring certain branches, and reducing management salaries.  The Company continues to review the viability of all its operations. Other expenses for the quarter were $0.9 million , down from $1.1 million in the prior year quarter, due primarily to lower incentive compensation expenses given the Company's decreased profitability, which was somewhat offset by higher bad debt provisions. The Annual General Meeting of the shareholders of Major Drilling Group International Inc. will be held at The TMX Broadcast Centre, Gallery, The Exchange Tower, 130 King St. W., Toronto, Ontario , on Thursday, September 4, 2014 at 11:00 am EDT . Non-GAAP Financial Measures In this news release, the Company uses the non-GAAP financial measure, EBITDA excluding restructuring charges, goodwill and intangible impairment and gain on reversal of contingent consideration.  The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance of the Company. These measures do not have a standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with GAAP. Forward-Looking Statements Some of the statements contained in this press release may be forward-looking statements, such as, but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals industry and the demand for the Company's services, the Canadian and international economic environments, the Company's ability to attract and retain customers and to manage its assets and operating costs, sources of funding for its clients, particularly for junior mining companies, competitive pressures, currency movements, which can affect the Company's revenue in Canadian dollars, the geographic distribution of the Company's operations, the impact of operational changes, changes in jurisdictions in which the Company operates (including changes in regulation), failure by counterparties to fulfill contractual obligations, and other factors as may be set forth, as well as objectives or goals, and including words to the effect that the Company or management expects a stated condition to exist or occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements by reason of factors such as, but not limited to, the factors set out in the discussion on pages 15 to 18 of the 2014 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 services companies. To support its customers' mining operations, mineral exploration and environmental activities, Major Drilling maintains field operations and offices in Canada , the United States , Mexico ,  South America , Asia , and Africa . Financial statements are attached. Major Drilling will provide a simultaneous webcast of its quarterly conference call on Thursday, September 4, 2014 at 9:00 AM (EDT) .  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)           Three months ended   July 31   (unaudited)           2014   2013                 TOTAL REVENUE $ 67,551   $ 108,211         DIRECT COSTS 50,884   73,089         GROSS PROFIT 16,667   35,122         OPERATING EXPENSES         General and administrative 10,979   13,047   Other expenses  871   1,065   (Gain) loss on disposal of property, plant and equipment (15)   170   Foreign exchange loss 73   1,224   Finance costs 204   314   Depreciation of property, plant and equipment 13,353   13,175   Amortization of intangible assets 321   342   Restructuring charge 591   2,034   26,377   31,371         (LOSS) EARNINGS BEFORE INCOME TAX (9,710)   3,751         INCOME TAX - PROVISION (RECOVERY) (note 7)         Current 328   3,791   Deferred (2,707)   (1,562)   (2,379)   2,229         NET (LOSS) EARNINGS $ (7,331)   $ 1,522                 (LOSS) EARNINGS PER SHARE (note 8)       Basic $ (0.09)   $ 0.02 Diluted $ (0.09)   $ 0.02 Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Comprehensive (Loss) Earnings (in thousands of Canadian dollars)           Three months ended   July 31   (unaudited)           2014   2013         NET (LOSS) EARNINGS $ (7,331)   $ 1,522         OTHER COMPREHENSIVE LOSS               Items that may be reclassified subsequently to profit or loss         Unrealized loss on foreign currency translations (net of tax) (2,500)   (5,097)         COMPREHENSIVE LOSS $ (9,831)   $ (3,575) Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Changes in Equity For the three months ended July 31, 2013 and 2014 (in thousands of Canadian dollars) (unaudited)                                 Share-based   Retained   Foreign currency         Share capital   payments reserve   earnings   translation reserve   Total                       BALANCE AS AT MAY 1, 2013   $ 230,985   $ 14,204   $ 283,088   $ 10,052   $ 538,329                       Share-based payments reserve   -   530   -   -   530     230,985   14,734   283,088   10,052   538,859 Comprehensive loss:                     Net earnings    -   -   1,522   -   1,522 Unrealized loss on foreign currency translations   -   -   -   (5,097)   (5,097) Total comprehensive loss   -   -   1,522   (5,097)   (3,575)                       BALANCE AS AT JULY 31, 2013   $ 230,985   $ 14,734   $ 284,610   $ 4,955   $ 535,284                                             BALANCE AS AT MAY 1, 2014   $ 230,985   $ 15,937   $ 211,945   $ 25,480   $ 484,347                       Exercise of stock options   12   (3)   -   -   9 Share-based payments reserve   -   355   -   -   355     230,997   16,289   211,945   25,480   484,711 Comprehensive loss:                     Net loss   -   -   (7,331)   -   (7,331) Unrealized loss on foreign currency translations   -   -   -   (2,500)   (2,500) Total comprehensive loss   -   -   (7,331)   (2,500)   (9,831)                       BALANCE AS AT JULY 31, 2014   $ 230,997   $ 16,289   $ 204,614   $ 22,980   $ 474,880 Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Cash Flows (in thousands of Canadian dollars)             Three months ended   July 31   (unaudited)           2014   2013         OPERATING ACTIVITIES       (Loss) earnings before income tax $ (9,710)   $ 3,751 Operating items not involving cash         Depreciation and amortization 13,674   13,517   (Gain) loss on disposal of property, plant and equipment (15)   170   Share-based payments reserve 355   530   Restructuring charge -   665 Finance costs recognized in (loss) earnings before income tax 204   314   4,508   18,947 Changes in non-cash operating working capital items (1,195)   (9,576) Finance costs paid (201)   (310) Income taxes paid (2,200)   (6,351) Cash flow from operating activities 912   2,710         FINANCING ACTIVITIES       Repayment of demand loan (3,354)   - Repayment of long-term debt (1,739)   (13,066) Issuance of common shares 9   - Dividends paid (7,916)   (7,916) Cash flow used in financing activities (13,000)   (20,982)         INVESTING ACTIVITIES       Payment of consideration for previous business acquisition -   (205) Acquisition of property, plant and equipment (note 6) (7,145)   (5,204) Proceeds from disposal of property, plant and equipment 10,634   1,816 Cash flow from (used in) investing activities 3,489   (3,593)         Effect of exchange rate changes (170)   613         DECREASE IN CASH (8,769)   (21,252)         CASH, BEGINNING OF THE PERIOD 74,244   82,311         CASH, END OF THE PERIOD $ 65,475   $ 61,059 Major Drilling Group International Inc. Interim Condensed Consolidated Balance Sheets As at July 31, 2014 and April 30, 2014 (in thousands of Canadian dollars) (unaudited)           July 31, 2014   April 30, 2014 ASSETS               CURRENT ASSETS         Cash $ 65,475   $ 74,244   Trade and other receivables 58,207   66,211   Income tax receivable 11,613   12,179   Inventories 79,979   81,308   Prepaid expenses 5,892   4,690   221,166   238,632         PROPERTY, PLANT AND EQUIPMENT 288,944   307,288         DEFERRED INCOME TAX ASSETS 6,491   5,825         GOODWILL 38,056   38,056         INTANGIBLE ASSETS 1,603   1,923           $ 556,260   $ 591,724                 LIABILITIES               CURRENT LIABILITIES         Demand loan $ 535   $ 3,909   Trade and other payables 35,883   52,155   Income tax payable 972   3,416   Current portion of long-term debt 9,294   9,655   46,684   69,135         LONG-TERM DEBT 12,811   14,187         DEFERRED INCOME TAX LIABILITIES 21,885   24,055   81,380   107,377         SHAREHOLDERS' EQUITY         Share capital 230,997   230,985   Share-based payments reserve 16,289   15,937   Retained earnings 204,614   211,945   Foreign currency translation reserve 22,980   25,480   474,880   484,347           $ 556,260   $ 591,724 MAJOR DRILLING GROUP INTERNATIONAL INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JULY 31, 2014 AND 2013 (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 and Africa . 2. BASIS OF PRESENTATION Statement of compliance These Interim Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB") and using the accounting policies as outlined in the Company's annual Consolidated Financial Statements for the year ended April 30, 2014 . On August 29, 2014 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, 2014 , with the exception of the impact of certain amendments to accounting standards or new interpretations issued by the IASB, which were applicable for fiscal years beginning on or after January 1, 2014 . 3. APPLICATION OF NEW AND REVISED IFRS The following IASB standards, now in effect, have had no significant impact on the Company's Consolidated Financial Statements: IAS 32 (amended) Financial Instruments: Presentation IAS 36 (amended) Impairment of Assets IAS 39 (amended) Financial Instruments: Recognition and Measurement IFRIC 21 Levies The Company has not applied the following revised IASB standards that have been issued, but are not yet effective: IFRS 9 (as amended in 2010) Financial Instruments IFRS 11 (amended) Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations IFRS 15 Revenue from Contracts with Customers IAS 16 (amended) Property, Plant and Equipment IAS 38 (amended) Intangible Assets The Company is currently in the process of assessing the impact of the adoption of these standards on the Consolidated Financial Statements. 4. 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 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 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 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, and the recognition of provisions and accrued liabilities. 5. 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, particularly in South and Central America . 6. PROPERTY PLANT & EQUIPMENT Capital expenditures for the three months ended July 31, 2014 were $7,145 (2013 - $5,204 ). The Company did not obtain direct financing in either quarter. 7. INCOME TAXES The income tax expense for the period can be reconciled to accounting profit as follows:   Q1 2015   Q1 2014         (Loss) earnings before income tax $ (9,710)   $ 3,751         Statutory Canadian corporate income tax rate 27%   28%         Expected income tax expense based on statutory rate $ (2,622)   $ 1,050 Non-recognition of tax benefits related to losses 750   76 Other foreign taxes paid 94   125 Rate variances in foreign jurisdictions (257)   454 Other (344)   524   $ (2,379)   $ 2,229 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 favorable or unfavorable adjustments to these estimated tax liabilities in the period the assessments are made, or resolved, or when the statutes of limitations lapse. 8. (LOSS) EARNINGS PER SHARE All of the Company's earnings are attributable to common shares therefore net earnings are used in determining earnings per share.   Q1 2015   Q1 2014         Net (loss) earnings for the period $ (7,331)   $ 1,522         Weighted average common shares outstanding - basic (000's) 79,162   79,161         Net effect of dilutive securities:       Stock options (000's) -   31 Weighted average common shares - diluted (000's) 79,162   79,192         (Loss) earnings per share:       Basic $ (0.09)   $ 0.02 Diluted $ (0.09)   $ 0.02 The calculation of the diluted (loss) earnings per share for the three months ended July 31, 2014 excludes the effect of 1,956,271 options (2013 - 2,815,212) as they were anti-dilutive. The total number of shares outstanding on July 31, 2014 was 79,163,388 (2013 - 79,161,378). 9. SEGMENTED INFORMATION The Company's operations are divided into three geographic segments corresponding to its management structure, Canada - U.S., South and Central America , and Australia , Asia and Africa . The services provided in each of the reportable 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, 2014 . Management evaluates performance based on (loss) 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:   Q1 2015   Q1 2014 Revenue         Canada - U.S. $ 36,419   $ 53,367   South and Central America 14,105   21,738   Australia, Asia and Africa 17,027   33,106           $ 67,551   $ 108,211         (Loss) earnings from operations         Canada - U.S. $ (613)   $ 7,363   South and Central America (4,718)   (2,087)   Australia, Asia and Africa (2,282)   1,447   (7,613)   6,723 Eliminations -   (152)   (7,613)   6,571 Finance costs 204   314 General corporate expenses* 1,893   2,506 Income tax (2,379)   2,229 Net (loss) earnings   $ (7,331)   $ 1,522 *General and corporate expenses include expenses for corporate offices and stock options. Canada - U.S. includes revenue for the period ended July 31, 2014 of $22,450 ( July 31, 2013 - $38,345 ) for Canadian operations.           Q1 2015   Q1 2014 Depreciation and amortization         Canada - U.S. $ 6,043   $ 5,809   South and Central America 3,654   3,014   Australia, Asia and Africa 3,605   4,123   Unallocated corporate assets 372   571 Total depreciation and amortization $ 13,674   $ 13,517                              July 31, 2014   April 30, 2014 Identifiable assets         Canada - U.S. $ 210,093   $ 197,673   South and Central America 163,653   178,026   Australia, Asia and Africa 130,627   148,806   504,373   524,505 Unallocated and corporate assets 51,887   67,219   $ 556,260   $ 591,724 Canada - U.S. includes property, plant and equipment at July 31, 2014 of $86,995 ( April 30, 2014 - $88,347 ) for Canadian operations. 10. FINANCIAL INSTRUMENTS Fair value The carrying values of cash, trade and other receivables, demand credit facility, demand loan 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, which approximates its fair values, as most debts carry variable interest rates and the remaining fixed rate debts continue to reflect fair value.  The fair value of the interest rate swap included in long-term debt is measured using quoted interest rates.   July 31, 2014   April 30, 2014         Long-term debt $ 22,105   $ 23,842 During the period, certain covenants were not met under the debt agreement.  Due to the level of EBITDA this quarter the debt service ratio of 1.5 to 1 was not met (actual 1.33 to 1). The debt continues to be presented as long-term, consistent with the debt agreement, as the lenders have provided a waiver and the Company's cash position is three times the amount of its debt. Credit risk As at July 31, 2014 , 81.1% of the Company's trade receivables were aged as current ( April 30, 2014 - 79.8%) and 5.9% of the trade receivables were impaired ( April 30, 2014 - 5.1%). The movement in the allowance for impairment of trade receivables during the three month periods were as follows:   July 31, 2014   July 31, 2013         Opening balance $ 3,016   $ 2,790 Increase in impairment allowance 588   203 Write-off charged against allowance (742)   - Foreign exchange translation differences 4   (41) Ending balance $ 2,866   $ 2,952 Foreign currency risk The carrying amounts of net monetary assets that: (i) are denominated in currencies other than the functional currency of the respective Company subsidiary; (ii) cause foreign exchange rate exposure; and (iii) may include intercompany balances with other subsidiaries, is US $430 as of July 31, 2014 . If the Canadian dollar moved by plus or minus 10% at July 31, 2014 , the unrealized foreign exchange gain or loss recognized in net (loss) earnings would move by approximately US $43 . Liquidity risk The following table details contractual maturities for the Company's financial liabilities.   1 year   2-3 years   4-5 years   thereafter   Total                     Demand loan $ 535   $ -   $ -   $ -   $ 535 Trade and other payables     35,883   -   -   -   35,883 Long-term debt       9,904   8,956   2,213   2,206   23,279   $ 46,322   $ 8,956   $ 2,213   $ 2,206   $ 59,697 11. SUBSEQUENT EVENT On August 1, 2014 , the Company entered into the underground percussive/longhole drilling sector with its purchase of the operations of Taurus Drilling Services, based in Canada and the United States .  Through this purchase, which fits with the Company's strategic focus on specialized drilling, the Company acquired 39 underground drill rigs. In addition to the rigs, this acquisition involved support equipment and inventory, existing contracts and receivables, the operation's management team, and other employees, including experienced drillers. Over the past 12 months the operations of Taurus have produced revenue of approximately $38 million . Goodwill arising from this acquisition will be the excess of the total consideration paid over the fair market value of the net assets acquired and amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Taurus and Major.  The purchase price for the transaction was $28.9 million (consisting of $15.9 million in cash, $8.7 million in Major Drilling shares, and $4.3 million in assumption of debt), and an additional maximum amount of $11.5 million tied to performance. The additional payout period extends for three years, commencing on August 1, 2014 , and payments are contingent on growing EBITDA run rates above current levels. As the Company's process of valuing the assets acquired is ongoing, valuation of equipment, inventory, receivables, goodwill, intangible assets and the range of possible outcomes of contingent consideration, is currently in the preliminary stages.   SOURCE MAJOR DRILLING GROUP INTERNATIONAL INC. Denis Larocque, Chief Financial Officer   Tel: (506) 857-8636 Fax: (506) 857-9211 [email protected] Copyright CNW Group 2014

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