Major Drilling Reports Record Third Quarter Revenue and Profits and Increases Dividend

MONCTON, NB, March 5, 2012 /CNW/ - Major Drilling Group International Inc. (TSX: MDI) today reported results for its third quarter of fiscal 2012, ended January 31, 2012.

Highlights
In millions of Canadian dollars (except earnings per share)			Q3-12		Q3-11		YTD-12		YTD-11
Revenue			$182.2		$107.7		$560.2		$345.0
Gross profit			47.1		23.9		172.7		85.5
	As percentage of sales		25.9%		22.2%		30.8%		24.8%
EBITDA^(1)			27.0		10.8		117.4		50.5
	As percentage of sales		14.8%		10.0%		21.0%		14.6%
Net earnings			9.6		1.7		59.0		18.1
Earnings per share			0.12		0.02		0.79		0.25
	(1) Earnings before interest, taxes, depreciation and amortization (see "non-gaap measures")

• Major Drilling posted quarterly revenue of $182.2 million, up nearly 70% from the $107.7 million recorded for the same quarter last year. This represents the highest level of third quarter revenue in the Company's history.
  
  
• Gross margin percentage for the quarter was 25.9% compared to 22.2% for the corresponding period last year.
  
  
• EBITDA increased 150% to $27.0 million compared to the corresponding period last year.
  
  
• Record third quarter earnings were reported at $9.6 million or $0.12 per share for the quarter, compared to earnings of $1.7 million or $0.02 per share for the prior year quarter.
  
  
• The Company has increased its semi-annual dividend by 12.5% to $0.09 per share to be paid on May 2, 2012.

"The Company achieved the highest third quarter revenue and profits in its history. Demand for drilling services continues to increase and customers remain anxious to secure rigs and crews," said Francis McGuire, President and CEO of Major Drilling. "The third quarter is always seasonally the weakest quarter of our fiscal year, as mining and exploration companies shut down, often for extended periods over the holiday season. Nevertheless, we recorded the highest ever utilization rate for a third quarter in our history. We saw our EBITDA grow by 150% compared to the corresponding period last year, despite the heavy ramp-up costs and delays in Canada, which were caused by mild weather."

"Going forward, the outlook for the fourth quarter remains strong, although weather continued to be somewhat challenging throughout February. During the third quarter, we renewed many of our contracts with pricing catching up to market conditions. We expect demand from gold and copper projects to continue to be strong in calendar 2012 assuming prices remain well above economical thresholds required for sustained exploration. Strong demand from coal and iron ore projects has also added a layer of work, which was not present at the peak in 2008," said Mr. McGuire. "Intermediate and junior mining companies with advanced projects have ramped up their already busy drilling programs by adding rigs, and most senior mining companies have increased their exploration budgets for 2012. We are starting to see increased demand for underground services around the world as mines are moving some surface drilling activities underground. Even though underground drilling tends to have lower margins, the Company expects to invest more in this area given that these contracts provide more financial stability, and target a different labour force."

"Our biggest operational challenge continues to be the speed at which we can grow the labour force and shrink the productivity gap of new drillers as they gain experience. We continue to aggressively and successfully invest in the recruitment and training of new drillers. Our ongoing efforts on recruitment and training should allow our global utilization rates to continue to improve as we add more drillers. We are also pleased to report that we have been able to reduce our turnover rate of new entrants by half over the last 12 months. As competition for drillers heats up, wage increases will be required in certain areas to retain and attract the most experienced drillers, which are key to high-quality customer service," observed Mr. McGuire.

"Net capital expenditures for the quarter were $22.5 million as we purchased 19 rigs. We also retired eight rigs through our modernization program. We are continuing the renewal of our fleet, which helps improve productivity, safety and speeds up the training of crews. The greater reliability of these rigs therefore allows us to increase the earning power of each crew. In fact, 60% of our rigs are now less than five years old in an industry where rigs tend to last 20 years."

"The Company is pleased to announce that today its Board of Directors increased its cash dividend by 12.5% to $0.09 per common share payable on May 2, 2012 to shareholders of record as of April 6, 2012. This dividend is designated as an "eligible dividend" for Canadian tax purposes," said Mr. McGuire.

"The Company would like to take this opportunity to welcome Fred Dyment to its Board of Directors.  Mr. Dyment is a Chartered Accountant with over 35 years of experience in the oil and natural gas industry and in international business. He held increasingly senior positions at Ranger Oil Limited, including Chief Financial Officer and President and Chief Executive Officer."

Third quarter ended January 31, 2012

Total revenue for the third quarter was $182.2 million compared to $107.7 million recorded for the prior year period. Part of the increase comes from the acquisition of the Bradley operations. Even without considering this acquisition, revenue was still the highest third quarter revenue in the Company's history. All of the Company's regions contributed to this growth.

Revenue from Canada-U.S. drilling operations was up 83% to $69.8 million for the quarter compared to $38.2 million for the same period last year. U.S. mineral drilling operations continued a strong recovery, particularly from its senior mining customers. In Canada, increased activity levels, combined with the acquisition of Bradley, contributed to the growth of revenue.

In South and Central America, revenue for the quarter was $59.2 million, up 61% from $36.8 million recorded in the prior year quarter. The increase was primarily driven by strong growth in our Mexican and Chilean operations, combined with the addition of the Bradley operations in Colombia and Suriname.

Australian, Asian and African drilling operations reported revenue of $53.2 million, up 63% from $32.7 million reported in the same period last year. Australia and Mongolia accounted for a significant portion of this growth. New operations in Burkina Faso, Mozambique and the DRC, combined with the addition of Bradley's operations in the Philippines, accounted for the rest of the growth in the region.

The overall gross margin percentage for the quarter was 25.9% compared to 22.2% for the same period last year. Third quarter margins are always impacted by a slowdown during the holiday season combined with higher than usual mobilizations, demobilizations and increased repairs during this period. This quarter, mild weather in Canada also caused delays in mobilizing to certain jobs.

General and administrative costs were $16.5 million for the quarter compared to $10.1 million in the same period last year. The increase was due to three main factors: i) new Bradley operations; ii) new operations in Burkina Faso, Mozambique and the DRC; and iii) increased costs to support the strong growth in activity levels.

Other expenses were $3.4 million for the quarter compared to $1.6 million for the same period last year, due to higher incentive compensation expenses given the Company's improved profitability and increased provision for bad debt.

Depreciation and amortization expense increased to $12.0 million for the quarter compared to $8.0 million for the same quarter last year. Two thirds of the increase relates to the acquisition of Bradley, including the amortization of intangible assets, which are amortized over four years. Investments in equipment over the last year account for the rest of the increase.

Non-GAAP Financial Measures

In this news release, the Company uses the following non-GAAP financial measures: EBITDA and EBITDA margin. 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.

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 17 to 20 of the 2011 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, March 6, 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 webcast. 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						Nine months ended
		January 31						January 31
		2012			2011			2012			2011
TOTAL REVENUE		$	182,188		$	107,720		$	560,194		$	345,018
DIRECT COSTS			135,068			83,847			387,520			259,512
GROSS PROFIT			47,120			23,873			172,674			85,506
OPERATING EXPENSES
	General and administrative		16,522			10,118			41,956			29,640
	Other expenses		3,388			1,573			12,036			6,005
	Loss (gain) on disposal of property, plant and equipment		635			391			1,316			(427)
	Foreign exchange (gain) loss		(384)			1,028			(19)			(220)
	Finance costs		874			265			2,660			876
	Depreciation and amortization (note 15)		12,017			8,048			29,963			22,742
			33,052			21,423			87,912			58,616
EARNINGS BEFORE INCOME TAX			14,068			2,450			84,762			26,890
INCOME TAX - PROVISION (RECOVERY) (note 12)
	Current		(3,910)			597			13,377			9,447
	Deferred		8,412			182			12,367			(683)
			4,502			779			25,744			8,764
NET EARNINGS		$	9,566		$	1,671		$	59,018		$	18,126
EARNINGS PER SHARE (note 13)
Basic *		$	0.12		$	0.02		$	0.79		$	0.25
Diluted **		$	0.12		$	0.02		$	0.78		$	0.25
* Based on 78,948,691 and 71,579,811 daily weighted average shares outstanding for the quarter ended January 31, 2012 and 2011, respectively and on 75,078,293 and 71,451,882 daily weighted average shares outstanding for the fiscal year to date 2012 and 2011, respectively. The total number of shares outstanding on January 31, 2012 was 79,086,376. ** Based on 80,067,340 and 72,534,171 daily weighted average shares outstanding for the quarter ended January 31, 2012 and 2011, respectively, and on 76,046,641 and 72,042,816 daily weighted average shares outstanding for the fiscal year to date 2012 and 2011, respectively.
Major Drilling Group International Inc.
Interim Condensed Consolidated Statements of Comprehensive Earnings (Loss)
(in thousands of Canadian dollars)
(unaudited)
		Three months ended						Nine months ended
		January 31						January 31
		2012			2011			2012			2011
NET EARNINGS		$	9,566		$	1,671		$	59,018		$	18,126
OTHER COMPREHENSIVE EARNINGS
	Unrealized gains (losses) on foreign currency translations (net of tax of $0)		2,286			(4,315)			9,860			4,280
	Unrealized loss on cash flow hedge (net of tax of $0)		(119)			-			(119)			-
COMPREHENSIVE EARNINGS (LOSS)		$	11,733		$	(2,644)		$	68,759		$	22,406

Major Drilling Group International Inc.
Interim Condensed Consolidated Statements of Changes in Equity
For the nine months ended January 31, 2011 and 2012
(in thousands of Canadian dollars)
(unaudited)
		Share capital			Reserves			Share based payments reserve			Retained earnings			Foreign currency translation reserve			Total
BALANCE AS AT MAY 1, 2010		$	144,919		$	-		$	9,236		$	153,358		$	-		$	307,513
	Exercise of stock options		2,011			-			(599)			-			-			1,412
	Share based payments reserve		-			-			1,906			-			-			1,906
	Dividends		-			-			-			(5,243)			-			(5,243)
			146,930			-			10,543			148,115			-			305,588
Comprehensive earnings:
	Net earnings		-			-			-			18,126			-			18,126
	Unrealized gains on foreign currency translations		-			-			-			-			4,280			4,280
	Total comprehensive earnings		-			-			-			18,126			4,280			22,406
BALANCE AS AT JANUARY 31, 2011		$	146,930		$	-		$	10,543		$	166,241		$	4,280		$	327,994
BALANCE AS AT MAY 1, 2011		$	150,642		$	-		$	10,280		$	170,425		$	(3,662)		$	327,685
	Exercise of stock options		2,022			-			(322)			-			-			1,700
	Share issue (net of issue costs) (note 11)		76,439			-			-			-			-			76,439
	Share based payments reserve		-			-			1,766			-			-			1,766
	Dividends		-			-			-			(6,242)			-			(6,242)
			229,103			-			11,724			164,183			(3,662)			401,348
Comprehensive earnings:
	Net earnings		-			-			-			59,018			-			59,018
	Unrealized gains on foreign currency translations		-			-			-			-			9,860			9,860
	Unrealized loss on cash flow hedge		-			(119)			-			-			-			(119)
Total comprehensive earnings			-			(119)			-			59,018			9,860			68,759
BALANCE AS AT JANUARY 31, 2012		$	229,103		$	(119)		$	11,724		$	223,201		$	6,198		$	470,107

Major Drilling Group International Inc.
Interim Condensed Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
(unaudited)
		Three months ended						Nine months ended
		January 31						January 31
		2012			2011			2012			2011
OPERATING ACTIVITIES
Earnings before income tax		$	14,068		$	2,450		$	84,762		$	26,890
Operating items not involving cash
	Depreciation and amortization (note 15)		12,017			8,048			29,963			22,742
	Loss (gain) on disposal of property, plant and equipment		635			391			1,316			(427)
	Share based payments reserve		645			695			1,766			1,906
Finance costs recognized in earnings before income tax			874			265			2,660			876
			28,239			11,849			120,467			51,987
Changes in non-cash operating working capital items			17,672			7,080			(4,629)			(4,784)
Finance costs paid			(938)			(265)			(2,724)			(876)
Income taxes (paid) recovered			(4,915)			2,188			(16,240)			473
Cash flow from operating activities			40,058			20,852			96,874			46,800
FINANCING ACTIVITIES
Repayment of long-term debt			(11,588)			(1,890)			(15,817)			(7,124)
Proceeds from long-term debt			-			-			25,000			-
Repayment of short-term debt			(5,141)			-			(5,141)			-
Proceeds from short-term debt			-			-			-			10,400
Issuance of common shares			1,035			132			78,139			1,412
Dividends paid			(6,242)			(5,243)			(11,525)			(9,993)
Cash flow (used in) from financing activities			(21,936)			(7,001)			70,656			(5,305)
INVESTING ACTIVITIES
Business acquisitions (net of cash acquired) (note 16)			(7,960)			(30)			(74,479)			(2,567)
Acquisition of property, plant and equipment (net of direct financing)			(22,539)			(18,310)			(60,032)			(40,518)
Proceeds from disposal of property, plant and equipment			164			572			1,711			3,929
Cash flow used in investing activities			(30,335)			(17,768)			(132,800)			(39,156)
Effect of exchange rate changes			269			237			(828)			(404)
(DECREASE) INCREASE IN CASH			(11,944)			(3,680)			33,902			1,935
CASH, BEGINNING OF THE PERIOD			62,061			35,847			16,215			30,232
CASH, END OF THE PERIOD		$	50,117		$	32,167		$	50,117		$	32,167
Major Drilling Group International Inc.
Interim Condensed Consolidated Balance Sheets
As at January 31, 2012 and April 30, 2011
(in thousands of Canadian dollars)
(unaudited)
		January 31, 2012			April 30, 2011
ASSETS
CURRENT ASSETS
	Cash	$	50,117		$	16,215
	Trade and other receivables		122,722			100,300
	Income tax receivable		4,719			2,720
	Inventories		99,703			69,864
	Prepaid expenses		6,635			8,439
			283,896			197,538
PROPERTY, PLANT AND EQUIPMENT (note 7)			315,160			235,473
DEFERRED INCOME TAX ASSETS			4,659			11,575
GOODWILL (note 8)			53,421			28,316
INTANGIBLE ASSETS (note 9)			7,370			1,235
		$	664,506		$	474,137
LIABILITIES
CURRENT LIABILITIES
	Trade and other payables	$	100,357		$	88,599
	Income tax payable		4,789			4,297
	Short-term debt		7,893			7,919
	Current portion of long-term debt (note 10)		8,799			8,402
			121,838			109,217
CONTINGENT CONSIDERATIONS			2,760			2,612
LONG-TERM DEBT (note 10)			44,005			16,630
DEFERRED INCOME TAX LIABILITIES			25,344			17,993
DEFERRED REVENUE			452			-
			194,399			146,452
SHAREHOLDERS' EQUITY
	Share capital (note 11)		229,103			150,642
	Reserves		(119)			-
	Share based payments reserve		11,724			10,280
	Retained earnings		223,201			170,425
	Foreign currency translation reserve		6,198			(3,662)
			470,107			327,685
		$	664,506		$	474,137

MAJOR DRILLING GROUP INTERNATIONAL INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2012 AND 2011 (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 maintains operations on every continent.

2. BASIS OF PRESENTATION

Statement of compliance
International Financial Reporting Standards ("IFRS") require entities that adopt IFRS to make an explicit and unreserved statement, in their first annual IFRS financial statements, of compliance with IFRS. The Company will make this statement when it issues its financial statements for the year ending April 30, 2012. These 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 the Company expects to adopt in its consolidated financial statements for the year ending April 30, 2012.

Basis of consolidation
The 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 preparation
The Interim Condensed Consolidated Financial Statements have been prepared based on the accounting policies presented in the first quarter Notes to Interim Condensed Consolidated Financial Statements for the three months ended July 31, 2011.

3. FUTURE ACCOUNTING CHANGES

The 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: Disclosures
	IFRS 9 (as amended in 2010) Financial Instruments
	IFRS 10 Consolidated Financial Statements
	IFRS 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 Benefits
	IAS 27 (reissued) Separate Financial Statements
	IAS 28 (reissued) Investments in Associates and Joint Ventures
	IAS 32 (amended) Financial Instruments: Presentation

The Company is currently evaluating the impact of applying these standards to its Consolidated Financial Statements.

4. SIGNIFICANT NEW ACCOUNTING POLICIES

Derivative financial instruments
The Company has entered into a derivative financial instrument, in the form of an interest rate swap, to manage its exposure to interest rate risk. The derivative is initially recognized at fair value at the date the derivative contract is executed and is subsequently re-measured to fair value at each reporting date. The resulting gain or loss is recognized in comprehensive earnings unless the derivative is considered to be ineffective, in which event it is recognized in profit or loss.

Hedge accounting
The Company designates the derivative as a cash flow hedge. At the inception of the hedge, and on an ongoing basis, the Company documents whether the hedging instrument used in the hedging relationship is highly effective in offsetting changes in cash flows of the hedged item.

Cash flow hedge
The effective portion of changes in the fair value of the derivative is deferred in equity. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.

Hedge accounting is discontinued when the Company revokes the hedging relationship, the hedging instrument expires or is terminated, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time is recognized immediately in profit or loss.

5. KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGMENTS

The preparation of financial statements in conformity with IFRSs 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, determination of cash generating units ("CGUs"), the degree of componentization of property, plant and equipment, and the recognition of provisions and accrued liabilities.

6. FIRST TIME ADOPTION OF IFRS

For the overall impact of IFRS on the opening balance sheet as at transition date, including a discussion of the optional exemptions taken and the applicable mandatory exceptions, refer to Note 6 in the first quarter Notes to Interim Condensed Consolidated Financial Statements for the three months ended July 31, 2011.

The following reconciliations present the adjustments made to the Company's previous GAAP financial results of operations and financial position to comply with IFRS 1 First-time Adoption of International Financial Reporting Standards ("IFRS 1"). A discussion of transitional adjustments follows the reconciliations.

IFRS Consolidated Balance Sheet
As at January 31, 2011
								(a)			(b)			(c)			(d)			(e)			(f)
ASSETS					Opening						Share based
		Previous			IFRS						payments			Deferred			Contingent			Fair value as			Building
		GAAP			restatements *			Adjustments			reserve			share units			consideration			deemed cost			componentization			IFRS
CURRENT ASSETS
	Cash	$	32,167		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	32,167
	Trade and other receivables		70,999			-			-			-			-			-			-			-			70,999
	Income tax receivable		4,784			-			-			-			-			-			-			-			4,784
	Inventories		67,155			-			-			-			-			-			-			-			67,155
	Prepaid expenses		5,345			-			-			-			-			-			-			-			5,345
			180,450			-			-			-			-			-			-			-			180,450
PROPERTY, PLANT AND EQUIPMENT			229,995			(11,877)			-			-			-			-			544			85			218,747
DEFERRED INCOME TAX ASSETS			10,643			469			-			-			-			-			(116)			(12)			10,984
GOODWILL			25,559			2,011			-			-			-			741			-			-			28,311
INTANGIBLE ASSETS			1,499			-			-			-			-			-			-			-			1,499
		$	448,146		$	(9,397)		$	-		$	-		$	-		$	741		$	428		$	73		$	439,991
LIABILITIES
CURRENT LIABILITIES
	Trade and other payables	$	57,898		$	(35)		$	-		$	-		$	26		$	-		$	-		$	-		$	57,889
	Income tax payable		7,481			-			-			-			-			-			-			-			7,481
	Short-term debt		11,129			-			-			-			-			-			-			-			11,129
	Current portion of long-term debt		6,701			-			-			-			-			-			-			-			6,701
			83,209			(35)			-			-			26			-			-			-			83,200
CONTINGENT CONSIDERATION			-			2,011			-			-			-			741			-			-			2,752
LONG-TERM DEBT			10,178			-			-			-			-			-			-			-			10,178
DEFERRED INCOME TAX LIABILITIES			16,441			(617)			-			-			-			-			25			18			15,867
			109,828			1,359			-			-			26			741			25			18			111,997
SHAREHOLDERS' EQUITY
	Share capital		143,847			2,484			599			-			-			-			-			-			146,930
	Share based payments reserve		12,605			(1,906)			(599)			443			-			-			-			-			10,543
	Retained earnings		221,919			(55,667)			-			(443)			(26)			-			403			55			166,241
	Foreign currency translation reserve		(40,053)			44,333			-			-			-			-			-			-			4,280
			338,318			(10,756)			-			-			(26)			-			403			55			327,994
		$	448,146		$	(9,397)		$	-		$	-		$	-		$	741		$	428		$	73		$	439,991
* total of May 1, 2010 transitional adjustments to re-state previous GAAP to IFRS

 

IFRS Consolidated Statement of Operations
For the three months ended January 31, 2011					(c)			(d)			(f)			(g)
					Share based			Deferred			Fair value			Building
		Previous GAAP			payments			share units			as deemed cost			componentization			IFRS
TOTAL REVENUE		$	107,720		$	-		$	-		$	-		$	-		$	107,720
DIRECT COSTS			83,847			-			-			-			-			83,847
GROSS PROFIT			23,873			-			-			-			-			23,873
OPERATING EXPENSES
	General and administrative		10,112			-			6			-			-			10,118
	Other expenses		1,434			139			-			-			-			1,573
	Loss on disposal of property, plant and equipment		391			-			-			-			-			391
	Foreign exchange loss		1,028			-			-			-			-			1,028
	Finance costs		265			-			-			-			-			265
	Depreciation and amortization		8,257			-			-			(181)			(28)			8,048
			21,487			139			6			(181)			(28)			21,423
EARNINGS (LOSS) BEFORE INCOME TAX			2,386			(139)			(6)			181			28			2,450
INCOME TAX - PROVISION (RECOVERY)
	Current		597			-			-			-			-			597
	Deferred		125			-			-			47			10			182
			722			-			-			47			10			779
NET EARNINGS (LOSS)		$	1,664		$	(139)		$	(6)		$	134		$	18		$	1,671
IFRS Consolidated Statement of Operations
For the nine months ended January 31, 2011					(c)			(d)			(f)			(g)
					Share based			Deferred			Fair value			Building
		Previous GAAP			payments			share units			as deemed cost			componentization			IFRS
TOTAL REVENUE		$	345,018		$	-		$	-		$	-		$	-		$	345,018
DIRECT COSTS			259,512			-			-			-			-			259,512
GROSS PROFIT			85,506			-			-			-			-			85,506
OPERATING EXPENSES
	General and administrative		29,614			-			26			-			-			29,640
	Other expenses		5,562			443			-			-			-			6,005
	Gain on disposal of property, plant and equipment		(427)			-			-			-			-			(427)
	Foreign exchange gain		(220)			-			-			-			-			(220)
	Finance costs		876			-			-			-			-			876
	Depreciation and amortization		23,371			-			-			(544)			(85)			22,742
			58,776			443			26			(544)			(85)			58,616
EARNINGS (LOSS) BEFORE INCOME TAX			26,730			(443)			(26)			544			85			26,890
INCOME TAX - PROVISION (RECOVERY)
	Current		9,447			-			-			-			-			9,447
	Deferred		(854)			-			-			141			30			(683)
			8,593			-			-			141			30			8,764
NET EARNINGS (LOSS)		$	18,137		$	(443)		$	(26)		$	403		$	55		$	18,126
IFRS Consolidated Statement of Comprehensive Earnings (Loss)
For the three months ended January 31, 2011
					(b)			(c)			(e)			(f)
					Share based			Deferred			Fair value			Building
		Previous GAAP			payments reserve			share units			as deemed cost			componentization			IFRS
NET EARNINGS (LOSS)		$	1,664		$	(139)		$	(6)		$	134		$	18		$	1,671
OTHER COMPREHENSIVE EARNINGS
	Unrealized loss on foreign currency translation (net of tax of $0)		(4,315)			-			-			-			-			(4,315)
COMPREHENSIVE EARNINGS (LOSS)		$	(2,651)		$	(139)		$	(6)		$	134		$	18		$	(2,644)
IFRS Consolidated Statement of Comprehensive Earnings (Loss)
For the nine months ended January 31, 2011
					(b)			(c)			(e)			(f)
					Share based			Deferred			Fair value			Building
		Previous GAAP			payments reserve			share units			as deemed cost			componentization			IFRS
NET EARNINGS (LOSS)		$	18,137		$	(443)		$	(26)		$	403		$	55		$	18,126
OTHER COMPREHENSIVE EARNINGS
	Unrealized gain on foreign currency translation (net of tax of $0)		4,280			-			-			-			-			4,280
COMPREHENSIVE EARNINGS (LOSS)		$	22,417		$	(443)		$	(26)		$	403		$	55		$	22,406

Adjustments required to transition to IFRS:

	a)	Adjustments - Subsequent to the release of the April 30, 2011 annual consolidated financial statements, management identified adjustments required for a component of deferred tax and classification of a component of stock based payments in the Company's April 30, 2010, July 31, 2010 and April 30, 2011 historical annual and interim consolidated financial statements.
	b)	Share based payments - The Company's policy under Canadian GAAP was to use the straight-line method to account for options that vest in installments over time. Under IFRS, each installment is accounted for as a separate share option grant with its own distinct vesting period, hence the fair value of each tranche differs. In addition, Canadian GAAP permits companies to either estimate the forfeitures at the grant date or record the entire expense as if all share based payments vest and then record forfeitures as they occur. IFRS requires that forfeitures be estimated at the time of grant to eliminate distortion of remuneration expense recognized during the vesting period. The estimate is revised if subsequent information indicates that actual forfeitures are likely to differ from previous estimates.
	c)	Deferred Share Units ("DSUs") - The Company's policy under Canadian GAAP was to value the DSUs using the intrinsic value at each reporting date. Under IFRS we use the fair value, which is affected by changes in underlying volatility of the stock as well as changes in the stock price.
	d)	Contingent consideration - Under Canadian GAAP, contingent consideration is recognized as part of the purchase cost when it can be reasonably estimated at the acquisition date and the outcome of the contingency can be determined beyond reasonable doubt. Under IFRS, contingent consideration, regardless of probability considerations, is recognized at fair value at the acquisition date. The Company has booked contingent considerations for the SMD Services and the North Star Drilling acquisitions.
	e)	Fair value as deemed cost - The Company has applied the IFRS 1 exemption as described in the "exceptions and exemptions applied" section presented in the first quarter Notes to Interim Condensed Consolidated Financial Statements for the three months ended July 31, 2011.
	f)	Building componentization - Under Canadian GAAP, costs incurred for property, plant and equipment on initial recognition are allocated to significant components when practicable. Under IFRS, costs incurred for plant and equipment on initial recognition are allocated to significant components, capitalized and depreciated separately over the estimated useful lives of each component. Practicability of allocating costs to significant components is not considered under IFRS. Costs incurred subsequent to the initial purchase of property, plant and equipment are capitalized when it is probable that future economic benefits will flow to the Company and the costs can be measured reliably. Upon capitalization, the carrying amount of components replaced, if any, are written off. The Company has componentized buildings.

7. PROPERTY, PLANT AND EQUIPMENT

Changes in the property, plant and equipment balance were as follows for the periods:

Cost	Land			Buildings			Drills			Auto			Other			Total
Balance as at April 30, 2011	$	1,375		$	11,201		$	257,838		$	91,977		$	25,501		$	387,892
Additions		-			127			45,397			11,811			3,138			60,473
Disposals		-			-			(6,085)			(2,582)			(47)			(8,714)
Business acquisitions		367			9,382			28,727			4,474			401			43,351
Effect of exchange rate changes and other		36			89			2,016			4,691			(141)			6,691
Balance as at January 31, 2012	$	1,778		$	20,799		$	327,893		$	110,371		$	28,852		$	489,693
Accumulated Depreciation	Land			Buildings			Drills			Auto			Other			Total
Balance as at April 30, 2011	$	-		$	(2,791)		$	(84,421)		$	(48,095)		$	(17,112)		$	(152,419)
Disposals		-			-			3,725			1,923			39			5,687
Depreciation		-			(594)			(16,438)			(9,968)			(1,388)			(28,388)
Effect of exchange rate changes and other		-			5			753			564			(735)			587
Balance as at January 31, 2012	$	-		$	(3,380)		$	(96,381)		$	(55,576)		$	(19,196)		$	(174,533)
Net book value April 30, 2011	$	1,375		$	8,410		$	173,417		$	43,882		$	8,389		$	235,473
Net book value January 31, 2012	$	1,778		$	17,419		$	231,512		$	54,795		$	9,656		$	315,160

 

There were no impairments recorded as at January 31, 2012, April 30, 2011 or January 31, 2011. The Company has assessed whether there is any indication that an impairment loss recognized in prior periods for property, plant and equipment may no longer exist or may have decreased. There were no impairments requiring reversal as at January 31, 2012, April 30, 2011 or January 31, 2011.

Capital expenditures were $22,833 and $18,310 for the three months ended January 31, 2012 and 2011 respectively, and $60,473 and $40,568 for the nine months ended January 31, 2012 and 2011, respectively. The Company obtained direct financing of $294 and $441 for the three and nine months ended January 31, 2012, respectively (three months ended January 31, 2011 - nil; nine months ended January 31, 2011 - $50).


8. GOODWILL

Changes in the goodwill balance were as follows:

Balance as at April 30, 2011	$	28,316
Goodwill on acquisition (note 17)		25,088
Effect of movement in exchange rates		17
Balance as at January 31, 2012	$	53,421

For a full discussion on allocation of goodwill to cash generating units ("CGUs"), refer to Note 8 in the first quarter Notes to Interim Condensed Consolidated Financial Statements for the three months ended July 31, 2011.

Goodwill from the acquisition of Bradley Group Limited, as disclosed in Note 16, has not been allocated to a CGU since the value is preliminary.


9. INTANGIBLE ASSETS

Changes in the intangible assets balance were as follows:

Balance as at April 30, 2011	$	1,235
Intangible assets on acquisition (note 17)		7,666
Amortization		(1,575)
Effect of movement in exchange rates		44
Balance as at January 31, 2012	$	7,370

10. LONG-TERM DEBT

		January 31, 2012			April 30, 2011
Revolving equipment and acquisition loan (authorized $50,000), bearing interest at either the bank's prime rate plus 0.75% or the bankers' acceptance rate plus 2.25% for Canadian dollar draws, and either the bank's U.S. dollar base rate in Canada plus 0.75% or the bank's LIBOR plus 2.25% for U.S. dollar draws, interest only payments required until maturity, maturing in September 2016, secured by corporate guarantees of companies within the group.		$	11,223		$	-
Non-revolving term loan, bearing interest at either the bank's prime rate plus 0.75% or the bankers' acceptance rate plus 2.25% for Canadian dollar draws, and either the bank's U.S. dollar base rate in Canada plus 0.75% or the bank's LIBOR plus 2.25% for U.S. dollar draws, payable in monthly installments of $417, maturing in September 2016, secured by corporate guarantees of companies within the group.			23,333			-
Revolving/non-revolving equipment and acquisition loan (authorized $45,000), bearing interest at either the bank's prime rate plus 1.0% or the bankers' acceptance rate plus 2.5% for Canadian dollar draws, and either the bank's U.S. dollar base rate in Canada plus 1.0% or the bank's LIBOR plus 2.5% for U.S. dollar draws, secured by corporate guarantees of companies within the group. This facility was refinanced in September 2011.			-			24,552
Term loan bearing interest at 5.9%, payable in monthly installments of $84, unsecured, maturing in August 2021.			9,584			-
Term loans bearing interest at rates ranging from 0% to 6.99%, payable in monthly installments of $25, secured by certain equipment, maturing through 2016.			545			480
Note payable bearing interest at 4%, repayable over three years, maturing in September 2014.			8,000			-
Derivative financial instrument with a notional principal amount of $23,333, swapping Canadian-Bankers' Acceptance- Canadian Dealer Offered Rate for an annual fixed rate of 3.665%, maturing in September 2016.			119			-
			52,804			25,032
Current portion			8,799			8,402
		$	44,005		$	16,630

The required annual principal repayments per remaining fiscal years on long-term debt are as follows:

2012		$	1,584
2013			8,809
2014			8,598
2015			9,088
2016			4,402
2017 and beyond			20,323
		$	52,804

The Company hedges its exposure to floating rates under the non-revolving term loan via an interest rate swap, exchanging a variable rate interest payment for a fixed rate interest payment. The interest swap contract was entered into early in the current quarter. As at January 31, 2012 the swap is deemed effective and is recognized as a cash flow hedge.

Under the terms of certain of the Company's debt agreements, the Company must satisfy certain financial covenants. Such agreements also limit, among other things, the Company's ability to incur additional indebtedness, create liens, engage in mergers or acquisitions and make dividend and other payments. The Company, at all times, was in compliance with all covenants and other conditions imposed by its debt agreements.

11. SHARE CAPITAL

On March 9, 2011, the Company announced a stock split for the issued and outstanding common shares on a three for one basis. The record date for the stock split was March 23, 2011. All share and stock option numbers have been retroactively adjusted to reflect the stock split to provide more comparable information.

On September 28, 2011, the Company issued a total of 5,900,000 Subscription Receipts at a price of $11.90 per Subscription Receipt for aggregate gross proceeds of $70,210. These Subscription Receipts were subsequently converted to 5,900,000 common shares in the Company upon the closing of the acquisition by the Company of Bradley Group Limited on September 30, 2011. The Company used the net proceeds of the offering to fund a portion of the purchase price in connection with the acquisition. On October 25, 2011, the Company issued a further 885,000 common shares for further aggregate gross proceeds of $10,531 as a result of the exercise by the underwriters of an over allotment option to purchase an additional 885,000 common shares of the Company for $11.90 per share. The Company is using the net proceeds from the over allotment exercise for general corporate purposes.

Authorized
Unlimited number of fully paid common shares, without nominal or par value, with each share carrying one vote and a right to dividends when declared.



The movement in the Company's issued and outstanding share capital during the period is as follows:

	Number of		Share
	shares (000's)		capital
Balance as at April 30, 2011	72,040		$	150,642
Exercise of stock options	261			2,022
Share issue (net of issue costs)*	6,785			76,439
Balance as at January 31, 2012	79,086		$	229,103
*share issue costs total $4,302

 12. INCOME TAXES

The income tax expense for the period can be reconciled to accounting profit as follows:

	2012 Q3			2011 Q3			2012 YTD			2011 YTD
Earnings before income tax	$	14,068		$	2,450		$	84,762		$	26,890
Statutory Canadian corporate income tax rate		29%			30%			29%			30%
Expected income tax expense based on statutory
rate	$	4,080		$	735		$	24,581		$	8,067
Non-recognition of tax benefits related to losses		47			352			360			605
Other foreign taxes paid		273			62			560			271
Rate variances in foreign jurisdictions		(137)			(441)			(625)			(1,389)
Other		239			71			868			1,210
	$	4,502		$	779		$	25,744		$	8,764

 
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 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.


13. EARNINGS PER SHARE

All of the Company's earnings are attributable to common shares therefore net earnings are used in determining earnings per share.

	2012 Q3			2011 Q3			2012 YTD			2011 YTD
Net earnings for the period	$	9,566		$	1,671		$	59,018		$	18,126
Weighted average shares outstanding - basic (000's)		78,949			71,580			75,078			71,452
Net effect of dilutive securities:
Stock options		1,118			954			969			591
Weighted average number of shares - diluted (000's)		80,067			72,534			76,047			72,043
Earnings per share:
Basic	$	0.12		$	0.02		$	0.79		$	0.25
Diluted	$	0.12		$	0.02		$	0.78		$	0.25

 

There were no anti-dilutive options for the three months ended January 31, 2012 and 2011 and the nine months ended January 31, 2012 while the calculation of diluted earnings per share for the nine months ended January 31, 2011 exclude the effect of 30,543 options as they were anti-dilutive.

14. 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 drilling segments are essentially the same. The accounting policies of the segments are the same as those described in Note 4 presented in the first quarter Notes to Interim Condensed Consolidated Financial Statements for the three months ended July 31, 2011. Management evaluates performance based on earnings from operations in these three geographic segments before finance costs and income tax. Data relating to each of the Company's reportable segments is presented as follows:

		2012 Q3			2011 Q3			2012 YTD			2011 YTD
Revenue
	Canada - U.S.	$	69,805		$	38,191		$	215,394		$	129,211
	South and Central America		59,168			36,836			178,522			118,896
	Australia, Asia and Africa		53,215			32,693			166,278			96,911
		$	182,188		$	107,720		$	560,194		$	345,018
Earnings from operations
	Canada - U.S.	$	5,491		$	1,503		$	34,406		$	16,649
	South and Central America		9,560			1,400			36,750			10,535
	Australia, Asia and Africa		5,405			2,996			30,274			10,608
			20,456			5,899			101,430			37,792
Eliminations			(10)			(235)			(93)			(700)
			20,446			5,664			101,337			37,092
Finance costs			874			265			2,660			876
General corporate expenses *			5,504			2,949			13,915			9,326
Income tax			4,502			779			25,744			8,764
Net earnings		$	9,566		$	1,671		$	59,018		$	18,126
*General corporate expenses include expenses for corporate offices, stock options and certain un-allocated costs
Depreciation and amortization
	Canada - U.S.	$	4,970		$	2,815		$	12,365		$	7,381
	South and Central America		2,716			2,227			7,471			6,261
	Australia, Asia and Africa		3,189			2,668			8,244			7,948
Unallocated and corporate assets			1,142			338			1,883			1,152
		$	12,017		$	8,048		$	29,963		$	22,742
					January 31, 2012			April 30, 2011
Identifiable assets
	Canada - U.S.				$	239,730		$	134,666
	South and Central America					202,127			189,083
	Australia, Asia and Afirca					175,914			130,071
						617,771			453,820
Eliminations						(1,606)			439
Unallocated and corporate assets						48,341			19,878
					$	664,506		$	474,137

 

15. NET EARNINGS FOR THE YEAR

Net earnings for the year have been arrived at after charging various employee benefit expenses as follows.

		2012 Q3			2011 Q3			2012 YTD			2011 YTD
Direct costs:
	Salaries and wages	$	47,750		$	31,383		$	87,080		$	91,376
	Other employee benefits		9,314			5,712			16,842			16,948
General and administrative expenses:
	Salaries and wages		5,524			4,249			10,705			12,499
	Other employee benefits		890			642			1,801			2,024
Other expenses:
	Share based payments		439			619			862			1,711

 Amortization expense for intangible assets has been included in the line item "Depreciation and amortization" in the Interim Condensed Consolidated Statements of Operations with breakdown as follows:

	2012 Q3			2011 Q3			2012 YTD			2011 YTD
Depreciation of property, plant and equipment	$	10,921		$	7,910		$	28,388		$	22,340
Amortization of intangible assets		1,096			138			1,575			402
	$	12,017		$	8,048		$	29,963		$	22,742

 

16. BUSINESS ACQUISITIONS

Bradley Group Limited
Effective September 30, 2011, the Company acquired all the issued and outstanding shares of Bradley Group Limited ("Bradley"), which provides a unique opportunity to further the Company's corporate strategy of focusing on specialized drilling, expanding its geographic footprint in areas of high growth and of maintaining a balance in the mix of drilling services. The acquisition was accounted for using the acquisition method and the results of this operation were included in the statement of operations as of the closing date. The acquired business includes the assets acquired (indicated below), contracts and personnel. The purchase price for the transaction was CAD $78,060, including customary working capital adjustments and net of cash acquired, financed with cash and debt.

The Company is in the process of finalizing the valuation of assets. As at January 31, 2012, the values allocated to net tangible and intangible assets are preliminary and are subject to adjustments as additional information is obtained.

The estimated net assets acquired at fair market value at acquisition are as follows:

Assets acquired
Trade and other receivables (net)		$	23,978
Inventories			15,330
Prepaid expenses			540
Property, plant and equipment			45,884
Deferred income tax assets			350
Goodwill (not tax deductible)			23,064
Intangible assets			7,324
Trade and other payables			(19,057)
Income tax payable			(1,751)
Short-term debt			(5,101)
Current portion of long-term debt			(113)
Long-term debt			(10,352)
Deferred income tax liability			(2,036)
Total assets		$	78,060
Consideration
Cash		$	72,000
Long-term debt (holdback)			8,000
Less: Cash acquired			(1,940)
		$	78,060

The Corporation incurred acquisition-related costs of $857 relating to external legal fees and due diligence costs. The legal fees and due diligence costs have been included in the other expenses line of the Interim Condensed Consolidated Statements of Operations.

It is impracticable to estimate the revenue and net income attributed to the additional business generated by Bradley for the three months ended January 31, 2012, or of the combined entity for the year as though the acquisition date was May 1, 2011.

Resource Drilling
Effective March 24, 2011, the Company acquired the assets of Resource Drilling, which provides contract drilling services in Mozambique, where Major Drilling did not previously have a presence. The acquisition was accounted for using the acquisition method and the results of this operation were included in the statement of operations as of the closing date. The acquired business includes drilling equipment, inventory, contracts and personnel. The purchase price for the transaction was USD $9,563 (CAD $9,345), including customary working capital adjustments, financed with cash.

The net assets acquired at fair market value at acquisition are as follows:

Assets acquired
Inventories	$	946
Prepaid expenses		23
Property, plant and equipment		6,010
Goodwill (not tax deductible)		2,024
Intangible assets		342
Total assets	$	9,345
Consideration
Cash	$	5,628
Trade and other payables		3,717
	$	9,345

North Star Drilling
Effective June 30, 2010, the Company acquired the assets of North Star Drilling, which provides contract drilling services to the fresh water and geothermal markets in certain mid-western states in the US, and operates from its head office in Little Falls, Minnesota, as well as from satellite offices in Brainerd and Bemidji, Minnesota. The acquisition was accounted for using the acquisition method and the results of this operation were included in the statement of operations as of the closing date. The acquired business includes working capital, drilling equipment, contracts and personnel. The purchase price for the transaction, excluding contingent consideration, was USD $2,449 (CAD $2,567), including customary working capital adjustments of CAD $215, financed with cash. The contingent consideration of USD $750 to the purchase price is based on future earnings. The acquiree is expected to meet target earnings, with payments to be made over the next five years.

The net assets acquired at fair market value at acquisition are as follows:

Assets acquired and liabilities assumed
Trade receivables (net)	$	776
Inventories		382
Prepaid expenses		18
Property, plant and equipment		1,078
Goodwill (not tax deductible)		1,083
Intangible assets		763
Trade and other payables		(779)
Net assets	$	3,321
Consideration
Cash	$	2,567
Contingent consideration		754
	$	3,321

17. DIVIDENDS

The Company declared two dividends during the year, $0.08 per common share paid on November 1, 2011 to shareholders of record as of October 10, 2011, and $0.09 per common share to be paid on May 2, 2012 to shareholders of record as of April 6, 2012.

The Company declared two dividends during the previous year. The first dividend of $0.07333 per common share was paid on November 1, 2010 to shareholders of record as of October 8, 2010. The second dividend of $0.07333 per common share was paid on May 2, 2011 to shareholders of record as of April 8, 2011.

18. FINANCIAL INSTRUMENTS

There are no significant changes to financial instruments compared to the Company's 2011 annual financial statements prepared under previous GAAP except for the following:

Risk management objectives
The Company's corporate treasury function monitors and manages the financial risks relating to the operations of the Company through analysis of the various exposures. When deemed appropriate, the Company uses financial instruments to hedge these risk exposures.

Interest rate risk management
The Company is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by use of interest rate swap contracts when deemed appropriate.

Interest rate swap contract
Under the interest rate swap contract, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. This contract enables the Company to mitigate the risk of changing interest rates on the cash flow exposures on the issued variable rate debt held.

The following table details the notional principal amount and the remaining term of the interest rate swap contract outstanding at the reporting date.

Remaining term		Notional principal amount			Fair value
56 months		$	23,333		$	(119)

The interest rate swap settles on a monthly basis swapping Canadian-Bankers' Acceptance-Canadian Dealer Offered Rate for an annual fixed rate of 3.665%.

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 following table shows carrying values of short and long-term debt and contingent considerations and approximates their fair value, 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.

	January 31, 2012			April 30, 2011
Short-term debt	$	7,893		$	7,919
Contingent considerations		2,760			2,612
Long-term debt		52,804			25,032

Credit risk
As at January 31, 2012, 76.3% of the Company's trade receivables were aged as current and 1.3% 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, 2011	$	982
Increase in impairment allowance		1,443
Write-off charged against allowance		(518)
Recovery of amounts previously written off		(406)
Foreign exchange translation differences		48
Balance as at January 31, 2012	$	1,549

Foreign currency risk
The 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:

	January 31, 2012			April 30, 2011
U.S. Dollars	$	37,021		$	14,605

If the Canadian dollar moved by plus or minus 10% at January 31, 2012, the unrealized foreign exchange gain or loss would move by approximately $3,702 (April 30, 2011 - $1,460).

Liquidity risk
The following table details the Company's contractual maturities for its financial liabilities.

	1 year		2-3 years		4-5 years		thereafter		Total
Trade and other payables	$	100,357	$	-	$	-	$	-	$	100,357
Short-term debt		7,893		-		-		-		7,893
Contingent considerations		1,004		1,756		-		-		2,760
Long-term debt		8,799		17,760		21,662		4,583		52,804
	$	118,053	$	19,516	$	21,662	$	4,583	$	163,814

 

 

Denis Larocque, Chief Financial Officer
Tel: [phone]
Fax: [phone]
[email protected]