Master Drilling provides drilling solutions to clients worldwide, which is why results are presented in USD as the reporting currency. These are mining and hydro-electric drilling solutions, not my frequently disappointing attempts to put up a picture for Mrs Ghost.

Naturally, the company benefits from a strong commodities cycle. This has been a feature of the market in recent times. Importantly, the company is also exposed to metals like copper and nickel, which are all the rage as we head towards a future of electric vehicles.

Record revenue in USD has been achieved for the year ended December 2021, up 40% from the prior year. Over 26% of revenue landed in cash from operating activities, so the result was backed up by what all shareholders want to see: money in the bank.

Headline earnings per share (HEPS) measured in USD increased by a whopping 396.2% to 12.9 cents. In ZAR, HEPS was up 349.9% to R1.90. Based on yesterday’s closing price, Master Drilling is trading on a Price/Earnings multiple of 7.8x.

From a free cash flow perspective, cash from operations of USD32.5 million were used to fund USD19.4 million in capex. This is a fairly heavy capex burden, with 43% of the capex invested in expansion and 57% on sustaining the existing fleet.

Debt decreased from US42.1 million to USD32.1 million and the gearing ratio (including cash) improved from 10.3% to 5.8% in 2021.

Moving to a segmental view, the South American business were all between 20% and 30% higher on the revenue line than in the prior year. Utilisation rates improved which also had a positive impact on profitability.

Things are also looking good in Central and North America and the teams in that region are sourcing work in other geographies as well. For example, the North American entity will be used to execute a project in Saudi Arabia.

The most important region remains Africa, with operations in several countries. Again, things look positive overall, and the company is expanding into African countries that meet the investment criteria. There are important technologies being developed and tested in South Africa on certain projects.

The narrative is positive across other markets that Master Drilling operates in, like Scandinavia and India. Master Drilling is investing heavily in Australia and those operations have required more cash than expected.

Master Drilling has erred on the side of caution when it comes to a dividend. Despite this strong result and a solid pipeline of work, no interim dividend has been declared. The company notes the conflict in Ukraine as the major driver of this decision and has indicated that a special dividend may be on the cards once there is more certainty over global conditions.

With fleet utilisation at 70%, Master Drilling is running below the “required benchmark” of 75% but is nearly there. Critically for investors, the company believes that it can capitalise on this commodity cycle without requiring additional capital investment.

The share price closed 3.6% higher yesterday.