ar 2015 final july 17 2015 - major drilling group ... · nevertheless, the company was able to...

2015ANNUALREPORT

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CORPORATEPROFILE

MajorDrillingGroup International Inc., (“the Company”) is one of theworld’s largest drillingservices companies primarily serving the mining industry. To support its customers’ variedexplorationdrillingrequirements,MajorDrillingmaintainsfieldoperationsandofficesinCanada,theUnitedStates,Mexico,SouthAmerica,AsiaandAfrica.MajorDrillingprovidesall typesofdrillingservices including surface and underground coring, directional, reverse circulation, sonic,geotechnical, environmental, water‐well, coal‐bed methane, shallow gas and undergroundpercussive/longholedrilling.Overtheyears,theCompanyhaspositioneditselfasoneofthelargestspecializedoperatorsintheworld by leveraging its main competitive advantages: specialized equipment, long‐standingrelationshipswiththeworld’slargestminingcompanies,accesstocapital,andskilledpersonnel.Thispositioning is strengthened by the Company’s senior management having experienced severaleconomicandminingindustrycycles.Duringthelastseveralyears,theCompanyhasachievedstronggrowthwhileremainingfocusedonthelong‐termobjectiveofbuildingasolidcompanyforthefuture.Ourcorporatestrategyremainsto:

betheworldleaderinspecializeddrilling;

diversifyourserviceswithinthedrillingfield;

maintainastrongbalancesheet;

bethebestinclassinsafetyandhumanresources;and

modernizeourconventionalfleetandexpandourfootprintinstrategicareas.MajorDrilling’scommonsharestradeontheTorontoStockExchangeunderthesymbolMDIandareincludedintheTSXCompositeIndex.

MessagetoShareholders...................................................................................................................................................3Management’sDiscussionandAnalysis......................................................................................................................5Management’sResponsibility........................................................................................................................................23IndependentAuditor’sReport......................................................................................................................................24ConsolidatedStatementsofOperations....................................................................................................................25ConsolidatedStatementsofComprehensiveLoss................................................................................................25ConsolidatedStatementsofChangesinEquity......................................................................................................26ConsolidatedStatementsofCashFlows....................................................................................................................27ConsolidatedBalanceSheets.........................................................................................................................................28NotestoConsolidatedFinancialStatements...........................................................................................................29HistoricalSummary...........................................................................................................................................................55ShareholderInformation.................................................................................................................................................56

INDEX

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MESSAGETOSHAREHOLDERS

ThefiscalyearendingApril30,2015wasanotherverychallengingyearforminingandforthedrillingindustry.Largeminingcompaniesfocusedoncostreductions.Drillingbudgetswerereducedtobareminimums.Juniorexplorationcompaniescontinuedtobeunabletoaccessfinancing.Thedropinoilpricesreducedourenergyactivitiesfromsome10%ofourrevenueattheendoflastyear,toalmostzeroby thisyear‐end. In thisenvironment,pricecompetitionwasverypronounced. Ourbiggestchallenge for the year was to find the right balance between generating revenue and securingcontracts at prices that allowed us to continue to generate positive cash. Indeed, our primaryobjective in this kind ofmarket is tomaintain our strongbalance sheetwhile retaining our corecapacitytorespondtotheup‐cyclewhenitcomes.Asaresultoftheseconditions,revenueinfiscalyear2015fellto$306millionfrom$355milliontheyear before. Adding to the challenge of severe price competitionwas the change inmix of ourbusiness.Specializeddrilling,whichisthehallmarkofourCompanyandproduceshighermargins,represented only 59% of our revenue at the end of the year; down from 75% two years ago.Specializeddrillingismoreexpensiveandtendstobedeferredwhenpossible.This,plusthepricingenvironment,sawourgrossmarginsreducefrom29.4%lastyearto21.6%duringthe2015fiscalyear.Nevertheless,theCompanywasabletomaintainthestrongestbalancesheetintheindustry.Netcashbalance(cashlessdebt)atthebeginningoftheyearwas$46million.Infiscal2015,weinvested$15millionincapex,distributed$16millionindividendpayments,andpaidout$21millionincashforthepurchaseoftheassetsofTaurusDrilling,whichwasanimportantstrategicmovefortheCompany.Despitethis$52millionofexpenditures,ouryear‐endcashbalanceonlydropped$16millionto$30million.WiththeacquisitionoftheassetsofTaurusDrilling,ourCompanyenteredanewtypeofundergroundservice as a provider of underground percussive/longhole drilling. Percussive/longhole drillingrelatesmoretotheproductionfunctionofamine.Offeringbothundergroundproductiondrillingandour existing underground core drilling, the Company now provides an even wider range ofcomplementaryservices,whichwillallowustogrowourclientbase.Responding to this challenging environment, our general and administrative expenses havebeenreducedby30%overthelasttwoyearsto$44.9million.TheCompanyhasavariablecoststructurewherebymostofitsdirectcosts,includingfieldstaff,goupordownwithcontractrevenue,andalargepartoftheCompany’sotherexpensesrelatetovariableincentivecompensation,whichisbasedontheCompany’sprofitability.Ourexpectation,asfiscalyear2015cametoanend,wasthatfiscal2016wouldnotbeverydifferent.Therefore,inMarch2015weannounced,asameasureoffinancialprudence,thatwewillbereducingourdividendinfiscalyear2016from$0.10persharesemi‐annually($16millioninfiscal2014),to$0.02persharesemi‐annually($3.2millioninfiscal2016).Overthemedium‐term,webelievethatmostcommoditieswillfaceanimbalancebetweensupplyanddemandasmining reserves continue todecreasedue to the lackof exploration,whileworldwideconsumptioncontinuestoincrease.Atsomepoint,theneedtodevelopresourcesinareasthatareincreasinglydifficulttoaccesswillsignificantlyincrease,atwhichtimeweexpecttoseearesurgenceindemandforspecializeddrilling.

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MESSAGETOSHAREHOLDERS

Ourstrongbalancesheetputsusinauniquepositiontoreactquicklywhentheindustrybeginstorecover as our resources have allowed us to continue to invest in safety and to maintain ourequipmentinexcellentcondition.Despitetheverychallengingenvironment,wedidhaveanumberofverypositivemilestonesduringtheyear.WehavealreadymentionedtheadditionofTaurus’percussive/longholedrilling.Onsafety,in 2015 we crossed the threshold of over 7 million hours worked without having any lost‐timeinjuries. Everyone in the Company has worked hard and takes great pride in this significantachievement. A strong culture of safety not only keeps our employees from being injured butincreasesproductivityandjobsatisfaction.Wehavealsoremainedfaithfultooursocialandenvironmentalresponsibilities.Wetrainandhirelocallyateveryopportunityandwestrivetoingrainourcultureofsafetyinallthosewhomweworkwith. We trainemployees toconserveandrecycle,weworkwithuniversities tosupportstudentactivities,andwecontinuetosupportschools,orphanagesandhealthcentresincommunitieswherewework.MajorDrillingisintentonmakingapositivedifferencewhereverourbusinesstouchestheworld.TheCompanystillholdstothefiveelementsofitsbusinessstrategy,whichare:

tobetheworldleaderinspecializeddrilling; todiversifyourserviceswithinthedrillingfield; tomaintainastrongbalancesheet; tobethebestinclassinsafetyandhumanresources;and tomodernizeourconventionalfleetandexpandourfootprintinstrategicareas.

Thebusinessenvironmentmaybetoughfordrillingcompaniesatthemomentbutwebelievethatwewillemergeasastrongerandmoreprofitablecompany,andonethat is truly theworld leader incontractdrillingfortheminingindustry.Finally,wewanttotakethisopportunitytothankyou,ourcustomers,employees,andshareholders,foryourongoingsupport,andwelookforwardtothetimewhentheminingcyclepicksup.Wewillbeready.DavidTennant FrancisMcGuireChairmanoftheBoard PresidentandChiefExecutiveOfficer

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MANAGEMENT’SDISCUSSIONANDANALYSIS

The followingmanagement’s discussion and analysis (“MD&A”), prepared as of June 4, 2015, should be readtogetherwith theaudited financial statements for the year endedApril30,2015and relatednotesattachedthereto,whichareprepared inaccordancewith InternationalFinancialReportingStandards.AllamountsarestatedinCanadiandollarsunlessotherwiseindicated.

FORWARD‐LOOKINGSTATEMENTS

This MD&A contains forward‐looking statements about the Company’s objectives, strategies,financialcondition,resultsofoperations,cashflowsandbusinesses.Thesestatementsare“forward‐looking” because they are based on current expectations, estimates, assumptions, risks anduncertainties. These forward‐looking statements are typically identified by future or conditionalverbssuchas“outlook”,“believe”,“anticipate”,“estimate”,“project”,“expect”,“intend”,“plan”,andtermsandexpressionsofsimilarimport.

Suchforward‐lookingstatementsaresubjecttoanumberofrisksanduncertaintiesthatinclude,butare not limited to: cyclical downturn, competitive pressures, dealingwith business and politicalsystemsinavarietyofjurisdictions,repatriationofpropertyinotherjurisdictions,paymentoftaxesinvariousjurisdictions,exposuretocurrencymovements, inadequateorfailedinternalprocesses,people or systems or from external events, dependence on key customers, safety performance,expansion and acquisition strategy, legal and regulatory risk, corruption, bribery and fraud byemployees and agents, extremeweather conditions and the impact of natural or other disasters,specializedskillsandcostoflabourincreases,equipmentandpartsavailabilityandreputationalrisk.These factors andother risk factors, asdescribedunder “GeneralRisks andUncertainties” of theCompany’s Annual Information Form, represent risks the Company believes arematerial. Actualresultscouldbemateriallydifferentfromexpectationsifknownorunknownrisksaffectthebusiness,orifestimatesorassumptionsturnouttobeinaccurate.TheCompanydoesnotguaranteethatanyforward‐looking statementwillmaterialize and, accordingly, the reader is cautioned not to placerelianceontheseforward‐lookingstatements.

The Company disclaims any intention and assumes no obligation to update any forward‐lookingstatement,evenifnewinformationbecomesavailable,asaresultoffutureeventsorforanyotherreasons,exceptinaccordancewithapplicablesecuritieslaws.RisksthatcouldcausetheCompany’sactualresultstomateriallydifferfromitscurrentexpectationsarealsodiscussedintheCompany’sAnnualInformationForm.

AdditionalinformationrelatingtotheCompany,includingtheCompany’sAnnualInformationFormforthepreviousyearandthemostrecentlycompletedfinancialyear,areorwillbeavailableontheSEDARwebsiteatwww.sedar.com.

CORPORATEOVERVIEW

Major Drilling Group International Inc. is one of the world’s largest drilling services companiesprimarily serving the mining industry. To support its customers’ varied exploration drillingrequirements,Major Drillingmaintains field operations and offices in Canada, the United States,Mexico,SouthAmerica,Asia,andAfrica.MajorDrillingprovidesalltypesofdrillingservicesincludingsurfaceandundergroundcoring,directional,reversecirculation,sonic,geotechnical,environmental,water‐well,coal‐bedmethane,shallowgasandundergroundpercussive/longholedrilling.

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BUSINESSSTRATEGY

MajorDrillingcontinuestobaseitsbusinesspremiseonthefollowing:miningcompaniescontinuetodepletethemoreeasilyaccessiblemineralreservesaroundtheworldandattractivedepositswillbeinincreasinglyremotelocations,areasdifficulttoaccessand/ordeepintheground.Forthisreason,MajorDrilling’sstrategy is to focus itsservicesonprojects thathave thesecharacteristics, callingtheseservices“specializeddrilling”.Overtheyears,theCompanyhaspositioneditselfasoneofthelargest specialized operators in theworld by leveraging itsmain competitive advantages: skilledpersonnel, specialized equipment, long‐standing relationships with the world’s largest miningcompaniesandaccesstocapital.Although the Company’s main focus remains specialized services, it also intends to continue tomodernizeitsconventionalfleetandexpanditsfootprintinstrategicareaswhilemaintainingprudentdebtlevelsandremainingbestinclassinsafetyandhumanresources.TheCompanywillalsoseektodiversifybyinvestinginenergyandundergrounddrillingservicesthatarecomplementarytoitsskillset.The Company categorizes its mineral drilling services into three types: specialized drilling,conventionaldrillingandundergrounddrilling.Specialized drilling can be defined as any drilling project that, by virtue of its scope, technicalcomplexity or location, createssignificantbarrierstoentryforsmallerdrillingcompanies.Thiswould include, for example,deep‐hole drilling, directionaldrilling, and mobilizations toremote locations or highaltitudes. Because significantore bodies are getting moredifficult to find, the Companyexpects specialized drillingservices to continue to fuelfuture growth, and over thenexttwodecades,theCompanybelieves these skills will be ingreaterandgreaterdemand.Conventionaldrillingtendstobemoreaffectedbytheindustrycycleasthebarrierstoentryarenotas significant aswith specializeddrilling. Thispart of the industry is highly fragmented andhasnumerouscompetitors.BecausetheCompanyoffersonlylimiteddifferentiationinthissector,itisnotitspriorityforinvestment.Undergrounddrillingtakesongreaterimportanceinthelatterstagesoftheminingcycleasclientsdevelop undergroundmines. During the year, the Company entered a new type of undergroundservicewith the acquisition of the assets of Taurus Drilling Services, a provider of undergroundpercussive/longholedrillingtominingcompanies.Percussive/longholedrillingrelatesmoretotheproduction function of a mine. Offering both underground production drilling and its existingunderground core drilling, the Company now provides an even wider range of complementaryservicestoitsclients.

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Akeypartof theCompany’sstrategy is tomaintainastrongbalancesheet. TheCompany is inauniquepositiontoreactquicklywhentheindustrybeginstorecoverasitsfinancialstrengthallowsittoinvestinsafetyandtomaintainitsequipmentinexcellentcondition.TheCompanyalsohasavariable cost structurewherebymostof itsdirect costs, including field staff, goupordownwithcontract revenue, and a large part of the Company’s other expenses relate to variable incentivecompensationbasedontheCompany’sprofitability.

INDUSTRYOVERVIEW

Themetalsandmineralsdrillingindustryisreliantprimarilyondemandfromtwometalgroups,goldontheonehandandbasemetalsontheother.Eachcommoditygroupisinfluencedbydistinctmarketforces.Gold has always been asignificant driver in themining industry accountingfor 40 to 50% of theexploration spend carriedon around the world.Exploration activity generallyvariesupordownwith thetrendingoldprices.Thedemandforbasemetalsis dependent on economicactivity.Inthelonger‐term,the fundamental drivers ofbasemetalsremainpositive,withworldwidesupplyformostmetalsexpectedtotightenandhigherdemandcomingfromtheemergingmarketsoverthelastfewyears.Asthesecountriescontinuetourbanize,therequirementforbasemetalswillcontinueto increaseatthesametimeastheeasilyaccessiblereservesarebeingdepleted.Oneoftherealitiesoftheminingindustryisthatfuturemineraldepositswillhavetocomefromareasdifficulttoaccess,eitherinremoteorpoliticallysensitiveareas,deeperinthegroundorathigheraltitudes.Thisshouldimprovedemandforspecializedservicesinthefuture.Intermsofcustomerbase,theCompanyhastwocategoriesofcustomers:seniorandintermediatecompanieswithoperatingmines,andjuniorexplorationcompanies.Theindustryiscurrentlyinacyclicaldownturn.Atthispointintime,mostseniorandintermediatemining companies are more cautious with their investments in exploration. Large base metalproducerswilleventuallyneedtoexpandexistingminesanddevelopnewonestomeettheworld’sgrowth,especiallyinemergingmarkets.Activityfromseniorgoldproducersislikelytoshowgreatervolatilityasgoldpricesvary,whichwillimpacttheirexplorationbudgets.Manyjuniorminingcompaniescontinuetoexperiencefinancingdifficultiesthushavesloweddowntheirexplorationefforts.Juniorminingcompaniescanaccountforsome50%ofthemarketincyclicalupturns.Whileitisexpectedthatsomeofthemoreadvancedprojectswillbeabletoobtainfinancingasneeded,itwillbenecessaryforinvestorstoonceagainsupportexplorationprojectsinorderfordrillingactivitiestoregainthemomentumthattheyhadattheirpeak.

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BUSINESSACQUISITION

AcquisitionofTaurusDrillingServices

EffectiveAugust1,2014,theCompanyenteredintotheundergroundpercussive/longholedrillingsectorwithitspurchaseoftheassetsofTaurusDrillingServices(“Taurus”),basedinCanadaandtheUnitedStates.Theacquisitionhasbeenaccountedforusingtheacquisitionmethodandtheresultsofthenewundergroundpercussive/longholedrillingdivisionhasbeenincludedintheConsolidatedStatementsofOperationsfromtheclosingdate.Throughthispurchase,whichfitswiththeCompany’sstrategic focus on specialized drilling, the Company acquired 39 underground drill rigs, supportequipment and inventory, existing contracts and receivables, and took on the operation’smanagementteam,andotheremployees,includingexperienceddrillers.

Thepurchasepriceforthetransactionwas$29.5million(consistingof$20.7million incash,$8.7millioninMajorDrillingshares,and$0.1millioninassumptionofdebt),andanadditionalmaximumamount of $11.5 million (undiscounted) tied to performance. The estimated fair value of thecontingentconsiderationwas$10.1millionatApril30,2015.Theadditionalpayoutperiodextendsforthreeyears,commencingonAugust1,2014,andpaymentsarecontingentongrowingEBITDA(earningsbeforeinterest,taxes,depreciationandamortization)runratesabovelevelsatthedateofacquisition.

OVERALLPERFORMANCERevenueforthefiscalyearendedApril30,2015decreased14%to$305.7millionfrom$354.9millionfor the corresponding period last year. The Company continued to see a decline in revenuethroughout theyeardue toa lackof funding for juniorexplorationcompaniesanda reductionofexplorationspendingbyseniorcompanies.Grossmarginfortheyearwasdownto21.6%comparedto29.4%lastyearduemainlytoreducedpricingasaresultofincreasedcompetitivepressures.Aswell,theCompany’scustomersarefocusingonminesitedrilling,especiallyundergrounddrilling,whichtendstohavelowermargins.

Duringtheyear,theCompanyrecordedarestructuringchargeof$4.6millionprimarilyrelatingtothedecisiontoshutdownoperations intheDemocraticRepublicofCongo(“DRC”). Thisconsistsprimarilyofanon‐cashwrite‐downofassetsandclose‐downcostsrelatingtoseveranceandmovingcosts. Also,theCompanyincurredadditionalrestructuringchargesasitcontinuestoreducecostsacrosstheorganization.

The combination of reduced revenue andmargins, alongwith the restructuring and impairmentchargesproducedanetlossof$49.6million($0.62pershare)comparedtoanetlossof$55.3million($0.70pershare)forthepreviousyear.

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SELECTEDANNUALINFORMATION

YearsendedApril30 2015 2014 2013(InmillionsofCAD dollars,exceptpershareinformation) Revenuebyregion Canada‐U.S. $ 177 $176 $ 317 SouthandCentralAmerica 76 74 203 Australia,AsiaandAfrica 53 105 176 306 355 696Grossprofit 66 104 220 asapercentageofrevenue 21.6% 29.4% 31.7%Net(loss)earnings (50) (55) 52 Pershare(basic) $ (0.62) $(0.70) $ 0.66 Pershare(diluted) $ (0.62) $(0.70) $ 0.65 Totalassets 543 592 686Totallong‐termfinancialliabilities 16 14 34Dividendpaid 16 16 15

RESULTSOFOPERATIONS

FISCAL2015COMPAREDTOFISCAL2014RevenueforthefiscalyearendedApril30,2015decreased14%to$305.7millionfrom$354.9millionforthecorrespondingperiodlastyear.Duetotheuncertaintyaroundeconomicmattersimpactingtheminingmarket,somecustomersdelayedorcancelledtheirexplorationdrillingplansthisyear.Inanumberofjurisdictions,uncertaintyastothepoliciesofhostgovernmentsorissuesoflandtenurealsohadanimpactonthisyear’sresults.Canada‐U.S.Canada‐U.S.revenueincreasedby1%to$177.1millioncomparedto$175.9millionlastyear.Theincrease,relatedtotheTaurusacquisition,wasoffsetbytheslowdownintheenergysectorintheU.S.GrossmarginsinCanada‐U.S.decreased as competitivepressures in the miningsector affected pricing. Aswell, the slowdown in theenergy sector affectedmargins.SouthandCentralAmericaRevenueinSouthandCentralAmerica increased by 3% to$75.6 million, compared to$73.6 million for the prioryear, as the Company saw

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increasedactivitylevelsinMexicocombinedwithanewoperationinBrazil.ThisrevenueincreasewasoffsetbyareductioninworkbyjuniorsandthecancellationofcertainprojectsinArgentinaandChile.Grossmargins in the region decreased year‐over‐year, affected by reduced pricing as a result ofincreasedcompetitivepressuresandstart‐upcostsinBrazil.Australia,AsiaandAfricaRevenueinAustralia,AsiaandAfricadecreased50%to$52.9millionfrom$105.5millionintheprioryear. The Company closed its operations in Australia at the end of last year, and also closed itsoperations in the DRC during the year due to ongoing administrative difficulties associatedwithoperatinginthatcountry. Also,Mongoliacontinuedtobeaffectedbypoliticaluncertaintyaroundmininglaws.Grossmargins in the region decreased year‐over‐year, affected by reduced pricing as a result ofincreasedcompetitivepressures.OperatingexpensesGeneralandadministrativecostsweredown10%to$44.9millioncomparedto$50.1millioninthesame period last year. With the decrease in activity, the Company has reduced its general andadministrative costs by implementing reductionsof salaried employees and restructuring certainbranches.Otherexpenseswere$5.9millionfortheyearcomparedto$3.6millionforthesameperiodlastyeardueprimarilytoacquisitionexpensesrelatingtotheTaurusassetacquisitionandhigherbaddebtprovisions.Duringtheyear,theCompanyrecordedarestructuringchargeof$4.6millionprimarilyrelatingtothedecisiontoshutdownoperationsintheDRC.Thisconsistsprimarilyofanon‐cashwrite‐downofassetsandclose‐downcostsrelating toseveranceandmovingcosts. Also, theCompany incurredadditionalrestructuringchargesasitcontinuestoreducecostsacrosstheorganization.

Incometaxexpensefortheyearwas$3.4millioncomparedto$10.6millionfortheprioryear.Theeffectivetaxratefortheyearwassignificantlyimpactedbyseveralfactors.TheCompanywrotedownrecognizedtaxlossesforatotalof$4.0milliononitsSouthAfricanandBraziliandeferredtaxassetsrelatedtocarry‐forwardlosses,giventheuncertaintyinthenear‐termoutlookforadequatetaxableincomeinthosecountries.Thetaxexpensefortheyearwasalsoimpactedbynon‐taxaffectedlossesandnon‐deductibleexpenses.

Netlossfortheyearwas$49.6millionor$0.62pershare($0.62persharediluted)comparedtoanetlossof$55.3millionor$0.70pershare($0.70persharediluted)inthepreviousyear.

SUMMARYANALYSISFISCAL2014COMPAREDTOFISCAL2013RevenueforthefiscalyearendedApril30,2014decreased49%to$354.9millionfrom$695.9millionforthecorrespondingperiodthepreviousyear.TheCompanycontinuedtoseeadeclineinrevenuethroughout theyeardue toa lackof funding for juniorexplorationcompaniesanda reductionofexplorationspendingbyseniorcompanies.

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Grossmarginfortheyearwasdownto29.4%comparedto31.7%thepreviousyearduemainlytoreducedpricingasaresultofincreasedcompetitivepressuresanddelays,particularlyinthesecondhalfoftheyear.Duringtheyear,theCompanyrecordedarestructuringchargeof$20.5millionconsistingprimarilyofanon‐cashwrite‐downofassetsinAustraliaof$9.7million,close‐downcostsof$7.1millioninAustraliarelatingtoseverance, leaseterminationandmovingcosts,and$3.7millioninadditionalrestructuringchargesasitcontinuedtoreducecostsacrosstheorganization.

Goodwillimpairmentsof$14.3millionwererecognizedduringtheyearattributabletoreducedcashflowexpectationsinChileandMozambique.Thegoodwillwrite‐offswerenon‐cashinnatureanddidnotaffectliquidityorcashflowsfromoperatingactivities.

Thecombinationofreducedrevenuealongwiththerestructuringandimpairmentchargesproducedanet lossof$55.3million($0.70pershare)comparedtonetearningsof$52.1million($0.66pershare)forthepreviousyear.

SUMMARYOFQUARTERLYRESULTS

(in$000CAD,expectpershare)

Fiscal2014

Fiscal2015Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Revenue $108,211 $92,268 $71,830 $82,637 $67,551 $87,192 $69,784 $81,191Grossprofit 35,122 30,011 17,770 21,524 16,667 20,736 7,786 20,707Grossmargin 32.5% 32.5% 24.7% 26.0% 24.7% 23.8% 11.2% 25.5%Netearnings(loss) 1,522 (19,100) (12,797) (24,935) (7,331) (10,148) (18,999) (13,087)Pershare‐basic 0.02 (0.24) (0.16) (0.31) (0.09) (0.13) (0.24) (0.16)Pershare‐diluted 0.02 (0.24) (0.16) (0.31) (0.09) (0.13) (0.24) (0.16)With the exceptionof the thirdquarter, theCompany exhibits very little seasonality inquarterlyrevenue.Thethirdquarter(NovembertoJanuary)isnormallytheCompany’sweakestquarterdueto theshutdownofminingandexplorationactivities,often forextendedperiodsover theholidayseason.SUMMARYANALYSISFOURTHQUARTERRESULTSENDEDAPRIL30,2015

Total revenue for the quarter was $81.2 million, down 2% from the $82.6 million recorded in the same quarter last year. Uncertainty around economic matters impacting the mining market continues to cause delays in customers’ exploration drilling plans. Also, many junior customers have scaled back or suspended drilling activities due to a lack of capital. The favourable foreign exchange translation impact for the quarter is estimated at $4.4 million on revenue but negligible on net earnings, when comparing to the effective rates for the same period last year. Revenue for the quarter from Canada-U.S. drilling operations increased by 7% to $49.9 million compared to the same period last year. The increase relates to the Taurus asset acquisition and is somewhat offset by the slowdown in the energy sector. South and Central American revenue was up 34% to $21.0 million for the quarter, compared to the prior year quarter. Most of the increase came from Mexico and the Guiana Shield, while other regions were flat.

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Australian, Asian and African operations reported revenue of $10.3 million, down 50% from the same period last year. The Company closed its operations in Australia and the DRC earlier in the year, and Mongolia continues to be affected by political uncertainty around mining laws. The overall gross margin percentage for the quarter was 25.5% compared to 26.0% for the same period last year. Given the current market conditions, the Company had a good quarter operationally, and this was the highest quarterly margins in this fiscal year. Margins continue to be affected by reduced pricing due to increased competitive pressures, and customers are often focusing on mine site drilling, especially underground drilling, which tends to have lower margins. General and administrative costs were $11.0 million for the quarter, a reduction of 13% compared to $12.7 million in the same period last year, and a reduction of 20% when excluding higher foreign exchange translation. With the decrease in activity, the Company has reduced its general and administrative costs across the operation. The income tax provision for the quarter was an expense of $5.1 million compared to an expense of $0.2 million for the prior year period. The Company wrote down recognized tax losses for a total of $4.0 million on its South African and Brazilian deferred tax assets related to carry-forward losses, given the uncertainty in the near-term outlook for adequate taxable income in those countries. The tax expense for the quarter was also impacted by non-tax affected losses and non-deductible expenses.

LIQUIDITYANDCAPITALRESOURCES

Operatingactivities

Cashflowfromoperations(beforechangesinnon‐cashoperatingworkingcapitalitems,financecostsand income taxes)was$10.3million for the fiscal year endedApril 30,2015, compared to$38.0milliongeneratedlastyear.

Thechangeinnon‐cashoperatingworkingcapitalitemswasaninflowof$12.7millioninfiscal2015compared to an inflowof $20.5million for thepreviousyear. The change innon‐cashoperatingworkingcapitalinfiscal2015wasprimarilyimpactedby:

$16.8millionrelatedtoadecreaseinaccountsreceivableascomparedtothesameperiodlastyear;

$7.8millionrelatedtoadecreaseininventory;offsetby

$14.5millionrelatedtoadecreaseinaccountspayable.

Financingactivities

Under the termsof certain of theCompany’s debt agreements, theCompanymust satisfy certainfinancialcovenants.Suchagreementsalsolimit,amongotherthings,theCompany’sabilitytoincuradditionalindebtedness,createliens,engageinmergersoracquisitionsandmakedividendandotherpayments.Duringtheyear,theCompanyamendedthecurrentcreditagreementwithitslenders.Asaresult,theCompanyisincompliancewithallcovenantsandotherconditionsimposedinthiscreditagreementasattheendoftheyear.

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Operatingcreditfacilities

Thecreditfacilitiesrelatedtooperationstotal$31.3million($25.0millionfromaCanadiancharteredbank,$4.0million foraChileanpesos facilityand$2.3million invariouscredit facilities)andareprimarilysecuredbycorporateguaranteesofcompanieswithinthegroup. AtApril30,2015, theCompanyhadutilized$5.5millionoftheselinesmainlyforstand‐bylettersofcredit.TheCompanyalsohasacreditfacilityof$1.8millionforcreditcardsforwhichinterestratesandrepaymenttermsareaspercardholderagreements.

Long‐termdebt

Totallong‐termdebtdecreasedby$8.5millionduringtheyearto$15.3millionatApril30,2015.Thedecreaseisduetodebtrepaymentsof$9.8millionduringtheyear,offsetbyadditionalequipmentfinancingof$1.3million.

AsofApril30,2015,theCompanyhadthefollowinglong‐termdebtfacilitiesavailable:

$7.1millionnon‐revolvingfacilityamortizedoverfiveyearsendinginSeptember2016.

$50.0millionrevolvingfacilityforfinancingthecostofequipmentpurchasesoracquisitioncostsofrelatedbusinesses.AtApril30,2015,thisfacilityhadnotbeenutilized.

$6.3millionnon‐revolving facility. This facilitycarriesa fixed interestrateof5.9%andisamortizedovertenyearsendinginAugust2021.

TheCompanyalsohasvariousotherloansandcapital leasefacilitiesrelatedtoequipmentpurchases that totaled$2.0millionatApril30,2015,whichwere fullydrawnandmaturethrough2018.

PaymentsDuebyPeriod(in$000CAD)Contractualobligations Total

Lessthan1year 2‐3years

4‐5years 6+years

Contingentconsideration $ 10,130 $ 2,735 $ 7,395 $‐ $ ‐Long‐termdebt 16,101 7,119 5,349 2,221 1,412Purchasingcommitments 1,674 1,674 ‐ ‐ ‐Operatingleases 3,505 1,495 1,198 667 145 Totalcontractualobligations $ 31,410 $ 13,023 $ 13,942 $2,888 $ 1,557TheCompanybelieves that itwillbeable togeneratesufficientcash flowtomeet itscurrentandfutureworkingcapital,capitalexpenditure,dividendanddebtobligations.AsatApril30,2015,theCompanyhadunusedborrowingcapacityunderitscreditfacilitiesof$75.8millionandcashof$44.9million,foratotalof$120.7millioninavailablefunds.

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Investingactivities

Capitalexpenditures

Capital expenditureswere$14.8million (netof $1.3millionof equipment financing) for theyearendedApril30,2015comparedto$22.6million(netof$0.7millionofequipmentfinancing)forthesameperiodlastyear.

During the year, the Company added 5 drill rigs through its capital expenditure program whileretiringordisposingof48drillrigsthroughitsmodernizationprogram.TheCompanyalsoadded39rigsthroughtheTaurusassetacquisition,withtheCompany’stotalnowstandingat704.

Itisexpectedthatcapitalexpenditureswillbebetween$15millionand$20millioninfiscal2016astheCompanyfocusesoncashflowgeneration.

OUTLOOK

Duetotheuncertaintyaroundeconomicmattersimpactingtheminingmarket,itisverydifficulttopredict customerbehaviorover thenext twelvemonths. At thismoment, althoughmine reserveissuesarestartingtocomebacktotheforefront,theCompanyexpectscalendar2015tocontinueatthepresentpace.Forthisreason,theCompanycurrentlyexpectscapitalexpendituresinfiscal2016tobeinlinewithfiscal2015,althoughitmayinvestmoretogrowitspercussivedrillingbusiness.TheCompany is in auniqueposition to reactquicklywhen the industrybegins to recover as theCompany’s financial strength has allowed it to invest in safety and tomaintain its equipment inexcellentcondition.However,thereisagrowingconcernthatqualitypeoplearepermanentlyleavingtheindustry,andduringarecovery,shortagesofqualifiedlabourwillonceagainbecomeacriticalissue.The Company will continue to focus on balancing pricing with revenue generation and cashpreservation.Itcontinuestohaveavariablecoststructurewherebymostofitsdirectcosts,includingfieldstaff,goupordownwithcontractrevenueandalargepartoftheCompany’sotherexpensesrelatestovariableincentivecompensationbasedontheCompany’sprofitability.Inthemedium‐term,itisbelievedthatmostcommoditieswillfaceanimbalancebetweensupplyanddemandasmine reserves continue todecreasedue to the lackof exploration. At the same time,worldwide consumption continues to increase. At somepoint in the future, the need to developresourcesinareasthatareincreasinglydifficulttoaccesswillsignificantlyincrease,atwhichtimearesurgenceindemandforspecializeddrillingisexpected.FOREIGNEXCHANGEThe Company’s reporting currency is the Canadian dollar, however a significant portion of theCompany’srevenueandoperatingexpensesoutsideofCanadaaredenominatedinU.S.dollarsandChileanpesos. Theyear‐over‐yearcomparisonsinthegrowthofrevenueandoperatingexpenseshavebeenimpactedbythefallingCanadiandollaragainsttheU.S.dollar.During fiscal 2015, approximately 40%of revenue generatedwas inCanadiandollars and4% inChileanpesoswithmostofthebalancebeinginU.S.dollars.Sincemostoftheinputcostsrelatedto

‐ 15 ‐


thisrevenueisdenominatedinthesamecurrencyastherevenue,theimpactonearningsissomewhatmuted.The favourable foreignexchange translation impact for theyear,whencomparing to theeffectiverates for the same period last year, is estimated at approximately $11million on revenue. Netearnings however, remained less impacted by currency fluctuations during the year as a largeproportion of costs are typically incurred in the same currency as revenue. The estimated totalunfavourableFXimpactonnetearningsfortheyearwasestimatedat$1.1million.ArgentinacurrencystatusTheArgentinegovernmenthasimplementedcertainmeasuresthatcontrolandrestricttheabilityofcompanies and individuals to exchange Argentine pesos for foreign currencies. Thosemeasuresinclude,amongotherthings,therequirementtoobtainthepriorapprovalfromtheArgentineTaxAuthoritiesfortheforeigncurrencytransaction(forexampleandwithoutlimitation,forthepaymentofnon‐Argentinegoodsandservices,paymentofprincipalandinterestofnon‐Argentinedebtandalsopaymentofdividendstopartiesoutsideofthecountry).Thatapprovalprocesscoulddelay,andeventuallyrestrict,theabilitytoexchangeArgentinepesosforothercurrencies,suchasU.S.dollars.FUTUREACCOUNTINGCHANGESTheCompanyhasnotappliedthefollowingrevisedIASBstandardsthathavebeenissued,butarenotyeteffective:IFRS9(asamendedin2014)FinancialInstrumentsIFRS10(amended)ConsolidatedFinancialStatementsIFRS11(amended)JointArrangements‐AccountingforAcquisitionsofInterestsinJointOperationsIFRS15RevenuefromContractswithCustomersIAS1(amended)PresentationofFinancialStatementsIAS16(amended)Property,PlantandEquipmentIAS27(amended)SeparateFinancialStatementsIAS28(amended)InvestmentsinAssociatesandJointVenturesIAS38(amended)IntangibleAssets

TheadoptionoftheabovestandardsisnotexpectedtohaveasignificantimpactontheCompany’sConsolidatedFinancialStatements.

KEYSOURCESOFESTIMATION,UNCERTAINTYANDCRITICALACCOUNTINGJUDGMENTS

UseofestimatesThe preparation of financial statements in conformity with IFRS requires management to makejudgments,estimatesandassumptionsthatarenotreadilyapparentfromothersources,whichaffectthereportedamountsofassetsandliabilitiesatthedatesoftheConsolidatedFinancialStatementsandthereportedamountsofrevenueandexpensesduringthereportedperiods.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatareconsideredtoberelevant.Actualresultscoulddifferfromtheseestimates.

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Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognizedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,or in theperiodof therevisionand futureperiods if therevisionaffectsbothcurrentandfutureperiods.Significantareasrequiringtheuseofmanagementestimatesrelatetotheuseful livesofProperty,Plant and Equipment (“PP&E”) for depreciation purposes, PP&E and inventory valuation,determinationofincomeandothertaxes,assumptionsusedincompilationofshare‐basedpayments,fairvalueofassetsacquiredandliabilitiesassumedinbusinessacquisitions,amountsrecordedasaccruedliabilitiesandcontingentconsiderations,andimpairmenttestingofgoodwillandintangibleassets.ManagementdeterminestheestimatedusefullivesofitsPP&EbasedonhistoricalexperienceoftheactuallivesofPP&Eofsimilarnatureandfunctions,andreviewstheseestimatesattheendofeachreportingperiod.Managementreviewstheconditionofinventoriesattheendofeachreportingperiodandrecognizesaprovisionforslow‐movingandobsoleteitemsofinventorywhentheyarenolongersuitableforuse.Management’sestimateof thenetrealizablevalueofsuch inventories isbasedprimarilyonsalespricesandcurrentmarketconditions.Amounts used for impairment calculations are based on estimates of future cash flows of theCompany.By theirnature, theestimatesof cash flows, including theestimatesof future revenue,operating expenses, utilization, discount rates and market pricing are subject to measurementuncertainty.Accordingly,theimpactintheConsolidatedFinancialStatementsoffutureperiodscouldbematerial.Tax interpretations, regulationsand legislation in thevarious jurisdictions inwhich theCompanyoperates are subject to change. As such, income taxes are subject to measurement uncertainty.Deferred income tax assets are assessed by management at the end of the reporting period todeterminetheprobabilitythattheywillberealizedfromfuturetaxableearnings.Compensationcostsaccruedforlong‐termshare‐basedpaymentplansaresubjecttotheestimationof what the ultimate payout will be using the Black‐Scholes pricing model, which is based onsignificantassumptionssuchasvolatility,dividendyieldandexpectedterm.The amount recognized as accrued liabilities and contingent considerations, including legal,restructuring,contractual,constructiveandotherexposuresorobligations,isthebestestimateoftheconsiderationrequiredtosettletherelatedliability,includinganyrelatedinterestcharges,takingintoaccounttherisksanduncertaintiessurroundingtheobligation.Inaddition,contingencieswillonlybe resolved when one or more future events occur or fail to occur. Therefore assessment ofcontingenciesinherentlyinvolvestheexerciseofsignificantjudgmentandestimatesoftheoutcomeof futureevents.TheCompanyassessesits liabilities,contingenciesandcontingentconsiderationsbaseduponthebestinformationavailable,relevanttaxlawsandotherappropriaterequirements.JudgmentsThe Company applied judgment in determining the functional currency of the Company and itssubsidiaries.Functionalcurrencywasdeterminedbasedonthecurrencythatmainlyinfluencessalesprices,labour,materialsandothercostsofprovidingservices.

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PP&E and goodwill are aggregated into Cash Generated Units (“CGUs”) based on their ability togeneratelargelyindependentcashinflowsandareusedforimpairmenttesting.ThedeterminationoftheCompany’sCGUsissubjecttomanagement’sjudgmentwithrespecttothelowestlevelatwhichindependentcashinflowsaregenerated.TheCompanyhasappliedjudgmentindeterminingthedegreeofcomponentizationofPP&E.EachpartofanitemofPP&Ewithacostthatissignificantinrelationtothetotalcostoftheitemandhasaseparateusefullifehasbeenidentifiedasaseparatecomponentandisdepreciatedseparately.The Company has applied judgment in recognizing provisions and accrued liabilities, includingjudgmentastowhethertheCompanyhasapresentobligation(legalorconstructive)asaresultofapastevent;whetheritisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation;andwhetherareliableestimatecanbemadeoftheamountoftheobligation.Deferred income tax assets are assessed by management at the end of the reporting period todeterminetheprobabilitythattheywillberealizedfromfuturetaxableearnings.Thisdeterminationissubjecttomanagementjudgment.

OFFBALANCESHEETARRANGEMENTS

Except for operating leases disclosed in Note 23 “Commitments” of the Notes to ConsolidatedFinancialStatementsandpresentedascontractualobligationsintheliquidityandcapitalresourcessectionherein,theCompanydoesnothaveanyothermaterialoffbalancesheetarrangements.

GENERALRISKSANDUNCERTAINTIES

TherisksdescribedbelowandelsewhereinthisMD&Adonotincludeallpossiblerisks,andtheremaybeotherrisksofwhichmanagementiscurrentlynotaware.

Cyclicaldownturn

ThemostsignificantoperatingriskaffectingtheCompanyisadownturnindemandforitsservicesduetoadecreaseinactivityinthemineralsandmetalsindustry.Inattemptingtomitigatethisrisk,theCompanyisexploitingitscompetitiveadvantageinspecializeddrillingandcontinuestoexploreopportunitiestodiversifyandtorationalizeitsregionalinfrastructures.Inpreviouscyclicalmarketdownturns,theCompanyrealizedthatitsspecializedserviceswerenotasaffectedbydecreasesinmetalandmineralprices,comparedtoitstraditionalservices.Consequently,theCompany’sadditionofrigsandacquisitionofbusinesseshavegenerallybeenfocusedonspecializeddrillingservices.TheimpactontheCompanyofasevereandpersistentdownturninthemineralsandmetalsindustryisnotfullymitigatedbytheforegoingmeasures.

Inmanycases,capitalmarketsaretheonlysourceoffundsavailabletojuniorminingcompaniesandanychangeintheoutlookforthesectororthelackofsuccessofaspecificexplorationprogramcanquicklyimpairtheabilityofthesejuniorstoraisecapitaltopayfortheirdrillingprograms.

Levelsof inventorytypically increaseasaresultof increasedactivity levels. Inadditiontodirectvolumerelatedincreaseshowever,inventorylevelsalsoincreaseduetoanexpansionofactivityinremotelocationsattheendoflongsupplychainswhereitisnecessarytoincreaseinventorytoensureanacceptablelevelofcontinuingservice,whichispartoftheCompany’scompetitiveadvantage.In

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theeventofasuddendownturnofactivitiesrelatedeithertoaspecificprojectortothesectorasawhole,itismoredifficultandcostlytoredeploythisremoteinventorytootherregionswhereitcanbeconsumed.

Competitivepressures

Pressuresfromcompetitorscanresultindecreasedcontractpricesandnegativelyimpactrevenue.TherecanbenoassurancethattheCompany’scompetitorswillnotbesuccessfulincapturingashareoftheCompany’spresentorpotentialcustomerbase.

Countryrisk

TheCompanyiscommittedtoutilizingitsexpertiseandtechnologyinexplorationareasaroundtheworld. With this comes the risk of dealing with business and political systems in a variety ofjurisdictions.Unanticipatedeventsinacountry(precipitatedbydevelopmentswithinorexternaltothe country), such as economic, political, tax related, regulatory or legal changes (or changes ininterpretation),could,directlyorindirectly,haveamaterialnegativeimpactonoperationsandassets.The risks include, but are not limited to, military repression, extreme fluctuations in currencyexchange rates, high rates of inflation, changes in mining or investment policies,nationalization/expropriation of projects or assets, corruption, delays in obtaining or inability toobtainnecessarypermits,nullificationofexistingminingclaimsorintereststherein,hostagetakings,labourunrest,oppositiontominingfromenvironmentalorothernon‐governmentalorganizationsorshiftsinpoliticalattitudethatmayadverselyaffectthebusiness.Therehasbeenanemergenceofatrendbysomegovernmentstoincreasetheirparticipationintheindustryandtherebytheirrevenuesthrough increased taxation, expropriation, orotherwise.This couldnegatively impact the level offoreigninvestmentinminingandexplorationactivitiesandthusdrillingdemandintheseregions.Sucheventscouldresultinreductionsinrevenueandtransitioncostsasequipmentisshiftedtootherlocations.Nationalization/expropriationofminingprojectshasadirectimpactonsupplierstotheminingindustry,liketheCompany.

WhiletheCompanyworkstomitigateitsexposurestopotentialcountryriskevents,theimpactofanysucheventisnotunderthecontroloftheCompany,ishighlyuncertainandunpredictableandwillbebasedonspecificfactsandcircumstances.Asaresult,theCompanycangivenoassurancethatitwillnotbesubjecttoanycountryriskevent,directlyorindirectly,inthejurisdictionsinwhichitoperates.

Repatriationoffundsorproperty

ThereisnoassurancethatanyofthecountriesinwhichtheCompanyoperatesormayoperateinthefuturewillnotimposerestrictionsontherepatriationoffundsorpropertytootherjurisdictions.

TaxesTheCompanyissubjecttomanydifferentformsoftaxationinvariousjurisdictionsthroughouttheworld,includingbutnotlimitedto,incometax,withholdingtax,commoditytaxandsocialsecurityandotherpayrollrelatedtaxes,whichmayleadtodisagreementswithtaxauthoritiesregardingtheapplicationoftaxlaw.

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TaxlawandadministrationisextremelycomplexandoftenrequirestheCompanytomakesubjectivedeterminations.Thecomputationofincome,payrollandothertaxesinvolvesmanyfactors,includingthe interpretation of tax legislation in various jurisdictions in which the Company is subject toongoingtaxassessments. TheCompany’sestimateof taxrelatedassets, liabilities, recoveriesandexpensesincorporatessignificantassumptions.Theseassumptionsinclude,butarenotlimitedto,thetaxratesinvariousjurisdictions,theeffectoftaxtreatiesbetweenjurisdictionsandtaxableincomeprojections.Totheextentthatsuchassumptionsdifferfromactualresults,theCompanymayhavetorecordadditionaltaxexpensesandliabilities,includinginterestandpenalties.

Foreigncurrency

TheCompanyconductsasignificantproportionofitsbusinessoutsideofCanadaandconsequentlyhasexposuretocurrencymovements,principallyinU.S.dollarsandChileanpesos.Inordertoreduceitsexposuretoforeignexchangerisksassociatedwithcurrenciesofdevelopingcountries,whereasubstantialportionof theCompany’sbusiness isconducted, theCompanyhasadoptedapolicyofcontractinginU.S.dollars,wherepracticalandlegallypermitted.

Foreignexchangetranslationscanhaveasignificantimpactonyear‐to‐yearcomparisonsbecauseofthegeographicdistributionoftheCompany’sactivities.Year‐over‐yearrevenuecomparisonshavebeenaffectedbythefluctuationintheCanadiandollaragainsttheU.S.dollar.Marginperformance,however,islessaffectedbycurrencyfluctuationsasalargeproportionofcostsaretypicallyinthesame currency as revenue. In future periods, year‐to‐year comparisons of revenue could besignificantlyaffectedbychangesinforeignexchangerates.

OperationalriskOperational risk is the risk of loss resulting from inadequate or failed internal processes, peopleand/orsystemsorfromexternalevents.OperationalriskispresentinalloftheCompany’sbusinessactivities,andincorporatesexposurerelatingtofiduciarybreaches,regulatorycompliancefailures,legal disputes, business disruption, pandemics, technology failures, processing errors, businessintegration,theftandfraud,damagetophysicalassets,employeesafetyandinsurancecoverage.

Dependenceonkeycustomers

Fromtimetotime,theCompanymaybedependentonasmallnumberofcustomersforasignificantportionofoverallrevenueandnetincome.ShouldoneormoresuchcustomersterminatecontractswiththeCompany,therecanbenoguaranteethattheCompanywillobtainsufficientreplacementcontractstomaintaintheexistingrevenueandincomelevels.Consequently,theCompanycontinuestoworktoexpanditsclientbaseandgeographicfieldofoperationstomitigateitsexposuretoanysingleclient,commodityorminingregion.

Safety

FailuretomaintainarecordofacceptablesafetyperformancemayhaveanadverseimpactontheCompany’sabilitytoattractandretaincustomers.MostoftheCompany’scustomersconsidersafetyandreliabilitytwoprimaryattributeswhenselectingaproviderofdrillingservices.TheCompanycontinuestoinvestintrainingtoimproveskills,abilitiesandsafetyawareness.

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Expansionandacquisitionstrategy

TheCompanyintendstoremainvigilantwithregardstopotentiallystrategicfutureacquisitionsandinternal expansion. It isnotpossible toensure that futureacquisitionopportunitieswill existonacceptableterms,orthatnewlyacquiredordevelopedentitieswillbesuccessfullyintegratedintotheCompany’soperations.Additionally,theCompanycannotgiveassurancesthatitwillbeabletosecurethenecessaryfinancingonacceptabletermstopursuethisstrategy.

Regulatoryandlegalrisk

Regulatory risk incorporates exposure relating to the risk of non‐compliance with applicablelegislation and regulatory directives. Legal risk incorporates non‐compliance with legalrequirements,includingtheeffectivenessofpreventingorhandlinglitigation.Localmanagementisresponsible for managing day‐to‐day regulatory risk. In meeting this responsibility, localmanagement receives advice and assistance from such corporate oversight functions as legal,complianceandinternalaudit. Complianceand internalaudit test theextenttowhichoperationsmeetregulatoryrequirements,aswellastheeffectivenessofinternalcontrols.Corruption,bribery,fraudThe Company is required to complywith the Canadian Corruption of ForeignPublicOfficialsAct(“CFPOA”)aswellassimilarapplicablelawsinotherjurisdictions,whichprohibitcompaniesfromengaginginbriberyorotherprohibitedpaymentsorgiftstoforeignpublicofficialsforthepurposeofretaining or obtaining business. The Company’s policies mandate compliance with these laws.However,therecanbenoassurancethatthepoliciesandproceduresandothersafeguardsthattheCompany has implemented in relation to its compliancewith these lawswill be effective or thatCompany employees, agents, suppliers, or other industry partners have not engaged or will notengageinsuchillegalconductforwhichtheCompanymaybeheldresponsible.ViolationsoftheselawscoulddisrupttheCompany’sbusinessandresultinamaterialadverseeffectonitsbusinessandoperations.ExtremeweatherconditionsandtheimpactofnaturalorotherdisastersThe Company operates in a variety of locations, some of which are prone to extreme weatherconditions.Fromtimetotimetheseconditions,aswellasnaturalorotherdisasters,couldhaveanadversefinancialimpactonoperationslocatedintheregionswheretheseconditionsoccur.SpecializedskillsandcostoflabourincreasesGenerallyspeaking,drillingactivityrelatedtometalsandmineralsisbroadlylinkedtopricetrendsin themetals andminerals sector. During periods of increased activity, a limiting factor in thisindustrycanbeashortageofqualifieddrillers.TheCompanyaddressesthisissuebyattemptingtobecome the “employer of choice” for drillers in the industry, aswell as hiring and trainingmorelocally‐baseddrillers. Developmentof localdrillershashadapositive impact inSouthAmerican,African,MongolianandIndonesianoperations,andisexpectedtocontinuetoplayanimportantrole.TheCompanyalsoreliesonanexperiencedmanagementteamacrosstheCompanytocarryonitsbusiness.Adepartureofseveralmembersofthemanagementteamatonetimecouldhaveanadversefinancialimpactonoperations.

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A material increase in the cost of labour can materially affect gross margins and therefore theCompany’sfinancialperformance.

Equipmentandpartsavailability

TheCompany’sabilitytoprovidereliableserviceisdependentupontimelydeliveryofequipmentandreplacementpartsfromfabricatorsandsuppliers.Anyfactorthatsubstantiallyincreasestheordertimeonequipmentandincreasesuncertaintysurroundingfinaldeliverydatesmayconstrainfuturegrowth,existingoperations,andthefinancialperformanceoftheCompany.

Reputationalrisk

Negativepublicity,whethertrueornot,regardingpractices,actionsorinactions,couldcauseadeclineintheCompany’svalue,liquidity,orcustomerbase.

DISCLOSURECONTROLSANDINTERNALCONTROLSOVERFINANCIALREPORTING

Disclosurecontrolsandproceduresaredesignedtoprovidereasonableassurancethatallrelevantinformation required to be disclosed in documents filedwith securities regulatory authorities isrecorded, processed, summarized and reported on a timely basis, and is accumulated andcommunicatedtotheCompany’smanagement,includingtheChiefExecutiveOfficer(“CEO”)andtheChief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding requireddisclosure.Management,includingtheCEOandtheCFO,doesnotexpectthattheCompany’sdisclosurecontrolswillpreventordetectallerrorsandallfraud.Theinherentlimitationsinallcontrolsystemsaresuchthattheycanprovideonlyreasonable,notabsolute,assurancethatallcontrolissuesandinstancesoffraudorerror,ifany,withintheCompanyhavebeendetected.TheCompany’sCEOandCFOhaveevaluatedtheeffectivenessoftheCompany’sdisclosurecontrolsandconcludedthat,subjecttotheinherentlimitationsandrestrictionsnotedabove,thosedisclosurecontrolswereeffectivefortheyearendedApril30,2015.TheCompany’sCEOandCFOareresponsiblefordesigninginternalcontrolsoverfinancialreporting(“ICFR”)orcausingthemtobedesignedundertheirsupervision.TheCompany’sICFRaredesignedtoprovidereasonableassuranceregardingthereliabilityoftheCompany’sfinancialreportinganditspreparationoffinancialstatementsforexternalpurposesinaccordancewithInternationalFinancialReportingStandards.Asdiscussedabove,theinherentlimitationsinallcontrolsystemsaresuchthattheycanprovideonlyreasonable, not absolute, assurance that all control issues and instances of fraudor error, if any,withintheCompanyhavebeendetected.Therefore,nomatterhowwelldesigned,ICFRhasinherentlimitations and can provide only reasonable assurance with respect to financial statementpreparationandmaynotpreventanddetectallmisstatements.

Duringfiscal2015,management,includingitsCEOandCFO,evaluatedtheexistenceanddesignoftheCompany’sICFRandconfirmtherewerenochangestotheICFRthathaveoccurredduringtheyearthat materially affected, or are reasonably likely to materially affect, the Company’s ICFR. TheCompanycontinuestoreviewanddocumentitsdisclosurecontrolsanditsICFR,andmayfromtime

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totimemakechangesaimedatenhancingtheireffectivenessandtoensurethatitssystemsevolvewiththebusiness.

AsofApril30,2015,anevaluationwascarriedout,underthesupervisionoftheCEOandCFO,oftheeffectivenessoftheCompany’sICFRasdefinedinNI52‐109.Basedonthisevaluation,theCEOandtheCFOconcludedthatthedesignandoperationoftheseICFRwereeffective.

The evaluations were conducted in accordance with the framework and criteria established inInternal Control ‐ Integrated Framework (2013), issued by the Committee of SponsoringOrganizations of the Treadway Commission (“COSO”), a recognized control model, and therequirementsofNI52‐109.

OUTSTANDINGSHAREDATA

TheauthorizedcapitaloftheCompanyconsistsofanunlimitednumberofcommonshares,whichiscurrentlytheonlyclassofvotingequitysecurities.Holdersofcommonsharesareentitledtoreceivenoticeof,attendandvoteatallmeetingsoftheshareholdersoftheCompany.EachcommonsharecarriestherighttoonevoteinpersonorbyproxyatallmeetingsoftheshareholdersoftheCompany.

AsatJune,theCompany’ssharecapitalwascomposedofthefollowing:

(amountsinthousands)Asat

June4,2015Asat

June5,2014Commonshares 80,137 79,161Stockoptionsoutstanding 3,842 3,429

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MANAGEMENT’SRESPONSIBILITY

Management is responsible forpreparationandpresentationof the annual consolidated financialstatements,management’sdiscussionandanalysis(“MD&A”)andallotherinformationintheannualreport.Inmanagement’sopinion,theaccompanyingconsolidatedfinancialstatementshavebeenproperlypreparedwithinreasonablelimitsofmaterialityinaccordancewithInternationalFinancialReportingStandardsandsummarizedintheconsolidatedfinancialstatements.TheMD&AhasbeenpreparedinaccordancewiththerequirementsofCanadiansecuritiesregulators.Managementhasdesignedandevaluatedtheeffectivenessofitsdisclosurecontrolsandprocedures.Sinceaprecisedeterminationofmany assets and liabilities isdependentupon futureevents, thepreparationofperiodicfinancialstatementsandtheMD&Anecessarilyinvolvestheuseofestimatesand approximations. These have been made using careful judgment and with all informationavailableuptoJune4,2015.TheMD&Aalsoincludesinformationregardingtheestimatedimpactofcurrenttransactionsandevents,sourcesofliquidity,operatingtrendsandrisksanduncertainties.Actual results in the futuremay differmaterially frommanagement’s present assessment of thisinformationbecausefutureeventsmaynotoccurasexpected.Financialoperatingdatainthereportareconsistent,whereapplicable,withtheconsolidatedfinancialstatements.Tomeetitsresponsibilityforreliableandaccuratefinancialstatements,managementhasestablishedsystems of internal control, which are designed to provide reasonable assurance that financialinformationisrelevant,reliableandaccurate,andthatassetsaresafeguardedandtransactionsareexecutedinaccordancewithmanagement’sauthorization.TheconsolidatedfinancialstatementshavebeenexaminedbyDeloitteLLP,independentcharteredaccountants. The independentauditors’responsibility is toexpressaprofessionalopiniononthefairnessofmanagement’sconsolidatedfinancialstatements.Theauditor’sreportoutlinesthescopeoftheirexaminationandsetsforththeiropinion.TheAuditCommitteeof theBoardofDirectors iscomprisedof independentdirectors. TheAuditCommitteemeetsregularlywithmanagementandtheindependentauditorstosatisfyitselfthateachisproperlydischargingitsresponsibilities,andtoreviewtheconsolidatedfinancialstatementsandtheMD&A.TheAuditCommitteereportsitsfindingstotheBoardofDirectorsforconsiderationwhenapprovingtheconsolidatedfinancialstatementsandtheMD&Aforissuancetotheshareholders.TheAudit Committee also recommends, for review by the Board of Directors and approval ofshareholders,theappointmentoftheindependentauditors.TheindependentauditorshavefullandfreeaccesstotheAuditCommittee.Major Drilling Group International Inc.’s Chief Executive Officer and Chief Financial Officer havecertifiedMajorDrillingGroupInternationalInc.’sannualdisclosuredocumentsasrequiredinCanadabytheCanadiansecuritiesregulators.FrancisMcGuire DenisLarocquePresident&ChiefExecutiveOfficer ChiefFinancialOfficerJune4,2015–Moncton,NewBrunswick,Canada

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INDEPENDENTAUDITOR’SREPORT

TotheShareholdersofMajorDrillingGroupInternationalInc.

We have audited the accompanying consolidated financial statements of Major Drilling GroupInternationalInc.,whichcomprisetheconsolidatedbalancesheetsasatApril30,2015andApril30,2014,andtheconsolidatedstatementsofoperations,comprehensiveloss,changesinequityandcashflows for the years then ended, and a summary of significant accounting policies and otherexplanatoryinformation.

Management'sResponsibilityfortheConsolidatedFinancialStatements

Managementisresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinancialstatements in accordancewith International FinancialReportingStandards, and for such internalcontrolasmanagementdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor'sResponsibility

Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudits.WeconductedourauditsinaccordancewithCanadiangenerallyacceptedauditingstandards.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheconsolidatedfinancialstatements.Theproceduresselecteddependontheauditor'sjudgment,including the assessment of the risks of material misstatement of the consolidated financialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity'spreparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity'sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccounting estimatesmadebymanagement, aswell as evaluating the overall presentation of theconsolidatedfinancialstatements.

Webelievethattheauditevidencewehaveobtainedinourauditsissufficientandappropriatetoprovideabasisforourauditopinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, thefinancialpositionofMajorDrillingGroupInternationalInc.asatApril30,2015andApril30,2014,and its financial performance and its cash flows for the years then ended in accordance withInternationalFinancialReportingStandards.

CharteredProfessionalAccountantsJune4,2015–SaintJohn,NewBrunswick

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CONSOLIDATEDSTATEMENTSOFOPERATIONS

FortheyearsendedApril30,2015and2014(inthousandsofCanadiandollars,exceptpershareinformation)

2015 2014

TOTALREVENUE $305,718 $ 354,946 DIRECTCOSTS 239,822 250,519 GROSSPROFIT 65,896 104,427 OPERATINGEXPENSES Generalandadministrative 44,913 50,087Otherexpenses 5,872 3,624(Gain)lossondisposalofproperty,plantandequipment (1,740) 1,617Lossonshort‐terminvestments ‐ 368Foreignexchangeloss 3,479 4,377Financecosts 686 1,002Depreciationofproperty,plantandequipment(note7) 51,080 51,947Amortizationofintangibleassets(note9) 3,158 1,359Impairmentofgoodwill(note19) ‐ 14,326Restructuringcharge(note20) 4,610 20,454

112,058 149,161 LOSSBEFOREINCOMETAX (46,162) (44,734) INCOMETAX–PROVISION(RECOVERY)(note12) Current 7,297 12,849Deferred (3,894) (2,273)

3,403 10,576NETLOSS $(49,565) $(55,310) LOSSPERSHARE(note14) Basic $(0.62) $(0.70)Diluted $(0.62) $(0.70)

FortheyearsendedApril30,2015and2014(inthousandsofCanadiandollars)

2015 2014

NETLOSS $(49,565) $(55,310) OTHERCOMPREHENSIVELOSS Itemsthatmaybereclassifiedsubsequentlytoprofitorloss Unrealizedgainsonforeigncurrencytranslations(netoftax) 25,188 15,428

COMPREHENSIVELOSS $(24,377) $(39,882)

CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVELOSS

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CONSOLIDATEDSTATEMENTSOFCHANGESINEQUITY

FortheyearsendedApril30,2015 and2014(inthousandsofCanadiandollars)

Sharecapital

Share‐basedpaymentsreserve

Retainedearnings

Foreigncurrencytranslationreserve

TotalBALANCEASATMAY1,2013 $230,985 $14,204

$283,088 $10,052 $538,329

Share‐basedpaymentsreserve(note13) ‐ 1,733

‐ ‐ 1,733

Dividends(note25) ‐ ‐ (15,833) ‐ (15,833)

230,985 15,937 267,255 10,052 524,229

Comprehensiveloss: Netloss ‐ ‐ (55,310) ‐ (55,310)Unrealizedgainsonforeigncurrencytranslations ‐ ‐

‐ 15,428 15,428

Totalcomprehensiveloss ‐ ‐

(55,310) 15,428 (39,882)

BALANCEASATAPRIL30,2014 $ 230,985 $ 15,937 $ 211,945 $25,480 $ 484,347

BALANCEASATMAY1,2014 $ 230,985 $ 15,937 $211,945 $25,480 $ 484,347 Exerciseofstockoptions(note13) 52 (13)

‐ ‐ 39

Shareissue(note18) 8,689 ‐ ‐ ‐ 8,689Share‐basedpaymentsreserve(note13) ‐ 1,310

‐ ‐ 1,310

Dividends(note25) ‐ ‐ (9,616) ‐ (9,616) 239,726 17,234 202,329 25,480 484,769 Comprehensiveloss: Netloss ‐ ‐ (49,565) ‐ (49,565)Unrealizedgainsonforeigncurrencytranslations ‐ ‐

‐ 25,188 25,188

Totalcomprehensiveloss ‐ ‐ (49,565) 25,188 (24,377) BALANCEASATAPRIL30,2015 $ 239,726 $ 17,234 $ 152,764 $50,668 $ 460,392

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CONSOLIDATEDSTATEMENTSOFCASHFLOWS

FortheyearsendedApril30,2015and2014(inthousandsofCanadiandollars)

2015 2014

OPERATINGACTIVITIES Lossbeforeincometax $(46,162) $ (44,734)Operatingitemsnotinvolvingcash Depreciationandamortization 54,238 53,306(Gain)lossondisposalofproperty,plantandequipment (1,740) 1,617Lossonshort‐terminvestments ‐ 368Share‐basedpaymentsreserve (note13) 1,310 1,733Impairmentofgoodwill(note19) ‐ 14,326Restructuringcharge(note20) 1,953 10,381

Financecostsrecognizedinlossbeforeincometax 686 1,002 10,285 37,999

Changesinnon‐cashoperatingworkingcapitalitems(note16) 12,731 20,532Financecostspaid (670) (983)Incometaxespaid (7,776) (16,624)Cashflowfromoperatingactivities 14,570 40,924

FINANCINGACTIVITIES (Decrease)increaseindemandloan(note10) (4,038) 4,066Repaymentoflong‐termdebt (9,837) (20,457)Issuanceofcommonshares 39 ‐Dividendspaid(note25) (15,930) (15,832)Cashflowusedinfinancingactivities (29,766) (32,223) INVESTINGACTIVITIES Businessacquisition (20,834) (205)Acquisitionofshort‐terminvestments ‐ (3,587)Proceedsfromdisposalofshort‐terminvestments ‐ 3,074Acquisitionofproperty,plantandequipment(netofdirectfinancing)(note7)

(14,754) (22,626)

Proceedsfromdisposalofproperty,plantandequipment 18,717 5,375Cashflowusedininvestingactivities (16,871) (17,969) Effectofexchangeratechanges 2,720 1,201 DECREASEINCASH (29,347) (8,067) CASH,BEGINNINGOFTHEYEAR 74,244 82,311 CASH,ENDOFTHEYEAR $44,897 $74,244

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CONSOLIDATEDBALANCESHEETS

AsatApril30,2015and2014(inthousandsofCanadiandollars)

2015 2014

ASSETS CURRENTASSETS Cash $44,897 $ 74,244Tradeandotherreceivables 58,559 66,211Incometaxreceivable 12,182 12,179Inventories(note6) 79,248 81,308Prepaidexpenses 2,968 4,690 197,854 238,632

PROPERTY,PLANTANDEQUIPMENT(note7) 276,594 307,288 DEFERREDINCOMETAXASSETS(note12) 4,722 5,825 GOODWILL(note8) 57,274 38,056

INTANGIBLEASSETS(note9) 6,260 1,923 $542,704 $591,724 LIABILITIES CURRENTLIABILITIES Demandloan(note10) $‐ $ 3,909 Tradeandotherpayables 33,820 52,155Incometaxpayable 2,388 3,416Currentportionofcontingentconsideration(note18) 2,735 ‐Currentportionoflong‐termdebt(note11) 6,776 9,655

45,719 69,135 CONTINGENTCONSIDERATION(note18) 7,395 ‐ LONG‐TERMDEBT(note11) 8,569 14,187

DEFERREDINCOMETAXLIABILITIES(note12) 20,629 24,055 82,312 107,377SHAREHOLDERS’EQUITY Sharecapital(note13) 239,726 230,985Share‐basedpaymentsreserve 17,234 15,937Retainedearnings 152,764 211,945Foreigncurrencytranslationreserve 50,668 25,480

460,392 484,347 $542,704 $ 591,724Contingenciesandcommitments(notes22and23)

ApprovedbytheBoardofDirectors

DavidTennant,ChairmanoftheBoard JoMarkZurel,ChairmanoftheAuditCommittee

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NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS

1. NATUREOFACTIVITIESMajorDrillingGroupInternationalInc.(the“Company”)isincorporatedundertheCanadaBusinessCorporationsActandhasitsheadofficeat111St.GeorgeStreet,Suite100,Moncton,NB,Canada.TheCompany’scommonsharesarelistedontheTorontoStockExchange(“TSX”).Theprincipalsourceof revenue consists of contract drilling for companies primarily involved inmining andmineralexploration.TheCompanyhasoperationsinCanada,theUnitedStates,Mexico,SouthAmerica,AsiaandAfrica.2. BASISOFPRESENTATIONStatementofcomplianceTheseConsolidatedFinancialStatementspresenttheCompany’sanditssubsidiaries’financialresultsofoperationsandfinancialpositioninaccordancewithInternationalFinancialReportingStandards(“IFRS”)asissuedbytheInternationalAccountingStandardsBoard(“IASB”)andusingtheaccountingpoliciesdescribedherein.OnJune4,2015,theBoardofDirectorsauthorizedtheseConsolidatedFinancialStatementsforissue.BasisofconsolidationTheseConsolidatedFinancialStatementsincorporatethefinancialstatementsoftheCompanyandentitiescontrolledbytheCompany.ControlisachievedwhentheCompanyisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.TheresultsofsubsidiariesacquiredordisposedofduringtheperiodareincludedintheConsolidatedStatementsofOperationsfromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal,asappropriate.Intra‐group transactions, balances, income and expenses are eliminated on consolidation, whereappropriate.BasisofpreparationTheConsolidatedFinancialStatementshavebeenpreparedbasedonthehistoricalcostbasisexceptfor certain financial instruments that are measured at fair value, as explained in the relatedaccountingpoliciespresentedinNote4.

FortheyearsendedApril30,2015and2014(inthousandsofCanadiandollars,exceptpershareinformation)

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3. APPLICATIONOFNEWANDREVISEDIFRSThefollowingIASBstandardsthathavecomeintoeffectduringthecurrentfiscalyear,havehadnosignificantimpactontheCompany’sConsolidatedFinancialStatements:

IAS32(amended)FinancialInstruments:PresentationIAS36(amended)ImpairmentofAssetsIAS39(amended)FinancialInstruments:RecognitionandMeasurementIFRIC21Levies

TheCompanyhasnotappliedthefollowingrevisedIASBstandardsthathavebeenissued,butarenotyeteffective:

IFRS9(asamendedin2014)FinancialInstruments‐effectivedateJanuary1,2018IFRS10(amended)ConsolidatedFinancialStatements‐effectivedateJanuary1,2016IFRS11(amended)JointArrangements‐AccountingforAcquisitionsofInterestsinJointOperations

‐effectivedateJanuary1,2016IFRS15RevenuefromContractswithCustomers‐effectivedateJanuary1,2017IAS1(amended)PresentationofFinancialStatements‐effectivedateJanuary1,2016IAS16(amended)Property,PlantandEquipment‐effectivedateJanuary1,2016IAS28(amended)InvestmentsinAssociatesandJointVentures‐effectivedateJanuary1,2016IAS38(amended)IntangibleAssets‐effectivedateJanuary1,2016

TheadoptionoftheabovestandardsisnotexpectedtohaveasignificantimpactontheCompany’sConsolidatedFinancialStatements.4. SIGNIFICANTACCOUNTINGPOLICIESCashCashiscomprisedofcashonhandanddemanddepositsinbanks.FinancialinstrumentsFinancial assetsand financial liabilitiesare initially recognizedat fair valueand their subsequentmeasurementisdependentontheirclassificationasdescribedbelow.Theirclassificationdependsonthepurposeforwhichthefinancialinstrumentswereacquiredorissued,theircharacteristicsandtheCompany’sdesignationofsuchinstruments.Settlementdateaccountingisused.

Asset/Liability Classification MeasurementCash Loansandreceivables AmortizedcostTradeandotherreceivables Loansandreceivables AmortizedcostTradeandotherpayables Otherfinancialliabilities AmortizedcostContingentconsideration Otherfinancialliabilities FairvalueLong‐termdebt Otherfinancialliabilities Amortizedcost

Transaction costs are included in the initial carrying value of financial instruments, except thoseclassified as fair value through profit or loss, and are amortized into income using the effectiveinterestmethod.

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4. SIGNIFICANTACCOUNTINGPOLICIES(Continued)RevenuerecognitionRevenuefromdrillingcontractsisrecognizedbasedonthetermsofcustomercontractsthatgenerallyprovideforrevenuerecognitiononthebasisofactualmetersdrilledatcontractratesorfixedmonthlychargesoracombinationofboth.Revenuefromancillaryservices,primarilyrelatingtoextraservicestothecustomer,isrecordedwhentheservicesarerendered.Revenueisrecognizedwhencollectionisreasonablyassured.InventoriesTheCompanymaintainsaninventoryofoperatingsupplies,drillrodsanddrillbits.Inventoriesarevaluedatthelowerofcostandnetrealizablevalue,determinedonafirstin,firstout(“FIFO”)basis.Thevalueofusedinventoryitemsisconsideredminimalthereforetheyarenotvalued,exceptfordrillrods,which,ifstillconsideredusable,arevaluedat50%ofcost.Property,plantandequipmentProperty,plantandequipment(“PP&E”)aremeasuredatcost, lessaccumulateddepreciationandimpairmentlosses.Depreciation,calculatedusingthestraight‐linemethod,ischargedtooperationsatratesbasedupontheestimatedusefullifeofeachdepreciableasset.WhensignificantcomponentsofanitemofPP&Ehavedifferentusefullives,theyareaccountedforasseparateassets.Thefollowingratesapplytothoseassetsbeingdepreciatedusingthestraight‐linemethod: Residualvalue(%) Usefullife(years)Buildings 0‐15 15‐20Drillingequipment 0‐15 5‐15Automotiveandoff‐roadequipment 0‐10 5‐10Other(office,computerandshopequipment) 0 5‐15Landandassetsunderconstructionnotavailableforusearenotdepreciated.Costsforrepairsandmaintenance are charged to operations as incurred. Subsequent costs are included in the asset’scarryingvaluewhenitisprobablethatfutureeconomicbenefitsassociatedwithitwillflowtotheCompanyandwhentheyarereadyfortheirintendeduse.Subsequentcostsaredepreciatedovertheusefullifeoftheassetandreplacedcomponentsarede‐recognized.AnitemofPP&Eisderecognizedupondisposalorwhennofutureeconomicbenefitsareexpectedtoarisefromthecontinueduseoftheasset.Gainorlossarisingonthedisposalorretirementisdeterminedasthedifferencebetweenthesaleproceedsandthecarryingamountoftheassetandisrecognizedinprofitorloss.Depreciationmethods,residualvaluesandusefullivesarere‐assessed,atminimum,onanannualbasis.LeasesTheCompanydeterminestheclassificationofleasesasfinanceoroperatingbasedontherisksandrewardsofownershipof theunderlyingassets.Whethera leaseisafinanceleaseoranoperatingleasedependsonthesubstanceofthetransactionratherthantheformofthecontract.

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4. SIGNIFICANTACCOUNTINGPOLICIES(Continued)BusinesscombinationsAcquisitions of businesses are accounted for using the acquisition method. The considerationtransferredinabusinesscombination, inexchangeforcontroloftheacquiree, ismeasuredat fairvalue.Atacquisitiondate,theidentifiableassetsacquiredandtheliabilitiesassumedarerecognizedat their fair values. Results of operations of a business acquired are included in the Company’sconsolidatedfinancialstatementsfromthedateofthebusinessacquisition.Businessacquisitionandintegrationcostsareexpensedinprofitorlossasincurred.WhentheconsiderationtransferredbytheCompanyinabusinesscombinationincludesassetsorliabilities resulting from a contingent consideration arrangement, the contingent consideration ismeasuredatitsacquisition‐datefairvalueandincludedaspartoftheconsiderationtransferredinabusiness combination. Changes in the fair value of the contingent consideration that qualify asmeasurement period adjustments are adjusted retrospectively, with corresponding adjustmentsappliedagainstgoodwill.Contingentconsiderationthat isclassifiedasanassetora liability isre‐measuredatsubsequentreportingdatesinaccordancewithIAS39,orIAS37Provisions,ContingentLiabilities and Contingent Assets, as appropriate, with the corresponding gain or loss beingrecognizedinprofitorloss.Goodwillismeasuredastheexcessofthesumoftheconsiderationtransferred,theamountofanynon‐controllinginterestsintheacquiree,andthefairvalueoftheacquirer'spreviouslyheldequityinterestintheacquiree(ifany)overthenetoftheacquisition‐datefairvalueoftheidentifiableassetsacquiredandtheliabilitiesassumed.GoodwillGoodwillrepresentstheexcessofthepurchasepriceofbusinessacquisitionsoverthefairvalueofthe identifiable net assets acquired. The value of goodwill is tested for impairment at leastannually. Anyimpairmentlossidentifiedbythistestwouldbereportedinearnings(loss)fortheperiodduringwhichthelossoccurred. For the purposes of impairment testing, goodwill is allocated to each of the Company’s cash‐generatingunits(orgroupsofcash‐generatingunits)thatisexpectedtobenefitfromthesynergiesofthecombination.Anyimpairmentlossrecognizedforgoodwillisnotreversedinsubsequentperiods.IntangibleassetsIntangibleassetsthatareacquiredinabusinesscombinationarerecognizedseparatelyfromgoodwillandareinitiallyrecognizedattheirfairvalueattheacquisitiondate(whichisregardedastheircost).Subsequenttoinitialrecognition,intangibleassetsacquiredinabusinesscombinationarereportedatcostlessaccumulatedamortizationandaccumulatedimpairmentlosses.Intangibleassetsincludecustomerrelationships/contractsandnon‐competeagreements,whichareamortizedonastraight‐linebasisoverathreeandfive‐yearperiod,respectively.

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4. SIGNIFICANTACCOUNTINGPOLICIES(Continued)Impairmentoflong‐livedassetsAttheendofeachreportingperiod,theCompanyassesseswhetherthereareanyindicatorsthatthecarryingvaluesof its long‐livedassetsare impaired. Ifanysuch indicationexists, therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Therecoverableamountofanassetisfirsttestedonanindividualbasis,ifdeterminable,orotherwiseatthecash‐generatingunit(“CGU”)level.ACGUisthesmallestidentifiablegroupofassetsthatgeneratecashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorgroupofassets.Corporate level assetsareallocated to the respectiveCGUswhereanallocationcanbedoneonareasonableandconsistentbasis.Therecoverableamountisthehigherofthefairvaluelesscostsofdisposalandthevalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre‐taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichtheestimatesoffuturecashflowshavenotbeenadjusted.Iftherecoverableamountofanasset(orCGU)isestimatedtobelessthanitscarryingamount,thecarryingamountoftheasset(orCGU)isreducedtoitsrecoverableamount.Animpairmentlossisrecognizedimmediatelyinprofitorloss.Attheendofeachreportingperiod,theCompanyassesseswhetherthereisanyindicationthatanimpairmentlossrecognizedinpriorperiodsforalong‐livedassetotherthangoodwillmaynolongerexistormayhavedecreased.Ifanysuchindicationexists,theCompanyestimatestherecoverableamountofthatasset.Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) isincreasedtotherevisedestimateofitsrecoverableamount,butsothattheincreasedcarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognizedimmediatelyinprofitorloss.IncometaxesCurrent ‐ The tax currently receivable or payable is based on taxable profit for the year and anyadjustments resulting from prior years. Taxable profit differs from profit as reported in theConsolidatedStatementsofOperationsbecauseof itemsof incomeorexpense thatare taxableordeductibleinotheryearsanditemsthatarenevertaxableordeductible.TheCompany’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod.Deferred‐TheCompanyfollowstheassetandliabilitymethodofaccountingfordeferredtaxes.Thismethod takes a balance sheet approach and focuses on the amount of income taxes payable orreceivablethatwillariseifanassetisrealizedoraliabilityissettledforitscarryingamount.Theseresulting assets and liabilities, referred to as “deferred income tax assets and liabilities”, arecomputedandrecognizedbasedoncarryforwardsofunusedtaxlosses,unusedtaxcreditsandthedifferencesbetweenthecarryingamountofbalancesheetitemsandtheircorrespondingtaxvaluesusingtheenacted,orsubstantivelyenacted,incometaxratesineffectwhentheassetsareexpectedtoberealizedortheliabilitiesareexpectedtobesettled.

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4. SIGNIFICANTACCOUNTINGPOLICIES(Continued)TheCompany’sprimarytemporarydifferencesarisebetweenthetaxcarryingvalueandnetbookvalueofPP&E.Thecarryingamountofdeferredtaxassetsisreviewedattheendofeachreportingperiodandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.TranslationofforeigncurrenciesTheConsolidatedFinancialStatementsarepresentedinCanadiandollars,whichistheCompany'spresentationcurrency,andthefunctionalcurrencyoftheparentcompany.Financialstatementsofforeignoperationsaretranslatedusingtherateineffectatthebalancesheetdateforassetsandliabilities,andusingtheaverageexchangeratesduringtheperiodforrevenueandexpenses. Adjustments arising from foreign currency translation are recorded in othercomprehensiveearnings.Foreigncurrencytransactionsaretransactions inacurrencyotherthantheCompany's functionalcurrency.Foreigncurrency transactionsare translated to the functional currencybyapplying theexchangerateprevailingatthedateofthetransactions.Translationgainsandlossesonassetsandliabilities denominated in a foreign currency are included in the statement of comprehensiveearnings.Additionally, foreign exchange gains and losses related to certain intercompany loans that arepermanentinnatureareincludedinothercomprehensiveearningsandforeigncurrencytranslationreserve.Share‐basedpaymentsTheCompanyusesthefairvaluemethodtomeasurecompensationexpenseatthedateofgrantofstock options to employees andDirectors. The fair value of each tranche for all option grants isdeterminedusingtheBlack‐Scholesoptionpricingmodel,whichconsidersestimatedforfeituresattimeofgrant,andeachtrancheisamortizedseparatelytoearningsoverthevestingperiodofthetranche with an offset to the share‐based payments reserve. When options are exercised, thecorresponding share‐based payments reserve and the proceeds received by the Company arecreditedtosharecapital.TheCompanyrecordsthefairvalueofdeferredshareunitsascompensationexpense,withoffsettoaccruedliabilities.ProvisionsProvisionsarerecognizedwhenthereisapresent(legalorconstructive)obligationasaresultofapastevent, it isprobablethattheCompanywillberequiredtosettletheobligationandareliableestimateoftheamountoftheobligationcanbemade.Theamountrecognizedasaprovisionisthepresentvalueofthebestestimateoftheconsiderationrequiredtosettlethepresentobligationattheendofthereportingperiod,takingintoaccounttherisksanduncertaintiesspecifictotheobligation.

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4. SIGNIFICANTACCOUNTINGPOLICIES(Continued)Restructurings‐ArestructuringprovisionisrecognizedwhentheCompanyhasdevelopedadetailedformalplanforrestructuringandhasraisedavalidexpectationinthoseaffectedthatitwillcarryouttherestructuringbystartingtoimplementtheplanorannouncingitsmainfeaturestothoseaffectedby it.Themeasurementofarestructuringprovision includesonly thedirectexpendituresarisingfrom the restructuring, which are those amounts that are both necessarily entailed by therestructuringandnotassociatedwiththeongoingactivitiesoftheentity.5. KEYSOURCESOFESTIMATION,UNCERTAINTYANDCRITICALACCOUNTING

JUDGMENTSUseofestimatesThe preparation of financial statements in conformity with IFRS requires management to makejudgments,estimatesandassumptionsthatarenotreadilyapparentfromothersources,whichaffectthereportedamountsofassetsandliabilitiesatthedatesoftheConsolidatedFinancialStatementsandthereportedamountsofrevenueandexpensesduringthereportedperiods.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatareconsideredtoberelevant.Actualresultscoulddifferfromtheseestimates.Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognizedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,or in theperiodof therevisionand futureperiods if therevisionaffectsbothcurrentandfutureperiods.Significantareasrequiringtheuseofmanagementestimatesrelatetotheuseful livesofPP&Efordepreciation purposes, PP&E and inventory valuation, determination of income and other taxes,assumptionsusedincompilationofshare‐basedpayments,fairvalueofassetsacquiredandliabilitiesassumed in business acquisitions, amounts recorded as accrued liabilities and contingentconsiderations,andimpairmenttestingofgoodwillandintangibleassetsandlong‐livedassets.ManagementdeterminestheestimatedusefullivesofitsPP&EbasedonhistoricalexperienceoftheactuallivesofPP&Eofsimilarnatureandfunctions,andreviewstheseestimatesattheendofeachreportingperiod.Managementreviewstheconditionofinventoriesattheendofeachreportingperiodandrecognizesaprovisionforslow‐movingandobsoleteitemsofinventorywhentheyarenolongersuitableforuse.Management’sestimateofthenetrealizablevalueofsuchinventoriesisbasedprimarilyoncurrentmarketconditions.Amounts used for impairment calculations are based on estimates of future cash flows of theCompany.By theirnature, theestimatesof cash flows, including theestimatesof future revenue,operating expenses, utilization, discount rates and market pricing are subject to measurementuncertainty.Accordingly,theimpactintheConsolidatedFinancialStatementsoffutureperiodscouldbematerial.

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5. KEYSOURCESOFESTIMATION,UNCERTAINTYANDCRITICALACCOUNTINGJUDGMENTS(Continued)

Tax interpretations, regulationsand legislation in thevarious jurisdictions inwhich theCompanyoperates are subject to change. As such, income taxes are subject to measurement uncertainty.Deferred income tax assets are assessed by management at the end of the reporting period todeterminetheprobabilitythattheywillberealizedfromfuturetaxableearnings.Compensationcostsaccruedforlong‐termshare‐basedpaymentplansaresubjecttotheestimationof what the ultimate payout will be using the Black‐Scholes pricing model, which is based onsignificantassumptionssuchasvolatility,dividendyieldandexpectedterm.The amount recognized as accrued liabilities and contingent considerations, including legal,restructuring,contractual,constructiveandotherexposuresorobligations,isthebestestimateoftheconsiderationrequiredtosettletherelatedliability,includinganyrelatedinterestcharges,takingintoaccounttherisksanduncertaintiessurroundingtheobligation.Inaddition,contingencieswillonlybe resolved when one or more future events occur or fail to occur. Therefore, assessment ofcontingenciesinherentlyinvolvestheexerciseofsignificantjudgmentandestimatesoftheoutcomeof futureevents.TheCompanyassessesits liabilities,contingenciesandcontingentconsiderationsbaseduponthebestinformationavailable,relevanttaxlawsandotherappropriaterequirements.JudgmentsThe Company applied judgment in determining the functional currency of the Company and itssubsidiaries.Functionalcurrencywasdeterminedbasedonthecurrencythatmainlyinfluencessalesprices,labour,materialsandothercostsofprovidingservices.PP&EandgoodwillareaggregatedintoCGUsbasedontheirabilitytogeneratelargelyindependentcashinflowsandareusedforimpairmenttesting.ThedeterminationoftheCompany’sCGUsissubjecttomanagement’sjudgmentwithrespecttothelowestlevelatwhichindependentcashinflowsaregenerated.TheCompanyhasappliedjudgmentindeterminingthedegreeofcomponentizationofPP&E.EachpartofanitemofPP&Ewithacostthatissignificantinrelationtothetotalcostoftheitemandhasaseparateusefullifehasbeenidentifiedasaseparatecomponentandisdepreciatedseparately.The Company has applied judgment in recognizing provisions and accrued liabilities, includingjudgmentastowhethertheCompanyhasapresentobligation(legalorconstructive)asaresultofapastevent;whetheritisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation;andwhetherareliableestimatecanbemadeoftheamountoftheobligation.Deferred income tax assets are assessed by management at the end of the reporting period todeterminetheprobabilitythattheywillberealizedfromfuturetaxableearnings.Thisdeterminationissubjecttomanagementjudgment.

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6. INVENTORIESThecostofinventoryrecognizedasanexpenseandincludedindirectcostsfortheyearendedApril30,2015was$38,681(2014‐$47,545).Duringtheyear,exceptfortheinventorywrite‐downsasdetailedinNote20,therewerenosignificantwrite‐downsofinventoryasaresultofnetrealizablevalue being lower than cost, and no inventory write‐downs recognized in previous years werereversed.Thefollowingisabreakdownofinventorybycategory: 2015 2014 Rodsandcasings $26,479 $27,313Consumables 4,912 5,149Machineparts 26,480 25,038Wirelineanddownholetools 7,445 7,130Diamondbits 6,524 6,686Other 7,408 9,992 $79,248 $81,308TheCompany’screditfacilityrelatedtooperationsisinpartsecuredbyageneralassignmentofaportionoftheCompany’sinventoryincertainregions.7. PROPERTY,PLANTANDEQUIPMENTChangesinthePP&Ebalancewereasfollowsfortheyear:Cost Land Buildings Drills Auto Other Total BalanceasatApril30,2014 $3,310 $ 22,021 $364,780 $129,253 $29,960 $549,324Additions ‐ 166 15,223 695 5 16,089Disposals (75) (2,496) (28,892) (22,003) (10,664) (64,130)Businessacquisition ‐ ‐ 8,847 421 ‐ 9,268Effectofexchangeratechangesandother 213 338 9,465

5,328 2,180 17,524

BalanceasatApril30,2015 $3,448 $ 20,029 $ 369,423 $113,694 $21,481 $528,075 AccumulatedDepreciation Land Buildings Drills Auto Other Total BalanceasatApril30,2014 $ (47) $ (6,966) $ (136,076) $(76,920) $(22,027) $(242,036)Disposals ‐ 2,220 18,436 17,806 8,691 47,153Impairment(Note20) ‐ ‐ (1,511) (372) (70) (1,953)Depreciation ‐ (1,786) (36,763) (11,234) (1,297) (51,080)Effectofexchangeratechangesandother 47 71 455

(2,388) (1,750) (3,565)

BalanceasatApril30,2015 $ ‐ $ (6,461) $(155,459) $(73,108) $(16,453) $(251,481) CarryingvalueApril30,2014 $3,263 $ 15,055 $228,704 $52,333 $7,933 $307,288CarryingvalueApril30,2015 $3,448 $ 13,568 $213,964 $40,586 $5,028 $276,594

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7. PROPERTY,PLANTANDEQUIPMENT(Continued)TheCompanyhasassessedwhetherthereisany indicationthatanimpairment lossrecognizedinprior periods for PP&Emay no longer exist ormay havedecreased. Therewere no impairmentsrequiringreversalasatApril30,2015or2014.Capitalexpenditureswere$16,089and$23,304,respectively,fortheyearsendedApril30,2015and2014.TheCompanyobtaineddirectfinancingof$1,335and$678,respectively,fortheyearsendedApril30,2015and2014.ThecarryingvalueofPP&EunderfinanceleasesfortheyearendedApril30,2015was$2,086(2014‐$1,976).8. GOODWILLChangesinthegoodwillbalancewereasfollows: 2015 2014 Openingbalance $38,056 $52,736Goodwillonacquisition(Note18) 18,367 ‐Impairmentcharge(Note19) ‐ (14,326)Effectofmovementinexchangerates 851 (354)Endingbalance $57,274 $38,056AllocationofgoodwilltoCGUsThecarryingamountofgoodwillwasallocatedtoCGUsasfollows: 2015 2014 Canada $48,548 $38,056U.S. 8,726 ‐ $57,274 $38,056CanadaTherecoverableamountofthe“CanadianBranch”asaCGUisdeterminedbasedonavalue‐in‐usecalculation,whichuses cash flowprojectionsbasedon financialbudgets and forwardprojectionsapprovedbymanagementcoveringafive‐yearperiod,andadiscountrateof14.6%perannum.Cashflowsbeyondthatperiodhavebeenextrapolatedusingasteady2%perannumgrowthrate.WhiletheminingservicesmarketinCanadaiscyclicalinnature,thisorganicgrowthratehasbeenachievedacrosstwobusinesscyclesandisseenbymanagementasafairandconservativelong‐termaveragegrowthrate.ManagementbelievesthatanyreasonablypossiblechangeinthekeyassumptionsonwhichtherecoverableamountisbasedwouldnotcausetheaggregatecarryingamounttoexceedtheaggregaterecoverableamountoftheCGU.

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8. GOODWILL(Continued)U.S.The recoverable amount of the “U.S. Branch” as a CGU is determined based on a value‐in‐usecalculation,whichuses cash flowprojectionsbasedon financialbudgets and forwardprojectionsapprovedbymanagementcoveringafive‐yearperiod,andadiscountrateof15.0%perannum.Cashflowsbeyondthatperiodhavebeenextrapolatedusingasteady2%perannumgrowthrate.WhiletheminingservicesmarketintheU.S.iscyclicalinnature,thisorganicgrowthratehasbeenachievedacrosstwobusinesscyclesandisseenbymanagementasafairandconservativelong‐termaveragegrowthrate.ManagementbelievesthatanyreasonablypossiblechangeinthekeyassumptionsonwhichtherecoverableamountisbasedwouldnotcausetheaggregatecarryingamounttoexceedtheaggregaterecoverableamountoftheCGU.KeyassumptionsThekeyassumptionsinthevalue‐in‐usecalculationsareasfollows:Revenue ‐ The values assigned to the assumptions reflect past experience. The effect of theincorporationoftheacquireddrillfleetsandsignificantlevelsofcapitalexpendituresince2007thathaveonaveragebeenhigherthanthesustaininglevel,haveprovidedthebasisonwhichtogrow.Thegrowthexpectedisconsistentwithmanagement’splansforfocusingoperationsandgrowingshareinthespecializeddrillingmarket.Grossmargin‐Managementexpectsthatgrossmarginswillremaininarangeinlinewithhistoricallyachievedlevels.9. INTANGIBLEASSETSChangesintheintangibleassetsbalancewereasfollows:

CostAccumulatedamortization Total

BalanceasatMay1,2013 $9,710 $(6,431) $3,279Amortization ‐ (1,359) (1,359)Effectofmovementinexchangerates ‐ 3 3BalanceasatApril30,2014 $9,710 $(7,787) $1,923Amortization ‐ (3,158) (3,158)Businessacquisition(Note18) 7,095 ‐ 7,095Effectofmovementinexchangerates 476 (76) 400BalanceasatApril30,2015 $17,281 $(11,021) $6,260Intangibleassetsconsistofcustomerrelationships/contracts.

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10. DEMANDCREDITFACILITIESTheCompanyhascreditfacilitiesavailableinCanadaof$25,000bearinginterestatthebank’sprimelendingrateplus0.75%orthebankers’acceptancefeeplus2.25%forCanadiandollardrawsandthebank’sU.S.dollarbaserateinCanadaplus0.75%orthebank’sLondoninterbankofferrate(“LIBOR”)plus2.25% forU.S.dollardraws.Thedemandcredit facilitiesareprimarily securedbycorporateguaranteesof companieswithin thegroup.TheCompanyhasa credit facilityof$1,825 for creditcards,withinterestratesandrepaymentsasperthecardholderagreement.AsatApril30,2015,theCompanyhadutilized$4,475(2014‐$5,157)oftheselinesforstand‐bylettersofcredit.

TheCompanyalsohasvariouscreditfacilitiesamountingto$6,329(2014‐$7,851)bearinginterestatratesrangingfrom2.8%to6.9%securedbycorporateguaranteesofcompanieswithinthegroup.AsatApril30,2015theamountdrawnontheselineswas$1,035(2014‐$4,749).11. LONG‐TERMDEBT 2015 2014Non‐revolvingtermloan,bearing interestateitherthebank’sprimerateplus0.75%orthebankers’acceptancerateplus2.25%forCanadiandollardraws,andeitherthebank’sU.S.dollarbaserateinCanadaplus0.75%orthe bank’s LIBOR plus 2.25% for U.S. dollar draws, payable in monthlyinstallmentsof$417,maturing inSeptember2016,securedbycorporateguaranteesofcompanieswithinthegroup.

$7,083

$12,083Termloanbearinginterestat5.9%,payableinmonthlyinstallmentsof$83,unsecured,maturinginAugust2021.Termloansbearinginterestatratesrangingfrom0%to6.95%,payableinmonthly installments of $117, secured by certain equipment, maturingthrough2018.

6,333

1,953

7,333

1,439 Notepayablebearinginterestat4%,repayableoverthreeyears,maturedinSeptember2014.

‐

3,000

Derivativefinancialinstrumentwithanotionalprincipalamountof$7,083,swappingCanadian‐Bankers’Acceptance‐CanadianDealerOfferedRateforanannualfixedrateof3.665%,maturinginSeptember2016.

(24)

(13) 15,345 23,842Currentportion

6,776

9,655

$8569 $14,187

Therequiredannualprincipalrepaymentsonlong‐termdebtareasfollows:

2016 $6,7762017 3,7712018 1,3632019 1,1022020 1,000thereafter 1,333 $15,345

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11. LONG‐TERMDEBT(Continued)TheCompanyhedgesitsexposuretofloatingratesunderthenon‐revolvingtermloanviaaninterestrateswap,exchangingavariablerateinterestpaymentforafixedrateinterestpayment.AsatApril30,2015,theswapisdeemedeffectiveandisrecognizedasacashflowhedge.12. INCOMETAXESIncome taxes vary from amounts thatwould be determined by applying the combined statutoryCanadiancorporateincometaxratetoearningsbeforeincometaxwithdetailsasfollows: 2015 2014Lossbeforeincometax $(46,162)

$(44,734)

Incometaxrecoverycalculatedat27%(2014‐27%) (12,464)

(12,078)

Non‐recognitionoftaxbenefitsrelatedtolosses

8,202

9,602

De‐recognitionofpreviouslyrecognizedtaxlosses 2,636 3,462Otherforeigntaxespaid 635 1,172Effectofratevariancesinforeignjurisdictions (411) (70)Permanentdifferencesandother 4,273 6,393 2,871 8,481Adjustmentsrecognizedinthecurrentyearinrelationtothecurrenttaxinprioryears 532

2,095

Incometaxexpenserecognizedinnetloss $3,403 $10,576Thetaxrateusedforthe2015and2014reconciliationshereinistheeffectivefederalandprovincialCanadiancorporatetaxrateof27%in2015(27%in2014).Themovementsindeferredincometaxbalancesareasfollows:

2014 Taxprovision Exchange Reclassified 2015Deferredtaxassetsrelatedtonon‐capitallosses $5,496 $(1,844) $688

$218 $4,558

Deferredtaxassetrelatedtoshareissuancecosts 329 (165) ‐

‐ 164

Deferredtaxliabilitiesrelatedtodifferenceintaxandbookbasis (24,055) 5,903 (2,477)

‐ (20,629)

Netdeferredtaxliabilities $ (18,230) $ 3,894 $(1,789) $218 $ (15,907)

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12. INCOMETAXES(Continued)Incometaxexpenserecognizedinnetloss: 2015 2014CurrenttaxCurrenttaxexpenseinrespectofthecurrentyear

$6,765

$10,754

Adjustmentsrecognizedinthecurrentyearinrelationtothecurrenttaxofprioryears

532

2,095

DeferredtaxDeferredtaxexpenserecognizedinthecurrentyear

(6,530)

(5,735)

Write‐downofpreviouslyrecordedtaxassets 2,636 3,462Incometaxprovision $3,403 $10,576The recognition andmeasurement of the current and deferred tax assets and liabilities involvesdealingwithuncertaintiesintheapplicationofcomplextaxregulationsinamultitudeofjurisdictionsandintheassessmentoftherecoverabilityofdeferredtaxassets.Potentialliabilitiesarerecognizedfor anticipated tax audit issues in various tax jurisdictions based on the Company’s estimate ofwhether,andtheextenttowhich,additionaltaxeswillbedue.If payment of the accrued amounts ultimately proves to be unnecessary, the elimination of theliabilitieswouldresultintaxbenefitsbeingrecognizedintheperiodwhentheCompanydeterminesthe liabilitiesno longer exist. If the estimateof tax liabilitiesproves tobe less than theultimateassessment,afurtherchargetoexpensewillresult.The Company has accumulated approximately $86,936 in non‐capital losses ofwhich $34,548 isavailabletoreducefutureincometaxesotherwisepayableinforeignjurisdictions.Theselosses,ifun‐used,willexpireinthefollowingcalendaryears:2015‐$1,381;2016‐$3,205;2019‐$1,385;2034‐$11,555;2035‐$15,370;indefinite‐$54,040.TheCompanyhasaccumulatedapproximately$4,756(A$4,967)ofcapitallossesthatareavailabletoreduceincometaxesotherwisepayableoncapitalgainsrealizedinAustralia. Thebenefitoftheselosseshasnotbeenrecognizedinthefinancialstatements.TheCompanyhasapproximately$194,000oftemporarydifferencesassociatedwithitsinvestmentsinforeignsubsidiariesforwhichnodeferredtaxeshavebeenprovidedonthebasisthattheCompanyisabletocontrolthetimingofthereversalofsuchtemporarydifferencesandsuchreversalisnotprobableintheforeseeablefuture.Therepatriationof cash throughdividends, fromcertain jurisdictions,maycausewithholding taxexpenseforwhichnoliabilityhasbeenprovidedonthebasisthattheCompanyisabletocontrolthetimingofrepatriation.

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12. INCOMETAXES(Continued)TheCompanyperiodicallyassesses its liabilities andcontingencies forall taxyearsopen to auditbased upon the latest information available. For those matters, where it is probable that anadjustmentwillbemade,theCompanyhasrecordeditsbestestimateofthesetaxliabilities,includingrelatedinterestcharges.Inherentuncertaintiesexistinestimatesoftaxcontingenciesduetochangesintaxlaws.Whilemanagementbelievestheyhaveadequatelyprovidedfortheprobableoutcomeofthesematters,futureresultsmayincludefavorableorunfavorableadjustmentstotheseestimatedtaxliabilitiesintheperiodtheassessmentsaremadeorresolved,orwhenthestatuteoflimitationlapses.13. SHARECAPITALAuthorizedUnlimited number of fully paid common shares, without nominal or par value, with each sharecarryingonevoteandarighttodividendswhendeclared.ThemovementintheCompany’sissuedandoutstandingsharecapitalduringtheyearisasfollows: 2015 2014 Numberof

shares SharecapitalNumberof

shares SharecapitalOpeningbalance 79,161,378 $230,985 79,161,378 $230,985Exerciseofstockoptions 9,011 52 ‐ ‐Shareissue 966,495 8,689 ‐ ‐Endingbalance 80,136,884 $239,726 79,161,378 $230,985StockoptionplanDetailsoftheCompany’sstockoptionplan(the“Plan”)forDirectors,OfficersandotheremployeesoftheCompanyanditssubsidiariescanbefoundintheCompany’s2014ManagementProxyCircular.TherehavebeennochangestothePlansincethatdate.AsummaryofthestatusofthePlan,asatApril30,2015and2014,andofchangesduringthoseyears,ispresentedbelow: 2015 2014

Numberofoptions

Weightedaverage

exerciseprice

Numberof

options

Weightedaverage

exercisepriceOutstanding,beginningofyear 3,428,619 $9.70

3,048,619 $10.04

Optionsgranted 444,400 7.57 410,000 7.04Optionsexpired (22,500) 7.04 (30,000) 7.00Optionsexercised (9,011) 4.32 ‐ ‐Outstanding,endofyear 3,841,508 9.49 3,428,619 9.70

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13. SHARECAPITAL(Continued)ThefollowingtablesummarizesinformationonstockoptionsoutstandingasatApril30,2015:

Rangeofexerciseprices

OutstandingatApril30,2015

Weightedaverageremaininglife

(years)

Weightedaverage

exerciseprice

ExercisableatApril30,2015

Weightedaverage

exerciseprice

$6.15‐$9.16 2,337,305 5.95 $7.55 1,634,572 $7.63$10.98‐$14.03 1,360,203 4.97 11.95 1,230,536 12.03$15.42‐$19.72 144,000 4.39 17.52 144,000 17.52 3,841,508 5.55 9.49 3,009,108 9.90

TheCompany’scalculationsofshare‐basedcompensationforoptionsgrantedweremadeusingtheBlack‐Scholesoption‐pricingmodelwithweightedaverageassumptionsasfollows:

2015 2014 Risk‐freeinterestrate 1.74% 1.64%Expectedlife 6.0years 5.9yearsExpectedvolatility(basedonhistoricalvolatility) 44.0% 54.0%Expecteddividendyield 2.5% 2.9%

TheweightedaveragegrantdatefairvalueofoptionsgrantedduringtheyearendedApril30,2015was $2.80 (2014 ‐ $2.78). For the year ended April 30, 2015, the amount of compensation costrecognizedinearningsandcreditedtoshare‐basedpaymentsreservewas$1,310(2014‐$1,733).DeferredshareunitsTheCompanyhasaDeferredShareUnitPlan(the“DSUPlan”)forDirectorsandcertaindesignatedOfficersasdescribedindetailintheCompany’s2014ManagementProxyCircular.TherehavebeennochangestotheDSUPlansincethatdate.ThefollowingtablesummarizesinformationonDSUsearnedundertheDSUPlanatApril30,2015and2014: 2015 2014 Numberof

unitsNumberof

unitsOutstanding,beginningofyear 64,713 49,365DSUsissuedduringyear 7,036 15,348Outstanding,endofyear 71,749 64,713AsatApril30,2015,thetotalvalueofDSUsoutstandingwas$445(2014‐$474).

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14. LOSSPERSHARE

All of the Company’s earnings are attributable to common shares, therefore net loss is used indetermininglosspershare.

2015 2014 Netloss $(49,565) $(55,310) Weightedaveragesharesoutstanding(000’s) 79,887 79,161Neteffectofdilutivesecurities: Stockoptions 2 66Weightedaveragenumberofshares‐diluted(000’s)

79,889

79,227

Losspershare:

Basic $(0.62) $(0.70)Diluted $(0.62) $(0.70)

ThecalculationofdilutedlosspersharefortheyearendedApril30,2015and2014excludestheeffectof3,809,567and2,585,434options,respectively,astheywereanti‐dilutive.15. SEGMENTEDINFORMATIONThe Company’s operations are divided into three geographic segments corresponding to itsmanagementstructure,Canada‐U.S.,SouthandCentralAmerica,andAustralia,AsiaandAfrica.Theservicesprovidedineachofthereportablesegmentsareessentiallythesame.TheaccountingpoliciesofthesegmentsarethesameasthosedescribedinNote4.Managementevaluatesperformancebasedonearningsfromoperationsinthesethreegeographicsegmentsbeforefinancecostsandincometax.DatarelatingtoeachoftheCompany’sreportablesegmentsispresentedasfollows: 2015 2014 Revenue Canada‐U.S.* $177,210 $175,882 SouthandCentralAmerica 75,604 73,583 Australia,AsiaandAfrica 52,904 105,481 $305,718 $354,946

Lossfromoperations Canada‐U.S. $(5,250) $9,315 SouthandCentralAmerica (10,828) (25,125) Australia,AsiaandAfrica (18,871) (19,776) (34,949) (35,586) Eliminations ‐ (554) (34,949) (36,140) Financecosts 686 1,002 Generalandcorporateexpenses** 10,527 7,592

Incometax 3,403 10,576 Netloss $(49,565) $(55,310)

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15. SEGMENTEDINFORMATION(Continued)*Canada‐U.S.includesrevenuein2015of$106,081(2014‐$112,899)forCanadianoperations.**Generalandcorporateexpensesincludeexpensesforcorporateoffices,stockoptionsandcertainunallocatedcosts.GoodwillandintangibleassetimpairmentchargesfortheyearendedApril30,2014areincludedinabovefiguresasfollows:SouthandCentralAmerica$12,057;Australia,AsiaandAfrica$2,269.Restructuringcharges,asdetailedinNote20,forthecurrentyearareincludedinabovefiguresasfollows:Canada‐U.S.$367(2014‐$503);SouthandCentralAmerica$882(2014‐$1,665);Australia,AsiaandAfrica$3,221(2014‐$18,286);Generalandcorporateexpenses$140(2014‐nil).CapitalexpendituresfortheyearendedApril30,2015areasfollows:Canada‐U.S.$9,445(2014‐$17,254);SouthandCentralAmerica$3,443(2014‐$3,452);Australia,AsiaandAfrica$2,514(2014‐$2,266)andCorporate$687(2014–$332). 2015 2014 Depreciationandamortization Canada‐U.S. $26,755 $22,928 SouthandCentralAmerica 12,749 12,072 Australia,AsiaandAfrica 12,996 16,161 Unallocatedandcorporateassets 1,738 2,145 Totaldepreciationandamortization $54,238 $53,306

IdentifiableassetsCanada‐U.S.* $226,919 $197,673SouthandCentralAmerica 163,539 178,026Australia,AsiaandAfrica 109,791 148,806Unallocatedandcorporateassets 42,455 67,219Totalidentifiableassets $542,704 $591,724*Canada‐U.S.includesproperty,plantandequipmentin2015of$84,115(2014‐$88,347)forCanadianoperations.16. ADDITIONALINFORMATIONTOTHESTATEMENTSOFCASHFLOWSChangesinnon‐cashoperatingworkingcapitalitems: 2015 2014Tradeandotherreceivables $16,609

$34,864

Inventories 7,801 6,396Tradeandotherpayables (14,495) (21,909)Otheritems 2,816 1,181 $12,731 $20,532

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17. NETEARNINGSFORTHEYEARNetearningsfortheyearhavebeenarrivedatafterchargingvariousemployeebenefitexpensesasfollows: 2015 2014Directcosts:

Salariesandwages $91,737 $99,442Otheremployeebenefits 21,001 18,771

Generalandadministrativeexpenses:

Salariesandwages 20,437 21,824Otheremployeebenefits 3,523 3,762

Otherexpenses:

Share‐basedpayments 1,133 1,41918. BUSINESSACQUISITIONEffectiveAugust1,2014, theCompanyentered into theundergroundpercussive/longholedrillingsectorwithitspurchaseoftheassetsofTaurusDrillingServices(“Taurus”),basedinCanadaandtheUnitedStates.The acquisition has been accounted for using the acquisitionmethod and the results of the newunderground percussive/longhole drilling division have been included in the ConsolidatedStatementsofOperationsfromtheclosingdate.Throughthispurchase, theCompanyacquired39undergrounddrill rigs, support equipment and inventory, existing contracts and receivables, andtookontheoperation’smanagementteam,andotheremployees,includingexperienceddrillers.Thepurchasepriceforthetransactionwas$29.5million(consistingof$20.7million incash,$8.7millioninMajorDrillingshares,and$0.1millioninassumptionofdebt),andanadditionalmaximumamount of $11.5 million (undiscounted) tied to performance. The estimated fair value of thecontingentconsiderationwas$10.1millionatApril30,2015.Theadditionalpayoutperiodextendsforthreeyears,commencingonAugust1,2014,andpaymentsarecontingentongrowingEBITDA(earningsbeforeinterest,taxes,depreciationandamortization)runratesabovelevelsatthedateofacquisition.Tradeandotherreceivablesarerecordedat fairvalue.Goodwillarising fromthisacquisitionwillrepresenttheexcessofthetotalconsiderationpaidoverthefairvalueofthenetassetsacquiredandthebenefitofexpectedsynergies,revenuegrowth, futuremarketdevelopmentandtheassembledworkforceofTaurusandMajorDrilling.

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18. BUSINESSACQUISITION(Continued)Theestimatednetassetsacquiredatfairvalueatacquisitionareasfollows:Assetsacquired:Tradeandotherreceivables $ 5,500Inventories 606Prepaidexpenses 40Property,plantandequipment 9,268Goodwill(taxdeductible) 18,367Intangibleassets 7,095Tradeandotherpayables (1,223)Totalassets $ 39,653Consideration:Cash $ 20,683Tradeandotherpayable 151Contingentconsideration 10,130SharesofMajorDrilling 8,689Totalconsideration $39,653The above consideration includes non‐cash investing activities, which are not reflected in theConsolidatedStatementsofCashFlows,includingtheissuanceof966,495sharesofMajorDrillingat$8.99foratotalof$8,689andcontingentconsiderationof$10,130.The Company incurred acquisition‐related costs of $356 relating to external legal fees and duediligence costs. These acquisition costs have been included in the other expenses line of theConsolidatedStatementsofOperations.RevenuesincethedateofacquisitionattributabletotheadditionalbusinessgeneratedbyTauruswas$34,217.DuetotheintegrationoftheTaurusacquisitionwithexistingoperations,itisimpracticabletoestimatetherevenueandnetincomeofthecombinedentityfortheyearasthoughtheacquisitiondatewasMay1,2014.19. IMPAIRMENTOFGOODWILLANDINTANGIBLEASSETSForthepurposesofassessingimpairment,theCompany’sassetsaregroupedandtestedattheCGUlevel. TheCompanyhasoperationsinCanada,theUnitedStates,Mexico,SouthAmerica,AsiaandAfricaandmanagementhasdeterminedthatitsCGUsareidentifiableatthecountrylevelasthisisthesmallestidentifiablegroupofassetsthatgeneratecashinflowsthatarelargelyindependentofcash inflows fromother assetsor groupsof assets,with internal reportingorganized tomeasureperformanceofeachcountry.Inthepreviousyear,duetotheweaknessintheChileanmarketcausedbythechangesinlaborlawsandtheseverityofthedownturninthatmarket,theCompanyrecordedanimpairmentofgoodwillof$12,057intheSouthandCentralAmericansegment.TheCompanyalsorecordedanimpairmentofgoodwillinthepreviousyearof$2,269intheAustralia,AsiaandAfricansegmentduetotheweaknessintheMozambiquemarketaswellasthedown‐sizingofasignificantcustomerinthatcountry.

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19. IMPAIRMENTOFGOODWILLANDINTANGIBLEASSETS(Continued)Cash flowprojectionswerecalculatedovera five‐yearperiodbasedonbudgetedearningsbeforeinterest,taxes,depreciationandamortization,forecastedfromhistoricalearnings,usingthevalue‐in‐usemethod,withapre‐taxdiscountrateof17.4%.Theweightedaveragecostofcapital(WACC)wasdeterminedtobeintherangeof13%to17%andisbasedonmarketcapitalstructureofdebt,risk‐freerate,equityriskpremium,betaadjustmenttotheequityriskpremiumbasedonareviewofbetasofcomparablepubliclytradedcompanies,anun‐systematicriskpremium,andafter‐taxcostofdebt.Maintainabledebt‐freenetcashflowbeyondtheforecastperiodisestimatedtoapproximatetheaverageofthefive‐yearforecastedcashflows,increasedbyaterminalgrowthrateintherangeof1% to 2% and is based on the industry’s expected growth rates, forecast inflation rates, andmanagement’sexperiences.20. RESTRUCTURINGCHARGEDuring the year, the Company continued to rationalize certain operations, and due to ongoingadministrativedifficultiesassociatedwithoperatingintheDemocraticRepublicofCongo(“DRC”),theCompanydecidedtoclosedownitsoperationinthatcountry.Duringthepreviousyear,duetohighcostsbeing incurredbyminingcompanies andnewmining taxes,projects inAustraliawerecancelled,thereforetheCompanycloseditsAustralianoperation.Theserestructuringactivitiesgeneratedimpairmentlossescalculatedbasedonthedeterminationofthefairvalueofassetslesscostofdisposal.Fairvaluewasdeterminedthroughtheuseofindustryknowledgeandspecialists.Thecostsrelatedtotheseinitiativesarerecordedaspartoftherestructuringchargeforatotalof$4,610(2014‐$20,454).Thisamountconsistsofanimpairmentchargeof$1,953(2014‐$5,714)relatingtoproperty,plantandequipment,employeeseverancechargesof$1,221(2014‐$5,043)incurred to rationalize the workforce, and a write‐down of $1,832 (2014 ‐ $4,002) to reduceinventorytonetrealizablevalue.Inthecurrentyear,theremainderconsistsofarecoveryof$396relatingtothecostofwindingdownoperations,andinthepreviousyeartheremainderconsistedof$5,695forthewindingdownofoperations,includinganonerousprovisionof$2,542toterminateleaseagreements.21. NON‐CASHTRANSACTIONSDuringtheyear,theCompanyenteredintothefollowingnon‐cashfinancingandinvestingactivities,whicharenotreflectedintheStatementsofCashFlows:

• TheCompanydeclaredadividendduringtheyearfor$1,603thatwasunpaidasatApril30,2015(2014‐$7,916).

• TheCompanyfinancedequipmentpurchasesfor$1,335(2014‐$678).• TheconsiderationforthebusinessacquisitiondetailedinNote18includesnon‐cashinvesting

activities, includingthe issuanceof966,495sharesofMajorDrillingat$8.99 fora totalof$8,689andcontingentconsiderationof$10,130.

‐ 50 ‐


22. CONTINGENCIESTheCompanyisinvolvedinvariouslegalclaimsandlegalnoticesarisingintheordinarycourseofbusiness.Theoutcomeofall theproceedingsandclaimsagainst theCompany issubject to futureresolutionandtheuncertaintiesoflitigation.BasedoninformationcurrentlyknowntotheCompanyand after consultation with outside legal counsel, it is management’s opinion that the ultimatedisposition of these matters will not have a material adverse effect on the Company’s financialposition,resultsofoperations,orcashflows.Anyamountsawardedasaresultoftheseactionswillbereflectedwhenknown.23. COMMITMENTSTheCompanyhasacommitmentforthepurchaseofequipmenttotaling$1,674withadeliverydateearly in fiscal2016aswell as various commitments,primarily for rentalofpremises,witharms‐length parties as follows: 2016 ‐ $1,495, 2017 ‐ $713, 2018 ‐ $485, 2019 ‐ $383, 2020 ‐ $284,thereafter$145.24. RELATEDPARTYTRANSACTIONSBalancesandtransactionsbetweentheCompanyanditssubsidiaries,whicharerelatedpartiesoftheCompany,havebeeneliminatedonconsolidationandarenotdisclosedinthisnote.TheremunerationofDirectorsandothermembersofkeymanagementpersonnelduringtheyearisasfollows: 2015 2014 Salaries,bonusesandfees $2,140

$2,214

Post‐employmentbenefits 41 112Otherlong‐termbenefits 86 139Share‐basedpaymentsbenefits 795 799 $3,062 $3,264

25. DIVIDENDSTheCompanydeclaredtwodividendsduringtheyear,$0.10percommonsharepaidonNovember3,2014toshareholdersofrecordasofOctober10,2014,and$0.02percommonsharetobepaidonMay1,2015toshareholdersofrecordasofApril7,2015.

TheCompanydeclaredtwodividendsduringthepreviousyear,$0.10percommonsharepaidonNovember1,2013toshareholdersofrecordasofOctober10,2013,and$0.10percommonsharepaidonMay1,2014toshareholdersofrecordasofApril7,2014.

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26. CAPITALMANAGEMENTTheCompanyincludesshareholders’equity(excludingforeigncurrencytranslationreserve),long‐termborrowingsanddemandloannetofcashinthedefinitionofcapital.Totalmanagedcapitalwasasfollows: 2015 2014 Long‐termdebt $15,345 $23,842Sharecapital 239,726 230,985Share‐basedpaymentsreserve 17,234 15,937Retainedearnings 152,764 211,945Cash (44,897) (74,244) $380,172 $408,465TheCompany’sobjectivewhenmanaging itscapitalstructure is tomaintain financial flexibility inorder to: (i) preserve access to capital markets; (ii) meet financial obligations; and (iii) financeinternally generated growth and potential new acquisitions. Tomanage its capital structure, theCompanymayadjustspending,issuenewshares,issuenewdebtorrepayexistingdebt.Under the termsof certain of theCompany’s debt agreements, theCompanymust satisfy certainfinancialcovenants.Suchagreementsalsolimit,amongotherthings,theCompany’sabilitytoincuradditionalindebtedness,createliens,engageinmergersoracquisitionsandmakedividendandotherpayments.Duringtheyear,theCompanyenteredintoanamendingagreementamendingthecurrentcreditagreementwithitslenders.Asaresult,theCompanyisincompliancewithallcovenantsandotherconditionsimposedinthiscreditagreement.In order to facilitate themanagement of its capital requirements, the Company prepares annualbudgetsthatareupdatedasnecessary,dependentonvariousfactors.TheCompany’sobjectiveswithregardstocapitalmanagementremainunchangedfrom2014.27. FINANCIALINSTRUMENTSRiskmanagementobjectivesTheCompany’scorporatetreasuryfunctionmonitorsandmanagesthefinancialrisksrelatingtotheoperationsoftheCompanythroughanalysisofthevariousexposures.Whendeemedappropriate,theCompanyusesfinancialinstrumentstohedgetheseriskexposures.InterestrateriskmanagementTheCompanyisexposedtointerestrateriskasitborrowsfundsatbothfixedandfloatinginterestrates. The risk ismanagedby theCompanybyuseof interest rate swap contractswhendeemedappropriate.

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27. FINANCIALINSTRUMENTS(Continued)InterestrateswapcontractUndertheinterestrateswapcontract,theCompanyagreestoexchangethedifferencebetweenfixedandfloatingrateinterestamountscalculatedonagreednotionalprincipalamounts. ThiscontractenablestheCompanytomitigatetheriskofchanginginterestratesonthecashflowexposuresontheissuedvariableratedebtheld.AsatApril30,2015theinterestrateswaphadaremainingtermof17months(2014‐29months),anotionalprincipalamountof$7,083(2014‐$12,083)andfairvalueof$24(2014‐$13).TheinterestrateswapsettlesonamonthlybasisswappingCanadian‐Bankers’Acceptance‐CanadianDealerOfferedRateforanannualfixedrateof3.665%.FortheyearendedApril30,2015thereisagainof$11recognizedinothercomprehensiveincomerelatingtothehedge(2014‐lossof$27).

FairvalueThecarryingvaluesofcash, tradeandotherreceivables,demandcredit facility,demand loanandtradeandotherpayablesapproximatetheirfairvalueduetotherelativelyshortperiodtomaturityoftheinstruments.Thefollowingtableshowscarryingvaluesofcontingentconsiderationandlong‐termdebt,whichapproximatestheirfairvalue,asmostdebtscarryvariableinterestratesandtheremainingfixedratedebtshavebeenacquiredrecentlyandtheircarryingvaluecontinuestoreflectfair value. The fair valueof the interest rate swap included in long‐termdebt ismeasuredusingquotedinterestrates. 2015 2014 Contingentconsideration $10,130 $ ‐Long‐termdebt 15,345 23,842

CreditriskTheCompanyhasadoptedapolicyofonlydealingwithcreditworthycounterpartiesandobtainingsufficient collateral, where appropriate, as a means of mitigating the risk of financial loss fromdefaults.ThemaximumcreditrisktheCompanywasexposedtoasatApril30,2015was$103,456(2014‐$140,455),representingtotalcash,tradeandotherreceivables.TheCompany’sexposureandthecreditratingsofitscounterpartiesarecontinuouslymonitored.AsatApril30,2015,89.0%(2014‐79.8%)oftheCompany’stradereceivableswereagedascurrentand8.2%(2014‐5.1%)ofthetradereceivableswereimpaired.

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27. FINANCIALINSTRUMENTS(Continued)Themovementintheallowanceforimpairmentoftradereceivablesduringtheyearwasasfollows: 2015 2014

Openingbalance $3,016 $2,790Increaseinimpairmentallowance 2,404 1,144Write‐offchargedagainstallowance (811) (873)Recoveryofamountspreviouslyimpaired (186) (40)Foreignexchangetranslationdifferences (219) (5)Endingbalance $4,204 $3,016

InterestrateriskThe demand credit facility of the Company bears a floating rate of interest, which exposes theCompanytointerestratefluctuations.AsatApril30,2015,thisfacilitywasunusedthereforeaonepercentagepointincreaseininterestrateswouldhavenoimpactontheCompany’snetincome.ForeigncurrencyriskInordertoreduceitsexposuretoforeignexchangerisksassociatedwithcurrenciesofdevelopingcountries,where a substantialportionof theCompany’sbusiness is conducted, theCompanyhasadoptedapolicyofcontractinginU.S.dollars,wherepracticalandlegallypermitted.

Themostsignificantcarryingamountsofnetmonetaryassetsthat:(i)aredenominatedincurrenciesotherthanthefunctionalcurrencyoftherespectiveCompanysubsidiary;(ii)causeforeignexchangerateexposure;and(iii)mayincludeintercompanybalanceswithothersubsidiaries,isUSD$2,201asofApril30,2015.IftheCanadiandollarmovedbyplusorminus10%atApril30,2015,theunrealizedforeignexchangegainorlossrecognizedinnetearningswouldmovebyapproximately$220.CurrencycontrolsandgovernmentpoliciesinforeignjurisdictionscanrestricttheCompany’sabilitytoexchangesuchforeigncurrencyforothercurrencies,suchastheU.S.dollar.Tomitigatethisrisk,theCompanyhasadoptedapolicyofcarryinglimitedforeigncurrenciesinlocalbankaccounts.

LiquidityriskTheCompanymanagesliquidityriskbymaintainingadequatereserves,bankingfacilitiesandreserveborrowingfacilities,bycontinuouslymonitoringforecastandactualcashflows,andbymatchingthematurityprofilesof financialassetsandliabilities. Note10setsoutdetailsofadditionalundrawnfacilitiesthattheCompanyhasatitsdisposaltofurtherreduceliquidityrisk.

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27. FINANCIALINSTRUMENTS(Continued)ThefollowingtabledetailstheCompany’scontractualmaturitiesforitsfinancialliabilities:

1year 2‐3years 4‐5years

thereafter Total Tradeandotherpayables $33,820 $ ‐ $‐ $‐ $33,820Contingentconsideration 2,735 7,395 ‐ ‐ 10,130Long‐termdebt _ 7,119 5,349 2,221 1,412 16,101

$43,674 $12,744 $2,221 $1,412 $60,051

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HISTORICALSUMMARY

(inmillionsofCanadiandollars,exceptpershareinformation)

2015 2014 2013 2012

2011 2010 2009OPERATINGSUMMARY Revenuebyregion

Canada‐U.S. $177 $176 $317 $322 $181 $103 $167SouthandCentralAmerica 76 74 203 252 169 108 155Australia,AsiaandAfrica 53 105 176 223 132 97 201

306 355 696 797 482 308 523 Grossprofit 66 104 220 251 120 74 176

asapercentageofrevenue 21.6% 29.4% 31.7% 31.5% 25.0% 24.2% 33.6% Generalandadministrativeexpenses 45 50 64 58

41 33 47

asapercentageofrevenue 14.7% 14.1% 9.2% 7.3% 8.5% 10.7% 9.0% Net(loss)earnings (50) (55) 52 90 28 ‐ 46 (Loss)earningspershare(1)

Basic (0.62) (0.70) 0.66 1.18 0.39 (0.01) 0.65Diluted (0.62) (0.70) 0.65 1.16 0.38 (0.01) 0.64

EBITDA(2) 13 44 143 174 73 36 115

pershare(1) 0.17 0.56 1.80 2.26 1.02 0.51 1.61 Dividendspaid 16 16 15 12 10 9 5 Totalnetcash(netofdebt) 30 46 39 (14) (17) 6 19

BALANCESHEETSUMMARY Cash,netofdemandloans 45 70 82 37 16 30 58Property,plantandequipment 277 307 340 318 235 211 240Debt 15 24 44 51 33 24 39Shareholders’equity 460 484 538 488 328 318 365 The2009and2010figuresabovehavenotbeenrestatedforIFRSadoption.

(1) Allamountsre‐statedtoreflectstocksplit.

(2) Non‐GAAP measure: Earnings before interest, income taxes, depreciation, amortization. 2015excludes$4.6millionofrestructuringcharges(2014‐$20.5million;2013‐$5.4million;2010‐$1.2million;2009‐$9.0million)and2014‐$14.3millionofgoodwilland intangibleassets impairment(2013‐$3.3million;2010‐$1.5million;2009‐$0.7million)and2013‐$2.0millionofgainonreversalofcontingentconsideration.

SHAREHOLDERINFORMATION

DIRECTORS OFFICERS TRANSFERAGENT DavidTennant(Chairman) FrancisMcGuire

PresidentandChiefExecutiveOfficerCSTTrustCompany

EdwardBreinerJeanDesrosiers AUDITORSFredDyment DenisLarocque

ChiefFinancialOfficerDavidFennell DeloitteLLPFrancisMcGuire CatherineMcLeod‐Seltzer DenisDespres

ChiefOperatingOfficerJaniceRennieJoMarkZurel JamesGibson

VPLegalAffairs,GeneralCounselandCorporateSecretary

DavidBalser

VP,Finance LarryPisto

VP,NorthAmericanOperations KellyJohnson

VP,LatinAmerican&WestAfricanOperations

CORPORATEOFFICE MajorDrillingGroupInternationalInc.111St.GeorgeStreet,Suite100Moncton,NewBrunswick,E1C1T7,CanadaTel:506‐857‐8636 Toll‐free:866‐264‐3986 Fax:506‐857‐9211 Website:www.majordrilling.comE‐mail:[email protected] ANNUALGENERALMEETING TheAnnualGeneralMeetingoftheshareholdersofMajorDrillingGroupInternationalInc.willbeheldat:TMXBroadcastCentre,GalleryTheExchangeTower130KingStreetWestToronto,ON,Canada September11,2015at11:00amEastern

ar 2015 final july 17 2015 - major drilling group ... · nevertheless, the company was able to...

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