Foraco International reports second quarter and six months results; Fiscal
2010 Marked by Transformational Acquisitions

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES NOR FOR DISSEMINATION IN THE UNITED STATES/

TORONTO and MARSEILLE, France, Aug. 10 /CNW/ - Foraco International SA (the "Company" or "Foraco"), a leading global provider of diversified drilling services, today reported unaudited financial results for its second quarter of 2010 ended June 30, 2010. All figures are reported in US Dollar (US$), unless otherwise indicated.

3 months Q2 2010 Highlights

    
    -   During Q2 2010, the Company completed the acquisitions of all of the
        outstanding shares of Adviser Drilling SA ("Adviser") and of a 50%
        controlling interest in LLC Eastern Drilling Company ("EDC") in
        Russia.

    -   Subsequent to the end of the second quarter, the Company agreed to
        acquire the remaining 49% minority interest in Mosslake Drilling
        Services Pty for a fixed cash consideration of AUD3.5 million.
        Closing is expected to occur in August.
    

"Thanks to the recent flow of acquisitions, we are well in line with our strategic roadbook, as presented when we listed the Company in 2007, which is to progressively transform FORACO into a truly global market leader, offering one of the widest range of drilling services to the mining industry. Now the Company has an established permanent presence in approximately 75% of its accessible market, as compared to 36% only three years ago. During the next months, our objective henceforth is to integrate these acquisitions, and use this transition period to bring their profitability up to top industry level." said Daniel Simoncini, Chairman and Chief Executive Officer of Foraco.

"Although it is not yet reflected in our Q2-2010 results, we have seen signs of recovery in the mining sector, both in terms of activity and price level and notably, in our new jurisdictions where we aim to optimize synergies so as to capitalize on our new presence in those markets. As of a matter of fact, we are already working on significant synergetic prospects that were not accessible to us in the recent past," said Jean-Pierre Charmensat, Vice-CEO and Chief Financial Officer of Foraco. "We can rely on our strong balance sheet to finance our organic growth which is now our priority, although we remain flexible to undertake further external development opportunities".

    
    -------------------------------------------------------------------------
    In accordance with IFRS, the Company has elected to report its
    consolidated financial statements using the US Dollar as its presentation
    currency. Previously, the Company reported in Euros. All figures
    previously reported in Euro have been converted using the historical,
    average or closing currency exchange rate, as appropriate and in
    accordance with generally accepted accounting principles.
    -------------------------------------------------------------------------
    

3 months Q2 2010 Financial Highlights:

    
    -   Revenue increased by US$1.8 million or 5.3% to US$35.9 million
        compared to Q2 2009, mainly as a result of:

        -  Adviser in South America generated revenue of US$7.2 million in
           June 2010, the first month of its integration.

        -  Stable Mining segment revenue which now represents 82% of the
           Company's activity.

        -  A US$3.8 million decrease in Water segment revenue in Africa due
           to administrative delays on certain projects.

        -  The strengthening of the US dollar against other currencies in
           Q2 2010 compared to Q2 2009 which negatively impacted revenue by
           US$2.4 million.

    -   Gross profit (including depreciation within cost of sales) was 24.4%
        of revenue in Q2 2010 compared to 32.2% of revenue in Q2 2009, a
        US $2.2 million decrease. This was mainly a result of an increase in
        depreciation expenses of US$1.7 million and continuing pressure on
        prices in certain regions in the mining sector which accounted for
        US $1.2 million.

    -   Selling, general and administrative expenses include $0.7 million of
        non-recurring transaction costs related to the acquisitions of
        Adviser and EDC.

    -   Net profit after tax is US$2.6 million compared to US$4.4 million in
        Q2 2009.
    

6 months YTD Q2 2010 Highlights:

    
    -   Revenue at US$60.4 million is 6% lower than that of YTD Q2 2009 in
        spite of the increased revenue reported in the second quarter.

    -   Net income amounts to US$3.6 million compared to US$8.0 million for
        YTD Q2 2009.

    -   Cash generated from operations before changes in operating assets and
        liabilities amounted to US$14.0 million compared to US$18.2 million
        for YTD Q2 2009.

    -   Following the acquisition of Adviser and EDC, cash and cash
        equivalents at the end of the period were US$12.8 million with
        financial debts and equivalents amounting to US$49.6 million,
        resulting in a net debt of US$36.8 million. The net debt to equity
        ratio at the end of the period remains low at 0.28. In the future,
        the Company aims to maintain a debt equity ratio which will provide
        the financial flexibility required to protect its sound financial
        position.
    

Financial Results

Foraco's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"), rather than Canadian Generally Accepted Accounting Principles ("Canadian GAAP"), and as such may not be directly comparable to the financial statements of other Canadian issuers.

    
    -------------------------------------------------------------------------
    In accordance with IFRS, the Company has elected to report its
    consolidated financial statements using the US Dollar as its presentation
    currency. Previously, the Company reported in Euros. All figures
    previously reported in Euro have been converted using the historical,
    average or closing currency exchange rate, as appropriate and in
    accordance with generally accepted accounting principles.
    -------------------------------------------------------------------------


                                 %                   YTD       %       YTD
         Revenue     Q2 2010  change   Q2 2009     Q2 2010  change   Q2 2009
                     -------  ------   -------     -------  ------   --------
    (In thousands of
    US$) - (unaudited)
    Reporting segment
    -----------------
    Mining            29,377     23%    23,806      48,188      7%    44,911
    Water              6,537    -37%    10,309      12,251    -37%    19,349
                       ------   -----   -------     -------   -----   -------
    Total revenue     35,915      5%    34,115      60,439     -6%    64,260
                      -------     ---   -------     -------    ----   -------
                      -------     ---   -------     -------    ----   -------

    Geographical
    ------------
     region
     ------
    Africa            15,021    -22%    19,156      26,358    -25%    35,191
    Europe             2,523    -13%     2,887       3,120    -51%     6,375
    Asia Pacific       5,367     32%     4,072      10,969     79%     6,145
    Americas          13,004     63%     8,000      19,992     21%    16,549
                      -------    ----    ------     -------    ----   -------
    Total revenue     35,915      5%    34,115      60,439     -6%    64,260
                      -------    ----    ------     -------    ----   -------
                      -------    ----    ------     -------    ----   -------


    Second Quarter Revenue
    ----------------------
    

Second quarter revenue increased 5.3% to US$35.9 million compared to US$34.1 million the previous year as a result of:

    
    -   Adviser in South America generated revenue of US$7.2 million in
        June 2010, the first month of its integration.

    -   Stable Mining segment revenue which now represents 82% of the
        Company's activity.

    -   A US$3.8 million decrease in Water segment revenue in Africa due to
        administrative delays on certain projects.

    -   The strengthening of the US$ against other currencies in Q2 2010
        compared to Q2 2009 which negatively impacted revenue by
        US$2.4 million.
    

Reporting segment

The Q2 2010 increase in Mining segment revenue of US$5.6 million or 23% corresponds mainly to the US$7.2 million generated by Adviser in June 2010 partially offset by a US$1.7 million negative impact from the strengthening US dollar against other currencies in 2010 compared to 2009. Excluding these two factors, the Company was able to maintain stable revenues when compared to Q2 2009's record high level of revenue.

The Q2 2010 decrease in revenue in the Water segment amounting US$3.8 million or 37%, is mainly attributable to certain projects in Africa which were halted by international institutions during the second quarter this year.

Geographical region

In Africa, the Q2 2010 revenue decreased by 22% due to reduced activity in the Water segment as explained above. The Mining activity in Africa in Q2 2010 benefitted from the full effect of revenue from contracts which were in the mobilization phase in Q1 2010.

In Asia-Pacific, the Q2 2010 revenue increase of 31% from US$4.1 million to US$5.4 million was mainly attributable to the recovery of mining activity in Australia.

Meanwhile, market conditions in Canada are still weak, which resulted in a decrease in North America revenue of 27% from US$8.0 million in Q2 2009 to US$5.8 million in Q2 2010.

    
    Six Months Revenue
    ------------------
    

YTD Q2 2010 revenue stood at US$60.4 million, which is 6% lower than that of US$64.2 million in YTD Q2 2009, in spite of the increased revenue reported in the second quarter.

In the first half of the year, revenue in the Mining segment increased by US$3.3 million or 7%, mainly due to a US$7.2 million expansion in South America that was partially offset by a US$1.5 million negative impact from the strengthening US dollar against other currencies. The Mining segments in Canada and Africa were affected by the slow start of certain projects in the first quarter.

In the first half year, revenue in the Water segment decreased by 37%, from US$19.3 million during YTD Q2 2009 to US$12.3 million in YTD Q2 2010 since certain projects in Africa experienced disruptions and/or delays.

In Europe, revenue for the six months decreased by US$3.3 million mainly due to the lower level of activity during the first quarter of 2010, which partially recovered during the second quarter. In Asia-Pacific, the US$4.9 million increase in revenue was mainly attributable to the recovery of mining activity in Australia. North America remained affected by the generally weaker market conditions prevailing in Canada.

    
                                 %                   YTD       %       YTD
      Gross profit   Q2 2010  change   Q2 2009     Q2 2010  change   Q2 2009
                     -------  ------   -------     -------  ------   -------
    (In thousands of
    US$) - (unaudited)
    Reporting segment
    -----------------
    Mining             7,099    -14%     8,264      10,961    -24%    14,369
    Water              1,651    -39%     2,721       3,192    -40%     5,360
                       ------   -----    ------      ------   -----    ------
    Total gross
     profit            8,750    -20%    10,985      14,153    -28%    19,729
                       ------   -----   -------     -------   -----   -------
                       ------   -----   -------     -------   -----   -------


    Second Quarter Gross Profit
    ---------------------------
    

In Q2 2010, gross profit decreased by US$2.2 million from US$11.0 million (or 32% of revenue) to US$8.8 million (or 24% of revenue). This decrease is mainly due to an increase in depreciation expenses accounting for US$4.9 million (14% of revenue) in Q2 2010, compared to US$3.2 million (or 9% of revenue) in Q2 2009. The Company's policy over recent years has been to maintain a modern fleet of operational equipment and to depreciate it over a short period of time. The integration of Adviser brought in 51 drills, all acquired new, during the last four years.

In the Mining segment, most of the contracts have performed satisfactorily and the decrease in margin, excluding the impact of depreciation, may be attributed to the general downward pressure on prices in the industry. In the Water segment, gross profit margins are comparable to those of Q2 2009.

    
    Six Months Gross Profit
    -----------------------
    

In YTD Q2 2010, gross profit decreased by US$5.6 million, from US$19.7 million (or 31% of revenue) to US$14.2 million (or 23% of revenue). This decrease is mainly due to an increase in depreciation expenses which represent US$7.9 million (13% of revenue) for the first half of 2010, compared to US$5.7 million (or 9% of revenue) the same period a year ago. In the Mining segment, most of the contracts have performed satisfactorily but the Company is facing general pressure on prices. In the Water segment, margins are comparable to those of the same period last year.

    
    Operating
     expenses
    (excluding
     cost of                     %                   YTD       %       YTD
      sales)         Q2 2010  change   Q2 2009     Q2 2010  change   Q2 2009
                     -------  ------   -------     -------  ------   -------
    (In thousands of
    US$) - (unaudited)

    Selling, general
     and
     administrative
     (SG&A) expenses   5,119     25%     4,080       8,960     20%     7,488
    Other (income)
     and expense,
     net                (193)      -         -        (225)     3%      (162)
    Total operating
     expenses          4,926     21%     4,080       8,735     20%     7,326
                       ------    ----    ------      ------    ----    ------
                       ------    ----    ------      ------    ----    ------
    

In Q2 2010, operating expenses increased by US$1 million, mainly due to the transaction costs related to the acquisition of Adviser and EDC (US$0.7 million) which were accounted for within General and Administrative expenses as required by IFRS 3(R) effective as at January 1, 2010; US$0.2 million of these costs were recorded in the first quarter of 2010.

    
       Operating                 %                   YTD       %       YTD
         profit      Q2 2010  change   Q2 2009     Q2 2010  change   Q2 2009
                     -------  ------   -------     -------  ------   -------
    (In thousands of
    US$) - (unaudited)
    Reporting segment
    -----------------
    Mining             3,105    -43%     5,416       4,045    -56%     9,248
    Water                719    -52%     1,489       1,373    -57%     3,154
                       ------   -----    ------      ------   -----   -------
    Total operating
     profit            3,824    -45%     6,906       5,418    -56%    12,402
                       ------   -----    ------      ------   -----   -------
                       ------   -----    ------      ------   -----   -------
    

Operating profit decreased in Q2 2010, primarily as a result of the lower level of gross profit and to the aforementioned increase in Selling, General and Administrative expenses. For the six months, profitability was also impacted by the lower level of revenue generated in Q1 2010.

    
                                 %                   YTD       %       YTD
         Income      Q2 2010  change   Q2 2009     Q2 2010  change   Q2 2009
                     -------  ------   -------     -------  ------   -------
    (In thousands of
    US$) - (unaudited)

    Revenue           35,915      5%    34,115      60,439     -6%    64,260
    Gross Profit(1)    8,750    -20%    10,985      14,153    -28%    19,729
    Operating
     Expenses(2)       4,926     21%     4,080       8,735     19%     7,326
    Operating Profit   3,824    -45%     6,906       5,418    -56%    12,403
    Net Earnings       2,590    -41%     4,375       3,646    -55%     8,033
    Earnings per share
      EPS in US$
       (basic)          0.03    -50%      0.06        0.05    -64%      0.14

    1   Includes amortization and depreciation expenses
    2   Excludes cost of sales
    

In Q2 2010, the Company generated a net profit after tax amounting to US$2.6 million or $0.03 per share compared to US$4.4 in Q2 2009 or $0.06 per share.

In YTD Q2 2010, the Company generated a net profit after tax amounting to US$3.6 million or $0.05 per share compared to US$8.0 in YTD Q2 2009 or $0.14 per share.

Balance Sheet

YTD Q2 2010 cash generated from operations before changes in operating assets and liabilities amounted to US$14.0 million compared to US$18.2 million for YTD Q2 2009.

Following the acquisition of Adviser and EDC, cash and cash equivalents at the end of the period were US$12.8 million with financial debts and equivalents amounting to US$49.6 million, resulting in a net debt of US$36.8 million.

The net debt to equity ratio at the end of the period remains low at 0.28. In the future, the Company aims to maintain a debt equity ratio which will provide the financial flexibility required to protect its sound financial position.

Currency and Exchange Rate

The exchange rates for the periods under review are provided in Management's Discussion & Analysis.

Outlook

The Company's business strategy is to continue to grow through the development and optimization of its service offering across geographical regions and industry segments, as well through the expansion of its customer base. Foraco expects it will continue to execute its strategy through a combination of organic growth and development, and acquisitions of complementary businesses in the drilling services industry.

Foraco's unaudited Financial Statements and Management's Discussion & Analysis ("MD&A"), for the three-month and six-month periods ended June 30, 2010, are available via Foraco's website at www.foraco.com and will be available on www.sedar.com.

Conference Call and Webcast

On Tuesday, August 10th 2010 at 10:00 am EDT, Management of the Company will host a conference call to review these financial results. The call will be hosted by Daniel Simoncini, Chairman and CEO, and Jean-Pierre Charmensat, Vice-CEO and CFO. You can join the call by dialing 1- 888 231 - 8191 or 647-427-7450. Please call in 15 minutes prior to the call to secure a line. You will be put on hold until the conference call begins. A live audio webcast of the conference call will also be available through http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3179880 or at www.foraco.com.

Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the webcast. An archived replay of the webcast will be available for 90 days.

About Foraco International SA

Foraco International SA (TSX: FAR) is a global leading drilling services company that provides turnkey solutions for mining, energy, water and infrastructure projects. Supported by its founding values of integrity, innovation and involvement, Foraco has grown into the 3RD largest global drilling enterprise with operations in 22 countries across five continents. For more information about Foraco, visit www.foraco.com.

To receive Company press releases, please email jennie@chfir.com and mention "Foraco News" on the subject line.

"Neither TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release."

Caution concerning forward-looking statements

This document may contain "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws. These statements and information include estimates, forecasts, information and statements as to Management's expectations with respect to, among other things, the future financial or operating performance of the Company and capital and operating expenditures. Often, but not always, forward-looking statements and information can be identified by the use of words such as "may", "will", "should", "plans", "expects", "intends", "anticipates", "believes", "budget", and "scheduled" or the negative thereof or variations thereon or similar terminology. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" in the Company's Annual Information Form dated March 31, 2010, which is filed with Canadian regulators on SEDAR (www.sedar.com). The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to Foraco or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

%SEDAR: 00025480E

SOURCE Foraco International SA

For further information: For further information: CHF Investor Relations at: Jeanny So, Director of Operations, Email: jeanny@chfir.com, Tel: +1-416-868-1079 x 225


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