Condensed unaudited consolidated interim financial information For the nine-month period ended 30 th September 2018

Transcription

1 Condensed unaudited consolidated interim financial information For the nine-month period ended 30 th September 2018

2 Condensed unaudited consolidated interim financial information For the nine-month period ended 30 th September 2018 Pages Condensed consolidated interim statement of profit or loss and other comprehensive income 3 Condensed consolidated interim statement of financial position 4 Condensed consolidated interim statement of cash flows 5 Condensed consolidated interim statement of changes in equity 6 Notes to the condensed consolidated interim financial information 7-19

3 Condensed unaudited consolidated interim statement of profit or loss and other comprehensive income for the nine-month period ended 30 th September 2018 Nine months ended 30-Sep-18 USD'000 Nine months ended 30-Sep-17 USD'000 Notes Revenue 7 243, ,381 Cost of Revenue (141,810) (119,461) Gross Profit 101,615 55,920 Administrative expenses (27,788) (21,026) Other income 2, Profit from Operations 76,177 35,787 Loss on Sale of Vessels (8,908) - Finance cost net 8 (50,770) (62,086) Profit / (Loss) before Income Tax 16,499 (26,299) Income tax expense 9 (15,093) (11,409) Profit/(Loss) for the nine months 1,406 (37,708) Add: Other Comprehensive Income - - Total Comprehensive Profit/(Loss) for the ninemonths ended 30 th September ,406 (37,708) Total Comprehensive Profit/(Loss) attributable to: Owners of the Company (7,361) (54,336) Non-controlling interest 8,767 16,628 Total Comprehensive Profit/(Loss) for the ninemonths ended 30 th September ,406 (37,708) (3)

4 Condensed unaudited consolidated interim statement of financial position as at 30 th September Sep-18 USD' Dec-17 USD'000 ASSETS Notes Non-current assets Property, plant and equipment 10 1,298,731 1,227,833 Intangible assets and goodwill 11 19,997 20,592 Long-term receivables and prepayments Deferred tax asset 9,520 9,520 Total non-current assets 1,328,478 1,258,475 Current assets Inventories 12 14,428 9,987 Accounts receivable and prepayments ,307 87,335 Due from related parties 21 17,078 16,742 Bank balances and cash 14 37,578 77,950 Asset classified as held-for-sale 10 12,879 12,879 Total current assets 185, ,893 Total Assets 1,513,748 1,463,368 EQUITY AND LIABILITIES Equity Share capital , ,720 Share premium 46,796 46,796 Retained earnings (164,561) (157,200) Total equity attributable to equity holders of the Company 166, ,316 Non-controlling interest 160, ,721 Total equity 327, ,037 Liabilities Non-current liabilities Term loans and Senior Notes , ,634 Loan due to holding company 17 59,230 66,536 Employees end of service benefits 18 4,182 3,758 Advance from Customers , ,310 Total non-current liabilities 921, ,238 Current liabilities Accounts payable and accruals 19 73,872 96,075 Advance from Customers ,606 49,762 Term loans 16 29,816 30,000 Loan due to holding company 17 19,370 12,064 Due to related parties Income tax payable 9 27,999 22,126 Total current liabilities 264, ,093 Total liabilities 1,185,905 1,120,331 Total Equity and Liabilities 1,513,748 1,463,368 (4)

5 Condensed unaudited consolidated interim statement of cash flows for the ninemonth period ended 30 th September 2018 Nine months ended 30-Sep-18 USD'000 Nine months ended 30-Sep-17 USD'000 Profit / (loss) before income tax 16,499 (26,299) Adjustments to reconcile profit /(loss) before tax to net cash flows: Provision for employees end of service benefits Finance costs (net) 50,770 62,086 Depreciation and amortization 51,653 52,330 Loss on Sale of Vessel 8,908 - Operating cash flows before changes in operating assets and liabilities 128,348 89,072 Inventories (4,441) (3,188) Accounts receivables, prepayments and other assets (16,186) 30,870 Accounts payable, accruals and other liabilities (14,170) (5,041) Due (from)/to related parties (405) 1,198 Cash generated from operations 93, ,911 Income tax paid (9,220) (10,438) End of service benefits paid (94) (912) Net cash flows generated from operating activities 83, ,561 Cash flow from investing activities Purchase of property, plant and equipment (134,101) (121,300) Proceeds from disposal of vessels 3,375 - Payment for intangible assets (136) (413) Change in advances from customers 68, ,866 Net cash flows used in investing activities (62,000) (20,847) Cash flow from financing activities Dividend paid (16,600) (3,603) Loans repaid (24,100) (22,500) Loan drawdown 35,000 - Interest paid (56,504) (40,816) Repayment of loan due to parent company - (2,000) Net cash flows used in financing activities (62,204) (68,919) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (40,372) 11,794 Cash and cash equivalents at 1 January 77,950 39,459 CASH AND CASH EQUIVALENTS AT 30 th September ,578 51,253 (5)

6 Condensed unaudited consolidated interim statement of changes in equity for the nine-month period ended 30 th September 2018 Share capital Share premium Retained earnings Total Non-controlling interest Total equity Balance at 1 st January ,720 46,796 (24,551) 306, , ,877 Comprehensive loss for the year - - (132,649) (132,649) 16,412 (116,237) Dividend paid to non-controlling interests (3,603) (9,000) Balance at 31 st Dec ,720 46,796 (157,200) 174, , ,037 Comprehensive loss for the period - - (7,361) (7,361) 8,767 1,406 Dividend paid to non-controlling interests (16,600) (16,600) Balance at 30 th Sep ,720 46,796 (164,561) 166, , ,843 (6)

7 the nine-month period ended 30 th September GENERAL INFORMATION Topaz Energy and Marine Limited ("the Company") is a limited liability company incorporated in Bermuda. The Company is a subsidiary of Topaz Energy & Marine Limited ("the Holding Company"), an Offshore company registered in the Jebel Ali Free Zone. The address of the registered office of the Company is P.O. Box 1022, Clarendon House, Church Street - West, Hamilton HM DX, Bermuda. The ultimate holding company is Renaissance Services SAOG, ("the Ultimate Holding Company") a joint stock company incorporated in the Sultanate of Oman. The condensed consolidated interim financial information for the nine-month period ended 30 September 2018 ( the interim financial information ) comprises the Company and its subsidiaries (together referred to as the Group and individually as Group entities ). The principal activities of the Group are the provision of offshore supply vessels and other marine vessels on charter primarily to the oil and gas industry. 2 BASIS OF PREPARATION The interim financial information has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting as issued by the International Accounting Standards Board ( IASB ). The interim financial information has been presented in United States Dollars (USD), which is the functional currency of the Company and the presentation currency of the Group. All values are rounded to the nearest thousand (USD 000 ) except as otherwise indicated. The interim financial information does not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Group s annual consolidated financial statements for the year ended 31 December 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRSs). 3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of interim financial information are consistent with those followed in the preparation of the Group s annual consolidated financial statements for the year ended 31 December The Group has complied with IFRS 15 Revenue from Contracts with Customers which is applicable with effect from 1 st January ESTIMATES The preparation of interim financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing the interim financial information, the significant judgments made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Group s annual consolidated financial statements for the year ended 31 December (7)

8 5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS 5.1 Financial risk factors The Group s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk) credit risk and liquidity risk. The interim financial information does not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group s annual consolidated financial statements for the year ended 31 December There have been no changes in the risk management department or any risk management policies since the year end. 5.2 Liquidity risk Compared to year end, there was no material change in the contractual undiscounted cash outflows for financial liabilities. The main characteristics of the term loans provided to the Group are described in Note 16 and Fair value estimation Financial instruments comprise financial assets and financial liabilities. Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). At 30 September 2018 Derivative financial instruments Total Level 1 Level 2 Level 3 Cost Derivative financial instruments At 31 December 2017 Derivative financial instruments Derivative financial instruments There were no transfers between Levels 1 and 2 during the period. (8)

9 5.4 Fair value of financial assets and liabilities measured at amortized costs The fair value of borrowings (including loan due to holding company) are as follows: Non-current 704, ,170 Current 49,186 42, , ,234 The fair value of the following financial assets and liabilities approximate their carrying amount: Trade and other receivable Cash and cash equivalents (excluding bank overdrafts) Trade and other payables 6 SEGMENT INFORMATION Management has determined the operating segments based on the information reviewed by chief operating decision-maker for the purposes of allocating resources and assessing performance. The Group operates in three primary geographical segments. The geographic segments are organized and managed separately according to the nature of the services provided, with each segment representing a strategic operating unit that offers different services. With effect from 1 st January 2018, the Group has added a new segment - Solutions specializing in provision of marine transportation and logistics worldwide. Geographic segments For management purposes, the Group is currently organized into four segments. These segments are the basis on which the Group reports its primary segmental information. These are: - Caspian - Solutions - MENA - Africa Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit after income tax, as included in the internal management reports that are reviewed by the chief operating decision-maker. Segment profit is used to measure performance as management believes that such information is most relevant in evaluating the results of individual segments relative to other entities that operate within these geographic segments. Inter-segment pricing is determined on an arm s length basis. (9)

10 The following table presents segmental information about these businesses: Caspian Solutions MENA Africa Corporate Elimination TOTAL 30 th September 2018 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 Revenue 118,542 64,649 34,529 25, ,425 Direct costs (65,264) (25,424) (32,038) (18,813) (271) - (141,810) Gross profit 53,278 39,225 2,491 6,892 (271) - 101,615 Administrative expenses (9,191) (3,274) (5,038) (3,455) (6,830) - (27,788) Other Income 2 2, ,350 Loss on Sale of Vessels - - (8,908) (8,908) Finance cost, net (23,093) (3,965) (6,782) (9,138) (7,792) - (50,770) Income Tax expense (11,356) (990) 283 (3,030) - (15,093) Profit/(loss) for the period 9,640 33,247 (17,857) (8,731) (14,893) - 1,406 Caspian MENA Africa Corporate Elimination Total 30 th September 2017 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 Revenue 131,410 36,232 4,875 3,215 (351) 175,381 Direct costs (67,097) (40,094) (10,400) (2,233) 363 (119,461) Gross profit 64,314 (3,863) (5,525) ,920 Administrative expenses (8,559) (5,181) (2,919) (4,368) - (21,026) Other Income Finance cost, net (20,507) (7,346) (6,468) (27,766) - (62,086) Income Tax expense (9,756) (1,143) (436) (73) - (11,409) Profit/(loss) for the period 25,495 (17,517) (14,974) (30,724) 12 (37,708) (10)

11 7 REVENUE 30 Sep 2017 Charter and other revenues from marine vessels 232, ,326 Construction Management Services (i) 10,545 3,061 Income from mobilization of marine vessels , ,381 (i) BUE Bulkers Limited, a subsidiary of the Group, had entered into a construction management services agreement with a customer, under which the Group would supervise the new build program for three module carrier vessels (MCVs), mobilise the MCVs to the Caspian Sea, procure and supervise modification works to be undertaken to the MCVs following completion by the shipyard and on arrival in the Caspian Sea, procure potential temporary lay-up of the MCVs and mobilise the MCVs to the relevant transshipment bases. 8 FINANCE INCOME AND COSTS Recognized in profit or loss 30 Sep 2017 Interest expense 50,756 42,255 Premium on early redemption of 8.625% Senior Notes - 15,318 Unamortized issuance costs written off - 3,748 Exchange loss Others Finance cost 51,090 62,726 Exchange gain Interest income Finance income Recognized in other comprehensive income Gain/ (loss) changes in the fair value of cash flow hedges INCOME TAX Tax expense relates to corporation tax payable on the profits earned by certain Group entities which operate in taxable jurisdictions, as follows: 30 Sep 2017 Tax expense 15,093 11,409 Income tax payable 27,999 22,852 (11)

12 10 PROPERTY, PLANT AND EQUIPMENT Buildings Plant, machinery furniture, fixtures and office equipment Marine vessels Motor vehicles Capital work in progress Total Cost: At 1 January ,958 15,419 1,730,518 1, ,128 1,995,103 Additions , , ,105 Transfer ,836 - (209,836) - Disposals - - (41,543) - - (41,543) At 30 Sep 2018 Depreciation: At 1 January 2018 Charge for the year Relating to disposals 3,958 16,140 1,918,303 1, ,150 2,087,665 1,231 12, ,730 1, , , , (29,260) - - (29,260) At 30 Sep 2018 Net carrying amount At 30 Sep ,350 12, ,951 1, ,934 2,608 3,609 1,144, ,150 1,298,731 (i) (ii) Capital work in progress includes costs incurred for construction of marine vessels. Disposals refer to sale of five vessels disposed for USD 3.4 million (loss on sale USD 8.9 million). (iii) As on 30 th September 2018, one vessel having a total net book value of USD 12.9 million is held for sale. (31 st Dec 17 : USD 12.9m) During the nine months ended September 2018, the Group has not capitalized any borrowing costs (2017: NIL). The depreciation charge has been allocated as follows: Direct costs 50,481 68,522 Administrative expenses ,924 69,314 (12)

13 11 INTANGIBLE ASSETS AND GOODWILL Goodwill Sep 2018 Dec 2017 Computer Software Total Goodwill Computer Software Total At 1 January 18,383 2,209 20,592 26,174 2,500 28,674 Additions Amortization - (731) (731) - (811) (811) Impairment (7,791) - (7,791) At 30 Sep/31 December 18,383 1,614 19,997 18,383 2,209 20,592 Cost (gross carrying amount) 26,174 4,705 30,879 26,174 4,569 30,743 Accumulated amortization - (3,091) (3,091) - (2,360) (2,360) Impairment (7,791) - (7,791) (7,791) - (7,791) Net carrying amount 18,383 1,614 19,997 18,383 2,209 20,592 Amortization of intangible assets has been allocated to administrative expenses in the condensed interim statement of comprehensive income. Goodwill comprises of the following: a) Goodwill arising from the acquisition of BUE Marine Limited with effect from 1 July b) Goodwill arising from the acquisition of Doha Marine Services WLL with effect from 8 May 2008 (written off as at 31 st December 2017). Goodwill has been allocated to two individual cash-generating units for impairment testing as follows: BUE Marine cash-generating unit; Doha Marine Services cash generating unit. Carrying amount of goodwill allocated to each of the cash-generating units is as follows: BUE Marine Limited Unit 18,383 18,383 Doha Marine Services Unit ,383 18,383 The recoverable amount of each cash-generating unit is determined based on a value in use calculation, using cash flow projections based on financial budgets approved by senior management. The date of the last impairment testing was 31 December The goodwill recognized on Doha Marine Services has been written off in full during the year-ended 31 December 2017 due to the downturn in the business within the region. (13)

14 12 INVENTORIES Stores, spares and consumables 14,428 9,987 14,428 9, ACCOUNTS RECEIVABLE AND PREPAYMENTS Trade accounts receivable 86,839 77,521 Allowance for impairment of receivable (4,247) (4,753) 82,592 72,768 Prepaid expenses 5,298 5,009 Advance to suppliers 6,719 3,706 Retention receivable 2,279 2,069 Other receivables 6,419 4, ,307 87,865 Less: Non-current portion of deferred mobilization costs - (530) 103,307 87,335 At 30 September 2018, trade receivables with a nominal value of USD 4,247 thousand (31 December 2017: USD 4,753 thousand) were impaired. Movement in the allowance for impairment of receivables were as follows: At 1 January 4,753 4,538 Charge for the period Amounts written off (408) - Adjustment to Accruals (860) At the end of the period 4,247 4,753 (14)

15 13. ACCOUNTS RECEIVABLE AND PREPAYMENTS (continued) The maximum exposure to credit risk for unimpaired trade receivables at the reporting date by geographic region was: MENA 8,907 6,276 Caspian 45,797 35,150 Africa 12,755 5,347 Solutions 15,133 25,995 At the end of the period 82,592 72,768 As at and, the ageing of unimpaired trade receivables is as follows: Neither past due nor impaired <30 days Past due but not impaired days days days >120 days ,592 59,172 4,848 6,491 2,330 6,498 3, ,768 56,342 9,068 1,800 1,885 1,902 1,771 Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of the Group to obtain collateral over receivables, and the clear majority are, therefore, unsecured. 14 CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the condensed interim statement of cash flows include the following: Cash at bank - Short term Deposits 5,000 25,000 - Current accounts 32,354 52,813 37,354 77,813 Cash in hand Cash and cash equivalents 37,578 77,950 (i) Balance in current accounts includes USD 3 million held by banks as cash collateral towards allocation of additional non-funded lines. (15)

16 15 SHARE CAPITAL Authorised 400,000,000 shares of USD 1 each (2017: 400,000,000 shares of USD 1 each) Issued and fully paid 284,719,616 shares of USD 1 each (2017: 284,719,616 shares of USD 1 each) 400, , , , TERM LOANS USD 375M 9.125% Senior Notes due 2022 (refer (i) and (ii) below) Term loan, at LIBOR plus 2.75% p.a. repayable by April , , , , , ,634 Current portion 29,816 30,000 Non-current portion 645, ,634 The term loans are repayable as follows: Due within one year 29,816 30,000 Due between two to five years 645, ,634 Due after five years , ,634 (i) In July 2017, Topaz completed the offering of USD 375 million aggregate principal amount of Senior Notes due 2022 (the Notes ) at a fixed coupon of 9.125% per annum. The gross proceeds from the issue of the Notes were used to fund the repurchase and redemption of Topaz s existing USD 350 million 8.625% Senior Notes due in 2018 and the associated costs. Of the total costs associated with the refinancing of the existing Senior Notes, USD 19 million was charged to Income Statement in 2017 comprising of USD 15.3 million incurred towards bond redemption premium and USD 3.7 million towards write-off of unamortized issuance costs relating to the redeemed notes. (16)

17 16 TERM LOANS (continued) (ii) As on 31 st December 2017, the Group had drawn down USD 25 million by utilising the available lines under Tranche B (USD 100 million) of the existing term loan facility. During the nine months ended September 2018, a further drawdown of USD 35 million was made. 17 LOAN DUE TO ULTIMATE HOLDING COMPANY Term loan (refer (i) below) 78,600 78,600 Current portion 19,370 12,064 Non-current portion 59,230 66,536 The loan is repayable as follows: Due within one year 19,370 12,064 Due between two to five years 59,230 54,628 Due after five years - 11,908 78,600 78,600 (i) The loan is subordinated to the Conventional and Islamic term loan facility and the Senior Notes. Any repayment towards the debt from Holding Company is subject to consent from the lenders under the term loan facility. 18 EMPLOYEES END OF SERVICE BENEFITS Provision for employees end-of-service benefits is made in accordance with the labour laws of the respective countries in which the Group operates, and is based on current remuneration and cumulative years of service as at the reporting date. Movement in the provision recognized in the condensed interim statement of financial position is as follows: Provision as at 1 January 3,758 3,529 Provided during the period 518 1,328 End of service benefits paid (94) (1,099) Closing Provision 4,182 3,758 (17)

18 19 ACCOUNTS PAYABLE AND ACCRUALS Current Trade accounts payables 6,397 32,103 Accrued expenses 52,652 42,070 Other payables 14,823 21,902 73,872 96, ADVANCE FROM CUSTOMERS Non-Current Current 212, , ,310 49, , ,072 (i) (ii) Advance from Customers comprises of premobilization funds received from Tengizchevroil (TCO) towards the Offshore Marine Module Transport Contract. This advance will be recovered, subsequent to commencement of operations, against amount receivable from TCO for provision of transportation services. The current portion of USD million represents management s estimate of the advance recoverable over next 12 months based on progress of the contract at the reporting date. As on 30 th September 2018, USD 29.8 million has been recovered by Tengizchevroil (TCO) against amount receivable by Topaz for provision of transportation services. 21 RELATED PARTY TRANSACTIONS AND BALANCES Related parties represent associated companies, major shareholders, directors and key management personnel of the Group, and entities controlled, jointly controlled or significantly influenced by such parties. The Group's management approves pricing policies and terms of these transactions. Due from related parties Topaz Energy & Marine Limited Holding Company 16,702 16,468 Topaz Energy & Marine PLC Directors ,078 16,742 (18)

19 21 RELATED PARTY TRANSACTIONS AND BALANCES (continued) Due to related parties Renaissance Services SAOG ("the Ultimate Holding Company") - 61 Tawoos subsidiary of Ultimate Holding Company CONTINGENCIES AND CLAIMS Contingent liabilities Letters of credit 3,143 - Letters of guarantee 34,425 29,544 37,568 29,544 These are non-cash banking instruments like bid bond, performance bond, refund guarantee, retention bonds, etc., which are issued by banks on behalf of group companies to customers/suppliers under the non-funded working capital lines with the banks. These lines are secured by the corporate guarantee from various group entities. The amounts are payable only in the event when certain terms of contracts with customers/suppliers are not met. 23 COMMITMENTS Capital expenditure commitment Purchase of marine vessels 92, ,154 92, ,154 (19)