NESTLÉ HOLDINGS, INC. (A Wholly Owned Subsidiary of Nestlé S.A.) AND SUBSIDIARIES. Half-yearly Financial Report. (unaudited) June 30, 2011

Transcription

1 N Half-yearly Financial Report (unaudited) June 30, 2011

2 N Contents Management Report 2 Responsibility Statement 5 Consolidated Interim Financial Statements Consolidated Income Statement 6 Consolidated Statement of Comprehensive Income 7 Consolidated Balance Sheet 8 Consolidated Statement of Cash Flows 9 Consolidated Statement of Changes in Equity 10 Notes to the Consolidated Interim Financial Statements 11 1

3 N Half-yearly Financial Report Management Report Nestlé Holdings, Inc. ( NHI ) (hereinafter, together with its subsidiaries, referred to as the Company ) is the holding company for Nestlé S.A. s principal operating subsidiaries in the United States, other than Nestlé Waters North America Inc. The Company manufactures food and beverages, with a strategic focus on the areas of nutrition, health and wellness. Its products are distributed primarily in the United States of America. Key Figures change % (Dollars in Millions) Net sales $ 9, , % Growth excluding acquisitions/divestitures 1.5% * Growth excluding acquisitions/divestitures and pricing -0.8% * Cost of goods $ 5, , % as a % of net sales 55.3% 53.0% Trading operating profit $ 1, , % as a % of net sales 10.6% 12.0% Net financing costs $ (260.2) (298.2) -12.7% Income tax expense (344.2) (350.1) -1.7% Net Income $ % as a % of net sales 4.5% 4.8% Operating cash flows $ % as a % of net sales 1.5% 3.7% Capital expenditures $ (217.6) (208.7) 4.3% *Figures not available as 2010 comparative has been restated to reflect the changes to the presentation of the consolidated income statement Overview The Company s solid first-half performance is due to ongoing execution of our proven strategies, combined with the successful implementation of operational efficiencies through the Nestlé Continuous Excellence cost saving program. We have increased investment in our brands, people and capabilities and have prepared the Company for a more challenging second half. In the first six months of 2011, net sales totaled $9.8 billion, representing an increase of 7.1% over the same period last year. The main contributor to higher sales was the acquisition of the frozen pizza business, which was purchased from Kraft Foods on March 1, This was responsible for an increase of 3.9% compared to 2010 sales. In addition, the acquisition of Waggin Train in September 2010 also contributed to the increase in sales. 2

4 Half-yearly Financial Report Although the Company benefited from the effects of our acquisitions and price increases, the rising costs of commodities prevented improvements in our trading operating profit margins. Price increases were implemented in order to partially offset rising commodity costs across several major businesses. Sales The main factors contributing to this overall sales growth in the first half of 2011 are as follows: Nestlé USA Brands sales grew by 10.2% to $4.7 billion, mainly due to the acquisition of Kraft s frozen pizza business. Along with price increases, the Company experienced gains in market share due to the success of promotional campaigns. In addition, increases occurred in retail ambient dairy, ready-to-drink beverages which were offset by a decrease in chocolate. Nestlé Purina Pet Care sales grew by 4.9% to $3.0 billion, mainly as a result of the Waggin Train acquisition that occurred in September 2010 that contributed $0.1 billion in sales for the six months ended June 30, Nutrition sales declined by 0.9% to $1.3 billion, with growth in juvenile life insurance, infant formula being offset by a decrease in the Jenny Craig weight management business. Sales of Other products rose 10.3% to $0.9 billion, due to the increases in Health Science aging care, Nespresso, Nestlé Professional ambient dairy and culinary products which were offset by a decrease in Nestlé Professional frozen foods Profitability Trading operating profit for the six-month period ended June 30, 2011, decreased 5.1% to $1.0 billion, or 10.6% of sales, a 140 basis point decrease in margins over the same period last year. Cost of goods sold, at 55.0% of sales, increased 230 basis points to $5.4 billion, due to higher commodity prices for coffee, dairy, sugar, grains, vegetable oils and meats. Distribution expenses at 19% of sales, increased 80 basis points to $1.0 billion, due to higher variable distribution expenses on finished goods transport and handling of items, which was partly due to the more distribution intensive direct store delivery network of the frozen pizza business. In addition, marketing, general and administrative expenses decreased by $47.8 million or 180 basis points. This was due to lower general overhead expenses, product salvage costs, and media spending, which was partially offset by increases in marketing, communication and promotion expenses. Net Income Net income for the six-month period ended June 30, 2011, rose by $9.3 million, an increase of 2.1%. The decline in trading operating profit noted above was primarily offset by lower net financing costs due to lower interest rates, as well as lower other operating expenses and income tax expense. Cash flow Operating cash flow decreased by $199 million, or 58.2%, in the first half of 2011 when compared to the same period last year. This was primarily caused by an increase in cash used for working capital, due to reductions in accruals and increases in inventory, offset by an increase in trade and other payables. 3

5 Half-yearly Financial Report Capital expenditures increased 4.3% in comparison to the same period last year. Principal risks and uncertainties In the course of its business, the Company is exposed to certain risks and uncertainties: risk of damage to consumer trust, credit risk, liquidity risk, market risk (including foreign currency and interest rate), commodity price risk, risk of disruption of supplies, settlement risk and other risks. The Company believes that its principal risks and uncertainties for the remaining six months of the financial year have not changed since the issuance of the 2010 NHI Annual Financial Report. The detailed discussion of these risks and uncertainties and the Company s objectives, policies and processes for managing these risks and uncertainties were disclosed in the Management Report section of 2010 NHI Annual Financial Report, under the heading Principal Risks and Uncertainties. Outlook The confidence of the typical US consumer continues to be affected by lack of job security, unemployment, a loss of wealth and uncertainty about the fragile economic outlook and continues to have the potential to affect the Company in the second half of the year. Challenges continue to emerge in the form of sustained high unemployment, strained relations between the Executive and Legislative branches of the US Federal government, volatile raw material prices, consumer price increases, and the potential for a return to recession in the next six to twelve months. The Company, however, is well positioned with strong, high quality brands which are valued by the consumer and leveraged across a variety of new product launches. It is committed to achieving continued growth in the second half, whilst recognizing that there are significant challenges to our consumers disposable income due to the continued economic concerns. 4

6 N Half-yearly Financial Report Responsibility Statement Dan Stroud, Chief Financial Officer, confirms that to the best of his knowledge: (a) the financial statements, which have been prepared in accordance with IAS 34, give a true and fair view of the assets, liabilities, financial position and profit or loss of NHI, or the undertakings included in the consolidation taken as a whole as required by DTR 4.2.4; and (b) the interim management report includes a fair review of the information required by DTR August 24,

7 N Consolidated Income Statement For Period Ended June 30, (a) Net sales $ 9,784,862 9,140,156 Cost of goods sold (5,409,508) (4,846,494) Distribution expenses (1,028,756) (887,135) Marketing, general and administrative expenses (1,735,049) (1,782,926) Royalties to affiliated company (557,459) (523,482) Other trading expense (note 5) (12,162) (2,258) Trading operating profit 1,041,928 1,097,861 Other operating expense (400) (15,552) Operating profit 1,041,528 1,082,309 Net financing costs (note 6) (260,189) (298,221) Share of results from associated companies 2, Income from continuing operations before income taxes 784, ,836 Income tax expense (note 7) (344,161) (350,069) Income from continuing operations 440, ,767 Income from discontinued operations, net of taxes 4, Net income $ 444, ,624 (a) 2010 comparatives have been restated to reflect the change in the consolidated income statement described in note 1, section "Accounting Policies and Changes in Accounting Policies" 6

8 Consolidated Statement of Comprehensive Income For the Period Ended June 30, Net income $ 444, ,624 Fair value adjustments on cash flow hedges: Recognized in other equity reserves (44,508) (165,761) Removed from other equity reserves 27,607 39,249 Income taxes on fair value adjustments on cash flow hedges 6,593 49,346 (10,308) (77,166) Net change in fair value of available-for-sale assets: Unrealized results 8,054 61,826 Recognition of realized results in the income statement 4,595 4,753 Income taxes on changes in fair value of available-for-sale assets (4,449) (23,307) 8,200 43,272 Defined benefit plan actuarial gains (losses) 121,838 (204,660) Income taxes on defined benefit plan actuarial gains (losses) (47,516) 79,817 74,322 (124,843) Foreign currency translation differences for foreign operations 622 (77) Other comprehensive income (loss) 72,836 (158,814) Total comprehensive income $ 517, ,810 7

9 N Consolidated Balance Sheet as at June 30, 2011 (Dollars in Thousands, Except Capital Stock Par Value and Shares) June December Assets Current assets: Cash and cash equivalents $ 314,400 44,302 Short term investments 5,766 6,019 Trade and other receivables, net 2,318,288 2,389,839 Assets held for sale 21,082 16,347 Inventories, net 1,885,217 1,485,788 Derivative assets 797, ,911 Prepayments 110,642 87,051 5,452,577 4,705,257 Non-current assets: Property, plant and equipment, net 4,520,839 4,582,974 Employee benefits assets 387, ,456 Investments in associated companies 13,552 10,788 Deferred tax assets 1,096,831 1,110,950 Financial assets 2,852,814 2,739,417 Goodwill 18,712,591 18,712,591 Intangible assets, net 904, ,554 28,488,924 28,199,730 Total assets $ 33,941,501 32,904,987 Liabilities and Equity Current liabilities: Trade and other payables $ 1,125,404 1,089,696 Provisions 92, ,110 Financial liabilities 11,098,314 12,511,339 Derivative liabilities 155, ,714 Accruals 1,018,021 1,470,024 13,489,316 15,317,883 Non-current liabilities: Financial liabilities 9,901,199 7,680,845 Employee benefits liabilities 2,142,212 2,152,541 Deferred tax liabilities 1,499,566 1,415,448 Other accrued liabilities 2,222,306 2,155,066 Provisions 109, ,984 15,875,244 13,527,884 Total liabilities 29,364,560 28,845,767 Equity: Capital stock, $100 par value. Authorized, issued, and outstanding, 1,000 shares Additional paid-in capital 1,650,353 1,650,353 Other equity reserves (812,089) (884,925) Accumulated earnings 3,738,577 3,293,692 Total equity 4,576,941 4,059,220 Total liabilities and equity $ 33,941,501 32,904,987 8

10 N Consolidated Statement of Cash Flows For the Period Ended June 30, Cash flows from operating activities: Net income $ 444, ,624 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property, plant, and equipment 253, ,895 Results on sales of property, plant and equipment 8,383 11,033 Impairment of property, plant and equipment 14, Amortization of intangible assets 74,931 72,070 Results on disposal of assets held for sale and other (82) (Increase) in cash surrender value of Company-owned life insurance policies (17,065) (4,641) (Decrease) in provisions (27,581) (28,833) Increase (decrease) in deferred income taxes 98,237 (87,486) Change in working capital (excluding effects from acquisitions and divestitures): Trade and other receivables, net (29,719) 49,293 Inventories, net (399,429) (309,611) Prepayments and other current assets (23,591) (15,044) Trade and other payables and other liabilities 304, ,543 Accruals (452,018) (238,427) (Increase) in working capital (600,086) (395,246) Taxes on other comprehensive income (loss) (45,372) 105,856 Share of results from investments in associated companies (7,707) (748) Non monetary movements on financial assets and liabilities (7,013) 13,076 Movements of trading derivatives 4,004 1,883 Cash movements on operating derivatives 77,121 54,470 Other employee benefits, net (128,753) (80,109) Total adjustments (302,459) (94,507) Net cash provided by operating activities 142, ,117 Cash flows from investing activities: Expenditure on property, plant and equipment (217,565) (208,691) Proceeds from sale of property, plant and equipment 666 2,981 Business acquisitions (2,185,856) Disposals of assets held for sale and other 16,900 Expenditure on intangible assets (83,954) (51,736) Investments in non current financial assets (91,244) (85,311) Other movements 459 (420) Net cash used in investing activities (391,638) (2,512,133) Cash flows from financing activities: Net borrowings of commercial paper 2,197,013 3,952,826 Net (repayment) increase of line of credit (57,877) 122,240 Bonds issued (note 4) 559, ,996 Bonds repaid (note 4) (2,021,594) (1,189,487) Loans to affiliates (issued) repaid, net (note 9) (95,262) 51,700 Notes to affiliates issued (note 9) 1,700,000 Notes to affiliates repaid (note 9) (1,800,000) (1,300,143) Cash movement on derivatives hedging bond principal, net 38,620 28,850 Other changes in financial liabilities (1,288) (40,194) Net cash provided by financing activities 518,690 2,175,788 Net increase in cash and cash equivalents 269,478 4,772 Cash and cash equivalents at beginning of period 44,302 38,798 Effect of exchange rate changes on opening balances 620 (542) Cash and cash equivalents at end of period $ 314,400 43,028 Supplemental information: Cash paid for: Interest $ 54,202 50,274 Taxes 274, ,438 9

11 N Consolidated Statement of Changes in Equity For the Period Ended June 30, 2011 Capital Additional Other Equity Accumulated Stock Paid-in Capital Reserves Earnings Total Balance at December 31, 2009 $ 100 1,650,353 (850,841) 2,244,869 3,044,481 Net income 435, ,624 Other comprehensive income (loss): Fair value adjustments on cash flow hedges (126,512) (126,512) Net change in fair value of available for sale assets 66,579 66,579 Foreign currency translation differences for foreign operations (77) (77) Defined benefit plan actuarial gains (loss) (204,660) (204,660) Taxes on other comprehensive income (loss) 105, ,856 Total other comprehensive income (loss) (158,814) (158,814) Total comprehensive income (158,814) 435, ,810 Balance at June 30, 2010 $ 100 1,650,353 (1,009,655) 2,669,637 3,310,435 Balance at December 31, 2010 $ 100 1,650,353 (884,925) 3,293,692 4,059,220 Net income 444, ,885 Other comprehensive income (loss): Fair value adjustments on cash flow hedges (16,901) (16,901) Net change in fair value of available for sale assets 12,649 12,649 Foreign currency translation differences for foreign operations Defined benefit plan actuarial gains (loss) 121, ,838 Taxes on other comprehensive income (loss) (45,372) (45,372) Total other comprehensive income (loss) 72,836 72,836 Total comprehensive income 72, , ,721 Balance at June 30, 2011 $ 100 1,650,353 (812,089) 3,738,577 4,576,941 10

12 Notes to the Consolidated Interim Financial Statements (1) Basis of Preparation These financial statements are the unaudited consolidated interim financial statements of Nestlé Holdings Inc. (NHI) (hereinafter, together with its subsidiaries, referred to as the Company) for the six-month period ended June 30, They have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting, and should be read in conjunction with NHI s consolidated financial statements for the year ended December 31, The consolidated interim financial statements were authorized for issuance by the directors of NHI on August 24, Accounting Policies and Changes in Accounting Policies The accounting conventions and accounting policies are the same as those applied in NHI s consolidated financial statements for the year ended December 31, 2010, except for the changes in presentation mentioned below. The preparation of NHI s consolidated interim financial statements requires management to make estimates, judgments and assumptions that affect the application of policies, reported amounts of revenues, expenses, assets and liabilities and disclosures. The key sources of estimation uncertainty within these consolidated interim financial statements remain the same as those applied to NHI s consolidated financial statements for the year ended December 31, Changes in presentation Revenue Certain allowances and discounts granted to trade chains, customers, retailers and consumers for trade and consumer promotions, selling, distribution, advertising and other services, rendered to the Company were previously reported as expenses under marketing and administration expenses as well as distribution expenses and costs of goods sold on grounds that they are incurred to generate sales. These allowances and discounts, as from January 1, 2011, will be treated as a deduction of sales in conformity with the practice generally applied by consumer goods companies. The impact of this change for the six-month period ended June 30, 2010 is a reduction in cost of goods sold by $64,299, distribution expenses of $16,896 as well as marketing and administration expenses of $1,658,207. The total impact is a reduction in sales of $1,739, comparatives have been restated accordingly. Changes in presentation Operating profit Previously the Company s consolidated income statement included EBIT (earnings before interest, taxes, restructuring and impairments) and profit before interest and taxes. As from 2011, the consolidated income statement displays a trading operating profit that is after restructuring costs, impairment of all assets except goodwill, litigation and onerous contracts, result on disposal of property, plant and equipment and specific other income and expenses that is also used in segment reporting. 11

13 Notes to the Consolidated Interim Financial Statements Finally the line profit before interest and taxes is renamed operating profit and is after impairment of goodwill, results on disposals of businesses, acquisition-related costs and other income and expenses that fall beyond the control of operating segments and relate to events such as natural disasters and expropriation of assets comparatives have been restated accordingly. Changes in presentation Analyses by segment The scope of the operating segments has been modified following on the changes in management responsibilities: HealthCare Nutrition, now managed by Nestlé Health Science, is reported under Other comparatives have been restated. Future Changes in Accounting Policies The following standards and amendments to existing standards have been published and are mandatory for the Company s accounting period beginning on January 1, The Company will not early adopt them. IFRS 9 Financial Instruments The standard addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard will affect the Company s accounting for its available-for-sale financial assets, as IFRS 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Such gains and losses are never reclassified to the income statement at a later date. There will be no impact on the Company s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss, and the Company does not have any such liabilities. IFRS 10 Consolidated Financial Statements This standard provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. It is not expected to have a material impact on the Company s consolidated financial statements. IFRS 11 Joint Arrangements This standard establishes principles for the financial reporting by parties to a joint arrangement. It is not expected to have a material impact on the Company s consolidated financial statements. 12

14 Notes to the Consolidated Interim Financial Statements IFRS 12 Disclosure of Interests in Other Entities This standard combines, enhances and replaces disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. It is not expected to have a material impact on the Company s consolidated financial statements. IFRS 13 Fair Value Measurement This standard applies when other IFRS requires or permits fair value measurements. It defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. It is not expected to have a material impact on the Company s consolidated financial statements. IAS 19 Revised 2011 Employee Benefits The amendments that are expected to have the most significant impact include: replacement of the expected return on plan assets and interests costs on the defined benefit obligation with a single net interest component which is calculated by applying the discount rate to the net defined asset or liability past-service costs that will be recognized in the period of a plan amendment and unvested benefits that will no longer be spread over a future period until the benefits become vested. The Company is currently assessing the impacts of these amendments. Improvements and other amendments to IFRS/IAS Several standards have been modified on miscellaneous points and are effective from January 1, Such changes include IAS 1 Presentation of Financial Statements, which requires entities to separate items presented in Other Comprehensive Income into two groups, based on whether or not they may be recycled to the Income Statement in the future. None of these amendments are expected to have a material effect on the Company s consolidated financial statements. 13

15 (2) Segmental Information Segmental information is as follows: Notes to the Consolidated Interim Financial Statements Nestle USA Brands (i) PetCare Nutrition (i) Other (i) Total June 30, 2011 Net Sales $ 4,694,174 2,983,413 1,254, ,497 9,787,857 Trading operating profit (ii) 300, , ,668 21,035 1,053,525 June 30, 2010 Net Sales $ 4,258,283 2,844,480 1,266, ,327 9,144,315 Trading operating profit (ii) 297, , ,698 39,456 1,110,339 (i) (ii) Nestlé USA Brands primarily consist of beverage, prepared foods, ice cream, confections and snacks, and other food products. Nutrition primarily consists of baby foods, weight management and performance related food products. Other includes Nestlé Professional, medical nutritional food products and Nespresso, which do not meet the criteria for separate disclosure. The Company determines trading operating profit by allocating corporate expenses to its operating segments based on activity based cost drivers. Reconciliation of segment trading operating profit to income from continuing operations before income taxes is as follows: Total segment trading operating profit $ 1,053,525 1,110,339 Intangibles amortization (252) (916) Provisions for onerous lease contracts (2,311) (2,802) Long term incentive adjustment - (4,600) Classify franchising income as other income (2,995) (4,159) Recognize additional royalty expense (6,164) - Other 126 (1) Trading operating profit 1,041,928 1,097,861 Net other (expense) (400) (15,552) Operating Profit 1,041,528 1,082,309 Net financing costs (260,189) (298,221) Share of results from associated companies 2, Income before continuing operations before income taxes $ 784, ,836 14

16 Notes to the Consolidated Interim Financial Statements (3) Seasonality The Company s businesses are subject to the effects of slight seasonality. This is primarily concentrated in the Nestlé USA Brands segment, with more demand in the second half of the year during the holiday season. Trading operating profit margins have historically improved in the second half of the year due to increased absorption of fixed costs directly related to the increase in second half sales. Consequently, the operating results for the six months ended June 30, 2011 are not necessarily indicative of results to be expected for the full year. (4) Bonds The following Eurobonds were issued or matured under the Debt Issuance Programme established by NHI and Nestlé Finance International Ltd.: Face Value Interest Rate Year of Issue/ Comments Nominal Effective Maturity Issued (Repaid) (in 000's) New issues: AUD 275,000 (b) 5.50% 5.69% $ 273,214 NOK 1,000,000 (b) 3.38% 3.59% ,494 USD 115,000 (d) 2.00% 2.11% ,371 Total new issues $ 559,078 Repayments: USD 500,000 (d) 4.75% 4.90% $ (500,000) AUD 300,000 (c) 7.25% 7.37% (299,220) AUD 300,000 (b) 7.25% 7.90% (299,220) NOK 1,000,000 (c) 5.00% 5.55% (173,145) USD 750,000 (d) 4.00% 3.87% (750,000) Other-NPPC repayments (9) Total repayments $ (2,021,594) (a) Not subject to a swap. (b) Subject to an interest rate and currency swap that creates a USD liability at a floating rate. (c) Subject to an interest rate and currency swap that creates a USD liability at a fixed rate. (d) Subject to an interest rate swap that creates a USD liability at a floating rate. 15

17 (5) Other Trading Expense Other trading expense is as follows: Notes to the Consolidated Interim Financial Statements Return on company owned life insurance $ 16,892 6,596 Profit on disposal of property, plant and equipment 1,174 Return on deferred compensation 2,031 Reversal of restructuring 3,600 0 Miscellaneous trading income Other trading income 21,145 9,965 Restructuring expense (5,769) Impairment of assets other than goodwill (14,963) (351) Litigations and onerous contracts (534) (4,226) Losses (or cost) on Deferred Compensation (16,974) Miscellaneous trading expenses (836) (1,877) Other trading expenses (33,307) (12,223) Net other trading expense $ (12,162) (2,258) (6) Net Financing Costs Net financing costs are as follows: Interest Income $ 1,835 2,352 Finance income 1,835 2,352 Interest Expenses (261,001) (298,869) Unwind of the discount on provisions (1,071) (1,720) Capitalised third party borrowing costs Finance expense (262,024) (300,573) Total net financing cost $ (260,189) (298,221) Interest expense on amounts due to affiliated and associated companies and bond and CP guarantee fees to Nestlé S.A. amounted to $153,157 and $170,400 in 2011 and 2010, respectively. Interest income on amounts due from affiliated and associated companies amounted to $1,488 and $2,247 in 2011 and 2010, respectively. 16

18 Notes to the Consolidated Interim Financial Statements (7) Income Taxes Reconciliation of tax expense from continuing operations is as follows: Tax at theoretical rate $ (302,629) (303,065) Tax effect on non-deductible amortization of goodwill and other intangible assets (89) (357) Permanent differences on company-owned life insurance policies 10,960 5,488 Tax effect on non-allowable items 6,278 8,996 Prior years' tax (58,000) (60,780) Other taxes (681) (351) $ (344,161) (350,069) Effective tax rate 44% 45% (8) Events after the Balance Sheet Date Other than the following, the Company was not aware of specific events or transactions occurring after June 30, 2011, and up to the date of the half-yearly financial report that would have a material impact on the presentation of the accompanying consolidated interim financial statements. The following Eurobond was issued under the Debt Issuance Programme established by NHI and Nestlé Finance International Ltd.: Issue Date Face Value Coupon Maturity 7/21/2011 $50,000, % 11/28/

19 (9) Transactions with Related Parties Notes to the Consolidated Interim Financial Statements Loans with Related Parties Loans from Nestlé S.A At January 1 $ 8,250,000 5,550,000 Loans received during year 1,700,000 - Loan repayments (1,800,000) (1,300,000) At June 30 $ 8,150,000 4,250,000 Loans from affiliates At January 1 $ 300, ,143 Loan repayments - (143) At June 30 $ 300, ,000 Loans to affiliates At January 1 $ 505, ,157 Loans granted during year 97,593 40,868 Loan repayments (2,331) (92,568) At June 30 $ 600, ,457 18