QUARTERLY REPORT FOR THE THREE MONTHS AND SIX MONTHS ENDED 30 JUNE 2015 (unaudited) HYVA GLOBAL B.V. (the Issuer )

Transcription

1 QUARTERLY REPORT FOR THE THREE MONTHS AND SIX MONTHS ENDED 30 JUNE 2015 HYVA GLOBAL B.V. (the Issuer ) 28 August 2015

2 Introduction On 24 March 2011, Hyva Global B.V. (the Issuer or the Company ) issued its 8.625% Senior Secured Notes due 2016 (the Notes ) pursuant to an indenture dated 24 March 2011 among the Issuer, Hyva III B.V., Wilmington Trust FSB, as Trustee, Principal Paying Agent, Registrar and Transfer Agent, and Wilmington Trust (London) Limited, as Security Agent (as amended or supplemented, the Indenture ). Unless otherwise specified, capitalised terms used herein that are not otherwise defined, have the meanings given to such terms in the Indenture. Section 4.16(1)(b) of the Indenture requires, so long as any Notes are outstanding, the Issuer to furnish to the Trustee, within 60 days following the end of each of the first three fiscal quarters in each fiscal year of the Issuer thereafter, quarterly financial statements containing the following information: (i) the Issuer s unaudited condensed consolidated balance sheet as at the end of such quarter and unaudited condensed statements of income and cash flow for the most recent quarter year to date period ending on the unaudited condensed balance sheet date and the comparable prior period, together with condensed footnote disclosure; (ii) an operating and financial review of the unaudited financial statements, including a discussion of the results of operations, financial condition, and material changes in liquidity and capital resources of the Issuer; and (iii) calculations of Consolidated EBITDA, Consolidated Non-Guarantor EBITDA, Consolidated Interest Expense and Consolidated Non-Guarantor Debt, in each case, for the four quarters ended with such fiscal quarter. Section 4.16(3) of the Indenture further requires the Issuer to make available copies of the report discussed above (a) on the Issuer s public website; (b) through the newswire service of Bloomberg, or, if Bloomberg does not then operate, any similar agency; and (c) if and so long as the Notes are listed and quoted on the Official List of the SGX-ST and to the extent that the rules of the SGX-ST so require, copies of such reports furnished to the Trustee shall also be made available at the specified office of the paying agent in Singapore. This Quarterly Report as of and for the three months and six months ended 30 June 2015, is published to comply with the reporting requirements in the Indenture discussed above. Forward-Looking Statements This Quarterly Report may include forward-looking statements. All statements other than statements of historical fact contained in this Quarterly Report, including, without limitation, those regarding future financial position and results of operations, strategy, plans, objectives, goals and targets, future developments in the markets in which the Issuer and its consolidated subsidiaries (together Hyva ) participate or seek to participate, and any statements preceded by, followed by or that include the words believe, expect, aim, intend, will, may, anticipate, seek, should or similar expressions or the negative thereof, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Hyva, which may cause actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding present and future business strategies and the environment in which Hyva will operate in the future. Actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this document are based on information available to Hyva as of the date of this Quarterly Report and Hyva assumes no obligation to update any such forwardlooking statements. 1

3 Presentation of Financial Information and Use of Non-GAAP Financial Information The condensed consolidated financial statements presented in this Quarterly Report have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRS ) and International Financial Reporting Interpretations Committee interpretations applicable to companies reporting under IFRS. However, please note that this Quarterly Report does not necessarily include all disclosure required by IFRS, including IAS 34 Interim Financial Reporting. The quarterly condensed consolidated financial statements included herein do not include all the information and disclosure required in the annual consolidated financial statements, and should therefore be read in conjunction with the Issuer s annual financial statements as at 31 December Detailed information regarding the accounting policies used for preparing the condensed financial statements included in this Quarterly Report is provided in Note 2 to the Issuer s consolidated financial statements for the year ended 31 December In this Quarterly Report, reference is made to EBITDA, Pro forma EBITDA and Adjusted EBITDA. EBITDA is defined as operating profit plus depreciation, amortisation and impairment of assets. Pro forma EBITDA is defined as EBITDA adjusted to exclude Transaction (as defined herein) related expenses. Adjusted EBITDA is defined as Pro forma EBITDA adjusted to exclude other additional extraordinary items, non-recurring costs and certain other items. Unless otherwise indicated, the EBITDA, Pro forma EBITDA and Adjusted EBITDA figures in this Quarterly Report are calculated on a consolidated basis, inclusive of all subsidiaries of Hyva Global B.V., as of 30 June It should also be noted that EBITDA is calculated differently from Consolidated EBITDA as defined and used in the Indenture governing the Notes. Management believes that EBITDA, Pro forma EBITDA and Adjusted EBITDA serve as useful indicators of Hyva s (as defined herein) operating performance. EBITDA, Pro forma EBITDA and Adjusted EBITDA are non-gaap measures and are not required by or presented in accordance with IFRS. They are not intended as a replacement for, or alternatives to, measures such as net cash from operating activities or operating profit as defined and required under IFRS. Hyva believes that EBITDA, Pro forma EBITDA and Adjusted EBITDA are measures commonly used by analysts, investors and peers in the industry. Accordingly, this information is disclosed to permit a more complete analysis of Hyva s operating performance. EBITDA, Pro forma EBITDA and Adjusted EBITDA, as calculated herein, may not be comparable to similarly titled measures reported by other companies. EBITDA, Pro forma EBITDA and Adjusted EBITDA may not be indicative of historical results of operations, nor are they meant to be predictive of future results. In this Quarterly Report, where information has been presented in thousands or millions, amounts may have been rounded. Accordingly, totals of columns or rows of numbers in tables or charts may not be equal to the apparent sum of the individual items. Actual numbers may differ from those contained herein due to such rounding. Important Note Regarding Confidentiality This Quarterly Report is confidential and has been prepared exclusively for use by any holder of the Notes or any prospective investor in accordance with Section 4.16 of the Indenture. You are authorised to use this Quarterly Report solely for the purpose of evaluating your investment in, or considering the purchase of, the Notes. Neither the delivery of, or access to, this Quarterly Report implies that any information set forth in this Quarterly Report is correct as of any date after the date of this Quarterly Report. You may not reproduce or distribute this Quarterly Report, in whole or in part, and you may not disclose any of the contents of this Quarterly Report or use any information herein for any purpose other than evaluating your investment in, or considering the purchase of, the Notes. You agree to the foregoing by accepting delivery of, or access to, this Quarterly Report. 2

4 TABLE OF CONTENTS 1. GENERAL Introduction Corporate Information Material Recent Developments Senior Management Update Risk Factors UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Introduction Unaudited Condensed Consolidated Statement of Income Unaudited Condensed Consolidated Balance Sheet Unaudited Condensed Consolidated Statement of Cash Flow OPERATING AND FINANCIAL REVIEW Introduction Results of Operations Financial Condition Liquidity and Capital Resources Outlook CERTAIN CALCULATIONS

5 1. GENERAL 1.1 Introduction This Quarterly Report provides an operational and financial review, including condensed consolidated financial information, for the Issuer for the three months and six months ended 30 June ( Q and H respectively). 1.2 Corporate Information The Issuer s registered address is Antonie van Leeuwenhoekweg 37, 2408 AK Alphen aan den Rijn, The Netherlands. Hyva is engaged in the development, production, marketing and distribution of hydraulic products and solutions for application in heavy duty equipment used in the mining, infrastructure, construction and environmental services end markets. 1.3 Material Recent Developments Hyva has secured necessary debt and equity financing to fully refinance the Notes and consequently a notice of early redemption has been made to the current holders of the Notes. The transaction is expected to be completed in early September. 1.4 Senior Management Update Mr Morten Steen Hansen, Vice President of Operations, has tendered his resignation. A search for his replacement is ongoing and Mr Hansen will continue in his position in the interim to ensure a smooth transition. Hyva is pleased to announce the appointment of Mr Anand Ganguly to the position of Managing Director of our Indian subsidiary a position that has been vacant since the tragic demise of the previous incumbent earlier in the year. Mr Ganguly was previously the MD of American Axle in India. Earlier, he held various engineering and manufacturing roles in the Anand Automotive Systems Group. 1.5 Risk Factors An investment in our Notes involves significant risks. This Quarterly Report does not include a detailed discussion of these risks. Existing and prospective investors should refer to the risk factors set forth in the Offering Memorandum dated 17 March 2011 relating to the Notes. Prospective investors should consider those risks carefully before making a decision to invest in the Notes. If any of those risks actually materialize, then our business, financial condition and results of operations would suffer. In addition, there may be risks of which we are currently unaware or that we currently regard as immaterial based on the information available to us that later may prove to be material. These risks may adversely affect our business, financial condition and operating results. As a result, you may lose all or part of your original investment in the Notes. 4

6 2. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2.1 Introduction The following summarises the unaudited condensed consolidated financial data of the Issuer, including the unaudited condensed consolidated statement of income, the unaudited condensed consolidated balance sheet and the unaudited condensed consolidated statement of cash flow. 2.2 Unaudited Condensed Consolidated Statement of Income Unaudited condensed consolidated statement of income For the three months and six months ended 30 Jun 2015 and 2014 QTD QTD YTD YTD 1 Apr Apr Jan Jan 2014 to to to to 30 Jun Jun 2014 Change 30 Jun Jun 2014 Change USD '000 USD '000 % USD '000 USD '000 % Revenue 130, , % 248, , % Cost of sales (97,025) (122,625) -20.9% (185,475) (247,459) -25.0% Gross profit 33,226 44, % 63,172 91, % Selling, general and administrative costs (23,221) (25,112) -7.5% (45,028) (50,354) -10.6% Other operating expenses (4,692) (5,063) -7.3% (9,447) (10,148) -6.9% One-time restructuring costs (480) (1,250) -61.6% (480) (1,761) -72.7% Total operating costs (28,393) (31,425) -9.6% (54,955) (62,263) -11.7% Operating profit 4,833 13, % 8,217 28, % Interest income % 531 1, % Interest costs (9,259) (9,907) -6.5% (17,955) (18,793) -4.5% Other finance expense net (249) (354) -29.7% (1,404) (59) % Net finance costs (9,282) (9,634) -3.7% (18,828) (17,830) 5.6% Result before income tax (4,449) 3, % (10,611) 10, % Income tax expense (1,446) (4,573) -68.4% (4,656) (8,922) -47.8% Result for the period (5,895) (1,024) 475.7% (15,267) 2, % Result attributable to: Owners of the parent (5,870) (1,005) 484.1% (15,217) 2, % Non-controlling interests (25) (19) 31.6% (50) (59) -15.3% (5,895) (1,024) 475.7% (15,267) 2, % Other comprehensive income: Currency translation differences 5,016 1, % (15,321) (5,902) 159.6% Comprehensive income for the period (879) % (30,588) (3,828) 699.1% Comprehensive income attributable to: Owners of the parent (854) % (30,538) (3,769) 710.2% Non-controlling interests (25) (19) 32.3% (50) (59) -15.0% (879) % (30,588) (3,828) 699.1% 5

7 2.3 Unaudited Condensed Consolidated Balance Sheet Unaudited condensed consolidated balance sheet As at 30 Jun 2015 and 2014 As at As at 30 Jun Jun 2014 USD '000 USD '000 Property, plant and equipment 33,529 38,409 Intangible fixed assets 625, ,382 Deferred income tax assets 10,535 11,001 Financial fixed assets Total non-current assets 669, ,929 Inventories 90, ,434 Trade and other receivables 153, ,764 Current income tax receivable 790 1,063 Derivative financial instruments Cash and cash equivalents 46,333 79,143 Current assets 291, ,404 Total assets 960,905 1,082,333 Equity attributable to the owners of the parent 330, ,483 Non-controlling interests (19) 159 Total equity 330, ,642 Non-current liabilities Borrowings 1, ,425 Deferred income tax liabilities 75,873 85,128 Other non-current liabilities 5,285 4,214 Current liabilities Borrowings 372, Current income tax payable 1,896 3,848 Trade and other payable 166, ,669 Other current liabilities 6,757 6,594 Total liabilities 630, ,691 Total equity and liabilities 960,905 1,082,333 6

8 2.4 Unaudited Condensed Consolidated Statement of Cash Flow Unaudited condensed consolidated statement of cash flow For the three months and six months ended 30 Jun 2015 and 2014 QTD QTD YTD YTD 1 Apr Apr Jan Jan 2014 to to to to 30 Jun Jun Jun Jun 2014 USD '000 USD '000 USD '000 USD '000 Cash flows from operating activities (Loss)/profit before income tax (4,449) 3,549 (10,611) 10,996 Adjustments for: - Depreciation and amortisation 6,253 6,872 12,562 13,812 - Change in provisions Fair value change in derivative financial instruments 32 - (144) - - Result on disposal of property, plant and equipment (3) 2 (5) 13 - Net interest expense 9,033 9,280 17,424 17,771 - Changes in working capital (687) 1,289 (30,041) (30,485) Cash from/(used in) operating activities 10,584 21,311 (10,274) 12,705 Taxes paid (2,834) (4,919) (5,722) (10,172) Net Interest (paid)/received (162) 250 (15,997) (16,036) Net cash from/(used in) operating activities 7,588 16,642 (31,993) (13,503) Cash flows (used in)/from investing activities Purchases of property, plant and equipment (1,058) (1,453) (2,066) (2,095) Investments in intangible assets (200) (263) (284) (317) Proceeds from sale of property, plant and equipment ,142 Net cash (used in)/from investing activities (1,254) (1,697) (2,335) 730 Cash flows used in financing activities Movements in loans and borrowings (332) (344) (387) (382) Net cash used in financing activities (332) (344) (387) (382) Net increase/(decrease) in cash and cash equivalents 6,002 14,601 (34,715) (13,155) Cash and cash equivalents at beginning of the period 39,803 65,065 83,506 93,941 Exchange gain/(losses) on cash and cash equivalent 528 (523) (2,458) (1,643) Cash and cash equivalents at end of the period 46,333 79,143 46,333 79,143 7

9 3. OPERATING AND FINANCIAL REVIEW 3.1 Introduction This section presents an operating and financial review, including condensed consolidated financial information, for the Issuer for the three months ( Q ) and the six months ( H ) ended 30 June For purposes of this section, the terms we, our and us refer to Hyva. 3.2 Results of Operations Consolidated Results Hyva s consolidated Q revenue of USD million decreased by USD 37.0 million or 22.1% compared to prior corresponding period ( pcp ). Excluding the impact of foreign exchange movements, the decrease would be USD 18.7 million or 11.2%. The fall in revenue is largely driven by continued weak market conditions in China, Brazil and India as well as the impact of EUR depreciation on our revenues in the EMEA region. For the first half of the year, revenue is 26.6% lower than H1 2014, largely caused by China, Brazil and, to a lesser extent, India. On a constant currency basis compared to pcp, our revenues have grown in all of other main markets. The Q gross margin decreased to 25.5% compared to the pcp level of 26.7% as a result of (1) a strong unfavorable regional and product revenue mix compared to pcp due to the lower weight of our more profitable China business, (2) lower manufacturing fixed costs absorption from lower volumes which were partly compensated by (3) continued purchasing savings in line with our budget and (4) productivity improvements following the various manufacturing footprint reorganisation implemented in Europe in the last 2 years. Q SG&A costs have decreased 7.5%, or USD 1.9 million, to USD 23.2 million compared to USD 25.1 million pcp. H SG&A costs decreased to USD 45.0 million compared to USD 50.4 million in the pcp (USD 5.4 million or 10.6%). The decrease in SG&A costs is largely in line with lower revenues as well as various cost containment actions implemented in our major operating regions. Expressed as a percentage of revenue, SG&A costs rose to 17.8% compared to 15.0% pcp in Q and rose to 18.1% compared to 14.9% pcp in H notably driven by a change in regional mix. Other operating expenses mainly represent the amortization of intangible fixed assets that resulted from the purchase price allocation and fair value adjustments arising in relation to the Acquisition. One-time costs incurred in Q mainly relate to the costs associated with the relocation of manufacturing activities from the Netherlands into our existing crane manufacturing facility in Italy. Overall, Hyva recorded an Adjusted EBITDA of USD 13.0 million, or 10.0% of sales compared to 12.9% pcp in Q Currency movements (mainly USD appreciation against most currency except Chinese Renminbi) during Q had a net adverse impact on sales of USD 18.3 million, or 10.9% and USD 1.8 million or 8.9%, on EBITDA. For H1 2015, currency movements had a net unfavourable impact of USD 32.8 million or 9.7% on sales and USD 2.9 million or 6.7% on EBITDA. This is largely due to the devaluation of most currency especially Euro and Brazilian Real. 8

10 The table below sets forth EBITDA (as reported), Pro forma EBITDA and Adjusted EBITDA: EBITDA adjustments For the three months and six months ended 30 June 2015 and 2014 (Unaudited) QTD QTD YTD YTD 1 Apr Apr Jan Jan 2014 to to to to 30 Jun Jun 2014 Change 30 Jun Jun 2014 Change USD '000 USD '000 % USD '000 USD '000 % EBITDA (as reported) 11,086 20, % 20,779 42, % Transaction related adjustments: Transaction related expenses Pro forma EBITDA 11,086 20, % 20,779 42, % Other exceptional items: Restructuring costs 480 1, % 480 1, % Various other normalisations 1, % 1, % Adjusted EBITDA 12,992 21, % 22,820 44, % EBITDA (as reported) as % of revenue 8.5% 12.0% 8.4% 12.6% Pro forma EBITDA as % of revenue 8.5% 12.0% 8.4% 12.6% Adjusted EBITDA as % of revenue 10.0% 12.9% 9.2% 13.3% Segment Results The table below sets revenue by region on an originating sales entity basis for the Hyva Group: Revenue by region on an originating sales entity For the three months and six months ended 30 June 2015 and 2014 (Unaudited) QTD QTD YTD YTD 1 Apr Apr Jan Jan 2014 to to to to 30 Jun Jun 2014 Change 30 Jun Jun 2014 Change USD '000 USD '000 % USD '000 USD '000 % China 28,130 45, % 51, , % India 21,244 27, % 44,285 49, % Other Asia 8,721 9, % 17,559 17, % Americas 11,514 16, % 22,135 32, % Europe/Middle East/Africa (EMEA) 60,642 68, % 113, , % Total 130, , % 248, , % As shown in the table above, the varying degrees of movements across each region has impacted the geographic mix of business compared to last year. In Q2 2015, China s contribution in consolidated revenue has decreased to 21.6% from 27.0% in pcp while EMEA s contribution increased to 46.6% in Q from 41.2% in the pcp. 9

11 China China s Q sales amounted to USD 28.1 million compared to USD 45.1 million last year pcp. On a YTD basis, sales decreased by USD 61.0 million or 54.4% in H compared to H (54.0% lower excluding exchange rate movement). The revenue performance mirrors the development of the heavy duty tipper market in China, which remains weak on the back of a sharp slowdown in the commencement of large scale infrastructure and construction projects in China. Despite such adverse market conditions, our strong market and price position remained unchanged. We continue to believe that recent actions taken by the Chinese central government to kick-start stalled large-scale projects will result in an improvement in the market for our hydraulics products in the coming quarters. India Sales in India decreased by USD 5.8 million or 21.5% in Q versus pcp (USD 4.5 million or 16.5% lower excluding exchange rate movements). India s revenue slowed down in Q mainly dues to the weak market for our hydraulics and tipper products. The long term outlook for our market in India remains positive, particularly with our recent initiatives to improve our position in the market. Overall, India s H sales of USD 44.3 million are 9.7% lower than H (USD 45.8 million or 6.6% lower excluding exchange rate movements). Other Asia Revenue from Other Asia in Q was USD 0.8 million or 8.2% lower versus pcp (USD 0.6 million or 6.0% higher excluding exchange rate movements). Excluding exchange rate movements, the positive revenue development results from the improvement in the region mainly in countries such as South Korea, Singapore, Laos and Vietnam. That good revenue progression was partly offset by a slowdown in Indonesia following continued weakness in mining activity. Americas Revenue from the Americas in Q decreased by USD 5.2 million or 31.3% versus pcp (USD 2.8 million or 16.8% lower excluding exchange rate movements, driven by the depreciation of Brazilian Real). In H1 2015, the Americas revenue was USD 10.6 million or 32.3% lower than H (USD 6.6 million or 20.2% excluding exchange rate movements). Our sales in Brazil continued to be negatively affected by the weak market conditions in both our tipper hydraulics and crane business and were partly compensated by good growth in North America compared to pcp. EMEA EMEA revenues decreased by USD 8.2 million or 11.9% in Q compared to Q However, excluding the impact of the sharp EUR depreciation against the USD, revenue in EMEA actually increased by USD 5.0 million or 7.3%. On a YTD basis, sales decreased by USD 13.8 million or 10.8% (USD 10.8 million or 8.5% increase excluding exchange rate movements). This good progress was mostly driven by the recovery observed in all our sub-regions, i.e. Western Europe, Eastern Europe (except Russia) and the Middle East. 10

12 3.2.3 Tax, Financing and Other Items Interest costs Interest costs mainly represent interest and amortisation expenses on the Notes of approximately USD 8.1 million and USD 0.9 million, respectively, per quarter. Other finance expense net Other finance expense for Q mainly represents realised and unrealised foreign exchange losses and gains of USD 0.5 million and USD 0.4 million respectively, included of other financial expense amounted to USD 0.1 million. Income tax expense Our income tax expense decreased by 68.4% to USD 1.4 million in Q compared to USD 4.6 million in Q This decrease in tax charge is in line with the lower results before tax generated in Q compared to pcp in various tax paying countries. Currency translation differences Currency translation differences (as included in other comprehensive income) amount to a net positive impact of USD 5.0 million in Q mostly as a result of the Euro and Brazilian Real appreciation compared to Q Financial Condition Working Capital 1 Hyva s net working capital decreased by USD 4.3 million to USD 83.8 million as at 30 June 2015 (30 June 2014 : USD 88.1 million). The improvement of our working capital results from the combined effect of (1) decrease in inventory (USD 15.0 million) and trade and other receivables (USD 24.3 million) primarily caused by lower sales (mostly China, EMEA, Brazil and India), which were offset by (2) a decrease in creditors in all regions (USD 35.0 million ). 1 Working capital: inventories plus trade and other receivables (excluding interest related receivables) less current liabilities (excluding provisions, income tax payables, interest related payables and current debt items). 11

13 Cash and debt The table below sets forth the debt of Hyva as at 30 June 2015: Debt (consolidated) (Unaudited) As at As at 30 Jun Jun 2014 USD '000 USD '000 Non-current debt Interest bearing loans and borrowings * - 375,026 Financial lease liabilities 910 1,219 Other financial liabilities 585 1,387 1, ,632 Current debt Interest bearing loans and borrowings * 375, Financial lease liabilities Other financial liabilities ** 4,101 9, ,219 10,273 Guarantees Gross debt *** 380, ,011 Cash and cash equivalents (excl. bank overdrafts) (46,333) (79,143) Net debt 334, ,868 Gross leverage (Gross debt / Consolidated EBITDA ****) Net leverage (Net debt / Consolidated EBITDA ****) Notes: *: Total interest bearing loans and borrowings classified as current debt as at 30 June 2015 (non-current debt as at 30 June 2014) represent USD 375 million Notes issued by the Issuer. The amount in the balance sheet is net of the capitalised financing costs (USD 2.6 million as at 30 June 2015 and USD 6.2 million as at 30 June 2014). **: The USD 4.1 million Other financial liabilities are predominantly specific to customer payment agreements in India (USD 3.8 million as at 30 June 2015 and USD 9.5 million as at 30 June 2014). ***: Gross debt is calculated as per Section 1.01 Indenture dated as at March 24, ****: Consolidated EBITDA is calculated as per Section 1.01 Indenture dated as at March 24, 2011 and shown in Section 4 of this report. Cash and cash equivalents (excl. bank overdraft) totaled USD 46.3 million as at 30 June 2015, decreased from USD 79.1 million as at 30 June Cash generated during Q amounted to USD 6.0 million compared to USD 14.6 million pcp and is mainly driven by the cash flow from the operating activities. The Group does not meet the Leverage covenant provided in Revolving Credit Facility ( RCF ) as at 30 June 2015, and therefore currently RCF is not available. However, the Group has sufficient cash to operate the 2015 business plan and meet future needs without any utilization under the RCF. 12

14 Non-current liabilities Non-current liabilities mainly represent deferred tax liabilities (approximately USD 75.9 million) which mainly originate from the purchase price allocation (approximately USD 75.2 million). Current liabilities Borrowings mainly represent current portion of the Notes, net of capitalised financing costs (approximately USD million). 3.4 Liquidity and Capital Resources Capital Expenditure Q capex amounted to USD 1.3 million compared to USD 1.7 million pcp. We largely fund our capital expenditure and investments in property, plant and equipment through cash generated from operating activities. We intend to continue to fund our future investments from existing financial resources and cash generated from operations. H1 2014, net cash from investing activities amounted to a net positive amount of USD 0.7 million following the proceeds from the sale of a building in Holland. Net Cash from / (used in) Operating Activities Q cash from operating activities amounted to USD 10.6 million. Operating activities recorded a net cash inflow of USD 7.6 million after tax payments (USD 2.8 million) and net interest paid (USD 0.2 million). Net Cash from / (used in) Investing Activities Our net cash used in investing activities Q created an outflow of USD 1.3 million, primarily attributable to normal capital expenditures and investments in property, plant and equipment. Net Cash from / (used in) Financing Activities Our net cash used in financing activities created an outflow of USD 0.3 million in Q2 2015, compared to Q at similar level. Available liquidity The Issuer s available liquidity as at 30 June 2015 is USD 46.3 million. This provides the business with sufficient cash to meet operating requirements, debt service obligations under the Notes and budgeted capital expenditure and investments. 3.5 Outlook The outlook for the remainder of the year remains cautious especially given the subdued market conditions in China, Brazil and to a lesser extent India. Under such an uncertain macro-economic environment in some of our key markets, we remain very much focused on our plans to actively control costs and contain working capital levels. We have implemented various cost reductions programs that produce tangible results in H across a range of functions and regions and have additional cost savings targets for the rest of We also continue to focus on executing a range of initiatives to ensure Hyva is well positioned to drive growth when the trading environment in our main markets further improves. Key initiatives include (i) investing in R&D and NPI to develop the next generation of products, (ii) continuing to expand geographic coverage to growth regions, (iii) globalising Hyva s crane and waste handling business, with a particular focus on the emerging markets and (iv) leveraging Hyva s existing distribution network by exploring vertical and horizontal product expansion. 13

15 4. CERTAIN CALCULATIONS This section should be read in conjunction with the section titled Presentation of Financial Information and Use of Non-GAAP Financial Information in this Quarterly Report. In order to calculate Consolidated EBITDA, Consolidated Non-Guarantor EBITDA and Consolidated Interest Expense, this report includes financial information for the Issuer for the twelve months period ended 30 June Hyva Global B.V. (Unaudited) Twelve months period ended 30 Jun 2015 USD '000 Consolidated EBITDA 53,782 Consolidated Non-Guarantor EBITDA 35,776 Consolidated Interest Expense 32,702 Consolidated Non-Guarantor Debt 4,095 The following table below sets forth the reconciliation from Reported EBITDA to Consolidated EBITDA for the Pro forma twelve months period ended 30 June 2015: Hyva Global B.V. EBITDA calculation (Unaudited) Twelve months period ended 30 Jun 2015 USD '000 Reported EBITDA 43,494 Transaction related expenses - Pro forma EBITDA 43,494 Restructuring costs 1,741 Other adjustments 6,214 Adjusted EBITDA 51,449 Realised FX gains (1,197) Management fee 1,115 Interest income 1,052 Other adjustments 1,363 Consolidated EBITDA 53,782 14