OCI N.V.
Semi-annual condensed consolidated financial statements
For the six month period ended 30 June 2020
(unaudited)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
30 June | 31 December | ||
$ millions | Note | 2020 | 2019 |
Assets | |||
Non-current assets | |||
Property, plant and equipment | 6,357.4 | 6,570.6 | |
Right-of-use assets | 268.8 | 277.5 | |
Goodwill and other intangible assets | (8) | 484.0 | 599.8 |
Trade and other receivables | 4.1 | 4.1 | |
Equity-accounted investees | 476.8 | 506.9 | |
Financial assets at fair value through other comprehensive income | 29.4 | 33.4 | |
Deferred tax assets | 1.8 | 6.5 | |
Total non-current assets | 7,622.3 | 7,998.8 | |
Current assets | |||
Inventories | 244.2 | 308.7 | |
Trade and other receivables | 448.2 | 508.4 | |
Income tax receivables | 2.3 | 3.2 | |
Cash and cash equivalents | 645.1 | 600.5 | |
Total current assets | 1,339.8 | 1,420.8 | |
Total assets | 8,962.1 | 9,419.6 | |
OCI N.V. Semi-Annual Report 2020 2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED AS AT
30 June | 31 December | ||
$ millions | Note | 2020 | 2019 |
Equity | |||
Share capital | 5.6 | 5.6 | |
Share premium | 6,316.3 | 6,316.3 | |
Reserves | (253.1) | (237.8) | |
Retained earnings | (4,761.9) | (4,726.6) | |
Equity attributable to owners of the Company | 1,306.9 | 1,357.5 | |
Non-controlling interest | 1,433.1 | 1,461.2 | |
Total equity | 2,740.0 | 2,818.7 | |
Liabilities | |||
Non-current liabilities | |||
Loans and borrowings | (9) | 4,281.9 | 4,392.7 |
Lease obligations | 237.1 | 244.3 | |
Trade and other payables | 28.5 | 30.7 | |
Provisions | 2.9 | 2.8 | |
Deferred tax liabilities | 483.9 | 490.2 | |
Total non-current liabilities | 5,034.3 | 5,160.7 | |
Current liabilities | |||
Loans and borrowings | (9) | 202.9 | 269.6 |
Lease obligations | 40.7 | 41.0 | |
Trade and other payables | 810.4 | 991.3 | |
Provisions | 128.4 | 129.5 | |
Income tax payables | 5.4 | 8.8 | |
Total current liabilities | 1,187.8 | 1,440.2 | |
Total liabilities | 6,222.1 | 6,600.9 | |
Total equity and liabilities | 8,962.1 | 9,419.6 | |
The notes on pages 8 to 12 are an integral part of these condensed consolidated financial statements.
OCI N.V. Semi-Annual Report 2020 3
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Three month | Three month | Six month | Six month | ||
period ended | period ended | period ended | period ended | ||
$ millions | Note | 30 June 2020 | 30 June 2019 | 30 June 2020 | 30 June 2019 |
Revenue | (12) | 875.4 | 953.5 | 1,686.5 | 1,550.0 |
Cost of sales | (10) | (748.7) | (788.1) | (1,482.5) | (1,332.1) |
Gross profit | 126.7 | 165.4 | 204.0 | 217.9 | |
Other income | (0.4) | (0.5) | 13.4 | 2.8 | |
Selling, general and administrative expenses | (10) | (52.1) | (51.9) | (109.2) | (98.5) |
Other expenses | (0.3) | (2.9) | (0.3) | (3.2) | |
Operating profit | 73.9 | 110.1 | 107.9 | 119.0 | |
Finance income | (11) | (4.1) | (2.1) | 31.9 | 17.1 |
Finance cost | (11) | (41.7) | (64.2) | (142.7) | (174.9) |
Net finance cost | (11) | (45.8) | (66.3) | (110.8) | (157.8) |
Income from equity-accounted investees (net of tax) | (20.1) | 1.8 | (27.4) | (7.9) | |
Profit / (loss) before income tax | 8.0 | 45.6 | (30.3) | (46.7) | |
Income tax | (6.2) | (6.0) | (3.4) | 4.1 | |
Total net profit / (loss) | 1.8 | 39.6 | (33.7) | (42.6) | |
Other comprehensive income: | |||||
Items that are or may be reclassified subsequently to profit or loss | |||||
Movement in hedge reserve | 0.8 | (18.2) | 0.6 | (18.6) | |
Currency translation differences | (50.0) | (16.6) | (47.6) | (4.7) | |
Currency translation differences from equity-accounted investees | (0.2) | 0.1 | (0.5) | (0.1) | |
Items that will not be reclassified to profit or loss | |||||
Changes in the fair value of financial assets at fair value through other comprehensive income | (1.1) | (4.4) | (3.5) | (4.4) | |
Other comprehensive income, net of tax | (50.5) | (39.1) | (51.0) | (27.8) | |
Total comprehensive income | (48.7) | 0.5 | (84.7) | (70.4) | |
Profit / (loss) attributable to: | |||||
Owners of the Company | (2.4) | 19.9 | (83.8) | (61.3) | |
Non-controlling interest | 4.2 | 19.7 | 50.1 | 18.7 | |
Net profit / (loss) | 1.8 | 39.6 | (33.7) | (42.6) | |
Total comprehensive income attributable to: | |||||
Owners of the Company | (37.7) | (19.2) | (102.7) | (85.5) | |
Non-controlling interest | (11.0) | 19.7 | 18.0 | 15.1 | |
Total comprehensive income | (48.7) | 0.5 | (84.7) | (70.4) | |
(Loss) / earnings per share (in USD) | |||||
Basic (loss) / earnings per share | (0.011) | 0.095 | (0.400) | (0.293) | |
Diluted (loss) / earnings per share | (0.011) | 0.095 | (0.400) | (0.293) |
The notes on pages 8 to 12 are an integral part of these condensed consolidated financial statements. | OCI N.V. Semi-Annual Report 2020 4 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable | |||||||
Retained | to owners of the | Non-controlling | Total | ||||
$ millions | Share capital | Share premium | Reserves | earnings | Company | interest | equity |
Balance at 1 January 2019 | 5.6 | 6,316.3 | (249.0) | (5,065.6) | 1,007.3 | 469.8 | 1,477.1 |
Net profit / (loss) | - | - | - | (61.3) | (61.3) | 18.7 | (42.6) |
Other comprehensive income | - | - | (24.2) | - | (24.2) | (3.6) | (27.8) |
Total comprehensive income | - | - | (24.2) | (61.3) | (85.5) | 15.1 | (70.4) |
Impact difference in profit sharing non-controlling interest | - | - | - | - | - | 5.2 | 5.2 |
Dividend to non-controlling interest | - | - | - | - | - | (6.1) | (6.1) |
Treasury shares sold / delivered | - | - | 3.9 | (1.6) | 2.3 | - | 2.3 |
Share-based payments | - | - | - | 2.8 | 2.8 | - | 2.8 |
Balance at 30 June 2019 | 5.6 | 6,316.3 | (269.3) | (5,125.7) | 926.9 | 484.0 | 1,410.9 |
Balance at 1 January 2020 | 5.6 | 6,316.3 | (237.8) | (4,726.6) | 1,357.5 | 1,461.2 | 2,818.7 |
Net profit / (loss) | - | - | - | (83.8) | (83.8) | 50.1 | (33.7) |
Other comprehensive income | - | - | (18.9) | - | (18.9) | (32.1) | (51.0) |
Total comprehensive income | - | - | (18.9) | (83.8) | (102.7) | 18.0 | (84.7) |
Impact difference in profit sharing non-controlling interest | - | - | - | - | - | 13.5 | 13.5 |
Treasury shares sold / delivered | - | - | 3.6 | (3.6) | - | - | - |
Business combination Fertiglobe | - | - | - | 48.3 | 48.3 | (59.6) | (11.3) |
Share-based payments | - | - | - | 3.8 | 3.8 | - | 3.8 |
Balance at 30 June 2020 | 5.6 | 6,316.3 | (253.1) | (4,761.9) | 1,306.9 | 1,433.1 | 2,740.0 |
The notes on pages 8 to 12 are an integral part of these condensed consolidated financial statements.
OCI N.V. Semi-Annual Report 2020 5
CONSOLIDATED STATEMENT OF CASH FLOWS
Three month | Three month | Six month | Six month | ||
period ended | period ended | period ended | period ended | ||
$ millions | Note | 30 June 2020 | 30 June 2019 | 30 June 2020 | 30 June 2019 |
Net profit / (loss) | 1.8 | 39.6 | (33.7) | (42.6) | |
Adjustments for: | |||||
Depreciation and amortization | 147.5 | 111.5 | 289.6 | 224.8 | |
Interest income | (1.0) | (1.4) | (2.6) | (3.1) | |
Interest expense | 71.5 | 71.0 | 123.5 | 150.4 | |
Net foreign exchange loss and others | (24.7) | (3.3) | (10.1) | 10.5 | |
Share in income of equity-accounted investees | 20.1 | (1.8) | 27.4 | 7.9 | |
Fertiglobe business combination | - | - | (13.3) | - | |
Equity-settledshare-based payment transactions | 2.1 | 4.2 | 3.8 | 5.1 | |
Impact difference in profit-sharingnon-controlling interest | 2.8 | 5.4 | 13.5 | 5.2 | |
Income tax expense | 6.2 | 6.0 | 3.4 | (4.1) | |
Changes in: | |||||
Inventories | 68.0 | 121.5 | 59.4 | (10.3) | |
Trade and other receivables | 132.0 | (46.5) | 25.4 | 85.5 | |
Trade and other payables | (74.0) | 13.2 | (81.2) | (55.3) | |
Provisions | 1.4 | 1.4 | 0.5 | 2.2 | |
Cash flows: | |||||
Interest paid | (115.7) | (103.9) | (156.5) | (151.9) | |
Interest received | 0.4 | 0.8 | 1.6 | 2.0 | |
Income taxes paid | (2.1) | (39.5) | (7.4) | (40.0) | |
Cash flow from / (used in) operating activities | 236.3 | 178.2 | 243.3 | 186.3 | |
Investments in property, plant and equipment | (68.1) | (48.7) | (163.8) | (108.4) | |
Dividends from equity-accounted investees | 2.6 | 1.4 | 2.6 | 1.6 | |
Cash flow from / (used in) investing activities | (65.5) | (47.3) | (161.2) | (106.8) |
OCI N.V. Semi-Annual Report 2020 6
CONSOLIDATED STATEMENT OF CASH FLOWS CONTINUED
Three month | Three month | Six month | Six month | ||
period ended | period ended | period ended | period ended | ||
$ millions | Note | 30 June 2020 | 30 June 2019 | 30 June 2020 | 30 June 2019 |
Proceeds from borrowings | 48.0 | 12.2 | 512.3 | 219.7 | |
Repayment of borrowings | (521.7) | (168.5) | (660.4) | (264.9) | |
Payment of lease obligations | (15.2) | (6.7) | (24.1) | (14.4) | |
Transaction costs | (2.0) | (2.0) | (5.6) | (2.0) | |
Post closing adjustment Fertiglobe | - | - | 166.8 | - | |
Cash flows from / (used in) financing activities | (490.9) | (165.0) | (11.0) | (61.6) | |
Net cash flows from / (used in) | (320.1) | (34.1) | 71.1 | 17.9 | |
Net increase / (decrease) in cash and cash equivalents | (320.1) | (34.1) | 71.1 | 17.9 | |
Cash and cash equivalents at start of period | 974.5 | 509.7 | 600.5 | 460.7 | |
Effect of exchange rate fluctuations on cash held | (9.3) | 1.9 | (26.5) | (1.1) | |
Cash and cash equivalents at 30 June | 645.1 | 477.5 | 645.1 | 477.5 |
The notes on pages 8 to 12 are an integral part of these condensed consolidated financial statements.
OCI N.V. Semi-Annual Report 2020 7
NOTES TO THE SEMI-ANNUAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE
1. General
OCI N.V. ('OCI' or 'Company') was established on 2 January 2013 as a public limited liability company incorporated under Dutch law, with its head office located at Honthorststraat 19, Amsterdam, the Netherlands. OCI is registered in the Dutch commercial register under no. 56821166 dated 2 January 2013. The quarterly condensed consolidated financial statements comprise the financial statements of the Company, its subsidiaries (together referred to as the 'Group') and the Group's interests in associates and joint ventures.
The Group is primarily involved in the production of natural gas-based products.
2. Basis of preparation
2.1 General
The semi-annual condensed consolidated financial statements for the period ended 30 June 2020 have been prepared in accordance with IAS 34 'Interim Financial Reporting' and do not include all the information and disclosures required in the annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2019. The semi-annual condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2019 which have been prepared in accordance with IFRS, as adopted by the European Union.
2.2 Fertiglobe business combination
On 30 September 2019, the Group and Abu Dhabi National Oil Company ("ADNOC") completed a transaction to combine ADNOC's fertilizer business into OCI's Middle East and North Africa ("OCI MENA") nitrogen fertilizer platform.
As part of the transaction, Fertiglobe, a subsidiary of the Group obtained OCI MENA under common control and 100% of the voting powers and economic returns from Ruwais Fertilizer Industries Ltd. ("Fertil"), a previously wholly owned subsidiary of ADNOC ('Combination'). Fertil has been consolidated by the Group from 30 September 2019. Fertil is based out of the Emirate of Abu Dhabi, United Arab Emirates and is engaged in processing feedstock gas to produce nitrogen fertilizers. In exchange, the Group transferred 42% of the total share capital of Fertiglobe to ADNOC. With the acquisition of Fertil, Fertiglobe will become the largest producer of nitrogen fertilizers in the MENA region.
The accounting for this business combination has been disclosed in our 2019 consolidated financial statements. As previously disclosed the accounting for this business combination at the end of 2019 was still provisional in respect of the accounting for the net debt settlement ('post-closing adjustment'). On 31 March 2020 the Company signed a final settlement with ADNOC for the post-closing adjustment which is considered to be an adjustment to the consideration transferred in this transaction. In our
2019 consolidated financial statements a settlement receivable was included of USD 49.7 million (which represented the uncontested amount at the time). In the final settlement a compensation of USD 178.0 million has been agreed with ADNOC as post-closing adjustment (of which USD 166.8 million was received in cash).
The measurement period adjustments recognized, compared to the 2019 consolidated financial statements, resulted in a decrease of goodwill (USD 115.1 million), trade and other receivables (USD
49.7 million) and non-controlling interest (USD 11.3 million) and an increase of cash (USD 166.8 million), which resulted in the identification of a gain on this transaction of USD 13.3 million.
Goodwill arising from the business combination has been recognized as follows:
$ millions
Consideration transferred | 1,057.5 |
NCI, based on their proportionate interest in the recognized amounts of the assets and | |
liabilities | 710.6 |
Fair value of identifiable net assets | (1,603.4) |
Additional consideration received | (178.0) |
Gain on transaction* | (13.3) |
- Due to the final post-completion settlement between the Company and ADNOC, the total consideration transferred (USD1,590.1m) is less than the fair value of the identifiable net assets (USD1,603.4m), resulting in a gain on purchase of USD13.3m which is recorded in the profit or loss.
2.3 Covid-19 impact
The outbreak of Covid-19 continues to impact the global economy and markets. Due to its pivotal role in the global food production, our business operations have been designated in all jurisdictions where we produce as critical infrastructure by the respective governments and all our product are deemed as essential by governments to ensure uninterrupted supply of goods and other essential products. At this time, the impact of the outbreak on our business has been limited as production at our plants is uninterrupted, and we have not witnessed significant changes in demand and have continued to ship products to our customers without experiencing any significant delay in ship, rail or truck transportation services due to the Covid-19. We noted decreasing selling prices for all our products over the course of the second quarter of 2020. As global energy prices plummeted, driving higher global operating rates and resulting in additional supply. Although based on the recent market recovery, we expect this will not impact the long term outlook of our business and the valuation of our assets.
We established an internal Covid-19 taskforce, to ensure safety of our employees and business continuity. OCI applied strict protective measures, including sanitation, personal protection equipment, social distancing and thermal testing prior to accessing any group locations and the status of returning to workplace differs per jurisdiction. Currently the majority of the locations are now at 50%-70% employee occupancy rates. As our plants are heavily automated, essential on-site operating and logistics personnel can be limited and administrative and operational support personnel have worked remotely in order to maintain social distancing following governmental guidelines.
OCI N.V. Semi-Annual Report 2020 8
NOTES TO THE SEMI-ANNUAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE CONTINUED
Although the long term effects of Covid-19 are still unclear, our current outlook is that our financial and operating performance remains solid. We have operated our business in a remote working environment and could continue to do so for an extended period, if necessary. Developments in each jurisdiction are being closely monitored and protocols are flexible to allow for rapid adjustments as needed, particularly given the risk of a second wave at many of our jurisdictions. The impressive resilience of our staff throughout the period gives all local management teams confidence to revert to a work-from-home policy again, if their locations face a second wave without interruptions to our operations and supply chain.
3. Summary of significant accounting policies
The accounting policies applied over the six month period ended 30 June 2020 are consistent with those applied in the consolidated financial statements for the year ended 31 December 2019. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
IFRS standards and interpretations thereof not yet in force which may apply to the future Group's consolidated financial statements are being assessed for their potential impact. Currently there are no standards and interpretations not yet effective that would have a significant impact on the Group.
4. Seasonality of operations
Our product portfolio is diversified primarily by industry and geography. The nitrogen fertilizer industry is inherently dependent on fundamental supply and demand drivers, including global population growth, crop yields, feedstock costs, and seasonality of crop planting and harvesting seasons. These and other long-term and short-term drivers result in cyclical nitrogen fertilizer pricing trends. Supply and demand dynamics in the industrial chemicals industries in which we operate, including industrial ammonia, methanol, and melamine, are more evenly distributed throughout the year, thereby contributing to stability in sales volumes. The global sales and diversified product mix - both as fertilizers and chemical products - mitigate the impact of any one product or region's seasonal fluctuations.
5. Critical accounting judgment, estimates and assumptions
The preparation of the financial statements in compliance with IFRS requires management to make judgements, estimates and assumptions that affect amounts reported in the condensed consolidated financial statements. The estimates and assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances and are used to judge the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised or in the revision period and future periods, if the changed estimates affect both current and future periods.
Compared to the consolidated financial statements for the year ended 31 December 2019 there were no significant changes to the critical accounting judgements, estimates and assumptions that could result in significantly different amounts than those recognized in the financial statements. As a result of the outbreak of Covid-19 in 2020, all our critical accounting judgments, estimates and assumptions
have been reviewed and updated when necessary following this situation.
With respect to financial instruments, there has not been any reclassification between categories of financial instruments compared to the consolidated financial statements for the year ended 31 December 2019. The objectives and policies of financial risk and capital management are consistent with those disclosed in the consolidated financial statements for the year ended 31 December 2019.
6. Significant rates
The following significant exchange rates applied during the period:
Average during the | Average during the | |||
six month period | six month period | Closing as at | Closing as at 31 | |
ended 30 June 2020 | ended 30 June 2019 | 30 June 2020 | December 2019 | |
Euro | 1.1019 | 1.1317 | 1.1243 | 1.1213 |
Egyptian pound | 0.0632 | 0.0579 | 0.0619 | 0.0623 |
Algerian dinar | 0.0081 | 0.0084 | 0.0077 | 0.0084 |
7. Financial risk and capital management
7.1 Financial risk management Categories of financial instruments:
Loans and | Financial assets | ||
30 June 2020 | receivables / | through other | |
payables at | Derivatives | comprehensive income | |
$ millions | amortized cost | at fair value | at fair value |
Assets | |||
Trade and other receivables | 445.4 | 6.9 | - |
Financial assets at fair value through | |||
other comprehensive income | - | - | 29.4 |
Cash and cash equivalents | 645.1 | - | - |
Total | 1,090.5 | 6.9 | 29.4 |
Liabilities | |||
Loans and borrowings | 4,484.8 | - | - |
Trade and other payables | 821.2 | 17.7 | - |
Total | 5,306.0 | 17.7 | - |
OCI N.V. Semi-Annual Report 2020 9
NOTES TO THE SEMI-ANNUAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE CONTINUED
Financial assets | |||
Loans and | through other | ||
31 December 2019 | receivables / | comprehensive | |
payables at | Derivatives | income at fair | |
$ millions | amortized cost | at fair value | value |
Assets | |||
Trade and other receivables | 507.5 | 5.0 | - |
Financial assets at fair value through | |||
other comprehensive income | - | - | 33.4 |
Cash and cash equivalents | 600.5 | - | - |
Total | 1,108.0 | 5.0 | 33.4 |
Liabilities | |||
Loans and borrowings | 4,662.3 | - | - |
Trade and other payables | 1,004.4 | 17.6 | - |
Total | 5,666.7 | 17.6 | - |
The Group has limited financial instruments carried at fair value. For derivative financial instruments, the fair value is calculated within hierarchy category level 2. Financial assets at fair value through other comprehensive income recognized as level 1 is USD 2.9 million (2019: USD 3.4 million), the investment in the Infrastructure and Growth Capital Fund of USD 4.7 million (2019: USD 6.8 million) was recognized as level 2 as the valuation is partially derived from listed shares. The investment in Notore Chemical of USD 21.8 million (2019: USD 23.2 million) is recognized as level 3.
Notore was listed on the Nigerian Stock Exchange in 2018, however due to the lack in trading volumes the investment is still valued within the hierarchy category level 3 based on audited financial statements.
In 2020 and 2019, there were no transfers between the fair value hierarchy categories. The carrying amounts of financial assets and liabilities carried at amortized cost (loans and borrowings, trade and other receivables and trade and other payables) approximates their fair values.
7.2 Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares, retained earnings and non-controlling interest of the Group. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders. The Group is required by external financial institutions to maintain certain capital requirements compared to its debt.
The Group's net debt to equity ratio at the reporting date was as follows:
30 June | 31 December | |
$ millions | 2020 | 2019 |
Loans and borrowings | 4,484.8 | 4,662.3 |
Less: cash and cash equivalents | 645.1 | 600.5 |
Net debt | 3,839.7 | 4,061.8 |
Total equity | 2,740.0 | 2,818.7 |
Net debt to equity ratio at | 1.40 | 1.44 |
8. Goodwill and other intangible assets
No impairment test was performed on goodwill in the period, as no impairment triggers were identified. The annual goodwill impairment test will be performed in the fourth quarter.
9. | Loans and borrowings | ||
30 June | 31 December | ||
$ millions | 2020 | 2019 | |
At 1 January | 4,662.3 | 4,580.3 | |
Proceeds from loans | 512.3 | 1,765.5 | |
Redemptions of loans | (660.4) | (1,654.4) | |
Newly incurred transaction costs | - | (24.1) | |
Amortization of transaction costs / (bond) premiums | 8.5 | 25.6 | |
Effect of movement in exchange rates | (37.9) | (24.4) | |
Debt modification gain | - | (6.2) | |
Balance at | 4,484.8 | 4,662.3 | |
Non-current | 4,281.9 | 4,392.7 | |
Current | 202.9 | 269.6 | |
Total | 4,484.8 | 4,662.3 |
The effect of movement in exchange rate mainly relates to EUR and DZD denominated loans, which are different from the Group's presentation currency.
New and amended financing arrangements in Q2 2020 There are no new or amended financing arrengements.
Covenants
Certain loan agreements include financial covenants. As per 30 June 2020 all financial covenants were met. In the event the respective borrowing company's would not comply with the covenant requirements, its loans would become immediately due. The external borrowings include change in control clauses that enable the lenders to call the financing provided.
OCI N.V. Semi-Annual Report 2020 10
NOTES TO THE SEMI-ANNUAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE CONTINUED
10. Development of cost of sales and selling, general and administrative expenses
Expenses by nature
30 June | 30 June | |
$ millions | 2020 | 2019 |
Raw materials and consumables and finished goods | 1,022.3 | 977.7 |
Maintenance and repair | 56.3 | 52.5 |
Employee benefit expenses | 177.5 | 129.3 |
Depreciation and amortization | 289.6 | 224.8 |
Consultancy expenses | 15.3 | 13.3 |
Other | 30.7 | 33.0 |
Total | 1,591.7 | 1,430.6 |
Cost of sales | 1,482.5 | 1,332.1 |
Selling, general and administrative expenses | 109.2 | 98.5 |
Total | 1,591.7 | 1,430.6 |
11. Net finance cost
30 June | 30 June | |
$ millions | 2020 | 2019 |
Interest income on loans and receivables | 2.6 | 3.1 |
Foreign exchange gain | 29.3 | 14.0 |
Finance income | 31.9 | 17.1 |
Interest expense and other financing costs on financial liabilities measured | ||
at amortized cost | (118.3) | (147.9) |
Interest expense lease liabilities (IFRS 16) | (5.2) | (2.4) |
Foreign exchange loss | (19.2) | (24.6) |
Finance cost | (142.7) | (174.9) |
Net finance cost recognized in profit or loss | (110.8) | (157.8) |
The foreign exchange gains and losses mainly relate to external financing and to the revaluation of intercompany balances in foreign currencies (for which the statement of profit or loss impact is not eliminated in the consolidated financial statements).
12. Segment reporting
30 June 2020 | Methanol | Methanol | Nitrogen | Nitrogen | ||||
$ millions | US1 | Europe | US | Europe | Fertiglobe | Other | Eliminations | Total |
Total revenues | 227.9 | 130.8 | 284.0 | 392.3 | 737.5 | 0.7 | (86.7) | 1,686.5 |
EBITDA2 | 52.6 | 7.8 | 99.2 | 78.9 | 205.6 | (19.5) | (27.1) | 397.5 |
Adjusted EBITDA2 | 50.2 | 7.8 | 99.2 | 78.9 | 209.1 | (30.2) | (2.5) | 412.5 |
Income from equity- | - | - | - | 2.0 | - | 0.6 | (30.0) | (27.4) |
accounted investees | ||||||||
Depreciation and | (70.0) | (12.4) | (70.3) | (39.5) | (133.6) | (2.0) | 38.2 | (289.6) |
amortization | ||||||||
Finance income | 0.4 | - | 0.2 | 4.2 | 21.7 | 61.3 | (55.9) | 31.9 |
Finance expense | (17.7) | (1.8) | (63.7) | (5.2) | (37.8) | (88.9) | 72.4 | (142.7) |
Income tax | 1.2 | (0.1) | (0.1) | (10.4) | (11.5) | 17.5 | - | (3.4) |
(expense) / income | ||||||||
Net profit / (loss) | (33.5) | (6.5) | (34.7) | 30.0 | 44.4 | (31.0) | (2.4) | (33.7) |
Equity-accounted | - | - | - | 14.5 | - | 0.5 | 461.8 | 476.8 |
investees | ||||||||
Capital expenditures | 46.0 | 30.8 | 1.6 | 31.6 | 24.3 | 0.3 | (5.6) | 129.0 |
PP&E | ||||||||
Total assets | 1,551.9 | 385.0 | 2,166.7 | 678.5 | 4,616.7 | 132.5 | (569.2) | 8,962.1 |
- Including ammonia at OCIB
- OCI N.V. uses Alternative Performance Measures ('APM') to provide a better understanding of the underlying developments of the performance of the business. The APMs are not defined in IFRS and should be used as supplementary information in conjunction with the most directly comparable IFRS measures.
OCI N.V. Semi-Annual Report 2020 11
NOTES TO THE SEMI-ANNUAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE CONTINUED
12. Segment reporting (continued)
13. | Contingencies | ||||||||||
There have been no significant changes in contingencies compared to the situation as described in the | |||||||||||
30 June 2019 | Methanol | Methanol | Nitrogen | Nitrogen | |||||||
consolidated financial statements for the year ended 31 December 2019. | |||||||||||
$ millions | US1 | Europe | US | Europe | Fertiglobe | Other | Eliminations | Total | |||
14. | Subsequent events | ||||||||||
Total revenues | 297.6 | 122.9 | 302.2 | 466.4 | 467.0 | - | (106.1) | 1,550.0 | |||
None. | |||||||||||
EBITDA2 | 64.1 | (7.0) | 127.2 | 77.9 | 167.6 | (44.6) | (41.4) | 343.8 | |||
Adjusted EBITDA2 | 72.4 | (6.0) | 127.2 | 79.8 | 167.6 | (35.4) | (1.2) | 404.4 | |||
Income from equity- | (0.7) | - | - | 2.6 | - | - | (9.8) | (7.9) | |||
accounted investees | |||||||||||
Depreciation and | (63.2) | (5.2) | (66.3) | (33.8) | (87.6) | (2.2) | 33.5 | (224.8) | |||
amortization | |||||||||||
Finance income | 0.2 | - | 0.4 | 2.0 | 7.6 | 64.7 | (57.8) | 17.1 | |||
Finance expense | (35.3) | 0.3 | (54.7) | (3.9) | (81.3) | (76.3) | 76.3 | (174.9) | |||
Income tax income / | 0.4 | (1.1) | (0.8) | (11.0) | (5.2) | 21.8 | - | 4.1 | |||
(expense) | |||||||||||
Net (loss) / profit | (34.5) | (13.0) | 5.8 | 33.8 | 1.1 | (36.6) | 0.8 | (42.6) | |||
Equity-accounted | - | - | - | 14.6 | - | 0.7 | 540.4 | 555.7 | |||
investees | |||||||||||
Capital expenditures | 12.1 | 46.5 | 9.5 | 47.7 | 6.4 | 0.6 | (1.0) | 121.8 | |||
PP&E | |||||||||||
Total assets | 1,738.4 | 366.3 | 2,293.5 | 703.4 | 2,753.0 | 105.5 | (627.5) | 7,332.6 |
- Including ammonia at OCIB
- OCI N.V. uses Alternative Performance Measures ('APM') to provide a better understanding of the underlying developments of the performance of the business. The APMs are not defined in IFRS and should be used as supplementary information in conjunction with the most directly comparable IFRS measures.
Until 2019 OCI Fuels Ltd. was included in segment Methanol US. Effective 1 January 2020, OCI Fuels Ltd. will be combined with OCI Fuels B.V. in the segment Methanol Europe. The comparative numbers of 2019 are restated to reflect that change.
OCI N.V. Semi-Annual Report 2020 12
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OCI NV published this content on 27 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 August 2020 09:37:21 UTC