FORACO INTERNATIONAL S.A.

Unaudited Condensed Interim Consolidated Financial Statements

Three‐month and nine‐month periods ended

September 30, 2023

1

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

Table of Contents

Unaudited condensed interim consolidated balance sheet ‐ Assets

3

Unaudited condensed interim consolidated balance sheet - Equity and Liabilities

4

Unaudited condensed interim consolidated income statement

5

Unaudited condensed interim consolidated statement of changes in equity

6

Selected notes to the unaudited condensed interim consolidated financial statements

8

1.

Basis of preparation

8

2.

Selected notes on critical accounting policies and new accounting pronouncements

8

3.

Financial risk management

10

4.

Segment information

10

5.

Property, plant and equipment

12

6.

Goodwill

12

7.

Inventories

13

8.

Financial debt and lease obligations

13

9.

Provisions

14

10. Share capital and change in equity

14

11.

Expenses by nature

15

12.

Income tax expense

15

13.

Commitments and contingencies

15

14.

Related‐party transactions

16

15. Earnings per share calculation

16

16. Post balance sheet events

16

2

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

Unaudited condensed interim consolidated balance sheet ‐ Assets

in thousands of US$

Note

September 30,

December 31,

2023

2022

ASSETS

Non‐current assets

Property, plant and equipment

(5)

48,719

39,536

Goodwill

(6)

63,407

64,055

Deferred income tax assets

15,084

18,791

Other non‐current assets

956

1,053

128,166

123,435

Current assets

Inventories, net

(7)

46,226

44,030

Trade receivables, net

64,024

42,439

Other current assets

12,738

10,232

Cash and cash equivalents

25,640

29,409

148,628

126,110

Total assets

276,793

249,545

3

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

Unaudited condensed interim consolidated balance sheet - Equity and Liabilities

September

December 31,

in thousands of US$

Note

30,

2022

2023

EQUITY

Capital and reserves attributable to the Company's

equity holders

Share capital

2,499

2,499

Share premium, reserves and retained earnings

80,589

62,688

83,088

65,187

Non‐controlling interests

11,791

10,305

Total equity

94,878

75,492

LIABILITIES

Non‐current liabilities

Borrowings ‐ Non‐current portion of long‐term debt

(8)

76,714

84,771

Lease obligations - Non current portion

(8)

3,816

3,276

Deferred income tax liabilities

2,378

2,292

Provisions for other liabilities and charges

(9)

724

563

Current liabilities

Trade payables

31,658

28,717

Other payables

37,031

30,243

Current income tax liabilities

4,807

6,524

Borrowings ‐ Current portion of long‐term debt

(8)

13,936

13,166

Borrowings ‐ Current portion of drawn credit lines

(8)

8,089

2,323

Lease obligations ‐ Current portion

(8)

2,607

2,032

Provisions for other liabilities and charges

(9)

157

144

Total liabilities

181,915

174,053

Total equity and liabilities

276,793

249,545

Net debt including operating lease obligations under IFRS 16

79,522

76,161

Net debt including operating lease obligations is a non IFRS measure and corresponds to the current and non‐ current portion of borrowings, net of cash and cash equivalents

4

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

Unaudited condensed interim consolidated income statement

In thousands of US$

Three‐month period ended

September 30,

Note

2023

2022

Revenue

(4)

95,060

91,414

Cost of sales

(11)

(68,197)

(66,968)

Gross profit

26,863

24,446

Selling, general and administrative expenses

(11)

(6,694)

(6,290)

Other operating income / (expense), net

‐

‐

Operating profit

20,169

18,156

Finance costs

(3,572)

(2,923)

Profit before income tax

16,597

15,233

Income tax (expense) / profit

(12)

(4,231)

(4,082)

Net profit for the period

12,366

11,151

Attributable to:

Equity holders of the Company

10,848

8,351

Non‐controlling interests

1,518

2,800

Earnings per share for profit attributable to the equity holders of the

Company during the period (expressed in US cents per share):

‐ basic

(15)

11.00

8.46

‐ diluted

(15)

10.77

8.25

Operating profit before depreciation, amortization and non‐cash

25,002

23,024

share based compensation expenses

Nine‐month period ended

September 30,

2023

2022

283,503

245,652

(209,559)

(192,859)

73,944

52,793

(20,705)

(18,411)

‐

‐

53,239

34,382

(10,623)

(8,277)

42,616

26,105

(11,195)

(7,013)

31,421

19,093

26,298

13,238

5,123

5,855

26.61 13.41

26.05 13.07

67,945 49,417

5

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

Unaudited condensed interim consolidated statement of changes in equity

Attributable to equity holders of the

Non‐

Total

Share

Share

Total

controlling

Equity

in thousands of US$

Capital

Premium and

interests

Retained

Earnings

Balance at January 1, 2022

2,499

53,480

55,979

6,549

62,528

Profi t / (loss) for the period

‐

13,238

13,238

5,855

19,092

Currency translation differences

‐

(10,977)

(10,977)

1,111

(9,866)

Employee share‐based compensation

‐

240

240

‐

240

Treasury shares purchased (see Note 10)

‐

(927)

(927)

‐

(927)

Dividend paid to non controlling interests

‐

‐

‐

(1,098)

(1,098)

Balance at September 30, 2022

2,499

55,054

57,553

12,417

69,970

Balance at January 1, 2023

2,499

62,688

65,187

10,305

75,492

Profit / (loss) for the period

‐

26,298

26,298

5,123

31,421

Currency translation differences

‐

(7,571)

(7,571)

(993)

(8,564)

Employee share‐based compensation

‐

270

270

‐

270

Treasury shares purchased (see Note 10)

‐

(1,097)

(1,097)

‐

(1,097)

Dividend paid to non controlling interests

‐

‐

‐

(2,644)

(2,644)

Balance at September 30, 2023

2,499

80,589

83,088

11,791

94,878

Unaudited statement of comprehensive income

in thousands of US$

Net profit / (loss) for the period Currency translation differences

Total comprehensive profit for the period

Attributable to:

Equity holders of the Company

Non‐controlling interests

September 30,

September 30,

2023

2022

31,421

19,092

(8,564)

(9,866)

22,857

9,226

18,727

2,260

4,130

6,966

6

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

Unaudited condensed interim consolidated cash flow statement

in thousands of US$

Nine‐month ended September 30,

2023

2022

Profit for the period

31,421

19,092

Adjus tments for:

‐ Depreciation, amortization and impairment (see Note 11)

14,435

14,795

‐ Share‐based compensation expenses (see Note 11)

270

240

‐ Income tax expenses / (profit) (see Note 12)

11,195

7,013

‐ Finance costs, net

10,623

8,277

Cash generated from operations before changes in operating assets

and liabilities

67,945

49,417

Changes in operating assets and liabilities:

‐ Inventories

(3,796)

(6,822)

‐ Trade accounts receivable and other receivables

(26,427)

(18,274)

‐ Trade accounts payable and other payables

7,207

6,569

Cash generated from / (used in) operations

44,930

30,890

‐ Interest paid, net

(10,435)

(7,097)

‐ Income tax paid

(9,601)

(5,685)

Net cash flow from / (used in) operating activities

24,894

18,108

Purchase of property, plant and equipment (*)

(20,719)

(14,096)

Net cash generated from / (used in) investing activities

(20,719)

(14,096)

Proceeds from issuance of borrowings, net of issuance costs

2,635

‐

Repayment of Bonds

(10,000)

(5,000)

Repayments of borrowings

(1,396)

(953)

Repayments of lease obligations

(1,920)

(1,880)

Proceeds from / (repayment of) short term credit facilities

5,786

10,188

Acquisition of treasury shares (see Note 10)

(1,097)

(927)

Dividends paid to non‐controlling interests

(1,098)

(1,098)

Net cash generated from / (used in) financing activities

(7,090)

330

Exchange differences on cash and cash equivalents

(854)

(635)

Net increase / (decrease) in cash and cash equivalents

(3,769)

3,708

Cash and cash equivalents at beginning of the period

29,408

23,924

Cash and cash equivalents at end of the period

25,640

27,631

(*) Excluding acquisition financed through leases

3,067

927

7

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

Selected notes to the unaudited condensed interim consolidated financial statements

1. Basis of preparation

These unaudited condensed interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting. All material intercompany balances have been eliminated. Due to the fact that all the disclosures required by IFRS are not included, these interim statements should be read in conjunction with the audited financial statements of Foraco International S.A. and its subsidiaries ("Foraco" or the "Company") for the year ended December 31, 2022.

Except when otherwise stated, all amounts are presented in thousands of US$, which is the presentation currency of the Company.

2. Selected notes on critical accounting policies and new accounting pronouncements

2.1. Accounting policies

The accounting policies have been consistently applied with those of the annual financial statements for the year ended December 31, 2022 except for the following: during the year, the income tax expense is recognized based on Management's best estimate of the average annual income tax rate expected for the full financial year on a tax jurisdiction by tax jurisdiction basis. In the last quarter of each fiscal year, Management determines the effective income tax rate for the full year based on the anticipated actual tax returns to be filed and the effective contribution of each tax jurisdiction to the consolidated financial statements.

2.2. Seasonal fluctuations

The worldwide presence of the Company reduces its overall exposure to seasonality and its influence on business activity. In West Africa, most of the Company's operations are suspended between July and October due to the rainy season. In Canada, seasonal slow periods occur during the winter freeze and spring thaw or break‐up periods. Depending on the latitude, this can occur anytime from October until late December (freezing) and from mid‐April through to mid‐June (break‐up). Operations at mining sites continue throughout the year. CIS is also affected by the winter period during which certain operations are slowed down. In Asia Pacific and in South America, a seasonal slowdown in activity occurs around year‐end during the vacation period. Certain contracts are also affected in Chile in July and August when the winter season peaks.

2.3. Sale of the Company's Russian subsidiary

On April 5, 2023, the Company entered into a preliminary agreement to sell its 50% stake in Eastern Drilling Company (EDC) to its Russian partners. The execution of this agreement, which is anticipated to occur in Q4 2023, remains uncertain, as it is subject to the approval of Russian authorities, an outcome anticipated but not definitively confirmed. EDC contributions to Foraco's consolidated revenues were 12.2 million for a net income of US$ 0.5 million for the nine‐month period ended September 30, 2023.

8

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

2.4. Impairment testing

As at December 31, 2022, the Company performed impairment tests at the level of each geographic region using the carrying value of the Company's long lived assets based on the expected discounted cash flows method. Based on the internal forecasts and projections made, the expected discounted future cash flows exceeded each of the long‐lived asset's carrying amount for each geographic region and accordingly no impairment was recognized as at December 31, 2022.

Based on the current activity trend, the Company considers that there is no triggering event which would justify an impairment testing as at September 30, 2023.

2.5. Deferred tax valuation allowance

The Company's policy is to recognize deferred tax assets only when they can be recovered within a reasonable timeframe. As a general rule, the Company recognizes deferred tax assets only when they can be used against taxable profit, generally within five years or when available tax opportunities exist. On this basis, the Company has adopted a partial recognition‐based approach and has recorded certain valuation allowances.

2.6. New accounting pronouncements

The consolidated

interim

financial

statements

have

been

prepared

using

the same accounting policies and methods of

evaluation

as those

disclosed

in the December 31,

2022, annual financial statements.

New standards and amendments effective for periods beginning on January 1, 2023, and therefore relevant to these interim financial statements.

  • IFRS 17 insurance Contracts,
  • IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 (Amendment ‐ Disclosure of Accounting Policies),
  • IAS 8 Accounting policies, Changes in Accounting Estimates and Errors (Amendment ‐ Definition of Accounting Estimates),
  • IAS 12 Income Taxes (Amendment - Deferred Tax related to Assets and Liabilities arising from a Single Transaction).

The application of these new standard and amendments has not had any material impact on the interim consolidated financial statements of the Company.

Agenda decisions ‐ IFRS Interpretations Committee

  • IAS 7 Statement of Cash Flows Demand Deposits with Restrictions on Use arising from a Contract with a Third Party,
  • IFRS 15 Revenue from Contracts with Customers Principal vs Agent: Software Reseller,

9

Foraco International S.A.

Unaudited condensed interim consolidated financial statements as of September 30, 2023

  • IFRS 17 Insurance Contracts Transfer of Insurance Coverage under a Group of Annuity Contracts,
  • IAS 32 Financial Instruments: Presentation SPAC: Classification of Public Shares as Financial Liabilities or Equity,
  • IAS 37 Provisions, Contingent Liabilities and Contingent Assets Negative Low Emission Vehicle Credits,
  • IFRS 9 Financial Instruments & IFRS 16 Leases Lessor Forgiveness of Lease Payments
  • IAS 32 Financial Instruments: Presentation SPAC: Accounting for Warrants at Acquisition,
  • IFRS 17 Insurance Contracts & IAS 21 The Effects of Changes in Foreign Exchange Rates Multi‐ currency Groups of Insurance Contracts.

These agenda decisions do not represent authoritative guidance but are seen as helpful, informative, and persuasive. The application of these decisions has not had any material impact on the interim consolidated financial statements of the Company.

Pronouncements with a mandatory effective date in future accounting periods

  • Lease Liability in a Sale and Leaseback (Amendment to IFRS 16),
  • IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non‐Current),
  • IAS 1 Presentation of Financial Statements (Amendment - Non‐Current Liabilities with Covenants.

The impact on the consolidated financial statements of the Company of these pronouncements is currently being evaluated.

3. Financial risk management

The Company is exposed to a variety of financial risks through its activity including: liquidity risk, currency risk, cash transfer restriction, interest rate, financial counter‐party risk and credit risk.

A significant portion of the cash flows of the Company are mainly denominated in Canadian Dollars, Euros, Australian Dollars, Brazilian Real, Russian Rubbles and US Dollars. The financial performance and position as reported in US$ are dependent on the fluctuations of the US$ against the other mentioned currencies of the Group.

4. Segment information

The business segment information for the three‐month periods ended September 30, 2023 and September 30, 2022 is as follows:

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Foraco International SA published this content on 30 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2023 07:48:02 UTC.