Ann: Maiden Dividend and 2014 Financial Year Results, page-55

Cheers mate.

I certainly take on board your comments about the risks of operating in hyper-inflationary domiciles.

I note your point in relation to pg47 and currency moves. I've reproduced it here:



My interpretation is that this relates to the losses stemming from its net USD debt exposure and not the BRL operations (which will benefit from a lower BRL); i.e. balance sheet risk not P&L risk.

From the above, you can see that as at 31/12/14 BDR had a net exposure of USD$55m.

This has subsequently reduced due to by the repayment of Mac Bank lease agreement from funds provided by MACA ($14.5m USD):



BDR has c. $13.9m unrestricted cash (some of which is accounted for above) and $38m in restricted cash that (would appear) to be held in AUD, comprised of:

(1) c. $19.9m as part of the MACA deal, effectively held in Trust until equipment is purchased from BDR over time [I understand that this is due to tax concessions received by BDR to import the equipment into Brazil, but the equipment had to be held for a set period of time]

(2) c. $18.7m of restricted cash required to be held by Santander until the loan was renegotiated (which subsequently happened in January 2015 and has now been released).






Thus based on this I would assume that the net USD exposure has dropped to ($55m - $14.5m) $40.5m. On top of this there are two months of (assumed) cash positive operations that, if management are smart will be held in USD.

Additionally BDR has access to c. $18.7m AUD released from Santander (of which $8m will be paid out in a dividend on the 14th April, and c. $6.4m will be paid in the first installment to Santander on the 15/4). On top of this BDR will progressively gain access to the c. AUD$19.9m from MACA in due course as equipment ownership is transferred.

Thus, IMO, the falling BRL is operationally beneficial to BDR (the caveat being your hyper-inflationary scenario) and the negatives from a strengthening USD are presently being reduced at a rapid rate.

Please correct me if my analysis is wrong.

Cheers
John