| Nexa Resources S.A. |
|
|
| Condensed consolidated |
|
|
| interim financial statements |
|
|
| at and for the three-month |
|
|
| period ended March 31, 2019 |
Contents
Condensed consolidated interim financial statements |
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Condensed consolidated interim income statement |
| 3 | |
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Condensed consolidated interim statement of comprehensive income |
| 4 | |
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Condensed consolidated interim balance sheet |
| 5 | |
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Condensed consolidated interim statement of cash flows |
| 6 | |
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Condensed consolidated interim statement of changes in shareholders’ equity |
| 7 | |
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Notes to the condensed consolidated interim financial statements |
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1 | General information |
| 8 |
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2 | Information by business segment |
| 9 |
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3 | Basis of preparation of the condensed consolidated interim financial statements |
| 10 |
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4 | Changes in accounting policies and disclosures |
| 10 |
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5 | Cash and cash equivalents |
| 12 |
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6 | Financial investments |
| 13 |
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7 | Derivative financial instruments |
| 13 |
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8 | Inventory |
| 14 |
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9 | Other assets |
| 14 |
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10 | Property, plant and equipment |
| 15 |
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11 | Intangible assets |
| 16 |
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12 | Right-of-use assets and lease liabilities |
| 16 |
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13 | Loans and financings |
| 17 |
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|
|
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14 | Current and deferred income taxes |
| 19 |
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15 | Asset retirement and environmental obligations |
| 20 |
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|
|
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16 | Provisions |
| 20 |
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|
|
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17 | Net revenue |
| 21 |
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|
|
|
18 | Expenses by nature |
| 21 |
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19 | Mineral exploration and project development |
| 22 |
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20 | Other income and expenses, net |
| 22 |
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|
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21 | Net financial results |
| 22 |
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22 | Financial instruments |
| 22 |
Nexa Resources S.A. |
Condensed consolidated interim income statement
Periods ended March 31
All amounts in thousands of US dollars, unless otherwise stated
|
| Note |
| March 31, |
| March 31, |
|
Net revenues |
| 17 |
| 569,816 |
| 676,188 |
|
Cost of sales |
| 18 |
| (487,348) |
| (484,957) |
|
Gross profit |
|
|
| 82,468 |
| 191,231 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Selling, general and administrative |
| 18 |
| (41,072) |
| (43,313) |
|
Mineral exploration and project development |
| 19 |
| (20,299) |
| (19,279) |
|
Other income and expenses, net |
| 20 |
| 5,646 |
| (7,053) |
|
|
|
|
| (55,725) |
| (69,645) |
|
Operating income |
|
|
| 26,743 |
| 121,586 |
|
|
|
|
|
|
|
|
|
Net financial results |
| 21 |
|
|
|
|
|
Financial income |
|
|
| 8,028 |
| 8,758 |
|
Financial expenses |
|
|
| (31,574) |
| (29,853) |
|
Foreign exchange loss, net |
|
|
| (2,338) |
| (7,904) |
|
|
|
|
| (25,884) |
| (28,999) |
|
|
|
|
|
|
|
|
|
Income before income tax |
|
|
| 859 |
| 92,587 |
|
|
|
|
|
|
|
|
|
Income tax |
| 14 |
|
|
|
|
|
Current |
|
|
| (22,117) |
| (35,298) |
|
Deferred |
|
|
| 12,962 |
| 5,461 |
|
Net income (loss) for the period |
|
|
| (8,296) |
| 62,750 |
|
Attributable to NEXA’s shareholders |
|
|
| (14,007) |
| 55,113 |
|
Attributable to non-controlling interests |
|
|
| 5,711 |
| 7,637 |
|
Net income (loss) for the period |
|
|
| (8,296) |
| 62,750 |
|
Weighted average number of outstanding shares – in thousand |
|
|
| 132,993 |
| 133,320 |
|
Basic and diluted earnings (loss) per share – USD |
|
|
| (0.11) |
| 0.41 |
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Condensed consolidated interim statement of comprehensive income
Periods ended March 31
All amounts in thousands of US dollars, unless otherwise stated
|
| March 31, |
| March 31, |
|
Net income (loss) for the period |
| (8,296) |
| 62,750 |
|
|
|
|
|
|
|
Other comprehensive income (loss) net of taxes, that can be reclassified to the income statement |
|
|
|
|
|
Cash flow hedge accounting |
| 1,232 |
| (770) |
|
Translation adjustment of foreign subsidiaries |
| (2,087) |
| 490 |
|
|
| (855) |
| (280) |
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period |
| (9,151) |
| 62,470 |
|
Attributable to NEXA’s shareholders |
| (14,720) |
| 55,179 |
|
Attributable to non-controlling interests |
| 5,569 |
| 7,291 |
|
|
| (9,151) |
| 62,470 |
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Condensed consolidated interim balance sheet
All amounts in thousands of US dollars
Assets |
| Note |
| March 31, |
| December 31, |
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
| 5 |
| 863,878 |
| 1,032,938 |
Financial investments |
| 6 |
| 49,898 |
| 91,878 |
Derivative financial instruments |
| 7 |
| 14,580 |
| 7,385 |
Trade accounts receivable |
|
|
| 164,073 |
| 173,204 |
Inventory |
| 8 |
| 299,548 |
| 269,705 |
Other assets |
| 9 |
| 144,606 |
| 122,857 |
|
|
|
| 1,536,583 |
| 1,697,967 |
Non-current assets |
|
|
|
|
|
|
Financial investments |
| 6 |
| 350 |
| 355 |
Derivative financial instruments |
| 7 |
| 2,430 |
| 3,820 |
Deferred income taxes |
| 14 |
| 206,243 |
| 201,154 |
Other assets |
| 9 |
| 137,553 |
| 121,198 |
Right-of-use assets |
| 12 |
| 39,635 |
| - |
Property, plant and equipment |
| 10 |
| 1,969,648 |
| 1,968,451 |
Intangible assets |
| 11 |
| 1,714,794 |
| 1,742,461 |
|
|
|
| 4,070,653 |
| 4,037,439 |
|
|
|
|
|
|
|
Total assets |
|
|
| 5,607,236 |
| 5,735,406 |
|
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Loans and financing |
| 13 |
| 40,582 |
| 32,513 |
Lease liabilities |
| 12 |
| 17,128 |
| - |
Derivative financial instruments |
| 7 |
| 15,283 |
| 8,662 |
Trade payables |
|
|
| 355,728 |
| 387,225 |
Confirming payables |
|
|
| 56,847 |
| 70,411 |
Dividends payable |
|
|
| 3,333 |
| 663 |
Asset retirement and environmental obligations |
| 15 |
| 21,578 |
| 20,357 |
Contractual liabilities |
|
|
| 29,900 |
| 31,992 |
Other liabilities |
|
|
| 95,525 |
| 100,027 |
|
|
|
| 635,904 |
| 651,850 |
Non-current liabilities |
|
|
|
|
|
|
Loans and financing |
| 13 |
| 1,390,393 |
| 1,392,354 |
Lease liabilities |
| 12 |
| 23,880 |
| - |
Derivative financial instruments |
| 7 |
| 4,411 |
| 5,560 |
Asset retirement and environmental obligations |
| 15 |
| 238,589 |
| 249,925 |
Provisions |
| 16 |
| 23,808 |
| 30,641 |
Deferred income taxes |
| 14 |
| 302,498 |
| 298,598 |
Contractual liabilities |
|
|
| 166,674 |
| 167,645 |
Other liabilities |
|
|
| 32,852 |
| 37,032 |
|
|
|
| 2,183,105 |
| 2,181,755 |
|
|
|
|
|
|
|
Total liabilities |
|
|
| 2,819,009 |
| 2,833,605 |
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
Attributable to NEXA’s shareholders |
|
|
| 2,382,077 |
| 2,476,593 |
Attributable to non-controlling interests |
|
|
| 406,150 |
| 425,208 |
|
|
|
| 2,788,227 |
| 2,901,801 |
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
|
| 5,607,236 |
| 5,735,406 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Condensed consolidated interim statement of cash flows
Periods ended March 31
All amounts in thousands of US dollars
|
| Note |
| March 31, |
| March 31, |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax |
|
|
| 859 |
| 92,587 |
Depreciation and amortization |
| 10, 11 and 12 |
| 81,109 |
| 69,985 |
Interest and foreign exchange loss |
|
|
| 30,181 |
| 16,802 |
Loss (gain) on sale of property, plant and equipment and intangible assets |
| 20 |
| 386 |
| (658) |
Changes in provisions |
|
|
| (2,386) |
| 7,615 |
Changes in operating assets and liabilities |
| 5 (b) |
| (111,808) |
| (61,145) |
Interest paid on loans and financing |
| 13 (c) |
| (10,202) |
| (14,215) |
Interest paid on lease liabilities |
| 12 (b) |
| (148) |
| - |
Income taxes paid |
|
|
| (25,759) |
| (44,345) |
Net cash provided by (used in) operating activities |
|
|
| (37,768) |
| 66,626 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of property, plant and equipment |
| 10 |
| (67,162) |
| (32,975) |
Net cash receipts from sale of financial investments |
|
|
| 46,991 |
| 75,324 |
Proceeds from the sale of property, plant and equipment |
|
|
| 115 |
| 673 |
Net cash provided by (used in) investing activities |
|
|
| (20,056) |
| 43,022 |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Payments of loans and financing |
| 13 (c) |
| (1,715) |
| (68,597) |
Payments of leasing liabilities |
| 12 |
| (3,809) |
| - |
Dividends paid |
|
|
| (102,298) |
| - |
Reimbursement of share premium |
|
|
| - |
| (80,000) |
Repurchase of the Company’s own shares |
|
|
| (3,756) |
| - |
Net cash used in financing activities |
|
|
| (111,578) |
| (148,597) |
|
|
|
|
|
|
|
Foreign exchange rates effect on cash and cash equivalents |
|
|
| 342 |
| (131) |
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
|
| (169,060) |
| (39,080) |
Cash and cash equivalents at the beginning of the period |
|
|
| 1,032,938 |
| 1,019,037 |
Cash and cash equivalents at the end of the period |
|
|
| 863,878 |
| 979,957 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Consolidated statement of changes in shareholders’ equity
Periods ended March 31
All amounts in thousands of US dollars
|
| Note |
| Capital |
| Treasury shares |
| Share premium |
| Additional paid in capital |
| Retained earnings (cumulative deficit) |
| Accumulated other comprehensive income (loss) |
| Total |
| Non- controlling interests |
| Total shareholders’ equity |
|
At January 1, 2018 |
|
|
| 133,320 |
| - |
| 1,123,755 |
| 1,318,728 |
| (13,430) |
| (77,356) |
| 2,485,017 |
| 422,068 |
| 2,907,085 |
|
Net income for the period |
|
|
| - |
| - |
| - |
| - |
| 55,113 |
| - |
| 55,113 |
| 7,637 |
| 62,750 |
|
Components of comprehensive income (loss) for the period |
|
|
| - |
| - |
| - |
| - |
| - |
| 66 |
| 66 |
| (346) |
| (280) |
|
Total comprehensive income for the period |
|
|
| - |
| - |
| - |
| - |
| 55,113 |
| 66 |
| 55,179 |
| 7,291 |
| 62,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in non-controlling interests |
|
|
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (2,757) |
| (2,757) |
|
Reimbursement of share premium |
|
|
| - |
| - |
| (80,000) |
| - |
| - |
| - |
| (80,000) |
| - |
| (80,000) |
|
Total contributions by and distributions to shareholders |
|
|
| - |
| - |
| (80,000) |
| - |
| - |
| - |
| (80,000) |
| (2,757) |
| (82,757) |
|
At March 31, 2018 |
|
|
| 133,320 |
| - |
| 1,043,755 |
| 1,318,728 |
| 41,683 |
| (77,290) |
| 2,460,196 |
| 426,602 |
| 2,886,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2019 |
|
|
| 133,320 |
| (1,352) |
| 1,043,755 |
| 1,318,728 |
| 61,430 |
| (79,288) |
| 2,476,593 |
| 425,208 |
| 2,901,801 |
|
Impact of the adoption of IFRS 16 |
| 4 (a) |
| - |
| - |
| - |
| - |
| 71 |
| - |
| 71 |
| - |
| 71 |
|
Impact of the adoption of IFRIC 23 |
| 4 (b) |
| - |
| - |
| - |
| - |
| (4,023) |
| - |
| (4,023) |
| - |
| (4,023) |
|
At January 1, 2019 after impacts of the adoption of news standards |
|
|
| 133,320 |
| (1,352) |
| 1,043,755 |
| 1,318,728 |
| 57,478 |
| (79,288) |
| 2,472,641 |
| 425,208 |
| 2,897,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period |
|
|
| - |
| - |
| - |
| - |
| (14,007) |
| - |
| (14,007) |
| 5,711 |
| (8,296) |
|
Components of comprehensive income (loss) for the period |
|
|
| - |
| - |
| - |
| - |
| - |
| (713) |
| (713) |
| (142) |
| (855) |
|
Total comprehensive income (loss) for the period |
|
|
| - |
| - |
| - |
| - |
| (14,007) |
| (713) |
| (14,720) |
| 5,569 |
| (9,151) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital increase – Aripuanã project |
| 1 (a) |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 8,253 |
| 8,253 |
|
Repurchase of the Company’s own shares |
| 1 (b) |
| - |
| (3,756) |
| - |
| - |
| - |
| - |
| (3,756) |
| - |
| (3,756) |
|
Dividends distribution |
| 1 (d) |
| - |
| - |
| - |
| (2,256) |
| (69,832) |
| - |
| (72,088) |
| (32,880) |
| (104,968) |
|
Total contributions by and distributions to shareholders |
|
|
| - |
| (3,756) |
| - |
| (2,256) |
| (69,832) |
| - |
| (75,844) |
| (24,627) |
| (100,471) |
|
At March 31, 2019 |
|
|
| 133,320 |
| (5,108) |
| 1,043,755 |
| 1,316,472 |
| (26,361) |
| (80,001) |
| 2,382,077 |
| 406,150 |
| 2,788,227 |
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
1 General information
Nexa Resources S.A. (“NEXA”) was incorporated on February 26, 2014 under the laws of Luxembourg as a public limited liability company (société anonyme). Its shares are publicly traded on the New York Stock Exchange and the Toronto Stock Exchange. The Company’s registered office is located at 37A, Avenue J. F. Kennedy in the city of Luxembourg in the Grand Duchy of Luxembourg.
NEXA and its subsidiaries (the “Company”) own and operate three polymetallic mines in Peru and two polymetallic mines in Brazil. Its operations are large-scale, mechanized underground and open pit mines. The Company also owns a zinc smelter in Peru and two zinc smelters in Brazil.
The Company’s majority shareholder is Votorantim S.A. (“VSA”), which holds 64.25% of its equity. VSA is a Brazilian privately-owned industrial conglomerate that holds ownership interests in metal, steel, cement and energy companies, among others.
Principal transactions for the three-month period ended March 31, 2019
(a) Aripuanã project developments
Contracts and expenditures related to Aripuanã project are incurred by Mineração Dardanelos Ltda. (“Dardanelos”), a partnership between the Company (which holds a 70% interest) and Mineração Rio Aripuanã Ltda., a subsidiary of Karmin Exploration Inc. (which holds the remaining 30.0% interest). Dardanelos owns 100% of the Aripuanã project.
During the three-month period ended March 31, 2019, Dardanelos’ share capital was increased by USD 27,510. The Company fully subscribed for its portion of the capital increase in the amount of USD 19,257. Mineração Rio Aripuanã Ltda. is not required to subscribe for its portion of USD 8,253 until October 19, 2019, one year after the completion of the feasibility study.
Until March 31, 2019, the Company committed to contracts in the amount of USD 117,816 related to capital expenditures of the Aripuanã project for the purchase of property, plant and equipment.
(b) Share buyback program
Until March 31, 2019, the Company repurchased its own shares in the aggregated amount of USD 5,108, corresponding to 477 thousand shares. These shares are being held in treasury and have not been cancelled. The repurchases are part of the Company’s USD 30,000 shares buyback program initiated in 2018.
(c) Interest rate swap
On January 2019, the Company entered into a ten-year interest rate swap in the notional amount of USD 58,233 (equivalent to BRL 226,880) to change the Brazilian inflation component (“IPC-A”) of financing arrangements with BNDES to 53.04% of the Brazilian interbank rate (“CDI”). In accordance with the Company’s accounting policy the fair value adjustment of this derivative financial instrument is accounted for in “Net financial results”.
(d) Dividend distribution
On February 15, 2019, the Board of Directors approved a dividend distribution to shareholders of record on March 14, 2019 in the amount of USD 0.525494 cents per common share, for a total amount of USD 69,832. Dividends were paid in cash on March 28, 2019.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
The Company’s subsidiary NEXA PERU also declared dividends in the three-month period ended March 31, 2019 in the amount of USD 200,001, including USD 32,880 to non-controlling interests and USD 2,256 to holders of investments shares (acciones de inversión). These shares give the holders right to receive dividends but are not entitled to voting right or residual value of NEXA PERU’s equity.
2 Information by business segment
The presentation of segment results and reconciliation to income before income tax in the condensed consolidated interim income statement is as follows:
|
|
|
|
|
|
|
|
| March 31, 2019 | |
|
| Mining |
| Smelting |
| Intersegment |
| Adjustments |
| Consolidated |
Net revenues |
| 272,242 |
| 454,976 |
| (159,170) |
| 1,769 |
| 569,816 |
Cost of sales |
| (198,961) |
| (427,184) |
| 159,170 |
| (20,373) |
| (487,348) |
Gross Profit |
| 73,280 |
| 27,792 |
|
|
| (18,604) |
| 82,469 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
| (20,262) |
| (16,401) |
| - |
| (4,409) |
| (41,072) |
Mineral exploration and project development |
| (18,632) |
| (1,667) |
| - |
| - |
| (20,299) |
Other income and expenses, net |
| (7,578) |
| (10,011) |
| - |
| 23,235 |
| 5,646 |
Operating income |
| 26,809 |
| (287) |
| - |
| 222 |
| 26,743 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 55,718 |
| 26,068 |
| - |
| (678) |
| 81,108 |
Adjusted EBITDA |
| 82,527 |
| 25,781 |
| - |
| (456) |
| 107,851 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
| (81,108) |
Net financial results |
|
|
|
|
|
|
|
|
| (25,884) |
Income before income tax |
|
|
|
|
|
|
|
|
| 859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, 2018 | |
|
| Mining |
| Smelting |
| Intersegment |
| Adjustments |
| Consolidated |
Net revenues |
| 327,235 |
| 557,295 |
| (208,415) |
| 73 |
| 676,188 |
Cost of sales |
| (172,523) |
| (516,698) |
| 208,415 |
| (4,151) |
| (484,957) |
Gross Profit |
| 154,711 |
| 40,597 |
|
|
| (4,078) |
| 191,231 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
| (13,388) |
| (21,731) |
| - |
| (8,194) |
| (43,313) |
Mineral exploration and project development |
| (18,156) |
| (1,123) |
| - |
| - |
| (19,279) |
Other income and expenses, net |
| (7,540) |
| (12,483) |
| - |
| 12,971 |
| (7,053) |
Operating income |
| 115,627 |
| 5,260 |
| - |
| 699 |
| 121,586 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 44,943 |
| 24,629 |
| - |
| 414 |
| 69,985 |
Exceptional items (i) |
|
|
|
|
|
|
| (348) |
| (348) |
Adjusted EBITDA |
| 160,570 |
| 29,888 |
| - |
| 765 |
| 191,223 |
|
|
|
|
|
|
|
|
|
|
|
Exceptional items (i) |
|
|
|
|
|
|
| 348 |
| 348 |
Depreciation and amortization |
|
|
|
|
|
|
|
|
| (69,985) |
Net financial results |
|
|
|
|
|
|
|
|
| (28,999) |
Income before income tax |
|
|
|
|
|
|
|
|
| 92,587 |
(i) Exceptional items are composed of miscellaneous adjustments and reconcile the segments’ Adjusted EBITDA to the consolidated Adjusted EBITDA.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
3 Basis of preparation of the condensed consolidated interim financial statements
These condensed consolidated interim financial statements as at and for the three-month period ended March 31, 2019 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) using the accounting principles consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These condensed consolidated interim financial statements do not include all disclosures required by IFRS for annual audited consolidated financial statements and accordingly should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended December 31, 2018 prepared in accordance with IFRS as issued by the IASB.
These condensed consolidated interim financial statements have been prepared on the basis of, and using the accounting policies, methods of computation and disclosure consistent with those applied and disclosed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2018, except for the adoption of new IFRS and interpretation disclosed in Note 4.
The preparation of the condensed consolidated interim financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses for the period end.
The critical judgments and estimates in the application of accounting principles during the three-month period ended March 31, 2019 are the same as those disclosed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2018.
These condensed consolidated interim financial statements of the Company were approved by the Board of Directors on April 29, 2019.
4 Changes in accounting policies and disclosures
New IFRS and interpretations that are effective beginning on January 1, 2019
(a) IFRS 16 – “Leases”
Main aspects introduced by the standard
IFRS 16 was issued in January 2016 and should be applied for periods beginning after January 1, 2019. It results in certain leases being recognized on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized.
Transition method
The Company has applied IFRS 16 from its mandatory adoption date of January 1, 2019, using the simplified transition approach and did not restate comparative amounts for the periods prior to the adoption. Right-of-use assets were measured on transition at the amount of the lease liability, adjusted by any prepaid or accrued lease expense.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
Practical expedients applied at the adoption
In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:
Ø The accounting for low value leases and leases with a remaining term of less than 12 months as at January 1, 2019;
Ø The exclusion of initial direct costs from the measurement of the right-of-use asset at the date of initial application; and
Ø The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
Accounting policy
The Company may lease assets in its normal course of business. Lease terms are negotiated on an individual asset basis and contractual provisions contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Lease contracts are recognized as a liability with a corresponding right-of-use asset at the date at which the leased asset is available for use by the Company. The right-of-use asset is amortized over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Liabilities arising from a lease contract are initially measured on a present value basis, using the incremental borrowing rate approach. The incremental borrowing rate is determined by the Company based on equivalent financial costs that would be charged by a counterparty for a transaction with the same currency and a similar amount, term and risk of the lease contract. The finance cost charged to the income statement produces a constant periodic rate of interest over the lease term. At March 31, 2019, interest rates were between 8.44% to 11.39% for Brazil and 4.73% to 5.31% for Peru.
Impacts of adoption
The Company recognized lease liabilities and right-of-use assets in the amount of USD 41,450 and USD 41,521, respectively. Prepayments made in 2018 in the amount of USD 71 were recognized in retained earnings at January 1, 2019. Net current assets were lowered in USD 17,128 due to the presentation of a portion of the liability as a current liability.
The income before tax for the three-month period ended March 31, 2019 decreased by USD 1,404 as a result the adoption. Adjusted EBITDA for the three-month period ended March 31, 2019, which is used to measure segment results, increased by USD 3,856 as the operating lease payments were previously included in Adjusted EBITDA as operating costs, but the amortization of the right-of-use assets and interest on the lease liabilities are now excluded from this measure.
(b) IFRIC 23 – Uncertainty over income tax treatments
Nature of change
The interpretation explains how to recognize, and measure current and deferred income tax assets and liabilities where there is uncertainty over a tax treatment.
Transaction method
The Company has applied the standard from its mandatory adoption date of January 1, 2019.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
Accounting policy
Income tax provisions for uncertainties over income tax treatments are recognized when (i) there is a probable assessment that an income tax treatment will not be accepted by a taxation authority; and (ii) the Company has a present legal or constructive obligation over income tax as a result of past events. The likelihood of losses and the estimated amount of uncertainties are periodically reviewed by the Company’s legal counsel.
Income tax provisions for uncertainties over income tax treatments are measured at the present value by reflecting the effect of the uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates, through the most likely amount method.
Impacts of adoption
The interpretation affected primarily the accounting for the Company’s uncertain income taxes treatments with a probable likelihood that a taxation authority will not accept such treatments. The impact of the adoption of IFRIC 23 at January 1, 2019 is USD 4,023. The Company also reclassified the amount of USD 6,047 from Provisions to Deferred income taxes.
5 Cash and cash equivalents
(a) Composition
|
| March 31, 2019 |
| December 31, 2018 |
Cash and banks |
| 243,313 |
| 320,069 |
Term deposits |
| 620,565 |
| 712,869 |
|
| 863,878 |
| 1,032,938 |
The reduction in cash and cash equivalents is mainly related to dividends paid in the amount of USD 102,298, including dividends paid to non-controlling interests of NEXA PERU, increase in purchases of property, plant and equipment and changes in operating assets and liabilities.
(b) Changes in operating assets and liabilities
|
| March 31, 2019 |
| March 31, 2018 |
Decrease (increase) in assets |
|
|
|
|
Trade accounts receivable |
| 9,088 |
| (54,293) |
Inventory |
| (28,775) |
| (24,563) |
Other assets |
| (27,588) |
| (1,817) |
Increase (decrease) in liabilities |
|
|
|
|
Trade payables |
| (31,497) |
| 3,029 |
Confirming payables |
| (13,564) |
| 58,938 |
Contractual liabilities |
| (4,778) |
| - |
Other liabilities |
| (14,694) |
| (42,439) |
|
| (111,808) |
| (61,145) |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
6 Financial investments
|
| March 31, 2019 |
| December 31, 2018 |
Investment fund quotas |
| 26,107 |
| 38,677 |
Bank deposit certificate |
| 19,062 |
| 44,595 |
Other |
| 5,079 |
| 8,961 |
|
| 50,248 |
| 92,233 |
Current assets |
| 49,898 |
| 91,878 |
Non-current assets |
| 350 |
| 355 |
Financial investments were redeemed by the Company in order to meet capital expenditures.
7 Derivative financial instruments
(a) Fair value by strategy
|
| March 31, 2019 |
| December 31, 2018 | ||||||
Strategy |
| Per Unit |
| Notional |
| Fair value |
| Notional |
| Fair value |
Mismatches of quotational periods |
|
|
|
|
|
|
|
|
|
|
Zinc forward |
| ton |
| 225,176 |
| (3,879) |
| 261,020 |
| (557) |
|
|
|
|
|
| (3,879) |
|
|
| (557) |
Sales of zinc at a fixed price |
|
|
|
|
|
|
|
|
|
|
Zinc forward |
| ton |
| 9,395 |
| 2,898 |
| 10,566 |
| (858) |
|
|
|
|
|
| 2,898 |
|
|
| (858) |
Inflation risk |
|
|
|
|
|
|
|
|
|
|
Brazilian inflation vs. Brazilian interbank interest rate swap — Note 1 (c) |
| BRL |
| 226,880 |
| 99 |
| - |
| - |
|
|
|
|
|
| 99 |
|
|
| - |
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
Foreign exchange collars (USD) |
| BRL |
| 946,802 |
| (1,802) |
| 1,056,922 |
| (1,602) |
|
|
|
|
|
| (1,802) |
|
|
| (1,602) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,684) |
|
|
| (3,017) |
Current assets |
|
|
|
|
| 14,580 |
|
|
| 7,385 |
Non-current assets |
|
|
|
|
| 2,430 |
|
|
| 3,820 |
Current liabilities |
|
|
|
|
| (15,283) |
|
|
| (8,662) |
Non-current liabilities |
|
|
|
|
| (4,411) |
|
|
| (5,560) |
(b) Changes in fair value
Strategy | Inventory | Cost of | Revenue | Other | Net | Other | Realized |
Mismatches of quotational periods | 132 | (22,201) | 7,955 | 2,513 | - | 1,232 | 7,047 |
Sales of zinc at a fixed price | - | - | - | 3,799 | - | - | (43) |
Inflation risk | - | - | - | - | 53 | - | 46 |
Foreign exchange risk | - |
| - | - | 1,798 | - | (1,998) |
| 132 | (22,201) | 7,955 | 6,312 | 1,851 | 1,232 | 5,052 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
8 Inventory
��
|
| March 31, 2019 |
| December 31, 2018 |
Finished products |
| 123,634 |
| 106,245 |
Semi-finished products |
| 58,852 |
| 52,534 |
Raw materials |
| 72,375 |
| 64,582 |
Auxiliary materials and consumables |
| 67,057 |
| 69,781 |
Provision for obsolete and slow-moving inventory |
| (22,370) |
| (23,437) |
|
| 299,548 |
| 269,705 |
NEXA CJM is building up finished products inventories in anticipation of the expected shutdown in 3Q19 for the implementation of Jarosite conversion process.
9 Other assets
|
| March 31, 2019 |
| December 31, 2018 |
Taxes recoverable |
| 188,200 |
| 183,628 |
Advanced income tax payments (i) |
| 25,759 |
| - |
Judicial deposits |
| 9,334 |
| 9,230 |
Related parties |
| 8,989 |
| 740 |
Deferred expenses |
| 5,171 |
| 8,556 |
Advance to third parties |
| 4,307 |
| 2,472 |
Credits to employees |
| 4,229 |
| 4,663 |
Other assets |
| 36,170 |
| 34,766 |
|
| 282,159 |
| 244,055 |
Current assets |
| 144,606 |
| 122,857 |
Non-current assets |
| 137,553 |
| 121,198 |
(i) The increase is due to advance income tax payments in Peru.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. Notes to the condensed consolidated interim financial statements At and for the three-month period ended March 31, 2019 All amounts in thousands of US dollars, unless otherwise stated |
10 Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, |
| Changes in |
|
| Dam and |
| Machinery, |
| Assets and |
| Asset |
| Mining |
| Other |
| Total |
| Total |
Balance at the beginning of the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
| 1,002,885 |
| 2,357,254 |
| 349,069 |
| 175,506 |
| 243,629 |
| 51,142 |
| 4,179,485 |
| 4,170,586 |
Accumulated depreciation |
| (452,560) |
| (1,554,728) |
| - |
| (91,874) |
| (86,904) |
| (24,968) |
| (2,211,034) |
| (2,174,072) |
Net balance at the beginning of the period |
| 550,325 |
| 802,526 |
| 349,069 |
| 83,632 |
| 156,725 |
| 26,174 |
| 1,968,451 |
| 1,996,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions (i) |
| - |
| 148 |
| 67,014 |
| - |
| - |
| - |
| 67,162 |
| 32,975 |
Disposals |
| - |
| (156) |
| (77) |
| - |
| - |
| (269) |
| (502) |
| (15) |
Depreciation |
| (13,442) |
| (32,370) |
| - |
| (1,647) |
| (582) |
| (410) |
| (48,451) |
| (47,987) |
Foreign exchange effect |
| (1,696) |
| (2,592) |
| (1,815) |
| 8 |
| - |
| (75) |
| (6,170) |
| (4,704) |
Transfers |
| 9,997 |
| 19,965 |
| (42,341) |
| - |
| 10,911 |
| 653 |
| (815) |
| (399) |
Remeasurement of asset retirement obligation |
| - |
| - |
| - |
| (10,027) |
| - |
| - |
| (10,027) |
| 9,758 |
Balance at the end of the period |
| 545,184 |
| 787,521 |
| 371,850 |
| 71,966 |
| 167,054 |
| 26,073 |
| 1,969,648 |
| 1,986,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
| 1,010,167 |
| 2,373,196 |
| 371,850 |
| 165,390 |
| 254,540 |
| 51,235 |
| 4,226,378 |
| 4,200,320 |
Accumulated depreciation |
| (464,983) |
| (1,585,675) |
| - |
| (93,424) |
| (87,486) |
| (25,162) |
| (2,256,730) |
| (2,214,178) |
Balance at the end of the period |
| 545,184 |
| 787,521 |
| 371,850 |
| 71,966 |
| 167,054 |
| 26,073 |
| 1,969,648 |
| 1,986,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average annual depreciation rates % |
| 4 |
| 7 |
| - |
| 5 |
| 8 |
| - |
|
|
|
|
(i) Additions include capitalized borrowing costs in the amount of USD 1,762 for the three-month period ended March 31, 2019 (March 31, 2018 – USD 2,452).
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
11 Intangible assets
|
|
|
|
|
|
|
| March 31, |
| Changes in the |
|
| Goodwill |
| Rights to use |
| Other |
| Total |
| Total |
Balance at the beginning of the period |
|
|
|
|
|
|
|
|
|
|
Cost |
| 674,800 |
| 1,669,645 |
| 56,853 |
| 2,401,298 |
| 2,408,302 |
Accumulated amortization |
| - |
| (620,600) |
| (38,237) |
| (658,837) |
| (585,583) |
Net balance at the beginning of the period |
| 674,800 |
| 1,049,045 |
| 18,616 |
| 1,742,461 |
| 1,822,719 |
|
|
|
|
|
|
|
|
|
|
|
Amortization |
| - |
| (27,764) |
| (516) |
| (28,280) |
| (21,999) |
Transfers |
| - |
| - |
| 815 |
| 815 |
| 399 |
Foreign exchange effect |
| (22) |
| (75) |
| (105) |
| (202) |
| (2,139) |
Balance at the end of the period |
| 674,778 |
| 1,021,206 |
| 18,810 |
| 1,714,794 |
| 1,798,980 |
|
|
|
|
|
|
|
|
|
|
|
Cost |
| 674,778 |
| 1,669,543 |
| 57,362 |
| 2,401,683 |
| 2,406,223 |
Accumulated amortization |
| - |
| (648,337) |
| (38,552) |
| (686,889) |
| (607,243) |
Balance at the end of the period |
| 674,778 |
| 1,021,206 |
| 18,810 |
| 1,714,794 |
| 1,798,980 |
|
|
|
|
|
|
|
|
|
|
|
Average annual amortization rates % |
| - |
| 6 |
| 19 |
|
|
|
|
��
12 Right-of-use assets and lease liabilities
(a) Right-of-use assets
|
|
|
|
|
|
|
| March 31, 2019 | ||
|
| Buildings |
| Machinery, |
| IT |
| Vehicles |
| Total |
Balance at January 1, 2019 |
| 4,312 |
| 8,536 |
| 5,846 |
| 22,827 |
| 41,521 |
New contracts |
| 2,427 |
| - |
| - |
| - |
| 2,427 |
Amortization |
| (404) |
| (759) |
| (1,116) |
| (2,099) |
| (4,378) |
Foreign exchange effect |
| 8 |
| 24 |
| - |
| 32 |
| 65 |
Balance at the end of the period |
| 6,343 |
| 7,801 |
| 4,730 |
| 20,760 |
| 39,635 |
|
|
|
|
|
|
|
|
|
|
|
Average annual amortization rates % |
| 23 |
| 34 |
| 63 |
| 35 |
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
(b) Lease liabilities
|
| March 31, 2019 |
Balance at January 1, 2019 |
| 41,450 |
New contracts |
| 2,427 |
Payments of lease liabilities |
| (3,809) |
Interest paid |
| (148) |
Interest accrued |
| 983 |
Foreign exchange effect |
| 105 |
Balance at the end of the period |
| 41,008 |
Current liabilities |
| 17,128 |
Non-current liabilities |
| 23,880 |
(c) Maturity profile
|
|
|
|
|
| March 31, 2019 | |
2019 | 2020 | 2021 | 2022 | 2023 | As from | Total | |
U.S. Dollar | 5,455 | 3,969 | 1,188 | 486 | 413 | 33 | 11,544 |
Real | 8,598 | 8,610 | 6,480 | 5,109 | 615 | 52 | 29,464 |
| 14,053 | 12,579 | 7,668 | 5,595 | 1,028 | 85 | 41,008 |
13 Loans and financings
(a) Composition
|
|
|
| March 31, |
| December |
Type | Average | Current | Non-current | Total | Total | |
Eurobonds - USD | Fixed 5.13% | 14,158 | 1,034,143 | 1,048,301 | 1,042,571 | |
Debt with banks | LIBOR + 1.27% | 2,034 | 197,539 | 199,573 | 197,292 | |
BNDES | TJLP + 2.82% | | 6,584 | 82,077 | 88,661 | 89,925 | |
Debentures | 110.50% CDI | 6,939 | 20,648 | 27,587 | 28,188 | |
Other | 10,867 | 55,986 | 66,853 | 66,891 | ||
40,582 | 1,390,393 | 1,430,975 | 1,424,867 | |||
| ||||||
Current portion of long term loans and financing (principal) | 21,352 | |||||
Interest on loans and financing | 19,230 | |||||
| 40,582 |
(b) Maturity profile
|
|
|
|
|
| March 31, 2019 | |
2019 | 2020 | 2021 | 2022 | 2023 | As from | Total | |
Eurobonds - USD | 14,460 | - | - | - | 341,828 | 692,013 | 1,048,301 |
Debt with banks | 2,239 | (822) | 79,195 | 79,254 | 39,706 | - | 199,573 |
BNDES | 4,897 | 6,747 | 8,102 | 12,164 | 12,164 | 44,587 | 88,661 |
Debentures | 6,946 | 6,871 | 6,884 | 6,886 | - | - | 27,587 |
Other | 9,235 | 8,920 | 8,921 | 8,820 | 7,795 | 23,163 | 66,853 |
37,776 | 21,716 | 103,102 | 107,125 | 401,494 | 759,763 | 1,430,975 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
(c) Changes
|
| March 31, |
| March 31, |
|
Balance at the beginning of the period |
| 1,424,867 |
| 1,447,299 |
|
Payments of loans and financing |
| (1,715) |
| (68,597) |
|
Foreign exchange effect |
| (442) |
| 803 |
|
Interest accrual |
| 18,467 |
| 18,306 |
|
Interest paid |
| (10,202) |
| (13,555) |
|
Balance at the end of the period |
| 1,430,975 |
| 1,384,256 |
|
(d) Analysis by currency
|
|
|
|
|
| March 31, |
| December 31, |
|
|
| Current |
| Non- |
| Total |
| Total |
|
U.S. Dollar |
| 25,368 |
| 1,284,442 |
| 1,309,810 |
| 1,301,395 |
|
Real |
| 15,214 |
| 105,951 |
| 121,165 |
| 123,472 |
|
|
| 40,582 |
| 1,390,393 |
| 1,430,975 |
| 1,424,867 |
|
(e) Analysis by index
|
|
|
|
|
| March 31, |
| December 31, |
|
|
| Current |
| Non- |
| Total |
| Total |
|
Fixed rate |
| 15,322 |
| 1,037,363 |
| 1,052,685 |
| 1,047,245 |
|
LIBOR |
| 10,380 |
| 247,838 |
| 258,218 |
| 255,333 |
|
TLP |
| 6,089 |
| 50,957 |
| 57,046 |
| 58,487 |
|
CDI |
| 6,939 |
| 20,648 |
| 27,587 |
| 28,188 |
|
BNDES SELIC |
| 293 |
| 19,355 |
| 19,648 |
| 19,447 |
|
TJLP |
| 1,559 |
| 14,232 |
| 15,791 |
| 16,167 |
|
|
| 40,582 |
| 1,390,393 |
| 1,430,975 |
| 1,424,867 |
|
(f) Guarantees and covenants
No changes to the contractual guarantees or to the financial covenants occurred in the three-month period ended March 31, 2019. At March 31, 2019, the Company was in compliance with all applicable covenants.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
14 Current and deferred income taxes
(a) Reconciliation of income tax expense
|
| March 31, |
| March 31, |
|
Income before income tax |
| 859 |
| 92,587 |
|
Standard rate |
| 26.01% |
| 26.01% |
|
|
|
|
|
|
|
Income tax at standard rate |
| (223) |
| (24,082) |
|
Difference in tax rate for subsidiaries outside Luxembourg |
| (1,629) |
| 218 |
|
Special mining levy and special mining tax |
| (3,447) |
| (5,094) |
|
Withholding tax on dividends paid by subsidiaries |
| (9,764) |
| - |
|
Other permanent differences |
| 5,908 |
| (879) |
|
Income tax |
| (9,155) |
| (29,837) |
|
|
|
|
|
|
|
Current |
| (22,117) |
| (35,298) |
|
Deferred |
| 12,962 |
| 5,461 |
|
Income tax |
| (9,155) |
| (29,837) |
|
(b) Analysis of deferred income tax balances
|
| March 31, |
| December 31, |
|
Tax credits on non-operating losses |
| 108,973 |
| 106,818 |
|
Uncertain tax income treatments – Note 4 (b) |
| (10,070) |
| - |
|
Tax credits on temporary differences |
|
|
|
|
|
Foreign exchange losses |
| 52,360 |
| 50,766 |
|
Environmental liabilities |
| 27,395 |
| 28,808 |
|
Asset retirement obligation |
| 25,222 |
| 8,616 |
|
Tax, civil and labor provisions |
| 9,007 |
| 10,467 |
|
Other provisions |
| 1,490 |
| 12,875 |
|
Provision for inventory losses |
| 2,939 |
| 4,331 |
|
Provision for profit sharing |
| 6,069 |
| 5,308 |
|
Other |
| 13,700 |
| 16,925 |
|
|
|
|
|
|
|
Tax debits on temporary differences |
|
|
|
|
|
Capitalized interest |
| (12,171) |
| (11,725) |
|
Accelerated depreciation and adjustment of useful lives |
| (7,996) |
| (10,636) |
|
Depreciation and amortization of fair value adjustment to property, plant and equipment and intangible assets |
| (312,028) |
| (318,198) |
|
Other |
| (1,145) |
| (1,799) |
|
|
| (96,255) |
| (97,444) |
|
|
|
|
|
|
|
Net deferred income tax assets related to the same legal entity |
| 206,243 |
| 201,154 |
|
Net deferred income tax liabilities related to the same legal entity |
| (302,498) |
| (298,598) |
|
|
| (96,255) |
| (97,444) |
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
15 Asset retirement and environmental obligations
|
|
|
|
|
| March 31, |
| March 31, |
|
| Asset retirement obligation |
| Environmental Obligations |
| Total |
| Total |
Balance at the beginning of the period |
| 185,552 |
| 84,730 |
| 270,282 |
| 283,279 |
Payments |
| (330) |
| (547) |
| (877) |
| (677) |
Foreign exchange effect |
| 2,066 |
| 121 |
| 2,187 |
| (968) |
Interest accrual |
| 2,311 |
| 1,877 |
| 4,188 |
| 4,236 |
Remeasurement |
| (10,005) |
| (5,608) |
| (15,613) |
| 9,222 |
Balance at the end of the period |
| 179,594 |
| 80,573 |
| 260,167 |
| 295,092 |
Current liabilities |
|
|
|
|
| 21,578 |
| 17,619 |
Non-current liabilities |
|
|
|
|
| 238,589 |
| 277,473 |
16 Provisions
(a) Analysis of provisions
|
|
|
|
|
|
|
|
|
| March 31, |
| Changes in |
|
| Tax |
| Labor |
| Civil |
| Environmental |
| Total |
| Total |
Balance at the beginning of the period |
| 12,068 |
| 12,188 |
| 1,371 |
| 5,014 |
| 30,641 |
| 57,882 |
Additions |
| 91 |
| 820 |
| 249 |
| 636 |
| 1,796 |
| 12,106 |
Reversals |
| (725) |
| (1,652) |
| (12) |
| (758) |
| (3,147) |
| (4,491) |
Interest accrual |
| 195 |
| 484 |
| 29 |
| 30 |
| 738 |
| 753 |
Payments |
| - |
| - |
| - |
| - |
| - |
| (680) |
Foreign exchange effect |
| 17 |
| 6 |
| (12) |
| 36 |
| 47 |
| (54) |
Adoption of IFRIC 23 – Note 4 (b) |
| (6,047) |
| - |
| - |
| - |
| (6,047) |
| - |
Other |
| (16) |
| (174) |
| (30) |
| - |
| (220) |
| (193) |
Balance at the end of the period |
| 5,583 |
| 11,672 |
| 1,595 |
| 4,958 |
| 23,808 |
| 65,323 |
(b) Breakdown of tax, civil, labor and environmental provisions
The provisions and the corresponding judicial deposits are as follow:
|
|
|
|
|
|
|
| March 31, 2019 |
| December 31, 2018 | ||
|
| Judicial |
| Provision |
| Carrying |
| Outstanding |
| Carrying |
| Outstanding |
Tax |
| (2,052) |
| 7,635 |
| 5,583 |
| 2,270 |
| 12,068 |
| 2,245 |
Labor |
| (4,402) |
| 16,074 |
| 11,672 |
| 6,615 |
| 12,188 |
| 6,555 |
Civil |
| (771) |
| 2,366 |
| 1,595 |
| 18 |
| 1,371 |
| 17 |
Environmental |
| - |
| 4,958 |
| 4,958 |
| 431 |
| 5,014 |
| 413 |
|
| (7,225) |
| 31,033 |
| 23,808 |
| 9,334 |
| 30,641 |
| 9,230 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
(c) Summary of contingent liabilities
The Company is part of other litigation involving a risk of possible loss, for which no provision is recognized, as detailed below:
|
| March 31,2019 |
| December 31,2018 |
Tax |
| 134,451 |
| 137,110 |
Labor |
| 30,981 |
| 29,079 |
Civil |
| 20,327 |
| 20,130 |
Environmental |
| 119,729 |
| 119,747 |
|
| 305,488 |
| 306,066 |
17 Net revenue
|
| March 31, 2019 |
| March 31, 2018 |
Gross revenues |
| 625,897 |
| 746,418 |
Revenues from products |
| 609,019 |
| 730,001 |
Revenues from services |
| 16,878 |
| 16,417 |
Taxes on sales |
| (54,973) |
| (69,000) |
Return of products sales |
| (1,108) |
| (1,230) |
Net revenues |
| 569,816 |
| 676,188 |
Net revenue declined in the three-month period ended in March 31, 2019 in comparison with the same period a year ago, following the sharp decrease of metal prices in the international market.
18 Expenses by nature
|
|
|
|
|
|
|
| March 31, |
| March 31, |
|
| Cost of |
| Selling, |
| Mineral |
| Total |
| Total |
Raw materials and consumables used |
| 323,114 |
| 1,828 |
| — |
| 324,942 |
| 322,030 |
Employee benefit expenses |
| 38,359 |
| 22,246 |
| 4,113 |
| 64,718 |
| 75,255 |
Depreciation and amortization |
| 80,061 |
| 1,490 |
| 7 |
| 81,558 |
| 69,989 |
Services, miscellaneous |
| 39,112 |
| 11,297 |
| 13,750 |
| 64,159 |
| 61,327 |
Other expenses |
| 6,702 |
| 4,211 |
| 2,429 |
| 13,342 |
| 18,947 |
|
| 487,348 |
| 41,072 |
| 20,299 |
| 548,719 |
| 547,549 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
19 Mineral exploration and project development
|
| March 31, 2019 |
| March 31, 2018 |
|
Mineral exploration |
| 13,749 |
| 15,880 |
|
Project development (FEL 1 and FEL 2) |
| 6,550 |
| 3,399 |
|
|
| 20,299 |
| 19,279 |
|
20 Other income and expenses, net
|
| March 31, 2019 |
| March 31, 2018 |
|
Corporate projects |
| (590) |
| (1,619) |
|
Mining obligations |
| (3,882) |
| (1,749) |
|
Loss on sale of property, plant and equipment |
| (386) |
| 658 |
|
Provision for tax, labor, civil and environmental claims |
| 1,351 |
| (4,238) |
|
Remeasurement of environmental obligations |
| 5,132 |
| - |
|
Other operating income (expenses), net |
| 4,021 |
| (105) |
|
|
| 5,646 |
| (7,053) |
|
21 Net financial results
|
| March 31, 2019 |
| March 31, 2018 |
|
Financial income |
|
|
|
|
|
Gains on financial investments |
| 5,495 |
| 6,110 |
|
Derivative financial instruments |
| 1,851 |
| - |
|
Other financial income |
| 682 |
| 2,648 |
|
|
| 8,028 |
| 8,758 |
|
|
|
|
|
|
|
Financial expenses |
|
|
|
|
|
Interest on loans and financing |
| (18,467) |
| (18,306) |
|
Interest on contractual liabilities |
| (1,715) |
| (1,897) |
|
Monetary adjustment of provisions |
| (2,285) |
| (1,110) |
|
Derivative financial instruments |
| - |
| (939) |
|
Interest on lease liabilities |
| (983) |
| - |
|
Other financial expenses |
| (8,124) |
| (7,601) |
|
|
| (31,574) |
| (29,853) |
|
|
|
|
|
|
|
Foreign exchange effects |
| (2,338) |
| (7,904) |
|
Net financial results |
| (25,884) |
| (28,999) |
|
22 Financial instruments
(a) Breakdown by category
The Company classifies its financial assets and liabilities under the following categories: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The classification by category and the corresponding accounting policies of each financial instruments in these condensed consolidated interim financial statements are consistent with those applied and disclosed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2018.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
|
|
|
|
|
|
|
| March 31, 2019 |
|
Assets per balance sheet |
| Amortized cost |
| Fair value |
| Fair value |
| Total |
|
Cash and cash equivalents |
| - |
| 863,878 |
| - |
| 863,878 |
|
Financial investments |
| - |
| 50,248 |
| - |
| 50,248 |
|
Derivative financial instruments |
| - |
| 11,103 |
| 5,907 |
| 17,010 |
|
Trade accounts receivable |
| 99,629 |
| 64,444 |
|
|
| 164,073 |
|
Related parties (i) |
| 8,989 |
| - |
| - |
| 8,989 |
|
|
| 108,618 |
| 989,673 |
| 5,907 |
| 1,104,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| March 31, 2019 |
|
Liabilities per balance sheet |
| Amortized cost |
| Fair value |
| Fair value |
| Total |
|
Loans and financing |
| 1,430,975 |
| - |
| - |
| 1,430,975 |
|
Lease liabilities |
| 41,008 |
| - |
| - |
| 41,008 |
|
Derivative financial instruments |
| - |
| 8,471 |
| 11,223 |
| 19,694 |
|
Trade payables |
| 355,728 |
| - |
| - |
| 355,728 |
|
Confirming payables |
| 56,847 |
| - |
| - |
| 56,847 |
|
Use of public assets (ii) |
| 22,572 |
| - |
| - |
| 22,572 |
|
Related parties (ii) |
| 867 |
| - |
| - |
| 867 |
|
|
| 1,907,997 |
| 8,471 |
| 11,223 |
| 1,927,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2018 |
| ||
Assets per balance sheet |
| Amortized cost |
| Fair value |
| Fair value |
| Total |
|
Cash and cash equivalents |
| - |
| 1,032,938 |
| - |
| 1,032,938 |
|
Financial investments |
| - |
| 92,233 |
| - |
| 92,233 |
|
Derivative financial instruments |
| - |
| 6,885 |
| 4,320 |
| 11,205 |
|
Trade accounts receivable |
| 22,146 |
| 151,058 |
| - |
| 173,204 |
|
Related parties (i) |
| 740 |
| - |
| - |
| 740 |
|
|
| 22,886 |
| 1,283,114 |
| 4,320 |
| 1,310,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2018 |
| ||
Liabilities per balance sheet |
| Amortized cost |
| Fair value |
| Fair value |
| Total |
|
Loans and financing |
| 1,424,867 |
| - |
| - |
| 1,424,867 |
|
Derivative financial instruments |
| - |
| 10,155 |
| 4,068 |
| 14,223 |
|
Trade payables |
| 387,225 |
| - |
| - |
| 387,225 |
|
Confirming payables |
| 70,411 |
| - |
| - |
| 70,411 |
|
Use of public assets (ii) |
| 22,126 |
| - |
| - |
| 22,126 |
|
Related parties (ii) |
| 1,580 |
| - |
| - |
| 1,580 |
|
|
| 1,906,209 |
| 10,155 |
| 4,068 |
| 1,920,432 |
|
(i) Classified as Other assets in the condensed consolidated interim balance sheet.
(ii) Classified as Other liabilities in the condensed consolidated interim balance sheet.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Nexa Resources S.A. |
Notes to the condensed consolidated interim financial statements
At and for the three-month period ended March 31, 2019
All amounts in thousands of US dollars, unless otherwise stated
(b) Fair value by hierarchy
|
|
|
| March 31, 2019 |
| ||
|
| Level 1 |
| Level 2 |
| Total |
|
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 863,878 |
| - |
| 863,878 |
|
Financial investments |
| 26,601 |
| 23,647 |
| 50,248 |
|
Derivative financial instruments |
| - |
| 17,010 |
| 17,010 |
|
Trade accounts receivable |
|
|
| 64,444 |
| 64,444 |
|
|
| 890,479 |
| 105,101 |
| 995,580 |
|
Liabilities |
|
|
|
|
|
|
|
Derivative financial instruments |
| - |
| 19,694 |
| 19,694 |
|
Loans and financing (i) |
| 1,070,484 |
| 385,901 |
| 1,456,385 |
|
|
| 1,070,484 |
| 405,595 |
| 1,476,079 |
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2018 |
| ||
|
| Level 1 |
| Level 2 |
| Total |
|
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 1,032,938 |
| - |
| 1,032,938 |
|
Financial investments |
| 39,167 |
| 53,066 |
| 92,233 |
|
Derivative financial instruments |
| - |
| 11,205 |
| 11,205 |
|
Trade accounts receivables |
| - |
| 151,058 |
| 151,058 |
|
|
| 1,072,105 |
| 215,329 |
| 1,287,434 |
|
Liabilities |
|
|
|
|
|
|
|
Derivative financial instruments |
| - |
| 14,223 |
| 14,223 |
|
Loans and financing (i) |
| 1,014,974 |
| 390,848 |
| 1,405,822 |
|
|
| 1,014,974 |
| 405,071 |
| 1,420,045 |
|
(i) Loans and financing are measured at amortized cost. Therefore, the amounts presented in this note do not match with the condensed consolidated interim balance sheet.
The carrying amount of other financial instruments measured at amortized cost do not differ significantly from their fair value.
(c) Fair value measurement and disclosures
The valuation techniques used in the fair value measurement and disclosure processes, including the critical accounting estimates used and judgements made by the Company, are consistent with those applied and disclosed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2018.
There were no reclassifications between fair value levels in the three-month period ended March 31, 2019. None of the financial instruments were classified as Level 3 as of March 31, 2019.
* * *
The accompanying notes are an integral part of these condensed consolidated interim financial statements.