| Nexa Resources S.A. |
|
|
| Condensed consolidated |
| interim financial statements |
| at and for the three and six-month |
| periods ended June 30, 2019 |
Nexa Resources S.A.
Condensed consolidated interim income statement
Periods ended June 30
All amounts in thousands of US dollars, unless otherwise stated
|
|
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| Note |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Net revenues |
| 5 |
| 613,299 |
| 636,517 |
| 1,183,115 |
| 1,312,705 |
|
Cost of sales |
| 6 |
| (478,720 | ) | (474,319 | ) | (966,067 | ) | (959,276 | ) |
Gross profit |
|
|
| 134,579 |
| 162,198 |
| 217,048 |
| 353,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
| 6 |
| (42,076 | ) | (43,846 | ) | (83,147 | ) | (87,160 | ) |
Mineral exploration and project development |
| 7 |
| (28,085 | ) | (27,514 | ) | (48,384 | ) | (46,793 | ) |
Other income and expenses, net |
| 8 |
| (19,257 | ) | 3,495 |
| (13,613 | ) | (3,557 | ) |
|
|
|
| (89,418 | ) | (67,865 | ) | (145,144 | ) | (137,510 | ) |
Operating income |
|
|
| 45,161 |
| 94,333 |
| 71,904 |
| 215,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial results |
| 9 |
|
|
|
|
|
|
|
|
|
Financial income |
|
|
| 9,766 |
| 10,562 |
| 17,794 |
| 19,320 |
|
Financial expenses |
|
|
| (33,173 | ) | (31,589 | ) | (64,747 | ) | (61,442 | ) |
Foreign exchange gain (loss), net |
|
|
| 8,063 |
| (131,359 | ) | 5,725 |
| (139,263 | ) |
|
|
|
| (15,344 | ) | (152,386 | ) | (41,228 | ) | (181,385 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax |
|
|
| 29,817 |
| (58,053 | ) | 30,676 |
| 34,534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax |
| 10 |
|
|
|
|
|
|
|
|
|
Current |
|
|
| (4,513 | ) | (16,825 | ) | (26,630 | ) | (52,123 | ) |
Deferred |
|
|
| (2,009 | ) | 39,555 |
| 10,953 |
| 45,016 |
|
Net income (loss) for the period |
|
|
| 23,295 |
| (35,323 | ) | 14,999 |
| 27,427 |
|
Attributable to NEXA’s shareholders |
|
|
| 20,393 |
| (40,466 | ) | 6,386 |
| 14,647 |
|
Attributable to non-controlling interests |
|
|
| 2,902 |
| 5,143 |
| 8,613 |
| 12,780 |
|
Net income (loss) for the period |
|
|
| 23,295 |
| (35,323 | ) | 14,999 |
| 27,427 |
|
Weighted average number of outstanding shares — in thousands |
|
|
| 132,628 |
| 133,320 |
| 132,809 |
| 133,320 |
|
Basic and diluted earnings (loss) per share — USD |
|
|
| 0.15 |
| (0.30 | ) | 0.05 |
| 0.11 |
|
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 June 30
All amounts in thousands of US dollars, unless otherwise stated
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Net income (loss) for the period |
| 23,295 |
| (35,323 | ) | 14,999 |
| 27,427 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of taxes - items that can be reclassified to the income statement |
|
|
|
|
|
|
|
|
|
Cash flow hedge accounting |
| 2,206 |
| 400 |
| 3,435 |
| (370 | ) |
Translation adjustment of foreign subsidiaries |
| 4,624 |
| (33,515 | ) | 2,540 |
| (33,025 | ) |
|
| 6,830 |
| (33,115 | ) | 5,975 |
| (33,395 | ) |
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period |
| 30,125 |
| (68,438 | ) | 20,974 |
| (5,968 | ) |
Attributable to NEXA’s shareholders |
| 22,431 |
| (62,392 | ) | 7,711 |
| (7,213 | ) |
Attributable to non-controlling interests |
| 7,694 |
| (6,046 | ) | 13,263 |
| 1,245 |
|
|
| 30,125 |
| (68,438 | ) | 20,974 |
| (5,968 | ) |
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, unless otherwise stated
|
| Note |
| June 30, 2019 |
| December 31, 2018 |
|
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 11 |
| 751,013 |
| 1,032,938 |
|
Financial investments |
|
|
| 109,079 |
| 91,878 |
|
Derivative financial instruments |
| 12 |
| 5,473 |
| 7,385 |
|
Trade accounts receivable |
|
|
| 168,381 |
| 173,204 |
|
Inventory |
| 13 |
| 310,834 |
| 269,705 |
|
Other assets |
| 14 |
| 200,433 |
| 122,857 |
|
|
|
|
| 1,545,213 |
| 1,697,967 |
|
Non-current assets |
|
|
|
|
|
|
|
Financial investments |
|
|
| 362 |
| 355 |
|
Derivative financial instruments |
| 12 |
| 2,631 |
| 3,820 |
|
Deferred income taxes |
| 10 |
| 202,516 |
| 201,154 |
|
Other assets |
| 14 |
| 144,004 |
| 121,198 |
|
Property, plant and equipment |
| 15 |
| 2,031,226 |
| 1,968,451 |
|
Intangible assets |
| 16 |
| 1,698,375 |
| 1,742,461 |
|
Right-of-use assets |
| 17 |
| 38,606 |
| — |
|
|
|
|
| 4,117,720 |
| 4,037,439 |
|
|
|
|
|
|
|
|
|
Total assets |
|
|
| 5,662,933 |
| 5,735,406 |
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Loans and financing |
| 18 |
| 32,979 |
| 32,513 |
|
Lease liabilities |
| 17 |
| 18,612 |
| — |
|
Derivative financial instruments |
| 12 |
| 5,967 |
| 8,662 |
|
Trade payables |
|
|
| 344,959 |
| 387,225 |
|
Confirming payables |
|
|
| 65,869 |
| 70,411 |
|
Dividends payable |
|
|
| 5,781 |
| 663 |
|
Asset retirement and environmental obligations |
| 19 |
| 22,392 |
| 20,357 |
|
Contractual liabilities |
|
|
| 30,767 |
| 31,992 |
|
Other liabilities |
|
|
| 118,065 |
| 100,027 |
|
|
|
|
| 645,391 |
| 651,850 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Loans and financing |
| 18 |
| 1,397,302 |
| 1,392,354 |
|
Lease liabilities |
| 17 |
| 23,515 |
| — |
|
Derivative financial instruments |
| 12 |
| 2,292 |
| 5,560 |
|
Asset retirement and environmental obligations |
| 19 |
| 252,879 |
| 249,925 |
|
Provisions |
| 20 |
| 23,930 |
| 30,641 |
|
Deferred income taxes |
| 10 |
| 298,845 |
| 298,598 |
|
Contractual liabilities |
|
|
| 159,600 |
| 167,645 |
|
Other liabilities |
|
|
| 33,829 |
| 37,032 |
|
|
|
|
| 2,192,192 |
| 2,181,755 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
| 2,837,583 |
| 2,833,605 |
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
Attributable to NEXA’s shareholders |
|
|
| 2,400,161 |
| 2,476,593 |
|
Attributable to non-controlling interests |
|
|
| 425,189 |
| 425,208 |
|
|
|
|
| 2,825,350 |
| 2,901,801 |
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
|
| 5,662,933 |
| 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 June 30
All amounts in thousands of US dollars
|
|
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| Note |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax |
|
|
| 29,817 |
| (58,053 | ) | 30,676 |
| 34,534 |
|
Depreciation and amortization |
| 15, 16 and 17 |
| 73,315 |
| 68,614 |
| 154,424 |
| 138,599 |
|
Interest and foreign exchange effect |
|
|
| 11,456 |
| 106,001 |
| 41,637 |
| 122,803 |
|
Loss on sale of property, plant and equipment and intangible assets |
| 8 |
| 596 |
| 9,385 |
| 982 |
| 8,727 |
|
Gain on sale of investment |
|
|
| — |
| — |
| — |
| (348 | ) |
Changes in provisions |
|
|
| 14,966 |
| (17,949 | ) | 12,580 |
| (10,333 | ) |
Changes in operating assets and liabilities |
| 11 (b) |
| (59,913 | ) | (591 | ) | (173,915 | ) | (59,976 | ) |
Interest paid on loans and financing |
| 18 |
| (26,362 | ) | (23,372 | ) | (36,564 | ) | (37,587 | ) |
Interest paid on lease liabilities |
| 17 |
| (211 | ) | — |
| (359 | ) | — |
|
Income taxes paid |
|
|
| (8,566 | ) | (27,351 | ) | (34,325 | ) | (73,109 | ) |
Net cash provided by (used in) operating activities |
|
|
| 35,098 |
| 56,684 |
| (4,864 | ) | 123,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of property, plant and equipment |
| 15 |
| (94,641 | ) | (58,487 | ) | (159,609 | ) | (91,462 | ) |
Net (purchases) sales of financial investments |
|
|
| (53,031 | ) | 17,453 |
| (6,040 | ) | 92,777 |
|
Proceeds from the sale of property, plant and equipment |
|
|
| 694 |
| 364 |
| 809 |
| 1,037 |
|
Net cash provided by (used in) investing activities |
|
|
| (146,978 | ) | (40,670 | ) | (164,840 | ) | 2,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
New loans and financing |
| 18 (c) |
| 13,369 |
| 276,495 |
| 13,369 |
| 276,495 |
|
Payments of loans and financing |
| 18 (c) |
| (5,601 | ) | (233,615 | ) | (7,316 | ) | (302,212 | ) |
Payments of lease liabilities |
| 17 (b) |
| (4,524 | ) | — |
| (8,333 | ) | — |
|
Dividends paid |
|
|
| (118 | ) | — |
| (102,416 | ) | — |
|
Reimbursement of share premium |
|
|
| — |
| — |
| — |
| (80,000 | ) |
Repurchase of the Company’s own shares |
| 1 (b) |
| (4,347 | ) | — |
| (8,103 | ) | — |
|
Net cash provided by (used in) financing activities |
|
|
| (1,221 | ) | 42,880 |
| (112,799 | ) | (105,717 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange effect on cash and cash equivalents |
|
|
| 236 |
| (5,716 | ) | 578 |
| (5,847 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
| (112,865 | ) | 53,178 |
| (281,925 | ) | 14,098 |
|
Cash and cash equivalents at the beginning of the period |
|
|
| 863,878 |
| 979,957 |
| 1,032,938 |
| 1,019,037 |
|
Cash and cash equivalents at the end of the period |
|
|
| 751,013 |
| 1,033,135 |
| 751,013 |
| 1,033,135 |
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements
Nexa Resources S.A.
Condensed consolidated interim statement of changes in shareholders’ equity
At and for three-month period ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
|
| Capital |
| Treasury |
| Share |
| Additional paid |
| Retained |
| Accumulated |
| Total |
| Non-controlling |
| Total |
|
At March 31, 2018 |
| 133,320 |
| — |
| 1,043,755 |
| 1,318,728 |
| 41,683 |
| (77,290 | ) | 2,460,196 |
| 426,602 |
| 2,886,798 |
|
Net income (loss) for the period |
| — |
| — |
| — |
| — |
| (40,466 | ) | — |
| (40,466 | ) | 5,143 |
| (35,323 | ) |
Other comprehensive loss for the period |
| — |
| — |
| — |
| — |
| — |
| (21,926 | ) | (21,926 | ) | (11,189 | ) | (33,115 | ) |
Total comprehensive loss for the period |
| — |
| — |
| — |
| — |
| (40,466 | ) | (21,926 | ) | (62,392 | ) | (6,046 | ) | (68,438 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2018 |
| 133,320 |
| — |
| 1,043,755 |
| 1,318,728 |
| 1,217 |
| (99,216 | ) | 2,397,804 |
| 420,556 |
| 2,818,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
| — |
| — |
| — |
| — |
| 20,393 |
| — |
| 20,393 |
| 2,902 |
| 23,295 |
|
Other comprehensive income for the period |
| — |
| — |
| — |
| — |
| — |
| 2,038 |
| 2,038 |
| 4,792 |
| 6,830 |
|
Total comprehensive income for the period |
| — |
| — |
| — |
| — |
| 20,393 |
| 2,038 |
| 22,431 |
| 7,694 |
| 30,125 |
|
Capital increase from non- controlling interest |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 13,911 |
| 13,911 |
|
Repurchase of the Company’s own shares |
| — |
| (4,347 | ) | — |
| — |
| — |
| — |
| (4,347 | ) | — |
| (4,347 | ) |
Dividends distribution to non-controlling interest |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| (2,566 | ) | (2,566 | ) |
Total contributions by and distributions to shareholders |
| — |
| (4,347 | ) | — |
| — |
| — |
| — |
| (4,347 | ) | 11,345 |
| 6,998 |
|
At June 30, 2019 |
| 133,320 |
| (9,455 | ) | 1,043,755 |
| 1,316,472 |
| (5,968 | ) | (77,963 | ) | 2,400,161 |
| 425,189 |
| 2,825,350 |
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements
Nexa Resources S.A.
Condensed consolidated interim statement of changes in shareholders’ equity
At and for six-month period ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
|
| Note |
| Capital |
| Treasury |
| Share |
| Additional |
| Retained |
| Accumulated |
| Total |
| Non- |
| Total |
|
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 |
|
|
| — |
| — |
| — |
| — |
| 14,647 |
| — |
| 14,647 |
| 12,780 |
| 27,427 |
|
Other comprehensive loss for the period |
|
|
| — |
| — |
| — |
| — |
| — |
| (21,860 | ) | (21,860 | ) | (11,535 | ) | (33,395 | ) |
Total comprehensive income (loss) for the period |
|
|
| — |
| — |
| — |
| — |
| 14,647 |
| (21,860 | ) | (7,213 | ) | 1,245 |
| (5,968 | ) |
Decrease in non-controlling interests |
|
|
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| (2,757 | ) | (2,757 | ) |
Reimbursement of share premium - USD 0.60 per share |
|
|
| — |
| — |
| (80,000 | ) | — |
| — |
| — |
| (80,000 | ) | — |
| (80,000 | ) |
Total contributions by and distributions to shareholders |
|
|
| — |
| — |
| (80,000 | ) | — |
| — |
| — |
| (80,000 | ) | (2,757 | ) | (82,757 | ) |
At June 30, 2018 |
|
|
| 133,320 |
| — |
| 1,043,755 |
| 1,318,728 |
| 1,217 |
| (99,216 | ) | 2,397,804 |
| 420,556 |
| 2,818,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 new 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 for the period |
|
|
| — |
| — |
| — |
| — |
| 6,386 |
| — |
| 6,386 |
| 8,613 |
| 14,999 |
|
Other comprehensive income for the period |
|
|
| — |
| — |
| — |
| — |
| — |
| 1,325 |
| 1,325 |
| 4,650 |
| 5,975 |
|
Total comprehensive income for the period |
|
|
| — |
| — |
| — |
| — |
| 6,386 |
| 1,325 |
| 7,711 |
| 13,263 |
| 20,974 |
|
Capital increase from non-controlling interest |
| 1 (a) |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 22,164 |
| 22,164 |
|
Repurchase of the Company’s own shares |
| 1 (b) |
| — |
| (8,103 | ) | — |
| — |
| — |
| — |
| (8,103 | ) | — |
| (8,103 | ) |
Dividends distribution to NEXA’s shareholders - USD 0.53 per share |
| 1 (d) |
| — |
| — |
| — |
| — |
| (69,832 | ) | — |
| (69,832 | ) | — |
| (69,832 | ) |
Dividends distribution to non-controlling interests and to NEXA PERU’s investment shares |
| 1 (d) |
| — |
| — |
| — |
| (2,256 | ) | — |
| — |
| (2,256 | ) | (35,446 | ) | (37,702 | ) |
Total contributions by and distributions to shareholders |
|
|
| — |
| (8,103 | ) | — |
| (2,256 | ) | (69,832 | ) | — |
| (80,191 | ) | (13,282 | ) | (93,473 | ) |
At June 30, 2019 |
|
|
| 133,320 |
| (9,455 | ) | 1,043,755 |
| 1,316,472 |
| (5,968 | ) | (77,963 | ) | 2,400,161 |
| 425,189 |
| 2,825,350 |
|
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 three and six-month periods ended June 30, 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 (“NYSE”) and the Toronto Stock Exchange (“TSX”). 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, two polymetallic mines in Brazil and is also constructing a polymetallic mine 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 and six-month periods ended June 30, 2019
(a) Aripuanã project developments
Contracts and expenditures related to the Aripuanã project are entered into and incurred by Mineração Dardanelos Ltda. (“Dardanelos”), an entity controlled by the Company (which holds a 70% interest), and Mineração Rio Aripuanã Ltda., a subsidiary of Karmin Exploration Inc. (which holds the remaining 30% interest). Dardanelos owns 100% of the Aripuanã project.
During the six-month period ended June 30, 2019, Dardanelos’ equity was increased by USD 74,613. The Company fully subscribed for its portion of the equity increase in the amount of USD 52,449. Mineração Rio Aripuanã Ltda. is not required to subscribe for its portion of USD 22,164 until October 19, 2019, one year after the completion of the feasibility study.
At June 30, 2019, Dardanelos has committed to contracts in the amount of USD 205,586 related to capital expenditures of the Aripuanã project for the purchase of property, plant and equipment.
(b) Share buyback program
At June 30, 2019, the Company has repurchased its own shares in the total amount of USD 8,103, corresponding to 881,922 thousand shares. These shares are being held in treasury and have not been cancelled. The repurchases are part of the Company’s outstanding USD 30,000 shares buyback program initiated in 2018.
(c) Interest rate swap
In January 2019, the Company entered into a ten-year interest rate swap with a 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”.
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
(d) Dividend distribution
On February 15, 2019, the Board of Directors approved a dividend distribution to the Company’s shareholders of record on March 14, 2019 in the amount of USD 0.53 cents per common share, for a total amount of USD 69,832. Dividends were paid in cash on March 28, 2019.
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 the right to receive dividends but are not entitled to voting rights or the residual value of NEXA PERU’s equity.
2 Segment results
The presentation of segment results and reconciliation to income before income tax in the condensed consolidated interim income statement is as follows:
|
| Three-month period ended |
| ||||||||
|
| June 30,2019 |
| ||||||||
|
| Mining |
| Smelting |
| Intersegment |
| Adjustments |
| Consolidated |
|
Net revenues |
| 246,102 |
| 508,837 |
| (140,749 | ) | (891 | ) | 613,299 |
|
Cost of sales |
| (186,627 | ) | (426,651 | ) | 140,749 |
| (6,191 | ) | (478,720 | ) |
Gross profit |
| 59,475 |
| 82,186 |
| — |
| (7,082 | ) | 134,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
| (30,277 | ) | (17,236 | ) | — |
| 5,438 |
| (42,076 | ) |
Mineral exploration and project development |
| (26,226 | ) | (1,859 | ) | — |
| — |
| (28,085 | ) |
Other income and expenses, net |
| (6,971 | ) | (14,363 | ) | — |
| 2,077 |
| (19,257 | ) |
Operating income |
| (4,000 | ) | 48,728 |
| — |
| 432 |
| 45,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 47,985 |
| 24,647 |
| — |
| 683 |
| 73,315 |
|
Adjusted EBITDA |
| 43,986 |
| 73,375 |
| — |
| 1,115 |
| 118,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
| (73,315 | ) |
Net financial results |
|
|
|
|
|
|
|
|
| (15,344 | ) |
Income before income tax |
|
|
|
|
|
|
|
|
| 29,817 |
|
|
| Three-month period ended |
| ||||||||
|
| June 30,2018 |
| ||||||||
|
| Mining |
| Smelting |
| Intersegment |
| Adjustments |
| Consolidated |
|
Net revenues |
| 301,330 |
| 520,227 |
| (184,209 | ) | (831 | ) | 636,517 |
|
Cost of sales |
| (176,057 | ) | (481,711 | ) | 184,209 |
| (760 | ) | (474,319 | ) |
Gross profit |
| 125,273 |
| 38,516 |
| — |
| (1,590 | ) | 162,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
| (12,740 | ) | (22,679 | ) | — |
| (8,427 | ) | (43,846 | ) |
Mineral exploration and project development |
| (25,740 | ) | (1,774 | ) | — |
| — |
| (27,514 | ) |
Other income and expenses, net |
| (15,146 | ) | 8,891 |
| — |
| 9,750 |
| 3,495 |
|
Operating income |
| 71,647 |
| 22,953 |
| — |
| (267 | ) | 94,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 44,696 |
| 23,751 |
| — |
| 167 |
| 68,614 |
|
Adjusted EBITDA |
| 116,343 |
| 46,704 |
| — |
| (100 | ) | 162,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
| (68,614 | ) |
Net financial results |
|
|
|
|
|
|
|
|
| (152,386 | ) |
Loss before income tax |
|
|
|
|
|
|
|
|
| (58,053 | ) |
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
|
| Six-month period ended |
| ||||||||
|
| June 30,2019 |
| ||||||||
|
| Mining |
| Smelting |
| Intersegment |
| Adjustments |
| Consolidated |
|
Net revenues |
| 518,344 |
| 963,813 |
| (299,919 | ) | 877 |
| 1,183,115 |
|
Cost of sales |
| (385,588 | ) | (853,835 | ) | 299,919 |
| (26,563 | ) | (966,067 | ) |
Gross profit |
| 132,756 |
| 109,978 |
| — |
| (25,686 | ) | 217,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
| (50,539 | ) | (33,637 | ) | — |
| 1,030 |
| (83,147 | ) |
Mineral exploration and project development |
| (44,858 | ) | (3,526 | ) | — |
| — |
| (48,384 | ) |
Other income and expenses, net |
| (14,549 | ) | (24,374 | ) | — |
| 25,310 |
| (13,613 | ) |
Operating income |
| 22,809 |
| 48,441 |
| — |
| 653 |
| 71,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 103,703 |
| 50,715 |
| — |
| 6 |
| 154,424 |
|
Adjusted EBITDA |
| 126,513 |
| 99,156 |
| — |
| 659 |
| 226,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
| (154,424 | ) |
Net financial results |
|
|
|
|
|
|
|
|
| (41,228 | ) |
Income before income tax |
|
|
|
|
|
|
|
|
| 30,676 |
|
|
| Six-month period ended |
| ||||||||
|
| June 30,2018 |
| ||||||||
|
| Mining |
| Smelting |
| Intersegment |
| Adjustments |
| Consolidated |
|
Net revenues |
| 628,565 |
| 1,077,522 |
| (392,624 | ) | (758 | ) | 1,312,705 |
|
Cost of sales |
| (348,580 | ) | (998,409 | ) | 392,624 |
| (4,911 | ) | (959,276 | ) |
Gross profit |
| 279,984 |
| 79,113 |
|
|
| (5,667 | ) | 353,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
| (26,128 | ) | (44,410 | ) | — |
| (16,622 | ) | (87,160 | ) |
Mineral exploration and project development |
| (43,896 | ) | (2,897 | ) | — |
| — |
| (46,793 | ) |
Other income and expenses, net |
| (22,686 | ) | (3,592 | ) | — |
| 22,721 |
| (3,557 | ) |
Operating income |
| 187,274 |
| 28,213 |
| — |
| 432 |
| 215,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 89,639 |
| 48,380 |
| — |
| 580 |
| 138,599 |
|
Exceptional items (i) |
|
|
|
|
| — |
| (348 | ) | (348 | ) |
Adjusted EBITDA |
| 276,913 |
| 76,592 |
| — |
| 665 |
| 354,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exceptional items (i) |
|
|
|
|
|
|
| 348 |
| 348 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
| (138,599 | ) |
Net financial results |
|
|
|
|
|
|
|
|
| (181,385 | ) |
Income before income tax |
|
|
|
|
|
|
|
|
| 34,534 |
|
(i) Exceptional items are composed of miscellaneous adjustments and reconcile the segments’ Adjusted EBITDA to the consolidated Adjusted EBITDA.
3 Basis of preparation of the condensed consolidated interim financial statements
These condensed consolidated interim financial statements for the three and six-month periods ended June 30, 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”).
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
The Company made a voluntary election to present the condensed consolidated interim statement of cash flows for the three-month period ended June 30, 2019 and 2018.
The Company is also presenting a condensed consolidated interim statement of changes in shareholders’ equity for the three-month period ended June 30, 2019 and 2018 in accordance with SEC Final Rule Release No. 33-10532, Disclosure Update and Simplification.
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 presentation 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. These critical accounting estimates represent estimates that are uncertain and changes in those estimates could materially impact the Company’s condensed consolidated interim financial statements. Actual future outcomes may differ from present estimates and the Company reviews its estimates and assumptions on an ongoing basis using the most current information available. Management also exercises judgment in the process of applying the Company’s accounting policies.
The critical judgments and estimates in the application of accounting principles during the six-month period ended June 30, 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 July 31, 2019.
4 Changes in accounting policies and disclosures
New and amended IFRS 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.
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 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:
· The accounting for low value leases and leases with a remaining term of less than 12 months as at January 1, 2019;
· The exclusion of initial direct costs from the measurement of the right-of-use asset at the date of initial application; and
· 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 June 30, 2019, interest rates were between 8.44% to 11.39% for Brazil and 4.73% to 5.49% 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 18,612 due to the presentation of a portion of the liability as a current liability. The Company also reclassified the amount of USD 2,278 from Property, plant and equipment to Right-of-use assets and USD 3,088 from Loans and financing to Lease liabilities corresponding to contracts previously classified as financial leases under IAS 17.
As a result of the adoption, income before tax decreased by USD 378 and USD 1,782 for the three-month and six-month period ended June 30, 2019, respectively. Adjusted EBITDA, which is used to measure segment results, increased by USD 4,855 and USD 8,711 for the three-month and six-month period ended June 30, 2019, respectively, 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.
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
(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.
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 Net revenues
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Gross revenues |
| 672,214 |
| 701,200 |
| 1,298,111 |
| 1,447,618 |
|
Revenues from products |
| 652,932 |
| 682,986 |
| 1,261,952 |
| 1,412,987 |
|
Revenues from services |
| 19,282 |
| 18,214 |
| 36,159 |
| 34,631 |
|
Taxes on sales |
| (57,676 | ) | (63,543 | ) | (112,649 | ) | (132,543 | ) |
Return of products sales |
| (1,239 | ) | (1,140 | ) | (2,347 | ) | (2,370 | ) |
Net revenues |
| 613,299 |
| 636,517 |
| 1,183,115 |
| 1,312,705 |
|
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
6 Expenses by nature
|
|
|
|
|
|
|
| Three-month period ended |
| ||
|
|
|
|
|
|
|
| 2019 |
| 2018 |
|
|
| Cost of sales |
| Selling, general |
| Mineral exploration |
| Total |
| Total |
|
Raw materials and consumables used |
| 260,508 |
| 2,026 |
| — |
| 262,534 |
| 289,389 |
|
Third-party services |
| 100,799 |
| 17,365 |
| 20,484 |
| 138,648 |
| 101,959 |
|
Depreciation and amortization |
| 71,072 |
| 2,236 |
| 7 |
| 73,315 |
| 68,614 |
|
Employee benefit expenses |
| 40,008 |
| 13,194 |
| 3,468 |
| 56,670 |
| 59,456 |
|
Other expenses |
| 6,333 |
| 7,255 |
| 4,126 |
| 17,714 |
| 26,261 |
|
|
| 478,720 |
| 42,076 |
| 28,085 |
| 548,881 |
| 545,679 |
|
|
|
|
|
|
|
|
| Six-month period ended |
| ||
|
|
|
|
|
|
|
| 2019 |
| 2018 |
|
|
| Cost of sales |
| Selling, general |
| Mineral exploration |
| Total |
| Total |
|
Raw materials and consumables used |
| 528,163 |
| 3,854 |
| — |
| 532,017 |
| 561,473 |
|
Third-party services |
| 196,334 |
| 28,174 |
| 34,234 |
| 258,742 |
| 217,437 |
|
Depreciation and amortization |
| 150,685 |
| 3,726 |
| 14 |
| 154,425 |
| 138,599 |
|
Employee benefit expenses |
| 77,645 |
| 32,204 |
| 7,581 |
| 117,430 |
| 131,315 |
|
Other expenses |
| 13,240 |
| 15,189 |
| 6,555 |
| 34,984 |
| 44,405 |
|
|
| 966,067 |
| 83,147 |
| 48,384 |
| 1,097,598 |
| 1,093,229 |
|
7 Mineral exploration and project development
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Mineral exploration |
| (18,984 | ) | (20,684 | ) | (32,733 | ) | (36,564 | ) |
Project development (FEL 1 and FEL 2) |
| (9,101 | ) | (6,830 | ) | (15,651 | ) | (10,229 | ) |
|
| (28,085 | ) | (27,514 | ) | (48,384 | ) | (46,793 | ) |
8 Other income and expenses, net
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Remeasurement of environmental obligations (i) |
| (1,220 | ) | 13,009 |
| 3,912 |
| 13,009 |
|
Commodities derivative financial instruments |
| (4,671 | ) | 7,178 |
| 1,641 |
| 7,517 |
|
Mining obligations |
| (2,074 | ) | (4,681 | ) | (5,956 | ) | (6,430 | ) |
Projects and contributions to communities |
| (719 | ) | (3,375 | ) | (1,309 | ) | (4,994 | ) |
Reversal (provision) for tax, labor, civil and environmental claims |
| (5,606 | ) | 355 |
| (4,255 | ) | (3,883 | ) |
Loss on sale of property, plant and equipment (i) |
| (596 | ) | (9,385 | ) | (982 | ) | (8,727 | ) |
Gain on sale of investments |
| — |
| — |
| — |
| 348 |
|
Other operating income (expenses), net |
| (4,371 | ) | 394 |
| (6,664 | ) | (397 | ) |
|
| (19,257 | ) | 3,495 |
| (13,613 | ) | (3,557 | ) |
(i) On May 21, 2018, the Company entered into an agreement to sell assets and transfer certain liabilities of the Fortaleza de Minas facility. The transaction resulted in the recognition of a loss of USD 9,615 on the sale of property, plant and equipment and intangible assets and a gain of USD 13,009 related to the reversal of the related asset retirement obligation.
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
9 Net financial results
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Financial income |
|
|
|
|
|
|
|
|
|
Gains on financial investments |
| 5,673 |
| 6,029 |
| 11,168 |
| 12,139 |
|
Derivative financial instruments |
| 3,608 |
| — |
| 5,459 |
| — |
|
Other financial income |
| 485 |
| 4,533 |
| 1,167 |
| 7,181 |
|
|
| 9,766 |
| 10,562 |
| 17,794 |
| 19,320 |
|
|
|
|
|
|
|
|
|
|
|
Financial expense |
|
|
|
|
|
|
|
|
|
Interest on loans and financing |
| (18,083 | ) | (18,044 | ) | (36,550 | ) | (37,115 | ) |
Interest on contractual liabilities |
| (1,673 | ) | (1,855 | ) | (3,388 | ) | (3,752 | ) |
Interest on other liabilities |
| (3,502 | ) | (1,338 | ) | (5,787 | ) | (2,448 | ) |
Derivative financial instruments |
| (872 | ) | — |
| (872 | ) | (939 | ) |
Interest on lease liabilities |
| (891 | ) | — |
| (1,874 | ) | — |
|
Other financial expenses |
| (8,152 | ) | (10,352 | ) | (16,276 | ) | (17,188 | ) |
|
| (33,173 | ) | (31,589 | ) | (64,747 | ) | (61,442 | ) |
|
|
|
|
|
|
|
|
|
|
Foreign exchange effects |
| 8,063 |
| (131,359 | ) | 5,725 |
| (139,263 | ) |
Net financial results |
| (15,344 | ) | (152,386 | ) | (41,228 | ) | (181,385 | ) |
10 Current and deferred income taxes
(a) Reconciliation of income tax benefit (expense)
|
| Three-month period ended |
| Six-month period ended |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Income (loss) before income tax |
| 29,817 |
| (58,053 | ) | 30,676 |
| 34,534 |
|
Standard rate (i) |
| 24.94 | % | 26.01 | % | 24.94 | % | 26.01 | % |
|
|
|
|
|
|
|
|
|
|
Income tax at standard rate |
| (7,436 | ) | 15,100 |
| (7,650 | ) | (8,982 | ) |
Difference in tax rate of subsidiaries outside Luxembourg |
| 4,173 |
| 15,621 |
| 2,544 |
| 15,839 |
|
Special mining levy and special mining tax |
| (1,578 | ) | (5,359 | ) | (5,025 | ) | (10,453 | ) |
Withholding tax on dividends paid by subsidiaries |
| — |
| — |
| (9,764 | ) | — |
|
Other permanent tax differences |
| (1,681 | ) | (2,632 | ) | 4,220 |
| (3,511 | ) |
Income tax |
| (6,522 | ) | 22,730 |
| (15,676 | ) | (7,107 | ) |
|
|
|
|
|
|
|
|
|
|
Current |
| (4,513 | ) | (16,825 | ) | (26,630 | ) | (52,123 | ) |
Deferred |
| (2,009 | ) | 39,555 |
| 10,953 |
| 45,016 |
|
Income tax |
| (6,522 | ) | 22,730 |
| (15,676 | ) | (7,107 | ) |
(i) On April 25, 2019 the Luxembourg Parliament approved the 2019 Budget Law, including a reduction of the corporate income tax rate from 26.01% to 24.94%, effective for 2019. As the Company’s tax credits on non-operating losses resulting from its standalone activities do not meet the recognition criteria and, therefore, no deferred tax assets are recognized, the change in the tax law has no impact on the condensed consolidated interim income statement or balance sheet.
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
(b) Analysis of deferred income tax assets and liabilities
|
| June 30, |
| December 31, |
|
Tax credits on non-operating losses |
| 127,469 |
| 106,818 |
|
Uncertain income tax treatments |
| (10,639 | ) | — |
|
Tax credits on temporary differences |
|
|
|
|
|
Foreign exchange losses |
| 33,515 |
| 50,766 |
|
Environmental liabilities |
| 27,705 |
| 28,808 |
|
Asset retirement obligation |
| 22,132 |
| 8,616 |
|
Tax, civil and labor provisions |
| 8,739 |
| 10,467 |
|
Other provisions |
| 1,702 |
| 12,875 |
|
Provision for obsolete and slow-moving inventory |
| 5,805 |
| 4,331 |
|
Provision for employee benefits |
| 4,553 |
| 5,308 |
|
Other |
| 16,327 |
| 16,925 |
|
|
|
|
|
|
|
Tax debits on temporary differences |
|
|
|
|
|
Capitalized interest |
| (16,361 | ) | (11,725 | ) |
Depreciation and amortization |
| (315,640 | ) | (328,834 | ) |
Other |
| (1,636 | ) | (1,799 | ) |
|
| (96,329 | ) | (97,444 | ) |
|
|
|
|
|
|
Deferred income tax assets |
| 202,516 |
| 201,154 |
|
Deferred income tax liabilities |
| (298,845 | ) | (298,598 | ) |
|
| (96,329 | ) | (97,444 | ) |
11 Cash and cash equivalents
(a) Composition
|
| June 30, 2019 |
| December 31, 2018 |
|
Bank accounts |
| 301,719 |
| 320,069 |
|
Term deposits |
| 449,294 |
| 712,869 |
|
|
| 751,013 |
| 1,032,938 |
|
The decrease in cash and cash equivalents balance is related principally to dividends payments in the amount of USD 102,298, which includes dividends paid to non-controlling interests of NEXA PERU and an increased acquisitions of property, plant and equipment and working capital (see (b) below and Note 13).
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
(b) Changes in operating assets and liabilities
|
| Three-month period |
| Six-month period |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Decrease (increase) in assets |
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
| (4,538 | ) | 25,764 |
| 4,550 |
| (28,529 | ) |
Inventory |
| (23,980 | ) | 31,672 |
| (52,755 | ) | 7,109 |
|
Other operating assets |
| (58,670 | ) | (5,988 | ) | (86,258 | ) | (12,376 | ) |
Increase (decrease) in liabilities |
|
|
|
|
|
|
|
|
|
Trade payables |
| (10,769 | ) | (5,232 | ) | (42,266 | ) | (2,203 | ) |
Confirming payables |
| 9,022 |
| (54,337 | ) | (4,542 | ) | 4,601 |
|
Contractual liabilities |
| (7,880 | ) | (12,980 | ) | (12,658 | ) | (16,963 | ) |
Other operating liabilities |
| 36,902 |
| 20,510 |
| 20,014 |
| (11,615 | ) |
|
| (59,913 | ) | (591 | ) | (173,915 | ) | (59,976 | ) |
12 Derivative financial instruments
(a) Fair value by strategy
|
| June 30, 2019 |
| December 31, 2018 |
| ||||||
|
| Per Unit |
| Notional |
| Fair value |
| Notional |
| Fair value |
|
Strategy |
|
|
|
|
|
|
|
|
|
|
|
Mismatches of quotational periods |
|
|
|
|
|
|
|
|
|
|
|
Zinc forward |
| ton |
| 237,498 |
| (457 | ) | 261,020 |
| (557 | ) |
|
|
|
|
|
| (457 | ) |
|
| (557 | ) |
Sales of zinc at a fixed price |
|
|
|
|
|
|
|
|
|
|
|
Zinc forward |
| ton |
| 13,545 |
| (231 | ) | 10,566 |
| (858 | ) |
|
|
|
|
|
| (231 | ) |
|
| (858 | ) |
Inflation risk |
|
|
|
|
|
|
|
|
|
|
|
Brazilian inflation vs. Brazilian interbank interest rate swap |
| BRL |
| 226,880 |
| 531 |
| — |
| — |
|
|
|
|
|
|
| 531 |
|
|
| — |
|
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange collars (USD) |
| BRL |
| 873,388 |
| 2 |
| 1,056,922 |
| (1,602 | ) |
|
|
|
|
|
| 2 |
|
|
| (1,602 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (155 | ) |
|
| (3,017 | ) |
Current assets |
|
|
|
|
| 5,473 |
|
|
| 7,385 |
|
Non-current assets |
|
|
|
|
| 2,631 |
|
|
| 3,820 |
|
Current liabilities |
|
|
|
|
| (5,967 | ) |
|
| (8,662 | ) |
Non-current liabilities |
|
|
|
|
| (2,292 | ) |
|
| (5,560 | ) |
(b) Changes in fair value in the six-month period ended June 30, 2019
|
| Inventory |
| Cost of |
| Net |
| Other income |
| Net |
| Other |
| Realized |
|
Strategy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mismatches of quotational periods |
| 357 |
| (14,808 | ) | 2,886 |
| 5 |
| — |
| 3,435 |
| (8,224 | ) |
Sales of zinc at a fixed price |
| — |
| — |
| — |
| 1,636 |
| — |
| — |
| 1,008 |
|
Inflation risk |
| — |
| — |
| — |
| — |
| 1,008 |
| — |
| 477 |
|
Foreign exchange risk |
| — |
| — |
| — |
| — |
| 3,579 |
| — |
| 1,945 |
|
|
| 357 |
| (14,808 | ) | 2,886 |
| 1,641 |
| 4,587 |
| 3,435 |
| (4,794 | ) |
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
13 Inventory
(a) Composition
|
| June 30, |
| December 31, |
|
Finished products (i) |
| 136,763 |
| 106,245 |
|
Semi-finished products |
| 61,787 |
| 52,534 |
|
Raw materials |
| 76,745 |
| 64,582 |
|
Auxiliary materials and consumables |
| 70,715 |
| 69,781 |
|
Provision for obsolete and slow-moving inventory |
| (35,176 | ) | (23,437 | ) |
|
| 310,834 |
| 269,705 |
|
(i) The increase in finished products is due to the anticipated shutdown of the Cajamarquilla smelter in 4Q19 for the implementation of the Jarosite conversion process.
(b) Changes to the provision in the six-month period ended June 30
|
| 2019 |
| 2018 |
|
At December 31 |
| (23,437 | ) | (20,736 | ) |
Additions |
| (14,005 | ) | (12,618 | ) |
Reversals |
| 2,379 |
| 4,765 |
|
Exchange variation gains (losses) |
| (114 | ) | 1,670 |
|
At June 30 |
| (35,176 | ) | (26,919 | ) |
14 Other assets
|
| June 30, 2019 |
| December 31, 2018 |
|
Taxes recoverable (i) |
| 237,889 |
| 183,628 |
|
Advances to third parties (ii) |
| 22,429 |
| 2,472 |
|
Dardanelos’ equity increase commitment (iii) |
| 22,164 |
| — |
|
Prepaid expenses |
| 14,245 |
| 8,556 |
|
Judicial deposits |
| 5,922 |
| 9,230 |
|
Related parties |
| 875 |
| 740 |
|
Other assets |
| 40,913 |
| 39,429 |
|
|
| 344,437 |
| 244,055 |
|
Current assets |
| 200,433 |
| 122,857 |
|
Non-current assets |
| 144,004 |
| 121,198 |
|
(i) Increase in taxes recoverable is mainly due to a) an increase in value added tax credits in the amount of USD 19,441 due to lower sales causing a reduction in taxes on sales against which the tax credits can be offset, and b) to income taxes prepayments in the amount of USD 16,196.
(ii) Increase in advances to third parties is related to a) USD 9,283 of advances to service providers in NEXA PERU, and b)
USD 7,967 advances to third party ore supplier in NEXA BR.
(iii) Increase is due to the unsubscribed portion of Dardanelos’ equity (Note 1(a)).
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month period ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
15 Property, plant and equipment
(a) Changes in the six-month period ended June 30
|
| 2019 |
| 2018 |
| ||||||||||||
|
| Dam and |
| Machinery, |
| Assets and |
| Asset |
| Mining |
|
|
|
|
|
|
|
|
| buildings |
| facilities |
| construction |
| obligation |
| projects |
| Other |
| Total |
| Total |
|
At December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
| — |
| 212 |
| 159,387 |
| — |
| — |
| 10 |
| 159,609 |
| 91,462 |
|
Disposals |
| (16 | ) | (344 | ) | (77 | ) | — |
| — |
| (372 | ) | (809 | ) | (9,732 | ) |
Depreciation |
| (26,580 | ) | (66,414 | ) | — |
| (3,039 | ) | (1,161 | ) | (783 | ) | (97,977 | ) | (94,877 | ) |
Foreign exchange effect |
| 3,093 |
| 3,990 |
| 2,751 |
| 1,124 |
| — |
| 167 |
| 11,125 |
| (135,777 | ) |
Transfers to intangibles |
| 22,656 |
| 63,893 |
| (102,854 | ) | — |
| 11,700 |
| 890 |
| (3,715 | ) | (3,137 | ) |
Reclassification — Note 4(a) |
| — |
| (2,278 | ) | — |
| — |
| — |
| — |
| (2,278 | ) | — |
|
Remeasurement of asset retirement obligation |
| — |
| — |
| — |
| (3,180 | ) | — |
| — |
| (3,180 | ) | 8,669 |
|
At June 30 |
| 549,478 |
| 801,585 |
| 408,276 |
| 78,537 |
| 167,264 |
| 26,086 |
| 2,031,226 |
| 1,853,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
| 1,030,325 |
| 2,418,464 |
| 408,276 |
| 173,597 |
| 255,328 |
| 51,271 |
| 4,337,261 |
| 3,979,442 |
|
Accumulated depreciation |
| (480,847 | ) | (1,616,879 | ) | — |
| (95,060 | ) | (88,064 | ) | (25,185 | ) | (2,306,035 | ) | (2,126,320 | ) |
At June 30 |
| 549,478 |
| 801,585 |
| 408,276 |
| 78,537 |
| 167,264 |
| 26,086 |
| 2,031,226 |
| 1,853,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average annual depreciation rates % |
| 4 |
| 7 |
| — |
| 5 |
| 8 |
| — |
|
|
|
|
|
(i) | Additions include capitalized borrowing costs in the amount of USD 4,221 for the six-month period ended June 30, 2019 (June 30, 2018 — USD 5,036). |
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
16 Intangible assets
(a) Changes in the six-month period ended June 30
|
| 2019 |
| 2018 |
| ||||||
|
| Goodwill |
| Rights to use |
| Other |
| Total |
| Total |
|
At December 31 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Disposals |
| — |
| — |
| (378 | ) | (378 | ) | — |
|
Amortization |
| — |
| (46,725 | ) | (1,088 | ) | (47,813 | ) | (43,722 | ) |
Transfers from property, plant and equipment |
| — |
| — |
| 3,715 |
| 3,715 |
| 3,105 |
|
Foreign exchange effect |
| 45 |
| 158 |
| 187 |
| 390 |
| (14,634 | ) |
At June 30 |
| 674,845 |
| 1,002,478 |
| 21,052 |
| 1,698,375 |
| 1,767,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
| 674,845 |
| 1,669,841 |
| 60,769 |
| 2,405,455 |
| 2,390,498 |
|
Accumulated amortization |
| — |
| (667,363 | ) | (39,717 | ) | (707,080 | ) | (623,030 | ) |
At June 30 |
| 674,845 |
| 1,002,478 |
| 21,052 |
| 1,698,375 |
| 1,767,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average annual amortization rates % |
| — |
| 6 |
| 19 |
|
|
|
|
|
17 Right-of-use assets and lease liabilities
(a) Right-of-use assets - Changes in the six-month period ended June 30
|
| 2019 |
| ||||||||
|
| Buildings |
| Machinery, |
| IT equipment |
| Vehicles |
| Total |
|
At January 1 |
| 4,312 |
| 8,536 |
| 5,846 |
| 22,827 |
| 41,521 |
|
New contracts |
| 2,499 |
| 154 |
| — |
| 811 |
| 3,464 |
|
Amortization |
| (807 | ) | (1,483 | ) | (2,129 | ) | (4,215 | ) | (8,634 | ) |
Reclassification — Note 4(a) |
| — |
| 2,278 |
| — |
| — |
| 2,278 |
|
Foreign exchange effect |
| (4 | ) | (13 | ) | — |
| (6 | ) | (23 | ) |
At June 30 |
| 6,000 |
| 9,472 |
| 3,717 |
| 19,417 |
| 38,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average annual amortization rates % |
| 23 |
| 34 |
| 63 |
| 39 |
|
|
|
(b) Lease liabilities - Changes in the six-month period ended June 30
|
| 2019 |
|
At January 1 |
| 41,450 |
|
New contracts |
| 3,464 |
|
Payments of lease liabilities |
| (8,333 | ) |
Interest paid |
| (359 | ) |
Interest accrual |
| 1,874 |
|
Reclassification — Note 4(a) |
| 3,088 |
|
Foreign exchange effect |
| 943 |
|
June 30 |
| 42,127 |
|
Current liabilities |
| 18,612 |
|
Non-current liabilities |
| 23,515 |
|
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
(c) Maturity profile
|
| June 30, 2019 |
| ||||||||||||
|
| 2019 |
| 2020 |
| 2021 |
| 2022 |
| 2023 |
| As from |
| Total |
|
U.S. Dollar |
| 5,266 |
| 4,909 |
| 2,094 |
| 1,355 |
| 419 |
| 34 |
| 14,077 |
|
Real |
| 6,121 |
| 9,118 |
| 6,781 |
| 5,330 |
| 643 |
| 57 |
| 28,050 |
|
|
| 11,387 |
| 14,027 |
| 8,875 |
| 6,685 |
| 1,062 |
| 91 |
| 42,127 |
|
18 Loans and financing
(a) Composition
|
| June 30, |
| December 31, |
| ||||||
Type |
| Average interest rate |
| Current |
| Non-current |
| Total |
| Total |
|
Eurobonds - USD |
| Fixed 5.13% |
| 8,705 |
| 1,034,448 |
| 1,043,153 |
| 1,042,571 |
|
Debt with banks |
| LIBOR + 1.27% |
| — |
| 197,744 |
| 197,744 |
| 197,292 |
|
BNDES |
| TJLP + 2.82% |
| 7,368 |
| 94,840 |
| 102,208 |
| 89,925 |
|
Debentures |
| 107.50% CDI |
| 7,521 |
| 21,002 |
| 28,523 |
| 28,188 |
|
Other |
|
|
| 9,385 |
| 49,268 |
| 58,653 |
| 66,891 |
|
|
|
|
| 32,979 |
| 1,397,302 |
| 1,430,281 |
| 1,424,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term loans and financing (principal) |
| 21,879 |
|
|
|
|
|
|
| ||
Interest on loans and financing |
|
|
| 11,100 |
|
|
|
|
|
|
|
|
|
|
| 32,979 |
|
|
|
|
|
|
|
(b) Maturity profile
|
| June 30, 2019 |
| ||||||||||||
|
| 2019 |
| 2020 |
| 2021 |
| 2022 |
| 2023 |
| As from 2024 |
| Total |
|
Eurobonds - USD |
| 9,312 |
| — |
| — |
| — |
| 341,828 |
| 692,013 |
| 1,043,153 |
|
Debt with banks |
| 326 |
| — |
| 79,195 |
| 79,254 |
| 38,968 |
| — |
| 197,743 |
|
BNDES |
| 3,598 |
| 7,539 |
| 9,372 |
| 14,870 |
| 14,870 |
| 51,959 |
| 102,208 |
|
Debentures |
| 7,534 |
| 6,986 |
| 7,000 |
| 7,003 |
| — |
| — |
| 28,523 |
|
Other |
| 4,748 |
| 9,429 |
| 9,377 |
| 8,048 |
| 7,796 |
| 19,256 |
| 58,654 |
|
|
| 25,518 |
| 23,954 |
| 104,944 |
| 109,175 |
| 403,462 |
| 763,228 |
| 1,430,281 |
|
(c) Changes in the six-month period ended June 30
|
| 2019 |
| 2018 |
|
At December 31 |
| 1,424,867 |
| 1,447,299 |
|
New loans and financing |
| 13,369 |
| 276,495 |
|
Payments of loans and financing |
| (7,316 | ) | (302,212 | ) |
Foreign exchange effect |
| 2,463 |
| 2,238 |
|
Gain on debt modification |
| — |
| (3,428 | ) |
Reclassification — Note 4(a) |
| (3,088 | ) | — |
|
Interest accrual |
| 36,550 |
| 37,115 |
|
Interest paid |
| (36,564 | ) | (36,877 | ) |
At June 30 |
| 1,430,281 |
| 1,420,630 |
|
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
(d) Analysis by currency
|
| June 30, 2019 |
| December 31, 2018 |
| ||||
|
| Current |
| Non-current |
| Total |
| Total |
|
U.S. Dollar |
| 16,372 |
| 1,278,605 |
| 1,294,977 |
| 1,301,395 |
|
Real |
| 16,607 |
| 118,697 |
| 135,304 |
| 123,472 |
|
|
| 32,979 |
| 1,397,302 |
| 1,430,281 |
| 1,424,867 |
|
(e) Analysis by index
|
| June 30, 2019 |
| December 31, 2018 |
| ||||
|
| Current |
| Non-current |
| Total |
| Total |
|
Fixed rate |
| 9,044 |
| 1,035,135 |
| 1,044,179 |
| 1,047,245 |
|
LIBOR |
| 7,667 |
| 244,156 |
| 251,823 |
| 255,333 |
|
TJLP |
| 1,784 |
| 18,286 |
| 20,070 |
| 16,167 |
|
CDI |
| 7,521 |
| 21,002 |
| 28,523 |
| 28,188 |
|
BNDES SELIC |
| 646 |
| 26,097 |
| 26,743 |
| 19,447 |
|
TLP |
| 6,317 |
| 52,625 |
| 58,943 |
| 58,487 |
|
|
| 32,979 |
| 1,397,301 |
| 1,430,281 |
| 1,424,867 |
|
(f) Guarantees and covenants
No changes to the contractual guarantees or to the financial covenants occurred in the six-month period ended June 30, 2019. At June 30, 2019, the Company was in compliance with all applicable covenants.
19 Asset retirement and environmental obligations
(a) Changes in the six-month period ended June 30
|
| 2019 |
| 2018 |
| ||||
|
| Asset retirement |
| Environmental |
| Total |
| Total |
|
At December 31 |
| 185,553 |
| 84,730 |
| 270,283 |
| 283,280 |
|
Payments |
| (899 | ) | (3,239 | ) | (4,138 | ) | (1,975 | ) |
Foreign exchange effect |
| 3,809 |
| 991 |
| 4,800 |
| (26,430 | ) |
Interest accrual |
| 4,763 |
| 2,914 |
| 7,677 |
| 7,990 |
|
Remeasurement |
| 561 |
| (3,912 | ) | (3,351 | ) | (5,078 | ) |
At June 30 |
| 193,787 |
| 81,484 |
| 275,271 |
| 257,787 |
|
Current liabilities |
|
|
|
|
| 22,392 |
| 17,793 |
|
Non-current liabilities |
|
|
|
|
| 252,879 |
| 239,992 |
|
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
20 Provisions
(a) Changes in the six-month period ended June 30
|
| 2019 |
| 2018 |
| ||||||||
|
| Tax |
| Labor |
| Civil |
| Environmental |
| Total |
| Total |
|
At December 31 |
| 12,068 |
| 12,188 |
| 1,371 |
| 5,014 |
| 30,641 |
| 818 |
|
Additions |
| 2,969 |
| 2,011 |
| 277 |
| 1,024 |
| 6,281 |
| 13,297 |
|
Reversals |
| (2,554 | ) | (2,354 | ) | (168 | ) | (1,085 | ) | (6,161 | ) | (11,537 | ) |
Interest accrual |
| 645 |
| 849 |
| 51 |
| 57 |
| 1,602 |
| 1,377 |
|
Payments |
| (445 | ) | (1,340 | ) | (252 | ) | (257 | ) | (2,294 | ) | (22,538 | ) |
Foreign exchange effect |
| 76 |
| 160 |
| 8 |
| 100 |
| 344 |
| (4,063 | ) |
Adoption of IFRIC 23 — Note 4 (b) |
| (6,047 | ) | — |
| — |
| — |
| (6,047 | ) | — |
|
Other |
| (32 | ) | (344 | ) | (60 | ) | — |
| (436 | ) | (167 | ) |
At June 30 |
| 6,680 |
| 11,170 |
| 1,227 |
| 4,853 |
| 23,930 |
| 15,580 |
|
(b) Breakdown of tax, civil, labor and environmental provisions
The provisions and the corresponding judicial deposits are as follow:
|
| June 30, 2019 |
| December 31, 2018 |
| ||||||||
|
| Judicial |
| Provisions |
| Carrying |
| Outstanding |
| Carrying |
| Outstanding |
|
Tax |
| (2,102 | ) | 8,782 |
| 6,680 |
| 2,223 |
| 12,068 |
| 2,245 |
|
Labor |
| (4,650 | ) | 15,820 |
| 11,170 |
| 3,146 |
| 12,188 |
| 6,555 |
|
Civil |
| (815 | ) | 2,042 |
| 1,227 |
| 25 |
| 1,371 |
| 17 |
|
Environmental |
| — |
| 4,853 |
| 4,853 |
| 528 |
| 5,014 |
| 413 |
|
|
| (7,567 | ) | 31,497 |
| 23,930 |
| 5,922 |
| 30,641 |
| 9,230 |
|
(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:
|
| June 30, 2019 |
| December 31, 2018 |
|
Tax |
| 140,624 |
| 137,110 |
|
Labor |
| 41,663 |
| 39,079 |
|
Civil |
| 22,096 |
| 20,130 |
|
Environmental |
| 120,560 |
| 119,747 |
|
|
| 324,943 |
| 316,066 |
|
21 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 of the financial instruments in these condensed consolidated interim financial statements are consistent with those
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
applied and disclosed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2018.
|
| June 30, 2019 |
| ||||||
Assets per balance sheet |
| Amortized |
| Fair value |
| Fair value |
| Total |
|
Cash and cash equivalents |
| — |
| 751,013 |
| — |
| 751,013 |
|
Financial investments |
| — |
| 109,441 |
| — |
| 109,441 |
|
Derivative financial instruments |
| — |
| 5,360 |
| 2,744 |
| 8,104 |
|
Trade accounts receivable |
| 106,358 |
| 62,023 |
|
|
| 168,381 |
|
Related parties (i) |
| 875 |
| — |
| — |
| 875 |
|
|
| 129,397 |
| 927,837 |
| 2,744 |
| 1,059,978 |
|
|
| June 30, 2019 |
| ||||||
Liabilities per balance sheet |
| Amortized |
| Fair value |
| Fair value |
| Total |
|
Loans and financing |
| 1,430,281 |
| — |
| — |
| 1,430,281 |
|
Lease liabilities |
| 42,127 |
| — |
| — |
| 42,127 |
|
Derivative financial instruments |
| — |
| 5,796 |
| 2,463 |
| 8,259 |
|
Trade payables |
| 344,959 |
| — |
| — |
| 344,959 |
|
Confirming payables |
| 65,869 |
| — |
| — |
| 65,869 |
|
Use of public assets (ii) |
| 23,609 |
| — |
| — |
| 23,609 |
|
Related parties (ii) |
| 653 |
| — |
| — |
| 653 |
|
|
| 1,907,498 |
| 5,796 |
| 2,463 |
| 1,915,752 |
|
|
| December 31, 2018 |
| ||||||
Assets per balance sheet |
| Amortized |
| 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 |
| 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.
Nexa Resources S.A.
Notes to the condensed consolidated interim financial statements
At and for three and six-month periods ended June 30, 2019
All amounts in thousands of US dollars, unless otherwise stated
(b) Fair value by hierarchy
|
| June 30, 2019 |
| ||||
|
| Level 1 |
| Level 2 |
| Total |
|
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 751,013 |
| — |
| 751,013 |
|
Financial investments |
| 54,930 |
| 54,511 |
| 109,441 |
|
Derivative financial instruments |
| — |
| 8,104 |
| 8,104 |
|
Trade accounts receivable |
| — |
| 168,381 |
| 168,381 |
|
|
| 805,943 |
| 230,996 |
| 1,036,939 |
|
Liabilities |
|
|
|
|
|
|
|
Derivative financial instruments |
| — |
| 8,259 |
| 8,259 |
|
Loans and financing (i) |
| 1,095,665 |
| 389,083 |
| 1,484,748 |
|
|
| 1,095,665 |
| 397,342 |
| 1,493,007 |
|
|
| 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 six-month period ended June 30, 2019. None of the financial instruments were classified as Level 3 as of June 30, 2019.