ABRIDGED UNAUDITED GROUP FINANCIAL RESULTS

0 downloads 224 Views 162KB Size Report
Dec 1, 2015 - also secured a US$1 million loan facility from a local financial institution, .... continued to increase a
ABRIDGED UNAUDITED GROUP FINANCIAL RESULTS (“BNC”, “the Corporation” or “the Company”)

For the half year ended 30 September 2015

Registered Address: Trojan Nickel Mine, Trojan Mine Road, P. O. Box 35, Bindura, Zimbabwe

Notice To Shareholders OVERVIEW The performance of the Company during the first 6 months of the year was characterized by a number of factors, significant among them being: •

One fatality in the Trojan Re-deep Project in June 2015. We express our deep condolences to the deceased employee’s family, workmates and friends;



Low production mainly due to a planned major shutdown during the month of July 2015 to facilitate the upgrade of the Power Supply system and Winders;



Declining nickel prices, resulting in liquidity and profitability constraints;



Changes to the parent company’s shareholding structure, culminating in significant changes to the BNC Board in September 2015, including the departure of the former Board Chairman, Mr. Kalaa Katema Mpinga.

FINANCIAL RESULTS Income statement Turnover comprised 2 762 tonnes of nickel in concentrate at a value of US$20.6 million (2014: 3 879 tonnes and US$46.4 million respectively). This represents a decrease of 29% in tonnes sold and 56% in value sold compared to the prior period. The average realised price for nickel in concentrate for the period was US$7 654 per tonne (2014: US$11 809 per tonne). Note: The Company has amended the method of reporting the nickel price received, cash cost and all-in sustaining cost. The average nickel price received reflects the actual price received rather than the average London Metal Exchange (LME) price for the period as previously reported. Cash costs and all-in sustaining costs are now reported as actual costs incurred. Previously these costs were adjusted for the opportunity cost forgone as a result of selling a nickel concentrate rather than a nickel cathode. Cost of sales decreased by 13% to US$18.3 million versus last year’s comparative period (US$ 22.6 million). The decrease was mainly as a result of the reduced tonnage referred to above. The Company incurred an operating loss of US$4.0 million compared to a profit of US$12.5 million in the prior period. Loss after tax was $3.4 million versus US$8.5 million profit after tax recorded in the comparative period in the prior year. Balance sheet The reduced profitability has resulted in a retained profit of US$ 3.1 million compared to US$3.8 million in the prior period.

Responsibility (CSR) Committee A streamlined SHEQ & CSR Committee comprising Messrs Oliver Mandishona Chidawu (Chairman), Batirai Manhando (Managing Director) and David Edgar Hoover Murangari is expected to operate more effectively while maintaining its stability and diversity. The Market The long awaited supply shortfall caused by the Indonesian ore export ban of January 2014 did not materialize. Analysts estimate that 60% - 65% of the producers are producing at a loss though there have not been any curtailments by producers as yet. Nickel supply continued to increase as the Chinese Nickel Pig Iron (NPI) sector managed to continue in production, albeit at a reduced rate, by blending high grade Indonesian ore with that from the Philippines and New Caledonia respectively. Coupled with this, the new generation of plants planned during the boom years (2006-2007) came into production. Nickel stocks continued to emerge from bonded warehouses into more secure London Metal Exchange (LME) warehouses following the Qingdao probe thus pushing LME stocks to all-time highs (+470kt in June 2015). Stainless steel production, which accounts for around two thirds of the global nickel demand, has not changed year on year as the Chinese output was staggered by soft domestic and export demand amid anti-dumping duties in Europe. In the United States, suppliers continue to destock due to high inventories while European distributors are keeping stocks at a minimum as a drop in nickel price is a powerful disincentive to hold stainless steel. The market is expected to remain in surplus for the rest of the year though LME stocks have reduced to around 426 000 tonnes. Fundamentals are improving and a deficit is most likely to be felt in 2016 as demand increases. The major demand growth is expected to come from China’s booming infrastructure industry where there will be increased use of the 300 series steel which uses more nickel as compared to the 200 series steel. In the medium term, the demand opened up in 2016 will outpace production and LME stocks will dwindle, providing a sustained price support. DIVIDEND Under the current circumstances, it is not feasible to declare a dividend for the period under review. APPRECIATION The Board pays tribute to management and staff for their dedication and hard work during the year. On Behalf of the Board Bindura Nickel Corporation Limited

Yim C. Kwan Board Chairman 1 December 2015

OPERATIONS Production in the second quarter of the year under review was lower than in the quarter ended 30 June 2015 mainly as a result of the planned shutdown in July 2015 to allow for equipment upgrades.

Nickel Production and Sales

Head grade was 1.41% versus 1.51% in the same period last year. Recovery was 85.8%, which was better than last year’s achievement of 83.3%. This was achieved as a result of improved plant uptime following improved maintenance and significant process improvement initiatives. Industrial relations remained calm throughout the period under review, due to ongoing efforts to constructively engage employees on all pertinent issues. CAPITAL PROJECTS The Shaft Re-deepening Project continued, albeit at a slower pace, given the cash flow constraints induced by the unfavourable nickel prices. Commissioning of this project is now planned for the 2016/17 financial year. Two key projects were completed and commissioned during the second quarter, namely (a) the Sub Vertical Service Winder and Main Rock Winder Drives Upgrade and; (b) the Concentrator Plant and Sub Vertical Medium Voltage Switch Room Equipment Replacement. The Smelter Restart Project is progressing well. Expenditure of US$12 million and commitments of US$5 million have been made to date respectively. The Board is conducting studies on the feasibility of modifying the Smelter to a plant that can also process Platinum Group Metals (PGMs). The Company’s other assets, namely the Refinery and Shangani Mine remain under care and maintenance. OUTLOOK Operational Performance The Board and Management take safety very seriously, given the inherently hazardous nature of mining. We have a zero tolerance to accidents. Safety, Health, Environment and Quality (SHEQ) systems are being developed and implemented to improve performance. The main area of focus on safety is to change the behaviour of employees in order to prevent or minimize accidents in line with the Corporation’s zero harm goal. In response to the declining nickel prices, the Mining Plan of Trojan Mine has been revised. The revised plan entails reducing the original tonnage by about 50% while maximizing higher grade massives and minimizing lower grade disseminated ore. The Company will remain with a leaner and more effective labour structure when it completes the ongoing rationalization and retrenchment process in the second half of the year ending 31 March 2016. All the above measures have already started showing a positive impact on the Company’s performance during the second half of the year. The months of September and October 2015 were both profitable. It is anticipated that the Company will have recovered from the first half’s loss situation and will have become profitable by the end of the financial year in March 2016. The New Board and Committees The newly constituted Board, which was announced soon after the Annual General Meeting in early September 2015, is settling down well. I was appointed Chairman in place of Mr Mpinga. Greater cohesiveness and focus as well as enhanced diversity and stability are the envisaged benefits going forward. Board Committees have been restructured as follows: Audit Committee Mr Olivier Alain Barbeau, a Chartered Accountant, replaced Mr Ngoni Kudenga as Chairman of the Audit Committee. Mr Muchadeyi Ashton Masunda and I continued as Committee Members. The newly constituted Audit Committee is expected to usher in fresh perspectives through its new Chairman while maintaining its stability, diversity and continuity through the rest of its membership. Remuneration Committee Mr Kalaa Katema Mpinga was replaced by Ms Hok Mun Vanessa Yam. She brings in a fresh perspective and diversity, by virtue of her gender and business acumen. The newly constituted Remuneration Committee is also expected to maintain its stability through the retention of its old members, Messrs Oliver Mandishona Chidawu and Muchadeyi Ashton Masunda. Safety, Health, Environment, Quality (SHEQ) and Corporate Social

Condensed Statement Of Changes In Equity



for the six (6) months ended 30 September 2015

Cash Flows Several cost cutting and cash conservation initiatives were implemented during the period under review. These enabled the Company to utilise only existing financing facilities, with no need for additional funding in the short term.

The mine milled 231 224 tonnes compared to 310 000 tonnes in the prior year.

Abridged Group Statement Of Cash Flows for the six (6) months ended 30 September 2015 6 months ended 6 months ended 30-Sep-15 30-Sep-14 US$ US$ Cash flows from operating activities Operating (loss)/profit from operations before interest and taxation (3 990 012 ) 12 542 158 Adjusted for: Depreciation of property, plant and equipment 1 075 164 1 653 851 Profit/(loss) on disposal of property, plant and equipment - 26 901 Operating cash flow before working capital changes (2 914 848 ) 14 222 910 Decrease/(Increase) in inventories 826 490 (1 298 583 ) Decrease/(Increase) in trade and other receivables 76 196 (3 288 663 ) Decrease in trade and other payables (2 567 675 ) (4 091 978 ) Net cash flows from operations (4 579 837 ) 5 543 686 Returns on investments and servicing of finance Interest received 1 825 26 458 Interest paid (25 985 ) (92 812 ) Exchange loss (118 811 ) (22 555) (142 971 ) (88 909 ) Net cash flows from operating activities (4 722 808 ) 5 454 777 Cash flows from investing activities Purchase of property, plant and equipment (8 803 348 ) (2 266 295 ) Proceeds from sale of property, plant and equipment - 103 033 Net cash flows from investing activities (8 803 348 ) (2 163 262 ) Net cash flows before financing activities (13 526 156 ) 3 291 515 Cash flows from financing activities Staff loans received/(issued) 37 151 (86 228 ) Long term loan repaid (2 761 500 ) (4 525 000 ) Long term loans received 4 600 000 Net cash flows from financing activities 1 875 651 (4 611 228 ) Decrease in cash and cash equivalents (11 650 505 ) (1 319 713 ) Cash and cash equivalents at the beginning of the year 11 945 957 4 210 744 Cash and cash equivalents at the end of the year 295 452 2 891 031

Balances at 31 March 2014

6 months ended 6 months ended 30-Sep-15 30-Sep-14 Tonnes Tonnes BNC production BNC Nickel Sales in Concentrates

2 791 2 762

3 891 3 879

Abridged Group Statement of Comprehensive Income

for the six (6) months ended 30 September 2015 Note 6 months ended 6 months ended 30-Sep-15 30-Sep-14 US$ US$ Turnover Nickel Concentrates 20 559 956 46 386 079 20 559 956 46 386 079 Cost of sales (18 304 939) (22 588 371) Gross Profit 2 255 016 23 797 708 Other Income 192 110 202 237 Marketing and distribution expenses (3 462 904) (7 476 514) Administrative expenses (2 974 234) (3 981 273) Operating (Loss)/Profit (3 990 012) 12 542 158 Net finance costs (269 692) (354 680) (Loss)/Profit before taxation (4 259 704) 12 187 478 Taxation 900 192 (3 679 161) (Loss)/Profit and total comprehensive income for the year (3 359 512) 8 508 317 Basic and diluted (loss)/earnings per ordinary share (cents) (0.27) 0.69

Non- Share distributable Retained capital reserves earnings Total US$ US$ US$ US$ 12 762

32 422 263

(4 672 541)

27 762 484

Total comprehensive profit for the half year - Other comprehensive profit for the half year - - - - - Profit for the half year attributable to ordinary shareholders 8 508 317 8 508 317 - Transactions with owners of the company - recognised directly into equity - Contributions by and distributions to owners of the company 16 46 133 - 46 149 Balances at 30 September 2014 12 778 32 468 396 3 835 776 36 316 950 Total comprehensive profit for the half year - - Other comprehensive profit for the half year - - - - - Profit for the half year attributable to ordinary shareholders 2 664 427 2 664 427 - Transactions with owners of the company - recognised directly into equity - Contributions by and distributions to owners of the company - Balances at 31 March 2015

12 778

32 468 396

6 500 203

38 981 377

Total comprehensive profit for the half year - - Other comprehensive profit for the half year - - - - - Loss for the half year attributable to ordinary shareholder (3 359 512) (3 359 512) - Transactions with owners of the company - recognised directly into equity - Contributions by and distributions to owners of the company - Balances at 30 September 2015 12 778 32 468 396 3 140 691 35 621 865

Notes To The Unaudited Condensed Financial Statements for the six (6) months ended 30 September 2015

1 Presentation The financial statements are presented in United States dollars (US$), which is the company’s functional currency. as at 30 September 2015 2 Principal group accounting policies 6 months ended 6 months ended Note The financial results for the six months ended 30 September 2015 have been prepared 30-Sep-15 30-Sep-14 in accordance with the listing requirements of the Zimbabwe Stock Exchange and the US$ US$ Companies Act (Chapter 24:03). All accounting policies have been applied consistently. EQUITY AND LIABILITIES Share capital 12 778 12 778 3 Profit per share 30 September 2015 30 September 2014 Non-distributable reserves 32 468 396 32 468 396 (3 359 512) 8 508 317 Retained profit 3 140 691 3 835 776 (Loss)/Profit attributable to shareholders (US$) Total equity 35 621 865 36 316 950 Weighed average number of shares 1 239 656 591 1 239 404 409 Basic and diluted (loss)/earnings per share (cents) (0.27) 0.69 Non-current liabilities Long term Liabilities 21 888 026 5 264 899 4 6 Capital expenditure 8 803 348 2 266 295 Environmental rehabilitation provision 11 798 820 11 963 226 Non-current assets 33 686 846 17 228 125 5 Property, plant and equipment 63 956 075 49 669 482 Current liabilities Loans 4 510 89 602 Trade payables 5 895 740 4 970 385 Long term investment 558 556 558 556 Deferred Taxation 3 424 183 3 626 326 Other payables 13 076 808 14 989 083 67 943 324 53 943 967 Related party payables 1 119 729 1 248 487 20 092 277 21 207 955 6 Long term liabilities Related party Loan - 3 475 000 Loan interest payable 888 026 1 789 899 Total equity and liabilities 89 400 988 74 753 030 Long term loans 21 000 000 - 21 888 026 5 264 899  ASSETS  The Corporation raised US$20 million to finance the restart of the Smelter, through a 5 year Bond with Non-current assets 67 943 324 53 943 966 5 a coupon rate of 10% per annum, secured by a Guarantee from the major shareholder. The Corporation also secured a US$1 million loan facility from a local financial institution, which carries an interest rate of 11% per annum and is secured by mortgage bonds over the Corporation’s immovable property. Current assets

Abridged Group Statement of Financial Position

Inventories 8 321 073 6 095 067 Trade and other receivables 10 760 532 11 822 966 Cash and cash equivalents 2 376 059 2 891 031 21 457 664 20 809 064 Total assets 89 400 988 74 753 030

Directors: Y. C. Kwan (Chairman), D. E. H. Murangari (Deputy Chairman), B. Manhando (Managing Director), O. A. Barbeau, O. M.

7 Analysis of private placement shares Ordinary shares approved for private placement at the 2013 AGM 100 000 000 Less ordinary shares issued as at 31 March 2014 (27 904 621) Less ordinary shares issued between April 2014 and 31 March 2015 (1 538 313) Private placement shares not yet issued as at 30 September 2015 70 557 066 Chidawu, J. H. L. Lampen, M. A. Masunda, H. M. V. Yam (Ms), B Zhao (Prof.).