REG - Fresnillo Plc - Interim results for the six months to 30 June 2016 <Origin Href="QuoteRef">FRES.L</Origin> - Part 3
02/08/2016 07:07
- Part 3: For the preceding part double click ID:nRSB9222Fb
Interim Consolidated Statement of Cash Flows
Notes For the six months ended 30 June
2016(Unaudited) 2015(Unaudited)
(in thousands of US dollars)
Net cash from operating activities 17 407,895 263,415
Cash flows from investing activities
Purchase of property, plant and equipment (198,817) (229,125)
Proceeds from the sale of property, plant and equipment and other assets 219 4,305
Repayments of loans granted to contractors 1,299 767
Short-term investments 13 (1,282) 74,730
Silverstream contract 10 20,123 22,727
Interest received 3,717 1,623
Net cash used in investing activities (174,741) (124,973)
Cash flows from financing activities
Dividends paid to shareholders of the Company (24,776) (22,054)
Capital contribution 5,090 3,080
Interest paid1 (12,987) (18,763)
Net cash used in financing activities (32,673) (37,737)
Net increase in cash and cash equivalents during the period 200,481 100,705
Effect of exchange rate on cash and cash equivalents (733) 703
Cash and cash equivalents at 1 January 13 381,420 154,340
Cash and cash equivalents at 30 June 13 581,168 255,748
1Total interest paid during the six months ended 30 June 2016 less amounts capitalised as part of fixed assets projects
totalling US$10.2 million (30 June 2015: US$4.4 million). The capitalised interest is included under the section
ofpurchase of property, plant and equipment.
Interim Consolidated Statement of Changes in Equity
(in thousands of US dollars)
Balance at 1 January 2015 (Audited) 368,546 1,153,817 (526,910) (9,946) 24,515 (597) 1,265,877 2,275,302 26,539 2,301,841
Profit for the period - - - - - - 76,499 76,499 (131) 76,368
Other comprehensive income, net of tax - - - 2,580 (2,859) (26) - (305) - (305)
Total comprehensive income for the period - - - 2,580 (2,859) (26) 76,499 76,194 (131) 76,063
Capital contribution - - - - - - - - 3,080 3,080
Dividends paid 14 - - - - - - (22,107) (22,107) - (22,107)
Balance at 30 June 2015 (Unaudited) 368,546 1,153,817 (526,910) (7,366) 21,656 (623) 1,320,269 2,329,389 29,488 2,358,877
Balance at 1 January 2016 (Audited) 368,546 1,153,817 (526,910) 36,214 16,297 (731) 1,296,906 2,344,139 30,202 2,374,341
Profit for the period - - - - - - 167,036 167,036 (1,410) 165,626
Other comprehensive income, net of tax - - - (35,879) 45,451 (390) (158) 9,024 - 9,024
Total comprehensive income for the period - - - (35,879) 45,451 (390) 166,878 176,060 (1,410) 174,650
Capital contribution - - - - - - - - 5,090 5,090
Dividends paid 14 - - - - - - (24,686) (24,686) - (24,686)
Balance at 30 June 2016 (Unaudited) 368,546 1,153,817 (526,910) 335 61,748 (1,121) 1,439,098 2,495,513 33,882 2,529,395
Notes to the Interim Condensed Consolidated Financial Statements
1 Corporate Information
Fresnillo plc ("the Company") is a public limited company registered in England and Wales with the registered number
6344120.
Industrias Peñoles S.A.B. de C.V. ("Peñoles") currently owns 74.99 percent of the shares of the Company and the ultimate
controlling party of the Company is the Baillères family, whose beneficial interest is held through Peñoles. Copies of
Peñoles accounts can be obtained from www.penoles.com.mx. Further information on related party balances and transactions
with Peñoles group companies is disclosed in Note 16.
The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2016 ("interim
consolidated financial statements"), were authorised for issue by the Board of Directors of Fresnillo plc on 1 August
2016.
The Group's principal business is the mining and beneficiation of non-ferrous minerals, and the sale of related production.
The primary contents of this production are silver, gold, lead and zinc. Further information about the Group's operating
mines and its principal activities is disclosed in Note 3.
2 Significant accounting policies
(a) Basis of preparation and statement of compliance
The interim consolidated financial statements of the Group for the six months ended 30 June 2016 have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (EU). They do not include all the
information required for full annual financial statements for the Group, and therefore, should be read in conjunction with
the Group's annual consolidated financial statements for the year ended 31 December 2015 as published in the Annual Report
2015.
These interim consolidated financial statements do not constitute statutory accounts as defined in section 435 of the
Companies Act 2006. The financial information for the full year is based on the statutory accounts for the financial year
ended 31 December 2015. A copy of the statutory accounts for that year, which were prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU up to 31 December 2015, has been delivered to the
Register of Companies. The auditors' report in accordance with Chapter 3 of Part 16 of the Companies Act 2006 in relation
to those accounts was unqualified.
The interim consolidated financial statements have been prepared on a historical cost basis, except for derivative
financial instruments, available-for-sale financial assets and defined benefit pension scheme assets which have been
measured at fair value.
The interim consolidated financial statements are presented in dollars of the United States of America (US dollars or US$)
and all values are rounded to the nearest thousand ($000) except where otherwise indicated.
The impact of seasonality or cyclicality on operations is not considered significant on the interim consolidated financial
statements.
(b) Basis of consolidation
The interim consolidated financial statements set out the Group's financial position as of 30 June 2016 and 31 December
2015, and its operations and cash flows for the periods ended 30 June 2016 and 30 June 2015.
The basis of consolidation adopted in the preparation of the interim consolidated financial statements is consistent with
that applied in the preparation of the consolidated financial statements for the year ended 31 December 2015.
(c) Changes in accounting policies and presentation
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with
those applied in the preparation of the consolidated financial statements for the year ended 31 December 2015.
As at 31 December 2015, derivatives relating to the gold hedging programme initiated in 2014 that mature after one year had
been presented as current assets. During 2016, the Group restated the prior year comparatives and reclassified these
derivatives to non-current assets. The reclassification resulted in an increase in non-current assets and a corresponding
reduction in current assets by US$97.5 million as at 31 December 2015, with no impact on previously reported profit, other
comprehensive income, liabilities, equity, cash flow or earnings per share. In addition, there is no tax effect and no
impact on segmental disclosures.
New standards and interpretations as adopted by the Group
The Group has adopted "IAS 1 Disclosure Initiative - Amendments to IAS 1". The amendments clarify existing requirements on
materiality, aggregation and disaggregation in the preparation of financial statements and presentation of the notes. This
amendment had no impact in the financial information of the Group.
Other than the above mentioned amendments there was no significant new accounting standards or interpretations required for
the Group to adopt effective 1 January 2016.
The IASB and IFRS Interpretation committee have issued, and the EU have adopted, certain amendments resulting from
improvements to IFRSs that management considers do not have any impact on the accounting policies, financial position or
performance of the Group. The Group has not early adopted any standard, interpretation or amendment that was issued but is
not yet effective.
3 Segment reporting
For management purposes the Group is organised into operating segments based on producing mines.
At 30 June 2016 the Group has six reportable operating segments which consist of the Group's six producing mines as
follows:
- The Fresnillo mine, located in the State of Zacatecas, the world's largest primary silver mine;
- The Saucito mine, located in the State of Zacatecas, an underground silver mine;
- The Cienega mine, located in the State of Durango, an underground gold mine; including the San Ramon satellite mine;
- The Herradura mine, located in the State of Sonora, a surface gold mine;
- The Soledad-Dipolos mine, located in the State of Sonora, a surface gold mine; and
- The Noche Buena mine, located in State of Sonora, a surface gold mine.
The operating performance and financial results for each of these mines are reviewed by management. As the Group´s chief
operating decision maker does not review segment assets and liabilities, the Group has not disclosed this information.
Substantially all revenue was derived from customers based in Mexico.
Management monitors the results of its operating segments separately for the purpose of performance assessment and making
decisions about resource allocation. Segment performance is evaluated without taking into account certain adjustments
included in Revenue as reported in the interim consolidated income statements, and certain costs included within Cost of
Sales and Gross Profit which are considered to be outside of the control of the operating management of the mines. The
table below provides a reconciliation from segment profit to Gross Profit as per the interim consolidated income statement.
Other income and expenses included in the interim consolidated income statement are not allocated to operating segments.
Transactions between reportable segments are accounted for on an arm's length basis similar to transactions with third
parties.
Operating segments
The following tables present revenue and profit information regarding the Group's operating segments for the six months
ended 30 June 2016 and 2015, respectively.
Six months ended 30 June 2016
US$ thousands Fresnillo Herradura Cienega Soledad-Dipolos 4 Saucito Noche Other5 Adjustments and eliminations Total
Buena
Revenues:
Third party1 152,862 327,687 83,232 - 215,935 105,642 - 1,519 886,877
Inter-Segment - - - - - - 38,682 (38,682) -
Segment revenues 152,862 327,687 83,232 - 215,935 105,642 38,682 (37,163) 886,877
Segment profit2 101,143 186,633 48,285 15,246 166,728 31,317 29,874 (6,984) 572,242
Hedging (2,571)
Depreciation and amortisation (165,327)
Employee profit sharing (9,946)
Gross profit as per the income statement 394,398
Capital expenditure3 91,340 38,004 17,194 - 43,615 2,027 6,636 - 198,816
1Total third party revenues include treatment and refining charges amounting US$74.1 million.
2 Segment profit excluding foreign exchange hedging losses, depreciation and amortisation and employee profit sharing.
3 See Note 9 for a description of the main capital expenditures.
4 Operations at Soledad-Dipolos were suspended in 2H 2013 as a result of the dispute disclosed in Note 15. The profit of
the period corresponds to the reversal of the adjustment of net realizable value of inventories, see Note 11.
5 Other includes inter-segment leasing services provided by Minera Bermejal, S.A. de C.V.
Six months ended 30 June 2015
US$ thousands Fresnillo Herradura Cienega Soledad-Dipolos 4 Saucito Noche Other5 Adjustments and eliminations Total
Buena
Revenues:
Third party1 140,405 230,045 79,449 - 218,895 82,690 - 824 752,308
Inter-Segment - - - - - - 34,509 (34,509) -
Segment revenues 140,405 230,045 79,449 - 218,895 82,690 34,509 (33,685) 752,308
Segment profit2 82,901 120,762 37,034 - 170,792 19,845 28,441 (10,268) 449,507
Hedging (10,186)
Depreciation and amortisation (159,733)
Employee profit sharing (5,950)
Gross profit as per the income statement 273,638
Capital expenditure3 95,422 57,902 11,788 - 58,092 846 5,075 - 229,125
1Total third party revenues include treatment and refining charges amounting US$70.9 million.
2 Segment profit excluding foreign exchange hedging losses, depreciation and amortisation and employee profit sharing.
3 See Note 9 for a description of the main capital expenditures.
4 Operations at Soledad-Dipolos were suspended in 2H 2013 as a result of the dispute disclosed in Note 15.
5 Other includes inter-segment leasing services provided by Minera Bermejal, S.A. de C.V. The presentation of other and
adjustments and eliminations have been changed to be consistent with the presentation in the 2016 table above.
4 Revenues
Revenues reflect the sale of goods, being concentrates, doré, slag, and precipitates of which the primary contents are
silver, gold, lead and zinc.
(a) Revenues by product sold
Lead concentrates (containing silver, gold, lead and by-products) 386,568 371,867
Doré and slag (containing gold, silver and by-products) 433,377 312,734
Zinc concentrates (containing zinc, silver and by-products) 45,149 43,602
Precipitates (containing gold and silver) 21,783 24,105
886,877 752,308
886,877
752,308
Substantially all lead and zinc concentrates, precipitates, doré and slag, were sold to Peñoles' metallurgical complex,
Met-Mex, for smelting and refining.
(b) Value of metal content in products sold
For products other than refined silver and gold, invoiced revenues are derived from the value of metal content adjusted by
treatment and refining charges incurred by the metallurgical complex of the customer. The value of the metal content of the
products sold, before treatment and refining charges is as follows:
Silver 342,883 332,652
Gold 542,280 421,748
Zinc 40,373 36,540
Lead 35,398 32,283
Value of metal content in products sold 960,934 823,223
Adjustment for treatment and refining charges (74,057) (70,915)
Total revenues1 886,877 752,308
Total revenues1
886,877
752,308
1 Includes provisional price adjustments which represent changes in the fair value of embedded derivatives resulting a gain
of US$7.2 million (2015: gain of US$1.4 million) and hedging gain of US$1.5 million (2015: gain of US$ 0.8 million)
The average realised prices for the gold and silver content of products sold prior to the deduction of treatment and
refining charges, were:
Gold2 1,245.61 1,206.10
Silver2 16.58 16.61
Gold2
1,245.61
1,206.10
Silver2
16.58
16.61
2 Revenue of product sold does not include hedging gains.
5 Cost of sales
Depreciation and amortisation (Note 9) 165,327 159,733
Personnel expenses1 42,670 37,875
Maintenance and repairs 45,551 45,452
Operating materials 64,788 67,502
Energy 56,726 57,643
Contractors 81,684 93,229
Mining concession rights and contributions 5,600 5,041
Freight 3,802 5,076
Insurance 2,586 2,585
Other 5,495 7,485
Cost of production 474,229 481,621
Losses on foreign currency hedges 2,571 10,186
Change in work in progress and finished goods (ore inventories) 38,257 (13,137)
Inventory write down (Note 11) (22,578) -
Cost of sales 492,479 478,670
Cost of sales
492,479
478,670
1 Personnel expenses include employees´ profit sharing of US9.9 million for the six months ended 30 June 2016 (six months
ended 30 June 2015: US$5.9 million).
6 Finance income and finance costs
Six months ended 30 June
2016 2015
(in thousands of US dollars)
Finance income:
Interest on short term deposits 1,627 889
Fair value movements on derivatives1 - 19,733
Other 2,094 555
3,721 21,177
Finance costs:
Interest on interest-bearing loans 13,488 18,656
Unwinding of discount on provisions 4,921 4,968
Fair value movements on derivatives1 135,126 -
Other 627 453
154,162 24,077
1 Principally relates to the time value associated with Gold commodity options- see Note 18 for further detail.
7 Income tax expense
Current corporate income tax:
Income tax charge1 82,461 88,377
Amounts over provided in previous periods (1,607) (31,720)
80,854 56,657
Deferred corporate income tax:
Origination and reversal of temporary differences (40,122) (8,593)
Revaluation effects of Silverstream contract 32,976 529
(7,146) (8,064)
Corporate income tax 73,708 48,593
Current special mining right:
Special mining right charge2 8,417 4,914
8,417 4,914
Deferred special mining right:
Origination and reversal of temporary differences 7,384 6,265
Special mining right 15,801 11,179
Income tax expense as reported in the income statement 89,509 59,772
Income tax expense as reported in the income statement
89,509
59,772
1 The current income tax has been reduced by US$12.2 million (2015: nil) as a result of a credit granted to taxpayers in
respect of an excise tax (Special Tax on Production and Services, or IEPS for its acronym in Spanish) paid when purchasing
diesel used for general machinery and certain mining vehicles. The credit can be applied against either the company's own
corporate income tax or the income tax withheld from third parties. The credit is calculated on an entity-by-entity basis
and any amount paid in excess of the sum of corporate income tax and income tax withheld cannot be credited in future
fiscal periods. No deferred tax asset has therefore been recognised in relation to any excess.
2 The special mining right allows the deduction of payments for mining concession rights up to the amount of the special
mining right payable within the same legal entity. In the six months ended 30 June 2016, the Group credited US$4.3 million
(2015: US$4.1million) of mining concession rights against the special mining right. Prior to credits permitted under the
special mining right regime, the current special mining right charge would have been US$12.7 million. (2015: US$9.0).
The total mining concession rights paid during the six month period were US$8.1 million (2015: US$9 million) and have been
recognised in the income statement within cost of sales and exploration expenses. Mining concessions rights paid in excess
of the special mining right cannot be credited to special mining rights in future fiscal periods, and therefore, no
deferred tax asset has been recognised in relation to the excess.
The effective tax rate for corporate income tax for the six months ended 30 June 2016 is 28.89% (six months ended 30 June
2015: 35.69%) and 35.08% including the special mining right (six months ended 30 June 2015: 43.90%). The main factor that
reduced the effective tax rate below 30% is the IEPS tax incentive described above. This impact was partially offset by the
effect of foreign exchange rates as a result the appreciation of the US dollar against the Mexican peso.
During 2015 the Group clarified the treatment applied in the computation of the 2014 tax provision regarding the deduction
of certain mining-related expenditures. This resulted in an adjustment of US$29.9 million to the 2015 current tax expense
with an equal and opposite effect to the deferred tax expense.
8 Earnings per share
Earnings per share ('EPS') is calculated by dividing profit for the period attributable to equity shareholders of the
Company by the weighted average number of ordinary shares in issue during the period.
The Company has no dilutive potential ordinary shares.
As of 30 June 2016 and 30 June 2015, earnings per share have been calculated as follows:
Six months ended 30 June
2016 2015
(in thousands of US dollars)
Earnings:
Profit from continuing operations attributable to equity holders of the Company 167,036 76,499
Adjusted profit from continuing operations attributable to equity holders of the Company 90,093 75,267
Adjusted profit is profit as disclosed in the Interim Consolidated Income Statement adjusted to exclude revaluation effects
of the Silverstream contract of US$109.9 million gain (US$76.9 million net of tax) (2015: US$1.8 million gain and US$1.2
million net of tax).
Adjusted earnings per share have been provided in order to provide a measure of the underlying performance of the Group,
prior to the revaluation effects of the Silverstream contract, a derivative financial instrument.
Six months ended 30 June
2016 2015
Number of shares: Weighted average number of ordinary shares in issue ('000) 736,894 736,894
Six months ended 30 June
2016 2015
Earnings per share: Basic and diluted earnings per ordinary share from continuing operations (US$) Adjusted basic and diluted earnings per ordinary share from continuing operations (US$) 0.227 0.122 0.104 0.102
9 Property, plant and equipment
The significant changes in property, plant and equipment during the six months ended 30 June 2016 are additions of US$202.8
million (six months ended 30 June 2015: US$246.4 million) and depreciation and amortisation of US$172.4 million, of which
US$7.1 million was capitalised as a part of the cost of other fixed assets (six months ended 30 June 2015: US$166.7
million, of which US$5.2 million was capitalised). Additions consist of capitalised interest, mine development works at the
underground mines, stripping activity at the surface mines, tailing ponds at Herradura and Cienega, the construction of San
Julian phase one facilities, and purchase of mine equipment such as scoops, trams and trucks.
As of 30 June 2016 the Group has contractual commitments related to the construction and acquisition of property, plant and
equipment of US$124.1 million (31 December 2015: US$145.5 million)
10 Silverstream contract
Cash received in respect of the period of US$17.4 million (six months ended 30 June 2015: US$15.8 million) corresponds to
1.9 million ounces of payable silver (six months ended 30 June 2015: 1.9 million ounces). As at 30 June 2016, a further
US$5.8 million (30 June 2015: US$4.7 million) of cash corresponding to 437,431 ounces of silver is due (30 June 2015:
440,115 ounces).
A reconciliation of the beginning balance to the ending balance is shown below.
2016 2015
(in thousands of US dollars)
Balance at 1 January: 384,771 392,276
Cash received in respect of the period (17,353) (15,753)
Cash receivable (5,778) (4,665)
Remeasurement gains recognised in profit or loss 109,919 1,761
Balance at 30 June 471,559 373,619
Less - Current portion 36,209 30,647
Non-current portion 435,350 342,972
During the six months ended 30 June 2016, the most significant driver of the US$109.9 million of unrealised gains recorded
in the income statement (six months ended 30 June 2015: gain of US$1.8 million) was the updating of external financial
assumptions used to value the Silverstream contract. The most significant of these were an increase in the forward price of
silver and the decrease of the reference discount rate (LIBOR).
11 Inventories
Finished goods1 3,415 1,711
Work in progress2 212,669 251,900
Ore stockpiles 11,442 -
Operating materials and spare parts 71,977 73,104
Inventories at lower of cost and net realisable value 299,503 326,715
Accumulated write-down of work in progress inventory3 - (22,578)
Allowance for obsolete and slow-moving inventories (3,562) (3,562)
Balance at lower of cost and net realisable value 295,941 300,575
Less - Current portion 204,321 224,200
Non-current portion4 91,620 76,375
91,620
76,375
1 Finished goods include metals contained in concentrates and doré bars, and concentrates on hand or in transit to a
smelter or refinery.
2 Work in progress includes metals contained in ores on leaching pads.
3 As of 30 June 2016 the Group reversed the accumulated write down of work in progress inventory amounting US$22.6 million
in 2015.
4 The non-current inventories are expected to be processed more than 12 months from the reporting date.
12 Trade and other receivables
Trade receivables from related parties (Note 16)1 166,422 115,805
Value added tax receivable 62,762 99,948
Advances and other receivable from contractors 15,877 13,641
Other receivables from related parties (Note 16) 5,778 2,769
Loans granted to contractors 2,152 2,595
Other receivables arising on the sale of fixed assets 335 759
Other receivables 3,027 2,775
256,353 238,292
Provision for impairment of other receivables (313) (300)
256,040 237,992
Other receivables classified as non-current assets:
Loans granted to contractors 1,625 2,289
1,625 2,289
257,665 240,281
257,665
240,281
1 Trade receivables from related parties' includes the fair value of embedded derivatives arising due to provisional
pricing in sales contracts of US$6.7 million as at 30 June 2016 (December 2015: US$(0.5) million).
13 Cash, cash equivalents and short term investments
The Group considers cash and cash equivalents and short term investments when planning its operations and in order to
achieve its treasury objectives.
Cash at bank and on hand 6,405 4,104
Short-term deposits 574,763 377,316
Cash and cash equivalents 581,168 381,420
581,168
381,420
Cash at bank earns interest at floating rates based on daily bank deposits. Short-term deposits are made for varying
periods of between one day and four months, depending on the immediate cash requirements of the Group, and earn interest at
the respective short-term deposit rates. Short-term deposits can be withdrawn at short notice without any penalty or loss
in value.
Short-term investments 120,000 118,718
120,000
118,718
Short-term investments are made for fixed periods no longer than four months and earn interest at fixed rates without an
option for early withdrawal. As at 30 June 2016 and 31 December 2015 all short-term investments are held in fixed-term
bank deposits.
14 Dividends paid
Dividends declared by the Company are as follows:
Per shareUS Cents Amounts$Million
Six months ended 30 June 2016
Total dividends paid during the period1 3.4 24.7
Six months ended 30 June 2015
Total dividends paid during the period2 3.0 22.1
1 Final dividend for 2015 approved at the Annual General Meeting on 3 May 2016 and paid on 9 May 2016.
2 Final dividend for 2014 approved at the Annual General Meeting on 18 May 2015 and paid on 22 May 2015.
15 Contingencies
The contingencies in the Group's annual consolidated financial statements for the year ended 31 December 2015 as published
in the 2015 Annual Report, are still applicable as of 30 June 2016, including the El Bajio agrarian community conflict as
described below:
- Minera Penmont ("Penmont") has already presented a conceptual mine closure and remediation plan before the
Unitarian Agrarian Court in respect of approximately 300 hectares where the Soledad-Dipolos mine is located (out of the
total 1,824 hectares which Penmont returned to the El Bajio community in July 2013). Remediation activities however remain
pending, since the agrarian members have not permitted Penmont physical access to the lands. Penmont will continue to
monitor this situation and reiterate its request before the Agrarian Court in order that access to the lands may be
permitted for remediation activities.
- In connection with the foregoing matters, and as previously reported by the Company in prior years, members of the
El Bajio agrarian community have presented additional claims, including a separate claim before the Unitarian Agrarian
Court, alleging US$65 million in damages as well as requesting the cancellation of Penmont's mining concessions and
environmental permits within the El Bajio lands. The Unitarian Agrarian Court has now issued a final and definitive ruling
on the matter denying claimants their allegations, which is consistent with the Company's view, as previously reported,
that this lawsuit had no merit.
- Various claims and counterclaims have been made between the relevant parties in the El Bajio matter including
appeals that are pending as well as criminal complaints between the parties. There remains significant uncertainty as to
the finalisation and ultimate outcome of these legal proceedings.
16 Related party balances and transactions
The Group had the following related party transactions during the six months ended 30 June 2016 and 30 June 2015 and
balances as at 30 June 2016 and 31 December 2015.
Related parties are those entities owned or controlled by the ultimate controlling party, as well as those who have a
minority participation in Group companies and key management personnel of the Group.
(a) Related party accounts receivable and payable
Accounts receivable Accounts payable
As at 30 June 2016 As at 31 December 2015 As at 30 June 2016 As at 31 December 2015
(in thousands of US dollars)
Trade:
Metalúrgica Met-Mex Peñoles, S.A. de C.V. 166,332 115,786 - 130
Other:
Industrias Peñoles, S.A.B. de C.V. 5,778 2,769 - -
Servicios Administrativos Peñoles, S.A de C.V. - - 2,787 366
Servicios Especializados Peñoles, S.A. de C.V. - - 2,019 1,804
Fuerza Eólica del Istmo, S.A. de C.V. - - - 916
Other 90 19 354 921
172,200 118,574 5,160 4,137
Related party accounts receivable and payable will be settled in cash.
Other balances due from related parties:
(in thousands of US dollars)
Silverstream contract:
Industrias Peñoles, S.A.B. de C.V. 471,559 384,771
The Silverstream contract can be settled in either silver or cash. Details of the Silverstream contract are provided in
Note 10.
(b) Principal transactions with affiliates are as follows:
Income:
Sales1:
Metalúrgica Met-Mex Peñoles, S.A. de C.V. 885,358 751,484
Other income 891 375
Total income 886,249 751,859
Total income
886,249
751,859
1 Figures do not include hedging gains as the derivative transactions are not undertaken with related parties. Figures are
net of the adjustment for treatment and refining charges of US$74.1 million (2015: US$70.9 million).
Expenses:
Administrative Services:
Servicios Administrativos Peñoles, S.A. de C.V.2 10,297 10,288
Servicios Especializados Peñoles, S.A. de C.V. 2 8,327 9,042
18,624 19,330
Energy:
Fuerza Eólica del Istmo, S.A. de C.V. 1,794 1,863
Termoeléctrica Peñoles, S. de R.L. de C.V. 7,615 11,296
9,409 13,159
Operating materials and spare parts:
Wideco Inc 2,247 2,802
Metalúrgica Met-Mex Peñoles, S.A. de C.V. 871 2,228
3,118 5,030
Equipment repairs and administrative services:
Serviminas, S.A. de C.V. 2,947 1,925
Insurance premiums:
Grupo Nacional Provincial, S.A.B. de C.V. 949 2,624
Other expenses: 4,285 3,491
Total expenses 39,332 45,559
Total expenses
39,332
45,559
2 Based on the Service Agreement with Servicios Administrativos Peñoles, S.A. de C.V., ("SAPSA") and Servicios
Especializados Peñoles, S.A. de C.V. ("SEPSA"), wholly owned Peñoles' subsidiaries, the companies provided administrative
services during the six months ended 30 June 2016 for a total amount of US$18.6 million (US$19.3 million for the six months
ended 30 June 2015). Services include administrative expenses of US$14 million (US$15.9 million for the six months ended 30
June 2016) and US$4.6 million operating expenses capitalised as exploration and development expenditure (US$3.4 million for
six months ended 30 June 2015).
(c) Compensation of key management personnel of the Group
Key management personnel include the members of the Board of Directors and the Executive Committee who receive
remuneration.
Salaries and bonuses 1,996 1,894
Post-employment pension 106 129
Other benefits 154 125
Total compensation paid to key management personnel 2,256 2,148
Total compensation paid to key management personnel
2,256
2,148
17 Notes to the consolidated statement cash flows
Reconciliation of profit for the period to net cash generated from operating activities
Profit for the period 165,626 76,368
Adjustments to reconcile profit for the period to net cash inflows from operating activities:
Depreciation and amortisation 165,327 159,733
Employee profit sharing 10,243 6,271
Deferred income tax expense/(benefit) 7 238 (1,799)
Current income tax expense 7 89,271 61,571
Loss on the sale of property, plant and equipment and other assets 910 804
Other (gains)/losses (148) 1,424
Impairment of available-for-sale financial assets - 761
Net finance costs 15,315 22,633
Foreign exchange loss 3,121 8,200
Difference between pension contributions paid and amounts recognised in the income statement 124 420
Non cash movement on derivatives 6 135,126 (19,733)
Changes in fair value of Silverstream 10 (109,919) (1,761)
Working capital adjustments
Increase in trade and other receivables (10,702) (2,182)
Decrease in prepayments and other assets 1,368 2,608
Decrease/(increase) in inventories 4,634 (16,077)
Increase/(decrease) in trade and other payables 5,247 (2,369)
Cash generated from operations 475,781 296,872
Income tax paid (55,394) (22,340)
Employee profit sharing paid (12,492) (11,117)
Net cash from operating activities 407,895 263,415
407,895
263,415
18 Financial instruments
a. Fair value category
As at 30 June 2016
US$ thousands
Financial assets: At fair value through profit or loss Available-for-sale investments at fair value through OCI Loans and receivables At fair value through OCI (cash flow hedges)
Trade and other receivables1 - - 178,004 -
Available-for-sale financial assets - 136,371 - -
Silverstream contract (Note 10) 471,559 - - -
Embedded derivatives within sales contracts1 6,724 - - -
Derivative financial instruments 109 - - 1,039
Financial liabilities: At fair value through profit or loss At amortised Cost At fair value through OCI (cash flow hedges)
Interest-bearing loans - 797,539 -
Trade and other payables - 79,620 -
Derivative financial instruments 103 - 72,843
1 Trade and other receivables and embedded derivatives within sales contracts are presented net in Trade and other
receivables in the balance sheet.
As at 31 December 2015
US$ thousands
Financial assets: At fair value through profit or loss Available-for-sale investments at fair value through OCI Loans and receivables At fair value through OCI (cash flow hedges)
Trade and other receivables1 - - 127,224 -
Available-for-sale financial assets - 71,442 - -
Silverstream contract (Note 10) 384,771 - - -
- More to follow, for following part double click ID:nRSB9222FdRecent news on Fresnillo
See all newsREG - Fresnillo Plc - Report on Payments to Governments
AnnouncementREG - Fresnillo Plc - Result of AGM
AnnouncementREG - Fresnillo Plc - Annual General Meeting Statement
AnnouncementREG - Fresnillo Plc - Sale of MAG Silver shares & Juanicipio partnership
AnnouncementREG - Fresnillo Plc - Conversion rate for 2024 Final & Special Dividends
Announcement