Subject: EARNINGS
Noranda Income Fund Announces a Restatement of Its December 31, 2017 Consolidated Financial Statements
SALABERRY-DE-VALLEYFIELD, QUÉBEC, April 26, 2018 (GLOBE NEWSWIRE) -- Noranda Income Fund (TSX:NIF.UN) (the "Fund") announces a restatement to its December 31, 2017 consolidated financial statements. Following the filing on March 15, 2018 of the audited consolidated financial statements as at and for the years ended December 31, 2017 and 2016, management and the Fund's external auditors reconsidered the accounting treatment of the sale of the 20,000 tonnes of zinc cathode to Glencore Canada in November 2017. As previously disclosed, the extra cathode had been produced because of the roasters, leaching plant and cell house operating at 70% of capacity during the second half of the year, while the zinc casting facility operated at 50% of capacity. The sale of cathode decreased the volume of inventory for the Fund and reduced the Fund's working capital. The transaction had been reported as a sale but, following this reconsideration, the Fund has determined that a correction was required and the accounting treatment has been changed to reflect a financing transaction in light of the tolling requirement should Glencore Canada choose not to ship the cathode to another processing facility. Therefore, the Fund has restated its previously reported consolidated financial statements as at and for the year ended December 31, 2017 and all related disclosures. The financial statements as at and for the year ended December 31, 2016 are not affected by the restatement. The impact of the correction is as follows (in thousands of US dollars):
| Consolidated statement of financial position | As reported | Adjustments | Restated | |||
| Inventories | 171,655 | 60,376 | 232,031 | |||
| Prepaid and other assets | 1,854 | 1,864 | 3,718 | |||
| Deferred tax assets | 12,453 | (501 | ) | 11,952 | ||
| Trade and other payables | 26,835 | (1,195 | ) | 25,640 | ||
| Deferred revenues | - | 61,459 | 61,459 | |||
| Net assets attributable to Unitholders and Non-controlling interest | 156,333 | 1,475 | 157,808 | |||
| Net assets attributable to: | ||||||
| Priority Unitholders | 123,002 | 1,106 | 124,108 | |||
| Ordinary Unitholders | 41,023 | 369 | 41,392 | |||
| 164,025 | 1,475 | 165,500 | ||||
| Non-controlling interest | (7,692 | ) | - | (7,692 | ) | |
| 156,333 | 1,475 | 157,808 | ||||
On the amended and restated consolidated statement of financial position, the restatement resulted in the increase in the reported inventories and an increase in deferred revenues reported. The trade and other payables were reduced reflecting the reduction of the transportation and distribution costs. Prepaid and other assets were increased reflecting the prepaid financing cost associated with the transaction.
| Consolidated statement of comprehensive loss | As reported | Adjustments | Restated | |||
| Sales | 677,159 | (59,062 | ) | 618,097 | ||
| Transportation and distribution costs | (13,503 | ) | 1,195 | (12,308 | ) | |
| Revenues | 663,656 | (57,867 | ) | 605,789 | ||
| Raw material purchase costs | 523,058 | (51,700 | ) | 471,358 | ||
| Net revenues less raw material purchase costs | 140,598 | (6,167 | ) | 134,431 | ||
| Other expenses - Production | 118,902 | (7,728 | ) | 111,174 | ||
| Depreciation | 18,100 | (948 | ) | 17,152 | ||
| Loss before finance costs and income taxes | (29,867 | ) | 2,509 | (27,358 | ) | |
| Finance costs, net | 5,211 | 533 | 5,744 | |||
| Loss before income taxes | (35,078 | ) | 1,976 | (33,102 | ) | |
| Deferred income tax recovery | (577 | ) | 501 | (76 | ) | |
| Loss attributable to Unitholders and Non-controlling interest | (26,811 | ) | 1,475 | (25,336 | ) | |
| Decrease in net assets attributable to Unitholders and Non-controlling interest | (27,522 | ) | 1,475 | (26,047 | ) | |
| Comprehensive loss | (19,785 | ) | 1,475 | (18,310 | ) | |
| Decrease in net assets attributable to: | ||||||
| Priority Unitholders | (15,825 | ) | 1,106 | (14,719 | ) | |
| Ordinary Unitholders | (5,275 | ) | 369 | (4,906 | ) | |
| (21,100 | ) | 1,475 | (19,625 | ) | ||
| Non-controlling interest | (6,422 | ) | - | (6,422 | ) | |
| (27,522 | ) | 1,475 | (26,047 | ) | ||
| Comprehensive loss attributable to: | ||||||
| Priority Unitholders | (10,940 | ) | 1,106 | (9,834 | ) | |
| Ordinary Unitholders | (3,645 | ) | 369 | (3,276 | ) | |
| (14,585 | ) | 1,475 | (13,110 | ) | ||
| Non-controlling interest | (5,200 | ) | - | (5,200 | ) | |
| (19,785 | ) | 1,475 | (18,310 | ) | ||
On the amended and restated consolidated statements of comprehensive loss, the restatement resulted in the reversal of the sales, transportation and distribution costs, raw material purchase costs, production expenses and depreciation associated with the cathode sale. In addition, a finance cost was recorded related to the transaction.
| Consolidated statement of cash flows | As reported | Adjustments | Restated | |||
| Operating activities | ||||||
| Loss before income taxes | (35,078 | ) | 1,976 | (33,102 | ) | |
| Adjustments to reconcile earnings before income taxes to cash used in operating activities | ||||||
| Depreciation | 18,100 | (948 | ) | 17,152 | ||
| Finance costs, net | 5,211 | 533 | 5,744 | |||
| Working capital adjustments | ||||||
| Increase in inventories | 12,340 | (59,428 | ) | (47,088 | ) | |
| Decrease (increase) in accounts payable and accrued liabilities | (6,542 | ) | (1,195 | ) | (7,737 | ) |
| Increase in deferred revenues | - | 61,459 | 61,459 | |||
| Interest paid | (4,578 | ) | (2,397 | ) | (6,975 | ) |
| Cash used in operating activities | (43,868 | ) | - | (43,868 | ) | |
On the amended and restated consolidated statement of cash flows, the restatement resulted in classification changes within some of the components of cash used in operating activities, however, there was no change to the reported cash used in operating activities.
The Fund will file on SEDAR the amended and restated consolidated financial statements and amended management's discussion and analysis shortly.
Annual General Meeting Webcast and Dial-In
When: April 27, 2018 at 11:00 a.m. E.T.
To access the webcast and view the slide presentation from the Noranda Income Fund website, please visit http://www.norandaincomefund.com/investor/presentations.php or click the link below:
http://webcast.servicewebdiffusion.com/noranda-eng. (English)
http://webcast.servicewebdiffusion.com/noranda-fr (French)
To access the webcast by telephone, dial 1-866-830-9441, access code 9192413 (English) or 1-866-518-5884, access code 3722750 (French). Please connect approximately 10 minutes prior to the beginning of the call to ensure participation. The webcast will be archived on the Fund's website following the meeting date.
A conference call to discuss first quarter 2018 financial results will be held Monday, April 30, 2018 at 10:00 a.m. ET. Webcast and call-in details are below.
First Quarter 2018 Results Conference Call
When: April 30, 2018 at 10:00 a.m. E.T
Dial in number: 647-788-4919 or
Toll-free North American number: 1-877-291-4570
To access the webcast and view the slide presentation from the Noranda Income Fund website: http://www.norandaincomefund.com/investor/conference.php or click on this link: https://edge.media-server.com/m6/p/4ap36svh.
Conference Call Replay
The recording will be available until midnight on May 14, 2018.
Dial in number: 416-621-4642 or
Toll-free North American number: 1-800-585-8367
The conference ID is 3780219 and you will be prompted to provide your name and company.
Noranda Income Fund is an income trust whose units trade on the Toronto Stock Exchange under the symbol "NIF.UN". Noranda Income Fund owns the electrolytic zinc processing facility and ancillary assets (the "Processing Facility") located in Salaberry-de-Valleyfield, Québec. The Processing Facility is the second-largest zinc processing facility in North America and the largest zinc processing facility in eastern North America, where the majority of zinc customers are located. It produces refined zinc metal and various by-products from sourced zinc concentrates. The Processing Facility is operated and managed by Canadian Electrolytic Zinc Limited, a wholly-owned subsidiary of Glencore Canada Corporation.
Further information about Noranda Income Fund can be found at:
www.norandaincomefund.com.
For further information, please contact:
Michael Boone, Vice President & Chief Financial Officer of Canadian Electrolytic Zinc Limited, Noranda Income Fund's Manager
Tel: 416-775-1561
[email protected]
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