REG - Evraz Plc - Half-year Report <Origin Href="QuoteRef">EVRE.L</Origin> - Part 2
19/08/2016 13:41
- Part 2: For the preceding part double click ID:nRSR4887Ha
completed in Q3 2016. The new
equipment will enable slag of fraction -0.16 mm or -50 mm to be supplied to customers. This will save money for
transportation and third-party conversion.
Steel, North America segment
The Steel, North America segment includes the production of crude steel and final steel products in the US and Canada.
Sales review
Steel products 770 92.5% 1,159 92.8% (33.6)%
Construction products1 89 10.7% 145 11.6% (38.6)%
Railway products2 130 15.6% 240 19.2% (45.8)%
Flat-rolled products3 197 23.7% 235 18.8% (16.2)%
Tubular products4 354 42.5% 539 43.2% (34.3)%
Other revenues5 62 7.5% 90 7.2% (31.1)%
Total 832 100% 1,249 100% (33.4)%
90
7.2%
(31.1)%
Total
832
100%
1,249
100%
(33.4)%
1 Includes beams, rebars and structural tubing
2 Includes rails
3 Includes commodity plate, specialty plate and other flat-rolled products
4 Includes large-diameter line pipes, ERW pipes and casing, seamless pipes, casing and tubing, and other tubular products
5 Includes scrap and services
Steel products
Construction products 160 195 (17.9)%
Railway products 184 280 (34.3)%
Flat-rolled products 295 308 (4.2)%
Tubular products 318 409 (22.2)%
Total 957 1,192 (19.7)%
Tubular products
318
409
(22.2)%
Total
957
1,192
(19.7)%
The segment's revenues from steel product sales decreased, driven by lower sales volumes (down 19.7%) and average sales
prices (down 13.9%).
Revenues from tubular product sales decreased by 34.3%, primarily due to lower sales volumes (down 22.2%) and average
prices (down 12.1%). The decrease in sales volumes was driven by weaker OCTG demand, caused by a slowdown in drilling
activities due to the falling oil price.
Railway product revenues declined by 45.8%, driven by a decline of 34.3% in volumes and 11.5% in average prices. The rail
market fundamentals were less positive, given moderate CAPEX of the Class-I railroads due to lower traffic and a surplus
inventory of rails.
Flat-rolled product revenues fell, mainly due to lower average prices (down 12.0%) and sales volumes (down 4.2%).
Revenues from sales of construction products fell due to lower sales volumes (down 17.9%) and average prices (down 20.7%).
Steel, North America segment cost of revenue
Steel North America segment cost of revenue
H1 2016 H1 2015
US$ million % of segment revenue US$ million % of segment revenue Change, %
Cost of revenue 699 84.0% 1,079 86.4% (35.2)%
Raw materials 207 24.9% 376 30.1% (44.9)%
Semi-finished products 112 13.5% 202 16.2% (44.6)%
Auxiliary materials 52 6.3% 68 5.4% (23.5)%
Services 68 8.2% 79 6.3% (13.9)%
Staff costs 110 13.2% 137 11.0% (19.7)%
Depreciation 51 6.1% 56 4.5% (8.9)%
Energy 41 4.9% 55 4.4% (25.5)%
Other* 58 6.9% 106 8.5% (45.3)%
(45.3)%
* Includes primarily allowances for inventories, goods for resale, certain taxes and transportation
Cost of revenue decreased by 35.2% year-on-year in H1 2016. The main drivers were as follows:
• Raw material costs decreased by 44.9%, primarily due to lower consumption of raw materials (scrap, coke, ferroalloys
and other). The main reasons for this were lower volumes of crude steel and finished products (primarily tubular products
and rails), cost-cutting initiatives that reduced consumption and declining raw material prices.
• Costs of semi-finished products fell by 44.6%, primarily due to a decline in prices for purchased slab and decrease
in consumption of coils resulting from lower tubular production volumes.
• Auxiliary materials dropped by 23.5%, as a cost-cutting plan was implemented and production volumes of crude steel
and finished products dropped year-on-year.
• Service costs declined by 13.9%, as production volumes fell year-on-year in H1 2016.
• Energy costs decreased, driven by lower production volumes and energy consumption.
Steel, North America segment gross profit
The segment's gross profit decreased by 21.8% year-on-year in H1 2016, primarily due to lower sales volumes amid a downturn
on the tubular and rail markets.
Operational update
In H1 2016, end markets for our products exhibited mixed results, with robust demand for wire rod, steady demand for LDP
and plate, continued weakness in the OCTG segment and a lacklustre performance in the rail business. Overall, commodity
prices staged a recovery, underpinned by favourable rulings on trade cases and low inventories in the distribution channel.
Between January and June 2016, the AMM Chicago shredded scrap index and the CRU Midwest plate index both surged by around
40%.
In H1 2016, output of finished saleable steel products and raw steel at EVRAZ's North American operations declined by 18%
and 19% year-on-year respectively. Steel production was adjusted downwards to match lower demand through a combination of
maintenance outages and production curtailments at the Regina and Pueblo steelmaking facilities. Additionally, during Q1
2016, we executed fixed cost reduction initiatives that we estimate will produce around US$26 million in savings during
2016.
During H1 2016, Class-1 railroad maintenance spending retrenched from the record levels seen in 2015. Together with the
high rail inventories, this resulted in lower overall demand. The Pueblo rail mill utilisation during the period declined
to around 67%, compared with full utilisation in H1 2015.
Regarding tubular products, LDP production increased by 16%, partly offsetting declines of 77% for OCTG, 38% for
small-diameter line pipe (SDP) and 88% for seamless pipe.
Delays by customers in obtaining regulatory approvals for their pipeline projects translated into lower than expected LDP
demand during the period. On June 22, the Canada Border Service Agency announced preliminary duties of 127% against LDP
from China and of 20% to 97% against LDP from Japan.
OCTG, SDP, and seamless pipe continued to be challenged during the period by subdued energy exploration activity and high
inventories at distributors. Production at the Canadian OCTG facilities was down 77% year-on-year. The EVRAZ Pueblo
seamless mill was idled in March 2016, resulting in a decline in seamless pipe production of 88% year-on-year. In Canada,
distributor inventories of some OCTG products appear to be sufficiently depleted and together with stabilizing rig counts
stabilising indicate better fundamentals for the second half of the year.
Flat-rolled product saleable volumes are in line with the same period last year, despite a planned outage of around 20 days
at the Portland, Oregon plate mill to complete repairs to the re-heat furnace lining. In contrast to H1 2015, the flat
division was materially accretive to EBITDA in H1 2016, as the benefits of higher plate prices and low relief values of
slab in inventory improved metal spreads. During April, the US Department of Commerce initiated investigations on dumping
and subsidisation of Carbon and Alloy Steel Cut-To-Length Plate from numerous countries.
In H2 2016, EVRAZ North America will continue responding to market conditions through aggressive cost structure management
and optimising inventory. Additionally, it will continue working on ramping up the new LDP mill, and on the steelmaking
and rolling mill upgrades in Regina.
Coal segment
The Coal segment includes coal mining and enrichment and the operations of the Nakhodka Commercial Sea Port, used
extensively to ship the Group's coal products to the Asian markets.
Sales review
External sales
Coal products 317 58.3% 307 56.9% 3.3%
Coking coal 21 3.9% 25 4.6% (16.0)%
Coal concentrate 296 54.4% 282 52.3% 5.0%
Intersegment sales
Coal products 185 34.0% 194 35.9% (4.6)%
Coking coal 20 3.7% 24 4.4% (16.7)%
Coal concentrate 165 30.3% 170 31.5% (2.9)%
Other revenues 42 7.7% 39 7.2% 7.7%
Total 544 100% 540 100% 0.7%
Other revenues
42
7.7%
39
7.2%
7.7%
Total
544
100%
540
100%
0.7%
External sales
Coal products 5,043 4,382 15.1%
Coking coal 673 735 (8.4)%
Coal concentrate and other products 4,370 3,647 19.8%
Intersegment sales
Coal products 2,902 2,910 (0.3)%
Coking coal 642 593 8.3%
Coal concentrate 2,260 2,317 (2.5)%
Total, coal products 7,945 7,292 9.0%
Coal concentrate
2,260
2,317
(2.5)%
Total, coal products
7,945
7,292
9.0%
Overall revenues in the segment increased slightly in H1 2016, despite lower sales prices, due to the recovery of global
demand supported by a temporary domestic supply deficit following the accident at Vorkutaugol's Severnaya mine. Sales
volumes increased due to the productivity improvement and favourable market conditions in H1 2016 compared with H1 2015.
Internal sales of coal products decreased due to lower average prices (down 4.3%) and sales volumes (down 0.3%).
External sales of coal products increased, mainly due to higher sales volumes (up 15.1%), partly offset by lower average
prices (down 11.8%).
In H1 2016, the Coal segment's sales to the Steel segment amounted to US$201 million, or 36.9% of sales, compared with
US$210 million and 38.8% of sales in H1 2015.
During the Period, around 49.5% of the coking coal consumed by EVRAZ's steelmaking operations came from own operations,
compared with 46.2% in H1 2015.
Coal segment cost of revenue
Coal segment cost of revenue
H1 2016 H1 2015
US$ million % of segment revenue US$ million % of segment revenue Change, %
Cost of revenue 344 63.2% 392 72.6% (12.2)%
Auxiliary materials 58 10.7% 57 10.6% 1.8%
Services 38 7.0% 32 5.9% 18.8%
Transportation 66 12.1% 80 14.8% (17.5)%
Staff costs 76 14.0% 109 20.2% (30.3)%
Depreciation 70 12.9% 81 15.0% (13.6)%
Energy 17 3.0% 20 3.7% (15.0)%
Other* 19 3.5% 13 2.4% 46.2%
46.2%
* Includes primarily certain taxes and goods for resale, raw materials and allowance for inventory
The main drivers of the year-on-year decrease in the segment's cost of revenues were as follows.
· The cost of auxiliary materials and services was almost flat year-on-year in H1 2016 in US dollar terms. The positive
effect of the rouble weakness (down US$13 million), as well as the effect of cost-cutting initiatives, was offset by higher
consumption of auxiliary materials due to an increase in volumes.
· Transportation costs declined due to the rouble devaluation.
· Staff costs decreased due to the rouble weakness (down US$17 million) and asset optimisation initiatives.
· Depreciation and depletion costs decreased, mostly due to the rouble weakness (down US$16 million), partly offset by
increase in depreciation costs due to higher volumes.
· Energy costs fell due to the effect of currency movements (down US$4 million), partly offset by higher electricity
prices in local currencies.
· Other costs increased, primarily due to changes in goods for resale.
Coal segment gross profit
The Coal segment's gross profit amounted to US$200 million in H1 2016, up from US$148 million in H1 2015. The gross profit
margin rose, primarily due to the effect of the rouble depreciation on costs and cost-cutting initiatives.
Operational update
The Coal segment continues to implement a production efficiency improvement programme. The main priorities in 2016 are to:
· enhance overall equipment effectiveness at longwalls and the Raspadsky open pit
· increase the rate of development work compared with 2015
· improve washing efficiency (growth of concentrate yields)
In H1 2016, EVRAZ's raw coking coal output totalled 11.0 million tonnes, up 1.6 million tonnes year-on-year.
Raspadskaya
In H1 2016, raw coking coal output from Raspadskaya amounted to 4.9 million tonnes (including 2.6 million tonnes from the
Raspadskaya mine). The Raspadsky open pit mined 2 million tonnes, 0.7 million tonnes higher than in H1 2015. The main
reason was favourable market conditions in 2016, which avoided the need to suspend mining activities, as in 2015.
Output from the Raspadskaya-Koksovaya mine in H1 2016 amounted to 0.28 million tonnes of K-grade raw coking coal. The mine
continues to develop room-and-pillar operations.
Yuzhkuzbassugol
In H1 2016, Yuzhkuzbassugol mined 5.9 million tonnes of raw coking coal, up 1.8 million tonnes year-on-year. The main
drivers were:
· Stable longwall operations, with higher output per face compared with 2015
· Optimisation of the longwall move schedule at the Uskovskaya and Esaulskaya mines
Mezhegeyugol
In H1 2016, Mezhegeyugol launched room-and-pillar mining operations. Raw coking coal output amounted to 0.2 million tonnes,
compared with 0.1 million tonnes in H1 2015.
Key RISKS AND UNCERTAINTIES
EVRAZ is exposed to numerous risks and uncertainties in its business. These may affect its ability to execute its strategy
effectively in the remaining six months of the financial year and could cause the actual results to differ materially from
expected and historical results.
Despite the ongoing market volatility described in the Market Outlook section, the directors consider that the principal
risks and uncertainties as summarised below and detailed in the EVRAZ plc 2015 annual report on pages 28 to 31, copies of
which are available at www.evraz.com, remain relevant in 2016 and the mitigating actions described continue to be
appropriate.
Risks:
· Global economic factors, industry conditions
· Competition
· Cost effectiveness
· Treasury: availability of finance
· Functional currency devaluation
· HSE: environmental
· HSE: health and safety
· Potential actions by governments
· Business interruption
EVRAZ continues to actively monitor the risk environment of the business and actively pursues strategies to mitigate the
identified risks on an ongoing basis.
DIRECTOR'S RESPONSIBILITY STATEMENT
The directors confirm that, to the best of their knowledge, this consolidated interim financial information has been
prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
An indication of important events that have occurred during the first six months and their impact on the consolidated
interim financial information, and a description of the principal risks and uncertainties for the remaining six months of
the financial year; and material related-party transactions in the first six months and any material changes in the
related-party transactions described in the last annual report.
By order of the Board
Alexander Frolov
Chief Executive Officer
EVRAZ plc
17 August 2016
Appendixes
Appendix 1
EBITDA
EBITDA is determined as a segment's profit/(loss) from operations, adjusted for social and social infrastructure
maintenance expenses, impairment of assets, profit/(loss) on disposal of property, plant and equipment and intangible
assets, foreign exchange gains/(losses) and depreciation, depletion and amortisation expense.
In 2015, the management changed the definition of segment expense and EBITDA to make them more comparable with the
indicators of Russian steel peers. Starting from 2015, segment expense in the consolidated financial statements does not
include social and social infrastructure maintenance expenses and profit/(loss) from operations is adjusted for these
expenses in arriving at EBITDA. As a result, the Group restated EBITDA for both financial reporting and management
accountings purposes for the six months ended 30 June 2015.
Appendix 2
Free Cash Flow
Free Cash Flow represents EBITDA, net of non-cash items, less changes in working capital, income tax paid, interest paid
and social and infrastructure maintenance, covenant reset charges, conversion premiums, premiums on early repurchases of
bonds and realised gain/(losses) on interest payments under swap contracts, interest income and debt issue costs, less
capital expenditure, including recorded in financing activities, purchases of subsidiaries, net of cash acquired, proceeds
from sale of disposals classified as held for sale, net of transaction costs, less purchases of treasury shares for
participants of the incentive plans, plus other cash flows from investing activities. Free Cash Flow is not a measure under
IFRS and should not be considered as an alternative to other measures of financial position. EVRAZ's calculation of Free
Cash Flow may be different from the calculation used by other companies and therefore comparability may be limited.
Appendix 3
Cash and short-term bank deposits
Cash and short-term bank deposits is not a measure under IFRS and should not be considered as an alternative to other
measures of financial position. EVRAZ's calculation of cash and short-term bank deposits may be different from the
calculation used by other companies and therefore comparability may be limited.
Cash and short-term bank deposits calculation
30 June 2016 31 December 2015
(US$ million)
Cash and cash equivalents 868 1,375
Cash of disposal groups classified as held for sale - -
Collateral under swaps - -
Cash and short-term bank deposits 868 1,375
Appendix 4
Total debt
Total debt represents the nominal value of loans and borrowings plus unpaid interest, including those related to the
disposal groups classified as held for sale, finance lease liabilities and the nominal effect of cross-currency swaps on
principal of rouble-denominated notes. Management uses this measure because it represents the Group's interest-bearing
financial obligations. Total debt is not defined in the international financial reporting standards, therefore, EVRAZ's
calculation of total debt may be different from the calculation used by other companies and therefore comparability may be
limited. This calculation differs from that used for covenant compliance calculations.
Total debt has been calculated as follows:
30 June 2016 31 December 2015
(US$ million)
Long-term loans, net of current portion 5,553 5,850
Short-term loans and current portion of long-term loans 546 497
Add back: Unamortised debt issue costs and fair value adjustment to liabilities assumed in business combination 48 47
Nominal effect of cross-currency swaps on principal of rouble-denominated notes 32 325
Finance lease liabilities, including current portion 5 5
Total debt 6,184 6,724
6,184
6,724
Appendix 5
Net debt
Net debt represents total debt less cash and liquid short-term financial assets, including those related to disposal groups
classified as held for sale. Net debt is not a measure under IFRS and should not be considered as an alternative to other
measures of financial position. EVRAZ's calculation of net debt may be different from the calculation used by other
companies and therefore comparability may be limited. The current calculation is different from that used for covenant
compliance calculations.
Net debt has been calculated as follows:
30 June 2016 31 December 2015
(US$ million)
Total debt 6,184 6,724
Short-term bank deposits - -
Cash and cash equivalents (868) (1,375)
Cash of assets classified as held for sale - -
Collateral under swaps - -
Net debt 5,316 5,349
5,349
EVRAZ plc
Unaudited Interim Condensed
Consolidated Financial Statements
Six-month period ended 30 June 2016
EVRAZ plc
Unaudited Interim Condensed Consolidated Financial Statements
Six-month period ended 30 June 2016
Contents
Report on Review of Interim Condensed Consolidated Financial Statements
Unaudited Interim Condensed Consolidated Financial Statements
Unaudited Interim Condensed Consolidated Statement of Operations
Unaudited Interim Condensed Consolidated Statement of Comprehensive Income
Unaudited Interim Condensed Consolidated Statement of Financial Position
Unaudited Interim Condensed Consolidated Statement of Cash Flows
Unaudited Interim Condensed Consolidated Statement of Changes in Equity
Selected Notes to the Unaudited Interim Condensed Consolidated Financial Statements
Independent Review Report to EVRAZ plc
Introduction
We have been engaged by EVRAZ plc (the Company) to review the condensed set of financial statements in the interim report
for the six months ended 30 June 2016 which comprises the Interim Condensed Consolidated Statement of Operations, Interim
Condensed Consolidated Statement of Comprehensive Income, Interim Condensed Consolidated Statement of Financial Position,
Interim Condensed Consolidated Statement of Cash Flows, Interim Condensed Consolidated Statement of Changes in Equity and
related notes 1 to 14. We have read the other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review
Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the
Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority. As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in
this interim financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim
financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland), 'Review of
Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP,
London,
17 August 2016
Unaudited Interim Condensed Consolidated Statement of Operations
(In millions of US dollars, except for per share information)
Six-month periodended 30 June
Notes 2016 2015*
Revenue
Sale of goods $ 3,444 $ 4,786
Rendering of services 99 108
3,543 4,894
Cost of revenue (2,638) (3,555)
Gross profit 905 1,339
Selling and distribution costs (334) (425)
General and administrative expenses (200) (267)
Social and social infrastructure maintenance expenses (12) (10)
Loss on disposal of property, plant and equipment (10) (17)
Impairment of assets 4 (7) (20)
Foreign exchange gains/(losses), net 41 (99)
Other operating income 7 10
Other operating expenses (57) (32)
Profit from operations 333 479
Interest income 5 5
Interest expense (241) (229)
Share of profits/(losses) of joint ventures and associates 7 (22) (28)
Gain/(loss) on financial assets and liabilities, net (10) 48
Gain/(loss) on disposal groups classified as held for sale, net - 20
Loss of control over a subsidiary - (167)
Other non-operating gains/(losses), net (17) (8)
Profit before tax 48 120
Income tax expense 5 (41) (101)
Net profit $ 7 $ 19
Attributable to:
Equity holders of the parent entity $ (4) $ 19
Non-controlling interests 11 -
$ 7 $ 19
Earnings/(losses) per share:
for profit/(loss) attributable to equity holders of the parent entity, basic and diluted, US dollars 10 $ (0.00) $ 0.01
* The amounts shown here do not correspond to the financial statements for the six-month period ended 30 June 2015
and reflect reclassifications described in Note 2.
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
Unaudited Interim Condensed Consolidated Statement of Comprehensive Income
(In millions of US dollars)
Six-month periodended 30 June
Notes 2016 2015
Net profit $ 7 $ 19
Other comprehensive income
Othercomprehensiveincometobereclassifiedtoprofitorlossin subsequentperiods
Exchange differences on translation of foreign operations into presentation currency 369 (5)
Recycling of exchange difference to profit or loss - 142
369 137
Effect of translation to presentation currency of the Group's joint ventures and associates 7 9 1
Share of other comprehensive income of joint ventures and associates accounted for using the equity method 9 1
Items not to be reclassified to profit or loss in subsequent periods
Gains/(losses) on re-measurement of net defined benefit liability - (5)
Income tax effect - 2
- (3)
Total other comprehensive income 378 135
Total comprehensive income, net of tax $ 385 $ 154
Attributable to:
Equity holders of the parent entity $ 366 $ 151
Non-controlling interests 19 3
$ 385 $ 154
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
Unaudited Interim Condensed Consolidated Statement of Financial Position
(In millions of US dollars)
Notes 30 June 2016 31 December 2015
Assets
Non-current assets
Property, plant and equipment 6 $ 4,640 $ 4,302
Intangible assets other than goodwill 324 324
Goodwill 1,215 1,176
Investments in joint ventures and associates 7 61 74
Deferred income tax assets 122 119
Other non-current financial assets 79 79
Other non-current assets 62 56
6,503 6,130
Current assets
Inventories 901 899
Trade and other receivables 552 447
Prepayments 52 50
Loans receivable 8 5
Receivables from related parties 8 16 6
Income tax receivable 30 44
Other taxes recoverable 128 127
Other current financial assets 35 35
Cash and cash equivalents 9 868 1,375
2,590 2,988
Assets of disposal groups classified as held for sale 11 1
2,601 2,989
Total assets $ 9,104 $ 9,119
Equity and liabilities
Equity
Equity attributable to equity holders of the parent entity
Issued capital 10 $ 1,507 $ 1,507
Treasury shares 10 (270) (305)
Additional paid-in capital 2,511 2,501
Revaluation surplus 119 124
Accumulated profits 610 644
Translation difference (3,965) (4,335)
512 136
Non-controlling interests 159 133
671 269
Non-current liabilities
Long-term loans 11 5,553 5,850
Deferred income tax liabilities 361 352
Employee benefits 324 301
Provisions 174 146
Other long-term liabilities 86 116
6,498 6,765
Current liabilities
Trade and other payables 790 1,070
Advances from customers 237 228
Short-term loans and current portion of long-term loans 11 546 497
Payables to related parties 8 171 143
Income tax payable 34 17
Other taxes payable 125 107
Provisions 32 23
1,935 2,085
Total equity and liabilities $ 9,104 $ 9,119
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
Unaudited Interim Condensed Consolidated Statement of Cash Flows
(In millions of US dollars)
Six-month period ended30 June
2016 2015
Cash flows from operating activities
Net profit $ 7 $ 19
Adjustments to reconcile net profit/(loss) to net cash flows from operating activities:
Deferred income tax (benefit)/expense (26) 27
Depreciation, depletion and amortisation 256 307
Loss on disposal of property, plant and equipment 10 17
Impairment of assets 7 20
Foreign exchange (gains)/losses, net (41) 99
Interest income (5) (5)
Interest expense 241 229
Share of (profits)/losses of associates and joint ventures 22 28
(Gain)/loss on financial assets and liabilities, net 10 (48)
(Gain)/loss on disposal groups classified as held for sale, net - (20)
Loss of control over a subsidiary - 167
Other non-operating (gains)/losses, net 17 8
Bad debt expense (1) 9
Changes in provisions, employee benefits and other long-term assets and liabilities - (3)
Expense arising from equity-settled awards 10 12
Other (1) (2)
506 864
Changes in working capital:
Inventories 54 78
Trade and other receivables (99) 20
Prepayments 4 28
Receivables from/payables to related parties 46 11
Taxes recoverable 27 (70)
Other assets (2) -
Trade and other payables (36) (81)
Advances from customers 13 2
Taxes payable 18 (49)
Other liabilities 2 1
Net cash flows from operating activities 533 804
Cash flows from investing activities
Issuance of loans receivable to related parties (1) (1)
Proceeds from repayment of loans receivable, including interest - 2
Restricted deposits at banks in respect of investing activities - (2)
Short-term deposits at banks, including interest 2 1
Purchases of property, plant and equipment and intangible assets (185) (248)
Proceeds from disposal of property, plant and equipment 4 2
Proceeds from sale of disposal groups classified as held for sale, net of transaction costs - 40
Dividends received 1 -
Other investing activities, net 4 -
Net cash flows used in investing activities (175) (206)
Continued on the next page
Unaudited Interim Condensed Consolidated Statement of Cash Flows
(continued)
(In millions of US dollars)
Six-month period ended30 June
2016 2015
Cash flows from financing activities
Purchase of treasury shares, including transaction costs $ - $ (339)
Sale of non-controlling interests - 1
Contribution of a non-controlling shareholder to share capital of the Group's subsidiary 7 -
Proceeds from bank loans and notes 989 1,463
Repayment of bank loans and notes, including interest (1,615) (1,756)
Net proceeds from/(repayment of) bank overdrafts and credit lines, including interest (1) (4)
Payments for purchase of property, plant and equipment on deferred terms (1) (3)
Gain/(loss) on derivatives not designated as hedging instruments (244) (123)
Collateral under swap contracts - 4
Payments under covenants reset (3) -
Payments under finance leases, including interest (1) (1)
Other financing activities (8) -
Net cash flows used in financing activities (877) (758)
Effect of foreign exchange rate changes on cash and cash equivalents 12 70
Net increase/(decrease) in cash and cash equivalents (507) (90)
Cash and cash equivalents at beginning of year 1,375 1,086
Cash and cash equivalents at end of period $ 868 $ 996
Supplementary cash flow information:
Cash flows during the period:
Interest paid $ (200) $ (213)
Interest received 2 2
Income taxes paid (37) (147)
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
Unaudited Interim Condensed Consolidated Statement of Changes in Equity
(In millions of US dollars)
Attributable to equity holders of the parent entity
Issued Treasury shares Additional paid-incapital Revaluation surplus Accumulated profits Translation difference Total Non-controlling interests Total Equity
capital
At 31 December 2015 $ 1,507 $ (305) $ 2,501 $ 124 $ 644 $ (4,335) $ 136 $ 133 $ 269
Net profit/(loss) - - - - (4) - (4) 11 7
Other comprehensive income/(loss) - - - - - 370 370 8 378
Reclassification of revaluation surplus to accumulated profits in respect of the disposed items of property, plant and equipment - - - (5) 5 - - - -
Total comprehensive income/(loss) for the period - - - (5) 1 370 366 19 385
Contribution of a non-controlling shareholder to share capital of the Group's subsidiary - - - - - - - 7 7
Transfer of treasury shares to participants of the Incentive Plans - 35 - - (35) - - - -
Share-based payments - - 10 - - - 10 - 10
At 30 June 2016 $ 1,507 $ (270) $ 2,511 $ 119 $ 610 $ (3,965) $ 512 $ 159 $ 671
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
Unaudited Interim Condensed Consolidated Statement of Changes in Equity (continued)
(In millions of US dollars)
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