REG - Evraz Plc - Half-year Report <Origin Href="QuoteRef">EVRE.L</Origin> - Part 2
10/08/2017 07:07
- Part 2: For the preceding part double click ID:nRSJ5874Na
specialty plate and other flat-rolled products
5 Includes large-diameter line pipes, ERW pipes and casing, seamless pipes, casing and tubing, and other tubular products
6 Includes scrap and services
Steel products
Semi-finished products 7 0 100.0%
Construction products 126 160 (21.3)%
Railway products 206 184 12.0%
Flat-rolled products 271 295 (8.1)%
Tubular products 340 318 6.9%
Total 950 957 (0.7)%
Tubular products
340
318
6.9%
Total
950
957
(0.7)%
The segment's revenues from steel product sales increased, driven by higher average sales prices (up 9.1%), albeit partly
offset by lower sales volumes (down 0.7%).
Revenues from construction product sales dropped by 9.0%, primarily due to lower sales volumes (down 21.3%), which was
partially offset by higher average prices (up 12.3%). The decrease was mainly due to lower beam sales volumes amid strong
import pressure.
Railway product revenues increased by 28.5% due to an increase in average prices (up 16.5%) and strong sales volumes (up
12.0%), which was driven by marginally better demand as Class I railroads finalised destocking.
Flat-rolled product revenues rose, mainly due to higher average prices (up 21.8%), which was partially offset by lower
sales volumes (down 8.1%) as a result of redirection from external sales to being used in OCTG production.
Steel, North America segment cost of revenues
Steel North America segment cost of revenues
H1 2017 H1 2016
US$ million % of segment revenues US$ million % of segment revenues Change, %
Cost of revenues 772 87.8% 703 84.5% 9.8%
Raw materials 286 32.5% 207 24.9% 38.2%
Semi-finished products 133 15.1% 112 13.5% 18.8%
Auxiliary materials 57 6.5% 52 6.3% 9.6%
Services 53 6.0% 68 8.2% (22.1)%
Staff costs 108 12.3% 110 13.2% (1.8)%
Depreciation 47 5.3% 51 6.1% (7.8)%
Energy 54 6.1% 41 4.9% 31.7%
Other* 34 3.9% 62 7.4% (45.2)%
(45.2)%
* Includes primarily allowances for inventories, goods for resale, certain taxes and transportation
The Steel, North America segment's cost of revenues increased by 9.8% year-on-year in
H1 2017. The main drivers were as follows:
• Raw material costs increased by 38.2%, primarily due to higher scrap prices, accompanied by an increase in other raw
material consumption due to higher sales of OCTG products amid a market recovery in 2017.
• Semi-finished products increased by 18.8% mainly due to higher purchase prices for semi-finished products.
• Auxiliary materials rose by 9.6% due to changes in product mix.
• Service costs declined by 22.1% due to lower coating and slitting costs as Camrose and Portland Tubular have been
idle since 2016.
• Energy costs rose by 31.7% amid higher rates and an increase in production of crude steel year-on-year in H1 2017.
• Other costs decreased primarily due to changes in allowances for inventories, accompanied by a reduction in goods
for resale.
Steel, North America segment gross profit
The segment's gross profit decreased by 17.1% year-on-year in H1 2017, reflecting the 5.6% increase in segment revenues,
while the cost of revenues increased by 9.8% primarily on the back of higher scrap prices.
Operational update
During the first half of 2017, demand and spreads continued to recover. Oil country tubular goods (OCTG) staged a
particularly strong recovery driven by depleted or very limited availability of inventories in Canada and the US, coupled
with significant increases in active rig counts. Rail demand improved in comparison to last year, driven by Class I
railroads finalising destocking. Plate demand in North America region showed a decrease on average however responded
positively in second quarter to the increased activity in the energy sector, wind tower, and non-residential construction.
Large-diameter pipe market continues to be impacted by uncertainty.
Shipments of steel products nevertheless remained approximately flat as the business built up working capital to sustain
the ramp-up in OCTG production. Rail products volumes increased by 12% as Class-1 railroads orders in the second quarter of
2017 were comparatively stronger than in the same period in 2016. Tubular products volumes increased 7% year-on-year as
OCTG volumes increases offset declines in line pipe volumes.
Volumes of flat-rolled products shipped declined 8% when compared to the same period last year as a result of steel from
the Regina mill being used internally to produce OCTG instead of being sold to third parties.
Prices for most steel products increased during the first half of 2017 largely tracking scrap increases. During the period,
the AMM Chicago shredded scrap index and the CRU Midwest plate index increased 30% and 27% respectively.
Coal segment
Sales review
External sales
Coal products 607 54.1% 317 58.3% 91.5%
Coking coal 79 7.0% 21 3.9% 276.2%
Coal concentrate 528 47.1% 296 54.4% 78.4%
Intersegment sales
Coal products 439 39.2% 185 34.0% 137.3%
Coking coal 35 3.1% 20 3.7% 75.0%
Coal concentrate 404 36.0% 165 30.3% 144.8%
Other revenues 75 6.7% 42 7.7% 78.6%
Total 1,121 100.0% 544 100.0% 106.1%
Other revenues
75
6.7%
42
7.7%
78.6%
Total
1,121
100.0%
544
100.0%
106.1%
External sales
Coal products 4,686 5,043 (7.1)%
Coking coal 933 673 38.6%
Coal concentrate and other products 3,753 4,370 (14.1)%
Intersegment sales
Coal products 2,884 2,902 (0.6)%
Coking coal 606 642 (5.6)%
Coal concentrate 2,278 2,260 0.8%
Total, coal products 7,570 7,945 (4.7)%
Coal concentrate
2,278
2,260
0.8%
Total, coal products
7,570
7,945
(4.7)%
Overall revenues in the segment increased significantly in H1 2017, despite lower sales volumes, due to the recovery of
global demand (especially on the Asian market), supported by the domestic market as well. Sales volumes decreased primarily
due to logistic constraints.
Internal revenues of coal products increased due to higher average prices (up 137.9%).
External sales of coal products rose, mainly due to higher average prices (up 98.6%), albeit partly offset by lower sales
volumes (down 7.1%).
In H1 2017, the Coal segment's sales to the Steel segment amounted to US$439 million, or 39.2% of sales, compared with
US$185 million and 34.0% of sales in H1 2016.
During the reporting period, around 58.2% of the coking coal consumed by EVRAZ' steelmaking operations came from own
operations, compared with 49.5% in H1 2016.
Coal segment cost of revenues
Coal segment cost of revenues
H1 2017 H1 2016
US$ million % of segment revenues US$ million % of segment revenues Change, %
Cost of revenues 460 41.0% 344 63.2% 33.7%
Auxiliary materials 53 4.7% 46 8.5% 15.2%
Services 54 4.8% 38 7.0% 42.1%
Transportation 101 9.0% 66 12.1% 53.0%
Staff costs 95 8.5% 76 14.0% 25.0%
Depreciation 77 6.9% 70 12.9% 10.0%
Energy 26 2.3% 17 3.0% 52.9%
Other* 54 4.8% 31 5.7% 74.2%
74.2%
* Includes primarily certain taxes and goods for resale, raw materials and allowance for inventory.
The main drivers of the year-on-year increase in the segment's cost of revenues were as follows:
· The cost of auxiliary materials increased by 15.2%, primarily due to the effect of rouble strengthening on costs (up
US$10 million), which was partially offset by the effect of cost-cutting initiatives.
· Service costs increased year-on-year in H1 2017 in US dollar terms, mostly due to the effect of rouble strengthening
on costs (up US$9 million), accompanied by an increase in service costs due to rescheduling of longwall repositioning from
H2 2016 to H1 2017 at Yuzhkuzbassugol's mines and higher service costs for drilling of degassing holes.
· Transportation costs rose primarily due to the effect of rouble strengthening on costs (up US$18 million),
accompanied by an increased export share in the sales mix, which drove transportation costs higher at trading companies.
· Staff costs increased primarily due to the effect of rouble strengthening on costs (up US$17 million), accompanied by
wage inflation at Russian sites.
· Depreciation and depletion costs increased primarily due to the effect of rouble strengthening on costs, which was
partially offset by the effect of asset optimisation initiatives.
· Energy costs increased in H1 2017 due to the effect of rouble strengthening on costs (up US$5 million), accompanied
by higher electricity prices in local currencies.
· Other costs increased primarily due to the effect of rouble strengthening on costs, accompanied by changes in goods
for resale and increase in taxes.
Coal segment gross profit
The Coal segment's gross profit amounted to US$661 million in H1 2017, up from US$200 million in H1 2016. The gross profit
margin rose primarily due to an increase in sales prices.
Operational update
The Coal segment continues working to maintain its position as a low-cost producer and is implementing several programmes
toward this aim:
· Reduce the downtime and increase the loads on longwalls.
· Optimise the time needed for longwall moves.
· Increase the rate of development work.
· Increase preliminary degassing efficiency.
· Improve washing efficiency (increase concentrate yields).
· Improve work safety.
In an effort to strengthen market position and expand the product portfolio, open pit mining operations were launched in 1H
2017 at the site of the Raspadskaya-Koksovaya mine to produce the deficit semi-hard OS grade. The first tonnes of this coal
grade were shipped to the holding's metallurgical plants, where they received positive quality ratings. This site's
development will be a key area for the division's work.
In H1 2017, EVRAZ's raw coking coal output totalled 11.7 million tonnes, up 0.6 million tonnes year-on-year.
Raspadskaya
In H1 2017, raw coking coal output from Raspadskaya amounted to 6.0 million tonnes (up 1.1 million tonnes year-on-year).
The Raspadskaya mine produced 3.6 million tonnes (up 0.97 million tonnes year-on-year) due to stable work at three
longwalls. The Raspadsky open pit mined 2.1 million tonnes in accordance with its current production capacity.
Output from the Raspadskaya-Koksovaya mine in H1 2017 increased to 0.3 million tonnes of K-grade raw coking coal. The mine
continues to develop room-and-pillar operations.
Yuzhkuzbassugol
In H1 2017, Yuzhkuzbassugol mined 5.3 million tonnes of raw coking coal, down 0.6 million tonnes year-on-year predominantly
due to the longwall move schedule at the Erunakovskaya mine, while production increased at the Esaulskaya and Uskovskaya
mines.
Mezhegeyugol
In H1 2017, Mezhegeyugol continued to develop room-and-pillar mining operations. Raw coking coal output amounted to 0.4
million tonnes, compared with 0.2 million tonnes in H1 2016. The sieving technology was mastered, which brought down the
cash cost of products shipped for export. Much attention is paid to the growth rate of development works. One of the
brigades has already reached a speed of more than 1 km per month.
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 on pages 32-35 of the EVRAZ plc 2016 annual report, copies of
which are available at www.evraz.com, remain relevant in 2017 and the mitigating actions described continue to be
appropriate.
Risks:
· Global economic factors, industry conditions, industry cyclicality.
· Product competition.
· Cost effectiveness.
· Treasury: availability of finance.
· Functional currency devaluation.
· HSE: environmental.
· HSE: health and safety.
· Potential actions by governments.
· Business interruption.
The Group has also continued to monitor and assess risks and uncertainties not considered to be principal, including IT
security, Cybersecurity and IT infrastructure failure risk.
On 27 June 2017, a computer virus attacked many major companies across the world including EVRAZ. All the EVRAZ IT systems
and data affected by the virus attack have been recovered. No significant damage was caused by the cyber security incident
so far however, management continues to implement additional measures to minimise similar risks.
EVRAZ continues to actively monitor the risk environment of the business and pursues strategies to mitigate the identified
risks on an ongoing basis.
DIVIDENDS
The Board of Directors has declared an interim dividend of US$0.30 per share, totalling US$429.6 million, to be paid on 8
September 2017 to shareholders on the register as of 18 August 2017. This marks a return to dividends after a payout was
not made in 2016. The decision follows a comprehensive review of EVRAZ' financial situation, which indicates that the Group
is well placed to meet its current and future financial requirements. Other factors considered included the solid results
for the first half of 2017 and positive outlook for the year.
EVRAZ' dividend rule remains in place and takes into account that the major leverage metric, the ratio of net debt to LTM
EBITDA, remains below 3.0, enabling the Board to consider dividends.
The interim dividend will be paid in UK pounds sterling, unless a shareholder elects to receive dividends in US dollars or
euros. All conversions will take place on or around 24 August 2017.
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
09 August 2017
Appendices
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.
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 covenant reset charges, conversion premiums, premiums on early repurchase 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' 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' 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 2017 31 December 2016 Change Change
(US$ million) %
Cash and cash equivalents 1,285 1,157 128 11.1%
Cash of disposal groups classified as held for sale - 2 (2) n/a
Cash and short-term bank deposits 1,285 1,159 126 10.9%
Appendix 4
Total debt
Total debt represents the nominal value of loans and borrowings plus unpaid interest, finance lease liabilities, loans of
assets classified as held for sale, and the nominal effect of cross-currency swaps on principal of rouble-denominated
notes. Total debt is not a measure under IFRS and should not be considered as an alternative to other measures of financial
position. EVRAZ' calculation of total 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.
Total debt has been calculated as follows:
30 June 2017 31 December 2016 Change Change
(US$ million) %
Long-term loans, net of current portion 5,050 5,502 (452) (8.2)%
Short-term loans and current portion of long-term loans 464 392 72 18.4%
Add back: Unamortised debt issue costs and fair value adjustment to liabilities assumed in business combination 36 43 (7) (16.3)%
Nominal effect of cross-currency swaps on principal of rouble-denominated notes 11 19 (8) (42.1)%
Finance lease liabilities, including current portion 8 5 3 60.0%
Total debt 5,569 5,961 (392) (6.6)%
5,569
5,961
(392)
(6.6)%
Appendix 5
Net debt
Net debt represents total debt less cash and liquid short-term financial assets, including those related to disposals
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' 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 2017 31 December 2016 Change Change
(US$ million) %
Total debt 5,569 5,961 (392) (6.6)%
Cash and cash equivalents (1,285) (1,157) (128) 11.1%
Cash of assets classified as held for sale - (2) 2 n/a
Net debt 4,284 4,802 (518) (10.8)%
4,284
4,802
(518)
(10.8)%
EVRAZ plc
Unaudited Interim Condensed
Consolidated Financial Statements
Six-month period ended 30 June 2017
EVRAZ plc
Unaudited Interim Condensed Consolidated Financial Statements
Six-month period ended 30 June 2017
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 2017 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 15. 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 2017 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,
9 August 2017
Unaudited Interim Condensed Consolidated Statement of Operations
(In millions of US dollars, except for per share information)
Six-month periodended 30 June
Notes 2017 2016*
Revenue
Sale of goods $ 4,959 $ 3,444
Rendering of services 147 99
5,106 3,543
Cost of revenue (3,613) (2,644)
Gross profit 1,493 899
Selling and distribution costs (335) (308)
General and administrative expenses (264) (220)
Social and social infrastructure maintenance expenses (15) (12)
Loss on disposal of property, plant and equipment (6) (10)
Impairment of assets 5 (15) (7)
Foreign exchange gains/(losses), net (7) 41
Other operating income 12 7
Other operating expenses (32) (57)
Profit from operations 831 333
Interest income 8 5
Interest expense (230) (241)
Share of profits/(losses) of joint ventures and associates 8 3 (22)
Gain/(loss) on financial assets and liabilities, net (51) (10)
Gain/(loss) on disposal groups classified as held for sale, net 4 (265) -
Other non-operating gains/(losses), net (2) (17)
Profit before tax 294 48
Income tax expense 6 (208) (41)
Net profit $ 86 $ 7
Attributable to:
Equity holders of the parent entity $ 53 $ (4)
Non-controlling interests 33 11
$ 86 $ 7
Earnings/(losses) per share:
for profit/(loss) attributable to equity holders of the parent entity, basic, US dollars 11 $ 0.04 $ (0.00)
for profit/(loss) attributable to equity holders of the parent entity, diluted, US dollars 11 $ 0.04 $ (0.00)
* The amounts shown here do not correspond to the financial statements for the six-month period ended 30 June 2016
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 2017 2016
Net profit $ 86 $ 7
Other comprehensive income
Othercomprehensiveincometobereclassifiedtoprofitorlossin subsequentperiods
Exchange differences on translation of foreign operations into presentation currency 106 369
Recycling of exchange difference to profit or loss on disposal of subsidiaries 4 609 -
Net gains/(losses) on available-for-sale financial assets 15 -
Net gains/(losses) on cash flow hedges 5 -
735 369
Effect of translation to presentation currency of the Group's joint ventures and associates 8 2 9
Share of other comprehensive income of joint ventures and associates accounted for using the equity method 2 9
Items not to be reclassified to profit or loss in subsequent periods
Gains/(losses) on re-measurement of net defined benefit liability 22 -
Income tax effect (5) -
17 -
Total other comprehensive income 754 378
Total comprehensive income, net of tax $ 840 $ 385
Attributable to:
Equity holders of the parent entity $ 807 $ 366
Non-controlling interests 33 19
$ 840 $ 385
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 2017 31 December 2016
Assets
Non-current assets
Property, plant and equipment 7 $ 4,715 $ 4,652
Intangible assets other than goodwill 283 297
Goodwill 895 880
Investments in joint ventures and associates 8 68 64
Deferred income tax assets 134 156
Other non-current financial assets 105 91
Other non-current assets 38 45
6,238 6,185
Current assets
Inventories 1,161 984
Trade and other receivables 620 502
Prepayments 75 60
Loans receivable 11 13
Receivables from related parties 9 11 8
Income tax receivable 43 43
Other taxes recoverable 199 192
Other current financial assets 34 33
Cash and cash equivalents 10 1,285 1,157
3,439 2,992
Assets of disposal groups classified as held for sale 27 27
3,466 3,019
Total assets $ 9,704 $ 9,204
Equity and liabilities
Equity
Equity attributable to equity holders of the parent entity
Issued capital 11 $ 1,507 $ 1,507
Treasury shares 11 (231) (270)
Additional paid-in capital 2,525 2,517
Revaluation surplus 111 112
Unrealised gains and losses 20 -
Accumulated profits 391 415
Translation difference (3,073) (3,790)
1,250 491
Non-controlling interests 212 186
1,462 677
Non-current liabilities
Long-term loans 12 5,050 5,502
Deferred income tax liabilities 309 348
Employee benefits 289 317
Provisions 233 205
Liabilities under put options for shares of subsidiaries 60 -
Other long-term liabilities 68 94
6,009 6,466
Current liabilities
Trade and other payables 917 935
Advances from customers 217 266
Short-term loans and current portion of long-term loans 12 464 392
Payables to related parties 9 300 226
Income tax payable 102 39
Other taxes payable 185 169
Provisions 39 26
2,224 2,053
Liabilities directly associated with disposal groups classified as held for sale 9 8
2,233 2,061
Total equity and liabilities $ 9,704 $ 9,204
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
2017 2016
Cash flows from operating activities
Net profit $ 86 $ 7
Adjustments to reconcile net profit/(loss) to net cash flows from operating activities:
Deferred income tax (benefit)/expense (48) (26)
Depreciation, depletion and amortisation 278 256
Loss on disposal of property, plant and equipment 6 10
Impairment of assets 15 7
Foreign exchange (gains)/losses, net 7 (41)
Interest income (8) (5)
Interest expense 230 241
Share of (profits)/losses of associates and joint ventures (3) 22
(Gain)/loss on financial assets and liabilities, net 51 10
(Gain)/loss on disposal groups classified as held for sale, net 265 -
Other non-operating (gains)/losses, net 2 17
Bad debt expense 7 (1)
Changes in provisions, employee benefits and other long-term assets and liabilities 10 -
Expense arising from equity-settled awards 8 10
Other - (1)
906 506
Changes in working capital:
Inventories (177) 54
Trade and other receivables (37) (99)
Prepayments (14) 4
Receivables from/payables to related parties 65 46
Taxes recoverable (10) 27
Other assets (1) (2)
Trade and other payables (16) (36)
Advances from customers (44) 13
Taxes payable 79 18
Other liabilities (5) 2
Net cash flows from operating activities 746 533
Cash flows from investing activities
Purchases of subsidiaries in business combinations (5) -
Issuance of loans receivable to related parties (1) (1)
Restricted deposits at banks in respect of investing activities (1) -
Short-term deposits at banks, including interest 3 2
Purchases of property, plant and equipment and intangible assets (284) (185)
Proceeds from disposal of property, plant and equipment 1 4
Proceeds from sale of disposal groups classified as held for sale, net of cash disposed and transaction costs (Note 4) 361 -
Dividends received 1 1
Other investing activities, net 1 4
Net cash flows from/(used in) investing activities 76 (175)
Continued on the next page
Unaudited Interim Condensed Consolidated Statement of Cash Flows
(continued)
(In millions of US dollars)
Six-month period ended30 June
2017 2016
Cash flows from financing activities
Contribution of a non-controlling shareholder to share capital of the Group's subsidiary $ 2 $ 7
Proceeds from bank loans and notes 1,224 989
Repayment of bank loans and notes, including interest (1,782) (1,615)
Net proceeds from/(repayment of) bank overdrafts and credit lines, including interest (135) (1)
Payments for purchase of property, plant and equipment on deferred terms - (1)
Gain/(loss) on derivatives not designated as hedging instruments 1 (244)
Gain/(loss) on hedging instruments 7 -
Payments under covenants reset - (3)
Payments under finance leases, including interest (1) (1)
Other financing activities (11) (8)
Net cash flows used in financing activities (695) (877)
Effect of foreign exchange rate changes on cash and cash equivalents (1) 12
Net increase/(decrease) in cash and cash equivalents 126 (507)
Cash and cash equivalents at beginning of year 1,157 1,375
Decrease/(increase) in cash of disposal groups classified as assets held for sale 2 -
Cash and cash equivalents at end of period $ 1,285 $ 868
Supplementary cash flow information:
Cash flows during the period:
Interest paid $ (216) $ (200)
Interest received 3 2
Income taxes paid (194) (37)
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 Unrealised gains and losses Accumulated profits Translation difference Total Non-controlling interests Total Equity
capital
At 31 December 2016 $ 1,507 $ (270) $ 2,517 $ 112 $ - $ 415 $ (3,790) $ 491 $ 186 $ 677
Net profit/(loss) - - - - - 53 - 53 33 86
Other comprehensive income/(loss) - - - - 20 17 717 754 - 754
Reclassification of revaluation surplus to accumulated profits in respect of the disposed items of property, plant and equipment - - - (1) - 1 - - - -
Total comprehensive income/(loss) for the period - - - (1) 20 71 717 807 33 840
Derecognition of non-controlling interests on sale of subsidiaries (Note 4) - - - - - - -
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