REG - Evraz Plc - Half Yearly Report <Origin Href="QuoteRef">EVRE.L</Origin> - Part 2
27/08/2015 07:10
- Part 2: For the preceding part double click ID:nRSa2282Xa
Ukrainian hryvnia weakening (-US$124 million), partly offset by an increase in tariffs in local
currencies (+US$28 million)
o the disposal of EVRAZ Vitkovice Steel and deconsolidation of EVRAZ Highveld Steel and Vanadium (-US$44 million)
o lower consumption of electricity and natural gas (-US$56 million), primarily at EVRAZ ZSMK and EVRAZ NTMK, due to the
shutdown of Rolling Mill 450 at EVRAZ ZSMK following the implementation of PCI, the outsourcing of the scrap recycling
department at EVRAZ NTMK and increased internal supply by the ZapSib Heat and Power plant.
· Other costs decreased, primarily due to changes in the cost of goods for resale
(-US$116 million), partly offset by changes in finished goods (+US$24 million) and other changes.
Steel segment gross profit
Gross profit in the Steel segment decreased by 26.0% compared with H1 2014, reflecting the 32.2% decline in segment
revenues, while the cost of revenues decreased by 34.3%.
Operational update
Steel: Russia
EVRAZ ZSMK:
· In April 2015, a billet caster was halted for reconstruction(with estimated loss in production of approximately
140,000 tonnes of billets in H1 2015), which will last until the fourth quarter of 2015. The work aims to increase the
caster's annual production capacity to 2.2 million tonnes and decrease the billet cash cost due to serial production and
lower crude steel to billet rate.
· Following the launch of a converter slag processing complex at EVRAZ ZSMK at the end of 2014, costs of third-party
purchases of iron ore decreased by around US$5 million due to the use of 75,000 iron containing stock received from
processing of reclaimed iron-bearing waste.
· EVRAZ began to sell special-purpose R65 rails (types DT370IK, DT350NN and DT350SS) to Russian Railways, delivering
43,000 tonnes overall.
· In April 2015, field tests of 60E2 rails began at Deutsche Bahn's testing ground in Germany for certification.
EVRAZ NTMK:
· Praxair's two air separation facilities were commissioned, which will supply nitrogen, oxygen and argon to NTMK's
blast furnace and converter shops. The new air separation units are 35% more energy-efficient compared with the previous
models resulting in lower cost of purchased gasses for EVRAZ NTMK. The facilities also feature an oxygen enrichment system,
the first of its kind in Russia that will eliminate oxygen loss in the blast furnaces.
· The facility increased the number of sizes of wide range beams produced monthly from 35 to 40. As a result, beams for
Russia and for export can now be produced simultaneously, including beams in accordance with the ASTM standard.
· The facility sold over 45,000 tonnes of slabs of complex API grades to OMK, one of Russia's largest producer of
pipes, for LDP production. In the second half of 2015, deliveries of the slabs will continue.
· NTMK began commercial production of two new wheel types (BA002, BA004) for sale in Europe and Turkey. Nine more types
are expected to be developed in the second half of 2015.
EVRAZ Caspian Steel:
· The facility reached the nominal production capacity of over 400,000 tonnes per year and now produces the whole range
of steel profiles.
Steel: Ukraine
EVRAZ DMZ:
· The facility successfully completed numerous initiatives that will reduce pig iron consumption in the production of
converter steel by pouring molten iron directly (without mixers).
· The facility continued to implement an energy efficiency programme aimed at reducing natural gas consumption. The
converter shop began to use compressed air instead of steam and coke gas instead of blast furnace gas. The project is
expected to be completed in the second half of 2015.
· Commercial production of three new steel profiles has been launched.
· In H1 2015, the facility sold 462,000 tonnes of steel products (53% billets, 47% construction and structural steel),
compared with 447,000 tonnes in H1 2014. Lower domestic demand and a drop in construction steel sales to the CIS were
partly offset by an increase in sales of construction products to the EU and MENA by 30% thanks to a greater focus on
customers.
Steel: South Africa
In mid-April 2015, a business rescue plan was launched at EVRAZ Highveld and Vanadium and has been managed by independent
rescue practitioners since then. As of April 2015, the results of EVRAZ Highveld and Vanadium are not consolidated.
Iron ore
During the Period, the iron ore division continued to focus on operational improvement programmes and cost reductions.
Operations at the core iron ore business in Russia, EVRAZ KGOK, were stable. In H1 2015, the facility mined 29.2 million
tonnes of iron ore (+468 kt compared with H1 2014) and produced 5.0 million tonnes of saleable iron ore products (+93 kt),
including 1.8 million tonnes of sinter and 3.3 million tonnes of pellets.
At Russia's Evrazruda, the project to reconstruct the Sheregesh iron ore mine has progressed and is expected to finish in
the second half of 2015.
In H1 2015, EVRAZ Sukha Balka in Ukraine produced 1.4 million tonnes of lumpy ore, selling 56% domestically and 44% abroad.
Work was conducted on the dry magnetic separation facilities to improve iron ore quality.
Vanadium
The installation of new pulp filtration equipment at EVRAZ Vanady Tula was finished in H1 2015, and the new filtration area
is now ready to fully substitute the old one. This will result in cost savings and secure better yields at the mill.
EVRAZ Stratcor is maximising the use of vanadium sourced within the Company. It account for around 65% of the total feed
in H1 2015. A further increase is expected in the second half of the year.
Chemical shipments rose by 18% compared with H1 2014 and those of Vanadium Aluminum Master Alloy by 7%, due to efforts to
increase the share of higher value-added products in EVRAZ' vanadium sales portfolio. Greater spending by existing
customers and an increase in the client base both contributed to this. Several product development opportunities were
recently identified and are expected to further expand EVRAZ' market share in high value-added niche product groups.
Steel, North America
The Steel, North America segment includes the production of crude steel and final steel products in the US and Canada.
Steel products 1,159 92.8% 1,481 93.9% (21.7)%
Construction products1 145 11.6% 163 10.3% (11.0)%
Railway products2 240 19.2% 271 17.2% (11.4)%
Flat-rolled products3 235 18.8% 304 19.3% (22.7)%
Tubular products4 539 43.2% 743 47% (27.5)%
Other revenues5 90 7.2% 97 6.1% (7.2)%
Total 1,249 100% 1,578 100% (20.8)%
97
6.1%
(7.2)%
Total
1,249
100%
1,578
100%
(20.8)%
1 Includes beams, rebars and structural tubing
2Includes rails
3Includes commodity plate, specialty plate and other flat-rolled products
4Includes large-diameter line pipes, ERW pipes and casing, seamless pipes, casing and tubing, and other tubular products
5Includes scrap and services
Steel products
Construction products 195 199 (2.0%)
Railway products 280 275 1.8%
Flat-rolled products 308 304 1.3%
Tubular products 409 521 (21.5%)
Other steel products 0 2 (100.0%)
Total 1,192 1,301 (8.4%)
Other steel products
0
2
(100.0%)
Total
1,192
1,301
(8.4%)
Revenues from steel product sales of the segment decreased due to lower sales prices (-9.6%) and a negative impact from
changes in sales volumes (-8.4%) and the product mix
(-3.7%). Revenues from sales of construction products fell due to lower sales volumes (-2.0%) and prices and changes in the
product mix (-9.0%). The decrease in sales volumes resulted from the disposal of the structural tubing facility in Portland
in March 2015, while prices were under pressure from high imports.
Railway product revenues declined by 11.4%, driven by a 13.2% decline in average prices, in line with the general price
trend in the US steel market. Revenues increased by 1.8% amid continuing demand from Class 1 railroads.
Lower flat-rolled product revenues were mainly due to lower prices (-24.0%), although sales volumes increased (+1.3%). A
record level of imports in the fourth quarter of 2014 and early 2015 impacted sales revenues.
Revenues from tubular product sales decreased by 27.5%, primarily due to lower sales volumes (-21.5%) and prices and
changes in the product mix (-6.0%). The decrease in sales volumes was driven by weaker demand for oil country tubular goods
(OCTG), caused by a slowdown in drilling activities due to the falling oil price.
Steel, North America segment cost of revenues
H1 2015 H1 2014 2015 v 2014
US$ million % of segment revenues US$ million % of segment revenues Change
Cost of revenues 1,091 87.3% 1,317 83.5% (17.2)%
Raw materials 373 29.9% 478 30.3% (22.0)%
Semi-finished products 199 15.9% 285 18.1% (30.2)%
Auxiliary materials 68 5.4% 107 6.8% (36.4)%
Services 79 6.3% 91 5.8% (13.2)%
Transportation 7 0.6% 7 0.4% 0.0%
Staff costs 146 11.7% 144 9.1% 1.4%
Depreciation 56 4.5% 56 3.5% 0.0%
Energy 55 4.4% 79 5.0% (30.4)%
Other* 108 8.6% 70 4.5% 54.3%
* Includes primarily changes in finished goods, certain taxes and allowances for inventories.
The main drivers of the lower cost of revenues in the segment were as follows:
· Raw material costs decreased, mostly due to lower raw material consumption (scrap, coke, ferroalloys and other) as a
result of lower output both of crude steel and finished products, such as OCTG, flat-rolled products and wire rod.
Cost-cutting initiatives resulted in lower consumption rates, while a decline in raw material prices also contributed to
the decrease.
· The cost of semi-finished products declined due to lower production volumes of tubular products and prices of
purchased slab.
· The cost of auxiliary materials fell due to the implementation of a cost-cutting plan in H1 2015 and a decrease in
production volumes of crude steel and finished products compared with H1 2014.
· Costs of services decreased due to lower production volumes compared with H1 2014.
· Energy costs declined, driven by lower production, which resulted in reduced energy consumption (-US$12 million),
alongside a decrease in tariffs for energy and natural gas
(-US$8 million).
· Other costs rose, primarily due to an increase of allowances for inventories caused by higher inventory write-offs
and slow-moving adjustments as a result of the market downturn.
Steel, North America gross profit
The segment's gross profit decreased to US$158 million in H1 2015, compared with US$262 million in H1 2014, due to a
decrease of sales volumes amid a downturn in the OCTG and flat product markets.
Operational update
Steel, North America
A strengthening US dollar and tepid demand for steel products outside North America resulted in record inflows of imports
into the North American market and price pressure. During H1 2015, output of crude steel and finished saleable steel
products at EVRAZ' North American operations declined by 7% and 8% respectively compared with H1 2014. The decline in crude
steel production was due to planned outages at the Regina and Pueblo steelmaking facilities, while the decrease in finished
steel products was the result of weak demand for OCTG, flat products and wire rod, partly offset by increased volumes of
LDP.
In H1 2015, EVRAZ North America's flat product group was impacted by rapidly declining plate prices amid record levels of
imports in the fourth quarter of 2014 and early months of 2015. In response, the Company has:
· reduced output and aggressively decreased costs as the market continues to work through the de-stocking cycle;
· reduced overall slab and work in-process inventories;
· increased efforts to sell value-added solutions and continued to upgrade the mix in favour of products where imports
cannot compete. For example, in Q2 2015, sales volumes of armour plate doubled.
As regards tubular products, the performance of the LDP and OCTG segments diverged significantly. For LDP, in the first
half of the year, volumes strengthened as mid-stream infrastructure companies initiated new projects to satisfy demand from
energy producers seeking low-cost access to markets. In H1 2015, EVRAZ announced the acquisition of pipe-making equipment
from United Spiral Pipe to supplement its LDP production capabilities and increase overall output of LDP by around 100,000
tonnes per year. Together with this acquisition, the Company announced an investment in the Regina Saskatchewan operations
to install equipment acquired and upgrade the steelmaking and rolling facilities. Through these two projects, EVRAZ North
America will strengthen its position as the leader in terms of quality and cost on a delivered basis in the Western North
America LDP market.
As for OCTG, the rapid decline in drilling activity stemming from lower oil prices and high inventories at distributors
forced EVRAZ to curtail its OCTG operations. At the EVRAZ Pueblo seamless mill, production was scaled down during Q1 2015,
while at the EVRAZ Calgary and Red Deer facilities, production curtailments occurred in Q2 2015. The teams have
aggressively managed their cost structures to minimise the cash cost of carrying these facilities while idle.
As regards long products, the EVRAZ Pueblo rail mill operated at full capacity during the first half of the year. Record
CAPEX spending by Class-1 railroads is expected to translate into robust demand throughout the year, and the strengthening
US economy recovery should underpin continued investment by Class-1 railroads. Utilisation at the wire rod mill in Pueblo
was scaled down, as high levels of imports depressed market prices, despite strong underlying demand from the construction
and industrial sectors in the US.
In the second half of the year, EVRAZ North America will continue focusing on enhancing financial performance through
aggressive cost structure management and inventory optimisation.
Coal
The Coal segment includes coal mining and enrichment and the operations of the Nakhodka Commercial Sea Port, used
extensively to ship the Company's coal products to the Asian markets.
Sales review
External sales
Coal products 307 56.9% 390 55.1% (21.3)%
Coking coal 25 4.6% 39 5.5% (35.9)%
Coal concentrate 282 52.2% 297 41.9% (5.1)%
Steam coal - 0.0% 54 7.6% (100.0)%
Intersegment sales
Coal products 194 35.9% 266 37.6% (27.1)%
Coking coal 24 4.4% 58 8.2% (58.6)%
Coal concentrate 170 31.5% 208 29.4% (18.3)%
Other revenues 39 7.2% 52 7.3% (25.0)%
Total 540 100% 708 100% (23.7)%
Other revenues
39
7.2%
52
7.3%
(25.0)%
Total
540
100%
708
100%
(23.7)%
External sales
Coal products 4,382 5,279 (17.0)%
Coking coal 735 792 (7.2)%
Coal concentrate and other products 3,647 3,375 8.1%
Steam coal - 1,112 (100.0)%
Intersegment sales
Coal products 2,910 3,271 (11.0)%
Coking coal 593 1,094 (45.8)%
Coal concentrate 2,317 2,177 6.4%
Total, coal products 7,292 8,550 (14.7)%
Coal concentrate
2,317
2,177
6.4%
Total, coal products
7,292
8,550
(14.7)%
Overall revenues in the segment decreased amid a reduction in sales prices, due to sluggish demand and lower coal prices
globally as well as higher output in other coal-exporting countries. Sales volumes also decreased, as the Company mined
less raw coal due to scheduled longwall moves in H1 2015. Another driver of the lower production was the deteriorating
market environment and the Russian rouble appreciation in Q2 2015, which made some export sales unprofitable.
Internal sales of coal products decreased due to lower prices (-22.3%) and sales volumes
(-11.0%), offset by a better product mix (+6.2%). The decrease in coal consumption compared with H1 2014 resulted from
reduced coal consumption at EVRAZ ZSMK after the shutdown of two coke batteries and launch of the PCI plant.
External sales of coal products decreased, mainly due to lower prices (-12.8%) and sales volumes (-17.0%), offset by a
better product mix (+8.5%). While steam coal mines have been closed, sales volumes of coking coal concentrate increased by
5.5%.
In H1 2015, the Coal segment's sales to the Steel segment amounted to US$210 million or 38.8% of sales, compared with
US$280 million or 39.5% of sales in H1 2014.
During the Period, around 78% of the coking coal consumed by EVRAZ' steelmaking operations came from its own operations,
compared with 73% in H1 2014.
Coal segment cost of revenues
Coal segment cost of revenues
H1 2015 H1 2014 2015 vs 2014
US$ million % of segment revenues US$ million % of segment revenues Change
Cost of revenues 387 71.7% 591 83.5% (34.5)%
Auxiliary materials 58 10.7% 89 12.6% (34.8)%
Services 32 5.9% 56 7.9% (42.9)%
Transportation 71 13.1% 87 12.3% (18.4)%
Staff costs 111 20.6% 181 25.6% (38.7)%
Depreciation 83 15.4% 137 19.4% (39.4)%
Energy 20 3.7% 28 4.0% (28.6)%
Other* 12 2.2% 13 1.7% (7.7)%
* Includes primarily changes in finished goods and certain taxes, allowance for inventory and raw materials
The main factors affecting the decrease in the segment's cost of revenues compared with H1 2015 were as follows:
· The cost of auxiliary materials and services decreased during the Period, primarily due to the rouble weakening
(-US$37 million and -US$29 million, respectively), as well as the effect of asset optimisations and cost-cutting
initiatives. This was partly offset by an increase in costs at Raspadskaya due to higher production volumes compared with
H1 2014.
· Transportation costs declined due to lower sales volumes (-7%) and transportation costs from Russian entities as a
result of the Russian rouble devaluation.
· Staff costs decreased due to headcount optimisationand the closure of the Yuzhkuzbassugol mines (Kusheyakovskaya)
(-US$9 million) and the Russian rouble weakening (-US$63 million).
· Depreciation and depletion costs decreased, mostly due to lower depreciation and depletion expenses at
Yuzhkuzbassugol caused by the revision and detailing of future mining plans and lower depletion of mineral deposits (-US$4
million). This was also accompanied by a fall in depreciation in US dollar terms due to the weakening of the Russian rouble
(-US$51 million).
· Energy costs fell due the effect of currency movements (-US$10 million), partly offset by higher electricity prices
in local currencies (+US$3 million).
· Other costs decreased by 33.3% primarily due to changes in work in progress and stocks of finished goods and the
impact of the Russian rouble weakening.
Coal segment gross profit
The segment's gross profit increased to US$153 million in H1 2015, from US$117 million in H1 2014. The increase in the
gross profit margin was primarily attributable to the effect of the Russian rouble weakening on costs, lower depreciation
and depletion, cost-cutting initiatives and the mine restructuring at Yuzhkuzbassugol.
Operational performance
The segment continued to implement its production efficiency improvement programme, which included the following
initiatives:
· improving performance of mining and washing plants;
· increasing efficiency of logistics;
· improving energy efficiency;
· optimising headcount;
· reducing general and administrative expenses (including combining management functions by creating a united
Raspadskaya management company).
In H1 2015, EVRAZ's raw coking coal output totalled 9.2 million tonnes, down 0.5 million tonnes compared with H1 2014. The
primary drivers were:
· A decrease in production due to several longwall moves
· The optimisation of the production programme in Q2 2015 to meet market demand and decrease unprofitable export sales
For more details, please refer to the Q2 2015 production report dated 17 July 2015.
Raspadskaya
In H1 2015, raw coking coal output from the Raspadskaya company's mines amounted to 5.1 million tonnes, including 2.8
million tonnes of raw coal from the Raspadskaya mine.
The decline in world commodity prices and exchange-rate volatility brought about adjustments to the 2015 coal production
programme. Unprofitable export sales to China were reduced by scaling down production at the Raspadsky Razrez open pit and
MUK-96 underground mine.
In H1 2015, the investment project at the Raspadskaya-Koksovaya mine's field 2 was completed and bord and pillar mining of
"K" grade coking coal began.
Yuzhkuzbassugol
In H1 2015, Yuzhkuzbassugol mined 4.2 million tonnes of raw coking coal.
The decommissioning of the Abashevskaya and Kusheyakovskaya mines was completed as part of the asset portfolio
optimisation. The implementation of a cost reduction programme at Yuzhkuzbassugol, including headcount optimisation,
resulted in cost savings of over US$7 million in H1 2015, and another US$8 million is expected in the second half.
Mezhegeyugol
Construction of the Mezhegey mine continued in H1 2015. Complicated hydrogeological conditions slowed the development work.
A programme of de-watering from the surface was conducted, although the launch of the mine was postponed from September to
December 2015.
Key RISKS AND UNCERTAINTIES
EVRAZ is exposed to numerous risks and uncertainties that exist in its business that 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 2014 Annual Report on pages 19 to 21, copies of
which are available at www.evraz.com, remain relevant in 2015 and the mitigating actions described continue to be
appropriate.
Risks:
• Global economic factors, industry conditions and cost effectiveness
• Health, safety and environment (HSE) issues
• Potential actions by governments
• Treasury
• Functional currency devaluation
• Business interruption
• Human resources (HR)
EVRAZ continues to monitor these risks and actively pursues strategies to mitigate them 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
Signature
Alexander Frolov
Chief Executive Officer
EVRAZ plc
26 August 2015
Appendix 1
Definition of EBITDA
EBITDA represents profit from operations plus depreciation, depletion and amortisation, impairment of assets, loss (gain)
on disposal of property, plant and equipment, and foreign exchange loss (gain). EVRAZ presents an EBITDA because it
considers EBITDA to be an important supplemental measure of its operating performance and believes that EBITDA is
frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the same
industry. EBITDA is not a measure of financial performance under IFRS and it should not be considered as an alternative to
net profit as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.
EVRAZ' calculation of EBITDA may be different from the calculation used by other companies and therefore comparability may
be limited. EBITDA has limitations as an analytical tool and potential investors should not consider it in isolation, or as
a substitute for an analysis of our operating results as reported under IFRS. Some of these limitations include:
· EBITDA does not reflect the impact of financing or financing costs on EVRAZ' operating performance, which can be
significant and could further increase if EVRAZ were to incur more debt.
· EBITDA does not reflect the impact of income taxes on EVRAZ' operating performance.
· EBITDA does not reflect the impact of depreciation and amortisation on EVRAZ' operating performance. The assets of
EVRAZ' businesses that are being depreciated and/or amortised will have to be replaced in the future, and such depreciation
and amortisation expense may approximate the cost of replacement of these assets in the future. EBITDA, due to the
exclusion of these costs, does not reflect EVRAZ' future cash requirements for these replacements. EBITDA also does not
reflect the impact of a loss on disposal of property, plant and equipment.
Appendix 2
Definition of 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 disposal groups 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 2015 31 December 2014
(US$ million)
Cash and cash equivalents 996 1,086
Cash of disposal groups classified as held for sale - -
Collateral under swaps 3 7
Cash and short-term bank deposits 999 1,093
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, 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 2015 31 December 2014
(US$ million)
Long-term loans, net of current portion 5,182 5,470
Short-term loans and current portion of long-term loans 947 761
Add back: Unamortised debt issue costs and fair value adjustment to liabilities assumed in business combination 36 37
Nominal effect of cross-currency swaps on principal of rouble-denominated notes 511 635
Finance lease liabilities, including current portion 3 4
Total debt 6,679 6,907
6,679
6,907
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' 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 2015 31 December 2014
(US$ million)
Total debt 6,679 6,907
Short-term bank deposits - -
Cash and cash equivalents (996) (1,086)
Cash of assets classified as held for sale - -
Collateral under swaps (3) (7)
Net debt 5,680 5,814
5,814
EVRAZ plc
Unaudited Interim Condensed Consolidated Financial Statements
FOR THE Six-month period ended 30 June 2015
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 2015 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 interim financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the interim 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 interim report for the six months ended 30 June 2015 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
26 August 2015
Unaudited Interim Condensed Consolidated Statement of Operations
(In millions of US dollars, except for per share information)
Six-month periodended 30 June
Notes 2015 2014*
Revenue
Sale of goods $ 4,786 $ 6,628
Rendering of services 108 177
4,894 6,805
Cost of revenue (3,570) (5,192)
Gross profit 1,324 1,613
Selling and distribution costs (425) (543)
General and administrative expenses (252) (390)
Social and social infrastructure maintenance expenses (10) (13)
Loss on disposal of property, plant and equipment (17) (21)
Impairment of assets 5 (20) (147)
Foreign exchange gains/(losses), net (99) (180)
Other operating income 10 18
Other operating expenses (32) (40)
Profit from operations 479 297
Interest income 5 9
Interest expense (229) (296)
Share of profits/(losses) of joint ventures and associates 8 (28) 5
Gain/(loss) on financial assets and liabilities, net 48 (43)
Gain/(loss) on disposal groups classified as held for sale, net 4 20 127
Loss of control over a subsidiary 4 (167) -
Other non-operating gains/(losses), net (8) -
Profit before tax 120 99
Income tax expense 6 (101) (84)
Net profit $ 19 $ 15
Attributable to:
Equity holders of the parent entity $ 19 $ 52
Non-controlling interests - (37)
$ 19 $ 15
Earnings per share:
basic, for profit attributable to equity holders of the parent entity, US dollars 11 $ 0.01 $ 0.03
diluted, for profit attributable to equity holders of the parent entity, US dollars 11 $ 0.01 $ 0.03
* The amounts shown here do not correspond to the financial statements for the six-month period ended 30 June 2014
and reflect adjustments made in connection with the cessation of classification of a subsidiary as held for sale (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 2015 2014*
Net profit $ 19 $ 15
Other comprehensive income
Othercomprehensiveincometobereclassifiedtoprofitorlossin subsequentperiods
Exchange differences on translation of foreign operations into presentation currency (5) (197)
Recycling of exchange difference to profit or loss 4 142 (65)
Net gains/(losses) on available-for-sale financial assets - (9)
137 (271)
Effect of translation to presentation currency of the Group's joint ventures and associates 8 1 (5)
Share of other comprehensive income of joint ventures and associates accounted for using the equity method 1 (5)
Items not to be reclassified to profit or loss in subsequent periods
Gains/(losses) on re-measurement of net defined benefit liability (5) (29)
Income tax effect 2 9
(3) (20)
Total other comprehensive income/(loss) 135 (296)
Total comprehensive income/(loss), net of tax $ 154 $ (281)
Attributable to:
Equity holders of the parent entity $ 151 $ (234)
Non-controlling interests 3 (47)
$ 154 $ (281)
* The amounts shown here do not correspond to the financial statements for the six-month period ended 30 June 2014
and reflect adjustments made in connection with the cessation of classification of a subsidiary as held for sale (Note 2).
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 2015 31 December 2014
Assets
Non-current assets
Property, plant and equipment 7 $ 5,605 $ 5,796
Intangible assets other than goodwill 373 441
Goodwill 1,495 1,541
Investments in joint ventures and associates 8 94 121
Deferred income tax assets 84 97
Other non-current financial assets 89 98
Other non-current assets 41 40
7,781 8,134
Current assets
Inventories 1,170 1,372
Trade and other receivables 574 654
Prepayments 50 82
Loans receivable 12 24
Receivables from related parties 9 15 53
Income tax receivable 43 23
Other taxes recoverable 198 158
Other current financial assets 37 40
Cash and cash equivalents 10 996 1,086
3,095 3,492
Assets of disposal groups classified as held for sale 2 4
3,097 3,496
Total assets $ 10,878 $ 11,630
Equity and liabilities
Equity
Equity attributable to equity holders of the parent entity
Issued capital 11 $ 1,507 $ 1,507
Treasury shares 11 (305) -
Additional paid-in capital 11 2,493 2,481
Revaluation surplus 124 155
Accumulated profits 1,309 1,299
Translation difference (3,509) (3,644)
1,619 1,798
Non-controlling interests 219 218
1,838 2,016
Non-current liabilities
Long-term loans 12 5,182 5,470
Deferred income tax liabilities 478 471
Employee benefits 357 364
Provisions 154 173
Other long-term liabilities 56 442
6,227 6,920
Current liabilities
Trade and other payables 1,355 1,379
Advances from customers 157 155
Short-term loans and current portion of long-term loans 12 947 761
Payables to related parties 9 142 108
Income tax payable 29 86
Other taxes payable 154 151
Provisions 29 41
2,813 2,681
Liabilities directly associated with disposal groups classified as held for sale - 13
2,813 2,694
Total equity and liabilities $ 10,878 $ 11,630
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
2015 2014*
Cash flows from operating activities
Net profit $ 19 $ 15
Adjustments to reconcile net profit/(loss) to net cash flows from operating activities:
Deferred income tax (benefit)/expense 27 (59)
Depreciation, depletion and amortisation 307 435
Loss on disposal of property, plant and equipment 17 21
Impairment of assets 20 147
Foreign exchange (gains)/losses, net 99 180
Interest income (5) (9)
Interest expense 229 296
Share of (profits)/losses of associates and joint ventures 28 (5)
(Gain)/loss on financial assets and liabilities, net (48) 43
(Gain)/loss on disposal groups classified as held for sale, net (20) (127)
Loss of control over a subsidiary 167 -
Other non-operating (gains)/losses, net 8 -
Bad debt expense 9 21
Changes in provisions, employee benefits and other long-term assets and liabilities (3) (2)
Expense arising from the equity-settled awards 12 15
Other (2) (1)
864 970
Changes in working capital:
Inventories 78 (35)
Trade and other receivables 20 (74)
Prepayments 28 29
Receivables from/payables to related parties 11 (186)
Taxes recoverable (70) (1)
- More to follow, for following part double click ID:nRSa2282XcRecent news on Evraz
See all newsREG-EVRAZ plc DISCONTINUATION OF DISCLOSURE VIA PRIMARY INFORMATION PROVIDER
AnnouncementREG-EVRAZ plc CLARIFICATION ON ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS FOR 2022
AnnouncementREG-EVRAZ plc EVRAZ plc announces that the Appointment and the Amendments adopted as part of the Consent Solicitation for its outstanding U.S.$700,000,000 5.250 per cent. notes due 2024 have become effective
AnnouncementREG-EVRAZ plc EVRAZ plc announces results of the Consent Solicitation for its outstanding U.S.$700,000,000 5.250 per cent. notes due 2024
AnnouncementREG-EVRAZ plc EVRAZ plc announces that the Appointment and the Amendments adopted as part of the Consent Solicitation for its outstanding notes due 2023 have become effective
Announcement