REG - Evraz Plc - Half Yearly Report <Origin Href="QuoteRef">EVRE.L</Origin> - Part 4
29/10/2014 15:28
- Part 4: For the preceding part double click ID:nRSa0638Qc
At 31 December 2012 (as reported) $ 1,340 $ (1) $ 1,820 $ 173 $ - $ 5 $ 3,004 $ (1,424) $ 4,917 $ 200 $ 5,117
Subsidiary that ceased to be classified as held for sale (Note 2) - - - - - - 5 - 5 - 5
At 31 December 2012 (as restated) 1,340 (1) 1,820 173 - 5 3,009 (1,424) 4,922 200 5,122
Net loss* - - - - - - (131) - (131) (15) (146)
Other comprehensive income/(loss)* - - - (4) - 4 - (318) (318) (33) (351)
Total comprehensive income/(loss) for the period* - - - (4) - 4 (131) (318) (449) (48) (497)
Issue of shares 133 - 478 - 156 - - - 767 - 767
Acquisition of non-controlling interests in existing subsidiaries - - 1 - - - - - 1 (3) (2)
Non-controlling interests arising on acquisition of subsidiaries - - - - - - - - - 314 314
Share-based payments - - 11 - - - - - 11 - 11
At 30 June 2013 (restated) $ 1,473 $ (1) $ 2,310 $ 169 $ 156 $ 9 $ 2,878 $ (1,742) $ 5,252 $ 463 $ 5,715
* The amounts shown here do not correspond to the financial statements for the six-month period ended 30 June 2013
and reflect adjustments made in connection with the cessation of classification of a subsidiary as held for sale and the
completion of initial accounting (Note 2).
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
Selected Notes
to the Unaudited Interim Condensed Consolidated Financial Statements
Six-month period ended 30 June 2014
1. Corporate Information
These interim condensed consolidated financial statements were authorised for issue by the Board of Directors of EVRAZ plc
on 26 August 2014.
EVRAZ plc ("EVRAZ plc" or "the Company") was incorporated on 23 September 2011 as a public company under the laws of the
United Kingdom with the registered number 7784342. The Company's registered office is at 5th Floor, 6 St. Andrew Street,
London, EC4A 3AE, United Kingdom.
The Company, together with its subsidiaries (the "Group"), is involved in the production and distribution of steel and
related products and coal and iron ore mining. In addition, the Group produces vanadium products. The Group is one of the
largest steel producers globally.
Lanebrook Limited (Cyprus) is the ultimate controlling party of the Company.
Going Concern
These interim condensed consolidated financial statements have been prepared on a going concern basis.
The Group's activities in all of its operating segments continue to be affected by the uncertainty and instability of the
current economic environment (Note 13). In response the Group implemented a number of cost cutting initiatives, reduced
capital expenditures and continues to reduce the level of debt.
Based on the currently available facts and circumstances the directors and management have a reasonable expectation that
the Group has adequate resources to continue in operational existence for the foreseeable future.
2. Significant Accounting Policies
Basis of Preparation
These interim condensed consolidated financial statements have been prepared in accordance with International Accounting
Standard ("IAS") 34 "Interim Financial Reporting", as adopted by the European Union. Accordingly, these interim condensed
consolidated financial statements do not include all the information and disclosures required for a complete set of
financial statements, and should be read in conjunction with the Group's annual consolidated financial statements for the
year ended 31 December 2013, which were prepared in accordance with International Financial Reporting Standards, as adopted
by the European Union.
The comparative figures as of 31 December 2013 are not the Company's statutory accounts for the year ended 31 December 2013
in terms of Section 435 of the Companies Act 2006.Statutory accounts for the year ended 31 December 2013 have been filed
with the Registrar of Companies. The auditor's report under section 495 of the Companies Act 2006 in relation to these
accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis
without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Operating results for the six-month period ended 30 June 2014 are not necessarily indicative of the results that may be
expected for the year ending 31 December 2014.
Restatement of Financial Statements
Subsidiary that Ceased to Be Classified as Held for Sale
On 12August 2014, the Group signed an agreement to sell 34% in EVRAZ Highveld Steel and Vanadium Limited and decided to
retain control over the remaining 51.1% ownership interest. The subsidiary was classified as a disposal group held for sale
starting from 31 December 2012 and the carrying value of its net assets was based on management's best estimate of the net
proceeds from the sale.
As a result of this decision the subsidiary ceased to meet the definition of a disposal group held for sale. In accordance
with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" the Group restated its consolidated financial
statements for the periods in which the assets were classified as held for sale as if the subsidiary had not been
classified as an asset held for sale in the past and all assets and liabilities and the results of operations had been
accounted for in accordance with the applicable International Financial Reporting Standards as adopted by the European
Union.
Completion of Initial Accounting
The purchase price allocation for Raspadskaya acquired in January 2013 has been completed during the preparation of the
annual consolidated financial statements for 2013. As a result, the Group recognised adjustments to the provisional values
of identifiable assets, liabilities and contingent liabilities of the entity and restated the interim consolidated
financial statements as of 30 June 2013 and for the six-month period then ended.
Reclassifications
In the second half of 2013, the Group started to apply new accounting policies with respect to certain operating costs
previously included in general and administrative expenses and selling costs. Consequently, the statement of operations for
the six-month period ended 30 June 2013 has been adjusted for comparability purposes.
The effects of the restatements on the previously reported amounts are set out below.
Statement of Operations Year ended 31 December 2013
As previouslyreported Subsidiary that ceased to be held for sale Restated
Revenue
Sale of goods $ 14,071 $ - $ 14,071
Rendering of services 340 - 340
14,411 - 14,411
Cost of revenue (11,468) (33) (11,501)
Gross profit 2,943 (33) 2,910
Selling and distribution costs (1,183) (30) (1,213)
General and administrative expenses (877) - (877)
Social and social infrastructure maintenance expenses (50) - (50)
Loss on disposal of property, plant and equipment (47) - (47)
Impairment of assets (446) (117) (563)
Foreign exchange gains/(losses), net (258) - (258)
Other operating income 53 - 53
Other operating expenses (116) - (116)
Profit/(loss) from operations 19 (180) (161)
Interest income 23 - 23
Interest expense (699) - (699)
Share of profits/(losses) of joint ventures and associates 8 - 8
Gain/(loss) on derecognition of equity investments, net 89 - 89
Gain/(loss) on financial assets and liabilities, net (43) - (43)
Gain/(loss) on disposal groups classified as held for sale, net (25) 156 131
Other non-operating gains/(losses), net 15 - 15
Loss before tax (613) (24) (637)
Income tax benefit/(expense) 41 45 86
Net profit/(loss) $ (572) $ 21 $ (551)
Attributable to:
Equity holders of the parent entity $ (522) $ 18 $ (504)
Non-controlling interests (50) 3 (47)
$(572) $ 21 $ (551)
Earnings/(losses) per share:
for profit/(loss) attributable to equity holders of the parent entity, US dollars, basic and diluted $ (0.35) $ 0.01 $ (0.34)
Statement of Comprehensive Income Year ended 31 December 2013
As previouslyreported Subsidiary that ceased to be held for sale Restated
Net profit/(loss) $ (572) $ 21 $ (551)
Other comprehensive income/(loss)
Other comprehensive income to be reclassified to profit or loss in subsequent periods
Exchange differences on translation of foreign operations into presentation currency (378) 3 (375)
Exchange differences recycled to profit or loss 90 - 90
Net gains/(losses) on available-for-sale financial assets 7 - 7
(281) 3 (278)
Effect of translation to presentation currency of the Group's joint ventures and associates (11) - (11)
(11) - (11)
Items not to be reclassified to profit or loss in subsequent periods
Gains/(losses) on re-measurement of net defined benefit liability 119 - 119
Income tax effect (30) - (30)
89 - 89
Decrease in revaluation surplus in connection with the impairment of property, plant and equipment (9) - (9)
Income tax effect 2 - 2
(7) - (7)
Total other comprehensive income/(loss) (210) 3 (207)
Total comprehensive income/(loss), net of tax $ (782) $ 24 $ (758)
Attributable to:
Equity holders of the parent entity $ (697) $ 20 $ (677)
Non-controlling interests (85) 4 (81)
$ (782) $ 24 $ (758)
Statement of Changes in Equity Year ended 31 December 2013
As previouslyreported Subsidiary that ceased to be held for sale Restated
Accumulated profits $ 2,566 $ 23 $ 2,589
Translation difference (1,687) 2 (1,685)
Non-controlling interests 427 4 431
Statement of Financial Position 31 December 2013
As previouslyreported Subsidiary that ceased to be held for sale Restated
Assets
Non-current assets
Property, plant and equipment $ 9,251 $ 136 $ 9,387
Intangible assets other than goodwill 525 63 588
Goodwill 1,988 - 1,988
Investments in joint ventures and associates 191 - 191
Deferred income tax assets 86 - 86
Other non-current financial assets 140 4 144
Other non-current assets 62 - 62
12,243 203 12,446
Current assets
Inventories 1,641 103 1,744
Trade and other receivables 873 42 915
Prepayments 122 2 124
Loans receivable 21 - 21
Receivables from related parties 13 - 13
Income tax receivable 59 - 59
Other taxes recoverable 281 2 283
Other current financial assets 71 - 71
Cash and cash equivalents 1,576 28 1,604
4,657 177 4,834
Assets of disposal groups classified as held for sale 804 (395) 409
5,461 (218) 5,243
Total assets $ 17,704 $ (15) $ 17,689
Equity and liabilities
Equity
Equity attributable to equity holders of the parent entity
Issued capital $ 1,473 $ - $ 1,473
Treasury shares (1) - (1)
Additional paid-in capital 2,326 - 2,326
Revaluation surplus 162 - 162
Other reserves 156 - 156
Unrealised gains and losses 12 - 12
Accumulated profits 2,566 23 2,589
Translation difference (1,687) 2 (1,685)
5,007 25 5,032
Non-controlling interests 427 4 431
5,434 29 5,463
Non-current liabilities
Long-term loans $ 6,039 $ 2 $ 6,041
Deferred income tax liabilities 827 14 841
Employee benefits 481 11 492
Provisions 194 60 254
Other long-term liabilities 230 - 230
7,771 87 7,858
Current liabilities
Trade and other payables 1,395 93 1,488
Advances from customers 179 1 180
Short-term loans and current portion of long-term loans 1,816 - 1,816
Payables to related parties 458 - 458
Income tax payable 57 - 57
Other taxes payable 202 - 202
Provisions 39 6 45
Dividends payable by the Group's subsidiaries to non-controlling shareholders 5 - 5
4,151 100 4,251
Liabilities directly associated with disposal groups classified as held for sale 348 (231) 117
4,499 (131) 4,368
Total equity and liabilities $ 17,704 $ (15) $ 17,689
$ 17,689
Statement of Operations Six-month period ended 30 June 2013
As previouslyreported Subsidiary that ceased to be held for sale Completion of initial accounting Reclassifications Restated
Revenue
Sale of goods $ 7,142 $ - - - $ 7,142
Rendering of services 220 - - (43) 177
7,362 - - (43) 7,319
Cost of revenue (5,877) (16) 12 (5) (5,886)
Gross profit 1,485 (16) 12 (48) 1,433
Selling and distribution costs (618) (17) (11) 38 (608)
General and administrative expenses (448) - - 10 (438)
Social and social infrastructure maintenance expenses (22) - - - (22)
Loss on disposal of property, plant and equipment (10) - (4) - (14)
Impairment of assets (7) - - - (7)
Foreign exchange gains/(losses), net (177) - (2) - (179)
Other operating income 48 - - - 48
Other operating expenses (68) - - - (68)
Profit/(loss) from operations 183 (33) (5) - 145
Interest income 16 - - - 16
Interest expense (377) - 4 - (373)
Share of profits/(losses) of joint ventures and associates 3 - - - 3
Gain/(loss) on derecognition of equity investments, net 89 - - - 89
Gain/(loss) on financial assets and liabilities, net (71) - - - (71)
Gain/(loss) on disposal groups classified as held for sale, net 54 - - - 54
Other non-operating gains/(losses), net (3) - 1 - (2)
Loss before tax (106) (33) - - (139)
Income tax benefit/(expense) (16) 9 - - (7)
Net loss $ (122) $ (24) $ - - $ (146)
Attributable to:
Equity holders of the parent entity $ (111) $ (20) $ - $ - $ (131)
Non-controlling interests (11) (4) - - (15)
$ (122) $ (24) $ - $ - $ (146)
Earnings/(losses) per share:
for profit/(loss) attributable to equity holders of the parent entity, US dollars, basic and diluted $ (0.07) $ (0.02) - - $ (0.09)
Statement of Comprehensive Income Six-month period ended 30 June 2013
As previouslyreported Subsidiary that ceased to be held for sale Completion of initial accounting Restated
Net loss $ (122) $ (24) $ - $ (146)
Other comprehensive income/(loss)
Other comprehensive income to be reclassified to profit or loss in subsequent periods
Exchange differences on translation of foreign operations into presentation currency (414) 2 3 (409)
Exchange differences recycled to profit or loss 68 - - 68
Net gains/(losses) on available-for-sale financial assets 4 - - 4
(342) 2 3 (337)
Effect of translation to presentation currency of the Group's joint ventures and associates (10) - - (10)
Share of other comprehensive income/(loss) of joint ventures and associates accounted for using the equity method (10) - - (10)
Items not to be reclassified to profit or loss in subsequent periods
Decrease in revaluation surplus in connection with the impairment of property, plant and equipment (5) - - (5)
Income tax effect 1 - - 1
(4) - - (4)
Total other comprehensive income/(loss) (356) 2 3 (351)
Total comprehensive income/(loss), net of tax $ (478) $ (22) $ 3 $ (497)
Attributable to:
Equity holders of the parent entity $ (430) $ (19) $ - $ (449)
Non-controlling interests (48) (3) 3 (48)
$ (478) $ (22) $ 3 $ (497)
Statement of Changes in Equity Six-month period ended 30 June 2013
As previouslyreported Subsidiary that ceased to be held for sale Completion of initial accounting Restated
Accumulated profits $ 2,893 $ (15) $ - $ 2,878
Translation difference (1,743) 1 - (1,742)
Non-controlling interests 509 (3) (43) 463
2. Significant Accounting Policies
Changes in Accounting Policies
In the preparation of the interim condensed consolidated financial statements, the Group followed the same accounting
policies and methods of computation as compared with those applied in the complete consolidated financial statements for
year ended 31 December 2013, except for the adoption of new standards and interpretations and revision of the existing IAS
as of 1 January 2014.
New/Revised Standards and Interpretations Adopted in 2014:
§ IFRS 10 "Consolidated Financial Statements", IAS 27 "Separate Financial Statements"
IFRS 10 replaced the portion of IAS 27 "Consolidated and Separate Financial Statements" that addresses the accounting for
consolidated financial statements. It also addresses the issues raised in SIC-12 "Consolidation - Special Purpose
Entities". IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The
changes introduced by IFRS 10 require management to exercise significant judgement to determine which entities are
controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27.
§ IFRS 12 "Disclosure of Interests in Other Entities"
IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as
well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity's
interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also
required, but has no impact on the Group's financial position or performance.
§ Amendments to IFRS 10, IFRS 12 and IAS 27
These amendments provide an exception to the consolidation requirement for entities that meet the definition of an
investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at
fair value through profit or loss.
§ IFRS 11 "Joint Arrangements", IAS 28 "Investments in Associates and Joint Ventures"
IFRS 11 replaced IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly-controlled Entities" - Non-monetary Contributions
by Venturers". IFRS 11 removed the option to account for jointly controlled entities (JCEs) using proportionate
consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. As
a consequence of the new IFRS 11 and IFRS 12, IAS 28 "Investments in Associates", has been renamed IAS 28 "Investments in
Associates and Joint Ventures", and describes the application of the equity method to investments in joint ventures in
addition to associates.
§ Amendments to IAS 32 "Financial Instruments: Presentation" - Offsetting Financial Assets and Financial Liabilities
These amendments clarify the meaning of "currently has a legally enforceable right to set-off" and the criteria for
non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting.
§ Amendments to IAS 36 - Recoverable Amount Disclosures for Non-financial Assets"
These amendments remove the unintended consequences of IFRS 13 "Fair Value Measurement" on the disclosures required under
IAS 36 "Impairment of Assets". In addition, these amendments require disclosure of the recoverable amounts for the assets
or cash-generating units (CGUs) for which an impairment loss has been recognised or reversed during the period.
§ Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting"
These amendments provide relief from discontinuing hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria.
§ IFRIC 21 "Levies"
IFRIC 21 is applicable to all levies imposed by governments under legislation, other than outflows that are within the
scope of other standards (e.g., IAS 12 Income Taxes) and fines or other penalties for breaches of legislation. The
interpretation clarifies that an entity recognises a liability for a levy no earlier than when the activity that triggers
payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued
progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant
legislation. For a levy that is triggered upon reaching a minimum threshold, no liability is recognised before the
specified minimum threshold is reached.
The new standards, interpretations and amendments described above did not have a significant impact on the financial
position or performance of the Group. The Group has not early adopted any other standard, interpretation or amendment that
has been issued but is not yet effective.
3. Segment Information
The management reporting that is used by the chief operating decision maker for making decisions about resource allocation
has changed to put more emphasis on analysis of the operating results of the mining segment separately for coal and iron
ore operations. As such, the mining segment has been split into two separate reportable segments. The comparative segment
information has been restated accordingly.
The following tables present measures of segment profit or loss based on management accounts.
Six-month period ended 30 June 2014
US$ million Steel Coal Iron Ore Vanadium Other Eliminations Total
Revenue
Sales to external customers $ 6,216 $ 307 $ 86 $ 123 $ 98 $ - $ 6,830
Inter-segment sales 362 311 760 151 254 (1,838) -
Total revenue 6,578 618 846 274 352 (1,838) 6,830
Segment result - EBITDA $ 759 $ 110 $ 210 $ 15 $ 43 $ (62) $ 1,075
Six-month period ended 30 June 2013
US$ million Steel Coal Iron Ore Vanadium Other Eliminations Total
Revenue
Sales to external customers $ 6,641 $ 317 $ 55 $ 148 $ 100 $ - $ 7,261
Inter-segment sales 179 386 799 140 235 (1,739) -
Total revenue 6,820 703 854 288 335 (1,739) 7,261
Segment result - EBITDA $ 530 $ 67 $ 181 $ 27 $ 36 $ (34) $ 807
3. Segment Information (continued)
The following table shows a reconciliation of revenue and EBITDA used by the management for decision making and revenue and
profit or loss before tax per the consolidated financial statements prepared under IFRS.
Six-month period ended 30 June 2014
US$ million Steel Coal Iron Ore Vanadium Other Eliminations Total
Revenue $ 6,578 $ 618 $ 846 $ 274 $ 352 $ (1,838) $ 6,830
Reclassifications and other adjustments (680) 47 (187) (19) 82 732 (25)
Revenue per IFRS financial statements $ 5,898 $ 665 $ 659 $ 255 $ 434 $ (1,106) $ 6,805
EBITDA $ 759 $ 110 $ 210 $ 15 $ 43 $ (62) $ 1,075
Exclusion of management services from segment result 57 4 12 2 1 - 76
Unrealised profits adjustment (41) 1 - - - 38 (2)
Reclassifications and other adjustments (4) 17 (6) 3 8 28 46
12 22 6 5 9 66 120
EBITDA based on IFRS financial statements $ 771 $ 132 $ 216 $ 20 $ 52 $ 4 $ 1,195
Unallocated subsidiaries (115)
$ 1,080
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