mtl-6k_20180405.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

April 5, 2018

(Commission File No. 001-32328)

 

MECHEL PAO

(Translation of registrant’s name into English)

 

Krasnoarmeyskaya 1,

Moscow 125167

Russian Federation

 

(Address of registrant’s principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F   Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7): [ ]

   

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

    Yes      No  

 

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):    n/a 

 

 

 

 


 

 

MECHEL REPORTS THE 2017 FINANCIAL RESULTS

 

Consolidated revenue – 299.1 bln rubles (+8% compared to FY2016)

EBITDA1 - 81.1 bln rubles (+23% compared to FY2016)

Profit attributable to equity shareholders of Mechel PAO – 11.6 bln rubles

 

Moscow, Russia – April 5, 2018 – Mechel PAO (MOEX: MTLR, NYSE: MTL), a leading Russian mining and steel group, announces financial results for the full year 2017.

 

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented:

“The 2017 financial results exceeded those of 2016. High coal prices greatly supported our mining division’s results. The steel division last year had to work in a more difficult environment, but by the end of the year the situation stabilized and the division attained good results.

“Metallurgical coal prices in 2017 were influenced by a large number of different factors, including weather cataclysms in Australia, China’s policy of regulating mining and steelmaking volumes, production and shipping problems in Australia’s mines and ports. As a result, coking coal prices were fluctuating very widely, with the annual average greatly exceeding expectations.

“The steel product market was less volatile, though the first and the second halves of the year were markedly different insofar as prices for finished products and production costs were concerned. The beginning of the year was characterized by high costs as coal and iron ore prices spiked, even as many products in our range met with weak demand and low price levels. The situation improved only in the second half of the year.

“One of our mining division’s key challenges was restoration of its mining volumes which have declined due to the lack of a sufficient amount of coal prepared for extraction. Starting in the second half of 2017 and throughout this year’s first quarter, we took steps to increase stripping operations by acquiring new equipment, actively funding repairs and bringing in contractors with equipment of their own.

“Last year, we have acquired and launched dozens of machines for our mines, open pits and washing plants, as well as modernized our environment-protection equipment. That includes 55 new equipment units for our Yakutia assets alone, including 5 excavators and 23 BelAZ trucks. This year more new equipment is forthcoming, which will enable us to step up mining volumes and take better advantage of the favorable market situation.

“The steel division consistently worked on optimizing its product range. Due to a decrease in the share of low-margin product sales, we increased output of high-value added products — structural steel, flat products, rails, stampings and forgings, products from specialty steels, and hardware from high-alloyed and stainless steels.

“The Group’s capital investment in 2017 totaled 11 billion rubles, including leasing, which is 25% more than the previous year. Our plans for 2018 include a further increase in capital investment.”

 

Consolidated Results For The Full Year 2017

 

Mln rubles

FY 2017

FY 2016

%

4Q’17

3Q’17

%

Revenue

from external customers

299,113

276,009

8%

76,316

73,413

4%

Operating profit

57,167

42,690

34%

10,752

15,738

-32%

EBITDA

81,106

66,164

23%

21,966

18,913

16%

EBITDA, margin

27%

24%

 

29%

26%

 

Profit

attributable to equity shareholders of Mechel PAO

11,557

7,126

62%

443

6,120

-93%

 

Mining Segment

 

Mechel-Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted:

“This past year was successful for the mining division with regard to financial results. The division’s revenue has grown by 12% year-on-year, EBITDA went up by 47%, and EBITDA margin reached 43%.

“This improvement was due to a favorable market conditions. The metallurgical coal market was highly volatile in 2017, with spot prices fluctuating from $141 to $314 per tonne through the year. Nevertheless, coal prices in 2017 have well exceeded the 2016 price level. For example, the average price on quarterly contracts for high-quality hard coking coal was some $210 FOB Australia, which is $96 or 84% higher than in 2016. Late 2017 was characterized by an upward price dynamics for high-quality coking coal. In November 2017 prices again topped $200 and remained over this level until the

 

1 

EBITDA - Adjusted EBITDA. Please find the calculation of the Adjusted EBITDA and other non-IFRS measures used here and hereafter in Attachment A.

 

 


 

end of March 2018. As a result, contract prices for premium coking coal demonstrated further growth in 1Q2018 and reached $237 per tonne.

“At the same time, there were factors that hampered the positive dynamics of our financial results. We were faced with occasional wagon shortages and natural disasters such as the Far East flooding. A decrease in coal mining and sales volumes had its impact on the division’s results. Starting the mid-2017, the division’s facilities are implementing a large-scale program to restore production volumes.

“We also plan to increase mining volumes by further developing Elga Coal Complex. Production plans for the Elga deposit in 2018 include mining volumes growth by nearly a quarter, up to nearly 5.3 million tonnes. High-quality coking coal will account for three quarters of this total volume.”

 

Mln rubles

FY 2017

FY 2016

%

4Q’17

3Q’17

%

Revenue

from external customers

100,129

89,647

12%

25,444

23,166

10%

Revenue

inter-segment

42,286

31,907

33%

9,312

9,706

-4%

EBITDA

61,425

41,884

47%

14,098

12,764

10%

EBITDA, margin

43%

34%

 

41%

39%

 

 

Steel Segment

 

Mechel-Steel Management Company OOO’s Chief Executive Officer Andrey Ponomarev noted:

“For the steel division, the past year was uneven. The first two quarters saw weak markets and high commodity prices. In the third quarter the market situation improved and remained stable until the year’s end. Prices for steel products consolidated, production costs went back to normal. As a result, profitability in the last two quarters rebounded, but overall 2017 results were weaker than in 2016, with EBITDA down by 19% year-on-year.

“In 2017 the division’s revenue went up by 7% year-on-year. This was largely due to changes in our production and sales structure. We have almost entirely given up on selling billets and wire rod and reduced rebar sales by 11%. At the same time, rail sales went up by 18%, sales of the universal rolling mill’s other structural shapes by 33%, stainless long steel by 16%, flat steel by 17%, forgings by 18% and stampings by 28%. Thus, sales of high value-added products demonstrated growth, which had its positive impact on the whole division’s profitability and make its results more resistant to market volatility.

“In order to further improve our product range, we continue to master new types of high value added products in demand by market. For example, last year Beloretsk Metallurgical Plant designed and produced new types of ropes, rope wires, stainless wire and bar of various sizes from more than 10 alloyed and high-alloyed steels. Chelyabinsk Metallurgical Plant increased exports of the universal rolling mill’s new products after they earned European quality certificates.”

 

Mln rubles

FY 2017

FY 2016

%

4Q’17

3Q’17

%

Revenue

from external customers

172,760

161,639

7%

43,383

44,422

-2%

Revenue

inter-segment

7,622

7,254

5%

2,209

1,673

32%

EBITDA

18,817

23,172

-19%

6,642

6,101

9%

EBITDA, margin

10%

14%

 

15%

13%

 

 

Power Segment

 

Mechel-Energo OOO’s Chief Executive Officer Petr Pashnin noted:

“On the whole, production and sales of the division’s key products changed little year-on-year. Positive dynamics in our revenues, both from third parties and within the group, and EBITDA was due primarily to a planned growth of electricity and heat tariffs in 2017. Also, the price growth exceeded the increase in production costs.”

 

Mln rubles

FY 2017

FY 2016

%

4Q’17

3Q’17

%

Revenue

from external customers

26,224

24,723

6%

7,489

5,825

29%

Revenue

inter-segment

16,338

15,903

3%

4,427

3,438

29%

EBITDA

2,308

1,662

39%

1,319

23

 

EBITDA, margin

5%

4%

 

11%

0%

 

 

 

 

 

 

 


 

***

The management of Mechel will host a conference call today at 6:00 p.m. Moscow time (4:00 p.m. London time, 11 a.m. New York time) to review Mechel’s financial results and comment on current operations. The call may be accessed via the Internet at http://www.mechel.com, under the Investor Relations section.

 

***

Alexey Lukashov

Director of Investor Relations

Mechel PAO

Phone: 7-495-221-88-88

Fax: 7-495-221-88-00

alexey.lukashov@mechel.com

 

***

 

Mechel is an international mining and steel company. Its products are marketed in Europe, Asia, North and South America, Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products.

***

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.


 


 

Attachments to the FY 2017 Earnings Press Release

 

Attachment A

Non-IFRS financial measures. This press release includes financial information prepared in accordance with International Financial Reporting Standards, or IFRS, as well as other financial measures referred to as non-IFRS. The non-IFRS financial measures should be considered in addition to, but not as a substitute for the information prepared in accordance with IFRS.

Adjusted EBITDA (EBITDA) represents profit (loss) attributable to equity shareholders of Mechel PAO before Depreciation, depletion and amortization, Foreign exchange (gain) loss, net, Finance costs including fines and penalties on overdue loans and borrowings and finance lease payments, Finance income, Net result on the disposal of non-current assets, Impairment of goodwill and other non-current assets, Write-off of accounts receivable, Provision (reversal of provision) for doubtful accounts,  Write-off of inventories to net realisable value, Loss (profit) after tax from discontinued operations, net, Net result on the disposal of subsidiaries, Profit (loss) attributable to non-controlling interests, Income tax expense (benefit), Pension service cost and actuarial loss, other related expenses, Other fines and penalties, Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term and Other one-off items. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of our Revenue. Our adjusted EBITDA may not be similar to EBITDA measures of other companies. Adjusted EBITDA is not a measurement under IFRS and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of profit (loss). We believe that our adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While depreciation, depletion, amortization and impairment of goodwill and other non-current assets are considered operating expenses under IFRS, these expenses primarily represent the non-cash current period allocation of costs associated with non-current assets acquired or constructed in prior periods. Our adjusted EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.

Adjusted profit (loss) represents profit (loss) attributable to equity shareholders of Mechel PAO before Impairment of goodwill and other non-current assets, Loss (profit) after tax from discontinued operations, net, Net result on the disposal of subsidiaries, Effect on loss attributable to non-controlling interests, Foreign exchange (gain) loss, net, Pension service cost and actuarial loss, other related expenses, Other fines and penalties, Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term and Other one-off items. Our adjusted profit (loss) may not be similar to adjusted profit (loss) measures of other companies. Adjusted profit (loss) is not a measurement under IFRS and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of profit (loss). We believe that our adjusted profit (loss) provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations. While impairment of goodwill and other non-current assets is considered operating expenses under IFRS, these expenses represent the non-cash current period allocation of costs associated with assets acquired or constructed in prior periods. Our adjusted profit (loss) calculation is used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.

 

 

 

 

 

 

 


 

 

Our calculations of Net debt, excluding fines and penalties on overdue amounts**2 and trade working capital are presented below:

Mln rubles

31.12.2017

31.12.2016

Interest-bearing loans and borrowings, excluding interest payable, fines and penalties on overdue amounts

380,541

395,571

Interest payable

20,420

16,916

Non-current interest-bearing loans and borrowings

17,360

11,644

Other non-current financial liabilities

40,916

36,740

Other current financial liabilities

734

-

less Cash and cash equivalents

(2,452)

(1,689)

Net debt, excluding finance lease liabilities, fines and penalties on overdue amounts

457,519

459,182

 

 

 

Current finance lease liabilities

7,476

10,175

Non-current finance lease liabilities

1,878

421

Net debt, excluding fines and penalties on overdue amounts

466,873

469,778

 

 

 

 

 

 

Mln rubles

31.12.2017

31.12.2016

Trade and other receivables

18,762

19,054

Inventories

37,990

35,227

Other current assets

7,589

6,942

Income tax receivables

107

686

Trade current assets

64,448

61,909

 

 

 

Trade and other payables

33,469

40,985

Advances received

4,385

3,815

Provisions and other current liabilities

3,428

3,515

Taxes and similar charges payable other than income tax

6,696

9,195

Income tax payable

4,578

2,552

Trade current liabilities

52,556

60,062

 

 

 

Trade working capital

11,892

1,847

 

EBITDA can be reconciled to our consolidated statement of profit (loss) as follows:

 

 

 **2 

  Calculations of Net debt could be differ from indicators calculated in accordance with loan agreements upon dependence on definitions in such agreements.

 

 


 

 

Consolidated Results

 

Mining Segment ***

 

Steel Segment***

 

Power Segment***

Mln rubles

12m 2017

12m 2016

 

12m 2017

12m 2016

 

12m 2017

12m 2016

 

12m 2017

12m 2016

Profit (loss) attributable to equity shareholders of Mechel PAO

11,557

7,126

 

18,188

1,797

 

(5,130)

6,399

 

(59)

(517)

Add:

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

14,227

13,714

 

7,979

7,912

 

5,800

5,435

 

448

367

Foreign exchange (gain) loss, net

(4,237)

(25,947)

 

(4,379)

(14,960)

 

144

(10,904)

 

(2)

(83)

Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments

47,610

54,240

 

34,546

39,345

 

14,136

17,411

 

880

1,078

Finance income

(633)

(1,176)

 

(1,810)

(2,482)

 

(717)

(2,234)

 

(57)

(54)

Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of accounts receivable, provision (reversal of provision) for doubtful accounts and write-off of inventories to net realisable value

7,334

8,447

 

4,443

2,584

 

2,406

5,389

 

486

474

Loss (profit) after tax for the year from discontinued operations, net

-

426

 

-

-

 

-

406

 

-

20

Net result on the disposal of subsidiaries

(470)

(194)

 

(470)

-

 

-

(194)

 

-

-

Profit attributable to non-controlling interests

1,013

1,706

 

407

511

 

417

1,056

 

189

139

Income tax expense (benefit)

3,150

4,893

 

2,023

5,019

 

800

(265)

 

327

139

Pension service cost and actuarial loss, other related expenses

(33)

(171)

 

(58)

(198)

 

22

26

 

3

2

Other fines and penalties

2,551

1,396

 

941

556

 

1,512

742

 

98

98

Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term

(963)

(115)

 

(385)

(19)

 

(573)

(95)

 

(5)

(1)

Other one-off items

-

1,819

 

-

1,819

 

-

-

 

-

-

EBITDA

81,106

66,164

 

61,425

41,884

 

18,817

23,172

 

2,308

1,662

EBITDA, margin

27%

24%

 

43%

34%

 

10%

14%

 

5%

4%

 

 

 

 

 

 

 

 

 

 

 

 

Mln rubles

12m 2017

12m 2016

 

12m 2017

12m 2016

 

12m 2017

12m 2016

 

12m 2017

12m 2016

Profit (loss) attributable to equity shareholders of Mechel PAO

11,557

7,126

 

18,188

1,797

 

(5,130)

6,399

 

(59)

(517)

Add:

 

 

 

 

 

 

 

 

 

 

 

Impairment of goodwill and other non-current assets

6,081

5,202

 

3,801

1,336

 

2,280

3,866

 

-

-

Loss (profit) after tax for the year from discontinued operations, net

-

426

 

-

-

 

-

406

 

-

20

Net result on the disposal of subsidiaries

(470)

(194)

 

(470)

-

 

-

(194)

 

-

-

Effect on loss attributable to non-controlling interests

(453)

(109)

 

(240)

-

 

(213)

(109)

 

-

-

Foreign exchange (gain) loss, net

(4,237)

(25,947)

 

(4,379)

(14,960)

 

144

(10,904)

 

(2)

(83)

Pension service cost and actuarial loss, other related expenses

(33)

(171)

 

(58)

(198)

 

22

26

 

3

2

Other fines and penalties

2,551

1,396

 

941

556

 

1,512

742

 

98

98

Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term

(963)

(115)

 

(385)

(19)

 

(573)

(95)

 

(5)

(1)

Other one-off items

-

1,819

 

-

1,819

 

-

-

 

-

-

Adjusted profit (loss), net of income tax

14,033

(10,567)

 

17,398

(9,669)

 

(1,958)

137

 

35

(481)

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

57,167

42,690

 

48,191

31,012

 

9,154

11,531

 

1,267

701

Add:

 

 

 

 

 

 

 

 

 

 

 

Impairment of goodwill and other non-current assets

6,081

5,202

 

3,801

1,336

 

2,280

3,866

 

-

-

Loss on write-off of non-current assets

321

1,953

 

135

863

 

145

1,089

 

41

1

Pension service cost and actuarial loss, other related expenses

(33)

(171)

 

(58)

(198)

 

22

26

 

3

2

Other fines and penalties

2,551

1,396

 

941

556

 

1,512

742

 

98

98

Other one-off items

-

1,819

 

-

1,819

 

-

-

 

-

-

Adjusted operating profit

66,087

52,889

 

53,010

35,388

 

13,113

17,254

 

1,409

802

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

*** including inter-segment operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Results

 

Mining Segment ***

 

Steel Segment***

 

Power Segment***

Mln rubles

4q 2017

3q 2017

 

4q 2017

3q 2017

 

4q 2017

3q 2017

 

4q 2017

3q 2017

Profit (loss) attributable to equity shareholders of Mechel PAO

443

6,120

 

1,316

6,175

 

(1,303)

487

 

522

(569)

Add:

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

3,185

3,813

 

1,716

2,185

 

1,353

1,528

 

116

101

Foreign exchange (gain) loss, net

(635)

(1,797)

 

(715)

(2,168)

 

81

372

 

(1)

(1)

Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments

11,337

12,177

 

8,094

8,728

 

3,454

3,709

 

215

216

Finance income

(140)

(51)

 

(407)

(361)

 

(145)

(150)

 

(13)

(12)

Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of accounts receivable, provision (reversal of provision) for doubtful accounts and write-off of inventories to net realisable value

6,531

(454)

 

3,933

11

 

2,418

(523)

 

180

58

Net result on the disposal of subsidiaries

4

(478)

 

4

(478)

 

-

-

 

-

-

Profit (loss) attributable to non-controlling interests

168

160

 

22

(207)

 

36

269

 

110

96

Income tax expense (benefit)

344

(821)

 

134

(1,234)

 

(31)

357

 

241

55

Pension service cost and actuarial loss, other related expenses

(128)

32

 

(133)

25

 

5

6

 

-

1

Other fines and penalties

1,659

293

 

465

104

 

1,243

110

 

(49)

79

Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term

(802)

(81)

 

(331)

(17)

 

(469)

(64)

 

(2)

(1)

Other one-off items

-

-

 

-

-

 

-

-

 

-

-

EBITDA

21,966

18,913

 

14,098

12,764

 

6,642

6,101

 

1,319

23

EBITDA, margin

29%

26%

 

41%

39%

 

15%

13%

 

11%

0%

 

 

 

 

 

 

 

 

 

 

 

 

Mln rubles

4q 2017

3q 2017

 

4q 2017

3q 2017

 

4q 2017

3q 2017

 

4q 2017

3q 2017

Profit (loss) attributable to equity shareholders of Mechel PAO

443

6,120

 

1,316

6,175

 

(1,303)

487

 

522

(569)

Add:

 

 

 

 

 

 

 

 

 

 

 

Impairment of goodwill and other non-current assets

6,081

-

 

3,801

-

 

2,280

-

 

-

-

Net result on the disposal of subsidiaries

4

(478)

 

4

(478)

 

-

-

 

-

-

Effect on loss attributable to non-controlling interests

(453)

-

 

(240)

-

 

(213)

-

 

-

-

Foreign exchange (gain) loss, net

(635)

(1,797)

 

(715)

(2,168)

 

81

372

 

(1)

(1)

Pension service cost and actuarial loss, other related expenses

(128)

32

 

(133)

25

 

5

6

 

-

1

Other fines and penalties

1,659

293

 

465

104

 

1,243

110

 

(49)

79

Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term

(802)

(81)

 

(331)

(17)

 

(469)

(64)

 

(2)

(1)

Other one-off items

-

-

 

-

-

 

-

-

 

-

-

Adjusted profit (loss), net of income tax

6,169

4,089

 

4,167

3,641

 

1,624

911

 

470

(491)

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit (loss)

10,752

15,738

 

8,116

10,874

 

1,663

5,041

 

1,066

(203)

Add:

 

 

 

 

 

 

 

 

 

 

 

Impairment of goodwill and other non-current assets

6,081

-

 

3,801

-

 

2,280

-

 

-

-

Loss on write-off of non-current assets

170

4

 

69

4

 

91

-

 

10

-

Pension service cost and actuarial loss, other related expenses

(128)

32

 

(133)

25

 

5

6

 

-

1

Other fines and penalties

1,659

293

 

465

104

 

1,243

110

 

(49)

79

Other one-off items

-

-

 

-

-

 

-

-

 

-

-

Adjusted operating profit (loss)

18,534

16,067

 

12,318

11,007

 

5,282

5,157

 

1,027

(123)

 

 

 

 

 

 

 

 

 

 

 

 

 


 

*** including inter-segment operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Attachment B

 

CONSOLIDATED STATEMENT OF PROFIT (LOSS) AND
OTHER COMPREHENSIVE INCOME (LOSS)

(All amounts are in millions of Russian rubles, unless stated otherwise)

 

Year ended December 31,

 

Year ended December 31,

 

 

2017

 

2016

 

 

 

 

 

Continuing operations

 

 

 

 

Revenue

 

299,113

 

276,009

Cost of sales

 

(160,356)

 

(146,322)

Gross profit

 

138,757

 

129,687

 

 

 

 

 

Selling and distribution expenses

 

(55,686)

 

(56,233)

Loss on write-off of non-current assets

 

(321)

 

(1,953)

Impairment of goodwill and other non-current assets

 

(6,081)

 

(5,202)

Provision for doubtful accounts

 

(332)

 

(758)

Taxes other than income taxes

 

(4,967)

 

(5,913)

Administrative and other operating expenses

 

(15,590)

 

(18,791)

Other operating income

 

1,387

 

1,853

Total selling, distribution and operating income and (expenses), net

 

(81,590)

 

(86,997)

Operating profit

 

57,167

 

42,690

 

 

 

 

 

Finance income

 

633

 

1,176

Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments of RUB 1,161 million and RUB 6,013 million for the periods ended December 31, 2017 and 2016, respectively

 

(47,610)

 

(54,240)

Foreign exchange gain (loss), net

 

4,237

 

25,947

Share of profit (loss) of associates, net

 

18

 

(17)

Other income

 

1,495

 

598

Other expenses

 

(220)

 

(2,003)

Total other income and (expense), net

 

(41,447)

 

(28,539)

Profit before tax from continuing operations

 

15,720

 

14,151

 

 

 

 

 

Income tax expense

 

(3,150)

 

(4,893)

Profit for the year from continuing operations

 

12,570

 

9,258

 

 

 

 

 

Discontinued operations

 

 

 

 

(Loss) profit after tax for the year from discontinued operations, net

 

-

 

(426)

Profit for the year

 

12,570

 

8,832

 

 

 

 

 

Attributable to:

 

 

 

 

Equity shareholders of Mechel PAO

 

11,557

 

7,126

Non-controlling interests

 

1,013

 

1,706

 

 

 

 

 

Other comprehensive income

 

 

 

 

Other comprehensive income to be reclassified to profit or loss in subsequent periods, net of income tax:

 

313

 

430

1


 

Exchange differences on translation of foreign operations

 

313

 

431

Net loss on available for sale financial assets

 

-

 

(1)

Other comprehensive income (loss) not to be reclassified to profit or loss in subsequent periods, net of income tax:

 

145

 

(23)

Re-measurement of defined benefit plans

 

145

 

(23)

Other comprehensive income for the year, net of tax

 

458

 

407

 

 

 

 

 

Total comprehensive income for the year, net of tax

 

13,028

 

9,239

 

 

 

 

 

Attributable to:

 

 

 

 

Equity shareholders of Mechel PAO

 

12,012

 

7,529

Non-controlling interests

 

1,016

 

1,710

 

 

 

 

 

Earnings (loss) per share

 

 

 

 

Weighted average number of common shares

 

416,270,745

 

416,270,745

Basic and diluted, profit for the year attributable to common equity shareholders of Mechel PAO

 

27.76

 

17.12

Earnings per share from continuing operations (Russian rubles per share), basic and diluted

 

27.76

 

17.99

Loss per share from discontinued operations (Russian rubles per share)

 

-

 

(0.87)

 

 

 

 


2


 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 

(All amounts are in millions of Russian rubles)

 

 

 

 

 

 

December 31, 2017

 

December 31, 2016

 

 

 

 

 

Assets

 

 

 

 

Current assets

 

 

 

 

Inventories

 

37,990

 

35,227

Income tax receivables

 

107

 

686

Trade and other receivables

 

18,762

 

19,054

Other current assets

 

7,589

 

6,942

Other current financial assets

 

562

 

167

Cash and cash equivalents

 

2,452

 

1,689

Total current assets

 

67,462

 

63,765

 

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

197,875

 

204,353

Mineral licenses

 

33,240

 

36,099

Goodwill and other intangible assets

 

19,211

 

18,355

Investments in associates

 

283

 

265

Deferred tax assets

 

96

 

1,502

Other non-current assets

 

758

 

891

Non-current financial assets

 

202

 

235

Total non-current assets

 

251,665

 

261,700

Total assets

 

319,127

 

325,465

 

 

 

 

 

Equity and liabilities

 

 

 

 

Current liabilities

 

 

 

 

Interest-bearing loans and borrowings, including interest payable, fines and penalties on overdue amounts of RUB 41,992 million and RUB 38,594 million as of December 31, 2017 and 2016, respectively

 

422,533

 

434,165

Trade and other payables

 

33,469

 

40,985

Finance lease liabilities

 

7,476

 

10,175

Income tax payable

 

4,578

 

2,552

Taxes and similar charges payable other than income tax

 

6,696

 

9,195

Advances received

 

4,385

 

3,815

Other current financial liabilities

 

734

 

-

Other current liabilities

 

69

 

19

Pension obligations

 

849

 

944

Provisions

 

3,359

 

3,496

Total current liabilities

 

484,148

 

505,346

 

 

 

 

 

Non-current liabilities

 

 

 

 

Interest-bearing loans and borrowings

 

17,360

 

11,644

Finance lease liabilities

 

1,878

 

421

Income tax payable

 

-

 

540

Other non-current financial liabilities

 

40,916

 

36,740

Other non-current liabilities

 

138

 

159

Pension obligations

 

3,512

 

3,501

Provisions

 

3,814

 

3,420

Deferred tax liabilities

 

11,494

 

16,282

Total non-current liabilities

 

79,112

 

72,707

Total liabilities

 

563,260

 

578,053

 

 

 

 

 

Equity

 

 

 

 

Common shares

 

4,163

 

4,163

Preferred shares

 

833

 

833

Additional paid-in capital

 

24,378

 

28,326

Accumulated other comprehensive income

 

1,303

 

848

3


 

Accumulated deficit

 

(283,743)

 

(294,444)

Equity attributable to equity shareholders of Mechel PAO

 

(253,066)

 

(260,274)

Non-controlling interests

 

8,933

 

7,686

Total equity

 

(244,133)

 

(252,588)

Total equity and liabilities

 

319,127

 

325,465


4


 

CONSOLIDATED STATEMENT OF CASH FLOWS

(All amounts are in millions of Russian rubles)

 

Year ended December 31,

 

Year ended December 31,

 

 

2017

 

2016

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Profit for the year

 

12,570

 

8,832

Less loss (profit) after tax for the year from discontinued operations, net

 

-

 

426

Profit for the year from continuing operations

 

12,570

 

9,258

Adjustments to reconcile profit from continuing operations to net cash provided by operating activities:

 

 

 

 

Depreciation

 

12,555

 

11,813

Depletion and amortisation

 

1,672

 

1,901

Foreign exchange (gain) loss, net

 

(4,237)

 

(25,947)

Deferred tax (income) expense

 

(3,401)

 

5,104

Provision for doubtful accounts

 

332

 

758

Write-off of accounts receivable

 

109

 

113

Write-off of inventories to net realisable value

 

470

 

364

Revision in estimated cash flows of rehabilitation provision

 

-

 

(375)

Loss on write-off of non-current assets

 

321

 

1,953

Impairment of goodwill and other non-current assets

 

6,081

 

5,202

Loss on disposal of non-current assets

 

21

 

57

Gain on sale of investments

 

(2)

 

(186)

Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term

 

(963)

 

(115)

Curtailment and remeasurement of pension obligations

 

(175)

 

(325)

Pension service cost and actuarial loss, other related expenses

 

142

 

154

Finance income

 

(633)

 

(1,176)

Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments of RUB 1,161 million and RUB 6,031 million for the periods ended December 31, 2017 and 2016, respectively

 

47,610

 

54,240

VEB commissions write-off

 

-

 

1,411

Gain on royalty and other proceeds associated with disposal of Bluestone

 

(474)

 

(121)

Provision for non-recoverable advances to pension funds

 

-

 

408

Other

 

281

 

51

 

 

 

 

 

Changes in working capital items:

 

 

 

 

Trade and other receivables

 

(318)

 

(5,542)

Inventories

 

(4,508)

 

(1,070)

Trade and other payables

 

(3,435)

 

(4,259)

Advances received

 

625

 

588

Taxes payable and other liabilities

 

4,064

 

2,368

Other current assets

 

(895)

 

(883)

 

 

 

 

 

Income tax paid

 

(4,530)

 

(2,101)

Net operating cash flows from discontinued operations

 

-

 

(436)

 

 

 

 

 

Net cash provided by operating activities

 

63,282

 

53,207

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Loans issued and other investments

 

(525)

 

(133)

Interest received

 

165

 

128

Royalty and other proceeds associated with disposal of Bluestone

 

474

 

103

Proceeds from disposal of subsidiaries, net of cash disposed

 

94

 

145

Purchases of available for sale securities

 

-

 

(4)

Proceeds from loans issued and other investments

 

144

 

31

Proceeds from disposals of property, plant and equipment

 

328

 

285

5


 

Purchases of property, plant and equipment

 

(6,460)

 

(4,742)

Purchases of intangible assets

 

(771)

 

-

Interest paid, capitalized

 

(587)

 

(782)

Net cash used in investing activities

 

(7,138)

 

(4,969)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from loans and borrowings

 

23,200

 

4,002

Repayment of loans and borrowings

 

(35,033)

 

(42,322)

Dividends paid to shareholders of Mechel PAO

 

(856)

 

(5)

Dividends paid to non-controlling interests

 

(122)

 

(2)

Interest paid, including fines and penalties

 

(31,948)

 

(33,872)

Acquisition of non-controlling interests in subsidiaries

 

(3,358)

 

-

Proceeds from sales of 49% stakes in Elga coal complex, with put-option granted

 

-

 

34,300

Repayment of obligations under finance lease

 

(3,513)

 

(3,238)

Deferred payments for acquisition of assets

 

(455)

 

-

Deferred consideration paid for the acquisition of subsidiaries in prior periods

 

(3,652)

 

(4,732)

Net cash used in financing activities

 

(55,737)

 

(45,869)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(637)

 

(1,807)

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(230)

 

562

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,689

 

3,079

Cash and cash equivalents, net of overdrafts at beginning of period

 

1,453

 

891

Cash and cash equivalents at end of period

 

2,452

 

1,689

Cash and cash equivalents, net of overdrafts at end of period

 

1,223

 

1,453

 

 

 

 

 

6


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

 

 

Mechel PAO

 

 

 

By:

Oleg V. Korzhov

 

Name:

Oleg V. Korzhov

Title:

CEO

Date: April 5, 2018

7