TIDMEVR
RNS Number : 2645R
Evraz Group S.A.
28 April 2009
EVRAZ ANNOUNCES FINANCIAL RESULTS FOR 2008
April 28, 2009 - Evraz Group S.A. (LSE: EVR) today announces its audited
financial results for the year ended 31 December 2008.
Highlights for FY 2008:
Financials:
* Revenue advanced 58.5% to US$20,380 million reflecting strong pricing during the
first three quarters of the year, acquisitions and an improved sales mix
* Consolidated adjusted EBITDA rose 46.9% to US$6,323 million
* Net profit attributable to equity holders of Evraz Group S.A. decreased by 11.2%
to US$1,868 million affected by significant one-off charges and
write-downs totalling US$1,857 million and the challenging market
environment in the fourth quarter of 2008
* Operating cash flow increased by 52.6% to US$4,569 million, reflecting higher
profit and the ongoing focus on working capital management
Steel:
* Crude steel production increased by 7.1% year-on-year to 17.7 million tonnes
* Total steel sales volumes rose 3.9% to 17.0 million tonnes
Vanadium:
* Revenues of vanadium segment increased by 106.9% to US$1,206 million
* Sales volumes of vanadium products rose 18.9% year-on-year to 26,400 tonnes in
vanadium equivalent
Mining:
* Iron ore self-coverage of 93%
* Coking coal self-coverage of 89%
Corporate developments and acquisitions:
* Acquisition of Claymont Steel for US$420 million completed in January
* Acquisition of IPSCO Canada for US$2,450 million completed in June
* Acquisition of select Ukrainian assets for US$1,110 million and 4,195,150 new
Evraz shares completed in September
* Successful bond placements totalling US$2.0 billion completed in April and May
Management's responses to challenging operating conditions:
The market environment deteriorated significantly in the fourth quarter of 2008.
International financial turbulence led to a sharp contraction in demand across
all product lines, causing significant price declines and a dramatic decrease
in visibility with regard to future orders. An extensive program has been
developed to mitigate these challenges, including cost reduction, operational
improvements, capital preservation and an increase in liquidity.
Principal operational measures:
* Production optimisation, idling three blast furnaces, production flexibility
allowing to rapidly align production to changing market environment
* Maintaining high utilisation rates in respect of our mining division with cost
in this segment below market prices
* Heavy cost reduction across all segments, targeting a 40%+ decrease in labour
costs and an approximate 50% decrease in services and raw material costs in 2009
compared to 2008
* Cutting CAPEX to maintenance level, suspension of all development projects:
total CAPEX expected to be not more than US$500 million for 2009
Principal capital preservation initiatives:
* Prudent working capital management: working capital reduced from 16% of revenues
in 2007 to 10% of revenues in 2008. Working capital reduction of more than
US$700 million targeted for 2009
* US$601 million of bonds repurchased as of 31 March 2009, improving net debt by
US$186 million
* Partial scrip dividend for H1 2008, no final dividend for FY2008. Company will
only resume dividend payments upon completion of the deleveraging plan and
market recovery
Improvement of liquidity position:
* Total debt reduced by US$1 billion during Q1 2009 to approximately US$9 billion
* Cash of US$800 million; undrawn credit lines of US$1.8 billion as of 31 March
2009
* US$650 million of short-term international bank debt rescheduled to longer term
+----------------------------+----------------+----------------+----------------+
| Full year to 31 December | 2008 | 2007 | Change |
| (US$ million unless | | | |
| otherwise stated) | | | |
+----------------------------+----------------+----------------+----------------+
| Revenue | 20,380 | 12,859 | 58.5% |
+----------------------------+----------------+----------------+----------------+
| Adjusted EBITDA 1 | 6,323 | 4,305 | 46.9% |
+----------------------------+----------------+----------------+----------------+
| Profit from operations | 3,720 | 3,468 | 7.3% |
+----------------------------+----------------+----------------+----------------+
| Net profit 2 | 1,868 | 2,103 | (11.2)% |
+----------------------------+----------------+----------------+----------------+
| Earnings per GDR 3, (US$) | 5.04 | 5.87 | (14.1)% |
+----------------------------+----------------+----------------+----------------+
1 Refer to Attachment 1 for reconciliation to profit from operations
2 Net profit attributable to equity holders of the parent entity
3 1 share is represented by 3 GDRs
Alexander Frolov, Evraz Group's CEO, commented:
"I am pleased to report that Evraz achieved a strong financial and operating
performance in 2008, a year that witnessed another important step in the
implementation of our corporate strategy. We grew our business by almost 60%
last year, both organically and through a series of strategic international
acquisitions, namely in the US, Canada and Ukraine. Organic growth benefited
from a favourable pricing environment for much of the year enhanced by an
improved product mix.
We further strengthened our position as the largest producer of crude steel and
construction steel products in our core Russian market. Acquisitions of US and
Canadian businesses served to underwrite our position as the regional leader in
the plate and tubular products markets.
The exceptionally strong results achieved during the first nine months of 2008
were overshadowed by a sharp slowdown of the global economy in the fourth
quarter. Our strategic disciplines of cost leadership, vertical
integration, geographic diversification and product mix improvement, being very
efficient in a growing market, also proved to be viable at a time of global
recession.
One of Evraz's competitive strengths lies in management's ability to assess and
react swiftly to market challenges. I am pleased to inform you that the initial
results from the management action plan are encouraging. We were able to
stabilise the situation and although some first signs of improvement are
apparent there is still a long way to go and visibility of demand remains
distinctly limited.
The aforementioned stabilisation has enabled management to focus on two key
areas: efficiency gains through extensive cost reductions and deleveraging.
In order to improve our efficiency we need to get rid of our non-core activities
and reduce our labour costs. We are focusing on the optimisation of our
production capacities and the discontinuation of cost inefficient operations
that lack a competitive edge on a global scale. We have set aggressive cost
reduction targets, including cuts of as much as 50% in certain cost lines
compared with 2008 levels. We have also decreased our capital expenditure to
effective maintenance levels and planned investment in 2009 is not expected to
exceed US$500 million. Our prudent management of working capital continued, as
illustrated by the reduction from a 16% proportion of revenues in 2007 to 10% in
2008, despite the challenging market environment in the fourth quarter. We
currently plan to reduce our working capital by US$700 million in 2009.
I am pleased that our liquidity plan has started to yield rewards. During the
first quarter of 2009 we reduced our net debt by US$1 billion to approximately
US$8 billion. As of 31 March 2009, we have accumulated more than US$800 million
of current cash and US$1.8 billion of undrawn credit facilities.As part of the
liquidity plan, and through dialogue with our debt-holders we have converted
some US$650 million of short-term debt into longer-term debt during the last six
months. We are pleased to see that our banking and lending relationships built
up over time continue to hold us in fair standing and that the overwhelming
majority of our debt-holders are professionally disposed to conduct continuous
business with us.
All these factors indicate that consistent implementation of the management
response plan will enable us to successfully weather the downturn and prepare to
fully capitalise on a market recovery."
Outlook
Commenting on the outlook for 2009 and beyond Mr Frolov added:
"The industry and the wider global economy now face serious challenges and
considerable uncertainty. Against this background and given the low visibility
of our future revenues due to unprecedented shrinkage of demand, it would be
irresponsible for me to give any firm guidance in respect of our prospective
financial and operating results.
Few can doubt that 2009 is going to prove a difficult year for the global steel
industry and for Evraz as one of the sector's key players. However we strongly
believe that the combination of asset composition, a high degree of vertical
integration and our geographic diversification, together with our experienced
international management team, will ensure that we not only overcome the
challenges but enter a new growth era with enhanced competitive credentials."
2008 Results Summary:
Evraz's consolidated revenues increased by 58.5% to US$20,380 million in 2008
compared with US$12,859 million in 2007. Steel segment sales accounted for the
majority of the increase in revenues, largely due to the higher average prices
of steel products and contributions from newly acquired operations in North
America, South Africa and Ukraine. Evraz's sales volumes of steel products
increased from 16.4 million tonnes in 2007 to 17.0 million tonnes in 2008.
The increase in steel sales volumes primarily relates to the contribution
from Evraz's North American operations (+1.0 million tonnes), particularly
reflecting the acquisition of Claymont Steel and IPSCO Canada, and the
contribution from Dnepropetrovsky Metal Works, or DMZ, in Ukraine (+0.9 million
tonnes). Approximately 0.2 million tonnes were contributed by South African
operations due to full year consolidation of Highveld in 2008 compared
with eight months in 2007. On the other hand, there was a 14% reduction, or
approximately 1.1 million tonnes, in domestic steel sales volumes in respect of
the Russian operations (excluding inter-segment sales), accompanied by a 6%, or
0.3 million tonnes, decrease in export sales volumes of the Russian operations.
These decreases were caused by the general slowdown in the steel markets in the
fourth quarter of 2008 and related cuts in production volumes.
Geographic breakdown of consolidated revenues
+----------+---------+--------+---------+--------+--------+
| | Year ended December 31 |
+----------+----------------------------------------------+
| | 2008 | 2007 |2008 v |
| | | | 2007 |
+----------+------------------+------------------+--------+
| | US$ | % of | US$ | % of | % |
| |million | total |million | total |change |
+----------+---------+--------+---------+--------+--------+
| Russia | 7,575 | 37.2% | 5,954 | 46.3% | 27.2% |
+----------+---------+--------+---------+--------+--------+
| Americas | 4,538 | 22.3% | 2,138 | 16.6% | 112.3% |
+----------+---------+--------+---------+--------+--------+
| Asia | 3,217 | 15.8% | 1,900 | 14.8% | 69.3% |
+----------+---------+--------+---------+--------+--------+
| Europe | 2,862 | 14.0% | 1,864 | 14.5% | 53.5% |
+----------+---------+--------+---------+--------+--------+
| CIS | 1,429 | 7.0% | 641 | 5.0% | 122.9% |
+----------+---------+--------+---------+--------+--------+
| Africa | 720 | 3.5% | 353 | 2.7% | 104.0% |
+----------+---------+--------+---------+--------+--------+
| Rest | 39 | 0.2% | 9 | 0.1% | 333.3% |
| of the | | | | | |
| world | | | | | |
+----------+---------+--------+---------+--------+--------+
| Total | 20,380 | 100.0% | 12,859 | 100.0% | 58.5% |
+----------+---------+--------+---------+--------+--------+
Revenues from sales in Russia increased by 27.2% to US$7,575 million due to
higher average steel prices on the local market.
In 2008, revenues from non-Russian sales rose by 85.4% to US$12,805
million compared with US$6,905 million in 2007 and increased as a percentage of
total revenues to 62.8%, compared with 53.7% in 2007. The growth of revenues
outside Russia in 2008 was driven by a strong pricing environment for much of
the year and additional sales volumes from new acquisitions.
In 2008, consolidated cost of revenues amounted to US$13,308 million or 65.3% of
consolidated revenues, compared with US$7,976 million, or 62.0% of consolidated
revenues, in 2007. While the average prices of raw materials increased
significantly, the growth in Evraz's own iron ore and coal production served, to
a considerable extent, to shield Evraz's consolidated gross profit from the
impact of such increases.
The effect of the strengthening of the average exchange rates of the Russian
rouble, Czech Koruna and Euro against the US dollar contributed
approximately 3%, 16% and 6% respectively, to the increase in costs of the
operations at Russian subsidiaries, Evraz Vitkovice Steel and Evraz Palini e
Bertoli in 2008 compared with 2007. The effect of the weakening of the average
exchange rate of the South African Rand against the US dollar had a positive
effect of around 19% on the costs of Highveld in 2008 vs. 2007.
Gross profit grew by 44.8% to US$7,072 million from US$4,883 million in 2007.
Selling, general and administrative (SG&A) expenses as a percentage of
consolidated revenues decreased year-on-year from 9.5% to 8.9%.
Total social and social infrastructure expenses increased by 39.0% in 2008 vs.
2007. The increase is largely attributable to social and social infrastructure
expenses in Russia. The new Ukrainian operations contributed 4.7% to this
increase.
Impairment of assets increased by US$873 million to US$880 million for 2008,
compared with US$7 million for 2007. Impairment of assets in 2008 is
primarily attributable to impairment of goodwill related to the acquisition of
the new operations in North America and Ukraine.
Profit from operations increased by 7.3% to US$3,720 million for 2008
compared with US$3,468 million in 2007, amounting to 18.3% and 27.0% of
consolidated revenues respectively.
Consolidated adjusted EBITDA rose 46.9% to US$6,323 million in 2008 compared
with US$4,305 million in 2007, with EBITDA margins of 31.0% and 33.5%
respectively.
The interest income increased by 39.0% to US$57 million in 2008 from
US$41 million in 2007, largely due to more efficient cash management
policies. The 2008 interest expense increased by 60.1% to US$655 million from
US$409 million in 2007 due to the higher debt level. In 2008, Evraz's share of
profits of joint ventures and associates amounted to US$198 million compared
with US$88 million in 2007 primarily due to a contribution by Evraz's investee,
the Raspadskaya coal company.
Loss on financial assets and liabilities in the amount of US$129 million mainly
relates to the revaluation of investments in Delong Holdings and Cape Lambert.
Loss on disposal of assets held for sale amounted to US$43 million and is
related to the disposal of vanadium assets by Highveld.
In 2008, income tax expense increased by 28.2% to US$1,213 million which
corresponds to an effective tax rate of 38.6%, compared to 30.3% in 2007, due to
a higher share of non-deductable expenses in 2008, in particular to impairment
of goodwill related to acquisition of the new operations in North America and
Ukraine.
In 2008, the Company reported consolidated net profit attributable to equity
holders of Evraz Group of US$1,868 million vs. US$2,103 million in 2007. Our net
profit line was affected by one-off charges and write-offs in the total amount
of US$1,857 million. Without the effect of these charges our net profit would
have grown by 72% in 2008 compared to the previous year.2
Explanation of One-Off Charges
By the end of 2008, Evraz's activities in most of its operating segments
had been materially affected by the instability in international financial,
currency and commodity markets resulting from the global financial crisis. As a
result, the Group recognised in its financial statements significant
extraordinary non-cash items in the total amount of US$1,857 million that
negatively affected its profitability levels.
The key items were:
* Impairment loss on assets of US$880 million affected operating profit.
This included impairment of goodwill in the amount of US$466 million on the
Ukrainian assets, US$187 million on Claymont Steel and US$103 million on Evraz
Inc. NA. It also included impairment of assets primarily caused by contemplated
or planned shutdowns of some obsolete and inefficient Russian production
facilities (open hearth furnaces, coke batteries) in the amount of
US$123 million.
* Revaluation of inventories down to net realisable values which resulted in an
additional charge of US$314 million that affected operating profit.
* Foreign exchange losses in the amount of US$471 million related to depreciation
of local currencies of Evraz's Russian, European, Canadian and South African
subsidiaries against the US dollar from 31 December 2007 to 31 December 2008.
* Revaluation of investments in Delong Holdings and Cape Lambert project by
US$150 million in total to mark them down to current market values.
* Evraz also booked a US$99 million gain on the selected bond repurchases made in
the fourth quarter of 2008, which was partially offset by a US$19 million loss
on the early repayment of Claymont Steel bonds at a premium.
2 Please refer to Attachment 2 for reconciliation of net profit to net profit
without the effect of one-off charges
Review of Operations
Steel Segment Results
+----------------------------+---------------+----------------+----------------+
| Full year to 31 December | 2008 | 2007 | Change |
| (US$ million unless | | | |
| otherwise stated) | | | |
+----------------------------+---------------+----------------+----------------+
| Revenues* | 17,925 | 11,908 | 50.5% |
+----------------------------+---------------+----------------+----------------+
| Profit from operations | 2,843 | 3,036 | (6.4)% |
+----------------------------+---------------+----------------+----------------+
| Adjusted EBITDA | 4,790 | 3,578 | 33.9% |
+----------------------------+---------------+----------------+----------------+
| Adjusted EBITDA margin | 26.7% | 30.0% | |
+----------------------------+---------------+----------------+----------------+
*Segmental revenues here and further include intersegment sales. Refer to
Attachment 3 for intersegment eliminations
Steel Segment Sales
+--------------------------------+---------+--------+---------+--------+--------+
| | Year ended 31 December |
+--------------------------------+----------------------------------------------+
| | 2008 | 2007 |2008 v |
| | | | 2007 |
+--------------------------------+------------------+------------------+--------+
| | US$ | % of | US$ | % of | % |
| |million | total |million | total |change |
+--------------------------------+---------+--------+---------+--------+--------+
| Steel | | | | | |
| products | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Construction | 4,850 | 27.1% | 3,713 | 31.2% | 30.6% |
| products 1 | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 291 | 1.6% | 164 | 1.4% | 77.4% |
| which | | | | | |
| Highveld | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 119 | 0.7% | n/a | n/a | n/a |
| which | | | | | |
| DMZ | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Flat-rolled | 3,239 | 18.1% | 1,968 | 16.5% | 64.6% |
| products 3 | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 435 | 2.4% | n/a | n/a | n/a |
| which | | | | | |
| Claymont | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 338 | 1.9% | 173 | 1.5% | 95.4% |
| which | | | | | |
| Highveld | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 250 | 1.4% | n/a | n/a | n/a |
| which | | | | | |
| IPSCO | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Railway | 2,226 | 12.4% | 1,697 | 14.3% | 31.2% |
| products 2 | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 10 | 0.1% | n/a | n/a | n/a |
| which | | | | | |
| DMZ | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Tubular | 1,861 | 10.4% | 703 | 5.9% | 164.7% |
| products 4 | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 938 | 5.2% | n/a | n/a | n/a |
| which | | | | | |
| IPSCO | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Semi-finished | 3,512 | 19.6% | 2,497 | 21.0% | 40.6% |
| products 5 | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 36 | 0.2% | n/a | n/a | n/a |
| which | | | | | |
| DMZ | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Other | 607 | 3.4% | 458 | 3.8% | 32.5% |
| steel | | | | | |
| products 6 | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 15 | 0.1% | n/a | n/a | n/a |
| which | | | | | |
| DMZ | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Other | 1,630 | 9.1% | 872 | 7.3% | 86.9% |
| products | | | | | |
| 7 | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 386 | 2.2% | n/a | n/a | n/a |
| which | | | | | |
| Ukrainian | | | | | |
| coke | | | | | |
| plants | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 29 | 0.2% | n/a | n/a | n/a |
| which | | | | | |
| Claymont | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| of | 63 | 0.4% | n/a | n/a | n/a |
| which | | | | | |
| IPSCO | | | | | |
+--------------------------------+---------+--------+---------+--------+--------+
| Total | 17,925 | 100.0% | 11,908 | 100.0% | 50.5% |
+--------------------------------+---------+--------+---------+--------+--------+
1 Includes rebars, wire rods, wire, H-beams, channels and angles.
2 Includes rail and wheels.
3 Includes plates and coils.
4 Includes large diameter, ERW, seamless pipes and casing.
5 Includes billets, slabs, pig iron, pipe blanks and blooms.
6 Includes rounds, grinding balls, mine uprights and strips.
7 Includes coke and coking products, refractory products, ferroalloys and resale
of coking coal.
Steel Segment Sales Volumes*
+------------------------------+---------------+---------------+---------------+
| Full year to 31 December | 2008 | 2007 | Change |
| ('000 tonnes) | | | |
+------------------------------+---------------+---------------+---------------+
| Steel products | | | |
+------------------------------+---------------+---------------+---------------+
| Construction sector | 5,239 | 5,191 | 0.9% |
+------------------------------+---------------+---------------+---------------+
| Railway sector | 2,438 | 2,285 | 6.7% |
+------------------------------+---------------+---------------+---------------+
| Flat-rolled products | 2,651 | 2,172 | 22.0% |
+------------------------------+---------------+---------------+---------------+
| Tubular products | 1,000 | 544 | 83.8% |
+------------------------------+---------------+---------------+---------------+
| Semi-finished products | 5,188 | 5,497 | (5.6)% |
+------------------------------+---------------+---------------+---------------+
| Other steel products | 628 | 750 | (16.3)% |
+------------------------------+---------------+---------------+---------------+
| Total | 17,144 | 16,439 | 4.3% |
+------------------------------+---------------+---------------+---------------+
* Including intersegment sales
Steel segment revenues increased by 50.5% to US$17,925 million in 2008 from
US$11,908 million in 2007. Steel segment revenues benefited from the positive
price dynamics for steel products, the acquisitions of Claymont Steel, IPSCO
Canada and the Ukrainian steel and coke plants. Post-acquisition revenues of
IPSCO Canada, Claymont Steel and Ukrainian assets, excluding intra-segment
sales, amounted to US$1,251 million (7.0% of steel segment revenues),
US$464 million (2.6% of steel segment revenues) and US$566 million (3.2% of
steel segment revenues), respectively. Revenues of Highveld in 2008 amounted to
US$650 million (3.6% of steel segment revenues) against US$422 million in the
eight months of 2007. Therefore, approximately US$3,512 million of the increase
in steel segment revenues was due to organic growth and approximately
US$2,509 million due to new operations.
The proportion of revenues attributable to sales of construction products in
total steel segment revenues decreased from 31.2% to 27.1% despite additional
volumes provided by Highveld and DMZ as a result of a dramatic contraction of
demand for construction products in the fourth quarter of 2008.
These factors also explain the decrease in the proportion of revenues
attributable to sales of railway products despite an increase from 13.9% to
14.2% in the proportion of volumes of railway products in total steel sales.
The proportion of revenues attributable to sales of flat-rolled products
increased due to additional sales volumes provided by the Group's acquisitions
in North America in 2008 and of Highveld in 2007.
The revenues from tubular product sales amounted to US$1,861 million in 2008, a
164.7% increase over 2007 as a result of increased volumes of tubular products
sold by Evraz Inc. NA following the acquisition of the IPSCO Canada business.
A decline in the proportion of revenues attributable to sales of semi-finished
products resulted from substantially lower sales volumes of semis sold by the
Russian operations to the export markets and allocation of production capacities
in favour of higher margin construction and railway products. It was partially
compensated by increased proportion of export sales of semi-finished products in
the fourth quarter due to a contraction in domestic demand.
The revenues attributable to other non-steel sales increased by 86.9%
year-on-year resulting from sales of coke to the market from the Ukrainian coke
plants, from the increased sales of coke from the Russian steel operations due
to both volume and price factors and from the contributions of Claymont Steel
and IPSCO Canada.
For 2008 and 2007, steel segment sales to the mining segment amounted to
US$179 million and US$103 million respectively. The increase is attributable to
increased sales of Russian steel operations to Russian mining operations and to
sales of Ukrainian steel and coke operations to Sukha Balka.
Revenues from sales in Russia amounted to approximately 39% of steel segment
revenues in 2008, compared to 47% in 2007. The decreased share of revenues from
sales in Russia is primarily attributable to the acquisition by Evraz of
non-Russian operations. The steel segment revenues in Russia in monetary terms
increased from US$5,636 million in 2007 to US$6,946 million in 2008 mainly due
to higher average prices of steel products.
Steel segment cost of revenues totalled US$12,546 million, or 70.0% of steel
segment revenues in 2008 compared with US$7,856 million or 66.0% of steel
segment revenues in 2007. The increase is attributable to the acquisitions in
Ukraine and North America, as well as to higher average prices of raw materials,
which was largely compensated by higher revenues of mining segment.
The cost of revenues, including intra-group profits, in respect of the Ukrainian
assets amounted to US$1,161 million (9.3% of steel segment cost of revenues) and
in respect of Claymont Steel to US$348 million (2.8% of steel segment cost of
revenues). The post-acquisition cost of revenues of IPSCO Canada
was US$916 million (7.3% of steel segment cost of revenues). Cost of revenues in
respect of part of Highveld related to steel segment amounted to US$323 million
(2.6% of steel segment cost of revenues) in 2008 compared to US$271 million
(3.4% of steel segment cost of revenues) in 2007.
In 2008, the steel segment profit from operations decreased by 6.4% to
US$2,843 million, or 15.9% of steel segment revenues, from US$3,036 million, or
25.5% of steel segment revenues in 2007. The new operations IPSCO Canada and
Claymont Steel contributed US$143 million and US$66 million to the profit from
operations of the steel segment in 2008. Highveld contributed US$287 million in
2008 against US$117 million in 2007. A loss of US$694 million attributable to
the Ukrainian assets resulted to a large extent from impairment of goodwill
initially recognised on their acquisition.
In 2008, adjusted EBITDA in the steel segment was US$4,790 million, or 26.7% of
steel segment revenues, vs. US$3,578 million, or 30.0% in 2007.
Mining Segment Results
+------------------------------+--------------+--------------+---------------+
| Full year to 31 December | 2008 | 2007 | Change |
| (US$ million unless | | | |
| otherwise stated) | | | |
+------------------------------+--------------+--------------+---------------+
| Revenues | 3,634 | 1,903 | 91.0% |
+------------------------------+--------------+--------------+---------------+
| Profit from operations | 967 | 444 | 117.8% |
+------------------------------+--------------+--------------+---------------+
| Adjusted EBITDA | 1,391 | 654 | 112.7% |
+------------------------------+--------------+--------------+---------------+
| Adjusted EBITDA margin | 38.3% | 34.4% | |
+------------------------------+--------------+--------------+---------------+
Mining Segment Sales
+----------------------------+---------+--------+---------+--------+--------+
| | Year ended 31 December |
+----------------------------+----------------------------------------------+
| | 2008 | 2007 |2008 v |
| | | | 2007 |
+----------------------------+------------------+------------------+--------+
| | US$ | % of | US$ | % of | % |
| |million | total |million | total |change |
+----------------------------+---------+--------+---------+--------+--------+
| Iron | 2,213 | 60.9% | 1,433 | 75.3% | 54.4% |
| ore | | | | | |
| products | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Iron | 625 | 17.2% | 242 | 12.7% | 158.7% |
| ore | | | | | |
| concentrate* | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Sinter* | 885 | 24.4% | 665 | 34.9% | 33.1% |
+----------------------------+---------+--------+---------+--------+--------+
| Pellets* | 566 | 15.6% | 524 | 27.5% | 8.0% |
+----------------------------+---------+--------+---------+--------+--------+
| Other | 137 | 3.8% | 2 | 0.1% | n/a |
+----------------------------+---------+--------+---------+--------+--------+
| of | 137 | 3.8% | 2 | 0.1% | n/a |
| which | | | | | |
| Sukha | | | | | |
| Balka | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Coal | 1,251 | 34.4% | 384 | 20.2% | 225.8% |
| products | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Coking | 259 | 7.1% | 194 | 10.2% | 33.5% |
| coal | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Coal | 725 | 20.0% | 159 | 8.4% | 356.0% |
| concentrate | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Steam | 267 | 7.3% | 32 | 1.7% | n/a |
| coal | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Other | 170 | 4.7% | 86 | 4.5% | 97.7% |
| revenues | | | | | |
+----------------------------+---------+--------+---------+--------+--------+
| Total | 3,634 | 100.0% | 1,903 | 100.0% | 91.0% |
+----------------------------+---------+--------+---------+--------+--------+
* Including resale of UGOK products in 2008
+------------------------------+---------------+---------------+---------------+
| Full year to 31 December | 2008 | 2007 | Change |
| ('000 tonnes) | | | |
+------------------------------+---------------+---------------+---------------+
| Iron ore products | 21,740 | 17,534 | 24.0% |
+------------------------------+---------------+---------------+---------------+
| Iron ore concentrate | 6,554 | 3,504 | 87.0% |
+------------------------------+---------------+---------------+---------------+
| Sinter | 7,860 | 7,825 | 0.4% |
+------------------------------+---------------+---------------+---------------+
| Pellets | 5,273 | 6,149 | (14.2)% |
+------------------------------+---------------+---------------+---------------+
| Other | 2,053 | 56 | n/a |
+------------------------------+---------------+---------------+---------------+
| Coal products | 11,703 | 6,456 | 81.3% |
+------------------------------+---------------+---------------+---------------+
| Coking coal | 3,117 | 3,592 | (13.2)% |
+------------------------------+---------------+---------------+---------------+
| Coal concentrate | 4,456 | 1,701 | 162.0% |
+------------------------------+---------------+---------------+---------------+
| Steam coal | 4,130 | 1,163 | 255.1% |
+------------------------------+---------------+---------------+---------------+
* Including intersegment sales
Mining segment revenues rose 91.0% to US$3,634 million, compared with US$1,903
million in 2007, primarily reflecting the growth in the average prices of iron
ore and coal and the acquisition of Yuzhkuzbassugol in June 2007 and Sukha Balka
at the end of 2007. Sales volumes of iron ore and coal increased year-on-year by
24.0% and 81.3% respectively.
In 2008 mining segment sales to the steel segment amounted to US$2,340 million,
or 64.4% of mining segment sales, vs. US$1,527 million, or 80.2% of mining
segment sales in 2007.
The mining segment cost of revenues grew by 84.6% from US$1,272 million in 2007
to US$2.348 million in 2008, mainly as a consequence of the Yuzhkuzbassugol and
Sukha Balka acquisitions.
The mining segment profit from operations increased by 117.8% to US$967 million,
or 26.6% of mining segment revenues, in 2008. This compares with US$444 million,
or 23.3% of mining segment revenues in 2007.
Adjusted EBITDA in the mining segment rose by 112.7% to US$1,391 million, or
38.3% of mining segment revenues in 2008 from US$654 million, or 34.4% of mining
segment revenues in 2007. The growth was the result of higher prices and
consolidation of Yuzhkuzbassugol and Sukha Balka.
Vanadium Segment Results*
+------------------------------+--------------+--------------+---------------+
| Full year to 31 December | 2008 | 2007 | Change |
| (US$ million unless | | | |
| otherwise stated) | | | |
+------------------------------+--------------+--------------+---------------+
| Revenues | 1,206 | 583 | 106.9% |
+------------------------------+--------------+--------------+---------------+
| Profit from operations | 170 | 45 | 277.8% |
+------------------------------+--------------+--------------+---------------+
| Adjusted EBITDA | 212 | 74 | 186.5% |
+------------------------------+--------------+--------------+---------------+
| Adjusted EBITDA margin | 17.6% | 12.7% | |
+------------------------------+--------------+--------------+---------------+
Vanadium Segment Sales Volumes*
+------------------------------+---------------+---------------+---------------+
| Full year to 31 December | 2008 | 2007 | Change |
| ('000 tonnes) | | | |
+------------------------------+---------------+---------------+---------------+
| Vanadium products | 26.4 | 22.2 | 18.9% |
+------------------------------+---------------+---------------+---------------+
| Vanadium in slag | 10.3 | 10.9 | (5.5)% |
+------------------------------+---------------+---------------+---------------+
| Vanadium in alloys and | 16.1 | 11.3 | 42.5% |
| chemicals | | | |
+------------------------------+---------------+---------------+---------------+
* Including intersegment sales
Vanadium segment revenues increased by 106.9% to US$1,206 million in 2008,
compared with US$583 million in 2007, due to additional volumes sold in Europe
and South Africa following the acquisition of Highveld and Nikom as well as
higher average prices for vanadium products in 2008.
The vanadium segment cost of revenues grew by 97.9% from US$466 million in 2007
to US$922 million in 2008.
The vanadium segment profit from operations amounted to US$170 million, or 14.1%
of vanadium segment revenues in 2008 vs. US$45 million, or 7.7% of vanadium
segment revenues, in 2007.
Adjusted EBITDA in the vanadium segment was up by 186.5% to US$212 million, or
17.6% of vanadium segment revenues, in 2008 from US$74 million, or 12.7% of
vanadium segment revenues, in 2007.
Other operations segment results
+------------------------------+---------------+---------------+---------------+
| Full year to 31 December | 2008 | 2007 | Change |
| (US$ million unless | | | |
| otherwise stated) | | | |
+------------------------------+---------------+---------------+---------------+
| Revenues | 1,022 | 783 | 30.5% |
+------------------------------+---------------+---------------+---------------+
| Profit from operations | 83 | 87 | (4.6)% |
+------------------------------+---------------+---------------+---------------+
| Adjusted EBITDA | 134 | 124 | 8.1% |
+------------------------------+---------------+---------------+---------------+
| Adjusted EBITDA margin | 13.1% | 15.8% | |
+------------------------------+---------------+---------------+---------------+
Evraz's revenues from other operations including logistics, port services, power
and heat generation and supporting activities reached US$1,022 million, a
30.5% increase compared with 2007's performance.
Consolidated Group Financial Position
Cash flow
Evraz demonstrated strong cash flow generation. Cash flow from operating
activities increased by 52.6% to US$4,569 million in 2008 vs. US$2,994 million
in 2007. The increase in net cash generated by operations was primarily due to
increased profit and new acquisitions.
Net cash used in investing activities totalled US$3,736 million in 2008 vs.
US$5,650 million in 2007.
In 2008, Evraz made capital expenditures of approximately US$1,103 million,
including US$682 million in respect of its steel segment, US$382 million in
respect of its mining segment and US$9 million in respect of its vanadium
segment.
In 2008, Evraz paid approximately US$1,915 million for acquisitions of new
subsidiaries (net of cash acquired) and US$120 million for purchases of minority
interests.
In 2008, net cash flows used in financing activities amounted to US$127 million
compared with US$2,112 million net cash generated from financing activities in
2007.
In 2008, Evraz paid approximately US$1,276 million in dividends to its
shareholders.
Balance sheet
As at 31 December 2008 and 31 December 2007, total debt reached US$9,986 million
and US$6,777 million, respectively. Cash and cash equivalents together with
short-term bank deposits amounted to US$955 million and US$352 million,
respectively. Liquidity, defined as cash and cash equivalents, amounts available
under unrestricted credit facilities and short-term bank deposits with original
maturity of more than three months, reached approximately US$2,634 million as of
31 December 2008 and approximately US$1,367 million as of 31 December 2007.
As of 31 December 2008, Evraz had unutilised borrowing facilities in the amount
of US$1,679 million, including US$991 million of committed facilities and US$688
million of uncommitted facilities.
Net debt 3 increased to US$9,031 million as of 31 December 2008 from US$6,404
million as of 31 December 2007.
As at 31 December 2008, total assets amounted to US$19,448 million, an increase
of 4.4% from US$18,637 million as at 31 December 2007.
Evraz Group S.A. shareholders' equity, including reserves and accumulated
profits as at 31 December 2008, decreased by 20.5% to US$4,729 million from
US$5,950 million as at 31 December 2007 due to the translation difference
originating from weakening operating currencies of Evraz's subsidiaries against
US dollar.
# # #
Note:
Percentage changes may not be exact due to rounding.
For further information:
Evraz Group
Investor Relations
Alexander Boreyko
Tel: +7 495 232 1370
IR@evraz.com
3 Please refer to Attachment 4 for calculation of net debt
Attachment 1
Adjusted EBITDA
Adjusted EBITDA represents profit from operations plus depreciation, depletion
and amortisation, impairment of assets and loss (gain) on disposal of property,
plant and equipment. Evraz presents an Adjusted EBITDA because it considers
Adjusted EBITDA to be an important supplemental measure of its operating
performance and believes Adjusted EBITDA is frequently used by securities
analysts, investors and other interested parties in the evaluation of companies
in the same industry. Adjusted 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's calculation of Adjusted EBITDA may be different
from the calculation used by other companies and therefore comparability may be
limited. Adjusted 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:
Adjusted EBITDA does not reflect the impact of financing or financing costs on
Evraz's operating performance, which can be significant and could further
increase if Evraz were to incur more debt.
Adjusted EBITDA does not reflect the impact of income taxes on Evraz's operating
performance.
Adjusted EBITDA does not reflect the impact of depreciation and amortisation on
Evraz's operating performance. The assets of Evraz's businesses which are being
depreciated and/or amortised will have to be replaced in the future and such
depreciation and amortisation expense may approximate the cost to replace these
assets in the future. By excluding this expense from Adjusted EBITDA, Adjusted
EBITDA does not reflect Evraz's future cash requirements for these replacements.
Adjusted EBITDA also does not reflect the impact of a loss on disposal of
property, plant and equipment.
Reconciliation of Adjusted EBITDA to profit from operations is as
follows (unaudited):
+------------------------------------------------+--------------+--------------+
| | Year ended 31 December |
+------------------------------------------------+-----------------------------+
| | 2008 | 2007 |
+------------------------------------------------+--------------+--------------+
| | (US$ million) |
+------------------------------------------------+-----------------------------+
| Consolidated Adjusted EBITDA reconciliation | |
+------------------------------------------------+-----------------------------+
| Profit from operations | 3,720 | 3,468 |
+------------------------------------------------+--------------+--------------+
| Add: | | |
+------------------------------------------------+--------------+--------------+
| Depreciation, depletion and amortisation | 1,215 | 749 |
+------------------------------------------------+--------------+--------------+
| Impairment of assets | 880 | 7 |
+------------------------------------------------+--------------+--------------+
| Loss (gain) on disposal of property, plant & | 37 | 26 |
| equipment | | |
+------------------------------------------------+--------------+--------------+
| Foreign exchange loss (gain) | 471 | 55 |
+------------------------------------------------+--------------+--------------+
| Consolidated Adjusted EBITDA | 6,323 | 4,305 |
+------------------------------------------------+--------------+--------------+
| Steel segment Adjusted EBITDA reconciliation | | |
+------------------------------------------------+--------------+--------------+
| Profit from operations | 2,843 | 3,036 |
+------------------------------------------------+--------------+--------------+
| Add: | | |
+------------------------------------------------+--------------+--------------+
| Depreciation and amortisation | 773 | 469 |
+------------------------------------------------+--------------+--------------+
| Impairment of assets | 821 | 4 |
+------------------------------------------------+--------------+--------------+
| Loss (gain) on disposal of property, plant & | 11 | 18 |
| equipment | | |
+------------------------------------------------+--------------+--------------+
| Foreign exchange loss (gain) | 342 | 51 |
+------------------------------------------------+--------------+--------------+
| Steel segment Adjusted EBITDA | 4,790 | 3,578 |
+------------------------------------------------+--------------+--------------+
| Mining segment Adjusted EBITDA reconciliation | | |
+------------------------------------------------+--------------+--------------+
| Profit from operations | 967 | 444 |
+------------------------------------------------+--------------+--------------+
| Add: | | |
+------------------------------------------------+--------------+--------------+
| Depreciation, depletion and amortisation | 363 | 205 |
+------------------------------------------------+--------------+--------------+
| Impairment of assets | 56 | 2 |
+------------------------------------------------+--------------+--------------+
| Loss (gain) on disposal of property, plant & | 15 | 8 |
| equipment | | |
+------------------------------------------------+--------------+--------------+
| Foreign exchange loss (gain) | (10) | (5) |
+------------------------------------------------+--------------+--------------+
| Mining segment Adjusted EBITDA | 1,391 | 654 |
+------------------------------------------------+--------------+--------------+
| Vanadium segment Adjusted EBITDA | | |
| reconciliation | | |
+------------------------------------------------+--------------+--------------+
| Profit from operations | 170 | 45 |
+------------------------------------------------+--------------+--------------+
| Add: | | |
+------------------------------------------------+--------------+--------------+
| Depreciation and amortisation | 43 | 30 |
+------------------------------------------------+--------------+--------------+
| Impairment of assets | 0 | 0 |
+------------------------------------------------+--------------+--------------+
| Loss (gain) on disposal of property, plant & | 0 | 0 |
| equipment | | |
+------------------------------------------------+--------------+--------------+
| Foreign exchange loss (gain) | (1) | (1) |
+------------------------------------------------+--------------+--------------+
| Vanadium segment Adjusted EBITDA | 212 | 74 |
+------------------------------------------------+--------------+--------------+
| Other operations Adjusted EBITDA | | |
| reconciliation | | |
+------------------------------------------------+--------------+--------------+
| Profit from operations | 83 | 87 |
+------------------------------------------------+--------------+--------------+
| Add: | | |
+------------------------------------------------+--------------+--------------+
| Depreciation | 33 | 37 |
+------------------------------------------------+--------------+--------------+
| Impairment of assets | 3 | 1 |
+------------------------------------------------+--------------+--------------+
| Loss (gain) on disposal of property, plant & | 11 | 2 |
| equipment | | |
+------------------------------------------------+--------------+--------------+
| Foreign exchange loss (gain) | 4 | (1) |
+------------------------------------------------+--------------+--------------+
| Other operations Adjusted EBITDA | 134 | 124 |
+------------------------------------------------+--------------+--------------+
Attachment 2
Reconciliation of net profit to net profit without the impact of one-offs and
write-offs (unaudited):
+------------------------------------------------+--------------+--------------+
| | Year ended 31 December |
+------------------------------------------------+-----------------------------+
| | 2008 | 2007 |
+------------------------------------------------+--------------+--------------+
| | (US$ million) |
+------------------------------------------------+-----------------------------+
| Net profit* | 1,868 | 2,103 |
+------------------------------------------------+--------------+--------------+
| Add: | | |
+------------------------------------------------+--------------+--------------+
| Impairment of assets | 880 | |
+------------------------------------------------+--------------+--------------+
| Revaluation of inventories | 314 | 7 |
+------------------------------------------------+--------------+--------------+
| Foreign exchange losses | 471 | 55 |
+------------------------------------------------+--------------+--------------+
| Revaluation of investments in Delong Holdings | 150 | |
| and Cape Lambert | | |
+------------------------------------------------+--------------+--------------+
| Gain on selected bond repurchases | (99) | |
+------------------------------------------------+--------------+--------------+
| Loss on early repayment of Claymont Steel | 19 | |
| bonds | | |
+------------------------------------------------+--------------+--------------+
| Other one-offs and write-offs | 122 | |
+------------------------------------------------+--------------+--------------+
| Net profit* | 3,725 | 2,165 |
+------------------------------------------------+--------------+--------------+
* Attributable to equity holders of the parent entity
Attachment 3
+---------------------+------------+--------+----------+------------+--------------+--------+
| (US$ million) | Steel | Mining | Vanadium | Other | Eliminations | Total |
| | production | | products | operations | | |
+---------------------+------------+--------+----------+------------+--------------+--------+
| Revenue | | | | | | |
+---------------------+------------+--------+----------+------------+--------------+--------+
| Sales to external | 17,623 | 1,290 | 1,201 | 266 | - | 20,380 |
| customers | | | | | | |
+---------------------+------------+--------+----------+------------+--------------+--------+
| Inter-segment sales | 302 | 2,344 | 5 | 756 | (3,407) | - |
+---------------------+------------+--------+----------+------------+--------------+--------+
| Total revenue | 17,925 | 3,634 | 1,206 | 1,022 | (3,407) | 20,380 |
+---------------------+------------+--------+----------+------------+--------------+--------+
Attachment 4
Net Debt
Net Debt represents long-term loans, net of current portion, plus short-term
loans and current portion of long?term loans less cash and cash equivalents
(excluding restricted deposits). Net Debt is not a balance sheet measure under
IFRS, and it should not be considered as an alternative to other measures of
financial position. Evraz's calculation of Net Debt may be different from the
calculation used by other companies and therefore comparability may be limited.
Net Debt has been calculated as follows (unaudited):
+-------------------------------------------------+------------+-------+------------+
| | 31 | 31 December 2007 |
| | December | |
| | 2008 | |
+-------------------------------------------------+------------+--------------------+
| | (US$ million) |
+-------------------------------------------------+---------------------------------+
| Net Debt Calculation | |
+-------------------------------------------------+---------------------------------+
| Add: | | |
+-------------------------------------------------+--------------------+------------+
| Long-term loans, net of current portion | 6,064 | 4,653 |
+-------------------------------------------------+--------------------+------------+
| Short-term loans and current portion of | 3,922 | 2,103 |
| long-term loans | | |
+-------------------------------------------------+--------------------+------------+
| Less: | | |
+-------------------------------------------------+--------------------+------------+
| Short-term bank deposits | (25) | (25) |
+-------------------------------------------------+--------------------+------------+
| Cash and cash equivalents | (930) | (327) |
+-------------------------------------------------+--------------------+------------+
| Net Debt | 9,031 | 6,404 |
+-------------------------------------------------+------------+-------+------------+
Evraz Group S.A.
Consolidated Income Statement
(In millions of US dollars, except for per share information)
+--------------------------------------------+----------------+----------------+
| |
+--------------------------------------------+
| | Year ended 31 December |
+--------------------------------------------+---------------------------------+
| | 2008 | 2007 |
+--------------------------------------------+----------------+----------------+
| Revenue | | |
+--------------------------------------------+----------------+----------------+
| Sale of goods | 19,990 | 12,627 |
+--------------------------------------------+----------------+----------------+
| Rendering of services | 390 | 232 |
+--------------------------------------------+----------------+----------------+
| | 20,380 | 12,859 |
+--------------------------------------------+----------------+----------------+
| Cost of revenue | (13,308) | (7,976) |
+--------------------------------------------+----------------+----------------+
| Gross profit | 7,072 | 4,883 |
+--------------------------------------------+----------------+----------------+
| | | |
+--------------------------------------------+----------------+----------------+
| Selling and distribution costs | (876) | (538) |
+--------------------------------------------+----------------+----------------+
| General and administrative expenses | (938) | (682) |
+--------------------------------------------+----------------+----------------+
| Social and social infrastructure | (114) | (82) |
| maintenance expenses | | |
+--------------------------------------------+----------------+----------------+
| Loss on disposal of property, plant | (37) | (26) |
| and equipment | | |
+--------------------------------------------+----------------+----------------+
| Impairment of assets | (880) | (7) |
+--------------------------------------------+----------------+----------------+
| Foreign exchange gains/(losses), net | (471) | (55) |
+--------------------------------------------+----------------+----------------+
| Other operating income | 28 | 14 |
+--------------------------------------------+----------------+----------------+
| Other operating expenses | (64) | (39) |
+--------------------------------------------+----------------+----------------+
| Profit from operations | 3,720 | 3,468 |
+--------------------------------------------+----------------+----------------+
| | | |
+--------------------------------------------+----------------+----------------+
| Interest income | 57 | 41 |
+--------------------------------------------+----------------+----------------+
| Interest expense | (655) | (409) |
+--------------------------------------------+----------------+----------------+
| Share of profits/(losses) of joint | 198 | 88 |
| ventures and associates | | |
+--------------------------------------------+----------------+----------------+
| Gain/(loss) on financial assets and | (129) | (71) |
| liabilities, net | | |
+--------------------------------------------+----------------+----------------+
| Gain/(loss) on disposal groups | (43) | (6) |
| classified as held for sale | | |
+--------------------------------------------+----------------+----------------+
| Excess of interest in the net fair | - | 10 |
| value of acquiree's identifiable | | |
| assets, liabilities and contingent | | |
| liabilities over the cost of | | |
| acquisition | | |
+--------------------------------------------+----------------+----------------+
| Other non-operating gains/(losses), | (5) | 4 |
| net | | |
+--------------------------------------------+----------------+----------------+
| Profit before tax | 3,143 | 3,125 |
+--------------------------------------------+----------------+----------------+
| | | |
+--------------------------------------------+----------------+----------------+
| Income tax expense | (1,213) | (946) |
+--------------------------------------------+----------------+----------------+
| Net profit | 1,930 | 2,179 |
+--------------------------------------------+----------------+----------------+
| | | |
+--------------------------------------------+----------------+----------------+
| Attributable to: | | |
+--------------------------------------------+----------------+----------------+
| Equity holders of the parent | 1,868 | 2,103 |
| entity | | |
+--------------------------------------------+----------------+----------------+
| Minority interests | 62 | 76 |
+--------------------------------------------+----------------+----------------+
| | 1,930 | 2,179 |
+--------------------------------------------+----------------+----------------+
| Earnings per share: | | |
+--------------------------------------------+----------------+----------------+
| basic, for profit attributable to | 15.13 | 17.62 |
| equity holders of the parent entity, | | |
| US dollars | | |
+--------------------------------------------+----------------+----------------+
| diluted, for profit attributable to | 15.07 | 17.49 |
| equity holders of the parent entity, | | |
| US dollars | | |
+--------------------------------------------+----------------+----------------+
Evraz Group S.A.
Consolidated Balance Sheet
(In millions of US dollars)
+--------------------------------------------+----------------+----------------+----------------+
| |
+--------------------------------------------+
| | 2008 | 31 December |
| | | 2007 |
+--------------------------------------------+----------------+----------------+
| Assets | | |
+--------------------------------------------+----------------+----------------+
| Non-current assets | | |
+--------------------------------------------+----------------+----------------+
| Property, plant and equipment | 9,012 | 10,107 |
+--------------------------------------------+----------------+----------------+
| Intangible assets other than goodwill | 885 | 806 |
+--------------------------------------------+----------------+----------------+
| Goodwill | 2,387 | 2,145 |
+--------------------------------------------+----------------+----------------+
| Investments in joint ventures and | 551 | 592 |
| associates | | |
+--------------------------------------------+----------------+----------------+
| Deferred income tax assets | 44 | 22 |
+--------------------------------------------+----------------+----------------+
| Other non-current assets | 278 | 240 |
+--------------------------------------------+----------------+----------------+
| | 13,157 | 13,912 |
+--------------------------------------------+----------------+----------------+
| Current assets | | |
+--------------------------------------------+----------------+----------------+
| Inventories | 2,416 | 1,619 |
+--------------------------------------------+----------------+----------------+
| Trade and other receivables | 1,369 | 1,802 |
+--------------------------------------------+----------------+----------------+
| Prepayments | 76 | 196 |
+--------------------------------------------+----------------+----------------+
| Loans receivable | 108 | 48 |
+--------------------------------------------+----------------+----------------+
| Receivables from related parties | 137 | 60 |
+--------------------------------------------+----------------+----------------+
| Income tax receivable | 262 | 86 |
+--------------------------------------------+----------------+----------------+
| Other taxes recoverable | 397 | 351 |
+--------------------------------------------+----------------+----------------+
| Short-term investments | 589 | 25 |
+--------------------------------------------+----------------+----------------+
| Cash and cash equivalents | 930 | 327 |
+--------------------------------------------+----------------+----------------+
| | 6,284 | 4,514 |
+--------------------------------------------+----------------+----------------+
| Assets of disposal groups classified as | 7 | 211 |
| held for sale | | |
+--------------------------------------------+----------------+----------------+
| | 6,291 | 4,725 |
+--------------------------------------------+----------------+----------------+
| Total assets | 19,448 | 18,637 |
+--------------------------------------------+----------------+----------------+
| Equity and liabilities | | |
+--------------------------------------------+----------------+----------------+
| Equity | | |
+--------------------------------------------+----------------+----------------+
| Equity attributable to equity holders of | | |
| the parent entity | | |
+--------------------------------------------+----------------+----------------+
| Issued capital | 332 | 320 |
+--------------------------------------------+----------------+----------------+
| Treasury shares | (9) | - | |
+--------------------------------------------+----------------+----------------+----------------+
| Additional paid-in capital | 1,054 | 286 |
+--------------------------------------------+----------------+----------------+
| Revaluation surplus | 218 | 211 |
+--------------------------------------------+----------------+----------------+
| Legal reserve | 30 | 29 |
+--------------------------------------------+----------------+----------------+
| Accumulated profits | 4,448 | 4,108 |
+--------------------------------------------+----------------+----------------+
| Translation difference | (1,344) | 996 |
+--------------------------------------------+----------------+----------------+
| | 4,729 | 5,950 |
+--------------------------------------------+----------------+----------------+
| Minority interests | 245 | 406 |
+--------------------------------------------+----------------+----------------+
| | 4,974 | 6,356 |
+--------------------------------------------+----------------+----------------+
| Non-current liabilities | | |
+--------------------------------------------+----------------+----------------+
| Long-term loans | 6,064 | 4,653 |
+--------------------------------------------+----------------+----------------+
| Deferred income tax liabilities | 1,329 | 1,690 |
+--------------------------------------------+----------------+----------------+
| Finance lease liabilities | 40 | 54 |
+--------------------------------------------+----------------+----------------+
| Employee benefits | 292 | 347 |
+--------------------------------------------+----------------+----------------+
| Provisions | 153 | 132 |
+--------------------------------------------+----------------+----------------+
| Other long-term liabilities | 58 | 55 |
+--------------------------------------------+----------------+----------------+
| | 7,936 | 6,931 |
+--------------------------------------------+----------------+----------------+
| Current liabilities | | |
+--------------------------------------------+----------------+----------------+
| Trade and other payables | 1,479 | 1,242 |
+--------------------------------------------+----------------+----------------+
| Advances from customers | 107 | 305 |
+--------------------------------------------+----------------+----------------+
| Short-term loans and current portion of | 3,922 | 2,103 |
| long-term loans | | |
+--------------------------------------------+----------------+----------------+
| Payables to related parties | 322 | 1,204 |
+--------------------------------------------+----------------+----------------+
| Income tax payable | 156 | 76 |
+--------------------------------------------+----------------+----------------+
| Other taxes payable | 154 | 209 |
+--------------------------------------------+----------------+----------------+
| Current portion of finance lease | 15 | 15 |
| liabilities | | |
+--------------------------------------------+----------------+----------------+
| Provisions | 63 | 55 |
+--------------------------------------------+----------------+----------------+
| Amounts payable under put options for | - | 6 |
| shares of subsidiaries | | |
+--------------------------------------------+----------------+----------------+
| Dividends payable by the parent entity to | 309 | 80 |
| its shareholders | | |
+--------------------------------------------+----------------+----------------+
| Dividends payable by the Group's | 11 | 16 |
| subsidiaries to minority shareholders | | |
+--------------------------------------------+----------------+----------------+
| | 6,538 | 5,311 |
+--------------------------------------------+----------------+----------------+
| Liabilities directly associated with | - | 39 |
| disposal groups classified as held for | | |
| sale | | |
+--------------------------------------------+----------------+----------------+
| | 6,538 | 5,350 |
+--------------------------------------------+----------------+----------------+
| Total equity and liabilities | 19,448 | 18,637 |
+--------------------------------------------+----------------+----------------+----------------+
Evraz Group S.A.
Consolidated Cash Flow Statement
(In millions of US dollars)
+---------------------------------------------------+----------------+----------------+
| |
+---------------------------------------------------+
| | Year ended 31 December |
+---------------------------------------------------+---------------------------------+
| | 2008 | 2007 |
+---------------------------------------------------+----------------+----------------+
| Cash flows from operating activities | | |
+---------------------------------------------------+----------------+----------------+
| Net profit | 1,930 | 2,179 |
+---------------------------------------------------+----------------+----------------+
| Adjustments to reconcile net profit to net | | |
| cash flows from operating activities: | | |
+---------------------------------------------------+----------------+----------------+
| Deferred | (381) | (87) |
| income tax | | |
| (benefit)/expense | | |
+---------------------------------------------------+----------------+----------------+
| Depreciation, | 1,215 | 749 |
| depletion and | | |
| amortisation | | |
+---------------------------------------------------+----------------+----------------+
| Loss on | 37 | 26 |
| disposal | | |
| of | | |
| property, | | |
| plant and | | |
| equipment | | |
+---------------------------------------------------+----------------+----------------+
| Impairment | 880 | 7 |
| of assets | | |
+---------------------------------------------------+----------------+----------------+
| Foreign | 471 | 55 |
| exchange | | |
| (gains)/losses, | | |
| net | | |
+---------------------------------------------------+----------------+----------------+
| Interest | (57) | (41) |
| income | | |
+---------------------------------------------------+----------------+----------------+
| Interest | 655 | 409 |
| expense | | |
+---------------------------------------------------+----------------+----------------+
| Share of | (198) | (88) |
| (profits)/losses | | |
| of associates | | |
| and joint | | |
| ventures, net | | |
+---------------------------------------------------+----------------+----------------+
| (Gain)/loss | 129 | 71 |
| on | | |
| financial | | |
| assets and | | |
| liabilities, | | |
| net | | |
+---------------------------------------------------+----------------+----------------+
| Loss on | 43 | 6 |
| disposal | | |
| groups | | |
| classified | | |
| as held | | |
| for sale | | |
+---------------------------------------------------+----------------+----------------+
| Excess of | - | (10) |
| interest | | |
| in the net | | |
| fair value | | |
| of | | |
| acquiree's | | |
| identifiable | | |
| assets, | | |
| liabilities | | |
| and | | |
| contingent | | |
| liabilities | | |
| over the | | |
| cost of | | |
| acquisition | | |
+---------------------------------------------------+----------------+----------------+
| Other | 5 | (4) |
| non-operating | | |
| (gains)/losses, | | |
| net | | |
+---------------------------------------------------+----------------+----------------+
| Bad debt | 59 | 9 |
| expense | | |
+---------------------------------------------------+----------------+----------------+
| Changes in | 25 | (8) |
| provisions, | | |
| employee | | |
| benefits | | |
| and other | | |
| long-term | | |
| assets and | | |
| liabilities | | |
+---------------------------------------------------+----------------+----------------+
| Share-based | 35 | 5 |
| payments | | |
+---------------------------------------------------+----------------+----------------+
| Other | 12 | 2 |
+---------------------------------------------------+----------------+----------------+
| | 4,860 | 3,280 |
+---------------------------------------------------+----------------+----------------+
| Changes in working capital: | | |
+---------------------------------------------------+----------------+----------------+
| Inventories | (605) | (111) |
+---------------------------------------------------+----------------+----------------+
| Trade and | 323 | (80) |
| other | | |
| receivables | | |
+---------------------------------------------------+----------------+----------------+
| Prepayments | 100 | (66) |
+---------------------------------------------------+----------------+----------------+
| Receivables | 165 | - |
| from / | | |
| payables to | | |
| related | | |
| parties | | |
+---------------------------------------------------+----------------+----------------+
| Taxes | (355) | 37 |
| recoverable | | |
+---------------------------------------------------+----------------+----------------+
| Other | (3) | 3 |
| assets | | |
+---------------------------------------------------+----------------+----------------+
| Trade and | 238 | (9) |
| other | | |
| payables | | |
+---------------------------------------------------+----------------+----------------+
| Advances | (203) | 4 |
| from | | |
| customers | | |
+---------------------------------------------------+----------------+----------------+
| Taxes | 51 | (74) |
| payable | | |
+---------------------------------------------------+----------------+----------------+
| Other | (2) | 10 |
| liabilities | | |
+---------------------------------------------------+----------------+----------------+
| Net cash flows from operating | 4,569 | 2,994 |
| activities | | |
+---------------------------------------------------+----------------+----------------+
| Cash flows from investing activities | | |
+---------------------------------------------------+----------------+----------------+
| Issuance of loans receivable | (1) | (31) |
| to related parties | | |
+---------------------------------------------------+----------------+----------------+
| Proceeds from repayment of | 32 | 1 |
| loans issued to related | | |
| parties, including interest | | |
+---------------------------------------------------+----------------+----------------+
| Issuance of loans receivable | (147) | (94) |
+---------------------------------------------------+----------------+----------------+
| Proceeds from repayment of | 33 | 58 |
| loans receivable, including | | |
| interest | | |
+---------------------------------------------------+----------------+----------------+
| Purchases of subsidiaries, | (1,915) | (4,755) |
| net of cash acquired | | |
+---------------------------------------------------+----------------+----------------+
| Purchases of minority | (120) | (421) |
| interests | | |
+---------------------------------------------------+----------------+----------------+
| Purchase of interest in | - | - |
| associates/joint ventures | | |
+---------------------------------------------------+----------------+----------------+
| Purchases of other | (896) | (2) |
| investments | | |
+---------------------------------------------------+----------------+----------------+
| Sale of other investments | 99 | 1 |
+---------------------------------------------------+----------------+----------------+
| Restricted deposits at banks | 3 | (1) |
| in respect of investing | | |
| activities | | |
+---------------------------------------------------+----------------+----------------+
| Short-term deposits at banks, | 29 | 24 |
| including interest | | |
+---------------------------------------------------+----------------+----------------+
| Purchases of property, plant | (1,103) | (744) |
| and equipment and intangible | | |
| assets | | |
+---------------------------------------------------+----------------+----------------+
| Proceeds from disposal of | 27 | 34 |
| property, plant and equipment | | |
+---------------------------------------------------+----------------+----------------+
| Proceeds from sale of | 161 | 223 |
| disposal groups classified as | | |
| held for sale, net of | | |
| transaction costs | | |
+---------------------------------------------------+----------------+----------------+
| Dividends and advances in | 70 | 57 |
| respect of future dividends | | |
| received | | |
+---------------------------------------------------+----------------+----------------+
| Other investing activities, net | (8) | - |
+---------------------------------------------------+----------------+----------------+
| Net cash flows used in investing | (3,736) | (5,650) |
| activities | | |
+---------------------------------------------------+----------------+----------------+
| Cash flows from financing activities | | |
+---------------------------------------------------+----------------+----------------+
| Issue of shares, net of transaction costs | (1) | 35 |
| of $1 million and $0, respectively | | |
+---------------------------------------------------+----------------+----------------+
| Repurchase of vested share options | (77) | (21) |
+---------------------------------------------------+----------------+----------------+
| Purchase of treasury shares | (197) | (8) |
+---------------------------------------------------+----------------+----------------+
| Sale of treasury shares | 81 | 2 |
+---------------------------------------------------+----------------+----------------+
| Distribution to a shareholder | (68) | - |
+---------------------------------------------------+----------------+----------------+
| Proceeds from loans provided by related | - | 3 |
| parties | | |
+---------------------------------------------------+----------------+----------------+
| Repayment of loans provided by related | (21) | (1) |
| parties, including interest | | |
+---------------------------------------------------+----------------+----------------+
| Net proceeds/(repayment) from bank | (54) | 212 |
| overdrafts and credit lines, including | | |
| interest | | |
+---------------------------------------------------+----------------+----------------+
| Proceeds from bank loans and | 5,657 | 4,638 |
| guaranteed notes | | |
+---------------------------------------------------+----------------+----------------+
| Repayment of bank loans and | (3,949) | (1,771) |
| guaranteed notes, including interest | | |
+---------------------------------------------------+----------------+----------------+
| Restricted deposits at banks in respect of | - | 9 |
| financing activities | | |
+---------------------------------------------------+----------------+----------------+
| Dividends paid by the parent entity to its | (1,276) | (916) |
| shareholders | | |
+---------------------------------------------------+----------------+----------------+
| Dividends paid by the Group's subsidiaries | (81) | (48) |
| to minority shareholders | | |
+---------------------------------------------------+----------------+----------------+
| Payments under finance leases, including | (20) | (22) |
| interest | | |
+---------------------------------------------------+----------------+----------------+
| Payments of restructured liabilities, | (121) | - |
| including interest | | |
+---------------------------------------------------+----------------+----------------+
| Net cash flows from/(used in) financing | (127) | 2,112 |
| activities | | |
+---------------------------------------------------+----------------+----------------+
| Effect of foreign exchange rate changes on | (103) | 29 |
| cash and cash equivalents | | |
+---------------------------------------------------+----------------+----------------+
| Net increase/(decrease) in cash and cash | 603 | (515) |
| equivalents | | |
+---------------------------------------------------+----------------+----------------+
| Cash and cash equivalents at beginning of | 327 | 842 |
| year | | |
+---------------------------------------------------+----------------+----------------+
| Cash and cash equivalents at end of year | 930 | 327 |
+---------------------------------------------------+----------------+----------------+
| Supplementary cash flow information: | | |
+---------------------------------------------------+----------------+----------------+
| Cash flows during the year: | | |
+---------------------------------------------------+----------------+----------------+
| Interest paid | (565) | (392) |
+---------------------------------------------------+----------------+----------------+
| Interest received | 44 | 42 |
+---------------------------------------------------+----------------+----------------+
| Income taxes paid | (1,680) | (1,084) |
+---------------------------------------------------+----------------+----------------+
| | | |
+---------------------------------------------------+----------------+----------------+
This information is provided by RNS
The company news service from the London Stock Exchange
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