TIDMEVR
RNS Number : 8347C
Evraz Plc
25 February 2022
EVRAZ plc
EVRAZ PUBLISHES 2021 ANNUAL REPORT AND REPORTS FULL YEAR 2021
RESULTS
25 February 20 22 - EVRAZ plc ("EVRAZ" or "the Company") (LSE: EVR) has today:
-- posted its Annual Report for the year ended 31 December 20 21
("20 21 Annual Report") on its website:
https://www.evraz.com/en/investors/reports-and-results/annual-reports/ and
-- submitted to the UK National Storage Mechanism a copy of its
20 21 Annual Report in accordance with LR 9.6.1 R.
The 20 21 Annual Report will shortly be available for inspection
on the National Storage Mechanism
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . The 2021
Annual Report and the Notice of the Company's Annual General
Meeting, which will be held in June 2022, will be posted to
shareholders in mid-May 2022.
FY 2021 HIGHLIGHTS
-- Total segment revenues grew to US$14,159 million (FY2020: US$9,754 million)
-- Total segment EBITDA amounted to US$5,015 million, compared
with US$2,212 million in FY2020, boosting the EBITDA margin from
22.7% to 35.4%
-- Free cash flow increased to US$2,257 million (FY2020: US$1,020 million)
-- Net profit increased to US$3,107 million vs. US$858 million in FY2020
-- Net debt significantly reduced: US$2,667 million (FY2020: US$3,356 million)
-- Net debt to last twelve months EBITDA went down to 0.5x as at
31 December 2021 (as at 31 December 2020 : 1.5x )
-- Total EBITDA effect from cost-cutting and customer focus
initiatives of US$ 590 million in 2021
-- Cash-costs:
o cash cost of slabs increased to US$308/t from US$213/t in
FY2020 due to higher raw material prices (iron ore, coal,
ferroalloys), and increased auxiliary, services and repairs
costs
o cash costs of coal concentrate in creased to US$41/t (FY2020:
US$31/t) mainly as a result of rise of mining costs
o cash costs of iron ore products increased to US$42/t (FY2020:
US$36/t) mainly by higher fixed costs as inflationary pressure
intensified
-- An interim dividend of US$ 729 million (US$0. 50 per share)
has been declared, reflecting the Board's confidence in the Group's
financial position and outlook.
-- The demerger of EVRAZ' coal business is expected to complete
in late March 2022 and it is anticipated that Raspadskaya will
announce a dividend according to its guidance during the
publication of the consolidated IFRS financial statements for 2021
in the amount of not less than 100% of free cash flow if net
debt/EBITDA is less than 1.0x and not less than 50% of free cash
flow if net debt/EBITDA is above 1.0x.
Financial Highlights(1)
(US$ million) FY2021 FY2020 Change, %
------------------------------------------ ----------------- ----------------- ----------
T otal segment revenues(2) 14,159 9,754 45.2
------------------------------------------ ----------------- ----------------- ----------
Profit from operations 4,413 1,671 n/a
------------------------------------------ ----------------- ----------------- ----------
Total segment EBITDA (2,3) 5,015 2,212 n/a
------------------------------------------ ----------------- ----------------- ----------
Net profit 3,107 858 n/a
------------------------------------------ ----------------- ----------------- ----------
Earnings per share, basic (US$) 2.08 0.58 n/a
------------------------------------------ ----------------- ----------------- ----------
Net cash flows from operating activities 3,424 1,928 77.6
------------------------------------------ ----------------- ----------------- ----------
Free cash flow(4) 2,2 57 1,020 n/a
------------------------------------------ ----------------- ----------------- ----------
CAPEX(5) 920 657 40.0
------------------------------------------ ----------------- ----------------- ----------
31 December 2021 31 December 2020 Change, %
------------------------------------------ ----------------- ----------------- ----------
Net debt(6) 2,667 3,356 (20.5)
------------------------------------------ ----------------- ----------------- ----------
Total assets 9,854 8,710 13.1
------------------------------------------ ----------------- ----------------- ----------
(1) Raspadskaya met all criteria to be classified as a disposal
held for distribution to owners, as discussed in more detail in
Note 2 and Note 13 of the EVRAZ consolidated financial statements,
as of 31 December 2021. Consequently, in accordance with the
requirements of IFRS 5 "Non-current Assets Held for Sale and
Discontinued Operations", it was accounted for as discontinued
operations in the consolidated financial statements.
(2) Total segment revenues and total segment EBITDA include the
contribution of discontinued operations. Revenues and EBITDA from
continuing operations are US$13,486 million (2020: US$9,452
million) and US$3,692million (2020: US$1,830 million)
respectively.
(3) See p.290 of EVRAZ plc Annual Report 2021 for the definition
of EBITDA.
(4) See p.290 of EVRAZ plc Annual Report 2021 for the definition
of free cash flow.
(5) Including payments on deferred terms recognised in financing
activities and non-cash transactions.
(6) See p.291 of EVRAZ plc Annual Report 2021 for the
calculation of net debt.
Commenting, EVRAZ Chief Executive Officer Aleksey Ivanov, said
:
" In 2021, the steel industry was mostly driven by demand-side
uctuations. Steelmakers increased output in anticipation of more
robust demand from the construction and manufacturing sectors.
Unable to keep up with the accelerated pace of recovery, steel
prices rose to their highest in years.
Amid the upswing on global markets, EVRAZ delivered outstanding
financial results in the year, with total segment EBITDA amounting
to US$5,015 million and the EBITDA margin reaching 35%. In
addition, the Group continued to implement its efficiency
improvement programme, which resulted in an EBITDA e ect of US$590
million.
In the reporting period, we announced the demerger of
Raspadskaya, our coal business, a process currently expected to
complete in late March 2022 . In our view, the demerger will
establish a clear and focused equity story for both companies and
provide greater flexibility to execute dedicated strategy for
each.
In 2022, we will press ahead with further improving our ESG
performance and strengthening our culture of continuous operational
improvement. I strongly believe in our long-term success given the
commitment of our employees, who represent the forefront of the
industry.
We are conscious of the current geopolitical circumstances. We
continue to monitor the situation and will keep you updated
regarding any material developments that can influence our
business."
EVRAZ ANNOUNCES ITS AUDITED RESULTS FOR THE YEARED 31 DECEMBER
2021
The Appendix to this announcement contains additional
information which has been extracted from the 2021 Annual Report
for the purposes of compliance with DTR 6.3.5 only and should be
read in conjunction with this announcement. Together these
constitute the material required by DTR 6.3.5 and DTR 4.2.3 to be
communicated to the media in unedited full text through a
Regulatory Information Service. This announcement should be read in
conjunction with and is not a substitute for reading the full 2021
Annual Report. Page and note references in the text below refer to
page numbers and notes in the 2021 Annual Report.
The financial information contained in this document does not
constitute statutory accounts as defined by section 435 of the
Companies Act 2006. Financial information for 2020 has been
extracted from the audited statutory accounts for the year ended 31
December 2020 which were prepared in accordance with in accordance
with UK adopted international accounting standards and the
requirements of the Companies Act 2006. The auditor's report on
those financial statements was unqualified with no reference to
matters to which the auditor drew attention by way of emphasis and
no statement under s498(2) or s498(3) of the Companies Act 2006.
The financial information for the year ended 31 December 2021 will
be delivered to the Registrar of Companies following the Company's
annual general meeting convened in June 2022. The auditor has
reported on the statutory accounts for the year ended 31 December
2021. The auditor's report was unqualified.
CONFERENCE CALL
A conference call to discuss the results, hosted by Aleksey
Ivanov, CEO, Nikolay Ivanov, CFO, and Alexander Kuznetsov, Vice
President, Corporate Strategy and Performance Management, will be
held on Friday, 25 February 2022, at:
12:00 (London time)
15:00 (Moscow time)
07:00 (New York time)
To join the call, please dial:
+44 (0)330 336 9601 or 0800 279 6877 UK
(toll free)
+7 495 646 5137 or 8 10 8002 8655011 Russia
(toll free)
+1 646 828 8073 or 800 289 0720 (toll US
free)
Conference ID: 2086600
To avoid any technical inconvenience, it is recommended that
participants dial in 10 minutes before the start of the call.
An audio webcast will be available at the following link
(registration needed):
https://www.webcast-eqs.com/evraz20220225
The FY2021 results presentation will be also available on the
Group's website, www.evraz.com , on Friday, 25 February 20 22 , at
the following link:
https://www.evraz.com/en/investors/presentations/financial-results/
An MP3 recording will be available on Monday, 28 February 2022,
at the following link:
https://www.evraz.com/en/investors/reports-and-results/financial-results/
Table of contents
Financial review
Statement of operations
CAPEX and key projects
Financing and liquidity
Review of operations by Segment
Steel segment
Steel, North America segment
Coal segment
APPIX
dEMERGER UPDATE
Key RISKS AND UNCERTAINTIES
DIVIDS
DIRECTORS' RESPONSIBILITY STATEMENT
Legal disclaimer
onsolidated statement of operations
onsolidated statement of comprehensive income
onsolidated statement of financial position ..
onsolidated statement of cash flows
onsolidated statement of cash flows (continued)
onsolidated statement of changes in equity ..
onsolidated statement of changes in equity (continued)
onsolidated statement of changes in equity (continued)
Financial review
The management have concluded that the demerger of the coal
business has become highly probable within one year and that
Raspadskaya Group met all criteria to be classified as a disposal
held for distribution to owners, as discussed in more detail in
Note 2 and Note 13 of the EVRAZ consolidated financial statements,
as of 31 December 2021. Consequently, in accordance with the
requirements of IFRS 5 "Non-current Assets Held for Sale and
Discontinued Operations", it was accounted for as discontinued
operations in the consolidated financial statements.
During 2021 the Coal business was an integral part of the Group
and was managed on this basis. Due to this the analysis presented
below is based on the data disclosed in the Note 3 "Segment
information" of the consolidated financial statements and follow
the same logic as in all previous years.
The reconciliation of these results with the amounts presented
in the consolidated statement of operations is provided in Note 13.
It is limited to the presentation of the results of the coal
business as discontinued operations.
Statement of operations
In 2021, EVRAZ' total segment revenues climbed by 45.2% YoY to
US$14,159 million, compared with US$9,754 million in 2020. The
increase was caused primarily by higher sales prices for
semi-finished and construction products, as well as greater volumes
for vanadium products. This increase was also attributable to
higher average realised prices and third party sales for coal.
The Group's total segment EBITDA amounted to US$5,015 million
during the period, compared with US$2,212 million in 2020, boosting
the EBITDA margin from 22.7% to 35.4%. The increase in EBITDA was
primarily attributable to higher steel, vanadium and coal product
sales prices.
Total segment revenues and total segment EBITDA include the
contribution of discontinued operations. Revenues and EBITDA from
continuing operations are US$13,486 million (2020: US$9,452
million) and US$3,692million (2020: US$1,830 million)
respectively.
Free cash flow soared by 121.3% YoY to US$2,257 million due to
better operating results.
In 2021, the Steel segment's revenues (including intersegment
sales) rose by 46.2% YoY to US$10,188 million, which constitutes
66.3% of the Group's total before eliminations. The increase was
mainly attributable to higher revenues from steel and vanadium
products, which climbed by 45.5% and 47.6% YoY, respectively. This
was primarily because average sales prices advanced by 50.4% for
steel products and by 38.8% for vanadium. The effect of higher
prices on the Steel segment revenues were partly offset by lower
sales volumes, which edged down from 12.3 million tonnes in 2020 to
11.6 million tonnes in 2021 following planned decrease in
production volumes at Russian mills.
In 2021, revenues from the Steel, North America segment rose by
30.6% YoY to US$2,324 million, driven by a 33.6% increase in sales
prices. The latter was offset by a 3.0% reduction in sales volumes,
primarily in the semi-finished and tubular products, but
compensated by improvements in sales of flat-rolled products.
The Coal segment's revenues increased by 55.8% YoY to US$2,321
million, mainly driven by an increase of 68.8% in coal product
sales prices and a decrease of 13.0% in sales volumes of coking
coal products .
In 2021, higher prices for semi-finished, construction and
vanadium products almost doubled the Steel segment's EBITDA,
despite an increase in cost of sales.
The Steel, North America segment's EBITDA increased because of
higher revenues from sales of flat-rolled, construction and railway
products.
The Coal segment's EBITDA rose YoY due to higher average
realised prices.
Total segment revenues
(US$ million)
--------------------------------------------------------------
Segment 2021 2020 Change Change, %
---------------------- -------- ------ -------- ----------
Steel 10,188 6,969 3 , 219 46.2
---------------------- -------- ------ -------- ----------
Steel, North America 2,324 1,779 545 30.6
---------------------- -------- ------ -------- ----------
Coal 2,321 1,490 831 55.8
---------------------- -------- ------ -------- ----------
Other operations 535 410 125 30.5
---------------------- -------- ------ -------- ----------
Eliminations (1,209) (894) (315) 35.2
---------------------- -------- ------ -------- ----------
Total 14,159 9,754 4,405 45.2
---------------------- -------- ------ -------- ----------
Total segment revenues by region
(US$ million)
--------------------------------------------------------------------------------------
Region 2021 2020 Change Change, %
------------------------------ ------------- ------ -------------- ---------------
Russia 5,521 3,722 1,799 48.3
------------------------------
Asia 3,684 2,949 735 24.9
------------------------------
Americas 3,016 1,915 1,101 57.5
------------------------------
Europe 946 461 485 n/a
------------------------------
CIS (excl. Russia) 934 584 350 59.9
------------------------------
Africa and rest of the world 58 123 (65) (52.8)
------------------------------ ------------- ------ -------------- ---------------
Total 14,159 9,754 4,405 45.2
------------------------------ ------------- ------ -------------- ---------------
Total segment EBITDA(1)
(US$ million)
-----------------------------------------------------------
Segment 2021 2020 Change Change, %
---------------------- ------ ------ ------- ----------
Steel 3,609 1,930 1,679 86.9
---------------------- ------ ------ ------- ----------
Steel, North America 321 (28) 349 n/a
---------------------- ------ ------ ------- ----------
Coal 1,292 400 892 n/a
---------------------- ------ ------ ------- ----------
Other operations 19 15 4 26.6
---------------------- ------ ------ ------- ----------
Unallocated (146) (126) (20) 15.9
---------------------- ------ ------ ------- ----------
Eliminations (80) 21 (101) n/a
---------------------- ------ ------ ------- ----------
Total 5,015 2,212 2,803 n/a
---------------------- ------ ------ ------- ----------
(1) For the definition of EBITDA, please refer to p. 290 of the
Annual Report 2021
The following table details the effect of the Group's
cost-cutting initiatives.
Effect of Group's cost-cutting initiatives in
2021,
(US$ million)
------------------------------------------------- ----
Increasing productivity and cost effectiveness 224
------------------------------------------------- ----
Improving auxiliary materials and service costs 71
------------------------------------------------- ----
Procurement efficiency 34
------------------------------------------------- ----
Other 6
------------------------------------------------- ----
Total 335
------------------------------------------------- ----
Revenues, cost of revenues and gross profit of segments
(US$ million)
-------------------------------------------------------------- ----------
2021 2020 Change Change, %
-------------------------------- -------- -------- -------- ----------
Steel segment
-------------------------------- -------- -------- -------- ----------
Revenues 10,188 6,969 3,219 46.2
-------------------------------- -------- -------- -------- ----------
Cost of sales (6,070) (4,596) (1,474) 32.1
-------------------------------- -------- -------- -------- ----------
Gross profit 4,118 2,373 1,745 73.5
-------------------------------- -------- -------- -------- ----------
Steel, North America segment
-------------------------------- -------- -------- -------- ----------
Revenues 2,324 1,779 545 30.6
-------------------------------- -------- -------- -------- ----------
Cost of sales (1,835) (1,604) (231) (14.4)
-------------------------------- -------- -------- -------- ----------
Gross profit 489 175 314 n/a
-------------------------------- -------- -------- -------- ----------
Coal segment
-------------------------------- -------- -------- -------- ----------
Revenues 2,321 1,490 831 55.8
-------------------------------- -------- -------- -------- ----------
Cost of sales (919) (1,027) 108 (10.5)
-------------------------------- -------- -------- -------- ----------
Gross profit 1,402 463 939 n/a
-------------------------------- -------- -------- -------- ----------
Other operations - gross
profit 206 115 91 79.1
-------------------------------- -------- -------- -------- ----------
Unallocated - gross profit (12) (8) (4) 50.0
-------------------------------- -------- -------- -------- ----------
Eliminations - gross
profit (183) (76) (107) n/a
-------------------------------- -------- -------- -------- ----------
Total 6,020 3,042 2,978 97.9
-------------------------------- -------- -------- -------- ----------
Total segment gross profit, expenses and results
(US$ million)
------------------------------------------------------------------ -------- ------ ------- ----------
2021 2020 Change Change, %
------------------------------------------------------------------ -------- ------ ------- ----------
Gross profit 6,020 3,042 2,978 97.9
------------------------------------------------------------------ -------- ------ ------- ----------
Selling and distribution costs (907) (840) (67) 8.0
------------------------------------------------------------------ -------- ------ ------- ----------
General and administrative expenses (617) (552) (65) 11.8
------------------------------------------------------------------ -------- ------ ------- ----------
Impairment of non-financial assets (30) (310) 280 (90.3)
------------------------------------------------------------------ -------- ------ ------- ----------
Foreign-exchange gains/(losses), net 34 408 (374) (91.7)
------------------------------------------------------------------ -------- ------ ------- ----------
Social and social infrastructure maintenance expenses (35) (31) (4) 12.9
------------------------------------------------------------------ -------- ------ ------- ----------
Gains/(losses) on disposal of property, plant and equipment, net (8) (3) ( 5 ) n/a
------------------------------------------------------------------ -------- ------ ------- ----------
Other operating income and expenses, net (44) (43) (1) 2.3
------------------------------------------------------------------ -------- ------ ------- ----------
Profit from operations 4,413 1,671 2,742 n/a
------------------------------------------------------------------ -------- ------ ------- ----------
Interest expense, net (227) (322) 95 (29.5)
------------------------------------------------------------------ -------- ------ ------- ----------
Share of profit/(losses) of joint ventures and associates 14 2 12 n/a
------------------------------------------------------------------ -------- ------ ------- ----------
Gain/(loss) on financial assets and liabilities, net (21) (71) 50 (70.4)
------------------------------------------------------------------ -------- ------ ------- ----------
Gain/(loss) on disposal groups classified as held for sale, net 2 1 1 100.0
------------------------------------------------------------------ -------- ------ ------- ----------
Other non-operating gains/(losses), net 3 14 (11) (78.6)
------------------------------------------------------------------ -------- ------ ------- ----------
Profit before tax 4,184 1,295 2,889 n/a
------------------------------------------------------------------ -------- ------ ------- ----------
Income tax expense (1,077) (437) (640) n/a
------------------------------------------------------------------ -------- ------ ------- ----------
Net profit 3,107 858 2,249 n/a
------------------------------------------------------------------ -------- ------ ------- ----------
In 2021, selling and distribution expenses rose by 8.0% amid
increased freight transportation costs related to higher shipment
volumes and freight rates. General and administrative expenses
climbed by 11.8%, mostly because of the implementation of projects
aimed at increasing productivity (EVRAZ Business System
transformation, legal and IT) and consulting services for these
projects. This was partly offset by the effect that depreciation of
the average ruble exchange rate had on costs.
In 2021, EVRAZ recognised a US$30 million impairment loss in
relation to certain functionally obsolete items of property, plant
and equipment.
Foreign exchange gains amounted to US$34 million. They were
mainly related to intra--group loans denominated in rubles and
payable by Evraz Group S.A., whose functional currency is the US
dollar, to the Russian subsidiaries, which have the ruble as their
functional currency. The depreciation of the Russian ruble against
the US dollar in 2021 led to foreign exchange gains being
recognised on the income statements of non-Russian
subsidiaries.
Net interest expense decreased to US$227 million in 2021,
compared with US$322 million in 2020. This was mainly due to
repayment of expensive debt and a lower indebtedness level during
2021. In the first quarter of 2021, the Group settled the 8.25%
notes due 2021 (US$735 million principal) and 12.6%
ruble-denominated bonds due 2021 (US$203 million principal at 31
December 2020). Later during 2021, the full amount of the 6.75%
notes due 2022 (US$500 million principal) was repurchased
early.
In the reporting period, the Group had an income tax expense of
US$1,077 million, compared with US$437 million in 2020. The change
mostly reflects the significant improvement in operating
results.
Cash flow
(US$ million)
----------------------------------------------------------------------------------------------------------------------
2021 2020 Change Change, %
---------------------------------------------------------------------------- -------- -------- -------- ----------
Cash flows from operating activities before changes in working capital 4,000 1,593 2,407 n/a
---------------------------------------------------------------------------- -------- -------- -------- ----------
Changes in working capital (576) 335 (911) n/a
---------------------------------------------------------------------------- -------- -------- -------- ----------
Net cash flows from operating activities 3,424 1,928 1,49 6 77.6
---------------------------------------------------------------------------- -------- -------- -------- ----------
Short-term deposits at banks, including interest 4 4 0 0.0
---------------------------------------------------------------------------- -------- -------- -------- ----------
Purchases of property, plant and equipment and intangible assets (910) (647) (263) 40.6
---------------------------------------------------------------------------- -------- -------- -------- ----------
Proceeds from sale of disposal groups classified as held for sale, net of
transaction costs 2 11 (9) ( 81.8 )
---------------------------------------------------------------------------- -------- -------- -------- ----------
Other investing activities (1) 8 (9) n/a
---------------------------------------------------------------------------- -------- -------- -------- ----------
Net cash flows used in investing activities (905) (624) (281) 45.0
---------------------------------------------------------------------------- -------- -------- -------- ----------
Net cash flows used in financing activities (2,707) (1,107) (1,600) n/a
---------------------------------------------------------------------------- -------- -------- -------- ----------
including dividends paid (1,549) (872) (677) 77.6
---------------------------------------------------------------------------- -------- -------- -------- ----------
Effect of foreign exchange rate changes on cash and cash equivalents (12) 7 (19) n/a
---------------------------------------------------------------------------- -------- -------- -------- ----------
Net increase/(decrease) in cash and cash equivalents (200) 204 (404) n/a
---------------------------------------------------------------------------- -------- -------- -------- ----------
Calculation of free cash flow(1)
(US$ million)
------------------------------------------------------------------------------- -------- ------ ------- ----------
2021 2020 Change Change, %
------------------------------------------------------------------------------- -------- ------ ------- ----------
EBITDA 5,015 2,212 2,803 n/a
------------------------------------------------------------------------------- -------- ------ ------- ----------
EBITDA excluding non-cash items 5,042 2,203 2,839 n/a
------------------------------------------------------------------------------- -------- ------ ------- ----------
Changes in working capital (576) 335 (911) n/a
------------------------------------------------------------------------------- -------- ------ ------- ----------
Income tax accrued (1,007) (579) (428) 73.9
------------------------------------------------------------------------------- -------- ------ ------- ----------
Social and social infrastructure maintenance expenses (35) (31) (4) 12.9
------------------------------------------------------------------------------- -------- ------ ------- ----------
Net cash flows from operating activities 3,424 1,928 1,496 77.6
------------------------------------------------------------------------------- -------- ------ ------- ----------
Interest and similar payments (248) (269) 21 (7.8)
------------------------------------------------------------------------------- -------- ------ ------- ----------
Capital expenditures, including recorded in financing activities and non-cash
transactions (920) (657) (263) 40.0
------------------------------------------------------------------------------- -------- ------ ------- ----------
Proceeds from sale of disposal groups classified as held for sale, net of
transaction costs 2 11 (9) (81.8)
------------------------------------------------------------------------------- -------- ------ ------- ----------
Other cash flows from investing activities (1) 7 (8) n/a
------------------------------------------------------------------------------- -------- ------ ------- ----------
Free cash flow 2,257 1,020 1,237 n/a
------------------------------------------------------------------------------- -------- ------ ------- ----------
(1) For the definition of free cash flow, please refer to p. 290 of the Annual Report 2021.
CAPEX and key projects
During the reporting period, EVRAZ' capital expenditures rose to
US$920 million, compared with US$657 million in 2020, driven by
higher development expenses. Capital expenditure projects during
2021, indicated in millions of US dollars, can be summarised as
follows.
Capital expenditures in 20 21
DEVELOPMENT PROJECTS, US$ million
------------------------------------------------------------- ----
Steel segment
------------------------------------------------------------- ----
Tashtagol iron ore mine upgrade at EVRAZ ZSMK mining
site
The project aim is to increase the annual iron ore
production of the Tashtagolsky deposit with a partial
switch to sublevel caving using mobile equipment 33
Sobstvenno-Kachkanarsky deposit greenfield project
The project aim is to maintain production of raw
iron ore 29
Rail and beam mill modernisation at EVRAZ NTMK
The project aim is to increase production of beams
and sheet piles 14
Construction of Vanadium processing facility at
EVRAZ Uzlovaya
The strategic aims of the new unit are to increase
cost efficiency in fully controlled and coordinated
at all stages processing chain from slag to final
product. 13
Transfer of direct coke oven gas for cleaning in
capture shop no. 3 at EVRAZ NTMK
The project aim is to decrease air emissions. 11
Reconstruction of pig-casting machines section for
blast furnace at EVRAZ NTMK
Technical re-equipment of the bottling section blast
furnace machines 9
Construction of uncompressed gas recovery turbines
for blast furnace no. 7 at EVRAZ NTMK
The project aim is to increase own electricity
generation 6
------------------------------------------------------------- ----
Steel, North America segment
------------------------------------------------------------- ----
Long rail mill at EVRAZ Pueblo
The project aim is to replace the existing rail
facility and meet the needs of customers for long
rail products 146
Electric arc furnace (EAF) repowering at EVRAZ Regina
The project aim is to increase EVRAZ Regina's prime
coil and plate production and reduce electrode consumption 7
Coal segment
------------------------------------------------------------- ----
Acquisition of equipment at Alardinskaya mine
The project aim is to reduce the time required for
transition from longwall to longwall and to increase
annual production volumes to 3.2mt. 17
Acquisition of equipment at Raspadskaya-Koksovaya
mine
Own equipment for open pit mining 12
Acquisition of equipment at Osinnikovskaya mine
The project aim is to acquire equipment that fully
complies with the mining and geological conditions
to provide the projected monthly longwall load 11
Other development projects 95
MAINTENANCE CAPEX 517
------------------------------------------------------------- ----
TOTAL 920
------------------------------------------------------------- ----
Financing and liquidity
EVRAZ began 2021 with total debt of US$4,983 million.
In January, the Group repaid at maturity US$735 million in
outstanding principal of its Eurobonds due in 2021. In June and
August, the Group completed several transactions to repurchase, in
aggregate, US$65 million in outstanding principal of its Eurobonds
due in 2022 and later in October completed a make-whole call for
the remaining US$435 million in outstanding principal of these
Eurobonds.
In March, the Group repaid, at maturity, RUB15,000 million
(roughly US$ 201 million) in outstanding principal of its
ruble-denominated bonds due in 2021.
In March, to compensate for the reduction in liquidity, EVRAZ
drew US$750 million under the committed syndicated facility that it
signed with a group of international banks in early 2020.
In February, EVRAZ ZSMK signed a new credit facility with
SberBank and borrowed US$67 million of the available funds.
In June, EVRAZ ZSMK signed an amendment to its existing US$100
million credit facility with ING DiBa, extending its repayment
schedule until 2026 and increasing its size to US$150 million. In
July, EVRAZ ZSMK utilised an additional US$50 million. In October,
the Group agreed an amendment to this credit facility implementing
sustainability-linked provisions, namely a pricing mechanism that
became linked to the management score component of the
Sustainalytics ESG rating.
In November, EVRAZ ZSMK signed a new, committed US$350 million
credit facility with Intesa with an availability period of six
months from the signing date. The facility remained unutilised as
at 31 December 2021.
In the process of preparing for a potential demerger of its Coal
assets, the Group obtained necessary creditor approvals, including
a Eurobond consent solicitation from the majority of holders of its
Eurobonds due in 2022, 2023 and 2024. It also took steps to
rebalance its debt between the Steel and Coal divisions and
refinance certain outstanding loans.
Raspadskaya received a US$200 million long-term loan from Alfa
Bank and a US$200 million long-term loan from SberBank.
Steelmaking subsidiaries of the Group, EVRAZ NTMK and EVRAZ
ZSMK, repaid a total of around US$ 619 million of their outstanding
bank debt of varying maturities during 2021.
As a result of these actions, as well as scheduled repayments of
bank loans and leases in 2021, total debt fell by US$889 million to
US$4 ,094 million as at 31 December 2021.
In 2021, EVRAZ paid three interim dividends to its shareholders:
US$437 million (US$0.30 per share) in April, US$292 million
(US$0.20 per share) in June, and US$802 million (US$0.55 per share)
in September.
On 14 December 2021, EVRAZ announced an interim dividend to its
shareholders of US$292 million (US$0.20 per share), payable in
January 2022.
Net debt dropped by US$689 million to US$ 2,667 million ,
compared with US$3,356 million as at 31 December 2020.
Interest expense accrued on loans, bonds and notes amounted to
US$186 million during the period, compared with US$291 million in
2020. The repayment of the Eurobonds due in 2021 and 2022 and
rouble bonds due in 2021, all of which had high coupon rates,
together with management's efforts to reduce total debt and
refinance indebtedness on favourable terms, led to the significant
reduction of interest expense compared with the previous year.
The higher EBITDA amid a strong market recovery and lower net
debt resulted in a significant reduction in the Group's major
leverage metric, the ratio of net debt to last twelve months (LTM)
EBITDA, to 0.5 as at 31 December 2021, compared with 1.5 as at 31
December 2020.
As at 31 December 2021, various bilateral facilities with a
total outstanding principal of around US$1, 697 million contained
financial maintenance covenants tested at the level of EVRAZ plc,
including a maximum net leverage and a minimum EBITDA interest
cover.
New debt facilities of Raspadskaya contain financial maintenance
covenants tested on the consolidated financials of Raspadskaya,
including a maximum net leverage and a minimum EBITDA interest
cover.
As at 31 December 2021, EVRAZ and its subsidiaries were in full
compliance with the financial covenants.
As at 31 December 2021, cash and cash equivalents amounted to
US$1,427 million, while short-term loans and the current portion of
long-term loans amounted to US$101 million. Cash balances and
committed credit facilities available to the Group (US$623 million)
comfortably cover upcoming maturities.
Review of operations by Segment
(US$ million) Steel Steel, North Coal Other
America
--------------- --------------- --------------- -------------- ------------
2021 2020 2021 2020 2021 2020 2021 2020
--------------- ------- ------ ------ ------- ------ ------ ----- -----
Revenues 10,188 6,969 2,324 1,779 2,321 1,490 535 410
--------------- ------- ------ ------ ------- ------ ------ ----- -----
EBITDA 3,609 1,930 321 (28) 1,292 400 19 15
--------------- ------- ------ ------ ------- ------ ------ ----- -----
EBITDA
margin 35.4% 27.7% 13.8% (1.6)% 55.7% 26.8% 3.6% 3.7%
--------------- ------- ------ ------ ------- ------ ------ ----- -----
CAPEX 468 401 216 92 228 154 8 10
--------------- ------- ------ ------ ------- ------ ------ ----- -----
Steel segment
Sales review
Steel segment revenues by product
202 1 20 20
--------- ------------------------------------ -------------------------------------
US$ % of total segment US$ % of total segment
million revenues million revenues Change, %
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Steel products, external
sales 8,842 86.8 6,079 87.2 45.5
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Semi-finished
products(1) 3,779 37.1 2,479 35.6 52.4
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Construction products(2) 3,177 31.2 2,013 28.9 57.8
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Railway products(3) 1,083 10.6 1,099 15.8 (1.5)
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Flat-rolled products(4) 237 2.3 146 2.1 62.3
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Other steel products(5) 566 5.6 342 4.9 65.5
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Steel products,
intersegment sales 28 0.3 37 0.5 (24.3)
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Including sales to
Steel, North America 8 0.1 26 0.4 (69.2)
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Iron ore products 234 2.3 146 2.1 60.3
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Vanadium products 515 5.1 349 5.0 47.6
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Other revenues 569 5.6 358 5.1 58.9
-------------------------- --------- ------------------------- --------- ------------------------- ----------
Total 10,188 100.0 6,969 100.0 46.2
-------------------------- --------- ------------------------- --------- ------------------------- ----------
1 Includes billets, slabs, pig iron, pipe blanks and other
semi-finished products.
2 Includes rebar, wire rods, wire, beams, channels and
angles.
3 Includes rails, wheels, tyres and other railway products.
4 Includes commodity plate and other flat-rolled products.
5 Includes rounds, grinding balls, mine uprights and strips.
Sales volumes of Steel segment
(thousand tonnes)
------- ---------------------
2021 2020 Change, %
--------------------------------------------- ------- ------- ------------
Steel products, external sales 11,597 12,197 (4.9)
--------------------------------------------- ------- ------- ------------
Semi-finished products 5,541 6,039 (8.2)
--------------------------------------------- ------- ------- ------------
Construction products 3,905 3,944 (1.0)
--------------------------------------------- ------- ------- ------------
Railway products 1,192 1,299 (8.2)
--------------------------------------------- ------- ------- ------------
Flat-rolled products 245 267 (8.2)
--------------------------------------------- ------- ------- ------------
Other steel products 714 647 10.4
--------------------------------------------- ------- ------- ------------
Steel products, intersegment sales 29 67 (56.7)
--------------------------------------------- ------- ------- ------------
Total steel products 11,626 12,264 (5.2)
--------------------------------------------- ------- ------- ------------
Vanadium products (tonnes of pure vanadium) 20,341 18,696 8.8
--------------------------------------------- ------- ------- ------------
Vanadium in slag 7,053 6,129 15.1
--------------------------------------------- ------- ------- ------------
Vanadium in alloys and chemicals 13,288 12,567 5.7
--------------------------------------------- ------- ------- ------------
Iron ore products (pellets) 1,430 1,732 (17.4)
--------------------------------------------- ------- ------- ------------
Geographic breakdown of external steel product sales
(US$ million)
-----------------------------------------------------------------------------------
2021 2020 Change, %
---------------------------------------- ----------------- ------ --------------
Russia 4,263 2,962 43.9
---------------------------------------- ----------------- ------ --------------
Asia 2,627 2,200 19.4
---------------------------------------- ----------------- ------ --------------
CIS 682 490 39.2
---------------------------------------- ----------------- ------ --------------
Europe 596 221 n/a
---------------------------------------- ----------------- ------ --------------
Africa, Americas and rest of the world 674 206 n/a
---------------------------------------- ----------------- ------ --------------
Total 8,842 6,079 45.5
---------------------------------------- ----------------- ------ --------------
In 2021, the Steel segment's revenues climbed by 46.2% YoY to
US$10,188 million, compared with US$6,969 million in 2020. This was
the result of higher sales prices, primarily for semi-finished
products and construction products, as well as greater vanadium
product volumes.
Revenues from external sales of semi-finished products rose by
52.4% YoY. This was driven by a 60.6% increase in average prices,
which was partly offset by an 8.2% decline in sales volumes. The
decrease was attributable to change in product mix and a reduction
in the output following the introduction of the export duty in
2021. The primary factor was a surge of 90.0% in the average prices
of slabs.
Revenues from sales of construction products to third parties
jumped by 57.8% YoY amid an increase of 58.8% in average prices.
This was caused mainly by higher sales prices for rebars on the
Russian and CIS markets, greater beam sales prices, as well as
higher sales prices for channels, primarily on the Russian
market.
Revenues from external sales of railway products decreased
because of reductions of 8.2% in sales volumes, which was partly
offset by a 6.7% increase in sales prices. The drop in sales
volumes was caused mostly by lower sales of rails amid reduced
demand in Russia and the CIS.
External revenues from flat-rolled products surged by 62.3% YoY,
driven by a 70.5% upswing in sales prices.
Revenues from external steel product sales in Russia climbed by
43.9% YoY, primarily because of higher prices and greater demand.
The share of the Russian market in total external steel product
sales decreased from 48.7% in 2020 to 48.2% in 2021. Asia's share
of sales fell from 36.2% to 29.7% because of lower sales volumes
for billets.
Steel segment revenues from sales of iron ore products,
including intersegment sales, surged by 60.3%, driven by an 77.7%
jump in sales prices and a 17.4% decline in sales volumes. The main
decrease in sales volumes was caused by a shortage of iron ore,
unplanned equipment downtimes and logistics restrictions.
During the reporting period, around 68.1% of EVRAZ' iron ore
consumed in steelmaking came from its own operations, compared with
63.2% in 2020.
Steel segment revenues from sales of vanadium products,
including intersegment sales, climbed by 47.6%, due primarily to a
38.8% increase in sales prices. Vanadium product prices followed
market trends, including the London Metal Bulletin and Ryan's Notes
benchmarks.
Steel segment cost of revenues
Steel segment cost of revenues
202 1 20 20
------------------------------------ ----------------------------------- ----------
US$ million % of segment revenue US$ million % of segment revenue Change, %
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Cost of revenues 6,070 59.7 4,596 65.9 32.1
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Raw materials 3,1 50 30.9 2,025 29.1 55.5
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Iron ore 776 7.6 503 7.2 54. 3
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Coking coal 1,218 12.0 769 11.0 58.4
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Scrap 673 6.6 442 6.3 52. 3
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Other raw materials 483 4.7 311 4.5 55. 3
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Auxiliary materials 328 3.2 339 4.9 ( 3.2 )
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Services 266 2.6 241 3.5 10. 4
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Transportation 380 3.7 407 5.8 (6.6)
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Staff costs 518 5.1 477 6.8 8. 6
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Depreciation 256 2.5 233 3.3 9. 9
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Energy 416 4.1 398 5.7 4.5
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
Other* 756 7.4 476 6.8 58.8
-------------------------- ------------ ---------------------- ------------ --------------------- ----------
* Primarily includes goods for resale, intersegment unrealised
profit and certain taxes, semi-finished products and allowances for
inventories
In 2021, the Steel segment's cost of revenues increased by 32.1%
YoY. The main reasons for the growth in costs were as follows:
-- The cost of raw materials rose by 55. 5 %, primarily because
of the higher cost of coking coal (up 58.4%) and iron ore (54. 3 %)
amid price increases. Scrap costs climbed by 52.3% because of
higher prices for scrap, which was driven by global market
trends.
-- Service costs rose by 10.4%, primarily driven by higher costs
for processing costs of vanadium in slag.
-- Transportation costs dropped by 6.6%, primarily because of lower railway tariffs.
-- Depreciation costs increased by 9. 9 %, mainly because of
higher depreciation at EVRAZ NTMK after fixed assets were upgraded
to improve their technical condition .
-- Other costs jumped by 58.8%, largely because of increase in
taxes due to export duty on metal products effective from 1 August
2021 and lower cost of goods for resale amid an increase in
purchase prices in 2021 compared with 2020.
Steel segment gross profit
The Steel segment's gross profit surged by 73.5% YoY and
amounted to US$4,118 million in the reporting period driven
primarily by higher prices for semi-finished, construction and
vanadium products. This was partly offset by the negative effect of
higher cost.
Steel, North America segment
Sales review
Steel, North America segment revenues by product
202 1 20 20
--------------------------------------- -------------------------------------- ----------
% of total segment % of total segment
US$ million revenue US$ million revenue Change, %
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Steel products 2,227 95.8 1,6 84 9 4 . 7 32. 2
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Semi-finished
products(1) 10 0. 4 109 6.1 (90.8)
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Construction
products(2) 268 11.5 183 10.3 46.4
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Railway products(3) 392 16.9 326 18.3 20.2
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Flat-rolled products(4) 900 38.7 323 18.2 178.6
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Tubular and other steel
products(5) 657 28.3 743 4 1 . 8 (11. 6 )
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Other revenues (6) 97 4.2 95 5.6 2.1
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
Total 2,324 100.0 1,779 100.0 30.6
------------------------- ------------ ------------------------- ------------ ------------------------ ----------
(1) Includes slabs
(2) Includes beams and rebars
(3) Includes rails and wheels
(4) Includes commodity plate, specialty plate and other
flat-rolled products
(5) Includes large-diameter line pipes, ERW line pipes, seamless
and welded OCTG and other steel products
(6) Includes scrap and services
Sales volumes of Steel, North America segment
(thousand tonnes)
2021 2020 Change, %
----------------------------------- ------ ------ ----------
Steel products
----------------------------------- ------ ------ ----------
Semi-finished products - 144 (100.0)
----------------------------------- ------ ------ ----------
Construction products 268 262 2.3
----------------------------------- ------ ------ ----------
Railway products 383 404 (5.2)
----------------------------------- ------ ------ ----------
Flat-rolled products 625 382 63.6
----------------------------------- ------ ------ ----------
Tubular and other steel products 402 537 (25.1)
----------------------------------- ------ ------ ----------
Total 1,678 1,729 ( 2 . 9 )
----------------------------------- ------ ------ ----------
The Steel, North America segment's revenues from the sale of
steel products climbed by 32. 2 % YoY amid a 35.3% surge in sales
prices, offset by a 2 . 9 % decrease in sales volumes. The
reduction in volumes was mainly attributable to sales of tubular
and semi--finished products, which was partly compensated by
increased sales of flat-rolled and construction products.
Revenues from semi-finished product sales dropped to almost zero
following the fulfilment of a contract with a key customer in
2020.
Revenues from construction product sales rose by 46.4% YoY
because of a 2.3% increase in volumes and a 44.1% improvement in
prices. The upward trend was driven by greater market demand amid
the economic recovery.
Railway product revenues increased by 20.2%, driven by a growth
in sales prices of 25.4%. This was partly offset by a decrease in
sales volumes of 5.2%.
Revenues from flat-rolled products soared by 178.6% amid a 63.6%
jump in volumes. This was supported by rapid market improvement and
a 115.0% increase in sales prices as a result of higher third-party
demand in 2021 amid the rapid market recovery from the pandemic and
limited supply.
Revenues from tubular and other steel product sales fell by 1 1
. 6 % YoY due to a 25.1% drop in sales volumes, which was partly
offset by an 1 3 . 5 % uptick in sales prices. The reduction in
volumes was caused by the idling of the spiral mills following the
completion of 2020 orders.
Steel, North America segment cost of revenues
Steel, North America segment cost of revenues
202 1 20 20
----------------------------------- ----------------------------------- ----------
US$ million % of segment revenue US$ million % of segment revenue Change, %
------------------------- ------------ --------------------- ------------ --------------------- ----------
Cost of revenues 1,835 79 . 0 1,604 90.1 14.4
------------------------- ------------ --------------------- ------------ --------------------- ----------
Raw materials 888 38 . 2 454 25.5 95.6
------------------------- ------------ --------------------- ------------ --------------------- ----------
Semi-finished products 137 5 . 9 238 13.4 (42.4)
------------------------- ------------ --------------------- ------------ --------------------- ----------
Auxiliary materials 202 8 . 7 172 9.7 17.4
------------------------- ------------ --------------------- ------------ --------------------- ----------
Services 135 5 . 8 145 8.2 (6.9)
------------------------- ------------ --------------------- ------------ --------------------- ----------
Staff costs 240 1 0 . 3 240 13.5 -
------------------------- ------------ --------------------- ------------ --------------------- ----------
Depreciation 89 3 . 8 100 5.6 (11.0)
------------------------- ------------ --------------------- ------------ --------------------- ----------
Energy 119 5 . 1 90 5.1 32.2
------------------------- ------------ --------------------- ------------ --------------------- ----------
Other (1) 25 1. 1 165 9.3 (84.8)
------------------------- ------------ --------------------- ------------ --------------------- ----------
(1) Primarily includes transportation, goods for resale, certain
taxes, changes in work in progress and fixed goods and allowances
for inventories
In 2021, the Steel, North America segment's cost of revenues
increased by 14.4% YoY. The main drivers were as follows:
-- Raw material costs surged by 95.6%, which was primarily
attributable to the higher cost of scrap metal and increased
consumption due to transition to increased share of internal supply
of semi-finished products.
-- The cost of semi-finished products dropped by 42.4% driven by
a reduction of externally purchased materials and transition to
internal supply.
-- Auxiliary material costs rose by 17.4% following a change in
classification (lime and coke to auxiliary materials, which were
previously included in other raw materials).
-- Service costs fell by 6.9%, mainly driven by decline in
coating services due to decreased pipe sales volumes.
-- Energy costs rose by 32.2%, primarily because of higher natural gas prices.
-- Other costs were down for the reporting period, mainly
because of changes in balances of finished goods and work in
progress compared with 2020 amid higher production and prices,
which were driven by global market trends.
Steel, North America segment gross profit
The Steel, North America segment's gross profit totalled US$489
million in the reporting period, up from US$175 million in 2020.
The increase was primarily driven by a significant growth in
revenues amid favourable market conditions. It was partly offset by
higher prices for raw materials, auxiliary materials and
energy.
Coal segment
Sales review
Coal segment revenues by product
202 1 20 20
--------------------------------------- --------------------------------------- ----------
% of total segment % of total segment
US$ million revenue US$ million revenue Change, %
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
External sales
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Coal products 1,531 65.9 929 62.4 64.8
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Coking coal 95 4.1 74 4.9 28.4
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Coal concentrate 1,436 61.9 853 57.3 68.3
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Steam coal - - 2 0.2 (100)
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Intersegment sales
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Coal products 762 32.8 536 35.9 42.2
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Coking coal 184 7.9 101 6.8 82.2
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Coal concentrate 578 24.9 435 29.2 32.9
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Other segment revenues 28 1.2 25 1.7 12.0
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Total 2,321 100 1,490 100.0 55.8
------------------------ ------------ ------------------------- ------------ ------------------------- ----------
Sales volumes of Coal segment
(thousand tonnes)
-------------------------------------- ----------------------------
2021 2020 Change, %
-------------------------------------- ------- ------- ----------
External sales
-------------------------------------- ------- ------- ----------
Coal products 10,608 12,336 (14.0)
-------------------------------------- ------- ------- ----------
Coking coal 686 2,233 (69.3)
-------------------------------------- ------- ------- ----------
Coal concentrate and other products 9,922 10,066 (1.4)
-------------------------------------- ------- ------- ----------
Steam coal 37 n/a
-------------------------------------- ------- ------- ----------
Intersegment sales
-------------------------------------- ------- ------- ----------
Coal products 6,197 6,986 (11.3)
-------------------------------------- ------- ------- ----------
Coking coal 2,172 2,323 (6.5)
-------------------------------------- ------- ------- ----------
Coal concentrate 4,025 4,663 (13.7)
-------------------------------------- ------- ------- ----------
Total, coal products 16,805 19,322 (13.0)
-------------------------------------- ------- ------- ----------
In 2021, the Coal segment's overall revenues increased as sales
prices rose in line with global market trends. As the global market
recovered from the pandemic-related decline seen in 2020, demand
for coal grew. Production restrictions observed since the second
half of 2021 in all global producing regions also contributed to
the strong increase in international prices .
Revenues from external sales of coal products increased amid a
78.8% upswing in prices. This was partly offset by an 14.0%
decrease in sales volumes because of lower production of the GZh
grade and a change in the product mix in favour of coking coal
concentrate to meet customer needs. Revenues from external sales of
coking coal and coking coal concentrate climbed by 28.4% and 68.3%,
respectively , amid higher prices.
Revenues from internal sales of coal products surged by 42.2%,
mainly because of a 53.5% jump in sales prices, which was partly
offset by an 11.3% drop in sales volumes amid a shortage of premium
K-grade coal.
In 2021, the Coal segment's sales to the Steel segment amounted
to US$76 2 million (3 2 . 8 % of total sales), compared with US$53
6 million (3 5 . 9 %) in 2020.
During the reporting period, roughly 70.7% of EVRAZ' coking coal
consumption in steelmaking came from the Group's own operations,
compared with 78.0% in 2020.
Coal segment cost of revenues
Coal segment cost of revenues
202 1 20 20
------------------------------------ ------------------------------------ ----------
US$ million % of segment revenue US$ million % of segment revenue Change, %
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Cost of revenues 919 39.6 1,027 68 . 9 (10.5)
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Auxiliary materials 141 6.1 110 7 . 4 28.2
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Services 65 2.8 53 3 . 5 22.6
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Transportation 286 12.3 294 1 9 .7 (2.7)
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Staff costs 226 9.7 200 13 . 4 13.0
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Depreciation 164 7.1 163 10 . 9 0.6
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Energy 46 2.0 43 2 .9 7.0
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
Other (1) (9) (0.4) 164 11 . 0 (105.5)
---------------------- ------------ ---------------------- ------------ ---------------------- ----------
(1) Primarily includes goods for resale, certain taxes, changes
in work in progress and finished goods, allowance for inventory,
raw materials and inter-segment unrealised profit .
The volume of total coal products sales decreased by 13% and
caused decrease of cost of sales by 10.5% while cost of production
increased due to increase of production as well as the following
factors:
-- The cost of auxiliary materials rose by 28.2% amid higher
longwall move costs at the Alardinskaya, Osinnikovskaya,
Erunakovskaya and Raspadskaya mines.
-- Costs for services climbed by 22.6% because due to the high
growth of the prices of contractors services in Kuzbass region.
-- Staff costs were up because of higher mining volumes
accompanied with insourcing new equipment and resumption of work at
Razrez Raspadsky.
Coal segment gross profit
In 2021, the Coal segment's gross profit amounted to US$1,402
million, up from US$463 million a year earlier, primarily because
of the surge in sales prices .
APPIX
dEMERGER UPDATE
Further to the Company's announcement on 8 February, the Capital
Reduction has been confirmed by the UK Court and become effective,
meaning the Company expects to have sufficient distributable
reserves to effect the Demerger. The entitlement to receive PJSC
Raspadskaya (RASP) Shares has been determined based on the
respective holding of the Company's shares at 6:00pm UK on 15
February 2022 and the window for EVRAZ Shareholders entitled to
receive the Demerger Dividend to submit the RASP Shares Information
Form to the Company's registrar is open.
The Demerger Dividend is expected to occur on 29 March 2022 and
eligible EVRAZ Shareholders will receive their RASP Shares as soon
as reasonably practicable after 29 March 2022. It is currently
anticipated that the settlement date for the transfer of RASP
Shares to Eligible Accounts will be 7 April 2022.
Further information on the steps EVRAZ Shareholders are required
to take to receive the RASP Shares to which they are entitled can
be found in Section 3 of Part I (Action to be Taken) of the
Shareholder Circular published by the Company on 15 December 2021
(the "Shareholder Circular"). These steps include opening or
otherwise holding an account with a direct or indirect participant
of a clearing institution eligible to receive RASP Shares (such as
Euroclear, Clearstream or the NSD), and providing the details of
such account to the Company's registrar by no later than 6:00pm UK
on 15 March 2022 by returning the RASP Shares Information Form, or
to the shareholders' broker or nominee at the date and by means,
defined by such broker or nominee. Any EVRAZ Shareholder who fails
to provide the relevant details by 15 March 2022 will be deemed to
be incapable of holding RASP Shares and the RASP Shares to which
they are entitled will be sold pursuant to the Share Sale
Facility.
Shareholders are reminded that neither the sale price nor the
sale timeframe is guaranteed under the Share Sale Facility. It is
currently anticipated that the sale of the RASP Shares pursuant to
the Share Sale Facility will be completed within six months
following the Demerger Dividend, however the precise timeframe, as
well as the realized price, will depend on the total number of RASP
Shares to be sold pursuant to the Share Sale Facility and market
conditions during the Sale Period. Therefore, the EVRAZ Board
recommends that EVRAZ Shareholders that are capable of holding RASP
Shares take the necessary action to receive RASP Shares and do not
participate in the Share Sale Facility.
Capitalised terms used but not defined in this paragraph have
the meaning given to such terms in the Shareholder Circular.
Key RISKS AND UNCERTAINTIES
EVRAZ is exposed to numerous risks and uncertainties that exist
in its business that may affect its ability to execute its strategy
effectively in 202 2 and could cause the actual results to differ
materially from expected and historical results.
The Directors consider that the principal risks and
uncertainties as summarised below and detailed in the EVRAZ
plc 202 1 Annual Report on pages 87 to 92, copies of which are available at https://www.evraz.com/en/investors/reports-and-results/annual-reports/ , are relevant in 2022 and the mitigating actions described are appropriate.
Principal risks
Risk Mitigating/ risk management actions
Global economic This is an external risk that is largely
factors, industry beyond the Group's control; however, it
conditions, is partly mitigated by exploring new market
industry opportunities, focusing on expanding the
cyclicality share of value- added products, further
downscaling inefficient assets, suspending
production in low-growth regions, reducing
and managing the cost base with the goal
of being among the sector's lowest- cost
producers, and improving the balance sheet/
gearing.
------------------------------------------------------------------
Product competition EVRAZ mitigates this risk by expanding its
product portfolio and penetrating new geographic
and product markets.
It is continuously developing and improving
its loyalty and customer focus programmes
and initiatives.
The Group is also implementing quality improvement
initiatives and strives to increase the
share of value-added products.
------------------------------------------------------------------
Cost For both the mining and steelmaking operations,
e ectiveness: EVRAZ is implementing cost reduction projects
cost position to increase asset competitiveness.
vs competitors The Group's focused investment policy aims
to reduce and manage the cost base.
EVRAZ also seeks to mitigate this risk through
the control of its Russian steel distribution
network, the development of high value-added
products and the implementation of EVRAZ
Business System transformation projects
that focus on increasing efficiency and
effectiveness.
In addition, the Group's digital projects
help to reduce risks associated with primary
equipment and improve effectiveness.
------------------------------------------------------------------
Potential regulatory EVRAZ and its executive teams are members
Actions by governments, of various national industry bodies. As
including trade, a result, they contribute to the development
antimonopoly, anti-dumping of such bodies and, when appropriate, participate
regulation, sanctions in relevant discussions with political and
and other laws regulatory authorities.
and regulations The Group seeks to monitor potential legislative
changes before their introduction at the
point when new laws are being drafted:
* identification of key stakeholders among government
authorities;
* monitoring of the legislative agenda planned by key
stakeholders;
* proactive approach to building regulatory rules
(acting as metals and mining experts).
Further development of control over antimonopoly
and anti-dumping regulation:
* issuing and monitoring of the Group's trade policies;
* preventing anti-dumping policies among
competitors/customers - Introduction of an IT tool
with a dashboard for antimonopoly risk management.
Ongoing liaison with both US and Canadian
governments and the American and Canadian
steel associations and ongoing engagement
with the Canadian government to monitor
and implement anti-dumping measures.
Development and enhancement of internal
controls in order to introduce preventive
measures to monitor risks associated with
duties and other negative measures against
the Group. Pricing on products subject to
anti-dumping duties is tightly monitored
and controlled in order to ensure duties
are reduced or eliminated. Taxation control
function monitors planned changes to tax
laws, analyses their impact on EVRAZ's operations
and reports them to the Company's management
on a quarterly basis. EVRAZ and its executive
teams are members of various national industry
bodies and, as a result, contribute to and
participate in relevant discussions with
political and tax authorities.
------------------------------------------------------------------
Functional currency This is an external risk which is largely
devaluation beyond the Group's control, however management
is reducing the risk through proper disclosure
and monitoring.
------------------------------------------------------------------
HSE: environmental EVRAZ monitors its environmental risk matrix
on a regular basis, and it develops and
implements mitigation measures in response
to these risks. Risk assessment is regularly
reviewed within the Sustainability Committee's
agenda. Senior management also devotes greater
attention to the monthly monitoring of environmental
risk trends and factors.
EVRAZ has developed an environmental strategy
until 2030 and updated its list of projects
in accordance with the strategy to achieve
its strategic goals regarding emissions
and waste. The strategy is being implemented
through dedicated programmes in each division.
Most of the Group's operations are certified
in accordance with ISO 14001, and work is
ongoing to bring the remaining plants into
compliance with this international standard.
EVRAZ is currently compliant with REACH
requirements.
It is obtaining complex environmental permits
for compliance with the new regulation.
For its North American operations, EVRAZ
is formulating a strategic 3-5 year plan
to be competitive in reducing greenhouse
gasses and its carbon footprint through
utility and energy utilisation, including
through such projects as Big Horn renewable
energy at the Pueblo facility.
EVRAZ is also involved in drafting GHG emissions
regulation in Russia.
------------------------------------------------------------------
HSE: health and To mitigate these risks, EVRAZ is taking
safety the following actions:
* Review of the Lockout Tagout (LOTO) procedure as the
main cause of fatalities in 2021.
* Further development and implementation of the
occupational safety risk management programme.
* Transformation of the Health & Safety operational
model with the implementation of roles and
responsibilities, reviewing training processes as
well as monitoring and continuing improvements.
* Further development/update of health and safety tools
(behaviour safety observations, contractual safety,
etc.) based on a regular analysis of major causes of
incidents.
* Introduction and development of safety audits.
* Consideration of the implementation of proactive KPIs
and indicators.
In addition, EVRAZ is utilising the EBS
rollout in order to further prompt employees
to identify improvements and/or safety concerns
and to increase visibility and enable the
Group to prioritise, execute and communicate
safety improvements and abatement measures.
It also driving the utilisation of a risk
matrix in the incident management system
through safety initiatives, taking it down
to the front line in order for supervisors
to implement higher levels of safety controls
and risk reduction measures and working
to change the safety culture through the
Leadership Development Programme.
In the coal segment, EVRAZ is implementing
the following programmes with a focus on
the safety of its operations:
* Further execution of the five-year degassing
programme.
* Mine collapse prevention programme.
* Prevention of spontaneous coal combustion in working
spaces (performance control).
* Dust and explosion safety of mines.
------------------------------------------------------------------
Business interruption The Group has defined and established disaster
recovery procedures that are subject to
regular review. Business interruptions in
mining mainly relate to production safety.
Measures to mitigate these risks include
methane monitoring and degassing systems,
timely mining equipment maintenance, as
well as employee safety training. Implementation
of quick actions that reduce risks on the
main equipment at mines (digital projects).
Creation of the equipment maintenance and
repair (TORO) system, including certain
digital projects and its circulation at
mines.
EVRAZ performs detailed incident cause analyses
to develop and implement preventive actions.
Records of minor interruptions are reviewed
to identify any other significant underlying
issues. The repairs and maintenance process
continues to undergo transformation in Siberia
and the Urals.
------------------------------------------------------------------
Digital Digital transformation is a part of the
e ectiveness Group's IT strategy. EVRAZ continuously
and e ective, assesses and monitors information security
efficient risks, and it takes mitigation measures
and uninterrupted based on external assessments by an independent
IT service advisor.
The Group conducts regular continuity testing
for the most critically important IT systems.
Other mitigating actions includes:
* Further improvement of IT processes with a focus on
fast and efficient project implementation.
* Building and improving IT competences in high-demand
areas: data science, back- and front-end programming,
design and information security.
* Realisation of the IT security improvement programme.
------------------------------------------------------------------
Capital projects EVRAZ reviews all proposed capital projects
and expenditures on a risk return basis. The current list
of projects has been reviewed and updated.
Each project is presented for approval against
the Group's risk matrix to assess its potential
downside and any possible mitigating actions.
EVRAZ has created a list of typical project
risks and a database of lessons learned.
Project delivery is closely monitored against
project plans, which allows for high-level
action to manage project investment for
both timely delivery and planned project
expenditures.
New mine development and the definition
of feasibility plans are reviewed and signed
off by independent mining engineers.
The Group regularly revisits key assumptions
for its main investment projects and performs
scenario analyses, which may result in the
suspension and/or postponement of certain
projects.
EVRAZ also uses financial modelling to define
the strategy of each individual asset and
the enterprise in general for the purpose
of long-term FCF forecasting, including
investment projects.
The project management system's transformation
is ongoing.
A pilot project is being conducted at one
mine on a long-term detailed planning of
LOM (life of mine) using a 3D model and
restrictions on air, gas and sinking.
------------------------------------------------------------------
Decarbonisation Assessing, verifying, and monitoring Scope
1, 2, and 3 GHG emissions on a yearly basis.
Reducing GHG emissions.
Setting an internal carbon price for assessment
of new investment projects.
Following the decarbonisation initiatives
roadmap.
Assessing the financial impacts of decarbonisation
on EVRAZ in 2022
------------------------------------------------------------------
EVRAZ monitors these risks and actively pursues strategies to
mitigate them on an ongoing basis.
Whilst there have not been direct impacts on the Group to date,
the Board continues to monitor the situation in Ukraine and the
response of international governments. The Directors have
considered additional scenarios for the purposes of its going
concern assessment (see page 189 of Annual Report 2021 ) and the
viability statement (see page 97 of Annual Report 2021).
Emerging risks
In addition to principal risks, management pays particular
attention to threats that could become significant over a certain
time, known as emerging risks. The Group defines these as events
that could meaningfully impact EVRAZ' activities and results, but
have a lower likelihood of materializing in the next three to five
years.
They include:
-- Climate-related issues.
-- Liabilities incurred due to environmental impairments.
-- Geopolitical instability.
-- Changes in technology.
-- Societal issues.
-- Demographic imbalance.
Emerging risks may be transferred to the class of current risks
depending on their circumstances and materialisation. Management
works continuously to monitor and manage emerging risks and devise
mitigation measures.
The major part of the Group is based in the Russian Federation
and is consequently exposed to the economic and political effects
of the policies adopted by the Russian government. Worsening
situation related to Ukraine has further increased the economic
uncertainty and the risk of the imposition of sanctions. These
conditions and future policy changes could affect the operations of
the Group and the realisation and settlement of its assets and
liabilities.
Climate change risks
EVRAZ is also exposed to numerous climate change risks and
opportunities. The Directors consider that climate change risks
that detailed in the EVRAZ plc 2021 Annual Report on pages 92 to
96, copies of which are available at
https://www.evraz.com/en/investors/reports-and-results/annual-reports/,
are relevant in 2022 and the mitigating actions described are
appropriate.
DIVIDS
Interim dividend
In consideration of EVRAZ strong performance in 2021, EVRAZ
Board of Directors has announced an interim dividend. On 24
February 2022, the Board of Directors voted to disburse a total of
US$729 million, or US$0. 50 per share. The record date is 1 1 March
2022 and payment date is 30 March 2022.
The interim dividend will be paid in US Dollars, unless a
shareholder elects to receive dividends in UK pounds sterling or
Euros. The last date for submitting a Currency Election will be 14
March 2022. All conversions will take place on or around 16 March
2022.
DIRECTORS' RESPONSIBILITY STATEMENT
Each of the directors whose names and functions are listed on
pages 104 - 108 of the Annual report confirm that to the best of
their knowledge:
-- the consolidated financial statements of EVRAZ plc, prepared
in accordance with UK adopted international accounting standards
and the requirements of the Companies Act 2006, give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole (the 'Group');
-- the management report required by DTR 4.1.8R includes a fair
review of the development and performance of the business and the
position of the Company and the Group, together with a description
of the principal risks and uncertainties that they face.
By order of the Board
Aleksey Ivanov
Chief Executive Officer
EVRAZ plc
24 February 2022
Legal disclaimer
This press-release contains forward-looking statements
concerning the financial condition, operational results, and
businesses of EVRAZ plc. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements. Forward-looking statements are statements of future
expectations that are based on management's current plans, goals,
intentions, expectations and assumptions. They involve known and
unknown risks and uncertainties that could cause actual results,
performance, or events to differ materially from those expressed or
implied in these statements. Forward-looking statements typically
contain words such as "will", "may", "should", "believe", "intend",
"expect", "anticipate", "target", "estimate," and words of similar
import.
By their nature, forward-looking statements involve known and
unknown risks and uncertainties, as they relate to events and
depend on circumstances that will or could occur in the future.
They are based on numerous assumptions regarding EVRAZ's present
and future business strategies and the environment in which it will
operate. There are a number of factors that could cause actual
results and developments to differ materially from those expressed
or implied by these forward-looking statements, including a number
of factors outside EVRAZ's control.
These include, inter alia, changes in the political, social, and
regulatory framework in which EVRAZ operates; changes to economic
and technological trends or conditions; the success of certain
business and operating initiatives; the actions of regulators;
legislative, fiscal, and regulatory developments, including
regulatory measures addressing climate change; the behavior of
other market participants; competitive product and pricing
pressures; changes in consumer habits and preferences; foreign
exchange rate fluctuations and interest rate fluctuations; changes
in the level of capital investment; the impact of any acquisitions,
disposals, or similar transactions; the outcome of any litigation;
risk inherent to doing business in countries subject to
international sanctions; environmental and physical risks; risks
associated with the impact of pandemics; and risks of unforeseeable
events and force majeure conditions.
Other unknown or unpredictable factors could also cause actual
results and developments to differ materially from those in
forward-looking statements.
Neither EVRAZ nor any of its subsidiaries or directors, officers
or advisers, provides any representation, assurance, or guarantee
that the occurrence of the events expressed or implied in any
forward-looking statements in this press-release will actually
occur.
Except as required by applicable regulations or by law, neither
EVRAZ nor any of its subsidiaries undertakes any obligation to
publicly update or revise any forward-looking statement as a result
of new information, future events, or otherwise. Each
forward-looking statement pertains only to the date of this
press-release, i.e. 24 February 2022. In light of these risks,
results could differ materially from those stated, implied, or
inferred from the forward-looking statements contained in this
press-release. No materials contained in this press-release
constitute an offer, solicitation, or recommendation to purchase or
sell securities or make investments. Readers should not place undue
reliance on forward-looking statements.
onsolidated statement of operations
(in millions of US dollars, except for per share
information)
Year ended 31 December
-------------------------------
Notes 20 21 20 20 * 201 9 *
----------------------------------------------------------------------------- ------ --------- --------- ---------
Continuing operations
Revenue
Sale of goods 3 $ 13,224 $ 9 ,222 $ 11,117
Rendering of services 3 262 230 327
----------------------------------------------------------------------------- ------ --------- --------- ---------
13,486 9,452 11,444
Cost of revenue 7 (7,454) (5,992) (7,554)
----------------------------------------------------------------------------- ------ --------- --------- ---------
Gross profit 6,032 3,460 3,890
Selling and distribution costs 7 (827) (788) (867)
General and administrative expenses 7 (545) (493) (536)
Social and social infrastructure maintenance expenses (30) (29) (23)
Gain/(loss) on disposal of property, plant and equipment, net (7) (3) 6
Impairment of non-financial assets 6 (22) (313) (335)
Foreign exchange gains/(losses), net 11 296 (311)
Other operating income 16 19 19
Other operating expenses 7 (45) (43) (42)
----------------------------------------------------------------------------- ------ --------- --------- ---------
Profit from operations 4,58 3 2,106 1,801
Interest income 7 4 5 7
Interest expense 7 (212) (315) (320)
Share of profits/(losses) of joint ventures and associates 11 14 2 9
Impairment of non-current financial assets 14 - - (56)
Gain/(loss) on financial assets and liabilities, net 7 (20) (71) 17
Gain/(loss) on disposal groups classified as held for sale, net 12 2 1 29
Other non-operating gains/(losses), net - 14 13
----------------------------------------------------------------------------- ------ --------- --------- ---------
Profit before tax from continuing operations 4,371 1,742 1,500
Income tax expense 8 (847) (373) (418)
----------------------------------------------------------------------------- ------ --------- --------- ---------
Net p rofit from continuing operations 3,524 1,369 1,082
============================================================================= ====== ========= ========= =========
Discontinued operations
Net loss from discontinued operations 13 (417) (511) (717)
Net p rofit 3,107 $ 8 58 $ 365
============================================================================= ====== ========= ========= =========
Attributable to:
Equity holders of the parent entity $ 3,034 $ 8 48 $ 3 26
Non-controlling interests 73 10 39
----------------------------------------------------------------------------- ------ --------- --------- ---------
$ 3,107 $ 8 58 $ 365
============================================================================= ====== ========= ========= =========
Earnings per share for profit attributable to equity holders of the parent
entity, US dollars:
Basic 20 $ 2.08 $ 0.58 $ 0. 23
Diluted 20 $ 2.07 $ 0.58 $ 0. 2 2
Earnings per share for profit from continuing operations attributable to
equity holders of
the parent entity, US dollars:
Basic 20 $ 2.38 $ 0.94 $ 0.74
Diluted 20 $ 2.37 $ 0.94 $ 0.73
*The amounts shown here do not correspond to the 2020 and 2019
financial statements and reflect adjustments made in connection
with the presentation of discontinued operations (Note 13).
The accompanying notes form an integral part of these
consolidated financial statements.
onsolidated statement of comprehensive income
(in millions of US dollars)
Year ended 31 December
-------------------------------
Notes 20 21 20 20 201 9
----------------------------------------------------------------------------- ------ -------- --------- ----------
Net profit $ 3,107 $ 8 58 $ 365
Other comprehensive income/(loss)
Oth er comprehen sive income to be reclassified to profit or lo ss in subs
equent periods,
net of tax
Exchange differences on translation of foreign operations into presentation
currency (36) (894) 75 7
Accumulated translation (gains)/losses recycled to profit or loss on
disposal of foreign operations 4, 12 (3) - 31
Net gains/(losses) on cash flow hedges 25 - - 27
Net (gains)/losses on cash flow hedges recycled to profit or loss 7, 25 - - (33)
----------------------------------------------------------------------------- ------ --------
( 39) (894) 782
Effect of translation to presentation currency of the Group's joint ventures
and associates 11 - (13) 8
----------------------------------------------------------------------------- ------ --------
- (13) 8
Items not to be reclassified to profit or loss in subsequent periods, net of
tax
Gains/(losses) on re-measurement of net defined benefit liability 23 85 (3) (15)
Income tax effect 8 (20) 2 (1)
----------------------------------------------------------------------------- ------ -------- --------- ----------
65 (1) (16)
Total other comprehensive income/(loss), net of tax 26 (908) 774
----------------------------------------------------------------------------- ------ -------- --------- ----------
Total comprehensive income/(loss), net of tax $ 3,133 $ ( 50 ) $ 1, 1 39
============================================================================= ====== ======== ========= ==========
Attributable to:
Equity holders of the parent entity $ 3,058 $ ( 41 ) $ 1,078
Non-controlling interests 75 (9) 61
----------------------------------------------------------------------------- ------ -------- --------- ----------
$ 3,133 $ ( 50 ) $ 1, 1 39
============================================================================= ====== ======== ========= ==========
The accompanying notes form an integral part of these
consolidated financial statements.
onsolidated statement of financial position
(in millions of US dollars)
The financial statements of EVRAZ plc (registered number
7784342) on pages were approved by the Board of Directors on 24
February 2022 and signed on its behalf by Deborah Gudgeon,
director.
31 December
------------------------------
Notes 20 21 20 20 201 9
------------------------------------------------------------------------------ ------ -------- --------- ---------
ASSETS
Non-current assets
Property, plant and equipment 9 $ 3,169 $ 4,31 4 $ 4,925
Intangible assets other than goodwill 10 126 138 185
Goodwill 5 457 457 5 94
Investments in joint ventures and associates 11 100 79 92
Deferred income tax assets 8 183 24 5 152
Receivables from related parties 17 10 - -
Other non-current financial assets 14 18 26 40
Other non-current assets 14 62 45 55
------------------------------------------------------------------------------ ------ -------- --------- ---------
4,125 5,304 6, 0 43
Current assets
Inventories 15 1,565 1,085 1,480
Trade and other receivables 16 626 378 534
Prepayments 96 80 93
Loans receivable - - 32
Receivables from related parties 17 34 10 10
Income tax receivable 29 46 53
Other taxes recoverable 18 171 178 175
Other current financial assets 19 12 2 4
Cash and cash equivalents 19 1,027 1,627 1,423
------------------------------------------------------------------------------ ------ -------- --------- ---------
3,560 3,406 3,804
Assets of disposal groups classified as held for distribution to owners 13 2,169 - -
------------------------------------------------------------------------------ ------ -------- --------- ---------
5,729 3,406 3,804
Total assets $ 9,854 $ 8,710 $ 9 ,847
============================================================================== ====== ======== ========= =========
EQUITY AND LIABILITIES
Equity
Equity attributable to equity holders of the parent entity
Issued capital 20 $ 75 $ 75 $ 75
Treasury shares 20 (148) (1 54 ) (169)
Additional paid-in capital 2,522 2,510 2,492
Revaluation surplus - 109 109
Accumulated profits 3,472 2,187 2,217
Translation difference (1,928) (3,936) (3,048)
Reserves of disposal group held for distribution to owners (1,939) - -
------------------------------------------------------------------------------ ------ -------- --------- ---------
2,054 791 1,676
Non-controlling interests 32 180 129 252
------------------------------------------------------------------------------ ------ -------- --------- ---------
2,234 920 1,928
Non-current liabilities
Long-term loans 22 3,440 3,759 4,599
Deferred income tax liabilities 8 194 253 352
Employee benefits 23 143 240 271
Provisions 24 182 272 321
Lease liabilities 25 49 57 83
Other long-term liabilities 25 77 102 40
4,085 4,683 5,666
Current liabilities
Trade and other payables 26 1,539 1,264 1,378
Contract liabilities 250 314 348
Short-term loans and current portion of long-term loans 22 101 1,078 140
Lease liabilities 25 22 30 34
Payables to related parties 17 50 38 19
Dividends payable to shareholders 20 292 - -
Income tax payable 67 108 79
Other taxes and duties payable 27 145 169 153
Provisions 24 37 41 33
Amounts payable under put options for shares in subsidiaries 4 - 65 69
------------------------------------------------------------------------------ ------ -------- --------- ---------
2,503 3,107 2,253
Liabilities directly associated with disposal groups classified as held for
distribution to
owners 13 1,032 - -
------------------------------------------------------------------------------ ------ -------- --------- ---------
3,535 3,107 2,253
Total l iabilities 7,620 7,790 7,919
Total equity and liabilities $ 9,854 $ 8,710 $ 9,847
============================================================================== ====== ======== ========= =========
The accompanying notes form an integral part of these
consolidated financial statements.
onsolidated statement of cash flows
(in millions of US dollars)
Year ended 31 December
---------------------------
Notes 2021 2020 2019
---------------------------------------------------------------------------------- ----- --------- -------- ------
Cash flows from operating activities
Net profit $ 3,107 $ 858 $ 365
Adjustments to reconcile net profit to net cash flows from operating activities:
Deferred income tax (benefit)/expense 8 70 (142) 5
Depreciation, depletion and amortisation 7 563 60 5 578
(Gain)/loss on disposal of property, plant and equipment, net 8 3 (3)
Impairment of non-financial assets 6 30 310 442
Foreign exchange (gains)/losses, net (34) (408) 341
Interest income 7 (5) (6) (8)
Interest expense 7 232 328 336
Share of (profits)/losses of associates and joint ventures 11 (14) (2) (9)
Impairment of non-current financial assets 14 - - 56
(Gain)/loss on financial assets and liabilities, net 7 21 71 (17)
(Gain)/loss on disposal groups classified as held for sale, net 12 (2) (1) (29)
Other non-operating (gains)/losses, net (3) (14) (14)
Allowance for expected credit losses 28 (1) (2) 3
Changes in provisions, employee benefits and other long-term assets and
liabilities 17 ( 17 ) -
Expense arising from equity-settled awards 21 12 11 13
Other (1) (1) (2)
---------------------------------------------------------------------------------- ----- --------- -------- ------
4,000 1,5 93 2,057
Changes in working capital:
Inventories (567) 250 61
Trade and other receivables (332) 8 1 304
Prepayments (29) 3 26
Receivables from/payables to related parties (19) 5 (114)
Taxes recoverable (93) (30) 29
Other assets (11) - (1)
Trade and other payables 429 (3 5 ) 219
Contract liabilities (68) (1 3 ) 13
Taxes payable 121 84 (155)
Other liabilities (7) (10) (9)
---------------------------------------------------------------------------------- ----- --------- -------- ------
Net cash flows from operating activities 3,424 1,9 28 2,430
================================================================================== ===== ========= ======== ======
Relating to:
Continuing operations 3,663 2,262 2,932
Discontinued operations 13 (239) (334) (502)
Cash flows from investing activities
Issuance of loans receivable to related parties (1) (1) -
Issuance of loans receivable (1) (1) (9)
Proceeds from repayment of loans receivable, including interest - 1 2
Purchases of subsidiaries, net of cash acquired - - (3)
Purchases of disposal groups held for sale 12 - - (22)
Investments in associates and joint ventures 11 (10) - (3)
Sale of associates 17 - - 5
Proceeds from sale of other investments 17 - - 32
Short-term deposits at banks, including interest 4 4 7
Purchases of property, plant and equipment and intangible assets (963) (66 7 ) (767)
Proceeds from government grants related to property, plant and equipment 9 53 20 5
Proceeds from disposal of property, plant and equipment 6 6 16
Proceeds from sale of disposal groups classified as held for sale, net of
transaction costs 12 2 11 44
Dividends received 11,17 3 1 9
Other investing activities, net 2 2 19
---------------------------------------------------------------------------------- ----- --------- -------- ------
Net cash flows used in investing activities (905) (6 24 ) (665)
================================================================================== ===== ========= ======== ======
Relating to:
Continuing operations (689) (482) (435)
Discontinued operations 13 (216) (142) (230)
Consolidated cash flows include amounts of discontinued
operations (Note 13).
Continued on the next page
The accompanying notes form an integral part of these
consolidated financial statements.
onsolidated statement of cash flows (continued)
(in millions of US dollars)
Year ended 31 December
---------------------------
Notes 2021 2020 2019
--------------------------------------------------------------------------------- ------ -------- -------- -------
Cash flows from financing activities
Purchases of non-controlling interests 4 $ (38) $ (66) $ (71)
Payments for property, plant and equipment on deferred terms (10) (10) -
Payments for investments on deferred terms 11 - - (8)
Dividends paid by the parent entity to its shareholders 20 (1,531) (872) (1,086)
Dividends paid by the Group's subsidiaries to non-controlling shareholders (18) (5) (5)
Proceeds from bank loans and notes 22 2,325 1,218 2,805
Repayment of bank loans and notes, including interest 22 (3,403) (1,304) (3,035)
Net proceeds from/(repayment of) bank overdrafts and credit lines, including
interest 22 (1) (25) 22
Payments under covenants reset 22 (10) - -
Restricted deposits at banks in respect of financing activities - 1 -
Realised gains/(losses) on derivatives not designated as hedging instruments 25 12 (11) 22
Realised gains/(losses) on hedging instruments 25 - - (23)
Payments under leases, including interest 25 (33) (33) (37)
Other financing activities, net - - 1
--------------------------------------------------------------------------------- ------ -------- -------- -------
Net cash flows used in financing activities (2,707) (1,107) (1,415)
================================================================================= ====== ======== ======== =======
Relating to:
Continuing operations (3,031) (1,053) (1,366)
Discontinued operations 13 324 (54) (49)
Effect of foreign exchange rate changes on cash and cash equivalents (12) 7 6
--------------------------------------------------------------------------------- ------ -------- -------- -------
Net increase/(decrease) in cash and cash equivalents (200) 204 356
Cash and cash equivalents at the beginning of the year 19 1,627 1,423 1,067
Decrease/(increase) in cash of disposal groups classified as held for
distribution to owners 13 (400) - -
Cash and cash equivalents at the end of the year 19 $ 1,027 $ 1,627 $ 1,423
================================================================================= ====== ======== ======== =======
Supplementary cash flow information:
Cash flows during the year:
Interest paid $ (243) $ (284) $ (283)
Interest received 4 5 7
Income taxes paid (included in operating activities) (999) (536) (581)
Consolidated cash flows include amounts of discontinued
operations (Note 13).
The accompanying notes form an integral part of these
consolidated financial statements.
onsolidated statement of changes in equity
(in millions of US dollars)
Attributable to equity holders of
the parent entity
---------------------------------------------------------------------------------------------------
Reserves
of
disposal
group
held
for
Additional distribution
Issued Treasury paid-in Revaluation Accumulated Translation to Non-controlling Total
capital shares capital surplus profits difference owners Total interests equity
$
( $ $ $
At 31 December $ 154 2 $ $ $ 79 $ 92
2020 75 ) ,510 109 2,187 $ (3,936) - 1 129 0
Net profit - - - - 3,034 - - 3,034 73 3,107
Other
comprehensive
income/(loss) - - - - 63 (39) - 24 2 26
Reclassification
of revaluation
surplus to
accumulated
profits in
respect
of the disposed
items of
property,
plant and
equipment - - - (1) 1 - - - - -
Total
comprehensive
income/(loss)
for the period - - - (1) 3,098 (39) - 3,058 75 3,133
Reclassification
of cumulative
income or
expense
recognised in
other
comprehensive
income relating
to discontinued
operations - - - (108) - 2,047 (1,939) - - -
Acquisition of
non-controlling
interests in
subsidiaries
(Note 4) - - - - (19) - - (19) (19) (38)
Reversal of
derecognition
of
non-controlling
interest in
subsidiaries
(Note 4) - - - - 35 - - 35 30 65
Transfer of
treasury
shares to
participants
of the Incentive
Plans (Notes 20
and 21) - 6 - - (6) - - - - -
Share-based
payments
(Note 21) - - 12 - - - - 12 - 12
Dividends
declared
by the parent
entity to its
shareholders
(Note
20) - - - - (1,823) - - (1,823) - (1,823)
Dividends
declared
by the Group's
subsidiaries to
non-controlling
shareholders
(Note
32) - - - - - - - - (35) (35)
------------------ -------- --------- ----------- ------------ ------------ ------------ ------------- -------- ---------------- --------
At 31 December $ $ $ $ $ $ $ $ $
2021 75 (148) 2,522 - 3,472 $ (1,928) (1,939) 2,054 180 2,234
================== ======== ========= =========== ============ ============ ============ ============= ======== ================ ========
The accompanying notes form an integral part of these
consolidated financial statements.
onsolidated statement of changes in equity (continued)
(in millions of US dollars)
Attributable to equity holders of the
parent entity
------------------------------------------------------------------------------------------------
Unrealised
Additional gains
Issued Treasury paid-in Revaluation and Accumulated Translation Non-controlling Total
capital shares capital surplus losses profits difference Total interests equity
At 31 December $ $ $ $ $ $ $
2019 75 (169) $ 2,492 109 - $ 2,217 $ (3,048) 1,676 252 1,928
8 8
Net profit - - - - - 8 48 - 48 10 58
Other
comprehensive
income/(loss) - - - - - (1) (888) (889) (19) (908)
Total
comprehensive ( (
income/(loss) 41 50
for the period - - - - - 8 47 (888) ) (9) )
Acquisition of
non-controlling
interests in
subsidiaries
(Note 4) - - 7 - - - - 7 (34) (27)
Change in
non-controlling
interests due
to
reorganisation
(Note 4) - - - - - 45 - 45 (45) -
Decrease in
non-controlling
interests due
to put options
(Note 4) - - - - - (35) - (35) (30) (65)
Transfer of
treasury
shares to
participants
of the
Incentive
Plans (Notes 20
and 21) - 15 - - - (15) - - - -
Share-based
payments
(Note 21) - - 11 - - - - 11 - 11
Dividends
declared
by the parent
entity to its
shareholders
(Note
20) - - - - - (872) - (872) - (872)
Dividends
declared
by the Group's
subsidiaries to
non-controlling
shareholders
(Note
32) - - - - - - - - (5) (5)
----------------- -------- --------- ----------- ------------ ----------- ------------ ------------ ------- ---------------- -------
$
( $ $
At 31 December $ 154 $ 2 $ $ $ 2,1 79 $ 92
2020 75 ) ,510 109 - 87 $ (3,936) 1 129 0
================= ======== ========= =========== ============ =========== ============ ============ ======= ================ =======
The accompanying notes form an integral part of these
consolidated financial statements.
onsolidated statement of changes in equity (continued)
(in millions of US dollars)
Attributable to equity holders of the
parent entity
-------------------------------------------------------------------------------------------------
Unrealised
Additional gains
Issued Treasury paid-in Revaluation and Accumulated Translation Non-controlling Total
capital shares capital surplus losses profits difference Total interests equity
At 31 December $ $ $ $ $ $ $
2018 75 (196) $ 2,480 110 6 $ 3,026 $ (3,820) 1,681 257 1,938
Net profit - - - - - 326 - 326 39 365
Other
comprehensive
income/(loss) - - - - (6) (14) 772 752 22 774
Reclassification
of revaluation
surplus to
accumulated
profits in
respect
of the disposed
items of
property,
plant and
equipment - - - (1) - 1 - - - -
Reclassification
of additional
paid-in capital
in respect of
the disposed
subsidiaries - - (1) - - 1 - - - -
-------- --------- ----------- ------------ ----------- ------------ ------------ -------- ---------------- --------
Total
comprehensive
income/(loss)
for the period - - (1) (1) (6) 314 772 1,078 61 1,139
Acquisition of
non-controlling
interests in
subsidiaries
(Note 4) - - - - - (10) - (10) (61) (71)
Transfer of
treasury
shares to
participants
of the Incentive
Plans (Notes 20
and 21) - 27 - - - (27) - - - -
Share-based
payments
(Note 21) - - 13 - - - - 13 - 13
Dividends declared
by the parent
entity to its
shareholders
(Note
20) - - - - - (1,086) - (1,086) - (1,086)
Dividends declared
by the Group's
subsidiaries to
non-controlling
shareholders
(Note
32) - - - - - - - - (5) (5)
------------------- -------- --------- ----------- ------------ ----------- ------------ ------------ -------- ---------------- --------
At 31 December $ $ $ $ $ $ $
2019 75 (169) $ 2,492 109 - $ 2,217 $ (3,048) 1,676 252 1,928
=================== ======== ========= =========== ============ =========== ============ ============ ======== ================ ========
The accompanying notes form an integral part of these
consolidated financial statements.
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