Mechel Reports the 1H 2017 Financial Results


Consolidated revenue 149.4 bln rubles (+15% compared to 1H2016)
EBITDA* - 40.2 bln rubles (+56% compared to 1H2016)
Net profit, attributable to equity shareholders of Mechel PAO 5.0 bln rubles

MOSCOW, Aug. 23, 2017 (GLOBE NEWSWIRE) -- Mechel PAO (MOEX:MTLR) (NYSE:MTL), a leading Russian mining and steel group, announces financial results for the 1H2017.

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented:

“The company’s 1H2017 results demonstrated a substantial improvement year-on-year. This became possible due to a positive dynamics in the coking coal market, significant diversification of our steel facilities’ products and an increase in the share of high value-added products — rails, beams and special steel. The company made every effort to efficiently use opportunities presented by favorable market conditions to improve its financial results and free cash flow. The net profit figure was largely driven by the currency denominated debt revaluation depending on currency exchange rates fluctuations.

Also, we  made significant progress in repairs of our technological equipment and increase in our machinery fleet by acquiring new vehicles,  lease financing and contractors outsourcing. Over the last six months, we made major repairs of our production facilities at our steel and mining segments, acquired and put into operation new trucks, excavators and other mining machinery. Capital investment in 1H2017 increased by more than twofold and reached 5.4 bln rubles. More than several dozen of vehicles are planned to arrive at our mining facilities by the end of the year. Considering the specifics of mining, the results of these efforts will be reflected in our future operating results.”

Consolidated Results For The 1H 2017

Mln rubles1H’ 171H’ 16%2Q’ 171Q’ 17%
Revenue
from external customers
149,384 130,197 15%71,970 77,414 -7%
Operating profit30,677 17,200 78%12,588 18,089 -30%
EBITDA 40,227 25,721 56%17,421 22,806 -24%
EBITDA, margin27%20% 24%29% 
Net profit (loss)
attributable to equity shareholders of Mechel PAO
4,994 8,300 -40%(8,908)13,902  

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

Mining Segment

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

“The coking coal market’s volatility, which we observed late last year and early this year, remained in the second quarter. April began with a hike in prices for high-quality hard coking coal concentrate from around $150 per tonne to over $300 per tonne after tropical storm Debbie seriously damaged the railroads used for transportation of coal mined in Australia’s Queensland to ports. These damages had briefly cut down coal exports from this region to international markets, creating a supply shortage. By mid-May, as local infrastructure recovered, coal prices went back to the level prior to the force majeure and remained there until the end of the quarter. In the third quarter, coal prices again began to grow and currently spot prices for hard coking coal are nearly at the level of $200 per tonne.

Due to uncertain spot market situation, negotiations between Australian mining companies and Japanese steelmakers regarding the 2Q2017 contract prices for hard coking coal had dragged out and ultimately resulted in a transfer to a new price system linked to spot indices. The ‘benchmark’ for hard coking coal was replaced by a ‘reference rate’ calculated as an average spot index over the period a month before the supply period.

The division took the advantage from the favorable market situation early in this quarter and increase coking coal exports to Asia-Pacific Region. We increased mining volumes by 4% quarter-on-quarter. Sales of coking coal concentrate also increased by 4%. Coking coal concentrate exports in 2Q2017 went up by over 20% quarter-on-quarter, and we nearly quadrupled our exports of Elga coal. Nevertheless, average commodity prices in 2Q2017 were lower than in 1Q2017, that led to a decrease in revenue and EBITDA quarter-on-quarter.”

Mln rubles1H’ 171H’ 16%2Q’ 171Q’ 17%
Revenue
from external customers
51,519 40,059 29%23,531 27,988 -16%
Revenue
inter-segment
23,268 14,711 58%10,803 12,465 -13%
EBITDA 34,563 14,438 139%14,607 19,956 -27%
EBITDA, margin46%26% 43%49% 

Steel Segment

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

“In 2Q2017, we continued to increase the share of high value-added products in the division’s sales structure. We have almost given up selling billets and reduced sales of wire rod by more than a quarter. Flat products sales remained at the previous quarter’s level. Sales of products made at Chelyabinsk Metallurgical Plant’s universal rolling mill, rebar and hardware went up. At the same time, the division’s revenue growth was limited by the second quarter’s market situation, which was weaker than in the first quarter. Since April, Russia’s rebar market has been hit by a negative price dynamics due to high stock, weak demand and the price slump on global markets of semi-finished and finished products. Prices began to recover only by the end of the quarter. This positive dynamics still persists, but effect from current prices will be reflected in the third quarter’s results. Meanwhile, even as revenue from sales to third parties grew, the division’s EBITDA decreased. Diversification of our product range improved the division’s financial results, but high commodity prices, including prices for raw materials acquired within the group, negated this effect.

In 2Q2017, we made a range of repairs to our facilities’ equipment. At Chelyabinsk Metallurgical Plant, we repaired two sintering machines and completed equipment repairs in the oxygen-converter workshop. At Izhstal, we conducted major repairs of the arc furnace for alloyed, stainless and high-speed steels. These measures will ensure stable and efficient work of those facilities and increase the level of ecological safety. We also continued to master production of new types of products. For example, Chelyabinsk Metallurgical Plant implemented technical solutions enabling the plant to produce bulk ingots. This production technology was successfully tested early in the third quarter 2017. The universal rolling mill also mastered production of new types of profiles, including rails compliant with the European railroad standards.”

Mln rubles1H’ 171H’ 16%2Q’ 171Q’ 17%
Revenue
from external customers
84,955 77,604 9%42,926 42,029 2%
Revenue
inter-segment
3,740 3,619 3%1,776 1,964 -10%
EBITDA 6,074 9,520 -36%2,518 3,556 -29%
EBITDA, margin7%12% 6%8% 

Power Segment        

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

“The second quarter’s financial results demonstrated a foreseen decrease quarter-on-quarter, as heat and electricity generation and sales went down with the closure of the heating season and beginning of repairs. The weakening of 1H2017 financial results year-on-year, even with a positive dynamics in our revenue, is due to the growth of tariffs on electricity for resale.”

Mln rubles1H’ 171H’ 16%2Q’ 171Q’ 17%
Revenue
from external customers
12,910 12,535 3%5,514 7,396 -25%
Revenue
inter-segment
8,473 7,899 7%3,835 4,638 -17%
EBITDA 966 2,014 -52%261 705 -63%
EBITDA, margin5%10% 3%6% 

The management of Mechel will host a conference call today at 18:00 p.m. Moscow time (4:00 p.m. London time, 11 a.m. New York time) to review Mechel’s financial results and comment on current operations. The call may be accessed via the Internet at http://www.mechel.com, under the Investor Relations section.

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

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

Attachments to the 1H 2017 Financial results Press Release

Attachment A

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

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

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

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

Mln rubles30.06.2017 31.12.2016 
Interest-bearing loans and borrowings, excluding interest payable, fines and penalties on overdue amounts390,629 395,571 
Interest payable18,867 16,916 
Non-current interest-bearing loans and borrowings10,209 11,644 
Other non-current financial liabilities38,201 36,197 
Other current financial liabilities618 - 
less Cash and cash equivalents(2,951)(1,689)
Net debt, excluding finance lease liabilities, fines and penalties on overdue amounts 455,573 458,639 
   
Finance lease liabilities, current portion8,232 10,175 
Finance lease liabilities, non-current portion775 421 
Net debt, excluding fines and penalties on overdue amounts464,580 469,235 
   
   
Mln rubles30.06.2017 31.12.2016 
Trade and other receivables18,938 19,054 
Inventories36,748 35,227 
Other current assets7,430 6,942 
Income tax receivables582 686 
Trade current assets63,698 61,909 
   
Trade and other payables38,186 40,985 
Advances received4,432 3,815 
Provisions and other current liabilities3,165 3,515 
Tax and similar charges payable other than income tax8,971 9,195 
Income tax payable3,632 2,552 
Trade current liabilities58,386 60,062 
   
Trade working capital5,312 1,847 

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


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

 Consolidated Results Mining Segment*** Steel Segment*** Power Segment***
Mln rubles6m 20176m 2016 6m 20176m 2016 6m 20176m 2016 6m 20176m 2016
Net profit (loss) attributable to equity shareholders of Mechel PAO4,994 8,300  10,698 250  (4,312)7,629  (13)669 
Add:           
Depreciation and depletion7,228 6,566  4,077 3,788  2,919 2,603  232 175 
Foreign exchange (gain) loss, net(1,804)(17,442) (1,496)(10,009) (308)(7,358) - (76)
Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments24,096 29,800  17,725 22,150  6,975 8,153  447 587 
Finance income(442)(3,887) (1,042)(3,551) (421)(1,337) (32)(89)
Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of accounts receivables, provision (reversal of provision) for doubtful accounts and write-off of inventories to net realisable value1,253 1,230  495 331  508 360  249 540 
Loss (profit) after tax from discontinued operations, net- 244  - (41) - 270  - 15 
Net result on the disposal of subsidiaries4 (55) 4 -  - (55) - - 
Profit (loss) attributable to non-controlling interests688 862  593 273  111 465  (16)125 
Income tax expense (benefit)3,627 (630) 3,123 821  473 (1,510) 31 59 
Pension service cost and actuarial loss, other related expenses64 83  51 61  11 21  2 1 
Other fines and penalties599 668  372 366  159 295  68 8 
Gain on write-off of accounts payable with expired legal term(80)(18) (37)-  (41)(18) (2)- 
Other one-off items- -  - -  - -  - - 
EBITDA40,227 25,721  34,563 14,438  6,074 9,520  966 2,014 
EBITDA, margin27%20% 46%26% 7%12% 5%10%
            
Mln rubles6m 20176m 2016 6m 20176m 2016 6m 20176m 2016 6m 20176m 2016
Net profit (loss) attributable to equity shareholders of Mechel PAO4,994 8,300  10,698 250  (4,312)7,629  (13)669 
Add:           
Impairment of goodwill and other non-current assets- -  - -  - -  - - 
Loss (profit) after tax from discontinued operations, net- 244  - (41) - 270  - 15 
Net result on the disposal of subsidiaries4 (55) 4 -  - (55) - - 
Effect on loss attributable to non-controlling interests- (40) - -  - (40) - - 
Foreign exchange (gain) loss, net(1,804)(17,442) (1,496)(10,009) (308)(7,358) - (76)
Pension service cost and actuarial loss, other related expenses64 83  51 61  11 21  2 1 
Other fines and penalties599 668  372 366  159 295  68 8 
Gain on write-off of accounts payable with expired legal term(80)(18) (37)-  (41)(18) (2)- 
Other one-off items- -  - -  - -  - - 
Adjusted net profit (loss), net of income tax 3,777 (8,260) 9,592 (9,374) (4,491)745  55 618 
Operating profit30,677 17,200  29,201 9,858  2,450 6,284  404 1,307 
Add:           
Impairment of goodwill and other non-current assets- -  - -  - -  - - 
Loss on write-off of property, plant and equipment148 121  62 109  54 13  32 - 
Pension service cost and actuarial loss, other related expenses64 83  51 61  11 21  2 1 
Other fines and penalties599 668  372 366  159 295  68 8 
Other one-off items- -  - -  - -  - - 
Adjusted operating profit31,488 18,072  29,686 10,393  2,674 6,612  506 1,316 
*** including inter-segment operations           


 Consolidated Results Mining Segment*** Steel Segment*** Power Segment***
Mln rubles2q 20171q 2017 2q 20171q 2017 2q 20171q 2017 2q 20171q 2017
Net (loss) profit attributable to equity shareholders of Mechel PAO(8,908)13,902  (2,163)12,858  (6,530)2,218  (250)237 
Add:           
Depreciation and depletion3,811 3,417  2,149 1,928  1,540 1,379  122 110 
Foreign exchange loss (gain), net7,876 (9,679) 4,106 (5,601) 3,756 (4,063) 14 (14)
Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments11,704 12,392  8,664 9,062  3,348 3,626  217 231 
Finance income(315)(127) (554)(488) (267)(154) (19)(13)
Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of accounts receivables, provision (reversal of provision) for doubtful accounts and write-off of inventories to net realisable value675 577  322 173  210 298  143 106 
Net result on the disposal of subsidiaries4 -  4 -  - -  - - 
Profit (loss) attributable to non-controlling interests132 556  202 392  (51)162  (19)3 
Income tax expense (benefit)  2,088 1,539  1,689 1,433  406 68  (7)38 
Pension service cost and actuarial loss, other related expenses32 32  25 25  6 6  1 1 
Other fines and penalties373 226  199 174  113 44  61 7 
Gain on write-off of accounts payable with expired legal term(51)(29) (37)-  (13)(28) (1)(1)
Other one-off items- -  - -  - -  - - 
EBITDA17,421 22,806  14,607 19,956  2,518 3,556  261 705 
EBITDA, margin24%29% 43%49% 6%8% 3%6%
            
Mln rubles2q 20171q 2017 2q 20171q 2017 2q 20171q 2017 2q 20171q 2017
Net (loss) profit attributable to equity shareholders of Mechel PAO(8,908)13,902  (2,163)12,858  (6,530)2,218  (250)237 
Add:           
Impairment of goodwill and other non-current assets- -  - -  - -  - - 
Net result on the disposal of subsidiaries4 -  4 -  - -  - - 
Effect on loss attributable to non-controlling interests- -  - -  - -  - - 
Foreign exchange loss (gain), net7,876 (9,679) 4,106 (5,601) 3,756 (4,063) 14 (14)
Pension service cost and actuarial loss, other related expenses32 32  25 25  6 6  1 1 
Other fines and penalties373 226  199 174  113 44  61 7 
Gain on write-off of accounts payable with expired legal term(51)(29) (37)-  (13)(28) (1)(1)
Other one-off items- -  - -  - -  - - 
Adjusted net (loss)  profit, net of income tax (674)4,452  2,134 7,456  (2,668)(1,823) (175)230 
            
Operating profit (loss)12,588 18,089  11,945 17,256  683 1,767  (73)478 
Add:           
Impairment of goodwill and other non-current assets- -  - -  - -  - - 
Loss on write-off of property, plant and equipment77 71  27 35  49 5  1 31 
Pension service cost and actuarial loss, other related expenses32 32  25 25  6 6  1 1 
Other fines and penalties373 226  199 174  113 44  61 7 
Other one-off items- -  - -  - -  - - 
Adjusted operating profit (loss)13,070 18,418  12,196 17,490  851 1,822  (10)517 
*** including inter-segment operations           


Attachment B

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT (LOSS) AND OTHER COMPREHENSIVE INCOME (LOSS)
(All amounts are in millions of Russian rubles) 6 months ended June 30,
  2017* 2016*
  (unaudited) (unaudited)
Continuing operations    
Revenue 149,384  130,197 
Cost of sales (80,608) (72,175)
Gross profit 68,776  58,022 
     
Selling and distribution expenses (27,723) (28,167)
Loss on write-off of property, plant and equipment (148) (121)
Provision for doubtful accounts (321) (543)
Taxes other than income taxes (2,556) (3,168)
Administrative and other operating expenses (7,718) (9,100)
Other operating income 367  277 
Total selling, distribution and operating income and (expenses), net (38,099) (40,822)
Operating profit 30,677  17,200 
     
Finance income 442  3,887 
Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments of RUB 428 million, RUB 4,567 million for the 6 months ended June 30, 2017 and 2016, respectively (24,096) (29,800)
Foreign exchange gain (loss), net 1,804  17,442 
Share of profit of associates, net of provision 11  16 
Other income 541  168 
Other expenses (70) (137)
Total other income and (expenses), net (21,368) (8,424)
Income before tax from continuing operations 9,309  8,776 
     
Income tax (expense) benefit (3,627) 630 
Income for the period from continuing operations 5,682  9,406 
     
Discontinued operations    
Loss after tax for the period from discontinued operations, net -  (244)
Profit for the period 5,682  9,162 
     
Attributable to:    
Equity shareholders of Mechel PAO 4,994  8,300 
Non-controlling interests 688  862 
     
Other comprehensive income    
Other comprehensive income to be reclassified to profit or loss in subsequent periods, net of income tax:   28  1,077 
Exchange differences on translation of foreign operations 27  1,085 
Net gain (loss) on available for sale financial assets 1  (8)
Other comprehensive income for the period, net of tax 28  1,077 
Total comprehensive income, net of tax 5,710  10,239 
     
Attributable to:    
Equity shareholders of Mechel PAO 5,022  9,377 
Non-controlling interests 688  862 
       


INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(All amounts are in millions of Russian rubles)    
   June 30, 2017*  December 31, 2016
  (unaudited)  
Assets    
Current assets    
Cash and cash equivalents 2,951  1,689 
Trade and other receivables 18,938  19,054 
Inventories 36,748  35,227 
Income tax receivables 582  686 
Other current financial assets 26  167 
Other current assets 7,430  6,942 
Total current assets 66,675  63,765 
     
Non-current assets    
Property, plant and equipment 202,254  204,353 
Mineral licenses 35,167  36,099 
Non-current financial assets 205  235 
Investments in associates 275  265 
Deferred tax assets 1,514  1,502 
Goodwill 18,344  18,355 
Other non-current assets 804  891 
Total non-current assets 258,563  261,700 
Total assets 325,238  325,465 
     
Equity and liabilities    
Current liabilities    
Interest-bearing loans and borrowings, including interest payable, fines and penalties on overdue amounts of RUB 40,287 million and RUB 38,594 million as of June 30, 2017 and December 31, 2016, respectively 430,916  434,165 
Trade and other payables 38,186  40,985 
Advances received 4,432  3,815 
Provisions 3,121  3,496 
Pension obligations 990  944 
Finance lease liabilities 8,232  10,175 
Income tax payable 3,632  2,552 
Taxes and similar charges payable other than income tax 8,971  9,195 
Other current financial liabilities 618  - 
Other current liabilities 44  19 
Total current liabilities 499,142  505,346 
     
Non-current liabilities    
Interest-bearing loans and borrowings 10,209  11,644 
Provisions 3,770  3,420 
Pension obligations 3,583  3,501 
Finance lease liabilities 775  421 
Deferred tax liabilities 16,938  16,282 
Other non-current liabilities -  159 
Other non-current financial liabilities 38,735  36,740 
Income tax payable 151  540 
Total non-current liabilities 74,161  72,707 
Total liabilities 573,303  578,053 
     
Equity    
Common shares 4,163  4,163 
Preferred shares 833  833 
Additional paid-in capital 28,326  28,326 
Accumulated other comprehensive income 876  848 
Accumulated deficit (290,306) (294,444)
Equity attributable to equity shareholders of Mechel PAO (256,108) (260,274)
Non-controlling interests 8,043  7,686 
Total equity (248,065) (252,588)
Total equity and liabilities 325,238  325,465 
       


INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(All amounts are in millions of Russian rubles) 6 months ended June 30,
  2017* 2016*
  (unaudited) (unaudited)
Cash Flows from Operating Activities    
Profit for the period 5,682  9,162 
Less loss after tax for the period from discontinued operations, net -  (244)
Income for the period from continuing operations 5,682  9,406 
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:    
Depreciation 6,334  5,745 
Depletion and amortization 894  822 
Foreign exchange (gain) loss, net (1,804) (17,442)
Deferred income taxes 646  (252)
Provision for doubtful accounts 321  543 
Write-off of accounts receivable 18  210 
Write-off of inventories to net realisable value 631  386 
Revision in estimated cash flows of rehabilitation provision -  (12)
Loss on write-off of property, plant and equipment 148  121 
Loss on disposal of non-current assets 134  10 
Gain on write-off of accounts payable with expired legal term (80) (16)
Pension service cost and actuarial loss, other related expenses 64  83 
Finance income (442) (3,887)
Finance costs, including fines and penalties on overdue loans and borrowings and finance lease payments 24,096  29,800 
Gain on royalty and other proceeds associated with disposal of Bluestone (462) (10)
Other 162  82 
Changes in working capital items:    
Trade and other receivables (334) (5,247)
Inventories (2,474) (1,714)
Trade and other payables (2,247) 1,318 
Advances received 597  65 
Taxes payable and other current liabilities 2,525  1,090 
Other current assets (424) (973)
Income tax paid (2,360) (545)
Net operating cash flows from discontinued operations -  (306)
     
Net cash provided by operating activities  31,625  19,277 
     
Cash Flows from Investing Activities    
Loans issued and other investments (5) (11)
Interest received 123  1 
Proceeds from disposal of subsidiaries 82  3 
Royalty and other proceeds associated with disposal of Bluestone 462  10 
Proceeds from loans issued and other investments 142  28 
Proceeds from disposals of property, plant and equipment 58  97 
Purchases of property, plant and equipment (3,102) (989)
Interest paid, capitalized (188) (243)
Net cash used in investing activities  (2,428) (1,104)
     
Cash Flows from Financing Activities    
Proceeds from loans and borrowings 6,179  4,140 
Repayment of loans and borrowings (15,984) (36,071)
Interest paid, including fines and penalties (15,869) (17,203)
Proceeds from sales of 49% share in Elga coal complex, with put-option granted -  34,300 
Repayment of obligations under finance lease (1,983) (968)
Deferred payments  for acquisition of assets (108) - 
Deferred consideration paid for the acquisition of subsidiaries in prior periods (1,545) (2,652)
Net cash used in financing activities  (29,310) (18,454)
     
Effect of exchange rate changes on cash and cash equivalents (268) 12 
     
Net decrease in cash and cash equivalents  (381) (269)
     
Cash and cash equivalents at beginning of period 1,689  3,079 
Cash and cash equivalents net of overdrafts at beginning of period 1,453  891 
Cash and cash equivalents at end of period 2,951  2,822 
Cash and cash equivalents net of overdrafts at end of period 1,072  622 

*These interim condensed consolidated financial statements were prepared by Mechel PAO in accordance with IFRS and have not been audited by the independent auditor. If these interim condensed consolidated financial statements are audited in the future, the audit could reveal differences in our consolidated financial results and we cannot assure that any such differences would not be material.
There were certain reclassifications to conform with the current period presentation.


            

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