Mechel Reports the 2017 Financial Results


Consolidated revenue 299.1 bln rubles (+8% compared to FY2016)
EBITDA* - 81.1 bln rubles (+23% compared to FY2016)
Profit attributable to equity shareholders of Mechel PAO 11.6 bln rubles

MOSCOW, April 05, 2018 (GLOBE NEWSWIRE) -- Mechel PAO (MOEX:MTLR) (NYSE:MTL), a leading Russian mining and steel group, announces financial results for the full year 2017.

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

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

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

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

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

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

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

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

Consolidated Results For The Full Year 2017

Mln rublesFY 2017FY 2016%4Q’173Q’17%
Revenue
from external customers
299,113 276,009 8%76,316 73,413 4%
Operating profit57,167 42,690 34%10,752 15,738 -32%
EBITDA 81,106 66,164 23%21,966 18,913 16%
EBITDA, margin27%24% 29%26% 
Profit
attributable to equity shareholders of Mechel PAO
11,557 7,126 62%443 6,120 -93%

Mining Segment

Mechel-Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted:
“This past year was successful for the mining division with regard to financial results. The division’s revenue has grown by 12% year-on-year, EBITDA went up by 47%, and EBITDA margin reached 43%.

“This improvement was due to a favorable market conditions. The metallurgical coal market was highly volatile in 2017, with spot prices fluctuating from $141 to $314 per tonne through the year. Nevertheless, coal prices in 2017 have well exceeded the 2016 price level. For example, the average price on quarterly contracts for high-quality hard coking coal was some $210 FOB Australia, which is $96 or 84% higher than in 2016. Late 2017 was characterized by an upward price dynamics for high-quality coking coal. In November 2017 prices again topped $200 and remained over this level until the end of March 2018. As a result, contract prices for premium coking coal demonstrated further growth in 1Q2018 and reached $237 per tonne.

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

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

Mln rublesFY 2017FY 2016%4Q’173Q’17%
Revenue
from external customers
100,129 89,647 12%25,444 23,166 10%
Revenue
inter-segment
42,286 31,907 33%9,312 9,706 -4%
EBITDA 61,425 41,884 47%14,098 12,764 10%
EBITDA, margin43%34% 41%39% 

Steel Segment

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

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

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

Mln rublesFY 2017FY 2016%4Q’173Q’17%
Revenue
from external customers
172,760 161,639 7%43,383 44,422 -2%
Revenue
inter-segment
7,622 7,254 5%2,209 1,673 32%
EBITDA 18,817 23,172 -19%6,642 6,101 9%
EBITDA, margin10%14% 15%13% 

Power Segment        

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

Mln rublesFY 2017FY 2016%4Q’173Q’17%
Revenue
from external customers
26,224 24,723 6%7,489 5,825 29%
Revenue
inter-segment
16,338 15,903 3%4,427 3,438 29%
EBITDA 2,308 1,662 39%1,319 23  
EBITDA, margin5%4% 11%0% 

***

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

***

Alexey Lukashov
Director of Investor Relations
Mechel PAO
Phone: 7-495-221-88-88
Fax: 7-495-221-88-00
alexey.lukashov@mechel.com

***

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

***

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

Attachments to the FY 2017 Earnings Press Release

Attachment A

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

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

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

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

Mln rubles31.12.2017 31.12.2016 
Interest-bearing loans and borrowings, excluding interest payable, fines and penalties on overdue amounts380,541 395,571 
Interest payable20,420 16,916 
Non-current interest-bearing loans and borrowings17,360 11,644 
Other non-current financial liabilities40,916 36,740 
Other current financial liabilities734 - 
less Cash and cash equivalents(2,452)(1,689)
Net debt, excluding finance lease liabilities, fines and penalties on overdue amounts 457,519 459,182 
   
Current finance lease liabilities7,476 10,175 
Non-current finance lease liabilities1,878 421 
Net debt, excluding fines and penalties on overdue amounts466,873 469,778 
   
   
Mln rubles31.12.2017 31.12.2016 
Trade and other receivables18,762 19,054 
Inventories37,990 35,227 
Other current assets7,589 6,942 
Income tax receivables107 686 
Trade current assets64,448 61,909 
   
Trade and other payables33,469 40,985 
Advances received4,385 3,815 
Provisions and other current liabilities3,428 3,515 
Taxes and similar charges payable other than income tax6,696 9,195 
Income tax payable4,578 2,552 
Trade current liabilities52,556 60,062 
   
Trade working capital11,892 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 consolidated statement of profit (loss) as follows:

        
 Consolidated Results Mining
Segment
***
 Steel
Segment
***
 Power Segment***
Mln rubles12m 201712m 2016 12m 201712m 2016 12m 201712m 2016 12m 201712m 2016
Profit (loss) attributable to equity shareholders of Mechel PAO11,557 7,126  18,188 1,797  (5,130)6,399  (59)(517)
Add:           
Depreciation, depletion and amortization14,227 13,714  7,979 7,912  5,800 5,435  448 367 
Foreign exchange (gain) loss, net(4,237)(25,947) (4,379)(14,960) 144 (10,904) (2)(83)
Finance costs including fines and penalties on overdue loans and borrowings and finance leases
payments
47,610 54,240  34,546 39,345  14,136 17,411  880 1,078 
Finance income(633)(1,176) (1,810)(2,482) (717)(2,234) (57)(54)
Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets,
write-off of accounts receivable, provision (reversal of provision) for doubtful accounts and write-off of
inventories to net realisable value
7,334 8,447  4,443 2,584  2,406 5,389  486 474 
Loss (profit) after tax for the year from discontinued operations, net- 426  - -  - 406  - 20 
Net result on the disposal of subsidiaries(470)(194) (470)-  - (194) - - 
Profit attributable to non-controlling interests1,013 1,706  407 511  417 1,056  189 139 
Income tax expense (benefit)3,150 4,893  2,023 5,019  800 (265) 327 139 
Pension service cost and actuarial loss, other related expenses(33)(171) (58)(198) 22 26  3 2 
Other fines and penalties2,551 1,396  941 556  1,512 742  98 98 
Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired
legal term
(963)(115) (385)(19) (573)(95) (5)(1)
Other one-off items- 1,819  - 1,819  - -  - - 
EBITDA81,106 66,164  61,425 41,884  18,817 23,172  2,308 1,662 
EBITDA, margin27%24% 43%34% 10%14% 5%4%
            
Mln rubles12m 201712m 2016 12m 201712m 2016 12m 201712m 2016 12m 201712m 2016
Profit (loss) attributable to equity shareholders of Mechel PAO11,557 7,126  18,188 1,797  (5,130)6,399  (59)(517)
Add:           
Impairment of goodwill and other non-current assets6,081 5,202  3,801 1,336  2,280 3,866  - - 
Loss (profit) after tax for the year from discontinued operations, net- 426  - -  - 406  - 20 
Net result on the disposal of subsidiaries(470)(194) (470)-  - (194) - - 
Effect on loss attributable to non-controlling interests(453)(109) (240)-  (213)(109) - - 
Foreign exchange (gain) loss, net(4,237)(25,947) (4,379)(14,960) 144 (10,904) (2)(83)
Pension service cost and actuarial loss, other related expenses(33)(171) (58)(198) 22 26  3 2 
Other fines and penalties2,551 1,396  941 556  1,512 742  98 98 
Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired
legal term
(963)(115) (385)(19) (573)(95) (5)(1)
Other one-off items- 1,819  - 1,819  - -  - - 
Adjusted profit (loss), net of income tax 14,033 (10,567) 17,398 (9,669) (1,958)137  35 (481)
            
Operating profit57,167 42,690  48,191 31,012  9,154 11,531  1,267 701 
Add:           
Impairment of goodwill and other non-current assets6,081 5,202  3,801 1,336  2,280 3,866  - - 
Loss on write-off of non-current assets321 1,953  135 863  145 1,089  41 1 
Pension service cost and actuarial loss, other related expenses(33)(171) (58)(198) 22 26  3 2 
Other fines and penalties2,551 1,396  941 556  1,512 742  98 98 
Other one-off items- 1,819  - 1,819  - -  - - 
Adjusted operating profit66,087 52,889  53,010 35,388  13,113 17,254  1,409 802 
            
*** including inter-segment operations

 
           
            
            
            
 Consolidated Results Mining
Segment
***
 Steel
Segment
***
 Power Segment***
Mln rubles4q
2017
3q
2017
 4q
2017
3q
2017
 4q
2017
3q
2017
 4q
2017
3q
2017
Profit (loss) attributable to equity shareholders of Mechel PAO443 6,120  1,316 6,175  (1,303)487  522 (569)
Add:           
Depreciation, depletion and amortization3,185 3,813  1,716 2,185  1,353 1,528  116 101 
Foreign exchange (gain) loss, net(635)(1,797) (715)(2,168) 81 372  (1)(1)
Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments11,337 12,177  8,094 8,728  3,454 3,709  215 216 
Finance income(140)(51) (407)(361) (145)(150) (13)(12)
Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of accounts receivable, provision (reversal of provision) for doubtful accounts and write-off of inventories to net realisable value6,531 (454) 3,933 11  2,418 (523) 180 58 
Net result on the disposal of subsidiaries4 (478) 4 (478) - -  - - 
Profit (loss) attributable to non-controlling interests168 160  22 (207) 36 269  110 96 
Income tax expense (benefit)344 (821) 134 (1,234) (31)357  241 55 
Pension service cost and actuarial loss, other related expenses(128)32  (133)25  5 6  - 1 
Other fines and penalties1,659 293  465 104  1,243 110  (49)79 
Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term(802)(81) (331)(17) (469)(64) (2)(1)
Other one-off items- -  - -  - -  - - 
EBITDA21,966 18,913  14,098 12,764  6,642 6,101  1,319 23 
EBITDA, margin29%26% 41%39% 15%13% 11%0%
            
Mln rubles4q
2017
3q
2017
 4q
2017
3q
2017
 4q
2017
3q
2017
 4q
2017
3q
2017
Profit (loss) attributable to equity shareholders of Mechel PAO443 6,120  1,316 6,175  (1,303)487  522 (569)
Add:           
Impairment of goodwill and other non-current assets6,081 -  3,801 -  2,280 -  - - 
Net result on the disposal of subsidiaries4 (478) 4 (478) - -  - - 
Effect on loss attributable to non-controlling interests(453)-  (240)-  (213)-  - - 
Foreign exchange (gain) loss, net(635)(1,797) (715)(2,168) 81 372  (1)(1)
Pension service cost and actuarial loss, other related expenses(128)32  (133)25  5 6  - 1 
Other fines and penalties1,659 293  465 104  1,243 110  (49)79 
Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired
legal term
(802)(81) (331)(17) (469)(64) (2)(1)
Other one-off items- -  - -  - -  - - 
Adjusted profit (loss), net of income tax 6,169 4,089  4,167 3,641  1,624 911  470 (491)
            
Operating profit (loss)10,752 15,738  8,116 10,874  1,663 5,041  1,066 (203)
Add:           
Impairment of goodwill and other non-current assets6,081 -  3,801 -  2,280 -  - - 
Loss on write-off of non-current assets170 4  69 4  91 -  10 - 
Pension service cost and actuarial loss, other related expenses(128)32  (133)25  5 6  - 1 
Other fines and penalties1,659 293  465 104  1,243 110  (49)79 
Other one-off items- -  - -  - -  - - 
Adjusted operating profit (loss)18,534 16,067  12,318 11,007  5,282 5,157  1,027 (123)
            
*** including inter-segment operations           
            

Attachment B

 
CONSOLIDATED STATEMENT OF PROFIT (LOSS) AND
OTHER COMPREHENSIVE INCOME (LOSS)
(All amounts are in millions of Russian rubles, unless stated otherwise) Year ended December 31, Year ended December 31,
  2017  2016 
     
Continuing operations    
Revenue 299,113  276,009 
Cost of sales (160,356) (146,322)
Gross profit 138,757  129,687 
     
Selling and distribution expenses (55,686) (56,233)
Loss on write-off of non-current assets (321) (1,953)
Impairment of goodwill and other non-current assets (6,081) (5,202)
Provision for doubtful accounts (332) (758)
Taxes other than income taxes (4,967) (5,913)
Administrative and other operating expenses (15,590) (18,791)
Other operating income 1,387  1,853 
Total selling, distribution and operating income and (expenses), net (81,590) (86,997)
Operating profit 57,167  42,690 
     
Finance income 633  1,176 
Finance costs including fines and penalties on overdue loans and
borrowings and finance leases payments of RUB 1,161 million and
RUB 6,013 million for the periods ended December 31, 2017 and
2016, respectively
 (47,610) (54,240)
Foreign exchange gain (loss), net 4,237  25,947 
Share of profit (loss) of associates, net 18  (17)
Other income 1,495  598 
Other expenses (220) (2,003)
Total other income and (expense), net (41,447) (28,539)
Profit before tax from continuing operations 15,720  14,151 
     
Income tax expense (3,150) (4,893)
Profit for the year from continuing operations 12,570  9,258 
     
Discontinued operations    
(Loss) profit after tax for the year from discontinued operations, net -  (426)
Profit for the year 12,570  8,832 
     
Attributable to:    
Equity shareholders of Mechel PAO 11,557  7,126 
Non-controlling interests 1,013  1,706 
     
Other comprehensive income    
Other comprehensive income to be reclassified to profit or loss in
subsequent periods, net of income tax:
 313  430 
Exchange differences on translation of foreign operations 313  431 
Net loss on available for sale financial assets -  (1)
Other comprehensive income (loss) not to be reclassified to profit
or loss in subsequent periods, net of income tax:
 145  (23)
Re-measurement of defined benefit plans 145  (23)
Other comprehensive income for the year, net of tax 458  407 
     
Total comprehensive income for the year, net of tax 13,028  9,239 
     
Attributable to:    
Equity shareholders of Mechel PAO 12,012  7,529 
Non-controlling interests 1,016  1,710 
     
Earnings (loss) per share    
Weighted average number of common shares 416,270,745  416,270,745 
Basic and diluted, profit for the year attributable to common equity
shareholders of Mechel PAO
 27.76  17.12 
Earnings per share from continuing operations (Russian rubles per
share), basic and diluted
 27.76  17.99 
Loss per share from discontinued operations (Russian rubles per
share)
 -  (0.87)
       


     
CONSOLIDATED STATEMENT OF FINANCIAL POSITION    
(All amounts are in millions of Russian rubles)    
  December 31, 2017 December 31, 2016
     
Assets    
Current assets    
Inventories 37,990  35,227 
Income tax receivables 107  686 
Trade and other receivables 18,762  19,054 
Other current assets 7,589  6,942 
Other current financial assets 562  167 
Cash and cash equivalents 2,452  1,689 
Total current assets 67,462  63,765 
     
Non-current assets    
Property, plant and equipment 197,875  204,353 
Mineral licenses 33,240  36,099 
Goodwill and other intangible assets 19,211  18,355 
Investments in associates 283  265 
Deferred tax assets 96  1,502 
Other non-current assets 758  891 
Non-current financial assets 202  235 
Total non-current assets 251,665  261,700 
Total assets 319,127  325,465 
     
Equity and liabilities    
Current liabilities    
Interest-bearing loans and borrowings, including interest payable, fines and
penalties on overdue amounts of RUB 41,992 million and RUB 38,594
million as of December 31, 2017 and 2016, respectively
 422,533  434,165 
Trade and other payables 33,469  40,985 
Finance lease liabilities 7,476  10,175 
Income tax payable 4,578  2,552 
Taxes and similar charges payable other than income tax 6,696  9,195 
Advances received 4,385  3,815 
Other current financial liabilities 734  - 
Other current liabilities 69  19 
Pension obligations 849  944 
Provisions 3,359  3,496 
Total current liabilities 484,148  505,346 
     
Non-current liabilities    
Interest-bearing loans and borrowings 17,360  11,644 
Finance lease liabilities 1,878  421 
Income tax payable -  540 
Other non-current financial liabilities 40,916  36,740 
Other non-current liabilities 138  159 
Pension obligations 3,512  3,501 
Provisions 3,814  3,420 
Deferred tax liabilities 11,494  16,282 
Total non-current liabilities 79,112  72,707 
Total liabilities 563,260  578,053 
     
Equity    
Common shares 4,163  4,163 
Preferred shares 833  833 
Additional paid-in capital 24,378  28,326 
Accumulated other comprehensive income 1,303  848 
Accumulated deficit (283,743) (294,444)
Equity attributable to equity shareholders of Mechel PAO (253,066) (260,274)
Non-controlling interests 8,933  7,686 
Total equity (244,133) (252,588)
Total equity and liabilities 319,127  325,465 
       


 
CONSOLIDATED STATEMENT OF CASH FLOWS
(All amounts are in millions of Russian rubles) Year ended December 31, Year ended December 31,
  2017  2016 
     
Cash flows from operating activities    
Profit for the year 12,570  8,832 
Less loss (profit) after tax for the year from discontinued operations, net -  426 
Profit for the year from continuing operations 12,570  9,258 
Adjustments to reconcile profit from continuing operations to net cash
provided by operating activities:
    
Depreciation 12,555  11,813 
Depletion and amortisation 1,672  1,901 
Foreign exchange (gain) loss, net (4,237) (25,947)
Deferred tax (income) expense (3,401) 5,104 
Provision for doubtful accounts 332  758 
Write-off of accounts receivable 109  113 
Write-off of inventories to net realisable value 470  364 
Revision in estimated cash flows of rehabilitation provision -  (375)
Loss on write-off of non-current assets 321  1,953 
Impairment of goodwill and other non-current assets 6,081  5,202 
Loss on disposal of non-current assets 21  57 
Gain on sale of investments (2) (186)
Gain on restructuring and forgiveness of accounts payable and write-off of
accounts payable with expired legal term
 (963) (115)
Curtailment and remeasurement of pension obligations (175) (325)
Pension service cost and actuarial loss, other related expenses 142  154 
Finance income (633) (1,176)
Finance costs including fines and penalties on overdue loans and
borrowings and finance leases payments of RUB 1,161 million and RUB
6,031 million for the periods ended December 31, 2017 and 2016, respectively
 47,610  54,240 
VEB commissions write-off -  1,411 
Gain on royalty and other proceeds associated with disposal of Bluestone (474) (121)
Provision for non-recoverable advances to pension funds -  408 
Other 281  51 
     
Changes in working capital items:    
Trade and other receivables (318) (5,542)
Inventories (4,508) (1,070)
Trade and other payables (3,435) (4,259)
Advances received 625  588 
Taxes payable and other liabilities 4,064  2,368 
Other current assets (895) (883)
     
Income tax paid (4,530) (2,101)
Net operating cash flows from discontinued operations -  (436)
     
Net cash provided by operating activities 63,282  53,207 
 

 
    
Cash flows from investing activities    
Loans issued and other investments (525) (133)
Interest received 165  128 
Royalty and other proceeds associated with disposal of Bluestone 474  103 
Proceeds from disposal of subsidiaries, net of cash disposed 94  145 
Purchases of available for sale securities -  (4)
Proceeds from loans issued and other investments 144  31 
Proceeds from disposals of property, plant and equipment 328  285 
Purchases of property, plant and equipment (6,460) (4,742)
Purchases of intangible assets (771) - 
Interest paid, capitalized (587) (782)
Net cash used in investing activities (7,138) (4,969)
     
Cash flows from financing activities    
Proceeds from loans and borrowings 23,200  4,002 
Repayment of loans and borrowings (35,033) (42,322)
Dividends paid to shareholders of Mechel PAO (856) (5)
Dividends paid to non-controlling interests (122) (2)
Interest paid, including fines and penalties (31,948) (33,872)
Acquisition of non-controlling interests in subsidiaries (3,358) - 
Proceeds from sales of 49% stakes in Elga coal complex, with put-option granted -  34,300 
Repayment of obligations under finance lease (3,513) (3,238)
Deferred payments for acquisition of assets (455) - 
Deferred consideration paid for the acquisition of subsidiaries in prior periods (3,652) (4,732)
Net cash used in financing activities (55,737) (45,869)
     
Effect of exchange rate changes on cash and cash equivalents (637) (1,807)
     
Net (decrease) increase in cash and cash equivalents (230) 562 
     
Cash and cash equivalents at beginning of period 1,689  3,079 
Cash and cash equivalents, net of overdrafts at beginning of period 1,453  891 
Cash and cash equivalents at end of period 2,452  1,689 
Cash and cash equivalents, net of overdrafts at end of period 1,223  1,453