Open Joint Stock Company Chelyabinsk Pipe-Rolling Plant financi… · · 2015-10-27Open Joint...
Transcript of Open Joint Stock Company Chelyabinsk Pipe-Rolling Plant financi… · · 2015-10-27Open Joint...
Open Joint Stock Company
Chelyabinsk Pipe-Rolling
Plant Unaudited Condensed Consolidated Interim
Financial Statements For the Six Months Ended 30 June 2013
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT
TABLE OF CONTENTS
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 ........................................................................................ 1 UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013:
Unaudited condensed consolidated interim statement of financial position ................................ 2 Unaudited condensed consolidated interim statement of comprehensive income ...................... 3 Unaudited condensed consolidated interim statement of cash flows .......................................... 4 Unaudited condensed consolidated interim statement of changes in equity ............................... 5
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. General information ................................................................................................................................. 6 2. Basis of preparation ................................................................................................................................ 6 3. Adoption of new or revised standards and interpretations ...................................................................... 8 4. New accounting pronouncements ......................................................................................................... 10 5. Subsidiaries ........................................................................................................................................... 11 6. Business combinations and disposals .................................................................................................. 12 7. Segment reporting ................................................................................................................................. 13 8. Property, plant and equipment .............................................................................................................. 17 9. Inventory ................................................................................................................................................ 18 10. Loans receivable ................................................................................................................................... 18 11. Trade and other receivables ................................................................................................................. 19 12. Borrowings ............................................................................................................................................ 20 13. Accounts payable and accrued expenses ............................................................................................ 23 14. Revenue ................................................................................................................................................ 23 15. Cost of sales ......................................................................................................................................... 23 16. Distribution costs................................................................................................................................... 24 17. General and administrative expenses .................................................................................................. 24 18. Impairment of assets............................................................................................................................. 24 19. Finance income and costs .................................................................................................................... 24 20. Income tax ............................................................................................................................................ 25 21. Earnings per share................................................................................................................................ 25 22. Balances and transactions with related parties .................................................................................... 25 23. Contingencies, commitments and operating risks ................................................................................ 27 24. Financial risk management ................................................................................................................... 28 25. Events after the reporting period .......................................................................................................... 29
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
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Management is responsible for the preparation of condensed consolidated interim financial statements that present fairly the financial position of Open Joint Stock Company Chelyabinsk Pipe-Rolling Plant and its subsidiaries (the “Group”) at 30 June 2013, and the results of its operations, cash flows and changes in equity for the six months then ended, in accordance with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”). In preparing the consolidated financial statements, management is responsible for:
properly selecting and applying accounting policies;
presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
providing additional disclosures when compliance with the specific requirements in International Financial Reporting Standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s condensed consolidated interim financial position and financial performance; and
making an assessment of the Group’s ability to continue as a going concern.
Management is also responsible for:
designing, implementing and maintaining an effective and sound system of internal controls, throughout the Group;
maintaining adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the condensed consolidated interim financial position of the Group, and which enable them to ensure that the condensed consolidated interim financial statements of the Group comply with IAS 34;
maintaining statutory accounting records in compliance with local legislation and accounting standards in the respective jurisdictions in which the Group operates;
taking such steps as are reasonably available to them to safeguard the assets of the Group; and
detecting and preventing fraud and other irregularities.
The condensed consolidated interim financial statements for the six months ended 30 June 2013 were approved on 28 August 2013 by: On behalf of the management: ________________________________ ________________________________ Yaroslav Zhdan Andrey Chaykov Chief Executive Officer Head of finance department –
financial officer Chelyabinsk, Russia 28 August 2013
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
2
Notes
30 June 2013
31 December
2012
(unaudited) (audited) ASSETS
Non-current assets Property, plant and equipment 8 60,600,504 62,001,977
Advances for capital construction 938,804 885,285 Goodwill 6,328,601 6,293,263 Intangible assets 1,194,089 1,205,215 Investments in associates 38,954 38,954 Other financial assets 3,212,875 3,212,875 Deferred tax assets 374,642 268,645 Other non-current assets 149,941 150,325
Total non-current assets 72,838,410 74,056,539
Current assets Inventory 9 23,598,873 21,689,289 Trade and other receivables 11 25,950,003 23,634,765 Current income tax prepayment 355,195 76,497 Loans receivable 10 879,601 758,544 Cash and cash equivalents 3,155,381 5,585,974
Total current assets 53,939,053 51,745,069
TOTAL ASSETS 126,777,463 125,801,608
EQUITY DEFICIT AND LIABILITIES Share capital 2,498,261 2,498,261 Legal reserve 70,857 70,857 Translation reserve 51,630 (5,311) Treasury shares (18,044,001) (17,795,009) Retained earnings 3 5,848,932 6,103,952
Equity deficit attributable to owners of the Company (9,574,321) (9,127,250)
Non-controlling interests 291,599 308,323
Total equity deficit (9,282,722) (8,818,927)
Non-current liabilities
Preferred shares 147,682 147,682 Borrowings 12 82,418,270 18,995,409 Accounts payable and accrued expenses 13 238,863 – Retirement benefit obligations 3 535,605 547,546 Deferred tax liabilities 3,646,907 3,817,077
Total non-current liabilities 86,987,327 23,507,714
Current liabilities
Borrowings 12 20,541,400 83,987,664 Accounts payable and accrued expenses 13 23,988,835 21,036,470 Advances from customers 2,375,236 4,170,325 Income tax payable 17,196 252,052 Other taxes payable 2,150,191 1,666,310
Total current liabilities 49,072,858 111,112,821
Total liabilities 136,060,185 134,620,535
TOTAL EQUITY DEFICIT AND LIABILITIES 126,777,463 125,801,608
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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Six months ended 30 June
Notes 2013 2012
(unaudited) (unaudited)
Revenue 14 55,426,962
55,208,292 Cost of sales 15 (42,169,973)
(41,739,618)
Gross profit 13,256,989
13,468,674
Distribution costs 16 (3,342,274)
(3,267,656)
General and administrative expenses 17 (3,840,454)
(3,873,077) (Loss) / gain on disposal of property, plant and equipment (49,036)
13,246
Impairment of assets 18 (72,551)
(387,573)
Operating profit 5,952,674
5,953,614
Finance income 19 109,368
107,619
Finance costs 19 (6,097,075)
(6,056,373) Dividend income 71,368
236,737
Foreign exchange (loss) / gain, net (356,990)
663,989 Share of loss of associates –
(334)
Gain on disposal of subsidiary 6 36,733
56,240
(Loss) / profit before income tax (283,922)
961,492
Income tax 20 (22,222)
(480,398) (Loss) / profit for the period (306,144)
481,094
Items that will not be reclassified subsequently to profit or loss:
Actuarial gains / (losses) on retirement benefits 34,400
(4,338)
Items that may be reclassified subsequently to profit or loss:
Exchange differences income / (expense) on translating of foreign operations 56,941
(7,409)
Other comprehensive income / (loss) for the period 91,341
(11,747)
Total comprehensive (loss) / income for the period (214,803)
469,347
(Loss) / profit for the period attributable to:
Owners of the Company (289,420)
500,273 Non-controlling interests (16,724)
(19,179)
(306,144)
481,094
Total comprehensive (loss) / income for the period attributable to:
Owners of the Company (198,079)
488,526 Non-controlling interests (16,724)
(19,179)
(214,803)
469,347
(Loss) / earnings per share attributable to owners of the Company, basic and diluted (Russian Roubles per share) 21 (0.93) 1.58
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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Six months ended 30 June
Notes 2013
2012
(unaudited) (unaudited) Operating activities
(Loss)/profit before income tax 3 (283,922)
961,492
Adjustments for: Depreciation and amortisation 15,16,17 3,581,039
3,298,944
Changes in pension and payroll accruals
55,047
97,931 Changes in inventory allowance 15 (130,452)
(66,329)
Impairment of assets 18 72,551
387,573 Loss/(gain) on disposals of property, plant and equipment
49,036
(13,246)
Share of loss of associates
–
334 Gain on disposal of subsidiary
(36,733)
(56,240)
Finance income 19 (109,368)
(107,619) Finance costs 19 6,097,075
6,056,373
Dividend income
(71,368)
(236,737) Foreign exchange differences on non-operating items
453,066
(118,041)
Other non-cash movements
–
(2,306)
Operating cash flows before working capital changes
9,675,971
10,202,129
Movements in working capital Increase in accounts receivable and prepayments
(2,620,423)
(7,781,943) (Increase)/decrease in inventories
(1,777,651)
1,001,009
Increase in trade and other payables
753,184
15,208,019
Cash generated from operations
6,031,081
18,629,214
Income tax (paid)/ refunded
(820,213)
1,103,719
Interest paid
(4,758,841)
(6,116,553) Interest received
60,500
69,458
Net cash generated from operating activities
512,527
13,685,838
Investing activities
Purchase of property, plant and equipment
(2,017,559)
(2,044,586)
Purchase of intangible assets
(111,283)
(89,323) Proceeds from sale of other current assets 11 382,649
–
Purchase of other current assets 11 (156,993)
(573) (Сash outflow from disposed)/proceeds from sale of property,
plant and equipment
(42,811)
270,453 Loans given
(164,387)
(2,518,050)
Proceeds from loans repaid
51,020
20,139 Cash received with sale of subsidiary
129,975
93,483
Dividends received
18,916
136,592
Net cash used in investing activities
(1,910,473)
(4,131,865)
Financing activities
Proceeds from borrowings
83,956,241
19,670,377
Repayment of borrowings
(84,643,065)
(27,597,707) Cash paid to acquire treasury shares
(248,992)
–
Payment of finance lease obligations
(96,831)
(53,543) Acquisition of non-controlling interests
–
(1,249)
Net cash used in financing activities
(1,032,647)
(7,982,122)
Net (decrease)/increase in cash and cash equivalents
(2,430,593)
1,571,851
Cash and cash equivalents at the beginning of the period
5,585,974
2,458,435
Cash and cash equivalents at the end of the period
3,155,381
4,030,286
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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Attributable to owners of the Company
Share capital
Legal reserve
Retained earnings
Treasury shares
Translation reserve
Total
Non-
controlling interests
Total (equity
deficit) / equity
Balance at 1 January 2012 (audited)
2,498,261 70,857 4,848,256 (17,795,009) 71,462 (10,306,173) 421,102 (9,885,071)
Changes in accounting policy (application of IAS 19)
–
– 74,175
– – 74,175
– 74,175
Balance at 1 January 2012 (restated) 2,498,261 70,857 4,922,431 (17,795,009) 71,462 (10,231,998) 421,102 (9,810,896) Profit / (loss) for the period – – 500,273 – – 500,273 (19,179) 481,094 Other comprehensive loss – – (4,338) – (7,409) (11,747) – (11,747)
Total comprehensive income/(loss) for the period – – 495,935 – (7,409) 488,526 (19,179) 469,347
Purchase of non-controlling interests – – 93,904 – – 93,904 (95,155) (1,251)
Balance at 30 June 2012 (unaudited) 2,498,261 70,857 5,512,270 (17,795,009) 64,053 (9,649,568) 306,768 (9,342,800)
Balance at 1 January 2013 (audited) 2,498,261 70,857 6,165,387 (17,795,009) (5,311) (9,065,815) 308,323 (8,757,492)
Changes in accounting policy (application of IAS 19) – – (61,435) – – (61,435)
– (61,435)
Balance at 1 January 2013 (restated) 2,498,261 70,857 6,103,952 (17,795,009) (5,311) (9,127,250) 308,323 (8,818,927) Loss for the period – – (289,420) – – (289,420) (16,724) (306,144) Other comprehensive income – – 34,400 – 56,941 91,341 – 91,341
Total comprehensive income/ (loss) for the period – – (255,020) – 56,941 (198,079) (16,724) (214,803)
Additions of treasury shares – – – (248,992) – (248,992) – (248,992)
Balance at 30 June 2013 (unaudited) 2,498,261 2,498,261
70,857 5,848,932 (18,044,001) 51,630 (9,574,321) 291,599 (9,282,722)
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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1. GENERAL INFORMATION Open Joint Stock Company Chelyabinsk Pipe-Rolling Plant (the “Company” or “Chelpipe”) was established as a state owned enterprise in 1942 and was incorporated as an open joint stock company on 21 October 1992 as part of and in accordance with the Russian government’s privatisation programme. The Company is domiciled in the Russian Federation. The Company’s registered address is Russia, 454129, Chelyabinsk, Mashinostroiteley str., 21. Hereinafter, the Company together with its subsidiaries are referred to as the Group. The immediate parent of the Company is Mountrise Limited, a company incorporated under the laws of Cyprus, which owns 52.42% of the Company’s issued share capital. Mr. A.I. Komarov is the ultimate controlling party of the Group. The Group’s principal activities include the production and distribution of pipes and pipe products for the oil and gas industry, housing and utilities infrastructure and industrial applications. The Group has three reportable segments, namely steel pipe production (“SPP”), oilfield services (“OFS”) and trunk pipeline systems (“TPS”). The Group is one of the largest pipe producers in Russia holding significant domestic market shares in welded large diameter pipes, oilfield tubular and stainless seamless pipes. The oilfield services segment manufactures and provides support services for oil well extraction equipment such as electric submersible pumps, sucker-rod drilling pumps and a number of other products and services for various stages of an oilfield’s development. The Group’s trunk pipeline systems segment produces highly customised components for the construction of oil and gas pipelines, including valves, hot-formed and cold-formed pipeline bends and hubs. The Group’s principal manufacturing facilities are based in the Ural and West Siberia regions of Russia and in the Czech Republic. The Company’s principal subsidiaries are disclosed in Note 5. All companies of the Group are incorporated under the laws of the Russian Federation, except ARKLEY (UK) LIMITED, which is incorporated under the laws of the United Kingdom, and MSA a.s. and its subsidiaries, which are incorporated in the Czech Republic.
2. BASIS OF PREPARATION Statement of compliance These unaudited condensed consolidated interim financial statements of the Group have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting”. The statement of financial position at 31 December 2012 has been derived from the statement of financial position included in the Group’s audited consolidated financial statements for the year ended 31 December 2012. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2012, which have been prepared in accordance with IFRS. The same accounting policies, presentation and methods of computation are followed in these condensed consolidated interim financial statements as were applied in the preparation of the Group’s consolidated financial statements for the year ended 31 December 2012, except for the impact of the adoption of the Standards and Interpretations described below.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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Financial condition and going concern These unaudited condensed consolidated interim financial statements of the Group have been prepared by management on the assumption that the Group will continue as a going concern, which presumes that the Group will, for the foreseeable future, be able to realise its assets and discharge its liabilities in the normal course of business. The continued weakness of the Group’s financial position reflecting an equity deficit at 30 June 2013 indicates the existence of a material uncertainty which may cast doubt on the Group’s ability to continue as a going concern. Were the Group unable to continue as a going concern, adjustments would have to be made to the classification and carrying value of assets and liabilities and accruals would be made for other liabilities that might arise. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Group’s operating performance was negatively affected during the reporting period by economic and industry conditions and by other financial and business factors, many of which were beyond the control of the Group. During the six months ended 30 June 2013 the Group suffered losses in the amount of 306,144, although the Group generated positive operating net cash flows, which comprised 512,527. In October 2012, the Group signed a syndicated loan agreement totaling 86,464,245 with a syndicate of fourteen banks. The Group received its first draw down on the syndicated loan in the amount of 70,310,399 in February 2013 and re-financed existing loans of the banks represented in the syndicated loan facility except loans of OJSC Gazprombank, which will be re-financed utilizing the second tranche in 2014. The state guarantee secures Group’s obligation in the event of a default in the total amount of 43,280,000 and expires in January 2020. Additionally, the Company successfully issued bonds in February 2013 in the amount of 8,225,000 the proceeds of which were entirely used to repay the borrowings of the following banks: OJSC Promsvyazbank, OJSC Bank Soyuz, OJSC Bank Otkrytie, OJSC Chelindbank and OJSC Ural Bank for Reconstruction and Development. As a result of restructuring of debt, at 30 June 2013 the Group’s current assets exceeded its current liabilities in the amount of 4,866,195 (31 December 2012: current liabilities exceeded current assets in the amount of 59,367,752). The Group has in place a recovery plan focused on returning the Group to profitability primarily through cost cutting and productivity gains. During 2013, the Group is considering the following actions to continue to improve its trading performance and financial position:
Introduction of new services and products in its oilfield services division (RIMERA business segment);
Continued focus on cost optimization, in particular raw material costs and product mix, outside service, optimization of labour compensation costs and a reduction of investment in working capital;
Forming a strategic alliance with a key raw material supplier with the objective of reducing raw material input costs and searching for strategic partners;
Optimisation of business process by designing and implementing systems of risk management, project management and performance management on the basis of non-financial indicators
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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Presentation and functional currency All amounts in these consolidated financial statements are presented in thousands of Russian Roubles (“RUB”), unless otherwise stated. The functional currency of the Company’s subsidiaries located in the Russian Federation is the Russian Rouble. The functional currency of ARKLEY (UK) LIMITED located in the United Kingdom is the US Dollar (“USD”). The functional currency of MSA a.s. located in Czech Republic is the Czech Koruna. At the reporting date, the assets and liabilities of the subsidiaries with a functional currency other than Russian Rouble are translated into the presentation currency at the rate of exchange effective at the reporting date, and their statements of comprehensive income are translated at the weighted average exchange rates for the year, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. The exchange differences arising on translation are taken directly to a separate component of other comprehensive income and accumulated in equity. On disposal of a subsidiary with a functional currency other than Russian Rouble, the deferred cumulative amount recognised in other comprehensive income relating to that particular subsidiary is recognised in profit or loss.
3. ADOPTION OF NEW OR REVISED STANDARDS AND INTERPRETATIONS The following new standards, amendments to standards or interpretations were adopted by the Group in these condensed consolidated interim financial statements during the current period:
IFRS 10 “Consolidated Financial Statements” (as revised in 2012) – replaced the parts of IAS 27 “Consolidated and Separate Financial Statements”;
IFRS 11 “Joint Arrangements” (issued in May 2011);
IFRS 12 “Disclosure of Interest in Other Entities” (issued in May 2011);
IFRS 13 “Fair Value Measurement” (issued in May 2011);
IAS 1 “Presentation of Financial Statements“ ( with amendments in June 2011) – presentation of Items of Other Comprehensive Income;
IAS 27 “Separate Financial Statements” (as revised in 2011);
IAS 28 “Investments in Associates and Joint Ventures” (as revised in 2011).
The first time application of the aforementioned amendments to standards and interpretations from 1 January 2013 had no material effect on the unaudited condensed consolidated interim financial statements of the Group.
IAS 19 “Employee Benefits” (as revised in 2011)
In the current year, the Group has applied IAS 19 “Employee Benefits” (as revised in 2011) and the
related consequential amendments for the first time. IAS 19 (as revised in 2011) changes the accounting for defined benefit plans and termination benefit. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in the fair value of plan assets when they occur, and hence accelerate the recognition of past service costs. All actuarial gains and losses are recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a ‘net interest’ amount under IAS 19 (as revised in 2011), which is calculated by applying the discount rate to the net defined benefit liability or asset. These changes have had an impact on the amounts recognised in profit and other comprehensive income in prior years (see the tables below for details).
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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Impact of the application of the revised IAS 19 “Employee benefits” on liabilities and equity as at 1 January 2012 was as follows:
Statement of financial position line item As previously
reported
Adjustment
As restated
Retirement benefit obligations (516,363) (74,175) (590,538)
Total non-current liabilities (20,872,777) (74,175) (20,946,952)
Retained earnings (4,848,256) 74,175 (4,774,081)
Total equity deficit 9,885,071 74,175 9,959,246
Impact of the application of the revised IAS 19 “Employee benefits” on liabilities and equity as at 31 December 2012 was as follows:
Statement of financial position line item As previously
reported Adjustment As restated
Retirement benefit obligations (486,111) (61,435) (547,546)
Total non-current liabilities (23,446,777) (61,435) (23,508,212)
Retained earnings (6,165,387) 61,435 (6,103,952)
Total equity deficit 8,757,492 61,435 8,818,927
Impact of the application of the revised IAS 19 “Employee benefits” on profit and other comprehensive income for the six months ended 30 June 2012 was as follows:
Statement of comprehensive income line item As previously
reported Adjustment As restated
Cost of sales (41,751,636) 12,018 (41,739,618) Profit for the period 469,076 12,018 481,094
Actuarial losses – (4,338) (4,338) Other comprehensive loss (7,409) (4,338) (11,747)
Total comprehensive income for the period 461,667 7,680 469,347
Profit for the period attributable to: Owners of the Company 488,255 12,018 500,273
Total comprehensive income for the period attributable to:
Owners of the Company 480,846 7,680 488,526
Impact of the application of the revised IAS 19 “Employee benefits” on net cash flows from operating activities for the six months ended at 30 June 2012 was as follows:
Statement of cash flows line item As previously
reported Adjustment As restated
Profit before income tax 949,474 12,018 961,492 Adjustments for:
Changes in pension and payroll accruals 109,949 (12,018) 97,931
Net cash generated from operating activities 13,685,838 – 13,685,838
The impact of the application of the revised IAS 19 on basic earnings per share is disclosed in Note 21.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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4. NEW ACCOUNTING PRONOUNCEMENTS At the date of approval of the Group’s unaudited condensed consolidated interim financial statements, the following new and revised Standards and Interpretations have been issued, but are not effective for the reporting period:
Effective for annual periods beginning
on or after
IFRS 7 “Financial Instruments: Disclosures” - amendments requiring disclosures about the initial application of IFRS 9 1 January 2015
IFRS 9 “Financial Instruments” – the effective date was deferred in December 2011 1 January 2015 IFRS 10 “Consolidated Financial Statements” – new standard published in May 2011 1 January 2014 IAS 32 “Financial Instruments: Presentation” – amendments to offsetting financial assets
and financial liabilities 1 January 2014 IFRS 9 “Financial Instruments” The Group’s management anticipates that the applications of IFRS 9 may have an impact on amounts reported in respect of the Group’s financial assets. The Group has equity investments in unlisted shares that do not have a quoted market price and that are currently classified as available-for-sale. Equity investments will have to be measured at their fair value at the end of subsequent accounting periods. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until a detailed review has been completed. IAS 32 “Financial Instruments: Presentation” The amendments to IAS 32 clarify the requirements to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realisation and settlement’. The directors of the Company do not anticipate that the application of these amendments to IAS 32 will have a significant impact on the Group’s condensed consolidated interim financial statements as the Group does not have any financial assets and financial liabilities that qualify for offset. The impact of the adoption of other Standards and Interpretations in the preparation of the consolidated financial statements in future periods is currently being assessed by the Group’s management, however, no material effect on the Group’s financial position or results of its operations is anticipated.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
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5. SUBSIDIARIES The Company’s effective ownership interest of principal subsidiaries, including the Company’s ownership interest through its subsidiaries, is as follows: Effective ownership, %
Subsidiary Country of
incorporation Activities Operating
segment 30 June
2013 31 December
2012
OJSC Pervouralsk
New Pipe Plant (PNTZ) Russia Pipe manufacturing SPP 100.00% 100.00% CJSC Uraltrubostal
Trade House (UTS) Russia Pipe distribution SPP 100.00% 100.00% ARKLEY (UK) LIMITED United Kingdom Pipe distribution SPP 100.00% 100.00% LLC Meta Russia Scrap procurement SPP 100.00% 100.00% OJSC Samaravtormet Russia Scrap procurement SPP 98.05% 98.05% OJSC UNP Vtorchermet Russia Scrap procurement SPP 100.00% 100.00% LLC Meta-Invest Russia Rent of property SPP 100.00% 100.00%
CJSC Pipeline Bends (SOT) Russia
Manufacturing and distribution of trunk pipeline bends TPS 100.00% 100.00%
MSA a.s. Czech Republic
Manufacturing and distribution of pipeline valves TPS 100.00% 100.00%
CJSC RIMERA Russia Distribution of
pipeline valves TPS 100.00% 100.00% OJSC ALNAS (ALNAS) Russia Oilfield service OFS 100.00% 100.00% Uganskneftegazgeofizika Ltd.
(UNGGF) Russia Oilfield service OFS 100.00% 100.00% OJSC Izhneftemash (INM) Russia Oilfield service OFS 73.14% 73.14% LLC Noyabrskaya
centralnaya trubnaya baza (NCTB) Russia Oilfield service OFS 100.00% 100.00%
LLC RIMERA-Service Russia Oilfield service OFS 100.00% 100.00%
Total loss for the six months ended 30 June 2013 attributable to non-controlling interests is 16,724, of which 16,701 relates to OJSC Izhneftemash. The accumulated non-controlling interest in OJSC Izhneftemash is 290,660 at 30 June 2013. The non-controlling interest in OJSC Samaravtormet is not material.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
12
6. BUSINESS COMBINATIONS AND DISPOSALS
Disposals for the six months ended 30 June 2013 Disposal of non-performing subsidiary of SPP operating segment In March 2013, the Group finalised disposal to third party of its full controlling interest in non-performing subsidiary of SPP operating segment - OJSC Baza materialno-tehnicheskogo snabgeniya. The carrying amounts of the major classes of disposed assets and liabilities were as follows:
Notes
Carrying value at the date of
disposal
Accounts receivable
3,718 Deferred tax assets
8,078
Property, plant and equipment 8 86,776 Cash and cash equivalents
1,525
Inventories
560 Trade and other payables
(5,890)
Net assets disposed of
94,767
Consideration
(131,500)
Gain on disposal
(36,733)
Consideration received in cash
131,500 Less cash and cash equivalents of subsidiary disposed of
(1,525)
Net inflow of cash and cash equivalents on disposal
129,975
Disposals for the six months ended 30 June 2012 Disposal of a number of non-performing subsidiaries of CJSC RIMERA In February and June 2012, the Group finalised disposals to third parties of its full controlling interests in a number of non-performing subsidiaries of CJSC RIMERA, as follows: LLC Almetevsk-Alnas-Service, LLC Alnas-Еlektronika, LLC Tajmyrskaja Burovaja Company. The carrying amounts of the major classes of disposed assets and liabilities were as follows:
Notes
Carrying value at the date of
disposal
Loans receivable
68,283 Accounts receivable
24,673
Intangible assets
15,896 Deferred tax assets
14,788
Property, plant and equipment 8 3,063 Cash and cash equivalents
2,527
Inventories
43 Trade and other payables
(100,377)
Borrowings
(32,815)
Net liabilities disposed of
(3,919)
Impairment of receivables due to disposals 10,11 43,689 Consideration
(96,010)
Gain on disposal
(56,240)
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
13
7. SEGMENT REPORTING The Group has identified the following segments based upon the reports used by chief operating decision maker (“CODM”):
Steel pipe production (“SPP”) – representing manufacturing and distribution of pipes and other related products, including activities related to the procurement of scrap and its further utilisation as raw materials in manufacturing of steel billets used in seamless pipe production;
Oilfield services (“OFS”) – representing equipment manufacturing and support services for oil well extraction equipment such as electric submersible pumps, sucker-rod drilling pumps and a number of other products and services for various stages of an oilfield’s development; and
Trunk pipeline systems (“TPS”) – representing production of highly customised components for the construction of oil and gas pipelines, including valves, hot-formed and cold-formed pipeline bends and hubs.
Segment assets consist of current and non-current assets. Segment liabilities comprise current and non-current liabilities. Impairment loss provisions relate only to those charges made against allocated assets. The CODM assesses the performance of the operating segments based on a measure of segment earnings before interest, tax, depreciation and amortization, foreign exchange gain/(loss), gain/(loss) on disposal of subsidiaries and excess of the Group’s share in provisional value of net assets acquired over the cost of acquisition (“Segment EBITDA”). Since this term is not defined in IFRS the Group’s definition of Segment EBITDA may differ from that of other companies. The segment information presented is based on information reviewed by the CODM, which differs from IFRS. Reconciliations are provided for the differences between this information and the information included in the consolidated financial statements. The adjustments between the information reviewed by the CODM and IFRS financial information (included in the Adjustment column in the following tables) include the following: Scope of consolidation – entities consolidated into the Group for IFRS are not consistent with
those included for management reporting purposes;
Reclassifications – the CODM reviews information classified and presented in conformity with Russian statutory accounting which includes recording amounts gross versus net, and aggregating and reclassifying some line items for purpose of making decisions about resources allocation to a segment and assessing its performance; and
Other adjustments – other adjustments arise due to differences between IFRS and statutory accounting and they are primarily related to adjustments for impairment of property, plant and equipment; intangible assets and promissory notes; discounting of borrowings; and recalculation of deferred taxes.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
14
Segment information related to the Group’s unaudited condensed consolidated interim statement of comprehensive income for the six months ended 30 June 2013 was as follows:
Segment information as reviewed by CODM
Total as per IFRS
Steel pipe production
Oilfield services
Trunk pipeline systems Adjustments Eliminations
unaudited condensed
consolidated interim
financial statements
Revenue from external customers 46,396,204 4,825,208 4,202,336 3,214 ─ 55,426,962 Inter-segment revenue 191,435 2,137 23,244 ─ (216,816) ─
Cost of sales (35,212,411) (4,214,688) (2,724,882) (235,397) 217,405 (42,169,973) Distribution costs (2,735,042) (138,722) (393,281) (75,537) 307 (3,342,274) General and administrative
expenses (2,637,380) (776,240) (529,223) 103,286 (897) (3,840,454) Reversal of
impairment/(impairment) of assets 50,864 (14,014) (1,394) (108,007) ─ (72,551) (Loss)/gain on disposal of property,
plant and equipment (53,767) 1,162 (466) 4,035 ─ (49,036) Dividend income 71,368 ─ ─ ─ ─ 71,368 Less: depreciation and amortisation 2,640,059 796,009 115,569 29,402 ─ 3,581,039
Segment EBITDA 8,711,330 480,852 691,903 (279,004) ─ 9,605,081
Depreciation and amortisation (2,640,059) (796,009) (115,569) (29,402) ─ (3,581,039) Finance income 267,781 15,541 193,058 1,350 (368,362) 109,368 Finance costs (6,027,462) (270,555) (205,176) 37,756 368,362 (6,097,075) Foreign exchange (loss) /gain, net (359,737) 31,060 (26,415) (1,898) ─ (356,990) Gain on disposal of subsidiary 36,733 ─ ─ ─ ─ 36,733 Income tax (expense)/benefit (39,028) 46,401 (94,482) 64,887 ─ (22,222)
(Loss)/profit for the period (50,442) (492,710) 443,319 (206,311) ─ (306,144)
Segment information related to the Group’s unaudited condensed consolidated interim statement of financial position at 30 June 2013 was as follows:
Segment information as reviewed by CODM
Total as per IFRS
Steel pipe
production Oilfield
services
Trunk pipeline systems Adjustments
unaudited condensed
consolidated interim
financial statements
Current assets 51,839,469 1,255,431 6,809,481 (5,965,328) 53,939,053 Non-current assets 84,880,159 6,984,020 3,485,825 (22,511,594) 72,838,410
Total assets 136,719,628 8,239,451 10,295,306 (28,476,922) 126,777,463
Current liabilities 42,205,557 2,900,897 3,119,570 846,834 49,072,858 Non-current liabilities 92,035,149 1,983,954 3,235,390 (10,267,166) 86,987,327
Total liabilities 134,240,706 4,884,851 6,354,960 (9,420,332) 136,060,185
The information analysed by the CODM is reconciled to the IFRS unaudited condensed consolidated interim statement of financial position at 30 June 2013 as follows:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
As reviewed by CODM 59,904,381 95,350,004 48,226,024 97,254,493 Scope of consolidation 49,455 (464,811) 76,884 32,888 Reclassifications (5,945,086) (3,425,863) 561,772 (9,932,721) Other adjustments (69,697) (18,620,920) 208,178 (367,333)
As per IFRS unaudited condensed consolidated interim
financial statements 53,939,053 72,838,410 49,072,858 86,987,327
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
15
Segment information related to the Group’s unaudited condensed consolidated interim statement of comprehensive income for the six months ended 30 June 2012 was as follows:
Segment information as reviewed by CODM
Total as per IFRS
Steel pipe production
Oilfield services
Trunk pipeline systems Adjustments Eliminations
unaudited condensed
consolidated interim
financial statements
Revenue from external customers 46,704,859 5,758,086 3,293,592 (548,245) ─ 55,208,292 Inter-segment revenue 333,508 815 16,716 ─ (351,039) ─
Cost of sales (35,576,400) (4,617,906) (2,250,342) 357,886 347,144 (41,739, 618) Distribution costs (2,742,870) (144,834) (176,273) (203,893) 214 (3,267,656) General and administrative
expenses (2,868,315) (834,734) (360,151) 186,442 3,681 (3,873,077) (Impairment)/reversal of
impairment of assets (284,869) 21,332 38,348 (162,384) ─ (387,573) Gain/(loss) on disposal of property,
plant and equipment 12,145 (2,142) 342 2,901 ─ 13,246 Dividend income 136,591 1,068 ─ 99,078 ─ 236,737 Share of profits of associates ─ ─ ─ (334) ─ (334) Other (expense)/income, net (46,591) ─ ─ 46,591 ─ ─ Less: depreciation and amortisation 2,458,569 646,330 76,631 117,414 ─ 3,298,944
Segment EBITDA 8,126,627 828,015 638,863 (104,544) – 9,488,961
Depreciation and amortisation (2,458,569) (646,330) (76,631) (117,414) ─ (3,298,944) Finance income 137,413 50,252 54,869 (6,086) (128,829) 107,619 Finance costs (5,767,752) (390,839) (19,219) (7,392) 128,829 (6,056,373) Foreign exchange gain/(loss), net 655,378 (9,636) (54) 18,301 ─ 663,989 (Loss)/gain on disposal of
subsidiary ─ (26,278) ─ 82,518 ─ 56,240 Income tax (expense)/benefit (159,524) 33,901 (108,693) (246,082) ─ (480,398)
Profit/(loss) for the period 533,573 (160,915) 489,135 (380,699) – 481,094
Segment information related to the Group’s consolidated statement of financial position at 31 December 2012 was as follows:
Segment information as reviewed by CODM
Total as per IFRS
Steel pipe
production Oilfield
services
Trunk pipeline systems Adjustments
consolidated financial
statements
Current assets 50,848,984 2,721,494 6,251,445 (8,076,854) 51,745,069 Non-current assets 84,307,732 8,861,789 2,224,302 (21,337,284) 74,056,539
Total assets 135,156,716 11,583,283 8,475,747 (29,414,138) 125,801,608
Current liabilities 91,306,048 4,783,246 2,226,561 12,796,966 111,112,821 Non-current liabilities 40,123,664 3,025,055 779,545 (20,420,550) 23,507,714
Total liabilities 131,429,712 7,808,301 3,006,106 (7,623,584) 134,620,535
The information analysed by the CODM is reconciled to the IFRS consolidated financial statements at 31 December 2012 as follows:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
As reviewed by CODM 59,821,923 95,393,823 98,315,855 43,928,264 Scope of consolidation 48,568 (456,964) 169,315 36,850 Reclassifications (6,401,985) 94,367 12,378,001 (18,685,620) Other adjustments (1,723,437) (20,974,687) 249,650 (1,771,780)
As per IFRS consolidated financial statements 51,745,069 74,056,539 111,112,821 23,507,714
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
16
Group’s revenue: geographical segments The Group operates in three main geographical areas. Sales are based on the country in which the customer is located, while total assets and capital expenditures are based on where the assets are located. Nearly all of the Group’s assets and capital expenditures are located in Russia with the exception of MSA a.s., which is located in the Czech Republic. The geographical segments of the Group’s sales are presented in the table below: Revenue for the six months ended 30 June
Russian Federation
Commonwealth of Independent States
Other foreign countries
Total
2013
46,862,301
7,716,374
848,287
55,426,962 2012
45,798,091
5,926,768
3,483,433
55,208,292
Group’s revenue: major customers The Group’s sales to major customers for the six months ended 30 June 2013 and 2012 are set out in the table below: Six months ended 30 June
2013 2012
Customer 1 7,449,791 9,619,695 Customer 2 5,817,817 5,117,783 Customer 3 5,203,340 5,116,271
Total revenue (all attributable to steel pipe production) 18,470,948 19,853,749
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
17
8. PROPERTY, PLANT AND EQUIPMENT Movements in the carrying amount of property, plant and equipment were as follows:
Notes Land
Buildings
Infrastructure
Plant and equipment
Other
Construction in progress
Total
Cost or valuation at 31 December 2011
483,278
27,655,297
4,768,150
53,587,485
3,312,790
5,130,811
94,937,811 Accumulated depreciation at 31 December 2011
–
(7,660,713)
(1,653,491)
(20,802,602)
(1,217,562)
–
(31,334,368)
Accumulated impairment at 31 December 2011
–
(71,948)
(43,653)
(389,328)
(4,145)
(182,217)
(691,291)
Carrying amount at 31 December 2011
483,278
19,922,636
3,071,006
32,395,555
2,091,083
4,948,594
62,912,152
Additions and transfers
6,624
1,066,025
(259,863)
1,217,255
332,924
992,070
3,355,035 Disposals (cost)
(1,376)
(20,697)
(4,314)
(444,308)
(38,770)
(13,610)
(523,075)
Effect of foreign currency exchange differences (cost)
(64)
(1,515)
–
(977)
(6)
(306)
(2,868) Disposals (accumulated depreciation)
–
6,561
3,584
217,761
24,349
–
252,255
Disposals (accumulated impairment)
–
–
–
1,758
10
3,644
5,412 Depreciation charge –
(365,689)
(112,242)
(2,542,303)
(174,938)
–
(3,195,172)
Effect of foreign currency exchange differences (depreciation)
–
(98)
–
647
19
–
568 Impairment recognised 18 –
(77,874)
(16,434)
(141,821)
(625)
(34)
(236,788)
Impairment reversed 18 –
79,294
–
3,660
–
1,463
84,417 Disposals of subsidiaries (cost) 6 (4)
(987)
–
(4,885)
(1,005)
–
(6,881)
Disposals of subsidiaries (accumulated depreciation) 6 –
80
–
2,659
1,079
–
3,818 Reclassification cost –
(232,882)
254,641
(69,707)
47,948
–
–
Reclassification depreciation –
162,805
(191,119)
110,216
(81,902)
–
– Reclassification impairment –
1,999
(3,776)
1,122
655
–
–
Cost or valuation at 30 June 2012 488,458
28,465,241
4,758,614
54,284,863
3,653,881
6,108,965
97,760,022 Accumulated depreciation at 30 June 2012 –
(7,857,054)
(1,953,268)
(23,013,622)
(1,448,955)
–
(34,272,899)
Accumulated impairment at 30 June 2012 –
(68,529)
(63,863)
(524,609)
(4,105)
(177,144)
(838,250)
Carrying amount at 30 June 2012 488,458
20,539,658
2,741,483
30,746,632
2,200,821
5,931,821
62,648,873
Cost or valuation at 31 December 2012 489,997
29,336,376
4,371,630
55,318,331
4,440,179
6,158,044
100,114,557 Accumulated depreciation at 31 December 2012 –
(8,243,106)
(1,978,985)
(25,297,554)
(1,697,741)
–
(37,217,386)
Accumulated impairment at 31 December 2012 –
(144,000)
(68,525)
(506,856)
(4,090)
(171,723)
(895,194)
Carrying amount at 31 December 2012
489,997
20,949,270
2,324,120
29,513,921
2,738,348
5,986,321
62,001,977
Additions and transfers
238
829,645
28,987
1,567,390
109,244
(362,426)
2,173,078 Disposals (cost) (7)
(13,229)
(536)
(1,834,775)
(15,791)
(3,957)
(1,868,295)
Effect of foreign currency exchange differences (cost) 388
10,401
–
7,833
1,901
1,781
22,304 Disposals (accumulated depreciation) –
11,841
354
1,721,053
12,926
–
1,746,174
Disposals (accumulated impairment) –
698
–
108,714
458
2,066
111,936 Depreciation charge –
(328,564)
(113,744)
(2,791,921)
(233,994)
–
(3,468,223)
Effect of foreign currency exchange differences (depreciation) –
(1,347)
–
(6,198)
(1,124)
–
(8,669) Impairment recognised 18 –
(34,268)
(20)
(7,601)
(7)
(46,956)
(88,852)
Impairment reversed 18 –
44,753
728
10,362
1
10,006
65,850 Disposals of subsidiaries (cost) 6 (5,968)
(102,652)
(8,527)
(10,387)
(1,716)
(5,979)
(135,229) Disposals of subsidiaries (accumulated depreciation) 6 –
33,946
6,535
6,518
1,454
–
48,453
Reclassification (cost) (961)
645,703
(311,888)
129,411
(474,249)
11,984
– Reclassification (depreciation) –
(116,210)
29,201
15,114
71,895
–
–
Cost or valuation at 30 June 2013 483,687
30,706,244
4,079,666
55,177,803
4,059,568
5,799,447
100,306,415 Accumulated depreciation at 30 June 2013 –
(8,643,440)
(2,056,639)
(26,352,988)
(1,846,584)
–
(38,899,651)
Accumulated impairment at 30 June 2013 –
(132,817)
(67,817)
(395,381)
(3,638)
(206,607)
(806,260)
Carrying amount at 30 June 2013
483,687
21,929,987
1,955,210
28,429,434
2,209,346
5,592,840
60,600,504
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
18
At 30 June 2013, a number of capital works-in-progress that in management’s opinion will not be continued in the foreseeable future are shown net of an impairment provision in amount of 206,608 (31 December 2012: 171,723). Additionally, at 30 June 2013, the Group has 461,702 of plant and equipment under finance leases (31 December 2012: 388,520). The entire amount guarantees the related finance lease obligation as discussed in Note 12.
9. INVENTORY
30 June 2013
31 December 2012
Raw materials 14,735,402
14,349,748
Finished goods and goods for resale 5,305,514
4,726,692 Work in progress 4,290,052
3,471,022
Allowance for obsolete and slow-moving inventory (732,095)
(858,173)
Total inventory 23,598,873
21,689,289
10. LOANS RECEIVABLE
30 June 2013
31 December 2012
Loans receivable from related parties at interest rates as follows - Interest free 31,005 31,307 - 2% p.a. 48,177 54,155 - 12% to 15% p.a. 111,717 104,000 Loans receivable from third parties at interest rates as follows - Interest free 61,321 65,163 - 0.01% p.a. 99,328 – - Mosprime 1M + 5.7% p.a. 359,335 359,335 - 3% to 6% p. a. 92,823 94,551 - 7% to 10% p.a. 42,542 20,423 - 12% to 14.5 % p.a. 705,223 704,986 - 17.5% to 18 % p.a. 3,600 32,815 Allowance for impairment of loans receivable (675,470) (708,191)
Total loans receivable 879,601 758,544
Movements in the allowance for impairment of loans receivable are as follows: Notes 2013 2012
At 1 January (708,191) (700,935)
Allowance recorded 18 (493) – Allowance reversed 18 1,029 20,005 Impairment of loans receivable disposed in a subsidiary 6 – (32,815) Loans receivable written-off during the year as uncollectible 32,185 –
At 30 June (675,740) (713,745)
The accrual and reversal of allowance for impaired loans receivable were included in the consolidated statement of comprehensive income (Note 18). Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
19
11. TRADE AND OTHER RECEIVABLES
30 June 2013
31 December 2012
Trade receivables 22,809,495 21,337, 436 Interest receivable 428,953 397,122 Receivables for other current assets * – 382,649 Other receivables 807,715 628,782 Allowance for impairment of trade and other receivables (1,846,556) (1,881,724)
Total financial assets 22,199,607 20,864,265
VAT and other taxes recoverable 2,262,846 1,487,892 Allowance for impairment of VAT and other taxes receivable (31,692) (32,105) Advances and prepayments 1,727,373 1,488,382 Allowance for impairment of advances and prepayments (208,131) (173,669)
Total non-financial assets 3,750,396 2,770,500
Total trade and other receivables 25,950,003 23,634,765
* Receivables for other current assets at 31 December 2012 represent the remaining amount due for construction of the industrial gas station, which the Group initially intended to use in its operating activities in OJSC Pervouralsk New Pipe Plant. In the reporting period the receivables were fully settled as well as the accounts payable related to construction of the station. Cash movements related to these operations were reported in the unaudited condensed consolidated interim financial statement of cash flows for the six months ended 30 June 2013 under the following lines: ‘Proceeds from sale of other current assets’ and ‘Purchase of other current assets’.
No accounts receivable were renegotiated during the six months ended 30 June 2013 (the six months ended 30 June 2012: nil). The Group usually provides customers with an average of 25-60 days credit. For major customers the Group can provide an average credit of 90-120 days. The ageing analysis of unimpaired trade, interest and other receivables (except advances and prepayments), based on maturity date is as follows: 30 June
2013 31 December
2012
Less than 3 months 21,965,477 20,512,144 3-6 months 58,250 239,993 More than 6 months 29,644 64,623
Trade, interest and other receivables not impaired 22,053,371 20,816,760
The Group identified trade, interest and other receivables of 1,992,792 (31 December 2012: 1,929,228) that were subject to individual impairment reviews. Of this amount, the Group has recognised allowance of 1,846,556 at 30 June 2013 (31 December 2012: 1,881,724). Individually impaired receivables are identified for customers that are in unexpectedly difficult economic situations or balances with long periods of settlement. The ageing of these receivables identified for individual impairment, based on maturity date is as follows: 30 June
2013 31 December
2012
3-6 months 292,472 95,008 More than 6 months 1,700,320 1,834,220
Total gross amount of fully and partially impaired trade,
interest and other receivables 1,992,792 1,929,228
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
20
Movements in the allowance for impairment of trade, interest and other receivables and advances are as follows:
Notes
Trade, interest and other receivables Advances and prepayments
2013 2012 2013 2012
At 1 January (1,881,724) (3,695,544) (173,669) (201,060)
Allowance recorded 18 (261,656) (280,185) (57,269) (49,010) Allowance reversed 18 246,268 45,447 22,572 28,541 Expense of foreign currency
exchange differences (413) 122 – – Impairment of receivables due to
disposals 6 – (10,874) – – Receivables written-off during the
year as uncollectible 50,887 21,177 235 275 Disposal of subsidiaries 82 10,065 – 885
At 30 June (1,846,556) (3,909,792) (208,131) (220,369)
The accrual and reversal of allowance for impaired receivables was included in the consolidated statement of comprehensive income (Note 18). Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
12. BORROWINGS
30 June 2013
31 December 2012
Non-current
Term loans with fixed rates 246,031
942,301
Term loans with floating rates –
148,826 Credit lines with fixed rates 5,436,065
16,061,149
Credit lines with floating rates –
1,646,738 Syndicated loan 70,303,833
–
Bonds payable 6,222,015
– Promissory notes issued 4,859
4,631
Finance lease liabilities 205,467
191,764
Total non-current borrowings 82,418,270
18,995,409
Current
Term loans with fixed rates 450,608
8,844,749
Term loans with floating rates 5,010,667
12,648,241 Credit lines with fixed rates 10,749,108
40,820,685
Credit lines with floating rates 2,171,825
21,522,629 Bonds payable 2,000,000
3,149
Finance lease liabilities 159,192
148,211
Total current borrowings 20,541,400
83,987,664
Total borrowings 102,959,670
102,983,073
Bonds payable The bonds payable represent bonds issued by the Company at various times, as described below. In April 2008, the Company issued 8,000,000 bonds at par value of 1 per bond (“Bond 03”). The bonds are repayable beginning 21 April 2015, the 2,548-th day following the date of placement. The interest yield on the bonds amounts to 8.0% p.a. As a result of various buy-back transactions with the bonds “Bond 03” during the period from 2008 to 2012 the Company repurchased 7,996,851 bonds. The carrying value of Bond 03 at 30 June 2013 was 3,149 (31 December 2012: 3,149).
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
21
In February 2013, the Company issued 8,225,000 bonds: BO 02, BO 03 and BO 04, at par value, the proceeds of which were used entirely to repay the borrowings of the following banks: OJSC Promsvyazbank, OJSC Bank Soyuz, OJSC Bank Otkrytie, OJSC Chelindbank and OJSC Ural Bank for Reconstruction and Development. The bonds were issued under the following conditions: BO 02
BO 03
BO 04
Quantity, units 2,000,000
5,000,000
1,225,000
Bonds par value 1
1
1
Total amount 2,000,000
5,000,000
1,225,000
Bonds expiry date 50% of par value
at 182-th day from
the date of
placement,
50% of par value
at 364-th day from
the date of placement
50% of par value
at 546-th day from
the date of
placement,
50% of par value
at 728-th day from
the date of placement
100% of par value
at 910-th day from
the date of placement
Coupon rate, % per annum 6
8
10
Coupon yield payment period quarterly
quarterly
quarterly
Carrying value at 30 June 2013 2,000,000
4,995,126
1,223,740
Term loans and credit lines The Group has various borrowing agreements with lenders including term loans, revolving credit facilities and letter of credit facilities. During the period, the Group did not enter into additional borrowing facilities. At 30 June 2013, the Group had available undrawn amounts under credit lines totaling 22,985 denominated in Russian Roubles. The non-current borrowings maturity schedule, excluding the present value of minimum lease payments, is as follows:
30 June 2013
31 December 2012
1 to 2 years 10,642,022
17,621,204 2 to 3 years 1,262,090
470,119
3 to 4 years 1,692,984
471,307 4 to 5 years 6,922,672
236,384
More than 5 years 61,693,035
4,631
Total non-current borrowings 82,212,803
18,803,645
Certain of the loan agreements contain debt covenants that impose restrictions on the purposes for which the loans may be utilised, covenants with respect to disposal of assets, incurring of additional liabilities, issuance of loans or guarantees, obligations under any future reorganisation procedures or bankruptcy of borrowers and also require that the respective Group entities maintain pledged assets. In addition, these agreements contain financial covenants which include compliance with several financial ratios and clauses regarding the acceleration of payment upon default, including cross-default provisions. At 30 June 2013, the Group was not in compliance with financial covenants contained in lending agreements with BNP Paribas S.A. and UniCredit Bank AG (Munich). Such breaches took place in respect of non-current borrowings in the amount of 7,182,491 at 30 June 2013, as a result the long term portion of these borrowings in the amount of 5,975,729 was reclassified as a current obligation at 30 June 2013.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
22
The original maturity of the portion of breached long-term borrowings recorded as current is as follows:
30 June 2013
31 December 2012
1 to 2 years 1,208,678
10,052,995 2 to 3 years 1,210,581
2,876,074
3 to 4 years 1,212,514
1,378,646 4 to 5 years 668,735
629,421
More than 5 years 1,675,221
1,892,845
Total non-current borrowings 5,975,729
16,829,981
Syndicated loan In October 2012 OJSC Chelyabinsk Pipe-Rolling Plant and OJSC Pervouralsk New Pipe Plant signed a syndicated loan agreement (the “Syndicated loan”) in the total amount of 86,464,245 with a syndicate of fourteen banks: OJSC Gazprombank, OJSC Bank of Moscow, CJSC Raiffeisenbank, OJSC Nomos bank, CJSC UniCredit Bank, OJSC Alfa-Bank, OJSC Bank Uralsib, OJSC Interregional commercial bank of development of communication and informatics, OJSC MTS-Bank, OJSC Transkreditbank, OJSC Chelindbank, OJSC AK BARS Bank, CJSC Surgutneftegasbank and OJSC Sberbank acting as an agent. The syndicated loan bears an effective interest rate of 13.0% per annum payable quarterly with the principal payable in semi-annual installments from June 2015 to October 2019. The Group received its first draw down on the syndicated loan in the amount of 70,310,399 in February 2013. The loan proceeds were fully used to re-finance existing loans of the individual banks represented in the syndicated loan facility. The remaining amount will be drawn in 2014. The syndicated loan is secured by the state guarantee in the event of a default in the total amount of 43,280,000 expiring in January 2020. In addition, the syndicated loan facility is secured by the pledge of controlling interests in the Company (Note 23), controlling interests in its subsidiaries as well as its fixed assets. Finance leases Minimum lease payments under finance leases and their present values are as follows:
Minimum lease payments Present value of
minimum lease payments
30 June
2013 31 December
2012 30 June
2013 31 December
2012
Due within 1 year 212,803 202,419 159,192 148,211 Due between 1 and 5 years 242,285 229,873 205,467 191,764
Total 455,088 432,292 364,659 339,975
All finance lease liabilities are effectively collateralised by the leased equipment as the right to the asset reverts to the lessor if the Group defaults on the lease.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
23
13. ACCOUNTS PAYABLE AND ACCRUED EXPENSES 30 June
2013 31 December
2012
Non-current
Interest payable 238,863 –
Total non-current accounts payable and accrued expenses 238,863 –
Current
Trade payables 21,114,591 19,131,748 Interest payable 1,106,780 166,554 Accrued liabilities and other creditors 467,746 359,926 Wages and salaries payable* 1,299,718 1,378,242
Total current accounts payable and accrued expenses 23,988,835 21,036,470
Total accounts payable and accrued expenses 24,227,698 21,036,470
*Non-financial liabilities
The major part of interest payable represents interest payable by the Group according to the terms of the syndicated loan agreement (Note 12).
14. REVENUE
Six months ended 30 June
2013 2012
Domestic sales of pipes 35,949,093 36,260,870 Domestic sales of oilfield services 8,590,924 7,590,474 Domestic sales of scrap 2,178,139 1,696,604 Domestic sales of other goods 144,145 250,143 Export of pipes 8,388,540 8,661,664 Export of oilfield services 176,121 726,544 Export of scrap – 21,993
Total revenue 55,426,962 55,208,292
15. COST OF SALES
Six months ended 30 June
2013 2012
Raw materials 27,314,818 28,856,327 Salaries and salary taxes 5,153,994 5,043,339 Depreciation and amortisation 3,269,771 3,047,440 Production overheads and repairs 2,995,237 2,531,785 Energy and utilities 1,999,770 2,071,369 Cost of goods for resale 3,111,414 1,080,679 Changes in balances of work in progress and finished goods (1,544,579) (824,992) Changes in inventory allowance (130,452) (66,329)
Total cost of sales 42,169,973 41,739,618
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
24
16. DISTRIBUTION COSTS
Six months ended 30 June
2013 2012
Transportation and customs expenses 1,705,609 1,877,947 Salaries and salary taxes 609,579 649,016 Packing, storage and handling 299,632 340,766 Advertising and marketing expenses 426,451 91,595 Office expenditure 78,374 75,613 Operating lease expenses 55,174 68,667 Depreciation and amortisation 43,541 51,038 Commission 38,846 69,696 Other 85,068 43,318
Total distribution costs 3,342,274 3,267,656
17. GENERAL AND ADMINISTRATIVE EXPENSES Six months ended 30 June
2013 2012
Salaries and salary taxes 1,557,151 1,625,313 Non-production overheads and repairs 979,657 963,201 Taxes other than income tax 694,729 664,595 Depreciation and amortisation 267,727 200,466 Consultancy, insurance, audit and legal services 181,399 202,314 Operating lease expenses 66,768 85,445
Other 93,023 131,743
Total general and administrative expenses 3,840,454 3,873,077
For the six months ended 30 June 2013, total staff cost in cost of sales, distribution costs and general and administrative expenses amounted to 7,320,724 (for the six months ended 30 June 2012: 7,317,668).
18. IMPAIRMENT OF ASSETS Notes Six months ended 30 June
2013 2012
Trade and other receivables 11 50,085 255,207 Property, plant and equipment 8 23,002 152,371
Loans receivable 10 (536) (20,005)
Total impairment of assets 72,551 387,573
19. FINANCE INCOME AND COSTS Six months ended 30 June
2013 2012
Interest income on term deposits and loans receivable 109,368 107,619
Total finance income 109,368 107,619
Interest cost on borrowings 6,047,233 5,999,184 Finance charges under finance lease 31,730 33,181 Interest on employee benefits liabilities 18,112 24,008
Total finance costs 6,097,075 6,056,373
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
25
20. INCOME TAX Income tax comprises the following:
Six months ended 30 June
2013
2012
Current tax 306,660 (2,700,130) Deferred tax (284,438) 3,180,528
Income tax expense 22,222 480,398
21. EARNINGS PER SHARE
For the six months ended 30 June 2013, basic earnings per share is calculated by dividing the loss attributable to shareholders of the parent company in the amount of 289,420 (the six months ended 30 June 2012: profit 500,273, Note 3) by the weighted average number of ordinary shares outstanding during the six months ended 30 June 2013, which comprised 312,178,894 shares (the six months ended 30 June 2012: 316,802,147 shares), excluding treasury shares. Changes in the Group’s accounting policies during the period are described in Note 3. To the same extent that those changes have had an impact on the financial results of the Group for the six months ended 30 June 2013 and 2012, they have had an impact on the amounts of earnings per share. The total effect of the changes in the accounting policies on basic earnings per share was as follows:
Increase in (loss) / profit attributable to
the owners of the Company
Increase in basic (loss) / earnings per
share, RUB per share
for the six months ended 30 June
for the six months ended 30 June
2013 2012
2013 2012
Changes in accounting policies relating to:
Application of IAS 19 (as revised in 2011) (26,720)
12,018
(0.09)
0.04
(26,720)
12,018
(0.09)
0.04
The Company has no potentially dilutive ordinary shares; accordingly diluted earnings per share is the same as the basic earnings per share.
22. BALANCES AND TRANSACTIONS WITH RELATED PARTIES Generally parties are considered to be related if one party has the ability to control the other party, is under common control or can exercise significant influence over, or is under significant influence of the other party in making financial and operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter into transactions, which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties. Related parties of the Group predominantly comprise parties under the control of the Group’s controlling shareholders.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
26
The nature of the related party relationships for those related parties with whom the Group entered into significant transactions or had significant balances outstanding at 30 June 2013 are detailed below:
Associates
Entities controlled by
the Group’s controlling
shareholder
Entities under significant
influence of the Group’s
controlling shareholder
Gross amount of trade and other receivables 36,000 206,784 66,486 Originated loans – 86,899 104,000 Trade and other payables – (319,361) (78)
Income and expense items with related parties as well as purchases for the six months ended 30 June 2013 were as follows:
Entities controlled by
the Group’s controlling
shareholder
Entities under significant
influence of the Group’s controlling
shareholder
Revenue 9,487 –
Purchases (158,059) (61) Distribution costs
(13,532)
–
General and administrative expenses (292,205) 6,679 Finance costs, net (36) –
At 30 June 2013, no guarantees were issued/received by the Group on behalf of related parties. Transactional cash flows with related parties for the six months ended 30 June 2013 were as follows:
Entities controlled by
the Group’s controlling
shareholder
Entities under significant
influence of the Group’s controlling
shareholder
Operating activities (586,741) (116) Financing activities (23) –
The nature of the related party relationships for those related parties with whom the Group entered into significant transactions or had significant balances outstanding at 31 December 2012, outstanding balances with related parties were as follows:
Associates
Entities controlled by
the Group’s controlling
shareholder
Entities under significant
influence of the Group’s
controlling shareholder
Gross amount of trade and other receivables 36,000
225,401
59,807 Originated loans –
85,462
104,000
Trade and other payables –
(344,988)
(122)
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
27
Income and expense items with related parties for the six months ended 30 June 2012 were as follows:
Associates
Entities controlled by
the Group’s controlling
shareholder
Entities under significant
influence of the Group’s controlling
shareholder
Revenue 81
14,369
–
Purchases (53)
(109,894)
(3,133) Distribution costs –
(2,986)
–
General and administrative expenses –
(264,544)
(199) Finance income, net –
7,406
–
Transactional cash flows with related parties parties for the six months ended 30 June 2012 were as follows:
Associates
Entities controlled by
the Group’s controlling
shareholder
Entities under significant
influence of the Group’s controlling
shareholder
Operating activities 96
(393,876)
(2,672) Investing activities –
(2,516,500)
–
Directors’ and key management remuneration At 30 June 2013, the Board of Directors comprised 7 directors (31 December 2012: 7 directors). During the six months ended 30 June 2013, compensation of the Board of Directors amounted to 14,035 and was included in general and administrative expenses (the six months ended 30 June 2012: 12,873). During the six months ended 30 June 2013, aggregate remuneration of executives amounted to 63,464 and was included in general and administrative expenses (the six months ended 30 June 2012: 65,508). Non-controlling interest At 30 June 2013, 10,927 of a non-controlling interest of 1.01% of the net assets of OJSC Izhneftemash was attributable to an entity controlled by the Group’s key management personnel (31 December 2012: 11,555, non-controlling interest of 1.01%).
23. CONTINGENCIES, COMMITMENTS AND OPERATING RISKS Legal proceedings The Group is involved in a number of court proceedings (both as a plaintiff and a defendant) arising in the ordinary course of business. In the opinion of management, there are no current legal proceedings or other claims outstanding, which could have a material effect on the results of operations or financial position of the Group. Tax legislation Management estimates that the Group has other possible obligations from exposure to other than remote tax risks of 186,553 at 30 June 2013 (31 December 2012: 186,553) which relate primarily to VAT and corporate profit tax. There is no liability recorded for this exposure as management does not believe payment is probable.
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
28
Capital expenditure commitments At 30 June 2013, the Group had contractual capital expenditure commitments to acquire equipment and works of capital nature totaling 2,611,269 (31 December 2012: 2,579,898). Shares pledged and restricted At 30 June 2013, the following Group’s shares were pledged as collateral:
Pledger
Company Pledgee Year Percent of
share capital
Secondary pledge of
shares to OJSC Sberbank*
Group’s shareholders Chelpipe OJSC Gazprombank 2010 50% + 1 share 50% + 1 share** Group’s shareholders Chelpipe OJSC Sberbank* 2012 2.00% – Poweredge Holdings Ltd Chelpipe OJSC Sberbank* 2012 4.30% – The Group Chelpipe OJSC Sberbank* 2012 32.94% – The Group PNTZ OJSC Sberbank* 2012 100.00% – The Group SOT OJSC Sberbank* 2012 100.00% – The Group CJSC RIMERA OJSC Sberbank* 2012 99.99% – The Group ALNAS ordinary shares OJSC Sberbank* 2012 100.00% – The Group ALNAS preferred shares OJSC Sberbank* 2012 100.00% – The Group INM ordinary shares OJSC Sberbank* 2012 73.14% – The Group INM preferred shares OJSC Sberbank* 2012 1.36% – The Group UNGGF OJSC Bank Saint Petersburg 2012 100.00% 100.00% The Group LLC Meta-Invest OJSC Sberbank* 2012 100.00% – The Group LLC Meta OJSC Sberbank* 2012 100.00% – The Group UTS OJSC Bank of Moscow 2010 99.00% – The Group CJSC SKS Metris OJSC Bank of Moscow 2010 100.00% –
* OJSC Sberbank is the syndicated loan agent that acts on behalf of itself and following banks:
OJSC Gazprombank, OJSC Bank of Moscow, CJSC Raiffeisenbank, OJSC Nomos-bank, CJSC UniCredit Bank, OJSC Alfa-Bank, OJSC Bank Uralsib, OJSC Interregional commercial bank of development of communication and informatics, OJSC MTS-Bank, OJSC Transkreditbank, OJSC Chelindbank, OJSC AK BARS Bank, CJSC Surgutneftegasbank (Note 12).
** In February 2013, the Group’s shareholders signed a share pledge agreement according to the terms of the syndicated loan and re-pledged 236,191,441 shares of the Company (or 50%+1 share of registered capital) as security for the syndicated loan.
24. FINANCIAL RISK MANAGEMENT Interest rate risk As the Group has no significant assets bearing interest at floating rates, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest rate risk arises from borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. At 30 June 2013 the Group’s borrowings comprised mostly fixed interest rate loans, the significant amount of which is represented by the syndicated loan (Note 12). Floating interest rate loans account for only 7% of the total amount of the Group’s borrowings. The Group analyses its interest rate risk exposure on a dynamic basis and calculates the impact of a defined interest rate shift on profit and loss. In the sensitivity analysis the same interest rate shift is used for all currencies. The scenarios are generated only for liabilities that represent major interest-bearing positions and include all types of loan agreements with floating and fixed rates. According to the scenario analysis performed for the six months ended 30 June 2013, the impact of a 100 basis points shift in interest rate on post-tax profit would be an increase/decrease of it by 444,796 (the six months ended 30 June 2012: the impact on post-tax profit would have been an increase/decrease of it by 432,566).
OPEN JOINT STOCK COMPANY CHELYABINSK PIPE-ROLLING PLANT NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013 (thousands of Russian Roubles, unless otherwise stated)
29
Fair value measurements
The carrying amounts of financial instruments such as trade and other receivables, cash and cash equivalents, syndicated loan, promissory notes issued, bonds payable, accounts payable and accrued expenses, finance lease liabilities approximate their fair values. The fair values and carrying values of the Group’s financial assets and liabilities are disclosed in the table below: 30 June 2013
31 December 2012
Notes Carrying amount
Fair value
Carrying amount
Fair value
Financial assets
Loans and receivables 23,079,208
23,072,071 21,622,809 21,614,642 Trade and other receivables 11 22,199,607 22,199,607 20,864,265 20,864,265 Loans receivable 10 879,601 872,464 758,544 750,377
Cash and cash equivalents 3,155,381 3,155,381 5,585,974 5,585,974
Total financial assets 26,234,589
26,227,452
27,208,783
27,200,616
Financial liabilities
Financial liabilities held at amortised cost 125,522,991 124,860,579 122,301,326 121,717,812
Term loans and credit lines 12 24,064,304
23,401,892
102,635,318
102,051,804 Syndicated loan 12 70,303,833
70,303,833
–
–
Promissory notes issued 12 4,859
4,859
4,631
4,631 Bonds payable 12 8,222,015
8,222,015
3,149
3,149
Accounts payable and accrued expenses 13 22,927,980
22,927,980
19,658,228
19,658,228
Finance lease liabilities 12 364,659 364,659 339,975 339,975
Total financial liabilities 125,887,650
125,225,238
122,641,301
122,057,787
The fair values of loans receivable, term loans and credit lines were calculated based on the present value of future principal and interest cash flows, discounted at market discount rate that reflects the credit risk of counterparties.
25. EVENTS AFTER THE REPORTING PERIOD In July 2013 the Group finalised disposal to third parties of its full controlling interest in LLC MSA-KTS, the non-performing subsidiary of CJSC RIMERA, for total consideration of 10 payable in cash.