Altraso Ventures Ltd. Interim Condensed Consolidated Financial Information for the 1st half of 2018 (unaudited)

Transcription

1 Altraso Ventures Ltd Interim Condensed Consolidated Financial Information for the 1st half of (unaudited)

2 TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR THE FIRST HALF OF (UNAUDITED) 1 INDEPENDENT AUDITORS REPORT ON REVIEW OF INTERIM CONDENSED FINANCIAL INFORMATION 2-3 INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR THE FIRST HALF OF : Consolidated statement of profit or loss and other comprehensive income 4 Consolidated statement of financial position 5 Consolidated statement of changes in equity 6 Consolidated statement of cash flows 7 Non-IFRS measures 8 Notes to the interim condensed consolidated financial information 9-18

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4 AO Deloitte & Touche CIS 5 Lesnaya Street Moscow, , Russia Tel: +7 (495) Fax: +7 (495) deloitte.ru REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To Shareholders of Altraso Ventures Ltd Introduction We have reviewed the accompanying interim condensed consolidated statement of financial position of Altraso Ventures Ltd (the Entity ) and its subsidiaries (the Group ) as of and the related interim condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six months then ended, and selected explanatory notes. Management is responsible for the preparation and presentation of this interim condensed consolidated financial information in accordance with International Accounting Standard ( IAS ) 34, Interim Financial Reporting. Our responsibility is to express a conclusion on this interim condensed consolidated financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. AO Deloitte & Touche CIS. All rights reserved.

5 Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial information is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting. Report on Non-IFRS Measures The information on page 8 of the accompanying interim condensed consolidated financial information is presented for the purpose of additional analysis and is not required by IFRSs. This information was not a subject for review procedures and we do not provide any assurance in relation to this information. Yuliya Krasnova Engagement director 17 September The Entity: Altraso Ventures Ltd Certificate of state registration HE Issued on Address: Proteas House, Floor 5, 155 Arch. Makariou III Limassol, Cyprus Audit Firm: AO Deloitte & Touche CIS Certificate of state registration , issued by the Moscow Registration Chamber on Primary State Registration Number: Certificate of registration in the Unified State Register of , issued by Moscow Interdistrict Inspectorate of the Russian Ministry of Taxation 39. Member of Self-regulated organization of auditors Russian Union of auditors (Association), ORNZ

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7 INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE (in millions of Russian rubles) Notes (unaudited) 31 December ASSETS Non-current assets Property, plant and equipment 9 10,065 8,812 Intangible assets 11 4 Deferred tax assets Total non-current assets 10,215 9,017 Current assets Inventories 10 3,548 2,258 Trade and other receivables 11 3,036 1,599 Prepayments Income tax receivable Cash and cash equivalents 1, Total current assets 8,362 5,455 TOTAL ASSETS 18,577 14,472 EQUITY AND LIABILITIES Capital and reserves Share capital Additional paid-in capital Revaluation reserve 1,838 1,838 Retained earnings / (Accumulated losses) 1,341 (522) Total equity 3,181 1,318 Non-current liabilities Loans and borrowings 13 7,213 5,406 Trade payables Deferred income Provisions Deferred tax liabilities 1, Total non-current liabilities 8,677 6,689 Current liabilities Loans and borrowings 13 2,308 2,935 Trade and other payables 14 1,774 1,476 Income tax payable Advances received 15 2,492 2,054 Total current liabilities 6,719 6,465 Total liabilities 15,396 13,154 TOTAL EQUITY AND LIABILITIES 18,577 14,472 The notes on pages 9-18 form an integral part of this interim condensed consolidated financial information. 5

8 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in millions of Russian rubles) Notes Share capital Additional paid-in capital Revaluation reserve Accumulated profit/ (loss) Total 1 January (3,551) (1,570) Profit and other comprehensive income for the period (unaudited) 1 1 1,979 (2,808) (827) 1 January 1 1 1,838 (522) 1,318 Profit and other comprehensive income for the period ,033 2, 033 Acquisition of minority interest in subsidiary (170) (170) (unaudited) ,838 1,341 3,181 The notes on pages 9-18 form an integral part of this interim condensed consolidated financial information. 6

9 CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in millions of Russian rubles) 1st half Notes Operating activities Profit before tax for the period 2, Adjustments for: Depreciation of property, plant and equipment Net finance costs 7 1, (Reversal of impairment loss) / impairment loss on trade receivables (1) 27 (Gain) / loss on disposal of property, plant and equipment (2) 18 Operating cash flows before movements in working capital 4,147 1,624 Movements in working capital: Change in trade and other receivables (1,477) 300 Change in inventories (1,290) (373) Change in prepayments (124) (115) Change in trade and other payables (net of payables for the supply of property, plant and equipment) 220 (399) Change in advances received 438 (1,358) Cash generated from / (used in) operations 1,914 (321) Reimbursement of income tax prepaid in prior periods, net of income tax paid Interest paid, net of government grants (262) (327) Net cash generated by / (used in) operating activities 2,080 (648) Investing activities Payments for property, plant and equipment (1,304) (1,716) Proceeds from loans issued - 30 Proceeds from the disposal of property, plant and equipment 17 3 Net cash used in investing activities (1,287) (1,683) Financing activities Proceeds from borrowings 5,541 3,069 Repayment of borrowings (5,706) (582) Repayment of finance lease liabilities (12) (22) Acquisition of minority interest in subsidiary 16 (170) - Net cash (used in)/generated by financing activities (347) Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 1, The notes on pages 9-18 form an integral part of this interim condensed consolidated financial information. 7

10 NON-IFRS MEASURES* (UNAUDITED) (in millions of Russian rubles) Management of the Group believes that it is appropriate to disclose the following non-ifrs measures that are used by management for an additional analysis of the operating effectiveness of the Group. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) Calculation of Adjusted EBITDA is not defined by IFRSs and therefore should not be considered as an alternative measure of profit in accordance with IFRSs. Management believes that it is appropriate to disclose the Adjusted EBITDA, since it provides additional information that may be useful to the users of financial information. Because there are no uniform rules for calculating the Adjusted EBITDA, other companies may calculate this measure by other methods and, therefore, the performance of different companies may not be comparable. The calculation of Adjusted EBITDA in accordance with the method consistently applied by management and used for the Group s performance analysis is presented below. 1st half Profit before tax 2, Adjustments: Depreciation of property, plant and equipment Foreign currency exchange differences, net 823 (32) Interest expense, net of government grants Adjusted EBITDA 4,179 1,746 Net working capital The calculation of this measure is not defined by IFRSs, but used for the analysis of changes in operating cash flows of the Group by management. Net working capital 31 December Inventories 3,548 2,258 Trade and other receivables 3,036 1,599 Prepayments Trade and other payables (2,027) (1,690) Advances received (2,492) (2,054) Net working capital 2, * This additional information is not a part of interim condensed consolidated financial information and is provided for the convenience of users. 8

11 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) 1. GENERAL INFORMATION 1.1. Organisation and operations Altraso Ventures Ltd (the Company) is a limited liability company registered under the law of Cyprus. The Company was incorporated on 4 December 2012 in Limassol, Cyprus. The office of the Company is located at Proteas House, Floor 5, 155 Arch. Makariou III Limassol, Cyprus. The Company and its subsidiaries (the Group) operate in the Russian Federation. The Group s principal activities are the extraction, transportation and sale of thermal coal. Mining and other assets of the Group are located in Sakhalin and Magadan regions of the Russian Federation Significant subsidiaries Subsidiary Country of incorporation Effective ownership / voting share 31 December Principal activities LLC East Mining Company LLC SUR LLC SVUK LLC Coal Sea Port of Shakhtersk LLC Tekhnologii Finansov LLC VGK Transportnye Sistemy Russian Federation 100% 99% Russian Federation 100% 99% Russian Federation 100% 99% Russian Federation 70% 69% Russian Federation 51% 51% Russian Federation 100% 100% Management company Brown coal extraction (open pit) Exploration and evaluation of mining reserve Port facilities Legal and consulting services Engineering and construction activities 2. BASIS OF PREPARATION AND PRESENTATION This interim condensed consolidated financial information has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. This interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements. The Group omitted disclosures which would substantially duplicate the information contained in its audited annual consolidated financial statements for prepared in accordance with International Financial Reporting Standards ( IFRS ), such as accounting policies and details of accounts which have not changed significantly in amount or composition. This interim condensed consolidated financial information has been prepared on the assumption that the Group is a going concern and will continue operating for the foreseeable future. Exchange rates for the currencies in which the Group transacts were as follows: 31 December Closing exchange rates [RUB] 1 U.S. dollar ( USD ) Euro

12 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) Average exchange rates for the six months ended [RUB] 1 USD Euro Seasonality of business. Due to the seasonal nature of coal sales caused by the limited availability of marine navigation during the winter period, higher revenues and operating profits are usually expected in the second half of the year than the first half. In, 30% of revenue were received in the first half of the year and 70% in the second half. Stripping volumes are higher in the first half of the year as more preparation works are required to enable a higher volume of coal extraction in the second half of the year due to the seasonality of coal sales. 3. SIGNIFICANT ACCOUNTING POLICIES The same accounting policies, presentation and methods of computation have been followed in this interim condensed consolidated financial information as were applied in the preparation of the Group s consolidated financial statements for the year ended 31 December, except for the impact of the adoption of the following new and amended Standards starting from 1 January : IFRS 9 Financial Instruments; IFRS 15 Revenue from Contracts with Customers; IFRIC 22 Foreign Currency Transactions and Advance Consideration; Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions; Amendments to IAS 40 Investment Property; Amendments to IFRS 4 Application of IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts; Annual improvements to IFRSs, The adoption of new standards, amendments and interpretations did not have a significant effect on the Group s interim condensed consolidated financial information, except for the impact disclosed below. IFRS 9 Financial Instruments In relation to the impairment of financial assets, IFRS 9 Financial Instruments requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39 in order to provide timely and complete recognition of impairment losses. In accordance with the requirements of the new standard, a provision assessment was performed considering the credit ratings of counterparties. The Group did not recognize the accumulated effect of IFRS 9 Financial Instruments adoption at retained earnings as at beginning of the reporting period because management assessed such effect as insignificant. IFRS 15 Revenue from Contracts with Customers Management has analysed the requirements of IFRS 15 on the classification of additional demurrage and dispatch payments in accordance with the terms of coal sales contracts and concluded that additional compensation payable to customers should be accounted for as a reduction of the revenue. As no significant compensation payments occurred during the first half of, the application of the new standard did not have significant effect on the Group s interim condensed consolidated financial information. 10

13 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) 4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY Critical accounting judgements and key sources of estimation uncertainty used for the preparation of this interim condensed financial information comply with the similar critical accounting judgements and key sources of estimation uncertainty in the consolidated financial statements for the year ended 31 December. 5. COST OF SALES 1st half Drilling, stripping and other third parties services (1,371) (790) Fuel (1,186) (708) Coal transportation to the seaport (832) (380) Personnel costs (792) (612) Depreciation of property, plant and equipment (547) (502) Spare parts (repair and maintenance) (426) (225) Other materials (255) (183) Operating lease (110) (126) Mineral extraction tax (74) (32) Electricity costs (66) (63) Total production costs (5,659) (3,621) Change in finished goods and goods in transit 1, Capitalisation of stripping activity asset Total cost of sales (4,655) (2,945) 6. ADMINISTRATION EXPENSES 1st half Personnel costs (469) (268) Consulting and other professional services (58) (66) Payments to budget (32) (14) Operating lease (18) (10) Other administration expenses (40) (23) Total (617) (381) 11

14 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) 7. FINANCE COSTS, NET FINANCE INCOME 1st half Interest income on loans issued 19 - Interest income on deposits 12 - Net gain on sale of foreign currency Foreign exchange gain on revaluation of accounts payable and loans and borrowings received - 32 Total finance income FINANCE COSTS Interest expenses on finance lease (1) (2) Discounting of financial instruments (1) (10) Interest expense on long-term accounts payable (15) (34) Interest on loans and borrowings, gross of government grants (247) (356) Government grants for compensation of interest expenses - 31 Foreign exchange loss on revaluation of accounts payable and borrowings received (823) - Total finance costs (1,087) (371) Finance costs, net (1,056) (160) 8. INCOME TAX EXPENSE Interim period income tax is accrued based on the estimated average annual effective income tax rate of 20% (first half of : 19%). 1st half Income tax expense (122) - Increase in deferred tax liabilities (392) (174) Total income tax expense for the period (514) (174) 12

15 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) 9. PROPERTY, PLANT AND EQUIPMENT Buildings and constructions Machinery and equipment Vehicles Vessels Construction in progress Advances for non-current assets Land Mining assets Total Cost / Revalued amount Balance at 1 January ,566 8,946 1, ,402 Additions ,155 Transfers (3) (24) - Disposals (21) - (21) Balance at ,655 9,042 1, ,536 Balance at 1 January ,715 8,336 1, ,083 Additions ,815 Transfers (238) - Disposals (2) (13) (15) Balance at ,013 4,617 8,482 1,626 1,166 1,123 18,883 Accumulated depreciation Balance at 1 January - (17) (303) (1,458) (5,937) (357) - - (8,072) Depreciation - (4) (20) (145) (251) (82) - - (502) Disposals Balance at - (21) (323) (1,603) (6,188) (439) - - (8,574) Balance at 1 January - (29) (328) (1,730) (5,662) (522) - - (8,271) Depreciation - (42) (16) (184) (241) (64) - - (547) Disposals Balance at - (71) (344) (1,914) (5,903) (586) - - (8,818) Carrying amount Balance at 1 January ,108 3, ,330 Balance at ,052 2, ,962 Balance at 1 January ,985 2,674 1, ,812 Balance at ,703 2,579 1,040 1,166 1,123 10,065 13

16 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) Mining assets As at, the stripping activity asset in the total amount of RUB 578 million (31 December : RUB 608 million) is recognised in the mining assets group. In the first half of no stripping activities meeting the stripping activity asset recognition criteria occurred. The stripping activities performed in were related to a new area of coal deposit, which was put into use in. The expected useful life of the stripping activity asset is not less than 10 years. 10. INVENTORIES 31 December Finished goods 2,707 1,703 Materials and spare parts Total 3,548 2, TRADE AND OTHER RECEIVABLES 31 December Trade receivables 2,279 1,065 VAT receivable Other receivables Tax receivables Total 3,036 1,599 The ageing of trade and other receivables as at the reporting dates was: 31 December Expected credit Expected credit Total losses Total losses Not past due 2,079 (19) Past due days 162 (9) Past due days 92 (7) 67 (1) Past due days 113 (25) 148 (20) More than 360 days 127 (107) 120 (106) Total 2,573 (167) 1,294 (127) Significant portion of accounts receivable is represented by receivables due from related parties (as at RUB 606 million, as at 31 December RUB 606 million), that purchase coal and inventories from the Group and regularly allow delay in payment compared to the contract terms. The management of the Group performed an assessment of expected credit losses and recognised a provision in the amount of RUB 122 million related to receivables due from related parties. Management expects that the outstanding balance will be fully repaid until the end of. Management estimated that the Group has an ability to offset receivables due from third parties with advances received, which do not meet the criteria for offsetting, from the same counterparties (Note 15). 12. CAPITAL AND RESERVES The share capital of the Company as at and 31 December amounted to RUB 4 thousand and comprised 100 shares with a par value of EUR 100 (RUB 0.4 thousand) per share. 14

17 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) Ordinary shares of the Company carry one vote per share at the Shareholders Meetings of the Company and carry a right to dividends that are subject to approval at the Shareholders Meetings. As at and 31 December, additional paid-in capital is represented by additional contributions of shareholders in the amount of EUR 17,509 (RUB 1 million) made before LOANS AND BORROWINGS 31 December Non-current loans and borrowings Unsecured bank loans 7,066 4,718 Secured loan from third parties Finance lease liability Total 7,213 5,406 Current loans and borrowings Unsecured bank loans 2,217 2,932 Unsecured loans from third parties 3 3 Finance lease liability 88 - Total 2,308 2,935 Total loans and borrowings 9,521 8,341 During the first half of the long-term secured loan from a third party was repaid ahead of schedule. As at 31 December, the loan was secured by property, plant and equipment with a carrying value of RUB 342 million. As at, the interest payable amounted to RUB 8 million. Terms and debt repayment schedule: Currency Nominal interest rate Year of maturity 31 December Unsecured bank loan USD Libor3M % ,054 3,718 Unsecured bank loan USD 5.2% ,012 1,003 Unsecured bank loan USD Libor3M % ,803 - Unsecured bank loan USD % 406 2,881 Unsecured loan due to third parties RUB 0.7% Unsecured bank loan RUB % - 48 Secured loan due to third parties RUB 5% Total 9,278 8,341 As at, the Group has a number of credit facility agreements in several major Russian banks. In accordance with the agreements, the Group is able to obtain additional financing under annual interest rates of 5-7% in USD and % in RUB (31 December : 5-11% for additional financing in RUB, % for additional financing in USD). As at the reporting date, the available long-term credit facilities amounted to RUB 5,717 million, including RUB 2,598 million payable after 2019 and RUB 3,119 million payable after 2020 (31 December : RUB 9,901 million, including RUB 1,993 million payable after 2019 and RUB 7,136 million payable after 2022). 15

18 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) Finance lease liabilities Finance lease liabilities are payable from to In the first half of the effective interest rate for finance lease contracts amounted to 1% (first half of : 12.5%). As at, the carrying value of assets leased under financial lease contracts amounted to RUB 260 million. As at 31 December, there were no finance lease liabilities. 14. TRADE AND OTHER PAYABLES 31 December Non-current payables for the supply of property, plant and equipment Trade payables Payables for the supply of property, plant and equipment Payables to employees Taxes payable Other payables Total current payables 1,774 1,476 Total 2,027 1,690 Payables for the supply of property, plant and equipment in particular include a liability of RUB 449 million and RUB 823 million as at and 31 December, respectively. The liability relates to certain equipment supply contracts principally denominated in RUB and EUR, for which the supplier provides a deferral in payment from one to five years. The liability was measured at the amortised cost using the effective interest rate. As at, the liability is secured by the equipment with carrying value of RUB 542 million (31 December : RUB 582 million). Payables to employees include provision for unused vacations in the amount of RUB 140 million (31 December : RUB 141 million). 15. ADVANCES RECEIVED In accordance with coal sales agreements, the Group regularly receives prepayments for future supplies of coal from customers. Generally, advances received are subject to set-off within ninetwelve months upon receipt. The Group performs advances set-off at the time specified in the contracts with the customers. The following table provides the gross amounts of trade receivables due from major customers and respective advances received, which were not offset due to the non-fulfilment of IAS 32 offset criteria. 31 December Advances received from customers for coal supply (2,492) (2,054) Accounts receivable from the same customers for coal supply 1, Net amount (964) (1,550) 16

19 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) 16. RELATED PARTY TRANSACTIONS As at and 31 December, the shareholders of the Company were Lazzio Commerce Inc. with ownership of 55% and Tamlensia Ventures Ltd with ownership of 45%. Shareholders of the Company do not produce financial statements available for public use. In accordance with the agreement concluded between the shareholders mentioned above, control and management over the Company s and the Group s operations are performed jointly. The ultimate controlling shareholders of the Group are three individuals, none of them is an ultimate controlling party Compensation of key management personnel During the first half of, key management personnel received remuneration of RUB 108 million (first half of : RUB 53 million) Other related party transactions As there is no ultimate controlling party, all transaction with related parties controlled by the shareholders were classified into transactions with entities having significant influence over the Group. Amounts due to and from related parties are disclosed in the following tables: Amounts owed by / (to) related parties 31 December Trade and other receivables (gross of allowance for doubtful debt) Allowance for doubtful debts (122) (92) Trade and other payables (1) (6) 1st half Sales of goods and services Acquisition of goods and services 2 64 Acquisition of property, plant and equipment In May, the Group acquired a 1% interest in the share capital of subsidiary LLC East Mining Company from a minority participant (related party of the Group). The carrying value of the net assets acquired is less than RUB 1 million, the consideration in the amount of RUB 170 million was fully paid in cash. 17. CAPITAL COMMITMENTS As at, under agreements for the construction and acquisition of property, plant and equipment, the Group is committed to incur capital expenditure of RUB 827 million, net of liabilities recognised as at the reporting date (31 December : RUB 244 million). 18. CONTINGENCIES Legal proceedings From time to time and in the normal course of business, claims against the Group are received from customers and counterparties. Management is of the opinion that no material unaccrued losses will be incurred and accordingly no provision has been made in this interim condensed consolidated financial information. 17

20 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (in millions of Russian rubles, if not stated otherwise) 19. EVENTS AFTER THE REPORTING PERIOD Subsequently to the reporting date, borrowings in the amount of RUB 5,162 million were repaid, including repayments ahead of schedule. In August, the Group concluded new loan facility agreement maturing in 2023 with the total credit limit of USD 55 million and an annual interest rate of 6.6%. 18