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Mechel Reports the 1H 2017 Financial Results

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

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

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented:

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

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

Consolidated Results For The 1H 2017

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

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

Mining Segment

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

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

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

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

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

Steel Segment

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

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

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

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

Power Segment

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

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

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

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

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

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

Attachments to the 1H 2017 Financial results Press Release

Attachment A

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

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

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

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

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

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


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

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


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


Attachment B

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


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


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

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

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

Source: Mechel PAO