Financial Results

COST OF SALES, DISTRIBUTION, AND GENERAL AND ADMINISTRATIVE EXPENSES

In 2019 the Company’s cost of sales amounted to USD3,195 million, a decline of 2.2% y-o-y. Thus cost of sales as a share of the Company’s total revenue stood at 45.9%, with no significant change on 2018.

Distribution expenses rose by 26.6%, to USD1,084 million, as a result of greater transportation expenses (due to increased maritime freight volumes, tariff indexation, higher rolling stock leasing costs, and a depreciation of the RUB). In 2019 the share of distribution expenses in the Company’s total revenue was 15.6%.

General and administrative expenses declined by 5.7% y-o-y, to USD328 million, which was 4.7% of the Company’s total revenue.

FINANCIAL POSITION AND DEBT MANAGEMENT

As at 31 December 2019 the Company’s total assets stood at USD8,425.9 million, compared to USD6,808.5 million as at 31 December 2018. Cash and cash equivalents stood at USD304 million as at 31 December 2019. In addition, as at the reporting date the Company had undrawn credit lines available in RUB, USD, and EUR, totalling around 604 million in the USD equivalent, that does not include the amount of available sample limits on loan agreements concluded for financing investment projects and guaranteed by export credit agencies.

Long-term debts remained prevalent in the loan portfolio structure (98% as at 31 December 2018, vs. 94.6% in the previous year). As at the reporting date the Company’s short-term debt amounted to USD70 million.

As at 31 December 2019 the Company’s total debt was at almost the same level as at 31 December 2018, and totalled USD4,059 million, which is explained by the implementation of the new IFRS 16 standard, effective for annual reporting periods starting on or after 1 January 2019 (as at 31 December 2019 the Company’s lease liabilities were USD115 million) and RUB appreciation (RUB/USD = 61.9 as at 31 December 2019, vs. 69.5 as at 31 December 2018). In 2019 net repayments stood at USD252 million.

• In 2019 Metalloinvest continued to improve the repayment schedule and optimise its loan portfolio:
• Partially refinanced its loan portfolio by signing a new RUB8.33 billion loan agreement with Gazprombank, with a six-year tenor.
• Placed BO-09 series exchange RUB-denominated bonds for a total amount of RUB5 billion, with a 10-year maturity and a call option in four years; it also contained a put option at nominal value in seven years.
• Opened a sustainable finance credit line with ING Bank of up to USD100 million until 30 November 2020.
• Redeemed in full Eurobonds-2020, with a nominal value of USD332.7 million.
• Signed a framework agreement with 12 banking partners on ECA-backed financing to optimise the financing process related to the Company’s annual investment programmes, including the acquisition of imported equipment. The first deal, worth EUR9.9 million, was closed in October 2019.
• Opened with a syndicate of international and Russian banks a new EUR300 million credit line for pre-export financing (PXF-2019/1).
• Placed a through a public offering BO-03 series exchange RUB-denominated bonds for a total amount of RUB10 billion; the proceeds were used to refinance BO-01 series bonds for the same amount within a call option.
• Opened with a syndicate of international banks a new EUR200 million credit line for pre-export financing (PXF- 2019/2).
• Improved the commercial terms for tranche B by USD250 million, as part of its pre-export finance facility (PXF-2017) signed in 2017 and repayable in 2022–2024. The additional agreement constitutes a significant reduction in the interest rate margin linked to LIBOR.