Annual Report 2007 - Severstal

OAO Severstal and subsidiaries
Notes to the consolidated financial statements
for the year ended December 31, 2007
(Amounts expressed in thousands of US dollars, except as otherwise stated)
Impairment losses
The aging of trade receivables including trade receivables from related parties at the reporting date was:
December 31,
2007 2006 2005
Gross Impairment Gross Impairment Gross Impairment
Not past due 1,065,731 (2,512) 891,505 (2,667) 842,773 (698)
Past due 0-30 days 502,650 (3,061) 365,751 (6,957) 289,436 (4,213)
Past due 31-90 days 125,033 (3,245) 132,621 (4,736) 135,059 (3,664)
Past due 91-180 days 27,335 (20,348) 21,745 (8,053) 61,979 (23,652)
Past due 180-365 days 11,947 (397) 12,513 (605) 12,708 (2,207)
More than one year 21,575 (6,320) 7,690 (3,926) 48,045 (9,209)
1,754,271 (35,883) 1,431,825 (26,944) 1,390,000 (43,643)
The impairment allowance at December 31, 2007 includes recognized impairment allowance in respect of trade receivables from related parties for the
total amount of US$ 9.2 million (2006: nil; 2005: nil).
The movement in allowance for impairment in respect of trade receivables including trade receivables from related parties during the year was
as follows:
Year ended December 31,
2007 2006 2005
Balance at 1 January (26,944) (43,643) (60,448)
Impairment loss recognised (9,716) (9,027) (5,039)
Impairment loss reversed – 27,268 20,840
Impairment loss – other movements 777 (1,542) 1,004
Balance at 31 December (35,883) (26,944) (43,643)
The allowance account in respect of trade receivables including trade receivables from related parties is used to record impairment losses unless the
Group is satisfied that no recovery of the amount owing is possible; at that point the amount is considered irrecoverable and is written off against the
financial asset directly.
No impairment allowance was recognised by the Group in respect of other financial assets.
At the balance sheet date there was a significant concentration of credit risk in respect of trade accounts receivable from related parties, originated
loans to related parties and deposits in related parties.
Trade receivables from related parties
The Group’s most significant customer, a related party ZAO TD Severstal-invest, accounts for US$ 30.1 million of trade receivables carrying amount
at December 31, 2007 (US$ 55.1 million and US$ 55.3 million at December 31, 2006 and December 31, 2005 respectively).
Originated short-term loans to related parties
The Group’s most significant related party in 2007, SeverCorr LLC, accounted for US$ 60 million of the short-term loans receivable carrying amount
at December 31, 2007.
The Group’s most significant related parties in 2006, OOO Impuls-Consult and ZAO TD Severstal-invest, accounted for US$ 46 million and
US$ 7.8 million of the short-term loans receivable carrying amount at December 31, 2006 respectively.
The Group’s most significant related parties in 2005, OOO Monolit, OAO Promstroybank and ZAO TD Severstal-invest, accounted for US$ 46.5 million,
US$ 7.7 million and US$ 6 million of the short-term loans receivable carrying amount at December 31, 2005.
Originated long-term loans to related parties
The Group’s most significant related parties in 2007, OAO Metcombank and ZAO TD Severstal-invest, accounted for US$ 13 million and US$ 19.7 million
of the long-term loans receivable carrying amount at December 31, 2007 respectively.
The Group’s most significant related party in 2006, SeverCorr LLC, accounted for US$ 60 million of the long-term loans receivable carrying amount
at December 31, 2006.
The Group’s most significant related party in 2005, Baracom Limited, accounted for US$ 38 million of the long-term loans receivable carrying amount
at December 31, 2005.
Long-term deposits in related parties
The Group’s most significant related party in 2007, NPF Stalfond, accounted for US$ 62.4 million of the long-term deposits carrying amount at
December 31, 2007 (US$ 50.1 million at December 31, 2006).
Severstal Annual Report 2007 113