eurochem-annual-report-2011

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Financial information Consolidated statement of changes in equity for the year ended 31 December 2011 (all amounts are presented in thousands of Russian Roubles, unless otherwise stated) 80 EuroChem Annual Report and Accounts 2011 Note Share capital Treasury shares (Note 14) Attributable to owners of the parent Cumulative currency translation differences Revaluation of availablefor-sale investments Retained earnings Total Noncontrolling interests Balance at 1 January 2010 6,800,000 (7,760) 1,884,761 5,095,017 58,664,359 72,436,377 758,683 73,195,060 Comprehensive income/(loss) Profit for the period – – – – 19,997,844 19,997,844 54,633 20,052,477 Other comprehensive income/(loss) Currency translation differences – – (644,882) – – (644,882) (50,401) (695,283) Revaluation of available-for-sale investments 9 – – – 9,642,508 – 9,642,508 – 9,642,508 Disposal of available-for-sale investments 9 – – – (1,407,261) – (1,407,261) – (1,407,261) Total other comprehensive income/(loss) – – (644,882) 8,235,247 – 7,590,365 (50,401) 7,539,964 Total comprehensive income/(loss) – – (644,882) 8,235,247 19,997,844 27,588,209 4,232 27,592,441 Transactions with owners Dividends 14 – – – – (5,834,000) (5,834,000) – (5,834,000) Acquisition of additional interest in subsidiaries – – – – (9,964) (9,964) (439,019) (448,983) Total transactions with owners – – – – (5,843,964) (5,843,964) (439,019) (6,282,983) Balance at 31 December 2010 6,800,000 (7,760) 1,239,879 13,330,264 72,818,239 94,180,622 323,896 94,504,518 Balance at 1 January 2011 6,800,000 (7,760) 1,239,879 13,330,264 72,818,239 94,180,622 323,896 94,504,518 Comprehensive income/(loss) Profit for the period – – – – 32,028,279 32,028,279 3,114 32,031,393 Other comprehensive income/(loss) Currency translation differences – – 484,344 – – 484,344 10,905 495,249 Revaluation of available-for-sale investments 9 – – – (12,689,257) – (12,689,257) – (12,689,257) Disposal of available-for-sale investments 9 – – – (914,434) – (914,434) – (914,434) Total other comprehensive income/(loss) – – 484,344 (13,603,691) – (13,119,347) 10,905 (13,108,442) Total comprehensive income/(loss) – – 484,344 (13,603,691) 32,028,279 18,908,932 14,019 18,922,951 Transactions with owners Repurchase of own shares 14 – (29,671,667) – – – (29,671,667) – (29,671,667) Acquisition of subsidiaries 29 – – – – – – 6,825,465 6,825,465 Acquisition of additional interest in subsidiaries 30 – – – – (32,303) (32,303) (178,226) (210,529) Total transactions with owners – (29,671,667) – – (32,303) (29,703,970) 6,647,239 (23,056,731) Balance at 31 December 2011 6,800,000 (29,679,427) 1,724,223 (273,427)104,814,215 83,385,584 6,985,154 90,370,738 The accompanying notes on pages 81 to 116 are an integral part of these consolidated financial statements. Total equity
Financial information Notes to the consolidated financial statements for the year ended 31 December 2011 (all amounts are presented in thousands of Russian Roubles, unless otherwise stated) 1 The EuroChem Group and its operations EuroChem Group comprises the parent entity, Open Joint Stock Company Mineral Chemical Company “EuroChem” (the “Company”), and its subsidiaries (collectively the “Group” or “EuroChem Group”). The Group’s principal activities include extracting minerals (iron-ore, apatite and baddeleyite), producing fertilisers and their distribution in domestic and foreign markets. The Group manufactures a large number of products, the most significant of which is a wide range of mineral fertilizers (nitrogen and phosphate groups). A company that holds the business interests beneficially of Mr. Andrey Melnichenko owns 100% of Linea Limited registered in Bermuda, which in turn owns 92.2% (31 December 2010: 95.0%) of EuroChem Group S.E. The remaining 7.8% (31 December 2010: 5.0%) is held by Mr. Dmitry Strezhnev, CEO of the Group. EuroChem Group S.E. owns 90.86% of the Company (31 December 2010: 99.9%). During the year ended 31 December 2011 the ownership structure changed: • In the second quarter of 2011 a company representing the interests of Mr. Dmitry Strezhnev, increased its shareholding in EuroChem Group S.E. from 5.0% to 7.8% by acquiring 2.8% from Linea Limited (Bermuda), whose shareholding in EuroChem Group S.E. decreased from 95.0% to 92.2%. • In the second and third quarters of 2011 the Group bought back from EuroChem Group S.E. 6,148,651 of its own ordinary shares which represent 9.04% of the issued share capital (Note 14). The Group’s manufacturing facilities are primarily based in the Russian Federation with the exception of one entity, Lifosa AB, located in Lithuania. The Company was incorporated and domiciled in the Russian Federation on 27 August 2001 as a closed joint stock company. On 3 April 2006 the Company changed its legal form to an open joint stock company. The Company has its registered office at: Dubininskaya St. 53, bld. 6 Moscow, Russian Federation 2 Basis of presentation and significant accounting policies Basis of presentation. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) under the historical cost convention, as modified by available-for-sale investments, which are accounted for at fair value. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated (Note 4). Functional currency. The functional currency for the Group’s subsidiaries located in Russia is the national currency of the Russian Federation, the Russian Rouble (“RR”). The Group has a subsidiary located in Lithuania, where the functional currency is the Lithuanian Lita, which is the currency of measurement in Lifosa AB’s financial statements. These have been translated into Russian Roubles, the presentation currency, at the applicable exchange rates as required by IAS 21 “The Effects of Changes in Foreign Exchange Rates” (“IAS 21”) for inclusion in these consolidated financial statements. Translation from functional to presentation currency. These consolidated financial statements have been presented in Russian Roubles (“RR”), which management believes is the most useful currency to adopt for users of these consolidated financial statements. The results and financial position of each group entity are translated into the presentation currency using the official exchange rate of the Central Bank of the Russian Federation (hereinafter “CBRF”) as follows: (i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; (ii) income and expenses for the statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and (iii) all resulting exchange differences are recognised as currency translation differences in other comprehensive income. Foreign currency translation. The functional currency of each of the Group’s consolidated entities is the currency of the primary economic environment in which the entity operates. Monetary assets and liabilities are translated into each entity’s functional currency at the official exchange rate of the CBRF at the respective balance sheet dates. Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities into each entity’s functional currency at year-end official exchange rates of the CBRF are recognised in profit and loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit and loss are recognised in profit and loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are recognised in other comprehensive income. Foreign exchange gains and losses that relate to borrowings and deposits are presented in the consolidated statement of comprehensive income in a separate line “Financial foreign exchange gain/(loss) – net”. All other foreign exchange gains and losses are presented in the profit and loss within “Other operating income/(expenses)”. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Annual Report and Accounts 2011 EuroChem 81 Financial information
Page 1 and 2:
Enabling our future Annual Report a
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...by supplying world markets Our s
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2011 Operational highlights > Succe
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Potash 912 MMT of proven and probab
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16 Estonia Lithuania 7 14 15 Belaru
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Raw materials Up to 80% self-suffic
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Ten years of performance Ten years
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A record RUB 131bn in revenues 66%
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4. Global economy Emerging economie
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Ranking by nutrient capacity MMT p.
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Despite the significant breakthroug
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Business review Our strategy Our st
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Enabling our future... ...by supply
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7billion World population in 2011 9
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Severneft-Urengoy Novy Urengoy, Yam
Page 31 and 32: Environmental footprint -16% decrea
Page 33 and 34: Our commitment We have committed US
Page 35 and 36: Vertical integration > 2.8 MMT p.a.
Page 37 and 38: Employee participation Our employee
Page 39 and 40: The following table highlights our
Page 41 and 42: Nitrogen segment RUBbn, or as indic
Page 43 and 44: Over the next five years (2012-2016
Page 45 and 46: Phosphate segment RUBbn or as indic
Page 47 and 48: EuroChem’s main planned investmen
Page 49 and 50: i Along with nitrogen and phosphate
Page 51 and 52: Distribution RUBbn, or as indicated
Page 53 and 54: i At Tuapse, one of our priorities
Page 55 and 56: Cost of sales and gross margin As i
Page 57 and 58: 2011 2010 2009 RUBm % of total % ch
Page 59 and 60: Balance sheet Working capital Worki
Page 61 and 62: Environment We’ve come a long way
Page 63 and 64: Occupational health and safety We s
Page 65 and 66: Strategic risks We classify as stra
Page 67 and 68: Area Ref. code Nature Description S
Page 69 and 70: Richard Sheath Audit Committee Chai
Page 71 and 72: Nikolay Pilipenko Audit Committee Q
Page 73 and 74: Where did we focus in 2011? The Boa
Page 75 and 76: The Strategy Committee The Strategy
Page 77 and 78: 1 Andrey Melnichenko (39) Chairman
Page 79 and 80: Financial information Consolidated
Page 81: Financial information Consolidated
Page 85 and 86: 2 Basis of presentation and signifi
Page 87 and 88: 2 Basis of presentation and signifi
Page 89 and 90: 3 Critical accounting estimates, an
Page 91 and 92: 4 Adoption of new or revised standa
Page 93 and 94: 6 Segment information continued The
Page 95 and 96: 8 Intangible assets Note Acquired s
Page 97 and 98: 10 Mineral rights continued As of 3
Page 99 and 100: 13 Cash and cash equivalents and fi
Page 101 and 102: 15 Bank borrowings continued Intere
Page 103 and 104: 17 Derivative financial assets and
Page 105 and 106: 22 Distribution costs Distribution
Page 107 and 108: 26 Income tax continued The movemen
Page 109 and 110: 29 Business combinations Acquisitio
Page 111 and 112: 31 Contingencies, commitments and o
Page 113 and 114: 32 Financial and capital risk manag
Page 119 and 120: Financial information Main producti
Page 121 and 122: Q4 2010 Q3 2010 Q2 2010 Q1 2010 201
Page 123 and 124: Forward-looking statements This ann
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eurochem-annual-report-2011

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