Committed to growth

Notes to the Consolidated Financial Statements
for the year ended 31 December 2015
(all amounts are presented in thousands of US dollars, unless otherwise stated)
1 The EuroChem Group and its operations
The EuroChem Group comprises the parent entity, EuroChem Group AG (the ‘Company’) and its subsidiaries (collectively the ‘Group’ or
‘EuroChem Group’). The Company was incorporated under the laws of Switzerland on 16 July 2014 as a part of corporate reorganization
and has its registered office at: Alpenstrasse 9, 6300, Zug, Switzerland.
These consolidated financial statements were authorized for issue by the Board of Directors of the Company on 11 February 2016.
At 31 December 2015, EuroChem Group SE owned 100% (31 December 2014: 100%) of the share capital of EuroChem Group AG.
A company that holds business interests beneficially for Mr Andrey Melnichenko owns 100% of Linea Ltd. registered in Bermuda,
which in turn owns 92.2% (31 December 2014: 92.2%) of EuroChem Group SE. The remaining 7.8% (31 December 2014: 7.8%)
of EuroChem Group SE is held indirectly by Mr Dmitry Strezhnev, CEO of the Group.
The Group’s principal activity is the production of mineral fertilizers (nitrogen and phosphate based) as well as mineral extraction (apatite,
phosphate rock, iron ore, baddeleyite and hydrocarbons), and the operation of a distribution network. The Group is developing potassium
salts deposits to start the production and marketing of potassium fertilizers. The Group’s main production facilities are located in Russia,
Lithuania, Belgium, Kazakhstan and China (the Group’s joint venture’s production facilities). The Group’s distribution assets are located
globally across Europe, Russia, the Commonwealth of Independent States (‘CIS’), North, Central and South America, and Central and
South East Asia.
2 Basis of preparation and significant accounting policies
Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’)
under the historical cost convention, as modified by the initial recognition of financial instruments based on fair value and derivative financial
instruments, 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.
Functional and presentation currency
The functional currency of each of the Group’s entities is the currency of the primary economic environment in which the entity operates.
While the Company’s functional currency is the US dollar (‘US$’), the functional currency for each of the Group’s subsidiaries is determined
separately. The functional currency of subsidiaries located in Russia is the Russian rouble (‘RUB’); the functional currency of subsidiaries
located in the Eurozone is the Euro (‘EUR’), the functional currency of subsidiaries located in North America and the functional currency
of a trading subsidiary located in Switzerland is the US$.
Strategic Report Corporate Governance Financial Statements
Effective 1 January 2015 the functional currency of certain subsidiaries was changed following a change in conditions and management
structure as a result of corporate reorganization which had occurred in 2014.
Monetary assets and liabilities are translated into each entity’s functional currency at the official exchange rate at the respective reporting
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 are recognized 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 recognized 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 recognized in other comprehensive income.
Foreign exchange gains and losses that relate to bank borrowings, third party loans, intragroup loans and deposits are presented in the
consolidated statement of profit or loss and other comprehensive income in a separate line ‘Financial foreign exchange gain/(loss), net’.
All other foreign exchange gains and losses are presented in the consolidated statement of profit or loss and other comprehensive income
within ‘Other operating income/(expenses), net’.
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.
The presentation currency of the Group is the US$ since the management considers the US$ to be more appropriate for the understanding
and comparability of consolidated financial statements. The results and financial position of each of the Group’s subsidiaries were translated
to the presentation currency as required by IAS 21, ‘The Effects of Changes in Foreign Exchange Rates’:
(i) assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date of that
consolidated statement of financial position;
EuroChem Annual Report and Accounts 2015 67