2000 financial results in accordance with international accounting standards
TRANSCRIPT
2000 Financial Results 2000 Financial Results in accordance with in accordance with
International Accounting StandardsInternational Accounting Standards
Principles of Reconciliation
The IAS financials results have been prepared based on the Russian Accounting Standards
financial reports
Currency of reporting – Russian rouble (RuR)
Accounting in a hyperinflation environment - IAS 29
Inflation over the last 3 years was close to 100%
The population prefers to keep its savings in a foreign currency
Payments by credit are priced at levels compensating for the purchasing power loss over
the term of the credit
average annual inflation index in 2000: 1,088
IAS review has been prepared by KPMG auditors
- RuR millions - 2000 1999 Change
Sales 152 989 94 142 +63%
International sales 136 335 89 071 +53%
Domestic sales 16 654 5 071 +228%
Cost of goods sold and SG&A 77 572 48 251 +61%
Operating profit 67 109 35 972 +87%
Profit tax 12 967 23% 15 915
Net income 40 089 17 249 +132%
Income Statement
Revenues (RuR millions)Revenues (RuR millions)
Ni 40%
Cu 21%
PGMs 33%
Co 3%
Other 3%
94 142
152 989
Ni 40%(38%)
Cu 15%(14%)
PGMs46%
(125%)
Co 2%(-9%)
Other 4%(105%)+63%
1999 2000Note: 2000 changes are in brackets
Financial Performance
Gross Profit MarginGross Profit Margin EBIT MarginEBIT Margin Net Income MarginNet Income Margin
1998 1998 19981999 2000 1999 19992000 2000
60.4%
39.6%
14.9%
59.5%
38.2%
18.3%
55.1%
43.9%
26.2%
Cost of Goods Sold
Operations:
Production growth and inflation:
Growth of costs of purchased materials
Growth of costs of electricity and fuel
Increase in costs of servicing machines and equipment
Growth in salaries
Norimet consolidation:
Resulted in third party sales and third party purchases, amortization of goodwill and a revaluation
of Norimet inventories to the cost of purchase. This revaluation was due to the difference in
accounting of Norilsk Nickel and Norimet. Norilsk Nickel accounts for its inventories at the cost of
purchase, while Norimet was accounting stockpiles of metals at current market prices.
7.5%
15.3%
0.56 RuR
12.3%
22.4%20.7%
32.1%
91 RuR
188 RuR
Financial Performance
Return on AssetsReturn on Assets Return on Shareholders’ Equity
Return on Shareholders’ Equity EPSEPS
1998 19981999 2000 1999 19992000 200019991998
Key Balance Sheet Items - RuR millions - 2000 1999
Cash and cash equivalents 16 886 8 818
Property, plant and equipment 81 318 70 225
Inventories 34 307 25 709
Shareholders Equity, 125 072 77 103
as % of balance sheet 64,4% 55,0%
Credits and loans 29 217 16 557
Key Balance Sheet Items Operations:
Growth in cash (by RuR 8 billion)
Growth in inventories (RuR 8,6 billion ) due to increase in purchased materials by RuR 9,4 billion
Growth in accounts receivable (RuR 13,5 billion) due to increase in VAT receivables from the state
(RuR 6,3 billion)
Growth in accounts payable (RuR 0,8 billion)
Norimet Consolidation:
Increase in credits and loans by RuR 8,3 billion
Increase in intangibles by RuR 5,5 billion (goodwill)
Increase in inventories by RuR 7,1 billion
Increase in accounts payable (RuR 0,6 billion) and accounts receivable (RuR 13,2 billion)
Cash Flows
19 044(24 046)
14 2138 069
(1 143)
- RuR millions -
Operating Activities
Investing Activities
FinancingsActivities
Capital Assets Revaluation
Net increase in cash and cash equivalents
15 901
(4 917)
(3 399)
(507) 7 078
1999 2000
10 984
7 585
7 078
8 0699 211
(5 002)
Cash Flows (continued)
Operating Activities:
Payback of tax arrears for the previous years (RuR 6,9 billion)
Norimet consolidation: the calculation of the change in inventories, receivables and payables of the
Group reflects the acquisition of Norimet
Investing Activities:
Capital expenditures totaled RuR 18,0 billion, by 280% more than in 1999
The main targets for capital expenditures were the following mines: «Oktyabrsk», «Kaula-
Kotselvaara» and «Taimyrsk», Talnakh concentrator and Pelyatinskoye gas condensate mineral
deposit
Acquisition of a stake in the Novolipetsk metallurgical plant (RuR 6,2 billion)
Capital Expenditures
- RuR billions -
Capital Expenditures (RAS*) 9.8
* Russian Accounting Standards
Capital expenditures by type of expenditure in 2000
% of capital expenditures
Raw materials supply 20%Concentration 15%Metallurgy 9%Energy 6%Equipment not included in construction bill 41%Accessorial assets 5%Non-production assets 4%Total 100%
Capital Expenditures (continued)
- RuR billions -
Capital Expenditures (RAS) 9.8
- revaluation of inventories, construction-in-progress and other
7.2
- inflation 1.0
Capital Expenditures (IAS) 18.0
Prospects
Review of interim IAS 6 month and 9 month 2001 financials
Review of IAS 2001 financials
Audit of IAS financials starting 2002
Restatement of interim (quarterly) financial reports starting 2002 and review of half-year
results