Annual report and accounts 2012

Segment information

OAO Severstal and Subsidiaries
Notes to the Consolidated Financial Statements
29. Segment information

for the years ended December 31, 2012, 2011 and 2010
(Amounts expressed in thousands of US dollars, except as otherwise stated)

Segmental statements of financial position as at December 31, 2012:

 Severstal
Resources
 Severstal
Russian
Steel
Severstal
International
Inter
segment
balances
Conso-
lidated
Assets      
Current assets:      
Cash and cash equivalents317,014 1,361,45047,811-1,726,275
Short-term financial investments2,079,173 957,347-(3,012,742)23,778
Trade accounts receivable162,990 648,050229,527-1,040,567
Amounts receivable from related parties117,983 56,3891,275(160,179)15,468
Inventories178,618 1,424,633767,219(17,572)2,352,898
VAT recoverable31,246 183,173--214,419
Income tax recoverable9,827 11,207135-21,169
Other current assets79,267 178,40344,450-302,120
Total current assets2,976,118 4,820,6521,090,417(3,190,493)5,696,694
Non-current assets:      
Long-term financial investments951,207

*

5,674,93819,900(6,537,985)108,060
Investments in associates and joint ventures82,835 89,360144,308-316,503
Property, plant and equipment1,530,367 4,318,4812,640,935(27,072)8,462,711
Intangible assets586,374 229,7484,813-820,935
Restricted financial assets32,970 ---32,970
Deferred tax assets7,605 47,23645,955-100,796
Other non-current assets6,616 21,527140,403-168,546
Total non-current assets3,197,974 10,381,2902,996,314(6,565,057)10,010,521
Total assets6,174,092 15,201,9424,086,731(9,755,550)15,707,215
Liabilities      
Current liabilities:      
Trade accounts payable127,094 538,106392,421-1,057,621
Amounts payable to related parties5,674 128,67058,861(156,971)36,234
Short-term debt finance126,148 2,879,696852,022(2,475,738)1,382,128
Income taxes payable1,575 14,829200-16,604
Other taxes and social security payable54,177 93,5344,879-152,590
Dividends payable- 89,079-(2,541)86,538
Other current liabilities144,955 424,46668,526-637,947
Total current liabilities459,623 4,168,3801,376,909(2,635,250)3,369,662
Non-current liabilities:      
Long-term debt finance687,477 3,865,6611,278,280(1,504,006)4,327,412
Deferred tax liabilities170,530 170,888-(3,340)338,078
Retirement benefit liabilities23,363 111,03167,158-201,552
Other non-current liabilities177,185 36,03742,046-255,268
Total non-current liabilities1,058,555 4,183,6171,387,484(1,507,346)5,122,310
Equity4,655,914

**

6,849,9451,322,338(5,612,954)7,215,243
Total equity and liabilities6,174,092 15,201,9424,086,731(9,755,550)15,707,215

* This amount includes US$ 210.0 million of Severstal treasury shares, measured at the Group's share in the Gold segment's net assets as at the date of its separation.
** This amount includes US$ 66.8 million effect of convertible bonds issue (Note 22).

Segmental statements of financial position as at December 31, 2011:

 Severstal
Resources
GoldSeverstal
Russian
Steel
Severstal
International
Inter
segment
balances
 Conso-
lidated
Assets       
Current assets:       
Cash and cash equivalents429,801-1,184,963248,774- 1,863,538
Short-term financial investments332,557-871,805-(1,193,862) 10,500
Trade accounts receivable243,453-675,514300,994- 1,219,961
Amounts receivable from related parties161,756-41,5481,186(177,141) 27,349
Inventories155,062-1,604,877807,752(48,537) 2,519,154
VAT recoverable23,558-170,327-- 193,885
Income tax recoverable6,618-73,82210,476- 90,916
Other current assets97,753-186,59042,820- 327,163
Assets held for sale-2,680,066--(2,756) 2,677,310
Total current assets1,450,5582,680,0664,809,4461,412,002(1,422,296) 8,929,776
Non-current assets:       
Long-term financial investments1,437,168-6,307,481100,000(7,662,387) 182,262
Investments in associates and joint ventures71,211-66,196163,908- 301,315
Property, plant and equipment1,186,872-3,645,1892,659,039(27,706) 7,463,394
Intangible assets582,820-182,2975,337- 770,454
Restricted financial assets21,455-1,001182- 22,638
Deferred tax assets14,323-40,80444,524- 99,651
Other non-current assets18,359-25,09696,846- 140,301
Total non-current assets3,332,208-10,268,0643,069,836(7,690,093) 8,980,015
Total assets4,782,7662,680,06615,077,5104,481,838(9,112,389) 17,909,791
Liabilities       
Current liabilities:       
Trade accounts payable114,471-507,656492,983- 1,115,110
Amounts payable to related parties4,995-158,75649,0701,370,210*1,583,031
Short-term debt finance488,060-1,161,69964,309(528,601) 1,185,467
Income taxes payable17,135-10,91635- 28,086
Other taxes and social security payable78,599-62,632122- 141,353
Dividends payable--111,208-- 111,208
Other current liabilities120,852-441,54793,021- 655,420
Liabilities related to assets held for sale-894,094--(343,971) 550,123
Total current liabilities824,112894,0942,454,414699,540497,638 5,369,798
Non-current liabilities:       
Long-term debt finance209,307-3,926,8892,172,470(1,518,035) 4,790,631
Deferred tax liabilities160,421-135,551-(8,846) 287,126
Retirement benefit liabilities19,975-83,62158,138- 161,734
Other non-current liabilities144,677-35,77652,726- 233,179
Total non-current liabilities534,380-4,181,8372,283,334(1,526,881) 5,472,670
Equity3,424,2741,785,9728,441,2591,498,964(8,083,146) 7,067,323
Total equity and liabilities4,782,7662,680,06615,077,5104,481,838(9,112,389) 17,909,791

* This amount includes US$ 1,547.0 million liability related to Gold segment separation (Note 11).

Segmental statements of financial position as at December 31, 2010:

 

Severstal
Resources

GoldSeverstal
Russian
Steel
LucchiniSeverstal
International
Inter
segment
balances
Conso-
lidated
Assets       
Current assets:       
Cash and cash equivalents66,497212,1821,700,229-33,754-2,012,662
Short-term bank deposits22-12,668---12,690
Short-term financial investments48,9042,070677,564--(701,075)27,463
Trade accounts receivable142,3971,260613,854-210,326-967,837
Amounts receivable from related parties207,708-110,524-39(305,912)12,359
Restricted financial assets--41,313---41,313
Inventories101,091283,4791,527,266-522,968(65,670)2,369,134
VAT recoverable26,45432,510220,662---279,626
Income tax recoverable4,4373,83320,570-10,738-39,578
Other current assets56,07232,400171,495-38,216-298,183
Assets held for sale3,266-10,8991,853,8491,643,991(2,123)3,509,882
Total current assets656,848567,7345,107,0441,853,8492,460,032(1,074,780)9,570,727
Non-current assets:       
Long-term financial investments1,325,960120,1856,409,105-6,000(7,656,708)204,542
Investments in associates and joint ventures21,3365,54767,142-64,539-158,564
Property, plant and equipment1,088,406488,1643,573,159-2,174,087(23,967)7,299,849
Intangible assets497,3421,275,184137,918-19,2291,2691,930,942
Restricted financial assets19,0175,45337,244---61,714
Deferred tax assets4,16611,16338,448-50,000-103,777
Other non-current assets8,0426,05216,982-47,190-78,266
Total non-current assets2,964,2691,911,74810,279,998-2,361,045(7,679,406)9,837,654
Total assets3,621,1172,479,48215,387,0421,853,8494,821,077(8,754,186)19,408,381
Liabilities       
Current liabilities:       
Trade accounts payable102,10857,879408,026-329,376-897,389
Amounts payable to related parties6,067-175,419-8,306(173,075)16,717
Short-term debt finance282,991280,2411,301,799-57,777(499,257)1,423,551
Income taxes payable6,76526,2318,234---41,230
Other taxes and social security payable61,84925,90967,766-554-156,078
Dividends payable--17,131---17,131
Other current liabilities70,03577,509354,597-48,2894,147554,577
Liabilities related to assets held for sale12,795-1,0572,026,6961,705,094(473,288)3,272,354
Total current liabilities542,610467,7692,334,0292,026,6962,149,396(1,141,473)6,379,027
Non-current liabilities:       
Long-term debt finance235,481116,1743,731,224-1,370,428(730,381)4,722,926
Deferred tax liabilities169,418206,524153,090--(13,961)515,071
Retirement benefit liabilities22,582-88,894-53,079-164,555
Other non-current liabilities141,61363,40936,566-35,5538277,149
Total non-current liabilities569,094386,1074,009,774-1,459,060(744,334)5,679,701
Equity2,509,4131,625,6069,043,239(172,847)1,212,621(6,868,379)7,349,653
Total equity and liabilities3,621,1172,479,48215,387,0421,853,8494,821,077(8,754,186)19,408,381

Segmental income statements for the year ended December 31, 2012:

 Severstal
Resources
 GoldSeverstal
Russian
Steel
Severstal
International
Inter
segment
transactions
Conso-
lidated
Revenue       
Revenue - third parties1,611,174 -8,426,0913,878,340-13,915,605
Revenue - related parties1,393,381 -191,039145(1,396,464)188,101
 3,004,555 -8,617,1303,878,485(1,396,464)14,103,706
Cost of sales(1,724,862) -(6,711,442)(3,774,920)1,425,932(10,785,292)
Gross profit1,279,693 -1,905,688103,56529,4683,318,414
General and administrative expenses(155,355) -(517,304)(91,107)9,153(754,613)
Distribution expenses(313,893) -(729,349)(5,336)183(1,048,395)
Other taxes and contributions(66,726) -(65,622)(1,918)-(134,266)
Share of associates' and joint ventures'
(loss)/profit
(990) -7,889(4,906)-1,993
Gain/(loss) on remeasurement and disposal of
financial investments
8,021 -381,510-(396,112)(6,581)
Loss on disposal of property, plant
and equipment and intangible assets
(3,866) -(19,887)(2,209)-(25,962)
Net other operating income/(expenses)3,726 -27,267(5,025)(5,725)20,243
Profit/(loss) from operations750,610 -990,192(6,936)(363,033)1,370,833
Impairment of non-current assets(51,687) -(2,430)--(54,117)
Net other non-operating income/(expenses)517,830*-(49,189)(222)(538,955)(70,536)
Profit/(loss) before financing and taxation1,216,753 -938,573(7,158)(901,988)1,246,180
Interest income81,908 -110,9653,386(128,090)68,169
Interest expense(58,001) -(365,360)(141,818)124,241(440,938)
Foreign exchange differences(23,465) -194,219(7,244)-163,510
Profit/(loss) before income tax1,217,195 -878,397(152,834)(905,837)1,036,921
Income tax (expense)/benefit(132,051) -(127,284)1,498(5,648)(263,485)
Profit/(loss) from continuing operations1,085,144 -751,113(151,336)(911,485)773,436
Profit/(loss) from discontinued operations- 153,797-(107,434)-46,363
Profit/(loss) for the period1,085,144 153,797751,113(258,770)(911,485)819,799
Additional information:       
depreciation and amortization expense240,357 -318,297170,342(2,951)726,045
capital expenditures555,507 -829,553155,348(2,550)1,537,858
intersegment revenue (incl. in revenue from
related parties)
1,301,001 -95,463-(1,396,464)-

* This amount includes US$ 537.3 million gain on transfer of OAO Severstal shares and GDR's, received as a result of the Gold segment separation, to Severstal Russian Steel, subsequently eliminated within Intersegment transactions.

Segmental income statements for the year ended December 31, 2011:

 Severstal
Resources
GoldSeverstal
Russian
Steel
LucchiniSeverstal
International
Inter
segment
transactions
Conso-
lidated
Revenue       
Revenue - third parties1,762,604-10,388,391-3,422,095-15,573,090
Revenue - related parties1,948,828-158,440--(1,867,958)239,310
 3,711,432-10,546,831-3,422,095(1,867,958)15,812,400
Cost of sales(1,745,500)-(7,748,673)-(3,291,548)1,882,499(10,903,222)
Gross profit1,965,932-2,798,158-130,54714,5414,909,178
General and administrative expenses(160,307)-(497,400)-(82,698)15,362(725,043)
Distribution expenses(326,582)-(774,609)---(1,101,191)
Other taxes and contributions(63,524)-(82,807)-477-(145,854)
Share of associates' (loss)/profit(2,727)-1,873-8,173-7,319
Gain/(loss) on remeasurement and disposal of
financial investments
33-(4,685)---(4,652)
Loss on disposal of property, plant and
equipment and intangible assets
(7,848)-(11,140)-(1,951)-(20,939)
Net other operating (expenses)/income(10,761)-20,610-6,993(18,303)(1,461)
Profit from operations1,394,216-1,450,000-61,54111,6002,917,357
Reversal of impairment of non-current assets--438---438
Net other non-operating expenses(21,207)-(53,283)--9,109(65,381)
Profit before financing and taxation1,373,009-1,397,155-61,54120,7092,852,414
Interest income24,768-183,677-79(158,843)49,681
Interest expense(106,751)-(358,642)-(98,178)127,430(436,141)
Foreign exchange differences65,689-(102,669)---(36,980)
Profit/(loss) before income tax1,356,715-1,119,521-(36,558)(10,704)2,428,974
Income tax expense(285,097)-(171,056)-(4,884)(4,975)(466,012)
Profit/(loss) from continuing operations1,071,618-948,465-(41,442)(15,679)1,962,962
Profit/(loss) from discontinued operations-277,582-129,217(226,231)30,205210,773
Profit/(loss) for the period1,071,618277,582948,465129,217(267,673)14,5262,173,735
Additional information:       
depreciation and amortization expense201,974155,873329,613-117,432(2,199)802,693
capital expenditures490,833320,306712,319-573,696-2,097,154
intersegment revenue (incl. in revenue
from related parties)
1,789,829-78,129--(1,867,958)-

Segmental income statements for the year ended December 31, 2010:

 Severstal
Resources
GoldSeverstal
Russian
Steel
Lucchini

Severstal
International

Inter
segment
transactions
Conso-
lidated
Revenue       
Revenue - third parties1,235,576-8,610,139-2,911,068-12,756,783
Revenue - related parties1,496,440-204,615-444(1,639,164)62,335
 2,732,016-8,814,754-2,911,512(1,639,164)12,819,118
Cost of sales(1,387,112)-(6,006,406)-(2,909,333)1,586,085(8,716,766)
Gross profit1,344,904-2,808,348-2,179(53,079)4,102,352
General and administrative expenses(84,435)-(424,161)-(78,353)1,906(585,043)
Distribution expenses(210,559)-(780,872)--704(990,727)
Other taxes and contributions(60,210)-(75,802)-(560)-(136,572)
Share of associates' profit4,727-2,906-12,728-20,361
Loss on remeasurement and disposal of
financial investments
(6,171)-(140,151)---(146,322)
(Loss)/gain on disposal of property, plant
and equipment and intangible assets
(25,852)-(20,337)-3,399-(42,790)
Net other operating (expenses)/income(10,997)-(2,855)-1,473(3,574)(15,953)
Profit/(loss) from operations951,407-1,367,076-(59,134)(54,043)2,205,306
Impairment of non-current assets(14,834)-(21,136)-(44,160)-(80,130)
Net other non-operating expenses(17,088)-(26,511)---(43,599)
Profit/(loss) before financing and taxation919,485-1,319,429-(103,294)(54,043)2,081,577
Interest income19,098-282,853-184(201,540)100,595
Interest expense(161,234)-(469,673)-(151,024)164,146(617,785)
Foreign exchange differences62,214-47,522---109,736
Profit/(loss) before income tax839,563-1,180,131-(254,134)(91,437)1,674,123
Income tax expense(144,722)-(235,830)-(58,505)11,751(427,306)
Profit/(loss) from continuing operations694,841-944,301-(312,639)(79,686)1,246,817
Profit/(loss) from discontinued operations-148,700-(1,210,076)(742,684)42,664(1,761,396)
Profit/(loss) for the period694,841148,700944,301(1,210,076)(1,055,323)(37,022)(514,579)
Additional information:       
depreciation and amortization expense177,048121,415287,57137,981237,711-861,726
capital expenditures262,114171,673575,63315,183341,620-1,366,223
intersegment revenue (incl. in revenue
from related parties)
1,496,377-142,7877,121-(1,646,285)-

The following is a summary of non-current assets other than financial instruments, investments in associates and joint ventures and deferred tax assets by location:

 December 31,
 201220112010
Russian Federation5,861,4574,784,7055,111,242
North America3,293,6353,336,1652,790,550
Africa168,931128,9101,063,247
Europe115,81692,863130,269
Central Asia--275,463
 9,439,8398,342,6439,370,771

The locations are primarily represented by the following countries:

  • In Europe: Latvia, Italy and Ukraine;
  • In Africa: Liberia (as at December 31, 2012 and 2011); Burkina Faso, Liberia and Guinea (as at December 31, 2010);
  • In the Central Asia: Kazakhstan (as at December 31, 2010);
  • In North America: the USA.