EVRAZ publishes 2014 Annual Repor and Reports full year 2014 results

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EVRAZ publishes 2014 Annual Repor and Reports full year 2014 results

EVRAZ plc (“EVRAZ” or “the Company”) (LSE: EVR) has today:

• posted its Annual Report for the year ended 31 December 2014 ("2014 Annual Report") on its website: as required by DTR 6.3.5 R (3); and

• submitted to the UK National Storage Mechanism a copy of its 2014 Annual Report in accordance with LR 9.6.1 R.

The 2014 Annual Report will shortly be available for inspection on the National Storage Mechanism

The 2014 Annual Report and the Notice of the Company's Annual General Meeting, which will be held on 18 June 2015 in London, will be posted to shareholders in mid-May 2015.

The Appendix to this announcement contains additional information which has been extracted from the 2014 Annual Report for the purposes of compliance with DTR 6.3.5 only and should be read in conjunction with this announcement. Together these constitute the material required by DTR 6.3.5 and DTR 4.2.3 to be communicated to the media in unedited full text through a Regulatory Information Service. This announcement should be read in conjunction with and is not a substitute for reading the full 2014 Annual Report. Page and note references in the text below refer to page numbers and notes in the 2014 Annual Report.

EVRAZ announces its audited results for the year ended 31 December 2014 (“the Period”).

The financial information contained in this document for the year ended 31 December 2014 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The audited statutory accounts for the year ended 31 December 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's annual general meeting convened for 18 June 2015.

The auditor has reported on the statutory accounts for the year ended 31 December 2014. The auditor’s report was unqualified.

Key Highlights

· Health and safety performance improved in FY2014 with annual LTIFR decreasing from 1.96x to 1.60x

· Consolidated revenue fell 9% as a result of decline in Steel segment revenues

· Consolidated EBITDA demonstrated excellent growth of 28% to US$2,325 million mostly driven by the Steel segment

· EVRAZ’s capex in 2014 amounted to US$654 million, down from US$902 million in 2013. Most of the capex was spent on sustaining current capacity, while US$211 million was used for projects aimed either at increasing production or decreasing costs.

· Net debt was reduced 11% to US$5.8 billion bringing the net debt to EBITDA ratio to 2.5x

· Net loss was US$1,278 million vs. US$551 million in 2013 mostly due to impairment of assets (US$540 million) and foreign exchange loss (US$1,005 million)

· The translation loss in Other comprehensive Income/(Loss) was approximately US$2 billion. It was caused by translating Russian roubles and Ukrainian hryvnia assets stated at historical cost using current (31 December 2014) exchange rate

· Successful implementation of the pulverised coal injection (PCI) project

· The launch of mass production on EVRAZ Caspian Steel

· Return to pre-accident levels of annualised production on Raspadskaya – over 10mt of coking coal

· EVRAZ North America Investment in EVRAZ Regina Steel upgrade and construction of a spiral pipe mill #5 approved

· Disposal of EVRAZ Vitkovice Steel based on an enterprise value of US$287 million

· In light of the strong financial performance in 2014, the Directors would like to make a return of capital to Shareholders of up to US$375 million by way of Tender Offer

Strategic progress

The Company has made notable progress on its strategic objectives during 2014, including:

· Sustainability in volatile market environment; EBITDA margin improved from 12.6% to 17.8%

· Operational efficiency plan implemented. Our actions to reduce costs and improve operational performance have had a significant positive impact on overall performance during the year

· Optimisation of asset portfolio; EVRAZ Vitkovice Steel sold

· Strong cash flow sufficient to pay down debt; Net Debt/EBITDA down to 2.5x vs 3.6x YoY

· We are transforming our coal business into a large scale market participant in Russia and globally – revamping of Raspadskaya finalised

· We are committed to investing into selected projects from our wide project portfolio that will achieve a rate of return which will significantly exceed our current cost of capital

· We further extended our portfolio of high value-added products and enhanced the quality of customer service

· The efficacy of our strategy was underlined by the strong operating results achieved by EVRAZ’s business units in 2014

Financial Highlights

Full year to 31 December

(US$ million)




Consolidated revenue




Loss from operations




Consolidated EBITDA




Net profit/(loss)




Earnings/(loss) per share, basic (US$)




Net cash flows from operating activities








31 December 2014

31 December 2013

Net debt




Total assets




Health, Safety and Environment

Health and safety of our employees and contractors is our ultimate value and key priority. We prioritise the safety and reliability of our businesses to protect the welfare of our employees and the environment.

Our strategic goal is to have zero fatal accidents at our plants. We believe that we can achieve this goal through extensive employee training and initiatives to create a culture of personal involvement and responsibility.

In 2014, we were focused on the implementation of electricity isolation initiatives and improvement of safety trainings practices. In conjunction with other initiatives this helped us to reduce our LTIFR by 18% in 2014. However, regrettably in 2014 the Company recorded 12 employee and 7 contractor fatalities vs. 18 and 6, incidents in 2013, correspondingly.

In 2015, all initiatives with a focus on safety training and the LOTO (Lockout, Tryout) energy isolation programme implementation will be continued. Compliance with environmental standards is one of the major long-term targets of EVRAZ’s HSE policy. EVRAZ is actively assessing its environmental impacts and potential liabilities to improve management of those exposures. EVRAZ recognises the importance of abating climate change and supports the global effort to reduce greenhouse (“GHG”) gas emissions into the atmosphere. Total 2014 GHG emissions decreased by 7% compared with the previous year due to implementation of the pulverised coal injection technology at EVRAZ ZSMK and disposals of certain assets.

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