Annual Report 2012

Cash flows

Operations

Net cash generated from operating activities was down 10% in 2012 to RUB 9,294 million (against RUB 10,374 million in 2011). The decrease was due to lower operating profit, higher inventories and influence of currency fluctuations on the items that are not part of operating activity. The higher inventories were mainly due to the start of operations of the Group’s new facility – the Oleniy Ruchey mine. In the course of commencement of operations and commissioning and start-up works at the mine, high inventories of ore and work-in-progress were generated.

Despite the increase in inventories of raw materials, spare parts and finished products, the Group’s working capital increased to a lesser extent (up RUB 2,520 million against RUB 3,285 million in 2011). This was due to a decrease in the total amount of trade receivables, advances to suppliers and a decrease in other accounts receivable.

Investing activities

In 2012, net cash used in investing activities was RUB 19,908 million (against RUB 602 million in 2011). In the reporting year, net cash used in investing activities was primarily affected by the following events:

  • Purchase of property, plant, equipment and intangible assets worth RUB 16,122 million. These expenses covered overhauls of production facilities, financing of the Oleniy Ruchey mine and construction of the Talitsky mine;
  • Purchase of available-for-sale investments in the amount of RUB 3,876 million (against RUB 46 million in 2011); the largest item was the Group’s investment in Azoty Tarnów in Poland.

Financing activities

Cash flows from financing activities in 2012 totalled RUB 25,478 million (against RUB -3,862 million in 2011). The main component of cash flows from financing activities was the proceeds from borrowings earmarked to finance the Group’s investments. This item was also affected by cash inflow in the amount of RUB 12,755 million from Vnesheconombank, Raiffeisenbank and Eurasian Development Bank, which hold equity capital in Verkhnekamsk Potash Company.

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