Market Overview

Mechel Reports the 1H 2018 Financial Results

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Consolidated revenue 157.0 bln rubles (+5% compared to 1H 2017) 
EBITDA* 41.4 bln rubles (+3% compared to 1H 2017) 
Profit attributable to equity shareholders of Mechel PAO – 4.7 bln rubles

MOSCOW, Aug. 22, 2018 (GLOBE NEWSWIRE) -- Mechel PAO ((MOEX: MTLR, NYSE:MTL), a leading Russian mining and steel group, announces financial results for the 1H 2018.

Mechel PAO's Chief Executive Officer Oleg Korzhov commented:

"In the second quarter, the Group improved its financial results quarter-on-quarter. The first half of the year's results have also improved year-on-year. This was due to the implementation of our strategy of increasing the share of high-margin products in our production and sales structure, as well as a favorable market environment for most of our products.

"In the second quarter, our company managed to stabilize mining volumes. The measures undertaken since mid-last year and aimed at renewing and replenishing our mining fleet, yielded positive results. The only decline in mining we registered was at Yakutugol, which had accumulated sufficient stockpiles for processing and shipping. Yakutugol focused on stripping works, which is preparation for future coal mining. Other mining facilities, including Korshunov Mining Plant, demonstrated increase in mining volumes. We continue to work on restoring our production volumes.

"A minor decrease in our steel division's pig iron and steel production was due to planned repairs at Chelyabinsk Metallurgical Plant. We also continue to push forward with our investment projects that will enable us to substitute imports and further improve our competitive advantages and profit margin. Practically all our facilities take advantage of favorable market conditions to master production of new product types and expand into new markets.

"Among other positive news I would like to note that the Group has received Gazprombank's confirmation of adherence to the debt repayment schedule agreed for our credit facilities, which led to the write-off of fines and penalties totaling 7.3 billion rubles."

Consolidated Results For The 1H2018

Mln rubles 1H' 18   1H' 17   %   2Q' 18   1Q' 18   %  
Revenue
from external customers
157,038   149,384   5 % 82,186   74,852   10 %
Operating profit 32,641   30,677   6 % 19,258   13,383   44 %
EBITDA 41,440   40,227   3 % 23,004   18,436   25 %
EBITDA, margin 26 % 27 %   28 % 25 %  
Profit
attributable to equity shareholders of Mechel PAO
4,693   4,994   -6 % 1,400   3,293   -57 %

___________________________

*  EBITDA - Adjusted EBITDA. Please find the calculation of the Adjusted EBITDA and other non-IFRS measures used here and hereafter in Attachment A.

Mining Segment

Mechel Mining Management OOO's Chief Executive Officer Pavel Shtark noted:

"In 2Q2018, the division demonstrated an improvement in financial results. Revenue from sales of our products to third parties went up by 13% quarter-on-quarter, EBITDA increased by 37%, and EBITDA margin reached 41%. The increase of sales of key products became the main factor that had a positive impact on the dynamics of the division's results.

"The situation in the global coal market has worsened in 2Q2018 quarter-on-quarter as contract prices for premium hard coking coal slumped from $237 to $197 per tonne and average spot prices went down from $228 to $190 per tonne. Russia's coal market was more stable, which enabled us to avoid the decrease in ruble prices on FCA basis quarter-on-quarter.

"The situation in China and Australia will traditionally have an impact on coal prices' further dynamics. In August, Chinese authorities announced that investment into railway infrastructure in 2018 will most likely exceed 800 billion yuan instead of 732 billion planned earlier. China's growing demand for steel products, combined with limitations on steel production in that country, which likely contribute to an inflated demand for high-quality imported raw materials. It is also possible that China will continue to amalgamate and consolidate coal producers while limiting mining volumes, which should also support prices.

"As for Australia, I should note that the leading producer of Australian coking coal reached record mining volumes, but export of Australian coal is unlikely to beat any records as insufficient funding will force rail freight operator Aurizon to reduce coal shipments by 20 million tonnes in 2018, including 16 million tonnes of coking coal.

"In the second quarter, the division increased coal sales volumes, as mining at Southern Kuzbass Coal Company and Elgaugol went up by 2% and 12% respectively. Mining at Yakutugol decreased quarter-on-quarter by 20%, which was due to an added focus on stripping works that exceeded the previous quarter's results by 40%. In addition, in 1Q2018 a certain amount of coal has not been shipped, but remained in storage to be sold in the second quarter, which ensured a quarter-on-quarter increase in coal shipments. Due to large volumes of stripping works done at Yakutugol, production costs of products sold went up, but growth of mining volumes at Southern Kuzbass and Yakutugol led to a decrease in product unit costs and, ultimately, to an improved EBITDA and margin."

Mln rubles 1H' 18   1H' 17   %   2Q' 18   1Q' 18   %  
Revenue
from external customers
48,400   51,519   -6 % 25,676   22,724   13 %
Revenue
inter-segment
19,045   23,268   -18 % 9,633   9,412   2 %
EBITDA 24,891   34,563   -28 % 14,408   10,483   37 %
EBITDA, margin 37 % 46 %   41 % 33 %  

Steel Segment

Mechel-Steel Management Company OOO's Chief Executive Officer Andrey Ponomarev noted:

"In this reporting period, the division continued to improve its operational and financial results. There was an improvement of financial results both in 2Q2018 quarter-on-quarter and in 1H2018 year-on-year. Revenue from sales to third parties went up by 13% quarter-on-quarter, EBITDA went up by 33%, and margin reached 16%.

"Though early in 2Q2018 market growth was restrained by high competition and our consumers' persistently low business activity, by mid-period demand has begun to pick up. Even though in June The 2018 FIFA World Cup put a damper on construction activity and overall demand, the price level for our products was higher quarter-on-quarter, which supported our financial results. Early in 3Q2018 prices in the market for long rolls began to grow, even though the excitement characteristic for the construction season is lacking.

"In this reporting period we increased sales of long products, hardware and stampings. Pig iron and steel production slumped by 4% and 6% accordingly quarter-on-quarter, which was due to planned repairs of Chelyabinsk Metallurgical Plant's key facilities. In addition, we decreased shipments of rails both quarter-on-quarter and half a year on half a year, for the duration of negotiations on a new annual contract terms with Russian Railways. During this pause, the universal rolling mill was additionally loaded with beam production."

Mln rubles 1H' 18   1H' 17   %   2Q' 18   1Q' 18   %  
Revenue
from external customers
94,382   84,955   11 % 50,144   44,238   13 %
Revenue
inter-segment
2,955   3,740   -21 % 1,365   1,590   -14 %
EBITDA 14,484   6,074   138 % 8,280   6,204   33 %
EBITDA, margin 15 % 7 %   16 % 14 %  

Power Segment        

Mechel-Energo OOO's Chief Executive Officer Petr Pashnin noted:

"In 2Q2018 the power division demonstrated an expected decline in financial and operational results quarter-on-quarter as the heating season came to a close and the repair campaign aimed at preparing our key heat and electrical equipment for the new season began. At the same time, in 1H2018 the power division demonstrated an improvement in both financial and operational results year-on-year, which was due to a higher load of our facilities in the cold winter season."

Mln rubles 1H' 18   1H' 17   %   2Q' 18   1Q' 18   %  
Revenue
from external customers
14,256   12,910   10 % 6,365   7,891   -19 %
Revenue
inter-segment
7,621   8,473   -10 % 3,584   4,037   -11 %
EBITDA 1,200   966   24 % 463   737   -37 %
EBITDA, margin 5 % 5 %   5 % 6 %  

The management of Mechel will host a conference call today at 6:00 p.m. Moscow time (4:00 p.m. London time, 11:00 a.m. New York time) to review Mechel's financial results and comment on current operations. The call may be accessed via the Internet at http://www.mechel.com, under the Investor Relations section.

Please dial the number below approximately 10 minutes prior to the scheduled time of the call.

Conference Call Phone Numbers:

International: +44 (0) 330 336 9125 
US: +1 323-994-2082
Russia: +7 495 213 1767

Conference ID: 1122595

Alexey Lukashov
Director of Investor Relations
Mechel PAO
Phone: 7-495-221-88-88
Fax: 7-495-221-88-00
alexey.lukashov@mechel.com

Mechel is an international mining and steel company. Its products are marketed in Europe, Asia, North and South America, Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.

Attachments to the 1H 2018 Earnings Press Release

Attachment A

Non-IFRS financial measures. This press release includes financial information prepared in accordance with International Financial Reporting Standards, or IFRS, as well as other financial measures referred to as non-IFRS. The non-IFRS financial measures should be considered in addition to, but not as a substitute for the information prepared in accordance with IFRS.

Adjusted EBITDA (EBITDA) represents profit (loss) attributable to equity shareholders of Mechel PAO before Depreciation, depletion and amortization, Foreign exchange loss (gain), net, Finance costs including fines and penalties on overdue loans and borrowings and finance lease payments, Finance income, Net result on the disposal of non-current assets, Impairment of goodwill and other non-current assets, Write-off of accounts receivable, Write-off of inventories to net realisable value, Allowance for expected credit losses on financial assets, Allowance for doubtful accounts,  Net result on the disposal of subsidiaries, Profit (loss) attributable to non-controlling interests, Income tax expense (benefit), Pension service cost and actuarial loss, other related expenses, Other fines and penalties, Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term and Other one-off items. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of our Revenue. Our adjusted EBITDA may not be similar to EBITDA measures of other companies. Adjusted EBITDA is not a measurement under IFRS and should be considered in addition to, but not as a substitute for the information contained in our interim condensed consolidated statement of profit (loss) and other comprehensive income. We believe that our adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While depreciation, depletion, amortisation and impairment of goodwill and other non-current assets are considered operating expenses under IFRS, these expenses primarily represent the non-cash current period allocation of costs associated with non-current assets acquired or constructed in prior periods. Our adjusted EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.

Our calculations of Net debt, excluding fines and penalties on overdue amounts** and trade working capital are presented below:

Mln rubles 30.06.2018   31.12.2017  
Loans and borrowings, excluding interest payable, fines and penalties on overdue  amounts 390,520   380,541  
Interest payable 18,889   20,420  
Non-current loans and borrowings 15,991   17,360  
Other non-current financial liabilities 42,516   40,916  
Other current financial liabilities   534   734  
less Cash and cash equivalents (2,936 ) (2,452 )
Net debt, excluding finance lease liabilities, fines and penalties on overdue amounts 465,514   457,519  
     
Current finance lease liabilities 6,572   7,476  
Non-current finance lease liabilities 2,327   1,878  
Net debt, excluding fines and penalties on overdue amounts 474,413   466,873  
     
     
Mln rubles 30.06.2018   31.12.2017  
Trade and other receivables 19,839   18,762  
Inventories 41,090   37,990  
Other current assets 7,831   7,589  
Income tax receivables 168   107  
Trade current assets 68,928   64,448  
     
Trade and other payables 33,640   33,469  
Advances received 5,430   4,385  
Provisions and other current liabilities 2,642   3,428  
Taxes and similar charges payable other than income tax 7,162   6,696  
Income tax payable 5,325   4,578  
Trade current liabilities 54,199   52,556  
     
Trade working capital 14,729   11,892  

_____________________________

** Calculations of Net debt could be differ from indicators calculated in accordance with loan agreements upon dependence on definitions in such agreements.


EBITDA can be reconciled to our interim condensed consolidated statement of profit (loss) and other comprehensive income as follows:

    Consolidated
Results
  Mining
Segment
***
  Steel
Segment
***
  Power
Segment
***
  Mln rubles  6m 2018    6m 2017      6m 2018    6m 2017      6m 2018    6m 2017      6m 2018    6m 2017  
  Profit (loss) attributable to equity shareholders of Mechel PAO 4,693   4,994     1,284   10,698     1,673   (4,312 )   643   (13 )
  Add:                      
  Depreciation, depletion and amortisation 6,991   7,228     3,916   4,077     2,825   2,919     250   232  
  Foreign exchange loss (gain), net 11,580   (1,804 )   7,792   (1,496 )   3,771   (308 )   17   -  
  Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments 21,445   24,096     15,867   17,725     6,036   6,975     281   447  
  Finance income (7,863 ) (442 )   (6,170 ) (1,042 )   (1,661 ) (421 )   (771 ) (32 )
  Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of accounts receivable and write-off of inventories to net realisable value, allowance for expected credit losses on financial assets and allowance for doubtful accounts 1,536   1,253     475   495     511   508     553   249  
  Net result on the disposal of subsidiaries (310 ) 4     (3 ) 4     (307 ) -     -   -  
  Profit (loss) attributable to non-controlling interests 587   688     85   593     393   111     110   (16 )
  Income tax expense 2,465   3,627     1,772   3,123     824   473     92   31  
  Pension service cost and actuarial loss, other related expenses 71   64     59   51     11   11     1   2  
  Other fines and penalties 309   599     (163 ) 372     447   159     26   68  
  Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term (64 ) (80 )   (23 ) (37 )   (39 ) (41 )   (2 ) (2 )
  EBITDA 41,440   40,227     24,891   34,563     14,484   6,074     1,200   966  
  EBITDA, margin 26 % 27 %   37 % 46 %   15 % 7 %   5 % 5 %
                         
  Mln rubles 2q 2018   1q 2018     2q 2018   1q 2018     2q 2018   1q 2018     2q 2018   1q 2018  
  Profit (loss) attributable to equity shareholders of Mechel PAO 1,400   3,293     1,013   271     (370 ) 2,043     676   (33 )
  Add:                      
  Depreciation, depletion and amortisation 3,514   3,477     1,946   1,970     1,452   1,373     116   134  
  Foreign exchange loss (gain), net 12,088   (508 )   8,289   (497 )   3,783   (12 )   16   1  
  Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments 10,982   10,463     8,167   7,700     3,057   2,979     123   158  
  Finance income (7,770 ) (93 )   (5,822 ) (348 )   (1,553 ) (108 )   (760 ) (11 )
  Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of accounts receivable and write-off of inventories to net realisable value, allowance for expected credit losses on financial assets and allowance for doubtful accounts 295   1,241     111   364     74   437     113   440  
  Net result on the disposal of subsidiaries (310 ) -     (3 ) -     (307 ) -     -   -  
  Profit attributable to non-controlling interests 349   238     56   29     221   172     73   37  
  Income tax expense (benefit) 2,455   10     893   879     1,686   (862 )   99   (7 )
  Pension service cost and actuarial loss, other related expenses 35   36     30   29     5   6     -   1  
  Other fines and penalties (1 ) 310     (255 ) 92     248   199     7   19  
  Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term (33 ) (31 )   (17 ) (6 )   (16 ) (23 )   -   (2 )
  EBITDA 23,004   18,436     14,408   10,483     8,280   6,204     463   737  
  EBITDA, margin 28 % 25 %   41 % 33 %   16 % 14 %   5 % 6 %
  *** including inter-segment operations 


Attachment B

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT (LOSS) AND
OTHER COMPREHENSIVE INCOME
for the six months ended June 30, 2018
(All amounts are in millions of Russian rubles, unless stated otherwise)   Six months ended
June 30,
2018
  Six months ended
June 30,
2017
    (unaudited)   (unaudited)
         
Revenue   157,038     149,384  
Cost of sales   (85,384 )   (80,608 )
Gross profit   71,654     68,776  
         
Selling and distribution expenses   (28,851 )   (27,723 )
Loss on write-off of non-current assets   (200 )   (148 )
Allowance for expected credit losses on financial assets   (528 )   (443 )
Taxes other than income taxes   (2,396 )   (2,556 )
Administrative and other operating expenses   (7,685 )   (7,718 )
Other operating income   647     489  
Total selling, distribution and operating income and (expenses), net   (39,013 )   (38,099 )
Operating profit   32,641     30,677  
         
Finance income   7,863     442  
Finance costs including fines and penalties on overdue loans and borrowings and finance leases payments of RUB 734 million and RUB 699 million for the six months ended June 30, 2018 and 2017, respectively   (21,445 )   (24,096 )
Foreign exchange (loss) gain, net   (11,580 )   1,804  
Share of profit of associates, net   36     11  
Other income   401     541  
Other expenses   (171 )   (70 )
Total other income and (expense), net   (24,896 )   (21,368 )
Profit before tax   7,745     9,309  
         
Income tax expense   (2,465 )   (3,627 )
Profit for the period   5,280     5,682  
         
Attributable to:        
Equity shareholders of Mechel PAO   4,693     4,994  
Non-controlling interests   587     688  
         
Other comprehensive income        
Other comprehensive (loss) income to be reclassified to profit or loss in subsequent periods, net of income tax:   (321 )   28  
Exchange differences on translation of foreign operations   (321 )   28  
Other comprehensive income not to be reclassified to profit or loss in subsequent periods, net of income tax:   6     -  
Re-measurement of defined benefit plans   6     -  
Other comprehensive (loss) income for the period, net of tax   (315 )   28  
         
Total comprehensive income for the period, net of tax   4,965     5,710  
         
Attributable to:        
Equity shareholders of Mechel PAO   4,378     5,022  
Non-controlling interests   587     688  
         
Earnings per share        
Weighted average number of common shares   416,270,745     416,270,745  
Basic and diluted profit for the period attributable to common equity shareholders of Mechel PAO (Russian rubles per share)   11,27     12,00  


INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as of June 30, 2018
(All amounts are in millions of Russian rubles)
     June 30, 2018    December 31, 2017
     (unaudited)    
         
Assets        
Non-current assets        
Property, plant and equipment   195,635     197,875  
Mineral licenses   32,626     33,240  
Goodwill and other intangible assets   19,234     19,211  
Investments in associates   291     283  
Deferred tax assets   148     96  
Other non-current assets   733     758  
Non-current financial assets   199     202  
Total non-current assets   248,866     251,665  
         
Current assets        
Inventories   41,090     37,990  
Income tax receivables   168     107  
Trade and other receivables   19,839     18,762  
Other current assets   7,831     7,589  
Other current financial assets   546     562  
Cash and cash equivalents   2,936     2,452  
Total current assets   72,410     67,462  
         
Total assets   321,276     319,127  
         
Equity and liabilities        
Equity        
Common shares   4,163     4,163  
Preferred shares   833     833  
Additional paid-in capital   24,378     24,378  
Accumulated other comprehensive income   988     1,303  
Accumulated deficit   (282,121 )   (283,743 )
Equity attributable to equity shareholders of Mechel PAO   (251,759 )   (253,066 )
Non-controlling interests   9,515     8,933  
Total equity   (242,244 )   (244,133 )
         
Non-current liabilities        
Loans and borrowings   15,991     17,360  
Finance lease liabilities   2,327     1,878  
Other non-current financial liabilities   42,516     40,916  
Other non-current liabilities   128     138  
Pension obligations   3,530     3,512  
Provisions   3,847     3,814  
Deferred tax liabilities   10,025     11,494  
Total non-current liabilities   78,364     79,112  
         
Current liabilities        
Loans and borrowings, including interest payable, fines and penalties on overdue amounts of RUB 32,451 million and RUB 41,992 million as of June 30, 2018 and December 31, 2017, respectively   422,971     422,533  
Trade and other payables   33,640     33,469  
Finance lease liabilities   6,572     7,476  
Income tax payable   5,325     4,578  
Taxes and similar charges payable other than income tax   7,162     6,696  
Advances received   5,430     4,385  
Other current financial liabilities   534     734  
Other current liabilities   75     69  
Pension obligations   880     849  
Provisions   2,567     3,359  
Total current liabilities   485,156     484,148  
         
Total liabilities   563,520     563,260  
Total equity and liabilities   321,276     319,127  


INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended June 30, 2018
(All amounts are in millions of Russian rubles unless stated otherwise)
    Six months ended
June 30,
2018
  Six months ended
June 30,
2017
    (unaudited)   (unaudited)
Cash flows from operating activities        
Profit for the period   5,280     5,682  
Adjustments to reconcile profit to net cash provided by operating activities        
Depreciation of property, plant and equipment   6,250     6,334  
Depletion of mineral licenses and amortisation of intangible assets   741     894  
Foreign exchange loss (gain), net   11,580     (1,804 )
Deferred tax (benefit) expense   (678 )   646  
Allowance for expected credit losses on financial assets   528     443  
Write-off of accounts receivable   67     18  
Write-off of inventories to net realisable value   710     631  
Loss on write-off of non-current assets   200     148  
Loss on disposal of non-current assets   52     134  
Gain on restructuring and forgiveness of accounts payable and write-off of accounts payable with expired legal term   (64 )   (80 )
Pension service cost and actuarial loss, other related expenses   71     64  
Finance income   (7,863 )   (442 )
Finance costs including fines and penalties on overdue loans and borrowings and finance lease payments of RUB 734 million and RUB 699 million for the six months ended June 30, 2018 and 2017, respectively   21,445     24,096  
Income associated with disposal of Bluestone   (3 )   (462 )
Provisions for legal claims, on taxes other than income tax and other provisions   (606 )   (3 )
Other   (45 )   40  
         
Changes in working capital items        
Trade and other receivables   (1,023 )   (334 )
Inventories   (4,221 )   (2,474 )
Trade and other payables   736     (2,247 )
Advances received   932     597  
Taxes payable and other liabilities   3,355     2,528  
Other current assets   (139 )   (424 )
         
Income tax paid   (2,501 )   (2,360 )
         
Net cash provided by operating activities   34,804     31,625  
         
Cash flows from investing activities        
Loans issued and other investments   -     (5 )
Interest received   37     123  
Proceeds from royalty and other proceeds associated with disposal of Bluestone   3     462  
Proceeds from disposal of subsidiaries, net of cash disposed   -     82  
Proceeds from loans issued and other investments   5     142  
Proceeds from disposals of property, plant and equipment   64     58  
Purchases of property, plant and equipment   (2,155 )   (3,102 )
Purchases of intangible assets   (150 )   -  
Interest paid, capitalised   (267 )   (188 )
Net cash used in investing activities   (2,463 )   (2,428 )
         
Cash flows from financing activities        
Proceeds from loans and borrowings, including proceeds from factoring arrangement of RUB 3,193 million and nil for the six months ended June 30, 2018 and 2017, respectively   4,054     6,179  
Repayment of loans and borrowings, including payments from factoring arrangement of nil and RUB 2,670 million for the six months ended June 30, 2018 and 2017, respectively   (15,256 )   (15,984 )
Dividends paid to non-controlling interests   (5 )   -  
Interest paid, including fines and penalties   (16,818 )   (15,869 )
Repayment of obligations under finance lease   (1,474 )   (1,983 )
Deferred payments for acquisition of assets   (406 )   (108 )
Deferred consideration paid for the acquisition of subsidiaries in prior periods   (2,393 )   (1,545 )
Net cash used in financing activities   (32,298 )   (29,310 )
         
Effect of exchange rate changes on cash and cash equivalents   37     (268 )
Allowance for expected credit losses on cash and cash equivalents   (32 )   -  
Net increase (decrease) in cash and cash equivalents   48     (381 )
         
Cash and cash equivalents at beginning of period   2,452     1,689  
Cash and cash equivalents, net of overdrafts at beginning of period   1,223     1,453  
Cash and cash equivalents at end of period   2,936     2,951  
Cash and cash equivalents, net of overdrafts at end of period   1,271     1,072  

These interim condensed consolidated financial statements were prepared by Mechel PAO in accordance with IFRS and have not been audited by the independent auditor. If these interim condensed consolidated financial statements are audited in the future, the audit could reveal differences in our consolidated financial results and we cannot assure that any such differences would not be material.
There were certain reclassifications to conform with the current period presentation.

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