RU

INTEGRATED REPORT 2016

Borrowings

  2016 2015
Bank loans 6,409,114 5,897,427
Short-term bank loans 1,827,100 2,325,387
Long-term bank loans 4,582,014 3,572,040
     
Finance lease payable 8,760 7,237
Short-term finance lease payable 101 83
Long-term finance lease payable 8,659 7,154
Total borrowings 6,417,874 5,904,664

Bank loans

As at 31 December 2016 and 31 December 2015 the fair value of borrowings is not materially different from their carrying amounts.

The Group uses cross-currency interest rate and interest rate swaps to reduce interest payments (Note 19). The Group does not use hedge accounting.

  2016 2015
Balance at 1 January 5,897,427 5,037,694
Bank loans received, denominated in US$ 1,350,389 1,761,317
Bank loans received, denominated in RR - 163,392
Bank loans repaid, denominated in US$ (701,113) (672,371)
Bank loans repaid, denominated in RR (196,912) (257,514)
Interest accrued 294,949 269,269
Interest paid (296,476) (254,929)
Recognition of syndication fees and other financial charges (19,831) (14,405)
Amortisation of syndication fees and other financial charges 12,338 8,010
Foreign exchange (gain)/loss, net (1,055,914) 1,399,028
Effect of translation to presentation currency 1,124,257 (1,542,064)
Balance at 31 December 6,409,114 5,897,427

The table below shows interest rates as at 31 December 2016 and 31 December 2015 and the split of bank loans into short-term and long-term.

Interest rates 31 December 2016 31 December 2015
Short-term bank loans    
Bank loans in US$: floating interest From 1 month Libor +2.15% to 6 month Libor +4.65% (31 December 2015: From 1 month Libor +2.15% to 6 month Libor +5.2%) 1,641,788 2,108,341
Bank loans in US$: fixed interest 2.67% - 28,495
Bank loans in RR: floating interest MosPrime Rate 3M+2.59% (31 December 2015: MosPrime Rate 3M+2.59%) 185,312 188,551
Total short-term bank loans   1,827,100 2,325,387
       
Long-term borrowings    
Bank loans in US$: floating interest From 1 month Libor +2.15% to 6 month Libor +4.65% (31 December 2015: From 3 month Libor +3.1% to 6 month Libor +5.2%) 4,447,492 3,310,399
Bank loans in RR: floating interest MosPrime 3M + 2.59% (31 December 2015: MosPrime 3M + 2.59%) 134,522 261,641
Total long-term bank loans   4,582,014 3,572,040

As at 31 December 2016 and 2015 no equipment or inventories were pledged as security for bank loans.

As at 31 December 2016, bank loans amounting US$ 2,138,964 (31 December 2015: US$ 1,268,998) were collateralised by future sales proceeds of the Group under export contracts with certain customers.

On 9 September 2015, the Company signed an agreement with PJSC Sberbank to open a non-revolving US$ 1.5 billion credit line with maturity of 5 years. Funds under the committed credit line are available for utilisation from 9 September 2015 till 3 March 2017. The availability period of the loan assumes proportional increase of the limit in accordance with the Company’s cash flows projections and the need in credit resources during 2016-2017. The final maturity date of the facility is 7 September 2020. As at the date of approval of these consolidated financial statements, the Company has not yet utilised the facility.

In March 2016 a credit line agreement with PJSC “Sberbank” was signed in the amount of up to US$ 3.9 billion for the purpose of refinancing of other loans received from the bank as well as for other general corporate purposes, which, together with related agreements, were secured by way of pledge to PJSC “Sberbank” of the Company shares and GDRs constituting 28.6% of the Company’s issued ordinary shares (equivalent of 389,981,286 ordinary shares and 89,959,526 GDRs). Funds under the committed credit line in the amount of US$ 2.0 billion are available to be drawn down from 1 January 2018 till 31 December 2019; funds in the amount of US$ 1.9 billion are available to be drawn down from 24 December 2017 till 23 February 2020. As at 31 December 2016, the Company has not yet used the facility.

In April 2016 the Company signed a Pre-Export Facility in the amount of US$1.2 billion with 16 international banks. The interest rate is Libor +3.25% with a loan maturity of 5 years. The loan was used for general corporate purposes including refinancing of Company’s existing loans.

On 29 August 2016 the Extraordinary General Meeting of PJSC “Uralkali” shareholders approved a number of interrelated transactions in respect of the placement of the Company’s Exchange Traded Bonds in favor of JSC “Uralkali-Technology” with a total nominal value of US$ 800 million and with a value of US$ 1,000 per one bond. The purpose of this placement was to replace the Company’s shares/GDRs with the Exchange Traded Bonds in the US$ 800 million REPO deal signed on 23 September 2015 between JSC “Uralkali-Technology” and JSC “VTB Capital”. In September 2016 Uralkali-Technology has terminated the pledge over the Company’s GDRs and released Company’s ordinary shares from REPO, constituting totally 20% of the Company’s issued ordinary shares.

Due to the Russian Rouble devaluation as at 31 December 2015, financial covenants that require the Group to maintain a certain Net debt/Net worth ratio were breached, consequently loans which were subject to this restrictive covenant, in the amount of US$ 1,528,573 were reclassified from non-current liabilities to current liabilities in the consolidated statement of financial position. The lenders did not request accelerated repayment of the loans.

During 2016 the Group signed amendments to change the definition of Net Debt/Net Worth in several facilities. The amendments changed the calculation of Net Worth by excluding from the calculation foreign exchange losses/gains and fair value loss/gain on derivatives from 1 January 2013. Under several other amendments Net Worth was adjusted to exclude treasury shares and share premium.

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