Cash Flow Analysis
|Name||Year, ended||Absolute change||Change, %||For the year ended 31 December 2017|
|31 December 2019||31 December 2018|
|Cash generated by operational activities||361,223||346,215||15,008||4.3%||327,101|
|Cash spent on acquisition of fixed assets, net||(268,226)||(267,974)||(252)||0.1%||(306,199)|
|Free cash flow||92,997||78,241||14,756||18.9%||20,902|
|Cash flow from other investment activities||7,463||101,551||(94,088)||(92.7%)||32,027|
|Cash flow used in financial activities||(113,196)||(166,575)||53,379||(32.0%)||(51,183)|
|Net cash (outflow)/flow||(12,736)||13,217||(25,953)||х||1,746|
|Change in the value of monetary funds and their equivalents, resulting from currency exchange rate fluctuations||(5,515)||12,473||(17,988)||х||(170)|
|Net (decrease)/increase in cash and equivalents||(18,251)||25,690||(43,941)||х||1,576|
The main source of the Group’s funds are cash flows generated by operating activities. The funds generated by operating activities for the year ended 31 December 2019 came to RUB 361,223 million, which is RUB 15,008 million or 4.3% more than in 2018.
The increase was mainly influenced by the following factors:
- RUB 62,994 million increase in cash received from customers;
- RUB 11,447 million increase in payments to suppliers and contractors;
- RUB 15,513 million decrease in the volume of insurance premium refunds, VAT and other taxes from the budget;
- RUB 13,203 million increase in the amount of income tax paid.
The main factors contributing to the RUB 94,340 million or 56.7% increase in cash used in the investment activities recorded in the consolidated cash flow statement for the year ended 31 December 2019 compared to 2018, are the following:
- a RUB 252 million increase in the funds used for acquisition of fixed assets (net) compared to the same period last year;
- a RUB 94,088 million decrease in cash used for other investment activities, as a result of the following:
- a RUB 133,198 million decrease in net cash used in debt securities sales and purchase along with deposit opening and closing, as compared to the same period last year;
- an increase in dividend and other income from subsidiaries and jointly run companies of RUB 4,028 million during the year ended 31 December 2019 compared to the previous year;
- inclusion of RUB 35,143 million cash inflows resulting from the sale of the NGT subsidiary, exclusive of NGT’s cash available for the year ended 31 December 2019;
- inclusion of a cash outflow to an escrow account with a state-controlled bank in the amount of RUB 12,800 million in the year ended 31 December 2019;
- inclusion of a cash inflow during the year ended 31 December 2018 as a result of the acquisition of 100% stakes in CPC Company and CPC Investments Company in the amount of RUB 5,203 million;
- Cash in the amount of RUB 49,319 million used to acquire the share in NCSP during the year ended 31 December 2018 and listed in the consolidated cash flow statement, exclusive of the cash available from NCSP and its subsidiaries as of the acquisition date in the amount of RUB 32,018 million.
The main factors that led to a RUB 53,378 million or 32.0% decrease in cash used in financial activities for the year ended 31 December 2019, compared to 2018, are the following:
- a decrease of RUB 81,230 million in the amount of cash received from attracting/used to repay loans and issue/repay ruble bonds, which resulted primarily from the following transactions:
- in the year ended 31 December 2019, bonds in the amount of RUB 58,675 million were redeemed;
- during the year ended 31 December 2018, monthly and long-term payments to repay loans under a contract with the China Development Bank were made, totaling USD 4,651.1 million (RUB 276,187 million at the exchange rate of the Bank of Russia at the dates of operations);
- in the year ended 31 December 2018, Eurobonds in the amount of USD 1,050 million (RUB 66,293 million) were redeemed;
- a decrease in cash inflow by RUB 242,569 million from borrowings and ruble bond issues, as compared to the same period of the previous year.
- an increase in cash outflow for dividend payments by RUB 24,439 million, as compared to the previous year.
Calculating Cash Flow from Operating Activities Using the Indirect Method
In addition to the consolidated statement of cash flows prepared using the direct method and included in the consolidated financial statement by IFRS for 2019, calculation of cash flows from operating activities using the indirect method is given below.
When the indirect method is used, the net cash flow from operating activities is calculated by adjusting profit before tax for the following values:
- changes in inventories, as well as receivables and payables, pertaining to operating activities during the reporting period;
- non-monetary transactions, such as depreciation and amortisation, outlay on valuation reserves, accrued unrealised foreign exchange gains and losses, interest receivable and payable, subsidiaries and jointly run companies’ profit share;
- other items generating cash flows from investment and financial activities.
|Profit before tax||245,018||277,711||242,167|
|Depreciation and amortisation||208,700||178,610||152,637|
|Loss from disposal of fixed assets||355||601||91|
|Gain from disposal of subsidiaries||(16,192)||-||(117)|
|Share in the profit of subsidiaries and jointly run companies||(16,073)||(10,231)||(15,847)|
|Revaluation of the existing share in NCSP (Omirico Limited) to the fair value at the date of acquisition of the controlling stake||-||(25,371)||-|
|Operating profit before changes in working capital and reserves||485,656||419,119||408,643|
|Changes in operating assets and liabilities:|
|Changes in inventories||10,186||(3,082)||1,266|
|VAT changes in receivables pertaining to operating activities and assets||(26,427)||(3,596)||11,885|
|Changes in payables and accruals pertaining to operating activities||5,799||12,937||3,515|
|Changes in contractual obligations||(1,018)||18,500||-|
|Cash flows from operating activities before paying income tax and interest||474,196||443,878||425,309|
|Income tax payments||(58,006)||(44,803)||(52,391)|
|Income tax refund||300||307||403|
|Net cash flows from operating activities||361,223||346,215||327,101|