Notes to the consolidated financial statements

for the year ended 31 December 2020

Millions of US Dollars, unless otherwise stated

1. General information

Organisation and principal activities.

Joint Stock Company ('JSC') 'Siberian Coal Energy Company' ('SUEK' or the 'Company') was founded on 1 December 1999. The Company and its subsidiaries are collectively referred to as the Group. The address of registered office is Dubininskaya st. 53, bld. 7, Moscow, Russian Federation. The principal activities of the Group are the extraction and sales of coal, generation and sales of electricity, heat and capacity and railroad transportation and transshipment in ports.

AIM Capital SE, registered in the Republic of Cyprus, is the immediate parent company of SUEK with 92.2% interest in the Company’s share capital.

A company that holds business interests beneficially for Mr. Andrey Melnichenko indirectly owns 100% of AIM Capital SE.

2. Basis of presentation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

The consolidated financial statements of the Group have been prepared on the historical cost basis, except for:

  • mining assets carried at fair value; and
  • derivative financial instruments which are stated at fair value.

Functional currency.

The functional currency of subsidiaries of the Group is the currency of the primary economic environment where these entities operate. The functional currency of foreign trading subsidiaries and predominantly export-oriented Russian subsidiaries is US Dollar ('USD'). The functional currency of the Company and Russian subsidiaries that are not predominantly export-oriented is the Russian Rouble ('RUB').

Presentation currency.

The presentation currency is the USD. The translation of the consolidated financial statements into the presentation currency was performed in accordance with the requirements of IAS 21 'The Effects of Changes in Foreign Exchange Rates'.

The following RUB/USD exchange rates were applied at 31 December and during the years then ended:

2020 2019
Year end 73.88 61.91
Average rate 72.15 64.74

Adoption of new and revised standards and interpretations

A number of new standards are effective for annual periods beginning after 1 January 2020 and earlier application is permitted; however, the Group has not early adopted the new or amended standards in preparing these consolidated financial statements.

A number of amendments to the existing standards are effective from 1 January 2020 but they do not have a material effect on the Group’s financial statements.

The following amended standards and interpretations are not expected to have a significant impact on the Group’s consolidated financial statements:

  • amendments to references to Conceptual Framework in IFRS standards;
  • definition of a business (Amendments to IFRS 3);
  • definition of material (Amendments to IAS 1 and IAS 8); and
  • interest rate benchmark reform (Amendments to IFRS 9, IAS 39 and IFRS 7).
3. Significant accounting policies

3.1. Basis of consolidation


Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

The acquisition of subsidiaries from third parties is accounted for using the purchase method of accounting. The identifiable assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values as at the date of acquisition. Non-controlling (minority) interest is measured at its proportionate interest in the identifiable assets and liabilities of the acquiree. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Changes in ownership interests by the Group in a subsidiary, while maintaining control, are recognised as an equity transaction.

Upon a loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

Business combination under common control.

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recorded previously in the predecessor’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity except that any share capital of the acquired entities is recognised as part of additional paid-in capital. Difference between the purchase consideration and carrying value of net assets acquired is recognised directly in equity.

3.2. Foreign currency transactions

Transactions in foreign currencies are recorded at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are converted to the respective functional currency at the exchange rate ruling at the balance sheet date. Exchange differences arising from changes in exchange rates are recognised in profit or loss, except that exchange differences arising from the revaluation of the intra-group debt accounted for as a part of net investments in foreign entities are recognised in other comprehensive income in the consolidated financial statements.

The translation of the financial statements from functional currency into presentation currency is performed in accordance with the requirements of IAS 21 'The Effects of Changes in Foreign Exchange Rates' as follows:

  • all assets and liabilities, both monetary and non-monetary, are translated at closing exchange rates at the dates of each consolidated statement of financial position presented;
  • all income and expenses in the consolidated statement of profit or loss are translated at the average exchange rates for the years presented;
  • resulting exchange differences are included in equity and presented separately; and
  • in the consolidated statement of cash flows, cash balances at the beginning and end of each year presented are translated at exchange rates at the respective dates. All cash flows are translated at the annual average exchange rates for the years presented. Resulting exchange differences are presented as foreign exchange effect on cash and cash equivalents.

3.3. Property, plant and equipment

Basis of carrying value of property, plant and equipment. Mining assets.

Mining assets include mineral rights with capitalised mine development costs and certain types of operating equipment, such as equipment which represents an integral part of a particular mine or a particular open-pit, or such items of mining equipment whose use on an alternative mine or open-pit is impracticable or not economically feasible. The remaining part of tangible fixed assets besides listed above is defined as operating tangible fixed assets.

Mining assets are carried at fair value since the date of the creation of this new class of property, plant and equipment. Mineral rights were classified as property, plant and equipment and carried at fair value starting from 1 January 2013.

The fair value is determined by discounting future cash flows which can be obtained from operations of the mines based on the life-of-mine plans and deducting the fair value of the operating tangible fixed assets.

Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the mining assets and the net amount is restated to the revalued amount of the asset. Revaluations are performed on an annual basis.

A revaluation increase is recognised in other comprehensive income and accumulated in equity except to the extent it reverses a previous revaluation decrease recognised in profit or loss, in which case it is recognised in profit or loss. A revaluation decrease is recognised in profit or loss except to the extent that it reverses a revaluation increase recognised directly in equity, in which case it is recognised directly in equity.

At the yearend a portion of the revaluation reserve, which is equal to the difference between depreciation based on the revalued carrying amount of the mining assets and depreciation based on the asset’s historical cost, is transferred from the revaluation reserve to retained earnings.

The mineral rights of new greenfields are carried at historical value until detailed technical and financial plans for the assets are finalised.

Property, plant and equipment, other than mining assets.

Property, plant and equipment, other than mining assets, is stated at cost less accumulated depreciation and impairment losses. The cost of self- constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads, and the corresponding capitalised borrowing costs.

Where an item of property, plant and equipment, other than mining assets, comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. Expenditure incurred to replace a component of an item of property, plant and equipment, other than mining assets, that is accounted for separately, is capitalised to the carrying amount of the component that has been replaced being written off.

Renewals, improvements and major capital maintenance costs are capitalised and the assets replaced are retired. Regular repair and maintenance costs are expensed as incurred. Gains and losses arising from the retirement of property, plant and equipment are included in profit and loss as incurred.


Mining assets are depreciated using the unit-of-production method, based on the estimated proven and probable coal reserves to which they relate, or are written off if the mine is abandoned or where there is an impairment in value. The impairment loss is recognised in profit or loss for the year to the extent it exceeds the previous revaluation surplus in equity. Estimated proven and probable coal reserves determined in accordance with internationally recognised standards for reporting coal reserves reflect the economically recoverable coal reserves which can be legally recovered in the future from coal deposits.

Tangible assets, other than mining assets, are depreciated using the straight-line method based on estimated useful lives. For each item the estimated useful life has due regard to both its own physical life limitations and, if applicable, the present assessment of the economically recoverable reserves of the mine property at which the item is located, and to possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all tangible assets, with annual reassessments for major items.

The estimated useful lives of property, plant and equipment, including mining assets, are as follows:

  • mining assets average of 57 years
  • generating assets 4–65 years
  • machinery, equipment, transport and other 2–37 years
  • buildings, structures and utilities 6–60 years
  • railcars 7–32 years

3.4. Capital construction-in-progress

Capital construction-in-progress comprises costs directly related to mine development, construction of buildings, infrastructure, processing plant, machinery and equipment. Amortisation or depreciation of these assets commences when the assets are put in the location and condition necessary for them to be capable of operating in the manner intended by management. Capital construction-in-progress is reviewed regularly to determine whether its carrying value is recoverable.

3.5. Impairment

The Group reviews the carrying amounts of its tangible and intangible assets regularly to determine whether there are indicators of impairment. If any such indicators exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs.

A recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset or CGU is estimated to be less than the carrying amount, the carrying amount is reduced to the recoverable amount and the impairment losses are recognised in profit or loss for the year. Impairment losses are allocated first to reduce the carrying amount of any goodwill allocated to CGU, and then to reduce the carrying amounts of the other assets in CGU on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.6. Research and exploration expenditure

Pre-exploration costs are recognised in profit or loss as incurred.

Exploration and evaluation costs (including geophysical, topographical, geological and similar types of expenditure) are capitalised as exploration and evaluation assets on a project-by-project basis pending determination of the technical feasibility and commercial viability of the project. The technical feasibility and commercial viability of extracting coal is considered to be determinable when proven coal reserves are determined to exist. Expenditure deemed to be unsuccessful is recognised immediately in profit or loss.

3.7. Inventories


Coal is measured at the lower of production cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses.Production costs include on-mine and processing costs, as well as transportation costs to the point of sale.

Consumable stores and materials.

The cost of inventories is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

3.8. Financial instruments

Non-derivative financial instruments.

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

The Group recognises a financial asset or a financial liability in its consolidated statement of financial position when it becomes party to the contractual provisions of the instrument. At initial recognition, the Group measures a financial asset or a financial liability at its fair value plus or minus, in the case of a financial asset or a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or the financial liability.

Financial assets at amortised cost.

Financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at fair value through profit or loss ('FVTPL'):

  • the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
  • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Financial assets at fair value through other comprehensive income ('FVOCI').

Financial assets are classified and measured at fair value through other comprehensive income if they meet both of the following conditions and are not designated as at FVTPL:

  • they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
  • their contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Financial assets at fair value through profit or loss.

Any financial assets that are not held in one of the two business models mentioned above are measured at fair value through profit or loss. This includes all derivative financial assets.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

If the Group changes its business model for managing financial assets it must reclassify all affected financial assets.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset, or it retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients in an arrangement.

Cash and cash equivalents.

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

Financial liabilities.

All financial liabilities are measured at amortised cost, except for financial liabilities at fair value through profit or loss. Such liabilities include derivatives (other than derivatives that are financial guarantee contracts or are designated and effective hedging instruments), other liabilities held for trading, and liabilities that the Group designates to be measured at fair value through profit or loss. After initial recognition, the Group cannot reclassify any financial liability.

The Group derecognises a financial liability (or a part of a financial liability) when the obligation specified in the contract is discharged or cancelled or expires.

Impairment of financial assets.

The Group assesses on a forward looking basis the expected credit losses ('ECL') associated with its financial assets carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. This will require considerable judgement over how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis. The impairment model applies to the financial instruments that are not measured at FVTPL.

Loss allowance is recognised at an amount equal to either 12-month ECLs or lifetime ECLs. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument, whereas 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date.

The Group measures loss allowances at an amount equal to lifetime ECLs, except in the following cases, for which the amount recognised will be 12-month ECLs:

  • debt securities that are determined to have low credit risk at the reporting date;
  • other financial instruments (other than lease and trade receivables) for which credit risk has not increased significantly since initial recognition.

For loans, the Group measures ECL on an individual basis, or on a collective basis for portfolios that share similar economic risk characteristics.

An impairment loss in respect of the financial assets is calculated as present value of the difference between the contractual cash flows that are due to the Group under the contract, and the cash flows that the Group expects to receive. For trade receivables, the Group applies a simplified approach permitted by the standard, which requires expected lifetime losses to be recognised from initial recognition of the receivables. To measure the expected credit losses, trade receivables and contract assets are grouped based on shared credit risk characteristics and the days past due. In assessing the impairment, the Group uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information.

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognised in other comprehensive income, instead of reducing the carrying amount of the asset. Impairment losses on financial assets are presented under ‘other expenses’ in the operating profit or loss, similar to the presentation under IAS 39, and not presented separately in the consolidated statement of profit or loss due to materiality considerations.

Derivative financial instruments.

The Group may enter into a variety of derivative financial instruments to manage its exposure to commodity price risk, foreign currency risk, interest rate risk and risk of changes in the price of freight.

Derivatives are initially recognised at fair value; any directly attributable transaction costs are recognised in profit or loss as they are incurred. The subsequent changes are recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

The Group designates certain derivatives as hedges of a highly probable forecast transaction (cash flow hedge). When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. The amount accumulated in equity is retained in other comprehensive income and reclassified to profit or loss (to revenue or foreign exchange gain/loss depending on a hedged item) in the same period in which the hedged item affects profit or loss.

When a hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, or the designation is revoked, then hedge accounting is discontinued prospectively. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was recognised in equity is reclassified to profit or loss.

3.9. Provisions

Provisions are recognised when the Group has legal or constructive obligations, as a result of a past event, for which it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

3.10. Employee benefit obligations

Remuneration to employees in respect of services rendered during a reporting year is recognised as an expense in that reporting year.

Defined contribution plan.

The Group contributes to the Pension Fund of the Russian Federation, a defined contribution pension plan. The only obligation of the Group is to make the specified contributions in the year in which they arise and these contributions are expensed as incurred.

Defined benefit plans.

In accordance with current legislation and internal documentation the Group operates defined benefit plans whereby field workers of its coal-producing subsidiaries are entitled to a lump sum payment. The amount of benefits depends on age, years of service, compensation and other factors.

The liability recognised in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date. Actuarial gains and losses are recognised directly in other comprehensive income.

The defined benefit obligation is calculated annually by the Group. The Projected Unit Credit Method is used to determine the present value of defined benefit obligations and the related current service cost. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability.

3.11. Income tax

Income tax expense comprises current and deferred taxation.

Current tax is the tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and includes any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of the assets and liabilitiesfor financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. In addition, deferred tax is not recognised for temporary differences arising on the initial recognition of goodwill and temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

In accordance with the tax legislation of the Russian Federation, tax losses and current tax assets of a company in the Group may not be set off against taxable profits and current tax liabilities of other Group companies. In addition, the tax base is determined separately for each of the Group’s main activities and, therefore, tax losses and taxable profits related to different activities cannot be offset.

3.12. Revenue recognition

Revenue comprises the sales value of coal, energy, heat, capacity and other goods and services supplied to customers during the period, excluding value-added tax.

Revenue is recognised when the Group fulfils the obligation to perform by transferring the promised goods and services to a customer. An asset is transferred when the buyer receives control of such an asset. Revenue is recognised in the amount of reimbursement that the Group expects to receive in return for the transfer of the promised goods or services to the customer.

Revenue from the sale of coal and other goods is recognised at the time of delivery. Revenue from the sale of electricity and heat is recognised at the time the electricity and heat are supplied to consumers. The ordinary conditions for settlements with customers imply payment upon delivery.

As a practical expedient, the Group does not adjust the promised amount of consideration for the effects of a significant financing component, if the term of settlement is up to one year from the date when the Group transfers a promised goods or services to a customer and the customer pays for that goods or services within one year or less.

Energy sales are carried out on both regulated and unregulated energy markets. Regulated market revenue is based on the application of authorised tariffs as approved by the Federal Antimonopoly Service and Regional Energy Commission of the Russian Federation. Revenue is recognised on a monthly basis upon the delivery of the electricity, heat and capacity. Capacity is a special good/service which gives a customer the right to demand generating company (the Group) to maintain its generation assets in a state of readiness to enable the electricity production for the customer.

Electricity volumes produced, not covered by the regulated contracts are traded at unregulated prices on the basis of free bilateral contracts or on a day-ahead market while capacity is supplied based on competitive capacity selection under the contracts for sales of capacity. Non-regulated bilateral contracts for supply of capacity may be also concluded.

The amounts of revenue and expenses of self-produced and consumed electricity volume are shown net for presentation purposes based on selling prices on a day-ahead market. Management believes that such presentation provides more relevant and meaningful information about the operation of the Group.

Revenue from the sale of railroad and transhipment service is recognised when the Group fulfils the obligation of transhipment. The ordinary conditions for settlements with customers imply payment upon delivery.

3.13. Dividends declared

Dividends and related taxation thereon are recognised as a liability in the year in which they have been declared and become legally payable.

Retained earnings legally distributable by the Group are based on the amounts available for distribution in accordance with the applicable legislation and as reflected in the statutory financial statements of the individual Group entities. These amounts may differ significantly from the amounts recognised in the Group’s consolidated IFRS financial statements.

3.14. Development expenditure

Development costs are capitalised when shaft sinking is done to prepare a certain part of a deposit for mining and used throughout the life of a mine. Development costs are capitalised in case longwalls are being prepared for extraction and amortised during the mining of the longwall.

3.15. Overburden removal expenditure

In open-pit coal mining operations, it is necessary to remove the overburden and other waste in order to access the economically recoverable coal.

Stripping costs incurred during the pre-production phase of the open-pit mine are capitalised as the cost of the development of the mining property and amortised over the life of the mine.

Due to the specifics of the geology of the Group’s mining assets, the period required to gain access to a coal seam is short, and the stripping ratio (volume of overburden removed over the volume of coal extracted) is relatively constant over the periods. Therefore, stripping costs incurred during the production phase of the open-pit mine are recognised in the profit or loss as incurred.

3.16. Environmental obligation

Environmental obligation includes provision for decommissioning and site restoration costs.

Environmental provision is recognised when the Group has a present legal or constructive obligation as a result of past events that existed at the balance sheet date:

  • to dismantle and remove its items of property, plant and equipment (decommissioning); and
  • to restore site damage after the commencement of coal production to bring the land into a condition suitable for its further use (site restoration).

Estimated future costs are provided for at the present value of estimated future expenditures expected to be incurred to settle the obligation, using estimated cash flows, based on current prices adjusted for the inflation.

The increase in the provision through unwinding of the obligation, due to the passage of time, is recognised as a finance cost in profit or loss.

Changes in the obligation, reassessed regularly, related to new circumstances or changes in law or technology, or in the estimated amount of the obligation, or in the pre-tax discount rates, are recognised as an increase or decrease of the cost of the relevant asset to the extent of the carrying amount of the asset; the excess is recognised immediately in profit or loss.

Gains from the expected disposal of mining assets at the end of the life of the mine are not taken into account when determining the provision.

3.17. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until the assets are substantially ready for their intended use. All other borrowing costs are recognised in profit or loss for the year in which they are incurred.

3.18. Goodwill

Goodwill arises on acquisitions and is recognised as an asset initially measured at cost, being the excess of the cost of the business combination over the Group’s share of the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities recognised at the date of acquisition. If the Group’s share of the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities, after reassessment, exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment. Transaction costs incurred in a business combination are expensed.

The Group elected not to restate past business combinations at the date of adoption of IFRS.

3.19. Lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any repayments of lease made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are

determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the payments of lease discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The weighted-average rate applied is 7.6% (8.03% in 2019).

Lease payments included in the measurement of the lease liability comprise the following:

  • fixed payments, including in-substance fixed payments;
  • variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
  • amounts expected to be payable under a residual value guarantee; and
  • the exercise price under a purchase option that the Group is reasonably certain to exercise, payments of lease in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future payments of lease arising from a change in an index or rate. If there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

If the terms of the asset’s lease agreement provide for a purchase option and the Group is reasonably certain that it exercises this option, the Group depreciates the right-of-use asset from the commencement date till the end of the useful life of the underlying asset. Depreciation will be calculated based on the useful life of assets under lease.

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (with a value of USD 5,000 or less upon purchase). The Group recognises the payments of lease associated with these leases as an expense on a straight-line basis over the lease term.

4. Critical accounting judgements and estimates

In the process of applying the Group’s accounting policies management has made the following principal judgements and estimates that have a significant effect on the amounts recognised in the consolidated financial statements. Actual results may differ from these estimates.

Coal reserve estimates.

Coal reserve estimates are used as the basis for future cash flows, which enter into the valuation of mining rights, the determination of provision for environmental obligations, calculations of amortisation and depreciation of mining assets, the unwinding of discount on environmental obligations and the related deferred taxes.

The coal reserve estimates represent the quantity of coal expected to be mined, processed and sold at prices at least sufficient to recover the estimated total costs, the carrying value of the investment and anticipated additional expenditures ('proven and probable coal reserves in international mining terminology). The estimates are based on several assumptions about the physical existence of coal reserves, future mining and recovery factors, production costs and coal prices and have been calculated using the assessment of available exploration and other data. The Group undertakes revisions of the coal reserve estimates, which are confirmed by independent consulting mining engineers, as appropriate.

Although management’s long-term mine plans exceed the remaining useful life of some of the mining licenses of the Group, the Group has a legal right to apply for the extension of the licenses for its existing mining resources and therefore management is confident that the licenses will be extended provided that it is the same coal resource within the original mining license and that certain other conditions are met. Extensions to new seams or adjacent areas are often subject to open auctions. Delay or failure in securing relevant government approvals or licences, as well as any adverse change in government policies, may cause a significant adjustment to development and acquisition plans, which may have a material adverse effect on the Group’s financial position and performance.

Valuation of mining assets.

Miningassets for coal extraction are stated at their fair value based on reports prepared by internal specialists of the Group at each year end.

Since there is no active market for mining assets, the fair value is determined by discounting future cash flows, which can be obtained from the operations of the mines based on the life-of-mine plans, and deducting the fair value of the operating tangible fixed assets. The Group did not identify any material intangible assets which should be deducted in arriving at the fair value of the miningassets.

Since the operating tangible fixed assets are carried at historical cost, for the purposes of regular revaluation of mining assets their fair value is determined either based on market prices for similar items of tangible fixed assets recently acquired or constructed by the Group or, in absence of such items, by applying a price index for the relevant year of acquisition of mining equipment to the residual value of items.

At 31 December 2020 the fair value of mining assets was determined based on the following key assumptions:

  • the cash flows were projected based on actual operating results and life-of-mine models constructed for each cash-generating mining unit and based on an assessment of proven and probable reserves using projected volumes of coal and the available capacity of the transport infrastructure in the foreseeable period and thereafter;
  • export coal sales volumes were estimated to grow at an average of 2% for the foreseeable forecasted period 2021–2031;
  • export coal prices for Asian markets are estimated to grow by 9% in 2021 in comparison to 2020 and to grow at an average of 1% for 2022–2025. Export coal prices for European markets are estimated to grow by 7% in 2021 in comparison to 2020 and to grow at an average of 2% for 2022–2025. Forecast for 2021–2025 is based on the forward rates and consensus forecast of investment banks, forecast after 2025 is estimated to be in line with long-term USD inflation;
  • domestic coal sales volumes were estimated to grow at an average of 2% for the foreseeable forecasted period 2021–2031;
  • domestic coal prices were estimated to grow at an average of 3.5% in 2021 and to grow in line with RUB inflation thereafter;
  • regulated railroad tariffs for 2021 were estimated to grow at an average of 3.7% and to grow in line with RUB inflation less than 0.1% thereafter;
  • the RUB/USD exchange rate was estimated in 2021 at the level of 75.8 RUB/USD. For 2021–2025 the estimate was based on the RUB/USD forward rate and a consensus forecast of investment banks and was indexed by the ratio between the expected RUB inflation of the corresponding year and the long-term USD inflation thereafter;
  • cash flow forecasts were discounted to their present value at the nominal weighted average cost of capital of 12.3% in RUB for brown coal mining units and at the nominal weighted average cost of capital of 9.2% in USD for hard coal mining units.

At 31 December 2020 the total effect of the revaluation of the mining assets was an increase of 648 million USD (31 December 2019 – a decrease of 810 million USD); the after-tax effect on equity was an increase of 518 million USD (31 December 2019 – a decrease of 648 million USD).

Example changes in key assumptions applied to the first forecasted year would have the following effect on the fair value of the mining assets:

(Decrease)/increase of the fair value
Increase in weighted average cost of capital by 1 percentage point (935)
Increase in export coal prices of 1% 371
Increase in RUB/ USD exchange rate of 1% 228
Increase in export coal sales volumes of 1% 201
Increase in regulated railroad tariffs growth of 1% (107)
Increase in domestic coal prices of 1% 121
Increase in domestic coal sales volumes of 1% 82

Determination of recoverable amount of property, plant and equipment of the Coal segment (other than mining assets).

The recoverable amount of the property, plant and equipment of the coal segment (other than mining assets) as at 31 December 2020 was determined either based on market prices for similar items of machinery and equipment recently acquired by the Group or, if no such purchases ocсured, by applying a price index for the relevant year of acquisition for mining equipment to the residual value of items. As a result of the testing no impairment loss was recognised.

5. Segmental information

The Group evaluates performance and makes investment and strategic decisions based on a review of the profitability of the Group as a whole, and based on operating segments. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses and whose operating results are regularly reviewed by management.

Operating segments identified by management are coal, logistics, energy and corporate segments.

The coal segment includes coal extraction and washing, sales and distribution in the Russian Federation and abroad; the logistics segment includes railroad transportation and transshipment in ports; the energy segment includes generation and sales of electricity, heat and capacity and the corporate segment includes operations of holding companies. Non-current assets of the Group are mostly located in the Russian Federation.

Operating segment information for the Group at 31 December 2020 and for the year then ended is as follows:

Coal Logistics Energy Corporate Intersegment elimination Total
Segment revenue and profitability
Segment external revenues 4,057 252 2,374 6,683
Russian Federation 488 252 2,374 3,114
Pacific region 2,377 2,377
Atlantic region 1,192 1,192
Inter-segment revenues 760 1,666 65 48 (2,539)
Segment expenses (4,779) (1,542) (1,917) (92) 2,539 (5,791)
Operating profit/(loss) 38 376 522 (44) 892
Depreciation and amortisation (637) (207) (228) (9) (1,081)
Interest expense and interest on lease (136) (76) (83) (227) 218 (304)
Interest income 5 6 1 214 (218) 8
(Loss)/profit before tax (183) 387 438 (395) 247
Income tax benefit/(expense) 33 (77) (88) 79 (53)
Net (loss)/profit for the year (150) 310 350 (316) 194
Capital expenditures incurred during the year 723 64 227 12 1,026
Additions of right-of-use assets 8 1 11 20
Segment assets and liabilities
Total segment assets 13,291 2,565 3,410 1,748 (4,980) 16,034
Total segment liabilities 4,962 1,224 2,119 7,655 (4,980) 10,980

Operating segment information for the Group at 31 December 2019 and for the year then ended is as follows:

Coal Logistics Energy Corporate Intersegment elimination Total
Segment revenue and profitability
Segment external revenues 5,140 309 2,189 7,638
Russian Federation 614 309 2,189 3,112
Pacific region 2,712 2,712
Atlantic region 1,814 1,814
Inter-segment revenues 664 1,903 8 53 (2,628)
Segment expenses (5,650) (1,676) (1,714) (111) 2,628 (6,523)
Operating profit/(loss) 154 536 483 (58) 1,115
Depreciation and amortisation (597) (271) (178) (7) (1,053)
Interest expense and interest on lease (157) (95) (121) (239) 206 (406)
Interest income 5 10 4 210 (206) 23
(Loss)/profit before tax (88) 493 363 127 895
Income tax benefit/(expense) 51 (101) (71) (25) (146)
Net (loss)/profit for the year (37) 392 292 102 749
Capital expenditures incurred during the year 972 94 158 12 1,236
Additions of right-of-use assets 13 932 4 949
Segment assets and liabilities
Total segment assets 13,271 2,722 3,688 1,210 (4,292) 16,599
Total segment liabilities 5,013 1,434 2,493 6,348 (4,292) 10,996
6. Revenue
2020 2019
Coal 3,799 4,877
Electric capacity 832 732
Electricity 813 693
Heat 647 707
Railroad transportation and transhipment in ports 231 309
Petroleum coke 77 153
Other 284 167
Total 6,683 7,638
7. Cost of sales
2020 2019
Depreciation and amortisation 887 794
Coal and petroleum coke purchased from third parties 779 1,090
Labour 752 854
Consumables and spares 354 457
Purchased fuel 330 279
Purchased energy 187 197
Repairs and maintenance services 144 164
Property and other taxes 58 54
Transportation services 44 73
Fire and rescue brigade expenses 36 36
Personnel transportation services 35 37
Tax on mining 29 41
Transfer of heat 21 28
Drilling and blasting services 16 22
Other 174 175
Total 3,846 4,301

Proceeds from the sale of electricity and purchased energy are presented after deduction of cost of electricity generated by the Group and consumed for own process needs in the amount of 83 million USD for the year ended 31 December 2020 (for the year ended 31 December 2019 – 96 million USD).

8. Distribution costs
2020 2019
Railway services 1,034 1,172
Freight 310 289
Depreciation and amortization 194 259
Stevedoring from third parties 112 138
Labour 42 44
Repair and maintenance services 38 44
Consumables and spares 16 9
Property and other taxes 2 2
Other 14 21
Total 1,762 1,978
9. General and administrative expenses
2020 2019
Salaries 127 140
Consulting, legal, audit and other professional services 31 38
Charitable donations 14 26
Other 13 25
Total 185 229
10. Finance Costs, NET
2020 2019
Interest expense 241 317
Interest on lease 63 89
Bank commissions and charges 26 24
Unwinding of discount on provisions 15 13
Interest income (8) (23)
Total 337 420
11. Property, plant and equipment
Mining assets Generating assets Machinery, equipment, transport and other Buildings, structures and utilities Railcars Construction-in-progress Total
Balance at 1 January 2019 (as previously reported) 7,991 2,356 2,676 1,513 316 607 15,459
Acquisition of Tuapse Bulk Terminal and Murmansk Bulk Terminal 29 76 9 114
Balance at 1 January 2019 (as adjusted) 7,991 2,356 2,705 1,589 316 616 15,573
Revaluation of mining assets (810) (810)
Business combination 28 314 15 36 40 433
Additions 55 6 57 1,118 1,236
Transfers 108 52 599 138 41 (938)
Disposals (5) (8) (77) (15) (17) (122)
Translation difference 207 305 112 85 23 30 762
Balance at 31 December 2019 7,574 3,019 3,360 1,890 380 849 17,072
Revaluation of mining assets 648 648
Business combination (see note 33) 181 5 17 2 17 222
Additions 42 23 27 934 1,026
Transfers 81 86 451 160 14 (792)
Reclassification from right-of-use assets 7 808 815
Disposals (2) (57) (8) (12) (9) (88)
Translation difference (314) (512) (165) (164) (106) (61) (1,322)
Balance at 31 December 2020 8,031 2,772 3,617 1,929 1,086 938 18,373
Accumulated depreciation and amortisation
Balance at 1 January 2019 (as previously reported) 1,025 627 1,513 542 28 3,735
Acquisition of Tuapse Bulk Terminal and Murmansk Bulk Terminal 18 20 38
Balance at 1 January 2019 (as adjusted) 1,025 627 1,531 562 28 3,773
Depreciation and amortisation 305 108 297 86 38 834
Disposals (5) (46) (2) (53)
Translation difference 44 81 56 24 3 208
Balance at 31 December 2019 1,369 816 1,838 670 69 4,762
Depreciation and amortisation 272 158 377 107 20 934
Disposals (1) (56) (7) (5) (69)
Reclassification from right-of-use assets 30 30
Translation difference (73) (136) (83) (58) (2) (352)
Balance at 31 December 2020 1,568 837 2,076 712 112 5,305
Net book value at 31 December 2019 6,205 2,203 1,522 1,220 311 849 12,310
Net book value at 31 December 2020 6,463 1,935 1,541 1,217 974 938 13,068

Group assets include advances issued for capital expenditures of 45 million USD (31 December 2019 – 64 million USD).

If mining assets had been carried at the historical cost, the net book value of property, plant and equipment at 31 December 2020 would have been 7,366 million USD (31 December 2019 – 6,854 million USD).

12. Right-of-use assets
Generating assets Buildings, structures and utilities Machinery, equipment, transport and other Railcars Total
Balance at 1 January 2019 79 117 11 591 798
Additions 4 11 2 932 949
Modifications (5) 13 (1) (1) 6
Disposals (38) (38)
Translation difference 10 14 1 111 136
Balance at 31 December 2019 88 155 13 1,595 1,851
Additions 11 5 3 1 20
Modifications 11 24 1 36 72
Reclassification to property, plant and equipment (7) (808) (815)
Disposals (9) (6) (10) (1) (26)
Translation difference (14) (24) (2) (190) (230)
Balance at 31 December 2020 87 147 5 633 872
Accumulated depreciation
Balance at 1 January 2019 4 4
Depreciation 10 11 7 192 220
Modifications (4) (4)
Disposals (25) (25)
Translation difference 1 (1) 1 8 9
Balance at 31 December 2019 11 14 8 171 204
Depreciation 11 9 3 145 168
Modifications (8) (8)
Reclassification to property, plant and equipment (30) (30)
Disposals (1) (1) (9) (1) (12)
Translation difference (2) (2) (1) (36) (41)
Balance at 31 December 2020 19 20 1 241 281
Net book value at 1 January 2020 77 141 5 1,424 1,647
Net book value at 31 December 2020 68 127 4 392 591

In 2020 the Group purchased railcars from lease for a consideration of 363 million USD.

The net book value of the railcars was reclassified from right-of-use assets to property, plant and equipment in the amount of 778 million USD.

13. Other assets
2020 2019
Contract assets under concession agreements 52 49
Other assets 53 51
Total 105 100
14. Trade accounts and other receivables
2020 2019
Trade accounts receivable 833 1,001
Advances issued 133 121
Other receivables 32 57
Subtotal 998 1,179
Less: Allowance for doubtful debts 176 198
Total 822 981
15. Inventories
2020 2019
Coal stock 288 356
Consumable stores and materials 454 456
Less: Allowance for obsolescence 38 45
Net consumable stores and materials 416 411
Total 704 767
16. Derivative financial instruments
2020 2019
Derivative assets Derivative liabilities Derivative assets Derivative liabilities
Coal contracts – cash flow hedges 2 86 37 7
Cross-currency swaps – cash flow hedges 22 328 104 5
Cross-currency forward contracts – cash flow hedge 27 1
Other derivatives 3 1 1
Total 54 416 142 12

Derivative financial instruments were valued using observable inputs, which correspond to Level 2 of the hierarchy of the fair value measurements (see note 31). Details of the effective portion of changes in fair value of cash flow hedges were as follows:

2020 2019
Loss recognised in comprehensive income Loss recycled from comprehensive income to the profit or loss Gain recognised in comprehensive income Gain recycled from comprehensive income to the profit or loss
Effective portion of changes in fair value of cash flow hedges (558) 40 344 (241)
Deferred tax 70 (9) (33) 21
Total (488) 31 311 (220)

Coal contracts.

The Group uses coal forwards to hedge the coal price index used in index price coal sales and purchase contracts. Details of the coal forwards designated as cash flow hedges were as follows:

2020 2019
Volume (million tonne) Derivative Volume (million tonne) Derivative
Derivative assets
0–3 months 0.5 1 1.0 9
3–6 months 0.1 1 0.7 11
6–9 months 0.1 0.7 9
9–12 months 0.9 8
Total 0.7 2 3.3 37
Derivative liabilities
0–3 months 3.6 23 0.2 2
3–6 months 2.4 27 0.1 2
6–9 months 1.9 16 0.1 2
9–12 months 2.3 20 0.1 1
Total 10.2 86 0.5 7

At 31 December 2020 the average coal sales price under the hedge coal forward contracts was 64 USD per ton (31 December 2019 – 70 USD per ton).

Cross-currency swaps.

The Group entered into cross-currency swap contracts to manage exposure of fluctuations in foreign currency exchange rates.

At 31 December 2020 the outstanding principle amount of hedge is 3,185 million USD. Details of the cross-currency swaps designated as cash flow hedges were as follows:

2020 2019
Volume (million USD) Derivative Volume (million USD) Derivative
Derivative assets
2021 13 1 177 17
2022 256 11 676 62
2023 258 10 392 25
Total 527 22 1,245 104
Derivative liabilities
2021 194 14
2022 937 73
2023 831 127 662 5
2024 220 35
2025 476 79
Total 2,658 328 662 5
17. Prepaid and recoverable taxes
2020 2019
Value-added tax recoverable 145 195
Income tax receivable 36 65
Prepaid other taxes 2 5
Total 183 265
18. Cash and cash equivalents
2020 2019
Current accounts — foreign currency 117 56
— RUB 17 83
Deposits — RUB 33 24
— foreign currency 16 9
Other cash equivalents — foreign currency 5
Total 183 177
19. Share capital and reserves
Number of shares, in thousands
2020 2019
Authorised share capital
Ordinary shares 236,060 236,060
Issued share capital
Ordinary shares 236,060 236,060

Ordinary shares of the Company have a par value of 0.005 RUB. All issued shares were fully paid.

20. Earnings per share

Basic earnings per share are calculated based on the weighted average number of ordinary shares outstanding during the year. Basic and diluted earnings per share are the same, as there is no dilution effect.

2020 2019
Profit for the year attributable to ordinary shareholders of the parent 185 742
Weighted average number of ordinary shares in issue (in thousands) 236,060 236,060
Basic and diluted earnings per share (in USD) 0.78 3.14
21. Borrowings
Effective interest rate 2020 2019
Long-term borrowings
Variable rate borrowings 4,115 2,952
Unsecured USD-denominated borrowings 6M LIBOR + 0.9% to 1M LIBOR + 3% 2,545 2,780
Unsecured RUB-denominated borrowings CBR+ 0.3% to CBR + 1.85% 1,286
Unsecured EUR-denominated borrowings 6M EURIBOR + 0.37% to 6M EURIBOR + 2.25% 284 172
Fixed rate borrowings 2,843 3,631
Unsecured USD-denominated borrowings 2.99% to 4% 1,404 1,814
Unsecured RUB-denominated bonds 6.7% to 8.3% 1,314 840
Unsecured RUB-denominated borrowings 0.05% to 4% 125 977
Subtotal 6,958 6,583
Less: Current portion of long-term borrowings 1,688 1,644
Total long-term borrowings 5,270 4,939
Short-term borrowings
Fixed rate borrowings 44 155
Unsecured RUB-denominated borrowings 1.8% 41
Unsecured USD-denominated borrowings 150
Other borrowings 3 5
Subtotal 44 155
Current portion of long-term borrowings 1,688 1,644
Total short-term borrowings 1,732 1,799

The Group’s long-term borrowings have restrictive covenants including, but not limited to, the requirement to maintain minimum ratios associated with:

  • consolidated net indebtedness to earnings before interest, tax, depreciation and amortisation ('EBITDA'); and
  • EBITDA to consolidated interest expense.

The covenants are calculated based on the IFRS financial statements of the Group on a semi-annual basis. As at 31 December 2020 the Group was in compliance with all such covenants.

22. Lease liabilities
2020 2019
Opening balance 1,224 813
Additions 20 521
Modifications 74 11
Interest on lease 63 89
Payment of lease liabilities (224) (313)
Payment for purchase of leased railcars (363)
Disposals (14) (16)
Translation difference (163) 119
Closing balance 617 1,224

The remaining amount of lease liabilities related to railcars reclassified from right-of-use assets to property, plant and equipment amounted to 10 million USD.

23. Changes in liabilities arising from financial activities

The table below provides information of changes in liabilities arising from financing activities, including changes arising from cash flows and non-cash changes:

Long-term borrowings Short-term borrowings Lease liabilities Dividends paid to shareholders Other Total
Balance as at 1 January 2019 4,291 62 813 5,166
Cash flows 1,828 5 (313) (91) 1,429
Foreign exchange loss 144 67 119 330
Interest expenses and interest on lease 296 21 89 406
Change in lease obligations 516 516
Bank commissions 24 24
Other payables 91 91
Balance as at 31 December 2019 6,583 155 1,224 7,962
Balance as at 1 January 2020 6,583 155 1,224 7,962
Cash flows 396 (102) (587) (103) (25) (421)
Foreign exchange gain (278) (19) (163) (460)
Interest expenses and interest on lease 231 10 63 304
Change in lease obligations 80 80
Bank commissions 26 26
Other payables 103 25 128
Balance as at 31 December 2020 6,958 44 617 7,619
24. Other long-term liabilities
2020 2019
Provision for environmental obligation 159 175
Provision for defined benefit obligation 44 64
Other long-term liabilities 133 132
Total 336 371

Provision for environmental obligation.

The extent and cost of future site restoration programmes are inherently difficult to estimate and depend on the estimated lives of the assets, the scale of any possible disturbance and contamination as well as the timing and extent of corrective actions. The following is a summary of the key assumptions on which the discounted carrying amounts of the obligations are based:

2020 2019
Discount rate 7% 7%
Inflation rate 4% 4%

Provision for defined benefit obligation.

Actuarial assumptions used for the calculation of the defined benefit obligation were as follows:

2020 2019
Discount rate 6% 7%
Inflation rate 4% 4%
Future increases in salaries 4% 4%
25. Trade accounts and other payables
2020 2019
Trade accounts payable and accruals 325 519
Payables for the acquisition of subsidiaries (see note 33) 282 65
Advances from customers 93 198
Accrual for vacation payments 62 72
Wages and salaries 42 66
Other creditors 111 83
Total 915 1,003
26. Taxes payable
2020 2019
Value-added tax 104 72
Income tax 35 47
Social security contributions 26 28
Other 19 20
Total 184 167
27. Taxation
2020 2019
Current income tax expense 138 220
Deferred income tax benefit (85) (74)
Income tax expense 53 146

The reconciliation of theoretical income tax, calculated at the rate effective in the Russian Federation, where the Company is domiciled, to the amount of actual income tax expense recorded in the consolidated statement of profit or loss and other comprehensive income is as follows:

2020 2019
Profit before tax 247 895
Theoretical income tax expense at 20% 49 179
Impact of specific tax rates in Switzerland (5) (38)
Impact of specific tax rates in Russian Federation (1) (2)
Impact of tax rate change in Switzerland (22)
Tax effect of non-deductible expenses 10 29
Total income tax expense 53 146

The tax effects of temporary differences that give rise to deferred taxation are presented below:

Opening balance Recognised in equity Recognised in profit or loss Reclassification of railcars Effect of translation to presentation currency Closing balance
Deferred tax assets 531 46 164 (73) (68) 600
Tax losses carried forward 191 177 (20) 348
Lease liabilities(see note 12) 231 (9) (73) (36) 113
Derivative financial liabilities 46 46
Environmental and other provisions 39 (4) (3) 32
Prepaid expenses and accruals 14 (4) (1) 9
Employee benefit obligations 17 (2) (2) 13
Trade accounts and other receivables 11 3 (1) 13
Inventory 5 1 (2) 4
Other 23 2 (3) 22
Deferred tax liabilities (1,880) (101) (79) 73 123 (1,864)
Property, plant and equipment (1,627) (116) (88) 89 (1,742)
Right-of-use assets(see note 12) (231) 5 73 33 (120)
Derivative financial assets (15) 15
Other (7) 4 1 (2)
Net deferred tax liabilities (1,349) (55) 85 55 (1,264)
Opening balance Effect of IFRS 16 Recognised in equity Recognised in profit or loss Effect of translation to presentation currency Closing balance
Deferred tax assets 247 159 9 81 35 531
Lease liabilities 159 62 10 231
Tax losses carried forward 193 6 (24) 16 191
Prepaid expenses and accruals 13 2 (1) 14
Environmental and other provisions 19 1 17 2 39
Employee benefit obligations 14 2 1 17
Trade accounts and other receivables 8 2 1 11
Inventory 5 5
Other 22 1 23
Deferred tax liabilities (1,778) (159) 149 (7) (85) (1,880)
Property, plant and equipment (1,761) 161 37 (64) (1,627)
Right-of-use assets (159) (62) (10) (231)
Derivative financial assets (3) (12) (15)
Inventory (7) 10 (3)
Other (7) 8 (8) (7)
Net deferred tax liabilities (1,531) 158 74 (50) (1,349)

Unrecognised temporary differences, related to investments in subsidiaries where the Group is able to control the timing of the reversal and distribution of dividends, including distribution on a tax-free basis when certain conditions are met, and it is probable that the temporary difference will not be reversed in the foreseeable future, amounted to 3.843 million USD (31 December 2019–3,229 million USD).

Management believes that sufficient taxable profits will be available, against which the unused tax losses can be utilised by the Group in the unlimited future period.

For presentation purposes certain deferred tax assets and liabilities are offset in accordance with the accounting policy.

2020 2019
Deferred tax assets 246 132
Deferred tax liabilities (1,510) (1,481)
Net deferred tax liabilities (1,264) (1,349)
28. Related party transactions

Related parties are considered to include the ultimate beneficiary, affiliates and entities under common ownership and control of the same principal ultimate beneficiary. The Company and its subsidiaries, in the ordinary course of their business, enter into various sales, purchases and service transactions with related parties.

Transactions with related parties not dealt with elsewhere in the consolidated financial statements are as follows:

2020 2019
Transshipment in the ports from EuroChem group 77 73
Coal sales to DEC group, which was an associate of a company with the same principal ultimate beneficiary till June 2020 44 134
Other energy sales 64 61
Other sales to EuroChem group 67 19
Purchases of goods and services from EuroChem group 68 21
Purchases of goods and services from other companies 34 9
Other expenses 2 4
Remuneration of the Board of Directors and the Management members 12 16

The outstanding balances with related parties are as follows:

2020 2019
Trade accounts and other receivables from EuroChem group 13 3
Other receivables 5 14
Payables to EuroChem group for the acquisition of subsidiaries (see note 33) 282
Trade accounts and other payables to EuroChem group 28 12
29. Commitments

Capital commitments.

The following key capital expenditures were approved:

2020 2019
Contracted 885 1,028
Not yet contracted 1,466 284
Total 2,351 1,312
30. Contingencies


The insurance industry in the Russian Federation is in the process of development, and some forms of insurance protection common in developed markets are not yet generally available at commercially acceptable terms. The Group has limited coverage for its mining, processing, transportation and energy generating facilities for business interruption or for third-party liabilities in respect of property or environmental damage arising from accidents on the Group’s property or relating to the Group’s operations. Management understands that until the Group obtains adequate insurance coverage there is a risk that the loss or destruction of certain operating assets could have a material adverse effect on the Group’s operations and financial position.


The Group has a number of small claims and litigations relating to regular business activities and small fiscal claims. Management believes that none of these claims, individually or in aggregate, will have a material adverse impact on the Group.

Taxation contingencies in the Russian Federation.

Russian tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Management’s interpretation of such legislation as applied to the transactions and activities of the Group may be challenged by the relevant regional and federal authorities. Recent events within the Russian Federation suggest that the tax authorities are taking a more assertive position in their interpretation of the legislation and assessments and, as a result, it is possible that transactions and activities that have not been challenged in the past may be challenged. It is therefore possible that significant additional taxes, penalties and interest may be assessed. Fiscal periods remain open to review by the authorities in respect of taxes for three calendaryears preceding the year of review. Under certain circumstances reviews may cover longer periods.

Management believes that it has paid or accrued all taxes that are applicable. Where uncertainty exists, the Group has accrued tax liabilities based on management’s best estimate of the probable outflow of resources embodying economic benefits which will be required to settle such liabilities.

Management believes that it has provided adequately for all tax liabilities based on its interpretation of the tax legislation. However, the relevant authorities may have differing interpretations, and the effect could be significant.

Environmental matters.

The Group is subject to extensive federal, state and local environmental controls and regulations in the regions in which it operates. The Group’s operations involve disturbance of land, discharge of materials and contaminants into the environment and other environmental concerns.

The Group’s management believes that it is in compliance with all current existing health, safety and environmental laws and regulations in the regions in which it operates. However, changes in environmental regulations are currently under consideration in the Russian Federation. The Group is continually evaluating its obligations relating to new and changing legislation. The Group is unable to predict the timing or extent to which environmental laws and regulations may change. Such change, if it occurs, may require the Group to modernise technology and incur future additional material costs to meet more stringent standards.

The Russian Federation risk.

The Group’s operations are primarily located in the Russian Federation. Consequently, the Group is exposed to the economic and financial markets of the Russian Federation which display characteristics of an emerging market. The legal, tax and regulatory frameworks continue to develop, but are subject to varying interpretations and frequent changes which together with other legal and fiscal impediments contribute to the challenges faced by entities operating in the Russian Federation.

Starting in 2014, the United States of America, the European Union and some other countries have imposed and expanded economic sanctions against a number of Russian individuals and legal entities. The imposition of the sanctions has led to increased economic uncertainty, including more volatile equity markets, a depreciation of the Russian Rouble, a reduction in both local and foreign direct investment inflows and a significant tightening in the availability of credit. This change in the environment did not have a significant effect on the Group’s operations, however, the longer-term effects of the imposed and possible additional sanctions are difficult to determine. The Group implemented relevant compliance policy, continuously monitors economic sanctions and analyses their effect on the Group’s financial position and operation results.

The consolidated financial statements reflect management’s assessment of the impact of the Russian business environment on the operations and the financial position of the Group. The future business environment may differ from management’s assessment.

Business environment.

On 11 March 2020, the World Health Organization declared a new coronavirus infection (COVID-19) a pandemic. The global markets began to experience significant volatility. Together with other factors, this have resulted in a sharp decrease in the oil price, stock market indices and coal prices, as well as a depreciation of the Russian rouble. Responding to the potentially serious threat the COVID-19 presents to public health, the Russian and other countries government authorities have taken extensive measures to contain the outbreak, including imposing restrictions on the cross-borders movement of people, entry restrictions for foreigners and instructing business community to transfer employees to working from home. The scope and duration of these events against the backdrop of the second wave of COVID-19 remain uncertain and may have further significant influence on the economy and companies operating in this environment.

The management of the Group is taking necessary precautions to protect the safety and well-being of employees against the spread of COVID-19. The Group has developed plans for mitigating the impact on its business and has reviewed the economic environment; the demand for the Group’s products; its supply chain; its available bank facilities; and the possible effects on its cash flow and liquidity position, including consideration of debt covenants.

Taking into account the above-mentioned measures and the Group’s current operational and financial performance along with other currently available public information, management does not anticipate significant adverse impact of the COVID-19 outbreak on the Group’s financial position and operating results. However, it may be difficult to predict the impact of the COVID-19 in the medium and long term perspective. Management closely monitors the development of the situation and takes necessary measures to mitigate negative effects of the COVID-19 pandemic.

The consolidated financial statements reflect management’s assessment of the impact of the business environment on the operations and the financial position of the Group. The future business environment may differ from management’s assessment.

31. Fair value measurement

The fair value of assets and liabilities is determined with reference to various market information and other valuation methods as considered appropriate. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in valuation techniques, as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data.

Financial instruments carried at amortised cost.

At 31 December 2020, the fair values of financial instruments carried at amortised cost, which are mainly loans, payables and receivables, did not materially differ from the carrying values. For payables and receivables this is based on their short-term nature, and loans fair values were calculated based on the present value of future cash flows (including interest) discounted at market interest rate.

Financial instruments carried at fair value.

Fair values of derivative financial assets and liabilities were determined using inputs from observable market data, which correspond to Level 2 of the hierarchy of fair values.

Mining assets carried at fair value.

The fair value of mining assets was determined using discounted cash flow method corresponding to Level 3 of the hierarchy of fair values (see note 4).

32. Financial risk management

In the normal course of its operations, the Group is exposed to market (including foreign currency and interest rate), credit and liquidity risks. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out through regular meetings of a risk management committee of operational management and by the central treasury department. The Board of Directors approves principles for overall risk management. In addition, operational management have developed policies covering specific areas, such as foreign currency risk, interest rate risk and the use of derivative and non-derivative financial instruments.

32.1. Market risk

Market risk is the risk that changes in market prices, such as coal prices, foreign exchange rates and interest rates will negatively impact the Group’s results or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Market risk management includes the analysis of foreign currency and interest rate risks.

Interest rate risk

Interest rate risk is the risk that changes in interest rates will adversely impact the financial results of the Group. The total net unhedged liability which exposes the Group to interest rate risk amounts to 4,115 million USD (31 December 2019–2.952 million USD).

The Group’s interest rate risk arises primarily from long-term borrowings. The Group’s borrowings at variable interest rates are primarily denominated in USD. Borrowings at variable interest rates expose the Group to a cash flow interest rate risk. The Group monitors the risk and, if necessary, manages its exposure by entering into variable-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from variable interest rates to fixed interest rates.

An increase or decrease in the floating interest rate by 1 percentage point, provided that the amount of outstanding balance remained constant for the whole year, would have decreased or increased profit for the year by 41 million USD (2019–30 million USD).

Foreign currency risk

Foreign currency risk is the risk that the financial results of the Group will be adversely impacted by changes in exchange rates to which the Group is exposed.

A significant portion of the Group’s revenues are denominated in USD, whereas the majority of the Group’s expenditures are denominated in RUB. Accordingly, operating profits may be adversely impacted by the appreciation of the RUB against the USD. The risk of negative fluctuations in the USD/RUB exchange rate for future revenue streams is naturally hedged by the USD borrowings.

The Group had the following monetary assets and liabilities denominated in currencies other than the functional currency of the respective Group entity:

2020 2019
Balances with third and related parties (469) (1,206) (380) (203) (1,787) (312)
Prepaid and recoverable taxes 25 137
Cash and cash equivalents 4 13 6 49 7
Trade accounts receivable 42 6 45 1
Other receivables 2 (2) 23
Borrowings (13) (1,221) (304) (1,772) (185)
Other long-term liabilities (203) (245) (6)
Trade accounts payable and Accruals (66) (2) (26) (142) (22) (76)
Other creditors (193) (56) (1) (46)
Taxes payable (21) (25)
Accrual for vacation payments (30) (24)
Wages and salaries (16) (20)
Intra-group balances (1,117) (1,008) 2 (696) (202) 4
Intra-group receivables 220 9 195 254 12 160
Intra-group borrowings (1,041) (971) (193) (450) (206) (156)
Intra-group payables (296) (46) (500) (8)
Total net liabilities (1,586) (2,214) (378) (899) (1,989) (308)

A 10% devaluation of functional currencies against foreign currencies at the reporting date would have the following effect on the profit or loss for the year and the equity including effect on derivatives:

RUB USD Other Total
(Increase)/decrease in equity (115) 161 30 76
(Increase)/decrease in profit or loss for the year (39) 90 30 81

32.2. Credit risk

Credit risk is the risk that a counterparty may default or not meet its obligations to the Group on a timely basis, leading to a financial loss to the Group. The Group minimises its exposure to this risk by ensuring that credit risk is spread across a number of counterparties. Trade receivables comprise international companies and large Russian companies, and credit is only extended to these customers after rigid credit approval procedures. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated statement of financial position.

At 31 December 2020 4% of total trade receivables were due from the Group’s largest customer and 22% of the total trade receivables were due from the Group’s next 19 largest customers (31 December 2019 – 8% and 26%, respectively).

The table below analyses the Group’s trade receivables into relevant groupings based on ageing.

2020 2019
Gross Allowance for doubtful debts Gross Allowance for doubtful debts
Not past due 559 725
Past due for less than 12 months 150 36 153 62
Past due for more than one year 124 124 123 123
Total 833 160 1,001 185

The movement in the allowance for doubtful debts in respect of trade receivables during the year was as follows:

2020 2019
Opening balance 185 168
Additional doubtful debts 69 99
Bad debt recovered (51) (95)
Bad debt written-off (13) (7)
Effect of translation to presentation currency (30) 20
Closing balance 160 185

Analysis of credit quality of cash and cash equivalents, including bank deposits, based on credit ratings of independent agencies 'Standard & Poor’s', 'Fitch Ratings' and others is listed in the table below:

2020 2019
From A- to AAA 28 48
From BBB- to BBB+ 113 85
From BB- to BB+ 28 30
Other 14 14
Total 183 177

32.3. Liquidity risk

Liquidity risk is the risk that the Group will not be able to settle all liabilities as they fall due.

Recently global and Russian capital markets have experienced significant volatility, including a lack of available sources of financing and significant fluctuation of the Russian Rouble against the USD and the Euro. Despite stabilisation measures undertaken by various governments, markets remain volatile.

Prudent liquidity risk management includes maintaining sufficient cash, the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. The Group expects that cash generated from operations will be the major source of the Group’s liquidity in 2021 and will be sufficient to cover the capital expenditures programme of the Group. In addition, management believes that the Company will be able to attract additional sources of financing in order to refinance existing short-term facilities.

The central treasury department of the Group maintains flexibility in funding by ensuring the availability of credit line facilities. The unused portion of these lines at 31 December 2020 totalled 2,499 million USD (31 December 2019 – 2,889 million USD).

The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the contractual undiscounted cash flows to maturity, including interest payments.

Carrying amount Contractual cash flows Due in the first year Due in the second year Due thereafter
Balance at 31 December 2020
Long-term borrowings 6,958 7,493 1,885 1,707 3,901
Short-term borrowings 44 44 44
Lease liabilities 617 997 179 167 651
Net-settled derivative liabilities 416 416 102 73 241
Trade accounts payable and accruals 325 325 325
Other creditors 393 393 393
Total 8,753 9,668 2,928 1,947 4,793
Balance at 31 December 2019
Long-term borrowings 6,583 6,947 1,903 2,087 2,957
Short-term borrowings 155 155 155
Lease liabilities 1,224 1,808 297 273 1,238
Trade accounts payable and accruals 519 519 519
Net-settled derivative liabilities 12 12 12
Other creditors 148 148 148
Total 8,641 9,589 3,034 2,360 4,195

32.4. Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns to equity holders and benefits for other stakeholders.

The Group defines capital as shareholders’ equity. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to equity holders, return capital to equity holders or issue new shares. This strategy remains unchanged from prior years.

33. Investments in significant subsidiaries
Subsidiaries by country of incorporation Principal activity 2020 2019
Russian Federation
JSC 'Murmanskiy Morskoi Torgovyi Port' Port facilities 100% 100%
LLC 'Murmansk Bulk Terminal' Port facilities 100%
Moscow Region
JSC 'National Transportation Company' Transportation services 100%
Krasnodarskiy krai
LLC 'Tuapse Bulk Terminal' Port facilities 100%
JSC 'Barnaul Generation' Energygeneration 100% 100%
JSC 'Byiskenergo' Energy generation 100% 100%
JSC 'SIBECO' Energy generation 100% 100%
JSC 'SUEK-Kuzbass' Hard coal extraction 100% 100%
JSC 'Kuzbassenergo' Energy generation 99.9% 99.9%
JSC 'Kemerovo Generation' Energy generation 100% 100%
JSC 'SUEK-Krasnoyarsk' Brown coal extraction 100% 100%
JSC 'Razrez Berezovskiy' Brown coal extraction 100% 100%
JSC 'Razrez Nazarovskiy' Brown coal extraction 100% 100%
JSC 'Yenisei Territorial Generating Company (TGC-13)' Energy generation 99.9% 99.9%
JSC 'Nazarovo GRES' Energy generation 100% 100%
LLC 'SUEK-Khakasia' Hard coal extraction 100% 100%
LLC 'Vostochno-Beyskiyrazrez' Hard coal extraction 50% 50%
JSC 'Razrez Tugnuiskiy' Hard coal extraction 100% 100%
JSC 'Razrez Kharanorskiy' Brown coal extraction 100% 100%
JSC 'Urgalugol' Hard coal extraction 100% 100%
JSC 'Daltransugol' Port facilities 100% 100%
LLC 'Primorskugol' Brown coal extraction 100% 100%
LLC 'Stevedoring Company 'Maly port' Port facilities 49.9% 49.9%
LLC 'Primorskaya GRES' Energy generation 100%
SUEK AG Export sales of coal 100% 100%
Republiс of Cyprus
SUEK LTD Debt holding company 100% 100%

Business combinations

Acquisition of Krasnoyarskaya GRES-2.

In March 2020, the Group acquired generating and other assets of Krasnoyarskaya GRES-2 for 156 million USD from a third party. The core activity of the acquired business is generation and sales of energy. Along with the acquired assets, the Group obtained control over all processes of generation and sales, acquired rights and obligations under key contracts were transferred to the Group. The Group recognizes the acquisition of the assets of Krasnoyarskaya GRES-2 as a business combination since assets represent a unified complex for generation of electricity and the Group also acquired all key processes, altogether representing the attributes of the business. The fair value amounts of the acquired assets, mainly presented by property, plant and equipment, and assumed liabilities at the date of acquisition were estimated at 158 million USD and 2 million USD, respectively. Before the Group completed the process of obtaining permits and licenses required to operate Krasnoyarskaya GRES-2, the acquired assets were leased back to the seller. Under the terms of the lease, the Group has control over business processes and financial results, thus, at the time of the transitional period, the Group consolidates Krasnoyarskaya GRES-2. In October 2020, the Group obtained permits and licenses required to operate Krasnoyarskaya GRES-2 and the lease back agreement has ended.The effect of the consolidation of the acquired assets on the consolidated revenue is 50 million USD for the year ended 31 December 2020. The effect on the consolidated profit or loss for the year ended 31 December 2020 is not significant.

Acquisition of Reftinskaya GRES.

In October 2019, the Group acquired generating and other assets of Reftinskaya GRES for 345 million USD, including a contingent consideration described below, from a third party. In 2019 and in 2020 the Group paid for the acquisition 259 million USD and 57 million USD, respectively. As at 31 December 2019, the Group also recognised a contingent consideration at fair value of 24 million USD and allocated it to the generating assets. In 2020 the Group reassessed the fair value of the contingent consideration to the amount of 15 million USD, the change in the fair value was recognised in other income. The last contingent payment is in 2024. In 2020 the Group finalised purchase price allocation for this business combination, asaresult, the carrying amounts of the acquired assets, mainly presented by property, plant and equipment, and assumed liabilities at the date of acquisition were estimated at 353 million USD and 8 million USD, respectively.

Acquisition of subsidiaries under common control

Acquisition of Primorskaya GRES.

In November 2020, the Group acquired from a related company 100% of LLC 'Primorskaya GRES' for 49 million USD. The principal activity of the acquired company is generation and sales of energy. Since the acquisition of the LLC 'Primorskaya GRES' represents a transaction under common control the consolidated financial statements of the Group were retrospectively restated to reflect the effect of the acquisition as if it had occurred on 5 June 2020, at the date when common control was established.

As LLC 'Primorskaya GRES' did not prepare IFRS financial statements, the independent appraisal of assets and liabilities was performed on the date of acquisition of control by the related company. The difference between the transaction price and the net assets of the company was recorded in retained earnings in the amount of 5 million USD. The carrying amount of assets, mainly presented by property, plant and equipment, and liabilities of LLC 'Primorskaya GRES' at the date of acquisition were estimated by the related party at 73 million USD and 13 million USD, respectively, and at 63 million USD and 14 million USD as at 31 December 2020. Other transactions in equity and consolidated cash flow statement include additional contribution to capital made by the prior owner in the amount of 8 million USD. The effect of the consolidation of LLC 'Primorskaya GRES' on the consolidated revenue is 85 million USD for the year ended 31 December 2020. The effect of the transaction on the consolidated profit or loss for the year ended 31 December 2020 is not significant.

Acquisition of Tuapse Bulk Terminal and Murmansk Bulk Terminal.

In December 2020, the Group acquired LLC 'TuapseBulk Terminal' and LLC 'Murmansk Bulk Terminal' for 114 million USD and 168 million USD, respectively, from EuroChem group to strengthen position on the logistics market. Since the acquisition of companies represents a transaction under common control the consolidated financial statements of the Group were retrospectively restated to reflect the effect of the acquisition as if it had occurred on 1 January 2019, at the beginning of the earliest comparative period presented. The transaction was accounted for using predecessor IFRS accounting at the carrying amount of the assets and liabilities. Other transactions in equity and consolidated cash flow statement include dividends paid to the previous shareholder in the amount of 28 million USD in 2020 (62 million USD in 2019).

The carrying amount of assets and liabilities of acquired subsidiaries is presented below:

At the acquisition date 2019
Property, plant and equipment 64 78
Right-of-use assets 12 16
Other assets 4 2
Trade accounts and other receivables 17 24
Inventories 1 1
Cash and cash equivalents 11
Long-term lease liabilities (12) (15)
Deferred tax liabilities (5) (5)
Trade accounts and other payables (4) (4)
Taxes payable (1) (1)
Net assets 87 96
Non-controlling interests.

Information of LLC 'Vostochno-Beyskiyrazrez' that has significant non-controlling interests is as follows:

2020 2019
Non-current assets 154 285
Current assets 44 55
Non-current liabilities (29) (55)
Current liabilities (6) (15)
Net assets 163 270
Accumulated non-controlling interests 82 135
Revenue 131 139
Net profit/(loss) for the year 3 (2)
Profit/(loss) allocated to non-controlling interests 2 (1)
Revaluation of mining assets (31) (22)
Cash flows from operating activities 21 11
Cash flows used in investment activities (16) (11)
Cash flows used in financing activities (6) (13)
Dividends to non-controlling interests 3 6
34. Events subsequent to the balance sheet date

In January 2021, SUEK LTD redomiciled from the Republiс of Cyprus to the Russian Federation.