Investor Presentaiton
Net debt has been calculated as of:
Short-term loans and borrowings
Long-term loans and borrowings
TOTAL DEBT
Net of:
Cash and short-term financial investments
NET DEBT
Management's Discussion and Analysis
Nine months ended September 30, 2011
September 30, 2011
June 30, 2011
December 31, 2010
in millions of U.S. dollars
June 30, 2010
December 31, 2009
446
539
3,323
3,478
3,769
4,017
702
829
1,538
3,170
2,815
2,214
3,872
3,644
3,752
(157)
3,612
(174)
3,843
(161)
3,711
(89)
3,555
(248)
3,504
Net Debt is not a balance sheet measure under IFRS, and it should not be
considered to be an alternative to other measures of financial position. Other
companies in the pipe industry may calculate Net Debt differently and therefore
comparability may be limited. Net Debt is a measure of our operating performance
that is not required by, or presented in accordance with, IFRS. Although Net Debt
is a non IFRS measure, it is widely used to assess liquidity and the adequacy of a
company's financial structure. We believe Net Debt provides an accurate indicator
of our ability to meet its financial obligations, represented by gross debt, from
available cash. Net Debt allows demonstrating investors the trend in our net
financial position over the periods presented. However, the use of Net Debt
assumes that gross debt can be reduced by cash. In fact, it is unlikely that all
available cash will be used to reduce gross debt all at once, as cash must also be
available to pay employees, suppliers and taxes, and to meet other operating needs
and capital expenditure requirements. Net Debt and its ratio to equity, or leverage,
are used to evaluate our financial structure in terms of sufficiency and cost of
capital, level of debt, debt rating and funding cost.
These measures also make it possible to evaluate if our financial structure is
adequate to achieve its business and financial targets. Our management monitors
the net debt and leverage or similar measures as reported by other companies in
Russia or abroad in order to assess our liquidity and financial structure relative to
such companies. Our management also monitors the trends in our Net Debt and
leverage in order to optimize the use of internally generated funds versus borrowed
funds.
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