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ЕВРАЗ. Годовой отчет за 2021 год - часть 12

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ANNUAL REPORT & ACCOUNTS 2021

9. PROPERTY, PLANT AND EQUIPMENT

9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Property, plant and equipment, including right-of-use assets, consisted of the following as of 31 December:

Year ended 31 December 2020

US$ million

2021

2020

2019

Buildings

Machinery and

Transport and

Mining

Other

Assets under

Cost

US$ million

Land

and constructions equipment

motor vehicles

assets

construction

Total

Land

$ 90

$ 97

$ 102

At 31 December 2019, cost, net of

Buildings and constructions

1,759

1,786

1,899

$ 102

$ 956

$ 1,854

$ 169

$ 1,160

$ 9

$ 675

$ 4,925

accumulated depreciation

Machinery and equipment

3,842

4,595

4,758

Additions

725

734

Transport and motor vehicles

288

333

369

Assets put into operation

128

401

(624)

Disposals

(1)

(7)

(8)

Mining assets

318

2,126

2,468

Depreciation and depletion charge

(78)

(356)

(44)

(64)

(2)

(544)

Other assets

Impairment losses recognised in statement

Assets under construction

834

707

681

(163)

(3)

(169)

of operations

7,166

9,680

10,311

Impairment losses reversed through

statement of operations

Accumulated depreciation, depletion and impairment losses

Change in site restoration and

(3)

Buildings and constructions

(934)

(903)

(943)

decommissioning provision

Machinery and equipment

(2,582)

(3,051)

(2,904)

Government grants

(20)

Translation difference

(5)

(122)

(193)

(25)

(189)

(74)

(608)

Transport and motor vehicles

(195)

(207)

(200)

At 31 December 2020, cost, net of

Mining assets

(178)

(1,152)

(1,308)

$ 97

$ 883

$ 1,544

$ 126

$ 974

$ 10

$ 680

$ 4,314

accumulated depreciation

Other assets

(28)

(26)

(25)

(3,917)

(5,339)

(5,380)

Government grants

(80)

(27)

(6)

Year ended 31 December 2019

$ 3,169

$ 4,314

$ 4,925

Buildings

Machinery and

Transport and

Mining

Other

Assets under

US$ million

Land

and constructions equipment

motor vehicles

assets

construction

Total

At 31 December 2018, cost, net of

$ 100

$ 895

$ 1,655

$ 81

$ 1,086

$ 7

$ 378

$ 4,202

The movement in property, plant and equipment, including right-of-use assets, was as follows:

accumulated depreciation

IFRS 16 adoption: recognition of right-of-

120

Year ended 31 December 2021

use assets (Note 2)

At 1 January 2019, cost, net of

$ 100

$ 907

$ 1,695

$ 149

$ 1,086

$ 7

$ 378

$ 4,322

Buildings

Machinery and

Transport and

Mining

Other

Assets under

accumulated depreciation

US$ million

Land

and constructions

equipment

motor vehicles

assets

construction

Total

Additions

828

844

At 31 December 2019, cost, net of

Assets put into operation

387

(555)

$ 97

$ 883

$ 1,544

$ 126

$ 974

$ 10

$ 680

$ 4,314

accumulated depreciation

Assets acquired in business combinations

Additions

–

906

952

Disposals

(3)

(1)

(6)

(4)

(14)

Assets put into operation

–

110

448

(647)

–

Depreciation and depletion charge

(82)

(331)

(46)

(87)

(4)

(550)

Disposals

(2)

(1)

(9)

–

(1)

–

(1)

(14)

Impairment losses recognised in statement

(13)

(25)

(101)

(10)

(149)

Depreciation and depletion charge

–

(83)

(362)

(43)

(64)

(4)

–

(556)

of operations

Impairment losses recognised in statement

Impairment losses reversed through

–

(14)

–

(23)

–

(2)

(39)

of operations

statement of operations

Impairment losses reversed through

Transfer to assets held for sale

(4)

(8)

(25)

(2)

(39)

–

statement of operations

Change in site restoration and

decommissioning provision

–

(1)

–

decommissioning provision

Government grants

(6)

Government grants

–

(53)

Translation difference

143

131

427

Transfer to assets held for distribution to

At 31 December 2019, cost, net of

(5)

(89)

(352)

(54)

(810)

–

(126)

(1,436)

$ 102

$ 956

$ 1,854

$ 169

$ 1,160

$ 9

$ 675

$ 4,925

owners (Note 13)

accumulated depreciation

Translation difference

–

(2)

(5)

(2)

(4)

–

(3)

(16)

At 31 December 2021, cost, net of

$ 90

$ 825

$ 1,260

$ 93

$ 140

$ 7

$ 754

$ 3,169

accumulated depreciation

Assets under construction include prepayments to constructors and suppliers of property, plant and equipment of $55 million, $22 million and

$77 million as of 31 December 2021, 2020 and 2019, respectively.

Impairment losses were identified in respect of certain items of property, plant and equipment that were recognised as functionally obsolete or as

a result of the testing at the level of cash-generating units (Note 6).

No borrowing costs were capitalised during the period from 2019 to 2021.

Government Grants Related to Assets

The Group receives government grants in the USA and Canada. In 2021, the Group received $50 million from the Pueblo Urban Renewal Authority.

In return, the Group is required to comply with certain conditions relating to the operating activities of the entity, including timely completion of the rail

mill construction in the City of Pueblo. The total amount of the financing to be received from the Pueblo Urban Renewal Authority is $100 million.

In 2021, the Strategic Innovation Fund of Canada provided $7 million (2020: $10 million) to the Group as partial financing of undergoing major capital

projects at various Group’s facilities in Canada. The Group has committed to complying with certain conditions including timely completion of the

financed capital projects and maintaining determined employment levels. 50% of the financing received is repayable starting from April 2025.

The Group accounts for the non-repayable financing and the difference between the fair value of the repayable financing and the proceeds received as

government grants.

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9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

10. INTANGIBLE ASSETS OTHER THAN GOODWILL

Right-of-Use Assets

Intangible assets consisted of the following as of 31 December:

In 2019-2021, the movement in right-of-use assets was as follows:

US$ million

2021

2020

2019

Buildings

Cost:

and

Machinery and

Transport and

Customer relationships

$ 608

$ 686

$ 678

US$ million

Land

constructions

equipment

motor vehicles

Total

Water rights and environmental permits

At 1 January 2019, assets under finance leases,

Contract terms

$ 3

$ 1

$ 3

$ -

$ 7

cost, net of accumulated depreciation

Other

Newly recognised right-of-use assets

120

753

827

826

Total right-of-use assets at 1 January 2019

$ 3

$ 13

$ 43

$ 68

$ 127

Additions

Accumulated amortisation and impairment:

Purchase of right-of-use assets

(3)

(1)

(4)

Customer relationships

(562)

(617)

(567)

Depreciation charge

(1)

(7)

(22)

(30)

Water rights and environmental permits

(13)

Transfer to assets held for sale

(2)

Contract terms

(16)

(14)

(15)

Translation difference

At 31 December 2019,

Other

(36)

(45)

(46)

$ -

$ 11

$ 48

$ 56

$ 115

cost, net of accumulated depreciation

(627)

(689)

(641)

Additions

Disposals

(2)

$ 126

$ 138

$ 185

Depreciation charge

(2)

(8)

(19)

(29)

Impairment

(2)

Translation difference

(1)

(8)

(9)

As of 31 December 2021, 2020 and 2019, water rights with a carrying value of $44 million relating to the Long products cash-generating unit had

At 31 December 2020,

$ –

$ 9

$ 42

$ 31

$ 82

an indefinite useful life.

cost, net of accumulated depreciation

Additions

–

The movement in intangible assets was as follows:

Depreciation charge

–

(2)

(6)

(20)

(28)

Transfer to assets held for distribution to owners

–

(25)

Year ended 31 December 2021

At 31 December 2021,

$ –

$ 15

$ 36

$ 15

$ 66

cost, net of accumulated depreciation

Water rights and

Customer

environmental

Contract

US$ million

relationships

permits

terms

Other

Total

The liabilities related to the right-of-use assets are disclosed in Note 25.

At 31 December 2020, cost, net of accumulated amortisation

$ 69

$ 44

$ 6

$ 19

$ 138

Additions

–

Assets under Operating Leases

Amortisation charge

(23)

–

(2)

(7)

(32)

The Group acts as a lessor in some operating lease contracts. The carrying value of assets under operating leases at 31 December 2021, 2020 and

Transfer to assets held for distribution to owners

–

(4)

2019 was $18 million, $31 million and $66 million, respectively, the main part of which relates to railroad cars representing the right-of-use assets in

At 31 December 2021, cost, net of accumulated amortisation

$ 46

$ 44

$ 4

$ 32

$ 126

sublease.

Buildings

and

Machinery and Transport and

Year ended 31 December 2020

US$ million

Land

constructions

equipment

motor vehicles

Total

At 31 December 2021,

Water rights and

$ –

$ 5

$ 3

$ 10

$ 18

Customer

environmental

Contract

cost, net of accumulated depreciation

At 31 December 2020,

US$ million

relationships

permits

terms

Other

Total

$ -

$ 3

$ 1

$ 27

$ 31

cost, net of accumulated depreciation

At 31 December 2019,

At 31 December 2019, cost, net of accumulated amortisation

$ 111

$ 44

$ 9

$ 21

$ 185

$ 1

$ 5

$ 8

$ 52

$ 66

Additions

cost, net of accumulated depreciation

Amortisation charge

(27)

(2)

(6)

(35)

In 2021, 2020 and 2019, rental income amounted to $26 million, $25 million and $32 million, respectively, including $19 million, $19 million and

Impairment

(16)

$25 million, respectively, of income from subleasing of right-of-use assets.

Translation difference

(1)

(3)

At 31 December 2020, cost, net of accumulated amortisation

$ 69

$ 44

$ 6

$ 19

$ 138

At 31 December 2021, the undiscounted lease payments to be received under operating leases were as follows:

In more than

2022

2023

2024

2025

2026

Total

US$ million

5 years

Year ended 31 December 2019

Lease payments under operating leases

$ 13

$ 2

$ 14

$ 35

Water rights and

Customer

environmental

Contract

At 31 December 2020, the undiscounted lease payments to be received under operating leases were as follows:

US$ million

relationships

permits

terms

Other

Total

In more than

At 31 December 2018, cost, net of accumulated amortisation

$ 131

$ 44

$ 10

$ 21

$ 206

2021

2022

2023

2024

2025

Total

US$ million

5 years

Additions

Amortisation charge

Lease payments under operating leases

$ 22

$12

$ 2

$ 11

$ 51

(26)

(2)

(6)

(34)

Translation difference

At 31 December 2019, cost, net of accumulated amortisation

$ 111

$ 44

$ 9

$ 21

$ 185

At 31 December 2019, the undiscounted lease payments to be received under operating leases were as follows:

In more than

2020

2021

2022

2023

2024

Total

US$ million

5 years

Lease payments under operating leases

$ 25

$ 26

$ 15

$ 3

$ 20

$ 92

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11. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES (CONTINUED)

11. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

Streamcore

The Group accounted for investments in joint ventures and associates under the equity method.

The Group owns a 50% interest in Streamcore Limited (Cyprus), a joint venture established for the purpose of exercising joint control over facilities for

The movement in investments in joint ventures and associates was as follows:

scrap procurement and processing in Siberia, Russia.

The table below sets out Streamcore’s assets and liabilities as of 31 December:

US$ million

Timir

Streamcore

Other associates

Total

US$ million

2021

2020

2019

Investment at 31 December 2018

$ 17

$ 47

$ 10

$ 74

Property, plant and equipment

$ 30

$ 23

$ 25

Additional investments

Other non-current assets

–

Share of profit/(loss)

(1)

Inventories

135

Dividends paid

(2)

Accounts receivable

169

Translation difference

Total assets

334

217

129

Investment at 31 December 2019

$ 17

$ 63

$ 12

$ 92

Disposal of investments

(1)

Deferred income tax liabilities

Share of profit/(loss)

Current liabilities

207

108

Dividends paid

(1)

Total liabilities

208

109

Translation difference

(3)

(10)

(13)

Investment at 31 December 2020

$ 14

$ 54

$ 11

$ 79

Net assets

126

108

125

Additional investments

Net assets attributable to 50% ownership interest

$ 63

$ 54

$ 63

Share of profit/(loss)

Dividends paid

(3)

Investment at 31 December 2021

$ 14

$ 63

$ 23

$ 100

The table below sets out Streamcore’s income and expenses:

US$ million

2021

2020

2019

Timir Iron Ore Project

Revenue

$ 657

$ 385

$ 502

In April 2013, the Group acquired a 51% ownership interest in the joint venture with Alrosa for the development of 4 iron ore deposits in the southern

Cost of revenue

(619)

(367)

(478)

part of the Yakutia region in Russia. Under the joint venture agreement major operating and financial decisions are made by unanimous consent of

Other expenses, including income taxes

(20)

(16)

(10)

the Group and Alrosa, and no single venturer is in a position to control the activity unilaterally. Consequently, the Group accounts for its interest in Timir

Net profit

under the equity method.

Group’s share of profit of the joint venture

The Group’s consideration for this stake amounted to 4,950 million roubles ($159 million at the exchange rate as of the date of the transaction)

payable in instalments to 15 July 2014. The consideration was measured as the present value of the expected cash outflows. Later the payment

schedule was changed by extending the payment period until 2019. From the dates of the amendments the Group incurred interest charges on

the unpaid liability.

12. DISPOSAL GROUPS HELD FOR SALE

In 2019, the Group paid 480 million roubles ($8 million) of purchase consideration and $1 million of interest charges. Previously, the Group paid the

principal of 4,470 million roubles ($113 million).

The table below demonstrates the carrying values of assets and liabilities, at the dates of disposal, of the subsidiaries and other business units

disposed of during 2019-2021.

Subsequently the investment in Timir was impaired due to postponement of production and additionally decreased as a result of devaluation of the

Russian rouble.

US$ million

2021

2020

2019

The table below sets out Timir’s assets and liabilities as of 31 December:

Property, plant and equipment

$ –

$ -

$ 39

Goodwill

–

US$ million

2021

2020

2019

Other non-current assets

–

Mineral reserves and property, plant and equipment

$ 46

$ 54

Inventories

–

Other non-current assets

Accounts receivable

–

Total assets

Cash and cash equivalents

–

Total assets

–

168

Non-current liabilities

Current liabilities

–

Employee benefits

–

Total liabilities

Other non-current liabilities

–

Current liabilities

–

110

Net assets

Total liabilities

–

130

Non-controlling interests

–

Net assets attributable to 51% ownership interest

$ 14

$ 17

Net assets

$ –

$ -

$38

In 2021, 2020 and 2019, Timir’s statement of operations included only other income and expenses amounting to $Nil, $Nil and $(1) million,

respectively.

At 31 December 2021, 2020 and 2019 Timir owed to the Group $10 million, $9 million and $9 million, respectively, which were recorded within

the receivables from related parties caption in non-current assets in 2021 and in current assets in 2020 and 2019. The amounts represent a loan

bearing interest equal to the Bank of Russia key rate, which ranged from 4.25% to 8.5% per annum in 2021. In 2019-2020, the loan bore interest at

a fixed rate of 6.45% per annum.

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12. DISPOSAL GROUPS HELD FOR SALE (CONTINUED)

The net assets of disposal groups sold in 2019-2021 related to the following reportable segments:

Strategic Minerals Corporation

US$ million

2021

2020

2019

In 2017, the Group sold Strategic Minerals Corporation, which owns a vanadium business in the Republic of South Africa. According to an agreement

the purchaser is obliged to pay earn-out payments to the Group until 31 December 2025, if benchmark prices for ferro-vanadium are met. In 2021 and

Assets classified as held for sale

$ –

$ -

$ 168

2020, the Group received $2 million and $1 million, respectively, of earn-out payments.

Steel

–

155

Coal

–

Other operations

–

Liabilities directly associated with assets classified as held for sale

–

130

13. DISCONTINUED OPERATIONS

Steel

–

124

Coal

In 2020, the Board of directors discussed the potential demerger of a group of coal companies consolidated under Raspadskaya (“Raspadskaya

Group”), which constitutes a major part of the coal segment. Raspadskaya Group includes coal mines, coal processing plants and supporting services

Other operations

–

of Raspadskaya, Yuzhkuzbassugol and Mezhegeyugol. The Raspadskaya Group’s business meets the criteria of a major business line, consequently,

the potential demerger should be treated as discontinued operations, if all criteria for the disposal group classified as held for distribution to owners

Cash flows on disposal of subsidiaries and other business units were as follows:

are met.

US$ million

2021

2020

2019

In January 2021, the Board of directors agreed that the management should proceed with investigating the options for the potential demerger of the

Raspadskaya Group. During 2021 the Board of directors and management conducted a comprehensive review of the rationale and feasibility of the

Net cash disposed of with subsidiaries

$ –

$ -

$ (47)

demerger to ensure that it serves the long-term interests of the Group’shareholders, employees, clients and other stakeholders.

Cash received

Tax and transaction costs paid

–

(1)

(8)

In December 2021 the plan of the potential demerger was finalised and on 14 December 2021, the Board of directors approved the proposed

demerger. The plan included, among other things, a voting for the relevant resolutions at the General Meeting scheduled for 11 January 2022 and

Net cash inflow

a creation of sufficient distributable reserves, which requires the issue of bonus shares and subsequent capital reduction through the cancellation of

bonus shares. Such capital reduction requires the UK Court’s approval.

The disposal groups sold during 2019-2021 and cash receipts relating to the disposed assets are described below.

On 15 December 2021 a circular containing the details of the transaction was published for the review of shareholders, together with a notice of

General Meeting. The overall reaction in late 2021 of the investment community to the proposal was positive. Three major independent agencies,

Stratcor Inc.

which are highly rated by non-controlling shareholders, supported the demerger and gave the recommendation to vote for it, ahead of 31 December

On 11 October 2019, the Group sold its wholly-owned subsidiary EVRAZ Stratcor Inc. to a third party for cash consideration of 1 US dollar.

2021. The Company hired an independent consultant to evaluate the potential outcome of the shareholders’ voting on the demerger. In late December

EVRAZ Stratcor Inc. is a vanadium producer located in the USA, it was included in the steel segment of the Group’s operations. The Group recognised

2021 the consultant prepared and presented to management and the Audit Committee 3 potential voting scenarios using the available data and

a $19 million gain on sale of the subsidiary within the Gain/(loss) on disposal groups classified as held for sale caption of the consolidated statement

historical voting patterns. In all these scenarios the threshold required for the approval of the demerger was expected to be overcome.

of operations. Cash disposed with the subsidiary amounted to $Nil.

Based on these facts and circumstances management concluded that Raspadskaya Group met the criteria for classification as disposal groups held for

distribution to owners at 31 December 2021. Consequently, the classification, measurement and presentation requirements of IFRS 5 “Non-current

Evraztrans Ukraine

Assets Held for Sale and Discontinued Operations” were applied in the consolidated financial statements as at, and for the year ended, 31 December

2021.

On 15 November 2019, the Group sold its wholly-owned subsidiary Evraztrans Ukraine to a third party for cash consideration of $8 million.

Evraztrans Ukraine is a railway forwarder located in Ukraine, it was included in 2 segments of the Group’s operations - other operations and steel.

On 11 January 2022, approximately 79.41% of EVRAZ plc’s shareholders took part in the voting at the General Meeting. Almost 100% of the voters

approved the demerger of Raspadskaya Group. The demerger is planned to be executed in the first half of 2022 through an interim in specie

The Group recognised a $(36) million loss on sale of the subsidiary, including $(37) million of cumulative exchange losses reclassified from other

distribution of Raspadskaya’s shares quoted on the Moscow Stock Exchange to EVRAZ plc’s shareholders. Other subsequent developments are

comprehensive income to the consolidated statement of operations. The result was included in the Gain/(loss) on disposal groups classified as held for

disclosed in Note 33.

sale caption of the consolidated statement of operations. Cash disposed with the subsidiary amounted to $Nil. At 31 December 2019, the sale

consideration was unsettled. In 2020, it was fully received in cash.

Yartsevo Rolling Mill

Profit/(loss) from discontinued operations shown as a single amount in the consolidated statements of operations comprised of the following

components:

Historically, the Group was one of major creditors of a steel-rolling mill in Yartsevo located in the Smolensk region of Russia. The mill went into

bankruptcy proceedings and in the 1^st half of 2019 the Group impaired the non-current financial asset relating to the mill, recognising a $56 million

US$ million

2021

2020

2019

loss, which was recorded in the Impairment of non-current financial assets caption of the consolidated statement of operations. At 30 June 2019,

Post-tax profit/(loss) of discontinued operations

$ (409)

$ (511)

$ (717)

the resulting carrying value of the non-current financial asset was $21 million. In November 2019, the Group acquired property, plant and equipment

Transaction costs directly attributable to the distribution of Raspadskaya Group

(8)

and inventory of this rolling mill from the auction undertaken in the course of the bankruptcy proceedings for $22 million with the purpose of

subsequent sale to a third party. The proceeds from the sale were used by the bankruptcy administrator to partially repay the debts of the mill,

(417)

(511)

(717)

the majority of which were the debts to the Group. Upon acquisition the acquired non-current asset was classified as a disposal group held for

sale. Shortly after the acquisition the Group sold the mill for cash consideration of $66 million to a third-party acquirer. The gain on sale before tax

amounting to $44 million was included in the Gain/(loss) on disposal groups classified as held for sale caption of the consolidated statement of

operations. Income tax paid on a resale margin amounted to $8 million. At the moment of the acquisition the Group did not have any arrangement for

the sale of the mill to a new purchaser, therefore, the purchase and sale transactions were not treated as linked.

Palini e Bertoli

On 2 December 2019, the Group sold its wholly-owned subsidiary EVRAZ Palini e Bertoli to a third party for cash consideration of $36 million.

EVRAZ Palini e Bertoli, an Italian rolling mill, was included in the steel segment of the Group’s operations.

The Group recognised a $2 million gain on sale of the subsidiary, including $(5) million of cumulative exchange losses reclassified from other

comprehensive income to the consolidated statement of operations and $(1) of transaction costs. The result was included in the Gain/(loss) on

disposal groups classified as held for sale caption of the consolidated statement of operations. Cash disposed with the subsidiary amounted to

$47 million. At 31 December 2019, $3 million of the sale consideration was unsettled. In 2020, it was fully received in cash.

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13. DISCONTINUED OPERATIONS (CONTINUED)

Raspadskaya Group Disclosures

Raspadskaya Group Disclosures (continued)

The statements of operations of the discontinued operations are presented below. The consolidated results of Raspadskaya Group are divided into

The cash flows of Raspadskaya Group were as follows:

transactions with external parties, which are classified as discontinued operations, and intra-group transactions between continuing and discontinued

US$ million

2021

2020

2019

operations, which were eliminated in EVRAZ plc’s consolidated financial statements.

Discontinued

Intra-group

Discontinued

Intra-group

Discontinued

Intra-group

Total

operations

US$ million

2021

2020

2019

Discontinued

Intra-group

Discontinued

Intra-group

Discontinued

Intra-group

Total

operations

Net cash provided by/(used in) operating

$ 869

$ (239)

$ 1,108

$ 103

$ (334)

$ 437

$ 947

$ (502)

$ 1,449

activities

Revenue

Net cash provided by/(used in) investing

(1,121)

(216)

(905)

113

(142)

255

(272)

(230)

(42)

activities

Sale of goods

$ 2,092

669

$ 1,423

$ 1,093

$ 292

$ 801

$ 1,663

$ 452

$ 1,211

Net cash provided by/(used in) financing

Rendering of services

324

(249)

(228)

(54)

(174)

(176)

(49)

(127)

activities

2,098

673

1,425

1,105

302

803

1,673

461

1,212

Cost of revenue

(752)

(685)

(67)

(775)

(720)

(55)

(781)

(719)

(62)

The major classes of assets and liabilities of a disposal group held for distribution to owners, which were measured at the lower of carrying amount and

Gross profit

1,346

(12)

1,358

330

(418)

748

892

(258)

1,150

fair value less costs of distribution, are presented in the table below. These assets and liabilities do not include balances of Raspadskaya Group

receivable from or payable to EVRAZ plc and its other subsidiaries as they were eliminated on consolidation.

Selling and distribution costs

(82)

(80)

(2)

(52)

(99)

US$ million

31 December 2021

General and administrative expenses

(74)

(64)

(10)

(66)

(59)

(7)

(82)

(75)

(7)

Social and social infrastructure maintenance

Non-current assets

(5)

–

(2)

(3)

expenses

Property, plant and equipment

$ 1,436

Gain/(loss) on disposal of property, plant and

Intangible assets other than goodwill

(1)

–

(3)

equipment, net

Deferred income tax assets

Impairment of non-financial assets

(8)

–

(107)

Other non-current assets

Foreign exchange gains/(losses), net

–

112

(30)

1,451

Other operating income

–

Current assets

Other operating expenses

(22)

(19)

(3)

(22)

(12)

Inventories

104

Profit from operations

1,181

(162)

1,343

306

(435)

741

559

(584)

1,143

Accounts receivable and other current assets

Taxes receivable

117

Interest income

Cash and cash equivalents

400

Interest expense

(31)

(20)

(11)

(19)

(13)

(6)

(17)

(16)

(1)

718

Gain/(loss) on financial assets and liabilities,

(1)

–

net

Assets of disposal groups classified as held for distribution to owners

2,169

Other non-operating gains/(losses), net

–

Profit/(loss) before tax

1,154

(179)

1,333

297

(447)

744

552

(598)

1,150

Non-current liabilities

Long-term loans

400

Income tax expense

(230)

–

(64)

(119)

Deferred income tax liabilities

Employee benefits

Net profit/(loss)

924

(409)

1,333

233

(511)

744

433

(717)

1,150

Provisions

105

Lease liabilities

Net profit/(loss) attributable to:

Other non-current liabilities

Equity holders of the parent entity

910

(423)

1,333

216

(528)

744

398

(752)

1,150

668

Non-controlling interests

–

Current liabilities

924

(409)

1,333

$ 233

$ (511)

$ 744

$ 433

$ (717)

$ 1,150

Trade and other payables

123

Income tax and other taxes payable

197

Provisions

Intra-group revenues of Raspadskaya Group consisted of the following:

Lease liabilities

US$ million

2021

2020

2019

Other current liabilities

364

Revenues from sales to segments other than the Coal segment - inter-segment

$ 766

$ 538

$ 721

sales (Note 3)

Liabilities directly associated with disposal groups classified as held for

Revenues from sales to the Coal segment - intra-segment sales

659

265

491

1,032

distribution to owners

$ 1,425

$ 803

$ 1,212

Supplementary disclosures illustrating the assets, liabilities and financial results of the Group excluding Raspadskaya Group are provided in Note 35.

228

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Additional information

ANNUAL REPORT & ACCOUNTS 2021

13. DISCONTINUED OPERATIONS (CONTINUED)

14. OTHER NON-CURRENT ASSETS

Re-presentation of Consolidated Statement of Operations of EVRAZ plc

Other non-current assets consisted of the following as of 31 December:

The Group’s consolidated statement of operations was prepared so that the discontinued operations would be excluded from the consolidated

Non-current Financial Assets

amounts and presented as a single amount. The comparatives in the statement of operations were re-presented in the same way. No adjustments to

comparative data were made for the assets and liabilities in the statement of financial position. The consolidated amounts below represent the income

US$ million

2021

2020

2019

statements as if Raspadskaya Group had not met the criteria of a discontinued operation at 31 December 2021.

Derivatives not designated as hedging instruments (Note 25)

$ 2

$ 17

US$ million

2021

2020

2019

Trade and other receivables

Less:

Consolidated

Less:

Consolidated

Less:

Loans receivable

–

Consolidated discontinued

As reported

(as previously

discontinued

As reported

(as previously

discontinued

As reported

Restricted deposits

operations

reported)

operations

reported)

operations

Continuing operations

$ 18

$ 26

$ 40

Revenue

Sale of goods

$ 13,893

(669)

$ 13,224

$ 9,514

$ (292)

$ 9,222

$ 11,569

$ (452)

$ 11,117

Rendering of services

266

(4)

262

240

(10)

230

336

(9)

327

Other Non-current Assets

14,159

(673)

13,486

9,754

(302)

9,452

11,905

(461)

11,444

US$ million

2021

2020

2019

Cost of revenue

(8,139)

685

(7,454)

(6,712)

720

(5,992)

(8,273)

719

(7,554)

Safety stock inventories

$ 22

$ 28

$ 29

Gross profit

6,020

6,032

3,042

418

3,460

3,632

258

3,890

Defined benefit asset (Note 23)

Income tax receivable

Selling and distribution costs

(907)

(827)

(840)

(788)

(966)

(867)

Other

General and administrative expenses

(617)

72*

(545)

(552)

(493)

(611)

(536)

Social and social infrastructure maintenance

$ 62

$ 45

$ 55

(35)

(30)

(31)

(29)

(26)

(23)

expenses

Gain/(loss) on disposal of property, plant and

(8)

(7)

(3)

equipment, net

Impairment of non-financial assets

(30)

(22)

(310)

(3)

(313)

(442)

107

(335)

15. INVENTORIES

Foreign exchange gains/(losses), net

(23)

408

(112)

296

(341)

(311)

Other operating income

(4)

(3)

Inventories consisted of the following as of 31 December:

Other operating expenses

(64)

(45)

(65)

(43)

(54)

(42)

US$ million

2021

2020

2019

Profit from operations

4,413

170

4,583

1,671

435

2,106

1,217

584

1,801

Raw materials and spare parts

$ 686

$ 542

$ 811

Interest income

(1)

Work-in-progress

237

136

185

Interest expense

(232)

(212)

(328)

(315)

(336)

(320)

Finished goods

642

407

484

Share of profits/(losses) of joint ventures and

–

$ 1,565

$ 1,085

$ 1,480

associates

Impairment of non-current financial assets

–

(56)

Gain/(loss) on financial assets and liabilities,

All respective inventory lines presented above are shown at lower of cost and net realisable value. As of 31 December 2021, 2020 and 2019, the net

(21)

(20)

(71)

net

realisable value allowance was $24 million, $29 million and $39 million, respectively.

Gain/(loss) on disposal groups classified as

–

As of 31 December 2021, 2020 and 2019, certain items of inventory with an approximate carrying amount of $556 million, $414 million and

held for sale, net

$512 million, respectively, were pledged to banks as collateral against loans provided to the Group (Note 22).

Other non-operating gains/(losses), net

(3)

–

(1)

Profit before tax

4,184

187

4,371

1,295

447

1,742

902

598

1,500

Income tax expense

(1,077)

230

(847)

(437)

(373)

(537)

119

(418)

16. TRADE AND OTHER RECEIVABLES

Net profit from continuing operations

3,107

417

3,524

858

511

1,369

365

717

1,082

Net loss from discontinued operations

–

(417)

(511)

(717)

Trade and other receivables consisted of the following as of 31 December:

Net profit

3,107

–

3,107

858

365

US$ million

2021

2020

2019

Trade accounts receivable

$ 612

$ 345

$ 481

Net profit from continuing operations

Other receivables

attributable to:

657

415

580

Equity holders of the parent entity

3,034

431

3,465

848

528

1,376

326

752

1,078

Allowance for expected credit losses

(31)

(37)

(46)

Non-controlling interests

(14)

(17)

(7)

(35)

3,107

417

3,524

858

511

1,369

365

717

1,082

$ 626

$ 378

$ 534

Net loss from discontinued operations

attributable to:

Equity holders of the parent entity

–

(431)

(528)

(752)

Ageing analysis and movement in allowance for expected credit losses are provided in Note 28.

Non-controlling interests

–

(417)

(511)

(717)

Net profit attributable to:

Equity holders of the parent entity

3,034

–

3,034

848

326

Non-controlling interests

–

$ 3,107

$ –

$ 3,107

$ 858

$ -

$ 858

$ 365

$ -

$ 365

*including $8 million of transaction costs directly attributable to the distribution of Raspadskaya Group

Supplementary disclosures illustrating the assets, liabilities and financial results of the Group excluding Raspadskaya Group are provided in Note 35.

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Additional information

ANNUAL REPORT & ACCOUNTS 2021

17. RELATED PARTY DISCLOSURES

17. RELATED PARTY DISCLOSURES (CONTINUED)

Related parties of the Group include associates and joint venture partners, key management personnel and other entities that are under the control or

Yuzhny GOK, an ore mining and processing plant, is an associate of an entity, which is under common control with EVRAZ plc. The Group sold steel

significant influence of the key management personnel and the Group’s ultimate controlling parties. In considering each possible related party

products to Yuzhny GOK and purchased sinter from the entity. In 2019 and 2018, the Group recognised dividend income from Yuzhny GOK amounting

relationship, attention is directed to the substance of the relationship, not merely the legal form.

to $3 million and $4 million, respectively, within the other non-operating gains/(losses) caption in the consolidated statement of operations. All these

dividends were received by the Group in 2019.

Amounts owed by/to related parties, included in current and non-current assets and liabilities, at 31 December were as follows:

The transactions with related parties were based on prevailing market terms.

Amounts due from

Amounts due to

related parties

US$ million

2021

2020

2019

2021

2020

2019

Compensation to Key Management Personnel

Key management personnel include the following positions within the Group:

Loans

Timir (Note 11)

$ 10

$ 9

$ –

$ -

•

directors of the Company,

•

vice presidents,

Sale of investments

•

senior management of major subsidiaries.

Streamcore

–

Trade balances

In 2021, 2020 and 2019, key management personnel totalled 28, 28 and 30 people, respectively. Total compensation to key management personnel

Nakhodka Trade Sea Port

–

were included in general and administrative expenses in the consolidated statement of operations and consisted of the following:

Vtorresource-Pererabotka

US$ million

2021

2020

2019

Other entities

Salary

$ 12

$ 13

$ 14

Less: allowance for expected credit losses

–

Performance bonuses

Social insurance contributions

$ 44

$ 10

$ 50

$ 38

$ 19

Share-based payments (Note 21)

Termination benefits

In 2019-2021, the Group did not recognise any expense or income in relation to the expected credit losses of related parties.

$ 34

$ 31

$ 38

Other disclosures on directors' remuneration required by Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts & Reports)

Transactions with related parties were as follows for the years ended 31 December:

regulations 2008 are included in the Directors' Remuneration Report.

Sales to

Purchases from

related parties

US$ million

2021

2020

2019

2021

2020

2019

18. OTHER TAXES RECOVERABLE

Allegro

$ 5

$ -

$ 4

$ –

$ -

Genalta Recycling Inc.

–

Taxes recoverable consisted of the following as of 31 December:

Nakhodka Trade Sea Port

–

US$ million

2021

2020

2019

Vtorresource-Pererabotka

653

376

498

Yuzhny GOK

–

Input VAT

$ 39

$ 45

$ 73

Other entities

Other taxes

132

133

102

$ 171

$ 178

$ 175

$ 23

$ 11

$ 39

$ 733

$ 463

$ 658

In addition to the disclosures presented in this note, some of the balances and transactions with related parties are disclosed in Note 11.

Input VAT, representing amounts payable or paid to suppliers, is recoverable from the tax authorities via offset against VAT payable to the tax

authorities on the Group’s revenue or direct cash receipts from the tax authorities. Management periodically reviews the recoverability of the balance of

Allegro is a Group’s joint venture, which will produce railway wheels once the current construction of plant is completed. In 2021, the Group sold

input value added tax and believes it is fully recoverable within one year.

constructon steel products to Allegro. In 2021, the Group invested $10 million in cash in the share capital of Allegro. In addition, the Group issued

a guarantee in respect of the bank loan received by Allegro (Note 30).

Genalta Recycling Inc. is a joint venture of a Canadian subsidiary of the Group. It sells scrap metal to the Group.

19. CASH AND CASH EQUIVALENTS

Lanebrook Limited (Cyprus) is an entity under common control with EVRAZ plc. The Group had other receivables from Lanebrook Limited, amounting to

$32 million, in connection with the acquisition of a 1% ownership interest in Yuzhny GOK in 2008. In 2019, these receivables were settled by cash.

Cash and cash equivalents, mainly consisting of cash at banks, were denominated in the following currencies as of 31 December:

Nakhodka Trade Sea Port (“NTSP”) is an entity under common control with EVRAZ plc. NTSP is located at the Far East of Russia, in a bay of the Sea

US$ million

2021

2020

2019

of Japan, and it renders handling services to the Group.

US dollar

$ 884

$ 1,461

$ 774

Streamcore Limited (“Streamcore”) is a joint venture of the Group (Note 11). In 2019, the Group received from Streamcore an advance payment for the

Euro

484

sale of another associate of the Group, RVK Limited, to Streamcore for $5 million. At the end of 2019 this transaction was not completed. In 2020, the

Russian rouble

124

134

share in RVK Limited was transferred to Streamcore and the Group recognised a $5 million gain on sale, which was recorded within the Other non-

Other

operating expense caption of the consolidated statement of operations.

$ 1,027

$ 1,627

$ 1,423

Vtorresource-Pererabotka is a subsidiary of Streamcore, the Group’s joint venture (Note 11). It sells scrap metal to the Group and provides scrap

processing and other services. In 2021, 2020 and 2019, the purchases of scrap metal from Vtorresource-Pererabotka amounted to $621 million

(1,618,871 tonnes), $344 million (1,378,211 tonnes) and $424 million (1,640,750 tonnes), respectively. Vtorresource-Pererabotka also provides to

At 31 December 2021, the assets of disposal groups classified as held for distribution to owners included cash amounting to $400 million.

the Group services, such as scrap cutting, slag processing, cleaning of slag ladles. At 31 December 2021, 2020 and 2019, $187 million, $131 million

and $156 million payable by the Group to Vtorresource-Pererabotka were classified as trade payables to third parties as Vtorresource-Pererabotka sold

its receivables under factoring contracts to several banks with no recourse (Note 26). In addition, at 31 December 2020, $10 million receivable by

the Group from Vtorresource-Pererabotka was classified as trade receivables from third parties due to factoring arrangements.

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19. CASH AND CASH EQUIVALENTS (CONTINUED)

20. EQUITY (CONTINUED)

In addition, the Group had bank deposits with restrictions on their use, which are presented within the Other current financial assets caption of

Dividends

the consolidated statement of financial position. They include either cash advances received from customers, which cannot be used by the Group until

Dividends declared by EVRAZ plc during 2019-2021 were as follows:

fulfilment of contracts, or cash blocked under guarantees for tenders and guaranteed quality of products.

US$ million

2021

2020

2019

To holders

Dividends declared,

Restricted deposits

$ 12

$ 2

$ 4

Date of declaration

registered at

US$ million

US$ per share

27/02/2019

08/03/2019

577.3

0.40

07/08/2019

16/08/2019

508.2

0.35

26/02/2020

06/03/2020

580.8

0.40

20. EQUITY

05/08/2020

21/08/2020

291.3

0.20

24/02/2021

12/03/2021

437.1

0.30

Share Capital

15/04/2021

28/05/2021

291.7

0.20

31 December

04/08/2021

13/08/2021

802.3

0.55

Number of shares

2021

2020

2019

14/12/2021

24/12/2021

291.7

0.20

Ordinary shares, issued and fully paid

1,506,527,294

21. SHARE-BASED PAYMENTS

Treasury Shares

In 2019-2021, the Group had a number of Incentive Plans under which certain senior executives and employees (“participants”) could be awarded

31 December

shares of the parent company upon vesting. These plans were adopted on 26 October 2015, 15 September 2016, 25 September 2017, 26 September

Number of shares

2021

2020

2019

2018, 25 September 2019, 28 September 2020 and 20 September 2021.

Treasury shares

47,837,582

49,654,691

54,620,233

The vesting under Incentive Plans adopted before 2017 does not depend on the achievement of any performance conditions. The new Plans adopted

in 2017 and later provide that the number of shares transferred to participants upon vesting is dependent on the Group’s performance versus

In 2015, EVRAZ plc repurchased 108,458,508 of its own shares ($336 million). Since that time treasury shares were used only in the Company’s

a selected group of peers. EBITDA and total shareholder return (“TSR”) are used as the key performance indicators. If the Group’s EBITDA achieves

Incentive Plans for employees (Note 21).

a specific ranking in the peer group (not lower than the 7^th place in terms of EBITDA dynamics), then 50% of the shares of a particular tranche become

vested, otherwise they are forfeited. If the Group’s TSR is not lower than the 7^th place in the peer group, then the other 50% of the shares of a particular

In 2021, 2020 and 2019, 1,817,109 shares, 4,965,542 shares and 8,556,954 shares, respectively, were transferred to the participants of Incentive

tranche become vested, otherwise they are forfeited. Subject to the resolution of the Remuneration Committee, EBITDA can become the only metric in

Plans. The cost of treasury shares transferred to the participants of Incentive Plans, amounted to $6 million, $15 million and $27 million in 2021,

the performance evaluation (in case if the net debt to EBITDA ratio is equal to 3 or higher). The TSR-related vesting condition was considered by the

2020 and 2019, respectively.

Group as a market condition. As such, it was included in the estimation of the fair value of the granted shares and will not be subsequently revised.

The vesting condition related to EBITDA was not taken into account when estimating the fair value of the share options at the grant date. Instead, this

is taken into account by adjusting the share-based expense based on the number of share options that eventually vest.

Earnings per Share

The vesting date for each tranche occurs within the 90-day period after announcement of the annual results. The expected vesting dates of the awards

Earnings per share are calculated by dividing the net income attributable to ordinary shareholders by the weighted average number of ordinary shares

outstanding at 31 December 2021 are presented below:

in issue during the period. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders by

the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be

issued on the conversion of all the potential dilutive ordinary shares into ordinary shares.

Number of Shares of EVRAZ plc

Total

Incentive Plan 2021

Incentive Plan 2020

Incentive Plan 2019

Incentive Plan 2018

The following reflects the income and share data used in the basic and diluted earnings per share computations:

March 2022

2,650,867

493,793

909,289

621,163

626,622

2021

2020

2019

March 2023

2,478,996

493,793

1,363,942

621,261

March 2024

2,104,643

740,677

1,363,966

Weighted average number of ordinary shares outstanding during the period

1,458,027,587

1,455,054,617

1,448,789,048

March 2025

740,676

Effect of dilution: share options

6,858,318

7,949,696

11,996,310

Weighted average number of ordinary shares adjusted for the effect of dilution

1,464,885,905

1,463,004,313

1,460,785,358

7,975,182

2,468,939

3,637,197

1,242,424

626,622

Net profit for the year attributable to equity holders of the parent, US$ million

$ 3,034

$ 848

$ 326

The plans are administered by the Board of Directors of EVRAZ plc. The Board of Directors has the right to accelerate vesting of the grant. In the event

of which net profit from continuing operations (Note 13)

3,465

1,376

1,078

of a participant’s employment termination, unless otherwise determined by the Board or by a decision of the authorised person, a participant loses

of which net loss from discontinued operations (Note 13)

(431)

(528)

(752)

the entitlement for the shares that were not awarded up to the date of termination.

Earnings/(losses) per share:

There have been no modifications or cancellations to the plans during 2019-2021.

from continuing operations

The Group accounted for share-based compensation at fair value pursuant to the requirements of IFRS 2 “Share-based Payment”. The weighted

- basic

$ 2.38

$ 0.94

$ 0.74

average fair value of share-based awards granted in 2021, 2020 and 2019 was $5.76, $3.23 and $4.25 per share, respectively. The fair value of

- diluted

$ 2.37

$ 0.94

$ 0.73

these awards was estimated at the date of grant and measured at the market price of the shares of the parent company reduced by the present value

of dividends expected to be paid during the vesting period. The following inputs, including assumptions, were used in the valuation of Incentive Plans,

from discontinued operations

which were effective during 2018-2020:

- basic

$ (0.30)

$ (0.36)

$ (0.51)

- diluted

$ (0.30)

$ (0.36)

$ (0.51)

Incentive Plan

2021

2020

2019

2018

2017

2016

2015

from continuing and discontinued operations

Dividend yield (%)

1.7

- 2.25

3.2

- 4.1

2.3

- 3.0

1.8

- 2.3

2.1

- 2.9

n/a

7.3

- 9.1

- basic

$ 2.08

$ 0.58

$ 0.23

Expected life (years)

0.5

- 3.5

0.5

- 3.5

0.5

- 3.5

0.5

- 3.5

0.5

- 3.5

0.5

- 3.5

0.6

- 3.6

- diluted

$ 2.07

$ 0.58

$ 0.22

Market prices of the shares of

EVRAZ plc at the grant dates

$7.73

$4.31

$5.75

$7.36

$3.86

$1.73

$1.36

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Additional information

ANNUAL REPORT & ACCOUNTS 2021

21. SHARE-BASED PAYMENTS (CONTINUED)

22. LOANS AND BORROWINGS (CONTINUED)

The following table illustrates the number of, and movements in, share-based awards during the years.

The movement in loans and borrowings was as follows:

Number of shares

2021

2020

2019

US$ million

2021

2020

2019

Outstanding at 1 January

9,922,485

10,771,774

17,755,977

1 January

$ 4,837

$ 4,739

$ 4,563

Granted during the year

2,468,939

5,100,822

2,578,803

Cash changes:

Forfeited during the year

(2,599,133)

(984,569)

(1,006,052)

Cash proceeds from bank loans and notes, net of debt issues costs

2,325

1,218

2,805

Vested and exercised during the year

(1,817,109)

(4,965,542)

(8,556,954)

Repayment of bank loans and notes, including interest

(3,403)

(1,304)

(3,035)

Outstanding at 31 December

7,975,182

9,922,485

10,771,774

Net proceeds from/(repayment of) bank overdrafts and credit lines, including

(1)

(25)

interest

The weighted average share price at the dates of exercise was $9.46, $2.97 and $7.21 in 2021, 2020 and 2019, respectively. The weighted average

Covenants reset charges

(10)

remaining contractual life of the share-based awards outstanding as of 31 December 2021, 2020 and 2019 was 1.4, 1.4 and 1.1 years, respectively.

Non-cash changes:

In the years ended 31 December 2021, 2020 and 2019, the expense arising from the equity-settled share-based compensations was as follows:

Interest and other charges expensed relating to continuing operations (Note 7)

188

291

Interest and other charges expensed relating to discontinued operations (Note 7)

US$ million

2021

2020

2019

Accrual of premiums and other charges on early repayment of borrowings

Expense arising from equity-settled share-based payment transactions

$ 12

$ 11

$ 13

(Note 7)

Transfer to disposal groups held for distribution (Note 13)

(400)

Effect of exchange rate changes

(12)

(82)

22. LOANS AND BORROWINGS

31 December

$ 3,541

$ 4,837

$ 4,739

The Group had the following loans and borrowings as of 31 December:

Pledged Assets

2021

2020

2019

The Group’s pledged assets at carrying value included the following at 31 December:

Non-

US$ million

Total

current

Current

Total

current

Current

Total

current

Current

US$ million

2021

2020

2019

Bank loans

$ 1,756

$ 1,697

$ 59

$ 1,550

$ 1,506

$ 44

$ 1,342

$ 1,300

$ 42

Property, plant and equipment

$ 55

$ 47

$ 72

Other loans

Inventory

556

414

512

US dollar-denominated

8.25% notes due 2021

–

735

750

6.75% notes due 2022

–

500

Issuer Substitution

5.375% notes due 2023

750

–

750

5.25% notes due 2024

700

–

700

On 13 March 2019, EVRAZ plc assumed the liabilities of Evraz Group S.A. as the issuer of all outstanding US dollar-denominated notes with the total

nominal value of $2,700 million.

Rouble-denominated

12.95% rouble bonds due 2019

–

12.60% rouble bonds due 2021

–

203

242

Issue of Notes and Bonds

7.95% rouble bonds due 2024

269

–

271

323

Unamortised debt issue costs

(17)

–

(16)

(18)

In April 2019, EVRAZ plc issued 5.25% US dollar-denominated notes due 2024 in the amount of $700 million. The proceeds from the issue of

Interest payable

–

the notes were used to finance the purchase of 6.50% notes due 2020 at the tender offer in April 2019 and make whole call in May 2019.

$ 3,541

$ 3,440

$ 101

$ 4,837

$ 3,759

$ 1,078

$ 4,739

$ 4,599

$ 140

In August 2019, EvrazHolding Finance, the Group’s subsidiary, issued 7.95% rouble-denominated bonds due 2024 in the amount of 20,000 million

roubles ($317 million at the exchange rate at the date of the transaction).

At 31 December 2021, the borowings relating to Raspadskaya Group amounted to $400 million of long-term loans. In the statement of financial

position at 31 December 2021 they were included in liabilities directly associated with disposal groups classified as held for distribution to owners

Repurchase of Notes and Bonds

(Note 13).

In January and March 2021, the Group fully settled its 8.25% notes and 12.6% rouble-denominated bonds, respectively, which were due in 2021.

The average effective annual interest rates were as follows at 31 December:

There was no gain or loss on these transactions.

Long-term borrowings

Short-term borrowings

In addition, in June and August 2021 the Group partially repurchased the 6.75% notes, which were due in 2022, and in October 2021 fully settled the

2021

2020

2019

2021

2020

2019

remaining liabilities under these notes, which resulted in a $9 million loss included in the Gain/(loss) on financial assets and liabilities caption of

the consolidated statement of operations.

US dollar

3.73%

4.76%

5.74%

–

8.00%

3.31%

Russian rouble

7.80%

7.22%

9.94%

–

12.59%

7.83%

In November 2020, the Group partially repurchased its 8.25% notes due 2021 ($15 million). There was no gain or loss on the transaction.

Euro

2.23%

2.39%

0.54%

1.03%

0.70%

In April and May 2019, the Group fully settled its 6.50% notes due 2020 ($700 million). The premium over the carrying value on the repurchase and

Canadian dollar

2.56%

4.08%

–

other costs relating to the transaction in the total amount of $26 million were charged to the Gain/(loss) on financial assets and liabilities caption of

the consolidated statement of operations.

The liabilities are denominated in the following currencies at 31 December:

In June 2019, the Group fully settled its 12.95% rouble bonds due 2019, there was no gain or loss on this transaction. Upon repayment of these

US$ million

2021

2020

2019

bonds, the related swap contracts matured and the Group recycled $33 million of the accumulated unrecognised gains on cash flow hedges from other

US dollar

$ 3,186

$ 3,993

$ 4,027

comprehensive income to the statement of operations.

Russian rouble

346

761

586

Canadian dollar

120

Compliance with Financial Covenants

Euro

Some of the loan agreements and terms and conditions of notes provide for certain covenants in respect of EVRAZ plc and its subsidiaries.

Unamortised debt issue costs

(17)

(16)

(18)

The covenants impose restrictions in respect of certain transactions and financial ratios, including restrictions in respect of indebtedness. EBITDA used

$ 3,541

$ 4,837

$ 4,739

for covenants compliance calculations is determined based on the definitions of the respective loan agreements and may differ from that used by

management for evaluation of performance.

236

237

Meet EVRAZ

EVRAZ in figures

Strategic report

Corporate governance

FINANCIAL STATEMENTS

Additional information

ANNUAL REPORT & ACCOUNTS 2021

22. LOANS AND BORROWINGS (CONTINUED)

23. EMPLOYEE BENEFITS

Several bank credit facilities totalling $1,697 million contain certain financial maintenance covenants. These covenants require EVRAZ plc to maintain

Russian Plans

two key ratios, consolidated net indebtedness to 12-month consolidated EBITDA and 12-month consolidated EBITDA to adjusted 12-month

Certain Russian subsidiaries of the Group provide regular lifetime pension payments and lump-sum amounts payable at retirement date. These

consolidated interest expense, within certain limits. A breach of one or both of these ratios would constitute an event of default under the facilities,

benefits generally depend on years of service, level of remuneration and amount of pension payment under the collective bargaining agreements.

which in turn may trigger cross default events under other debt instruments of the Group. The terms of certain facilities also set certain limitations on

Other post-employment benefits consist of various compensations and certain non-cash benefits. The Group funds the benefits when the amounts of

acquisitions and disposals by EVRAZ plc.

benefits fall due for payment.

At 31 December 2021 notes due in 2023 and 2024, totalling $1,450 million have covenants restricting the incurrence of indebtedness by the issuer

In addition, some subsidiaries have defined benefit plans under which contributions are made to a separately administered non-state pension fund.

and its consolidated subsidiaries conditional on a gross leverage ratio. While the ratio level itself does not constitute a breach of covenants, exceeding

The Group matches 100% of the employees’ contributions to the fund up to 4% of their monthly salary. The Group’s contributions become payable at

the threshold of 3.5 times triggers a restriction on incurrence of consolidated indebtedness, which is removed once the ratio goes back below the

the participants’ retirement dates. At the end of the reporting year the benefit obligation was valued based on the terms of the pension plan assuming

threshold. The effect of the restriction is such that EVRAZ plc and its subsidiaries would not be allowed to increase the consolidated indebtedness, but

that all defined benefit plan participants will continue to participate in the plan.

are allowed to refinance existing indebtedness subject to certain conditions. As of 31 December 2021, the Group’s gross leverage ratio was below 3.5.

Defined contribution plans represent payments made by the Group to the Russian state pension, social insurance and medical insurance funds at

Two bank credit facilities of Raspadskaya totalling $400 million contain financial maintenance covenants based on the consolidated financial

the statutory rates in force, based on gross salary payments. The Group has no legal or constructive obligation to pay further contributions in respect of

statements of Raspadskaya. These covenants require Raspadskaya to maintain 2 key ratios within certain limits (consolidated net indebtedness to

those benefits.

12-month consolidated EBITDA and 12-month consolidated EBITDA to adjusted 12-month consolidated interest expense). A breach of one or both of

these ratios would constitute an event of default under the facilities, which in turn may trigger cross default events under other debt instruments of the

Group. If Raspadskaya Group ceases to be a subsidiary of EVRAZ plc as a result of the potential demerger (Notes 2 and 13), a breach of covenants

US and Canadian Plans

under these facilities will not trigger a cross default event under the debt instruments of EVRAZ plc and its other subsidiaries.

The Group’s subsidiaries in the USA and Canada have defined benefit pension plans that cover specified eligible employees. Benefits are based on

Several bank credit facilities totalling $83 million provide for certain covenants restricting the incurrence of indebtedness by EVRAZ North America plc

pensionable years of service, pensionable compensation, or a combination of both depending on the individual plan. The subsidiaries also have U.S.

and its subsidiaries conditional on a fixed charge ratio. Once the threshold for the ratio is exceeded, it triggers restrictions on incurrence of additional

and Canadian supplemental retirement plans (“SERP’s”), which are non-qualified plans designed to maintain benefits for eligible employees at the plan

indebtedness by EVRAZ North America plc and its subsidiaries.

formula level. The subsidiaries provide other unfunded post-retirement medical and life insurance plans (“OPEB’s”) for certain of their eligible

employees upon retirement after completion of a specified number of years of service. For the pension plans, SERP’s and OPEB’s, the subsidiaries use

The incurrence covenants are in line with the Group’s financial strategy and, therefore, do not constitute any excessive restriction on its operations.

a measurement date for plan assets and obligations of 31 December.

During 2021 the Group was in compliance with all financial and non-financial covenants. In 2021, in connection with the noteholders’ and lenders’

Certain employees that were hired after specified dates are no longer eligible to participate in the defined benefit pension plans. Those employees are

consent to the potential demerger of Raspadskaya Group (Note 13) and the related amendments of the notes and bank loans' terms the Group paid

instead enrolled in defined contribution plans and receive a contribution funded by the Group’s subsidiaries equal to 3-7% of annual wages, including

$10 million. These charges will be amortised during the term of the respective notes and bank loans.

applicable bonuses. The defined contribution plans are funded throughout the year and, depending on their work location, participants’ benefits

vesting dates range from immediate to after three years of service. In two Canadian locations, employees hired after a specific date participate in

Unamortised Debt Issue Costs

hybrid defined benefit/defined contribution pension plans. The benefits in the hybrid pension plans are at a reduced benefit for the defined benefit,

and the defined contribution portion is funded at 1.5-1.6% of annual wages. In addition, the subsidiaries have defined contribution plans available for

Unamortised debt issue costs represent bank fees and transaction costs paid by the Group in relation to the arrangement and reset of loans and notes.

eligible U.S. and Canadian-based employees in which the subsidiaries generally match a percentage of the participants’ contributions.

Some Canadian employees participate in a retirement savings plan. For these employees, the participation may be voluntary, employee contributions

Unutilised Borrowing Facilities

are matched by the employer at 1-1.5% of annual wages, including applicable bonuses, and depending on the group of employees, are funded either

The Group had the following unutilised borrowing facilities as of 31 December:

annually or throughout the year.

US$ million

2021

2020

2019

Other Plans

Committed

623

937

447

Uncommitted

848

424

1,165

Defined benefit pension plans and defined contribution plans are maintained by the subsidiaries located in Europe.

Total unutilised borrowing facilities

$ 1,471

$ 1,361

$ 1,612

Defined Contribution Plans

The Group’s expenses under defined contribution plans were as follows:

US$ million

2021

2020

2019

Expense under defined contribution plans

$ 287

$ 257

$ 274

Continuing operations

212

191

204

Discontinued operations

Defined Benefit Plans

The Russian and other defined benefit plans were mostly unfunded and the US and Canadian plans were partially funded.

Except as disclosed above in 2021 there were no significant plan amendments, curtailments or settlements.

The Group’s defined benefit plans are exposed to the risks of unexpected growth in benefit payments as a result of increases in life expectancy,

inflation, and salaries. As the plan assets include significant investments in quoted and unquoted equity shares, corporate and government bonds and

notes, the Group is also exposed to equity market risk.

The components of net benefit expense recognised in the consolidated statement of operations for the years ended 31 December 2021, 2020 and

2019 and amounts recognised in the consolidated statement of financial position as of 31 December 2021, 2020 and 2019 for the defined benefit

plans were as follows:

238

239

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