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ЕВРАЗ. Годовой отчет за 2021 год - часть 15

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FINANCIAL STATEMENTS

Additional information

ANNUAL REPORT & ACCOUNTS 2021

6. RELATED PARTY TRANSACTIONS (CONTINUED)

7. LOANS AND BORROWINGS (CONTINUED)

Guarantees

In January 2021, 8.25% notes due 2021 were fully settled.

The guarantees issued by Company to related parties were as follows at 31 December:

In June, August and October 2021, EVRAZ plc early repaid in full its 6.75% notes due 2022 ($500 million). The premium over the carrying value on the

repurchase amounting to $(9) million was included in the Gain/(loss) on financial assets and liabilities caption of the separate statement of

US$ million

2021

2020

comprehensive income.

Guaranteed

Financial

Maturity at

Guarantee Guaranteed

Guarantee

In 2021, the Company paid $10 million in connection with the covenants reset relating to the potential demerger of the coal business (Note 13 of

Debtor

Subject of guarantee

amount

guarantee

amount

guarantee

31 December 2021

fees earned

the consolidated financial statements). These charges will be amortised during the term of the respective notes.

(principal)

laibility

(principal)

laibility

East Metals A.G.

Bank loans

not determined

$ 348

$ −

$ 1

$ 193

$ −

$ 1

In November 2020, EVRAZ plc early repaid $15million under 8.25% notes due 2021.

EVRAZ NTMK/ EVRAZ ZSMK

Bank loans

2023-2028

1,697

1,458

At 31 December 2021, the current portion of the borrowings included only interest payable under the notes. At 31 December 2020, the current portion

Evrazholding Finance

Rouble bonds

not determined

269

280

of the borrowings included a principal payable under 8.25% notes due 2021 and interest payable under all issued notes.

Evraz Group S.A.

Loan to East Metals A.G.

2022-2024

667

−

486

−

Management Company

Performance of services

2023

202

203

Mezhdurechensk

EVRAZ Nikom a.s.

Bank loans

not determined

−

8. TRADE AND OTHER PAYABLES

$ 3,196

$ 13

$ 8

$ 2,634

$ 21

$ 10

Trade and other accounts payable included the following at 31 December:

The above guarantees are recognised at fair value in the statement of financial position of the Company. The guarantee fees are recorded within

the Operating income caption of the Company’s statement of comprehensive income.

2021

2020

In 2018, the Company issued a guarantee to nine companies owned by Sibuglemet to compensate any direct losses caused by the failure to perform

US$ million

Non-current

Current

Non-current

Current

the agreed management services provided by Management Company Mezhdurechensk, an indirect subsidiary of the Company, to these entities

Liability relating to a settlement of guarantee

$ –

$ 4

(Note 30 of the consolidated financial statements). In 2018, the Company recognised financial guarantee liability of $18 million. In 2021 and 2020,

Other payables

–

the Company accrued $1 million and $3 million income, respectively, under this guarantee. In May 2020, the Group issued a notification about

$ –

$ 7

$ 4

termination of the management services contract from 15 November 2020. The guarantee will continue to be effective 3 years after the date of

termination.

At 31 December 2021 and 2020, trade and other accounts payable included liabilities relating to the settlement of the Company’s guarantee under

a long-term take-or-pay supply contract of a former indirect subsidiary of the Company. In 2021, the Company paid $4 million (2020: $7 million) in

Other Transactions

respect of this liability and recognised interest expense of $Nil (2020: $1 million).

In 2021, OOO Evraz (former name - Evrazholding), an indirect subsidiary of the Company, rendered consulting services to the Company in the amount

of $1 million (2020: $Nil).

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

9. INCOME TAXES

regulations 2008 and those specified for audit by the Directors’ Remuneration Report Regulations 2002 are included in the Directors’ Remuneration

Report.

A reconciliation of income tax expense applicable to profit before income tax using the statutory tax rate to income tax expense as reported in

the Company’s financial statements for the years ended 31 December is as follows:

US$ million

2021

2020

7. LOANS AND BORROWINGS

Profit/(loss) before income tax

$ 2,212

$ 1,765

In 2019, Evraz Group S.A. transferred all rights and obligations under its notes to EVRAZ plc for consideration being the market value of the notes at

At the statutory income tax rate of 19%

(420)

(336)

that date. The Company recognised the liabilities at fair value and classified them as subsequently measured at amortised cost.

Group relief effect

(2)

During 2020-2021 the movement in the notes was as follows.

Non-taxable income/(non-deductible expenses)

(56)

Effect of lower tax rate for dividend income

182

192

8.25% notes

6.75% notes

5.375% notes

5.25% notes

$US million

Total

Allowance for deferred tax asset

(2)

(13)

due 2021

due 2022

due 2023

due 2024

Current income tax expense

$ (202)

$ (213)

31 December 2019

$ 806

$ 531

$ 768

$ 705

$ 2,810

Non-cash changes:

Interest and other charges expensed

139

In 2021, the effect of non-taxable income was mostly caused by the reversal of impairment of investments (Note 3), which is not taxable.

Cash changes:

Repayment of interest and premiums on

(62)

(34)

(40)

(37)

(173)

early repayment

A numerical reconciliation between the average effective tax rate and the applicable tax rate is dsclosed in the table below.

Repayment of principal

(15)

2021

2020

31 December 2020

$ 765

$523

$ 767

$706

$ 2,761

Non-cash changes:

Applicable income tax rate

19.0%

Interest and other charges expensed

Accrual of premiums and other charges on

Group relief effect

0.1%

early repayment of borrowings

Non taxable income/(non-deductible expenses)

(1.8)%

3.2%

Capitalisation of covenants reset costs

(3)

(4)

(10)

Effect of lower tax rate for dividend income

(8.3)%

(10.9)%

Cash changes:

Allowance for deferred tax asset

0.1%

0.8%

Repayment of interest and premiums on

(31)

(49)

(40)

(37)

(157)

early repayment

Average effective interest rate

9.1%

12.1%

Repayment of principal

(735)

(500)

–

(1,235)

31 December 2021

$ -

$ –

$ 762

$703

$ 1,465

The applicable tax rate is a normal corporation tax in the United Kingdom.

280

281

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FINANCIAL STATEMENTS

Additional information

ANNUAL REPORT & ACCOUNTS 2021

9. INCOME TAXES (CONTINUED)

10. FINANCIAL INSTRUMENTS (CONTINUED)

The movement in the net balance of current income tax receivable/(payable) was as follows:

US$ million

2021

2020

Liquidity Risk (continued)

1 January

$ (54)

$ (46)

Current income tax on dividend income

(202)

(213)

Income tax withheld (Note 6)

249

197

31 December 2020

Foreign exchange gain/(loss)

–

Less than 3

3 to 12

On demand

1 to 2 years

2 to 5 years

After 5 years

Total

US$ million

months

31 December

$ (7)

$ (54)

Fixed-rate debt

Loans and borrowings

The tax rate on dividends is equal to 10% for income from the Russian subsidiaries and zero rate for dividend income from Luxembourg.

Principal

$ -

$ 735

$ -

$ 500

$ 1,450

$ -

$ 2,685

At 31 December 2021 the Company had an amount payable of $23 million in relation to income tax on dividends receivable from Raspadskaya (2020:

$70 million of income tax payable on dividends receivable from EVRAZ NTMK).

Interest

317

Loans payable to related parties

In 2019, the Company recognised current income tax benefit of $16 million relating to prior year tax losses of $87 million that can be carried back to

Principal

280

3,201

3,481

recover income tax paid in 2018.

Interest

192

At 31 December 2021, the unused tax losses carried forward amounted to $196 million (2020: $188 million). Deferred tax assets in respect of these

Trade and other payables

losses have not been recorded as it is not probable that sufficient taxable profits will be available in the foreseeable future to offset the losses. They

Financial guarantees

are available for offset against future taxable profits indefinitely.

Total fixed-rate debt

1,069

154

671

4,810

6,704

At 31 December 2021, the Company had $253 million of accumulated unutilised foreign tax credits (2020: $209 million). No deferred tax asset has

been recognised on these tax credits as they are unlikely to have value in the future. These tax credits have no fixed expiry date.

Non-interest bearing debt

Payables to related parties

Total non-interest bearing debt

10. FINANCIAL INSTRUMENTS

$ 6

$ 1,069

$ 154

$ 671

$ 4,810

$ -

$ 6,710

Liquidity Risk

The following tables summarise the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments, including

interest payments.

Market Risk

31 December 2021

Currency Risk

Less than 3

3 to 12

On demand

1 to 2 years

2 to 5 years

After 5 years

Total

The Company’s exposure to currency risk determined as the net monetary position in the respective currencies was as follows at 31 December:

US$ million

months

Fixed-rate debt

US$ million

2021

2020

Loans and borrowings

USD/RUB

$ –

$ 6

Principal

$ –

$–

$ –

$ 750

$ 700

$ –

$ 1,450

Interest

–

152

Loans payable to related parties

Sensitivity Analysis

Principal

–

4,526

–

4,526

The following table demonstrates the sensitivity to reasonably possible changes in the respective currencies, with all other variables held constant, of

Interest

–

219

the Company’s profit before tax. In estimating reasonably possible changes the Company assessed the volatility of foreign exchange rates during

Trade and other payables

–

the reporting periods.

Financial guarantees

–

Total fixed-rate debt

–

157

5,419

721

–

6,364

2021

2020

Change in

Non-interest bearing debt

exchange rate

Effect on PBT

exchange rate

Effect on PBT

Dividends payable

–

292

–

292

US$ millions

Trade and other payables

–

(16.88)

Total non-interest bearing debt

292

–

295

USD/RUB

16.88

(1)

$ 3

$ 359

$ 157

$ 5,419

$ 721

$ –

$ 6,659

Fair Value of Financial Instruments

The carrying amounts of financial instruments, such as cash, accounts receivable and payable, loans payable to related parties, approximate their fair

value. The fair value of the notes is disclosed in Note 28 of the consolidated financial statements.

11. SUBSEQUENT EVENTS

In January 2022, the Company fully paid to its shareholders the dividends declared in December 2021 (Dividends in Note 4).

In February 2022, the Company received the full amount of dividends declared by Raspadskaya in December 2021 (Dividend Income in Note 6).

282

Other material events after the reporting year are disclosed in Note 33 of the consolidated financial statements.

283

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ADDITIONAL INFORMATION

ANNUAL REPORT & ACCOUNTS 2021

ADDITIONAL

TCFD DISCLOSURE

CROSS-REFERENCE

SUMMARY

COMMENTS

FUTURE STEPS

FOR THE DISCLOSURE

OF THE CLIMATE-

FOR NON-COMPLIANCE

IN THE REPORT

RELATED FINANCIAL

INFORMATION

DISCLOSURES

Strategy

a. Describe the climate-

p. 92-96

We have identified time

related risks

horizons as long (2050),

and opportunities

medium (2030) and short

the organization

(2025) for each climate

has identified

risk identified.

over the short,

The results

medium, and long

of the qualitative risk

TCFD COMPLIANCE STATEMENT AND INDEX

term.

assessment is presented

in section “Climate

change risks”

b. Describe the impact

p. 92-96

EVRAZ considers

Currently, we are not

In 2022, we plan

Compliance statement

and Recommended Disclosures. EVRAZ

•Risk management - (a), (b), (c);

of climate-related risks

the environmental

able to describe

to incorporate

•Metrics and Targets - (b) and (c).

is set to cover most of the partially

and opportunities

impact of its operations

the impact of climate-

climate-related risks

In accordance with LSE Listing Rule 9.8.6(8)

consistent disclosures in 2022.

on the organization’s

as well as the potential

related issues on our

into financial models

R we present our 2021 TCFD compliance

(b) partially consistent with the following

businesses, strategy,

consequences

financial performance

and conduct financial

index and confirm that we have in this

TCFD Recommendations

In assessing compliance with LSE Listing

and financial

of climate-related

and financial position

analysis to assess how

Report made climate-related financial

and Recommended Disclosures:

Rules 9.8.6(8) R, we took into consideration

planning.

risks during strategic

due to not completing

climate risks will affect

planning. The Company

a financial analysis

our financial stability.

disclosures for the year ended 31 December

•Strategy - (b);

the documents referred to in the guidance

continuously researches

of climate-related risks

The quantitative analysis

2021 which are::

notes to the Listing Rules,

•Metrics and Targets - (a).

opportunities to improve

and opportunities.

will include a description

as well as considering on a voluntary basis

its business and product

of the process

(a) consistent with the following TCFD

In the table below, we include cross-

the updated guidance on Implementing

lines sustainably.

and methodologies used.

Recommendations and Recommended

references to disclosures made elsewhere

the Recommendations of the Task Force

EVRAZ has developed

Disclosures¹:

within the Report and explain the reasons

on Climate-related Financial Disclosures

the Environmental

Strategy 2030

Governance - (a) and (b);

for partially complying with the certain

published in October 2021.

•

and is developing

of the TCFD Recommendations

•Strategy - (a) and (c);

the Decarbonisation

pathway roadmap based

on thorough research

TCFD DISCLOSURE

CROSS-REFERENCE

SUMMARY

COMMENTS

FUTURE STEPS

of industry-specific

FOR THE DISCLOSURE

OF THE CLIMATE-

FOR NON-COMPLIANCE

measures and best

IN THE REPORT

RELATED FINANCIAL

practice initiatives

DISCLOSURES

over the short, medium

and long-term time

Governance

horizons.

a. Describe the board’s

p. 58-60

Issues related to climate

c. Describe the resilience

p. 92-96

All risks, including

In 2022, we plan

oversight of climate-

risks and opportunities

of the organization’s

climate-related risks,

to incorporate

related risks

are reviewed

strategy, taking

are closely monitored

climate-related risks

and opportunities.

and considered at BoD

into consideration

and considered when

into financial models

meetings 10-12 times per

different climate-

planning the Group’s

and conduct financial

year.

related scenarios,

strategy. If a significant

analysis to assess how

b. Describe

p. 58-60

Management reviews

In 2022, we are planning

including a 2°C or

change affects the risk

climate risks will affect

management’s

and considers issues

to include climate-related

lower scenario.

assessment results,

our financial stability.

role in assessing

related to climate change,

and decarbonisation KPIs

EVRAZ is set to adjust its

The analysis will include

and managing

climate-related risks,

for the Vice Presidents

strategy accordingly.

the potential effects

climate-related risks

and decarbonisation

of EVRAZ.

of climate scenarios

and opportunities.

opportunities.

(SSP1-2.6, SSP2-4.5,

The Group is currently

Management monitors

SSP5-8.5, particularly

aligning its

the Company’s climate-

the 2°C or lower

remuneration process

related performance

scenario. We will further

with decarbonisation

and progress against

analyse the resilience

goals and targets.

targets.

of our strategy against

risks and opportunities

in accordance

with climate scenarios.

284

As defined in Appendix 1 of the Financial Conduct Authority Listing Rules.

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TCFD DISCLOSURE

CROSS-REFERENCE

SUMMARY

COMMENTS

FUTURE STEPS

TCFD DISCLOSURE

CROSS-REFERENCE

SUMMARY

COMMENTS

FUTURE STEPS

FOR THE DISCLOSURE

OF THE CLIMATE-

FOR NON-COMPLIANCE

FOR THE DISCLOSURE

OF THE CLIMATE-

FOR NON-COMPLIANCE

IN THE REPORT

RELATED FINANCIAL

IN THE REPORT

RELATED FINANCIAL

DISCLOSURES

RISK MANAGEMENT

Metrics and Targets

a. Describe

p. 92-96

EVRAZ determines

In addition, we

a. Disclose

p. 62-64

EVRAZ monitors GHG

Currently, we are unable

EVRAZ has set

the organization’s

climate risks by following

are planning to report

the metrics used

emission, carbon intensity

to provide an internal

an internal carbon

processes

the Group’s approach.

on the internal carbon

by the organization

of the key product

carbon price. EVRAZ

price that will continue

for identifying

The assessment process

price used for developing

to assess climate-

categories, primary

has set an internal

to be used for budgeting

and assessing climate-

identifies risks in relation

our Group strategy

related risks

energy consumption

carbon price, however

and planning its

related risks.

to all major divisions

and budgeting.

and opportunities

and energy intensity.

the methodology

operations and being

of the Company.

in line with its strategy

For the risk management

for establishing

an additional metric

The risk identification

and risk management

purposes, we apply

the metric is being

considered when

process is in line

process.

internal carbon price

revised.

assessing investment

with three climate

and analysis of KPIs

projects and mitigating

against targets.

regulatory risks. EVRAZ

scenarios (SSP1-2.6,

SSP2-4.5, and SSP5-8.5)

plans to disclose

and focus on long time

information upon

horizons (2050), medium

this metric in future

(2030) and short (2025).

disclosures.

b. Disclose Scope 1,

p. 62-64

EVRAZ reports

We are planning

Scope 2, and, if

on Scope 1 and Scope 2

to publish the Scope 3

b. Describe

p. 92-96

All risks are assessed

appropriate, Scope

greenhouse gas (GHG)

calculations in the public

the organization’s

annually to ensure that

3 greenhouse gas

emissions and the related

reports and press

processes

they are appropriately

(GHG) emissions,

risks on a yearly basis.

releases in 2022.

for managing climate-

documented and that

and the related risks.

related risks.

timely risk management

We will be updating

procedures have

the accounting

and monitoring

been developed

practices for energy

throughout the Group

and at operational levels.

consumption. As well as,

For each climate-related

undertaking investments

risk we analyse mitigation

and operational measures

aimed at improving

measures (accept, avoid,

energy efficiency,

transfer or mitigate).

developing internal

c. Describe how

p. 92-96

EVRAZ identifies,

power generation

processes

assesses, and manages

capacity, using

for identifying,

climate-related risks

renewable energy

assessing,

according to the overall

sources and upgrading

and managing

Group’s risk management

equipment.

climate-related

approach. As part

c. Describe

p. 62-64

All emissions

risks are integrated

of its risk management

into the organization’s

process, the Group has

the targets used

are calculated, however

overall risk

developed a unified

by the organization

targets are set on specific

management.

framework to detect,

to manage climate-

processes.

related risks

assess and manage

EVRAZ intends to reduce

and opportunities

climate-related risks

the intensity of Scope 1

at the corporate

and performance

and 2 GHG emissions

and operational

against targets.

from steel making

levels. The framework

operations by 20%

encompasses all business

and reach 75% utilisation

processes and day-to-day

of methane (CH4)

activities. The method

emitted while degassing

used to categorise risks

coal mines by 2030,

as either principal or

against a 2019 baseline.

non-principal is also

applied to managing

climate-related risks.

286

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STOCK PERFORMANCE INDICATORS AND

UNSOLICITED TELEPHONE CALLS AND

SHAREHOLDER INFORMATION

CORRESPONDENCE

Shareholders are advised to be wary of any

If you receive any unsolicited investment

•If the calls persist, hang up.

unsolicited advice, offers to buy shares at

advice:

Information about shares of EVRAZ plc

a discount, or offers of free reports about

Details of any share dealing facilities that

•Make sure you get the correct name of

the Company. These are typically from

the person and organisation.

the company endorses will be included in

The Company’s issued share capital as of

overseas-based ‘brokers’ who target US or

Company mailings.

•Check that they are properly authorised

The shares of EVRAZ plc trades on the Main market of London

31 December 2021 and 24 February 2022

UK shareholders, offering to sell them what

by the FSA before getting involved by

Stock Exchange

was 1,506,527,294 ordinary shares, of which

often turns out to be worthless or high risk

visiting www.fsa.gov.uk/fsaregister and

47,837,582 shares are held in Treasury.

Ticker (Bloomberg)

EVR LN

shares.

contacting the firm using the details on

Therefore, the total number of voting

the register.

Trading service

SETS

rightsin the Company is 1,458,689,712.

These operations are commonly known as

Report the matter to the FSA either by

•

Market

MAIN MARKET

‘boiler rooms’ and the ‘brokers’ can be very

calling 0845 606 1234 or visiting www.

Listing category

Premium Equity Commercial Companies

persistent and extremely persuasive.

fsa.gov.uk/scams.

FTSE index

FTSE 100

FTSE sector

Industrial Metals & Mining

FTSE sub-sector

Iron & Steel

Country of share register

ELECTRONIC SHAREHOLDER COMMUNICATIONS

Segment

STMM

EVRAZ uses its website www.evraz.com as

access information instantly as well as

communications can revoke their consent

MiFID Status

Regulated Market

its primary means of communication with its

helping EVRAZ reduce its costs and its

at any time by contacting the Company’s

SEDOL

B71N6K8

shareholders provided that the shareholder

impact on the environment. Shareholders

registrar, Computershare.

ISIN number

GB00B71N6K86

has agreed or is deemed to have agreed

can sign up for electronic communications

that communications may be sent or

via Computershare’s Investor Centre

supplied in that manner in accordance

website at www.investorcentre.co.uk.

Relative share price dynamics, 52w

with the Companies Act 2006. Electronic

Shareholders that have consented or are

communications allow shareholders to

deemed to have consented to electronic

150

125

100

01.01.2021

31.12.2021

EVRAZ PLC

FTSE 100 INDEX

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ADDITIONAL INFORMATION

ANNUAL REPORT & ACCOUNTS 2021

Total debt

nominal effect of cross-currency swaps on

different from the calculation used by other

DEFINITIONS OF SELECTED ALTERNATIVE

principal of rouble-denominated notes.

companies and therefore comparability

Total debt represents the nominal value

Total debt is not a measure under IFRS and

may be limited. The current calculation

PERFORMANCE MEASURES

of loans and borrowings plus unpaid

should not be considered as an alternative

is different from that used for covenant

interest, finance lease liabilities, loans of

to other measures of financial position.

compliance calculations.

assets classified as held for sale, and the

EVRAZ’ calculation of total debt may be

The Group uses alternative performance

Free Cash Flow

Cash and short-term bank

measures (APMs) to improve comparability

deposits

Total debt¹ has been calculated as follows:

of information between reporting periods

Free Cash Flow represents EBITDA, net of

and business units, either by adjusting

noncash items, less changes in working

Cash and short-term bank deposits is

for uncontrollable or one-off factors

capital, income tax paid, interest paid

not a measure under IFRS and should

US$ MILLION

31 DECEMBER

CHANGE

CHANGE, %

which impact upon IFRS measures or, by

and covenant reset charges, conversion

not be considered as an alternative to

2021

2020

aggregating measures, to aid the user of

premiums, premiums on early repurchase

other measures of financial position.

Long-term loans, net of current portion

3,840

3,759

0.0

this report in understanding the activity

of bonds and realised gain/(losses) on

EVRAZ’ calculation of cash and short-term

Short-term loans and current portion of long-term

101

1,078

(977)

(90.6)

taking place across the Group’s portfolio.

interest payments under swap contracts,

bank deposits may be different from the

loans

interest income and debt issue costs, less

calculation used by other companies and

Add back: Unamortised debt issue costs and fair

0.0

capital expenditure, including recorded

therefore comparability may be limited.

value adjustment to liabilities assumed in business

in financing activities, purchases of

combination

EBITDA

subsidiaries, net of cash acquired, proceeds

Nominal effect of cross-currency swaps on principal

0.0

from sale of disposals classified as held for

of rouble-denominated notes

EBITDA is determined as a segment’s

sale, net of transaction costs, less purchases

Total segment revenues, total

profit/(loss) from operations adjusted for

of treasury shares for participants of the

segment EBITDA

Finance lease liabilities, non-current portion

12.3

social and social infrastructure maintenance

incentive plans, plus other cash flows from

Finance lease liabilities, current portion

(2)

(0.1)

expenses, impairment of assets, profit/

investing activities.

Total segment revenues and total segment

Total debt

4,094

4,983

(889)

(17.8)

(loss) on disposal of property, plant and

EBITDA include the contribution of

equipment and intangible assets, foreign

Free Cash Flow is not a measure under

discontinued operations. During 2021 the

exchange gains/(losses) and depreciation,

IFRS and should not be considered as an

Coal business was an integral part of the

depletion and amortisation expense.

alternative to other measures of financial

Group and was managed on this basis. As

Net debt

classified as held for sale. Net debt is not

from the calculation used by other

position. EVRAZ’ calculation of Free Cash

such these measures are considered more

a measure under IFRS and should not

companies and therefore comparability

See note 3 of the consolidated financial statement

for additional information and reconciliation with

Flow may be different from the calculation

reflective of the performance of the Group

Net debt represents total debt less cash

be considered as an alternative to other

may be limited. The current calculation

IFRS financial statements.

used by other companies and therefore

in the year.

and liquid short-term financial assets,

measures of financial position. EVRAZ’

is different from that used for covenant

comparability may be limited.

including those related to disposals

calculation of net debt may be different

compliance calculations.

See more in Note 3 on page 202.

Net debt¹ has been calculated as follows:

31 DECEMBER

CHANGE

CHANGE, %

Cash and short-term bank deposits calculation¹

US$ MILLION

2021

2020

US$ MILLION

31 DECEMBER 2021

31 DECEMBER 2020

CHANGE

CHANGE, %

Total debt

4,094

4,983

(889)

(17.8)

Cash and cash equivalents

1,427

1,627

(200)

(12.3)

Cash and cash equivalents

(1,427)

(1,627)

200

12.3

Cash and short-term bank deposits

1,427

1,627

(200)

(12.3)

Net debt

2,667

3,356

(689)

(20.5)

1. As discussed in more detail in Note 2 and Note 13 of the EVRAZ consolidated financial statements, as of 31 December 2021, the management had concluded that

the demerger of the coal business had become highly probable within one year and that Raspadskaya Group met all criteria to be classifed as a disposal held

for distribution to owners. Consequently, in accordance with the requirements of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, it was

accounted for as discontinued operations in the consolidated financial statements.

At the same time, in 2021, the coal business was an integral part of the Group. The analysis below is based on this view taken by the management and presented in

Note 3 of the consolidated financial statements.

The reconciliation of these results with the amounts presented in the consolidated statement of operations is provided in Note 13. It is limited to the presentation of

290

the results of the coal business as discontinued operations.

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ADDITIONAL INFORMATION

ANNUAL REPORT & ACCOUNTS 2021

CAPEX

DATA ON MINERAL RESERVES

Capital expenditure (CAPEX) is cash expenditure on property, plant and equipment. For internal reporting and analysis, CAPEX includes

non-cash transactions related to CAPEX.

Coal

CAPEX¹ has been calculated as follows:

Raspadskaya (Novokuznetsk site) JORC equivalent coal proved and probable reserves, kt

US$ MILLION

31 DECEMBER 2021

31 DECEMBER 2020

CHANGE

CHANGE, %

MINE

AS OF 31 DECEMBER 2021

Purchases of property, plant and

910

647

263

40.6

Alardinskaya

126,437

equipment and intangible assets

Yesaulskaya

8,099

Purchases of property, plant and

0.0

equipment on deferred terms

Erunakovskaya-8

113,136

CAPEX

920

657

263

40.6

Osinnikovskaya

70,259

Uskovskaya

182,780

Razrez Tomsky-Yuzny

53,684

GHG intensity ratio

X is the total number of occupational

Iron ore products cash cost,

Total

554,395

injuries resulted in lost time among the

US$/t

Tonnes of CO₂ equivalent (Scope 1 and

company employees in the reporting

2 GHG emissions) divided by tonnes of

period. Fatalities are not included.

Cash cost of iron ore products is defined

Raspadskaya (Mezhdurechensk site) JORC equivalent coal proved and probable reserves, kt

crude steel. Оnly steelmaking enterprises

as cost of revenues less depreciation

are included into the calculation, which are

Y is the actual total number of man-hours

and SG&A, the result is divided by sales

MINE

AS OF 31 DECEMBER 2021

located in Russia and North America.

worked by all company employees in the

volumes.

Raspadskaya (incl. reserves of MUK-96)

905,281

reporting period.

Raspadskaya Koksovaya

144,999

Razrez Raspadskiy (open-pit)

97,384

Labor productivity, US$/t

Number of EBS

Koksovaya GRR (open-pit)

22,642

Slab cash costs, US$/t

transformations

Total

1,170,305

P=S/V

Cash cost of slab is defined as the

Number of EBS transformations

S — Labor Costs (asset and A-category

production cost less depreciation, the result

implemented at the key assets during the

Raspadskaya (Mezhegeyugol site) JORC equivalent coal proved and probable reserves, kt

subsidiaries), exclusive of tax, local currency

is divided by production volumes of slab.

reporting year.

(on Division consolidation sites with

Raw materials from EVRAZ coal and iron

MINE

AS OF 31 DECEMBER 2021

different currencies, $)

ore producers are accounted for on at-cost-

Mezhegeyugol

86,200

basis. Costs of slab of EVRAZ NTMK, EVRAZ

V — production volume, tn. (for steel

ZSMK are then weighted averaged by the

Effect from efficiency

assets: V — metal products shipped)

total saleable slab production volume.

improvement programme

(сustomer focus and cost

cutting effects)

Iron ore

LTIFR

Coking coal concentrate cash

Each project effect is calculated as an

EVRAZ ZSMK mining operations JORC equivalent coal proved and probable reserves, kt

cost, US$/t

absolute deviation of targeted metriс year

MINE

AS OF 31 DECEMBER 2021

FE, %

S, %

The KPI is calculated on a year-to-date

to year multiplied by relevant price or

basis for the company employees only.

Cash cost of coking coal concentrate

volume depending on project’s focus.

Kaz

16,043

is defined as cost of revenues less

Tashtagol

48,358

LTIFR = X•1000000/Y

depreciation and SG&A, the result is

Sheregesh

69,371

divided by sales volumes.

Total

133,772

31.90

1.39

Kachkanarsky GOK (EVRAZ KGOK) JORC equivalent coal proved and probable reserves, kt

MINE

AS OF 31 DECEMBER 2021

FE, %

V2O5 %

Gusevogorskoe

2,929,768

1. As discussed in more detail in Note 2 and Note 13 of the EVRAZ consolidated financial statements, as of 31 December 2021, the management had concluded that

the demerger of the coal business had become highly probable within one year and that Raspadskaya Group met all criteria to be classifed as a disposal held

Kachkanar Proper (Sobstvenno-Kachkanarskoye)

6,737,354

for distribution to owners. Consequently, in accordance with the requirements of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, it was

accounted for as discontinued operations in the consolidated financial statements.

Total

9,800,894

15.9

0.13

At the same time, in 2021, the coal business was an integral part of the Group. The analysis below is based on this view taken by the management and presented in

Note 3 of the consolidated financial statements.

The reconciliation of these results with the amounts presented in the consolidated statement of operations is provided in Note 13. It is limited to the presentation of

292

the results of the coal business as discontinued operations.

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ADDITIONAL INFORMATION

ANNUAL REPORT & ACCOUNTS 2021

SHORT SUMMARY OF RELEVANT ANTI-CORRUPTION

POLICIES

Short summary of relevant anti-corruption policies

Code of Conduct

Anti-corruption System Policy

Sponsorship and Charity

relationships. At the same time, adequate

cardinal principles are somehow violated.

carrying out his/her work responsibilities.

Policy

and consistent control over such expenses

If employees, clients, or contractors feel

This policy specifies how to identify,

The Code of Conduct is the key document

This policy defines the structural elements

is highly important and one of the key

unable to do so through other means

consider and duly take care of situations

that all employees must adhere to and act

of the Group’s system for dealing with risks

This policy regulates all aspects of

areas for anti-corruption compliance

and procedures, a confidential hotline is

with signs of such conflicts. HR and

in full accordance with. Every new employee

of corruption and bribery, explaining the

sponsorship and charity efforts at EVRAZ

to watch. This policy defines rules and

available 24/7.

compliance managers routinely check

is instructed to read it carefully on his or her

specific roles and responsibilities of each

as necessary. According to it, the Group

strict approval procedures to be followed

whether there are conflicts of interests

first day of work. The document is available

component, including those of compliance

may consider supporting low-income or

when extending or receiving gifts and

in the Group, whereas employees

on the corporate intranet and stresses the

managers. The regulation sets forth

physically challenged individuals, and those

hospitality. In particular, all amounts

Candidate background and

and particularly their managers are

ultimate importance of ethical behaviour in

principles underlying planning for anti-

suffering from conflicts or natural disasters.

above US$100 for a personal gift (received

criminal record checks

expected to provide information about

all circumstances. Anti-corruption training

corruption activities, lists related risks and

EVRAZ may choose to support certain

or given) and US$500 for hospitality

any potentially risky situations. Special

and the tone set from the top of the

lays grounds for conducting corresponding

projects in education, sport, healthcare,

(received or extended) must be approved

EVRAZ consistently performs thorough

commissions consider cases reported and

organisation emphasise the role of the Code

risk assessments. The policy is accessible on

culture and environmental protection.

by the responsible compliance manager.

background and criminal record checks

devise the best possible solution to each

of Conduct in the Group’s daily life.

the corporate intranet.

The corresponding amounts in the US

on all potential employees. Among other

individual situation.

All petitions are carefully considered in terms

and Canada are US$50 and US$250,

requirements and norms, its policy specifies

of legitimacy and transparency of purpose,

respectively. To this end, an electronic

that all necessary effort is invested only

Anti-corruption Policy

Anti-corruption Training Policy

the amount sought and the reputation of the

notification system has been developed.

after a candidate gives written permission

Contractor/supplier due

petitioner. The decisions are then taken by

The internal audit function conducts

to work with his/her personal data. The

diligence checks

This policy establishes and explains the key

Consistent anti-corruption education

the Group CEO. When support is granted,

regular checks of the completeness and

Group is committed to protecting each

principles that all assets have adopted to

efforts are an integral element of a well

sponsorship being the preferred form,

accuracy of records, either planned or

individual’s privacy and works in full

To guard against unscrupulous, unreliable

prevent corruption. It is easily accessible

designed compliance system. Adopted

such instances are followed up by experts

requested by a compliance manager,

compliance with the relevant laws on

or suspicious would-be agents and

on the corporate intranet for employees,

in December 2015, this policy defines

under the vice president for corporate

and compliance specialists act on any

personal data.

partners, EVRAZ runs comprehensive due

interested parties and partners, who

what positions and levels of authority are

communications and by compliance

recommendations promptly.

diligence checks on a business or person

are all expected to be compliant with

to undergo training in anti-corruption

managers. This ensures full accountability

before signing a contract. The Group

relevant anti-corruption legislation and the

awareness. Specifically, all managers and

and the strict adherence of those supported

Conflict of Interest Policy

strictly enforces a know-your-partner/client

principles upheld by the Group. Every new

specialists from compliance, legal, control,

to EVRAZ’ policy requirements.

Hotline policy and

policy and, in doing so, is fully compliant

employee reads the policy on his or her

asset protection, investor and government

whistleblowing procedures

A conflict of interest is a set of

with the applicable anti-corruption laws.

first day of work.

relations, and HR are to receive training

circumstances in which an employee has

The investigation includes but is not limited

and pass a corresponding test. The same

Gift and Business

EVRAZ encourages employees to raise

financial or other personal considerations

to checking a counterparty’s business

refers to all decision makers and/or client

Entertainment Policy

concerns to their line managers if they

that may compromise or influence his/

reputation and solvency, as well as its top

managers from procurement and sales.

believe that the Group’s policies or

her professional judgment or integrity in

management’s profile and reputation.

Compliance managers have the authority

EVRAZ believes that business gifts

to analyse risk areas and decide who else

and hospitality are accepted ways to

needs to be trained.

demonstrate and further develop good

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TERMS AND ABBREVIATIONS

The unwanted gases can be used as fuels

Construction products

Continuous casting machine

or processed further to recover valuable

chemicals. The resulting material (coke) has

Include beams, channels, angles, rebars,

Process whereby molten metal is solidified

a strong porous structure which makes it

wire rods, wire and other goods.

into a “semi-finished” billet, bloom, or slab

ideal for use in a blast furnace.

for subsequent rolling in the finishing mills.

Basic oxygen furnace

construction industry and are available in

coke reduces the iron ore to liquid iron. To

Converter

various standard sizes, eg 40-k beam, 60Sh

increase efficiency and productivity, hot air

Coke battery

Crude steel

Basic oxygen furnace is a frunace used in

beam, 70Sh beam as mentioned in this

(often enriched with oxygen) is blown into

A type of furnace that uses pure oxygen

a method of primary steelmaking in which

report.

the bottom of the blast furnace. In order to

A group of coke ovens operating as a unit

in the process of producing steel from cast

Steel in its solidified state directly after

carbon-rich molten pig iron is made into

save coke, coal or other carbon containing

and connected by common walls.

iron or dry mix.

casting. This is then further processed

steel. Blowing oxygen through molten pig

materials are sometimes injected with this

by rolling or other treatments, which can

iron lowers the carbon content of the alloy

hot air.

change its properties.

and changes it into low-carbon steel. The

Billet

process is known as basic because fluxes of

Coking coal

Conversion costs

burnt lime or dolomite, which are chemical

A usually square, semi-finished steel product

bases, are added to promote the removal

obtained by continuous casting or rolling of

By-product

Highly volatile coal used to manufacture

Conversion costs is defined as production

of impurities and protect the lining of the

blooms. Sections, rails, wire rod and other

coke.

costs without raw materials and

converter.

rolled products are made from billets.

A secondary product which results from

depreciation, incl. SG&A and Maintenance

a manufacturing process or chemical

CAPEX.

reaction.

Concentrate

This measure is used to monitor segment

Beam

Blast furnace

competitiveness improvement.

A product resulting from iron ore / coal

A structural element. Beams are

The blast furnace is the classic production

enrichment, with a high grade of extracted

characterised by their profile (the shape

unit to reduce iron ore to molten iron,

mineral.

of their cross-section). One of the most

known as hot metal. It operates as a

common types of steel beam is the I-beam,

counter-current shaft system, where iron

also known as H-beam, or W-beam

ore and coke is charged at the top. While

(wideflange beam), or a ‘universal beam/

this charge descends towards the bottom,

column’. Beams are widely used in the

ascending carbon containing gases and

Debottlenecking

Deposit

Increasing capacity of a supply or

An area of coal resources or reserves

production chain through the modification

identified by surface mapping, drilling or

Cash cost of coking coal

CFR

Coal washing

of existing equipment or infrastructure to

development.

concentrate

improve efficiency.

Cost and freight, the seller must pay the

The process of removing mineral matter

Cash cost of coking coal concentrate

costs and freight to bring the goods to

from coal usually through density

is defined as the production cost less

the port of destination. However, risk is

separation, for coarser coal and using

depreciation, incl. SG&A and Maintenance

transferred to the buyer once the goods

surface chemistry for finer particles.

CAPEX, the result is divided by production

are loaded on the vessel. Insurance for the

volumes. This measure is used to monitor

goods is not included.

segment competitiveness improvement.

Coke

Electric arc furnace

Channel

A product made by baking coal without

CAPEX

oxygen at high temperatures. Unwanted

A furnace used in the steelmaking process

U-shaped section for construction.

gases are driven out of the coal.

which heats charged material via an electric

Capital expenditure.

arc.

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Feasibility study

Finished products

Flat products or Flat-rolled

JORC Code

steel products

A comprehensive engineering estimate of

Products that have completed the

The Australasian Joint Ore Reserves

all costs, revenues, equipment requirements

manufacturing process but have not yet

Include commodity plate, specialty plate

Committee, which is widely accepted as

and production levels likely to be achieved

been sold or distributed to the end user.

and other products in flat shape such as

a standard for professional reporting of

if a mine is developed. The study is used to

sheet, strip and tin plate.

Mineral Resources and Ore Reserves.

define the technical and economic viability

of a project and to support the search for

project financing.

Thousand tonnes.

Greenfield

Grinding balls

The development or exploration of a new

Balls used to grind material by impact and

project not previously examined.

pressure.

Labour productivity

Lean

LTIFR

Labour productivity is defined as

Lean is philosophy of managing the

Lost time injury frequency rate, which

labour costs exclusive of tax divided by

business that is based on a set of principles

represents the number of lost time injuries

Head-hardened rails

Heat-treatment

HiPo

production volumes of steel products. The

that define the way of work.

(1 day or more of absence) divided by the

measurement of performance enables the

total number of hours worked expressed in

High strength rails with head hardened by

A group of industrial and metalworking

High potential employee.

Company to monitor labour efficiency.

millions of hours.

heat treatment.

processes used to alter the physical, and

sometimes chemical, properties of a

Long products

material.

Ladle furnace

Include bars, rods and structural products

Lumpy ore

that are ‘long’ rather than ‘flat’ and are

The secondary metallurgy vessel used

produced from blooms or billets.

Iron ore between 6mm and 30mm in size.

between steelmaking and casting

Lump is preferred in the blast furnace as

operations to allow the composition of

its particle size allows oxygen to circulate

molten steel to be brought to the required

around the raw materials and melt them

customer specification.

Longwall

efficiently.

Iron ore

ISO 14001

ISO 9001:2008

An underground mining process in which

the coal face is dug out by a shearer and

Chemical compounds of iron with other

The International Standardisation

transported above ground by conveyors.

elements, mainly oxygen, silicon, Sulphur

Organisation’s standard for environmental

Organisation’s standard for a quality

or carbon. Only extremely pure (rich)

management systems.

management system.

iron-oxygen compounds are used for

steelmaking.

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