En+ International public joint stock : Group FY2020 financial results

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EN+ GROUP FY 2020 FINANCIAL RESULTS

STRONG EBITDA AND CASH FLOW DESPITE A CHALLENGING ENVIRONMENT

25 March 2021 - EN+ GROUP IPJSC (the "Company", "En+ Group" or the "Group") announces its financial results for the year ended 31 December 2020.

The Group delivered a robust financial performance in 2020 despite the challenges presented by the COVID-19 pandemic, which led to a significant decline in economic activity and considerable volatility in commodity markets across the globe.

While the Group's priorities for the year were to keep its people safe and maintain business continuity, it also made progress, increasing the sales volume of value added products, improving cost efficiency in the Metals segment and making progress on an ambitious decarbonisation strategy.

Against a backdrop of lower aluminium prices and foreign exchange headwinds, Adjusted EBITDA was USD 1.9 billion, supported by a strong operational performance, with stable aluminium output from the Metals segment and increased output from the Power segment. The Group's EBITDA margin remained strong at 18.0% reflecting the cost benefits of the Group's vertically integrated model. Free cash flow1 was USD 968 million.

•  En+ maintained a stable operating performance: aluminium production was broadly unchanged y- o-y, totalling 3,755 kt, sales of value added products2 (VAP) increased 11.3% y-o-y; electricity production3 increased 5.7% y-o-y and hydro power3 output increased by 7.9%.

•  EBITDA margin remained stable at 18.0%, with effective cost management, supported by the positive impact of rouble depreciation on production costs. Total cost of sales decreased 12.0% y-o-y.

•  The Company simplified its ownership structure through the USD 1.58 billion acquisition of VTB Group's 21.37% stake in En+ Group.

•  In 2020, the Group's Metals segment, RUSAL, became one of the first aluminium producers globally to receive an 'A' level rating from CDP.

•  The Group entered into partnerships with Hodaka, an innovative producer of high-quality aluminium alloys, and Henan Mingtai Aluminum Co., Ltd, a large-scale modern aluminium processing enterprise to deliver aluminium value added products with a defined low carbon footprint.

•  The Group further enhanced its corporate governance structure, including the split of its Corporate Governance and Nominations Committee into two committees: the Corporate Governance

1 Calculated as operating cash flow less net interest paid and less capital expenditure adjusted for payments from settlement of derivative instruments, less restructuring fees and other payments related to issuance of shares and plus dividends from associates and joint ventures.

• 2 VAP includes alloyed ingots, slabs, billets, wire rod and special purity aluminium.

• 3 Excluding Onda HPP (installed capacity 0.08 GW), located in the European part of the Russian Federation, leased to

RUSAL since October 2014.

Committee and the Nominations Committee. The Board of Directors has also refreshed composition of some of its committees.

•  In January 2021, the Company announced the aluminium industry's most ambitious greenhouse gas (GHG) emissions reduction targets, of at least a 35% by 2030 (compared with 2018 levels) and to be net zero by 2050. The Group intends to publish a report on its reduction pathway in September 2021.4

•  In February 2021, the Group's Metals segment announced the acquisition of the business and assets of Aluminium Rheinfelden GmbH, one of Germany's leading manufacturers of aluminium alloys, semis and carbon-based components and a major supplier to the global automotive industry, with a production capacity of 30 thousand tonnes of alloys per annum. This will allow the Company to reinforce its position as a world-leading supplier of low-carbon aluminium products and solutions to both automotive and non-automotive customers.

USD million (except %)	FY20	FY19	chg,%
Revenue	10,356	11,752	(11.9%)
Primary aluminium and alloys sales5	6,969	7,906	(11.9%)
Alumina sales	533	664	(19.7%)
Electricity sales	1,169	1,300	(10.1%)
Heat sales	426	462	(7.8%)
Other	1,259	1,420	(11.3%)
Adjusted EBITDA6	1,861	2,127	(12.5%)
Adjusted EBITDA margin	18.0%	18.1%	(0.1pp)
Net profit	1,016	1,304	(22.1%)
Net profit margin	9.8%	11.1%	(1.3pp)
Net debt7	9,826	10,204	(3.7%)
Free cash flow8	968	1,614	(40.0%)
LME aluminium price per tonne	1,702	1,792	(5.0%)

Lord Barker, Executive Chairman of En+ Group, said:

"2020 was a year unlike any other, yet despite the huge challenges of the COVID-19 pandemic, the En+ Group produced robust results against a backdrop of volatile prices and fluctuating economic trends. This is testament to the resilience and agility of our vertically integrated business model, but most of all to the remarkable resilience of our employees.

"The safety and health of our employees is the absolute priority of En+ Group. The Company purchased substantial amounts of personal protective equipment, medical equipment and medicines for medical

• 4 Scope 1 and 2, as benchmarked against the Group's 2018 GHG emissions.

• 5 Consolidated data.

• 6 Adjusted EBITDA for any period represents the results from operating activities adjusted for amortisation and depreciation, impairment charges and loss on disposal of property, plant and equipment for the relevant period.

7 The sum of loans and borrowings and bonds outstanding less total cash and cash equivalents as at the end of the relevant period.

8 Calculated as operating cash flow less net interest paid and less capital expenditure adjusted for payments from settlement of derivative instruments, less restructuring fees and other payments related to issuance of shares and plus dividends from associates and joint ventures.

institutions in the regions, in which we operate. We conducted free testing and initiated a vaccination programme for employees in Russia and other countries.

"We also sustained our investment in enhanced operational efficiency, delivered by our New Energy programme, which contributed to the robust performance of our Power segment in 2020. We also stayed close to our customers and were able to maintain overall aluminium sales volumes, actually increasing market share and sales of value-added product to our clients in countries where the impact of COVID-19 was less severe.

"Furthermore, despite COVID-19, the Group did not falter in its commitment to leading the aluminium industry into the low-carbon economy. This culminated in the announcement in January 2021 of our commitment to become a 'Net Zero' emitter of GHGs by 2050. This over-arching ambition now informs every aspect of Group strategy going forward - net zero is both our biggest challenge and our greatest commercial opportunity. Coupled with our new commitment to reduce GHG emissions by at least 35% by 2030, we believe these are the boldest carbon reduction targets yet seen in the global aluminium industry. In the year of the Glasgow Climate Conference, we intend to reinforce further our climate leadership role, with industrial innovation at the heart of our approach.

"In 2020 we continued to make the case for greater transparency in the carbon content of aluminium, pressing the London Metal Exchange to impose mandatory, as opposed to voluntary, disclosure of the carbon content of all metals traded on the exchange. We also highlighted the unique potential for low-carbon aluminium to help power Europe's COVID-19 recovery package and the European Union's climate transition strategy.

"We are working hard engaging with customers, regulators and other key decision makers in major aluminium markets to take measures that will incentivise producers to reduce the carbon footprint of their metals more aggressively.

"Despite the continuing uncertainty as markets recover at different rates around the world, aluminium markets showed improving dynamics as the effect of the pandemic lessened over the second half of 2020, with a strong price recovery in the early part of 2021. We are confident in both the long and the short-term drivers for demand for low carbon aluminium across a diverse range of end use markets. As the world looks to 'build back better' from the economic crisis left by the pandemic, our clean metals will be a vital and sustainable resource.

"More broadly, En+ remains committed to market leading standards of corporate governance and to rigorous ongoing compliance with the "Barker Plan" agreed with OFAC in 2019.

"In summary, as we cautiously emerge from the worst impacts of the COVID-19 pandemic, our group faces the future with increasing confidence. Therefore, knowing how important the resumption of dividends is for our shareholders, I very much hope that if the global recovery is sustained through this year that we will be in a position to recommend a return to our full dividend policy on the back of our first half results for 2021."

Consolidated results

Revenue

In 2020, revenue decreased by 11.9% y-o-y to USD 10,356 million, reflecting a 5.0% decline in the average LME aluminium price during the period, a 6.0% decline in sales volumes of primaryaluminium and alloys given normalised levels of inventories of primary aluminium in 2020. The revenues from the Power segment were impacted by 11.4% rouble depreciation.

EBITDA

In 2020, the Group's Adjusted EBITDA decreased 12.5% y-o-y to USD 1,861 million, reflecting the revenue impacts described above, offset by tight cost control and the positive effect of rouble depreciation on production costs. The Group's Adjusted EBITDA margin for the reporting period remained almost unchanged at 18.0%.

Net profit

Net profit decreased by 22.1% in 2020 to USD 1,016 million (USD 1,304 million in 2019). The decrease was driven mainly by the same factors that influenced the decrease in EBITDA, as well as a decrease in the share of profit obtained by the Group from its associates and joint ventures, impacted by provisions made in respect of environmental costs.

Capital expenditure

The Group's capital expenditure amounted to USD 1,128 million in 2020 (up 6.3% y-o-y).

The Power segment's capital expenditure accounted for USD 237 million in 2020, as compared to USD 236 million in 2019. The Metals segment's capital expenditure amounted to USD 897 million in 2020 as compared to USD 848 million in 2019.9 See below for more detail on capex spent in each segment.

Debt position

The Group's net debt as of 31 December 2020 decreased by 3.7% as compared to 31 December 2019, and amounted to USD 9,826 million. The net debt attributable to the Metals segment decreased by 14.0% y-o-y, to USD 5,563 million as of 31 December 2020. The net debt attributable to the Power segment increased by 14.0% y-o-y and accounted for USD 4,263 million as of 31 December 2020.

Free cash flow

In 2020, the Group's free cash flow decreased by 40.0% to USD 968 million from USD 1,614 million in 2019, reflecting a combination of lower cash flow from operating activities and higher capital expenditures.

Net-zero Pathway Update

The Company has moved forward since the announcement in January of its commitment to targets of at least a 35% reduction in Carbon emissions by 2030 and to be net zero by 2050 (scope 1 and 2) as benchmarked against the Group's 2018 emissions. The Climate Change Taskforce is in place, it will report to the Board in due course and is on target to publish the Group's roadmap to net zero in September 2021 as planned.

Dividends

The Group's dividend policy, approved by the Board on 14th November 2019, remains unchanged. The policy stipulates that when determining the size of the dividends recommended to the General Shareholders Meeting the Board shall calculate the minimum dividends as:

•  75% of free cash flow of the Power segment, subject to a minimum of USD 250 million per annum; and

•  100% of dividends received from UC RUSAL.

9 Before consolidation adjustments.