Raspadskaya : has published its financial results for 2022

Raspadskaya PJSC announces IFRS results for 2022

Moscow, 16 March 2023 - PJSC Raspadskaya (MOEX: RASP; "Raspadskaya" or "the Company") today announces its consolidated IFRS results for 2022.

Financial performance	2022	2021	Change	Change, %
	US$ million
Revenue	2,842	2,098	744	35
Cost of sales	(1,102)	(807)	(295)	37
Gross profit	1,740	1,291	449	35
Selling and distribution expenses	(542)	(82)	(460)	n/a
General and administrative expenses	(106)	(74)	(32)	43
Social expenses	(7)	(4)	(3)	75
Gain/(loss) on disposal of property, plant and equipment	(8)	(5)	(3)	60
Impairment of assets	(24)	(11)	(13)	n/a
Foreign exchange gains/(losses)	(51)	23	(74)	n/a
Other operating income	9	10	(1)	(10)
Other operating expenses	(11)	(27)	16	(59)
Operating profit	1,000	1,121	(121)	(11)
Interest income	20	2	18	n/a
Interest expense	(22)	(33)	11	(33)
Share of profits in associates	1	-	1	100
Profit before income tax	999	1,090	(92)	(8)
Income tax expense	(217)	(215)	2	1
Profit for the period	782	875	(93)	(11)
Net profit margin	27%	42%
Earnings per share,cents	117.2	130.8	(14)	(10)
EBIT	1,090	1,118	(28)	(3)
EBITDA	1,295	1,332	(37)	(3)
Capital expenditure (CAPEX)	231	228	3	1
	31 December 2022	31 December 2021
Debt	23	421	(398)	(95)
Cash and cash equivalents	385	400	(15)	(4)

EXTERNAL CHALLENGES AND THEIR IMPACT ON THE COMPANY

• The economic sanctions imposed by the US, the EU and other countries against many Russian state and commercial organisations, including banks, certain economy sectors and individuals, caused Russia's economy to slow down and fenced off from global capital markets.
• Many foreign enterprises announced the suspension of operations in or the termination of deliveries to Russia. The EU and the UK banned imports of certain metal products and coal from Russia.
• The Russian metals and mining sector in general, and the Group in particular, have been adversely affected by international sanctions and are facing difficulties in selling their products globally.
• Export and import restrictions, limited access to international capital markets and technologies, restrictions on cross-border dividend payments and borrowings altogether produce a negative impact on the Group's operations.
• As a result of supply chain disruptions, the Company was forced to create extra stocks of spare parts and materials, which boosted the need for working capital.
• A spike in inflation as in Russia, so abroad and stronger rouble have negatively affected the costs.
• The global macro economic environment remains volatile and its impact on the Group's performance and financial position is currently unpredictable.

OUR RESPONSE

• The management is closely monitoring the economic situation and doing its best to make the operations more resilient.
• The Company is adapting export channels to the ongoing developments to ensure timely revenue inflows by actively tapping into the Indian market and diverting European exports to the Asia-Pacific.
• The Group has moulded a strategy to switch to alternative suppliers, all the necessary deliveries are being carried out.
• The Company is running a cost-cutting programme, while also actively implementing digital technologies to increase efficiency.

DIVIDENDS

• The Board of Directors has decided not to recommend the payment of dividend for 2022.

OPERATIONAL PERFORMANCE IN 2022

• Due to the change in delivery terms and higher selling prices on coal products, the revenue increased to US$2,842 million, up US$744 million from 2021.
• EBITDA came in at US$1,295 million as compared to US$1,332 million in 2021.
• Net operating cash flow amounted to US$915 million as compared to US$869 million in 2021.
• The Company generated net profit of US$782 million vs US$875 million in 2021. Earnings per share totalled US$117.2 cents.

· Net profit margin declined from 42% in 2021 to 28% in the reporting period.

• The output of raw coking coal of all grades was 21.5 mt in comparison to 22.8 mt in 2021.
• Working capital increased by US$385 million y-o-y, following changes in the sales chain and an increase of payments processing time for export deliveries.
• Selling and distribution expensed increased by US$460 million y-o-y due to the start of FOB, CIF and CFR terms deliveries, most part of this increase was also recognised in revenue.
• The cash cost per tonne of concentrate increased by 69% (US$27) y-o-y to US$66 per tonne.
• CAPEX amounted to US$231 million vs US$228 million in 2021.
• The Company has fully repaid the bank loans which were received in 2021.
• As of 31 December 2022, cash and cash equivalents totalled US$385 million.

Ilya Shirokobrod, CEO of Raspadskaya Coal Company, commented:

"Last year was one of the most challenging period in the Company's history. The Group was materially impacted by the increased geopolitical tension, global economic slowdown, weaker demand for coking coal amid a slump in steel production, and increased competition in Russia driven by export restrictions.

However, we demonstrated robust financial results on the back of higher coal prices, with revenue reaching US$2.8 billion and EBITDA coming in at US$1.3 billion. In 2022, we paid US$247 million in dividends, and also used about US$400 million to pay off debt. At the same time, operational performance in 2022 did not live up to our expectations.

Needless to mention that last year we drafted a new development strategy for the Company and sought to standardise our key production processes as a way to ensure successful growth and higher production volumes amid unprecedented market volatility.

Despite the challenges, we don`t hold back on our commitment to sustainability and ESG principles, so the health and safety of our own and contractor employees remain the Company's key priority. Even though we have brought our lost-time injury frequency rate (LTIFR) down to 2.76 in the reporting period, our assets have recorded four fatalities, which is unacceptable. Evidently, there is still a room for improvement of safety controls and prevention measures.

In addition to safety enhancement efforts, in 2022 the Company kept working to meet its 2030 environmental targets and develop its ESG strategy.

Despite the robust financial performance, the Board of Directors does not currently consider the payment of dividends for 2022 to be in the best interests of the Company and its shareholders given the persistently high volatility in key sales markets, geopolitical developments, existing restrictions and the Company's business growth plans.

In 2023, saving the team and ensuring business continuity will remain our top priority. The Company's management and me personally are focusing on keeping our business resilient, streamlining production, and delivering of our plans to ramp up mining volumes. I am confident that our commitment and teamwork will help us tackle all challenges head-on."