Evercore Annual Report 2020

← All annual reports

FY2020 Annual Report · Evercore

Loading PDF…

For a Better Future

Annual report & accounts 2020

MEET EVRAZ

For our
PARTNERS

For our
PEOPLE

For our
COMMUNITY

million tonnes

steel products sales

69,619

employees

as of 31 December 2020

US$ 31

million

Social and social infrastructure
maintenance expenses

LEADER

• In construction and railway product markets in Russia.

• The largest coking coal producer in Russia.

• In production of rails and large diameter pipes in North America.

Global footprint

Canada ↘

USA ↘

London Office •

Switzerland ↗

• Moscow Office

↙ ↙ Russia

↙ Czech
Republic

↙ Kazakhstan

Annual report & accounts 2020CONTENTS

→ Meet EVRAZ

→ EVRAZ in figures

→ Strategic report
Chairman’s introduction

Chief executive officer’s letter

EVRAZ’ business model

Operational model

Sustainable development

EVRAZ business system

Market review

Strategic priorities

Key performance indicators

Impact of COVID-19

Financial review

Business review

Corporate Social Responsibility

Customer-centric R&D

Digital transformation

Principal risks and uncertainties

Viability statement

Statement in accordance with S172 of the Companies Act

Non-financial reporting

→ Corporate governance

Board of Directors

Management

Corporate governance report

Stakeholder Engagement

Audit Committee report

Nominations Committee report

Health, Safety and Environment Committee

Remuneration report

Directors report

Directors responsibility statement

→ Financial statements

Independent Auditors report to members of EVRAZ plc

Consolidated financial statements

Separate financial statements

→ Additional information

Stock performance indicators and shareholder information

Definitions of selected alternative performance measures

Data on mineral reserves

Short summary of relevant anti-corruption policies

Terms and abbreviations

Contact details

4
5

100
101

104

106

116

118

124

126

128

140

145

146
147

158

236

250
251

253

256

257

258

262

Report boundaries

This annual report
(“the Report”) presents
the results for EVRAZ plc
and its subsidiaries for 2020
divided into segments:
Steel; Steel, North America;
and Coal. It details the Group’s
operational and financial
results and corporate social
responsibility activities in 2020.

The Report has been
prepared in accordance
with the disclosure
requirements of the United
Kingdom and the Financial
Conduct Authority:
the Companies Act
2006, the Listing Rules,
the Disclosure Guidance
and Transparency Rules,
and the Competition
and Market Authority.
The Report has also been
prepared taking into account
the International Integrated
Reporting Framework,
and sustainability reporting
best practices.

→ Steel segment

→ Steel, North America segment

→ Coal segment

Global footprint

Annual report & accounts 2020

EVRAZ IN FIGURES
FINANCIAL HIGHLIGHTS

Consolidated revenues by segment, US$ million

Consolidated EBITDA by segment, US$ million

9
7
8
8

3
4
1
,
8

9
6
9
6

7
3
3
2

1
2
0
2

0
9
4
,
1

3
8
5
2

0
0
5
2

9
7
7
,
1

2
7
4

3
8
4

0
1
4

)
5
3
4
,
1
(

)
2
4
2
,
1
(

)
4
9
8
(

6
3
8
2
1

5
0
9
,
1
1

4
5
7
,
9

2
7
6
2

0
3
9
,
1

5
9
7
,
1

8
1
2
,
1

3
4
8

0
0
4

)
8
2
(

4
1

8
3

7
1

8
1

5
1

)
5
4
1
(

)
3
9
(

)
5
0
1
(

7
7
7
,
3

1
0
6
2

2
1
2
2

Steel

Coal

Steel, NA

Other
operations

Eliminations

Total

Steel

Coal

Steel, NA

Other
operations

Eliminations
and unallocated
subsidiaries

Total

2018

2019

2020

2018

2019

2020

Read more on page 255 →

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationIMPACT OF COVID-19

EVRAZ is closely monitoring the pandemic and its impact on employees, operations
and the broader stakeholder base. The Group is committed to doing all reasonable steps
to protect the lives and health of employees and minimise the effect on its enterprises
and the communities in which it operates.

Impact on key markets

Global steel prices continued to slide
throughout spring 2020, primarily due
to the initial outbreak of COVID-19 in China.
In March, as the pandemic spread, several
key markets in Southeast Asia were locked
down, including the Philippines, Thailand
and Indonesia, among others.

To hedge against the risk of production
disruptions, the Group extended
the order book for semi-finished products
with overseas customers where possible.
In early April, the only accessible market
was China, one of the first countries
to stabilise amid the pandemic and restore
consumer activity. Facing such limited
demand, the price decline on global
markets accelerated. However, from early
May, as countries started to ease lockdown
restrictions and market conditions improved,
the trend reversed and prices recovered,
even gaining additional positive momentum,
which helped to end the year with growth.

For more details about the performance
of key markets in 2020, see Market Review
on pages 20-23 →
Impact on operations

The Group remains closely focused on its
operations, including logistics, supply
and technological processes. Despite
the fact that more than 6,700 employees
contracted COVID-19 in 2020, EVRAZ faced
no significant issues with the production

or supply of raw materials and other goods.
Shipments continued and raw material
deliveries to enterprises were stable.

Impact on liquidity, solvency
and access to financing

In 2020, the pandemic had a limited
impact on the Group’s liquidity. Despite
the negative market trends seen mostly
in the first half of the year, operations
and sales continued to generate sufficient
operating cash flow through the year, while
EVRAZ proactively addressed its upcoming
obligations and maintained a strong
liquidity position. As of 31 December 2020,
cash and cash equivalents stood at around
US$1.6 billion, supported by operating cash
flow and financing initiatives.

For more details, see Financial Review
on pages 32-43 →

Measures taken to protect
the wellbeing and safety
of employees and local
communities

• Two-week isolation with salary

for employees returning from trips abroad,
either personal or work-related.
• Remote work, as well as additional
personal protection equipment
for employees who must come to work,
including eye protectors, respirators
and gloves.

• Installation of thermal imaging devices
and pyrometers at facility entrances
to monitor people’s temperatures.

• Elimination of large gatherings where
possible (with social distancing when
they must take place) and cancellation
of all major corporate, sporting
and entertainment events.

• Increase in supplies of antiseptic

and disinfectant products in communal
areas, as well as regular sanitation
of facilities and transport.

• Campaigns to raise awareness

among employees and contractors
about behavioural guidelines, social
distancing and personal protection.
• Access to a telemedical consultancy

service.

Since March 2020, in response
to the COVID-19 pandemic, the Group has
introduced numerous additional safety
measures to protect its people and ensure
operational continuity:
• Significant reduction of domestic business
travel and cancellation of overseas trips.

In addition to caring for the physical health
of employees and their families, EVRAZ
is carefully assessing the possible mental
impact of the measures being undertaken
to prevent the spread of COVID-19. More
than 4,500 employees of the Group were
switched to remote work during the peak
of the pandemic.

Annual report & accounts 202030 | 31

Since March 2020, EVRAZ has undertaken
additional measures aimed at supporting
the wellbeing and mental health of its
employees during the pandemic:
• The corporate website has been updated

with a special page containing information
about COVID-19 (https://www.evraz.
com/en/covid-19/) and the actions that
the Group is taking amid the pandemic.
The page provides phone numbers
for 24/7 corporate hotlines if employees
have questions or encounter problems.
EVRAZ North America has engaged
external providers for this purpose.

• Employees receive regular emails on topics
such as how to deal with stress and anxiety;
manage remote teams effectively; handle
conflicts at home; and organise children’s
education and entertainment; as well
as the importance of leisure time amid self-
isolation and other restrictions.

• Virtual meetings with senior management

are being held, allowing employees
to participate and ask questions.

• Corporate challenges are regularly being
set to promote positive change. As part
of the “We Do Not Risk” social media
challenge, for every post by participants,
EVRAZ is providing antiseptic
and masks to doctors at municipal hospitals
in Nizhny Tagil, Kachkanar, Novokuznetsk
and Mezhdurechensk. The “What I Will
Do After Self-Isolation” challenge allows
employees to share their thoughts
and improve their outlook by seeing what
colleagues are planning.

• The PR function is sending newsletters
to inform employees about the Group’s
work to deal with the virus, as well as global
and local events.

• The IT function has rolled out a mobile

application for employees in Russia called
“Antivirus” to promptly alert employees
of possible COVID-19 exposure. It is based
on the “Stopp Corona” application, which
was developed jointly by Accenture
and the Austrian Red Cross to identify
symptoms more efficiently.

In addition to these measures, the IT and HR
functions are conducting regular employee
surveys to learn about their experience
of working remotely, as well as any technical

or personal problems, what help is needed
from the Group, and what can be improved.

Outlook

In 2020, EVRAZ financed the purchase
of specialised equipment, transport
and protective gear for hospitals
in Russia’s Sverdlovsk and Kemerovo
regions. In particular, Novokuznetsk’s
municipal clinical infectious disease
hospital No. 8 is being renovated
to accommodate a polymerase chain
reaction (PCR) laboratory. It will offer
COVID-19 tests and same-day results,
and its new equipment will be able to screen
for different viruses without having to be
adapted.

Additionally, the Group opened a COVID-19
treatment facility for its employees
at the Urals Vladislav Tetyukhin Medical
and Rehabilitation Centre. Put into
operation in December 2020, the facility
is fully equipped to treat COVID-19 patients
and can admit up to 25 people. To equip
the facility, EVRAZ financed the acquisition
of ventilators, a fibre-optic bronchoscope,
a defibrillator, 25 oxygen humidifiers,
as well as an Airvo 2 machine with a supply
of consumables to treat breathing disorders
and facilitate transition from artificial lung
ventilation to oxygen therapy. The facility
has two zones, one for the medical
personnel and one for the patients.
Doctors and nurses work in weekly shifts;
catering is provided to them in disposable
containers. Over 40 employees of EVRAZ
NTMK and EVRAZ KGOK have been
treated at the facility. The Group is currently
considering setting up a post-treatment
rehabilitation centre and will expand its
cooperation with medical organisations
in local communities.

Since the outset of the pandemic, EVRAZ
has allocated more than US$25 million
to ensure safe working conditions
for employees, as well as to support
medical and pre-school institutions in local
communities in Sverdlovsk and Kemerovo
regions, Moscow and Tula.

The management of EVRAZ plc has
considered the Group’s cash flow forecasts
for the period to 30 June 2022 being its
going concern assessment period and has
evaluated various financial performance
scenarios, including a base, pessimistic
and an additional stress downside test
scenario. These scenarios considered
the possible impacts of the COVID-19 crisis
on the financial results and liquidity position
of the Group as well as the potential impact
of the possible coal assets demerger (Note
2, Accounting Judgements).

The most pessimistic stress scenario is based
upon results at the level experienced
in 2009, the lowest reported results since
the Group listed in 2005, and assumes prices
for steel, iron ore and coal all significantly
below management’s current forecasts.
In this scenario, the Group maintained
sufficient liquidity for the period to 30
June 2022 and would be able to operate
within its debt covenants. Furthermore,
since 2009 the Group disposed of some
of its low-performing assets in South Africa,
Ukraine, North America and the Czech
Republic and acquired additional assets
in the Russian Federation, which have
improved the Group’s profitability despite
an overall decrease in steel production
capacity. The conclusions below
are not changed by any currently expected
potential impacts of the possible coal assets
demerger, a transaction within the Group’s
control and which it would not proceed
with if it were to have a detrimental impact
on going concern or shareholder value.

The Group does not reasonably anticipate
that the most pessimistic stress scenario
will occur, given the relatively limited
impacts on the Group’s businesses to date
and the signs of a recovery in key markets.

Based on this analysis and other currently
available facts and circumstances directors
and management have a reasonable
expectation that the Company
and the Group have adequate resources
to continue in the foreseeable future.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationFINANCIAL REVIEW

Nikolay Ivanov
Chief Financial Officer

as a result of a decline in prices for raw
materials, including coal, scrap and other
raw materials, and exchange rate impact
on rouble denominated costs.

The Steel, North America segment’s
EBITDA decreased due to lower revenues
from sales of flat-rolled, tubular, railway,
and construction products.

The Coal segment’s EBITDA was down, amid
lower coal product sales prices, while the cost
of sales was largely unchanged.

Eliminations mainly reflect unrealised profits
or losses that relate to the inventories
produced by the Steel segment on the Steel,
North America segment’s balance sheet,
and coal inventories produced by the Coal
segment on the Steel segment’s balance
sheet.

STATEMENT OF OPERATIONS

In its full-year financial results for 2020,
EVRAZ reported a 18.1% year-on-year
decrease in consolidated revenues, which
totalled US$9,754 million, compared
with US$11,905 million in 2019. The reduction
was primarily the result of a drop in sales
prices for steel, vanadium and coal products
against a background of less favourable
market trends.

EVRAZ’ consolidated EBITDA amounted
to US$2,212 million in the period, compared
with US$2,601 million in 2019, with the EBITDA
margin rising to 22.7%, from 21.8%, and free
cash flow amounting to US$1,020 million
in 2020. The decline in EBITDA was primarily
attributable to lower steel, vanadium and coal
product sales prices, as well as lower sales
of tubular and flat-rolled steel products
resulting from weakening market demand
in North America.

The Steel segment’s revenues (including inter-
segment) dropped by 14.4% year-on-year
to US$6,969 million, or 65.4% of the Group’s
total before elimination. The decrease
was mainly due to lower revenues from sales
of vanadium and steel products, which fell

by 46.0% and 8.4% year-on-year respectively.
This was primarily due to a downturn
in average sales prices of 42.7% for vanadium
and 9.4% for steel products, underpinned
by unfavourable market conditions.
The Group’s lower prices from sales of steel
products were partly offset by higher sales
volumes, which increased from 11.0 million
tonnes in 2019 to 12.1 million tonnes in 2020,
following an increase in production volumes
at Russian mills amid higher demand.

The Steel, North America segment’s revenues
decreased by 28.8% year-on-year. Steel
product revenues fell by 29.2%, driven
by declining sales volumes (down 21.7%)
and lower prices (down 7.5%).

The Coal segment’s revenues fell by 26.3%
year-on-year, due to a 35.1% decline in coal
product sales prices which was partly offset
by a 9.6% increase in coal product sales
volumes. Coal prices followed the downward
trend set by global benchmarks during
the period.

In 2020, the Steel segment’s EBITDA rose
amid lower expenses compared to revenue,

32 | 33

Revenues, US$ million

Segment

Steel

Steel, North America

Coal

Other operations

Eliminations

Total

Revenues by region, US$ million

Region

Russia

Asia

Americas

CIS (excl. Russia)

Europe

Africa and the rest of the world

Total

EBITDA, US$ million

Segment

Steel

Steel, North America

Coal

Other operations

Unallocated

Eliminations

Total

2020

6,969

1,779

1,490

410

(894)

9,754

2020

3,722

2,949

1,915

584

461

123

9,754

2020

1,930

(28)

400

(126)

2,212

2019

8,143

2,500

2,021

483

(1,242)

11,905

2019

4,373

2,893

2,709

865

956

109

11,905

2019

1,795

843

(141)

2,601

For the definition of EBITDA, please refer to page 253

The following table details the effect of the Group’s cost-cutting initiatives.

Effect of Group’s cost-cutting initiatives in 2020, US$ million

Improving yields and raw material costs, including

Various improvements at coal washing plants and mines

Auxiliary materials and service costs of Urals and Siberia operations

Auxiliary materials and service costs of North American and Vanadium operations

Increasing productivity and cost effectiveness

Others, including

Reduction of general and administrative (G&A) costs and non-G&A headcount

Assets optimisation

Total

Change

(1,174)

(721)

(531)

(73)

348

(2,151)

Change, %

(14.4)

(28.8)

(26.3)

(15.1)

(28.0)

(18.1)

Change

Change, %

(651)

(794)

(281)

(495)

(2,151)

(14.9)

1.9

(29.3)

(32.5)

(51.8)

12.8

(18.1)

Change

Change, %

135

(66)

(443)

(3)

(27)

(389)

7.5

n/a

(52.6)

(16.7)

(10.6)

(56.3)

(15.0)

102

192

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationRevenues, cost of revenues and gross profit of segments, US$ million

2020

2019

Change

Change, %

Steel segment

Revenues

Cost of revenues

Gross profit

Steel, North America segment

Revenues

Cost of revenues

Gross profit

Coal segment

Revenues

Cost of revenues

Gross profit

Other operations – gross profit

Unallocated – gross profit

Eliminations – gross profit

Total

Gross profit, expenses and results, US$ million

Gross profit

Selling and distribution costs

General and administrative expenses

Social and social infrastructure maintenance expenses

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

Impairment of assets

Foreign exchange gains/(losses), net

Other operating income and expenses, net

Profit from operations

Interest expense, net

Share of profits/(losses) of joint ventures and associates

Impairment of non-current financial assets

Gain/(loss) on financial assets and liabilities, net

Gain/(loss) on disposal groups classified as held for sale, net

Other non-operating losses, net

Profit before tax

Income tax expense

Net profit

6,969

(4,596)

2,373

1,779

(1,604)

175

1,490

(1,027)

463

115

(8)

(76)

3,042

2020

3,042

(840)

(552)

(31)

(3)

(310)

408

(43)

1,671

(322)

(71)

1,295

(437)

858

8,143

(5,836)

2,307

2,500

(2,204)

296

2,021

(1,046)

975

116

(4)

(58)

3,632

2019

3,632

(966)

(611)

(26)

(442)

(341)

(32)

1,217

(328)

(56)

902

(537)

365

(1,174)

(1,240)

(721)

600

(121)

(531)

(20)

(512)

(1)

(590)

Change

(590)

126

(5)

(6)

132

749

(11)

454

(7)

(56)

(88)

(28)

393

100

493

14.4

(21.2)

2.9

(28.8)

(27.2)

(40.9)

(26.3)

(1.9)

(52.5)

(1.0)

n/a

(31.0)

(16.2)

Change, %

(16.2)

(13.0)

(9.7)

19.2

n/a

(29.9)

n/a

34.4

37.3

(1.8)

(77.8)

n/a

(96.6)

43.6

(18.6)

n/a

In 2020, selling and distribution expenses fell
by 13.0%, amid lower railroad transportation
costs related to lower shipment volumes
and tariffs. General and administrative
expenses fell by 9.7%, mostly due
to a furlough in the May-July period and staff
reductions in North America caused by weak
market conditions and idling.

In 2020, EVRAZ recognised a US$310
million impairment loss. As a result
of impairment testing, in 2020, the Group
recognised a US$234 million impairment loss
with respect to the Large diameter pipes
cash-generating unit, which was allocated
to goodwill (US$65 million), intangible
assets (US$16 million) and property, plant

and equipment (US$153 million) and a US$67
million impairment loss with respect
to the Oil Country Tubular Goods cash-
generating unit, which was allocated
to goodwill. The impairment was caused
by the reassessment of demand on the steel,
oil and commodities markets in the USA
and Canada.

Annual report & accounts 202034 | 35

Foreign exchange gains amounted
to US$408 million, mainly related to intra-
group loans denominated in roubles
and payable by subsidiaries, whose functional
currency is the US dollar, to the Russian
subsidiaries, which have the rouble
as their functional currency. The depreciation
of the Russian rouble against the US dollar

in 2020 led to exchange gains recognised
in the income statements of non-Russian
subsidiaries.

The loss on financial assets and liabilities
amounted to US$71 million and consisted
primarily of losses on foreign currency swap
contracts.

For the reporting period, the Group had
an income tax expense of US$437 million,
compared with US$537 million in 2019.
The change reflects the decline
in the operating results.

Cash flow, US$ million

Cash flows from operating activities before changes
in working capital

Changes in working capital

Net cash flows from operating activities

Short-term deposits at banks, including interest

Purchases of property, plant and equipment
and intangible assets

Proceeds from sale of disposal groups classified as held for sale,
net of transaction costs

Other investing activities

Net cash flows used in investing activities

Net cash flows used in financing activities

including dividends paid

Effect of foreign exchange rate changes on cash
and cash equivalents

Net increase/(decrease) in cash and cash equivalents

Calculation of free cash flow, US$ million

EBITDA

EBITDA excluding non-cash items

Changes in working capital

Income tax accrued

Social and social infrastructure maintenance expenses

Net cash flows from operating activities

Interest and similar payments

Capital expenditures, including recorded in financing activities

Proceeds from sale of disposal groups classified as held for sale,
net of transaction costs

Other cash flows from investing activities

Free cash flow

For the definition of free cash flow, please refer to page 253.

2020

1,593

335

1,928

(647)

(624)

(1,107)

(872)

204

2020

2,212

2,203

335

(579)

(31)

1,928

(269)

(657)

1,020

2019

2,057

373

2,430

(762)

(665)

(1,415)

(1,086)

356

2019

2,601

2,615

373

(532)

(26)

2,430

(302)

(762)

1,456

Change

(464)

(38)

(502)

(3)

115

(33)

(38)

308

214

(152)

Change, %

(22.6)

(10.2)

(20.7)

(42.9)

(15.1)

(75.0)

(82.6)

(6.2)

(21.8)

(19.7)

16.7

(42.7)

Change

Change, %

(389)

(412)

(38)

(47)

(5)

(502)

105

(33)

(39)

(436)

(15.0)

(15.8)

(10.2)

8.8

19.2

(20.7)

(10.9)

(13.8)

(75.0)

(84.8)

(29.9)

In 2020, net cash flows from operating activities decreased by 20.7% year-on-year. Free cash flow for the period was US$1,020 million.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCAPEX AND KEY PROJECTS

In 2020, EVRAZ’ capital expenditures fell to US$657 million, compared with US$762 million a year earlier. Capital expenditures (including
those recognised in financing activities) for 2020 (in millions of US dollars) can be summarised as follows.

Capital expenditures in 2020

Development Projects

Steel segment

Tashtagol iron ore mine upgrade at EVRAZ ZSMK mining site
The project’s aim is to increase annual ore production at the Tashtakolsky deposit with a partial switch to sublevel caving
using mobile equipment.

Sobstvenno-Kachkanarsky deposit greenfield project
The project’s aim is to maintain production of raw ore.

Rail and beam mill modernisation at EVRAZ NTMK
The project’s aim is to increase the production of beams and of sheet piles.

Steel, North America segment

Long rail mill at EVRAZ Pueblo
The project’s aim is to replace the existing rail facility and meet the needs of customers for long rail products.

Electric arc furnace (EAF) repowering at EVRAZ Regina
The project’s aim is to increase prime coil and plate production at EVRAZ Regina and reduce electrode consumption.

Coal segment

Acquisition of equipment at Osinnikovskaya mine
Acquisition of equipment fully compliant with mining and geological conditions to provide the projected longwall load
on a monthly basis.

Access and development of reserves in the Uskovskaya mine’s seam no. 48
The project’s aim is to prepare the reserves in seam no. 48 for mining

Acquisition of equipment at Alardinskaya mine
The project’s aim is to reduce the time required for transition from longwall to longwall and to increase annual production
volumes to 3.2mt.

Access and development of reserves in the Esaulskaya mine’s seam no. 29a
The project’s aim is to relocate mining operations from seam no. 26 to seam no. 29a

Other development projects

Maintenance projects

Steel segment

Major overhaul of blast furnace no. 6 at EVRAZ NTMK

Technical re-equipment of the air heaters of blast furnace no. 2 at EVRAZ ZSMK

Other maintenance projects

Total

371

657

Annual report & accounts 202036 | 37

FINANCING AND LIQUIDITY

EVRAZ began 2020 with a total debt
of US$4,868 million.

Debt management has focused on capital
markets maturities coming due in the first
quarter of 2021. Specifically, in March 2020,
EVRAZ signed a US$750 million
committed syndicated facility with a group
of international banks with funds made
available for one year after signing. Once
utilised, this facility will be repayable
in nine equal quarterly instalments,
following a three-year grace period.
As of 31 December 2020, the US$750 million
committed syndicated facility remained
unutilised.

In the wake of uncertainties related
to the COVID-19 pandemic, the Group
decided to increase its cash
safety cushion through additional
borrowing. In March, EVRAZ utilised
RUB5,000 million (c. US$68 million
as of 31 December 2020), under its
committed credit facility with VTB. Later,
in April, it drew another RUB15,000 million
(c. US$203 million as of 31 December 2020),
under the uncommitted credit
facility with this bank. Currency risk

exposure under the first credit facility
of RUB5,000 million was hedged using
cross-currency swaps.

In November, the Group repurchased,
in a series of open market purchases,
and cancelled US$15 million
of the outstanding principal of its
US$750 million 8.25% Notes due in 2021.

These actions, partially offset by scheduled
repayments of bank loans and leases, led
to an increase in total debt during 2020
by US$115 million to US$4,983 million,
as of 31 December 2020.

During 2020, EVRAZ paid two interim
dividends to its shareholders in the amount
of US$581 million (US$0.40 per share)
in March and US$291 million (US$0.20 per
share) in October.

By the end of 2020 EVRAZ achieved
a net debt reduction of US$89 million
to US$3,356 million, compared
with US$3,445 million as of 31 December 2019.
The ratio of net debt to last twelve
months (LTM) EBITDA was 1.5 times
as of 31 December 2020, compared

with 1.3 times as of 31 December 2019.
Interest expense accrued on loans, bonds
and notes amounted to US$291 million during
the period, flat compared with the amount
of 2019, despite a higher total debt load,
reflecting lower USD and RUB base rates
since the second quarter 2020.

As of 31 December 2020, various bilateral
facilities with a total outstanding principal
of around US$1,458 million contained
financial maintenance covenants.
Maintenance covenants under these
facilities include two key ratios calculated
using EVRAZ plc’s consolidated
financials: a maximum of net leverage
and a minimum of EBITDA interest cover.
As of 31 December 2020, EVRAZ was in full
compliance with its financial covenants.

As of 31 December 2020, cash amounted
to US$1,627 million and committed credit
facilities to US$937 million, allowing
the Group to comfortably cover upcoming
maturities. Short-term loans and the current
portion of long-term loans amounted
to US$1,078 million.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationREVIEW OF OPERATIONS BY SEGMENT

Operations by Segment, US$ million

Steel

Steel, North America

Coal

Other

2020

6,969

1,930

27.7%

401

2019

8,143

1,795

22.0%

394

2020

1,779

(28)

(1.6)%

2019

2,500

1.5%

128

2020

1,490

400

26.8%

154

2019

2,021

843

41.7%

227

2020

410

3.7%

2019

483

3.7%

Revenues

EBITDA

EBITDA margin

CAPEX

Steel segment

Sales review

Steel segment revenues by product

Steel products, external sales

Semi-finished products1
Construction products2
Railway products3
Flat-rolled products4
Other steel products5
Steel products, intersegment sales
Including sales to Steel, North America
Iron ore products
Vanadium products
Other revenues
Total

2020

US$ million

6,079

2,479
2,013
1,099
146
342
37
26
146
349
358
6,969

% of total
segment
revenues
87.2

35.6
28.9
15.8
2.1
4.9
0.5
0.4
2.1
5.0
5.1
100.0

Sales volumes of Steel segment (thousand tonnes)

Steel products, external sales
Semi-finished products
Construction products
Railway products
Flat-rolled products
Other steel products
Steel products, intersegment sales
Total steel products
Vanadium products (tonnes of pure vanadium)
Vanadium in slag
Vanadium in alloys and chemicals
Iron ore products
Sinter
Pellets
Other iron ore products

Includes billets, slabs, pig iron, pipe blanks and other semi-finished products.
Includes rebar, wire rods, wire, beams, channels and angles.
Includes rails, wheels, tyres and other railway products.
Includes commodity plate and other flat-rolled products.
Includes rounds, grinding balls, mine uprights and strips.

2020
12,197
6,039
3,944
1,299
267
647
67
12,264
18,696
6,129
12,534
1,732
-
1,732
-

2019

US$ million

6,637

2,528
2,166
1,181
386
377
168
154
190
648
499
8,143

2019
12,075
5,636
3,800
1,393
622
624
318
12,393
19,334
6,451
12,883
1,895
759
1,134
2

% of total
segment
revenues
81.5

31.0
26.6
14.5
4.7
4.6
2.1
1.9
2.3
8.0
6.1
100.0

Change
122
403
144
(94)
(355)
23
(251)
(129)
(638)
(322)
(349)
(163)
(759)
598
(2)

Change, %

(8.4)

(1.9)
(7.1)
(6.9)
(62.2)
(9.3)
(78.0)
(83.1)
(23.2)
(46.1)
(28.3)
(14.4)

Change, %
1.0
7.2
3.8
(6.7)
(57.1)
3.7
(78.9)
(1.0)
(3.3)
(5.0)
(2.7)
(8.6)
(100.0)
52.7
(100.0)

Annual report & accounts 202038 | 39

Geographic breakdown of external steel product sales, US$ million

Russia

Asia

Europe

CIS

Africa, America and rest of the world

Total

2020

2,962

2,200

221

490

206

6,079

2019

3,358

2,028

492

565

195

6,638

Change

Change, %

(396)

172

(271)

(75)

(558)

(11.8)

8.5

(55.0)

(13.4)

6.3

(8.4)

In 2020, revenues from the Steel segment
dropped by 14.4% to US$6,969 million,
compared with US$8,143 million a year
earlier. The segment’s revenues were
impacted by a sharp reduction in sales prices
for vanadium products, as well as a slight fall
in construction sales prices and lower flat-
rolled sales volumes, along with lower sales
volumes in the North America segment.

Revenues from external sales of semi-
finished products decreased by 1.9% amid
a decline of 9.1% in average prices, which
was partly offset by a 7.2% increase in sales
volumes. The increase was driven primarily by
change in the product mix in favour of higher
slab and billets sales to export destinations
following a decrease in demand in Russia
amid the COVID-19 pandemic.

increase due to higher export sales volumes
to Asia following a decrease in demand
in Russia amid the COVID-19 pandemic.

Revenues from external sales of railway
products fell due to a 6.7% decrease
in volumes, which was coupled with sales
price decline of 0.2%. A key driver
of lower railway product sales volumes
during the reporting period was lower
demand for railway wheels on the Russian
market, which was also attributable
to the COVID-19 pandemic.

External revenues from flat-rolled products
fell by 62.2%. A 57.1% decrease was attributed
to a drop in sales volumes to Europe mainly
due to disposal of EVRAZ Palini e Bertoli
which took place in Q4 2019, and a 5.2%
decrease due to lower sales prices.

Revenues from sales of construction products
to third parties fell by 7.1%: a 10.9% decrease
was attributed to a reduction in average
prices, which was partly offset by a 3.8%

The share of sales to the Russian market
declined from 50.6% in 2019 to 48.7% in 2020,
following increase of export sales to Asia.

Steel segment revenues from sales of iron
ore products dropped by 23.2%. This was
due to a 14.6% decrease in sales prices,
as well as 8.6% reduction in sales volumes,
primarily as a result of the absence of sinter
sales to third parties, due to disposal
of EvrazTransUkraina and greater
requirements for own operations.

In 2020, around 63.2% of EVRAZ’ iron
ore consumption in steelmaking came
from the Group’s own operations, compared
with 66.6% a year earlier.

Steel segment revenues from sales
of vanadium products dropped by 46.0%,
primarily due to a 42.7% downturn
in sales prices in line with market trends.
Ferrovanadium prices dropped in line
with the London Metal Bulletin and Ryan’s
Notes quotations, while vanadium slag prices
fell along with vanadium pentoxide (V2O5)
quotations.

Steel segment cost of revenues

Cost of revenues

Raw materials

Iron ore

Coking coal

Scrap

Other raw materials

Auxiliary materials

Services

Transportation

Staff costs

Depreciation

Energy

Other1

2020

US$ million

% of segment
revenue

2019

US$ million

% of segment
revenue

Change, %

4,596

2,025

503

769

442

311

339

241

407

477

233

398

476

65,9

29.1

7.2

11.0

6.3

4.5

4.9

3.5

5.8

6.8

3.3

5.7

6.8

5,836

2,577

540

1,082

542

413

366

277

457

501

227

439

992

71.7

31.6

6.6

13.3

6.7

5.0

4.5

3.4

5.6

6.2

2.8

5.4

12.2

(21.2)

(21.4)

(6.9)

(28.9)

(18.5)

(24.7)

(7.4)

(13.0)

(10.9)

(4.8)

2.6

(9.3)

(52.0)

Includes goods for resale, changes in work in progress and finished goods, taxes in cost of revenues, semi-finished products, allowance for inventory and inter-segment
unrealised profit.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationIn 2020, the Steel segment’s cost of revenues
decreased by 21.2% year-on-year. The main
reasons for the increase were:
• The cost of raw materials declined

• Costs for auxiliary materials declined
by 7.4%, amid lower consumption
of auxiliary materials and auxiliary
materials prices.

by 21.4%, mainly due to lower costs
of coking coal (down 28.9%), due
to the trend on global markets, as well
as reduced use of more expensive coal
concentrate, which was replaced with a
cheaper form from Esaulskaya mine. Scrap
costs declined by 18.5%, due to lower
scrap price and lower share of scrap
in metal-charge amid increased pig iron
consumption. The decrease in raw material
costs was also accompanied by a weaker
rouble and reduced consumption due
to cost-cutting initiatives.

• Service costs declined by 13.0%, primarily

driven by the lower cost and volume
of ferrovanadium processing, whose costs
are linked to final product quotes.

• Transportation costs declined by 10.9%,

primarily due to lower shipment volumes
due to the COVID-19 pandemic, national
lockdowns, the global economic shock
and a sharp decline in economic growth
rates.

• Energy costs were lower due to the weaker
rouble, as well as higher own electricity
generation and change in fuel structure.

• Other costs were down by 52.0%, mainly
due to the lower cost of goods for resale,
amid a drop in vanadium purchase prices
in 2020, compared to 2019. Other reasons
were related to a reduction in the purchase
price of goods, higher sales of own
production scrap, and significant increases
of semi- and vanadium stocks due
to COVID-19.

Steel segment gross profit

The Steel segment’s gross profit increased
by 2.9% year-on-year, as positive effects
of lower cost outweighed the decrease
in sales volumes and prices.

Steel, North America segment

Sales review

Steel, North America segment revenues by product

Steel products

Semi-finished products

Construction products1

Railway products2

Flat-rolled products3

Tubular products4

Other revenues5

Total

2020

US$ million

of total segment
revenue

US$ million

of total segment
revenue

Change, %

2019

1,679

109

183

326

323

743

1,779

94.4

6.1

10.3

18.3

18.2

41.8

5.6

100.0

2,372

121

200

405

518

1,128

128

2,500

94.8

4.8

8.0

16.2

20.7

45.1

5.1

100.0

(29.2)

(9.9)

(8.5)

(19.5)

(37.6)

(34.1)

(21.9)

(28.8)

Sales volumes of steel products at Steel, North America segment (thousand tonnes)

Semi-finished products

Construction products

Railway products

Flat-rolled products

Tubular and other steel products

Total

2020

144

262

404

382

537

1,729

2019

Change

Change, %

192

256

441

523

795

2,207

(48)

(37)

(141)

(256)

(476)

(25.0)

2.3

(8.4)

(27.0)

(32.3)

(21.5)

Includes beams, rebar and structural tubing.
Includes rails and wheels.
Includes commodity plate, specialty plate and other flat-rolled products.
Includes large-diameter line pipes, ERW pipes and casing, seamless pipes, casing and tubing and other products.
Includes scrap and services.

6. Primarily includes transportation, goods for resale, certain taxes, changes in work in progress and fixed goods, and allowances for inventories.

Annual report & accounts 202040 | 41

The segment’s revenues from the sale
of steel products dropped, due to a
decrease of 21.7% in volumes, as well
as a decrease of 7.5% in prices. This was
mainly attributable to lower demand
on the tubular and flat-rolled market.

Revenues from the sale of semi-finished
products decreased by 9.9%, due to a
decline in sales volumes of 25.0%, following
the fulfilment of a contract with a key
customer, albeit partly offset by an increase
in prices of 15.1%.

Construction product revenues fell by 8.5%,
due to a 10.8% reduction in prices, partly
offset by a 2.3% increase in sales volumes
as a result of improved market conditions.

in prices and of 27.0% in sales volumes, as a
result of weakening market demand amid
the COVID-19 pandemic.

Railway product revenues fell by 19.5%,
driven by a decline in prices of 12.1%,
along with lower sales volumes by 8.4%,
due to reduced demand driven
by the COVID-19 pandemic.

Revenues from flat-rolled products
decreased due to declines of 10.6%

Revenues from tubular product sales fell
by 34.1% year-on-year, due to a drop
of 32.5% in volumes. This was driven
by turbulence on the oil and gas markets,
which led to falling demand, resulting
in the idling of the OCTG mills in Canada
and the US.

Steel, North America segment cost of revenues

Cost of revenues

Raw materials

Semi-finished products

Auxiliary materials

Services

Staff costs

Depreciation

Energy

Other6

2020

US$ million

% of segment
revenue

2019

US$ million

% of segment
revenue

Change, %

1,604

454

238

172

145

240

100

165

90.1

25.5

13.4

9.7

8.2

13.5

5.6

5.1

9.3

2,204

686

396

222

190

319

109

117

165

88.1

27.4

15.8

8.9

7.6

12.8

4.4

4.7

6.6

(27.2)

(33.8)

(39.9)

(22.5)

(23.7)

(24.8)

(8.3)

(23.1)

In 2020, the Steel, North America
segment’s cost of revenues dropped
significantly year-on-year driven
by declined sales volumes. The main
changes related to:
• Raw material costs fell by 33.8%,

primarily because of lower production
volumes and lower cost of scrap.
• The cost of semi-finished products

was down 39.9%, due to the reduction
of consumption at Portland Flat.

• Auxiliary material costs fell by 7.6%,
driven by lower production levels
at Pueblo and in Canada.

• Service costs went down by 23.7%, driven
primarily by lower production volumes
and mill idling.

• Staff costs decreased by 24.8%, mostly

driven by the idling of OCTG mills
in Canada and the US, an overall
decrease in production levels for other
products and a rotating furlough
schedule for salaried employees.

• Energy costs fell by 23.1%, primarily due
to reduced production levels and lower
natural gas prices.

• Other costs remained broadly flat

year-on-year.

Steel, North America segment
gross profit

The Steel, North America segment’s gross
profit totalled US$175 million for 2020,
down from US$296 million a year earlier.
The decline was driven primarily by lower
sales volumes for flat-rolled and OCTG,
due to worsening market conditions,
which was partly offset by lower prices
for raw materials, purchased semi-finished
products, staff costs, auxiliary materials
and services.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationSales volumes of Coal segment (thousand tonnes)

Coal segment

Sales review

Coal segment revenues by product

External sales

Coal products

Coking coal

Coal concentrate

Steam coal

Intersegment sales

Coal products

Coking coal

Coal concentrate

Other revenues

Total

External sales

Coal products

Coking coal

Steam coal

Coal concentrate and other products

Intersegment sales

Coal products

Coking coal

Coal concentrate

Total, coal products

Revenues from external sales of coal
products fell, amid a 37.3% reduction
in prices, partly offset by an 11.6%
increase in sales volumes. Coking coal
revenues fell by 50.0% and coking coal
concentrate revenues dropped by 22.7%
amid lower pricing, but were offset
in part by higher sales volumes. These
were driven by strong demand for coal
on the Russian market, as well as growth
in demand for coal from China. Long-
term partnerships with Japanese, Korean

2020

US$ million % of total segment
revenue

2019

US$ million

% of total
segment revenue

Change, %

929

853

536

101

435

1,490

62.4

4.9

57.3

0.2

35.9

6.8

29.2

1.7

100.0

2020

12,336

2,233

10,066

6,986

2,323

4,663

19,322

1,251

148

1,103

730

124

606

2,021

61.9

7.3

54.6

36.1

6.1

30.1

2.0

100.0

(25.7)

(50.0)

(22.7)

100.0

(26.6)

(18.5)

(28.2)

(37.5)

(26.3)

2019

Change

Change, %

11,053

1,928

9,124

6,569

2,044

4,525

17,622

1,283

305

941

417

279

138

1,700

11.6

15.8

n/a

10.3

6.3

13.6

3.3

9.6

and European clients have minimised
the impact of declining demand on these
markets.

Revenues from internal sales of coal
products were down 26.8%, mainly due
to a 33.1% reduction in sales prices,
which was partly offset by a 6.3% uptick
in volumes. Coking coal volumes rose
by 22.4%, due to increased sales of K
and KS grades.

In 2020, the Coal segment’s sales
to the Steel segment amounted
to US$537 million (36.0% of total sales),
compared with US$730 million (36.1%)
in 2019.

During the reporting period, roughly
78.0% of EVRAZ’ coking coal consumption
in steelmaking came from the Group’s own
operations, compared with 74.1% in 2019.

Annual report & accounts 202042 | 43

Coal segment cost of revenues

Cost of revenues

Auxiliary materials

Services

Transportation

Staff costs

Depreciation

Energy

Other1

2020

US$ million

% of segment
revenue

2019

US$ million

% of segment
revenue

Change, %

1,027

110

294

200

163

164

68.9

7.4

3.5

19.7

13.4

10.9

2.9

11.0

1,046

159

351

223

171

(6)

51.8

7.9

4.8

17.4

11.0

8.5

2.5

(0.3)

(1.8)

(30.8)

(45.4)

(16.2)

(10.3)

(4.7)

(15.7)

100.0

The main drivers of the year-on-year increase
in the Coal segment’s cost of revenues were
as follows:
• The consumption of auxiliary materials

decreased by 30.8% due mainly to lower
volumes of preparation at third-party plants,
the idling of production at the Raspadsky
open pit in Q2-Q3 2020, and a decrease
in the production volumes at Raspadskaya
mine.

• Costs for services dropped by 45.4%, due
mainly to lower volumes of preparation
at third-party plants, the idling
of production at the Raspadsky open

pit in Q2-Q3 2020, and a decrease
in production volumes at Raspadskaya mine.

• Transportation costs fell by 16.2% during

the reporting period, primarily due
to the idling of production at the Raspadsky
open pit mine in Q2-Q3 2020, the use
of in-house transportation equipment
instead of third-party contractor equipment,
lower volumes shipped.

• Staff costs fell by 10.3% because

of lower mining volumes as well as rouble
depreciation.

• Other costs increased during the reporting

period, mainly due to higher sales

of accumulated stock, partially offset
by higher work-in-progress, and the lower
cost of goods for resale and lower mineral
extraction tax payments, due to reduced
production levels.

Coal segment gross profit

In 2020, the Coal segment’s gross profit was
US$464 million, down from US$975 million a
year earlier, primarily due to lower sales
prices.

Nikolay Ivanov
Chief Financial Officer

1. Primarily includes goods for resale, certain taxes, changes in work in progress and finished goods, allowance for inventory, raw materials and inter-segment unrealised profit.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationBUSINESS
REVIEW

EVRAZ’ STEEL
ACROSS
THE GLOBE

RUSSIA

Amur Gas Processing Plant
→ Amur region

Arctic LNG 2 project
→ Yamalo-Nenets region,
Murmansk region

Taishet Aluminium Smelter
→ Krasnoyarsk

Skolkovo Technopark
→ Moscow

Zolotoi transport hub
→ Yekaterinburg

Kemerovo Airport → Kemerovo region
Krasnodar Airport → Krasnodar region

6.
7.
8. Udokan Metals and Mining Plant

→ Zabaikal region
9.
Kola Shipyard → Murmansk region
10. Radioactive material processing facility

11.

at Leningrad Nuclear Plant → Leningrad region
Large Circle Line and Lyublinsko-Dmitrovskaya line
of the Moscow underground → Moscow
12. Rubbish incineration facilities → Moscow region
Launchpad 1A at Angara Cosmodrome
13.
→ Amur region

14. Yubileyny underground mine → Bashkortostan
15. Nasedkino Mining and Processing Plant → Irkutsk
16. Western quay with fuel terminal at Geoport

17.

in Novorossiisk → Krasnodar
Russian Post logistics centre for Samara region
→ Samara

18. New terminal at Novosibirsk Airport

→ Novosibirsk region

NORTH AMERICA

60 Mexico City Metro Line 12

extension (Sistema de Transporte
Colectivo) → Mexico City, Mexico

61 Metro Gold Line Foothill Extension
→ Los Angeles, California, USA

Palo Alto II wind farm
(MidAmerican Energy)
→ Cylinder, Iowa, USA

63. Trans Mountain pipeline

→ Alberta/British Columbia, Canada

64. Costal GasLink pipeline → British Columbia, Canada
65. Alberta Carbon Trunk Line → Alberta, Canada
66. Interoceanic Railway of Mexico (Ferrocarril
Interoceanico de Mexico) → Mexico
67. Sound Transit Federal Way Link Extension

→ Seattle, Washington, USA

68. Central 70 → Denver, Colorado, USA
69. Southern Hills wind farm (MidAmerican Energy)

→ Creston, Iowa, USA

70. Sagamore Wind Project (Xcel Energy)

→ Rogers, Minnesota, USA

71. North Fork Ridge wind farm (Algonquin Power

& Utilities Company) → Liberal, Missouri, USA

SOUTH AMERICA

72. RUMO: track maintenance between the ports

of Santos, Paranaguá, São Francisco do Sul and Rio
Grande → Brazil

73. Peru Copper Mine → Ilo, Peru

AFRICA

74. Egyptian National Railways maintenance → Egypt
75. Greater Cairo Metro Line 3 → Egypt

Annual report & accounts 202044 | 45

19. Moscow City (15 plots) → Moscow
20. Omsk Oil Refinery → Omsk
21. Zvezda Shipyard → Bolshoi Kamen,

Primorye region

22. Surgutneftegaz → Khanty-Mansiisk region
23. Reservoirs nos. 5 and 6 at Obsk LNG

→ Yamal peninsula

24. Electricity pylons for Transneft

→ Chelyabinsk region

25. Electricity connection for infrastructure at Rosneft's

Erginsk deposits
→ Khanty-Mansiisk region

26. Power of Siberia gas pipeline → Siberia
27. Avangard Ice Arena → Omsk
28. Water Sports Centre → Yekaterinburg
29. UGMK Ice Arena → Yekaterinburg
30. Severnaya Werf Shipyard → St Petersburg
31. PhosAgro → Murmansk region
32. NOVATEK → Leningrad region

33. Lakta Centre → St Petersburg
34. Blast furnace no.3 at Severstal → Cherepovets
35. Salmanovskoye deposit → Yamalo-Nenets region
36. Ethylene plant at Nizhnekamskneftekhim

→ Tatarstan

37. GRINN shopping and entertainment centre

→ Bryansk

38. Pipe section plant at NOVATEK's Heavy

Sea Equipment Construction Centre
→ Murmansk region

39. M500 methanol unit at Shchyokino Azot

→ Tula region

40. Overhead steam pipe at Tatneft → Tatarstan
41. Nitric acid and ammonia nitrate complex
at Shchyokino Azot → Tula region
42. Field hockey stadium → Kemerovo
43. Sulphuric acid neutralisation unit at the Kolesnikov

Nadezhdinsk Metals Plant → Krasnoyarsk region

44. Noise reduction screens for the Central Ring Road

→ Moscow

45. Udarnaya Thermal Power Plant in Taman

→ Krasnoyarsk region

46. Facilities for Arctic LNG 2 project (onshore)

→ Yamalo-Nenets region

47. Afipsky Oil Refinery → Krasnoyarsk region
48. Nezhdaninskoye gold deposit → Yakutiya
49. Meat processing plant for Agroeco

→ Voronezh region

School → Magadan

50. Oil extraction plant → Kurskaya region
51.
52. Kubazz Arena stadium → Kemerovo
53. Chess centre → Khanty-Mansiisk
54. Cardboard production plant → Irkutsk region
55. Haier plant → Tatarstan
56. Ust-Luga port terminal (Ultramar)

→ Leningrad region
Sambo and boxing school → Moscow

57.
58. Associated gas processing facility → Lipetsk region
59. Makfa logistics centre → Chelyabinsk

100

CIS

200-unit in-patient treatment
facility for the presidential
administration medical centre
→ Nur-Sultan, Kazakhstan

National Centre for Oncology
Research → Nur-Sultan, Kazakhstan

Almalyk Metals and Mining Plant
→ Almalyk, Uzbekistan

81. Rixos Turkestan hotel (by MunaiKurylysServis)

→ Turkestan, Kazakhstan

82. 7,000-seat stadium (by U-Con Three)

→ Turkestan, Kazakhstan
83. New airport (by Vlasta-Servis)
→ Shymkent, Kazakhstan

84. Dramatics theatre → Turkestan, Kazakhstan
85. Glass factory (by KasAlPack)
→ Shymkent, Kazakhstan
86. Constitutional Council building
→ Nur-Sultan, Kazakhstan

79. Specialist infection hospital

87. Hematology centre

(for COVID-19 cases) → Pavlodar, Kazakhstan

→ Ust-Kamenogorsk, Kazakhstan

80. Residential buildings

in the Saryarka and Dostyk districts
→ Pavlodar, Kazakhstan

88. Uly-Dala Museum → Turkestan, Kazakhstan
89. Media centre (by U-Con Three)

→ Turkestan, Kazakhstan

ASIA

100

Kolkata Metro (RVNL)
→ India

Taipei Metro
→ Taiwan

101 Kuala Lumpur Light Rail Transit

line 3 → Malaysia

102. Tavan Tolgoi - Zuunbayan rail link (415 kilometres)

→ Mongolia

103. Oil refinery in Altanshiree, Dornogovoi province

→ Mongolia

104. Genghis Khan museum in Ulaanbaatar

→ Mongolia

105. Namviet: Vietnam Railways Maintenance

→ Vietnam

106. Sanying Line, New Taipei Metro → Taiwan

90. Mosque → Nur-Sultan, Kazakhstan
91. Hampton by Hilton hotel → Turkestan, Kazakhstan
92. Chipboard and hardboard plant
→ Mogilyov Region, Belarus

93. Tashkent City district

(residential buildings, business centre, retail and
entertainment centre) → Tashkent, Uzbekistan

94. Oil extraction plant

→ Tashkent, Uzbekistan
95. Airport → Kerki, Turkmenistan
96. Logistics centre → Fanipol, Belarus
97. Tyre centre → Kazakhstan
98. Thermal power plant reconstruction

→ Nur-Sultan, Kazakhstan

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationEVRAZ
KGOK

EVRAZ
NTMK

EVRAZ
ZSMK

EVRAZ
Caspian
Steel

KAZAKHSTAN

STEEL
SEGMENT

EVRAZ is No. 1 among rail
suppliers and the leader
in the construction steel market
in Russia. The Steel segment’s
primary focus is producing steel
in the CIS from closely located raw
materials to serve the domestic
infrastructure and construction
market while maintaining export
flexibility.

EVRAZ
Vanady-Tula

EVRAZ
Nikom

CZECH
REPUBLIC

Iron ore

Iron ore products

Slabs, billets

Construction products

Railway products

Vanadium products

Our goals

• Be a leader on the Russian construction steel market.
• Secure a leadership position on the Russian rail market.
• Be an efficient producer of steel products for infrastructure projects.

Production highlights

Crude steel

12,050 kt

Iron ore products

14,205 kt

Steel products

11,018 kt

Vanadium slag

19,533 kt

Sales highlights1

Finished products

Iron ore products

Semi-finished products

Vanadium final products

6,158 kt

1,732 kt

6,039 kt

12,534 kt

Financial highlights

Revenues

EBITDA

EBITDA margin

CAPEX

US$ 6,969 million

US$ 1,930 million

27.7%

US$ 401 million

1. Sales to third parties only.

Annual report & accounts 202046 | 47

KEY ASSETS

Mining operations

EVRAZ KGOK

EVRAZ KGOK is one of the Group’s core mining companies in Russia. Located
in Sverdlovsk region, 140 kilometres from EVRAZ NTMK, EVRAZ KGOK
mines titanomagnetite iron ore with vanadium content at the Gusevogorskoe
deposit. The vanadium content makes it possible to produce high-strength
grades of alloy steel. EVRAZ NTMK is a primary consumer of EVRAZ KGOK’s
products. At the moment, EVRAZ KGOK uses three open pits to produce ore,
which is then processed by its crushing, processing, sintering and pelletising
plants. The final product, in the form of sinter and pellets, is loaded into railway
cars and shipped to consumers, including those abroad.

EMPLOYEES:

5,948
people

CAPACITY

60
million tonnes
of ore per year

PROVEN AND PROBABLE
RESERVES:

9,734
million tonnes

EVRAZ ZSMK (mining operations)1

EVRAZ ZSMK’s mining operations include several mining and processing
facilities in Kemerovo region. It uses an underground mining process and most
of the iron ore that it produces is consumed internally by its steelmaking
operations. The mining complex includes the Tashtagol mine, the Gorno-
Shorskaya mine, the Kazskaya mine, the Gurievsky open pit for limestone, as well
as the Abagaturskaya Concentration and Sinter Plant.

EMPLOYEES:

4,464
people

CAPACITY

9
million tonnes
of ore per year

PROVEN AND PROBABLE
RESERVES:

141
million tonnes

1. Former Evrazruda

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationSteelmaking operations

EVRAZ ZSMK (Russia)

EVRAZ ZSMK has five coke oven batteries and three blast furnaces in operation.
For steelmaking, it has two oxygen converter shops, which consist of five basic
oxygen furnaces. It also has an electric arc furnace. EVRAZ ZSMK operates one
eight-strand continuous casting machine, which produces square billets, a two-
strand continuous slab casting machine, and one four-strand continuous casting
machine, which makes semi-finished products for the rail mill. Rolling facilities
include a blooming mill, one medium-section 450 mill, two small-section 250 mills,
one rail and structural steel mill, one sectional mill and two ball-rolling mills.

The EVRAZ ZSMK steel mill has its own coal washing plant for coking coal. It can
also produce customised coking coal blends if necessary.

EVRAZ NTMK (Russia)

EVRAZ NTMK has coke and chemical production facilities, two blast furnaces,
steelmaking facilities (one oxygen converter shop consisting of four LD
converters), four continuous casters, seven rolling mills, as well as a power
and heat generation plant.

EVRAZ Caspian Steel (Kazakhstan)

EVRAZ Caspian Steel has a light-section rolling mill.

EMPLOYEES:

18,067
people

CAPACITY

6.2
million tonnes
of pig iron
per year

EMPLOYEES:

13,359
people

CAPACITY

4.9
million tonnes
of pig iron
per year

7.7
million tonnes
of crude steel
per year

4.4
million tonnes
of crude steel
per year

EMPLOYEES:

202
people

CAPACITY

450
thousand tonnes
of rebars per year

Annual report & accounts 202048 | 49

Vanadium operations

EVRAZ Vanady Tula (Russia)

EVRAZ Vanady Tula is the largest European producer of vanadium pentoxide, ferrovanad
ium-50 and ferrovanadium-80, which are alloy additions used to manufacture extra high
strength steel for various applications and titanium alloys. The site’s production and scientific
resources make it possible to process any vanadium-containing materials and produce a wide
range of products.

Its production facilities are in Tula, in the Tula region of Russia. EVRAZ Vanady Tula uses low-
cost, highly efficient technology to process the vanadium slag produced by EVRAZ NTMK.

EVRAZ Nikom
(Czech Republic)

EVRAZ Nikom produces ferroalloys and corundum material. It converts the vanadium oxide
produced by EVRAZ Vanady Tula into ferrovanadium, the major vanadium product used
by the steel industry to increase strength and hardness.

Trading companies

Trading Company EvrazHolding

Trading Company EvrazHolding is the largest Russian supplier of rolled steel and sells
EVRAZ products in Russia and the CIS. It focuses on products for use in construction
and engineering, rolled products for the transportation segment (rails, wheels and specialist
products), as well as products for the mining and pipemaking sectors.

EVRAZ East Metals

East Metals AG is a Swiss-based EVRAZ trading company, which is a sole distribution
channel outside the CIS. Its main exports include semi-finished steel products (slab
and square billet), long finished products (rail, beam, wire rod and rebar), pig iron, coking
coal, vanadium products and iron ore pellets. A wide network of agencies and representative
offices (including those in China, Hong Kong, Indonesia, Japan, the Philippines, South Korea,
Taiwan, Thailand, Turkey, etc) ensures proximity to clients in key markets.

EVRAZ Metall Inprom

EVRAZ Metall Inprom is a leading Russian steel provider for infrastructure projects and trader
supplying rebar, profile, flat, tubular and rolled section steel manufactured by major plants
in the CIS. The company’s major presence in various regions of Russia is supported by a branch
network that includes 48 subdivisions, and EVRAZ Metall Inprom’s branches are advantageously
located in the industrial centres of the central, south and north-west of Russia, in Chernozemye,
Povolzhye, Siberia, the Urals and Russia’s Far East, as well as in Kazakhstan. Each subdivision’s
product range is shaped subject to local demand. Also, a park of 120 metal processing machines
allows us to satisfy the needs of those customers who needs a HVA products.

EMPLOYEES:

610
people

EMPLOYEES:

64
people

EMPLOYEES:

138
people

EMPLOYEES:

79
people

EMPLOYEES:

1,452
people

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCOAL
SEGMENT

EVRAZ ranks first among Russian
coking coal producers. The Group
offers integrated solutions to optimise
the coal blend to a global clientele
and prides itself on being a reliable
supplier. Coal and concentrate products
are used by EVRAZ steelmaking
divisions, as well as by third-party
domestic customers and export clients
in Asia and Europe.

RUSSIA

Yuzhkuzbassugol

Raspadskaya

Mezhegeyugol

The product portfolio comprises
a wide range of coking coal
blends, including hard, semi-hard
and semi-soft.

Raw coking coal

Coking coal concentrate

Our goals

• Work safely and ensure growth by using innovative

technology and methods.

• Achieve 100% self-sufficiency in all coal grades

and expand the product portfolio in insufficient grades.
• Maintain cash costs in the first quartile of the cost curve.

Production highlights

Sales highlights1

Raw coking coal

20,653 kt

Coking coal concentrate

Raw coking coal

Coking coal concentrate

13,598 kt

2,271 kt

10,065 kt

1. Sales to third parties only.

Financial highlights

Revenues

EBITDA

EBITDA margin

CAPEX

US$ 1,490 million

US$ 400 million

26.8%

US$ 154 million

Annual report & accounts 202050 | 51

KEY ASSETS

Mining and coal washing operations

Raspadskaya
EVRAZ completed the consolidation of its coal businesses under Raspadskaya
on 30 December 2020.

Mezhdurechensk site (Russia)
Raspadskaya has two operational underground coking coal mines and two open-pits
in Mezhdurechensk, the Kemerovo region. This complex includes the Raspadskaya mine,
Russia’s largest. The operations produce hard coking coal (K and OS grades), semi-hard
coking coal (GZh grade) and semi-soft coking coal (GZhO grade).

Raspadskaya’s coal washing plant is one of the most modern in Russia. It enjoys low
maintenance costs and is designed to process high volumes with a small staff.

Novokuznetsk site (Russia)
Raspadskaya has five coking coal mines in Novokuznetsk, the Kemerovo region. They
produce hard and semi-hard coking coal (Zh, GZh and KS grades), which is processed
into high-quality concentrate (classified as HCC grade internationally). Most of this
is produced in the Yerunakovskaya-8 mine.

At Novokuznetsk site Raspadskaya has two coal washing plants, which produce customised
coking coal blends and pulverised coal injection (PCI) coal. The Kuznetskaya washing plant
produces high-quality HCC concentrate for domestic market. The Abashevskaya washing
plant produces a wide variety of products whose quality matches specific customers’ needs.

Mezhegey
It was decided to stop production at the Mezhegey mine from the beginning of 2020
with the conservation of the mine until demand and market prices recover.

EMPLOYEES:

CAPACITY

15,578
people

26
million tonnes
of raw coal
per year

PROVEN AND PROBABLE RESERVES:

1,896
million tonnes

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationSTEEL,
NORTH
AMERICA
SEGMENT

EVRAZ is a leading North
American producer of high-quality,
engineered steel for rail, energy
and industrial end user markets,
with a focus on manufacturing products
with unmatched quality for the Group’s
customers. The segment is the largest
producer of rail and large-diameter pipe
(LDP) in North America.

EVRAZ also holds leading positions
in Western Canada’s oil country tubular
goods (OCTG) and small-diameter line
pipe (SDP) markets, as well as in the US
West Coast plate market.

EVRAZ
Red Deer

EVRAZ
Regina

CANADA

EVRAZ Portland

EVRAZ
Calgary

EVRAZ
Camrose

USA

EVRAZ
Pueblo

Construction products

Tubular products

Railway products

Flat-rolled products

The Steel, North America segment has three business units organised
by geographic locations: Canada, Pueblo and Portland. Each of the new
business units has product portfolios based on product mix at operating
facilities.

Each of EVRAZ North America’s business units are structured to strengthen
the focus on safety, quality and operational excellence across the Steel, North
America segment.

Production highlights

Crude steel

1,580 kt

Steel products

1,668 kt

Sales highlights1

Steel products

1,729 kt

Our goals

• Grow leadership position in North

American energy pipe market.

• Maintain leading position

in the Western region plate market.

• Expand leading position

in the rail market.

Financial highlights

Revenues

EBITDA

EBITDA margin

CAPEX

US$ 1,779 million

US$ (28) million

(1.6)%

US$ 92 million

1. Sales to third parties only.

Annual report & accounts 202052 | 53

KEY ASSETS

Canada - Steelmaking and rolling

EVRAZ Regina

EVRAZ Regina in Saskatchewan is the largest steelmaking operation in Western
Canada. It comprises two electric arc furnaces (EAFs), a ladle furnace,
a continuous variable-width slab caster, as well as a Steckel mill capable
of rolling coil and plate with a width of up to 72 inches. EVRAZ Regina Steel
produces carbon steel slabs, flat-rolled discrete plate and coiled plate. EVRAZ
Regina’s tubular operations are comprised of a 24-inch ERW line pipe mill,
a 2-inch ERW pipe mill (OCTG tubing welding), five Helical Submerged Arc-
Welded (HSAW) mills, and ID/OD coating facility, producing large-diameter
pipe for oil, natural gas, and LNG transmission. EVRAZ Regina’s tubular mills
are important suppliers to the North American energy markets, serving leading
energy producers and midstream operators in both Canada and the US.

EVRAZ Calgary

EVRAZ Calgary comprises an Electric Resistance Welded (ERW) pipe mill as well
as heat treat, API threading, and finishing lines for OCTG casing with an outside
diameter of up to 9 5/8 inches. The site also operates ERW tubing finishing facilities
comprising pipe upsetting, threading, testing and inspection. EVRAZ Calgary’s
products are primarily used in the exploration and production of oil and gas
in Canada and the US.

EVRAZ Camrose

EVRAZ Camrose operates an ERW pipe mill and finishing line, capable of producing
small-diameter line pipe and carbon OCTG casing with an outside diameter of up
to 16 inches. Camrose products are primarily used in the drilling, transmission
and distribution of oil and natural gas as well as in the transmission of other
substances such as carbon dioxide.

EMPLOYEES:

1,072
people

CAPACITY

1.1
million tonnes
of crude steel
per year

EMPLOYEES:

243
people

EMPLOYEES:

91
people

CAPACITY

186
thousand tonnes
of tubular
products

CAPACITY

118
thousand tonnes
of tubular
products

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationEVRAZ Edmonton
Coupling Machining

EVRAZ Edmonton Coupling Machining specialises in manufacturing API couplings
with an outside diameter of up to 9 5/8 inches. Couplings produced at ECM are supplied
to EVRAZ’s Calgary and Red Deer OCTG casing and tubing operations.

EVRAZ Red Deer

EVRAZ Red Deer comprises an ERW pipe mill producing OCTG casing and small-diameter
line pipe with an outside diameter of up to 13 3/8 inches. The site includes a casing heat
treat line, API and premium threading lines, as well as separate OCTG casing and SDP
finishing lines.

EMPLOYEES:

CAPACITY:

16
people

EMPLOYEES:

178
people

1.5
million
couplings per
year

CAPACITY

167
thousand
tonnes
of tubular
products

US - Steelmaking and rolling

EVRAZ Portland

EVRAZ Portland in Oregon comprises a Steckel rolling mill, a plate quench
and tempering facility, and two HSAW pipe mills. The Portland rolling mill
is the only plate mill on the West Coast and has deep-water access to the Pacific
Ocean as well as access to Class I railways and trucking routes serving North
America. Finished products include hot-rolled carbon and alloy steel plate, hot-
rolled coil, heat-treated plate, shot-blasted and primed plate, temper-passed cut-
to-length plate and plate coil. The Portland HSAW mills produce large-diameter
API grade pipe for oil and gas transmission and structural applications.

EMPLOYEES:

302
people

CAPACITY

204
thousand tonnes
of tubular products
per year

Annual report & accounts 202054 | 55

EVRAZ Pueblo

EVRAZ Pueblo in Colorado comprises three rolling mills: a rail mill; a seamless pipe mill
that produces OCTG products for use in oil and gas exploration; and a wire rod and coiled
reinforcing bar mill. EVRAZ also operates one EAF and a billet caster that supplies round
billets to the hot rolling mills. In addition, EVRAZ Pueblo owns and operates the Colorado
and Wyoming railway, a short-line route that serves the Group’s mills and connects the site
to both the Burlington Northern Santa Fe and the Union Pacific railway lines, which results
in minimal delivery costs to these customers.

In June 2020, the EVRAZ board of directors approved execution of a capital project
to construct a universal long rail mill at the Pueblo site. This project will modernise Pueblo’s
rail making capability and enable the manufacture and welding of 100m rails.

EMPLOYEES:

1,022
people

CAPACITY

1.0
thousand
tonnes
of crude steel
per year

Recycling

EVRAZ Recycling

EVRAZ Recycling is the largest metal scrap recycler in Western Canada with 13 facilities across
the prairies, as well as three facilities in the US, of which one is in North Dakota and two
are in Colorado. EVRAZ Recycling buys, processes and sells a wide range of ferrous and non-
ferrous materials, while also offering a variety of metal recycling and other services, including
auto wrecking yards that provide a great selection of low-cost parts on a self-serve basis.

EMPLOYEES:

265
people

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCORPORATE SOCIAL
RESPONSIBILITY

HEALTH, SAFETY, AND ENVIRONMENT

2020 highlights

The Group’s LTIFR
was

1.58

Employees received Risk Management
Project training

40,000

Approach to HSE management

Governance

Environmental safety and protecting the health
and safety of employees and contractors have
always been priorities at EVRAZ. The Group
is committed to enhancing its health, safety,
and environment (HSE) management system
and endeavours to provide its employees
and contractors with safe working conditions
at all its assets, while also protecting local
environments.

Health, occupational, and environmental
safety considerations are at the core
of EVRAZ’ operations. The Group has
adopted a four-phase HSE management
system that covers all levels of the business,
from development strategies to daily
operational issues.

The Group understands the importance
of having strong leaders and strives
to involve executives and managers in HSE
management processes. In 2010, the HSE
Committee at the Board of Directors
level was created in order to improve
the HSE strategy and to analyse the impact
of HSE measures on the Group. In 2018,
the EVRAZ HSE Management Committee
was established to boost the level
of engagement level of management
and enhance the safety culture within
the Group. This strategic body, which
consists of the EVRAZ CEO and vice
presidents, is authorised to set HSE goals,
approve relevant annual KPIs and take other
measures.

While the HSE Committee deals with HSE
issues at the executive level, each EVRAZ
facility has its own HSE unit subordinated
to a local management team, with the vice
president supervising the overall workstream.

EVRAZ closely adheres to the guidance
of the World Steel Association’s
Environmental Policy (EPCO)
and the Technology Policy (TPCO)
and works actively with Safety and Health
(SHCO) committees, as well as the HSE
committees of Russian Steel (a Russia-
based, non-commercial partnership)
and the Russian Union of Industrialists
and Entrepreneurs.

EVRAZ HSE management structure

HSE Committee of the Board of Directors

EVRAZ plc Board of Directors

HSE Management Committee

EVRAZ CEO

HSE Vice President

Health and Safety Directorate

Industrial Safety Directorate

Environmental Management Directorate

HSE FUNCTION AND SAFETY REPRESENTATIVES FOR ALL EVRAZ OPERATIONS

Annual report & accounts 202056 | 57

HSE system

The fundamental purpose of the HSE
management system is to ensure the safety
and health of employees by identifying
potential hazards in workplaces and facilities
and to find and evaluate sources of potential
environmental pollution and prepare
mitigation measures.

The primary HSE document is the EVRAZ
HSE Policy, which was implemented
in 2011 across the Group and amended
in 2018. The policy sets out basic HSE
principles, identifies the health and safety
of employees as a priority, determines
expectations for employees and sets out
EVRAZ’ commitment to implementing
leading environmental management
practices as part of sustainability efforts.

EVRAZ strives to adhere to all respective
local HSE laws, the Group’s internal
regulations and all HSE policy principles.
In addition to technical regulations,
the operational activities of the Group
are governed by the following HSE
documents:
• The HSE Policy.
• The Cardinal Safety Rules.
• The Fundamental Environmental

Requirements.

• The Standard Incident Reporting Rules.
The HSE management system at EVRAZ’
metallurgical plants is certified
under OHSAS 18001 and major steel entities
are certified under the ISO 14001 standard.
In 2020, Bureau Veritas Certification
RUS carried out a recertification
audit at the EVRAZ ZSMK facility
as part of meeting the requirements
of the ISO 45001 international standard.

HSE reporting system

Standard incident reporting rules, which
form part of the Incident Management
Standard, have been adopted across
the Group, in line with the principle
of making continuous improvements
to the HSE management system. If
an incident occurs, a flash report, containing
all of the details and circumstances
of the incident, as well as response actions
taken, is issued within 24 hours. The report
is distributed immediately to all relevant
managers. The local HSE department
conducts an investigation and disseminates
the key findings in order that all employees
can learn from these incidents.

The Group requires all incidents to be
investigated. In 2020, EVRAZ revised

1.
Forecast and assessment
of the main HSE risks.

4.
Analysis
of performance,
adjusting and setting
new strategic
HSE goals.

The HSE
management
process operates
in a continuous
cycle, which
consists of:

2.
Development
and implementation
of HSE initiatives.

3.
Monitoring, review
and investigation of incidents
via a root-cause analysis.

the internal regulation of incident
investigations to strengthen the practise
of root cause identification and to facilitate
the integration of Risk Management
Project tools into the investigation process.
In addition, the A3 problem solving tool
is used in all investigations of incidents
to determine the key causes of incidents.
This analysis helps users gain a deeper
understanding of issues and allows them
to present their ideas on preventive
measures using a single sheet of A3-sized
paper.

HSE functions also monitor subsidiaries
using monthly, quarterly, and annual
HSE performance reports based on data
collected through the corporate HSE
reporting system.

Each fatality, serious injury, or significant
environmental incident is reviewed
by the HSE Management Committee,
which also verifies the completeness
and appropriateness of all remedial
actions taken.

EVRAZ requires that its employees
do not conceal or misrepresent
the circumstances surrounding an incident.
Violations in this area can lead to dismissal.
To help prevent any concealment of data
and information, several HSE KPIs
have been implemented for managers
and executives. In addition, EVRAZ
employees can use a hotline to report any
operational hazards or HSE gaps.

The Group is committed to conducting
regular internal and external audits to verify
whether the HSE management system
is functioning properly and to monitor
the effectiveness of remedial measures
being taken. All audit results are used
to develop corrective actions and eliminate
violations. State supervisory bodies also
perform external inspections and all
recommendations made as a result
of these are carefully analysed to ensure
the necessary remedial measures are taken.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationOCCUPATIONAL HEALTH AND SAFETY

Lost time injury frequency rate (LTIFR)

Work-related employee fatalities

2020

2019

2018

2017

2016

1.58

2.04

1.91

1.90

2.36

2020

2019

2018

2017

2016

EVRAZ employees

Contractors

Main types of high-consequence work-related injuries and fatalities, 2020
(incl. contractors), %

Moving and rotating equipment
Rock burst
Transport accidents
Collapsing and falling materials
Other unclassiﬁed factors of injury
Employee falling
Impact of smoke and ﬁre
Falling from height

30
17
14
13
10
10
3
3

Safeguarding human life and health
from threats related to harmful
and dangerous industrial factors
is the Group’s highest priority. All EVRAZ
employees are covered by the HSE
management system. Despite consistent
efforts on the part of the Group, many
EVRAZ employees and contractors work
in conditions that sometimes entail health
and safety risks. Rock bursts, floods, gas
explosions and incidents caused by blasting
works are some of the typical risks
encountered during mining operations.
Employees at EVRAZ’ production assets
work with moving machinery, molten metal,
lifting equipment and in very hot conditions.
Other risks to employees include working
at heights, working with electrical power
units, and operating cutting materials
and equipment. Even employees working
in offices are sometimes exposed to health
and safety hazards.

EVRAZ has also analysed the entire
industrial process to identify the main risk
areas and the procedures in place across its
operations to develop, alongside technical
solutions, risk management methods
and to mitigate hazardous and harmful
impacts on employees.

Another way in which the Group seeks
to improve operational safety is by training
staff in risk identification and analysis, HSE
regulations and safe working methods,
as prescribed by law. EVRAZ also equips
employees with personal protective
equipment (PPE) to lessen the impacts
of potentially harmful operations.

Performance in 2020

LTIFR

The Group uses a number of occupational
health and safety (OHS) performance
measurement methods. One of the most
important is the Lost Time Injury Frequency
Rate (LTIFR). In 2020, the LTIFR at EVRAZ
stood at 1.58, which was 22.5% lower than
the 2019 figure of 2.04. The Group met its
target level of 1.61.

saddened by these losses and continues
to work towards eliminating injuries
and achieving the goal of zero fatalities
in the near future.

In-depth, internal investigations
were conducted into each accident
to determine the critical factors and root
causes. EVRAZ is resolutely committed
to avoiding such incidents in the future.
The OHS Management Committee reviews
investigations and then creates a plan
for corrective measures and implements
respective health and safety initiatives
across the Group and in individual
business segments or facilities. The HSE
Committee also approves these plans.
The HSE Committee and other committees
of the Board of Directors monitor
the implementation of these measures,
as well as their efficacy.

The Group strives constantly to enhance
the safety culture, and all employees
and contractors are required to understand
that they are personally responsible for their
health and safety. With this in mind, EVRAZ
initiated the Risk Management Project
to improve the level of safety culture
and to actively engage staff in the HSE
management process.

Fatalities

It is regrettable to report that, in 2020,
five colleagues lost their lives during
the performance of their duties. These
incidents involved exposure to moving
equipment, dynamic mine processes
and falling loads. The Group is deeply

Annual report & accounts 202058 | 59

Health protection

Risk hunting

The Group carries out in-depth
work to enhance working conditions
and to improve industrial sanitary
and hygiene conditions. In line
with domestic legal requirements
and international best practices, EVRAZ
provides all employees with insurance
for work-related injuries and disease.
The Group also offers staff regular
medical check-ups, which help to prevent
occupational diseases and ensure prompt
treatment.

If an occupational disease is diagnosed,
the employee receives temporary disability
compensation and their treatment costs
are fully covered by the Group. EVRAZ also
provides financial assistance to employees
with occupational diseases, depending
on their circumstances and medical
condition. Those in need of long-term
medical treatment and recovery can also
receive compensation for any harm they
have suffered.

During the reporting period, 166 cases
of occupational diseases were recorded
at EVRAZ facilities, which was 29.9% lower
than the figure for 2019 (237). The Group
takes a proactive approach to managing
health risks, by elaborating and continuously
enhancing occupational disease prevention
programmes.

The most common occupational diseases
were hearing disability and illnesses
of musculoskeletal system owing
to the nature of working conditions.

Key projects

EVRAZ believes that the safety initiatives
implemented across the Group help
to support the development of the safety
culture and will hence have a long-lasting
effect on safety performance. In 2020,
the Group continued to implement new
safety initiatives.

EVRAZ launched a new mobile app,
Hunt for Risk, to identify and eliminate
workplace risks. This app strengthens
the safety culture level of staff through using
gaming techniques. The new app is a key
tool of the risk management system that
EVRAZ began to implement in early 2020,
with a view to preventing and eliminating
threats to health and safety. With the app,
the majority of employees can report
and mitigate risks easily, simply and fast.

EVRAZ and Tactise risk
management symposiums

In 2020, EVRAZ, together with Tactise
Group, conducted five symposiums for risk
managers relating to the Risk Management
Project launched in 2019. The online meeting
was held in August 2020. The aim of such
meetings is to exchange best practices
and experience among risk managers across
EVRAZ. Also, such conversations allow
urgent issues to be openly discussed. As a
result, cross-divisional symposiums have
become a regular fixture for EVRAZ risk
managers.

Video analysis implementation

The EVRAZ Coal segment has
introduced artificial intelligence methods
to prevent incidents that involve workers.
This modern technology allows OHS
violations and inappropriate or hazardous
actions by employees to be detected
on a 24/7 basis. The pilot project was
launched in 2020 at Raspadskaya Coal
Company. A digital network monitors
whether an employee has the necessary PPE
or whether they are in a safe area. A similar
system will be rolled out for the corporate
auto fleet. Video analysis will be used
to ascertain whether drivers and passengers
have fastened their belts or are using
their phone while driving.

Outlook for 2021
and the medium term

In 2021, in addition to continuing division-
specific key risk programmes, EVRAZ plans
to continue to implement key initiatives
targeted at fostering and improving
the safety culture. The strategic goal
is to reach at least 60% compliance
according to the Bradley scale of safety
culture in 2021.

Three key areas for improvement
of the Safety culture were defined:
• Dilemma of safety vs. production.
• Promotion of safety behaviour: comply,

communicate and improve.

• The motivational system for safety actions.
EVRAZ plans to further develop these areas
and has already conducted several pilot
projects and developed the programme
for these areas for implementation in 2021.

During the next reporting period, another
key HS objective for EVRAZ will be to carry
out HSE transformation initiatives that
include the in-depth adaptation of the HSE
Management System for risk management
processes and the HSE team.

EVRAZ has set the goal of reducing
documentation in safety processes by 30%
and using the additional time available
for management to improve employee
engagement. The Group also expects
the HSE team will be reorganised along
the following lines:
• Incorporating the risk-management project
team into the HSE organisational structure.

• Balancing the team and its competences

with new processes and their requirements.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationENVIRONMENTAL MANAGEMENT

Management approach

A priority strategic goal for EVRAZ
is to ensure that its business operations
are conducted in the most sustainable way
possible. To comply with its environmental
obligations and meet stakeholder
expectations, the Group prioritises
the mitigation of adverse environmental
impacts caused by its day-to-day operations.

The environmental management approach
of EVRAZ is determined by its business
strategy and HSE Policy (see the Health,
safety, and environment section
on page 56). All enterprises in the Group
adopt an environmental management
system (EMS) based on the plan-do-check-
act (PDCA) model. The EMS provides
a framework that contributes to mitigating
environmental risks and supports
the organisation of the Group’s environmental
compliance processes. EVRAZ conducts
internal audits to assess risks and evaluate its
HSE management system.

The Group strives to comply with all
applicable environmental requirements.
EVRAZ also strictly adheres to registration,
evaluation, authorisation and restriction
of chemicals (REACH) regulations governing
products that it supplies to or manufactures
in the European Economic Area. In 2020,
the Group began to update its corporate
regulations concerning REACH compliance,
which it plans to complete in 2021.

EVRAZ implements environmental and social
impact assessments (ESIAs) for all new
projects and operations. This is part of how
it evaluates the potential direct and indirect
impacts of its activities on local communities
and the surrounding environment.
It further prepares mitigation plans
to limit and manage these impacts. While
conducting ESIAs, the Group discusses any
decisions and measures to be implemented
with local and regional government, business
and community stakeholders throughout
the project’s life.

When conducting day-to-day operations,
all employees are required to adhere
to the EVRAZ Fundamental Environmental
Requirements. These comprise procedures
related to environmental control systems.
They also prohibit the discharge of any
chemical products and waste disposal outside
designated areas.
1. The figure exceeds 100% due to the recycling

of previously accumulated waste.

2020 highlights

Non-mining waste
recycling and reuse1

102.7%

Reduction in total air
pollutant emissions

3.7%

Environmental strategy

To ensure environmental compliance
and mitigate any potential adverse
environmental impacts, EVRAZ has
elaborated and is constantly improving
its environmental strategy. It is based
on sustainable business practices
and environmental principles, which
are incorporated into all stages
of the Group’s value chain.

In 2017, EVRAZ set five-year
environmental goals in three areas:
water, waste and GHG emissions.
In 2020, the Group accomplished
these water and waste goals (for GHG
emissions, see the Climate and energy
section on page 64-67).

Goal

Result in 2020

To maintain an intensity ratio of less than
two tonnes of carbon dioxide equivalent
(tCO2e) per tonne of crude steel cast.

Achieved level of 1.97 tonnes of carbon
dioxide equivalent (tCO2e) per tonne
of crude steel cast.

Reduce water consumption
to 207 million cubic metres

Reduced water consumption
to 206 million cubic metres

Recycle 95% of non-mining waste
and by-products

Recycled 102.7%1 of non-mining waste
and by-products

In 2020, EVRAZ updated
the environmental strategy
and developed two scenarios related
to the level of impacts and capital
investments: realistic and stressful.
To meet the expectations of investors
and society, the Group has also set
new goals for the period up to 2030.

Using 2019 as the baseline year, they
cover four aspects: water, waste,
air emissions and GHG indicators
(for more details, see the Climate
and energy section on page 64-67).
EVRAZ set the following new goals
with the realistic scenario in mind.

Area

Water

Waste

Goal (2019–2030)

Zero water discharge from steel production

Utilise 95% of waste from metal production
and general waste

Recycle 50% of mining waste

Air emissions

Reduce total atmospheric emissions from steel
production by 33%

2020 status

68.6 million
cubic metres

102.7%

28.5%

3.7% decrease

Reduce dust emissions from coal mining by 1.5 times

10.0% decrease

Within the new strategy the Group
also aims to ensure full regulatory
compliance and transparent data
measurements by 2025. To enhance
the disclosure of information

regarding its environmental
strategy, the Group also updated its
environmental reporting procedures
during the reporting period.

Annual report & accounts 202060 | 61

To maintain a high level of environmental
awareness and competence among
employees, the Group provides training
on waste management methods, HSE
practices and other topics. In 2020, due
to the COVID-19 pandemic, most of these
trainings were held in an online format.

In 2020, EVRAZ spent US$56.95 million
on projects to improve its environmental
performance and US$32.87 million
on measures to ensure environmental
compliance. There were no significant
environmental incidents or material
environmental claims involving the Group’s
assets during the reporting period. Non-
compliance related environmental levies
and penalties totaled US$3.1 million (US$5
million in 2019).

The Group has committed
to implement various environmental
protection programmes over 2021–26.
As of 31 December 2020, the estimated
cost to implement these programmes
totaled US$226.2 million, compared
with US$198.6 million as of 31 December
2019. The rising environmental commitments
is mainly related to renewal of obligations
under the Wastewater Management
programs of steel production sites
to implement “zero water discharge” goal.

EVRAZ total air emissions (including key
emissions), 2018–2020, kt

EVRAZ key air emissions, 2018–2020, kt

2020

2019

2018

381.57

396.22

409.20

2020

2019

2018

121.30

127.69

128.24

Clean Air project

EVRAZ has continued to implement
the Clean Air federal project, which
forms part of the Environment
national project. As part of the Clean
Air project, the Group undertook
significant measures in 2020
to improve gas purification systems
at EVRAZ NTMK. These included
overhauling blast furnace No. 6,
a modern facility in Russia that
has aspiration units containing
34,560 filters to collect and purify air.
The new system more than doubled
the efficiency of the facility’s gas
cleaning system. The project required
total investments of US$176 million,

including US$10.7 million to modernise
the aspiration units.

The Clean Air project also involved
modernising the electrostatic
precipitators at EVRAZ ZSMK’s boilers
Nos. 7 and 8, as well as commissioning
boiler No. 10. The electrostatic
precipitators purify flue gases
from ash when burning coal in boilers.
As a result, annual dust emissions
into the atmosphere of Novokuznetsk
will be reduced by 10 thousand tonnes.
During the past three years, the Group
invested a total of US$8.4 million in this
project.

Lowering air emissions

EVRAZ fresh water intake for production
needs, 2018–2020, million cubic metres

Total water discharge,
million cubic metres

EVRAZ understands that its growing
business activities produce air emissions.
The Group does its utmost to reduce them,
as well as to mitigate any potential impacts
on human health and the environment.
This includes implementing best available
technologies and regularly upgrading
equipment. EVRAZ also continuously
monitors all emissions to minimise the risk
of breaching acceptable limits. Key emissions
include sulphur oxide (SOx), nitrogen oxide
(NOx), volatile organic compounds (VOCs)
and particulate matter (dust). In 2020, total
key air emissions fell by 5% year-on-year.

To attain these goals, the Group undertakes
various activities and investments, including
those within the scope of the Clean Air
project.

2020

2019

2018

206.2

205.32

226.49

2020

2019

2018

68.6

68.9

75.3

56.7

57.0

56.6

Water Discharges
(Steel)

Water Discharges
(Mining)

Zero discharge

In 2020, the Group continued its
efforts to reduce adverse water-
related impacts on the environment.
As part of this programme, EVRAZ
ZSMK began to construct new
wastewater treatment facilities. These
measures will halt water discharges
into Lake Uzkoe, in line with the goal
set forth in the environmental
strategy. Treated wastewater
will be used for production needs.

The project includes multi-stage
wastewater treatment to ensure that
no threshold limit for pollutants
will be exceeded. The estimated
capacity of the project’s treatment
units is 600 cubic metres per
hour. The project is scheduled
for completion at the end of 2022.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationBalancing water supply

Waste management strategy

Minimise
at the source

• Improve technological processes to enhance product quality.
• Secure by-products without generating waste.

Reuse

• Reuse main types of waste from metal production: slag,

clinker and tailings, including from old dumps.

Recycle

• Develop new products that feature various types of waste.
• Use inert waste to reshape land plots and build dams

or roads.

Burn as fuel /
generate heat

• Generate heat from hot slag.
• Use waste for heating (local boilers).

Store

Burn

• Store waste that cannot be used today safely, retaining
the option of using the locations as industrial sites
in the future.

• Under the EVRAZ Fundamental Environmental Requirements,
it is forbidden to: “burn production and consumption waste
without special facilities or dump it outside designated areas”.

EVRAZ mining and non-mining waste generated, 2018–2020, million tonnes

Waste type

Non-mining waste

Mining waste

2018

7.9

232.0

2019

8.4

198.8

2020

8.7

135.6

Non-mining waste recycling and reuse
rate1, 2018–2020, %

Mining waste recycling and reuse
rate, 2018–2020, %

2020

2019

2018

102.7

105.2

111.3

2020

2019

2018

28.5

26.7

38.0

2030 goal: 95%

2030 goal: 50%

Mining and steelmaking operations use
significant volumes of water. To ensure
the rational use of water resources
and prevent water-related adverse impacts,
EVRAZ strives to implement efficient water
management methods to handle both mine
water and fresh water.

Most of the Group’s business operations
do not take place in water-stressed regions.
EVRAZ uses fresh water from surface water
bodies, groundwater wells and public
water networks for production processes,
equipment cooling, fire safety, drinking
and household purposes. Almost 95%
of total fresh water intake for production
needs occurs at major steel factories: EVRAZ
NTMK, EVRAZ KGOK, and EVRAZ ZSMK
(including Evrazruda). Around 90% of these
factories’ fresh water intake is covered
by surface water, including from rivers,
lakes and reservoirs. In 2020, the total water
consumption at these sites was 205.7 million
cubic metres, of which fresh water accounted
for more than 95.2%. The total volume
of fresh water consumed for production
purposes was 206.2 million cubic metres,
an increase of 0.9 million cubic metres
year-on-year.

For safety reasons, the Group also pumps
mine water (quarry water) out of mines
and open pits at its coal and ore mining
sites. Mine water is produced when ground
water of various horizons mixes and interacts
with mine atmosphere and rocks uncovered
by mining excavations. Unfortunately,
it is not possible to fully control or forecast
the volume of this water because it depends
on natural processes. While EVRAZ strives
to use mine water for production needs
instead of fresh water, the volume of such
water exceeds what the mining assets can
consume. The majority of mines are also
located in remote areas that exclude any
possibility of delivering surplus water
to other consumers. In 2020, the Group used
24.3 million cubic metres (or 34.6%) of mine
water for production needs instead of fresh
water. The remaining volume of 45.8 million
cubic metres (65.4%) was discharged
into water bodies. In line with the water-
related goal established in the environmental
strategy, EVRAZ treats mine water to remove
pollutants introduced during mining.

1. The recycling and reuse rate exceeds 100% due to the recycling of previously accumulated waste.

Annual report & accounts 202062 | 63

The Group strictly adheres to legal
requirements related to water discharges.
In 2020, the total volume of water
discharged was 125.3 million cubic
metres, a reduction of 0.6 million cubic
metres year-on-year.

Waste stewardship

EVRAZ recognises that its business activities
generate large volumes of waste, including
from metal production and general (non-
mining) waste. They also produce mining
waste, such as overburden, tailings
and barren rock. The Group endeavours
to apply effective management practices
in this area to ensure the rational use
of natural resources and reduce waste
generation. The waste management strategy
includes the following priorities, listed
in order of importance.

In 2020, the total volume of non-mining
waste and by-products that EVRAZ
enterprises generated was 8.7 million tonnes.

In line with the environmental strategy,
the Group seeks to increase the amounts
of waste that it recycles and reuses. In 2020,
it reused 48.9 million tonnes of waste
(including mining waste). Where possible,
EVRAZ uses non-hazardous mining waste
for land rehabilitation purposes, as well
as to build dams and roads. In 2020,
38.6 million tonnes of this waste were
reused.

EVRAZ stores waste from metal production
at tailings storage facilities (TSFs), in keeping
with standard industry practices. The Group
has three TSFs in operation at EVRAZ ZSMK
and EVRAZ KGOK. The safety of TSFs
is a top priority, as their operation entails
significant environmental risks. EVRAZ has a
dam safety management system that ensures
compliance with applicable legislation
covering all stages of their service life:
design, construction, operation and closure.
The Group also conducts continual safety
monitoring, and its TSFs are regularly
audited by internal and external specialists,
as well as inspectors from regulatory bodies.

Protecting biodiversity

EVRAZ has a responsibility to protect
biodiversity and local species, as well
as their habitats. The Group assesses
biodiversity related impacts during all stages
of implementing mining and steelmaking
projects. No EVRAZ assets are located
in protected natural areas or territories
with a high biodiversity value. In addition,
the Group’s activities do not directly impact
biodiversity.

EVRAZ strives to promote a rational
and prudent attitude towards biodiversity
and enhancing the living environments of its
employees. The Group also actively engages
with local communities on biodiversity
related issues.

The Group’s environmental initiatives include
planting trees in parks and public squares,
along town/city streets and in the territory
around kindergartens. The Group planted
around 7,000 trees during the year.

Rehabilitating disturbed land
and landscaping

To restore land disturbed by mining
and steelmaking operations, EVRAZ
implements environmental projects aimed

Project

EVRAZ ZSMK

Coke gas cooling system upgrade

Off-gas desulphurisation installation

EVRAZ NTMK

Coke gas redirection to by-product recovery plant No. 3

Efficiency upgrades of off-gas cleaning units

Decommissioning of coke oven gas cooling tower

EVRAZ Vanady-Tula

Kiln off-gas system upgrade

at rehabilitating affected areas. In 2020,
the Group completed a reclamation project
for tailings storage facility No. 2 at Evrazruda
(EVRAZ ZSMK).

Restoring aquatic biodiversity

The Group’s approach to biodiversity
includes striving to preserve the quality
of water ecosystems and supporting existing
biodiversity. EVRAZ regularly releases
various species of fish into affected water
bodies to offset any potential impacts
on bioresources. In 2020, the Group’s assets
released more than 204 thousand fingerlings
in Kemerovo region.

Outlook for 2021

In 2021, EVRAZ will continue its efforts
to mitigate any adverse impacts, as well
as to preserve and enhance surrounding
environments. Going forward, the Group
plans to review its HSE Policy and REACH
regulations. EVRAZ will remain committed
to implementing measures under the Clean
Air national project.

The Group will also continue to implement
its air emission reduction programme, which
includes the following key projects.

2021 task

Complete the design stage

Complete the design stage
(in progress since 2019)

Continue the project
(to be completed by 2022)

Continue the project
(to be completed by 2024)

Continue the project
(to be completed by 2022)

Complete the project

In 2021, the Group will also continue
to implement the water management
programmes launched in previous periods,
including at EVRAZ ZSMK, EVRAZ NTMK,

Raspadskaya and EVRAZ Vanady-Tula.
In addition, Raspadskaya will continue
to construct wastewater treatment facilities.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationGHG EMISSIONS AND ENERGY EFFICIENCY

2020 highlights

Total GHG emissions

GHG emission intensity

Total energy consumption

Energy intensity

43.57 Mt CO2e

1.97 t CO2e/tcs

351.81 million GJ1

23.30 GJ/tcs2

Approach

EVRAZ recognises the importance of taking
action to combat climate change in order
to prevent negative and irreversible impacts
resulting from further rises in global average
temperatures. In 2020, the Group took its
first steps in assessing climate-related risks
in accordance with Task Force on Climate-
related Financial Disclosures (TCFD)
recommendations. These include conducting
a qualitative evaluation and plans to improve
the analysis of these risks in the future.

EVRAZ’ approach to managing climate
change risks is to systematically reduce
greenhouse gas emissions by implementing
best practices and technologies.
A substantial part of these initiatives to lower
total and specific GHG emissions relates
to energy and fuel consumed at the Group’s
facilities. These projects are aimed
at enhancing energy efficiency and boosting
the use of renewable and secondary energy
sources. The Group is working to reduce
the carbon intensity of its energy sources
and to increase its own power generation
and self-sufficiency by recycling 100%
of secondary energy resources generated
at its metallurgical plants. In addition,
in order to enhance energy efficiency,
EVRAZ is working to improve energy
management at its assets and to engage
all employees in energy efficiency issues.
EVRAZ plans to implement several related
projects in the next five years. These
are expected to not only lower energy costs,
but also the negative impacts of accelerating
climate change.

GHG emissions

Mining and metallurgical operations
are energy intensive and produce a high
level of carbon dioxide (CO2) and other
greenhouse gas emissions that contribute
to climate change.
1. or 97,723 million kWh.
2. or 6,472 kWh/tcs

EVRAZ recognises its commitment to climate
change mitigation and understands
that businesses must play an active role
in finding solutions. By adopting TCFD
recommendations, the Group keeps
stakeholders informed about the risks
it faces due to climate change, as well
as opportunities to manage these risks.

The Group supports global initiatives
to combat climate change, as well
as national climate-related strategies
in the countries where it operates.
As a member of organisations such
as Russian Steel and the World Steel
Association, EVRAZ resolutely supports
efforts at climate mitigation and adaptation.

Another milestone for the Group
in 2020 was joining the UN Global Compact
initiative, which considers business as a force
for good and will support the Group’s
efforts to promote the transition to a low-
carbon future. As a participant in the UN
Global Compact, EVRAZ promotes
a preventive approach to environmental
challenges and greater environmental
responsibility, as well as work to develop
and implement “green” technologies, such
as those that lower its GHG emissions.

EVRAZ’ commitment to reducing
greenhouse gas emissions is reflected
in its goals. The Group has set a target
for the period 2018–2022 of maintaining
specific Scope 1 and 2 GHG emissions
from steel production (the Steel and North
America segments) below 2 tonnes of carbon
dioxide equivalent per tonne of crude steel
(tCO2e/tcs). This target was reached in 2019,
with a level of 1.97 tCO2e/tcs. In 2020, EVRAZ
was able to meet the target, with the same
value of 1.97 tCO2e/tcs.

During 2020, the Group developed
an updated Environmental strategy that sets
forth new and ambitious climate-related

goals up to 2030, using 2019 as a baseline
year. These steps include:
• Reducing specific Scope 1 and 2 GHG

emissions from EVRAZ’s Steel segments
(the Steel and North America segments)
by 20%, which complies with the Paris
Agreement. Efforts to meet this goal
will involve modernisation and energy
efficiency measures, with energy
efficiency projects representing
a core focus for EVRAZ in lowering its
level of GHG emissions. In addition
to energy efficiency initiatives, during
the development of the Group’s
Environmental strategy, EVRAZ
considered several promising projects
for switching to the best technologies
available aimed at reducing GHG
emissions, including the return of sinter
gases to the sinter furnace and gas
tank installation for the recovery
of converter gas and heat at oxygen
converter shop no. 2. It is planned
to adopt these technologies in the future
as part of the implementation
of the Environmental strategy to 2030.
• Utilising 75% of methane (CH4) emitted
in the process of degassing carried out
during coal mining.

In 2021, the Group plans to improve its
approach to estimating greenhouse gas
emissions, including the methodology
for calculating them.

As above, EVRAZ discloses data in tCO2e
(tonnes of carbon dioxide equivalent),
calculated using IPCC 2006 global warming
potentials.

A comparative analysis of GHG
emissions from the Group’s operations,
for the period 2016 to 2020, demonstrates
relatively stable growth in total GHG
emissions. In 2020, nearly all of EVRAZ’s
overall GHG emissions remained
at the same level, rising by only 0.51%

Annual report & accounts 202064 | 65

Climate Change Report 2020

In October 2020, EVRAZ issued its first dedicated Climate
Change Report compliant with TCFD recommendations
and providing stakeholders with additional information
about the Group’s approach to climate change. This
includes the role played by top management in this area
and the organisational structure of climate-related risk
management. In 2020, EVRAZ conducted its first climate
scenario review, determining and analysing relevant transition

and physical climate-related risks, as well as identifying
appropriate opportunities. Insights into how climate change
under different scenarios will impact the Group’s operations,
how significant this will be, and which actions will be taken
are presented in the report. The report also provides information
on EVRAZ’ vision for a low-carbon future for steel producers.

Discover more in the Climate Change Report: https://www.evraz.com/en/
sustainability/data-center/climate-change-reports/

compared to 2019. There was also a 0.87%
rise in the Group’s direct GHG emissions.

The increase was mainly attributable
to an annual increase in methane
emissions (by 5.4% vs. 2019), due to higher
methane concentrations in the coal seams
and more intense degassing at some mines.

As methane is combustible, the Group
carries out preliminary degassing to improve
employee safety. To boost efficiency in this
regard, it is important to increase the volume
of gas captured. It generates higher methane
emissions, and to reduce these, EVRAZ
plans to conduct research and development
projects on methane utilisation in 2021.

In 2020, EVRAZ reduced its Scope
2 emissions by 2.8%. This was due to lower
steel production at the Group’s North
American assets, which have no integrated
power plants and have to purchase
electricity from the market, and a decrease
in electricity purchases by Russian steel mills.

EVRAZ GHG emissions, 2016–2020, million tCO2e

Direct (Scope 1)

Consisting of:

– CO2

– CH4

– N2O

– PFC and HFC

– SF6

– NF3

Indirect (Scope 2)

Total GHG emissions

2016

35.81

28.76

6.99

0.07

0.0001

–

5.02

40.83

2017

36.68

28.35

8.26

0.06

2018

34.56

26.86

7.64

0.06

20191

39.06

27.96

11.04

0.06

2020

39.41

27.71

11.64

0.06

0.00003

0.00009

0.00002

0.00012

–

4.97

41.65

–

4.23

38.79

–

4.28

43.35

–

4.16

43.57

Note: Scope 1 data includes emissions in tonnes of carbon dioxide equivalent from the combustion of fuel and from other sources that are owned or controlled
by the company.

The Steel segment (incl. North America)
continues to generate a significant portion
of the Group’s gross GHG emissions,
and accounted for 70% of the total GHG
level in 2020. Operations in the Coal segment
accounted for 30% of overall GHG emissions

in 2020, almost all of which (94%) were
methane emissions.

Overall emissions in the steel sector (the Steel
and North America segments) were 0.5%
lower than the 2019 level, mostly due

to a minor decrease in crude steel production
and therefore the specific intensity of GHG
emissions remains at the same level
of 1.97 tCO2e/tcs.

EVRAZ Scope 1 and 2 GHG emissions
in 2020, million tCO2e

Specific Scope 1 and 2 GHG emissions
from steel production (the Steel and North
America segments), tCO2e/tcs

GHG emissions per consolidated revenue
in 2020 vs. 2019, kgCO2e/US$

EVRAZ total

Steel segment

39.4

26.5

Steel, NA segment

Coal segment

0.62

0.59

12.28

0.91

4.16

2.66

Direct emissions
(Scope 1)

Direct emissions
(Scope 2)

2020

2019

2018

2017

2016

1.97

2.01

2.02

2.11

EVRAZ total

Steel segment

Steel, NA segment

0.7
0.6

Coal segment

4.5

3.6

4.2

3.6

2020

2019

8.9

6.2

1. The numbers for 2019 were recalculated, which resulted in a downward correction of 0.03 million tCO2e for direct GHG emissions (Scope 1).

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationEnergy efficiency

EVRAZ strives to improve the energy
efficiency of all its facilities to minimise
the Group’s environmental impact. This
helps to reduce greenhouse gas emissions,
as well as energy and process fuel costs.
Energy intensity is an important aspect
of the energy efficiency programmes
at EVRAZ.

The energy management system
is the primary driver of energy efficiency
transformation processes. In 2019,
the Group’s senior management decided
to create a separate function to strengthen
the energy management system at its
production divisions in Russia. These efforts
focused partly on production processes
and the transportation of energy resources
to power plants at facilities. They also sought
to expand the scale of the energy efficiency
management approach to include energy
consumption processes at steel production
workshops.

In 2020, several changes were made
to the energy efficiency management
function. A group of energy management
system experts was created at the two most
energy-intensive facilities, EVRAZ ZSMK
and EVRAZ NTMK. These two enterprises
account for more than 85% of the Group’s
energy consumption. Energy management
teams were formed to monitor energy
consumption, minimise energy intensity
and reduce energy costs.

Results in 2020

Based on the positive lessons learned
at EVRAZ ZSMK in September 2019, EVRAZ
NTMK and EVRAZ KGOK held Idea Factory
sessions in February 2020. Called “Growth
Points. Energy Efficiency”, the sessions
helped to shape the energy efficiency
programmes at steel production workshops.

The Group also conducted an ambitious
target setting cycle covering energy
efficiency. It relied on industry
benchmarking and a review of best
production practices in each technological
segment to evaluate the potential to reduce
energy intensity. It resulted in short-term
and long-term targets being set, as well
as further steps for reducing energy
consumption being identified.

Digital transformation in power supply

In 2020, EVRAZ ZSMK’s thermal
power plant launched a system
for modelling operating conditions,
as well as calculating technical
and economic metrics. The system
is capable of calculating the optimal
composition and load of primary
and auxiliary equipment. It can also
monitor power plant KPIs and predict
standard specific fuel equivalent
consumption.

The project helped to reduce specific
fuel consumption by:

1.4%

for electricity
supplies

0.9%

for thermal
energy supplies

Based on the lessons learned
from this initiative, the system
will be rolled out at EVRAZ NTMK’s
thermal power plant in 2021.

Installation of gas top pressure recovery
turbine at EVRAZ NTMK

EVRAZ NTMK is installing a gas top
pressure recovery turbine to generate
energy from secondary sources.
This technology makes it possible
to convert blast furnace gas pressure
energy into electric power without
the combustion of additional fuel.
The facility is expected to be more
advanced and powerful than its
counterparts, of which there are only
five in Russia.

The new turbine is scheduled to be
launched in the first quarter of 2021.
It will help EVRAZ NTMK to enhance
its resource and energy efficiency,
increase its self-sufficiency in electricity
and lower the cost of its final products.

As the technology does not consume
additional fuel, it will help to reduce
overall CO2 and other emissions,
in proportion to the volume
of electricity generated.

In 2020, EVRAZ developed a comprehensive
programme aimed at creating a system
to fully track the consumption of energy
resources at the workshop and plant
level. The process included an assessment
of ways for production personnel to have
an immediate impact on fuel and energy
costs in the technological process. The initial
phase of the programme’s implementation
will help to reduce unaccounted
interdepartmental energy flows by 30%
in 2021.

The main aspects of the energy efficiency
programmes include:
• Optimising and minimising energy

consumption and losses at production
sites, including electricity, thermal energy,
fuel, natural gas and air gases.

• Using secondary and renewable energy

sources.

• Optimising the blend of furnace charge,

coking coal and process fuel.

• Automating energy-intensive equipment.
• Implementing digital transformations

of energy supply systems.

The Group’s energy efficiency programmes
are helping to achieve the goal of reducing
the energy intensity of its production
processes. The programmes include
initiatives covering a five-year period.

In 2020, EVRAZ NTMK continued
to install a gas top pressure recovery
turbine at blast furnace No. 7. This project
is as part of an initiative to reduce electricity
purchases by generating energy in-house.

Annual report & accounts 202066 | 67

As part of its energy efficiency efforts,
the Group has begun to track energy
intensity metrics at all of its production
facilities. EVRAZ is using this new KPI
to improve employee engagement
and motivation. Success in improving
energy efficiency also requires daily efforts
to enhance the operational efficiency
of equipment.

In 2020, the Group’s total energy
consumption decreased by 5.3% year
on year (to 351.8 million GJ), including
the energy consumption of metallurgical
enterprises which decreased by 5.6% year
on year (to 319.9 million GJ), consumption
of iron ore and coal assets - by 2.5% (to
31.9 million GJ). It should be noted that
the specific energy intensity of EVRAZ
NTMK and EVRAZ ZSMK also decreased,
by 9% (compared to 2018 which is a base
year) due to the development of the energy
management system.

The Group is working diligently to develop
and improve its energy management
system. In January 2021, EVRAZ NTMK
recertified the compliance of its energy
management system with the updated
ISO 50001:2018 standard. Going forward,
EVRAZ ZSMK and EVRAZ KGOK also plan
to receive ISO 50001 certification.

Total energy consumption of EVRAZ’
steelmaking operations and its
production, 2018 - 20201

Total energy consumption of EVRAZ’
mining operations (coal and iron ore)
and its production, 2018 - 20201

2020

2019

2018

13,650

319.9

13,832

13,036

339.0

322.6

2020

2019

2018

34,858

31.9

39,905

37,703

32.7

32.5

Production, kt

Energy consumption,
million GJ

Production, kt

Energy consumption,
million GJ

Note: Energy consumption in million kWh: 88,871
in 2020, 94,163 in 2019 and 89,617 in 2018.

Note: Energy consumption in million kWh: 8,852
in 2020, 9,079 in 2019 and 9,021 in 2018.

Energy intensity of EVRAZ’ steelmaking
operations, 2018 - 2020, GJ/t2

2020

2019

2018

23.3

25.6

24.5

27.5

25.3

28.5

EVRAZ

EVRAZ NTMK
and EVRAZ ZSMK

Note: EVRAZ energy intensity in kWh: 6,472 in 2020,
6,805 in 2019 and 7,027 in 2018.

Outlook for 2021

In 2021, EVRAZ will
develop a comprehensive methodology
for assessing the development of the energy
management systems throughout
the Group’s facilities. This methodology
will be applied during internal energy
management audits at the segment
and shop levels.

Note: EVRAZ does not have any production facilities
in the UK, only the office. Data for UK office as well
as data for offices located in Russia and North
America were not included in the graphs, since
the volumes of consumed power are not material
in terms of overall energy consumption within
the Group.

EVRAZ will also continue to integrate
energy efficiency criteria in its procurement
and investment processes. The Group
is actively working to purchase energy
efficient electric motors and transformers.

In addition, EVRAZ will implement measures
as part of its energy efficiency programme
aimed at reducing energy intensity. These
measures are part of the ambitious targets
that the Group has set for each of its
facilities.

1. This graph presents gross output as the sum of production volume metrics for key products (raw steel, iron ore products and unprocessed coking coal) and vanadium
slag. To calculate the Group’s total energy consumption, this Report takes into account all energy used at EVRAZ facilities, including for the production of coke, coke
products, energy and heat. The graphic shows data for EVRAZ ZSMK (including Evrazruda), EVRAZ NTMK, EVRAZ KGOK, EVRAZ Vanady-Tula, Raspadskaya, EVRAZ
Caspian Steel, EVRAZ Nickel and the Group’s Steel, North America segment. To compute total energy consumption within the Group, the formula given in GRI 302-1
is used (the sum of fuel consumed, non-renewable and renewable, and electricity, heating, cooling, steam purchased for consumption and self-generated which
are not consumed minus the volumes of electricity, heating, cooling, and steam sold).

2. The figure includes data on the Steel segment (EVRAZ ZSMK, EVRAZ NTMK), Steel, North America segment (EVRAZ Portland, EVRAZ Pueblo, EVRAZ Regina, EVRAZ
Camrose, EVRAZ Calgary, and EVRAZ Red Deer). To calculate energy intensity ratio for the Group, the formula given in GRI 302-3 is used (the volumes of energy
consumed per unit produced).

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationOUR PEOPLE

2020 highlights

Average headcount

Employee turnover rate

69,619

9.8%

Approach

EVRAZ is always seeking to improve
the professional and personal skills
of its employees, understanding that
this represents an investment in the Group’s
future achievements. That is why it is of great
importance to create a working environment
where all employees can fully realise
their potential.

With this in mind, the Group continued
to work actively in the following key areas
of HR policy during the reporting period:

• Enhancing staff recruitment processes.
• Continuously improving the KPIs system.
• Enrolling employees in various professional

courses and programmes.

• Implementing a targeted pay system.
• Developing Human Rights Policies.

• Regularly collecting feedback via a variety

of communications channels.

EVRAZ does not tolerate discrimination
of any kind, whether based on gender,
social status or class, or any other factors
not directly related to an employee’s
professional qualities. It is crucial
for the Group to comply with international
human rights laws, hence it has internal
documents ensuring such compliance,
such as the Code of Ethics and the Code
of Conduct. These documents guarantee
equal employment opportunities
for everyone. Child labour, forced labour,
human trafficking, and other forms
of slavery (known as modern slavery)
are strictly prohibited at all EVRAZ
subsidiaries and their suppliers.

The Group endeavours to do its utmost
to comply with international human rights
legislation. In order to reduce the risk
of legal violations, the treatment of workers
is monitored by public organisations,
including trade unions active in the Group’s
operations, as well as regional and federal
trade union associations and representatives
from Russia’s Presidential Council for Civil
Society and Human Rights.

The Group holds its partners to equally high
standards of human rights and business
ethics. EVRAZ’ policies require that all
contracts with partners contain sections
governing the prevention of corruption
and human trafficking.

Case study
Human rights

During the reporting period, EVRAZ prepared and published
two documents: Human rights policy and Diversity and inclusion
policy, both of which were adopted by the Board of Directors
on 16 April 2020.

The Human Rights Policy conforms with recommendations
set forth in international documents and standards granting
fundamental rights to all people, such as: The Universal
Declaration of Human Rights and The International Covenant
on Civil and Political Rights. The Diversity and Inclusion Policy
was elaborated in accordance with international guidelines
and standards, which address diversity and inclusion issues:
The Universal Declaration on Cultural Diversity, The United
Nations Global Compact and others.

EVRAZ’ employees can expect to be treated with respect,
enjoy the safest working conditions possible, receive support
to help develop their competencies and skills, have open
and constructive discussions about the results of their work,
receive recognition and respective performance-based financial
rewards.

EVRAZ understands the benefits of diversity and inclusion
in the Group. The Diversity and Inclusion Policy sets out key
principles in the following areas:
• Having a diverse Board of Directors.
• Recruitment and employment.
• The rights of disabled people.
• Empowering women.
• Development and training.
• Zero tolerance towards bullying and harassment.

The Group requires that suppliers and contractors run
their businesses in such a way that they respect the values
and principles of these policies.

Annual report & accounts 202068 | 69

Personnel profile

Headcount

As at 31 December 2020, EVRAZ had a total
of 69,619 employees. Compared to 2019,
the Group saw an over 2% decrease
in headcount.

Number of employees,
31 December 2020, people

2018

2019

2020

Diversity

69,712

71,215

69,619

EVRAZ sees diversity as being beneficial
in terms of business and cultural
development. The goal is to ensure that

30.5

Staff recruitment and reduction

all employees receive equal protection,
irrespective of race, nationality, gender, age,
sexual orientation, religion, political or other
opinion, national or social origin, property,
birth or other status.

The Group believes that diversity fosters
employee engagement and development,
as it nurtures different ideas and approaches
within the business.

Breakdown of employees and top
management by age, 31 December 2020, %

5.3

0.2

13.6

20.2

<20
20-29
30-39
40-49
50-59
>60

30.2

Breakdown of employees by region
in 2020, %

Russia and CIS
North America
Europe

3,278

131

4.7% 0.2%
69,619

95.1%

66,210

Diversity of employees in 2020
by gender, broken down by senior
management and employees, %

Senior
management

Employees

74.1%

72.6%

Men

Women

25.9%

27.4%

402
69,217

EVRAZ pays particular attention
to identifying and addressing human
rights risks, including those related
to recruitment and working conditions.
The Group embraces the principle of equal

opportunity when hiring and prohibit all
forms of discrimination. Staff recruitment
is conducted in full compliance with the laws
of the countries in which the Group
operates, including respective regulations

governing labour protection, minimum
wage levels, annual paid and parental leave,
collective bargaining agreements, health
insurance, pensions and personal data
protection.

EVRAZ adheres to the following recruitment principles:

safety

respect for people

performance
and responsibility

customer focus

effective teamwork

EVRAZ tries to recruit most employees
on permanent employment contracts.
However, on occasions, fixed-term
employment contracts are necessary.
Employees working under such contracts

are in a favourable position when it comes
to hiring for permanent positions that arise
that suit their qualifications and educational
backgrounds. Remuneration is the same
for both fixed-term and permanent

employees, with the exception of university
students undergoing practical training
and some others. Fixed-term contracts
are used in certain cases such as: practical
training of university students, internship etc.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCase study
EVRAZ redesigns The HuntFlow system

In 2020, the Group paid special attention to boosting
the efficiency of HR processes. The HuntFlow system was
redesigned, and EVRAZ automated a number of routine
processes. In the HuntFlow system, recruiters can see that
a candidate is already at the interview stage, which eliminates

the possibility of different departments hiring the same
professional. Also, recruiters from different departments are able
to exchange useful information in cases when a candidate
is more suitable for an open position that is not the same
as the one for which they originally applied.

EVRAZ has a mentoring programme, as well
as a Buddy programme, introduced in 2019,
and updated in 2020 as it was transitioned
to an online format. In addition, EVRAZ
implemented the Buddy mobile app,
which allows new hires to stay in touch
with supervisors. It also helps keep track
of tasks, useful information, requirements
and Group rules. There is also a Buddy app
available for mentors, which enables them
to conveniently track their student’s activity.

In cases where temporary layoffs
do happen, collective bargaining
agreements contain clearly defined
and specific measures to support workers
and preserve jobs: changing work
schedules, introducing shorter workdays
or work weeks, creating temporary jobs,
transferring employees to other jobs (with
their consent) and elaborating a social
adaptation programme for workers
with the participation of a trade union.

for a child with a disability or for a child
younger than three years, women who
are pregnant, etc.

In addition, the Group has sought to expand
the range of people that are granted
priority rights to retain employment
beyond categories of employees specified
under Russian law, including: single fathers,
people with disabilities, people whose
spouse is retired or unemployed, and others.

The Group occasionally has to implement
staff reduction measures linked
to continuous efficiency improvements.
As a socially responsible company,
EVRAZ deals with personnel dismissals
in the most appropriate manner, as guided
by an internal document adopted in 2012,
the Socially Responsible Layoff Programme.

Overall and voluntary employee turnover
broken down by segments, 2020, %

As a part of the Group’s work with trade
unions, detailed employment-related
sections are included in collective bargaining
agreements and industry tariff agreements.
All decisions regarding staff reductions
are discussed with the trade union
organisation. In addition, in compliance
with Russian law, the following categories
of employees have additional guarantees
against being dismissed as a result
of downsizing measures: single mothers,
parents who are the sole breadwinner

EVRAZ endeavours to retain its production
staff. When downsizing, the Group
offers employees vacant positions and, if
necessary, also makes available training
for new professions. If needed, EVRAZ
organises employee relocations to other
Group facilities, working with employment
centres in the regions where it operates.
EVRAZ also provides training and financial
assistance to discharged employees
considering starting their own business.

Steel
segment

Coal
segment

Steel, North
America segment

Other

4.8

5.6

8.5

8.1

12.2

12.0

12.6

12.5

Voluntary

Overall

Learning and development

The development of its people is a top
priority for EVRAZ. The Group has a multi-
level system of human resource management
in place, geared towards improving
the engineering and personal skills
of employees, and fostering collaboration
with educational institutions.

In 2020, EVRAZ continued its “Top 300”
corporate management programme,
and a total of 28 people took part
in the third wave (September). Each
programme participant is mentored by one
of the Group’s senior executives.

In 2020, the “Top 1,000” corporate
management programme was launched,

as an extension of the “Top 300”
programme, which aimed at managing
employees of lower positions. Its participants
received instruction in such management
practices as target-setting performance
dialogues, feedback, delegation
and the development of subordinates.
More than 230 employees participated
in the programme this year.

Annual report & accounts 202070 | 71

Case study
EVRAZ receives awards for Personnel Development

EVRAZ NTMK and EVRAZ KGOK received awards
in the Personnel Development category at the 17th Annual
Metals and Mining Industry contest held by the Russian
Metallurgists Association and the Central Council of the Russian
Mining and Metallurgical Union. The Group hosts retraining

and professional development programmes for its employees,
compensates them for the cost of higher education
for in-demand professions and encourages their participation
in scientific conferences.

Particular attention is paid to students and junior specialists. In 2020,
over 240 students performed internships at EVRAZ and over half
of these are already working for the Group. Junior specialists
participate in scientific and technical conferences, professional skill
competitions and in all-Russian competitions.

An EVRAZ team took part in the national championship WorldSkills
Hi-Tech 2020, which was held using a partially remote format.
The team competed in multiple skillsets and won seven medals:
four golds, one silver and two bronzes, including employees aged
over 50 and junior categories.

Motivation

EVRAZ strives to provide the best possible
working conditions and opportunities
for professional development. It approaches
each employee individually, continuously
improving the motivation system.

Financial motivation

EVRAZ endeavours to look beyond
compliance with minimum wage
requirements, with a view to ensuring that
it fully compensates staff for their efforts. It
also strives to ensure that the remuneration
system at Group enterprises is transparent
and easily understandable for employees.

In 2020, EVRAZ completed
the implementation of a target remuneration
system based on a grading system
for employees at all of the enterprises
of the Steel segment in Russia: EVRAZ
NTMK, EVRAZ KGOK, EVRAZ ZSMK
and at EVRAZ Vanady Tula, covering 43,500
employees.

The aim of the project is to elaborate
and implement a uniform set
of fair and transparent rules and principles
for setting remuneration across the Group’s
enterprises, and to harmonise fixed
and variable pay so that amounts
and growth dynamics depend
on the performance of an employee,
team, and department, ensuring a focus
on constant improvements and achievement
of ambitious goals.

The implementation of the target
remuneration system for production assets’
employees below the level of shop heads
and mine directors is the main stage
in the deployment of EVRAZ’ unified
remuneration system, which intends to cover
all of the Group’s employees in Russia.

Non-financial incentives

The non-financial compensation package
offered by EVRAZ to employees exceeds
minimum statutory requirements
and contributes to their total remuneration.
The package includes:
• Voluntary health insurance.
• Additional voluntary insurance against

accidents at work.

• A state pension programme.
• A programme that offsets a portion

of interest paid on mortgages.

• Free wellness leave vouchers for employees

and their families.

Other categories of employees who fall
under EVRAZ’ non-financial assistance
include former employees who have
worked for 10 or more years at the Group,
employees who have been merged
into public organisations and young
professionals. The Group congratulates
employees and their families on holiday
occasions and organises cultural,
entertainment and sporting events
in the regions where it operates.

EVRAZ’ collective bargaining agreements
also prescribe additional leave for childbirth,
weddings and the funerals of close
relatives. There is also a programme that
provides financial assistance to employees
in challenging circumstances.

Performance management

The staff motivation system at EVRAZ
includes KPIs to assess staff productivity.
The KPI system is continuously
reviewed and refined. Technical KPIs
are in line with the best industry practices
and are monitored by the Group’s CEO.
Corresponding KPI targets are included
in management scorecards, down
to the level of shop managers.

In 2021, EVRAZ plans to update
the personnel assessment system so that
each worker’s accomplishments are viewed
individually, rather than as accomplishments
within a certain position or group. This
assessment will be held every year.

As a part of the HR strategy, in 2021,
EVRAZ implemented an HR-analytics
project allowing the shops heads and mine
directors to monitor the HR metrics
of their departments and understand how
their actions may impact certain indicators.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationEmployee interaction

EVRAZ acknowledges the value of receiving
feedback and addressing employee
concerns across the organisation,
and regularly interacts with employees
via the corporate intranet and website,
corporate publications, social networks
and web conferences, as well as Q&A
and townhall meetings with members
of senior management. General meetings
as well as satisfaction and engagement
surveys are regularly held to identify
key problems. In addition, townhall
meetings with employees were held. Two
non-executive directors were involved
in the meetings dedicated to raising
awareness surrounding prevalent trends
and concerns.

Work with trade unions

EVRAZ endeavours to establish long-term
collective bargaining agreements with trade
unions. The Group interacts with trade
unions through the signing of collective
bargaining agreements, which covered
88% of employees in 2020. The majority
of the Group’s employees are members
of trade unions and provided with unique
benefits.

In 2020, the Group worked on implementing
a target pay system. Since changes
had to be made in working conditions,
it negotiated respective changes in collective
agreements with trade unions at all Group
facilities.

The year also saw extensions
to The Coal Industry and Steel Industry Tariff
Agreements with the active participation
of the Group.

In 2020, there were no conflicts or collective
labour disputes at the Group’s Russian
operating facilities. All changes and updates
to collective agreements were constructive
and in strict accordance with the law
and the principles of social partnership.
During the year, the Council of Social
Work met twice; both meetings discussed
the implementation of the target pay system.

Employee engagement

EVRAZ Hotline

In order to identify the main employee
engagement trends, management closely
reviews engagement data from surveys.
The We Are Together employee engagement
survey was held annually until 2019, when
it was decided that the survey would be
held once every two years. The fourth We
Are Together survey, carried out in 2019,
outlined the need to increase employee
awareness surrounding what is happening
at the Group. In 2019, employee
engagement survey response rate was 80%.

Based on the survey results, companywide
improvement plans were announced. Raising
employee awareness surrounding Group
activities, including through short- and long-
term goals, development plans and working
conditions, is the main area for further
development. Focus groups are held
and after each meeting an enterprise
develops a plan to eliminate problem areas.

In addition, the Coal segment conducts
an annual satisfaction pulse-survey on social
and living conditions at the enterprise.
A special mobile app has been developed,
on which various questionnaires are posted.

Performance as an employer

EVRAZ takes the issue of social performance
management very seriously and participates
annually in contests that confirm its status
as a socially responsible employer. In 2020,
the Group won awards in the category
of Personnel Development at the 17th
Annual Metals and Mining Industry contest
held by the Russian Metallurgists Association
and the Central Council of the Russian
Mining and Metallurgical Union.

In 2020, EVRAZ began planning its employer
brand development strategy. The Group
launched a communications campaign
and detailed actions for 2021 in pursuit
of becoming one of the best recruiters
in the regions where the Group operates.

One of the main channels of communication
at EVRAZ is an anonymous, 24-hour
Hotline. The Hotline tracks employee
satisfaction levels and records incidents
at the Group’s production facilities. Queries
are processed with the help of an IT system
and the process is governed by EVRAZ
Hotline Statutes. Enquiries are broken down
by the responsible business unit (HSE,
HR, Security, etc.), and then investigated
and addressed. All employee grievances
are investigated by the internal audit
department, and difficult, contentious,
or sensitive cases are reviewed by members
of the Hotline Committee, which
includes the vice president for corporate
communications, the internal audit
director, and the internal and external
communications director. Random quality
control reviews are carried out on a quarterly
basis.

Breakdown of hotline enquiries, 2020, %

2.2

3.2

11.1

14.6

General
Labour relations
Health and safety
Security
Others

68.9

In 2020, the hotline received 1,096 requests.
The most frequent issues related to labour
relations, including the quality of labour
relations (496), worker transportation (84),
and labour compensation (69).

In 2020, an extra hotline was set up due
to the COVID-19 pandemic. The Steel
and Coal segments have 24/7 corporate
hotlines, which employees can address
with questions and problems. EVRAZ
North America employs external providers
for this purpose.

Annual report & accounts 202072 | 73

COVID-19

The absolute priority of the Group is the
life and health of its employees. In 2020,
measures were taken to protect personnel
from COVID-19.

The working hours of office staff have been
adjusted in order to reduce the number
of mass gatherings. EVRAZ has moved
most office employees to a remote working
format. New laptops were purchased
and additional equipment and software

installed, which facilitate efficient and safe
remote working conditions. All meetings
are held remotely using modern conference
and video call applications. All mass
business, sporting and entertainment
corporate events were postponed
or cancelled. Canteen schedules were
adjusted and the number and format
of shift meetings at production facilities
are currently being optimised.

In addition, EVRAZ has been providing
staff and their families with necessary
psychological assistance during
the COVID-19 pandemic. EVRAZ assesses
the potential psychological impacts
related to the preventative measures being
undertaken as a result of the pandemic.

See more details in the Impact of COVID-19 section
on pages 30-31

Case study
EVRAZ releases app to prevent the spread of COVID-19

EVRAZ is rolling out an app, called Antivirus, to promptly alert
employees of their possible exposure to the COVID-19 virus.
The app is based on the Stop Corona application, which was
developed jointly by Accenture and the Austrian Red Cross
to more effectively identify symptoms of the novel coronavirus
infection.

Antivirus will offer a checklist developed by EVRAZ in case
of COVID-19 infection, as well as general recommendations
based on Rospotrebnadzor requirements. The app will
anonymously exchange data with employees’ devices
located nearby (automatically via a Bluetooth connection).
If an employee suspects that they might have COVID-19, all
their contacts will be alerted via the app and instructed to self-
isolate, helping to break the chain of virus transmission.

Outlook for 2021 and the medium term

Learning and development

Motivation

Social policy

The Group plans to launch LMS –
the Learning Management System.
The system will incorporate all
types of training and development
courses and aim to make the learning
and development process transparent
and accessible for all personnel,
from managers to employees.

In 2021, EVRAZ will continue
with efforts to develop internal coaches,
as well as standard competency and skills
development programmes.

Performance as an employer

EVRAZ has plans to create
an employer brand. In 2021, it will establish
a communications campaign and outline
the development strategy.

In 2021, EVRAZ will develop and introduce
unified salary merit increase principles
for production assets’ employees below
the level of shop heads and mine directors
based on multi-factor assessment of each
employee’s performance. This approach
will allow the assessment of the individual
contributions and efforts of each
employee, increasing the transparency
of the relationship between performance
and pay rises and boosting the transparency
and reliability of communications between
the employee and the employer.

Other goals for 2021 include:
• Continuing to implement the grading

system in the Coal segment.

• Completing the transition of all divisions

to the unified pay system.

EVRAZ will also continue to roll out its
programme to promote healthy lifestyles
and healthcare in the Urals division
and extend this programme to the Siberia
division.

Other goals for 2021 include:
• Adjusting the strategy for collective

bargaining agreements.

• Unifying social business processes
and pooling them into one portal.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCOMMUNITY RELATIONS

Approach

Guided by the international principles
of corporate social responsibility, EVRAZ
strives to make a meaningful contribution
to the regions where it operates. In 2020,
the Group focused its community
relations efforts on COVID-19 prevention
and response.

An important aspect of this work involved
engaging with employees and the public
about the actions that EVRAZ is taking
to fight the pandemic. This information
included safety precautions people can take,
ways how to diagnose infection and where
they can receive medical care. The Group
also promoted a social media challenge
to provide medical workers with protective
equipment and disinfectants.

Throughout the year, EVRAZ continued
to implement its programmes supporting
projects in education, sport, ecology,
urban development and charity. Despite
the new restrictions and risks associated
with the pandemic, the Group sought
to foster a meaningful dialogue with all
stakeholders.

The Group’s charity funds in the Urals
and Siberia select projects based
on the EVRAZ Social Investments
Guidelines. Priorities include supporting
families in need, orphanages and veterans,
financing educational, sport and cultural
projects, as well as subsidising healthcare
and environmental protection programmes.

In 2020, EVRAZ has conducted an analysis
of its charitable activities and surveyed
the residents of the cities where its
operations are located. The residents
believe that EVRAZ should provide better
health care support, including support
of children with disabilities, improvement
of urban environment and leisure spaces.
In this regard, EVRAZ plans to update its
corporate social responsibility priorities
and develop dedicated programs
for the next 5-10 years.

Annual report & accounts 202074 | 75

Federal and regional events

EVRAZ organises events to support
sport, the environment, and the social
and cultural development of cities. It also
participates in national programmes, as well
as federal and international forums. Due
to the restrictions imposed to prevent
the spread of COVID-19, most events in 2020
were held online or in a hybrid format.

During the reporting period, the Group
participated in the “Innosocium”
nationwide competition of social
projects and the WorldSkills Hi-Tech

national championship of working
professions. It was also a strategic partner
of the INNOPROM International Industrial
Fair. In addition, EVRAZ partnered
with the “Ecology of Russia. Regional
Aspect” online marathon, which Kommersant
Publishing House held in Siberia.

In 2020, EVRAZ partnered with RUSAL
to organise the third annual “Create.
Embody. Evaluate” project workshop. This
educational event was part of the “EVRAZ:
City of Friends – City of Ideas” grant

contest and RUSAL’s “School of Urban
Change” social programme. More than 500
people from 80 Russian cities participated
in the online workshop.

EVRAZ supports the Novokuznetsk Drama
Theatre and the “Science for Children”
Endowment Fund, as well as Moscow’s
Meshchersky Park and Documentary
Film Centre. The Group also assists
the “Connection” Deaf-Blind Support
Foundation and other local charitable
organisations.

Brand Finance, a consulting agency that has
been ranking global brands for more than
20 years, named EVRAZ among the year’s
50 strongest Russian brands.

The EVRAZ News corporate newspaper
won the “Best Corporate Media
in the Metallurgical Industry of Russia
and the CIS – 2020” competition. The award
was presented by Metal Supply and Sales
magazine.

Awards

In 2020, The Wall Street Journal (WSJ)
ranked EVRAZ second in its list of the top 10
companies at management environmental
risk. This was part of the WSJ’s ranking
of the world’s 100 most sustainably managed
companies. In explaining its decision, WSJ
cited the Group’s waste management efforts
and focus on energy efficiency projects.

In 2020, EVRAZ was recognised
at the Association of Communications
and Corporate Media Directors of Russia’s
annual Best Corporate Video competition.
The Group’s videos “Stronger than Steel”,
“The Choice is Yours” and “IT Transformation
at EVRAZ” won first or second place
in the “PR Video”, “HSE Video” and “IR
Video” categories.

At the InterComm-2020 awards,
the EVRAZ project “People’s Correspondent.
To the Factory? To the People!” won
the “Dream Job” nomination. The “Risk
Management” project also took the silver
prize in the “Team Energy” nomination.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationPublic organisations and business associations

EVRAZ is a member of key industry, business and charity associations, including:

• Steel Construction Development

• Association of Railway Product

Association.

Producers.

• National Association for Subsoil

Examination.

• Russian Railways Consumer Council.
• Donor’s Forum.

• Russian Managers’ Association.
• Russian Union of Industrialists

and Entrepreneurs.

• Russian Steel.
• Russian Metallurgists’ Association.

Key projects

EVRAZ for kids

EVRAZ participates in various federal
youth programmes and works closely
with academic institutions. The Group
finances the purchase of school supplies
and sport equipment, grants scholarships
and provides vocational guidance
for students. It also offers training
in accordance with the WorldSkills
methodology, arranges work study
programmes for students and provides
internships for graduates.

EVRAZ places a high priority on supporting
children in orphanages and children
with special needs. These efforts include
ongoing programmes that provide
assistance and rehabilitation for children
with health limitations and cerebral palsy.

Case study
In December 2020, EVRAZ partnered with the “Gift for an Angel”
charity fund to launch the “School for Special Parents” online
project in Siberia.

The project offers a five-month home rehabilitation training
programme for 30 parents of children with cerebral palsy

in Novokuznetsk and Mezhdurechensk. The parents will receive
training from leading national experts in speech therapy,
psychology, physical therapy, rehabilitation and occupational
therapy.

Annual report & accounts 202076 | 77

EVRAZ: City of Friends –
City of Ideas

The “EVRAZ: City of Friends – City
of Ideas” grant contest aims to engage
people to improve public spaces, protect
the environment and develop social
initiatives. The project seeks to increase
participation in social design, urban
improvement, environmental education
and preservation of urban natural resources.
The programme provides seminars
and business planning training for potential
grant recipients.

Since 2017, the contest has been held in four
cities where the Group operates. In 2020,
the contest received 193 applications
from Siberia and 142 from the Urals.
Of these, 44 projects received grants
totalling RUB14.5 million. Overall,
the projects received more than 78,000
votes and the programme’s website had
136,000 visitors.

EVRAZ for cities

EVRAZ invests to improve urban
infrastructure in cities and towns
in the regions where it operates. The Group
sponsors medical, educational and cultural
institutions and projects. In 2020, supporting
healthcare facilities became a top priority
due to the COVID-19 pandemic.

Case study
Several “EVRAZ: City of Friends – City
of Ideas” projects were implemented
in 2020.

The Group helped to set up
a multifunctional lean production lab
at Siberian State Industrial University.
The lab uses active and interactive
teaching methods, including via
e-learning and distance learning
technology, to teach students
the principles of lean production.

EVRAZ also helped Nizhny Tagil’s
Children’s and Youth Centre to create
a new facility called the “Astrocentre”.
The programme aims to provide
children a modern understanding
of how the universe is structured.
The centre also holds space-themed
public events, excursions, seminars
and lectures.

Case studies
• In Kemerovo, Sverdlovsk and Tula regions, EVRAZ acquired
protective gear and equipment for regional medical, social
and educational institutions. The Group outfitted a modern
laboratory for the Centre for Hygiene and Epidemiology
in Sverdlovsk region. It also purchased ventilators for hospitals
in Nizhny Tagil and Kachkanar, as well as medicine
and medical equipment to supply oxygen to patients
with pneumonia. An ambulance was provided for the doctors
at the Nikomed medical facility. EVRAZ also provided funding
for the construction of a municipal infectious disease hospital
in Novokuznetsk. In addition, the Group joined the Far East
and Arctic Development Fund’s initiative to help regions
in Russia’s Far East Federal District to fight COVID-19.

• For the 90th anniversary of Novokuznetsk’s Siberian State
Industrial University, EVRAZ provided funding to create
two research and educational centres. The first is focused
on Environmental Geology and the second functions
as a Digital Competence Centre.

• The Group helped to create the “History of Metallurgy”

museum complex at the Mosolov Museum Estate
in the Tula region village of Dubna. The museum was created
and the estate was restored in preparation for the celebration
of the 500th anniversary of the construction of Tula’s Kremlin.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationEVRAZ for sport

EVRAZ strives to develop sport infrastructure
in the cities where it operates. The Group
supports amateur and professional sport

teams, and sponsors national and regional
competitions. EVRAZ also works
to popularise sport and healthy lifestyles

among its employees and their family
members.

Case study
This year EVRAZ held the 6th High-Five! Race, in a combined
format. Participants had one week to perform a run
in an individual mode. They could choose the route they took,
and the distance for adults was five kilometres and for children
one kilometre. Each runner shared their route and time
on the race website, could view their position in overall
standings, and received an e-diploma for taking part. Those

who began preparing in advance had an opportunity to take
a course of 16 trainings conducted by guest trainers in running
and general physical training and published weekly on the race
website. High five! brought together people from 36 cities,
with the youngest participant aged younger than three,
and the oldest being 70 years old.

EVRAZ volunteers

While EVRAZ does not have an official
policy regarding volunteering, for many
years the Group’s employees have been
helping people in difficult situations.
These efforts include supporting children’s
institutions, as well as organising various
sport and social events.

For example, employees of EVRAZ ZSMK
have been sponsoring two orphanages
for more than 70 years: Orphanage No.
95 and Island of Hope. In 2020, the plant’s

women’s public organisation, management
and primary labour union continued
to work on the social adaptation of orphans
and children left without parental care.
The children are taught independent
housekeeping, cooking, cutting and sewing
skills. They also attend vocational guidance
classes, engage in sport and competitions,
and visit cultural events. In addition, material
aid is provided to orphanages. In 2020,
many events were held online.

Participants in the “EVRAZ Beauty – 2020”
competition in the Urals held creative
workshops for children with health
limitations. They also assisted with equine
therapy classes.

The Group’s employees volunteered to give
New Year gifts from EVRAZ to children
with health limitations.

Annual report & accounts 202078 | 79

New projects

In 2020, the Group continued to develop
a comprehensive communications strategy
that focuses on digital channels as the most
relevant format during the COVID-19
pandemic.

Crisis communications:
EVRAZ Against COVID-19

In 2020, the Group updated its internal
corporate portal with two new pages.
The first, “EVRAZ Against COVID-
19”, provides current information
about the efforts that it is taking to fight
the pandemic. The second, “Secure Office”,
contains workplace policies and COVID-
19 prevention services in the office
of the management company.

The Group’s Russian and North American
enterprises organised regular mailing
to the employees of EVRAZ against COVID-
19 and Coronavirus information bulletins.
They provide up-to-date information
about how the pandemic is impacting
the Group, country and world. They also
contain recommendations for employees
to follow, as well as information
about helpful internal and external services.

In Russia, more than 40,000 EVRAZ
employees received a phone call
with a recording of the renowned sport
announcer Nobel Arustamyan. He offered
them information about COVID-19
prevention and recommendations on how
to stay healthy in their leisure time.

Throughout the pandemic,
the management of EVRAZ has focused
its business media communication strategy
on the Group’s COVID-19 prevention
measures and sustainability efforts.

EVRAZ strives to provide transparent
information to employees and the broader
public. As part of these efforts, the Group’s
corporate media has published 389
articles and 11 videos about pandemic

safety measures. EVRAZ released a joint
video project with Komsomolskaya Pravda
Publishing House called “You Can’t
Weld Metal Remotely”. The Group has
also produced the “Thank You” video
series, a separate series of social media
publications with the online artist Gudim
about safety during the pandemic, as well
as the “What I’ll Do After” project. Overall,
these publications reached more than 1.2
million users.

In Russia, EVRAZ held a social media
challenge called “We Don’t Risk”
on VKontakte and Instagram. For each post
or story made as part of the challenge,
the Group sent masks and disinfectants
to medical workers in the cities where
it operates.

Brand update

In 2020, EVRAZ refreshed its corporate
brand to reflect its goals with the new
tagline “For A Better Future”. The updated
brand reflects the Group’s commitment
to continuous development together
with its clients and partners. It also brings
out the expertise and global outreach
of its business, emphasises the synergies
among its assets and highlights its social
responsibility.

The new brand concept was developed
together with international branding
agency Siegel+Gale. All core components
of the brand were modernised, including
positioning, communication platform
attributes and visuals. The update covered
the EVRAZ brand and sub-brands.

Corporate media ecosystem

In 2020, the Group created an editorial
office to coordinate its online and offline
corporate media efforts. This includes
the EVRAZ News corporate newspaper
and EVRAZ TV, as well as the Group’s web
portal and social media presence.

This effort has driven quantitative
and qualitative improvements
in the production of multiplatform content.
The editorial team has created more than
4,000 minutes of video and more than 1,700
pieces of content, reaching 7.5 million users.

In the past year, EVRAZ has more than
doubled the size of its social media
audience on VKontakte, Odnoklassniki,
Facebook, Instagram and YouTube to 36,100
subscribers.

In addition, the editorial team has streamed
42 broadcasts via corporate channels
available only to the Group’s employees.
This includes town hall meetings with senior
executives, staff award ceremonies and other
corporate events.

“People’s Correspondent.
To the factory? To the people!”

Inspired by the Russian travel show “Heads
and Tails”, 12 young EVRAZ employees
visited cities in Siberia and the Urals
where the Group has facilities. Each city
was featured in an episode that paired
two presenters, one of whom explored
local tourist sights while the other visited
a production asset.

The “People’s Correspondent” series was
broadcast on the EVRAZ YouTube channel
and social media accounts, as well as local
television stations. Overall, they received
more than 1.46 million views and around
6,000 reactions.

The presenters explained complex
technological processes to the audience
in an easily understandable manner
and shared interesting details
about the production facilities. They
also highlighted unusual tourist sights
and interesting historical facts about each
of the cities.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationANTI-CORRUPTION AND ANTI-BRIBERY

Our approach

EVRAZ has always striven for consistency
in its strict compliance with the Law
of the Russian Federation No. 273
“On Preventing Corruption”, the UK Bribery
Act, the US Foreign Corrupt Practices Act
and other relevant local legal equivalents.
Battling bribery and unethical practices
are core aspects of EVRAZ’ anti-corruption
efforts.

The Group has a developed system of well
documented procedures that define the day-
to-day routines of managers appointed
to monitor compliance with applicable
anti-corruption laws. Today, compliance
specialists scrutinise all tender procedures,
check potential and existing business
partners, vet prospective new candidates
and ensure that the principles set forth
in the Anti-corruption Policy, Code
of Conduct and other relevant internal
regulations are followed conscientiously
and fully.

Policies and regulations

In 2020, EVRAZ continued to review its key
documents defining the norms of ethical
and responsible behaviour for employees
in particular circumstances. The Code
of Conduct and Anti-corruption Policy, which
were previously updated to reflect changes
in processes that the Group has made, were
joined by the Regulating Conflict of Interest
Situations Policy and the Sponsorship

and Charity Policy. These new and updated
policies enable compliance managers
to refer to clearer definitions and a wider
range of recommended patterns to avoid
risks of corruption. All relevant policies
are available on the corporate intranet
and employees bear personal responsibility
for full compliance with them.

All internal policies and procedures related
to anti-corruption compliance consistently
encourage employees to seek guidance
from compliance managers whenever they
have questions about the expected course
of action in difficult situations. The Group
urges everyone to voice concerns about any
known violations.

Today, managers responsible for monitoring
compliance with applicable anti-corruption
laws are present at every major asset
and responsible for controlling risks
and handling anti-bribery matters. They
ensure that all possible non-compliance
with policies receive proper attention
immediately; monitor charity payments
and hospitality spending; and act on whistle-
blower allegations of possible bribery,
corruption, fraud and malfeasance. They then
present their findings and recommendations
to local managing directors, the Group’s
compliance manager and specialists
reporting to the vice president for compliance
and asset protection. The latter reviews
investigation results to liaise with senior
management as necessary.

The Group’s compliance manager regularly
updates the Audit Committee on the status
of ongoing anti-corruption efforts
and prepares memos at the committee’s
request.

Employees have access to a brief summary
of relevant anti-corruption policies as well
as links to the full texts of top-level documents
on the corporate intranet. Where necessary,
the compliance managers discuss the essence
of the adopted rules and procedures with all
interested parties. New employees are obliged
to familiarise themselves with the Code
of Conduct and the Anti-corruption Policy
on their first day of work. They are also briefed
about other relevant internal documents
and procedures that pertain to the Group’s
anti-corruption efforts.

Risk analysis

At the end of each calendar year,
compliance managers analyse potential anti-
corruption risks across all assets. For this
purpose, they consider every business
process and redefine key risk areas if
necessary. Each area is then evaluated
to see if existing controls and procedures
effectively mitigate the associated risks. In its
Anti-corruption Policy, EVRAZ declares zero
tolerance for bribery and corruption.

The Group investigates carefully
and discreetly all signals suggesting
potential violations of applicable law
and internal anti-corruption policies.

Annual report & accounts 202080 | 81

Key Group policies to regulate anti-corruption and anti-money laundering efforts

CODE OF CONDUCT

Anti-corruption policy

Rules on securities dealings

Hotline policy
and whistle-blowing procedures

Anti-corruption
training policy

Sponsorship
and charity
policy

Gifts
and business
entertainment
policy

Candidates’
background
and criminal
record check

Conflict
of interest policy

Contractors/
suppliers due
diligence check

Examples of anti-corruption risks tested in the Group’s
business processes

In the process “sale of goods, works
and services”, compliance managers
define risk indicators to look and then test
for:
• Goods sold at prices and on terms

that are significantly different
from the market average.

• Goods, works and services sold via
middlemen and agents when direct
contracts are possible.

• Discounts or mismatched conditions
in supply contracts that contradict
the Group’s trade policy requirements.

and shipping documentation,
and granting a delay in payment that
violates the current internal requirements.
So, random transactions – recent
or past – are singled out and carefully
considered for signs of said risks. Should
compliance managers reveal systemic
or significant violations of anti-corruption
procedures, this is drawn to the attention
of the Group’s compliance manager
and the top management, locally
or at the Group level. Compliance
managers then ensure that risks
are properly addressed and mitigated.

or bribery. So, in another example, they
consider charity and sponsorship payments
to make sure:
• There were no violations

of the approval procedure for charity
and sponsorship projects.
• All the required and correct

documents were properly supplied
for consideration to decide if
the charity or sponsorship payment can
be made.

• Potential recipients of charity

or sponsor support are allowable
in accordance with the internal policy.

Other corruption risk indicators here
include unexplained/unjustified bonuses
to the buyer based on the amount
of purchased products, lack of primary

Similarly, compliance managers further
examine every major process for signs
of corruption risks, unethical practices

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationAnti-corruption risk management cycle

Determine or update list of risks
for all business processes
Oct

Input from legal, internal audit
and security departments

Prepare comprehensive list of risks
Oct-Nov

Check events for signs of risk
Nov-Dec

Input from internal audit

Analyse and draft risk reports
Dec-Jan

Compliance
team

Inform senior vice president for business
support and interregional relations
Mar-Oct

Monitor how risks are being mitigated
Mar-Oct

Risk owners

Discuss results with risk
owners and top managers

Top managers

Compliance officer presents reports
to the Audit Committee

As the Group’s business processes are stable
and consistent from year to year, compliance
managers typically examine the same
following processes for signs of risk:
• Purchase of goods or services.
• Payments.
• Sale of goods, works and services.
• Business gifts, hospitality, entertainment

and travel expenses.

• Charity and sponsorship.
• Interaction with government authorities.
• Vetting contractors or customers.
• Contract approval.
• Group property management.

In January 2021, the compliance managers
involved in the abovementioned processes
assessed the risks based on their own
statistics from checking tenders, approving
contracts, monitoring purchases, conducting
inventory checks, etc. The compliance
managers routinely meet with the managers
responsible for each asset to inform
them of known or newly revealed risks
and threats, as well as to recommend further
actions. The compliance managers then
monitor any corrective measures undertaken
to mitigate the risks discussed. In the event
that the necessary follow-up is lacking

or inadequate, the matter gets presented
to the vice-president for compliance
and asset protection for consideration.

In February 2021, the compliance officer
presented to the Audit Committee
the analysis for 2020, which revealed no
significant violations of anti-corruption
statutes or cases of non-compliance
with Group policies.

Annual report & accounts 202082 | 83

Key developments in 2020

In 2020, the Group’s compliance function
did not initiate any investigations into signs
of corrupt practices involving state or public
officials. However, compliance managers’
own leads regarding potential fraudulent
schemes between unscrupulous managers
and suppliers/providers led to investigations.
In the past year, there were four cases
of fraudulent intent, namely lobbying
for money and kickbacks. The employees
involved were dismissed and vendors banned.
The compliance function considers ongoing
preventive efforts, effective existing controls,
the tone from the top and employees’
adherence to the anti-corruption requirements
as effective and adequate for the existing
risks.

In 2020 alone, close to 2,200 managers
throughout the Group completed online anti-
corruption training developed by a leading
international provider in the field. Also
in 2020, the compliance officer developed
several internal EVRAZ training modules
to familiarise employees with or refresh
their active knowledge of the Anti-corruption
Policy and the Code of Conduct. In 2021,
the new approach will be developed
further to create a full-scale internal training

programme in anti-corruption operated
from the EVRAZ Learning Management
System. This will greatly improve the capacity
to train new employees, as well as to help
existing ones to refresh their knowledge
of anti-corruption principles and best
practices. Another initiative launched
in December 2020 and currently being
tested is to invite vendors to learn the anti-
corruption principles of EVRAZ. So far, close
to 200 managers from contractor companies
have passed this special course. This trend
will also develop further in 2021.

The key learning objectives of all internal
courses is to:
• Confirm the Group’s position

and ensure full compliance with applicable
anti-corruption laws.

• Explain existing controls to manage
the risk of bribery and corruption.

• Raise awareness about the damaging

effects of bribery and corruption.

• Draw attention to red flags and warnings
about possible illegal payments or other
corrupt activities.

For additional information, see the EVRAZ
Sustainability Report for 2020, which is to be
published in May 2021

Outlook for 2021

In 2021, more anti-corruption policies
(for example, on vetting vendors,
gifts and hospitality) will be updated
to reflect existing and best practice,
as well as the changes implemented within
the compliance system since its launch.
The Group plans to fully transfer to internal
training modules and tests to make anti-
corruption courses much more specific
and relevant to life at EVRAZ.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCUSTOMER-CENTRIC R&D

In 2020, EVRAZ’ R&D centres worked to improve existing products and to extend the Group’s
portfolio. Advances were made across the main product lines: rails, wheels, beams, long products,
plates, tubular goods and vanadium. The products offer customers such benefits as better
performance, longer product lifetimes and improved material properties to meet their growing
requirements. The Group aims to continue to expand its work on basic research and new product
development in 2021. EVRAZ’ R&D centres use the network and vast knowledge of the Group’s
experts and metallurgists. They also set up partnerships with scientific institutions and universities
to benefit from the state-of-the art research and practical applications. “Customer first” will
remain the hallmark of EVRAZ’ R&D work in 2021 and beyond.

EVRAZ’ R&D SYSTEM

In 2020, EVRAZ announced the creation
of an integrated system of R&D
centres to develop innovative products
and solutions. It builds on existing R&D
capacity and many projects were already
in the pipeline. During the year, the R&D
centres continued to work on key product
areas and meeting customer requirements
from the early stage of development
to the final certification phase. The product
development process is designed
to understand client needs and unlock new
market opportunities.

R&D requires significant time and resources.
EVRAZ’ product development process takes

place in close connection with external
partners, including laboratories, scientific
institutions and universities to benefit
from the latest breakthroughs in the field.
The Group collaborates with its customers
to accelerate the process of testing
and certifying products, as well as to bring
them to the market, from short-term
improvements to new product launches.

EVRAZ’ R&D system is designed to make
full use of the product and geographical
expertise of the centres. The Moscow
office focuses on managing the product
portfolio. The North American centre
specialises in the portfolio from the Group’s

US and Canadian plants and has expertise
in developing high-quality line pipes, OCTG
and rail products capable of withstanding
the harshest environmental conditions. R&D
experts in Switzerland and Tula, Russia,
focus on the use of vanadium in steels
and the development of new recovery
technologies respectively. At NTMK,
the centre concentrates on expanding
the product portfolio for wheels, beams
and grinding balls and is expanding its
expertise to the hardening of rail heads.
At ZSMK, the centre focuses on premium rail
products for the Russian and export market.

Annual report & accounts 202084 | 85

EVRAZ R&D CENTRES

EVRAZ
North America

Moscow
OFFICE

EVRAZ
Tula

EVRAZ
NTMK

EVRAZ
ZSMK

EAST METALS AG
Zug, Switzerland

Rails

Tubular goods, Plate

Beams, Wheels, long products

Vanadium

General

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationEVRAZ North America

New! R&D across EVRAZ North America has been reorganised into a single function. This newly formed structure allows for better resource
and knowledge sharing and covers all product lines: line-pipe, OCTG, plates, rails and long products.

The new APEX G2HH rail – A top seller in North America

EVRAZ Pueblo has developed, patented
and put into production an new ultra
premium rail alloy designed to withstand
the most challenging conditions in North
America. The rail grade was designed
to achieve 430 HB average hardness
at carbon levels that are universally
acceptable for all of the NA (North
American) Class I Railroad customers,
a benchmark only achievable in the past
by increasing carbon content beyond

levels deemed acceptable by many
of EVRAZ’ largest railroad customers.
This unique approach to alloy design,
combined with state of the art head
hardening, achieves superior strength
and hardness levels to resist wear
and rolling contact fatigue damage.
It simultaneously achieves enhanced
ductility and fracture toughness compared
to softer rail grades.

The APEX G2HH rail has been
fully qualified for running rail
and special trackwork applications
by five of the seven NA Class
I railroads, and testing is continuing
with the remaining two operators.

EVRAZ Vanadium R&D centre
(East Metals AG, Zug)

New! Established in June 2020,
the Vanadium R&D centre is promoting
vanadium usage in the steel industry
through cooperation with world-class
research organisations, in order to promote
sustainable and diversified demand
for vanadium from the global steel industry.

Steels that are microalloyed with vanadium
exhibit remarkable properties that are able
to address several current challenges

facing the industry. Given recent
research and industrial trials, the Group
has the capacity to redesign steels
from the nanoscale up.
To bring these benefits to market, EVRAZ’
vanadium research is shaping steelmaking
processes by coupling vanadium’s
unique properties with appropriate
metallurgical process designs. This results
in microstructures that are precisely tailored
to specific market needs and which can
be produced efficiently and economically
by modern steel mills.

EVRAZ ZSMK

At EVRAZ’ ZSMK R&D centre, activities
include the optimisation of the chemical
composition, improvement of rail properties
as well as the development of manufacturing
processes and regulatory documentation
for new railway products. The R&D team
also carries out testing and monitoring
of rail performance directly on the tracks
of customers and works with leading
research institutions.

DT400IK rails – increased wear resistance and contact fatigue strength for work in horseshoe curves under high loads.
The service conditions of the mountain pass sections of the East Siberian and Trans-Baikal Railways, part of the Trans-Siberian trunk
line, are among the toughest in the world. Severe operational conditions come together, including high tonnages, low temperatures
(as low as minus 60°С), a combination of track ascents and descents and small radius curves. Therefore, special rails are required
for these conditions. These offer a combination of superior hardness and strength, while remaining ductile. Such a new generation
rail was developed by EVRAZ ZSMK and is called the DT400IK.

Annual report & accounts 202086 | 87

EVRAZ NTMK

The NTMK plant has the most versatile
product mix within the EVRAZ group,
producing high-quality beams, rails, wheels,
grinding balls, merchant bars and other

long products for the Russian market
and export destinations. Group experts
have continuously expanded the product
mix using the New Product Development
process along with R&D work on rail head
hardening technology and increasing

the mechanical properties of larger sized
beams and grinding balls. The requirements
for wheels are steadily growing. As a result,
a new R&D centre with the necessary
research and testing equipment is being
considered to meet future demand.

The new ECO wheel – evolution in Wheel performance. The new wheels are designed for European and Russian freight
cars. They offer lower residual stresses and a high level of fatigue resistance compared to standard designs. It significantly lowers
the dynamic impact of the wagon on the track. Operating costs are reduced, the lower wheel weight increases the railcar carrying
capacity.

EVRAZ Tula

EVRAZ’ Vanady Tula R&D centre was
created to support technological
improvements at the plant

and to develop new technologies. Located
at the hydrometallurgical plant, its
primary focus is the improvement
of vanadium recovery technology, along
with production of value-added products,

such as electrolytes for vanadium redox
flow batteries. In addition, it is developing
chemical and hydrometallurgical
technologies for extraction of other valuable
elements not currently produced by EVRAZ.

R&D PARTNERSHIPS
Beam Eco system

Vanadium projects with Swerim
and ASPPRC

EVRAZ, in partnership with leading Russian
Scientific institutes (CNIIISK, CNIIST),
and engineering companies (including
Ferrostroy), are creating new ideas for using
beams and other innovative solutions.
In addition, it focuses on implementing
completed R&D projects in design
and construction practices, through trials,
development of codes and pilot projects.

The Advanced Steel Production
and Processing Center of Colorado School
of Mines (ASPPRC) is a platform where
leading global steel producers, major steel
consumers from the automotive and energy
industries and the leading suppliers
from the steel industry can meet with world
class research staff and faculty to collaborate
on general steelmaking and steel
applications.

A bilateral R&D programme has been
founded at Sweden’s Swerim, the joint
research centre of the Swedish steel
and metals industry and academic
metallurgical institutions. The programme
covers the vital needs of steel producers
and steel consumers in Europe.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationDIGITAL
TRANSFORMATION

EVRAZ DIGITAL TRANSFORMATION PATH

2017-18

2019

2020

Results in 2020

Plans for 2021

Plans 2021-2023

→ Pilot projects and
proof of concept

↓

→ Outcome analysis

→ Decision to
make digital
transformation a
strategic priority
of EVRAZ

↓

→ Launch of

major digital
transformation
projects

→ Broad discussion

of digital
transformation
approach,
objectives and
outcomes

↓

→ Decision to

systematically
employ digital
tools on a large
scale throughout
enterprises and
business units

68 projects

implemented
with an annual
effect of
US$

17 million

→ Implement
a major
programme
with more than
100 projects

→ Implement
projects
with cross-
functional product
teams

→ Focus

on production
projects
with direct
economic impacts

→ Generate

an total effect
of US$150 million

ADVANCED ANALYTICS PROJECTS IN 2020

Advanced analytics is a trend in digitalisation based on solutions involving machine learning
and other artificial intelligence elements. It is a digital transformation priority at EVRAZ.

Advanced analytics systems are forward-
looking, predictive and prescriptive.
They help manufacturers to make more
timely and informed decisions, as well
as to improve efficiency and productivity,
in the following ways:
• Rapid response to changes
in the production process.

• Reduced probability of defects.
• Stabilised concentrate quality.
• Minimised costs for charge and auxiliary

materials.

In 2020, EVRAZ engaged an external consultant to help with the successful launch
of six advanced analytics projects:

Urals division

Siberia division

Coal division

• Dynamic ore
concentration
management at EVRAZ
KGOK.

• Optimisation of loading
parameters at EVRAZ
NTMK’s coking plant.

• Dynamic ore processing

management
at the Abagur ore
processing plant.

• Optimisation of extra-
furnace processing
and ladling at EVRAZ
ZSMK’s electric
steelmaking shop.

management
at the Raspadskaya ore
processing plant.
• Advanced analytics

at the Raspadsky open
pit mine’s operational
control management
centre.

Annual report & accounts 202088 | 89

Digital transformation goals

• Improve client service.
• Improve industrial safety.
• Assist operators of complex technological processes
in order to improve the efficiency of equipment,
reduce costs and improve product quality.

• Enhance efficiency and streamline business processes

by eliminating internal barriers.

Key digital technologies

• Advanced analytics based on machine

learning and artificial intelligence.

• Basic industrial analytics

(modern BI tools).

• Expert systems (from vendors).
• Computer vision.
• IoT (Internet of Things) sensors as data source
for analytical and decision making systems.

Other key discussion topics during 2020

The Board also discussed the following topics during 2020.

Strategy and planning • Reviewing the critical success factors for strategic development of the Group’s competitive advantages.

• Disposing of non-core businesses.
• Linking succession planning to corporate strategy execution, and the need to look deeper into the Group for future

leaders.

Operational matters

• Reviewing the performance of key businesses, including commercial initiatives to improve operational performances

and revenues, with particular emphasis on North America.

• Reviewing investment projects.
• Implementing the EVRAZ Business System throughout the Group over the next five years to promote an operational

culture of values and behaviours that support the drive for continuous improvement and business change.

• Reviewing HSE updates, including key initiatives and responses to significant incidents.
• Monitoring the implementation of a risk analysis approach to Health and Safety, including reviewing the associated

training programmes.

Financial

• Reviewing and approving the Group’s consolidated budget and budgets of individual business units.
• Approving the interim and full-year results, as well as the 2019 annual report.

Governance

• Ensuring compliance with the Market Abuse Regulation in relation to managing inside information, share dealing

by insiders and online training of all insiders.

• Reviewing the findings of the externally facilitated Board evaluation exercises and action plans resulting therefrom.
• Approving the 2019 Modern Slavery Statement.
• Approving the Payments to Governments Report.

The Board’s Section 172 Statement is shown on pages 97.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationIn addition, the Board discussed proposals
to pay: an interim dividend of US$0.40 per
ordinary share, totalling US$581 million,
on 27 March 2020; and an interim dividend
of US$0.20 per share, totalling US$291
million, on 2 October 2020. The level
of distributable reserves within the balance
sheet was considered at each distribution
and was found to be sufficient to enable
the dividend to be paid. The dividends
paid were in line with the dividend policy
previously agreed by the Board, which
also considered the impact of COVID-19
on the Group’s going concern and cash flow
position.

During the year, the Board adopted
a revised environmental strategy
and governance process (for

more details, see Strategic Report
on page 14-15 ). To support
the Board in adopting the strategy,
the Audit Committee undertook a review
of the parameters that were required to be
met, and the HSE Committee undertook
a full review with divisional business heads
before the Board reviewed and approved
the strategy.

In keeping with the requirements
of the relationship agreements in place
between the Company and its major
shareholders, the independent non-
executive directors of the Company
have conducted an annual review
to consider the continued good
standing of the relationship agreements
and are satisfied that the terms

of the relationship agreements are being
fully observed by all parties. In accordance
with LR9.8.4R (14), it is confirmed
that the Company has complied
with the independence provisions
of the relationship agreements.

As far as the Company is aware, Greenleas
International Holdings Ltd., Abiglaze
Ltd and Crosland Global Limited (or
any of their associates) have complied
with the independence provisions
of the relationship agreements; and so
far as the Company is aware, Greenleas
International Holdings Ltd., Abiglaze
Ltd and Crosland Global Limited have
complied with the procurement obligations
in the relationship agreements.

Principal decisions

Decision

Context

Stakeholder
considerations

Strategic actions
supported
by the Board

Impact
of these actions
on the long-term
success of the Company

2021 Business Plan and Budget

The Business Plan and Budget sets the annual targets and the costs of the necessary resources to achieve these targets.
It is developed considering the Group’s overall strategy, as well as any specific challenges faced by each division and its
underlying business units, including any stakeholder-related considerations. The Chief Executive Officer, supported by key
members of the management team, presents the Business Plan and Budget for the Board’s challenge and approval.

In reviewing the Business Plan and Budget, the Board considered the potential impact that each operation and project
might have on its stakeholders (employees, local communities, government and regulators, contractors and suppliers,
shareholders and customers) and the environment.

The strategic actions of the Business Plan and Budget supported by the Board to generate value for stakeholders are:
• Further HSE initiatives, which will be monitored by the HSE Committee, to improve performance as detailed in the HSE

Committee Report on pages 126-127.

• Approval of investment plans to further reduce greenhouse gas emissions, supporting government regulations.
• Continuing high standards of corporate governance and adherence to regulations.
• Approval of maintenance CAPEX to enhance business efficiency, increase value and improve working conditions

for staff.

• Approval of investment plans, generating new projects that provide additional employment opportunities.

The Business Plan and Budget creates a balance between current operating performance and considerations that matter
to all stakeholders in the short- and long-term, such as health and safety, environmental performance and community
relations.

Outcome

In December 2020, the Board discussed and approved the 2021 Business Plan and Budget.

Decision

Context

Approval of construction of EVRAZ Pueblo’s new rail plant

As part of the Group’s ongoing programme of renovating existing facilities and developing new ones to expand its
product range, the Board considered an investment project to construct a new long rail mill at EVRAZ Pueblo.

Stakeholder
considerations

Shareholders
• Enhance shareholder value by improving production efficiency and unlocking markets for new products.

Employees
• Provide modern working conditions and a better overall working environment at a state-of-the-art plant.

Environment
• Reduce greenhouse gas emissions by developing a solar farm in partnership with a local energy provider.
• Improve wastewater control.

Customers
• Consult with key customers during decision process regarding their needs for long rails, as well as their commitment

to contract for the product.

Annual report & accounts 2020108 | 109

Decision

Approval of construction of EVRAZ Pueblo’s new rail plant

Impact
of these actions
on the long-term
success of the Company

Strategic actions
supported
by the Board

The decision to invest demonstrates confidence in the long-term outlook for long rail products in the US market
served by this new production facility, as well as the Group’s commitment to sustainable growth for the benefit of all
stakeholders.

The Board supported the development of the new rail mill to generate value for stakeholders by:
• Improving health and safety conditions for staff.
• Reducing greenhouse gas emissions in line with government regulations.
• Improving operational efficiency.
• Providing a product that meets customers’ needs.

Outcome

The Board decided to proceed with an investment in the new rail mill at EVRAZ Pueblo.

Decision

Context

Stakeholder
considerations

Impact
of these actions
on the long-term
success of the Company

Strategic actions
supported
by the Board

Approval of Environmental Strategy

EVRAZ is aware of the impact that some of its operations have on the environment and seeks to minimise it as far
as practicable. The updated strategy takes into account the latest environmental regulations and best practice.

Shareholders
• Avoid fines and production delays due to breaches of environmental regulation.
• Ensure that operations are carried out on an ethical basis.

Employees
• Improve company ethos and provide safer working conditions.

Environment
• Reduce greenhouse gas emissions.
• Improve wastewater control.
• Increase energy efficiency.

A robust environmental strategy is a key component of the Group’s ongoing development in the modern world
and supports its commitment to sustainable growth for the benefit of all stakeholders.

The Board supported the investment projects to generate value for stakeholders by:
• Improving health and safety conditions for staff.
• Reducing greenhouse gas emissions in line with government regulations.
• Improving operational efficiency and increasing shareholder value.
• Providing transparent tendering opportunities for national and international contractors.

Outcome

The Board approved the Environmental Strategy during the year, which was disseminated to management and employees.
For more details, see Strategic Report on page 14-15.

Decision

Context

Approval of various other investment projects

The business plan for each financial year contains numerous investment projects, involving sizeable capital expenditure
amounts. These can be for a variety of different types of projects, including the replacement of outdated equipment
in existing facilities, or the construction of new plants to take advantage of new market opportunities.

Stakeholder
considerations

Shareholders
• Enhance production efficiency and access markets for new products, thereby improving shareholder value.

Employees
• Provide safer working conditions with a better working environment.

Environment
• Reduce greenhouse gas emissions.
• Improve wastewater control.
• Increase energy efficiency.

Impact
of these actions
on the long-term
success of the Company

Strategic actions
supported
by the Board

The decision to invest demonstrates confidence in the long-term outlook for iron and steel products in the markets served
by these production facilities, as well as the Group’s commitment to sustainable growth for the benefit of all stakeholders.

The Board supported the investment projects to generate value for stakeholders by:
• Reducing greenhouse gas emissions in line with government regulations.
• Improving operational efficiency and increasing shareholder value.
• Improving working conditions for employees.
• Reassuring customers that the products they purchase have been made in line with environmental regulations.

Outcome

The Board approved a number of investment projects, during the year.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationChairman and chief executive

Board meetings
and composition

The Board determines the division
of responsibilities between the chairman
and the chief executive officer (CEO).
This division of duties is documented
in a separate document approved
by the Board.

The chairman’s principal
responsibility is the effective running
of the Board, ensuring that the Board
as a whole plays a full and constructive
part in the development and determination
of the Group’s strategy and overall
commercial objectives. The Board is chaired
by Alexander Abramov.

The CEO is responsible for leading
the Group’s operating performance,
as well as for the day- to-day management
of the Company and its subsidiaries.
The Group’s CEO is Alexander Frolov.

The CEO is supported by the executive
team.

In addition, the Board appoints one
independent non-executive director to serve
as the senior independent director, whose
duties are detailed in the documents that
describe the roles of the chairman and CEO.

EVRAZ plc held eight scheduled Board
meetings during 2020. In 2021, up
to the date of this report’s publication,
two Board meetings were held. One
unscheduled meeting was held to discuss
a significant investment proposition. Due
to travel restrictions put in place amid
the COVID-19 pandemic, only one meeting
was held in person; the remainder were held
by video conference call.

The chief financial officer and the senior
vice president for commerce and business
development attended all Board meetings,
with other members of senior management
attending meetings by invitation to deliver
presentations on the status of projects
and performance of business units.

The table on the next page sets out
the attendance of each current director
at scheduled EVRAZ plc Board and Board
committee meetings in 2020.

As at 31 December 2020, the Board
comprised the chairman, one executive
director, and seven non-executive directors,
including a senior independent director.
Olga Pokrovskaya, a former non-executive
director, is invited to attend Board meetings
in an advisory capacity and to attend Audit
Committee meetings as an observer.

Board and AGM attendance by each director

The Board considers that five non-executive
directors (Laurie Argo, Karl Gruber,
Deborah Gudgeon, Alexander Izosimov
and Sir Michael Peat) are independent
in character and judgement, and free
from any business or other relationship that
could materially interfere with the exercise
of their independent judgement,
in compliance with the UK Corporate
Governance Code.

The independent non-executive directors
comprise the majority (excluding the Health,
Safety and Environment Committee)
on and chair all Board Committees.

Board composition

Independent Non-Executive Director
Non-Executive Director

Chairman, Non-Executive
Executive Director

56%
22%

11%
11%

Total number of meetings

Alexander Abramov

Alexander Frolov

Laurie Argo

Karl Gruber

Deborah Gudgeon

Alexander Izosimov

Sir Michael Peat

Eugene Shvidler

Eugene Tenenbaum

Scheduled
Board meetings

Unscheduled
Board meeting

8/8

7/81

8/8

1/1

HSE

2/2

Remco

4/4

Audit

Nomco

AGM

9/9

8/9

3/3

Due to conflicting travel arrangements between the Audit Committee and the Board meeting, Ms Argo was unable to attend one Board meeting.

Annual report & accounts 2020110 | 111

Boardroom diversity

Board expertise

EVRAZ recognises the importance
of diversity both at the Board level
and organisation-wide.

The Board has determined that, as a whole,
it has the appropriate skills and experience
necessary to discharge its functions.

The Group remains committed to increasing
diversity throughout its global operations
and takes diversity into account during
each recruitment and appointment
process, working to attract outstanding
candidates with diverse backgrounds, skills,
ideas and cultures. As stated in the CSR
Report, EVRAZ sees diversity as a crucial
business driver and strives to ensure
that all employees’ rights receive equal
protection, regardless of race, nationality,
religious belief, gender or sexual orientation.
People with disabilities are given full
consideration both during the recruitment
process and once employed, to ensure that
their unique aptitudes and abilities are taken
into account.

During the year, the Nominations Committee
considered boardroom diversity, especially
in view of the need to appoint up to two
new independent non-executive directors
to replace those standing down having
served terms of nine years. The Board
hopes to be able to appoint another
female director and a director who will
broaden the Board’s ethnic diversity. It will,
of course, balance this with appointing
directors who can best serve the Company’s
and shareholders’ interests by providing
excellent governance and appropriate
challenge, with one new director also having
knowledge of operating an integrated steel
business substantially based in the Russian
Federation.

For more detailed information, see the Nominations
Committee Report on pages 124-125 and the CSR
Report on pages 68-69.

The Company believes that the Board’s
composition provides an appropriate
balance of skills, knowledge and experience.
The Board members comprise a number
of different nationalities with a wide
range of skills, capabilities and experience
from a variety of business backgrounds.
Biographies of the Board members
are provided in the Board of Directors
section.

Executive and non-executive directors
have the experience required to contribute
meaningfully to the Board’s deliberations
and resolutions. Non-executive directors
assist the Board by constructively challenging
and helping to develop strategy proposals.

While most of the directors have been
in post since the incorporation of EVRAZ
plc in October 2011, the recruitment of new
independent non-executive directors
in recent years has strengthened the Board’s
technical expertise and widened the skills
base. The Nominations Committee has
commenced a process to identify suitable
candidates for the role of independent
non-executive director to replace those
directors who will be required to stand
down at the 2021 and 2022 AGMs, having
completed terms of nine years.

Induction and professional
development

The chairman is responsible for ensuring
that there is a properly constructed
and timely induction for new directors upon
joining the Board. Directors have full access
to a regular supply of financial, operational,
strategic and regulatory information to help
them to discharge their responsibilities.

For more detailed information, read the Nominations
Committee Report on pages 124-125.

Performance evaluation

An externally facilitated annual Board
evaluation was conducted in 2020, following
an internally evaluated review undertaken
in 2018 and 2019. Lintstock was appointed
as the external evaluator, having undertaken
the review previously in 2016. Lintstock has
no other connection with the Company.

The review was carried out at the initiative
and with the participation of the Company’s
Nominations Committee. Questionnaires
were distributed to all Board directors
for their response and comment.

The results were discussed at three levels:(i)
among the members of the Nominations
Committee; (ii) between Sir Michael Peat (as
chairman of the Nominations Committee)
and Alexander Abramov (as chairman
of the Board); and (iii) among the members
of the Board as a whole.

Board performance was deemed to be
satisfactory. The outcome of the 2020 board
evaluation called for: further emphasis
to be placed on strategic issues, especially
the impact of new technology and digital
development across the sector; sustained
momentum on sustainability; reconsideration
of the Group’s risk profile; along with further
board training on key topics.

Arising from the previous years action plan,
the Board noted that its members had
spent more time considering the Group’s
investment proposals and their impact
on other stakeholders. It had also spent
a significant amount of time monitoring
the implementation of the HSE system
across the Group. The Company
undertakes regular performance evaluations
of the Board in line with the requirements
of the UK Corporate Governance Code.

Board committees

The following principal committees
support the Board in its work: the Audit
Committee, the Remuneration Committee,
the Nominations Committee, and the Health,
Safety and Environment Committee. Each
committee has written terms of reference,
approved by the Board, summarising its
role and responsibilities. The committees
review their respective terms of reference
each year and submit any recommended
changes to the Board for approval. All terms
of reference for the committees are available
on the Group’s website: www.evraz.com.

The Audit Committee consists of three
non-executive directors, all independent,
which complies with the Code. The Board
considers that, as a whole, the committee
has competence relevant to the industry
sector in which the Group operates.
Specifically, Deborah Gudgeon has relevant
recent financial experience.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationBoard composition as at 31 December 2020

Name

Executive director

Alexander Frolov

Non-executive directors

Alexander Abramov

Eugene Shvidler

Eugene Tenenbaum

Independent non-executive directors

Laurie Argo

Karl Gruber

Deborah Gudgeon

Alexander Izosimov

Position

CEO

Chairman

Director

Committee membership

Year of tenure

HSEC — member

NC — member

None

AC — member, RC — member

HSEC — chairman, NC — member

AC — chairman, RC — member

RC — chairman, NC — member,
AC — member

Sir Michael Peat

Senior independent director

NC — chairman, RC — member

Role and composition of each committee

Committee name

Audit Committee

Nominations Committee

Remuneration Committee

Function

Composition

Audit, financial reporting, risk
management and controls

All three members are independent
non-executive directors

Selection and nomination
of Board members

All five members are non-
executive directors, of which three
are independent

Remuneration of Board
members and top management

All four members are independent
non-executive directors

HSE Committee

HSE issues

Two of the three members
are non-executive with an independent
chairman who is also a non executive
director of the Company1

Link to committee
report

Read on pages 118-123

Read
on pages 124-125

Read
on pages 128-139

Read
on pages 126-127

1. The members of the Health, Safety and Environment Committee at 31 December 2020 were Karl Gruber (chairman), Alexander Frolov and Olga Pokrovskaya, who has
continued as a non-executive member of the HSE Committee following her cessation as a Board member of the Company on 14 March 2016. With more than 50%
of EVRAZ operations based in the Russian Federation, the committee continues to value the contribution she brings in terms of her technical and regional experience.

Annual report & accounts 2020112 | 113

RISK MANAGEMENT AND INTERNAL CONTROL

EVRAZ maintains a comprehensive financial
reporting procedures (FRP) manual
detailing the Group’s internal control
and risk management systems and activity.
The manual was last updated in November
2020 to reflect changes in internal processes.
The document was prepared in accordance
with the Financial Reporting Council (FRC)
Guidance on Risk Management, Internal
Control and Related Financial and Business
Reporting issued in September 2014.
The aim of the risk management process
is to identify, evaluate and manage potential
and actual threats to the Group’s ability
to achieve its objectives.

The EVRAZ Enterprise Risk Management
(ERM) process is designed to identify,
quantify and respond to these threats,
as well as to monitor the Group’s
prevention and mitigation system.
Management maintains a risk register that
encompasses both internal and external
threats. The level of risk appetite approved
by the Board is used to identify particular
risks and uncertainties that require specific
Board oversight. In 2020, the process
in relation to principal risks and uncertainties
was consistent with the UK Corporate
Governance Code, the FRC Guidance
on the Strategic Report issued in July 2018
and the abovementioned FRC guidance
issued in September 2014.

Executive management is responsible
for both internal controls in place
and mitigating actions related to risk
management throughout the Group’s
business and operations. This serves
to encourage a risk-conscious business
culture.

EVRAZ applies the following core principles
to identifying, monitoring and managing risk
throughout the organisation:
• Risks are identified, documented,

assessed and monitored, and their profile
is communicated to the relevant levels

of management team, regularly.
The business management team
is primarily responsible for ERM
and accountable for all risks assumed
in the operations.

• The Board is responsible for assessing

the optimum balance of risk (risk appetite)
through the alignment of business strategy
and risk tolerance on an enterprise-wide
basis. In addition, the Board oversees
and approves risks above the Group’s
defined risk appetite and reviews any
significant internal control weaknesses.

• EVRAZ has established a reporting process

involving business unit management
teams and other relevant bodies
at major enterprises. Its aim is to identify,
evaluate and establish management
actions for risk mitigation at a regional
level, as well as at the Group’s major
steel and mining operations. The Risk
Management Group maintains a corporate
risk register representing a summary
of this information. Business unit
management teams and other relevant
bodies are accountable to the Risk
Management Group, which consists
of business unit and function vice
presidents.

The Board has delegated primary oversight
of the internal control process at EVRAZ
to the Audit Committee, which discusses any
major internal control findings exceeding
the Board’s risk appetite.

The EVRAZ Business Security department
is led by a vice president and has specific
responsibility for preventing and detecting
business fraud and malpractice, including
fraudulent behaviour by employees,
customers and suppliers. Robust
internal controls help to minimise
the risk, and the EVRAZ Business Security
department ensures that appropriate
processes are in place to protect the Group’s
interests.

Internal audit

Internal audit is an independent appraisal
function established by the Board
to evaluate the adequacy and effectiveness
of controls, systems and procedures
at EVRAZ, which helps to reduce business
risks to an acceptable level in a cost-
effective manner. The Board approved
the latest version of the internal audit
charter on 22 January 2020.

The internal audit function’s role
in the Group is to provide an independent,
objective, innovative, responsive
and effective value-added internal
audit service. This is achieved through
a systematic and disciplined approach based
on assisting management in controlling
risks and monitoring compliance, as well
as improving the efficiency and effectiveness
of internal control systems and governance
processes. Once a year, the function
provides an opinion of the overall
effectiveness of the internal controls in place
at EVRAZ.

During 2020, the Group’s head of internal
audit and the secretary of the Audit
Committee attended all the committee’s
meetings and addressed any reported
deficiencies in internal control as required
by the committee.

The internal audit planning process
starts with the Group’s strategy; includes
the formal risk assessment process,
consideration of the results of management’s
internal control self-assessment,
and the identification of management
concerns based on the results of previous
audits; and ends with an internal audit plan,
which the Audit Committee approves.

Audit resources are predominantly
allocated to areas of higher risk
and, to the extent considered necessary,
to financial and business controls

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationand processes, with appropriate resource
reservation for ad hoc and follow-up
assignments.

In 2020, internal audit projects covered
the following risks of the Group:
• Cost effectiveness.
• HSE: health and safety.
• Capital projects and expenditure.
• Human resources.
• Potential regulatory actions

by governments.

• Business interruption, as well as equipment
and infrastructure downtime management.

the Group via quality assurance
and improvement programmes.

• Transportation, sourcing, raw materials

and energy supply.

• Digital effectiveness, as well as effective,

efficient and continuous IT service.

The internal audit function at EVRAZ
is structured on a regional basis, reflecting
its geographic spread of operations.
The internal audit function aligns common
internal audit practices throughout

In 2020, EVRAZ engaged an independent
party to ensure that the internal audit
function’s activities are in compliance
with the requirements of the Institute
of Internal Auditors (IIA), as well as the IIA’s
Code of Ethics and best international
practices in internal audit. The Group’s
internal audit function received the highest
rating in the independent review.

Components of the internal control system

Component

Basis for assurance

Action in 2020

Assurance framework — principal entity-level
controls to prevent and detect error or material
fraud, as well as to ensure the effectiveness
of operations and compliance with principal
external and internal regulations

• Annual self-assessment by management at all
major operations of the internal control system
using the EVRAZ Assurance Framework.

• Review of the self-assessment by the internal

audit function.

• Assessment of the overall effectiveness

of the governance, risk and control framework.

Investment project management

• Effectiveness of project management

and management of project risks is monitored
by an established management committee
and subcommittees.

• Reviewed by the internal audit function.

Operating policies and procedures

• Implemented, updated and monitored

by management.

• Reviewed by the internal audit function.

Operating budgets

• Approved by the Board.
• Monitored by the controlling unit.
• Reviewed by the internal audit function.

In 2020, the internal audit function reviewed
the results of management’s internal control
self-assessment and evaluated the overall
effectiveness of the governance, risk
management and internal control system.
All major production sites were certified
as having effective overall governance, risk
management and internal control.

In 2020, various activities were implemented
to further improve the efficiency
and effectiveness of the project management
process, for example by creating a project
risk register and training more than 50
project managers and project team members.

Operating policies and procedures
are updated as per the internal initiatives
by the operational management
and in response to recommendations
from the internal audit function. The process
of improving the internal regulation
framework began in 2019 and continued
in 2020.

Operating budgets are prepared
by the executive management and approved
by the Board.

Annual report & accounts 2020114 | 115

Approach to risk appetite

Risk appetite is an important part
of the risk management process that serves
as a measure of the risks that management
is willing to accept in pursuit of value.
The Board has approved a risk appetite
in accordance with the risk management
methodology adopted by EVRAZ.

Risk appetite is considered in evaluating
strategies and setting objectives within
the Group’s strategic and budgeting cycle,
in decision making and in developing
risk management actions and methods,
as well as in identifying particular risks
and uncertainties that require specific
Board oversight. The strategic objectives
set by EVRAZ are aligned with, and risk
mitigation actions are reflective of, the risk
appetite approved by the Board. The Group
adopts a robust approach in relation to risk
management. Risk appetite for some specific
business processes (eg health and safety,

fraud, security, bribery and corruption)
is assessed, defined and evaluated
separately from the rest of the processes.

Management reassesses
the risk appetite at least annually via
the Risk Management Group, which
reports on the analysis performed
to the Audit Committee. The committee
then makes recommendations to the Board
regarding the level of risk appetite.
The Risk Management Group and the Audit
Committee last reviewed the Group’s risk
profile in November 2020.

Based on the results of the most recent
review, management concluded that
the risk-acceptance approach employed
by EVRAZ had not changed and that
the risk appetite remained the same
as in the prior year. An appropriate
recommendation regarding the level of risk
appetite was made to the Audit Committee
and to the Board on 26 January 2021.

Objectives for 2021

Further development of the risk
management system and risk management
practices is planned for 2021.

In 2020, the Group was focused
on enhancing its health and safety risk
management methodology, including
the risk of mass quarantine of workers due
to COVID-19; this work will continue in 2021.

In 2021, in addition to continuing
to implement ongoing initiatives focused
on improving risk management (in HSE,
equipment maintenance and repairs, IT
projects and other processes), the Group
plans to focus more on addressing
environmental risks, which have always
been a topic of focus for management
and are recognised as principal risks
for the Group.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationSTAKEHOLDER ENGAGEMENT

EVRAZ uses various communication channels to ensure that its stakeholder
engagement approach covers all stakeholder groups and facilitates two-way
communication and feedback.

Engagement by Board members

Engagement by management

Shareholders and investors

Regular Capital Markets
Days

Roadshows following
financial reporting
announcements

Russian and international
investment
conferences

Site visits

Day-to-day engagement

Engagement with the following
stakeholder groups is primarily undertaken
by management through the engagement
mechanisms set out below. Key issues
are reported to the Board via management’s
monthly Board Report.

Customers

Regularly monitoring customer
satisfaction levels

Suppliers
and contractors

Discussions with potential
suppliers

Meetings and feedback
sessions with clients and EVRAZ
management

Electronic platform for suppliers

Electronic platform for clients

Site visits to production assets

Educational programmes
for contractors to ensure high
level of workplace safety

Annual report & accounts 2020116 | 117

The executive team is responsible
for the day-to-day stewardship of all
stakeholder relationships and its members
report to the Board on the key metrics
and initiatives. The Board, either
directly or through its committees,
engages or oversees engagement

with the Company’s stakeholders
through a number of governance
activities (which are described in more
detail, along with further information
about the Company’s engagement with key
stakeholders, on page 136).

Our goal

To build honest
and supportive
relationships with all
stakeholders on its path
towards sustainable
development.

Employees

Direct engagement
of dedicated Board
members

Development of a safety
culture

Regular educational
programmes to develop
employees’ professional
skills

Regular interaction
with trade unions

Internal portal
for employees

Annual employee
engagement survey

Corporate newspapers

Hotline

Local communities

Implementing various social,
infrastructural and environmental
projects based on local
communities’ needs

Organising social events
for populations of regions where
EVRAZ operates

Holding direct dialogues
with local communities

Government
and regulatory
authorities

Regular meetings
with representatives
of government and regulatory
authorities at federal, regional
and local levels

Disclosure of information
concerning the Group’s social,
economic and environmental
performance

Agreements on regional socio-
economic development

Media

Industry organisations

Hosting regular press
conferences

Organising and participating
in conferences, as well as other
industry events

Initiating and supporting
various social, economic,
educational and environmental
projects

Supporting and initiating
mutual communication projects.

Supporting regional TV
channels and newspapers.

Organising site visits.

Day-to-day and ad-hoc
engagement.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationAUDIT COMMITTEE
REPORT

I am pleased to present the Audit Committee Report for the year ended 31 December
2020.

Deborah Gudgeon
Independent Non-Executive Director,
Chairman of Audit Committee

The emergence of COVID-19 at the beginning of the financial year impacted
the committee’s work in certain ways. From March 2020, all meetings were held
virtually and it was not possible to hold a meeting at one of the operations,
as originally scheduled. The impact of the pandemic on all aspects of the committee’s
responsibilities and work was regularly evaluated throughout the year.

I would like to extend the thanks of the committee to the executive and financial
management of the Group, the internal audit department and our external
auditor, EY, for their continuing diligence and valued contribution to the work
of the committee during this challenging year.

ROLE AND RESPONSIBILITIES
OF THE AUDIT COMMITTEE

The work of the committee is determined
by its terms of reference. These were
reviewed and updated in August 2020
and can be accessed at: www.evraz.com.

The Audit Committee minutes are tabled
at Board meetings for consideration
and the chairman updates the Board orally
on the committee proceedings, making
recommendations on areas covered by its
terms of reference, if appropriate.

The Audit Committee reviews
the Group’s governance, risk
and control environment annually, together
with the risk register and risk appetite
proposed by the management, before they
are considered by the board.

I confirm, on behalf of the Group,
its compliance during the financial
year commencing 1 January 2020
with the provisions of the Competition

and Markets Authority Order 2014
on mandatory tendering and audit
committee responsibilities.

COMMITTEE MEMBERS AND ATTENDANCE

The Audit Committee members
are all independent non-executive directors
and, between them, have a wide range
of skills and experience. Deborah Gudgeon
has recent and relevant financial experience
and Alexander Izosimov provides key
strategic expertise. Laurie Argo has extensive
commercial and financial experience
in the North American market. As disclosed
in the Corporate Governance report
on page 110, Olga Pokrovskaya attends Audit
Committee meetings by invitation, providing
additional technical expertise and valuable
regional knowledge.

The CFO and senior members of the Group’s
finance function, the head of internal
audit and the external auditors attend all
committee meetings.

Other members of the management team
and internal audit function are invited
to attend committee meetings as appropriate.

During the year, key members
of the executive management and Risk
Management Group are invited to attend
Audit Committee meetings to present
on specific matters. During 2020, these
included the CEO and the vice presidents
of strategy, commerce and business
development, HSE, IT, legal, human relations
and the Group’s compliance officer.

The committee met nine times during
2020 and three times in early 2021 prior
to the publication of this Annual Report.
Due to the COVID-19 pandemic, only two
meetings were in person. Eight of these
meetings were held by video conference
and two by a telephone conference.

Annual report & accounts 2020118 | 119

ACTIVITIES AND WORK OF THE COMMITTEE DURING 2020

The Audit Committee has continued to focus
on the integrity of the Group’s financial
reporting, the related internal control
framework and risk management, including
finance, operations, regulatory compliance
and fraud. These areas were comprehensively
reviewed and the committee received
regular updates from the Group’s financial
and operational management, internal audit,
compliance officer and vice president of legal
affairs, as well as the external auditor.

The committee’s continuing focus
on the IT security of the Group was
strengthened following the cyberattack
on the North American operations in March
2020. The committee reviewed a detailed
report on the attack in June 2020, together
with the recommendations from Accenture
in respect of the IT security architecture
and emerging risks, and considered
the implications for the whole business.
Progress against the updated North
American mitigation plan was monitored
throughout the year. The risk mitigation
plan for the Russian business was
also updated and expanded to reflect
the experience in North America, emerging
risks and the results of the EY assessment
in November 2019. The committee
recommended that a common IT
governance structure be implemented across
the business and welcomed the establishment
of the Information Security Committee
headed by the CEO. Given the significance
of IT security to the Group’s risk profile
and resilience, and the level of digital
transformation throughout the business,

this will remain an area of focus for the Audit
Committee in 2021 and beyond.

Ahead of the implementation of ISA
(UK) 570 (revised), the Audit Committee
requested the external auditor to perform
certain agreed procedures on the 2019
reporting process and year end position
to undertake certain of the additionally
required procedures of the new standard
and so provide the Committee with some
assurance as to the Group’s readiness
for the new standard. The management
controls and processes underpinning
the going concern assumption were reviewed,
challenged and benchmarked against
examples of best practice. The Group’s
process for evaluating a severe but plausible
downside scenario over the going concern
period was also considered. In June 2020,
the Audit Committee reviewed the EY report
and accepted the limited recommendations
made by the external auditor.

During 2020, the committee reviewed
progress on a number of ongoing projects.
These included the repair and maintenance
transformation project, the standardisation
of the procurement contract process,
as well as the project to improve inventory
and product shipment controls at one
of the operations. The committee also
reviewed the Group’s management of working
capital.

The committee updated its own terms
of reference and undertook a self-assessment
to consider the performance of the committee.

The Group’s financial reporting procedures
(FRP) manual was also reviewed
and updated. The effectiveness and status
of the anti-corruption policy and sanctions risk
compliance controls were reviewed throughout
the course of the year, together with progress
to meet the recommendations of the FRC’s
Guidance on Risk Management, Internal
Control and Related Financial and Business
Reporting.

At the request of the Board, the Audit
Committee reviewed the pro forma Viability
Statement and supporting analysis, which was
produced by the management and reviewed
by the Risk Management Group. The Audit
Committee considered the scenarios being
tested in the context of the updated risk
register, current operating environment
and the Group’s strategy. The assumptions
and mitigating actions underpinning
each scenario and the capital required
for the effective operation of the business
were also reviewed. The scenario testing
of the Group’s resilience to a cyberattack was
updated to reflect the real-world experience
gained in 2020. The committee also
considered the emerging risks that EVRAZ
faces, primarily climate change. These risks
were extensively assessed during development
of the Climate Change Strategy in 2020
and found not to currently pose a critical risk
to the business over the period of the viability
testing. The Audit Committee will review
this annually.

SIGNIFICANT FINANCIAL REPORTING ISSUES
CONSIDERED IN 2020

The Audit Committee’s primary objective
is to support the Board in ensuring
the integrity of the Group’s financial
statements and Annual Report, including
review of:
• Compliance with financial reporting

standards and governance requirements.

• The material financial areas in which

significant accounting judgements have
been made.

• The critical accounting policies

and substance, consistency and fairness
of management estimates.

• The clarity of disclosures.
• Whether the Annual Report,

taken as a whole, is fair, balanced
and understandable, and provides
the information necessary for shareholders
to assess the Group’s performance,
business model, strategy, principal risks
and uncertainties.

The Audit Committee considered
several financial reporting issues
in relation to the interim results
for H1 2020 and the financial results

for the year ended 31 December 2020.
These included the appropriateness
of the accounting policies adopted,
disclosures and management’s estimates
and judgements. The committee considered
papers produced by the management
on the key financial reporting judgements
and reviewed reports by the external
auditor on the audit process for the full-year
and interim results.

The financial statements are impacted
by fluctuations in the key functional

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationcurrencies of the business (primarily
the Russian rouble) against the US dollar,
the presentation currency of the financial
statements, as set out in Note 2. As a result,
the analysis of balance movements
in the financial statements between
reporting periods can be difficult, although
the management separately reports
the forex impact for key movements.

Going concern (Note 2)

EVRAZ is exposed to a wide range
of risks and inherent uncertainties
as set out on pages 90-95, many of which
are outside the control of the Group.
While the onset of the COVID-19 pandemic
in early 2020 resulted in a significant fall
in the demand for steel products across
the world, there was a material rebound
in EVRAZ’s key markets during the second
half of the year. The Audit Committee
reviewed management’s going concern
analysis which tested three scenarios:
a base case; a flexed downside scenario
based upon pricing close to the bottom
of the range of current investment analyst
forecasts; and an additional stressed
downside scenario based upon the 2009
reported results of the Group, the lowest
since the Group listed in 2005, which
assumed prices for steel, coal and iron ore
significantly below management’s current
forecasts. The Committee challenged
management to validate the additional
stressed downside scenario given
the changes in the Group’s asset base
and steel capacity since 2009 and accepted
the analysis produced which demonstrated
that some low –performing assets
in South Africa, Ukraine, North America
and the Czech Republic had been disposed
and replaced by more profitable operations
in the Russian Federation. In addition,
management tested a potential scenario
in which the coal assets are demerged
in the going concern period.

The committee carefully considered
the projected use and sources of funds
for the period to June 2022, which includes
scheduled loan repayments, new committed
funding, free cash flow after committed
capital expenditure and the dividend policy.
Given the volatility of the global supply
and demand environment in which EVRAZ
operates and the continuing pandemic,
the committee focused on the flexed
downside scenario and the implications
for free cash flow and compliance
with financial covenants. Although COVID-19

has had a limited impact on the Group’s
business to date and with the signs
of recovery in key markets, the committee
also considered the additional stressed
downside scenario and the reverse stress
testing undertaken by EY. The implications
of the potential coal demerger was also
considered.

Following these detailed considerations,
the Audit Committee resolved
to recommend the going concern basis
of preparation for the Financial Statements
as at 31 December 2020 to the Board.

Significant accounting
judgements and management
estimates

Impairment of goodwill
and non-current assets
(Note 7)

The committee considered
the management’s impairment assessment
for the financial year in the context
of the current and future trading
environment for the Group, including
assumptions as to the continuation
of tariffs and duties in North America
and their impact on the recoverable
amount of the affected assets. Impairment
testing was undertaken at 30 September
2020 and reassessed at 31 December 2020,
when no further impairment triggers were
identified.

The recoverable amount
of all cash generating units tested
in 2020 were determined by their value-
in-use. In 2019, the recoverable amount
for large diameter pipes was determined
on the basis of fair value less cost
of disposal, as the management
considered that it provided a more
reliable result and could be compared
to a recent relevant open market
transaction. The relative weakness
of the rouble means that the carrying
value of Russian cash-generating units
remains low in US dollar terms; but they
remain largely unchallenged by value-in-
use comparisons, even if the pricing outlook
is assumed to deteriorate.

An impairment charge of US$310 million
is recorded in the financial statements
for 2020. This primarily relates to the large
diameter pipe business in Canada, where
a charge of US$234 million is recognised

(goodwill US$65 million, intangibles US$16
million and PPE US$153 million) and the oil
country tubular goods cash generating
unit, where a goodwill impairment of US$67
million has been recorded. The committee
considered the management’s reassessment
of demand for steel, oil and commodities
in the US and Canada, which it is assumed
will only partially recover in 2022, together
with the continuing implications of trade
barriers and the long-term outlook for these
businesses, and accepted the management’s
proposed impairment charges.

Recovery of deferred tax assets

Given the management’s reassessment
of North American demand, the Audit
Committee considered the recoverability
of the net deferred tax assets, most of which
relate to EVRAZ North America, together
with tax planning strategies available
to the Group. As a result, the committee
is satisfied that the deferred tax assets
are recoverable.

Other matters

The potential demerger
of the Group’s coal assets

Further to the Company’s announcement
on 26 January 2021, management
is currently considering the strategic merits
of. The consolidated coal assets constitute
a major business segment to be treated
as a discontinued operation if the demerger
meets IFRS 5 requirements. However,
as at 31 December 2020 and the date
of the annual report, there was no certainty
as to whether the demerger would proceed.
The Committee considered the accounting
treatment and concluded that, given
the uncertainties, the Coal segment should
not be treated as a discontinued operation
in the 2020 financial statements.

Reverse factoring

In 2020, certain suppliers sold their accounts
receivable from the Group to a bank
under non-recourse factoring contracts.
Trade payables subject to these
arrangements are payable in 60-180 days
enhancing the Group’s management
of working capital. Management analysed
these reverse factoring arrangements
and, as they do not contain a financing
element, determined that they should
continue to be presented as trade

Annual report & accounts 2020120 | 121

payables in the financial statements.
At 31 December 2020, US$188 million was
outstanding and included in trade payables.
The Audit Committee reviewed and agreed
with this treatment.

Fair, balanced
and understandable

In considering whether the Annual Report
is fair, balanced and understandable,
the committee reviewed the information
it had received, discussions held
with the management throughout the year
and the preparation process adopted.
The management agreed the key overall

messages of the Annual Report at an early
stage to ensure a consistent message
in both the narrative and financial
reporting. Regular meetings were held
to review the draft Annual Report
and for the management and committee
members to provide comments,
and detailed reviews of the appropriate
draft sections were undertaken
by the relevant directors and external
advisers. In particular, the committee
considered whether the description
of the business, principal risks
and uncertainties, strategy and objectives
were consistent with the understanding
of the Board, and whether the controls

over the consistency and accuracy
of the information presented in the Annual
Report are robust.

Taking into account the disclosure
implications of the issues discussed
in this report, the committee recommended
to the Board that, taken as a whole,
it considers the Annual Report to be fair,
balanced and understandable. The Audit
Committee recommended approval
of the Group’s 2020 Consolidated
Financial Statements by the Board.
Both recommendations were accepted
by the Board.

OTHER MATTERS

UKBA

During 2020, the Group extended its
policies relating to anti-corruption
through the addition of policies
relating to conflict of interest situations
and charity and sponsorship, as set
out on page 80-83. Using the updated
framework for monitoring compliance
with EVRAZ’ anti-corruption policies
and identifying risk, compliance during
2020 was tested and the results reported
to the Audit Committee in February 2021.
The testing indicated further progress
in reducing risk.

Anti-corruption training is online
and, as a result, was not impacted
by the pandemic. In 2020, a total of 2,200
managers completed the course developed
by Thomson Reuters. In addition, several
bespoke training modules were developed
in-house by the EVRAZ compliance team.
This approach will be developed further
in 2021 to create a total internal programme
covering anti-corruption, significantly
extending the capacity to provide both
initial and refresher training across
the Group.

Sanctions compliance controls

The committee continued to monitor
compliance with the current sanctions
regime during 2020, including the control
processes, procedures and reporting
framework. The implications of the United
Kingdom’s departure from the European
Union upon the sanctions regime
is currently under investigation
and will be reviewed by the Audit
Committee in 2021, along with any other
changes.

RISK MANAGEMENT AND INTERNAL CONTROL

This should be read in conjunction
with the Risk Management and Internal
Control section on pages 112-115.

EVRAZ has an integrated approach to risk
management to ensure that the review
and consideration of current and emerging
risks inform the management of the business
at all levels, the design of internal
controls and the internal audit process.
The Group’s financial reporting procedures,
internal controls, risk management
systems and activities are documented
in a comprehensive FRP manual. The manual
was updated and reviewed by the Audit
Committee in December 2020.

The risk profile was reviewed and updated
in July 2020 to incorporate the effects
of COVID-19 and the Group’s response.
The Risk Management Group
and the Audit Committee further reviewed
the Group’s risk profile in November 2020
and finalised the assessment in January
2021. The assessment includes the Risk
Management Group’s recommendation
on the level of risk appetite of the Group
and how that appetite is applied to strategic
and operational business decisions. This
was reviewed by the Audit Committee,
along with the draft Statement of Principal
Risks and Uncertainties to be included
in the Annual Report, prior to the Board’s
consideration.

Internal audit findings on control
issues that exceed the Group’s risk
appetite are reported to the Board
by the Audit Committee and followed up
by the Group’s Management Committee.
Progress on the timely and effective
resolution of issues is monitored regularly
by the committee.

The Audit Committee receives quarterly
updates on whistleblowing reports,
together with a bi-annual security report
on the progress of follow-up investigations
and resulting actions in relation to fraud
and theft. Any significant whistleblowing
report is reported to the committee
on an ad hoc basis when it arises.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationcontract documentation were also
considered. Other areas reviewed were
the repair and maintenance transformation
project across the Russian assets,
as well as the ongoing project to optimise
product inventory and shipment control
at one of the plants. The Audit Committee
considered whether any of these matters
had implications for the risk and control
environment of the Group.

Assessment of the Group’s
Risk Profile and Control
Environment

Internal audit evaluates the overall
effectiveness of the Group’s governance,
risk and control environment
annually and this is considered
by the Risk Management Group
and the Audit Committee. The chairman
of the Audit Committee tables the internal
audit report assessment of the governance,
risk and control environment with the Board.

The Audit Committee monitors
the internal control environment throughout
the year and engages with the executive
management to ensure the resolution of any
deficiencies identified by internal audit.

The mitigation of health and safety risks
across the business continued to be an area
of focus during 2020. The committee
reviewed reports from both internal audit
and the industrial safety team, in addition
to regular updates from the management.
Following the cyberattack at EVRAZ North
America in March 2020, the committee
was regularly updated on the deficiencies
exposed by the attack, the mitigation
plan developed by the management
and progress against this plan. The Audit
Committee also continued to review
information security risks across the business
by way of updated annual assessments
and consideration of initiatives to mitigate
the evolving risk environment. Progress
on projects to automate payment
processes and to standardise procurement

INTERNAL AUDIT

The Audit Committee receives quarterly
internal audit reports detailing significant
findings, progress on the timely
and effective resolution of outstanding
findings, the status of ad hoc projects
and any revisions to the current year
audit plan. The internal audit plan
for 2021 was reviewed by the Audit
Committee and revisions proposed
to reflect the updated risk profile
of the business and the continuing
pandemic, as well as to prioritise

key business cycles and controls
from a risk perspective. Overall,
the committee considers the current
internal audit resource to be adequate
for the internal control and risk
management assurance requirements.

The Audit Committee reviewed
the Internal Audit Charter in January 2021
and concluded that no changes were
required. The key performance indicators
for the internal audit function were also

reviewed and updated in January 2021. An
annual assessment of the effectiveness,
independence and quality of the internal
audit function by committee members,
the management and the external auditor
was undertaken and was again found to be
satisfactory. Deloitte undertook an external
assessment of internal audit in Russia,
the CIS and Europe in 2020 and found that
the function fully complies with internal
audit standards with no significant findings.

EXTERNAL AUDIT

The Audit Committee is responsible
for monitoring the ongoing effectiveness
and independence of the external auditor,
as well as making recommendations
to the Board on the re-appointment
of the external auditor.

During 2020, the Financial Reporting
Council Audit Quality Review (AQR)
team undertook a review of EY’s audit
of the financial statements of EVRAZ
for the year ended 31 December 2019.
As part of this review, the AQR team
interviewed the chairman of the Audit
Committee. The review scope included

the key audit matters identified by EY
in their 2019 report, as well as certain other
audit areas, the quality of communication
with the Audit Committee and matters
related to planning, completion,
ethics and quality control. The report
was completed in November 2020
and shared with the chairman of the Audit
Committee. The AQR found that only
limited improvements in the audit were
required, primarily relating to the provision
of sufficient documentation in audit
files to evidence certain assumptions
and procedures relating to some key
audit matters. The committee discussed

the report with the external audit team,
reviewed the actions proposed by EY
to remedy the matters raised by the AQR
and was satisfied that the deficiencies
identified were being addressed.
The Financial Reporting Council intend
to publish the inspection report in 2022,
after the forthcoming Consultation
Document on the government’s approach
to reform of corporate reporting and audit.

At the request of the committee,
the external auditor provided a detailed
assessment of the impact of COVID-
19 on their audit approach in 2020,

Annual report & accounts 2020122 | 123

particularly with regard to significant risks
and fraud risks. The assessment concluded
that the requirement to undertake
some work remotely was mitigated
by EY’s digital approach, the involvement
of forensic specialists in the identification
and response to fraud risks, the high
degree of continuity in the group audit
team and coordinated efforts from both EY
and the management. The Audit Committee
reviewed and accepted the assessment
of the external auditor.

engagement with the external
auditor to determine the implications
of recommendations on the EVRAZ audit
process both in current and future years.

The management and members
of the Audit Committee completed
a questionnaire to assess the effectiveness
and independence of the 2019 external
audit process during 2020, which was found
to be satisfactory.

Effectiveness
and Independence

The Audit Committee has an established
framework through which it monitors
the effectiveness, independence, objectivity
and compliance of the external auditor
with ethical, professional and regulatory
requirements. These include:
• Review and approval of the external audit
plan for the interim review and year-end
audit, including consideration of the audit
scope, key audit risks, audit materiality
and compliance with best practice.
• Review and approval of the external

auditor’s engagement letter.

• Review of the FRC’s annual Quality

Inspection Report of July 2020 and the EY
response.

• Consideration of EY’s reports

on the interim review, annual report
and representation letters.

• Review of the EY management letter

on the 2019 audit, consideration
of the management’s response
and proposed actions.

The committee is updated on the key risk
areas throughout the audit process by both
the external auditor and the management,
providing transparency and allowing
the committee to assess the assumptions
underpinning each position, as well
as the robustness and level of the challenge
provided by EY to the management
in arriving at an agreed position.

The committee has continued to monitor
the enquiries into the independence
of audit firms, the effectiveness of the audit
process during 2020 and the EY response.
There continues to be a constructive

Although the Audit Committee has
not been able to meet with the external
auditor in person since February 2020 due
to COVID-19, there has been a regular
virtual dialogue without the management
to consider the appropriateness
of the Group’s accounting policies
and audit process. During 2020,
the external auditor confirmed that these
policies and processes were appropriate.
The committee chairman also had regular
virtual meetings with the Senior Statutory
Auditor outside of committee meetings.

Engagement of the external auditor
for non-audit services is managed
in accordance with the Group’s policy,
which can be found on the website www.
evraz.com. This policy identifies a range
of non-audit services, which are prohibited
on the basis that they might compromise
the independence of the external
auditor. It also establishes threshold limits
for the level of non-audit fees relative
to audit fees and authorisation processes
for the approval of fees.

During 2020, non-audit fees totalled
US$521,000 and included US$465,000
in respect of the interim review (in 2019,
the total was US$1,178,000, including
US$543,000 in respect of the interim
review). The balance in 2020 included
US$39,000 in respect of the Group’s
Sustainability Report and US$14,000
for the provision of verification services
for a financing facility. Non-audit fees
were 19% of the 2020 audit fee of US$2.8
million, compared to 40% of the audit
fee in 2019. Irrespective of the prior
approval of the CFO and Audit Committee
chairman, all fees are reported to the Audit
Committee for noting and comment.

Re-appointment
of the external auditor

Following a tender process
in 2016, the committee recommended
the re-appointment of Ernst & Young
LLP (EY) as external auditor for the years
ended 31 December 2017 and 2018.
After consideration of the UK Corporate
Governance Code, EU legislation
on audit regulation and the performance
of EY, the committee recommended
in 2017 that, subject to the agreement
of appropriate terms, a further tender
be deferred until the year ended 31
December 2021, with the process being
undertaken in the summer of 2020 to allow
for an orderly and effective rotation. Given
the exigencies of the COVID-19 pandemic
and travel restrictions, the committee
determined that a fair and effective
tender process could not be undertaken
in 2020 and that the tender should be
further deferred until these criteria could
be met. The committee will monitor
the situation during 2021 to determine
the most appropriate time to reschedule
the tender process. The latest regulatory
guidance, the terms agreed with EY
in respect of the year ended 31 December
2021 and the performance of EY were all
considered by the committee in reaching
this decision.

EY was appointed as external auditor
of EVRAZ plc in 2011. The current audit
engagement partner, Steve Dobson,
assumed the role for the year ended
31 December 2016 and will step down
following the conclusion of the audit
for the year ended 31 December 2020
and be replaced by Danny Trotman.

The Audit Committee continues to consider
EY to be effective and independent
in its role as auditor and has provided
the Board with its recommendation
to the shareholders that EY be re-appointed
as external auditor for the year ended 31
December 2021.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationNOMINATIONS
COMMITTEE
REPORT

The Nominations Committee has continued to review developments
in corporate governance and to ensure that the Group adheres to best practice.
It monitors the Board’s composition to ensure that it remains appropriate
for the Company. With two of the five independent non-executive directors
needing to retire at the 2021 annual general meeting having completed nine years
on the Board, a search process has commenced. Currently, two of the Board’s nine
members are female, which is below the Hampton-Alexander review recommended
level. This will be taken into account when the next director appointment is made;
however, all appointments will be made on the basis of merit.

Sir Michael Peat
Senior Independent Non-Executive Director,
Chairman of Nominations Committee

The Board delegates the Nominations Committee’s role and responsibilities, which are set out in the written terms of reference:
https://www.evraz.com/en/company/governance/policies/#reference

ROLE

The Nominations Committee is responsible for making recommendations to the Board on the structure, size and composition of the Board
and its committees. It also oversees succession planning for directors and senior management.

COMMITTEE MEMBERS AND ATTENDANCE

The Nominations Committee members
at 31 December 2020 were Sir Michael
Peat, Alexander Izosimov, Karl Gruber,
Alexander Abramov and Eugene Shvidler.
Sir Michael Peat served as the chairman
of the Nominations Committee throughout
the year.

Three of the five committee members
were independent non-executive directors.

The CEO attended all meetings
and the company secretary acted
as the сommittee’s secretary.

The сommittee met on three occasions
during 2020. As reported on page 110,
all members were in attendance for all
meetings.

ACTIVITY DURING 2020

During 2020, the Nomination Committee
considered the following matters.

Board and committee
composition

Succession planning

EVRAZ had benefited from having a stable
board and a group of people who interact
well.

are due to retire at the 2021 or 2022
AGMs. The search for their replacements
commenced in 2020.

The Board agreed that its size and its
committees were appropriate for the Group’s
ongoing needs. The сommittee determined
that the Board represented a good mix
of skills and experience. It also found that

The Nominations Committee considered
succession planning for the independent
non-executive directors, in the context
of length of service. Three of the five
independent non-executive directors

The сommittee also paid close attention
to senior management succession.

The сommittee has engaged The Inzito
Partnership as an external search
consultancy to assist with the recruitment
of two independent non-executive directors

Annual report & accounts 2020124 | 125

to join the Board during 2021. The Inzito
Partnership has no other contractual
relationships with the Group.

Board performance evaluation

In 2020, as required by the UK Corporate
Governance code, the Company
undertook a Board performance evaluation
using an external facilitator, Lintstock
LLP. Following the review’s conclusion,

the сommittee considered the outcome
of the report and prepared an action
plan for the Board to review and agree.
The plan reflected continuing improvements
to the Board process, information flow
and induction.

The outcome of the review and the action
plan are described in the Corporate
Governance section on page 111.

Independence of non-
executive directors

The Nominations Committee reviewed
the independent status of the non-executive
directors based on the provisions in the UK
Corporate Governance Code. It confirmed
the appropriateness of the independent
status of each of the independent non-
executive directors.

PERFORMANCE OF CHAIRMAN
AND INDIVIDUAL DIRECTORS

The senior independent non-executive
director sought views from all directors
about the performance and contribution
of the chairman. The conclusions of this
review were considered by the independent
non-executive directors at a meeting
on 19 February 2021.

The review concluded, as previously,
that the chairman continues to make
an important contribution to the Group,
including through his industry knowledge,
experience and contacts. It also noted
that the chairman was not independent
on appointment as required by Provision 9
of the UK Corporate Governance
Code. However, it found that in view
of his experience and knowledge,
his independence of judgement was
not considered to be impaired.

In addition, the review noted that
the chairman has been in his post
since the IPO in October 2011. He
has therefore served in excess
of nine years, longer than the limit
suggested by Provision 19 of the Code.
The Nominations Committee has considered
this situation and, as described above, values
his extensive experience and expertise
of the Group’s key markets and of the steel

2021 PRIORITIES

The Nominations Committee will continue
to fulfil its general responsibilities
with particular emphasis on compliance
with the UK Corporate Governance Code,
Board diversity and succession planning.

sector. The сommittee believe his continuing
as chairman is in the Company’s best
interest. In addition, during a period
of transition of board members having
the same chairman helps with the Board’s
continuity and stability. The сommittee
therefore, with the chairman recusing
himself, recommended to the Board that
he be put forward for re-appointment
at the 2021 AGM.

The chairman of the Group
and the chairman of the Nominations
Committee discussed the performance
of the individual directors, including time
available to devote to the Group’s business.
They noted no concerns and determined
that no independent non-executive director
had a significant number of roles.

Diversity policy

The Board’s diversity policy is to have Board
membership that reflects the international
nature of the Group’s operations
and includes at least two women as board
members.

The Board currently meets these criteria.

The сommittee continues to review
and monitor the Group’s performance
against its diversity policy, including aspects
such as age, gender and educational
and professional backgrounds. More
information about diversity is disclosed
in the CSR report on page 69.

The Nominations Committee and the Board
are committed to meeting best practice
standards in gender and ethnic diversity.
While the nature of the steel and mining
industries makes this more challenging,
it does not diminish the сommittee’s
and the Board’s commitment. In 2020,
the сommittee discussed Board diversity
amid the search for two new independent
non-executive directors to replace those
retiring after having served their nine
year terms. The Board hopes to be able
to appoint another female director and a
director who will broaden the Board’s
ethnic diversity. It will, of course, balance
this with appointing directors who can best
serve the Company’s and shareholders’
interests by providing excellent
governance and appropriate challenge.
It is also important for one of the new
directors to have knowledge of operating
an integrated steel business substantially
based in the Russian Federation.

The сommittee will conclude a search
to replace those independent non-executive
directors who will stand down at the 2021
AGM after serving for nine years.

In addition, the сommittee will continue
to consider development and succession
planning for senior management.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationHEALTH, SAFETY
AND ENVIRONMENT
COMMITTEE

In 2020, EVRAZ concentrated its health, safety and environment efforts
on implementing a new approach to safety culture improvement by engaging
employees in the risk identification and mitigation process. The Group also focused
on responding to the COVID-19 pandemic by ensuring safe working conditions
for employees, as well as supporting medical institutions and local communities.
These efforts led to a considerable 22% improvement in the lost-time injury frequency
rate and reduced the number of fatalities by more than two-fold. Despite these
achievements, five tragic fatalities of our employees occurred during the past year.

During the reporting period, EVRAZ laid a solid foundation for improving its
environmental performance over the next 10 years. This included assessing climate
risks, applying best environmental practices, considering stakeholder expectations
and developing an ambitious Environmental Strategy.

The Group believes that this is the optimal approach to improve its safety
and environmental performance in the future.

Karl Gruber
Independent Non-Executive Director
Chairman of Health, Safety
and Environment Committee

Role and responsibilities

The Health, Safety and Environment
(HSE) Committee reports to the Board
of Directors on matters concerning
employee wellbeing and occupational
safety, as well as protecting the environment
and local communities where EVRAZ
operates. It receives monthly HSE
updates and provides a quarterly report
to the Board, and its tasks include:
• Assessing the effects of the Group’s HSE

initiatives on key stakeholder groups, such
as employees and local residents, as well
as their reputational impact.
• Liaising between management

and the Board when there have
been fatalities or serious incidents
in the workplace, including to ensure that
remedial action is implemented effectively.

• Reviewing HSE strategy,

monitoring pertinent parts
of any independent operational audits
and making recommendations for action
or improvement as deemed necessary.

Committee members
and attendance

As of 31 December 2020, the members
of the HSE Committee included Chairman

Karl Gruber, as well as Alexander Frolov
and Olga Pokrovskaya.

• Progress of health and safety initiatives.
• Industrial safety risk assessment.

In 2020, the committee held three
meetings: regular meetings on 4 February
and 28 July, as well as one additional meeting
on 22 October to review the Risk Management
Project implementation and Environmental
Strategy development process. All committee
meetings had a necessary quorum and were
convened as required. The meetings included
reviews of current issues and HSE initiatives
at the divisional level.

In the aftermath of every fatality, severe
injury and incident involving significant
damage to property at EVRAZ, the HSE
Committee conducts an investigation
to determine the root cause, as well
as to establish courses of remedial action.
This involves recording a detailed description
of the scene, the sequence of events, root
cause analysis and corrective measures
implemented.

Activities during 2020

Below is a summary of the HSE Committee’s
performance of its duties in 2020.

HSE performance review

Throughout the year, the committee applied
the following criteria to review the Group’s
HSE performance:
• Fatal incidents.
• Lost-time injuries (LTI).
• Lost-time injury frequency rate (LTIFR),
calculated as the number of injuries
resulting in lost time per 1 million hours
worked.

• Enforcement of cardinal safety rules.

The committee applies the following criteria
to evaluate the Group’s environmental
performance:
• Key air emissions, including nitrogen

oxides (NOx), sulphur oxides (SOx), dust
and volatile organic compounds.
• Non-mining waste and by-product
generation, recycling and re-use.

• Fresh water intake and water management

aspects.

• Non-compliance related environmental

levies (taxes) and penalties.

• Environmental commitments and liabilities.
• Major environmental litigation and claims.
• Asset coverage with environmental

permits/licenses.
• Public complaints.

Annual report & accounts 2020126 | 127

• Material environmental incidents

and preventative measures.
• Environmental risk assessment.

In 2020, the committee also reviewed
new environmental metrics to measure
the implementation of the Environmental
Strategy.

HSE strategy review

In 2020, the HSE Committee conducted
three reviews of the Risk Management
Project, a new corporate HSE initiative.
The project methodology consists of a set
of existing, known HSE tools and best
practices, which were initially tested during
2019. Additionally, the project’s approach
fosters more intensive interaction among
workers and their supervisors by means
of health and safety training, safety
conversations and using the motivational
tools applied within the EVRAZ Business
System.

The committee’s members reviewed
the implementation of the new risk
management tools, training programme
and facilitation based on risk hunting.
The next stage of the project
will be related to revision of the health
and safety management system and auditing
the processes. In addition, the committee
supported the divisional management’s
efforts in the following HSE initiatives, finding
that the priorities are generally on track:
• Health and safety initiatives, such

as the implementation of a lockout-tagout
(LOTO) system, review of contractor
management requirements and mine safety
programmes.

• Environmental programmes, including air
emission, water consumption and waste
management initiatives.

During the year, the HSE Committee
discussed the Group’s Environmental Strategy
and Climate Change Strategy after reviewing
the matter at the request of the Board
of Directors. The committee reviewed
scenario analysis results, key identified
climate risks and opportunities, as well
as a map with climate change risks relevant
for EVRAZ. The results of this process were

presented in the first EVRAZ Climate Change
Report, which was developed in accordance
with the recommendations of the Task Force
on Climate-related Financial Disclosures.
The report was published in November
2020 and demonstrates how the Group
will manage the climate risks and presents
the results of conducted climate risks analysis.

The committee’s members approved
the EVRAZ Environmental Strategy
and agreed that it sets ambitious
environmental goals that meet
the expectations of regulators, society
and investors. To ensure the transparency
of measurements, the Group will introduce
online monitoring of sources of controlled
emissions at metallurgical plants.

HSE regulatory changes

In 2020, the HSE Committee evaluated
the risks and opportunities related
to the introduction of new regulation.
Over the reporting period, EVRAZ
reviewed drafts of HSE-related legislation
for the Russian Steel Association’s HSE
Committee, helping the steel industry
to form positions in various areas, including:
• EU carbon border tax regulation.
• Regulation of greenhouse gases in Russia.
• Integrated environmental permits in Russia.
• On-line monitoring requirements for air

emissions and water discharges.
• Air emission quotation systems

in Novokuznetsk and Nizhniy Tagil.

• A new state decree on tariff setting rules
for municipal water treatment services
in Russia.

The HSE Committee acknowledges the risks
involved and recommended a proactive
approach in alliance with the business
community and steel producers.
The committee also recommended
to incorporate those issues into
the Environmental Strategy.

HSE audit review

During the reporting period, the Group’s
operations underwent compliance
inspections of state supervisory

agencies and internal HSE auditors,
and the committee reviewed:

• The HQ Industrial Safety Department’s
audits of processes and structural units
at EVRAZ facilities.

• The environmental risks identified via
the HQ Environmental Management
Directorate’s internal audit and risk
assessment process.

• The Internal Audit Department’s audits

of the HSE function.

• External environmental inspections carried
out by environmental regulators, as well
as the implementation of remedial action.

Community relations
performance

In 2020, the HSE Committee reviewed
the Group’s CSR events, as well as an update
on social programmes aimed at:
• Improving the quality of life in local

communities.

• Developing infrastructure, sport,

educational and cultural programmes.

• Helping children with special needs.
• Caring for the environment.
• Promoting a responsible attitude towards

safety at work and home.

During the year, the committee reviewed
COVID-19 statistics and measures to ensure
safe working conditions for employees,
as well as to support medical and preschool
institutions in local communities where
the Group operates.

In addition, the committee reviewed
the results of the annual reputation
audit, engaging businesses, clients,
media, government representatives
and local communities. The efforts that
EVRAZ undertook to build sustainable
partnerships with key stakeholders were
rated as satisfactory. The Group’s reputation
index shows sustainably high performance
over the last three years.

For more details on HSE issues, see the CSR Report
on pages 56-67 →

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationREMUNERATION
REPORT

I am pleased to present EVRAZ’ annual report on directors’ remuneration
and to confirm that the сommittee has taken its decisions fully in line
with the shareholder-approved policy. This policy is designed to help deliver
the Group’s sustainable business objectives and maximise long-term returns
to shareholders. I am pleased to report our new remuneration policy was confirmed
at the 2020 AGM with 95.9% approval.

Alexander Izosimov
Independent Non-Executive Director,

Chairman of the Remuneration Committee

INTRODUCTION

This report has been prepared in accordance
with the relevant UK company laws
and regulations (the “Regulations”). It
also meets the relevant requirements
of the Financial Conduct Authority’s Listing
Rules and describes how the Board has
applied the principles of good governance
as set out in the 2018 UK Corporate
Governance Code (July 2018).

This policy is broadly the same
as the previous version as, following a review
by the сommittee, it was felt to still
be appropriate for the Group’s requirements.
However, the сommittee has made
some small changes to better reflect current
market practice, as detailed below.

Annual remuneration report

This report contains both auditable and non-
auditable information. The information
subject to audit by the Group’s auditors,
Ernst & Young LLP, is set out in the Annual
Remuneration Report and has been
identified accordingly.

Directors’ remuneration policy

The current Remuneration Policy
was approved by shareholders at the Annual
General Meeting (AGM) in June 2020.
The Regulations require that shareholders
formally approve the policy every three
years and therefore the next occasion will
be at the AGM in 2023.

The second part of the report, the Annual
Remuneration Report, sets out details
of remuneration paid in 2020 and how
the Group intends to apply its
Remuneration Policy in 2021. This section
will be put to an advisory shareholder vote
at the forthcoming AGM.

Key decisions taken during
the year

The сommittee operated under its terms
of reference (as described on page 139)
without conflicts of interest and having
sought advice to determine the future policy.

The сommittee assessed the performance
of the CEO against predetermined
KPIs and targets as well as the overall
performance of the Group and concluded
that the CEO’s annual bonus payout
for 2020 should be 59.75% of the maximum.
This assessment included a review
of the performance of the business
according to ESG parameters and positive
developments achieved during the year that
set the business up for future improvements.
Despite global uncertainty and the negative
impact on world economies
caused by the COVID-19 pandemic,
the performance of the Group has been
strong from both operational and financial
perspectives, meeting most established
targets and showing good progress
on strategic projects. During the year,
the Group continued to increase its focus
on health and safety, placing paramount
importance on measures aimed to improve
the safety culture, which led to significant
improvements in this area. Further details
can be found on pages 134-135.

Annual report & accounts 2020128 | 129

Through an ongoing dialogue
with management, the сommittee
maintained a thorough understanding
of remuneration arrangements across
the Group and, under its amended terms
of reference, approved the remuneration
of the senior executives operating
immediately under the CEO.

In line with its commitment to good
corporate governance, the сommittee
will continue to monitor investors’ views,
developments in best practices and market
trends on executive remuneration.
These will be considered when deciding
on executive remuneration at EVRAZ,
in order to ensure that its Remuneration
Policy remains appropriate in the context
of business performance and strategy.

Link with business strategy

EVRAZ’ strategic priorities define
the selection of KPIs for the CEO.

These strategic priorities are reflected
in the Group’s approach to executive
remuneration. A large proportion
of the CEO’s remuneration is linked
to performance through the annual bonus.

The determination of the annual bonus
is based on the Group’s key quantitative
financial, operational and strategic
measures to ensure focus is spread across
the key aspects of Group’s performance
and strategy. The exact measures
and associated weighting are determined
on an annual basis according

to the Company’s strategic priorities
for the year.

For 2020, the following five indicators,
each with an equal weighting of 20%,
were considered when determining
the CEO’s annual bonus: LTIFR, EBITDA,
Free Cash Flow (adjusted), Cash Cost Index
and the сommittee’s assessment of overall
performance against strategic objectives.

The KPIs are specific and focus
on deliverables to support the Group’s
strategy.

How business strategic priorities align to overall reward at EVRAZ

CEO KPIs

Weighting

Sustainable
development

EVRAZ
Business
System

Debt
management
and stable
dividends

Prudent
CAPEX

Retention
of low- cost
position

Development
of product
portfolio
and customer
base

LTIFR

EBITDA

Adjusted FCF

Cash Cost Index

Strategic Objectives

20%

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationPOLICY REPORT

Shareholder approval was received
at the 2020 AGM for the updated policy
(outlined on pages 130-133).

high level of performance and aligns
the interests of management with those
of shareholders.

The Remuneration Policy’s primary objectives
are to attract, retain and reward talented staff
and management by offering compensation
that is competitive within the industry,
motivates management to achieve
the Group’s business objectives, encourages a

The CEO’s incentive arrangements are subject
to “malus”, under which the сommittee
may adjust bonus payments downwards
to reflect the Group’s overall performance,
including the safety of underlying practices
and resulting performance. The сommittee

does not operate clawback arrangements
on directors’ remuneration on the basis
that such arrangements would not be
enforceable under the Russian Labour Code.
The сommittee will keep this under review
and should the Russian Labour Code change,
it will revisit the inclusion of such provisions
in the Group’s variable remuneration
plans in order to comply with the 2018 UK
Corporate Governance Code.

Remuneration Policy

Element

Purpose and link to strategy

Operation

Maximum potential value

Performance metrics

Executive director

Base salary

Provides a level of base pay
to reflect individual experience
and role to attract and retain high
calibre talent.

Benefits

To provide a market level
of benefits, as appropriate
for individual circumstances,
to recruit and retain executive
talent.

Normally reviewed annually,
considering individual
and market conditions,
including: size and nature
of the role; relevant market
pay levels; individual
experience and pay
increases for employees
across the Group.
For the current CEO,
base salary incorporates a
director’s fee (paid to all
directors of the Group
for participation in the work
of the Board committees
and Board meetings –
see the section on Non-
executive Director
Remuneration Policy below).
Where a salary is paid in a
currency other than US
dollars, the сommittee may
make additional payments
to ensure that the total
annual salary equals
the level of annual salary
in US dollars.

Benefits currently include
private healthcare. Other
benefits (including pension
benefits) may be provided
if the сommittee considers
it appropriate. The current
CEO does not participate
in any pension scheme
at this time.
In the event that
an executive director
is required by the Group
to relocate, or do so
following recruitment,
benefits may include,
but are not limited to, a
relocation, housing, travel
and education allowance.

None

Generally, the maximum
increase per year
will be in line
with the overall level
of increases within
the Group.
However, there
is no overall maximum
opportunity as increases
may be made above
this level at the сommittee’s
discretion, to take account
of individual circumstances
such as increases in scope
and responsibility
and to reflect
the individual’s development
and performance in the role.

None

The cost of benefits will
generally be in line with that
for the senior management
team. However, the cost
of insurance benefits
may vary from year
to year depending
on the individual’s
circumstances.
The overall benefit
value will be set at a
level the сommittee
considers proportionate
and appropriate to reflect
individual circumstances,
in line with market practices.
There is no total maximum
opportunity.

Annual report & accounts 2020130 | 131

Element

Purpose and link to strategy

Operation

Maximum potential value

Performance metrics

Annual bonus

To align executive remuneration
to Group strategy by rewarding
the achievement of annual
financial and strategic business
targets.

Up to 200% of base salary
in respect of any financial
year of the Group.

The Group operates
an annual bonus
arrangement under which
awards are generally
delivered in cash.
Targets are reviewed
annually and linked
to corporate performance
based on predetermined
targets.

The bonus
is based on achievement
of the Group’s key
quantitative financial,
operational and strategic
measures in the year
to ensure focus is spread
across the key aspects
of the Group’s performance
and strategy.
The exact measures
and associated weighting
will be determined
on an annual basis,
according to the Group’s
strategic priorities, however
at least 60% will be based
on the Group’s financial
measures.
For achievement
of threshold performance,
0% of maximum
will be paid, rising in a
straight line to no more
than 50% of the maximum
for target performance
and 100% of the maximum
for outstanding
performance.
The сommittee retains
discretion to adjust bonus
payments to reflect
the Group’s overall
performance.

Element

Purpose and link
to strategy

Non-executive directors

Chairman
and non-
executive director
remuneration

To provide
remuneration that
is sufficient to attract
and retain high calibre non-
executive talent.

Operation

Maximum potential value

Performance metrics

Director fees are normally paid in the form of cash, but with the flexibility to forgo all or part
of such fees (after deduction of applicable income tax and social taxes) to acquire shares
in the Company should the non-executive director so wish. Non-executive director fees
are reviewed from time to time.
Non-executive directors receive an annual fee for Board membership.
Additional fees are payable by reference to other Board responsibilities taken on by the non-
executive directors (for example, membership and chairmanship of the Board committees).
The chairman of the Board receives an all-inclusive annual fee.
Costs incurred in the performance of non-executive directors’ duties for the Company may be
reimbursed or paid for directly by the Company, including any tax due on the costs. This may
include travel expenses, professional fees incurred in the furtherance of duties as a director,
and the provision of training and development. In addition, the Company contributes an annual
amount towards secretarial and administrative expenses of non-executive directors.
Non-executive directors may not participate in the Company’s share incentive schemes
or pension arrangements.
Total fees paid to non-executive directors will remain within the limit stated in the Articles
of Association.

Performance measures
and targets

Annual bonus measures and targets
are selected to ensure an appropriate
balance between providing the director
with incentives to meet financial objectives
for the year and achieving key operational
objectives. The Remuneration Committee

reviews them annually to ensure that
the measures and weightings are in line
with the strategic priorities and needs
of the business.

Remuneration arrangements
throughout the Group

This remuneration approach and philosophy
is applied consistently at all levels, up
to and including the executive director.
This ensures that there is alignment
with the business strategy throughout
the Group. Remuneration arrangements

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationbelow the Board level reflect the seniority
of the role and local market practices,
and therefore the components
and remuneration levels for different
employees may differ in parts
from the policy set out above.

For instance, in addition to a base
salary, a performance-related bonus
(calculated by reference to KPIs aligned
with the Group’s strategy) and benefits,
senior managers are also entitled
to participate in a long-term incentive
programme. This is designed to align
the interests of these individuals
to the delivery of long-term growth
in shareholder value.

The current CEO already holds a substantial
shareholding in the Group and therefore
does not participate in this plan.

Illustration of the application
of the Remuneration Policy

The following chart provides an indication
of what could be received by an executive
director under the Remuneration Policy.

Application of the remuneration policy,
US$ thousand

Minimum

100%

In line with expectations

50%

Maximum

34%

Base pay

Annual bonus

2,652

5,277

7,902

50%

66%

Policy on recruitment
of executive directors

This part of the Remuneration Policy has
been developed to enable the Group
to recruit the best possible candidate
and one able to contribute to the Group’s
performance and able to help it reach its
goals.

When hiring a new executive director,
remuneration is determined in line
with the following Remuneration Policy.

So far as is practicable and appropriate,
the Remuneration Committee will
seek to structure the pay and benefits
of any new executive directors in line
with the current Remuneration Policy.

Regarding any pension benefits, these
will not exceed the percentage of salary
earned by the majority of the workforce
(either of the Group or the county in which
the executive director works).

Notwithstanding this, the сommittee
recognises that the Remuneration Policy
set out above is tailored towards the only
current executive director, the CEO,
who has a significant shareholding
in the Company. Any new executive
director is likely to have different
circumstances from the current CEO,
and thus the сommittee believes
it is important to retain the flexibility
to be able to offer other elements,
namely market-competitive, share-based
incentive programmes, which are linked
to the Group’s performance and designed
to align the executive director’s interests
to the delivery of growth in shareholder
value.

The maximum level of variable
remuneration which may be granted
in respect of recruitment (excluding any
buyouts) will not exceed the ongoing
policy of more than 200% of base salary,
as described in the policy table above. This
additional headroom has been capped
at a level comparable with the maximum
award levels seen in conventional long-term
incentive plans used in the wider UK-listed
market.

The сommittee’s intention would be
for any share-based incentive awards
to be subject to performance conditions.
Where the intention is to grant regular
long-term incentive awards to a candidate,
the сommittee would seek appropriate
shareholder approval for a new share plan
in accordance with the Listing Rules.

When setting salaries for new hires,
the сommittee will consider all relevant
factors, including the skills and experience
of the individual, the market from which
they are recruited, and the market rate
for the role. For interim positions, a cash
supplement may be paid rather than salary
(for example, a non-executive director
taking on an executive function on a short-
term basis).

To facilitate recruitment, the сommittee
may need to compensate an executive
director for the loss of remuneration
arrangements forfeited on joining
the Company. In granting any buyout
award, the сommittee will consider relevant
factors, including any performance

conditions attached to the awards forfeited,
the form in which they were granted
(eg cash or shares) and the timeframe
of the awards. The сommittee will
generally seek to structure the buyout
on a comparable basis to awards forfeited.
The overriding principle is that any buyout
award would be at or below the commercial
value of remuneration forfeited.

The сommittee retains the flexibility to alter
the performance measures of the annual
bonus for the first year of appointment,
if it determines that the circumstances
of the recruitment merit such alteration.

Where an executive director is appointed
from within the organisation, the normal
policy is that any legacy arrangements
would be honoured in line with the original
terms and conditions. Similarly, if
an executive director is appointed following
an acquisition of, or merger with another
company, legacy terms and conditions
will be honoured.

On the appointment of a new
chairman or non-executive director,
their remuneration will typically be in line
with the Remuneration Policy as set
out above. Any specific cash or share
arrangements delivered to the chairman
or non-executive directors will not include
share options or any other performance-
related elements.

Policy on shareholdings
of executive directors

The Company’s policy is that
executive directors should hold shares
in the Company and any new executive
director will be required to build
and retain a level of shareholding
in the Company. The application of this
policy will be contained from time to time
in the Annual Remuneration Report
and is currently set at 200% of salary.
This level of shareholding (or the actual
level on departure if it is lower) will
normally have to be retained for two years
following the departure of an executive
director from their position. As the current
executive director, the CEO, has a holding
in excess of 9.66% of the Company
and does not participate in share plans,
this guideline does not apply to him.

Annual report & accounts 2020132 | 133

Executive director’s service
contract and loss of office
policy

The CEO has a service contract with a
subsidiary of EVRAZ plc. The CEO’s service
contract does not provide for any specific
notice period and therefore, in the event
of termination, the applicable notice period
will be as provided for in the Russian
Labour Code from time to time (where
the termination is at the Company’s
initiative, the entitlement to pay in lieu
of notice is currently limited to three

months’ base salary). The сommittee may
determine that a termination payment of up
to 12 months’ base salary should be paid,
taking into consideration the circumstances
of departure. Going forward, all new
executive directors’ contracts will normally
provide for a notice period of no more
than 12 months and for any compensation
provisions for termination without notice
to be capped at 12 months’ base salary
and contractual benefits.

There is no automatic entitlement to annual
bonus and executive directors would

not normally receive a bonus in respect
of the financial year of their cessation.
However, where an executive director
leaves by reason of death, disability, ill-
health, or other reasons that the сommittee
may determine, a bonus may be awarded.
Any such bonus would normally be subject
to performance and time pro-rating, unless
the сommittee determines otherwise.

Executive director

Alexander V. Frolov

Date of contract

31 December 2020

Notice period (months)

N/A

Non-executive directors’ letters
of appointment

Each non-executive director has a letter
of appointment setting out the terms
and conditions covering their appointment.

They are required to stand for election
at the first AGM following their appointment

and, subject to the outcome of the AGM,
the appointment is for a further one-year
term. Over and above this arrangement,
the appointment may be terminated
by the director giving three months’
notice or in accordance with the Articles
of Association. Letters of appointment do
not provide for any payments in the event
of loss of office.

Key terms of non-executive directors’ appointment letters

All directors are subject to annual
reappointment and will stand for re-election
on the upcoming AGM on 15 June 2021
except SIr Michael Peat and Karl Gruber.

Non-executive directors

Alexander Abramov

Karl Gruber

Alexander Izosimov

Sir Michael Peat

Deborah Gudgeon

Eugene Shvidler

Eugene Tenenbaum

Laurie Argo

Date of contract

14 October 2011

28 February 2012

14 October 2011

31 March 2015

14 October 2011

8 August 2018

Notice period

Three months

Copies of the directors’ letters
of appointment or, in the case of the CEO,
the service contract, are available
for inspection by shareholders
at the Group’s registered office.

Consideration of conditions
elsewhere in the Group

Management prepares the details
of all employee pay and conditions,

and the сommittee considers them
on an annual basis.

The сommittee takes this into account when
setting the CEO’s remuneration.

However, it does not consider any
direct comparison measures between
the executive director and wider employee
pay. The Group does not formally consult
with employees on executive director
remuneration.

Consideration of shareholder
views

When determining the Remuneration Policy,
the сommittee considers investor body
guidelines and shareholder views.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationANNUAL REMUNERATION REPORT

This section summarises remuneration paid
out to directors for the 2020 financial year
and details of how the Remuneration Policy
will be implemented in the 2021 financial
year.

Executive director’s
remuneration

In 2020, the CEO, Alexander Frolov,
was entitled to a base salary, a

performance-related bonus and provision
of benefits. As a member of the Board,
he is also entitled to a director’s fee
(US$150,000) and any applicable fees
for participation in the work of the Board
committees as laid out in the section below
on non-executive director remuneration.

However, the сommittee considers these
fees to be incorporated in his base salary.
Alexander Frolov’s current shareholding

(9.66% of issued share capital as at 31
December 2020) provides alignment
with the delivery of long-term growth
in shareholder value. As such, the сommittee
does not consider it necessary for the CEO
to participate in any long-term incentive
plans or to impose formal shareholding
guidelines. However, the сommittee will
continue to review this on an ongoing basis.

Single total figure of remuneration (audited)

Key elements of the CEO’s remuneration package received in relation to 2020 (compared with the prior year)

Alexander V. Frolov

Salary and director fees1

Benefits

Bonus

Total

Total Fixed Remuneration

Total Variable Remuneration

Base salary

The сommittee approved the CEO’s
current salary on 1 January 2019 at the level
of US$2,625,000 (which includes,
for the avoidance of doubt, the director’s
fee, fees paid for committee membership
and any salary from subsidiaries of EVRAZ
plc). This salary level will remain unchanged
for 2021.

Pension and benefits (audited)

The CEO does not currently receive any
pension benefit or allowance. Benefits
consist principally of private healthcare.

Annual bonus

The CEO is eligible for a performance-
related bonus that is paid in cash following
the year-end, subject to the сommittee’s

2020 (US$)

2,625,000

26,909

3,136,930

5,788,839

2,651,909

3,136,930

2019 (US$)

2,625,000

32,970

2,657,970

agreement and the Board of Directors’
approval.

The bonus is linked to achieving
performance conditions based
on predetermined targets set by the Board
of Directors. The target bonus is 100%
of base salary with a maximum potential
of 200% of base salary.

Annual bonus for 2020
(audited)

The bonus is linked to the Group’s
main quantitative financial, operational
and strategic measures during the year
to ensure alignment with the key aspects
of Group performance and strategy.

For 2020, the following five indicators,
each with an equal weighting of 20%,
were considered when determining
the CEO’s annual bonus: LTIFR, EBITDA,

Free Cash Flow (adjusted), Cash Cost Index
and the сommittee’s assessment of overall
performance against strategic objectives.

The сommittee reviews the resulting bonus
payout to ensure that it is appropriate
considering the Group’s overall
performance, as well as safety record
and procedures.

In 2020, EVRAZ outperformed the threshold
target for all of its operational and financial
KPIs, resulting in an annual bonus payout
of 59.75% of the maximum. Despite
the negative impact on world economies
caused by the COVID-19 pandemic,
management has delivered a robust
set of financial and operational results
and continued to advance core strategic
projects according to plan while, most
importantly, doing everything it could
to protect its people and support local
communities during a pandemic.

1. The salary is paid in roubles and the amounts paid in the year are reconciled at the year-end so as to equal US$2,625,000.

Annual report & accounts 2020134 | 135

Details of the targets set for each KPI, the actual achievement in the year, and total payout level for the 2020 bonus

KPIs

LTIFR

EBITDA

Adjusted FCF

Cash cost index

Discretion

Total

Result measurement

Outstanding

Actual 2020

Bonus payout (%
of max)

Threshold

1.93

US$1,913m

US$868

110%

Planned level (%
of target)

1.61

US$2,391m

US$1,085m

100%

1.29

US$2,869m

US$1,303m

90%

1.58

US$2,212

US$1,245m

95%

Remuneration Committee assessment of overall performance against
strategic objectives

55%

31%

87%

76%

50%

59.75%

Remuneration committee
assessment of overall
performance

EVRAZ‘ Remuneration Policy stipulates
that the discretionary portion of the bonus
should reflect the CEO’s performance
in relation to the Group’s key strategic
priorities, as well as his efforts to ensure
its long-term success. During the year,
the business continued to deliver in relation
to key strategic priorities and create long-
term returns for shareholders.

The сommittee determined that
in 2020 the Group maintained stable
production and showed good progress
on strategic projects despite the global
outbreak of COVID-19. The Group’s primary
focus was on ensuring safe working
conditions for employees, safeguarding local
communities and preventing the spread
of COVID-19. In recognition of this, the CEO
received 100% of Discretion KPI. The key
reasons for this are:
• Relatively limited impact of COVID-19

on the Groups’ business due to proactive
safety measures undertaken to protect

employees and ensure operational
continuity.

• Completion of late-stage investment

projects on schedule.

• Progress made on all key strategic

priorities including environmental agenda,
despite global uncertainty caused
by the COVID-19 pandemic.

• Net debt of US$3,356 million, bringing
the net debt/EBITDA ratio to 1.5, in line
with the medium-term target that EVRAZ
has set to maintain net debt below
US$4 billion.

• The efficiency improvement programme

delivered savings of US$192 million
from a cost-cutting initiatives.

• The customer focus programme generated

an EBITDA effect of US$234 million.
• A strong start of digital transformation
projects which generated an efficiency
improvement effect of US$17 million.

Annual bonus for 2021

For 2021, the bonus framework will be in line
with 2020. The Board considers forward-
looking targets to be commercially sensitive;
however, they will generally be disclosed

Single total figure of remuneration (audited)

in the subsequent year. In line with previous
years, a malus arrangement will apply
under which bonus payouts may be adjusted
downwards to reflect the Group’s overall
performance including underlying safety
practices and resulting performance.

Non-executive directors’
remuneration

Non-executive directors’ fixed remuneration
payable in respect of 2020 and 2019 is set
out in the table below.

A non-executive director’s
remuneration consists of an annual fee
of US$150,000 and a fee for committee
membership (US$24,000) or chairmanship
(US$100,000 for chairmanship of the Audit
Committee and US$50,000 for other
committees). The fee for employee
engagement responsibilities is set
at US$24,000.

Non-executive director

2020 (US$ thousand)

2019 (US$ thousand)

Total fees1

Admin2

Total

Total fees1

Admin2

Total

Alexander G. Abramov

Alexander Izosimov

Eugene Shvidler

Eugene Tenenbaum

Karl Gruber

Sir Michael Peat

Deborah Gudgeon

Laurie Argo

750

272

174

150

224

274

222

780

302

204

180

254

304

252

750

248

174

150

224

274

174

780

278

204

180

254

304

204

1. Total fees include annual fees and fees for committee membership or chairmanship (pro rata working days).
2. The Group contributes an annual amount of US$30,000 towards secretarial and administrative expenses of non-executive directors. In addition to the amounts disclosed

above, the Group reimburses directors’ travel and accommodation expenses incurred in the discharge of their duties.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationFor reference, the fees payable
for the chairmanship of a committee include
the membership fee, and any director
elected as chairman of more than one
committee is generally entitled to receive
fees in respect of one chairmanship only.
The fee for the chairman of the Board
amounts to US$750,000 from 1 March 2012
(this fee includes, for the avoidance
of doubt, director’s fees and fees paid
for committee membership).

Aggregate directors’
remuneration

The aggregate amount of directors’
remuneration payable in respect
of qualifying services for the year ended
31 December 2020 was US$8,319 thousand
(2019: US$5,116 thousand).

Share ownership by the Board
of Directors (audited)

current shareholding in EVRAZ. However,
the proposed policy includes these
in relation to any future appointments.

The directors’ interests in EVRAZ shares
as of 31 December 2020 were as follows.

There have been no changes
in the directors’ interests from 31
December 2020 through 24 February 2021.

Fees will remain unchanged for 2021.

There were no formal minimum shareholding
requirements in place, reflecting the CEO’s

Directors’ interest in EVRAZ shares as of 31 December 2020

Directors

Alexander Abramov

Alexander Frolov

Eugene Shvidler

Alexander Izosimov

Number of shares

Total holding, ordinary shares, %

281,870,003

140,723,705

40,488,242

80,000

19.35

9.66

2.78

0.01

The CEO holds shares to the value
of 345 times his salary as at 31
December 2020.

The shares held by Alexander Izosimov were
acquired in 2012 when he was appointed
as an independent non-executive director.

All shares held by directors are held outright
with no performance or other conditions
attached to them, other than those applicable
to all shares of the same class.

Other directors do not currently hold EVRAZ
shares.

Policy on external
appointments

The сommittee believes that the Group can
benefit from executive directors holding
approved non-executive directorships
in other companies, offering executive
directors the opportunity to broaden
their experience and knowledge. EVRAZ’
policy is to allow executive directors to retain
fees paid from any such appointment.
The CEO does not currently hold a non-
executive directorship of another company.

Engagement with the workforce

and executing the Group’s vision
and strategy. It also allows for informative
decisions to be made throughout
the business. Considering the views
of the wider workforce has been in place
at the Group for many years. Employees
participate in an employee engagement
survey aimed at gathering wider workforce
views on various topics.

The survey has historically been successful
in driving numerous employee-focused
initiatives and helps to set key priorities
for the forthcoming year, aimed at improving
the engagement of all employees.

The Board reviews the engagement
data and is therefore aware of any
trends, comments or concerns in relation
to executive pay. The Board also receives a
quarterly summary report of complaints made
on the EVRAZ employee telephone hotline.

In 2020, EVRAZ has introduced additional
tools aimed at engaging with employees
during the pandemic. Virtual meetings
with senior management were regularly held,
allowing employees to participate and ask
questions. The 24/7 corporate hotlines were
opened for employees if they have questions
or encounter problems.

EVRAZ is committed to regularly engaging
with its workforce and realises the value
of listening to and acting on employee
views across the organisation. These
insights are vital to attracting and retaining
employees, which is key to delivering

In 2020, two non-executive directors,
appointed in 2018 to be involved in town-
hall meetings with employees, participated
in virtual meetings. Alexander Izosimov
took part in an online town-hall meeting
with employees of EVRAZ ZSMK.

During this meeting Alexander learned
about employees’ priorities and concerns,
noting the openness and transparency
of communications. Laurie Argo participated
in Evraz North America Executive
Leadership Team virtual meeting. During
this meeting the executive team shared
their regular business update, Laurie was
engaged in the conversation and shared
her insights. This information was shared
with the Committee and discussed.

The сommittee also considers executive
remuneration in the context of the wider
employee population and is kept regularly
updated on pay and conditions across
the Group. The proportion of variable
pay increases with progression through
management levels with the highest
proportion of variable pay
at executive director level, as defined
by the Remuneration Policy. Variable pay
cascades down through the next tiers
of management with appropriate reductions
in opportunity levels based on seniority.
In addition, the Group operates pension
arrangements in some of its businesses
around the world, where this is relevant
to the local conditions. The key element
of remuneration for those below senior
management grades is base salary
and the Group’s policy is to ensure that
base salaries are fair and competitive
in the local markets. General pay increases
take into account local salary norms, inflation
and business conditions.

Annual report & accounts 2020136 | 137

Gender pay gap and CEO pay
ratio

Relative importance of spend
on pay

EBITDA was chosen for the comparison
as it is the KPI that best shows the Group’s
financial performance.

EVRAZ had less than 10 UK employees
during the year and does not therefore have
any gender pay or CEO pay ratio information
to report under the Regulations.

The following table shows a comparison
of the total cost of remuneration paid to all
employees between the current and previous
years and financial metrics in US$ millions.

US$ million

EBITDA

Share buybacks

Dividends

Total employee pay

For more information on the definition of EBITDA, please read page 253. →

2020

2,212

872

1,331

2019

2,601

1,086

1,464

Performance graph

The following graph shows the Group’s
performance as measured by total
shareholder return compared
with the performance of the FTSE 350
Basic Resources Index since EVRAZ

Total Shareholder Return Performance, %

plc’s admission to the premium listing
segment of the London Stock Exchange
on 7 November 2011. The FTSE 350 Basic
Resources Index has been selected
as an appropriate benchmark, as it is a
broad-based index of which the Group is a
constituent member.

The following table shows as a single figure
the CEO’s total remuneration over the past
eight years, along with a comparison
of variable payments as a percentage
of the maximum bonus available.

Year ends

07.11.2011

31.12.2011

31.12.2012

31.12.2013

31.12.2014

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

31.12.2020

Total Shareholder Return Performance, %

FTSE 350 Basic Resources Index

100.00

93.98

96.80

84.39

76.30

43.07

86.77

113.62

109.41

128.36

152.50

Evraz

100.00

105.55

78.20

33.80

48.40

22.95

69.49

116.12

194.84

182.40

246.75

250

200

150

100

07.11.2011

31.12.2011

31.12.2012

31.12.2013

31.12.2014

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

31.12.2020

FTSE 350 Basic Resources Index

Evraz

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCEO’s total remuneration paid in 2013–2020

(US$)

2020

2019

2018

2017

2016

2015

2014

2013

CEO single figure of total remuneration

Annual bonus payout
(as a % of maximum opportunity)

5,788,839

2,657,970

5,393,884

5,516,553

4,560,054

3,186,585

5,808,752

4,894,286

59.75%

57.21%

59.82%

40.78%

13.33%

77.00%

50.00%

Percentage change
in remuneration

The following table sets out the percentage
change in the elements of remuneration
for the directors of Evraz plc, compared
with average figures for Russia-based
administrative personnel.

This group of employees has been selected
as an appropriate comparator, as they
are based in the same geographic market
as the CEO, and so are subject to a similar
external environment and pressures.

The population of employees the calculation
has been performed for includes

administrative personnel in the Head Office
and the Ural and Siberia management
companies. This provides a representative
calculation across the Russian businesses.

Percentage change in the elements of remuneration for the directors compared with average figures for Russia-based
administrative personnel

Role

Russia-based administrative personnel

Alexander Frolov (CEO)

Alexander Abramov (NED)

Alexander Izosimov (NED)

Eugene Shvidler (NED)

Eugene Tenenbaum (NED)

Karl Gruber (NED)

Sir Michael Peat (NED)

Deborah Gudgeon (NED)

Laurie Argo (NED)

Salary1

Benefits

Annual bonus

24%

40%

(9%)

n/a

100%

n/a

Committee composition

This section details the Remuneration
Committee’s composition and activities
undertaken over the past year.

Committee members

The сommittee’s composition remains
the same as in 2019, its current members are:
• Alexander Izosimov.
• Deborah Gudgeon.
• Sir Michael Peat.
• Laurie Argo.

All members of the Committee
are independent non-Executive Directors.
This is fundamental to ensuring Executive
Directors and senior executives remuneration
is set by people who are independent
and have no personal financial interest,
other than as shareholders, in the matters
discussed. There are no potential conflicts
of interest arising from cross-directorships
and there is no day-to-day involvement
in running the business. No-one is allowed
to participate in any matter directly
concerning the details of their own
remuneration or conditions of service.

The сommittee may invite other individuals
to attend all or part of any committee
meeting, as and when appropriate
and necessary, in particular the CEO,
the head of human resources and external
advisers.

1. Total fixed remuneration for NEDs.

Annual report & accounts 2020138 | 139

Role

The Remuneration Committee is a
formal committee of the Board and can
operate with a quorum of two committee
members. It is operated according to its
Terms of Reference, which were reviewed
and updated in the year to reflect changes
made to the UK Corporate Governance
Code. A copy can be found on the Group’s
website.

The сommittee’s main responsibilities are to:
• Set and implement the Remuneration

Policy covering the chairman of the Board,
the CEO, the company secretary and other
senior executives.

• Take into account all factors that

it deems necessary to determine, such
as framework or policy, including all
relevant legal and regulatory requirements,
the provisions and recommendations
of the 2018 UK Corporate Governance
Code and associated guidance.

• Review and consider remuneration trends

across the Group and the alignment
of incentives and rewards with culture
when setting the Remuneration Policy.

• Review regularly the Remuneration Policy’s

appropriateness and relevance.
• Determine the total individual

remuneration package of the chairman
of the Board, the company secretary
and other senior executives, including
pension rights, bonuses, benefits in kind,
incentive payments and share options,

or other share-based remuneration within
the terms of the agreed policy.

• Approve awards for participants where

existing share incentive plans are in place.

• Review and approve any compensation

payable to executive directors and other
senior executives in connection with any
dismissal, loss of office or termination
(whether for misconduct or otherwise)
to ensure that such compensation
is determined in accordance
with the relevant contractual terms
and the Remuneration Policy, and that
such compensation is otherwise fair
and not excessive for the Group

• Oversee any major changes

in the structure of employee benefits
throughout the Group and report
on what engagement has taken place
with the workforce on executive pay.

During 2020, the сommittee met four times.
The main purpose of the meetings was
to consider and make recommendations
to the Board in relation to the remuneration
packages of the executive director and key
senior managers; to approve the annual
bonus for the 2019 results; to approve
the 2020 long-term incentive plan (LTIP)
awards for key senior management
and to be updated on pay across
the workforce.

Advisers

The сommittee has appointed Korn Ferry
(UK) Limited (Korn Ferry) to provide

independent remuneration consultancy
services to the Group. Korn Ferry
is a member of the Remuneration
Consultants’ Group and, as such,
voluntarily operates under the code
of conduct in relation to executive
remuneration consulting in the UK.
The code of conduct can be found
at www.remunerationconsultantsgroup.com.

During the year, Korn Ferry principally
advised the сommittee on developments
in the regulatory environment and market
practice, and on the development
of the Group’s pay arrangements. The total
fee for advice provided to the сommittee
during the year was £20,824.

The сommittee is satisfied that the advice
it has received has been objective
and independent.

Shareholder considerations

EVRAZ remains committed to ongoing
shareholder dialogue and takes an active
interest in feedback received from its
shareholders and from voting outcomes.

Where there are substantial votes against
resolutions in relation to directors’
remuneration, the Group shall seek
to understand the reasons for any such
vote and will detail any actions in response
to these.

Actual voting results from the AGM, which was held, in respect of the previous remuneration report and Remuneration Policy

Number of votes

For

Against

Withheld

Total votes
as % of issued share
capital

To approve the Directors Remuneration
Policy as set out on pages 131-135 of the 2019
Annual Report and Accounts

To approve the Annual Remuneration Report
set out on pages 130-139 of the 2019 Annual
Report and Accounts

1,189,736,031
(95.85%)1

1,227,370,864
(98.62%)

51,449,970
(4.15%)

17,138,237
(1.38%)

3,329,067

85.20%

5,966

85.42%

1. Percentage of votes cast.

Signed on behalf of the Board of Directors,

Alexander Izosimov
Chairman
of the Remuneration
Committee

24 February 2021

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationDIRECTORS’ REPORT

INTRODUCTION

In accordance with section 415
of the Companies Act 2006, the Directors
of EVRAZ plc present their report
to shareholders for the financial year ended
31 December 2020, which they are required
to produce by applicable UK company law.
The Directors’ Report comprises the Directors’

Report section of this report, together
with the sections of the annual report
incorporated by reference. As permitted
by legislation, some of the matters normally
included in the Directors’ Report have instead
been included in other sections of the annual
report, as indicated below.

The Company was incorporated
under the name EVRAZ plc as a public
company limited by shares on 23 September
2011 under registered number 7784342.
EVRAZ plc listed on the London
Stock Exchange in November 2011
and is a member of the FTSE 100 Index.

Dividends

Share capital

Authority to purchase
own shares and transfer
of treasury shares
to Company’s Employee
Share Trust

Directors

Directors’ appointment
and re-election

Directors’ interests
Directors’ indemnities
and director and officer
liability insurance

Powers of directors

Major interests in shares

The underlying cash flow generation and continuing success with deleveraging have allowed the Company to continue
to pay dividends in line with its dividend policy. Please read page 24 for details.
The Company paid an interim dividend of US$0.40 per ordinary share, totalling US$581 million, on 27 March 2020
to shareholders on the register as of 6 March 2020.
The Company paid an interim dividend of US$0.20 per ordinary share, totalling US$291 million, on 2 October 2020
to shareholders on the register as of 21 August 2020.
The Board of Directors have declared an interim dividend of US$0.30 per share, totalling US$437 million, to be paid
on 7 April 2021 to shareholders on the register as of 12 March 2021.
Details of the Company’s share capital are set out in Note 20 to the Consolidated Financial Statements, including details
on the movements in the Company’s issued share capital during the year.
As of 31 December 2020, the Company’s issued share capital consisted of 1,506,527,294 ordinary shares, of which
49,654,691 shares are held in Treasury. Therefore, the total number of voting rights in the Company is 1,456,872,603.
The Company’s issued ordinary share capital ranks paripassu in all respects and carries the right to receive all dividends
and distributions declared, made or paid on or in respect of the ordinary shares. There are currently no redeemable non-
voting preference shares or subscriber shares of the Company in issue.
The authority given at the 2020 AGM for the Company to make market purchases of 145,687,260 of its shares,
representing 10% of the issued share capital (excluding shares held in treasury), expires on the earlier of the 2021 AGM
or 30 June 2021. EVRAZ will ask shareholders to give a similar authority at the 2021 AGM. During 2020, no shares were
purchased under this authority.
Details of the Company’s authority to purchase its own shares, which will be sought at the Company’s forthcoming Annual
General Meeting (AGM), will be set out in the notice of meeting for that AGM.
On 29 April 2020, the Company transferred 4,964,830 ordinary shares out of treasury to the Company’s Employee Share
Trust.
Biographies of the directors who served on the Board during the year are provided in the Governance section
on pages 102-103.
The Board has the power at any time to elect any person to be a director, but the number of directors must not exceed
the maximum number fixed by the Company’s Articles of Association.
Any person so appointed by the directors will retire at the next AGM and then be eligible for election. In accordance
with the UK Corporate Governance Code, the directors are subject to annual re-election by shareholders.
For additional information about directors’ appointment and resignation, see the Remuneration Report on page 132.
Sir Michael Peat and Karl Gruber will not be seeking re-election as directors at the AGM, having completed terms of nine
years. All of the other directors intend to stand for re-election at the 2021 AGM to be held later this year.
Information on share ownership by directors can be found in this Report and in the Remuneration Report on page 136.
As at the date of this report, the Company has granted qualifying third-party indemnities to each of its directors
against any liability that attaches to them in defending proceedings brought against them, to the extent permitted
by the Companies Act. In addition, directors and officers of the Company and its subsidiaries have been and continue
to be covered by director and officer liability insurance.
Subject to the Company’s Articles of Association, UK legislation and to any directions given by special resolution,
the business of the Company is managed by the Board, which may exercise all the powers of the Company. The Articles
of Association contain specific provisions concerning the Company’s power to borrow money and provide the power
to make purchases of any of its own shares.
The directors have the authority to allot shares or grant rights to subscribe for or to convert any security into shares
in the Company. Further details of the proposed authorities are set out in the Notice of the AGM.
Notifiable major share interests of which the Company has been made aware are set out in this Directors’ Report.

Annual report & accounts 2020140 | 141

Research and development

Sustainable development

Payments to governments

Political donations
Greenhouse gas emissions

Employees
Overseas branches

Financial risk management
and financial instruments

Going concern

Auditor

Future developments
Events since
the reporting date
Annual General Meeting
(AGM)

Electronic
communications

Corporate governance
statement

Section 172 Statement
Employee engagement
Stakeholder engagement
on key decisions

EVRAZ is constantly engaged in process and product innovation. The research and development centres located
at the Company’s production sites improve and develop high-quality steel products to better meet customers’ needs
and to ensure that EVRAZ remains competitive in the global and local markets.
For examples of the Company’s efforts in research and development in different operations, please refer to the Business
R&D section on pages 84-87.
The Corporate Social Responsibility section of this report focuses on the health and safety, environmental and employment
performance of the Company’s operations, and outlines the Company’s core values and commitment to the principles
of sustainable development and development of community relations programmes.
Details of the Company’s policies and performance are provided in the Corporate Social Responsibility section
on pages 56-83.
EVRAZ published its 2019 report on payments to governments in June 2020. The report provides citizens, authorities
and independent users with information on payments made to governments where the Company conducts its extractive
activities. The report is prepared in accordance with the requirements of the Disclosure Guidance and Transparency Rules.
Instrument 2014 “Report on payments to governments”, issued by the UK Financial Conduct Authority.
The report is available on the Company’s website at www.evraz.com.
No political contributions were made in 2020.
In 2020, in accordance with the requirements of the Companies Act 2006 (Strategic and Directors’ Report) Regulations
2013, and Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018,
EVRAZ undertook to assess full emissions of greenhouse gases (GHGs) from facilities under its control. Details can be
found in the CSR section on page 65
Information regarding the Company’s employees can be found in the Our People section on pages 68-73.
EVRAZ does not have any branches. A full list of the Group’s controlled subsidiaries is disclosed in Note 34
of the Consolidated Financial Statements.
Information regarding the financial risk management and internal control processes and policies, as well as details
of hedging policy and exposure to the risks associated with financial instruments, can be found in Note 28
to the Consolidated Financial Statements, the Corporate Governance Report and Risk Management and Internal Control
section on pages 112-115 and the Financial Review section on pages 32-43.
The financial position and performance of the Group and its cash flows are set out in the Financial Review section
of the report on pages 32-43.
Based on the currently available facts and circumstances, the directors and management have a reasonable expectation
that the Group has adequate resources to continue in operational existence for the foreseeable future.
More details are provided in Note 2 to the Consolidated Financial Statements on page 166.
The Audit Committee conducted a tender for the external audit of the Group in July 2016. Ernst
& Young LLP was selected to undertake the audits for the financial years ended December 2017
and 2018 (subject to shareholder approval at the respective AGM). The Board has agreed that no
re-tender will take place until the conclusion of the 2020 financial year. A decision on whether to re-tender
will be taken in due course by the Audit Committee and presented to the Board for consideration.
Ernst & Young LLP has indicated its willingness to continue in office and a resolution seeking to re-appoint
it will be proposed at the forthcoming AGM.
Information on the Group and its subsidiaries’ future developments is provided in the Strategic Report on pages 4-99.
The major events after 31 December 2020 are disclosed in Note 33 to the Consolidated Financial Statements
on page 229.
The 2021 AGM will be held later this year in London. At the AGM, shareholders will have the opportunity to put questions
to the Board, including the chairmen of the Board committees.
Full details of the AGM, including explanatory notes, are contained in the Notice of the AGM, which will be distributed
at least 20 working days before the meeting. The Notice sets out the resolutions to be proposed at the AGM
and an explanation of each resolution.
All documents relating to the AGM will be available on the Company’s website at www.evraz.com.
A copy of the 2020 annual report, the Notice of the AGM and other corporate publications, reports and announcements
will be available on the Company’s website at the following link: https://www.evraz.com/en/investors/
Shareholders may elect to receive notification by email of the availability of the annual report on the Company’s website
instead of receiving paper copies.
The Disclosure Guidance and Transparency Rules (DTR7.2) require certain information to be included in a corporate
governance statement set out in a company’s Directors’ Report.
In common with many companies, EVRAZ has an existing practice of issuing, within its annual report, a Corporate
Governance Report that is separate from its Directors’ Report. The information that fulfils the requirement of DTR7.2
is located in the EVRAZ Corporate Governance Report (and is incorporated into this Directors’ Report by reference),
with the exception of the information referred to in DTR7.2.6, which is located in this Directors’ Report.
The Company’s Section 172 Statement can be found in the Strategic Report on page 97.
Details of how the Company engages with its workforce can be found in the Strategic Report on page 72.
Details of the key decisions and discussions of the Board during the year and the main stakeholder inputs into those
decisions are set out in the Corporate Governance Report on page 107.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationMAJOR SHAREHOLDINGS

The Company’s issued share capital as of 31 December 2020 was 1,506,527,294 ordinary shares, of which 49,654,691 shares are held
in Treasury. Therefore, the total number of voting rights in the Company is 1,456,872,603.

As of 31 December 2020, the following significant holdings of voting rights in the Company’s share capital were disclosed to the Company
under Disclosure and Transparency Rule 5.

Greenleas International Holdings Ltd.1

Abiglaze Ltd2

Crosland Global Limited3

Kadre Enterprises Ltd4

Number of ordinary shares

% of voting rights

417,767,314

281,870,003

140,723,705

83,751,827

28.68

19.35

9.66

5.75

The Company is aware of the following individuals who each have a beneficial interest in three percent or more of EVRAZ plc’s issued share
capital (in each case, except for Gennady Kozovoy, held indirectly) as of 31 December 2020:

Roman Abramovich

Alexander Abramov

Alexander Frolov

Gennady Kozovoy

Number of ordinary shares

% of voting rights

417,767,314

281,870,003

140,723,705

83,751,827

28.68

19.35

9.66

5.75

There have been no changes in the Company’s issued share capital and the Company has not received any notifications under Disclosure
Guidance and Transparency Rule 5, from 31 December 2020 through 24 February 2021.

LISTING RULE DISCLOSURES

For the purposes of LR 9.8.4CR, the information required to be disclosed by LR 9.8.4R can be found in the following locations:

Interest capitalised

Publication of unaudited financial information

Detail of long-term incentive schemes

Waiver of emoluments by a director

Waiver of future emoluments by a director

Non pre-emptive issues of equity for cash

Non pre-emptive issues of equity for cash in relation to major subsidiary undertakings

Parent participation in a placing by a listed subsidiary

Contract of significance in which a director is interested

Contracts of significance with a controlling shareholder

Provision of services by a controlling shareholder

Shareholder waiver of dividends

Shareholder waiver of future dividends

Agreements with controlling shareholder

Note 9 to the Consolidated Financial Statements

Not applicable

Note 21 to the Consolidated Financial Statements,
Remuneration Report

None

Relationship Agreements section below

None

Relationship Agreements section below

1. The Company understands that Roman Abramovich has an indirect economic interest in the 417,767,314 shares held by Greenleas International Holdings Ltd.
2. The Company understands that Alexander Abramov has an indirect economic interest in the 281,870,003 shares held by Abiglaze Ltd.
3. The Company understands that Alexander Frolov has an indirect economic interest in the 140,723,705 shares held by Crosland Global Limited.

Includes shares held by Gennady Kozovoy, Kadre’s shareholder, both indirectly through Kadre and directly. The number of shares is as per TR-1 Form: Notification
of major interest in shares dated 6 February 2013.

Annual report & accounts 2020142 | 143

SIGNIFICANT CONTRACTUAL ARRANGEMENTS
Relationship agreements

The Company has entered into relationship
agreements (the “Relationship Agreements”)
with each of Greenleas International Holdings
Ltd., Abiglaze Ltd and Crosland Global
Limited (the “Controlling Shareholders”) that
regulate the ongoing relationship between
the Controlling Shareholders and the Company.
This ensures that the Company is in compliance
with the provisions of the Listing Rules
and capable of carrying on its business
independently of the Controlling Shareholders,
and ensures that any transactions
and relationships between the Company
and the Controlling Shareholders are at arm’s
length and on normal commercial terms. These
Relationship Agreements were last amended
and restated (or, in the case of Abiglaze Ltd,
first entered into) in January 2019 reflecting
changes in the Company’s shareholder
structure that took place in December 2018.

The Relationship Agreements terminate if
the Controlling Shareholders cease to own
or control (directly or indirectly) in aggregate
at least 30% of the issued ordinary
shares in the Company (or at least 30%
of the aggregate voting rights in the Company).

Under the Relationship Agreements,
the Controlling Shareholders
and the Company agree that:
• The Controlling Shareholders have the right
to appoint the maximum number of non-
executive directors that may be appointed
while ensuring that the composition
of the Board remains compliant
with the UK Corporate Governance Code
for so long as the Controlling Shareholders
hold in aggregate an interest of 30%
or more of the Company (or hold 30%
or more of the aggregate voting rights
in the Company) with each appointee being
a “Shareholder Director”.

• The Controlling Shareholders

and their associates shall not take any action
that would have the effect of preventing
the Company from complying with its
obligations under the Companies Act,
the Listing Rules and the Disclosure
Guidance and Transparency Rules.
• Neither the Controlling Shareholders

nor any of their associates will propose
or procure the proposal of any shareholder
resolution that is intended or appears
to be intended to circumvent the proper
application of the Listing Rules.

• Transactions, relationships and agreements

between the Company and/or

its subsidiaries (on the one hand)
and the Controlling Shareholders shall be
entered into and conducted on arm’s length
terms and on a normal commercial basis,
unless otherwise agreed by a committee
comprising the non-executive directors
of the Company whom the Board
considers to be independent in accordance
with the UK Corporate Governance Code
(the “Independent Committee”).

• The Controlling Shareholders shall, insofar

as it is legally able to do so, exercise
their powers, and shall procure that each
member of the respective Controlling
Shareholder group does the same, so that
the Company is managed in accordance
with the principles of good governance set
out in the UK Corporate Governance Code,
save as agreed in writing by a majority
of the Independent Committee.

• The Controlling Shareholders will, and will
procure (as far as is reasonably possible)
that each member of the respective
Controlling Shareholder group will, treat
as confidential all information (subject
to certain exceptions) acquired relating
to the Company and its subsidiaries.
• The provision of, access to and use

of information pursuant to the Relationship
Agreements is governed by applicable laws
relating to insider information, including,
without limitation, the Disclosure Guidance
and Transparency Rules.

• The Controlling Shareholders shall

not, and shall procure, insofar as they
are legally able to do so, that each member
of the respective Controlling Shareholder
group shall not, take any action that
precludes or inhibits the Company and/or
any of its subsidiaries from carrying on its
business independently of the Controlling
Shareholders or any member
of the respective Controlling Shareholder
group.

• The quorum for any Board meeting

of the Company shall be three, of which
at least one must be a Shareholder
Director appointed by Greenleas
International Holdings Ltd., at least one
must be a Shareholder Director appointed
by Abiglaze Ltd and/or Crosland Global
Limited and at least one must be
a non-executive director whom the Board
considers to be independent in accordance
with the UK Corporate Governance Code.

• The Controlling Shareholders shall

not, and shall procure, insofar as they
are legally able to do so, that each member
of the respective Controlling Shareholder
group shall not, exercise any of their voting

or other rights and powers to procure
any amendment to the Memorandum
and Articles that would be inconsistent
with, undermine or breach any
of the provisions of the Relationship
Agreements, and will abstain from voting
on, and will procure that the Controlling
Shareholder Directors abstain from voting
on, any resolution to approve a transaction
with a related party (as defined in the Listing
Rules) involving the Controlling Shareholders
or any member of the respective Controlling
Shareholder group.

• In any matter that, in the opinion

of an independent director, gives rise
to a potential conflict of interest between
the Company and/or any of its subsidiaries
(on the one hand) and the Shareholder
Directors, the Controlling Shareholders
or any member of the respective Controlling
Shareholder group (on the other), such
matter must be approved at a duly
convened meeting of the Independent
Committee or in writing by a majority
of the Independent Committee.

• For so long as Greenleas International
Holdings Ltd. (and its affiliates) holds
in aggregate an interest of 25% or more
in the Company, Greenleas International
Holdings Ltd. undertakes that it will
not become, and will use its reasonable
endeavours to procure that no other
member of its group becomes, involved
in any competing business (subject
to certain exceptions) in Russia, Ukraine
or the CIS without giving the Company
the opportunity to participate in the relevant
competing business.

• For so long as Abiglaze Ltd and Crosland

Global Limited (and their respective
affiliates) hold in aggregate an interest
of 25% or more in the Company, Abiglaze
Ltd and Crosland Global Ltd undertake
that they will not become, and will use
their reasonable endeavours to procure
that no other member of the respective
Controlling Shareholder group becomes,
involved in any competing business (subject
to certain exceptions) in Russia, Ukraine
or the CIS without giving the Company
the opportunity to participate in the relevant
competing business.

The Board is satisfied that the Company
is capable of carrying on its business
independently of the Controlling
Shareholders and that the Board makes its
decisions in a manner consistent with its
duties to the Company and stakeholders
of EVRAZ plc.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationOther agreements

The change of control provisions contained
in several loan agreements with a total principal

amount of US$1,018 million outstanding
as of 31 December 2020 specify that if
a change of control occurs, each lender
under these agreements has a right to cancel

their commitments and request repayment
of their portion of the respective loans ahead
of schedule.

ARTICLES OF ASSOCIATION

The Company’s Articles of Association
were adopted with effect from June 2012
and contain, among others, provisions
on the rights and obligations attaching

SHARE RIGHTS

to the Company’s shares, including
the redeemable non-voting preference
shares and the subscriber shares.

The Articles of Association may only be
amended by special resolution at a general
meeting of the shareholders.

Without prejudice to any rights attached
to any existing shares, the Company may
issue shares with rights or restrictions
as determined by either the Company

by ordinary resolution or, if the Company
passes a resolution, the directors.
The Company may also issue shares
that are, or are liable to be, redeemed

at the option of the Company or the holder
and the directors may determine the terms,
conditions and manner of redemption
of any such shares.

VOTING RIGHTS

There are no other restrictions on voting rights
or transfers of shares in the Articles other than
those described in these paragraphs.

of shares on a poll, every member present
in person or by proxy has one vote for every
share that he or she holds.

Details of deadlines for exercising voting
rights and proxy appointment will be set out
in the Notice of the 2020 AGM.

At a general meeting, subject to any special
rights or restrictions attached to any class

A proxy is not entitled to vote where
the member appointing the proxy
would not have been entitled to vote
on the resolution had he or she been
present in person. Unless the directors
decide otherwise, no member shall be

entitled to vote either personally or by proxy
or to exercise any other right in relation
to general meetings if any sum due
from him or her to the Company in respect
of that share remains unpaid.

The trustee of the Company’s Employee
Share Trust is entitled, under the terms
of the trust deed, to vote as it sees fit
in respect of the shares held in trust.

TRANSFER OF SHARES

The Company’s Articles provide that
transfers of certificated shares must be
effected in writing, and duly signed
by or on behalf of the transferor
and, except in the case of fully paid
shares, by or on behalf of the transferee.

The transferor shall remain the holder
of the shares concerned until the name
of the transferee is entered in the Register
of Members in respect of those shares.
Transfers of uncertificated shares may

be effected by means of CREST unless
the CREST Regulations provide otherwise.

The directors may refuse to register
an allotment or transfer of shares in favour
of more than four persons jointly.

AUDIT INFORMATION

Each of the Directors who were members
of the Board at the date of the approval
of this report confirms that:

So far as he or she is aware, there
is no relevant audit information of which
the Company’s auditors are unaware.

He or she has taken all the reasonable
steps that he or she ought to have taken

as a Director to make him or herself
aware of any relevant audit information
and to establish that the Company’s
auditors are aware of the information.

The EVRAZ Directors’ Report has been
prepared in accordance with applicable
UK company law and was approved
by the Board on 24 February 2021.

The confirmation is given
and should be interpreted in accordance
with the provisions of section 418
of the Companies Act 2006.

By the order of the Board

Alexander Frolov
Chief Executive Officer
EVRAZ plc

Annual report & accounts 2020144 | 145

DIRECTORS’ RESPONSIBILITY
STATEMENT

Responsibility Statement
under the Disclosure Guidance
and Transparency Rules

Each of the directors whose names
and functions are listed on pages 102-103
confirm that to the best of their knowledge:
• The consolidated financial statements
of EVRAZ plc, prepared in accordance
with international accounting standards
in conformity with the requirements
of the Companies Act 2006 and IFRSs
adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European
Union, give a true and fair view of the assets,
liabilities, financial position and profit
of the Company and the undertakings
included in the consolidation taken as a whole
(the “Group”).

• The Annual report and Accounts, including
the Strategic Report, include a fair review
of the development and performance
of the business and the position
of the Company and the Group, together
with a description of the principal risks
and uncertainties that they face.

Statement Under the UK
Corporate Governance Code

The Board considers that the report
and accounts taken as a whole, which
incorporates the Strategic Report and Directors’
Report, is fair, balanced and understandable,
and that it provides the information necessary
for shareholders to assess the Company’s
performance, business model and strategy.

Statement of Directors’
Responsibilities in Relation
to the annual report
and Financial Statements

The directors are responsible for preparing
the annual report and the Group and parent
company financial statements in accordance
with applicable United Kingdom law
and regulations. Company law requires
the directors to prepare Group and parent
company financial statements for each
financial year. Under that law the directors
have elected to prepare the group and parent
company financial statements in accordance
with international accounting standards
in conformity with the requirements
of the Companies Act 2006.

Under the Companies Act 2006, the directors
must not approve the Group and parent
company financial statements unless they
are satisfied that they give a true and fair view
of the state of affairs of the Group and parent
company and of the profit or loss of the Group
and parent company for that period.

Under that law the directors have elected
to prepare the group and parent company
financial statements in accordance
with international accounting standards
in conformity with the requirements
of the Companies Act 2006. Under company
law the directors must not approve the financial
statements unless they are satisfied that they
give a true and fair view of the state of affairs
of the group and the company and of the profit
or loss of the group and the company for that
period.

Under the Financial Conduct Authority’s
Disclosure Guidance and Transparency Rules,
group financial statements are required to be
prepared in accordance with international
financial reporting standards (IFRSs) adopted
pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union.

In preparing each of the Group and parent
company financial statements, the directors
are required to:
• Present fairly the financial position, financial
performance and cash flows of the Group
and parent company.

• Select suitable accounting policies

in accordance with IAS8 (Accounting Policies,
Changes in Accounting Estimates and Errors)
and then apply them consistently.

• Present information, including accounting

policies, in a manner that provides relevant,
reliable, comparable and understandable
information

• Make judgements and estimates that

are reasonable.

• Provide additional disclosures when

compliance with the specific requirements
in IFRSs is insufficient to enable users
to understand the impact of particular
transactions, other events and conditions
on the Group’s and parent company’s financial
position and financial performance.

• In respect of the Group financial statements,

state whether international accounting
standards in conformity with the requirements
of the Companies Act 2006 and IFRSs adopted

pursuant to Regulation(EC) No 1606/2002
as it applies in the European Union have been
followed, subject to any material departures
disclosed and explained in the financial
statements;

• In respect of the parent company financial
statements, state whether international
accounting standards in conformity
with the requirements of the Companies Act
2006, have been followed, subject to any
material departures disclosed and explained
in the financial statements.

• Prepare the financial statements on the going

concern basis unless it is appropriate
to presume that the company and/
or the group will not continue in business.

The directors are responsible for keeping
adequate accounting records that
are sufficient to show and explain the Group’s
and parent company’s transactions
and disclose with reasonable accuracy at any
time the financial position of the Group
and parent company and enable them
to ensure that the financial statements comply
with the Companies Act 2006.

They are also responsible for safeguarding
the assets of the Group and parent company
and hence for taking reasonable steps
for the prevention and detection of fraud
and other irregularities.

The directors are also responsible for preparing
the Strategic Report, the Directors’ Report,
the Directors’ Remuneration Report
and the Corporate Governance Report
in accordance with the Companies Act 2006
and applicable regulations, including
the requirements of the Listing Rules
and the Disclosure Guidance and Transparency
Rules of the United Kingdom Listing Authority.
Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.

By the order of the Board

Alexander Frolov
Chief Executive Officer
EVRAZ plc
24 February 2021

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationFINANCIAL
STATEMENTS

Solid
results

for a Better Future

CONTENTS

→ Independent auditor’s report

to the members of EVRAZ PLC

→ Consolidated Financial Statements

Consolidated Statement of Operations
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements

Corporate Information

Significant Accounting Policies

Segment Information

Changes in the Composition of the Group

Goodwill

Impairment of Non-Financial Assets

Income and Expenses

Income Taxes

Property, Plant and Equipment

Intangible Assets Other Than Goodwill

Investments in Joint Ventures and Associates

Disposal Groups Held for Sale

Other Non-Current Assets

Inventories

Trade and Other Receivables

Related Party Disclosures

Other Taxes Recoverable

Other Current Financial Assets

Cash and Cash Equivalents

Equity

Share-Based Payments

Loans and Borrowings

Employee Benefits

Provisions

Lease and Other Long-Term Liabilities

Trade and Other Payables

Other Taxes Payable

Financial Risk Management Objectives and Policies

Non-Cash Transactions

Commitments and Contingencies

Auditor’s Remuneration

Material Partly-Owned Subsidiaries

Subsequent Events

List of Subsidiaries and Other Significant Holdings

147

158

158
159
160
161
163
165
165

165

178

185

186

187

189

191

193

196

197

198

200

201

203

204

205

206

208

215

216

218

219

225

227

229

230

→ Separate Financial Statements

236

236
Separate Statement of Comprehensive Income
237
Separate Statement of Financial Position
238
Separate Statement of Cash Flows
Separate Statement of Changes in Equity
239
EVRAZ plc Notes to the separate financial statements 240

Annual report & accounts 2020
146 | 147

INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF EVRAZ PLC

OUR OPINION ON THE FINANCIAL STATEMENTS

In our opinion:
• EVRAZ plc’s Group financial statements and Parent Company
financial statements (the “Financial Statements”) give a true
and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2020 and of the Group’s
and the Parent Company’s profit for the year then ended;

• The financial statements have been properly prepared
in accordance with International Accounting Standards
in conformity with the requirements of the Companies Act
2006 and, as regards the Consolidated Financial Statements,

International Financial Reporting Standards adopted pursuant
to Regulation (EC) No. 1606/2002 as it applies in the European
Union; and

• The financial statements have been prepared in accordance

with the requirements of the Companies Act 2006.

We have audited the financial statements of EVRAZ plc
(the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2020 which comprise:

Group

Parent Company

the Consolidated Statement of Operations,

the Separate Statement of Comprehensive Income;

the Consolidated Statement of Comprehensive Income;
the Consolidated Statement of Financial Position;
the Consolidated Statement of Cash Flows;
the Consolidated Statement of Changes in Equity; and
the related notes 1 to 34.

the Separate Statement of Financial Position;
the Separate Statement of Cash Flows;
the Separate Statement of Changes in Equity; and
the related notes 1 to 11.

The financial reporting framework that
has been applied in their preparation
is applicable law and International
Accounting Standards in conformity

with the requirements of the Companies
Act 2006 and, as regards the Consolidated
Financial Statements, International
Financial Reporting Standards adopted

pursuant to Regulation (EC) No. 1606/2002
as it applies in the European Union.

BASIS FOR OPINION

We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of our report. We
are independent of the Group in accordance

with the ethical requirements that
are relevant to our audit of the financial
statements in the UK, including the FRC’s
Ethical Standard as applied to listed
public interest entities, and we have
fulfilled our other ethical responsibilities
in accordance with these requirements.

We believe that the audit evidence we have
obtained is sufficient and appropriate
to provide a basis for our opinion.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements,
we have concluded that the directors’ use
of the going concern basis of accounting
in the preparation of the financial
statements is appropriate. Our evaluation
of the directors’ assessment of the Group
and Parent Company’s ability to continue
to adopt the going concern basis
of accounting included the assessment
of the consistency of the cash flow forecasts,
the key assumptions within the scenarios
modelled and the available sources
of liquidity with the findings from other
areas of the audit, testing of the historical
accuracy of management’s forecasting
and use of our valuation specialists
to challenge the assumptions with reference
to historical data and, where applicable,
external benchmarks.

To reflect the economic downturn following
the global pandemic, management
has modelled two pessimistic scenarios
which we believe give due consideration
to potential operating scenarios that would
place significant stress on the Group.
In addition, following the board decision
to consider a demerger of the Group’s coal
segment, management ran an additional
scenario to model the potential effect
of the demerger. We analysed both
the impact of additional sensitivities
and the availability of mitigating future

Overview of our audit approach

Audit scope

Key audit matters

actions on the going concern assessment.
As in their pessimistic case scenario
management sensitised commodity prices
(the main non-controllable estimate
of the going concern assessment) based
on the lower end of the range derived
from market analysts’ projections, we have
also assessed pessimistic case commodity
prices against external data.

We considered, based on our own
independent analysis, what reverse stress
testing scenarios, including the possible
coal assets demerger, could lead either
to a loss of liquidity or a covenant breach
and whether these scenarios were plausible.
In our reverse stress testing we reflected
controllable mitigating factors including
reduced dividends distribution and capital
expenditures to the extent we concluded
these were controllable. In our demerger
sensitivity analysis we considered
the fact that the structure of the transaction
is under management control and is subject
to lenders’ consent which further mitigates
the risk that the transaction proceeds
in a manner which are detrimental
to the financial position of the Group.
We also confirmed the availability of debt
facilities to the signed debt agreements,
and reviewed their underlying terms,
including covenants.

Based on the work we have performed,
we have not identified any material
uncertainties relating to events or conditions
that, individually or collectively, may cast
significant doubt on the Group and Parent
Company’s ability to continue as a going
concern for a 16-month period from the date
the financial statements are authorised
for issue, being management’s going
concern assessment period.

In relation to the Group and Parent
Company’s reporting on how they have
applied the UK Corporate Governance
Code, we have nothing material
to add or draw attention to in relation
to the directors’ statement in the financial
statements about whether the directors
considered it appropriate to adopt the going
concern basis of accounting.

Our responsibilities and the responsibilities
of the directors with respect to going
concern are described in the relevant
sections of this report. However, because
not all future events or conditions can be
predicted, this statement is not a guarantee
as to the Group’s ability to continue
as a going concern.

• We performed an audit of the complete financial information of seven components, audit
procedures on specific balances for a further two components, review procedures on one
component and specified procedures on five components

• The nine reporting components where we performed full or specific audit procedures accounted
for 76% of the Group’s EBITDA and 87% of the Group’s revenue (with 68% and 86% respectively
representing seven full scope components and 8% and 1% respectively two specific scope
components)

• The six reporting components where we performed review or specified procedures accounted
for 19% of the Group’s EBITDA and 10% of the Group’s revenue (with 18% and 1% respectively
representing one review scope component and 1% and 9% respectively five specified procedures
components)

• For the remaining 32 reporting components of the Group representing 5% of the Group’s EBITDA
and 3% of the Group’s revenue we have performed other procedures appropriate to respond
to the risk of material misstatement

• We have obtained an understanding of the entity-level controls of the Group which assisted
us in identifying and assessing risks of material misstatement due to fraud or error, as well
as assisting us in determining the most appropriate audit strategy

• Goodwill and non-current asset impairment
• Recoverability of deferred tax assets related to EVRAZ North America
• Completeness of related party transactions
• Parent company – Investment in subsidiaries impairment considerations and determination

of distributable reserves

Materiality

• Overall Group materiality of $66 million (2019: $75 million), which represents approximately 3%

(2019: 3%) of EBITDA.

Annual report & accounts 2020148 | 149

AN OVERVIEW OF THE SCOPE OF OUR AUDIT

Tailoring the scope

Our assessment of audit risk, our evaluation
of materiality and our allocation
of performance materiality determine
our audit scope for each company within
the Group. Taken together, this enables
us to form an opinion on the Consolidated
Financial Statements. We take into account
size, risk profile, changes in the business
environment and other factors when
assessing the level of work to be performed
at each entity.

The EVRAZ Group has centralised processes
and controls over the key areas of our audit
focus with responsibility lying with Group
management for the majority of estimation
processes and significant risk areas. We
have tailored our audit response accordingly
and thus for the majority of our focus areas,
audit procedures were undertaken directly
by the Group audit team with testing
undertaken by the component audit teams
on the verification of operational data
and other routine processes.

In assessing the risk of material
misstatement to the Consolidated Financial
Statements, and to ensure we had adequate
quantitative coverage of significant
accounts, of the 47 reporting components

2020 scope chart

of the Group we selected 15 components,
covering entities within Russia, Switzerland,
Canada, Luxembourg, the UK and the USA,
which represent the principal business units
within the Group where component teams
carried out full, specific, review or specified
procedures.

organization, its accounting systems
and other matters relevant to the financial
data presented in the reporting package.
For the remaining five components
(“specified procedures”), the primary team
performed procedures directly focussing
on the specific accounts.

Of the 15 components selected,
we performed an audit of the complete
financial information of seven components
(full scope components), which
were selected based on their size
or risk characteristics. For the two selected
components (specific scope components)
we performed audit procedures on specific
accounts within the component that
we considered had the potential
for the greatest impact on the amounts
in the Consolidated Financial Statements,
either because of the size of these
accounts or their risk profile. The extent
of our audit work on the specific scope
accounts was similar to that for a full
scope audit. For the one review scope
component, the primary team performed
analytical review procedures to obtain
an understanding of the business,
the industry and the environment in which
the component operates sufficient
to identify the risks of material misstatement.
This included considering the component’s

The nine reporting components where
we performed full or specific scope
procedures accounted for 76% (2019: 72%)
of the Group EBITDA, 87% (2019: 84%)
of the Group’s revenue and 86% (2019: 84%)
of the Group’s total assets. For the current
year, the full scope components contributed
68% (2019: 53%) of the Group EBITDA, 86%
(2019: 83%) of the Group’s revenue and 80%
(2019: 80%) of the Group’s total assets.
The specific scope components contributed
8% (2019: 19%) of the Group EBITDA, 1%
(2019: 1%) of the Group’s revenue and 6%
(2019: 4%) of the Group’s total assets.
The audit scope of these components may
not have included testing of all significant
accounts of the component but will have
contributed to the coverage of significant
accounts tested for the Group. A further
breakdown of the size of these components
compared to key metrics of the Group
is provided below.

11%

1% 3%

Total assets

Revenue

18%

EBITDA

80%

86%

68%

Full

Speciﬁc

Speciﬁed Procedures

Review

Other

For the remaining 32 components
of the Group we performed other
procedures, including analytical review,
review of internal audit reports, testing
of consolidation journals, cross check
of the related party list against journals,
intercompany eliminations and foreign

currency translation recalculations
to respond to any potential significant risks
of material misstatement to the Consolidated
Financial Statements.

as a whole which assisted us in identifying
and assessing risks of material misstatement
due to fraud or error, as well as assisting
us in determining the most appropriate audit
strategy.

We have obtained an understanding
of the entity-level controls of the Group

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationChanges from the prior year

Our scope allocation in the current
year is broadly consistent with 2019
in terms of overall coverage of the Group
and the number of full and specific scope
entities except for the following changes:

• EVRAZ Metall Inprom Group moved

from other scope to specified
procedures scope in the current year
due to an increase in revenue from sales
of goods; and

• EMNA component that was assessed
as review scope last year was moved
to other scope this year (as it is no longer
material for EVRAZ Consolidated Financial
Statements).

This led to the increased revenue coverage
for full and specific scope components
as indicated above.

Integrated team structure

The overall audit strategy is determined
by the senior statutory auditor. The senior
statutory auditor is based in the UK,
but, since Group management and many
operations reside in Russia, the Group
audit team includes members from both
the UK and Russia who work together
as an integrated team throughout the audit
process. The senior statutory auditor
focused his time on the significant risks
and judgemental areas of the audit. He
attended management’s going concern,
impairment and significant estimates
and judgements presentations
to the Audit Committee via video calls.
During the current year’s audit he reviewed
key working papers and held conference
calls with representatives of the component
audit team for all Russian and North
American based full and specific scope
components including internal valuation
specialists used in the audit to discuss
the audit approach and issues arising
from their work.

Impact of the COVID-19
pandemic

Early in the planning process, we worked
with EVRAZ to agree a timetable to provide
sufficient time for the judgements
arising from COVID-19 to be considered
fully, disclosures adequately assessed,
and to reflect the incremental time impact
on completing our year end external audit
remotely.

The Group audit team performed the year-
end audit fully remotely. We engaged
with EVRAZ throughout the audit, using
video calls, secure encrypted document
exchanges and data downloads to avoid any
limitation on the audit evidence required.

In instances where physical access to sites
was restricted due to social distancing
measures, we conducted inventory counts
remotely using mobile video technology.
All key meetings, such as closing and Audit
Committee meetings, were performed via
video conference calls.

We have refined our methods of interaction
to ensure direction by the Partner in Charge
throughout the audit, ensuring involvement
in key calls throughout the audit both
internally and with EVRAZ management.
Additional calls were held with the Chair
of the Audit Committee to consider audit
progress, timetable and matters arising.

Involvement with component
teams

In establishing our overall approach
to the Group audit, we determined
the type of work that needed to be
undertaken at each of the components
by us, as the primary audit engagement
team or by component auditors
from other EY global network firms
operating under our instruction.
Of the seven full scope components, audit
procedures were performed on all of these
by the relevant component audit teams.

Of the two specific scope components
selected, audit procedures were performed
on one of these directly by the primary audit
team. For the components where the work
was performed by component auditors,
we determined the appropriate level
of involvement to enable us to determine
that sufficient audit evidence had been
obtained as a basis for our opinion
on the Group as a whole.

Impact of the COVID-19
pandemic

The physical visits of the Group team
to the component teams planned for 2020
and 2021 had to be replaced by virtual
meetings due to the travel restrictions
imposed by the COVID-19 outbreak.

These virtual meetings involved discussing
the audit approach with the component
teams and any issues arising from their work,
including any impacts of COVID-19
on the Group or our component audit
procedures. The primary audit team
participated in key discussions, via
conference calls with all full and specific
scope locations. The primary audit team
interacted regularly with the component
teams where appropriate during various
stages of the audit, reviewed key working
papers and were responsible for the scope
and direction of the audit process. We
maintained continuous and open dialogue
with the component audit teams in addition
to holding formal meetings to ensure
that we were fully aware of their progress
and results of their procedures. This,
together with the additional
procedures performed at Group level,
gave us appropriate audit evidence
for our opinion on the Consolidated
Financial Statements.

KEY AUDIT MATTERS

Key audit matters are those matters that,
in our professional judgment, were of most
significance in our audit of the financial
statements of the current period and include
the most significant assessed risks of material
misstatement (whether or not due to fraud)

that we identified. These matters included
those which had the greatest effect on:
the overall audit strategy, the allocation
of resources in the audit; and directing
the efforts of the engagement team. These
matters were addressed in the context

of our audit of the financial statements
as a whole, and in our opinion thereon,
and we do not provide a separate opinion
on these matters.

Annual report & accounts 2020150 | 151

Risk

Our audit approach

Goodwill and non-current asset impairment

What we reported to the Audit
Committee

Risk direction: ← →

Refer to the Group Audit Committee report on page 120, the estimates and judgements on pages 167-169 and the disclosures of impairment
in note 6 of the Consolidated Financial Statements

At 31 December 2020 the carrying value
of goodwill was $457 million (2019: $594
million). The carrying value of Property, Plant
and equipment was $4,315 million (2019:
$4,925 million). The Group recognised a net
impairment charge in respect of Goodwill
of $148 million (2019: $300 million) and $162
million in respect of items of PP&E during
the year (2019: $142 million). The continued
unstable economic and geopolitical
environment, wider impacts of Covid-
19 and commodity price volatility led
us to conclude that risk had remained
at the same level as the prior year in respect
of Group non-current assets.

In accordance with IAS 36 management
disclosed that, in addition to the impairment
charge already recognised, a reasonably
possible change in discount rates, sales
prices and cost control measures, would lead
to impairments in Flat, Seamless and Nikom
CGUs where no impairment is currently
recognised.

We focused on this area due
to the significance of the carrying value
of the assets being assessed, the number
and size of recent impairments, the recent
economic environment in the Group’s
operating jurisdictions and because
the assessment of the recoverable amount
of the Group’s Cash Generating Units
(“CGUs”) involves significant judgements
about the future results of the business
and the discount rates applied to future cash
flow forecasts.

In particular we focused our effort on those
CGUs with the largest carrying values
and those with the lowest headroom (EVRAZ
North America CGUs).

Due to challenges raised
through our audit process
management changed a number
of their assumptions resulting
in the recognition of an additional
impairment in the Large Diameter
Pipe CGU of $218 million
and the modification of certain
sensitivity disclosures for other
CGUs.

We consider management’s
final estimates to be reasonable
for the current year, with key
assumptions within an acceptable
range where appropriate.

Management has reflected known
changes in the circumstances
of each CGU in its forecasts
for forthcoming periods, including
their best estimate of the North
American tariffs’ impact.

After modifications
were made as a result
of our challenges, we concluded
that the related disclosures provided
in the Consolidated Financial
Statements are appropriate.
Given the inherent uncertainty
of management’s assumptions
on anti-dumping duties (especially
for Large Diameter Pipe CGU),
we ensured that the importance
of anti-dumping duties
is appropriately disclosed.

We have not identified evidence
to suggest that management’s
assumptions on anti-dumping duties
are unreasonable.

Our audit procedures were performed mainly by the Group
audit team with the assistance of our valuation specialists,
with the exception of certain location specific inputs
to management’s models, which were assessed
by the component teams under instruction from the Group
team.

We confirmed our understanding of the impairment
assessment process.

Our audit procedures included the evaluation
of management’s key assumptions used in their impairment
models. The assumptions to which the models were most
sensitive and most likely to lead to further impairments were:
• decreases in commodity prices;
•
increases in production costs;
• discount rates;
• Capex;
• sales volumes; and
•

terminal growth rate.

We challenged management’s assumptions with reference
to historical data and, where applicable, external benchmarks.
In instances where management’s assumptions fell outside
an acceptable range, we considered the impact on headroom
in the models and disclosures ensuring adjustments were
made where necessary.

We performed an independent estimate of key assumptions
and in some instances applied our own valuation
methodology to determine our own range of potential
recoverable values of the North American CGUs comparing
to management’s assumptions and making adjustments when
appropriate.

We have discussed and tested, including consideration
of potentially contradictory evidence, management’s
assumptions that the North American anti-dumping duties
will stay in place until 2024 and the resultant impact on other
key assumptions in the model noted above. For external
market information, we compared management’s assumptions
to those of our local specialists.

We tested the integrity of management’s models,
recalculated their sensitivity calculations and with the help
of our specialists ran our own sensitivity calculations.

We compared the historical accuracy of management’s
budgets and forecasts to actual results, sought appropriate
evidence for any anticipated improvements and considered
the presence of any contrary evidence in major assumptions
such as discount rates, sales volumes, EBITDA per ton, CAPEX
assumptions. We corroborated previous forecasts with actual
data.

We tested the appropriateness of the related disclosures
provided in the Consolidated Financial Statements.
In particular we ensured the adequacy of the disclosures
regarding those CGUs with material goodwill balances
and where a reasonably possible change in certain variables
could lead to impairment charges.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationRisk

Our audit approach

Recoverability of deferred tax assets related to EVRAZ North America

Refer to note 8 of the Consolidated Financial Statements

At 31 December 2020 the EVRAZ North
America business unit has recognised a net
deferred tax asset of $219 million (2019:
$117 million) which management anticipates
utilising in future periods.

The recoverability of the deferred tax assets
(‘DTA’) is subject to judgement regarding
the future profitability of the Canadian
and US subsidiaries. During the year
their net DTA balances have increased
from $25m and $92m to $113m and $106m
respectively which, when considered along
with the prolonged period of expected
utilisation and 20 year limit on carrying non-
capital tax losses in Canada, was considered
as a reason to elevate the risk classification.

Our audit procedures were performed mainly by the Group
audit team with the assistance of our tax and valuation
specialists.

We confirmed our understanding of the Group’s DTA
recoverability assessment process as well as the control
environment implemented by management.

We ensured that the forecasts used by management
for assessing the recoverability of DTAs were consistent
with those used when testing for impairment and assessing
going concern and viability. We challenged management’s
assumptions with reference to historical data and, where
applicable, external benchmarks. In instances where
management’s assumptions fell outside an acceptable range,
we considered the impact on headroom in the models
and disclosures ensuring adjustments were made where
necessary.

We noted that any specific risks identified in the impairment
assessment were reflected in the cash flows (as opposed
to discount rates or other assumptions) which therefore
appropriately reduced profit projections prepared
for the purpose of DTA recoverability.

We reviewed management forecasts to assess whether
the deferred tax asset is recoverable and meets the criteria
per IAS 12 ‘Income Tax’ for recognition in the financial
statements.

To scrutinize the sufficiency of the available headroom
we performed a stress test by further sensitizing
the projected table profits beyond the Group’s five-year
forecast horizon and business cycle.

We considered available tax planning opportunities
none of which was incorporated in management’s DTA
recoverability assessment.

We also involved our tax specialists to ensure that
the management recoverability analysis was consistent
with the US and Canadian tax provisions including expiry
periods for tax losses carried forward.

What we reported to the Audit
Committee

Risk direction: ↑

Based on the procedures performed
we concluded that management’s
assessment of recoverability
is reasonable.

At the same time, we point out
that management’s forecasts
for the Canadian business unit
indicates a 13 year period to fully
recover the respective DTA balance.

From our stress test we concluded
that the existing headroom
is sufficient to accommodate
a further 30% reduction
in the forecast taxable profits
compared to the current projections
before any of the available tax
losses are at risk of expiry. When
straight forward, available tax
planning opportunities are reflected
in the forecasts, this taxable profit
decrease would need to be 54%
before any of the available tax
losses are at risk of expiry.

We concluded that
the related significant judgement
is appropriately disclosed
in the Consolidated Financial
Statements.

Completeness of related party transactions

Refer to note 16 of the Consolidated Financial Statements

Risk direction: ← →

During 2015, management discovered historic
transactions with a company controlled
by a key management person had been
erroneously omitted from the prior year’s
disclosures of related party transactions
in the Consolidated Financial Statements,
leading to us assessing the completeness
of related party transactions as a significant
risk.

There have been no misstatements of related
party transactions/disclosures since 2015,
and therefore we have deemed completeness
of related party transactions to no longer be
an area of significant risk. It remains, however
a key audit matter due to the sensitivity
of this matter and we believe that it requires
special audit consideration.

We considered the elevated risk to be limited
to the Russian entities within the Group
where external business interests, especially
in relation to local product suppliers,
are more common amongst members of key
management.

At both a component team and Group level, we have
understood and tested management’s process for identifying
related parties, and for recording and disclosure of related
party transactions.

Based on our procedures performed
we have not identified any related
party transactions or balances
omitted from disclosure.

We concluded that
the related disclosures provided
in the Consolidated Financial
Statements are appropriate.

Across the Russian components we obtained
an understanding of unusual or high value transactions
with new counterparties. We also performed analytical reviews
of transactions and balances with customers and suppliers,
including consideration of contradictory evidence, to assess
whether there are any significant changes in trading activity
indicating undisclosed related parties.

We selected all directors together with a sample of key
management personnel based on our risk assessment,
and ran a search for any companies controlled by those
individuals (the search was performed via an independent
register of all companies based in the CIS and their directors
or shareholders). We compared the results of the research
made with the list of entities included in the related party
listing provided to us by management, and investigated
the differences between the listings.

We assessed management’s evaluation that the transactions
were on an arm’s length basis by reviewing a sample
of agreements and comparing the related party transaction
prices to those quoted by comparable unrelated companies.

Annual report & accounts 2020152 | 153

Risk

Our audit approach

What we reported to the Audit
Committee

Investment in subsidiaries impairment considerations and determination of distributable reserves

Risk direction: ← →

As noted above, due to challenges
raised through our audit process
management recognized
an additional goodwill and PP&E
impairment. This additionally
resulted in an impairment
of the parent company investment
in EGSA and subsequent impact
on distributable reserves of $76
million.

Following the recorded adjustment,
we consider management’s estimate
of the recoverable amount of its
investments in subsidiaries to be
reasonable and the impairment
recognized in EGSA to be
appropriate.

We consider the impact
of the various transactions during
the year on distributable reserves
to be appropriately considered
and the reserves available to be
satisfactorily disclosed.

Refer to notes 3 and 4 of the Separate Financial Statements

This Key Audit Matter relates to the Parent
Company only

Our audit procedures were performed mainly by the Group
audit team with the assistance of our valuation specialists.

Investment impairment considerations

We assessed the investments in NTMK and Raspadskaya
for impairment indicators including reference to external data.

For the investment in EGSA, we tested the integrity
of management’s models and with the help of our specialists
ran our own sensitivity calculations.

We recalculated the recoverable amount of the investment
in EGSA by using the results of our work on the North
American CGUs from our Group impairment work
and audited net assets of other EGSA subsidiaries.

Distributable reserves

We analysed transactions that impacted significantly
the retained earnings of the parent company and subsidiary
entities paying significant dividends and considered
whether any of these transactions did not meet the criteria
of distributable profits or losses.

We compared the dividends distributed throughout
the year with the available distributable reserves at the date
of declaration and are satisfied the reserves were sufficient
at the dates of distribution.

We reviewed management’s analysis of profits available
for distribution in the parent company comparing
this to the proposed year end dividend declaration and agree
the dividend is permissible.

We also reperformed the calculation of parent company
distributable profits available for distribution and audited
the roll-forward of profits available for distribution
from 1 January to 31 December 2020. We were satisfied that
the impairment of the investment in EGSA was appropriately
recognised within this calculation.

At 31 December 2020 the carrying value
of investments in subsidiaries was $15,057
million (2019: $15,095 million).

In 2019 the Group undertook a reorganisation
to move the ownership of Raspadskaya
and NTMK from EVRAZ Group S.A (“EGSA”)
to EVRAZ plc, resulting in significant
increase in the carrying value of investments
and reduction in the headroom underlying
subsidiaries’ estimated recoverable amounts
had over the book value of investments.
EGSA made a gain on this transaction which
was passed onto EVRAZ plc in the form
of a dividend.

As a result management assessed
the recoverable amount of EVRAZ plc’s
investment in EGSA based on an aggregation
of the fair values of the various business
units owned by EGSA, including those within
the Group’s North American Business.

Distributable reserves

At 31 December 2020, EVRAZ plc had $1,051
million of distributable profits (2019: $386
million). In 2020, EVRAZ distributed $872
million of dividends.

The Group introduced its current dividend
policy in 2018 and although annual profits
have been made by the Group since
2017, the Company needs to ensure it has
sufficient distributable reserves within
the stand-alone parent to declare dividends
in accordance with the policy.

The legal framework applicable
to UK companies for determining profits
available for distribution is contained
in both the Companies Act 2006
and complementary technical guidance.
Under this framework, distributions are made
by individual companies and not by groups.
The EVRAZ consolidated financial statements
are therefore not relevant for the purposes
of determining EVRAZ’s profits available
for distribution. Whether or not a distribution
may be made should be determined
by reference to EVRAZ’s ‘relevant accounts’,
being the parent company financial
statements.

Given the judgements in respect
of impairment considerations we have
included this as a Key Audit Matter consistent
with the prior year.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationOUR APPLICATION OF MATERIALITY

We apply the concept of materiality in planning and performing the audit, in evaluating the effect
of identified misstatements on the audit and in forming our audit opinion.

Materiality
$66 million

Materiality

Performance materiality
$33 million

Reporting threshold
$3.3 million

The magnitude of an omission or misstatement that, individually or in the aggregate could reasonably be expected to influence
the economic decisions of the users of the Financial Statements. Materiality provides a basis for determining the nature and extent
of our audit procedures.

We determined materiality for the Group
to be $66.0 million (2019: $75.0 million),
which is set at approximately 3.0% (2019: 3%)
of EBITDA.

We have used an earnings-based measure
as our basis of materiality. It was considered
inappropriate to calculate materiality using
Group profit before tax due to the historic
volatility of this metric. EBITDA is a key

performance indicator for the Group
and is also a key metric used by the Group
in the assessment of the performance
of management. We also noted that market
and analyst commentary on the performance
of the Group uses EBITDA as a key
metric. We therefore, considered EBITDA
to be the most appropriate performance
metric on which to base our materiality
calculation as we considered that to be

the most relevant performance measure
to the stakeholders of the entity.

We determined materiality for the Parent
Company to be $19.1 million (2019: $8.7
million), which we calculated as 1.5%
(2019: 1.5%) of Equity adjusted to exclude
non-distributable reserves which arose
on a restructure in 2019.

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessment,
together with our assessment of the Group’s
overall control environment, our judgment
was that given the number and monetary
amounts of individual misstatements
(corrected and uncorrected) identified
in prior periods as well as the nature
of the misstatements, overall performance
materiality for the Group should be 50%
(2019: 50%) of materiality, namely $33.0
million (2019: $37.5 million).

Audit work at component locations
for the purpose of obtaining audit coverage
over significant financial statement accounts
is undertaken based on a percentage of total
performance materiality. The performance
materiality set for each component
is based on the relative scale and risk

of the component to the Group as a whole
and our assessment of the risk of misstatement
at that component. In the current year
the range of performance materiality
allocated to components was $6.6 million
to $21.5 million.

Annual report & accounts 2020154 | 155

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report
to the Committee all audit differences in excess of $3.3 million
(2019: $3.8 million), which is set at 5% of planning materiality, as well
as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both
the quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.

OTHER INFORMATION

The other information comprises
the information included in the annual
report set out on pages 1 to 145, including
the Strategic report, Corporate Governance
sections (including Corporate governance
report, Remuneration report, Directors’
Report and Directors’ Responsibility
statement) and Additional information
sections, other than the financial statements
and our auditor’s report thereon.
The directors are responsible for the other
information.

Our opinion on the financial statements
does not cover the other information
and, except to the extent otherwise explicitly
stated in this report, we do not express any
form of assurance conclusion thereon.

Our responsibility is to read the other
information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
or our knowledge obtained in the audit
or otherwise appears to be materially

misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to determine
whether there is a material misstatement
in the financial statements or a material
misstatement of the other information. If,
based on the work we have performed,
we conclude that there is a material
misstatement of the other information,
we are required to report that fact.

We have nothing to report in this regard.

OPINIONS ON OTHER MATTERS PRESCRIBED
BY THE COMPANIES ACT 2006

In our opinion, the part of the directors’
remuneration report to be audited has
been properly prepared in accordance
with the Companies Act 2006.

In our opinion, based on the work
undertaken in the course of the audit:
• The information given in the strategic report
and the directors’ report for the financial
year for which the financial statements
are prepared is consistent with the financial
statements; and

• The strategic report and the directors’

report have been prepared in accordance
with applicable legal requirements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT
BY EXCEPTION

In the light of the knowledge
and understanding of the Group
and the Parent Company and its
environment obtained in the course
of the audit, we have not identified material
misstatements in the strategic report
or the directors’ report.

to which the Companies Act 2006 requires
us to report to you if, in our opinion:
• Adequate accounting records have

Remuneration Report to be audited
are not in agreement with the accounting
records and returns; or

not been kept by the Parent Company,
or returns adequate for our audit have
not been received from branches
not visited by us; or

• Certain disclosures of directors’
remuneration specified by law
are not made; or

We have nothing to report in respect
of the following matters in relation

• The Parent Company financial

statements and the part of the Directors’

• We have not received all the information
and explanations we require for our audit.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCORPORATE GOVERNANCE STATEMENT

The Listing Rules require us to review
the directors’ statement in relation to going
concern, longer-term viability and that part
of the Corporate Governance Statement
relating to the Group and Parent Company’s
compliance with the provisions of the UK
Corporate Governance Code specified
for our review.

Based on the work undertaken as part
of our audit, we have concluded that each
of the following elements of the Corporate
Governance Statement is materially
consistent with the financial statements
or our knowledge obtained during the audit:

• Directors’ statement with regards

• Board’s confirmation that it has carried

to the appropriateness of adopting
the going concern basis of accounting
and any material uncertainties identified set
out on page 145.

• Directors’ explanation as to its assessment

of the Parent Company’s prospects,
the period this assessment covers
and why the period is appropriate set out
on page 96.

• Directors’ statement on fair, balanced

and understandable set out on page 145.

out a robust assessment of the emerging
and principal risks set out on page 91.

• The section of the annual report that

describes the review of effectiveness of risk
management and internal control systems
set out on page 121; and;

• The section describing the work

of the Audit Committee set out on page 119.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the directors’
responsibilities statement set out
on page 145, the directors are responsible
for the preparation of the financial
statements and for being satisfied that
they give a true and fair view, and for such
internal control as the directors determine
is necessary to enable the preparation

of financial statements that are free
from material misstatement, whether due
to fraud or error.

In preparing the financial statements,
the directors are responsible for assessing
the Group and Parent Company’s ability
to continue as a going concern, disclosing,

as applicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the Group or the Parent
Company or to cease operations, or have no
realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high

level of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs (UK) will always detect
a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually

or in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis
of these financial statements.

EXPLANATION AS TO WHAT EXTENT THE AUDIT
WAS CONSIDERED CAPABLE OF DETECTING
IRREGULARITIES, INCLUDING FRAUD

Irregularities, including fraud,
are instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
below, to detect irregularities, including
fraud. The risk of not detecting a material
misstatement due to fraud is higher
than the risk of not detecting one
resulting from error, as fraud may involve

deliberate concealment by, for example,
forgery or intentional misrepresentations,
or through collusion. The extent to which
our procedures are capable of detecting
irregularities, including fraud is detailed
below.

However, the primary responsibility
for the prevention and detection

of fraud rests with both those charged
with governance of the company
and management.

Our approach was as follows:
• We obtained an understanding

of the legal and regulatory frameworks
that are applicable to the Group
and determined that the most significant

Annual report & accounts 2020156 | 157

which are directly relevant to specific
assertions in the financial statements
are those related to the reporting
framework (IFRS, the Companies act
2006 and UK Corporate Governance
Code) and the relevant tax compliance
regulations in Russia.

• We have considered the impact
of the sanctions against Russia
on the Group’s operations, customer base
and credit risk as well as the possibility
of further more restrictive sanctions
being imposed and nothing has
come to our attention to suggest that
the operations or the liquidity of the group
have been adversely affected directly
by the current political and economic
situation other than the negative impact
on capital markets and the financing
options available to management. We
reviewed management’s assessment
of the sanctions impact on the Group’s

operations and the external advice
received by the Group.

• We understood how EVRAZ plc
is complying with those legal
and regulatory frameworks by making
enquiries to management, internal audit,
those responsible for legal and compliance
procedures and the company secretary.
We corroborated our enquiries through
our review of board minutes and papers
provided to the Audit Committee. We
assessed legal and regulatory frameworks
by involvement of integrated team
members based in Russia and the USA.

• We assessed the susceptibility

of the Group’s financial statements
to material misstatement, including
how fraud might occur by meeting
with management from various parts
of the business to understand where
it is considered there was a susceptibility

of fraud. We also considered performance
targets and their propensity to influence
on efforts made by management
to manage earnings. We considered
the programs and controls that the Group
has established to address risks identified,
or that otherwise prevent, deter and detect
fraud; and how senior management
monitors those programs and controls.
Where the risk was considered to be
higher, we performed audit procedures
to address each identified fraud risk.
These procedures included testing manual
journals and were designed to provide
reasonable assurance that the financial
statements were free of fraud or error.

A further description of our responsibilities
for the audit of the financial statements
is located on the Financial Reporting
Council’s website at https://www.frc.org.
uk/auditorsresponsibilities. This description
forms part of our auditor’s report.

OTHER MATTERS WE ARE REQUIRED TO ADDRESS

• We were appointed by the company

in 2011 to audit the financial statements
for the year ended 31 December 2011
and subsequent financial periods.
The period of total uninterrupted
engagement including previous renewals
and reappointments is ten years, covering

periods from our initial appointment
in 2011 through to the year ended 31
December 2020.

Company and we remain independent
of the Group and the Parent Company
in conducting the audit.

• The non-audit services prohibited
by the FRC’s Ethical Standard were
not provided to the Group or the Parent

• The audit opinion is consistent

with the Audit Committee report.

USE OF OUR REPORT

This report is made solely to the company’s
members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been
undertaken so that we might state

to the company’s members those
matters we are required to state to them
in an auditor’s report and for no other
purpose. To the fullest extent permitted
by law, we do not accept or assume

responsibility to anyone other than
the company and the company’s members
as a body, for our audit work, for this report,
or for the opinions we have formed.

Steven Dobson
(Senior statutory auditor)
for and on behalf of Ernst & Young
LLP, Statutory Auditor
London
24 February 2021

Notes:

1. The maintenance and integrity of the EVRAZ plc web site is the responsibility of the directors; the work carried out by the auditors does
not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred
to the financial statements since they were initially presented on the web site.

2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCONSOLIDATED FINANCIAL
STATEMENTS WITH NOTES

Сonsolidated statement of operations

(in millions of US dollars, except for per share information)

CCoonnttiinnuuiinngg ooppeerraattiioonnss

RReevveennuuee

Sale of goods

Rendering of services

Cost of revenue

GGrroossss pprrooffiitt

Selling and distribution costs

General and administrative expenses

Social and social infrastructure maintenance expenses

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

Impairment of non-financial assets

Foreign exchange gains/(losses), net

Other operating income

Other operating expenses

PPrrooffiitt ffrroomm ooppeerraattiioonnss

Interest income

Interest expense

Share of profits/(losses) of joint ventures and associates

Impairment of non-current financial assets

Gain/(loss) on financial assets and liabilities, net

Gain/(loss) on disposal groups classified as held for sale, net

Other non-operating gains/(losses), net

PPrrooffiitt bbeeffoorree ttaaxx

Income tax expense

NNeett pprrooffiitt

Attributable to:

Equity holders of the parent entity

Non-controlling interests

EEaarrnniinnggss ppeerr sshhaarree ffoorr pprrooffiitt aattttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff tthhee ppaarreenntt eennttiittyy,,
UUSS ddoollllaarrss::

Basic

Diluted

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr

NNootteess

22002200

22001199

22001188

1111

1133

1122

2200

$$ 99,,551144

224400

99,,775544

((66,,771122))

33,,004422

((884400))

((555522))

((3311))

((33))

((331100))

440088

2222

((6655))

$ 11,569

336

11,905

(8,273)

3,632

(966)

(611)

(26)

(442)

(341)

(54)

$ 12,525

311

12,836

(8,011)

4,825

(1,013)

(546)

(27)

(11)

(30)

361

(55)

11,,667711

1,217

3,528

((332288))

––

((7711))

1144

11,,229955

((443377))

$$ 885588

$$ 884488

1100

$$ 885588

$$00..5588

(336)

(56)

902

(537)

$ 365

$ 326

$ 365

$0.23

$0.22

(359)

–

(10)

3,201

(731)

$ 2,470

$ 2,406

$ 2,470

$ 1.67

$ 1.65

The accompanying notes form an integral part of these consolidated financial statements.

Annual report & accounts 2020

158 | 159

Сonsolidated statement of comprehensive income

(in millions of US dollars)

NNeett pprrooffiitt

OOtthheerr ccoommpprreehheennssiivvee iinnccoommee//((lloossss))

OOtthheerr ccoommpprreehheennssiivvee iinnccoommee ttoo bbee rreeccllaassssiiffiieedd ttoo pprrooffiitt oorr lloossss iinn ssuubbsseeqquueenntt
ppeerriiooddss

Exchange differences on translation of foreign operations into presentation
currency

Exchange differences recycled to profit or loss on disposal of foreign operations

Net gains/(losses) on cash flow hedges

Net (gains)/losses on cash flow hedges recycled to profit or loss

Effect of translation to presentation currency of the Group’s joint ventures and
associates

IItteemmss nnoott ttoo bbee rreeccllaassssiiffiieedd ttoo pprrooffiitt oorr lloossss iinn ssuubbsseeqquueenntt ppeerriiooddss

Net gains/(losses) on equity instruments at fair value through other
comprehensive income

Gains/(losses) on re-measurement of net defined benefit liability

Income tax effect

TToottaall ootthheerr ccoommpprreehheennssiivvee iinnccoommee//((lloossss)),, nneett ooff ttaaxx

TToottaall ccoommpprreehheennssiivvee iinnccoommee//((lloossss)),, nneett ooff ttaaxx

Attributable to:

Equity holders of the parent entity

Non-controlling interests

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr

NNootteess

22002200

$$ 885588

22001199

$ 365

22001188

$ 2,470

44,,1122

2255

77,, 2255

1111

1133

2233

((889944))

––

((889944))

((1133))

––

((33))

((11))

((990088))

$$ ((5500))

$$ ((4411))

((99))

$$ ((5500))

757

(33)

782

–

(15)

(1)

(16)

(1,120)

(3)

–

(1,060)

(13)

(6)

774

(992)

$ 1,139

$ 1,478

$ 1,078

$ 1,139

$ 1,441

$ 1,478

The accompanying notes form an integral part of these consolidated financial statements.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

Сonsolidated statement of financial position

(in millions of US dollars)

The financial statements of EVRAZ plc (registered number 7784342) on pages 100-190 were approved by the Board of Directors on 24 February 2021
and signed on its behalf by Alexander Frolov, Chief Executive Officer.

NNootteess

22002200

22001199

22001188

3311 DDeecceemmbbeerr

AASSSSEETTSS
NNoonn--ccuurrrreenntt aasssseettss

Property, plant and equipment

Intangible assets other than goodwill

Goodwill

Investments in joint ventures and associates

Deferred income tax assets

Other non-current financial assets

Other non-current assets

CCuurrrreenntt aasssseettss

Inventories

Trade and other receivables

Prepayments

Loans receivable

Receivables from related parties

Income tax receivable

Other taxes recoverable

Other current financial assets

Cash and cash equivalents

TToottaall aasssseettss

EEQQUUIITTYY AANNDD LLIIAABBIILLIITTIIEESS

EEqquuiittyy

EEqquuiittyy aattttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff tthhee ppaarreenntt eennttiittyy

Issued capital

Treasury shares

Additional paid-in capital

Revaluation surplus

Unrealised gains and losses

Accumulated profits

Translation difference

NNoonn--ccoonnttrroolllliinngg iinntteerreessttss

NNoonn--ccuurrrreenntt lliiaabbiilliittiieess

Long-term loans

Deferred income tax liabilities

Employee benefits

Provisions

Lease liabilities

Other long-term liabilities

CCuurrrreenntt lliiaabbiilliittiieess

Trade and other payables

Contract liabilities

Short-term loans and current portion of long-term loans

Lease liabilities

Payables to related parties

Income tax payable

Other taxes payable

Provisions

Amounts payable under put options for shares in subsidiaries

TToottaall eeqquuiittyy aanndd lliiaabbiilliittiieess

1100

1111

1133

1144

1155

1166

1177
1188

1199

2200

1133,,2255

3322

2222

2233

2244

2255

2266

2222

2255

1166

2277

2244

$$ 44,,331144

$ 4,925

$ 4,202

113388

445577

7799

224455

2266

4455

55,,330044

11,,008855

337788

8800

––

1100

4466

117788
22

11,,662277

33,,440066

185

594

152

6,043

1,480

534

175
4

1,423

3,804

$$ 88,,771100

$ 9,847

$$ 7755

((115544))

22,,551100

110099

––

22,,118877

((33,,993366))

779911

112299

992200

33,,775599

225533

224400

227722

5577

110022

44,,668833

11,,226644

331144

11,,007788

3300
3388

110088

116699

4411

6655

$ 75

(169)

2,492

109

–

2,217

(3,048)

1,676

252

1,928

4,599

352

271

321

5,666

1,378

348

140

34
19

153

206

864

5,573

1,474

835

113

201
35

1,067

3,800

$ 9,373

$ 75

(196)

2,480

110

3,026

(3,820)

1,681

257

1,938

4,186

258

226

222

–

4,930

1,216

320

377

–
122

104

266

33,,110077

$$ 88,,771100

2,253

$ 9,847

2,505

$ 9,373

The accompanying notes form an integral part of these consolidated financial statements.

Annual report & accounts 2020

160 | 161

Сonsolidated statement of cash flows

(in millions of US dollars)

CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess

Net profit
Adjustments to reconcile net profit to net cash flows from operating activities:

Deferred income tax (benefit)/expense (Note 8)
Depreciation, depletion and amortisation (Note 7)
(Gain)/loss on disposal of property, plant and equipment, net
Impairment of non-financial assets
Foreign exchange (gains)/losses, net
Interest income
Interest expense
Share of (profits)/losses of associates and joint ventures
Impairment of non-current financial assets
(Gain)/loss on financial assets and liabilities, net
(Gain)/loss on disposal groups classified as held for sale, net
Other non-operating (gains)/losses, net
Allowance for expected credit losses
Changes in provisions, employee benefits and other long-term assets and liabilities
Expense arising from equity-settled awards (Note 21)
Other

Changes in working capital:

Inventories
Trade and other receivables
Prepayments
Receivables from/payables to related parties
Taxes recoverable
Other assets
Trade and other payables
Contract liabilities
Taxes payable
Other liabilities

NNeett ccaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess

CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess
Issuance of loans receivable to related parties
Issuance of loans receivable
Proceeds from repayment of loans receivable, including interest
Purchases of subsidiaries, net of cash acquired (Note 4)
Purchases of disposal groups held for sale (Note 12)
Investments in associates and joint ventures (Note 11)
Sale of associates (Note 16)
Proceeds from sale of other investments (Notes 18 and 13)
Short-term deposits at banks, including interest
Purchases of property, plant and equipment and intangible assets
Proceeds from disposal of property, plant and equipment
Proceeds from sale of disposal groups classified as held for sale, net of transaction costs (Note 12)
Dividends received (Notes 11 and 16)
Other investing activities, net
NNeett ccaasshh fflloowwss uusseedd iinn iinnvveessttiinngg aaccttiivviittiieess

Continued on the next page

The accompanying notes form an integral part of these consolidated financial statements.

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr

22002200

22001199

22001188

$$ 885588

((114422))
660055
33
331100
((440088))
((66))
332288
((22))
––
7711
((11))
((1144))
((22))
((1177))
1111
((11))
11,,559933

225500
8811
33
55
((3300))
––
((3355))
((1133))
8844
((1100))

$ 365

5
578
(3)
442
341
(8)
336
(9)
56
(17)
(29)
(14)
3
–
13
(2)
2,057

61
304
26
(114)
29
(1)
219
13
(155)
(9)

$ 2,470

48
542
11
30
(361)
(18)
359
(9)
–
(13)
10
(2)
(1)
(16)
15
(2)
3,063

(482)
(128)
(48)
(58)
(24)
–
108
63
148
(9)

11,,992288

2,430

2,633

((11))
((11))
11
––
––
––
––
––
44
((664477))
66
1111
11
22
((662244))

–
(9)
2
(3)
(22)
(3)
5
32
7
(762)
16
44
9
19
(665)

(1)
(1)
2
–
–
–
–
92
11
(521)
4
52
6
(22)
(378)

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

Сonsolidated statement of cash flows (continued)

(in millions of US dollars)

CCaasshh fflloowwss ffrroomm ffiinnaanncciinngg aaccttiivviittiieess

Purchases of non-controlling interests (Note 4)
Payments for property, plant and equipment on deferred terms
Payments for investments on deferred terms (Note 11)
Dividends paid by the parent entity to its shareholders (Note 20)
Dividends paid by the Group’s subsidiaries to non-controlling shareholders
Proceeds from bank loans and notes (Note 22)
Repayment of bank loans and notes, including interest (Note 22)
Net proceeds from/(repayment of) bank overdrafts and credit lines, including interest (Note 22)
Restricted deposits at banks in respect of financing activities
Realised gains/(losses) on derivatives not designated as hedging instruments (Note 25)
Realised gains/(losses) on hedging instruments (Note 25)
Payments under leases, including interest (Note 25)
Other financing activities, net
NNeett ccaasshh fflloowwss uusseedd iinn ffiinnaanncciinngg aaccttiivviittiieess

Effect of foreign exchange rate changes on cash and cash equivalents

Net increase/(decrease) in cash and cash equivalents
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee bbeeggiinnnniinngg ooff tthhee yyeeaarr

CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr

Supplementary cash flow information:

CCaasshh fflloowwss dduurriinngg tthhee yyeeaarr::

Interest paid
Interest received
Income taxes paid (included in operating activities)

The accompanying notes form an integral part of these consolidated financial statements.

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr

22002200

22001199

22001188

$$ ((6666))
((1100))
––
((887722))
((55))
11,,221188
((11,,330044))
((2255))
11
((1111))
––
((3333))
––
((11,,110077))

220044
11,,442233

$$ 11,,662277

$$ ((228844))
55
((553366))

$ (71)
–
(8)
(1,086)
(5)
2,805
(3,035)
22
–
22
(23)
(37)
1
(1,415)

356
1,067

$ 1,423

$ (283)
7
(581)

$ (24)
–
(11)
(1,556)
(1)
1,412
(2,459)
–
12
11
11
–
(1)
(2,606)

(48)

(399)
1,466

$ 1,067

$ (320)
9
(623)

Annual report & accounts 2020

162 | 163

Сonsolidated statement of changes in equity

(in millions of US dollars)

AAttttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff tthhee ppaarreenntt eennttiittyy

AAddddiittiioonnaall

IIssssuueedd
ccaappiittaall

TTrreeaassuurryy
sshhaarreess

ppaaiidd--iinn

ccaappiittaall

RReevvaalluuaattiioonn
ssuurrpplluuss

UUnnrreeaalliisseedd
ggaaiinnss aanndd
lloosssseess

AAccccuummuullaatteedd

pprrooffiittss

TTrraannssllaattiioonn
ddiiffffeerreennccee

TToottaall

NNoonn--
ccoonnttrroolllliinngg
iinntteerreessttss

TToottaall

eeqquuiittyy

AAtt 3311 DDeecceemmbbeerr 22001199
Net profit
Other comprehensive income/(loss)
Total comprehensive income/(loss) for

the period

Acquisition of non-controlling interests in

subsidiaries (Note 4)

Change in non-controlling interests due to

reorganisation (Note 4)

Decrease in non-controlling interests due to put

options (Note 4)

Transfer of treasury shares to participants of

the Incentive Plans (Notes 20 and 21)

Share-based payments (Note 21)
Dividends declared by the parent entity to its

shareholders (Note 20)

Dividends declared by the Group’s subsidiaries

to non-controlling shareholders

$$ 7755
––
––

$$ ((116699))
––
––

$$ 22,,449922
––
––

$$ 110099
––
––

$$ ––
––
––

$$ 22,,221177
884488
((11))

$$ ((33,,004488)) $$ 11,,667766
884488
((888899))

––
((888888))

$$ 225522
1100
((1199))

$$ 11,,992288
885588
((990088))

––

––
––

––

1155
––

––

––
1111

––

––
––

––

––
––

––

884477

((888888))

((4411))

((99))

((5500))

––

4455

((3355))

((1155))
––

((887722))

––

––
––

––

4455

((3344))

((2277))

((4455))

––

((3355))

((3300))

((6655))

––
1111

((887722))

––
––

––

––
1111

((887722))

––

((55))

AAtt 3311 DDeecceemmbbeerr 22002200

$$ 7755

$$ ((115544))

$$ 22,,551100

$$ 110099

$$ ––

$$ 22,,118877

$$ ((33,,993366))

$$ 779911

$$ 112299

$$ 992200

The accompanying notes form an integral part of these consolidated financial statements.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

Сonsolidated statement of changes in equity (continued)

(in millions of US dollars)

AAttttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff tthhee ppaarreenntt eennttiittyy

IIssssuueedd
ccaappiittaall

TTrreeaassuurryy
sshhaarreess

AAddddiittiioonnaall
ppaaiidd--iinn

ccaappiittaall

RReevvaalluuaattiioonn
ssuurrpplluuss

UUnnrreeaalliisseedd
ggaaiinnss aanndd
lloosssseess

AAccccuummuullaatteedd

pprrooffiittss

TTrraannssllaattiioonn
ddiiffffeerreennccee

TToottaall

NNoonn--
ccoonnttrroolllliinngg
iinntteerreessttss

TToottaall

eeqquuiittyy

$ 75
–
–

$ (196)
–
–

$ 2,480
–
–

$ 110
–
–

$ 6
–
(6)

$ 3,026
326
(14)

$ (3,820) $ 1,681
326
752

–
772

$ 257
39
22

$ 1,938
365
774

–

–
–

–

27
–

–

(1)

–

–
13

–

(1)

–

(1)

–

–
–

–

(6)

314

772

1,078

1,139

–

–
–

–

(10)

(27)
–

(1,086)

–

–
–

–

(10)

(61)

(71)

–
13

(1,086)

–
–

–

–
13

(1,086)

–

(5)

AAtt 3311 DDeecceemmbbeerr 22001188
Net profit
Other comprehensive income/(loss)
Reclassification of revaluation surplus to

accumulated profits in respect of
the disposed items of property, plant and
equipment

Reclassification of additional paid-in capital in

respect of the disposed subsidiaries
Total comprehensive income/(loss) for

the period

Acquisition of non-controlling interests in

subsidiaries (Note 4)

Transfer of treasury shares to participants of

the Incentive Plans (Notes 20 and 21)

Share-based payments (Note 21)
Dividends declared by the parent entity to its

shareholders (Note 20)

Dividends declared by the Group’s subsidiaries

to non-controlling shareholders

AAtt 3311 DDeecceemmbbeerr 22001199

$ 75

$ (169)

$ 2,492

$ 109

$ –

$ 2,217

$ (3,048) $ 1,676

$ 252

$ 1,928

The accompanying notes form an integral part of these consolidated financial statements.

Сonsolidated statement of changes in equity (continued)

(in millions of US dollars)

AAttttrriibbuuttaabbllee ttoo eeqquuiittyy hhoollddeerrss ooff tthhee ppaarreenntt eennttiittyy

AAddddiittiioonnaall

IIssssuueedd
ccaappiittaall

TTrreeaassuurryy
sshhaarreess

ppaaiidd--iinn

ccaappiittaall

RReevvaalluuaattiioonn
ssuurrpplluuss

UUnnrreeaalliisseedd
ggaaiinnss aanndd
lloosssseess

AAccccuummuullaatteedd

pprrooffiittss

TTrraannssllaattiioonn
ddiiffffeerreennccee

TToottaall

NNoonn--
ccoonnttrroolllliinngg
iinntteerreessttss

TToottaall

eeqquuiittyy

$ 1,507
–
–

$ (231)
–
–

$ 2,500
–
–

$ 111
–
–

$ 39
–
56

$ 635
2,406
22

$ (2,777) $ 1,784
2,406
(965)

–
(1,043)

$ 242
64
(27)

$ 2,026
2,470
(992)

–

–
(1,432)

–

–
–

–

–
–

–

35
–

–

(35)

(35)
–

–

–
15

–

(1)

–

(1)
–

–

–
–

–

(89)

–

(33)
–

2,553
1,432

(1,043)
–

1,441
–

37
–

1,478
–

–

–
–

–

(3)

(35)
–

(1,556)

–

–
–

–

(3)

(21)

(24)

–
15

(1,556)

–
–

–

–
15

(1,556)

–

(1)

AAtt 3311 DDeecceemmbbeerr 22001177
Net profit
Other comprehensive income/(loss)
Transfer of realised gains on sold equity

instruments to accumulated profits (Note 13)

Reclassification of revaluation surplus to

accumulated profits in respect of
the disposed items of property, plant and
equipment

Reclassification of additional paid-in capital in

respect of the disposed subsidiaries
Total comprehensive income/(loss) for

the period

Reduction in par value of shares (Note 20)
Acquisition of non-controlling interests in

subsidiaries (Note 4)

Transfer of treasury shares to participants of

the Incentive Plans (Notes 20 and 21)

Share-based payments (Note 21)
Dividends declared by the parent entity to its

shareholders (Note 20)

Dividends declared by the Group’s subsidiaries

to non-controlling shareholders

AAtt 3311 DDeecceemmbbeerr 22001188

$ 75

$ (196)

$ 2,480

$ 110

$ 6

$ 3,026

$ (3,820) $ 1,681

$ 257

$ 1,938

The accompanying notes form an integral part of these consolidated financial statements.

Annual report & accounts 2020

164 | 165

Notes to the consolidated financial statements
Year ended 31 December 2020

1. CORPORATE INFORMATION

These consolidated financial statements were authorised for issue by the Board of Directors of EVRAZ plc on 24 February 2021.

EVRAZ plc (“EVRAZ plc” or “the Company”) was incorporated on 23 September 2011 as a public company limited by shares under the laws of the
United Kingdom. The Company was incorporated under the Companies Act 2006 with the registered number in England 7784342. The Company’s
address is 2 Portman street, London, W1H 6DU, United Kingdom.

The Company is a holding company which owns steel, mining and trading companies. The Company, together with its subsidiaries (the “Group”), is
involved in the production and distribution of steel and related products, vanadium products and coal and iron ore mining. The Group is one of
the largest steel producers globally.

Until 3 September 2018 Lanebrook Limited (“Lanebrook”) registered in Cyprus was the ultimate controlling party of the Group. On that date Lanebrook
distributed all its ownership interest in EVRAZ plc to its direct shareholders in proportion to their holdings in Lanebrook. At 31 December 2020, 2019
and 2018, EVRAZ plc was jointly controlled by a group of 3 shareholders: Greenleas International Holdings Limited (BVI), Abiglaze Limited (Cyprus) and
Crosland Global Limited (Cyprus).

The major subsidiaries included in the consolidated financial statements of the Group were as follows at 31 December:

SSuubbssiiddiiaarryy

EEffffeeccttiivvee

oowwnneerrsshhiipp iinntteerreesstt,, %%

22002200

22001199

22001188

BBuussiinneessss
aaccttiivviittyy

LLooccaattiioonn

EVRAZ Nizhny Tagil Metallurgical Plant

110000..0000

100.00

Steel production

Russia

EVRAZ Consolidated West-Siberian Metallurgical Plant

110000..0000

100.00

Steel production

Russia

EVRAZ Inc. NA

EVRAZ Inc. NA Canada

Raspadskaya

Yuzhkuzbassugol

110000..0000

100.00

Steel production

USA

110000..0000

100.00

Steel production

Canada

9955..1155**

88.17

83.84

Coal mining

9955..1155**

100.00

Coal mining

Russia

EVRAZ Kachkanarsky Mining-and-Processing Integrated Works

110000..0000

100.00

Ore mining &
processing

* The ownership interest in Raspadskaya and Yuzhkuzbassugol reflects the potential purchase of 4.25% in Raspadskaya under the share buyback
offer disclosed in Note 4 Put Option for the Shares of Raspadskaya.

The full list of the Group’s subsidiaries and other significant holdings as of 31 December 2020 is presented in Note 34.

2. SIGNIFICANT ACCOUNTING POLICIES

BBaassiiss ooff PPrreeppaarraattiioonn

These consolidated financial statements of the Group have been prepared in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006 and International Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation (EC)
No.1606/2002 as it applies in the European Union.

The consolidated financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.
Exceptions include, but are not limited to, property, plant and equipment at the date of transition to IFRS accounted for at deemed cost, equity
instruments measured at fair value, assets classified as held for sale measured at the lower of their carrying amount or fair value less costs to sell and
post-employment benefits measured at present value.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

2. SIGNIFICANT ACCOUNTING POLICIES

BBaassiiss ooff PPrreeppaarraattiioonn ((ccoonnttiinnuueedd))

Going Concern

These consolidated financial statements have been prepared on a going concern basis.

The Group’s financial position at 31 December 2020 including its cash flows, liquidity position and borrowing facilities are set out in the Financial
Review section. The Group’s net debt as at 31 December 2020 was $3,356 million (31 December 2019: $3,445 million) and its cash plus committed
undrawn facilities were $2,564 million (31 December 2019: $1,870 million).

As disclosed in Note 30, macroeconomic uncertainty and instability have arisen due to the COVID-19 pandemic. However, the majority of the Group’s
businesses were relatively unaffected with no significant issues for production, supply or shipments. Over the going concern period, we will continue to
focus on operations amid signs of a recovery in demand and, therefore, prices in key markets. Furthermore, management has already taken actions to
increase its liquidity with a new (undrawn) syndicated facility of $750 million having been secured with a view to the scheduled repayment of the 8.25%
notes with the outstanding principal of $735 million as of 31 December 2020 (Note 28).

The management of EVRAZ plc has considered the Group’s cash flow forecasts for the period to 30 June 2022 being its going concern assessment
period and has evaluated various financial performance scenarios, including a base, pessimistic and an additional stress downside test scenario.
These scenarios considered the possible impacts of the COVID-19 crisis on the financial results and liquidity position of the Group as well as
the potential impact of the possible coal assets demerger (Note 2, Accounting Judgements).

The most pessimistic stress scenario is based upon results at the level experienced in 2009, the lowest reported results since the Group listed in
2005, and assumes prices for steel, iron ore and coal all significantly below management’s current forecasts. In this scenario, the Group maintained
sufficient liquidity for the period to 30 June 2022 and would be able to operate within its debt covenants. Furthermore, since 2009 the Group disposed
of some of its low-performing assets in South Africa, Ukraine, North America and the Czech Republic and acquired additional assets in the Russian
Federation, which have improved the Group’s profitability despite an overall decrease in steel production capacity. The conclusions below are not
changed by any currently expected potential impacts of the possible coal assets demerger, a transaction within the Group’s control and which it would
not proceed with if it were to have a detrimental impact on going concern or shareholder value. The Group does not reasonably anticipate that the most
pessimistic stress scenario will occur, given the relatively limited impacts on the Group’s businesses to date and the signs of a recovery in key markets.

Based on this analysis and other currently available facts and circumstances directors and management have a reasonable expectation that the
Company and the Group have adequate resources to continue as a going concern.

CChhaannggeess iinn AAccccoouunnttiinngg PPoolliicciieess

NNeeww//RReevviisseedd SSttaannddaarrddss aanndd IInntteerrpprreettaattiioonnss AAddoopptteedd iinn 22002200::



Amendments to IFRS 3: Definition of a Business

The amendment to IFRS 3 “Business Combinations” clarifies that to be considered a business, an integrated set of activities and assets must include,
at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified that a
business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the consolidated
financial statements of the Group, but may impact future periods should the Group enter into any business combinations.



Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform

The amendments to IFRS 9 and IAS 39 “Financial Instruments: Recognition and Measurement” provide a number of reliefs, which apply to all hedging
relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainties
about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments had no material
impact on the consolidated financial statements of the Group.



Amendment to IFRS 16: COVID-19-related Rent Concessions

The amendment provides relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct
consequence of the COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID-19-related rent concession from a
lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19-related rent
concession the same way it would account for the change under IFRS 16, if the change were not a lease modification.



Amendments to IAS 1 and IAS 8: Definition of Material

The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be
expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which
provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or magnitude of
information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is
material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the consolidated
financial statements of the Group.



Amendments to References to the Conceptual Framework in IFRS Standards

The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and
clarifies some important concepts. These amendments had no impact on the consolidated financial statements of the Group.

Annual report & accounts 2020

166 | 167

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CChhaannggeess iinn AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

SSttaannddaarrddss IIssssuueedd BBuutt NNoott YYeett EEffffeeccttiivvee

SSttaannddaarrddss nnoott yyeett eeffffeeccttiivvee ffoorr tthhee ffiinnaanncciiaall ssttaatteemmeennttss ffoorr tthhee yyeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

EEffffeeccttiivvee ffoorr aannnnuuaall ppeerriiooddss

bbeeggiinnnniinngg oonn oorr aafftteerr



Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, IFRS 16: Interest Rate Benchmark Reform, phase 2

Amendments to IFRS 4: Extension of the Temporary Exemption from Applying IFRS 9

Amendments to IFRS 3: Reference to the Conceptual Framework

Amendments to IAS 16: Proceeds before intended use

Amendments to IAS 37: Onerous Contracts — Cost of Fulfilling a Contract

Amendments to Annual improvements 2018-2020

IFRS 17 “Insurance Contracts”, including amendments

Amendments to IAS 1: Classification of Liabilities as Current or Non-current

Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies

Amendments to IAS 8: Definition of Accounting Estimates

1 January 2021

1 January 2022*

1 January 2023*

*Subject to UK endorsement

The Group expects that the adoption of the pronouncements listed above will not have a significant impact on the Group’s results of operations and
financial position in the period of initial application.

Interest Rate Benchmark Reform, phase 2

Over the past few years global financial regulators developed a reform aimed at replacement of benchmark interbank offered rates (“IBORs”), such as
LIBOR and EURIBOR, with new “official” benchmark rates, known as alternative risk-free rates. This reform caused changes to financial reporting
requirements under IFRS. The International Accounting Standards Board tackled the changes in two phases.




Phase 1 amended specific hedge accounting requirements where uncertainty could arise in the run-up to transition;
Phase 2 addressed potential financial reporting issues that may arise when IBORs are either reformed or replaced.

In 2017 it was announced that LIBOR, one of the most widely used benchmarks, will be discontinued after December 2021, as panel banks will no
longer be required to submit the quotes used to construct it.

The Group has a number of short-term and long-term borrowings with variable interest rates. Currently the Group is assessing its floating-rate debt
maturing after 2021 and discussing with banks the possible changes to the contract terms. It is expected that IBORs will be replaced by Secured
Overnight Financing Rate (“SOFR”). All new loan agreements contain appropriate fallback language. The Group is in the process of evaluation of
the effect of application of these amendments.

SSiiggnniiffiiccaanntt AAccccoouunnttiinngg JJuuddggeemmeennttss aanndd EEssttiimmaatteess

AAccccoouunnttiinngg JJuuddggeemmeennttss

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimates,
which have the most significant effect on the amounts recognised in the consolidated financial statements:



The Group determined based on the criteria in IFRIC 4 “Determining whether an Arrangement Contains a Lease” (before 2019) and IFRS 16
“Leases” (from 2019) that the supply contracts with PraxAir and Air Liquide do not contain a lease. These contracts include the construction of air
separation plants by PraxAir and Air Liquide to be owned and operated by them and the supply of oxygen and other industrial gases produced by
the entities to the Group’s steel plants for a long-term period on a take or pay basis. Management believes that these arrangements do not
convey a right to the Group to use the assets as the Group does not have an ability to operate the assets or to direct other parties to operate
the assets; it does not control physical access to the assets; and it is expected that more than an insignificant amount of the assets’ output will be
sold to the parties unrelated to the Group. The commitments under the contracts are disclosed in Note 30.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SSiiggnniiffiiccaanntt AAccccoouunnttiinngg JJuuddggeemmeennttss aanndd EEssttiimmaatteess ((ccoonnttiinnuueedd))

AAccccoouunnttiinngg JJuuddggeemmeennttss ((ccoonnttiinnuueedd))



In 2019, the Group concluded a contract with Xcel Energy Inc. for the construction of a solar power plant to be owned and operated by a third
party and for the supply of electricity to the Group’s steel plant for a long-term period on a take-or-pay basis. The Group determined based on
the criteria in IFRS 16 “Leases” that the supply contract with Xcel Energy Inc. does not contain a lease. Management believes that this
arrangement does not convey a right to the Group to use the assets as the Group does not have an ability to operate the assets or to direct other
parties to operate the assets; it does not control physical access to the assets; and it is expected that more than an insignificant amount of the
assets’ output will be sold to the parties unrelated to the Group. The commitments under the contract are disclosed in Note 30.

In 2019, an independent trader concluded contracts with two Group’s subsidiaries: for the purchase of semi-finished steel products with one
subsidiary of the Steel segment and for the sale of semi-finished steel products with another subsidiary of the Steel North America segment.
The Group analysed the nature of the contracts and determined that they require a separate recognition of the sales and purchase transactions
as there is neither a tripartite agreement, nor a call or put option, which would require to treat these contracts as a single arrangement.
Specifically, the trader bears full inventory and market risks, it has a full discretion in establishing prices for each contract separately based on
prevailing market conditions. In 2020, the Group sold to the independent trader 322 thousand metric tonnes of slabs for $145 million (2019:
330 thousand metric tonnes of slabs for $161 million) and purchased from it 276 thousand metric tonnes for $141 million (2019: 192 thousand
metric tonnes for $108 million).

In June 2020 and January 2021, the Board of directors discussed the possible de-merger of a group of coal companies headed by Raspadskaya,
which constitutes a major part of the coal segment. However, at 31 December 2020 and at the date of authorisation of these consolidated
financial statements for issue, it remained uncertain whether this transaction would be finally approved by the directors and executed as there
were a number of additional significant uncertainties and potential conditions pending, such as approval of the transaction by shareholders and
bondholders, by the regulatory authorities of the UK and the Russian Federation. Accordingly, the classification, measurement and presentation
requirements of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” have not been applied to the coal segment in
the consolidated financial statements for the year ended 31 December 2020. If the transaction is approved by all respective individuals and
authorities, the coal segment will meet the criteria of a major business line, consequently, its disposal shall be treated as discontinued
operations.

In 2020, certain Group’s suppliers sold their accounts receivable from the Group under factoring contracts to banks with no recourse. The Group
analysed these reverse factoring arrangements and determined that they do not significantly change the terms and conditions of payments, i.e.
they do not contain a financing component and, consequently, should continue to be presented as trade payables in the consolidated statement
of financial position and in cash flows from operating activities in the consolidated statement of cash flows. At 31 December 2020, $188 million
were unpaid under the reverse factoring liabilities.

EEssttiimmaattiioonn UUnncceerrttaaiinnttyy

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below.

Impairment of Property, Plant and Equipment

The Group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the Group
makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value
less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the assets.
In 2020, 2019 and 2018, the Group recognised a net impairment reversal/(loss) of $(162) million, $(142) million and $(30) million, respectively
(Notes 6 and 9).

The determination of impairments of property, plant and equipment involves the use of estimates that include, but are not limited to, the cause, timing
and amount of the impairment. Impairment is based on a large number of factors, such as changes in current competitive conditions, expectations of
growth in the industry, increased cost of capital, changes in the future availability of financing, technological obsolescence, discontinuance of service,
current replacement costs and other changes in circumstances that indicate that impairment exists.

The determination of the recoverable amount of a cash-generating unit involves the use of estimates by management. Methods used to determine the
value in use include discounted cash flow-based methods, which require the Group to make an estimate of the expected future cash flows from the
cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. These estimates, including
the methodologies used, may have a material impact on the value in use and, ultimately, the amount of any impairment.

Annual report & accounts 2020

168 | 169

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SSiiggnniiffiiccaanntt AAccccoouunnttiinngg JJuuddggeemmeennttss aanndd EEssttiimmaatteess ((ccoonnttiinnuueedd))

EEssttiimmaattiioonn UUnncceerrttaaiinnttyy ((ccoonnttiinnuueedd))

Impairment of Goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating
units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from
the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

The carrying amount of goodwill at 31 December 2020, 2019 and 2018 was $457 million, $594 million and $864 million, respectively. In 2020,
2019 and 2018, the Group recognised an impairment loss in respect of goodwill in the amount of $132 million, $300 million and $Nil, respectively.
More details of the assumptions used in estimating the value in use of the cash-generating units to which goodwill is allocated are provided in Note 6.

Deferred Income Tax Assets

At 31 December 2020, 2019 and 2018, the Group had recognised net deferred tax assets of $245 million, $152 million and $92 million, respectively
(Note 8). These assets mostly related to the US and Canadian subsidiaries and mainly consisted of the unused tax losses and tax credits. Such assets
are recognised only to the extent that there are sufficient taxable temporary differences or there is convincing evidence that sufficient taxable profits
will be available against which the deductible temporary differences can be utilised.

The assumptions about generation of future taxable profits depend on management’s estimates of future cash flows and are contained in yearly
budgets and long-term forecasts. Judgements and assumptions are also required about the application of income tax legislation, expiration of tax
losses carried forward and tax planning strategies.

All these judgements and assumptions are subject to risks and uncertainties, hence there is a possibility that changes in circumstances will alter
expectations, which may impact the amount of deferred tax assets recognised in the consolidated statement of financial position and the amount of
other tax losses and temporary differences not yet recognised. In such circumstances some or all of the carrying amounts of the recognised deferred
tax assets may require a material adjustment within the next year, resulting in a corresponding credit or charge to the consolidated statement of
operations.

Post-Employment Benefits

The Group uses an actuarial valuation method for the measurement of the present value of post-employment benefit obligations and related current
service cost. This involves the use of demographic assumptions about the future characteristics of the current and former employees who are eligible
for benefits (mortality, both during and after employment, rates of employee turnover, disability and early retirement, etc.) as well as financial
assumptions (discount rate, future salary and benefit levels, expected rate of return on plan assets, etc.). More details are provided in Note 23.

FFoorreeiiggnn CCuurrrreennccyy TTrraannssaaccttiioonnss

The presentation currency of the Group is the US dollar because presentation in US dollars is most relevant for the major current and potential users of
the consolidated financial statements.

The functional currencies of the Group’s subsidiaries are the Russian rouble, US dollar, euro, Czech koruna, Canadian dollar and Ukrainian hryvnia.
At the reporting date, the assets and liabilities of the subsidiaries with functional currencies other than the US dollar are translated into
thepresentation currency at the rate of exchange ruling at the end of the reporting period, and their statements of operations are translated at
the exchange rates that approximate the exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken
directly to a separate component of equity. On disposal of a subsidiary with functional currency other than the US dollar, the deferred cumulative
amount recognised in equity relating to that particular subsidiary is recognised in the statement of operations.

The following exchange rates were used in the consolidated financial statements:

USD/RUB

EUR/USD

USD/CAD

USD/UAH

22002200

22001199

22001188

3311 DDeecceemmbbeerr

AAvveerraaggee

3311 DDeecceemmbbeerr

aavveerraaggee

3311 DDeecceemmbbeerr

7733..88775577

11..11227711

11..22774400

nn//aa

7722..11446644

11..11442222

11..33441133

nn//aa

61.9057

1.1234

1.2968

n/a

64.7362

1.1195

1.3269

26.1337

69.4706

1.1450

1.3658

27.6883

aavveerraaggee

62.7078

1.1810

1.2962

27.2029

Transactions in foreign currencies in each subsidiary of the Group are initially recorded in the functional currency at the rate ruling at the date of the
transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
was determined. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange ruling at
the end of the reporting period. All resulting differences are taken to the statement of operations. Any goodwill arising on the acquisition of a foreign
operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities
of the foreign operation and translated at the closing rate.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BBaassiiss ooff CCoonnssoolliiddaattiioonn

Subsidiaries

Subsidiaries, which are those entities in which the Group has an interest of more than 50% of the voting rights and over which the Group has control, or
otherwise has power to exercise control over their operations, are consolidated. Subsidiaries are consolidated from the date on which control is
transferred to the Group and are no longer consolidated from the date that control ceases.

All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, accounting policies for subsidiaries
have been changed to ensure consistency with the policies adopted by the Group.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are presented in
the consolidated statement of financial position within equity, separately from the parent’s shareholders’ equity.

Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling
interests having a deficit balance.

Acquisition of Subsidiaries

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration
transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the
Group measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.

Acquisition costs incurred are expensed and included in administrative expenses.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value
of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with IFRS 9 either in profit or loss or as
a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled
within equity.

The initial accounting for a business combination involves identifying and determining the fair values to be assigned to the acquiree’s identifiable
assets, liabilities and contingent liabilities and the cost of the combination. If the initial accounting for a business combination can be determined only
provisionally by the end of the period in which the combination is effected because either the fair values to be assigned to the acquiree’s identifiable
assets, liabilities or contingent liabilities or the cost of the combination can be determined only provisionally, the Group accounts for the combination
using those provisional values. The Group recognises any adjustments to those provisional values as a result of completing the initial accounting within
twelve months of the acquisition date.

Comparative information presented for the periods before the completion of initial accounting for the acquisition is presented as if the initial
accounting had been completed from the acquisition date.

Increases in Ownership Interests in Subsidiaries

The differences between the carrying values of net assets attributable to interests in subsidiaries acquired and the consideration given for such
increases is either added to additional paid-in capital, if positive, or charged to accumulated profits, if negative, in the consolidated financial
statements.

Purchases of Controlling Interests in Subsidiaries from Entities under Common Control

Purchases of controlling interests in subsidiaries from entities under common control are accounted for using the pooling of interests method.

The assets and liabilities of the subsidiary transferred under common control are recorded in these financial statements at the historical cost of the
controlling entity (the “Predecessor”). Related goodwill inherent in the Predecessor's original acquisition is also recorded in the financial statements.
Any difference between the total book value of net assets, including the Predecessor's goodwill, and the consideration paid is accounted for in
the consolidated financial statements as an adjustment to the shareholders' equity.

These financial statements, including corresponding figures, are presented as if a subsidiary had been acquired by the Group on the date it was
originally acquired by the Predecessor.

Put Options over Non-controlling Interests

The Group derecognises non-controlling interests if non-controlling shareholders have a put option over their holdings. The difference between
the amount of the liability recognised in the statement of financial position and the carrying value of the derecognised non-controlling interests is
charged to accumulated profits.

Annual report & accounts 2020

170 | 171

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IInnvveessttmmeennttss iinn AAssssoocciiaatteess

Associates are entities in which the Group generally has between 20% and 50% of the voting rights, or is otherwise able to exercise significant
influence, but which it does not control or jointly control.

Investments in associates are accounted for under the equity method of accounting and are initially recognised at cost including goodwill. Subsequent
changes in the carrying value reflect the post-acquisition changes in the Group’s share of net assets of the associate and goodwill impairment charges,
if any.

The Group’s share of its associates’ profits or losses is recognised in the statement of operations and its share of movements in reserves is recognised
in equity. However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise
further losses, unless the Group has legal or constructive obligations to make payments to, or on behalf of, the associate. If the associate subsequently
reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates;
unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

IInntteerreessttss iinn JJooiinntt VVeennttuurreess

The Group’s interest in its joint ventures is accounted for under the equity method of accounting whereby an interest in jointly ventures is initially
recorded at cost and adjusted thereafter for post-acquisition changes in the Group's share of net assets of joint ventures. The statement of operations
reflects the Group's share of the results of operations of joint ventures.

PPrrooppeerrttyy,, PPllaanntt aanndd EEqquuiippmmeenntt

The Group’s property, plant and equipment is stated at purchase or construction cost, excluding the costs of day-to-day servicing, less accumulated
depreciation and any impairment in value. Such cost includes the cost of replacing part of plant and equipment when that cost is incurred and
recognition criteria are met.

The Group’s property, plant and equipment include mining assets, which consist of mineral reserves, mine development and construction costs and
capitalised site restoration costs. Mineral reserves represent tangible assets acquired in business combinations. Mine development and construction
costs represent expenditures incurred in developing access to mineral reserves and preparations for commercial production, including sinking shafts
and underground drifts, roads, infrastructure, buildings, machinery and equipment.

At each end of the reporting period management makes an assessment to determine whether there is any indication of impairment of property, plant
and equipment. If any such indication exists, management estimates the recoverable amount, which is the higher of an asset’s fair value less cost to
sell and its value in use. The carrying amount is reduced to the recoverable amount, and the difference is recognised as impairment loss in
the statement of operations or other comprehensive income. An impairment loss recognised for an asset in previous years is reversed if there has been
a change in the estimates used to determine the asset’s recoverable amount.

Land is not depreciated. Depreciation of property, plant and equipment, except for mining assets, is calculated on a straight-line basis over the
estimated useful lives of the assets. The useful lives of items of property, plant and equipment and methods of their depreciation are reviewed, and
adjusted as appropriate, at each fiscal year end.

The table below presents the useful lives of items of property, plant and equipment.

Buildings and constructions

Machinery and equipment

Transport and motor vehicles

Other assets

UUsseeffuull lliivveess

((yyeeaarrss))

15–60

4–45

7–20

3–15

WWeeiigghhtteedd aavveerraaggee

rreemmaaiinniinngg uusseeffuull lliiffee ((yyeeaarrss))

The Group determines the depreciation charge separately for each significant part of an item of property, plant and equipment.

Depletion of mining assets including capitalised site restoration costs is calculated using the units-of-production method based upon proved and
probable mineral reserves. The depletion calculation takes into account future development costs for reserves which are in the production phase.

Maintenance costs relating to items of property, plant and equipment are expensed as incurred. Major renewals and improvements are capitalised,
and the replaced assets are derecognised.

The Group has the title to certain non-production and social assets, primarily buildings and facilities of social infrastructure, which are carried at their
recoverable amount of zero. The costs to maintain such assets are expensed as incurred.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

MMiinneerraall RReesseerrvveess

The Group estimates its mineral reserves in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves (“JORC Code”). Estimation of reserves in accordance with the JORC Code involves some degree of uncertainty. The uncertainty depends
mainly on the amount of reliable geological and engineering data available at the time of the estimate and the interpretation of this data, which also
requires use of subjective judgement and development of assumptions.

The changes in the pricing environment and geology-related risk factors may lead to a revision of mining plans, decisions to abandon or to mothball
certain parts of a mine, to a reassessment of the capital expenditures required for the extraction of the proved and probable reserves, as well as to
the changes in the resources classified as proved and probable reserves. These changes may have an impact on the depletion charge and impairment,
which may arise as a result of a decline in the recoverable amounts of the affected mines.

EExxpplloorraattiioonn aanndd EEvvaalluuaattiioonn EExxppeennddiittuurreess

Exploration and evaluation expenditures represent costs incurred by the Group in connection with the exploration for and evaluation of mineral
resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. The expenditures include
acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling, activities in
relation to evaluating the technical feasibility and commercial viability of extracting mineral resources. These costs are expensed as incurred.

When the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the Group commences recognition of
expenditures related to the development of mineral resources as assets. These assets are assessed for impairment when facts and circumstances
suggest that the carrying amount of an asset may exceed its recoverable amount.

LLeeaasseess

Group as a Lessee

The determination of whether an arrangement is, or contains, a lease is done at contract inception and includes the assessment of whether
the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before
the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end
of the lease term or exercise a purchase option, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Otherwise, the lessee depreciates the right-of-use asset from the commencement date to the end of
the useful life of the underlying asset. Right-of-use assets are subject to impairment. The right-of-use assets are included in the Property, plant and
equipment caption of the statement of financial position (Note 9).

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include
the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease
term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as
expense (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. The incremental borrowing rate is determined based on the Group’s borrowing rates for similar terms
and currencies in an economic environment, in which the lessee operates. After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment of plans to purchase the
underlying asset.

The lease term is a non-cancellable period for which a lessee has the right to use an underlying asset, together with any periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease if it is reasonably certain not to
be exercised.

The lease term of cancellable or renewable leases is dependent of the enforceability of the contract beyond the date on which it can be terminated.
The contract is enforceable if only one party of the lease contract has the right to terminate the lease without permission from the other party with no
more than an insignificant penalty. In this case the Group, as a lessee, assesses whether it is reasonably certain to exercise an extension option, or not
to exercise a termination option.

Lease payments for contracts with a duration of 12 months or less or leases for which the underlying assets are of low value are not recognised as
lease liabilities. They are expensed to the statement of operations on a straight-line basis over the lease term and included in cost of revenues, selling,
general and administrative expenses.

Information about lease arrangements is disclosed in Note 25.

Annual report & accounts 2020

172 | 173

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Group as a Lessor

Finance leases, in which the Group acts as a lessor, when substantially all the risks and benefits incidental to ownership of the leased item are
transferred to the lessee, are recognised as net investments in finance lease from the commencement of the lease term at the present value of
the minimum lease payments. Lease payments are apportioned between the finance income and reduction of the lease receivable so as to achieve
a constant rate of interest on the remaining balance of receivables. Finance income is included in the interest income caption.

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases (Note 9). Operating
lease income is recognised within the rendering of services caption on a straight-line basis over the lease term.

Accounting for Leases before 2019

Before 1 January 2019 the Group recognised as liabilities only finance lease arrangements. Finance leases, which involved the transfer to the Group
substantially all the risks and benefits incidental to ownership of the leased item, were capitalised from the commencement of the lease term at the
fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments were apportioned between the
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
were charged to interest expense.

Leases where the lessor retained substantially all the risks and benefits of ownership of the asset were classified as operating leases. Operating lease
payments were recognised as an expense in the statement of operations on a straight-line basis over the lease term.

GGooooddwwiillll

Goodwill represents the excess of the aggregate of the consideration transferred for an acquisition of a subsidiary or an associate and the amount
recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value
of the net assets of the acquiree, the difference is recognised in the consolidated statement of operations.

Goodwill on acquisition of a subsidiary is included in intangible assets. Goodwill on acquisition of an associate is included in the carrying amount of the
investments in associates.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more
frequently, if events or changes in circumstances indicate that the carrying amount may be impaired. For the purpose of impairment testing, goodwill
acquired in a business combination is allocated to each of the Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit, or the group of cash-generating units, to which the goodwill
relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. An impairment
loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in
this circumstance is measured based on the relative fair values of the operation disposed of and the portion of the cash-generating unit retained.

IInnttaannggiibbllee AAsssseettss OOtthheerr TThhaann GGooooddwwiillll

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is
fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any
accumulated impairment losses. Expenditures on internally generated intangible assets, excluding capitalised development costs, are expensed as
incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful
economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with a finite life are reviewed at least at each year end. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits embodied in the asset are treated as changes in accounting estimates. Intangible
assets with indefinite useful lives are not amortised, they are tested for impairment annually either individually or at the cash-generating unit level.

The table below presents the useful lives of intangible assets.

Customer relationships

Contract terms

Other

UUsseeffuull lliivveess

((yyeeaarrss))

WWeeiigghhtteedd aavveerraaggee

rreemmaaiinniinngg uusseeffuull lliiffee ((yyeeaarrss))

1–15

5–19

Certain water rights and environmental permits are considered to have indefinite lives as management believes that these rights will continue
indefinitely. The most part of the Group’s intangible assets represents customer relationships arising on business combinations (Note 10).

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FFiinnaanncciiaall AAsssseettss

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and
fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them, i.e. how the Group manages its financial assets in order to generate cash flows.
The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

With the exception of trade and other receivables that do not contain a significant financing component or for which the Group has applied the practical
expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs.

The Group measures financial assets at amortised cost if both of the following conditions are met:




The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are
recognised in profit or loss when the asset is derecognised, modified or impaired.

Trade and Other Accounts Receivable

Trade and other receivables are recognised at their transaction price as defined in IFRS 15 “Revenue” if they do not contain a significant financing
component or if the Group expects, at contract inception, that the period between when the Group transfers a promised good or service to a customer
and when the customer pays for that good or service will be one year or less.

For trade and other receivables, the Group applies a simplified approach for calculating the expected credit losses. Therefore, the Group does not track
changes in credit risk, but, instead, it recognises a loss allowance based on the lifetime expected credit losses at each reporting date. The Group
separately determines the expected credit losses for individually significant balances or collectively for trade and other receivables that are not
individually significant.

The expected credit losses for individually significant balances are estimated using debtors’ historical credit loss experience adjusted for forward-
looking factors specific to the debtors and economic environment.

IInnvveennttoorriieess

Inventories are recorded at the lower of cost and net realisable value. Cost of inventory is determined on the weighted average basis and includes
expenditure incurred in acquiring or producing inventories and bringing them to their existing location and condition. The cost of finished goods and
work in progress includes an appropriate share of production overheads based on normal operating capacity, but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary
to make the sale.

VVaalluuee AAddddeedd TTaaxx

The tax authorities permit the settlement of sales and purchases value added tax (“VAT”) on a net basis.

The Group’s subsidiaries apply the accrual method for VAT recognition, under which VAT becomes payable upon invoicing and delivery of goods or
rendering services as well upon receipt of prepayments from customers. VAT on purchases, even if not settled at the end of the reporting period, is
deducted from the amount of VAT payable.

Where provision has been made for impairment of receivables, an impairment loss is recorded for the gross amount of the debtor, including VAT.

CCaasshh aanndd CCaasshh EEqquuiivvaalleennttss

Cash and cash equivalents comprise cash at bank and in hand and deposits with an original maturity of three months or less.

BBoorrrroowwiinnggss

Borrowings are initially recognised at fair value, net of directly attributable transaction costs. After initial recognition, borrowings are measured at
amortised cost using the effective interest rate method; any difference between the amount initially recognised and the redemption amount is
recognised as interest expense over the period of the borrowings.

Borrowing costs relating to qualifying assets are capitalised (Note 9).

Annual report & accounts 2020

174 | 175

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EEqquuiittyy

Share Capital

Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares are shown as a deduction in equity from the
proceeds. Any excess of the fair value of consideration received over the par value of shares issued is recognised as additional paid-in capital.

Treasury Shares

Own equity instruments which are acquired by the Group (treasury shares) are deducted from equity. No gain or loss is recognised in statement of
operations on the purchase, sale, issue or cancellation of the treasury shares. Any difference between the carrying amount and the consideration, if
reissued, is recognised in additional paid-in capital.

Dividends

Dividends are recognised as a liability and deducted from equity only if they are declared before the end of the reporting period. Dividends are
disclosed when they are proposed before the end of the reporting period or proposed or declared after the end of the reporting period but before
the financial statements are authorised for issue.

PPrroovviissiioonnss

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset
but only when the reimbursement is virtually certain.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognised as an interest expense.

Site Restoration Provisions

The Group reviews site restoration provisions at each reporting date and adjusts them to reflect the current best estimate in accordance with IFRIC 1
“Changes in Existing Decommissioning, Restoration and Similar Liabilities”.

Provisions for site restoration costs are capitalised within property, plant and equipment.

EEmmppllooyyeeee BBeenneeffiittss

Social and Pension Contributions

Defined contributions are made by the Group to the Russian and Ukrainian state pension, social insurance and medical insurance funds at 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
those benefits. Its only obligation is to pay contributions as they fall due. These contributions are expensed as incurred.

Defined Benefit Plans

The Group companies provide pensions and other benefits to their employees (Note 23). The entitlement to these benefits is usually conditional on
the completion of a minimum service period. Certain benefit plans require the employee to remain in service up to retirement age. Other employee
benefits consist of various compensations and non-monetary benefits. The amounts of benefits are stipulated in the collective bargaining agreements
and/or in the plan documents.

The Group involves independent qualified actuaries in the measurement of employee benefit obligations.

The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Re-measurements, comprising of
actuarial gains and losses on post-employment benefit obligations, the effect of the asset ceiling, and the return on plan assets (excluding amounts
included in interest income), are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings
through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of the date of the plan amendment or curtailment, and the date that the Group
recognises restructuring-related costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. It is recorded within interest expense in
the consolidated statement of operations.

The Group recognises current service costs, past-service costs, gains and losses on curtailments and non-routine settlements in the consolidated
statement of operations within “cost of sales”, “general and administrative expenses” and “selling and distribution expenses”.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EEmmppllooyyeeee BBeenneeffiittss ((ccoonnttiinnuueedd))

Other Costs

The Group incurs employee costs related to the provision of benefits such as health services, kindergartens and other services. These amounts
principally represent an implicit cost of employment and, accordingly, have been charged to cost of sales.

Share-based Payments

The Group has management compensation schemes (Note 21), under which certain senior executives and employees of the Group receive
remuneration in the form of share-based payment transactions, whereby they render services as consideration for equity instruments (“equity-settled
transactions”).

The cost of equity-settled transactions with grantees is measured by reference to the fair value of the Company’s shares at the date on which they are
granted. The fair value is determined using the Black-Scholes-Merton model. In valuing equity-settled transactions, no account is taken of any
conditions, other than market conditions.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity (additional paid-in capital), over the period in
which service conditions are fulfilled, ending on the date on which the relevant persons become fully entitled to the award (“the vesting date”).
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The charge or credit in the statement of
operations for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards if EBITDA-related conditions are not satisfied or participants lose the entitlement for the shares due to
the termination of their employment. Accumulated share-based expense is adjusted to reflect the number of share options that eventually vest. For
market-related performance conditions, such as TSR (Note 21), if the conditions are not met and the share options do not vest, then no reversal is
made for the share-based expense previously recognised.

The TSR-related vesting condition of Incentive Plans adopted in 2017, 2018, 2019 and 2020 was considered by the 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. 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 will be taken into account by
adjusting the share-based expense based on the number of share options that eventually vest.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition,
an expense is recognised for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial
to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for
the award is recognised immediately.

The dilutive effect of outstanding share-based awards is reflected as additional share dilution in the computation of earnings per share (Note 20).

RReevveennuuee

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.

The following specific recognition criteria must also be met before revenue is recognised:

Sale of Goods

The Group recognises revenues from sales of goods at the point in time when control of the asset is transferred to the customer and it is probable that
the amount of consideration is collectible. The moment of transfer of control is determined by the contract terms and usually occurs at the date of
shipment.

Some contracts with customers provide a right of return, trade discounts or volume rebates. The Group recognises revenue from the sale of goods
measured at the fair value of the consideration received or receivable, net of the estimated returns and price concessions, trade discounts and volume
rebates. The variable consideration is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The Group enters into contracts with its customers, under which the Group provides transportation and handling services using third party providers
(i.e. the Group selects suitable firms and manages the shipment and delivery). These services are provided to the customers before, or after, they
obtain control over the goods. The cost of services is included in the contract price. Under IFRS 15, transportation and handling services rendered by
the Group before control over the goods is transferred to the customers do not represent a separate performance obligation. Therefore, the Group
recognises these services at the moment when control over the goods is passed to the customers. With respect to the contracts when the Group
provides transportation and handling services after obtaining control over the goods by the customers, the Group concluded that these services
represent a separate performance obligation and the Group acts as a principal rather than an agent. Consequently, the control over its services is
transferred over time. Transportation and handling services rendered by the Group in contracts, in which it acts as a principal, are presented within
the caption ”Sales of goods” in the consolidated statement of operations.

Annual report & accounts 2020

176 | 177

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RReevveennuuee ((ccoonnttiinnuueedd))

Rendering of Services

The Group’s revenues from rendering of services include electricity, transportation and other services. The pattern of revenue recognition reflects the
transfer of services to customers and may occur at a point in time or over time.

Advances from Customers

The Group receives only short-term advances from its customers. The Group uses the practical expedient provided in IFRS 15, which allows not to
adjust the promised amount of consideration for the effects of a significant financing component in the contracts where the Group expects, at contract
inception, that the period between the Group’s transfer of a promised good or service to a customer and when the customer pays for that good or
service will be one year or less. Therefore, for short-term advances, the Group does not account for a financing component even if it is significant.

Interest

Interest is recognised using the effective interest method.

Dividends

Dividend income is recognised when the shareholders’ right to receive the payment is established.

Rental Income

Rental income is accounted for on a straight-line basis over the lease term on ongoing leases.

GGoovveerrnnmmeenntt GGrraannttss

Government grants are recognised at their fair value, when there is reasonable assurance that the grant will be received and all attaching conditions
will be complied with.

Grants related to non-monetary assets are presented in the statement of financial position by deducting the grant in arriving at the carrying amount of
the asset and are recognised as a deduction from depreciation expense over the life of the asset. Government grants related to costs are deducted
from the relevant expenses to be compensated in the same period.

CCuurrrreenntt IInnccoommee TTaaxx

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the end of the reporting
period.

Current income tax relating to items recognised outside profit or loss is recognised in other comprehensive income or equity and not in the statement
of operations.

DDeeffeerrrreedd IInnccoommee TTaaxx

Deferred tax assets and liabilities are calculated in respect of temporary differences using the liability method. Deferred income taxes are provided for
all temporary differences arising between the tax basis of assets and liabilities and their carrying values for financial reporting purposes, except where
the deferred income tax arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

A deferred tax asset is recorded only to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Various factors are considered to assess
the probability of the future utilisation of deferred tax assets, including past operating results, operational plans, expiration of tax losses carried
forward, tax legislation and tax planning strategies.

Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realised or the liability is settled,
based on tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the
timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

3. SEGMENT INFORMATION

For management purposes the Group has four reportable operating segments:



Steel segment includes production of steel and related products at all mills except for those located in North America. Extraction of vanadium ore
and production of vanadium products, iron ore mining and enrichment and certain energy-generating companies are also included in this segment
as they are closely related to the main process of steel production.

Steel, North America is a segment, which includes production of steel and related products in the USA and Canada.

Coal segment includes coal mining and enrichment.

Other operations include energy-generating companies, shipping and railway transportation companies.

Management and investment companies are not allocated to any of the segments. Operating segments have been aggregated into reportable
segments if they show a similar long-term economic performance, have comparable production processes, customer industries and distribution
channels, operate in the same regulatory environment, and are generally managed and monitored together.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

Management monitors the results of the operating segments separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on EBITDA. This performance indicator is calculated based on management
accounts and differs from the IFRS consolidated financial statements for the following reasons:

1) for the last month of the reporting period management accounts are prepared using a forecast for that month;

2) certain unallocated costs are treated as segment expenses in management accounts.

Before 2020 there were additional differences between the IFRS indicators and the figures of management accounts, such as non-consolidation of
certain subsidiaries in management accounts, use of the adjusted local GAAP figures and simplified methods of translation into presentation currency.

Segment revenue is revenue reported in the Group's statement of operations that is directly attributable to a segment and the relevant portion of
the Group’s revenue that can be allocated to it on a reasonable basis, whether from sales to external customers or from transactions with other
segments.

Segment expense is expense resulting from the operating activities of a segment that is directly attributable to the segment and the relevant portion of
an expense that can be allocated to it on a reasonable basis, including expenses relating to external counterparties and expenses relating to
transactions with other segments. Segment expense does not include social and social infrastructure maintenance expenses.

Segment result is segment revenue less segment expense that is equal to earnings before interest, tax, depreciation and amortisation (“EBITDA”) for
that segment.

Segment EBITDA is determined as a segment’s profit/(loss) from operations adjusted for social and social infrastructure maintenance expenses,
impairment of assets, profit/(loss) on disposal of property, plant and equipment and intangible assets, foreign exchange gains/(losses) and
depreciation, depletion and amortisation expense. Management believes that this measure is useful and relevant for the users and gives a better
comparison with the Russian steel peers.

Annual report & accounts 2020

178 | 179

3. SEGMENT INFORMATION (CONTINUED)

The following tables present measures of segment profit or loss based on management accounts.

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

Revenue

Sales to external customers

Inter-segment sales

TToottaall rreevveennuuee

SStteeeell

NNoorrtthh AAmmeerriiccaa

CCooaall

ooppeerraattiioonnss

EElliimmiinnaattiioonnss

TToottaall

SStteeeell,,

OOtthheerr

$$66,,990022

6677

66,,996699

$$ 11,,777799

––

11,,777799

$$995522

553388

11,,449900

$$ 112211

228899

441100

$$ ––

((889944))

$$ 99,,775544

––

99,,775544

SSeeggmmeenntt rreessuulltt –– EEBBIITTDDAA

$$ 11,,888888

$$ ((2222))

$$ 339966

$$ 1177

$$ 2200

$$ 22,,229999

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

Revenue

Sales to external customers

Inter-segment sales

TToottaall rreevveennuuee

SStteeeell

NNoorrtthh AAmmeerriiccaa

CCooaall

ooppeerraattiioonnss

EElliimmiinnaattiioonnss

TToottaall

SStteeeell,,

OOtthheerr

$ 7,903

175

8,078

$ 2,517

–

2,517

$ 1,273

735

2,008

$ 186

303

489

$ –

(1,213)

$ 11,879

–

11,879

SSeeggmmeenntt rreessuulltt –– EEBBIITTDDAA

$ 1,668

$ 38

$ 883

$ 19

$ 32

$ 2,640

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

Revenue

Sales to external customers

Inter-segment sales

TToottaall rreevveennuuee

SStteeeell

NNoorrtthh AAmmeerriiccaa

CCooaall

ooppeerraattiioonnss

EElliimmiinnaattiioonnss

TToottaall

SStteeeell,,

OOtthheerr

$ 8,373

343

8,716

$ 2,593

–

2,593

$ 1,533

1,322

2,855

$ 214

279

493

$ –

(1,944)

$ 12,713

–

12,713

SSeeggmmeenntt rreessuulltt –– EEBBIITTDDAA

$ 2,701

$ 18

$ 1,180

$ 17

$ (14)

$ 3,902

In 2020, chief operating decision makers ceased to review the amounts of revenue reported by management accounts. Instead of them, the revenue
based on IFRS is used for performance analysis. The comparative information has not been restated since it contains currently used IFRS measures.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

3. SEGMENT INFORMATION (CONTINUED)

The following table shows a reconciliation of revenue and EBITDA used by management for decision making and revenue and profit or loss before tax
per the consolidated financial statements prepared under IFRS.

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

SStteeeell

NNoorrtthh AAmmeerriiccaa

CCooaall

ooppeerraattiioonnss

EElliimmiinnaattiioonnss

TToottaall

SStteeeell,,

OOtthheerr

RReevveennuuee ppeerr IIFFRRSS ffiinnaanncciiaall ssttaatteemmeennttss

$$ 66,,996699

$$ 11,,777799

$$ 11,,449900

$$ 441100

$$((889944))

$$ 99,,775544

EEBBIITTDDAA

Unrealised profits adjustment

Reclassifications and other adjustments

$$ 11,,888888

$$ ((2222))

$$ 339966

$$ 1177

$$ 2200

$$ 22,,229999

((4488))

9900

4422

((44))

((22))

((66))

––

((22))

––

((5511))

8899

3388

EEBBIITTDDAA bbaasseedd oonn IIFFRRSS ffiinnaanncciiaall ssttaatteemmeennttss

$$ 11,,993300

$$ ((2288))

$$ 440000

$$ 1155

$$ 2211

$$ 22,,333388

((2244))

((226611))

((55))

––

((5555))

––

((114477))

((330088))

((33))

$$ 11,,558855

$$ ((448844))

((22))

((118899))

––

112222

$$ 333344

––

((33))

––

$$ 1122

$$ 2211

Unallocated subsidiaries

Social and social infrastructure maintenance

expenses

Depreciation, depletion and amortisation expense

Impairment of assets
Gain on disposal of property, plant and equipment

and intangible assets

Foreign exchange gains/(losses), net

Unallocated income/(expenses), net

PPrrooffiitt//((lloossss)) ffrroomm ooppeerraattiioonnss

Interest income/(expense), net

Share of profits/(losses) of joint ventures and

associates

Gain/(loss) on financial assets and liabilities

Gain/(loss) on disposal groups classified as held for

sale

Other non-operating gains/(losses), net

PPrrooffiitt//((lloossss)) bbeeffoorree ttaaxx

((112266))

$$ 22,,221122

((2266))

((660000))

((331100))

((33))

6699

$$ 11,,334422

332299

$$ 11,,667711

((332222))

((7711))

1144

$$ 11,,229955

Annual report & accounts 2020

180 | 181

3. SEGMENT INFORMATION (CONTINUED)

Year ended 31 December 2019

US$ million

RReevveennuuee

Reclassifications and other adjustments

RReevveennuuee ppeerr IIFFRRSS ffiinnaanncciiaall ssttaatteemmeennttss

EEBBIITTDDAA

Unrealised profits adjustment

Reclassifications and other adjustments

SStteeeell,,

OOtthheerr

SStteeeell

NNoorrtthh AAmmeerriiccaa

CCooaall

ooppeerraattiioonnss

EElliimmiinnaattiioonnss

TToottaall

$ 8,078

$ 2,517

$ 2,008

(17)

$ 8,143

$ 2,500

$ 2,021

$ 489

(6)

$483

$(1,213)

$ 11,879

(29)

$(1,242)

$ 11,905

$ 1,668

$ 38

$ 883

$ 19

$ 32

$ 2,640

127

–

(81)

(40)

–

(1)

139

(37)

102

EEBBIITTDDAA bbaasseedd oonn IIFFRRSS ffiinnaanncciiaall ssttaatteemmeennttss

$ 1,795

$ 38

$ 843

$ 18

$ 48

$ 2,742

(17)

(254)

(26)

(10)

–

(147)

(309)

(3)

(168)

(107)

(3)

(30)

$ 1,489

$ (368)

$ 532

–

(4)

–

$ 24

–

$ 48

Unallocated subsidiaries

Social and social infrastructure maintenance

expenses

Depreciation, depletion and amortisation expense

Impairment of assets

Gain on disposal of property, plant and equipment

and intangible assets

Foreign exchange gains/(losses), net

Unallocated income/(expenses), net

PPrrooffiitt//((lloossss)) ffrroomm ooppeerraattiioonnss

Interest income/(expense), net

Share of profits/(losses) of joint ventures and

associates

Impairment of non-current financial assets

Gain/(loss) on financial assets and liabilities

Gain/(loss) on disposal groups classified as held for

sale

Other non-operating gains/(losses), net

PPrrooffiitt//((lloossss)) bbeeffoorree ttaaxx

(141)

$ 2,601

(20)

(573)

(442)

$ 1,584

(367)

$ 1,217

(328)

(56)

$ 902

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

3. SEGMENT INFORMATION (CONTINUED)

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

RReevveennuuee

Reclassifications and other adjustments

RReevveennuuee ppeerr IIFFRRSS ffiinnaanncciiaall ssttaatteemmeennttss

EEBBIITTDDAA

Unrealised profits adjustment

Reclassifications and other adjustments

EEBBIITTDDAA bbaasseedd oonn IIFFRRSS ffiinnaanncciiaall ssttaatteemmeennttss

Unallocated subsidiaries

Social and social infrastructure maintenance
expenses
Depreciation, depletion and amortisation expense
Impairment of assets
Loss on disposal of property, plant and equipment
and intangible assets
Foreign exchange gains/(losses), net

Unallocated income/(expenses), net

PPrrooffiitt//((lloossss)) ffrroomm ooppeerraattiioonnss

Interest income/(expense), net
Share of profits/(losses) of joint ventures and
associates
Gain/(loss) on financial assets and liabilities
Gain/(loss) on disposal groups classified as held for
sale
Other non-operating gains/(losses), net

PPrrooffiitt//((lloossss)) bbeeffoorree ttaaxx

SStteeeell,,

OOtthheerr

SStteeeell

NNoorrtthh AAmmeerriiccaa

CCooaall

ooppeerraattiioonnss

EElliimmiinnaattiioonnss

TToottaall

$ 8,716

163
$ 8,879

$ 2,701
(46)
17

(29)

$ 2,672

(25)

(239)
(18)

(3)

31
$ 2,418

$ 2,593

(10)
$ 2,583

$ 18
–
(4)

(4)

$ 14

–

(137)
(2)

(2)

(72)
$ (199)

$ 2,855

(518)
$ 2,337

$ 1,180
(25)
63

$ 1,218

(2)

(158)
(10)

(6)

30
$ 1,072

$ 493

(21)
$ 472

$ 17
–
–

–

$ 17

–

(3)
–

–

(2)
$ 12

$(1,944)

509
$(1,435)

$12,713

123
$12,836

$ (14)
4
1

$ (9)

–

–
–

–

–
$ (9)

$ 3,902
(67)
77

$ 3,912

(135)

$ 3,777

(27)

(537)
(30)

(11)

(13)
$ 3,159
369

$ 3,528

(341)

(10)

$ 3,201

Annual report & accounts 2020

182 | 183

3. SEGMENT INFORMATION (CONTINUED)

The revenues from contracts with external customers for each group of similar products and services and rental income are presented in the following
table:

US$ million

SStteeeell

Construction products

Flat-rolled products

Railway products

Semi-finished products

Other steel products

Other products

Iron ore

Vanadium in slag

Vanadium in alloys and chemicals

Rendering of services

SStteeeell,, NNoorrtthh AAmmeerriiccaa

Construction products

Flat-rolled products

Railway products

Tubular products

Other products

Rendering of services

CCooaall

Coal

Other products

Rendering of services

OOtthheerr ooppeerraattiioonnss

Rendering of services

22002200

22001199

22001188

$$ 22,,001133

114466

11,,009999

22,,447799

334422

225577

114466

6644

228855

7711

66,,990022

118833

332233

332266

774433

117700

3344

11,,777799

992299

1144

995522

112211

$ 2,166

386

1,181

2,528

377

365

190

109

539

103

7,944

200

518

405

1,128

211

2,500

1,251

1,287

174

$ 2,280

415

965

2,521

399

545

158

228

922

8,504

247

597

380

1,167

168

2,583

1,506

1,558

191

$$ 99,,775544

$ 11,905

$ 12,836

Revenue from rendering of services included rental income, which was mainly attributable to the subsidiaries of the steel segment.

US$ million

Revenues from contracts with customers

Rental income

22002200

$$ 99,,772299

2255

$$ 99,,775544

22001199

$ 11,873

$ 11,905

22001188

$ 12,822

$ 12,836

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

3. SEGMENT INFORMATION (CONTINUED)

Distribution of the Group’s revenues by geographical area based on the location of customers for the years ended 31 December was as follows:

22002200

22001199

22001188

$ 4,373

$ 4,564

US$ million

CCIISS

Russia

Kazakhstan

Ukraine

Uzbekistan

Belarus

Kyrgyzstan

Others

AAmmeerriiccaa

USA

Canada

Mexico

Others

AAssiiaa

China

Taiwan

Philippines

Indonesia

Republic of Korea

Japan

United Arab Emirates

Mongolia

Thailand

Vietnam

India

Singapore

Others

EEuurrooppee

European Union

Turkey

Others

AAffrriiccaa

Kenya

Egypt

Others

OOtthheerr ccoouunnttrriieess

$$ 33,,772222

227799

8800

6633

5588

4466

5588

44,,330066

11,,006600

773355

6611

5599

11,,991155

11,,005522

552255

333388

227711

225555

110066

9955

7777

6699

6644

4400

1122

4455

297

291

5,238

1,701

847

119

2,709

478

680

387

244

282

243

124

247

22,,994499

2,893

331144

113355

1122

446611

8877

3300

112222

767

166

956

107

237

480

5,500

2,226

537

154

3,009

114

433

631

346

409

186

225

133

2,716

1,146

254

1,426

179

None of the Group’s customers amounts to 10% or more of the consolidated revenues.

$$ 99,,775544

$11,905

$ 12,836

Annual report & accounts 2020

184 | 185

3. SEGMENT INFORMATION (CONTINUED)

Non-current assets other than financial instruments, deferred tax assets and post-employment benefit assets were located in the following countries at
31 December:

US$ million

Russia

Canada

USA

Kazakhstan

Czech Republic

Italy

Other countries

22002200

$$ 33,,550000

664433

881188

3322

3377

––

22001199

$ 3,967

981

827

–

22001188

$ 3,258

1,221

791

$$ 55,,003333

$ 5,851

$ 5,390

4. CHANGES IN THE COMPOSITION OF THE GROUP

PPuurrcchhaassee ooff NNoonn--ccoonnttrroolllliinngg IInntteerreessttss

Raspadskaya

In 2020, the Group acquired an additional 2.73% ownership interest in Raspadskaya, a subsidiary of the Group, for cash consideration of $27 million.
The excess of the carrying values of non-controlling interests acquired over consideration amounting to $7 million was credited to additional paid-in
capital.

In 2019, the Group acquired an additional 1.8% ownership interest in Raspadskaya for cash consideration of $25 million. The excess of consideration
over the carrying values of non-controlling interests acquired amounting to $3 million was charged to accumulated profits.

In addition, in June 2019 Raspadskaya purchased its own shares in course of the tender offer for cash consideration of $46 million. The Group
derecognised 2.53% of non-controlling interests and charged to accumulated profits $7 million representing the excess of consideration over the
carrying values of non-controlling interests acquired.

In the course of the closed subscription in September 2019 Raspadskaya issued 80,285 new shares, and Evraz Group S.A. acquired 80,284 shares,
thus increasing the Group’s stake in the subsidiary by 0.0014%.

In 2018, the Group acquired an additional 1.89% ownership interest in Raspadskaya for cash consideration of $24 million. The excess of consideration
over the carrying values of non-controlling interests acquired amounting to $3 million was charged to accumulated profits.

Mezhegeyugol

On 14 March 2017, the Group signed an option agreement with a non-controlling shareholder in respect of shares of Mezhegeyugol, a coal mining
subsidiary of the Group. Under the agreement, the non-controlling shareholder had the right to sell to the Group (the put option) all its shares in
Mezhegeyugol (39.9841%) for $39 million and to settle the loan payable to the Group for $25 million. As a result, the Group would hold 100%
ownership interest in the subsidiary. The option could be exercised from 1 December 2019 to 1 December 2020.

In 2017, the Group determined that the terms of the option agreement give the Group the rights to the beneficial interests in Mezhegeyugol and
derecognised the non-controlling interests in full and recognised a liability under the put option in the amount of $60 million. From March 2017 and
until the put option exercise the Group accrued $9 million interest on this liability ($1 million, $3 million and $4 million in 2020, 2019 and 2018,
respectively).

In June 2020, the non-controlling shareholder sold its interest to the Group. The consideration for the purchased non-controlling interest comprised of
a non-cash settlement of a loan owed to the Group with a carrying value of $30 million, which approximated the fair value, and $39 million of cash
consideration.

CChhaannggee iinn NNoonn--ccoonnttrroolllliinngg IInntteerreessttss dduuee ttoo RReeoorrggaanniissaattiioonn

In 2020, EVRAZ plc decided to reorganise its business structure combining all coal operations in one group headed by Raspadskaya.

On 30 December 2020, Nizhny Tagil Metallurgical Plant, a wholly-owned subsidiary of the Group, sold its 100% ownership interest in Yuzhkuzbassugol
(which is in turn the parent entity of Mezhegeyugol) to Raspadskaya for cash consideration of RUB 67,741 million ($920 million at the date of the
transaction). As a result, the Group’s interest in Yuzhkuzbassugol was diluted from 100% to 90.90%. The carrying value of non-controlling interests
decreased by $45 million, being the share of non-controlling shareholders in the excess of cost of acquisition of Yuzhkuzbassugol over its consolidated
net assets, with a corresponding increase in the Group’s accumulated profits through the consolidated statement of changes in equity.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

4. CHANGES IN THE COMPOSITION OF THE GROUP (CONTINUED)

PPuutt OOppttiioonn ffoorr tthhee SShhaarreess ooff RRaassppaaddsskkaayyaa

In the course of the Group’s business and ownership structure reorganisation, as described above in Change in Non-controlling Interests due to
Reorganisation, Raspadskaya followed the Russian legislation, which, in particular, required the approval of the potential acquisition of
Yuzhkuzbassugol by the majority of the voted non-controlling shareholders of Raspadskaya. The non-controlling shareholders who voted against or did
not vote have the right to sell their stakes to Raspadskaya at a price being the fair value determined by an independent appraiser (RUB 164 per share).
At the same time the liability for the share repurchase is limited to 10% of net assets of JSC Raspadskaya, thus, the number of shares to be
repurchased is proportionately reduced if all potential shareholders cannot be satisfied.

Consequently, the Group derecognised the non-controlling interests relating to the shareholders, which have a put option over their holding (4.25% of
the total shares of Raspadskaya), with the carrying value of $30 million, and recognised a $65 million liability to these shareholders at fair value.
The difference between the amount of the recognised liability and the carrying value of the derecognised non-controlling interests was charged to
accumulated profits.

On 1 February 2021, Raspadskaya completed the collection of the share repurchase requests from eligible non-controlling shareholders. The actual
number of shares to be repurchased amounted to 2.51% of Raspadskaya’s share capital, which is equal to a $38 million liability. On expiry of the put
option the difference with the liability originally recognised was reversed through equity with a corresponding increase of the non-controlling interests of
$27 million in relation to those shareholders who did not exercise the option.

SSaallee ooff SSuubbssiiddiiaarriieess

In 2019, the Group sold EVRAZ Stratcor Inc, EVRAZ Palini e Bertoli, and Evraztrans-Ukraine. In 2018, the Group sold Dneprovsk Metallurgical Plant.
Further details of these transactions are disclosed in Note 12.

5. GOODWILL

Goodwill relates to the assembled workforce and synergy from integration of the acquired subsidiaries into the Group. The table below presents
movements in the carrying amount of goodwill.

US$ million

AAtt 3311 DDeecceemmbbeerr 22001177

Sale of subsidiaries (Note 12)

Translation difference

AAtt 3311 DDeecceemmbbeerr 22001188

Sale of subsidiaries (Note 12)

Impairment of Large diameter pipes

Translation difference

AAtt 3311 DDeecceemmbbeerr 22001199

Impairment

Large diameter pipes

Oil Country Tubular Goods

Translation difference

AAtt 3311 DDeecceemmbbeerr 22002200

GGrroossss

aammoouunntt

$$ 22,,440033
(112)
(70)

$$ 22,,222211

(63)

–

IImmppaaiirrmmeenntt

lloosssseess

$$ ((11,,448866))
112
17

$$ ((11,,335577))

(300)

(4)

$$ 22,,119922

$$ ((11,,559988))

–

(65)

(67)

(12)

$$ 22,,119999

$$ ((11,,774422))

CCaarrrryyiinngg

aammoouunntt

$$ 991177
–
(53)

$$ 886644

–

(300)

$$ 559944

(65)

(67)

(5)

$$ 445577

The carrying amount of goodwill was allocated among cash-generating units as follows at 31 December:

US$ million

EVRAZ Inc. NA/EVRAZ Inc. NA Canada

Large diameter pipes

Oil Country Tubular Goods

Long products

EVRAZ Vanady-Tula

EVRAZ Nikom, a.s.

Others

22002200

22001199

22001188

$$ 339922
––

7766

331166

2277

3355

$$ 445577

$ 525
68

141

316

$ 594

$ 799
349

134

316

29
33
3

$ 864

Annual report & accounts 2020

186 | 187

6. IMPAIRMENT OF NON-FINANCIAL ASSETS

A summary of impairment losses recognition and reversals relating to non-financial assets is presented below.

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

EVRAZ Inc. NA Canada

EVRAZ Inc. NA

Others, net

RReeccooggnniisseedd iinn pprrooffiitt oorr lloossss

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

EVRAZ Inc. NA Canada

Raspadskaya

EVRAZ Consolidated West-Siberian Metallurgical Plant

Yuzhkuzbassugol

EVRAZ Nizhny Tagil Metallurgical Plant

EVRAZ Inc. NA

Others, net

RReeccooggnniisseedd iinn pprrooffiitt oorr lloossss

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

EVRAZ Stratcor Inc.

Yuzhkuzbassugol

Evrazruda

Others, net

RReeccooggnniisseedd iinn pprrooffiitt oorr lloossss

GGooooddwwiillll aanndd
iinnttaannggiibbllee aasssseettss

PPrrooppeerrttyy,, ppllaanntt aanndd
eeqquuiippmmeenntt

$$ ((114488))

––

$$ ((114488))

((114488))

$$ ((115533))

((77))

((22))

$$ ((116622))

((116622))

GGooooddwwiillll aanndd
iinnttaannggiibbllee aasssseettss

PPrrooppeerrttyy,, ppllaanntt aanndd
eeqquuiippmmeenntt

$ (300)

–

$ (300)

(300)

$ (1)

(92)

(18)

(15)

(11)

(8)

$ (142)

(142)

GGooooddwwiillll aanndd
iinnttaannggiibbllee aasssseettss

PPrrooppeerrttyy,, ppllaanntt aanndd
eeqquuiippmmeenntt

$ –
–
–
–

$ –

–

$ (12)
(6)
(4)
(8)

$ (30)

(30)

TToottaall

$$ ((330011))

((77))

((22))

$$ ((331100))

((331100))

TToottaall

$ (301)

(92)

(18)

(15)

(11)

(8)

$ (442)

(442)

TToottaall

$ (12)
(6)
(4)
(8)

$ (30)

(30)

In 2018-2020, the Group made a write-off of certain functionally obsolete items of property, plant and equipment. In 2019, the Group decided to
postpone reopening of a coal mine MUK-96, a subsidiary of Raspadskaya. In connection with this decision the recoverable amount of mining assets
relating to this mine ($84 million) was reassessed and fully impaired.

In addition, the Group recognised impairment losses as a result of impairment testing at the level of cash-generating units. For the purpose of the
impairment testing the Group assessed the recoverable amount of each cash-generating unit to which goodwill was allocated or where indicators of
impairment were identified. In 2018-2020, the impairment tests were performed as of 30 September, the conclusions were reassessed at
31 December and no further impairment triggers were identified.

The recoverable amounts for all cash-generating units, except for Large diameter pipes in 2019, have been determined based on the calculation of
value-in-use. This valuation technique uses cash flow projections based on the actual operating results and business plans approved by management
and appropriate discount rates reflecting the time value of money and risks associated with respective cash-generating units. For the periods not
covered by management business plans, terminal value is used. The terminal value is calculated based on the cash flow projections by extrapolating
the results of the respective business plans using a zero real growth rate.

In 2019, the recoverable amount of Large diameter pipes was determined based on the calculation of fair value less costs of disposal as it was
deemed to produce a more reliable result. This valuation method was based on unobservable inputs (discounted cash flows), which represent Level 3
of the fair value hierarchy.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

6. IMPAIRMENT OF NON-FINANCIAL ASSETS (CONTINUED)

The key assumptions used by management in the impairment tests with respect to the cash-generating units to which the goodwill was allocated or
units containing intangible assets with indefinite useful lives are presented in the table below.

CCoommmmooddiittyy

PPeerriioodd ooff
ffoorreeccaasstt,, yyeeaarrss

PPrree--ttaaxx ddiissccoouunntt
rraattee,, %%

AAvveerraaggee

pprriiccee ooff ccoommmmooddiittyy
ppeerr ttoonnnnee iinn tthhee nneexxtt
rreeppoorrttiinngg yyeeaarr

RReeccoovveerraabbllee
aammoouunntt ooff CCGGUU aatt
3300 SSeepptteemmbbeerr,,

CCaarrrryyiinngg aammoouunntt
ooff CCGGUU bbeeffoorree
iimmppaaiirrmmeenntt aatt
3300 SSeepptteemmbbeerr**,,

UUSS$$ mmiilllliioonn

22002200

22001199

22002200

22001199

22002200

22001199

22002200

22001199

22002200

22001199

Steel North America

Large diameter pipes

steel products

Oil Country Tubular Goods

steel products

Long products

EVRAZ Vanady-Tula

EVRAZ Nikom, a.s.

steel products

vanadium
products

ferrovanadium
products

9.58

9.32

$1,373

$ 1,112

10.17

10.05

9.65

9.90

$1,121

$ 1,127

$799

$ 720

312

279

865

567

464

623

12.22

12.55

$17,548

$ 21,452

575

712

13.71

10.48

$18,569

$ 21,371

546

346

553

867

356

528

* Carrying amounts represent the sum of net book values of property, plant and equipment, intangible assets and goodwill recorded in the balance
sheets at 30 September excluding an impairment recognised in the 1st half of the reporting year.

In addition, the Group determined that there were indicators of impairment in other cash generating units, which do not contain goodwill or intangible
assets with indefinite useful lives, and tested them for impairment using the following assumptions.

Raspadskaya

Steel North America

Flat-rolled products

Seamless pipes

PPeerriioodd ooff ffoorreeccaasstt,,
yyeeaarrss

PPrree--ttaaxx

AAvveerraaggee pprriiccee

ooff ccoommmmooddiittyy ppeerr ttoonnnnee

ddiissccoouunntt rraattee,, %%

CCoommmmooddiittyy

iinn tthhee nneexxtt rreeppoorrttiinngg yyeeaarr

10.34

coking coal

$ 55

11.48

12.04

steel products

$ 785

$ 1,139

The impairment test models take into account the impact of Section 232 tariffs imposed on imports to the US and anti-dumping duties imposed by
the US against Canada on large-diameter pipes (Note 30). The effect of the anti-dumping duties is expected to last until 2024 when it will be subject to
a five-year (sunset) review by the US Department of Commerce. The Section 232 tariffs are expected to last until 2023.

As a result of impairment testing, in 2020, the Group recognised a $234 million impairment loss with respect to the Large diameter pipes cash-
generating unit, which was allocated to goodwill ($65 million), intangible assets ($16 million) and property, plant and equipment ($153 million) and
a $67 million impairment loss with respect to the Oil Country Tubular Goods cash-generating unit, which was allocated to goodwill. The impairment was
caused by the reassessment of demand on the steel, oil and commodities markets in the USA and Canada. The value-in-use models are based on the
expectation that the demand will partially recover in 2022.

In 2019, the Group recognised a $300 million impairment loss with respect to goodwill allocated to the Large diameter pipes cash-generating unit.
The impairment was caused by the use of a more conservative valuation model due to the increased current market volatility.

The estimations of recoverable amounts are most sensitive to the following assumptions:

Discount Rates

Discount rates reflect the current market assessment of the risks specific to each cash-generating unit. The discount rates have been determined using
the Capital Asset Pricing Model and analysis of industry peers. Reasonably possible changes in discount rates could lead to an additional impairment at
Large diameter pipes, Oil Country Tubular Goods, Seamless pipes and Nikom. If discount rates were 10% higher, this would lead to an additional
impairment of $81 million.

Sales and Purchases Prices

The price assumptions for the products sold and purchased by the Group were estimated based on industry research using analysts’ views published
by BCS, Citi, CRU, Fitch Solutions, Goldman Sachs, J.P. Morgan, Morgan Stanley, Renaissance Capital, Sberbank during the period from July to
November 2020. The Group expects that the nominal prices will fluctuate with a compound annual growth rate of (6.4)-6.4% in 2021 – 2025 and 2%
in 2026 and thereafter. Reasonably possible changes in sales and purchases prices could lead to an additional impairment at Large diameter pipes,
Oil Country Tubular Goods and Seamless pipes. If the prices assumed for 2021 and 2022 in the impairment test were 10% lower, this would lead to an
additional impairment of $100 million.

Annual report & accounts 2020

188 | 189

6. IMPAIRMENT OF NON-FINANCIAL ASSETS (CONTINUED)

Sales Volumes

Management assumed that the sales volumes of steel products in 2021 will change by (12)%-3% and future dynamics will be driven by a gradual
market recovery and removal of anti-dumping duties allowing the Group to utilise assets’ capacities to a greater extent. Reasonably possible changes in
sales volumes could lead to an additional impairment at Large diameter pipes and Oil Country Tubular Goods. If the sales volumes were 10% lower
than those assumed for 2021 and 2022 in the impairment test, this would lead to an additional impairment of $18 million.

Cost Control Measures

The recoverable amounts of cash-generating units are based on the business plans approved by management. A reasonably possible deviation in cost
from these plans could lead to an additional impairment at Large diameter pipes, Oil Country Tubular Goods, Seamless pipes, Flat-rolled products and
Nikom. If the actual costs were 10% higher than those assumed for 2021 and 2022 in the impairment test, this would lead to an additional impairment
of $134 million.

The impact of reasonably possible changes in assumptions is summarised in the table below.

US$ million

Nikom

Steel North America

Large diameter pipes

Oil Country Tubular Goods

Flat-rolled products

Seamless pipes

Sensitivity Analysis

DDiissccoouunntt rraatteess

SSaalleess pprriicceess

SSaalleess vvoolluummeess

CCoosstt ccoonnttrrooll mmeeaassuurreess

$ (2)

(39)

(29)

–

(11)

–

(66)

(28)

–

(6)

–

(16)

(2)

–

$ (12)

(75)

(34)

(4)

(9)

$$ ((8811))

$$ ((110000))

$$ ((1188))

$$ ((113344))

For the cash-generating units, which were not impaired in the reporting period and for which the reasonably possible changes could lead to impairment,
the recoverable amounts would become equal to their carrying amounts if the assumptions used to measure the recoverable amounts changed by
the following percentages:

Nikom

Steel North America

Flat-rolled products

Seamless pipes

7. INCOME AND EXPENSES

DDiissccoouunntt rraatteess

SSaalleess pprriicceess

SSaalleess vvoolluummeess

CCoosstt ccoonnttrrooll mmeeaassuurreess

6.7%

–

1.2%

–

(2.0)%

–

3.0%

9.5%

1.5%

Cost of revenues, selling and distribution costs, general and administrative expenses include the following for the years ended 31 December:

US$ million

Cost of inventories recognised as expense

Staff costs, including social security taxes

Depreciation, depletion and amortisation

22002200

$$ ((33,,449955))

((11,,333311))

((660055))

22001199

$ (4,595)

(1,464)

(578)

22001188

$ (4,580)

(1,326)

(542)

In 2020, 2019 and 2018, the Group recognised expense on allowance for net realisable value in the amount of $(2) million, $(4) million and $Nil,
respectively.

Staff costs include the following:

US$ million

Wages and salaries

Social security costs

Net benefit expense

Share-based awards

Other compensations

22002200

$$ 995588

225577

3377

1111

6688

22001199

$ 1,047

274

22001188

$ 968

245

$$ 11,,333311

$ 1,464

$ 1,326

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

7. INCOME AND EXPENSES (CONTINUED)

The average number of staff employed under contracts of service was as follows:

Steel

Steel, North America

Coal

Other operations

Unallocated

The major components of other operating expenses were as follows:

US$ million

Stoppage of production, including termination benefits

Restoration works and casualty compensations in connection with accidents

Other

Interest expense consisted of the following for the years ended 31 December:

US$ million

Bank interest

Interest on bonds and notes

Interest on lease liabilities (Note 25)

Net interest expense on employee benefits obligations (Note 23)

Discount adjustment on provisions (Note 24)

Other

22002200

4455,,333322

33,,119999

1155,,444400

883377

22,,553311

6677,,333399

22002200

$$ ((3377))

((22))

((2266))

$$ ((6655))

22002200

$$ ((6633))

((222288))

((66))

((1111))

((1177))

((33))

22001199

44,512

4,295

14,655

927

2,345

66,734

22001199

$ (20)

(3)

(31)

$ (54)

22001199

$ (60)

(231)

(8)

(13)

(18)

(6)

22001188

45,282

3,877

13,505

882

2,344

65,890

22001188

$ (17)

(3)

(35)

$ (55)

22001188

$ (74)

(248)

–

(13)

(16)

(8)

$$ ((332288))

$ (336)

$ (359)

Interest income consisted of the following for the years ended 31 December:

US$ million

Interest on bank accounts and deposits

Interest on loans and accounts receivable

Other

22002200

$$ 55

––

$$ 66

Gain/(loss) on financial assets and liabilities included the following for the years ended 31 December:

US$ million

Gain/(loss) on extinguishment of debts (Notes 22, 25)

Gain/(loss) on derivatives not designated as hedging instruments (Note 25)

Realised gain/(loss) on hedging instruments (Note 25)

Net gains/(losses) on cash flow hedges recycled to profit or loss

Other

22002200

$$ 22

((6699))

––

((44))

$$ ((7711))

22001199

$ 7

–

$ 8

22001199

$ (27)

(23)

(4)

$ 17

22001188

$ 9

$ 18

22001188

$ (1)

–

$ 13

In 2020, the Group’s costs relating to the COVID-19 pandemic included contributions to funds and hospitals, payments to employees during sick leave,
laboratory testing, purchase of medical supplies and equipment. These costs in the total amount of $25 million were recorded in Cost of revenue,
General and administrative expenses, Social expenses, Other operating expenses. Also in 2020 the Canadian subsidiaries received $19 million of
the Canada Emergency Wage Subsidy. This income-related government grant reduced the amounts of staff costs and the related expense captions of
the consolidated statement of operations.

Operating costs incurred during production stoppages for an extended period of time, such as preparatory works for stoppage of workshops,
maintenance expenses relating to the idle assets, termination benefits for the dismissed employees or compensations to those who were on temporary
leave, have been classified as “stoppage of production” costs within other operating expenses.

Annual report & accounts 2020

190 | 191

8. INCOME TAXES

The Group’s income was subject to tax at the following tax rates:

Russia

Canada

Cyprus

Czech Republic

Italy

Switzerland

Ukraine

United Kingdom

USA

22002200

22001199

22001188

2200..0000%%

aanndd 1166..5500%%

20.00%

and 16.50%

20.00%

and 16.50%

2255..0099%%

1122..5500%%

1199..0000%%

––

99..1100%%

––

1199..0000%%

2244..5577%%

26.08%

12.50%

19.00%

27.90%

9.62%

18.00%

19.00%

24.87%

26.32%

12.50%

19.00%

27.90%

9.18%

18.00%

19.00%

24.69%

In 2018, EVRAZ Nizhny Tagil Metallurgical Plant completed capital construction works, which make it eligible for investment tax credit from the regional
government. Income tax rate was reduced from 20% to 16.5% for a period from 2018 to 2022. The Group determined that the investment tax credit is
in the scope of IAS 12 “Income taxes”. As a result, in 2020, 2019 and 2018, EVRAZ Nizhny Tagil Metallurgical Plant and other subsidiaries included in
the group of consolidated taxpayers received a current income tax benefit amounting to $28 million, $33 million and $37 million, respectively.

Major components of income tax expense for the years ended 31 December were as follows:

US$ million

Current income tax expense
Adjustment in respect of income tax of previous years
Deferred income tax benefit/(expense) relating to origination and reversal of
temporary differences
Deferred income tax recognised directly in other comprehensive income
Income tax (expense)/benefit reported in the consolidated statement of
operations

22002200

$$ ((557755))

((44))

114444

((22))

$$ ((443377))

22001199

$ (540)

(6)

22001188

$ (679)

(4)

(54)

$ (537)

$ (731)

The major part of income taxes is paid in the Russian Federation. A reconciliation of income tax expense applicable to profit before income tax using
the Russian statutory tax rate to income tax expense as reported in the Group’s consolidated financial statements for the years ended 31 December is
as follows:

US$ million

Profit/(loss) before income tax

At the Russian statutory income tax rate of 20%

Adjustment in respect of income tax of previous years

Current income tax benefit from investment tax credit

Other tax credits recognised/(utilised)

Current tax on dividends distributed by the Group’s subsidiaries

Change in deferred tax on undistributed earnings of the Group’s subsidiaries

Effect of non-deductible expenses and other non-temporary differences

Unrecognised temporary differences recognition/reversal

Effect of the difference in tax rates in countries other than the Russian

Federation

Share of profits in joint ventures and associates

Income tax (expense)/benefit reported in the consolidated statement of

operations

22002200

$$ 11,,229955

((225599))

((44))

2288

1166

((221133))

((9955))

7700

1122

––

22001199

$ 902

(180)

–

(178)

(19)

(96)

(130)

22001188

$ 3,201

(640)

(4)

–

(53)

(35)

(37)

(58)

$$ ((443377))

$ (537)

$ (731)

As of 31 December 2020, the Group accrued deferred income taxes in respect of undistributed earnings of the Group’s subsidiaries in the amount of
$46 million (2019: $54 million, 2018: $35 million). The current tax rate on intra-group dividend income varies from 0% to 15%. The temporary
differences associated with investments in subsidiaries were not recognised as the Group is able to control the timing of the reversal of these
temporary differences and does not intend to reverse them in the foreseeable future. At 31 December 2020, the aggregate amount of such temporary
differences, for which deferred tax liabilities have not been recognised, amounted to $63 million (2019: $59 million, 2018: $101 million).

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

8. INCOME TAXES (CONTINUED)

In the context of the Group’s current structure, tax losses and current tax assets of the different companies may not be set off against current tax
liabilities and taxable profits of other companies in the same jurisdiction, except for the companies registered in Cyprus, Russia, the USA and
the United Kingdom where group relief and tax consolidation can be applied. As of 31 December 2020, the unused tax losses carried forward
approximated $10,503 million (2019: $8,620 million, 2018: $9,321 million). The Group recognised deferred tax assets of $275 million (2019:
$234 million, 2018: $199 million) in respect of unused tax losses. This includes $172 million (2019: 141 million, 2018: $124 million) in respect of
unused tax losses in Canada which expire after 20 years if not utilised. Deferred tax assets in the amount of $2,244 million (2019: $1,878 million,
2018: $2,287 million) have not been recorded as it is not probable that sufficient taxable profits will be available in the foreseeable future to offset
these losses. Tax losses of $9,071 million (2019: $7,592 million, 2018: $8,492 million) for which deferred tax assets were not recognised arose in
companies registered in Canada, Cyprus, Italy, Kazakhstan, Luxembourg, Russia, Ukraine, the United Kingdom and the USA. Losses in the amount of
$8,975 million (2019: $7,499 million, 2018: $8,399 million) are available indefinitely for offset against future taxable profits of the companies in
which the losses arose and $96 million will expire within 10 years (2019: $93 million, 2018: $93 million).

Deferred income tax assets and liabilities and their movements for the years ended 31 December were as follows:

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

Deferred income tax liabilities:

Valuation and depreciation of property,
plant and equipment
Valuation and amortisation of intangible
assets

Other

Deferred income tax assets:

Tax losses available for offset

Accrued liabilities

Impairment of accounts receivable

Other

Net deferred income tax asset

Net deferred income tax liability

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

Deferred income tax liabilities:

Valuation and depreciation of property,
plant and equipment
Valuation and amortisation of intangible
assets

Other

Deferred income tax assets:

Tax losses available for offset

Accrued liabilities

Impairment of accounts receivable

Other

Net deferred income tax asset

Net deferred income tax liability

CChhaannggee
rreeccooggnniisseedd iinn
ssttaatteemmeenntt ooff
ooppeerraattiioonnss

CChhaannggee
rreeccooggnniisseedd iinn
ootthheerr
ccoommpprreehheennssiivvee
iinnccoommee

CChhaannggee dduuee ttoo
ddiissppoossaall ooff
ssuubbssiiddiiaarriieess

TTrraannssllaattiioonn
ddiiffffeerreennccee

OOtthheerr
mmoovveemmeennttss

((5577))

((1122))

((4411))

((111100))

4455

((33))

((88))

((22))

3322

9911

((5511))

––

((6600))

((11))

((99))

((7700))

((44))

((1133))

((33))

((22))

((2222))

––

((4488))

––

CChhaannggee
rreeccooggnniisseedd iinn
ssttaatteemmeenntt ooff
ooppeerraattiioonnss

CChhaannggee
rreeccooggnniisseedd iinn
ootthheerr
ccoommpprreehheennssiivvee
iinnccoommee

CChhaannggee dduuee ttoo
ddiissppoossaall ooff
ssuubbssiiddiiaarriieess

TTrraannssllaattiioonn
ddiiffffeerreennccee

OOtthheerr
mmoovveemmeennttss

(3)

(9)

(28)

–

(1)

–

(1)

–

(6)

–

(6)

(7)

(1)

–

(7)

(1)

–

22002200

$$ 440022

3300

9966

552288

227755

111155

112266

552200

224455

$$ 225533

22001199

$ 519

146

708

234

129

130

508

152

$ 352

22001199

$$ 551199

4433

114466

770088

223344

112299

1155

113300

550088

115522

$$ 335522

22001188

$ 469

615

199

152

449

$ 258

Other movements in deferred tax assets and liabilities represent adjustments in connection with the adoption of IFRS 16 “Leases” (Note 2).

Annual report & accounts 2020

192 | 193

8. INCOME TAXES (CONTINUED)

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

Deferred income tax liabilities:

Valuation and depreciation of property,
plant and equipment
Valuation and amortisation of intangible
assets
Other

Deferred income tax assets:

Tax losses available for offset

Accrued liabilities

Impairment of accounts receivable

Other

Net deferred income tax asset

Net deferred income tax liability

22001188

$ 469

96
615

199
95
3
152
449
92

$ 258

CChhaannggee
rreeccooggnniisseedd iinn
ssttaatteemmeenntt ooff
ooppeerraattiioonnss

CChhaannggee
rreeccooggnniisseedd iinn
ootthheerr
ccoommpprreehheennssiivvee
iinnccoommee

CChhaannggee dduuee ttoo
ddiissppoossaall ooff
ssuubbssiiddiiaarriieess

TTrraannssllaattiioonn
ddiiffffeerreennccee

OOtthheerr
mmoovveemmeennttss

(4)

(8)

27
15

(42)
(15)
(7)
31
(33)
(65)

(17)

–

–
–

–
(6)
–
–
(6)
(4)

–

(1)
–
–
–
(1)
(1)

–

(73)

(4)

(11)
(88)

(25)
(10)
(2)
(7)
(44)
(11)

(55)

–

–
–
–

–

22001177

$ 546

80
688

267
126
12
128
533
173

$ 328

9. PROPERTY, PLANT AND EQUIPMENT

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

US$ million

Cost

Land

Buildings and constructions

Machinery and equipment

Transport and motor vehicles

Mining assets

Other assets

Assets under construction

Accumulated depreciation, depletion and impairment losses

Buildings and constructions

Machinery and equipment

Transport and motor vehicles

Mining assets

Other assets

Government grants

22002200

22001199

22001188

$$ 9977

11,,778866

44,,559955

333333

22,,112266

3366

770077

99,,668800

((990033))

((33,,005511))

((220077))

((11,,115522))

((2266))

((55,,333399))

((2277))

$ 102

1,899

4,758

369

2,468

681

10,311

(943)

(2,904)

(200)

(1,308)

(25)

(5,380)

(6)

$ 100

1,752

4,302

226

2,084

378

8,877

(857)

(2,647)

(145)

(998)

(28)

(4,675)

–

$$ 44,,331144

$ 4,925

$ 4,202

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

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

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

At 31 December 2019, cost, net of

accumulated depreciation

Additions
Assets put into operation
Disposals
Depreciation and depletion charge
Impairment losses recognised in statement

of operations

Impairment losses reversed through

statement of operations

Change in site restoration and
decommissioning provision

Government grants
Translation difference
At 31 December 2020, cost, net of

accumulated depreciation

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

At 31 December 2018, cost, net of

accumulated depreciation

IFRS 16 adoption: recognition of right-of-

use assets (Note 2)

At 1 January 2019, cost, net of
accumulated depreciation

Additions
Assets put into operation
Assets acquired in business combinations
Disposals
Depreciation and depletion charge
Impairment losses recognised in statement

of operations

Impairment losses reversed through

statement of operations

Transfer to assets held for sale
Change in site restoration and
decommissioning provision

Government grants
Translation difference
At 31 December 2019, cost, net of

accumulated depreciation

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

At 31 December 2017, cost, net of
accumulated depreciation
Additions
Assets put into operation
Disposals
Depreciation and depletion charge
Impairment losses recognised in statement
of operations
Impairment losses reversed through
statement of operations
Transfer to assets held for sale
Change in site restoration and
decommissioning provision
Translation difference
At 31 December 2018, cost, net of
accumulated depreciation

BBuuiillddiinnggss

LLaanndd

aanndd ccoonnssttrruuccttiioonnss

MMaacchhiinneerryy aanndd
eeqquuiippmmeenntt

TTrraannssppoorrtt aanndd
mmoottoorr vveehhiicclleess

MMiinniinngg

aasssseettss

OOtthheerr

aasssseettss

AAsssseettss uunnddeerr
ccoonnssttrruuccttiioonn

TToottaall

$$ 110022

$$ 995566

$$ 11,,885544

$$ 116699

$$ 11,,116600

$$ 99

$$ 667755

$$ 44,,992255

––
––
––
––

––

––
((55))

––
112288
((11))
((7788))

––

––
((112222))

77
440011
((77))
((335566))

((116633))

––

––
((119933))

22
2244
––
((4444))

––

––
((2255))

––
6688
––
((6644))

((33))

––
((118899))

––
33
––
((22))

––

––
––

772255
((662244))
––
––

((33))

––

((2200))
((7744))

773344
––
((88))
((554444))

((116699))

((33))

((2200))
((660088))

$$ 9977

$$ 888833

$$ 11,,554444

$$ 112266

$$ 997744

$$ 1100

$$ 668800

$$ 44,,331144

BBuuiillddiinnggss

LLaanndd

aanndd ccoonnssttrruuccttiioonnss

MMaacchhiinneerryy aanndd
eeqquuiippmmeenntt

TTrraannssppoorrtt aanndd
mmoottoorr vveehhiicclleess

MMiinniinngg

aasssseettss

OOtthheerr

aasssseettss

AAsssseettss uunnddeerr
ccoonnssttrruuccttiioonn

TToottaall

$ 100

$ 895

$ 1,655

$ 81

$ 1,086

–

$ 100

$ 907

$ 1,695

$ 149

$ 1,086

1
–
4
(3)
–

–

(4)

–

–
4

–
50
–
(1)
(82)

(13)

(8)

–
90

11
387
–
(6)
(331)

(25)

–
143

4
46
–
–
(46)

–

(2)

–

–
18

–
66
–
–
(87)

(101)

–

–
131

$ 7

–

$ 7

–
6
–
–
(4)

–

–
–

$ 378

$ 4,202

–

120

$ 378

$ 4,322

828
(555)
–
(4)
–

(10)

–

(6)
41

844
–
4
(14)
(550)

(149)

(39)

(6)
427

$ 102

$ 956

$ 1,854

$ 169

$ 1,160

$ 9

$ 675

$ 4,925

BBuuiillddiinnggss

LLaanndd

aanndd ccoonnssttrruuccttiioonnss

MMaacchhiinneerryy aanndd
eeqquuiippmmeenntt

TTrraannssppoorrtt aanndd
mmoottoorr vveehhiicclleess

MMiinniinngg

aasssseettss

OOtthheerr

aasssseettss

AAsssseettss uunnddeerr
ccoonnssttrruuccttiioonn

TToottaall

$ 107

$ 926

$ 1,906

$ 87

$ 1,349

$ 9

$ 549

$ 4,933

–
31
(1)
(23)

–

–
58
(2)
(82)

(15)

–

(1)

(13)

$ 81

(227)

$ 1,086

–
2
–
(3)

–

(1)

$ 7

579
(665)
–
–

(8)

–

(10)

–

(67)

579
–
(19)
(501)

(37)

(65)

(5)

(690)

$ 378

$ 4,202

–
–
–
–

–

–
224
(1)
(80)

(4)

–

(20)

(5)

(7)

$ 100

(145)

$ 895

350
(15)
(313)

(10)

(35)

(230)

$ 1,655

Annual report & accounts 2020

194 | 195

9. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Assets under construction include prepayments to constructors and suppliers of property, plant and equipment in the amount of $22 million,
$77 million and $36 million as of 31 December 2020, 2019 and 2018, 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).

The amount of borrowing costs capitalised during the year ended 31 December 2020 was $Nil (2019: $Nil, 2018: $1 million).

Right-of-Use Assets

In 2020 and 2019, the movement in right-of-use assets were as follows:

US$ million

At 1 January 2019, assets under finance

leases, cost, net of accumulated depreciation

Newly recognised right-of-use assets
Total right-of-use assets at 1 January 2019
Additions
Purchase of right-of-use assets
Depreciation charge
Transfer to assets held for sale
Translation difference
At 31 December 2019, cost, net of

accumulated depreciation

Additions
Disposals
Depreciation charge
Impairment
Translation difference
At 31 December 2020, cost, net of

accumulated depreciation

BBuuiillddiinnggss

LLaanndd

aanndd
ccoonnssttrruuccttiioonnss

MMaacchhiinneerryy aanndd
eeqquuiippmmeenntt

TTrraannssppoorrtt aanndd
mmoottoorr vveehhiicclleess

TToottaall

$ 3

–
$ 3
–
(3)
–
–
–

$$ ––

––
––
––
––
––

$ 1

12
$ 13
–
(1)
(1)
–
–

$$ 1111

––
––
((22))
––
––

$ 3

40
$ 43
11
–
(7)
–
1

$$ 4488

77
((22))
((88))
((22))
((11))

$ –

68
$ 68
4
–
(22)
(2)
8

$$ 5566

22
––
((1199))
––
((88))

$ 7

120
$ 127
15
(4)
(30)
(2)
9

$$ 111155

99
((22))
((2299))
((22))
((99))

$$ ––

$$ 99

$$ 4422

$$ 3311

$$ 8822

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

Assets in Operating Lease

The Group acts as a lessor in some operating lease contracts. The carrying value of assets in operating lease at 31 December 2020 and 2019 was
$31 million and $66 million, respectively, the main part of which relates to railroad cars representing the right-of-use assets in sublease.

US$ million

At 31 December 2020, cost, net of

accumulated depreciation

At 31 December 2019, cost, net of

accumulated depreciation

BBuuiillddiinnggss

LLaanndd

aanndd
ccoonnssttrruuccttiioonnss

MMaacchhiinneerryy aanndd
eeqquuiippmmeenntt

TTrraannssppoorrtt aanndd
mmoottoorr vveehhiicclleess

TToottaall

$$ ––

$ 1

$$ 33

$ 5

$$ 11

$ 8

$$ 2277

$ 52

$$ 3311

$ 66

In 2020 and 2019, rental income amounted to $25 million and $32 million, respectively, including $19 million and $25 million, respectively, of income
from subleasing of right-of-use assets.

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

US$ million

22002211

22002222

22002233

22002244

22002255

IInn mmoorree tthhaann

55 yyeeaarrss

Lease payments under operating leases

$$ 2222

$$1122

$$ 22

$$ 1111

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

US$ million

22002200

22002211

22002222

22002233

22002244

IInn mmoorree tthhaann
55 yyeeaarrss

Lease payments under operating leases

$ 25

$ 26

$ 15

$ 3

$ 20

TToottaall

$$ 5511

TToottaall

$ 92

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

10. INTANGIBLE ASSETS OTHER THAN GOODWILL

Intangible assets consisted of the following as of 31 December:

US$ million

Cost:

Customer relationships

Water rights and environmental permits

Contract terms

Other

Accumulated amortisation and impairment:

Customer relationships

Water rights and environmental permits

Contract terms

Other

22002200

22001199

22001188

$$ 668866

5577

2200

6644

882277

((661177))

((1133))

((1144))

((4455))

((668899))

$$ 113388

$ 678

826

(567)

(13)

(15)

(46)

(641)

$ 656

798

(525)

(13)

(11)

(43)

(592)

$ 185

$ 206

As of 31 December 2020, 2019 and 2018, water rights and environmental permits with a carrying value of $44 million had an indefinite useful life.

The movement in intangible assets was as follows:

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

CCuussttoommeerr

rreellaattiioonnsshhiippss

WWaatteerr rriigghhttss aanndd
eennvviirroonnmmeennttaall

ppeerrmmiittss

CCoonnttrraacctt

tteerrmmss

At 31 December 2019, cost, net of accumulated amortisation

$$ 111111

$$ 4444

Additions

Amortisation charge

Impairment

Translation difference

––

((2277))

((1166))

––

At 31 December 2020, cost, net of accumulated amortisation

$$ 6699

$$ 4444

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

At 31 December 2018, cost, net of accumulated amortisation

Additions

Amortisation charge

Translation difference

CCuussttoommeerr

rreellaattiioonnsshhiippss

$ 131

–

(26)

WWaatteerr rriigghhttss aanndd
eennvviirroonnmmeennttaall

ppeerrmmiittss

$ 44

–

At 31 December 2019, cost, net of accumulated amortisation

$ 111

$ 44

$$ 99

––

((22))

––

((11))

$$ 66

CCoonnttrraacctt

tteerrmmss

$ 10

–

(2)

$ 9

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

CCuussttoommeerr

rreellaattiioonnsshhiippss

WWaatteerr rriigghhttss aanndd
eennvviirroonnmmeennttaall
ppeerrmmiittss

CCoonnttrraacctt

tteerrmmss

At 31 December 2017, cost, net of accumulated amortisation

$ 180

$ 44

$ 15

Additions

Amortisation charge

Translation difference

–

(36)

(13)

–

(2)

(3)

At 31 December 2018, cost, net of accumulated amortisation

$ 131

$ 44

$ 10

OOtthheerr

TToottaall

$$ 2211

$$ 118855

((66))

––

((33))

((3355))

((1166))

((33))

$$ 1199

$$ 113388

OOtthheerr

$ 21

(6)

–

TToottaall

$ 206

(34)

$ 21

$ 185

OOtthheerr

$ 20

(6)

(3)

$ 21

TToottaall

$ 259

(44)

(19)

$ 206

Annual report & accounts 2020

196 | 197

11. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

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

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

US$ million

IInnvveessttmmeenntt aatt 3311 DDeecceemmbbeerr 22001177

Share of profit/(loss)

Dividends paid

Translation difference

IInnvveessttmmeenntt aatt 3311 DDeecceemmbbeerr 22001188

Additional investments

Share of profit/(loss)

Dividends paid

Translation difference

IInnvveessttmmeenntt aatt 3311 DDeecceemmbbeerr 22001199

Disposal of investments

Share of profit/(loss)

Dividends paid

Translation difference

IInnvveessttmmeenntt aatt 3311 DDeecceemmbbeerr 22002200

TTiimmiirr IIrroonn OOrree PPrroojjeecctt

TTiimmiirr

$$ 2211
(1)
–

(3)

$$ 1177

–

(1)

–

$$ 1177

–

(3)

$$ 1144

SSttrreeaammccoorree

OOtthheerr aassssoocciiaatteess

$$ 4477
9
–

(9)

$$ 4477

–

$$ 6633

–

(10)

$$ 5544

$$ 1111
1
(1)

(1)

$$ 1100

–

(2)

$$ 1122

(1)

–

$$ 1111

TToottaall

$$ 7799
9
(1)

(13)

$$ 7744

(2)

$$ 9922

(1)

(13)

$$ 7799

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

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.

In 2019 and 2018, the Group paid 480 million roubles ($8 million) and 500 million roubles ($9 million), respectively, of purchase consideration and
$1 million and $2 million, respectively, of interest charges. Previously, the Group paid the principal of 3,970 million roubles ($104 million) in total.
In addition, the Group paid interest charges on the liability.

At 31 December 2018, trade and other accounts payable included liabilities relating to this acquisition in the amount of $8 million. In January 2019,
the liability was fully settled.

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

US$ million

Mineral reserves and property, plant and equipment

Other non-current assets

TToottaall aasssseettss

Current liabilities

TToottaall lliiaabbiilliittiieess

NNeett aasssseettss

NNeett aasssseettss aattttrriibbuuttaabbllee ttoo 5511%% oowwnneerrsshhiipp iinntteerreesstt

22002200

$$ 4466
66

5522

2244

2288

$$ 1144

22001199

$ 54

22001188

$ 48

$ 17

In 2020, 2019 and 2018, Timir’s statement of operations included only other income and expenses amounting to $Nil, $(1) million and $(2) million,
respectively.

At 31 December 2020, 2019 and 2018 Timir owed to the Group $9 million, $9 million and $7 million, respectively, which were included in
the receivables from related parties caption. The amounts represent a loan bearing interest of 6.45% per annum.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

11. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES (CONTINUED)

SSttrreeaammccoorree

The Group owns a 50% interest in Streamcore (Cyprus), a joint venture established for the purpose of exercising joint control over facilities for scrap
procurement and processing in Siberia, Russia.

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

US$ million

Property, plant and equipment

Other non-current assets

Inventories

Accounts receivable

TToottaall aasssseettss

Deferred income tax liabilities

Current liabilities

TToottaall lliiaabbiilliittiieess

NNeett aasssseettss

NNeett aasssseettss aattttrriibbuuttaabbllee ttoo 5500%% oowwnneerrsshhiipp iinntteerreesstt

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

US$ million

Revenue

Cost of revenue

Other expenses, including income taxes

NNeett pprrooffiitt

GGrroouupp’’ss sshhaarree ooff pprrooffiitt ooff tthhee jjooiinntt vveennttuurree

12. DISPOSAL GROUPS HELD FOR SALE

22002200

$$ 2233

9955

9966

221177

110088

110099

110088

$$ 5544

22002200

$$ 338855

((336677))

((1166))

22001199

$ 25

–

129

125

$ 63

22001199

$ 502

(478)

(10)

22001188

$ 21

–

151

181

$ 94

$ 47

22001188

$ 579

(553)

(8)

$ 18

$ 9

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 2018–2020.

US$ million

Property, plant and equipment

Goodwill

Other non-current assets

Inventories

Accounts receivable

Cash and cash equivalents

TToottaall aasssseettss

Employee benefits

Other non-current liabilities

Current liabilities

TToottaall lliiaabbiilliittiieess

NNoonn--ccoonnttrroolllliinngg iinntteerreessttss

NNeett aasssseettss

22002200

$$ ––

––

$$ ––

22001199

$ 39

–

168

110

130

–

$38

22001188

$ 65

–

153

–

147

168

–

$ (15)

Annual report & accounts 2020

198 | 199

12. DISPOSAL GROUPS HELD FOR SALE (CONTINUED)

The net assets of disposal groups sold in 2018–2020 related to the following reportable segments:

US$ million

AAsssseettss ccllaassssiiffiieedd aass hheelldd ffoorr ssaallee

Steel

Coal

Other operations

LLiiaabbiilliittiieess ddiirreeccttllyy aassssoocciiaatteedd wwiitthh aasssseettss ccllaassssiiffiieedd aass hheelldd ffoorr ssaallee

Steel

Coal

Other operations

NNoonn--ccoonnttrroolllliinngg iinntteerreessttss

Steel

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

US$ million

Net cash disposed of with subsidiaries

Cash received

Tax and transaction costs paid

NNeett ccaasshh iinnffllooww

The disposal groups sold during 2018–2020 are described below.

Stratcor Inc.

22002200

$$ ––

––

22002200

$$ ––
1111

––

1111

22001199

$ 168

155

–

130

124

–

22001199

$ (47)
99

(8)

22001188

$ 153

153

–

168

–

22001188

$ (2)
54

–

$ 52

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

Evraztrans Ukraine

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.

The Group recognised a $(36) million loss on sale of the subsidiary, including $(37) million of cumulative exchange losses reclassified from other
comprehensive income to the consolidated statement of operations. 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 $Nil. At 31 December 2019, the sale
consideration was unsettled. In 2020, it was fully received in cash.

Yartsevo Rolling Mill

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
the bankruptcy proceedings and in the 1st half of 2019 the Group impaired the non-current financial asset relating to the mill, recognising a $56 million
loss, which was recorded in the Impairment of non-current financial assets caption of the consolidated statement of operations. At 30 June 2019,
the resulting carrying value of the non-current financial asset was $21 million. In November 2019, the Group acquired property, plant and equipment
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,
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.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

12. DISPOSAL GROUPS HELD FOR SALE (CONTINUED)

Dneprovsk Metallurgical Plant

On 6 March 2018, the Group sold Dneprovsk Metallurgical Plant (Ukraine), in which it had a 97.73% ownership interest, to a third party for cash
consideration of $35 million. The consideration was payable in 2 instalments: $25 million was received upon signing of the transaction documents and
the rest was settled in December 2018. The Group received interest income on deferred consideration in the amount of $1 million.

Prior to disposal the subsidiary was included in the steel segment. The Group recognised a $(10) million loss on sale of the subsidiary, including
$(60) million of cumulative exchange losses reclassified from other comprehensive income to the consolidated statement of operations. 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 $2 million.

13. OTHER NON-CURRENT ASSETS

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

Non-current Financial Assets

US$ million

Derivatives not designated as hedging instruments (Note 25)

Trade and other receivables

Loans receivable

Receivables from related parties

Restricted deposits
Other

Other Non-current Assets

US$ million

Safety stock inventories
Defined benefit asset (Note 23)
Income tax receivable
Other

22002200

$$ 22

1188

––

$$ 2266

22002200

$$ 2288

––

$$ 4455

22001199

$ 17

–

$ 40

22001199

$ 29

$ 55

22001188

$ –

$ 91

22001188

$ 24

$ 44

Other Non-current Financial Assets

In 2018, the Group’s other non-current financial assets mainly related to a steel-rolling mill located in the Smolensk region of Russia. In 2019, these
assets were partially impaired and the remaining balance was settled by cash (Note 12).

Financial Assets Measured at Fair Value Through Other Comprehensive Income

At 31 December 2017, the Group held approximately 15% in Delong Holdings Limited (“Delong”), a flat steel producer headquartered in Beijing (China).
At that date the investments in Delong were classified as available-for-sale and measured at fair value based on market quotations of the Singapore
Exchange. At 31 December 2017, the carrying value of these investments amounted to $33 million, including a $30 million increase in the fair value
recognised in other comprehensive income in 2017.

At 1 January 2018, the Group irrevocably designated these investments as measured at fair value through other comprehensive income. For such
financial instruments all subsequent changes in fair value are reported in other comprehensive income, no impairment losses are recognised in profit
or loss and no gains or losses are recycled to profit or loss upon derecognition.

In June 2018, the Group sold its ownership interest in Delong to the major shareholder of the entity for cash consideration of $92 million. Market value
of the equity instruments at the date of sale was $71 million. Total gain, comprising the change in market value until the sale and the excess of the
sale price over the market value of the investments at the sale date, amounting to $59 million was recognised in other comprehensive income. Upon
sale the Group transferred the realised gains accumulated in other comprehensive income ($89 million) to accumulated profits.

Annual report & accounts 2020

200 | 201

14. INVENTORIES

Inventories consisted of the following as of 31 December:

US$ million

Raw materials and spare parts
Work-in-progress

Finished goods

22002200

$$ 554422

113366

440077

22001199

$ 811

185

484

22001188

$ 737

292

445

$$ 11,,008855

$ 1,480

$ 1,474

All respective inventory lines presented above are shown at lower of cost and net realisable value. As of 31 December 2020, 2019 and 2018, the net
realisable value allowance was $29 million, $39 million and $34 million, respectively.

As of 31 December 2020, 2019 and 2018, certain items of inventory with an approximate carrying amount of $414 million, $512 million and
$629 million, respectively, were pledged to banks as collateral against loans provided to the Group (Note 22).

15. TRADE AND OTHER RECEIVABLES

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

US$ million

Trade accounts receivable

Other receivables

Allowance for expected credit losses

22002200

$$ 334455

7700

441155

((3377))

$$ 337788

22001199

$ 481

580

(46)

$ 534

22001188

$ 806

877

(42)

$ 835

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

16. RELATED PARTY DISCLOSURES

Related parties of the Group include associates and joint venture partners, key management personnel and other entities that are under the control or
significant influence of the key management personnel, the Group’s ultimate parent or its shareholders. In considering each possible related party
relationship, attention is directed to the substance of the relationship, not merely the legal form.

Amounts owed by/to related parties at 31 December were as follows:

US$ million

Loans

Timir (Note 11)

Dividends receivable

Yuzhny GOK

Sale of investments

Streamcore

Trade balances

Nakhodka Trade Sea Port

Vtorresource-Pererabotka

Yuzhny GOK

Other entities

Less: allowance for expected credit losses

AAmmoouunnttss dduuee ffrroomm
rreellaatteedd ppaarrttiieess

AAmmoouunnttss dduuee ttoo
rreellaatteedd ppaarrttiieess

22002200

22001199

22001188

22002200

22001199

22001188

$$ 99

$ 9

$ 7

$$ ––

$ –

––

1100

––

–

––

1100

2288

––

3388

––

–

122

–

$$ 1100

$ 10

$ 11

$$ 3388

$ 19

$ 122

In 2018–2020, the Group did not recognise any expense or income in relation to the expected credit losses of related parties.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

16. RELATED PARTY DISCLOSURES (CONTINUED)

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

US$ million

Genalta Recycling Inc.

Nakhodka Trade Sea Port

Vtorresource-Pererabotka

Yuzhny GOK

Other entities

SSaalleess ttoo
rreellaatteedd ppaarrttiieess

PPuurrcchhaasseess ffrroomm

rreellaatteedd ppaarrttiieess

22002200

$$ ––

––

22001199

22001188

22002200

22001199

22001188

$ –

–

$ –

–

$$ 88

7777

337766

––

$ 10

498

$ 15

569

104

$$ 1111

$ 39

$$ 446633

$ 658

$ 765

In addition to the disclosures presented in this note, some of the balances and transactions with related parties are disclosed in Notes 11, 12, 13 and
25.

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

Lanebrook Limited (“Lanebrook”) was a controlling shareholder of the Company. After the transfer of ownership interests in EVRAZ plc to
the shareholders of Lanebrook (Note 1), it represents an entity under common control by the shareholder. At 31 December 2018, the Group had other
receivables from Lanebrook, amounting to $32 million, in connection with the acquisition of a 1% ownership interest in Yuzhny GOK in 2008 (Note 18).
In 2019, these receivables were settled by cash.

Nakhodka Trade Sea Port (“NTSP”) is an entity under common control with the Group. NTSP renders handling services to the Group.

Streamcore is a joint venture of the Group. In 2019, the Group received from Streamcore an advance payment for the 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 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-operating expense caption of
the consolidated statement of operations.

Vtorresource-Pererabotka is a subsidiary of Streamcore, the Group’s joint venture. It sells scrap metal to the Group and provides scrap processing and
other services. In 2020, 2019 and 2018, the purchases of scrap metal from Vtorresource-Pererabotka amounted to $344 million (1,378,211 tonnes),
$424 million (1,640,750 tonnes) and $494 million (1,821,380 tonnes), respectively. At 31 December 2020 and 2019, $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.

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
products to Yuzhny GOK and purchased sinter from the entity. In 2019 and 2018, the volume of purchases was 755,085 tonnes and
1,344,277 tonnes, respectively. In 2019 and 2018, the Group recognised dividend income from Yuzhny GOK in the amount of $3 million and
$4 million, respectively, within the other non-operating gains/(losses) caption in the consolidated statement of operations. The dividends declared in
2018 were received by the Group in 2019.

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

Compensation to Key Management Personnel

Key management personnel include the following positions within the Group:





directors of the Company,
vice presidents,
senior management of major subsidiaries.

In 2020, 2019 and 2018, key management personnel totalled 28, 30 and 32 people, respectively. Total compensation to key management personnel
were included in general and administrative expenses in the consolidated statement of operations and consisted of the following:

US$ million

Salary
Performance bonuses
Social security taxes
Share-based payments (Note 21)
Termination benefits

22002200

$$ 1133

$$ 3311

22001199

$ 14

$ 38

22001188

$ 14

–

$ 39

Other disclosures on directors' remuneration required by Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts & Reports)
regulations 2008 are included in the Directors' Remuneration Report.

Annual report & accounts 2020

202 | 203

17. OTHER TAXES RECOVERABLE

Taxes recoverable consisted of the following as of 31 December:

US$ million

Input VAT
Other taxes

22002200

$$ 4455

113333

$$ 117788

22001199

$ 73

102

$ 175

22001188

$ 78

123

$ 201

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

18. OTHER CURRENT FINANCIAL ASSETS

Other current assets included the following as of 31 December:

US$ million

Other receivables from Lanebrook (Note 16)
Restricted deposits at banks

22002200

$$ ––

$$ 22

22001199

$ –

$ 4

19. CASH AND CASH EQUIVALENTS

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

US$ million

US dollar
Euro

Russian rouble
Other

22002200

$$ 11,,446611

3344

112244

22001199

$ 774

484

134

22001188

$ 32

$ 35

22001188

$ 273

540

215

$$ 11,,662277

$ 1,423

$ 1,067

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

20. EQUITY

SShhaarree CCaappiittaall

Number of shares

3311 DDeecceemmbbeerr

22002200

22001199

22001188

Ordinary shares, issued and fully paid

11,,550066,,552277,,229944

1,506,527,294

On 10 July 2018, EVRAZ plc reduced the nominal value of its shares from $1 to $0.05 each. The amount of the cancelled share capital
($1,432 million) became distributable reserves.

TTrreeaassuurryy SShhaarreess

Number of shares

Treasury shares

3311 DDeecceemmbbeerr

22002200

22001199

22001188

4499,,665544,,669911

54,620,233

63,177,187

In 2015, EVRAZ plc repurchased 108,458,508 of its own shares ($336 million).

In 2020, 2019 and 2018, 4,965,542 shares, 8,556,954 shares and 11,297,476 shares, respectively, were transferred to the participants of Incentive
Plans (Note 21). The cost of treasury shares transferred to the participants of Incentive Plans, amounted to $15 million, $27 million and $35 million in
2020, 2019 and 2018, respectively.

EEaarrnniinnggss ppeerr SShhaarree

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

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

22002200

22001199

22001188

Weighted average number of ordinary shares outstanding during the period

Effect of dilution: share options

WWeeiigghhtteedd aavveerraaggee nnuummbbeerr ooff oorrddiinnaarryy sshhaarreess aaddjjuusstteedd ffoorr tthhee eeffffeecctt ooff ddiilluuttiioonn

11,,445555,,005544,,661177

77,,994499,,669966

11,,446633,,000044,,331133

1,448,789,048

11,996,310

1,460,785,358

1,439,326,349

19,462,750

1,458,789,099

$$ 884488

$$ 00..5588

$ 326

$ 0.23

$ 0.22

$ 2,406

$ 1.67

$ 1.65

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

Basic earnings per share

Diluted earnings per share

DDiivviiddeennddss

Dividends declared by EVRAZ plc during 2018–2020 were as follows:

DDaattee ooff ddeeccllaarraattiioonn

TToo hhoollddeerrss

rreeggiisstteerreedd aatt

DDiivviiddeennddss ddeeccllaarreedd,,
UUSS$$ mmiilllliioonn

UUSS$$ ppeerr sshhaarree

28/02/2018

24/05/2018

08/08/2018

15/11/2018

27/02/2019

07/08/2019

26/02/2020

05/08/2020

09/03/2018

08/06/2018

17/08/2018

23/11/2018

08/03/2019

16/08/2019

06/03/2020

21/08/2020

429.6

187.6

577.3

361

577.3

508.2

581

291

0.30

0.13

0.40

0.25

0.40

0.35

0.40

0.20

Annual report & accounts 2020

204 | 205

21. SHARE-BASED PAYMENTS

In 2018-2020, the Group had several Incentive Plans under which certain senior executives and employees (“participants”) could be awarded shares
of the parent company upon vesting. These plans were adopted on 8 August 2014, 26 October 2015, 15 September 2016, 25 September 2017,
26 September 2018, 25 September 2019 and 28 September 2020.

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 the
selected group of peers. EBITDA and total shareholder return (“TSR”) are used as the key performance indicators. If the Group’s EBITDA achieves
a specific ranking in the peer group (not lower than the 7th 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 achieves a specific ranking in the peer group, then the other 50% of the shares of a particular
tranche become vested, otherwise they are forfeited. Subject to the resolution of the Remuneration Committee, EBITDA can become the only metric in
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
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.
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 will
be taken into account by adjusting the share-based expense based on the number of share options that eventually vest.

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
outstanding at 31 December 2020 are presented below:

Number of Shares of EVRAZ plc

TToottaall

IInncceennttiivvee PPllaann 22002200

IInncceennttiivvee PPllaann 22001199

IInncceennttiivvee PPllaann 22001188

IInncceennttiivvee PPllaann 22001177

March 2021

March 2022

March 2023

March 2024

3,725,939

2,436,585

2,229,714

1,530,247

1,020,164

1,530,247

466,291

699,443

699,467

–

716,893

716,978

–

1,522,591

–

9,922,485

5,100,822

1,865,201

1,433,871

1,522,591

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 a participant’s employment termination, unless otherwise determined by the Board or by a decision of the authorised person, a participant loses
the entitlement for the shares that were not awarded up to the date of termination.

There have been no modifications or cancellations to the plans during 2018–2020.

The Group accounted for share-based compensation at fair value pursuant to the requirements of IFRS 2 “Share-based Payment”. The weighted
average fair value of share-based awards granted in 2020, 2019 and 2018 was $3.23, $4.25 and $5.27 per share, respectively. The fair value of
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,
which were effective during 2018-2020:

Dividend yield (%)

Expected life (years)

Market prices of the shares of
EVRAZ plc at the grant dates

IInncceennttiivvee PPllaann
22002200

IInncceennttiivvee PPllaann
22001199

IInncceennttiivvee PPllaann
22001188

IInncceennttiivvee PPllaann
22001177

IInncceennttiivvee PPllaann
22001166

IInncceennttiivvee PPllaann
22001155

IInncceennttiivvee PPllaann
22001144

3.2 – 4.1

0.5 – 3.5

2.3 – 3.0

0.5 – 3.5

1.8 – 2.3

0.5 – 3.5

2.1 – 2.9

0.5 – 3.5

n/a

0.5 – 3.5

7.3 – 9.1

0.6 – 3.6

3.6 – 4.8

0.6 – 3.6

$4.31

$5.75

$7.36

$3.86

$1.73

$1.36

$1.68

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

Number of shares

OOuuttssttaannddiinngg aatt 11 JJaannuuaarryy

Granted during the year

Forfeited during the year

Vested and exercised during the year

OOuuttssttaannddiinngg aatt 3311 DDeecceemmbbeerr

22002200

22001199

22001188

1100,,777711,,777744

55,,110000,,882222

((998844,,556699))

((44,,996655,,554422))

99,,992222,,448855

17,755,977

2,578,803

(1,006,052)

(8,556,954)

10,771,774

27,912,610

3,143,865

(2,003,022)

(11,297,476)

17,755,977

The weighted average share price at the dates of exercise was $2.97, $7.21 and $6.82 in 2020, 2019 and 2018, respectively. The weighted average
remaining contractual life of the share-based awards outstanding as of 31 December 2020, 2019 and 2018 was 1.4, 1.1 and 1 years, respectively.

In the years ended 31 December 2020, 2019 and 2018, the expense arising from the equity-settled share-based compensations was as follows:

US$ million

Expense arising from equity-settled share-based payment transactions

22002200

$$ 1111

22001199

$ 13

22001188

$ 15

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

22. LOANS AND BORROWINGS

Short-term and long-term loans and borrowings were as follows as of 31 December:

US$ million

Bank loans

US dollar-denominated
6.50% notes due 2020
8.25% notes due 2021
6.75% notes due 2022
5.375% notes due 2023
5.25% notes due 2024

Rouble-denominated
12.95% rouble bonds due 2019
12.60% rouble bonds due 2021
7.95% rouble bonds due 2024

Unamortised debt issue costs
Interest payable

22002200

NNoonn--
ccuurrrreenntt

CCuurrrreenntt

22001199

NNoonn--
ccuurrrreenntt

CCuurrrreenntt

22001188

NNoonn--
ccuurrrreenntt

CCuurrrreenntt

$$ 11,,660088

$$ 11,,555544

$$ 5544

$ 1,404

$ 1,352

$ 52

$ 1,370

$ 1,290

$ 80

––
773355
550000
775500
770000

––
220033
227711

((1166))
8866

––
––
550000
775500
770000

––

227711

((1166))
––

––
773355
––
––
––

––
220033
––

––
8866

–
750
500
750
700

–
242
323

(18)
88

–
750
500
750
700

–
242
323

(18)
–

–
–
–
–
–

–
–
–

–
88

700
750
500
750
–

216
216
–

(20)
81

700
750
500
750
–

–
216
–

(20)
–

–
–
–
–
–

216
–
–

–
81

$$ 44,,883377

$$ 33,,775599

$$ 11,,007788

$ 4,739

$ 4,599

$ 140

$ 4,563

$ 4,186

$ 377

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

Long-term borrowings

Short-term borrowings

US dollar

Russian rouble

Euro

Canadian dollar

22002200

44..7766%%

77..2222%%

22..2233%%

22..5566%%

22001199

5.74%

9.94%

2.39%

4.08%

22001188

6.13%

12.84%

3.47%

3.87%

22002200

88..0000%%

1122..5599%%

11..0033%%

––

22001199

3.31%

7.83%

0.70%

–

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

US$ million

US dollar

Russian rouble

Canadian dollar

Euro

Other

Unamortised debt issue costs

22002200

$$ 33,,999933

776611

7755

2244

––

((1166))

22001199

$ 4,027

586

120

–

(18)

22001188

–

0.74%

–

22001188

$ 3,758

440

144

238

(20)

The movement in loans and borrowings were as follows:

US$ million

1 January

CCaasshh cchhaannggeess::

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

Repayment of bank loans and notes, including interest

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

interest

NNoonn--ccaasshh cchhaannggeess::

Change in the balance of debt issues costs paid in subsequent reporting period

Non-cash proceeds (Note 29)

Interest and other charges expensed (Note 7)

Interest capitalised (Note 9)

Accrual of premiums and other charges on early repayment of borrowings

(Note 7)

Transfer to disposal groups held for sale

Effect of exchange rate changes

31 December

$$ 44,,883377

$ 4,739

$ 4,563

22002200

$$ 44,,773399

11,,221188

((11,,330044))

((2255))

––

229911

––

((8822))

$$ 44,,883377

22001199

$ 4,563

2,805

(3,035)

–

291

–

$ 4,739

22001188

$ 5,391

1,412

(2,459)

–

322

–

(111)

$ 4,563

Annual report & accounts 2020

206 | 207

22. LOANS AND BORROWINGS (CONTINUED)

Pledged Assets

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

US$ million

Property, plant and equipment

Inventory

Issuer Substitution

22002200

$$ 4477

441144

22001199

$ 72

512

22001188

$ 67

629

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.

Issue of Notes and Bonds

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
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.

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).

Repurchase of Notes and Bonds

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

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
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.

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
bonds, the related swap contracts matured and the Group recycled $33 million of the accumulated unrecognised gains on cash flow hedges from other
comprehensive income to the statement of operations.

Compliance with Financial Covenants

Some of the loan agreements and terms and conditions of notes provide for certain covenants in respect of EVRAZ plc and its subsidiaries.
The covenants impose restrictions in respect of certain transactions and financial ratios, including restrictions in respect of indebtedness and
profitability. EBITDA used 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.

Several bank credit facilities totalling $1,458 million contain certain financial maintenance covenants. These covenants require EVRAZ plc to maintain
two key ratios, consolidated net indebtedness to 12-month consolidated EBITDA and 12-month consolidated EBITDA to adjusted 12-month
consolidated interest expense, within certain limits. 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. The terms of certain facilities also set certain limitations on
acquisitions and disposals by EVRAZ plc.

Notes due 2021, 2022, 2023 and 2024, totalling $2,685 million issued by the Group have covenants restricting the incurrence of indebtedness by
the issuer and its consolidated subsidiaries conditional on a gross leverage ratio. While the ratio level itself does not constitute a breach of covenants,
exceeding the threshold of 3.5 times triggers a restriction on incurrence of consolidated indebtedness, which is removed once the ratio goes back
below the threshold. The effect of the restriction is such that EVRAZ plc and its subsidiaries would not be allowed to increase the consolidated
indebtedness, but are allowed to refinance existing indebtedness subject to certain conditions. As of 31 December 2020, the Group’s gross leverage
ratio was below 3.5.

Several bank credit facilities totalling $126 million provide for certain covenants restricting the incurrence of indebtedness by EVRAZ North America plc
and its subsidiaries conditional on a fixed charge ratio. Once the threshold for the ratio is exceeded, it triggers restrictions on incurrence of additional
indebtedness by EVRAZ North America plc and its subsidiaries.

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

During 2020 the Group was in compliance with all financial and non-financial covenants.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

22. LOANS AND BORROWINGS (CONTINUED)

Unamortised Debt Issue Costs

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.

Unutilised Borrowing Facilities

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

US$ million

Committed

Uncommitted

Total unutilised borrowing facilities

23. EMPLOYEE BENEFITS

Russian Plans

22002200

993377

442244

$$ 11,,336611

22001199

447

1,165

$ 1,612

22001188

$ 377

1,434

$ 1,811

Certain Russian subsidiaries of the Group provide regular lifetime pension payments and lump-sum amounts payable at retirement date. These
benefits generally depend on years of service, level of remuneration and amount of pension payment under the collective bargaining agreements.
Other post-employment benefits consist of various compensations and certain non-cash benefits. The Group funds the benefits when the amounts of
benefits fall due for payment.

In addition, some subsidiaries have defined benefit plans under which contributions are made to a separately administered non-state pension fund.
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 participants’ retirement dates. At the end of the reporting year the benefit obligation was valued based on the terms of the pension plan assuming
that all defined benefit plan participants will continue to participate in the plan.

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

In October 2018, the Russian pension law was amended introducing a higher retirement age from 1 January 2019. During 2019 – 2023 the retirement
age will be gradually increased for women from 55 to 60 and for men from 60 to 65. The Group accounted for these amendments, when measuring
the post-employment benefit obligations as of 31 December 2018 and recorded the resulting decrease in the obligations in the amount of $2 million
as a part of past service costs.

US and Canadian Plans

The Group’s subsidiaries in the USA and Canada have defined benefit pension plans that cover specified eligible employees. Benefits are based on
pensionable years of service, pensionable compensation, or a combination of both depending on the individual plan. The subsidiaries also have U.S.
and Canadian supplemental retirement plans (“SERP’s”), which are non-qualified plans designed to maintain benefits for eligible employees at the plan
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
a measurement date for plan assets and obligations of 31 December.

Certain employees that were hired after specified dates are no longer eligible to participate in the defined benefit pension plans. Those employees are
instead enrolled in defined contribution plans and receive a contribution funded by the Group’s subsidiaries equal to 3–7% of annual wages, including
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
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
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
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
annually or throughout the year.

Other Plans

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

Annual report & accounts 2020

208 | 209

23. EMPLOYEE BENEFITS (CONTINUED)

DDeeffiinneedd CCoonnttrriibbuuttiioonn PPllaannss

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

US$ million

Expense under defined contribution plans

DDeeffiinneedd BBeenneeffiitt PPllaannss

22002200

$$ 225577

22001199

$ 274

22001188

$ 245

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

Except as disclosed above, in 2020 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 2020, 2019 and
2018 and amounts recognised in the consolidated statement of financial position as of 31 December 2020, 2019 and 2018 for the defined benefit
plans were as follows:

NNeett bbeenneeffiitt eexxppeennssee ((rreeccooggnniisseedd iinn tthhee ssttaatteemmeenntt ooff ooppeerraattiioonnss wwiitthhiinn ccoosstt ooff ssaalleess aanndd sseelllliinngg,, ggeenneerraall aanndd aaddmmiinniissttrraattiivvee eexxppeennsseess aanndd iinntteerreesstt
eexxppeennssee))

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

Current service cost

Net interest expense

Past service cost

Other

Net benefit expense

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

Current service cost

Net interest expense

Net actuarial gains/(losses) on other long-term employee
benefits obligation
Past service cost

Other

Net benefit expense

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

Current service cost

Net interest expense

Net actuarial gains/(losses) on other long-term employee
benefits obligation
Past service cost

Curtailment/settlement gain

Other

Net benefit expense

RRuussssiiaann

ppllaannss

$$ ((33))
((77))
((22))
––

$$ ((1122))

RRuussssiiaann

ppllaannss

$ (2)

(8)

(4)

(1)

–

UUSS

&& CCaannaaddiiaann

ppllaannss

$$ ((1188))
((44))
––
((33))

$$ ((2255))

UUSS

&& CCaannaaddiiaann

ppllaannss

$ (17)

(5)

–

(3)

OOtthheerr

ppllaannss

$$ ––
––
––
––

$$ ––

OOtthheerr

ppllaannss

$(1)

–

TToottaall

$$ ((2211))
((1111))

((22))
((33))

$$ ((3377))

TToottaall

$ (20)

(13)

(4)

(1)

(3)

$ (15)

$ (25)

$ (1)

$ (41)

OOtthheerr

ppllaannss

$–
–

–

–
–
–

$–

TToottaall

$ (21)
(13)

(1)

(1)
1
(3)

$ (38)

RRuussssiiaann

ppllaannss

UUSS

&& CCaannaaddiiaann

ppllaannss

$ (2)
(8)

(1)

–
1
–

$ (19)
(5)

–

(1)
–
(3)

$ (10)

$ (28)

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

23. EMPLOYEE BENEFITS (CONTINUED)

GGaaiinnss//((lloosssseess)) rreeccooggnniisseedd iinn ootthheerr ccoommpprreehheennssiivvee iinnccoommee

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

Return on plan assets, excluding amounts included in net

interest expense

Net actuarial gains/(losses) on post-employment benefit

obligation

Effect of asset ceiling

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

Return on plan assets, excluding amounts included in net

interest expense

Net actuarial gains/(losses) on post-employment benefit

obligation

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

Return on plan assets, excluding amounts included in net
interest expense
Net actuarial gains/(losses) on post-employment benefit
obligation

Actual return on plan assets was as follows:

US$ million

Actual return on plan assets

including:

US & Canadian plans

Russian plans

NNeett ddeeffiinneedd bbeenneeffiitt lliiaabbiilliittyy

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22002200

US$ million

Benefit obligation
Plan assets

Net defined benefit asset

Net defined benefit liability

RRuussssiiaann

ppllaannss

UUSS

&& CCaannaaddiiaann

ppllaannss

$$ ––

––

$$ 66

$$6633

((7744))

$$ ((99))

RRuussssiiaann

ppllaannss

$ –

(15)

$ (15)

UUSS

&& CCaannaaddiiaann

ppllaannss

$ 84

(81)

$ 3

RRuussssiiaann

ppllaannss

UUSS

&& CCaannaaddiiaann

ppllaannss

$ –

$ 2

$ (30)

$ 26

OOtthheerr

ppllaannss

$$ ––

––

$$ ––

OOtthheerr

ppllaannss

$ –

(3)

$ (3)

OOtthheerr

ppllaannss

$ –

–

$ –

TToottaall

$$6633

((6688))

$$ ((33))

TToottaall

$ 84

(99)

$ (15)

TToottaall

$ (30)

$ 28

22002200

$$ 8822

8822

––

22001199

$ 105

105

–

22001188

$ (10)

(10)

–

RRuussssiiaann

ppllaannss

$$ 110022
––

––

$$ 110022

UUSS

&& CCaannaaddiiaann

ppllaannss

$$885588
((772244))

––

$$ 113344

OOtthheerr

ppllaannss

$$ 1100
((66))

––

$$ 44

TToottaall

$$ 997700
((773300))

––

$$ 224400

Annual report & accounts 2020

210 | 211

23. EMPLOYEE BENEFITS (CONTINUED)

NNeett ddeeffiinneedd bbeenneeffiitt lliiaabbiilliittyy ((ccoonnttiinnuueedd))

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001199

US$ million

Benefit obligation
Plan assets

Net defined benefit asset

Net defined benefit liability

YYeeaarr eennddeedd 3311 DDeecceemmbbeerr 22001188

US$ million

Benefit obligation
Plan assets

Net defined benefit asset

Net defined benefit liability

MMoovveemmeennttss iinn nneett ddeeffiinneedd bbeenneeffiitt lliiaabbiilliittyy//((aasssseett))

US$ million

AAtt 3311 DDeecceemmbbeerr 22001177

Net benefit expense recognised in the statement of

operations

Contributions by employer

(Gains)/losses recognised in other comprehensive income

Reclassification to liabilities directly associated with disposal

groups classified as held for sale

Translation difference

AAtt 3311 DDeecceemmbbeerr 22001188

Net benefit expense recognised in the statement of

operations

Contributions by employer

(Gains)/losses recognised in other comprehensive income

Reclassification to liabilities directly associated with disposal

groups classified as held for sale

Translation difference
AAtt 3311 DDeecceemmbbeerr 22001199

Net benefit expense recognised in the statement of

operations

Contributions by employer

(Gains)/losses recognised in other comprehensive income

Translation difference

AAtt 3311 DDeecceemmbbeerr 22002200

OOtthheerr

ppllaannss

$ 11
(7)

–

$ 4

OOtthheerr

ppllaannss

$ –
–

–

$ –

OOtthheerr

ppllaannss

$$ 1199

–

(20)

$$ ––

–

$$ 44

–

(1)

–

$$ 44

TToottaall

$ 919
(660)

$ 271

TToottaall

$ 778
(555)

$ 226

TToottaall

$$ 228844

(32)

(28)

(20)

(19)

$$ 222233

(25)

(7)

$$ 225599

(41)

(18)

$$ 224400

RRuussssiiaann

ppllaannss

$ 123
–

–

$ 123

RRuussssiiaann

ppllaannss

$ 91
–

–

$ 91

UUSS

&& CCaannaaddiiaann

ppllaannss

$ 785
(653)

$ 144

UUSS

&& CCaannaaddiiaann

ppllaannss

$ 687
(555)

$ 135

RRuussssiiaann

ppllaannss

$$ 111111

UUSS

&& CCaannaaddiiaann

ppllaannss

$$ 115544

(8)

(2)

–

(20)

$$ 9911

(10)

–

(24)

(26)

–

$$ 113322

(15)

(3)

(7)

–

$$ 112233

$$ 113322

(7)

(6)

(20)

(33)

$$ 110022

$$ 113344

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

23. EMPLOYEE BENEFITS (CONTINUED)

MMoovveemmeennttss iinn bbeenneeffiitt oobblliiggaattiioonn

US$ million

AAtt 3311 DDeecceemmbbeerr 22001177

Interest cost on benefit obligation

Current service cost

Past service cost

Benefits paid
Actuarial (gains)/losses on benefit obligation related to

changes in demographic assumptions

Actuarial (gains)/losses on benefit obligation related to

changes in financial assumptions

Actuarial (gains)/losses on benefit obligation related to

experience adjustments

Curtailment/settlement gain
Reclassification to liabilities directly associated with disposal

groups classified as held for sale*

Translation difference

AAtt 3311 DDeecceemmbbeerr 22001188

Interest cost on benefit obligation

Current service cost

Past service cost

Benefits paid
Actuarial (gains)/losses on benefit obligation related to

changes in demographic assumptions

Actuarial (gains)/losses on benefit obligation related to

changes in financial assumptions

Actuarial (gains)/losses on benefit obligation related to

experience adjustments

Reclassification to liabilities directly associated with disposal

groups classified as held for sale

Other

Translation difference
AAtt 3311 DDeecceemmbbeerr 22001199

Interest cost on benefit obligation

Current service cost

Past service cost

Benefits paid
Actuarial (gains)/losses on benefit obligation related to

changes in demographic assumptions

Actuarial (gains)/losses on benefit obligation related to

changes in financial assumptions

Actuarial (gains)/losses on benefit obligation related to

experience adjustments

Effect of asset ceiling

Other

Translation difference

AAtt 3311 DDeecceemmbbeerr 22002200

RRuussssiiaann

ppllaannss

$$ 111111

UUSS

&& CCaannaaddiiaann

ppllaannss

$$ 776655

OOtthheerr

ppllaannss

$$ 1199

(36)

(7)

(49)

–

(31)

$$ 668877

–

(36)

(2)

–

(8)

–

(20)

$$ ––

–

(1)

–

TToottaall

$$ 889955

(44)

(7)

(55)

(1)

(20)

(50)

$$ 777788

(47)

101

(8)

$$ 778855

$$ 1111

$$ 991199

–

(51)

(6)

(4)

(2)

–

(4)

–

(62)

(5)

(10)

(2)

(9)

$$ 885588

$$ 1100

$$ 997700

–

(8)

–

(6)

(1)

–

(20)

$$ 9911

(10)

–

$$ 112233

(7)

(1)

(6)

–

(20)

$$ 110022

* This movement reflects the sale of Dneprovsk Metallurgical plant (Ukraine) in March 2018.

The weighted average duration of the defined benefit obligation was as follows:

Years

Russian plans

Ukrainian plans

US & Canadian plans

Other plans

22002200

1100..9977

––

1144..9966

2200..44

22001199

10.85

–

14.34

20.3

22001188

9.82

8.00

13.48

7.46

Annual report & accounts 2020

212 | 213

23. EMPLOYEE BENEFITS (CONTINUED)

CChhaannggeess iinn tthhee ffaaiirr vvaalluuee ooff ppllaann aasssseettss

US$ million

AAtt 3311 DDeecceemmbbeerr 22001177

Interest income on plan assets

Return on plan assets (excluding amounts included in net

interest expense)

Contributions of employer

Benefits paid

Other

Translation difference

AAtt 3311 DDeecceemmbbeerr 22001188

Interest income on plan assets
Return on plan assets (excluding amounts included in net

interest expense)

Contributions of employer

Benefits paid

Reclassification to liabilities directly associated with disposal

groups classified as held for sale

Other

Translation difference
AAtt 3311 DDeecceemmbbeerr 22001199

Interest income on plan assets

Return on plan assets (excluding amounts included in net

interest expense)

Contributions of employer

Benefits paid

Other

Translation difference

AAtt 3311 DDeecceemmbbeerr 22002200

RRuussssiiaann

ppllaannss

$$ ––

–

(8)

–

$$ ––

–

(10)

–

$$ ––

–

(7)

–

UUSS

&& CCaannaaddiiaann

ppllaannss

$$ 661111

(30)

(36)

(3)

(31)

OOtthheerr

ppllaannss

$$ ––

–

TToottaall

$$ 661111

(30)

(44)

(3)

(31)

$$ 555555

$$ ––

$$ 555555

(36)

(1)

(3)

–

(1)

–

(47)

(1)

$$ 665533

$$ 77

$$ 666600

(51)

(2)

–

(4)

–

(62)

–

$$ ––

$$ 772244

$$ 66

$$ 773300

The amount of contributions expected to be paid to the defined benefit plans during 2021 approximates $42 million.

The major categories of plan assets as a percentage of total plan assets were as follows at 31 December:

US & Canadian plans:

Equity funds and investment trusts

Governmental bonds

Corporate bonds and notes

Cash

Other

22002200

22001199

22001188

QQuuootteedd

UUnnqquuootteedd

QQuuootteedd

UUnnqquuootteedd

QQuuootteedd

UUnnqquuootteedd

4455%%

1177%%

2244%%

33%%

9922%%

––

88%%

48%

–

14%

–

65%

34%

–

35%

51%

–

12%

–

65%

35%

–

35%

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

23. EMPLOYEE BENEFITS (CONTINUED)

The principal assumptions used in determining pension obligations for the Group’s plans are shown below:

22002200

UUSS &&

22001199

UUSS &&

22001188

UUSS &&

RRuussssiiaann

CCaannaaddiiaann

ppllaannss

66..22%%

44--77%%

7711

8800

––

22--22..66%%

––

33%%

8866..55

8888..55

66..55%%

OOtthheerr

ppllaannss

00..22%%

11%%

8888

9911

––

RRuussssiiaann

CCaannaaddiiaann

ppllaannss

OOtthheerr

ppllaannss

RRuussssiiaann

CCaannaaddiiaann

ppllaannss

OOtthheerr

ppllaannss

–

3.3-3.4%

0.2%

–

88.5

5-6.8%

–

8.6%

5-9%

–

3.3-4.3%

–

88.5

5-7%

–

Discount rate
Future benefits increases
Future salary increase
Average life expectation, male, years
Average life expectation, female, years
Healthcare costs increase rate

The following table demonstrates the sensitivity analysis of reasonable changes in the significant assumptions used for the measurement of the
defined benefit obligations, with all other variables held constant.

IImmppaacctt oonn tthhee ddeeffiinneedd bbeenneeffiitt oobblliiggaattiioonn
aatt 3311 DDeecceemmbbeerr 22002200,,

IImmppaacctt oonn tthhee ddeeffiinneedd bbeenneeffiitt oobblliiggaattiioonn
aatt 3311 DDeecceemmbbeerr 22001199,,

IImmppaacctt oonn tthhee ddeeffiinneedd bbeenneeffiitt
oobblliiggaattiioonn aatt 3311 DDeecceemmbbeerr 22001188,,

RReeaassoonnaabbllee
cchhaannggee iinn
aassssuummppttiioonn

UUSS$$ mmiilllliioonn

UUSS &&

UUSS$$ mmiilllliioonn

UUSS &&

UUSS$$ mmiilllliioonn

UUSS &&

RRuussssiiaann

CCaannaaddiiaann

ppllaannss

OOtthheerr

ppllaannss

RRuussssiiaann

CCaannaaddiiaann

ppllaannss

OOtthheerr

ppllaannss

RRuussssiiaann

CCaannaaddiiaann

ppllaannss

OOtthheerr

ppllaannss

Discount rate

Future benefits increases

Future salary increase

Average life expectation,

male, years

Average life expectation,

female, years

Healthcare costs
increase rate

10%

(10%)

10%

(10%)

10%

(10%)

(1)

10%

(10%)

$$ ((88))

$$ ((3322))

$$ ((11))

$ (8)

$ (34)

$ (1)

$ (7)

$ (38)

$ –

((66))

((11))

––

3333

––

((11))

1144

((1144))

((99))

((11))

––

(9)

(1)

–

(1)

(12)

(7)

–

(4)

(1)

–

(2)

–

(2)

–

(1)

(11)

(6)

(1)

–

Annual report & accounts 2020

214 | 215

24. PROVISIONS

At 31 December the provisions were as follows:

US$ million

22002200

22001199

22001188

NNoonn--ccuurrrreenntt

CCuurrrreenntt

NNoonn--ccuurrrreenntt

CCuurrrreenntt

NNoonn--ccuurrrreenntt

CCuurrrreenntt

Site restoration and

decommissioning costs

Other provisions

$$ 227722

––

$$ 227722

$$ 2244

1177

$$ 4411

$ 321

–

$ 321

$ 21

$ 33

$ 221

$ 222

In the years ended 31 December 2020, 2019 and 2018, the movement in provisions was as follows:

US$ million

AAtt 3311 DDeecceemmbbeerr 22001177

Additional provisions

Increase from passage of time

Effect of change in the discount rate

Effect of changes in estimated costs and timing

Utilised in the year

Reclassification to liabilities directly associated with disposal groups classified

as held for sale

Translation difference

AAtt 3311 DDeecceemmbbeerr 22001188

Additional provisions

Increase from passage of time

Effect of change in the discount rate

Effect of changes in estimated costs and timing

Utilised in the year

Unused amounts reversed

Reclassification to liabilities directly associated with disposal groups classified

as held for sale

Translation difference

AAtt 3311 DDeecceemmbbeerr 22001199
Additional provisions

Increase from passage of time

Effect of changes in estimated costs and timing

Utilised in the year

Unused amounts reversed

Translation difference

AAtt 3311 DDeecceemmbbeerr 22002200

Site Restoration Costs

SSiittee rreessttoorraattiioonn aanndd
ddeeccoommmmiissssiioonniinngg ccoossttss

OOtthheerr pprroovviissiioonnss

$$ 228899

(38)

(13)

(1)

(42)

$$ 224444

(20)

(21)

–

(9)

$$ 334422

(10)

(49)

$$ 1122

–

(12)

–

(1)

$$ 1133

–

(10)

(4)

(8)

–

$$ 1122

–

(4)

(8)

(1)

$$ 229966

$$ 1177

$$ 331133

Under the legislation, mining companies and steel mills have obligations to restore mining sites and contaminated land. The majority of costs are
expected to be paid after 2061.

At 31 December the respective liabilities were measured based on estimates of restoration costs, which are expected to be incurred in the future
discounted at the following annual rates:

Russia

USA
Others

22002200

77%%

22%%

nn//aa

22001199

n/a

22001188

4.7%

$ 23

$ 35

TToottaall

$$ 330011

(38)

(25)

(1)

(43)

$$ 225577

(20)

(31)

(4)

(17)

$$ 335544

(14)

(18)

(50)

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

25. LEASE AND OTHER LONG-TERM LIABILITIES

LLeeaassee LLiiaabbiilliittiieess

The Group has a number of lease contracts, under which it leases railroad cars, coating equipment, warehouses, offices and other machinery and
equipment (Note 9). Before the adoption of IFRS 16 (Note 2) the Group classified its leases (as lessee) at the inception date as either a finance lease
within the Other long-term liabilities caption or an operating lease. The movement in lease liabilities is disclosed in the table below:

22002200

NNoonn--ccuurrrreenntt
lleeaassee lliiaabbiilliittiieess

CCuurrrreenntt ppoorrttiioonn
ooff lleeaassee
lliiaabbiilliittiieess

22001199

TToottaall

NNoonn--ccuurrrreenntt
lleeaassee lliiaabbiilliittiieess

CCuurrrreenntt ppoorrttiioonn
ooff lleeaassee
lliiaabbiilliittiieess

US$ million

1 January

Recognition of liabilities under new contracts

Sale of subsidiaries

Interest accrued

Payment of principal

Payment of interest

Termination of lease arrangements

Reclassification into short-term portion

Translation difference

31 December

TToottaall

$$ 111177

––

((3311))

((22))

––

((1100))

$$ 8877

$$ 8833

$$ 3344

$ 124

––

((11))

((3311))

((66))

$$ 5577

––

((3311))

((22))

((11))

3311

((44))

(2)

(35)

(2)

–

$$ 3300

$ 117

Total expenses under lease contracts are summarised in the table below.

US$ million

Interest accrued under lease liabilities
Expense relating to variable lease payments not included in the
measurement of opening lease liabilities
Expense relating to leases, which were not recognised as lease
liabilities (leases of low-value assets and short-term leases)

22002200

$$ 66

1111

$$ 2244

$ 34

(2)

(35)

(2)

–

$ 34

$ 90

–

(33)

$ 83

22001199

$ 8

$ 27

The maturity of contractual undiscounted and discounted cash flows under lease payments at 31 December was as follows:

US$ million

Not later than 1 year from the reporting date

Later than 1 year and not later than 2 years

Later than 2 years and not later than 5 years

Later than 5 years and not later than 10 years

Later than 10 years

TToottaall lleeaassee ppaayymmeennttss

Less: amounts representing finance charges

3311 DDeecceemmbbeerr

22002200

22001199

LLeeaassee ppaayymmeennttss

ooff lleeaassee ppaayymmeennttss

LLeeaassee ppaayymmeennttss

ooff lleeaassee ppaayymmeennttss

PPrreesseenntt vvaalluuee

$$ 3311

3344

1188

1122

110011

((1144))

$$ 8877

$$ 3300

2299

1155

8877

––

$ 35

135

(18)

$ 34

117

–

$$ 8877

$ 117

Annual report & accounts 2020

216 | 217

25. LEASE AND OTHER LONG-TERM LIABILITIES (CONTINUED)

OOtthheerr LLoonngg--TTeerrmm LLiiaabbiilliittiieess

Other liabilities consisted of the following as of 31 December:

US$ million

FFiinnaanncciiaall lliiaabbiilliittiieess
Finance lease liabilities

Derivatives not designated as hedging instruments

Hedging instruments

Long-term trade and other payables

Long-term accounts payable to related parties

Less: current portion (Note 26)

NNoonn--ffiinnaanncciiaall lliiaabbiilliittiieess

Employee income participation plans and compensations

Tax liabilities

Other non-financial liabilities

Less: current portion (Note 26)

22002200

22001199

22001188

$$ ––

4499

––

3344

––

8833

((1100))

7733

––

1166

3322

((33))

2299

$ –

–

(24)

–

(3)

(68)

(3)

$$ 110022

$ 40

$ 38

Hedging Instruments

In July 2015, the Group issued bonds in the total amount of 15,000 million Russian roubles ($216 million at 31 December 2018), which bore interest
of 12.95% per annum and had a put date in June 2019. The Group used an intercompany loan to transfer the proceeds from the bonds within
the Group. To manage the currency exposure, the Group entered into a series of cross currency swap contracts with several banks under which it
agreed to deliver US-dollar denominated interest payments at rates ranging from 5.90% to 6.55% per annum plus the notional amount, totaling
approximately $265 million, in exchange for rouble-denominated interest payments at the rate of 12.95% per annum plus notional, totaling
14,948 million roubles ($215 million at 31 December 2018).

12.95 per cent bonds due 2019

Year

of issue

2015

Bonds principal,

millions

of roubles

15,000

Hedged amount,
millions

Swap amount,

Interest rates

of roubles

US$ million

on the swap amount

13,310

239

5.90% - 6.55%

The Group accounted for these swap contracts as cash flow hedges. In 2017, one of these swap contracts with the notional amount of $26 million did
not meet the criteria for efficiency and ceased to be classified as hedging instruments. In 2019 and 2018, the change in fair value of these derivatives
amounted to $46 million and $(44) million, respectively. The realised gain/(loss) on the swap transactions amounting to $(23) million and $11 million,
respectively, was related to the interest portion of the change in fair value of the swap.

Under IFRS the lesser of the cumulative gain or loss on the hedging instrument from inception of the hedge and the cumulative change in present value
of the expected future cash flows on the hedged item from inception of the hedge is recognised in other comprehensive income and the remaining loss
on the hedging instrument is recorded through the statement of operations. In 2020, 2019 and 2018, the Group recognised a gain/(loss) in other
comprehensive income amounting to $Nil, $27 million and $(3) million, respectively. Most of the swaps were assessed as effective. Those swaps,
which ceased to be effective, were reclassified into Derivatives Not Designated as Hedging Instruments. In 2020, 2019 and 2018, $Nil, $19 million
and $(41) million, respectively, were recorded in the Foreign exchange gains/(losses) caption in the consolidated statement of operations. In June
2019, upon repayment of the 12.95% rouble bonds, the related swap contracts matured and the Group recycled $33 million of the accumulated
unrecognised gains on cash flow hedges from other comprehensive income to the statement of operations.

Derivatives Not Designated as Hedging Instruments

In 2018-2020 derivatives not designated as hedging instruments comprised of those swap contracts, which either were not designated as cash flow or
fair value hedges or ceased to be effective, and forward contracts.

The aggregate amounts under swap contracts translated at the year end exchange rates are summarised in the table below.

US$ million

Bonds and loans, principal
Hedged amount
Swap amount

22002200

$$ 333388

333388

338811

22001199

$ 323

323

317

22001188

$ 24

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

25. LEASE AND OTHER LONG-TERM LIABILITIES (CONTINUED)

Derivatives Not Designated as Hedging Instruments (continued)

To manage the currency exposure on the rouble-denominated bonds, the Group partially economically hedged these transactions. In 2020, the Group
concluded a currency and interest rate swap contract under which it agreed to deliver US dollar-denominated interest payments at a fixed rate of
3.335% rate per annum plus the US dollar notional amount, in exchange for variable rouble-denominated CBR key rate-based interest payments plus
the rouble notional amount. The exchange is exercised on approximately the same dates as the payments under the bank loan.

In 2019, the Group concluded a currency and interest rate swap contract under which it agreed to deliver US dollar-denominated interest payments at
a fixed rate of 3.75% per annum plus the US dollar notional amount, in exchange for fixed rouble-denominated interest payments plus the rouble
notional amount. The exchange is exercised on approximately the same dates as the payments under the bonds.

The swap contracts, which were effective at 31 December 2020 and 2019, are summarised in the table below.

YYeeaarr
ooff iissssuuee

BBoorrrroowwiinnggss pprriinncciippaall,,
mmiilllliioonnss ooff rroouubblleess

HHeeddggeedd aammoouunntt,,
mmiilllliioonnss ooff rroouubblleess

SSwwaapp aammoouunntt,,
UUSS$$ mmiilllliioonn

IInntteerreesstt rraatteess
oonn tthhee sswwaapp aammoouunntt

7.95 per cent bonds due 2024

EVRAZ ZSMK bank loan agreement due 2023

2019

2020

20,000

5,000

20,000

5,000

317

3.75%

3.335%

The discount rates used in the valuation were the non-deliverable forward rate curve and the interest rate swap curve for US dollar at the reporting
dates.

In 2020, 2019 and 2018, a change in fair value of these derivatives of ($64) million, $20 million and $(6) million, respectively, together with a realised
gain/(loss) on the swap transactions, amounting to $13 million, $8 million and $2 million, respectively, was recognised within gain/(loss) on financial
assets and liabilities in the consolidated statement of operations (Note 7).

In 2018-2020, the Group concluded EUR/USD forward contracts, which were accounted for at fair value. In 2020, 2019 and 2018, the change in fair
value of the derivatives $6 million, $(4) million and $(2) million, respectively, together with a realised gain/(loss) on the currency forward transactions,
amounting to $(24) million, $14 million and $9 million, respectively, was recognised within gain/(loss) on financial assets and liabilities in the
consolidated statement of operations (Note 7).

26. TRADE AND OTHER PAYABLES

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

US$ million

Trade accounts payable
Liabilities for purchases of property, plant and equipment, including VAT

Accrued payroll
Other payables
Other long-term obligations with current maturities (Note 25)

22002200

$$ 884444

220000

115577

5500

1133

22001199

$ 982

132

162

22001188

$ 877

140

$$ 11,,226644

$ 1,378

$ 1,216

The maturity profile of the accounts payable is shown in Note 28.

At 31 December 2020 and 2019, trade accounts payable included $131 million and $156 million, respectively, owed by the Group for purchases of
scrap from Vtorresource-Pererabotka, a related party (Note 16). These amounts were classified as trade payables to third parties as Vtorresource-
Pererabotka sold its receivables from the Group under factoring contracts to several banks with no recourse.

27. OTHER TAXES PAYABLE

Other taxes payable were mainly denominated in roubles and consisted of the following as of 31 December:

US$ million

VAT
Social insurance taxes
Property tax

Land tax

Personal income tax
Import/export tariffs
Other taxes, fines and penalties

22002200

$$ 8899

4477

––

1122

22001199

$ 67

22001188

$ 124

$$ 116699

$ 153

$ 266

Annual report & accounts 2020

218 | 219

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

CCrreeddiitt RRiisskk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Financial instruments
that potentially expose the Group to concentrations of credit risk consist primarily of cash and trade accounts receivable.

To manage credit risk related to cash, the Group maintains its available cash, mainly in US dollars and euros, in reputable international banks and
major Russian banks. Management periodically reviews the creditworthiness of the banks in which it deposits cash.

The Group’s trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. There are no
significant concentrations of credit risk within the Group. The Group defines counterparties as having similar characteristics if they are related entities.
In 2020, the major customers were Russian Railways (6% of total sales) and TC Energy Corporation (4%).

Part of the Group’s sales is made on terms of letter of credit. In addition, the Group requires prepayments from certain customers. The Group does not
require collateral in respect of trade and other receivables, except when a customer applies for credit terms which are longer than normal. In this case,
the Group requires bank guarantees or other collateral. The Group has developed standard credit terms and constantly monitors the status of accounts
receivable collection and the creditworthiness of the customers.

Certain of the Group’s long-standing Russian customers for auxiliary products, such as heat and electricity, represent municipal enterprises and
governmental organisations that experience financial difficulties. The significant part of allowance for expected credit losses consists of receivables
from such customers. The Group has no practical ability to terminate the supply to these customers and negotiates with regional and municipal
authorities the terms of recovery of these receivables.

At 31 December the maximum exposure to credit risk is equal to the carrying amount of financial assets, which is disclosed below.

US$ million

Restricted deposits at banks (Notes 13 and 18)
Financial instruments included in other non-current and current assets
(Notes 13 and 18)

Long-term and short-term investments (Notes 13 and 18)

Trade and other receivables (Notes 13 and 15)

Loans receivable
Receivables from related parties (Notes 13 and 16)
Cash and cash equivalents (Note 19)

22002200

$$ 88

–

339966

–

1100

11,,662277

$$ 22,,004433

22001199

$ 10

–

550

1,423

$ 2,043

22001188

$ 9

852

1,067

$ 2,068

The ageing analysis of trade and other receivables, loans receivable and receivables from related parties at 31 December is presented in the table
below.

US$ million

22002200

22001199

22001188

GGrroossss aammoouunntt

IImmppaaiirrmmeenntt

GGrroossss aammoouunntt

IImmppaaiirrmmeenntt

GGrroossss aammoouunntt

IImmppaaiirrmmeenntt

Not past due
Past due

less than 6 months

between 6 months and 1 year
over 1 year

$$ 334433
110000
4466
55
4499

$$ 444433

$$ ((11))
((3366))
––
((22))
((3344))

$$ ((3377))

$ 446
193
107
31
55

$ 639

$ (1)
(45)
(1)
–
(44)

$ (46)

$ 770
166
109
9
48

$ 936

In the years ended 31 December 2020, 2019 and 2018, the movement in allowance for expected credit losses was as follows:

US$ million

At 1 January
Charge for the year

Utilised

Translation difference

At 31 December

LLiiqquuiiddiittyy RRiisskk

22002200

$$ ((4466))

$$ ((3377))

22001199

$ (42)

(3)

$ (46)

$ (1)
(41)
–
–
(41)

$ (42)

22001188

$ (54)

$ (42)

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to
ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.

The Group manages liquidity risk by maintaining adequate cash reserves and borrowing facilities, by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and liabilities.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

LLiiqquuiiddiittyy RRiisskk ((ccoonnttiinnuueedd))

The Group prepares a rolling 12-month financial plan which ensures that the Group has sufficient cash on demand to meet expected operational
expenses, financial obligations and investing activities as they arise. The Group exercises a daily monitoring of cash proceeds and payments. The Group
maintains credit lines and overdraft facilities that can be drawn down to meet short-term financing needs. If necessary, the Group refinances its short-
term debt by long-term borrowings. The Group also uses forecasts to monitor potential and actual financial covenants compliance status (Note 22).
Where compliance is at risk, the Group considers options including debt repayment, refinancing or covenant reset. The Group has developed standard
payment periods in respect of trade accounts payable and monitors the timeliness of payments to its suppliers and contractors.

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

3311 DDeecceemmbbeerr 22002200

US$ million

FFiixxeedd--rraattee ddeebbtt
Loans and borrowings

Principal
Interest
Lease liabilities
Other long-term financial liabilities

TToottaall ffiixxeedd--rraattee ddeebbtt

VVaarriiaabbllee--rraattee ddeebbtt
Loans and borrowings

Principal
Interest

TToottaall vvaarriiaabbllee--rraattee ddeebbtt

NNoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt
Loans and borrowings
Trade and other payables
Payables to related parties
Amounts payable under put options for shares in
subsidiaries

TToottaall nnoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt

3311 DDeecceemmbbeerr 22001199

US$ million

FFiixxeedd--rraattee ddeebbtt
Loans and borrowings

Principal
Interest
Lease liabilities
Other long-term financial liabilities
Amounts payable under put options for shares in
subsidiaries

TToottaall ffiixxeedd--rraattee ddeebbtt

VVaarriiaabbllee--rraattee ddeebbtt
Loans and borrowings

Principal
Interest

TToottaall vvaarriiaabbllee--rraattee ddeebbtt

NNoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt
Trade and other payables
Payables to related parties

TToottaall nnoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt

OOnn ddeemmaanndd

LLeessss tthhaann

33 mmoonntthhss

33 ttoo 1122

mmoonntthhss

11 ttoo 22 yyeeaarrss

22 ttoo 55 yyeeaarrss

AAfftteerr

55 yyeeaarrss

TToottaall

$$ ––
––
––
––

––

––
––

––

––
119955
11

––

119966

$$ 994433
9922
77
33

11,,004455

33
1122

1155

––
889900
3333

6655

998888

$$ 55
8855
2244
77

112211

4411
4477

8888

––
99
––

––

$$ 551100
111166
3344
1111

$$ 11,,774488
112200
1188
6677

667711

11,,995533

$$ ––
––
1188
––

1188

$$ 33,,220066
441133
110011
8888

33,,880088

335500
5533

440033

––
––
––

––

11,,115577
5544

11,,221111

11
––
––

––

––
––

––

99
––
––

––

11,,555511
116666

11,,771177

1100
11,,009944
3344

6655

11,,220033

$$ 119966

$$ 22,,004488

$$ 221188

$$ 11,,007744

$$ 33,,116655

$$ 2277

$$ 66,,772288

OOnn ddeemmaanndd

LLeessss tthhaann

33 mmoonntthhss

33 ttoo 1122

mmoonntthhss

11 ttoo 22 yyeeaarrss

22 ttoo 55 yyeeaarrss

AAfftteerr

55 yyeeaarrss

TToottaall

$ –
–
–
–

–

–
–

–

228
1

229

$ 5
97
9
16

–

$ 5
134
26
8

$ 1,002
184
38
11

$ 2,304
249
40
16

–

127

242

1,235

2,609

26
14

883
13

896

16
45

78
–

30
59

–
–

–

386
125

511

–
–

–

$ 10
–
22
–

–

885
16

901

–
–

–

$ 3,326
664
135
51

4,245

1,343
259

1,602

1,189
14

1,203

$ 229

$ 1,063

$ 381

$ 1,324

$ 3,120

$ 933

$ 7,050

Annual report & accounts 2020

220 | 221

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

LLiiqquuiiddiittyy RRiisskk ((ccoonnttiinnuueedd))

3311 DDeecceemmbbeerr 22001188

US$ million

FFiixxeedd--rraattee ddeebbtt
Loans and borrowings

Principal
Interest

Finance lease liabilities
Other long-term financial liabilities
Amounts payable under put options for shares in
subsidiaries

Principal
Interest

TToottaall ffiixxeedd--rraattee ddeebbtt

VVaarriiaabbllee--rraattee ddeebbtt
Loans and borrowings

Principal
Interest

TToottaall vvaarriiaabbllee--rraattee ddeebbtt

NNoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt
Trade and other payables
Payables to related parties

TToottaall nnoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt

OOnn ddeemmaanndd

LLeessss tthhaann

33 mmoonntthhss

33 ttoo 1122

mmoonntthhss

11 ttoo 22 yyeeaarrss

22 ttoo 55 yyeeaarrss

AAfftteerr

55 yyeeaarrss

TToottaall

$ –
–
–
–

–
–

–

3
–

129
94

223

$ –
84
–
13

–
–

2
15

864
26

890

$ 226
148
3
53

60
9

499

65
45

110

12
–

$ 710
194
–
9

–
–

$ 2,452
211
1
8

–
–

913

2,672

13
59

–
–

–

1,014
107

1,121

–
–

–

$ 17
–
5
3

–
–

–

–
–

–

$ 3,405
637
9
86

60
9

4,206

1,097
226

1,323

1,005
120

1,125

$ 226

$ 1,004

$ 621

$ 985

$ 3,793

$ 25

$ 6,654

Payables to related parties in the tables above do not include contract liabilities in the amount of $4 million, $5 million and $2 million as of
31 December 2020, 2019 and 2018, respectively.

MMaarrkkeett RRiisskk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s income or
the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures, while
optimising the return on risk.

IInntteerreesstt RRaattee RRiisskk

The Group borrows on both a fixed and variable rate basis and has other interest-bearing liabilities, such as finance lease liabilities and other
obligations.

The Group incurs interest rate risk on liabilities with variable interest rates. The Group’s treasury function performs analysis of current interest rates.
In case of changes in market fixed or variable interest rates management may consider the refinancing of a particular debt on more favourable terms.

The Group does not have any financial assets with variable interest rates.

Fair Value Sensitivity Analysis for Fixed Rate Instruments

The Group does not account for any fixed rate financial assets or liabilities at fair value through profit or loss. Therefore, a change in interest rates at
the reporting date would not affect the Group’s profits.

The Group does not account for any fixed rate financial assets as assets available for sale. Therefore, a change in interest rates at the reporting date
would not affect the Group’s equity.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

MMaarrkkeett RRiisskk ((ccoonnttiinnuueedd))

IInntteerreesstt RRaattee RRiisskk ((ccoonnttiinnuueedd))

Cash Flow Sensitivity Analysis for Variable Rate Instruments

Based on the analysis of exposure during the years presented, reasonably possible changes in floating interest rates at the reporting date would affect
profit before tax (“PBT”) by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant.

In estimating reasonably possible changes the Group assessed the volatility of interest rates during the reporting periods.

US$ million

22002200

22001199

22001188

BBaassiiss ppooiinnttss

EEffffeecctt oonn PPBBTT

BBaassiiss ppooiinnttss

EEffffeecctt oonn PPBBTT

BBaassiiss ppooiinnttss

EEffffeecctt oonn PPBBTT

US$ millions

LLiiaabbiilliittiieess ddeennoommiinnaatteedd iinn UUSS ddoollllaarrss
Decrease in LIBOR
Increase in LIBOR

LLiiaabbiilliittiieess ddeennoommiinnaatteedd iinn eeuurroo
Decrease in EURIBOR
Increase in EURIBOR

LLiiaabbiilliittiieess ddeennoommiinnaatteedd iinn rroouubblleess
Decrease in Bank of Russia key rate
Increase in Bank of Russia key rate

CCuurrrreennccyy RRiisskk

((1188))
1188

((3322))
3322

((7755))
7755

22
((22))

––
––

(17)
17

(6)
6

(75)
50

2
(2)

–
–

(17)
17

(1)
1

(100)
50

$ 2
(2)

–
$ –

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in currencies other than the functional currencies of
the respective Group’s subsidiaries. The currencies in which these transactions are denominated are primarily US dollars, Canadian dollars and euro.
The Group does not have formal arrangements to mitigate currency risks of the Group’s operations. However, management believes that the Group is
partly secured from currency risks as foreign currency denominated sales are used to cover repayment of foreign currency denominated borrowings.

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

US$ million

USD/RUB
EUR/RUB

EUR/USD

USD/CAD

EUR/CZK

USD/CZK

USD/UAH

USD/KZT

RUB/KZT

22002200

$$22,,223300

((7711))

1166

((661144))

((1144))

2244

––

((116688))

22001199

$ 2,750

467

(77)

(907)

(11)

–

(164)

–

22001188

$ 2,886

265

(723)

(12)

(20)

(119)

(170)

–

Annual report & accounts 2020

222 | 223

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

MMaarrkkeett RRiisskk ((ccoonnttiinnuueedd))

CCuurrrreennccyy RRiisskk ((ccoonnttiinnuueedd))

Sensitivity Analysis

The following table demonstrates the sensitivity to reasonably possible changes in the respective currencies, with all other variables held constant, of
the Group’s profit before tax. In estimating reasonably possible changes the Group assessed the volatility of foreign exchange rates during the reporting
periods.

22002200

22001199

22001188

CChhaannggee iinn
eexxcchhaannggee rraattee

EEffffeecctt oonn

CChhaannggee iinn

PPBBTT

eexxcchhaannggee rraattee

EEffffeecctt oonn

PPBBTT

CChhaannggee iinn
eexxcchhaannggee rraattee

EEffffeecctt oonn

PPBBTT

US$ millions

((1166..8888))
1166..8888
((1177..1100))
1177..1100
((1188..9911))
1188..9911
((77..7799))
77..7799
((88..1133))
88..1133
((77..5566))
77..5566
((1111..4488))
1111..4488
((77..2255))
77..2255
((1100..0022))
1100..0022
((1144..8866))
1144..8866

((447788))
330044
1122
((1122))
––
––
((11))
11
5500
((5500))
11
((11))
((33))
33
––
––
––
––
2255
((2255))

(7.78)
7.78
(7.50)
7.50
(8.84)
8.84
(5.02)
5.02
(4.58)
4.58
(2.23)
2.23
(5.98)
5.98
(7.68)
7.68
(4.20)
4.20
–
–

(230)
200
(35)
35
–
–
4
(4)
42
(42)
–
–
(1)
1
–
–
7
(7)
–
–

(13.87)
13.87
(13.54)
13.54
(16.08)
16.08
(7.35)
7.35
(6.76)
6.76
(2.96)
2.96
(8.54)
8.54
(5.86)
5.86
(8.43)
8.43
–
–

(468)
350
(36)
36
–
–
(1)
1
49
(49)
–
–
2
(2)
7
(7)
14
(14)
–
–

USD/RUB

EUR/RUB

CAD/RUB

EUR/USD

USD/CAD

EUR/CZK

USD/CZK

USD/UAH

USD/KZT

RUB/KZT

In addition to the effects of changes in the exchange rates disclosed above, the Group is exposed to currency risk on derivatives (Note 25). The impact
of currency risk on the fair value of these derivatives is disclosed below.

22002200

22001199

22001188

CChhaannggee iinn
eexxcchhaannggee rraattee

EEffffeecctt oonn

CChhaannggee iinn

PPBBTT

eexxcchhaannggee rraattee

EEffffeecctt oonn

PPBBTT

CChhaannggee iinn
eexxcchhaannggee rraattee

EEffffeecctt oonn

PPBBTT

US$ millions

USD/RUB

((1166..8888))
1166..8888

7744
((5522))

(7.78)
7.78

30
(25)

(13.87)
13.87

36
(27)

FFaaiirr VVaalluuee ooff FFiinnaanncciiaall IInnssttrruummeennttss

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:



Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
and
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data
(unobservable inputs).

The carrying amounts of financial instruments, such as cash, short-term and long-term investments, short-term accounts receivable and payable, short-
term loans receivable and payable and promissory notes, approximate their fair value.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

FFaaiirr VVaalluuee ooff FFiinnaanncciiaall IInnssttrruummeennttss ((ccoonnttiinnuueedd))

At 31 December the Group held the following financial instruments measured at fair value:

US$ million

LLeevveell 11

LLeevveell 22

LLeevveell 33

LLeevveell 11

LLeevveell 22

LLeevveell 33

LLeevveell 11

LLeevveell 22

LLeevveell 33

22002200

22001199

22001188

AAsssseettss mmeeaassuurreedd aatt ffaaiirr vvaalluuee

Derivatives not designated as hedging
instruments (Notes 13, 25)
Hedging instruments (Note 25)

LLiiaabbiilliittiieess mmeeaassuurreedd aatt ffaaiirr vvaalluuee

Derivatives not designated as hedging
instruments (Note 25)
Hedging instruments (Note 25)

––

4477

––

–

During the reporting period, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair
value measurements.

The following table shows financial instruments for which carrying amounts differ from fair values at 31 December.

US$ million

22002200

22001199

22001188

CCaarrrryyiinngg aammoouunntt

FFaaiirr vvaalluuee

CCaarrrryyiinngg aammoouunntt

FFaaiirr vvaalluuee

CCaarrrryyiinngg aammoouunntt

FFaaiirr vvaalluuee

Long-term fixed-rate bank loans

Long-term variable-rate bank loans

Long-term zero-rate bank loans

USD-denominated

6.50% notes due 2020

8.25% notes due 2021

6.75% notes due 2022

5.375% notes due 2023

5.25% notes due 2024

Rouble-denominated

12.95% rouble bonds due 2019

12.60% rouble bonds due 2021

7.95% rouble bonds due 2024

$$ 3388

11,,554422

––

776622

551144

776611

770077

––

221100

227799

$$ 4477

11,,553311

––

776677

554433

881188

777788

––

221133

229977

$ 56

1,309

–

776

513

759

705

–

250

333

$ 57

1,330

–

825

555

819

770

–

268

346

$ 269

1,084

–

708

777

513

759

–

216

223

–

$ 266

1,092

–

723

826

535

754

–

222

241

–

$$ 44,,882222

$$ 55,,000011

$ 4,701

$ 4,970

$ 4,549

$ 4,659

The fair value of the non-convertible bonds and notes was determined based on market quotations (Level 1). The fair value of long-term bank loans
was calculated based on the present value of future principal and interest cash flows, discounted at the Group’s market rates of interest at
the reporting dates (Level 3). The discount rates used for valuation of financial instruments were as follows:

Currency in which financial instruments are denominated

22002200

22001199

22001188

USD

EUR

RUB

CCaappiittaall MMaannaaggeemmeenntt

11..66 –– 22..66%%

2.5 – 3.8%

4.9 – 5.7%

22..22%%

44..99 –– 77..22%%

–

1.7 – 3.4%

8.13%

Capital includes equity attributable to the equity holders of the parent entity. Revaluation surplus which is included in capital is not subject to capital
management because of its nature.

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to
support its business and maximise the return to shareholders. The Board of Directors reviews the Group’s performance and establishes key
performance indicators. There were no changes in the objectives, policies and processes during 2020.

The Group manages its capital structure and makes adjustments to it by the issue of new shares, dividend payments to shareholders, and the
purchase of treasury shares. In addition, the Group monitors distributable profits on a regular basis and determines the amounts and timing of
dividend payments taking into account cashflow and other constraints.

Annual report & accounts 2020

224 | 225

29. NON-CASH TRANSACTIONS

Transactions that did not require the use of cash or cash equivalents, not disclosed in the notes above, were as follows in the years ended
31 December:

US$ million

Liabilities for purchases of property, plant and equipment, excluding VAT
Loans provided in the form of payments by banks for property, plant and
equipment

22002200

$$ 119944

–

22001199

$ 142

–

22001188

$ 92

30. COMMITMENTS AND CONTINGENCIES

Operating Environment of the Group

The Group is one of the largest vertically integrated steel producers globally and the largest steel producer in Russia. The Group’s major subsidiaries
are located in Russia, the USA and Canada. Russia is considered to be a developing market with higher economic and political risks.

The unrest in the Southeastern region of Ukraine and the economic sanctions imposed by the USA and the European Union on Russia in 2014 and
later on caused economic slowdown in Russia and reduced access to international capital markets. Further sanctions imposed on Russia could have
an adverse impact on the Group’s business.

Steel consumption is affected by the cyclical nature of demand for steel products and the sensitivity of that demand to worldwide general economic
conditions.

In March 2018 the United States placed 25% tariffs on imports of most steel products from several countries, including Russia, while granting
temporary exemptions for others, including Canada, Mexico, and the European Union. In May 2018, the U.S. announced the end of temporary
exemptions for Canada, Mexico, and the European Union, putting 25% tariffs on imports from those jurisdictions effective 1 June 2018. In response,
the government of Canada introduced 25% tariffs effective 1 July 2018 on selected steel products from the U.S. In addition, effective 25 October 2018,
the Canadian government imposed provisional safeguard measures on imports from most countries (excluding the United States) of certain categories
of steel products by adding a 25% surtax in cases, where the volume of imports from trading partners exceeded historical norms. Most of those
provisional safeguards expired on 29 April 2019 following an inquiry by the Canadian International Trade Tribunal. In May 2019, the United States
lifted the 25% tariffs on imports of steel products from Canada and Mexico. The Canadian government lifted its retaliatory tariffs on steel the same day.

Therefore, the Group’s cross-border transactions between U.S. and Canadian subsidiaries no longer face the 25% Section 232 tariffs and Canadian
retaliatory tariffs. The entities of the Steel North America segment import steel for further processing and final products for selling to domestic
customers. U.S. Section 232 tariffs remain in place against other countries, including Russia, and U.S. subsidiaries still face those 25% tariffs on any
imported steel from those countries.

In August 2018, the U.S. imposed a preliminary 24.38% antidumping duty on welded line pipe greater than 16-inch outside diameter exported from
Canada into the United States. In April 2019, the U.S. imposed a final antidumping duty of 12.32% that remains in place. The first administrative
review of the duty rate at the U.S. Department of Commerce was initiated in July 2020, which may lead to a revised antidumping duty rate in January
2022.

The coronavirus (COVID-19) pandemic outbreak has significantly affected the world economy, including steel production, oil and gas, and construction
industry. However, the majority of the Group’s businesses were relatively unaffected with no significant issues for production, supply or shipments.
The increased market volatility may have an impact on the Group’s financial position, earnings and cash flows in 2021 and beyond. Management
closely monitors the development of the economic situation and undertakes all necessary measures to maintain the sustainability of the Group’s
business in the current circumstances.

The global economic climate continues to be unstable and this may negatively affect the Group’s results and financial position in a manner not
currently determinable.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

30. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Taxation

Russian tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Further, the interpretation
of tax legislation by tax authorities as applied to the transactions and activity of the Group’s entities may not coincide with that of management.
As a result, tax authorities may challenge transactions and the Group’s entities may be assessed for additional taxes, penalties and interest. In Russia
the periods remain open to review by the tax and customs authorities with respect to tax liabilities for three calendar years preceding the year of
review. Under certain circumstances reviews may cover longer periods.

Management believes that it has paid or accrued all taxes that are applicable. Where uncertainty exists, the Group has accrued tax liabilities based on
its best estimate of the probable outflow of resources embodying economic benefits, which will be required to settle these liabilities. Possible liabilities
which were identified by management at the end of the reporting period as those that can be subject to different interpretations of the tax laws and
other regulations and are not accrued in these financial statements could be up to approximately $72 million.

Contractual Commitments

At 31 December 2020, 2019 and 2018, the Group had contractual commitments for the purchase of production equipment and construction works for
an approximate amount of $462 million, $379 million and $250 million (including VAT), respectively.

In 2010, the Group concluded a contract with PraxAir (Note 2, Accounting Judgements) for the construction of an air separation plant and for the
supply of oxygen and other gases produced by PraxAir at this plant for a period of 20 years (extended to 25 years in 2015, when the construction was
completed). This supply contract does not fall within the scope of IFRS 16 “Leases”. At 31 December 2020, the Group has committed expenditure of
$517 million over the life of the contract.

In 2018, the Group concluded a contract with Air Liquide for the construction of an air separation plant and for the supply of oxygen and other gases
produced by Air Liquide at this plant for a period of 20 years. The contractual price comprises a fixed component and a variable component. The total
amount of the fixed component approximates $422 million, which is payable within 20 years starting upon commencement of production in 2021 in
proportion to the amounts of the variable component. The variable component is determined based on the actual purchase of gases and is estimated
at $374 million during the life of the contract. Based on management’s assessment this supply contract does not fall within the scope of IFRS 16
“Leases” as the Group has no access to the equipment and has no rights either to operate the assets, or to design them in order to predetermine
the way of their usage. Also it is expected that more than an insignificant amount of the assets’ output will be sold to the parties unrelated to the
Group. In addition, Air Liquide will construct the system of trunk and auxiliary pipelines, distribution stations and other equipment for products delivery,
which will be leased by the Group for a period of 20 years and accounted for under IFRS 16. The cost of construction of the products delivery system is
estimated at $98 million.

In 2019, the Group concluded a contract with Xcel Energy Inc. for the supply of electricity for a period of 22 years. The Group is committed to purchase
from 1 January 2022 at least 500,000 MWh annually on a take-or-pay basis at rates ranging from 3.90 to 4.90 cents/kWh. The rates can be adjusted
for gas prices. The total amount of this commitment at the unadjusted rates approximates $440 million.

Social Commitments

The Group is involved in a number of social programmes aimed to support education, healthcare and social infrastructure development in towns where
the Group’s assets are located. The Group budgeted to spend approximately $20 million under these programmes in 2021.

Environmental Protection

In the course of its operations, the Group may be subject to environmental claims and legal proceedings. The quantification of environmental
exposures requires an assessment of many factors, including changing laws and regulations, improvements in environmental technologies, the quality
of information available related to specific sites, the assessment stage of each site investigation, preliminary findings and the length of time involved in
remediation or settlement.

The Group has a number of environmental claims and proceedings which are at a stage of investigation. Environmental provisions in relation to these
proceedings that were recognised at 31 December 2020 amounted to $21 million. Preliminary estimates available of the incremental costs indicate
that such costs could be up to $186 million. The Group has insurance agreements, which will provide reimbursement of the costs to be actually
incurred up to $228 million, of which $21 million relate to the accrued environmental provisions and have been recognised in receivables at
31 December 2020. Management believes that an economic outflow of the additional costs is not probable and any pending environmental claims or
proceedings will not have a material adverse effect on its financial position and results of operations.

In addition, the Group has committed to various environmental protection programmes covering periods from 2021 to 2026, under which the Group
will perform works aimed at reductions in environmental pollution and contamination. As of 31 December 2020, the costs of implementing these
programmes are estimated at $226 million.

Annual report & accounts 2020

226 | 227

30. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Legal Proceedings

The Group has been and continues to be the subject of legal proceedings, none of which has had, individually or in aggregate, a significant effect on its
operations or financial position.

The Group exercises judgement in measuring and recognising provisions and the exposure to contingent liabilities related to pending litigations or other
outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities. Judgement
is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the final
settlement. Because of the inherent uncertainties in this evaluation process, actual losses may be different from the originally estimated provision.
These estimates are subject to change as new information becomes available, primarily with the support of internal specialists or with the support of
outside consultants. As of 31 December 2020, possible legal risks approximate $35 million.

Issued Guarantees

In June 2018, EVRAZ plc and EVRAZ West-Siberian Metallurgical Plant issued a joint guarantee in the amount of up to 30 billion roubles ($478 million
at the exchange rate at the transaction date) to nine companies owned by Sibuglemet in respect of management services provided by one the Group’s
subsidiaries to these entities. Sibuglemet is a producer of coking coal and operator of coal refineries in the Kemerovo region of Russia. The
management company committed to perform all management functions including, inter alia, all the decisions required to carry out the day-to-day
operations of these coal companies, their investment and procurement activities. The maturity of the guarantee was set for 31 December 2030.

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

31. AUDITOR’S REMUNERATION

The remuneration of the Group’s auditor in respect of the services provided to the Group was as follows.

US$ million

Audit of the parent company of the Group
Audit of the subsidiaries

TToottaall aauuddiitt ffeeeess

OOtthheerr sseerrvviicceess

22002200

$$ 11

––

$$ 33

22001199

$ 1

$ 4

22001188

$ 1

$ 4

32. MATERIAL PARTLY-OWNED SUBSIDIARIES

Financial information of subsidiaries that have material non-controlling interests is provided below.

Subsidiary

Raspadskaya

New CF&I (subsidiary of EVRAZ Inc NA)

CCoouunnttrryy ooff
iinnccoorrppoorraattiioonn

Russia

USA

NNoonn--ccoonnttrroolllliinngg iinntteerreessttss aatt 3311 DDeecceemmbbeerr

22002200

4.85%

10.00%

22001199

11.83%

10.00%

22001188

16.16%

10.00%

US$ million

22002200

22001199

22001188

AAccccuummuullaatteedd bbaallaanncceess ooff mmaatteerriiaall nnoonn--ccoonnttrroolllliinngg iinntteerreessttss
Raspadskaya
New CF&I (subsidiary of EVRAZ Inc NA)

Others

PPrrooffiitt aallllooccaatteedd ttoo mmaatteerriiaall nnoonn--ccoonnttrroolllliinngg iinntteerreessttss

Raspadskaya
New CF&I (subsidiary of EVRAZ Inc NA)
Others

$$ 4444

110055

((2200))

112299

1177

––

((77))

$$ 1100

$ 162

105

(15)

252

$ 39

$ 170

103

(16)

257

(14)

$ 64

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

32. MATERIAL PARTLY-OWNED SUBSIDIARIES (CONTINUED)

The summarised financial information regarding these subsidiaries is provided below. This information is based on amounts before inter-company
eliminations. As described in Note 4, at the end of 2020 Raspadskaya acquired Yuzhkuzbassugol. Consequently, the consolidated statement of
financial position of Raspadskaya includes, among others, Yuzhkuzbassugol and its subsidiaries, and the statement of operations and cash flow
information do not include the acquired entities. In addition, at 31 December 2020, the share of non-controlling shareholders takes into account
the potential buyback of 4.25% of Raspadskaya’s shares (Note 4).

SSuummmmaarriisseedd ssttaatteemmeennttss ooff ooppeerraattiioonnss

Raspadskaya

US$ million

Revenue
Cost of revenue

GGrroossss pprrooffiitt//((lloossss))

Operating costs

Impairment of assets

Foreign exchange gains/(losses), net

PPrrooffiitt//((lloossss)) ffrroomm ooppeerraattiioonnss

Non-operating gains/(losses)

PPrrooffiitt//((lloossss)) bbeeffoorree ttaaxx
Income tax benefit/(expense)

NNeett pprrooffiitt//((lloossss))

OOtthheerr ccoommpprreehheennssiivvee iinnccoommee//((lloossss))

TToottaall ccoommpprreehheennssiivvee iinnccoommee//((lloossss))

attributable to non-controlling interests

dividends paid to non-controlling interests

New CF&I

US$ million

Revenue
Cost of revenue

GGrroossss pprrooffiitt//((lloossss))

Operating costs

Impairment of assets

PPrrooffiitt//((lloossss)) ffrroomm ooppeerraattiioonnss

Non-operating gains/(losses)

PPrrooffiitt//((lloossss)) bbeeffoorree ttaaxx
Income tax benefit/(expense)

NNeett pprrooffiitt//((lloossss))

OOtthheerr ccoommpprreehheennssiivvee iinnccoommee//((lloossss))

TToottaall ccoommpprreehheennssiivvee iinnccoommee//((lloossss))

attributable to non-controlling interests

dividends paid to non-controlling interests

22002200

$$ 662277

((444411))

118866

((7777))

––

9944

220033

220077

((4433))

$$ 116644

((224422))

((7788))

((88))

((55))

22002200

$$ 556611

((449966))

6655

((8822))

–

((1177))

2222

((11))

$$ 44

((11))

––

22001199

$ 996

(509)

487

(96)

(92)

(24)

275

298

(64)

$ 234

150

384

(3)

22001199

$ 757

(654)

103

(93)

–

(7)

$ 23

(6)

–

22001188

$ 1,086

(493)

593

(76)

(4)

536

541

(113)

$ 428

(204)

224

–

22001188

$ 808

(690)

118

(88)

(1)

(11)

$ 37

–

Annual report & accounts 2020

228 | 229

32. MATERIAL PARTLY-OWNED SUBSIDIARIES (CONTINUED)

SSuummmmaarriisseedd ssttaatteemmeennttss ooff ffiinnaanncciiaall ppoossiittiioonn aass aatt 3311 DDeecceemmbbeerr

Raspadskaya

US$ million

Property, plant and equipment
Other non-current assets
Current assets

TToottaall aasssseettss

Deferred income tax liabilities

Non-current liabilities

Current liabilities

TToottaall lliiaabbiilliittiieess

TToottaall eeqquuiittyy

attributable to:

equity holders of parent

non-controlling interests

New CF&I

US$ million

Property, plant and equipment
Other non-current assets
Current assets

TToottaall aasssseettss

Deferred income tax liabilities

Non-current liabilities

Current liabilities

TToottaall lliiaabbiilliittiieess

TToottaall eeqquuiittyy

attributable to:

equity holders of parent

non-controlling interests

SSuummmmaarriisseedd ccaasshh ffllooww iinnffoorrmmaattiioonn

Raspadskaya

US$ million

Operating activities
Investing activities

Financing activities

New CF&I

US$ million

Operating activities
Investing activities

Financing activities

22002200

$$ 11,,445522

2244

990066

22,,338822

9966

119966

11,,223300

11,,552222

886600

881166

4444

22002200

$$ 222288

11,,002222

114499

11,,339999

1177

111100

222222

334499

11,,005500

994455

110055

22002200

$$ 8899

((4477))

((5566))

22002200

$$ 2222

((22))

((1199))

22001199

$ 870

1,082

1,961

327

485

1,476

1,314

162

22001199

$ 205

1,038

152

1,395

128

204

348

1,047

942

105

22001199

$ 386

194

(72)

22001199

$ 76

(70)

(6)

22001188

$ 831

113

858

1,802

545

639

1,163

993

170

22001188

$ 173

982

199

1,354

231

324

1,030

927

103

22001188

$ 345

(285)

(37)

22001188

$ 80

(80)

–

33. SUBSEQUENT EVENTS

On 24 February 2021, the Board of directors of EVRAZ plc declared dividends in the amount of $437 million, which represents $0.30 per share.

In January 2021, the Group fully settled its 8.25% notes due 2021.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

34. LIST OF SUBSIDIARIES AND OTHER SIGNIFICANT HOLDINGS

CCoouunnttrryy ooff
iinnccoorrppoorraattiioonn
Canada

NNaammee

RReellaattiioonnsshhiipp

Camrose Pipe Corporation

indirect subsidiary

OOwwnneerrsshhiipp
iinntteerreesstt iinn 22002200
100.00%

RReeggiisstteerreedd aaddddrreessss

NNootteess

9040 N.Burgard Way, Portland, OR 97203

merged

Canada

Canadian National Steel Corporation

indirect subsidiary

100.00%

3300 TD Canada Trust Tower, 421-7
Avenue SW, Calgary Alberta T2P 4K9

merged

Canada

Evraz Canada Holding Company Ltd

indirect subsidiary

100.00%

Canada

EVRAZ Inc. NA Canada

indirect subsidiary

100.00%

Canada

EVRAZ Materials Recycling Inc.

indirect subsidiary

100.00%

Canada

EVRAZ Recycling ( previously General
Scrap Partnership)

EVRAZ Wasco Pipe Protection
Corporation

indirect subsidiary

100.00%

indirect subsidiary

51.00%

Canada

Genalta Recycling Inc.

joint venture

50.00%

Canada

Genlandco Inc.

indirect subsidiary

100.00%

Canada

Kar-basher Manitoba Ltd

joint venture

50.00%

Canada

Kar-basher of Alberta Ltd

indirect subsidiary

100.00%

Canada

King Crusher Inc.

joint venture

50.00%

Canada

New Gensubco Inc.

indirect subsidiary

100.00%

Canada

Sametco Auto Inc.

indirect subsidiary

100.00%

Cyprus

Actionfield Limited

indirect subsidiary

96.36%

Cyprus

East Metals Limited

indirect subsidiary

100.00%

Cyprus

Malvero Holdings Limited

indirect subsidiary

Cyprus

Mastercroft Finance Limited

indirect subsidiary

100.00%

Cyprus

Nafkratos Limited

indirect subsidiary

100.00%

Cyprus

RVK Invest Limited

associate

21.31%

Cyprus

Sinano Shipmanagement Limited

indirect subsidiary

100.00%

Cyprus

Steeltrade Limited

indirect subsidiary

100.00%

Cyprus

Streamcore Limited

joint venture

50.00%

Cyprus

Unicroft Limited

indirect subsidiary

100.00%

suite 2500, 450 – 1st Street S.W.Calgary,
Alberta T2P 5H1

160 Elgin Street, Suite 2600, Ottawa
Ontario K1P 1C3

160 Elgin Street, Suite 2600, Ottawa,
Ontario K1P 1C3

387 Broadway, Winnipeg, Manitoba R3C
0V5

181 Bay Street, Suite 2100, Toronto,
Ontario M5J 2T3

2400, 525 8th Avenue SW
Calgary AB T2P 1G1

387 Broadway, Winnipeg, Manitoba R3C
0V5

merged

387 Broadway, Winnipeg, Manitoba R3C
0V5

3300 TD Canada Trust Tower, 421-7
Avenue SW, Calgary, Alberta T2P 4K9

merged

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

100% controlled
through put option for
the purchase of
shares

3300 TD Canada Trust Tower, 421-7
Avenue SW, Calgary, Alberta T2P 4K9

387 Broadway, Winnipeg, Manitoba R3C
0V5

160 Elgin Street, Suite 2600, Ottawa,
Ontario K1P 1C3

3 Themistokli Dervi, Julia House, 1066,
Nicosia

Themistokli Dervi, 3, Julia House, P.C. 1066,
Nicosia, Cyprus

3 Themistokli Dervi, Julia House, 1066,
Nicosia

Leoforos Archiepiskopou Makariou lll, 135,
EMELLE Building, flat/office 22, 3021,
Limassol

Cyprus

Velcast Limited

indirect subsidiary

100.00%

3 Themistokli Dervi, Julia House, 1066,
Nicosia

liquidated

Annual report & accounts 2020

230 | 231

34. LIST OF SUBSIDIARIES AND OTHER SIGNIFICANT HOLDINGS (CONTINUED)

CCoouunnttrryy ooff
iinnccoorrppoorraattiioonn
Czech
Republic

NNaammee

RReellaattiioonnsshhiipp

EVRAZ Nikom, a.s.

indirect subsidiary

OOwwnneerrsshhiipp
iinntteerreesstt iinn 22002200
100.00%

RReeggiisstteerreedd aaddddrreessss

NNootteess

Mnisek pod Brdy, c. 900, 25210

Kazakhstan

Evraz Caspian Steel

indirect subsidiary

65.00%

41, ul. Promyshlennaya, Kostanai, 110000

Kazakhstan

EvrazMetall Kazakhstan

indirect subsidiary

100.00%

office 411; 29, prospekt Jenis, Saryarka
district, Nur-Sultan

Luxembourg

Evraz Group S.A.

direct subsidiary

100.00%

13, avenue Monterey, L-2163, Luxembourg

Mexico

EVRAZ NA Mexico

indirect subsidiary

100.00%

Frida Kahlo 195-709, Valle Оrientе, San
Pedro Garza Garcia, Nuevo Leon, 66269

Netherlands

ECS Holdings Europe B.V.

indirect subsidiary

65.00%

Hoogoorddreef 15, 1101 BA Amsterdam

Republic of
S.Africa

EVRAZ Highveld Steel and Vanadium
Limited

indirect subsidiary

85.11%

Old Pretoria Road, Portion 93 of the Farm
Schoongezicht 308 JS eMalahleni (Witbank)

deconsolidated in
2015

Republic of
S.Africa

Mapochs Mine (Proprietary) Limited

indirect subsidiary

62.98%

Mapochs Mine Community Trust

indirect subsidiary

Old Pretoria Road, Portion 93 of the Farm
Schoongezicht 308 JS eMalahleni (Witbank)

deconsolidated in
2015

Portion 93 of the farm Schoongezicht
No.308 JS, eMalahleni

deconsolidated in
2015

Russia

Aktiv-Media

indirect subsidiary

100.00%

Russia

Allegro

associate

50.00%

Russia

ATP Yuzhkuzbassugol

indirect subsidiary

90.90%

Russia

AVT-Ural

indirect subsidiary

51.00%

Russia

Blagotvoritelniy fond Evraza - Sibir

Russia

Blagotvoritelniy fond Evraza - Ural

indirect subsidiary -
non-commercial

office 6; 35, ul. Ordzhonikidze,
Novokuznetsk, Kemerovskaya obl., 654007

office 2/2, bld.2, ul. Vladislava Tetyukhina,
Verhnyaya Salda, Sverdlovskaya obl.,
624760

20, Silikatnaya, Novokuznetsk,
Kemerovskaya obl., 654086

2, ul. Sverdlova, Kachkanar, Sverdlovskaya
obl., 624351

1, ul. Ploshad Pobedy, Novokuznetsk,
Kemerovskaya obl., 654006

office 4, 39, ul. Karl Marks, Nizhny Tagil,
Sverdlovskaya obl., 622001

Russia

Brianskmetallresursy

indirect subsidiary

99.95%

14, ul. Staleliteinaya, Bryansk, 241035

Russia

Centr kultury i iskusstva NTMK

indirect subsidiary -
non-commercial

Russia

Centr podgotovki personala Evraz-
Ural

indirect subsidiary -
non-commercial

1, ul. Metallurgov, Nizhny Tagil,
Sverdlovskaya obl., 622025

Russia

Centr Servisnykh Resheniy

indirect subsidiary

100.00%

Russia

Centralnaya Obogatitelnaya Fabrika
Abashevskaya

indirect subsidiary

83.72%

1, ul. Rudokoprovaya, Novokuznetsk,
Kemerovskaya obl., 654063

12, Tupik Strelochny, Novokuznetsk,
Kemerovskaya obl., 654086

Russia

Centralnaya Obogatitelnaya Fabrika
Kuznetskaya

indirect subsidiary

90.90%

16, Shosse Severnoe, Novokuznetsk,
Kemerovskaya obl., 654043

Russia

Elektrosvyaz YKU

indirect subsidiary

79.27%

Russia

EVRAZ Consolidated West-Siberian
metallurgical Plant

EVRAZ Kachkanarsky Ore Mining
and Processing Plant

indirect subsidiary

100.00%

indirect subsidiary

100.00%

Russia

EVRAZ Metall Inprom

indirect subsidiary

100.00%

Russia

EVRAZ Nizhny Tagil Metallurgical
Plant

direct subsidiary

100.00%

33, Prospect Kurako, Novokuznetsk,
Kemerovskaya obl., 654006

16, ul. Shosse Kosmicheskoe,
Novokuznetsk, Kemerovskaya obl., 654043

2, ul. Sverdlova, Kachkanar, Sverdlovskaya
obl., 624351

2-a, ul. Marshala Zhukova, Taganrog,
Rostovskaya obl., 347942

1, ul. Metallurgov, Nizhny Tagil,
Sverdlovskaya obl., 622025

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

liquidated

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

34. LIST OF SUBSIDIARIES AND OTHER SIGNIFICANT HOLDINGS (CONTINUED)

CCoouunnttrryy ooff
iinnccoorrppoorraattiioonn
Russia

NNaammee

RReellaattiioonnsshhiipp

EVRAZ Uzlovaya

indirect subsidiary

OOwwnneerrsshhiipp
iinntteerreesstt iinn 22002200
100.00%

RReeggiisstteerreedd aaddddrreessss

NNootteess

4, ul.Entuziastov, kvartal 5 Pyatiletka,
Uzlovaya, Tulskaya obl., 301600

Russia

EVRAZ Vanady Tula

indirect subsidiary

100.00%

1, ul. Przhevalskogo, Tula, 300016

Russia

EVRAZ Yuzhny Stan

indirect subsidiary

100.00%

Russia

Evrazenergotrans

indirect subsidiary

50.00%

1, ul. Zarechnaya, rabochy poselok Ust-
Donetsky, Ust-Donetsky raion, Rostovskaya
obl., 346550

4, ul. Rudokoprovaya, Novokuznetsk,
Kemerovskaya obl., 654006

controlled through put
option for the
purchase of shares of
Malvero Holdings
Limited

Russia

EvrazHolding Finance

indirect subsidiary

100.00%

office 14; 62, ul. Internationalnaya, Kyzyl,
Tyva Republic, 667000

Russia

EvrazHolding LLC

indirect subsidiary

100.00%

4, ul. Belovezhskaya, Moscow, 121353

Russia

EvrazService

indirect subsidiary

100.00%

4, ul. Belovezhskaya, Moscow, 121353

Russia

Evraztekhnika

indirect subsidiary

100.00%

4, ul. Belovezhskaya, Moscow, 121353

Russia

Ferro-Building

indirect subsidiary

80.00%

Russia

Gurievsky rudnik

indirect subsidiary

100.00%

Russia

Industrialnaya Vostochno-
Evropeiskaya company

indirect subsidiary

100.00%

Russia

KachkanarEnergoTrans

indirect subsidiary

50.00%

office 402A, 6, bld. 1, 1st Nagatinsky
proezd, Moscow, 117105

1, ul. Zhdanova, Gurievsk, Kemerovskaya
obl., 652780

floor 5, office 1, 9, ul. Khimicheskaya,
Taganrog, Rostovskaya obl., 347913

office 115; 2, ul. Sverdlova, Kachkanar,
Sverdlovskaya obl., 624351

controlled through put
option for the
purchase of shares of
Malvero Holdings
Limited

Russia

Kachkanarskaya
teplosnabzhauschaya company

indirect subsidiary

100.00%

17, 8 microraion, Kachkanar, Sverdlovskaya
obl., 624350

Russia

Kulturno-sportivniy centr metallurgov

indirect subsidiary -
non-commercial

20, Prospect Metallurgov, Novokuznetsk,
Kemerovskaya obl., 654006

Russia

Kuznetskpogruztrans

indirect subsidiary

85.90%

18, ul. Promyshlennaya, Novokuznetsk,
Kemerovskaya obl., 654029

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

Russia

Kuznetskteplosbyt

indirect subsidiary

100.00%

Russia

Magnit

indirect subsidiary

Russia

Managing Company EVRAZ
Mezhdurechensk

indirect subsidiary

100.00%

Russia

Medsanchast Vanady

indirect subsidiary

100.00%

Russia

Metallenergofinance

indirect subsidiary

100.00%

Russia

Metservice

indirect subsidiary

100.00%

Russia

Mezhegeyugol Coal Company

indirect subsidiary

90.90%

Russia

Mine Abashevskaya

indirect subsidiary

90.90%

4, ul. Rudokoprovaya, Novokuznetsk,
Kemerovskaya obl., 654006

4, ul. Sverdlova, Kachkanar, Sverdlovskaya
obl., 624351

69, ul. Kirova, Novokuznetsk,
Kemerovskaya obl., 654080

1, Zeleny Mys district, Kachkanar,
Sverdlovskaya obl., 624350

4, ul. Rudokoprovaya, Novokuznetsk,
Kemerovskaya obl., 654006

90, ul. Industrialnaya, Nizhny Tagil,
Sverdlovskaya obl., 622000

62, ul. Internationalnaya, Kyzyl, Tyva
Republic, 667000

5, ul. Kavkazskaya, Novokuznetsk,
Kemerovskaya obl., 654013

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

Annual report & accounts 2020

232 | 233

34. LIST OF SUBSIDIARIES AND OTHER SIGNIFICANT HOLDINGS (CONTINUED)

CCoouunnttrryy ooff
iinnccoorrppoorraattiioonn
Russia

NNaammee

RReellaattiioonnsshhiipp

Mine Alardinskaya

indirect subsidiary

OOwwnneerrsshhiipp
iinntteerreesstt iinn 22002200
90.90%

Russia

Mine Esaulskaya

indirect subsidiary

90.90%

RReeggiisstteerreedd aaddddrreessss

NNootteess

56, ul. Ugolnaya, Malinovka, Kaltan,
Kemerovskaya obl., 652831

33, Prospect Kurako, Novokuznetsk,
Kemerovskaya obl., 654006

Russia

Mine Osinnikovskaya

indirect subsidiary

90.90%

3, ul. Shakhtovaya, Osinniki, Kemerovskaya
obl., 652804

Russia

Mine Uskovskaya

indirect subsidiary

90.90%

33, Prospect Kurako, Novokuznetsk,
Kemerovskaya obl., 654006

Russia

Mining Metallurgical Company
“Timir”

joint venture

51.00%

Russia

Montazhnik Raspadskoy

indirect subsidiary

90.90%

Russia

Mordovmetallotorg

indirect subsidiary

99.90%

Russia

MU-Invest

indirect subsidiary

90.90%

Russia

Nizhny Tagil Telecompany Telecon

indirect subsidiary

Russia

Novokuznetskmetallopttorg

associate

48.51%

4, Prospect Geologov, Neryungri, Republic
of Saha (Yakutia), 678960

office 408; 106, ul. Mira, Mezhdurechensk,
Kemerovskaya obl.,652870

39, Aleksandrovskoe Shosse, Saransk,
Respublica Mordovia, 430006

office 79, 4, ul. Belovezhskaya, Moscow,
121353

74, ul. Industrialnaya, Nizhny Tagil,
Sverdlovskaya obl., 622034

16, ul. Chaikinoi, Novokuznetsk,
Kemerovskaya obl., 654005

Russia

Ohothichie hozyaistvo

indirect subsidiary -
non-commercial

1, ul. Metallurgov, Nizhny Tagil,
Sverdlovskaya obl., 622025

Russia

Olzherasskoye
shakhtoprokhodcheskoye upravlenie

indirect subsidiary

90.90%

office 331; 106, ul. Mira, Mezhdurechensk,
Kemerovskaya obl.,652870

Russia

Osinnikovsky remontno-
mekhanichesky zavod

indirect subsidiary

76.75%

1/2, ul. Pervogornaya, Osinniki,
Kemerovskaya obl., 652804

Russia

Promuglepoject

indirect subsidiary

90.90%

4, ul. Nevskogo, Novokuznetsk,
Kemerovskaya obl., 654006

Russia

Publishing House IKaR

indirect subsidiary

Russia

Raspadskaya

direct subsidiary

90.90%

Russia

Raspadskaya Coal Company

indirect subsidiary

90.90%

Russia

Raspadskaya Preparation Plant

indirect subsidiary

90.90%

Russia

Raspadskaya-Koksovaya

indirect subsidiary

90.90%

4, ul. Sverdlova, Kachkanar, Sverdlovskaya
obl., 624350

106, ul. Mira, Mezhdurechensk,
Kemerovskaya obl.,652870

office 201; 33, Prospect Kurako,
Novokuznetsk, Kemerovskaya obl.,
654006

office 203; 106, ul. Mira, Mezhdurechensk,
Kemerovskaya obl.,652870

office 424; 106, ul. Mira, Mezhdurechensk,
Kemerovskaya obl.,652870

excluding the effect of
derecognition of
4.25% in
Raspadskaya (Note 4)

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

34. LIST OF SUBSIDIARIES AND OTHER SIGNIFICANT HOLDINGS (CONTINUED)

CCoouunnttrryy ooff
iinnccoorrppoorraattiioonn
Russia

NNaammee

RReellaattiioonnsshhiipp

Razrez Raspadskiy

indirect subsidiary

OOwwnneerrsshhiipp
iinntteerreesstt iinn 22002200
90.90%

RReeggiisstteerreedd aaddddrreessss

NNootteess

office 213; 106, ul. Mira, Mezhdurechensk,
Kemerovskaya obl.,652870

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

Russia

Regional Media Company

indirect subsidiary

Russia

Regionalniy Centr podgotovki
personala Evraz-Sibir

indirect subsidiary -
non-commercial

Russia

Rembytcomplex

indirect subsidiary

100.00%

Russia

Sanatoriy-porfilactory Lenevka

indirect subsidiary -
non-commercial

Russia

Sfera

indirect subsidiary

100.00%

Russia

Sibir-VK

joint venture

50.00%

Russia

Sibmetinvest

indirect subsidiary

100.00%

4, ul. Belovezhskaya, Moscow, 121353

4, ul. Nevskogo, Novokuznetsk,
Kemerovskaya obl., 654006

8, 8 microraion, Kachkanar, Sverdlovskaya
obl., 624351

Nikolopoltavskoye post-office, Lenevka,
Prigorodny district, Sverdlovskaya obl.,
622911

office 315; 205, ul. 8 Marta, Ekaterinburg,
Sverdlovskaya obl., 620085

office 302, 37A, ul. Kutuzova,
Novokuznetsk, Kemerovskaya obl., 654041

office 10; 1, 1st km of Rublevo-Uspenskoye
shosse, der. Razdory, Odintsovo area,
Moscow region, 143082

Russia

Specializirovanniy registrator
KOMPAS

Specializirovannoye
Shakhtomontazhno-naladochnoye
upravlenie

investment

11.16%

57, Prospect Stroiteley, Novokuznetsk,
Kemerovskaya obl., 654005

sold

indirect subsidiary

45.12%

28, proezd Zaschitny, Novokuznetsk,
Kemerovskaya obl., 654034

Russia

Sportivniy complex Uralets

indirect subsidiary -
non-commercial

Russia

Sportivno-Ozdorovitelny complex
Metallurg-Forum

indirect subsidiary -
non-commercial

Russia

Tagilteplosbyt

indirect subsidiary

100.00%

Russia

Tomusinskoye pogruzochno-
transportnoye upravlenie

indirect subsidiary

53.26%

36, Gvardeisky bulvar, Nizhny Tagil,
Sverdlovskaya obl., 622005

office 26; 61, ul. Krasnogvardeiskaya,
Nizhny Tagil, Sverdlovskaya obl., 622013

78A, ul. Industrialnaya, Nizhny Tagil,
Sverdlovskaya obl., 622059

office 209; 106, ul. Mira, Mezhdurechensk,
Kemerovskaya obl.,652870

controlled through put
option for the
purchase of shares of
Malvero Holdings
Limited

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

Russia

Trade Company EvrazHolding

indirect subsidiary

100.00%

4, ul. Belovezhskaya, Moscow, 121353

Russia

TV-Most

indirect subsidiary

Russia

TVN

indirect subsidiary

Russia

Uliyanovskmetall

indirect subsidiary

99.37%

office 164, 31, Moscovsky prospect,
Kemerovo, 650065

office 16; 35, ul. Ordzhonikidze,
Novokuznetsk, Kemerovskaya obl., 654007

20, 11 proezd Inzhenerny, Ulyanovsk,
432072

Russia

United accounting systems

indirect subsidiary

100.00%

office 205; 1, ul. Rudokoprovaya,
Novokuznetsk, Kemerovskaya obl., 654063

liquidated

Russia

United Coal Company
Yuzhkuzbassugol

indirect subsidiary

90.90%

33, Prospect Kurako, Novokuznetsk,
Kemerovskaya obl., 654006

Russia

Upravlenie po montazhu,
demontazhu i remontu
gornoshakhtnogo oborudovaniya

indirect subsidiary

90.90%

3, ul. Shakhtovaya, Osinniki, Kemerovskaya
obl., 652804

Russia

Vanady-transport

indirect subsidiary

100.00%

2, ul. Sverdlova, Kachkanar, Sverdlovskaya
obl., 624351

Russia

Vladimirmetallopttorg

indirect subsidiary

95.64%

57, ul. P. Osipenko, Vladimir, 600009

Russia

Vtorresurs-Pererabotka

joint venture

50.00%

37A, ul. Kutuzova, Novokuznetsk,
Kemerovskaya obl., 654041

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

Annual report & accounts 2020

234 | 235

34. LIST OF SUBSIDIARIES AND OTHER SIGNIFICANT HOLDINGS (CONTINUED)

CCoouunnttrryy ooff
iinnccoorrppoorraattiioonn
Russia

NNaammee

Yuzhno-Kuzbasskoye
geologorazvedochnoye upravlenie

RReellaattiioonnsshhiipp

indirect subsidiary

OOwwnneerrsshhiipp
iinntteerreesstt iinn 22002200
90.90%

Russia

ZAO Irkutskvtorchermet

associate

21.31%

Russia

ZAO Vtorchermet

associate

21.31%

RReeggiisstteerreedd aaddddrreessss

NNootteess

excluding the effect of
derecognition of
4.25% in Raspadskaya
(Note 4)

33, Prospect Kurako, Novokuznetsk,
Kemerovskaya obl., 654006

office 212, bld. ZAO Vtorchermet, ul.
Severny Promuzel, Irkutsk, 664053

office 211, bld. ZAO Vtorchermet, ul.
Severny promuzel, Irkutsk, 664053

Russia

Zapadnye Vorota

indirect subsidiary

100.00%

4, ul. Belovezhskaya, Moscow, 121353

Russia

Zavod metallurgicheskih reagentov

associate

50.00%

1, ul. Metallurgov, Nizhny Tagil,
Sverdlovskaya obl., 622025

Switzerland

East Metals A.G.

indirect subsidiary

100.00%

Baarerstrasse 131, 6300 Zug

Switzerland

East Metals Shipping A.G.

indirect subsidiary

100.00%

Baarerstrasse 131, 6300 Zug

United
Kingdom

EVRAZ North America plc

indirect subsidiary

100.00%

Suite 1, 3rd Floor,
11-12 St James’s Square
London
SW1 4LB

USA

CF&I Steel LP

indirect subsidiary

90.00%

1612 E Abriendo Pueblo, CO 81004

Colorado and Wyoming Railway
Company

indirect subsidiary

90.00%

2100 S. Freeway Pueblo, CO 81004

East Metals North America, LLC

indirect subsidiary

100.00%

East Metals Services Inc.

indirect subsidiary

100.00%

71 S.Wacker, Suite 1700, Chicago, IL
60606

liquidated

EVRAZ Claymont Steel, Inc.

indirect subsidiary

100.00%

EVRAZ Inc. NA

indirect subsidiary

100.00%

EVRAZ Trade NA LLC

indirect subsidiary

100.00%

71 S.Wacker, Suite 1700, Chicago, IL
60606

Fremont County Irrigating Ditch Co.

investment

13.50%

113 W. 5th Street Florence, CO 81226

General Scrap Inc.

indirect subsidiary

100.00%

3101 Valley Street Minot, ND 58702

New CF&I Inc.

indirect subsidiary

90.00%

1612 E Abriendo Pueblo, CO 81004

Oregon Ferroalloy Partners

indirect subsidiary

60.00%

14400 Rivergate Blvd. Portland, OR 97203

Oregon Steel Mills Processing Inc.

indirect subsidiary

100.00%

OSM Distribution Inc.

indirect subsidiary

100.00%

Palmer North America LLC

indirect subsidiary

90.00%

71 S.Wacker, Suite 1700, Chicago, IL
60606

liquidated

251 Little Falls Drive, Wilmington, Delaware
19808

Union Ditch and Water Co.

indirect subsidiary

57.59%

113 W. 5th Street Florence, CO 81226

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

SEPARATE FINANCIAL STATEMENTS
EVRAZ plc
Separate Financial Statements
WITH NOTES
for the year ended 31 December 2020

Separate statement of comprehensive income

(In millions of US dollars)

General and administrative expenses

Operating income

Impairment of investments

Foreign exchange gains/(losses)

Interest expense

Gain/(loss) on financial assets or liabilities

Dividend income

Other non-operating gains/(losses)

PPrrooffiitt bbeeffoorree ttaaxx

Current income tax expense

NNeett pprrooffiitt

TToottaall ccoommpprreehheennssiivvee iinnccoommee

The accompanying notes form an integral part of these separate financial statements.

NNootteess

22002200

22001199

3311 DDeecceemmbbeerr

66,,99

33,,66,,77,,88

$$ ((1122))

1100

((7766))

((4499))

((223399))

––

22,,112299

11,,776655

((221133))

11,,555522

$ (11)

(318)

(199)

(211)

(6)

9,732

9,029

(139)

8,890

$$ 11,,555522

$ 8,890

Annual report & accounts 2020

236 | 237

Separate statement of financial position

(In millions of US dollars)

AASSSSEETTSS

NNoonn––ccuurrrreenntt aasssseettss

Investments in subsidiaries

Investments in joint ventures

Receivables from related parties

CCuurrrreenntt aasssseettss

Receivables from related parties

Dividends receivable from related parties

Income tax receivable

TTOOTTAALL AASSSSEETTSS

EEQQUUIITTYY AANNDD LLIIAABBIILLIITTIIEESS

CCaappiittaall aanndd rreesseerrvveess

Issued capital

Treasury shares

Reorganisation reserve

Merger reserve

Share-based payments

Accumulated profits

LLIIAABBIILLIITTIIEESS

NNoonn--ccuurrrreenntt lliiaabbiilliittiieess

Trade and other payables

Long-term loans

Loans payable to related parties

Financial guarantee liabilities

CCuurrrreenntt lliiaabbiilliittiieess

Trade and other payables

Payables to related parties

Short-term loans and current portion of long-term loans

Loans payable to related parties

Financial guarantee liabilities

Income tax payable

TTOOTTAALL LLIIAABBIILLIITTIIEESS

NNootteess

3311 DDeecceemmbbeerr

22002200

22001199

33,,88

$$ 1155,,005577

$ 15,095

2233

1122

1155,,009922

1122

770044

1166

773322

15,136

629

654

1155,,882244

15,790

7755

((115544))

((558844))

112277

117733

99,,883355

99,,447722

11,,996611

33,,220011

1122

55,,117788

880000

228855

7700

11,,117744

66,,335522

(169)

(584)

127

162

9,170

8,781

2,747

522

3,295

3,151

424

3,714

7,009

TTOOTTAALL EEQQUUIITTYY AANNDD LLIIAABBIILLIITTIIEESS

$$ 1155,,882244

$ 15,790

The Financial Statements on pages 236 to 249 were approved by the Board of Directors on 24 February 2021 and signed on its behalf
by Alexander Frolov, Chief Executive Officer.

The accompanying notes form an integral part of these separate financial statements.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationSeparate statement of cash flows

(In millions of US dollars)

CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess

Net profit

Adjustments to reconcile net loss to net cash flows from operating activities:

NNootteess

22002200

22001199

$$ 11,,555522

$ 8,890

Impairment of investments

Foreign exchange (gains)/losses

Interest expense

(Gain)/loss on financial assets or liabilities

Dividend income

Other non-operating (gains)/losses

Changes in working capital:

Payables/receivables from related parties

Income tax receivable

Trade and other payables

Taxes payable

NNeett ccaasshh ffllooww uusseedd iinn ooppeerraattiinngg aaccttiivviittiieess

CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess

Dividends received

Payment for acquisition of investments in subsidiaries

NNeett ccaasshh ffllooww ffrroomm iinnvveessttiinngg aaccttiivviittiieess

CCaasshh fflloowwss ffrroomm ffiinnaanncciinngg aaccttiivviittiieess

Proceeds from bank loans and notes

Repayment of bank loans and notes, including interest

Proceeds from loans provided by related parties

Repayment of loans provided by related parties, including interest

Payments for investments on deferred terms, including interest

Dividends paid to shareholders

NNeett ccaasshh ffllooww uusseedd iinn//((ffrroomm)) ffiinnaanncciinngg aaccttiivviittiieess

Effect of foreign exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr

SSuupppplleemmeennttaarryy ccaasshh ffllooww iinnffoorrmmaattiioonn::

Interest paid to third parties

Interest paid to related parties

Income taxes paid

The accompanying notes form an integral part of these separate financial statements.

33,,66,,77

7766

4499

223399

––

((22,,112299))

((22))

((221155))

((6644))

––

((77))

221133

((7733))

11,,777777

((4477))

11,,773300

––

((118888))

11,,334455

((11,,994477))

––

((887722))

((11,,666622))

––

$$ ––

((117733))

((110022))

––

318

199

211

(9,732)

(33)

(141)

(1)

(16)

(7)

140

(25)

784

––

784

695

(854)

1,736

(1,241)

(8)

(1,086)

(758)

(1)

–

$ –

(129)

(71)

(16)

Annual report & accounts 2020

238 | 239

Separate statement of changes in equity

(In millions of US dollars)

NNootteess

IIssssuueedd

ccaappiittaall

TTrreeaassuurryy
sshhaarreess

RReeoorrggaanniissaattiioonn
rreesseerrvvee

MMeerrggeerr
rreesseerrvvee

SShhaarree--bbaasseedd
ppaayymmeennttss

AAccccuummuullaatteedd
pprrooffiittss

TToottaall

AAtt 3311 DDeecceemmbbeerr 22001188

$ 75

$ (196)

$ (584)

$ 127

$ 149

$ 1,393

$ 964

Total comprehensive
loss for the year

Share-based payments

Dividends declared

Transfer of treasury
shares to participants of
the Incentive Plans

AAtt 3311 DDeecceemmbbeerr 22001199

Total comprehensive
income for the year

Share-based payments

Dividends declared

Transfer of treasury
shares to participants of
the Incentive Plans

AAtt 3311 DDeecceemmbbeerr 22002200

–

8,890

–

8,890

(1,086)

(27)

–

$$ 7755

$$ ((116699))

$$ ((558844))

$$ 112277

$$ 116622

$$ 99,,117700

$$ 88,,778811

––

1155

––

1111

––

11,,555522

––

((887722))

((1155))

1111

((887722))

––

$$ 7755

$$ ((115544))

$$ ((558844))

$$ 112277

$$117733

$$ 99,,883355

$$ 99,,447722

The accompanying notes form an integral part of these separate financial statements.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

EVRAZ plc
Notes to the separate financial statements
Year ended 31 December 2020

1. CORPORATE INFORMATION

These separate financial statements were authorised for issue by the Board of Directors of EVRAZ plc on 24 February 2021.

EVRAZ plc (“EVRAZ plc” or “the Company”) was incorporated on 23 September 2011 as a public company limited by shares under the laws of
the United Kingdom. The Company was incorporated under the Companies Act 2006 with the registered number in England 7784342. The Company’s
registered address is 2 Portman street, London, W1H 6DU, United Kingdom.

The Company, together with its subsidiaries (the “Group”), is involved in the production and distribution of steel and related products, vanadium
products and coal and iron ore mining. The Group is one of the largest steel producers globally.

At 31 December 2020 and 2019, EVRAZ plc was jointly controlled by a group of 3 shareholders: Greenleas International Holdings Limited (BVI),
Abiglaze Limited (Cyprus) and Crosland Global Limited (Cyprus).

2. SIGNIFICANT ACCOUNTING POLICIES

BBaassiiss ooff PPrreeppaarraattiioonn

These separate financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of
the Companies Act 2006.

International financial reporting standards are issued by the International Accounting Standard Board (“IASB”).

These financial statements have been prepared on a going concern basis as the directors believe that there are no material uncertainties which could
create a significant doubt as to the Company’s ability to continue as a going concern in the foreseeable future.

FFoorreeiiggnn CCuurrrreennccyy TTrraannssaaccttiioonnss

The presentation and functional currency of the Company is the US dollar. Transactions in foreign currencies are initially recorded in US dollars at
the rate on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange at the
balance sheet date. Exchange gains and losses are recognised in profit or loss.

IInnvveessttmmeennttss

Investments in subsidiaries, associates or joint ventures are initially recorded at acquisition cost. Impairment in value is recorded if the carrying value
of an investment exceeds its recoverable amount.

The initial cost of the investment in Evraz Group S.A. was measured at the carrying amount of the equity items of Evraz Group S.A. as a separate legal
entity at the date of the reorganisation (Note 3).

Dividend income is recognised as revenue when the Company’s right to receive the payment is established.

All purchases and sales of investments are recognised on the settlement date, which is the date when the investment is delivered to or by the
Company.

CCaasshh aanndd CCaasshh EEqquuiivvaalleennttss

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

BBoorrrroowwiinnggss

PPrroovviissiioonnss

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, and when it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of
the obligation. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised
as a separate asset but only when the reimbursement is virtually certain.

Annual report & accounts 2020

240 | 241

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FFiinnaanncciiaall GGuuaarraanntteeee LLiiaabbiilliittiieess

Financial guarantee liabilities issued by the Company are those contracts that require a payment to be made to reimburse the incurred losses because
the specified debtor or counterparty to a contract fails to make payments or to perform the agreed terms of a contract. Financial guarantees issued by
the Company are recognised initially as a liability at fair value, being equal to the estimated future cash inflows receivable from the subsidiaries under
the guarantee agreements, with a corresponding recognition of the same amount as receivables from related parties. Subsequently, the liability is
amortised over the lives of the guarantees through the statement of comprehensive income, unless it is considered probable that a guarantee will be
called, in which case it is measured at the value of the guaranteed amount payable, if higher.

3. INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES

Investments in subsidiaries and joint ventures consisted of the following as of 31 December:

Subsidiaries

Evraz Group S.A.

EVRAZ NTMK

Raspadskaya

Joint Ventures

Timir

OOwwnneerrsshhiipp iinntteerreesstt

CCoosstt,, nneett ooff iimmppaaiirrmmeenntt UUSS$$ mmiilllliioonn

22002200

22001199

22002200

22001199

110000%%

9900..9900%%

100%

88.16%

22,,880088

1100,,778811

11,,446688

1155,,005577

2,884

10,771

1,440

15,095

5511..0000000011%%

51.00001%

2233

The movement in investments was as follows:

$US million

3311 DDeecceemmbbeerr 22001188

Additional investments

Impairment loss (recognition)/reversal

Share-based compensations

3311 DDeecceemmbbeerr 22001199

Additional investments

Impairment loss (recognition)/reversal

Share-based compensations

EEvvrraazz GGrroouupp SS..AA..

$ 3,197

–

(316)

NNTTMMKK

$ –

10,761

–

RRaassppaaddsskkaayyaa

$ –

1,440

–

$$ 22,,888844

$$ 1100,,777711

$$ 11,,444400

––

((7777))

––

1100

2288

––

TTiimmiirr

$ 24

–

(2)

–

$$ 2222

––

TToottaall

$ 3,221

12,201

(318)

$$ 1155,,111177

2288

((7766))

1111

3311 DDeecceemmbbeerr 22002200

$$22,,880088

$$ 1100,,778811

$$11,,446688

$$ 2233

$$1155,,008800

The Company recognises share-based payments made to employees of subsidiaries under control of Evraz Group S.A., EVRAZ NTMK and Raspadskaya
as an addition to the cost of its investments in these subsidiaries (Note 5).

The accumulated impairment of the investments was as follows:

$US million

3311 DDeecceemmbbeerr 22001188

Impairment loss (recognition)/reversal

3311 DDeecceemmbbeerr 22001199

Impairment loss (recognition)/reversal

3311 DDeecceemmbbeerr 22002200

Evraz Group S.A.

EEvvrraazz GGrroouupp SS..AA..

EEVVRRAAZZ NNTTMMKK

RRaassppaaddsskkaayyaa

$ –

(316)

$$ ((331166))

((7777))

$$ ((339933))

$ –

–

$$ –

––

$$ –

$ –

–

$$ –

––

$$ –

TTiimmiirr

$ (125)

(2)

$$ ((112277))

$$ ((112266))

TToottaall

$ (125)

(318)

$$ ((444433))

((7766))

$$((551199))

In 2011, the Company acquired Evraz Group S.A. by means of the share exchange offer made by the Company to the shareholders of Evraz Group S.A.
At that date the cost of investments in Evraz Group S.A. was measured at the carrying amount of the equity items shown in the separate accounts of
Evraz Group S.A. at the dates of the share exchange. In 2020 and 2019, the Company impaired its investment in Evraz Group S.A. largely as
a consequence of the decline in value of cash-generating units of EVRAZ Inc. NA Canada. More details are provided in Note 6 of the consolidated
financial statements.

EVRAZ NTMK

On 18 April 2019, the Company acquired 100% ownership interest in EVRAZ NTMK from Evraz Group S.A. for consideration of $10,761 million, which
was partially settled by non-cash consideration (Note 6). At 31 December 2019, the Company owed $2,899 million to Evraz Group S.A. in respect of
this acquisition. In 2020, the Company paid $25 million under these liabilities and the remaining balance was converted into a loan (Note 6).

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

3. INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES (CONTINUED)

Raspadskaya

On 18 April 2019, the Company acquired 84.33% ownership interest in Raspadskaya from Evraz Group S.A. for consideration of $1,423 million, which
was settled wholly by non-cash consideration (Note 6). Later in 2019, the Company acquired 1.33% in Raspadskaya from Evraz Group S.A. for cash
consideration of $17 million, which in 2020 was converted into a loan payable to Evraz Group S.A. in the amount of $15 million (Note 6).

In 2020, the Company acquired an additional 2.74% interest in Raspadskaya from Evraz Group S.A. for cash consideration of $28 million of which
$22 million was paid in cash (Note 6).

OJSC Mining and Metallurgical Company Timir

Since 2013 the Company has owned a 51% ownership interest in the joint venture with Alrosa for the development of iron ore deposits in the Yakutia
region in Russia. The Company’s consideration for this stake of 4,950 million roubles was recognised in the amount of $149 million being the present
value of the expected cash outflows at the exchange rate as of the date of the transaction. During 2013-2019 the Company paid deferred installments
for this acquisition. In 2019, the Company paid the final tranche of 480 million roubles ($7 million of purchase consideration and $1 million of interest
charges).

In 2016 and before, due to the postponement of the major project activities, the Company impaired its investment in Timir. In 2019, the Company
additionally impaired $2 million and in 2020 a $1 million impairment loss was reversed.

Additional information regarding Timir is provided in Note 11 of the consolidated financial statements.

Indirect Subsidiaries and Other Significant Holdings

The full list of indirect subsidiaries and other significant holdings of EVRAZ plc is presented in Note 34 of the consolidated financial statements.

4. EQUITY

Share Capital

NNuummbbeerr ooff sshhaarreess

3311 DDeecceemmbbeerr

22002200

22001199

Ordinary shares of $0.05 each, issued and fully paid

11,,550066,,552277,,229944

1,506,527,294

EVRAZ plc does not have an authorised limit on its share capital.

Treasury Shares

NNuummbbeerr ooff sshhaarreess

Treasury shares

3311 DDeecceemmbbeerr

22002200

22001199

4499,,665544,,669911

54,620,233

In 2015, EVRAZ plc purchased 108,458,508 of its own shares. These shares are used for the Company’s Incentive Plans (Note 21 of the consolidated
financial statements). Under these plans, in 2020 and 2019, the Company transferred to the participants of Incentive Plans 4,965,542 and
8,556,954 shares, respectively.

Reorganisation Reserve

Reorganisation reserve represents the difference between the net assets of Evraz Group S.A. at the date of the Group’s reorganisation (7 November
2011) and the par value of the issued shares of EVRAZ plc. This charge to equity reduced the amount of distributable reserves.

Merger Reserve

The merger reserve arose in 2013 in connection with the purchase of 50% in Corber Enterprises S.à r.l. (“Corber”) in accordance with section 612 of
the Companies Act 2006. Impairments of the carrying value of this investment were transferred to the merger reserve.

In 2015, the disposal of the investment in Corber to Evraz Group S.A. (Note 3) was made for non-cash consideration, which does not meet the criteria
for qualifying consideration. The balance of the merger reserve will be presented as a separate component of equity in the Company’s statement of
financial position until such time as Evraz Group S.A. is sold for qualifying consideration, and the merger reserve will be re-allocated to accumulated
profits and become distributable.

Annual report & accounts 2020

242 | 243

4. EQUITY (CONTINUED)

Dividends

In 2020 and 2019, the Company declared dividends in the amount of $872 million and $1,086 million, respectively (Note 20 of the consolidated
financial statements).

Distributable Reserves

$US million

Accumulated profits

Reorganisation reserve

Unrealised profits

31 December

22002200

99,,883355

((558844))

((88,,220000))

11,,005511

22001199

9,170

(584)

(8,200)

386

Dividend income from Evraz Group S.A. (Note 6) did not constitute a qualifying consideration and was distributed out of the profit resulting from sale of
assets (EVRAZ NTMK and Raspadskaya) to parent and, therefore, this income is excluded from the Company’s distributable reserves at 31 December
2020 and 2019.

Although distributable reserves are currently calculated at $1,051 million (2019: $386 million), the Company has also considered the impact of further
restrictions on distributions for public companies within Section 831 of the Companies Act. Under these restrictions the amount of reserves available
for distribution at 31 December 2020 would be $1,051 million (2019: $379 million).

In February 2020 the directors became aware that certain dividends paid in 2018 and 2019 totaling $1,447 million had been made otherwise than in
accordance with the Companies Act 2006. The directors duly checked the sufficiency of distributable reserves before each distribution, but due to
an administrative error the interim accounts were not filed at Companies House prior to payment. To rectify these breaches, in February 2020
the Company filed the interim accounts in respect of each dividend payment. In addition, a special resolution was planned to be proposed at
the Annual General Meeting of the Company’s shareholders in June 2020 to authorise the appropriation of distributable profits for the payment of
the relevant dividends and remove any right for the Company to pursue shareholders or directors (the ‘Director Release’) for repayment. Due to
the uncertainty caused by the effect of COVID-19 on the Company’s ability to conduct in-person meeting of shareholders this resolution was postponed
to a more convenient time. It is expected that the special resolution will be proposed at the Annual General Meeting of the Company’s shareholders in
June 2021. The Director Release will constitute a related party transaction under the Listing Rules of the UK Listing Authority and under IFRS.
The overall effect of the special resolution will be to return all parties to the position they would have been in had the relevant dividends been made in
full compliance with the Companies Act 2006.

5. SHARE-BASED PAYMENTS

As disclosed in Note 21 of the consolidated financial statements, the Group has incentive plans under which certain employees (“participants”) can be
gifted shares of the Company. In 2020 and 2019, the Company recognised share-based compensation expense amounting to $11 million and
$13 million, respectively, as a cost of investments in subsidiaries with a corresponding increase in equity.

6. RELATED PARTY TRANSACTIONS

Related parties of the Company include its direct and indirect subsidiaries, associates and joint venture partners, key management personnel and
other entities that are under the control or significant influence of the key management personnel, the Company’s parent or its shareholders.

Loans Received from Related Parties

The following movements in loans payable to related parties were in 2019-2020.

BBaallaannccee aatt
3311
DDeecceemmbbeerr
22001199

LLooaannss
rreecceeiivveedd
ffrroomm
rreellaatteedd
ppaarrttiieess

IInntteerreesstt
rraattee

MMaattuurriittyy

IInntteerreesstt
eexxppeennssee

RReeppaayymmeenntt
ooff llooaannss

NNoonn--ccaasshh
ttrraannssaaccttiioonnss

FFoorreexx
((ggaaiinn))//lloossss

BBaallaannccee aatt
3311
DDeecceemmbbeerr
22002200

US$ million

CCuurrrreennccyy

Direct subsidiary

Evraz Group S.A.

USD

1.93-4.95%

2021-2023

$$ 552288

$$881155

$$ 8899

$$ ((559966))

$$ 11,,990000

Evraz Group S.A.

RUB

6.4%

2020

−−

Indirect subsidiaries

East Metals A.G.

EVRAZ ZSMK

ENA plc

USD

RUB

USD

3.00-5.06%

4.56%

1.93%

2020

2021

2023

441188

−−

446666

6644

−−

((445599))

447744

((889922))

−−

((6666))

775500

$$ −−

((1177))

−−

$$22,,773366

−−

775500

$$ 994466

$$ 11,,334455

$$ 9999

$$ ((11,,994477))

$$ 33,,005588

$$((1155))

$$ 33,,448866

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

6. RELATED PARTY TRANSACTIONS (CONTINUED)

Loans Received from Related Parties (continued)

BBaallaannccee aatt
3311
DDeecceemmbbeerr
22001188

LLooaannss
rreecceeiivveedd
ffrroomm
rreellaatteedd
ppaarrttiieess

IInntteerreesstt
rraattee

MMaattuurriittyy

IInntteerreesstt
eexxppeennssee

RReeppaayymmeenntt
ooff llooaannss

NNoonn--ccaasshh
ttrraannssaaccttiioonnss

FFoorreexx
((ggaaiinn))//lloossss

BBaallaannccee aatt
3311
DDeecceemmbbeerr
22001199

US$ million

CCuurrrreennccyy

Direct subsidiary

Evraz Group S.A.

USD

3.50%

2022

$ −

$ 543

$ 6

$ (21)

Indirect subsidiaries

East Metals A.G.

EVRAZ KGOK

Sibmetinvest

EVRAZ Vanady Tula

EVRAZ ZSMK

USD

RUB

2.73-5.06%

2018-2020

5.89%

2019-2020

5.51%

5.51-5.89%

2020

2019

648

−

244

5.51-5.89%

2019-2021

1,263

466

368

100

194

(121)

(126)

−

(101)

(872)

$ −

−

(973)

(69)

(271)

(719)

$ −

$ 528

−

418

−

$ 2,217

$ 1,736

$ 97

$ (1,241)

$ (2,032)

$ 169

$ 946

In 2020, non-cash transactions included the following:



In January 2020, a US dollar-denominated loan, which was received from Evraz Group S.A. in 2019, amounting to $474 million was
converted into a loan denominated in roubles.
In March 2020, EVRAZ plc and Evraz Group S.A. signed an assignment agreement and the outstanding balances payable to Evraz Group S.A.
for the purchase of EVRAZ NTMK and Raspadskaya (Note 3) and for the transfer of loans in 2019 were converted into a loan in the amount
of $3,124 million.
In April 2020, EVRAZ plc transferred to Evraz Group S.A. its obligations under loans payable to EVRAZ ZSMK amounting to $66 million for
consideration of $64 million. An amount of $2 million was recognised as non-operating gain in the separate statement of comprehensive
income.
In December 2020, Evraz Group S.A. reassigned $750 million under a loan receivable from EVRAZ plc to ENA plc.

In 2019, non-cash transactions included the transfer of the Company’s obligations under loans payable with a carrying value of $2,032 million to
Evraz Group S.A. for consideration of $1,999 million. The excess of the carrying value of the liabilities transferred over the newly recognised liability to
Evraz Group S.A. amounting to $33 million was recognised as a gain in the income statement within the Other non-operating gains/(losses) caption.

Dividend Income

Dividends receivable at 31 December 2018

Dividend income accrued in 2019

Dividends received by cash

Tax withheld

Non-cash offset

Foreign exchange gain/(loss)

Dividends receivable at 31 December 2019

Dividend income accrued in 2020

Dividends received by cash

Tax withheld

Non-cash offset

Foreign exchange gain/(loss)

Dividends receivable at 31 December 2020

EEvvrraazz GGrroouupp SS..AA..

EEVVRRAAZZ NNTTMMKK

RRaassppaaddsskkaayyaa

$ –

8,200

–

(8,200)

–

$$ ––

––

$$ ––

$ –

1,509

(763)

(85)

–

(32)

$$ 662299

22,,008833

((11,,773355))

((119933))

––

((8800))

$$ 770044

$ –

(21)

(2)

–

$$ ––

4466

((4422))

((44))

––

$$ ––

TToottaall

$ –

9,732

(784)

(87)

(8,200)

(32)

$$ 662299

22,,112299

((11,,777777))

((119977))

––

((8800))

$$ 770044

In 2019, the Company’s dividend income consisted of dividends from Evraz Group S.A. ($8,200 million declared in August 2019 and settled by a non-
cash offset), EVRAZ NTMK ($886 million declared in July 2019 and fully paid by cash and $623 million declared in December 2019 and not paid as of
31 December 2019) and from Raspadkaya ($23 million declared in September 2019 and fully paid by cash).

In February, June, August and December 2020, EVRAZ NTMK, the Company’s wholly-owned subsidiary, declared dividends in the amount of 31.9 billion
roubles ($499 million), 38.4 billion roubles ($556 million), 23.6 billion roubles ($324 milion) and 52.4 billion roubles ($704 million), respectively.
As of 31 December 2020, dividends declared in December 2020 amounted to $704 million were not paid to EVRAZ plc.

In May and September 2020, EVRAZ plc received its share in the dividends declared and fully paid by Raspadskaya in the amount of 1.7 billion roubles
($24 million) and 1.7 billion roubles ($22 million), repectively.

Annual report & accounts 2020

244 | 245

6. RELATED PARTY TRANSACTIONS (CONTINUED)

Offset of Liabilities with Evraz Group S.A.

During 2020 there were a number of transactions between EVRAZ plc and its direct subsidiary Evraz Group S.A.:



In February 2020, EVRAZ plc repaid $25 milion to Evraz Group S.A. in respect of the liabilities for the purchase of EVRAZ NTMK (Note 3).
In March 2020, EVRAZ plc and Evraz Group S.A. signed an assignment agreement and the remaining balances payable to Evraz Group S.A.
for the purchase of EVRAZ NTMK and Raspadskaya (Note 3) and for the transfer of loans were converted into a loan amounting to
$3,124 million. An amount of $2 million was recognised as foreign exchange gain in the separate statement of comprehensive income
(Note 6, Loans Received from Related Parties);
In April 2020, EVRAZ plc transferred to Evraz Group S.A. its obligations under loans payable to EVRAZ ZSMK amounting to $66 million for
consideration of $64 (Note 6, Loans Received from Related Parties);
During 2020 EVRAZ plc purchased Raspadskaya shares from Evraz Group S.A. for total consideration of $28 million of which $6 million were
not settled at 31 December 2020.

During 2020 EVRAZ plc and Evraz Group S.A. concluded agreements, under which the above mentioned mutual payment obligations were offset
resulting in a net liability payable to Evraz Group S.A. in the amount of $6 million.

During 2019 the following transactions were executed by EVRAZ plc and Evraz Group S.A.:




EVRAZ plc purchased EVRAZ NTMK and Raspadskaya from Evraz Group S.A. for total consideration of $12,201 million (Note 3);
EVRAZ plc transferred its obligations under loans payable to EVRAZ KGOK, EVRAZ Vanady Tula, EVRAZ ZSMK, Sibmetinvest for consideration
of $1,999 million (Note 6, Loans Received from Related Parties);
Evraz Group S.A. transferred to EVRAZ plc notes payble for consideration of $2,850 million (Note 7);
Evraz Group S.A. declared dividends to EVRAZ plc in the amount of $8,200 million (Note 6, Dividend Income).

During 2019 EVRAZ plc and Evraz Group S.A. concluded agreements, under which the above mentioned mutual payment obligations were offset
resulting in a net liability payable to Evraz Group S.A. in the amount of $3,151 million, which comprised of $2,916 million allocated to payables for
the purchase of EVRAZ NTMK and Raspadskaya and $235 million allocated to payables for the transfer of loans payable to related parties.

Guarantees

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

US$ million

DDeebbttoorr

SSuubbjjeecctt ooff gguuaarraanntteeee

MMaattuurriittyy aatt
3311 DDeecceemmbbeerr 22002200

GGuuaarraanntteeeedd
aammoouunntt
((pprriinncciippaall))

East Metals A.G.

EVRAZ NTMK/ EVRAZ ZSMK

Bank loans

2021

2021-2028

Evrazholding Finance

Evraz Group S.A.

Management Company
Mezhdurechensk

EVRAZ Nikom a.s.

Rouble bonds

not determined

Loan to East Metals A.G.

2021-2024

Performance of services

2023

Bank loans

not determined

$$ 119933

11,,445588

228800

448866

220033

1144

22002200

FFiinnaanncciiaall
gguuaarraanntteeee
llaaiibbiilliittyy

$$ −

1100

−

22001199

GGuuaarraanntteeee
ffeeeess eeaarrnneedd

GGuuaarraanntteeeedd
aammoouunntt
((pprriinncciippaall))

FFiinnaanncciiaall
gguuaarraanntteeee
llaaiibbiilliittyy

GGuuaarraanntteeee
ffeeeess eeaarrnneedd

$$ 11

−

$ 141

1,191

323

169

486

$ −

$ 1

−

$$ 22,,663344

$$ 2211

$$ 1100

$ 2,327

$ 26

$ 9

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 income statement.

In 2018, the Company issued a guarantee to nine companies owned by Sibuglemet to compensate any direct losses caused by the failure to perform
the agreed management services provided by Management Company Mezhdurechensk, an indirect subsidiary of the Company, to these entities
(Note 30 of the consolidated financial statements). In 2018, the Company recognised financial guarantee liability of $18 million. In 2020 and 2019,
the Company accrued $3 million and $4 million income, respectively, under this guarantee. In May 2020, the Group issued a notification about
termination of the management services contract from 15 November 2020. The guarantee will continue to be effective 3 years after the date of
termination.

Other Transactions

In 2020, Evrazholding, an indirect subsidiary of the Company, rendered consulting services to the Company in the amount of $Nil (2019: $1 million).

Other disclosures on directors' remuneration required by Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts & Reports)
regulations 2008 and those specified for audit by the Directors' Remuneration Report Regulations 2002 are included in the Directors' Remuneration
Report.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

7. LOANS AND BORROWINGS

The Company had the following loans and borrowings during 2019-2020.

66..5500%% nnootteess

88..2255%% nnootteess

66..7755%% nnootteess

55..337755%% nnootteess

55..2255%% nnootteess

dduuee 22002200

dduuee 22002211

dduuee 22002222

dduuee 22002233

dduuee 22002244

$US million

3311 DDeecceemmbbeerr 22001188

NNoonn--ccaasshh cchhaannggeess::
Recognition of notes at fair value
Interest and other charges expensed
Accrual of premiums and other charges on
early repayment of borrowings
CCaasshh cchhaannggeess::
Cash proceeds from bank loans and notes,
net of debt issues costs
Repayment of interest and premiums on
early repayment
Repayment of principal
3311 DDeecceemmbbeerr 22001199

NNoonn--ccaasshh cchhaannggeess::
Interest and other charges expensed
CCaasshh cchhaannggeess::
Repayment of interest and premiums on
early repayment
Repayment of principal

3311 DDeecceemmbbeerr 22002200

$ –

738
4

–

(48)

(700)

$$ ––

––

$$ ––

$ –

808
29

–

(31)

–

$ –

528
20

–

(17)

–

$$ 880066

$$ 553311

3366

((6622))

((1155))

2266

((3344))

––

$ –

776
32

–

(40)

–

$$ 776688

3399

((4400))

––

TToottaall

$ –

2,850
113

695

(154)

(700)

$ –

–
28

–

695

(18)

–

$$ 770055

$$ 22,,881100

3388

((3377))

––

113399

((117733))

((1155))

$$ 776655

$$552233

$$ 776677

$$770066

$$ 22,,776611

On 13 March 2019, Evraz Group S.A. transferred all its rights and obligations under the notes with a nominal amount of $2,700 million to EVRAZ plc for
consideration of $2,850 million being the market value of the notes at that date. The Company recognised the liabilities at fair value and classified
them as subsequently measured at amortised cost.

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
amounting to $(6) million was included in the Gain/(loss) on financial assets and liabilities caption of the separate statement of comprehensive
income.

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

At 31 December 2020, the current portion of the borrowings included a principal payable under 8.25% notes due 2021 and interest payable under all
issued notes. At 31 December 2019, the current portion of the borrowings included only interest payable under the notes.

8. TRADE AND OTHER PAYABLES

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

US$ million

Liability relating to a settlement of guarantee

22002200

22001199

NNoonn--ccuurrrreenntt

CCuurrrreenntt

NNoonn--ccuurrrreenntt

CCuurrrreenntt

$$ 44

$ 7

At 31 December 2020 and 2019, 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 2020, the Company paid $7 million (2019: $7 million) in
respect of this liability and recognised interest expense of $1 million (2019: $1 million).

Annual report & accounts 2020

246 | 247

9. INCOME TAXES

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

Profit/(loss) before income tax

At the statutory income tax rate of 19%

Adjustment in respect of income tax of previous years

Non-deductible expenses

Effect of lower tax rate for dividend income

Allowance for deferred tax asset

Current income tax expense

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

US$ million

1 January

Current income tax on dividend income

Benefit from a tax loss carryback

Adjustment in respect of income tax of previous years

Income tax withheld (Note 6)

Paid for the period

Foreign exchange gain/(loss)

31 December

2020

$$ 11,,776666

((333366))

––

((5566))

119922

((1133))

$$ ((221133))

2020

$$ ((4466))

((221133))

––

119977

––

$$ ((5544))

2019

$ 9,029

(1,716)

(2)

(94)

1,696

(23)

$ (139)

2019

$ (14)

(153)

(2)

$ (46)

The tax rate on dividends is equal to 10% for income from the Russian subsidiaries and zero rate for dividend income from Luxembourg.
At 31 December 2020 the Company had an amount payable of $70 million (2019: $62 million) in relation to income tax on dividends receivable from
EVRAZ NTMK.

In 2019, the Company recognised current income tax benefit of $16 million relating to the current year tax losses of $87 million that can be carried
back to recover current tax paid in 2018.

At 31 December 2020, the unused tax losses carried forward amounted to $188 million (2019: $121 million). Deferred tax assets in respect of these
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
are available for offset against future taxable profits indefinitely.

At 31 December 2020, the Company had $49 million of unutilised foreign tax credits (2019: $76 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.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

10. FINANCIAL INSTRUMENTS

LLiiqquuiiddiittyy RRiisskk

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

3311 DDeecceemmbbeerr 22002200

US$ million

FFiixxeedd--rraattee ddeebbtt

Loans and borrowings

Principal

Interest

Loans payable to related parties

Principal

Interest

Trade and other payables

Principal

Financial guarantees

TToottaall ffiixxeedd--rraattee ddeebbtt

NNoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt

Payables to related parties

TToottaall nnoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt

3311 DDeecceemmbbeerr 22001199

US$ million

FFiixxeedd--rraattee ddeebbtt

Loans and borrowings

Principal

Interest

Loans payable to related parties

Principal

Interest

Trade and other payables

Principal

Interest

Financial guarantees

TToottaall ffiixxeedd--rraattee ddeebbtt

NNoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt

Payables to related parties

TToottaall nnoonn--iinntteerreesstt bbeeaarriinngg ddeebbtt

OOnn ddeemmaanndd

LLeessss tthhaann 33
mmoonntthhss

33 ttoo 1122
mmoonntthhss

11 ttoo 22 yyeeaarrss

22 ttoo 55 yyeeaarrss

AAfftteerr 55 yyeeaarrss

TToottaall

$$ 550000

$$ 11,,445500

$$ ––

$$ 22,,668855

$$ ––

––

$$ 773355

4488

228800

––

$$ ––

7788

––

6655

9977

––

6633

9944

33,,220011

6600

––

11,,006699

115544

667711

44,,881100

––

––
––

––

331177

33,,448811

119922

2211

66,,770044

$$ 66

$$ 11,,006699

$$ 115544

$$ 667711

$$ 44,,881100

$$ ––

$$ 66,,771100

OOnn ddeemmaanndd

LLeessss tthhaann 33
mmoonntthhss

33 ttoo 1122
mmoonntthhss

11 ttoo 22 yyeeaarrss

22 ttoo 55 yyeeaarrss

AAfftteerr 55 yyeeaarrss

TToottaall

$ –

–

$ –

198

–

$ –

105

218

$ 750

142

$ 1,950

169

–

522

–

273

362

921

2,662

3,151

–

$ –

$ 2,700

–

–
–

–

484

938

4,218

3,151

$ 3,151

$ 273

$ 362

$ 921

$ 2,662

$ –

$ 7,369

Annual report & accounts 2020

248 | 249

10. FINANCIAL INSTRUMENTS (CONTINUED)

MMaarrkkeett RRiisskk

CCuurrrreennccyy RRiisskk

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

USD/RUB

Sensitivity Analysis

2020

$ 6

2019

$ 613

The following table demonstrates the sensitivity to reasonably possible changes in the respective currencies, with all other variables held constant, of
the Company’s profit before tax. In estimating reasonably possible changes the Company assessed the volatility of foreign exchange rates during
the reporting periods.

USD/RUB

FFaaiirr VVaalluuee ooff FFiinnaanncciiaall IInnssttrruummeennttss

22002200

CChhaannggee iinn

22001199

CChhaannggee iinn

eexxcchhaannggee rraattee

EEffffeecctt oonn PPBBTT

eexxcchhaannggee rraattee

EEffffeecctt oonn PPBBTT

US$ millions

((1166..8888))
1166..8888

11
((11))

(7.78)
7.78

52
(44)

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

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

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information

ADDITIONAL
INFORMATION

Annual report & accounts 2020250 | 251

STOCK PERFORMANCE INDICATORS
AND SHAREHOLDER INFORMATION

INFORMATION ABOUT SHARES OF EVRAZ PLC

The Company’s issued share capital as of 31 December 2020 and 24
February 2021 was 1,506,527,294 ordinary shares, of which 49,654,691

shares are held in Treasury. Therefore, the total number of voting
rights in the Company is 1,456,872,603.

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

EVR LN

SETS

MAIN MARKET

Premium Equity Commercial Companies

FTSE 100

Industrial Metals & Mining

Iron & Steel

STMM

Regulated Market

B71N6K8

GB00B71N6K86

Ticker (Bloomberg)

Trading service

Market

Listing category

FTSE index

FTSE sector

FTSE sub-sector

Country of share register

Segment

MiFID Status

SEDOL

ISIN number

Share price

Relative share price dynamics, 52w

140

120

100

01.01.2020

EVRAZ

FTSE 100 INDEX

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationShareholder structure

Ultimate beneficial owners, % of voting rights1

28.68

19.35

9.66

5.75

33.80

Roman Abramovich1

Alexander Abramov1

Alexander Frolov1

Gennady Kozovoy2

Free-ﬂoat

1. The number of shares as dealing notification dated 20 June 2019.
2. The number of shares is as per TR-1 Form: Notification of major interest in shares dated 6 February 2013. For Mr Kozovoy, includes shares held directly.

Unsolicited telephone calls
and correspondence

Shareholders are advised to be wary
of any unsolicited advice, offers to buy
shares at a discount, or offers of free reports
about the Company. These are typically
from overseas-based ‘brokers’ who target
US or UK shareholders, offering to sell them
what often turns out to be worthless or high
risk shares.

These operations are commonly known
as ‘boiler rooms’ and the ‘brokers’ can
be very persistent and extremely persuasive.

If you receive any unsolicited investment
advice:
• Make sure you get the correct name

of the person and organisation.

• Check that they are properly authorised

by the FSA before getting involved
by visiting www.fsa.gov.uk/fsaregister
and contacting the firm using the details
on the register.

• Report the matter to the FCA either

by calling 0845,606 1234 or visiting www.
fsa.gov.uk/scams.

• If the calls persist, hang up.

Details of any share dealing facilities that
the company endorses will be included
in Company mailings.

Electronic shareholder
communications

EVRAZ uses its website www.evraz.com as its
primary means of communication with its
shareholders provided that the shareholder

has agreed or is deemed to have agreed
that communications may be sent
or supplied in that manner in accordance
with the Companies Act 2006. Electronic
communications allow shareholders
to access information instantly as well
as helping EVRAZ reduce its costs and its
impact on the environment. Shareholders
can sign up for electronic communications
via Computershare’s Investor Centre website
at www.investorcentre.co.uk. Shareholders
that have consented or are deemed to have
consented to electronic communications
can revoke their consent at any time
by contacting the Company’s registrar,
Computershare.

Annual report & accounts 2020252 | 253

DEFINITIONS OF SELECTED
ALTERNATIVE PERFORMANCE
MEASURES

The Group uses alternative performance
measures (APMs) to improve comparability
of information between reporting periods
and business units, either by adjusting
for uncontrollable or one-off factors
which impact upon IFRS measures
or, by aggregating measures, to aid the user
of this report in understanding the activity
taking place across the Group’s portfolio.

EBITDA

EBITDA is determined as a segment’s
profit/(loss) from operations adjusted
for social and social infrastructure
maintenance expenses, impairment
of assets, profit/(loss) on disposal
of property, plant and equipment
and intangible assets, foreign exchange
gains/(losses) and depreciation, depletion
and amortisation expense.

See note 3 of the consolidated financial statement
for additional information and reconciliation with IFRS
financial statements.

Free Cash Flow

Free Cash Flow represents EBITDA,
net of noncash items, less changes
in working capital, income tax paid,
interest paid and covenant reset charges,
conversion premiums, premiums on early
repurchase of bonds and realised gain/
(losses) on interest payments under swap
contracts, interest income and debt issue
costs, less capital expenditure, including
recorded in financing activities, purchases
of subsidiaries, net of cash acquired,
proceeds from sale of disposals classified
as held for sale, net of transaction costs, less
purchases of treasury shares for participants
of the incentive plans, plus other cash flows
from investing activities.

Free Cash Flow is not a measure
under IFRS and should not be considered
as an alternative to other measures
of financial position. EVRAZ’ calculation
of Free Cash Flow may be different

Cash and short-term bank deposits calculation

from the calculation used by other
companies and therefore comparability may
be limited.

Cash and short-term bank
deposits

Cash and short-term bank deposits
is not a measure under IFRS and should
not be considered as an alternative
to other measures of financial position.
EVRAZ’ calculation of cash and short-
term bank deposits may be different
from the calculation used by other
companies and therefore comparability may
be limited.

US$ million

Cash and cash equivalents

Cash and short-term bank deposits

31 December 2020

31 December 2019

Change

Change, %

1,627

1,423

204

14.3

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationTotal debt

Total debt represents the nominal value of loans and borrowings plus unpaid interest, finance lease liabilities, loans of assets classified
as held for sale, and the nominal effect of cross-currency swaps on principal of rouble-denominated notes. Total debt is not a measure
under IFRS and should not be considered as an alternative to other measures of financial position. EVRAZ’ calculation of total debt may
be different from the calculation used by other companies and therefore comparability may be limited. The current calculation is different
from that used for covenant compliance calculations.

Total debt has been calculated as follows:

US$ million

31 December 2020

31 December 2019

Change

Change, %

Long-term loans, net of current portion

Short-term loans and current portion of long-
term loans

Add back: Unamortised debt issue costs
and fair value adjustment to liabilities assumed
in business combination

Nominal effect of cross-currency swaps
on principal of rouble-denominated notes

Finance lease liabilities, non-current portion

Finance lease liabilities, current portion

Total debt

Net debt

3,759

1,078

4,599

140

(6)

4,983

4,868

(840)

938

(2)

(26)

(4)

115

(18.3)

n/a

(11.1)

n/a

(31.3)

(11.8)

2.4

Net debt represents total debt less cash and liquid short-term financial assets, including those related to disposals classified as held
for sale. Net debt is not a measure under IFRS and should not be considered as an alternative to other measures of financial position.
EVRAZ’ calculation of net debt may be different from the calculation used by other companies and therefore comparability may be limited.
The current calculation is different from that used for covenant compliance calculations.

Net debt has been calculated as follows:

US$ million

Total debt

Cash and cash equivalents

Net debt

CAPEX

31 December 2020

31 December 2019

Change

Change, %

4,983

(1,627)

3,356

4,868

(1,423)

3,445

115

(204)

(89)

2.4

14.3

(2.6)

Capital expenditure (CAPEX) is cash expenditure on property, plant and equipment. For internal reporting and analysis, CAPEX includes
non-cash transactions related to CAPEX.

CAPEX has been calculated as follows:

US$ million

31 December 2020

31 December 2019

Purchases of property, plant and equipment
and intangible assets

Purchases of purchase of property, plant
and equipment on deferred terms

CAPEX

647

657

762

Change

(115)

(105)

Change, %

15.1

n/a

(13.8)

Annual report & accounts 2020254 | 255

GHG intensity ratio

Tonnes of CO2 equivalent (Scope 1 and 2
GHG emissions) divided by tonnes
of crude steel. Оnly steelmaking enterprises
are included into the calculation, which
are located in Russia and North America.

Labor productivity, US$/t

P=S/V

S – Labor Costs (asset and A-category
subsidiaries), exclusive of tax, local currency
(on Division consolidation sites with different
currencies, $)

V – production volume, tn. (for steel assets:
V – metal products shipped)

LTIFR

The KPI is calculated on a year-to-date basis
for the company employees only.

LTIFR = X•1000000/Y

X is the total number of occupational injuries
resulted in lost time among the company
employees in the reporting period. Fatalities
are not included.

Y is the actual total number of man-
hours worked by all company employees
in the reporting period.

Slab cash costs, US$/t

Cash cost of slab is defined
as the production cost less depreciation,
the result is divided by production volumes
of slab. Raw materials from EVRAZ coal
and iron ore producers are accounted
for on at-cost-basis. Costs of slab of EVRAZ
NTMK, EVRAZ ZSMK are then weighted
averaged by the total saleable slab
production volume.

Coking coal concentrate cash
cost, US$/t

Cash cost of coking coal concentrate
is defined as cost of revenues less
depreciation and SG&A, the result is divided
by sales volumes.

Iron ore products cash cost,
US$/t

Cash cost of iron ore products is defined
as cost of revenues less depreciation
and SG&A, the result is divided by sales
volumes.

Number of EBS
transformations

Number of EBS transformations
implemented at the key assets during
the reporting year.

Effect from efficiency
improvement programme
(сustomer focus and cost
cutting effects)

Each project effect is calculated
as an absolute deviation of targeted metriс
year to year multiplied by relevant price
or volume depending on project’s focus.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationDATA ON MINERAL RESERVES

COAL

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

Mine

Alardinskaya

Yesaulskaya

Erunakovskaya-8

Osinnikovskaya

Uskovskaya

Total

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

Mine

Raspadskaya

Raspadskaya Koksovaya

MUK-96

Razrez Raspadskiy (open-pit)

Koksovaya GRR (open-pit)

Total

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

Mine

Mezhegeyugol

IRON ORE

As of 31 December 2020

79,813

21,443

110,672

71,144

182,015

465,088

As of 31 December 2020

905,913

203,786

113,058

100,428

22,930

1,346,115

As of 31 December 2020

85,739

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

Mine

Kaz

Tashtagol

Sheregesh

Total

As of 31 December 2020

Fe, %

S, %

2,403

59,564

80,001

141,968

31.90

1.39

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

Mine

Gusevogorskoe

Kachkanar Proper (Sobstvenno-Kachkanarskoye)

Total

As of 31 December 2020

Fe, %

V2O5 %

2,990,494

6,743,199

9,733,693

15.9

0.13

Annual report & accounts 2020256 | 257

SHORT SUMMARY OF RELEVANT
ANTI-CORRUPTION POLICIES

Code of Conduct

The Code of Conduct is the key document
that all employees must adhere to and act
in full accordance with. Every new employee
is instructed to read the Code of Conduct
carefully on his or her first day of work.
The document is available on the corporate
intranet and stresses the ultimate importance
of ethical behaviour in all circumstances.
Anti-corruption training and the tone
set from the top of the organisation
emphasise the role of the Code of Conduct
in the Group’s daily life.

Anti-corruption policy

The EVRAZ Anti-corruption Policy establishes
and explains key principles that all assets have
adopted to prevent corruption. The policy
is easily accessible on the corporate intranet
for employees, interested parties and partners,
who are all expected to be compliant
with relevant anti-corruption legislation
and the principles upheld by the Group. Every
new employee reads the policy on his or her
first day of work.

Anti-corruption training policy

Consistent anti-corruption education efforts
are an integral element of a well-thought-
out compliance system. The policy adopted
in December 2015 defines what positions
and levels of authority are to undergo
training in anti-corruption awareness.
Specifically, all managers and specialists
from compliance, legal, controlling, asset
protection, investor and government relations,
and HR are to receive training and pass
a corresponding test. The same refers to all
decision makers and/or client managers
from procurement and sales. Compliance
managers are assigned discreet authority
to analyse risk areas and decide who else
needs to be trained.

Sponsorship and charity policy

from conflicts or natural disasters. EVRAZ
may choose to support certain projects
in education, sport, healthcare, culture
and environmental protection.

All petitions are carefully considered in terms
of legitimacy and transparency of purpose,
the amount sought and the reputation
of the petitioner. The decisions are then taken
by the Group CEO. When support is granted,
sponsorship being its preferred form,
such instances are followed up by experts
under the vice president for corporate
communications and by compliance managers.
This ensures full accountability and strict
adherence of those supported to EVRAZ
policy requirements.

or contractors feel unable to do so via other
means and procedures, a confidential hotline
is available 24/7.

Candidate background
and criminal record checks

EVRAZ consistently performs thorough
background and criminal record checks
on all potential employees. Among other
requirements and norms, the policy specifies
that all necessary effort is invested only
after the candidate gives written permission
to work with his/her personal data. The Group
is committed to protecting each individual’s
privacy and works in full compliance
with relevant laws on personal data.

Gift and business entertainment
policy

Conflict of interest policy

EVRAZ believes that business gifts
and hospitality are accepted ways
to demonstrate and further develop good
relationships. At the same time, adequate
and consistent control over such expenses
is highly important and is one of the key
areas for anti-corruption compliance to watch.
The policy defines rules and strict approval
procedures to be followed when extending
or receiving gifts and hospitality. In particular,
all amounts above US$100 for a personal gift
(received or given) and US$500 for hospitality
(received or extended to a person) must be
approved by the responsible compliance
manager. Corresponding amounts in the US
and Canada are US$50 and US$250,
respectively. To this end, an electronic
notification system has been developed.

The internal audit function conducts regular
checks of the completeness and accuracy
of records, either planned or requested
by a compliance manager, and compliance
specialists act on any recommendations
promptly.

Hotline policy and whistle-
blowing procedures

A conflict of interest is a set of circumstances
in which employees have financial or other
personal considerations that may compromise
or influence their professional judgment
or integrity in carrying out their work
responsibilities. The policy specifies how
to identify, consider and duly take care
of situations with signs of such conflicts.

HR together with compliance managers
routinely check whether there are conflicts
of interests in the Group, whereas employees
and particularly their managers are expected
to provide information about any potentially
risky situations. Special commissions consider
cases that are reported and found to come
up with the best possible solution to each
individual situation.

Contractor/supplier due
diligence checks

To guard against unscrupulous, unreliable,
or suspicious would-be agents and partners,
EVRAZ runs comprehensive due diligence
checks on a business or person prior
to signing a contract. The Group strictly
enforces a know-your-partner/client
policy and in doing so is fully compliant
with the applicable anti-corruption laws.
The investigation includes but is not limited
to checking the company’s business reputation
and solvency, as well as its top management’s
profile and reputation.

This policy regulates all aspects of sponsorship
and charity efforts at EVRAZ, as necessary.
According to it, the Group may consider
supporting low-income or physically
challenged individuals, and those suffering

EVRAZ encourages employees to raise
concerns to their line managers if they believe
the Group’s policies or cardinal principles
are somehow violated. If employees, clients,

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationTERMS AND ABBREVIATIONS

By-product

Coke battery

A secondary product which results from a
manufacturing process or chemical reaction.

A group of coke ovens operating as a unit
and connected by common walls.

Basic oxygen furnace

Basic oxygen furnace is a frunace used
in a method of primary steelmaking
in which carbon-rich molten pig iron
is made into steel. Blowing oxygen through
molten pig iron lowers the carbon content
of the alloy and changes it into low-carbon
steel. The process is known as basic because
fluxes of burnt lime or dolomite, which
are chemical bases, are added to promote
the removal of impurities and protect
the lining of the converter.

Beam

A structural element. Beams
are characterised by their profile (the shape
of their cross-section). One of the most
common types of steel beam is the I-beam,
also known as H-beam, or W-beam (wide-
flange beam), or a ‘universal beam/column’.
Beams are widely used in the construction
industry and are available in various
standard sizes, eg 40-k beam, 60Sh beam,
70Sh beam as mentioned in this report.

Billet

Cash cost of coking coal
concentrate

Cash cost of coking coal concentrate
is defined as the production cost less
depreciation, incl. SG&A and Maintenance
CAPEX, the result is divided by production
volumes. This measure is used to monitor
segment competitiveness improvement.

CAPEX

Capital expenditure.

CFR

Cost and freight, the seller must pay
the costs and freight to bring the goods
to the port of destination. However, risk
is transferred to the buyer once the goods
are loaded on the vessel. Insurance
for the goods is not included.

Channel

A usually square, semi-finished steel product
obtained by continuous casting or rolling
of blooms. Sections, rails, wire rod and other
rolled products are made from billets.

U-shaped section for construction.

Coal washing

Blast furnace

The blast furnace is the classic production
unit to reduce iron ore to molten iron,
known as hot metal. It operates as a
counter-current shaft system, where iron
ore and coke is charged at the top. While
this charge descends towards the bottom,
ascending carbon containing gases
and coke reduces the iron ore to liquid iron.
To increase efficiency and productivity, hot
air (often enriched with oxygen) is blown
into the bottom of the blast furnace.
In order to save coke, coal or other carbon
containing materials are sometimes injected
with this hot air.

The process of removing mineral matter
from coal usually through density separation,
for coarser coal and using surface chemistry
for finer particles.

Coke

A product made by baking coal without
oxygen at high temperatures. Unwanted
gases are driven out of the coal.
The unwanted gases can be used as fuels
or processed further to recover valuable
chemicals. The resulting material (coke) has a
strong porous structure which makes it ideal
for use in a blast furnace.

Coking coal

Highly volatile coal used to manufacture
coke.

Concentrate

A product resulting from iron ore / coal
enrichment, with a high grade of extracted
mineral.

Construction products

Include beams, channels, angles, rebars,
wire rods, wire and other goods.

Converter

A type of furnace that uses pure oxygen
in the process of producing steel from cast
iron or dry mix.

Conversion costs

Conversion costs is defined as production
costs without raw materials and depreciation,
incl. SG&A and Maintenance CAPEX.
This measure is used to monitor segment
competitiveness improvement.

Continuous casting machine

Process whereby molten metal is solidified
into a “semi-finished” billet, bloom, or slab
for subsequent rolling in the finishing mills.

Crude steel

Steel in its solidified state directly after
casting. This is then further processed
by rolling or other treatments, which can
change its properties.

258 | 259

Debottlenecking

Greenfield

ISO 9001:2008

The International Standardisation
Organisation’s standard for a quality
management system.

Increasing capacity of a supply
or production chain through
the modification of existing equipment
or infrastructure to improve efficiency.

Deposit

The development or exploration of a new
project not previously examined.

Grinding balls

Balls used to grind material by impact
and pressure.

An area of coal resources or reserves
identified by surface mapping, drilling
or development.

JORC Code

The Australasian Joint Ore Reserves
Committee, which is widely accepted
as a standard for professional reporting
of Mineral Resources and Ore Reserves.

Electric arc furnace

A furnace used in the steelmaking process
which heats charged material via an electric
arc.

Feasibility study

Head-hardened rails

High strength rails with head hardened
by heat treatment.

Heat-treatment

Thousand tonnes.

A group of industrial and metalworking
processes used to alter the physical,
and sometimes chemical, properties of a
material.

HiPo

High potential employee.

A comprehensive engineering estimate of all
costs, revenues, equipment requirements
and production levels likely to be achieved
if a mine is developed. The study is used
to define the technical and economic
viability of a project and to support
the search for project financing.

Iron ore

Finished products

Products that have completed
the manufacturing process but have not yet
been sold or distributed to the end user.

Flat products or Flat-rolled
steel products

Include commodity plate, specialty plate
and other products in flat shape such
as sheet, strip and tin plate.

Chemical compounds of iron with other
elements, mainly oxygen, silicon, Sulphur
or carbon. Only extremely pure (rich)
iron-oxygen compounds are used
for steelmaking.

ISO 14001

The International Standardisation
Organisation’s standard for environmental
management systems.

Labour productivity

Labour productivity is defined as labour
costs exclusive of tax divided by production
volumes of steel products. The measurement
of performance enables the Company
to monitor labour efficiency.

Ladle furnace

The secondary metallurgy vessel used
between steelmaking and casting operations
to allow the composition of molten steel
to be brought to the required customer
specification.

Lean

Lean is philosophy of managing the business
that is based on a set of principles that
define the way of work.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationInclude rails, rail fasteners, wheels, tyres
and other goods for the railway sector.

Rebar

Reinforcing bar, a commodity grade steel
used to strengthen concrete in highway
and building construction. Rebar A500SP
is a type of reinforcing bar that allows
for a reduction in the metallic component
of reinforced concrete, thereby significantly
lowering construction costs.

Rolled steel products

Products finished in a rolling mill; these
include bars, rods, plate, beams etc.

Rolling mill

A machine which converts semi-finished
steel into finished steel products by passing
them through sets of rotating cylinders
which form the steel into finished products.

Open pit mine

Railway products

A mine working or excavation open
to the surface where material is not replaced
into the mined out areas.

OCTG pipe

Oilfield Casing and Tubing Goods or Oil
Country Tubular Goods – pipes used
in the oil industry.

Long products

Include bars, rods and structural products
that are ‘long’ rather than ‘flat’ and are
produced from blooms or billets.

Longwall

An underground mining process
in which the coal face is dug out by a
shearer and transported above ground
by conveyors.

LTIFR

Lost time injury frequency rate, which
represents the number of lost time injuries
(1 day or more of absence) divided
by the total number of hours worked
expressed in millions of hours.

Lumpy ore

Pellet

Iron ore between 6mm and 30mm in size.
Lump is preferred in the blast furnace as its
particle size allows oxygen to circulate
around the raw materials and melt them
efficiently.

Model line

Model line is as a value stream
within a single facility or operation,
provides a focused and controlled
playground for implementing lean. Serve
as internal benchmark for the Company.
The measurement of performance
enables the Company to monitor lean
implementation.

Million tonnes.

Mtpa

Million tonnes per annum.

An enriched form of iron ore shaped
into small balls or pellets. Pellets are used
as raw material in the steel making process.

Pig iron

The solidified iron produced from a blast
furnace used for steel production. In liquid
form, pig iron is known as hot metal.

Pipe blank

A flat sheet of metal, a semi-finished
product, sold to pipemakers to manufacture
pipes.

SG&A

Plate

A long thin square shaped construction
element made from slabs.

Pulverised coal injection (PCI)

A cost-reducing technique in iron-making,
where cheaper coal is prepared to replace
normal coking coal in the blast furnace.
The coal is pulverised into very small
particles before injection into the furnace.

Selling, General and Administrative
Expenses.

Saleable products

Products produced by EVRAZ mines or steel
mills which are suitable for sale to third
parties.

Self-coverage

The raw material requirement of EVRAZ
steelmaking facilities compared with coal
product sales or production of iron ore
products from own raw materials.

Annual report & accounts 2020260 | 261

Scrap

Steam coal

Iron containing recyclable materials
(mainly industrial or household waste)
that is generally remelted and processed
into new steel.

Semi-finished products

The initial product forms in the steel making
process including slabs, blooms, billets
and pipe blanks that are further processed
into more finished products such as beams,
bars, sheets, tubing etc.

Sinter

An iron rich clinker formed by heating
iron ore fines and coke in a sinter line.
The materials, in pellet form, combine
efficiently in the blast furnace and allow
for more consistent and controllable iron
manufacture.

Slab

A common type of semi-finished steel
product which can be further rolled
into sheet and plate products.

Slag

Slag is a by product generated when
nonferrous substances in iron ore, limestone
and coke are separated from the hot
metal in metallurgical production. Slag
is used in cement and fertiliser production
as wellas for base course material in road
construction.

All other types of hard coal not classified
as coking coal. Coal of this type is also
commonly referred to as thermal coal.

Tailings

Also called mine dumps, are the materials
left over after the process of separating
the valuable content from the uneconomic
remainder (gangue) of an ore. These
materials can be reprocessed using new
methods to recover additional minerals.

Tubular products

Vanadium

A grey metal that is normally used
as an alloying agent for iron and steel. It
is also used to strengthen titanium based
alloys.

Vanadium pentoxide

The chemical compound with the formula
V2O5: this orange solid is the most
important compound of vanadium. Upon
heating, it reversibly loses oxygen.

Vanadium slag

Include large diameter line pipes, ERW
pipes and casings, seamless pipes and other
tubular products.

Vanadium slag produced from pig iron
in the converter shop and used as a
raw material by producers of ferroalloys
and vanadium products.

Unrealised profit (URP)

Inter-segment unrealised profit or loss
(URP) is a change in the sales margin
included in balances of inventories
purchased from segments other than
the reportable segment between the end
and the beginning of the reporting period.

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional informationCONTACT DETAILS

Registered Name and Number

Registered Office

EVRAZ plc (Company No. 07784342)

2 Portman street, London, W1H 6DU, England, UK.

Secretary

Prism Cosec

Investor Relations

Tel. (London): +44 (0) 207 832 8990

Tel. (Moscow): +7 (495) 232 1370

E-mail: ir@evraz.com

Auditors

Ernst & Young LLP

Registrars

For information about proxy voting, dividends and to report changes
in personal details, shareholders should contact the Company’s
registrar

Directors

Alexander Abramov

Alexander Frolov

Laurie Argo

Karl Gruber

Deborah Gudgeon

Alexander Izosimov

Sir Michael Peat

Eugene Shvidler

Eugene Tenenbaum

Solicitors

Linklaters LLP

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS13 8AE

United Kingdom

Tel.: +44 (0) 870 873 5848

Fax: +44 (0) 870 703 6101

E-mail: webqueries@computershare.co.uk

Annual report & accounts 2020262 | 263

Meet EVRAZEVRAZ in figuresStrategic report Corporate governanceFinancial statementsAdditional information