Evraz Regulatory News (EVR)

EVRAZ plc

EVRAZ PUBLISHES 2021 ANNUAL REPORT AND REPORTS FULL YEAR 2021 RESULTS

25 February 2022 - EVRAZ plc ("EVRAZ" or "the Company") (LSE: EVR) has today:

• posted its Annual Report for the year ended 31 December 2021 ("2021 Annual Report") on its website: https://www.evraz.com/en/investors/reports-and-results/annual-reports/ and

• submitted to the UK National Storage Mechanism a copy of its 2021 Annual Report in accordance with LR 9.6.1 R.

The 2021 Annual Report will shortly be available for inspection on the National Storage Mechanism https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The 2021 Annual Report and the Notice of the Company's Annual General Meeting, which will be held in June 2022, will be posted to shareholders in mid-May 2022.

FY 2021 HIGHLIGHTS

• Total segment revenues grew to US$14,159 million (FY2020: US$9,754 million)

• Total segment EBITDA amounted to US$5,015 million, compared with US$2,212 million in FY2020, boosting the EBITDA margin from 22.7% to 35.4%

• Free cash flow increased to US$2,257 million (FY2020: US$1,020 million)

• Net profit increased to US$3,107 million vs. US$858 million in FY2020

• Net debt significantly reduced: US$2,667 million (FY2020: US$3,356 million)

• Net debt to last twelve months EBITDA went down to 0.5x as at 31 December 2021 (as at 31 December 2020: 1.5x)

• Total EBITDA effect from cost-cutting and customer focus initiatives of US$590 million in 2021

• Cash-costs:

o cash cost of slabs increased to US$308/t from US$213/t in FY2020 due to higher raw material prices (iron ore, coal, ferroalloys), and increased auxiliary, services and repairs costs

o cash costs of coal concentrate increased to US$41/t (FY2020: US$31/t) mainly as a result of rise of mining costs

o cash costs of iron ore products increased to US$42/t (FY2020: US$36/t) mainly by higher fixed costs as inflationary pressure intensified

• An interim dividend of US$729 million (US$0.50 per share) has been declared, reflecting the Board's confidence in the Group's financial position and outlook. 

• The demerger of EVRAZ' coal business is expected to complete in late March 2022 and it is anticipated that Raspadskaya will announce a dividend according to its guidance during the publication of the consolidated IFRS financial statements for 2021 in the amount of not less than 100% of free cash flow if net debt/EBITDA is less than 1.0x and not less than 50% of free cash flow if net debt/EBITDA is above 1.0x.

Financial Highlights1

1 Raspadskaya met all criteria to be classified as a disposal held for distribution to owners, as discussed in more detail in Note 2 and Note 13 of the EVRAZ consolidated financial statements, as of 31 December 2021. Consequently, in accordance with the requirements of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations", it was accounted for as discontinued operations in the consolidated financial statements.

2 Total segment revenues and total segment EBITDA include the contribution of discontinued operations. Revenues and EBITDA from continuing operations are US$13,486 million (2020: US$9,452 million) and US$3,692million (2020: US$1,830 million) respectively.

3 See p.290 of EVRAZ plc Annual Report 2021 for the definition of EBITDA.

4 See p.290 of EVRAZ plc Annual Report 2021 for the definition of free cash flow.

5 Including payments on deferred terms recognised in financing activities and non-cash transactions.

6 See p.291 of EVRAZ plc Annual Report 2021 for the calculation of net debt.

Commenting, EVRAZ Chief Executive Officer Aleksey Ivanov, said:

" In 2021, the steel industry was mostly driven by demand-side fluctuations. Steelmakers increased output in anticipation of more robust demand from the construction and manufacturing sectors. Unable to keep up with the accelerated pace of recovery, steel prices rose to their highest in years.

Amid the upswing on global markets, EVRAZ delivered outstanding financial results in the year, with total segment EBITDA amounting to US$5,015 million and the EBITDA margin reaching 35%. In addition, the Group continued to implement its efficiency improvement programme, which resulted in an EBITDA effect of US$590 million.

In the reporting period, we announced the demerger of Raspadskaya, our coal business, a process currently expected to complete in late March 2022. In our view, the demerger will establish a clear and focused equity story for both companies and provide greater flexibility to execute dedicated strategy for each.

In 2022, we will press ahead with further improving our ESG performance and strengthening our culture of continuous operational improvement. I strongly believe in our long-term success given the commitment of our employees, who represent the forefront of the industry.

We are conscious of the current geopolitical circumstances. We continue to monitor the situation and will keep you updated regarding any material developments that can influence our business."

EVRAZ ANNOUNCES ITS AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021

The Appendix to this announcement contains additional information which has been extracted from the 2021 Annual Report for the purposes of compliance with DTR 6.3.5 only and should be read in conjunction with this announcement. Together these constitute the material required by DTR 6.3.5 and DTR 4.2.3 to be communicated to the media in unedited full text through a Regulatory Information Service. This announcement should be read in conjunction with and is not a substitute for reading the full 2021 Annual Report. Page and note references in the text below refer to page numbers and notes in the 2021 Annual Report.

The financial information contained in this document does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. Financial information for 2020 has been extracted from the audited statutory accounts for the year ended 31 December 2020 which were prepared in accordance with in accordance with UK adopted international accounting standards and the requirements of the Companies Act 2006. The auditor's report on those financial statements was unqualified with no reference to matters to which the auditor drew attention by way of emphasis and no statement under s498(2) or s498(3) of the Companies Act 2006. The financial information for the year ended 31 December 2021 will be delivered to the Registrar of Companies following the Company's annual general meeting convened in June 2022. The auditor has reported on the statutory accounts for the year ended 31 December 2021. The auditor's report was unqualified.

CONFERENCE CALL

A conference call to discuss the results, hosted by Aleksey Ivanov, CEO, Nikolay Ivanov, CFO, and Alexander Kuznetsov, Vice President, Corporate Strategy and Performance Management, will be held on Friday, 25 February 2022, at:

12:00 (London time)

15:00 (Moscow time)

07:00 (New York time)

To join the call, please dial:

Conference ID: 2086600

To avoid any technical inconvenience, it is recommended that participants dial in 10 minutes before the start of the call.

An audio webcast will be available at the following link (registration needed): https://www.webcast-eqs.com/evraz20220225

The FY2021 results presentation will be also available on the Group's website, www.evraz.com, on Friday, 25 February 2022, at the following link:

https://www.evraz.com/en/investors/presentations/financial-results/

An MP3 recording will be available on Monday, 28 February 2022, at the following link:

https://www.evraz.com/en/investors/reports-and-results/financial-results/ 

Table of contents

Financial review

Statement of operations

CAPEX and key projects

Financing and liquidity

Review of operations by Segment

Steel segment

Steel, North America segment

Coal segment

APPENDIX

dEMERGER UPDATE

Key RISKS AND UNCERTAINTIES

DIVIDENDS

DIRECTORS' RESPONSIBILITY STATEMENT

Legal disclaimer

Сonsolidated statement of operations

Сonsolidated statement of comprehensive income

Сonsolidated statement of financial position..

Сonsolidated statement of cash flows

Сonsolidated statement of cash flows (continued)

Сonsolidated statement of changes in equity..

Сonsolidated statement of changes in equity (continued)

Сonsolidated statement of changes in equity (continued)

Financial review

The management have concluded that the demerger of the coal business has become highly probable within one year and that Raspadskaya Group met all criteria to be classified as a disposal held for distribution to owners, as discussed in more detail in Note 2 and Note 13 of the EVRAZ consolidated financial statements, as of 31 December 2021. Consequently, in accordance with the requirements of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations", it was accounted for as discontinued operations in the consolidated financial statements.

During 2021 the Coal business was an integral part of the Group and was managed on this basis. Due to this the analysis presented below is based on the data disclosed in the Note 3 "Segment information" of the consolidated financial statements and follow the same logic as in all previous years.

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

Statement of operations

In 2021, EVRAZ' total segment revenues climbed by 45.2% YoY to US$14,159 million, compared with US$9,754 million in 2020. The increase was caused primarily by higher sales prices for semi-finished and construction products, as well as greater volumes for vanadium products. This increase was also attributable to higher average realised prices and third party sales for coal.

The Group's total segment EBITDA amounted to US$5,015 million during the period, compared with US$2,212 million in 2020, boosting the EBITDA margin from 22.7% to 35.4%. The increase in EBITDA was primarily attributable to higher steel, vanadium and coal product sales prices.

Total segment revenues and total segment EBITDA include the contribution of discontinued operations. Revenues and EBITDA from continuing operations are US$13,486 million (2020: US$9,452 million) and US$3,692million (2020: US$1,830 million) respectively.

Free cash flow soared by 121.3% YoY to US$2,257 million due to better operating results.

In 2021, the Steel segment's revenues (including intersegment sales) rose by 46.2% YoY to US$10,188 million, which constitutes 66.3% of the Group's total before eliminations. The increase was mainly attributable to higher revenues from steel and vanadium products, which climbed by 45.5% and 47.6% YoY, respectively. This was primarily because average sales prices advanced by 50.4% for steel products and by 38.8% for vanadium. The effect of higher prices on the Steel segment revenues were partly offset by lower sales volumes, which edged down from 12.3 million tonnes in 2020 to 11.6 million tonnes in 2021 following planned decrease in production volumes at Russian mills.

In 2021, revenues from the Steel, North America segment rose by 30.6% YoY to US$2,324 million, driven by a 33.6% increase in sales prices. The latter was offset by a 3.0% reduction in sales volumes, primarily in the semi-finished and tubular products, but compensated by improvements in sales of flat-rolled products.

The Coal segment's revenues increased by 55.8% YoY to US$2,321 million, mainly driven by an increase of 68.8% in coal product sales prices and a decrease of 13.0% in sales volumes of coking coal products.

In 2021, higher prices for semi-finished, construction and vanadium products almost doubled the Steel segment's EBITDA, despite an increase in cost of sales.

The Steel, North America segment's EBITDA increased because of higher revenues from sales of flat-rolled, construction and railway products.

The Coal segment's EBITDA rose YoY due to higher average realised prices.

1 For the definition of EBITDA, please refer to p. 290 of the Annual Report 2021

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

In 2021, selling and distribution expenses rose by 8.0% amid increased freight transportation costs related to higher shipment volumes and freight rates. General and administrative expenses climbed by 11.8%, mostly because of the implementation of projects aimed at increasing productivity (EVRAZ Business System transformation, legal and IT) and consulting services for these projects. This was partly offset by the effect that depreciation of the average ruble exchange rate had on costs.

In 2021, EVRAZ recognised a US$30 million impairment loss in relation to certain functionally obsolete items of property, plant and equipment.

Foreign exchange gains amounted to US$34 million. They were mainly related to intra‑group loans denominated in rubles and payable by Evraz Group S.A., whose functional currency is the US dollar, to the Russian subsidiaries, which have the ruble as their functional currency. The depreciation of the Russian ruble against the US dollar in 2021 led to foreign exchange gains being recognised on the income statements of non-Russian subsidiaries.

Net interest expense decreased to US$227 million in 2021, compared with US$322 million in 2020. This was mainly due to repayment of expensive debt and a lower indebtedness level during 2021. In the first quarter of 2021, the Group settled the 8.25% notes due 2021 (US$735 million principal) and 12.6% ruble-denominated bonds due 2021 (US$203 million principal at 31 December 2020). Later during 2021, the full amount of the 6.75% notes due 2022 (US$500 million principal) was repurchased early.

In the reporting period, the Group had an income tax expense of US$1,077 million, compared with US$437 million in 2020. The change mostly reflects the significant improvement in operating results.

1 For the definition of free cash flow, please refer to p. 290 of the Annual Report 2021.

CAPEX and key projects

During the reporting period, EVRAZ' capital expenditures rose to US$920 million, compared with US$657 million in 2020, driven by higher development expenses. Capital expenditure projects during 2021, indicated in millions of US dollars, can be summarised as follows.

Capital expenditures in 2021 

Financing and liquidity

EVRAZ began 2021 with total debt of US$4,983 million.

In January, the Group repaid at maturity US$735 million in outstanding principal of its Eurobonds due in 2021. In June and August, the Group completed several transactions to repurchase, in aggregate, US$65 million in outstanding principal of its Eurobonds due in 2022 and later in October completed a make-whole call for the remaining US$435 million in outstanding principal of these Eurobonds.

In March, the Group repaid, at maturity, RUB15,000 million (roughly US$201 million) in outstanding principal of its ruble-denominated bonds due in 2021.

In March, to compensate for the reduction in liquidity, EVRAZ drew US$750 million under the committed syndicated facility that it signed with a group of international banks in early 2020.

In February, EVRAZ ZSMK signed a new credit facility with SberBank and borrowed US$67 million of the available funds.

In June, EVRAZ ZSMK signed an amendment to its existing US$100 million credit facility with ING DiBa, extending its repayment schedule until 2026 and increasing its size to US$150 million. In July, EVRAZ ZSMK utilised an additional US$50 million. In October, the Group agreed an amendment to this credit facility implementing sustainability-linked provisions, namely a pricing mechanism that became linked to the management score component of the Sustainalytics ESG rating.

In November, EVRAZ ZSMK signed a new, committed US$350 million credit facility with Intesa with an availability period of six months from the signing date. The facility remained unutilised as at 31 December 2021.

In the process of preparing for a potential demerger of its Coal assets, the Group obtained necessary creditor approvals, including a Eurobond consent solicitation from the majority of holders of its Eurobonds due in 2022, 2023 and 2024. It also took steps to rebalance its debt between the Steel and Coal divisions and refinance certain outstanding loans.

Raspadskaya received a US$200 million long-term loan from Alfa Bank and a US$200 million long-term loan from SberBank.

Steelmaking subsidiaries of the Group, EVRAZ NTMK and EVRAZ ZSMK, repaid a total of around US$619 million of their outstanding bank debt of varying maturities during 2021.

As a result of these actions, as well as scheduled repayments of bank loans and leases in 2021, total debt fell by US$889 million to US$4,094 million as at 31 December 2021.

In 2021, EVRAZ paid three interim dividends to its shareholders: US$437 million (US$0.30 per share) in April, US$292 million (US$0.20 per share) in June, and US$802 million (US$0.55 per share) in September.

On 14 December 2021, EVRAZ announced an interim dividend to its shareholders of US$292 million (US$0.20 per share), payable in January 2022.

Net debt dropped by US$689 million to US$2,667 million, compared with US$3,356 million as at 31 December 2020.

Interest expense accrued on loans, bonds and notes amounted to US$186 million during the period, compared with US$291 million in 2020. The repayment of the Eurobonds due in 2021 and 2022 and rouble bonds due in 2021, all of which had high coupon rates, together with management's efforts to reduce total debt and refinance indebtedness on favourable terms, led to the significant reduction of interest expense compared with the previous year.

The higher EBITDA amid a strong market recovery and lower net debt resulted in a significant reduction in the Group's major leverage metric, the ratio of net debt to last twelve months (LTM) EBITDA, to 0.5 as at 31 December 2021, compared with 1.5 as at 31 December 2020.

As at 31 December 2021, various bilateral facilities with a total outstanding principal of around US$1,697 million contained financial maintenance covenants tested at the level of EVRAZ plc, including a maximum net leverage and a minimum EBITDA interest cover.

New debt facilities of Raspadskaya contain financial maintenance covenants tested on the consolidated financials of Raspadskaya, including a maximum net leverage and a minimum EBITDA interest cover.

As at 31 December 2021, EVRAZ and its subsidiaries were in full compliance with the financial covenants.

As at 31 December 2021, cash and cash equivalents amounted to US$1,427 million, while short-term loans and the current portion of long-term loans amounted to US$101 million. Cash balances and committed credit facilities available to the Group (US$623 million) comfortably cover upcoming maturities.

Review of operations by Segment

Steel segment

Sales review

1 Includes billets, slabs, pig iron, pipe blanks and other semi-finished products.

2 Includes rebar, wire rods, wire, beams, channels and angles.

3 Includes rails, wheels, tyres and other railway products.

4 Includes commodity plate and other flat-rolled products.

5 Includes rounds, grinding balls, mine uprights and strips.

In 2021, the Steel segment's revenues climbed by 46.2% YoY to US$10,188 million, compared with US$6,969 million in 2020. This was the result of higher sales prices, primarily for semi-finished products and construction products, as well as greater vanadium product volumes.

Revenues from external sales of semi-finished products rose by 52.4% YoY. This was driven by a 60.6% increase in average prices, which was partly offset by an 8.2% decline in sales volumes. The decrease was attributable to change in product mix and a reduction in the output following the introduction of the export duty in 2021. The primary factor was a surge of 90.0% in the average prices of slabs.

Revenues from sales of construction products to third parties jumped by 57.8% YoY amid an increase of 58.8% in average prices. This was caused mainly by higher sales prices for rebars on the Russian and CIS markets, greater beam sales prices, as well as higher sales prices for channels, primarily on the Russian market.

Revenues from external sales of railway products decreased because of reductions of 8.2% in sales volumes, which was partly offset by a 6.7% increase in sales prices. The drop in sales volumes was caused mostly by lower sales of rails amid reduced demand in Russia and the CIS.

External revenues from flat-rolled products surged by 62.3% YoY, driven by a 70.5% upswing in sales prices.

Revenues from external steel product sales in Russia climbed by 43.9% YoY, primarily because of higher prices and greater demand. The share of the Russian market in total external steel product sales decreased from 48.7% in 2020 to 48.2% in 2021. Asia's share of sales fell from 36.2% to 29.7% because of lower sales volumes for billets.

Steel segment revenues from sales of iron ore products, including intersegment sales, surged by 60.3%, driven by an 77.7% jump in sales prices and a 17.4% decline in sales volumes. The main decrease in sales volumes was caused by a shortage of iron ore, unplanned equipment downtimes and logistics restrictions.

During the reporting period, around 68.1% of EVRAZ' iron ore consumed in steelmaking came from its own operations, compared with 63.2% in 2020.

Steel segment revenues from sales of vanadium products, including intersegment sales, climbed by 47.6%, due primarily to a 38.8% increase in sales prices. Vanadium product prices followed market trends, including the London Metal Bulletin and Ryan's Notes benchmarks.

Steel segment cost of revenues

* Primarily includes goods for resale, intersegment unrealised profit and certain taxes, semi-finished products and allowances for inventories

In 2021, the Steel segment's cost of revenues increased by 32.1% YoY. The main reasons for the growth in costs were as follows:

· The cost of raw materials rose by 55.5%, primarily because of the higher cost of coking coal (up 58.4%) and iron ore (54.3%) amid price increases. Scrap costs climbed by 52.3% because of higher prices for scrap, which was driven by global market trends.

· Service costs rose by 10.4%, primarily driven by higher costs for processing costs of vanadium in slag.

· Transportation costs dropped by 6.6%, primarily because of lower railway tariffs.

· Depreciation costs increased by 9.9%, mainly because of higher depreciation at EVRAZ NTMK after fixed assets were upgraded to improve their technical condition.

· Other costs jumped by 58.8%, largely because of increase in taxes due to export duty on metal products effective from 1 August 2021 and lower cost of goods for resale amid an increase in purchase prices in 2021 compared with 2020.

Steel segment gross profit

The Steel segment's gross profit surged by 73.5% YoY and amounted to US$4,118 million in the reporting period driven primarily by higher prices for semi-finished, construction and vanadium products. This was partly offset by the negative effect of higher cost.

Steel, North America segment

Sales review 

1 Includes slabs

2 Includes beams and rebars

3 Includes rails and wheels

4 Includes commodity plate, specialty plate and other flat-rolled products

5 Includes large-diameter line pipes, ERW line pipes, seamless and welded OCTG and other steel products

6 Includes scrap and services

The Steel, North America segment's revenues from the sale of steel products climbed by 32.2% YoY amid a 35.3% surge in sales prices, offset by a 2.9% decrease in sales volumes. The reduction in volumes was mainly attributable to sales of tubular and semi‑finished products, which was partly compensated by increased sales of flat-rolled and construction products.

Revenues from semi-finished product sales dropped to almost zero following the fulfilment of a contract with a key customer in 2020.

Revenues from construction product sales rose by 46.4% YoY because of a 2.3% increase in volumes and a 44.1% improvement in prices. The upward trend was driven by greater market demand amid the economic recovery.

Railway product revenues increased by 20.2%, driven by a growth in sales prices of 25.4%. This was partly offset by a decrease in sales volumes of 5.2%.

Revenues from flat-rolled products soared by 178.6% amid a 63.6% jump in volumes. This was supported by rapid market improvement and a 115.0% increase in sales prices as a result of higher third-party demand in 2021 amid the rapid market recovery from the pandemic and limited supply.

Revenues from tubular and other steel product sales fell by 11.6% YoY due to a 25.1% drop in sales volumes, which was partly offset by an 13.5% uptick in sales prices. The reduction in volumes was caused by the idling of the spiral mills following the completion of 2020 orders.

Steel, North America segment cost of revenues

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

In 2021, the Steel, North America segment's cost of revenues increased by 14.4% YoY. The main drivers were as follows:

· Raw material costs surged by 95.6%, which was primarily attributable to the higher cost of scrap metal and increased consumption due to transition to increased share of internal supply of semi-finished products.

· The cost of semi-finished products dropped by 42.4% driven by a reduction of externally purchased materials and transition to internal supply.

· Auxiliary material costs rose by 17.4% following a change in classification (lime and coke to auxiliary materials, which were previously included in other raw materials).

· Service costs fell by 6.9%, mainly driven by decline in coating services due to decreased pipe sales volumes.

· Energy costs rose by 32.2%, primarily because of higher natural gas prices.

· Other costs were down for the reporting period, mainly because of changes in balances of finished goods and work in progress compared with 2020 amid higher production and prices, which were driven by global market trends.

Steel, North America segment gross profit

The Steel, North America segment's gross profit totalled US$489 million in the reporting period, up from US$175 million in 2020. The increase was primarily driven by a significant growth in revenues amid favourable market conditions. It was partly offset by higher prices for raw materials, auxiliary materials and energy.

Coal segment

Sales review

In 2021, the Coal segment's overall revenues increased as sales prices rose in line with global market trends. As the global market recovered from the pandemic-related decline seen in 2020, demand for coal grew. Production restrictions observed since the second half of 2021 in all global producing regions also contributed to the strong increase in international prices.

Revenues from external sales of coal products increased amid a 78.8% upswing in prices. This was partly offset by an 14.0% decrease in sales volumes because of lower production of the GZh grade and a change in the product mix in favour of coking coal concentrate to meet customer needs. Revenues from external sales of coking coal and coking coal concentrate climbed by 28.4% and 68.3%, respectively, amid higher prices.

Revenues from internal sales of coal products surged by 42.2%, mainly because of a 53.5% jump in sales prices, which was partly offset by an 11.3% drop in sales volumes amid a shortage of premium K-grade coal.

In 2021, the Coal segment's sales to the Steel segment amounted to US$762 million (32.8% of total sales), compared with US$536 million (35.9%) in 2020.

During the reporting period, roughly 70.7% of EVRAZ' coking coal consumption in steelmaking came from the Group's own operations, compared with 78.0% in 2020.

Coal segment cost of revenues 

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.

The volume of total coal products sales decreased by 13% and caused decrease of cost of sales by 10.5% while cost of production increased due to increase of production as well as the following factors:

· The cost of auxiliary materials rose by 28.2% amid higher longwall move costs at the Alardinskaya, Osinnikovskaya, Erunakovskaya and Raspadskaya mines.

· Costs for services climbed by 22.6% because due to the high growth of the prices of contractors services in Kuzbass region.

· Staff costs were up because of higher mining volumes accompanied with insourcing new equipment and resumption of work at Razrez Raspadsky.

Coal segment gross profit

In 2021, the Coal segment's gross profit amounted to US$1,402 million, up from US$463 million a year earlier, primarily because of the surge in sales prices.

APPENDIX

dEMERGER UPDATE

Further to the Company's announcement on 8 February, the Capital Reduction has been confirmed by the UK Court and become effective, meaning the Company expects to have sufficient distributable reserves to effect the Demerger. The entitlement to receive PJSC Raspadskaya (RASP) Shares has been determined based on the respective holding of the Company's shares at 6:00pm UK on 15 February 2022 and the window for EVRAZ Shareholders entitled to receive the Demerger Dividend to submit the RASP Shares Information Form to the Company's registrar is open.

The Demerger Dividend is expected to occur on 29 March 2022 and eligible EVRAZ Shareholders will receive their RASP Shares as soon as reasonably practicable after 29 March 2022. It is currently anticipated that the settlement date for the transfer of RASP Shares to Eligible Accounts will be 7 April 2022.

Further information on the steps EVRAZ Shareholders are required to take to receive the RASP Shares to which they are entitled can be found in Section 3 of Part I (Action to be Taken) of the Shareholder Circular published by the Company on 15 December 2021 (the "Shareholder Circular"). These steps include opening or otherwise holding an account with a direct or indirect participant of a clearing institution eligible to receive RASP Shares (such as Euroclear, Clearstream or the NSD), and providing the details of such account to the Company's registrar by no later than 6:00pm UK on 15 March 2022 by returning the RASP Shares Information Form, or to the shareholders' broker or nominee at the date and by means, defined by such broker or nominee. Any EVRAZ Shareholder who fails to provide the relevant details by 15 March 2022 will be deemed to be incapable of holding RASP Shares and the RASP Shares to which they are entitled will be sold pursuant to the Share Sale Facility.

Shareholders are reminded that neither the sale price nor the sale timeframe is guaranteed under the Share Sale Facility. It is currently anticipated that the sale of the RASP Shares pursuant to the Share Sale Facility will be completed within six months following the Demerger Dividend, however the precise timeframe, as well as the realized price, will depend on the total number of RASP Shares to be sold pursuant to the Share Sale Facility and market conditions during the Sale Period. Therefore, the EVRAZ Board recommends that EVRAZ Shareholders that are capable of holding RASP Shares take the necessary action to receive RASP Shares and do not participate in the Share Sale Facility.

Capitalised terms used but not defined in this paragraph have the meaning given to such terms in the Shareholder Circular. 

Key RISKS AND UNCERTAINTIES

EVRAZ is exposed to numerous risks and uncertainties that exist in its business that may affect its ability to execute its strategy effectively in 2022 and could cause the actual results to differ materially from expected and historical results.

The Directors consider that the principal risks and uncertainties as summarised below and detailed in the EVRAZ plc 2021 Annual Report on pages 87 to 92, copies of which are available at https://www.evraz.com/en/investors/reports-and-results/annual-reports/, are relevant in 2022 and the mitigating actions described are appropriate.

Principal risks

EVRAZ monitors these risks and actively pursues strategies to mitigate them on an ongoing basis.

Whilst there have not been direct impacts on the Group to date, the Board continues to monitor the situation in Ukraine and the response of international governments. The Directors have considered additional scenarios for the purposes of its going concern assessment (see page 189 of Annual Report 2021) and the viability statement (see page 97 of Annual Report 2021).

Emerging risks

In addition to principal risks, management pays particular attention to threats that could become significant over a certain time, known as emerging risks. The Group defines these as events that could meaningfully impact EVRAZ' activities and results, but have a lower likelihood of materializing in the next three to five years.

They include:

· Climate-related issues.

· Liabilities incurred due to environmental impairments.

· Geopolitical instability.

· Changes in technology.

· Societal issues.

· Demographic imbalance.

Emerging risks may be transferred to the class of current risks depending on their circumstances and materialisation. Management works continuously to monitor and manage emerging risks and devise mitigation measures.

The major part of the Group is based in the Russian Federation and is consequently exposed to the economic and political effects of the policies adopted by the Russian government. Worsening situation related to Ukraine has further increased the economic uncertainty and the risk of the imposition of sanctions. These conditions and future policy changes could affect the operations of the Group and the realisation and settlement of its assets and liabilities.

Climate change risks

EVRAZ is also exposed to numerous climate change risks and opportunities. The Directors consider that climate change risks that detailed in the EVRAZ plc 2021 Annual Report on pages 92 to 96, copies of which are available at https://www.evraz.com/en/investors/reports-and-results/annual-reports/, are relevant in 2022 and the mitigating actions described are appropriate.

DIVIDENDS

Interim dividend

In consideration of EVRAZ strong performance in 2021, EVRAZ Board of Directors has announced an interim dividend. On 24 February 2022, the Board of Directors voted to disburse a total of US$729 million, or US$0.50 per share. The record date is 11 March 2022 and payment date is 30 March 2022.

The interim dividend will be paid in US Dollars, unless a shareholder elects to receive dividends in UK pounds sterling or Euros. The last date for submitting a Currency Election will be 14 March 2022. All conversions will take place on or around 16 March 2022.

DIRECTORS' RESPONSIBILITY STATEMENT

Each of the directors whose names and functions are listed on pages 104-108 of the Annual report confirm that to the best of their knowledge:

• the consolidated financial statements of EVRAZ plc, prepared in accordance with UK adopted international accounting standards and the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole (the 'Group');

• the management report required by DTR 4.1.8R includes 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.

By order of the Board

Aleksey Ivanov

Chief Executive Officer

EVRAZ plc

24 February 2022

Legal disclaimer

This press-release contains forward-looking statements concerning the financial condition, operational results, and businesses of EVRAZ plc. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current plans, goals, intentions, expectations and assumptions. They involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in these statements. Forward-looking statements typically contain words such as "will", "may", "should", "believe", "intend", "expect", "anticipate", "target", "estimate," and words of similar import.

By their nature, forward-looking statements involve known and unknown risks and uncertainties, as they relate to events and depend on circumstances that will or could occur in the future. They are based on numerous assumptions regarding EVRAZ's present and future business strategies and the environment in which it will operate. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including a number of factors outside EVRAZ's control.

These include, inter alia, changes in the political, social, and regulatory framework in which EVRAZ operates; changes to economic and technological trends or conditions; the success of certain business and operating initiatives; the actions of regulators; legislative, fiscal, and regulatory developments, including regulatory measures addressing climate change; the behavior of other market participants; competitive product and pricing pressures; changes in consumer habits and preferences; foreign exchange rate fluctuations and interest rate fluctuations; changes in the level of capital investment; the impact of any acquisitions, disposals, or similar transactions; the outcome of any litigation; risk inherent to doing business in countries subject to international sanctions; environmental and physical risks; risks associated with the impact of pandemics; and risks of unforeseeable events and force majeure conditions.

Other unknown or unpredictable factors could also cause actual results and developments to differ materially from those in forward-looking statements.

Neither EVRAZ nor any of its subsidiaries or directors, officers or advisers, provides any representation, assurance, or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this press-release will actually occur.

Except as required by applicable regulations or by law, neither EVRAZ nor any of its subsidiaries undertakes any obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise. Each forward-looking statement pertains only to the date of this press-release, i.e. 24 February 2022. In light of these risks, results could differ materially from those stated, implied, or inferred from the forward-looking statements contained in this press-release. No materials contained in this press-release constitute an offer, solicitation, or recommendation to purchase or sell securities or make investments. Readers should not place undue reliance on forward-looking statements. 

Сonsolidated statement of operations

(in millions of US dollars, except for per share information)

\* The amounts shown here do not correspond to the 2020 and 2019 financial statements and reflect adjustments made in connection with the presentation of discontinued operations (Note 13).

The accompanying notes form an integral part of these consolidated financial statements.  

Сonsolidated statement of comprehensive income

(in millions of US dollars)

The accompanying notes form an integral part of these consolidated financial statements.

Сonsolidated statement of financial position

(in millions of US dollars)

The financial statements of EVRAZ plc (registered number 7784342) on pages were approved by the Board of Directors on 24 February 2022 and signed on its behalf by Deborah Gudgeon, director.

The accompanying notes form an integral part of these consolidated financial statements. 

Сonsolidated statement of cash flows

(in millions of US dollars)