NLMK.L Regulatory News (NLMK)

k t/$ million

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Sales volumes

4,172

4,015

4%

4,643

-10%

17,069

17,591

-3%

Revenue

2,312

2,576

-10%

3,013

-23%

10,554

12,046

-12%

EBITDA 2

480

654

-27%

847

-43%

2,564

3,589

-29%

EBITDA margin

21%

25%

-4 p.p.

28%

-7 p.p.

24%

30%

-6 p.p.

Profit for the period 3

200

343

-42%

509

-61%

1,339

2,238

-40%

Free cash flow 4

338

249

36%

502

-33%

1,523

2,027

-25%

Net debt 5

1,786

1,736

3%

891

2x

1,786

891

2x

Net debt/EBITDA 5

0.70x

0.59x

0.25x

0.70x

0.25x

Investor relations contact:

Dmitry Kolomytsyn, CFA

+7 (495) 504 0504

ir@nlmk.com

Media relations contact:

Maria Simonova

+7 (915) 322 62 25

simonova_mn@nlmk.com

2019 prices

·; Raw material prices: average global coal prices decreased by 11% yoy due to weak demand in India and import restrictions in China; iron ore prices increased by 34% yoy amid disruptions of supply from Brazil and Australia.

·; Market prices** for flat products: decreased by 23-27% yoy in the U.S, bottoming out in early Q4 2019, followed by a gradual recovery. Prices in Europe decreased by an average 15-20% yoy, but starting from mid-Q4 the region also saw a recovery in prices.

·; Russian prices for steel products, as denominated in dollars, decreased by 3-6% yoy, following global prices. The more gradual decline in prices is associated with strong consumption growth rates on the Russian steel market.

·; Slab export prices (FOB Black Sea) decreased by 18% yoy, following global prices for finished products.

12M 2019 output and sales breakdown

·; Steel output* decreased by 10% yoy to 15.7 m t amid capital repairs at NLMK Lipetsk BF and BOF operations, and low demand for billets on export markets.

·; Sales decreased by 3% yoy, down to 17.1 m t, following the decline in production output, which was partially offset by selling off stocks accumulated by the end of 2018 at the beginning of the year.

·; Finished steel sales increased by 3% yoy, up to 11.1 m t. HVA sales increased by 2% yoy up to 5.1 m t. The share of HVA in the sales portfolio grew by 1 p.p. to 30%.

·; Sales of semis to 3rd parties decreased by 12% yoy, down to 3.9 m t amid lower sales of pig iron and billets. Slab sales to NBH went down by 12% yoy to 2.1 m t, due to NLMK Clabecq restructuring and optimization of slab stocks at the European sites in H2 2019.

·; Sales on "home" markets (w/ NBH) increased to a record high of 11.4 m t (+7% yoy) due to the increase in Russian sales to 6.6 m t (+15% yoy). U.S. sales decreased by 3% yoy due to lower demand for uncoated flats. Sales of NLMK's European companies remained flat yoy.

Q4 2019 output and sales breakdown

·; Steel output* increased by 1% qoq, up to 3.8 m t, following the completion of major repairs at NLMK Lipetsk BF and BOF operations.

·; Sales increased by 4% qoq to 4.2 m t due an increase in pig iron sales following the completion of repairs at NLMK Lipetsk.

·; Sales of finished products grew by 1% qoq to 2.7 m t amid an increase in HRC sales following the completion of the HSM upgrade at NLMK Lipetsk and an increase in deliveries of finished long products.

* Hereinafter NLMK Group steel output and sales in "home" markets include NBH. Consolidated sales are given without NBH. Sales to "home" markets mean sales of the Group's companies in the regions, where production capacities are located in Russia, Europe and the U.S.

NLMK GROUP KEY FINANCIALS

12M 2019 revenue

·; Revenue totalled $10.55 bn (-12% yoy). The increase in the share of finished and HVA products in the sales mix partially offset the 10% yoy reduction in average sales prices and the decrease in steel product sales volumes.

·; The share of finished steel in the revenue grew to 68% (+3 p.p. yoy). The share of HVA products totalled 38% (+2 p.p. yoy) amid lower sales of semis.

·; The share of the Russian market in the revenue grew by 7 p.p. yoy to 41%, driven by a 15% increase in steel product sales in the Russian market yoy. The shares of the US (18%) and the EU (18%) were down by 3 p.p. and 1 p.p. yoy, respectively.

·; The share of the Group's revenue from sales on its home markets (Russia, the US and the EU), including NBH JV sales, grew by 5 p.p. yoy to 71%.

Q4 2019 revenue

·; Revenue totalled $2.31 bn (-10% qoq) due to a drop in steel product prices and a higher share of pig iron in the sales mix, which was partially offset by an increase in total sales by 4% qoq.

·; Revenue in the Russian market totalled $1.07 bn, or 8% less than in the previous quarter. The decline was due to price adjustments. The share of the Russian market in the Group's consolidated revenue grew by 1 p.p. qoq to 46%. Revenue from sales in the EU remained flat qoq at $0.38 bn with the market share in total revenue growing by 1 p.p. qoq to 16%. Revenue in the US declined to $0.41 bn (-4% qoq).

·; The share of the Group's revenue from sales on its home markets, including NBH JV sales, grew by 2 p.p. qoq to 74%.

12M 2019 EBITDA

·; EBITDA went down by 29% yoy to $2.56 bn due to the narrowing of steel/raw material price spreads, which was partially offset by an improvement in the product portfolio structure and operational efficiency gains.

·; Commercial expenses decreased by 5% yoy to $843 m, due to lower export volumes.

·; G&A expenses decreased by 6% yoy to $352 m, driven by cost optimization.

Q4 2019 EBITDA

·; EBITDA* reduced by 27% qoq to $480 m, due to the narrowing of steel/raw material price spreads.

·; Commercial expenses increased to $213 m (+5% qoq), due to higher sales and transportation costs driven by an increase in exports.

·; G&A expenses remained flat qoq.

Net profit**

·; 12M 2019 net profit decreased by 40% yoy due to the decrease in EBITDA and higher effective income tax rate (NLMK USA loss).

·; Q4 net profit decreased by 42% qoq to $200 m, following the decline in EBITDA.

* EBITDA used in NLMK's financial releases is calculated as operating profit before equity share in net losses of associates and other

companies accounted for using the equity method of accounting, impairment and write-off of assets, adjusted to depreciation and

amortization. EBITDA is not an indicator of operating profit, operating activity or liquidity under IFRS, and NLMK discloses it because

equivalent indicators could be used by investors and analysts. That said, NLMK's EBITDA should not be viewed on a standalone basis,

or in place of profit before tax, or cash flows from operations, as defined by IFRS, or as an indicator of operational efficiency, or as the

sum of free cash funds that NLMK can invest into business development. NLMK's EBITDA margin and EBITDA might not be comparable

to similar indicators disclosed by other companies as there are no commonly accepted rules for calculating them. For instance, NLMK's

EBITDA is calculated similar to what is termed as 'Adjusted EBITDA' in other companies, as NLMK's EBITDA excludes other profit/loss

items in addition to interest payments, income tax, depreciation and amortization.

** Profit for the period, attributable to NLMK shareholders.

2019 free cash flow

·; Free cash flow decreased by 25% yoy to $1.5 bn with a reduction in cash flow from operating activities and higher capex as part of Strategy 2022.

·; Operating cash flow decreased by 4% yoy to $2.6 bn, driven by the reduction in EBITDA, which was partially offset by the release of cash from working capital.

·; Cash inflow from working capital totalled $465 m (vs. an outflow of $261 m during 2018) due to:

o +$314 m: a decrease in receivables driven by lower steel product sales volumes and prices;

o +$284 m: inventory reduction due to lower prices, lower exports of slabs and long products, as well as inventory optimization across the supply chain;

o -$132 m: decrease in payables.

Q4 2019 free cash flow

·; Free cash flow increased by 36% qoq to $338 m, driven by working capital release.

·; Operating cash flow grew by 25% qoq to $710 m.

·; Cash released from working capital totalled $334 m due to:

o +$238 m: a decrease in receivables driven by lower steel product prices and faster settlements with buyers;

o +$91 m: a seasonal decrease in stocks of scrap, finished flat and long products, as well as declining prices for steel products.

NLMK Russia Flat

12M 2019 highlights:

·; Sales decreased by 8% yoy, down to 12.46 m t amid major repairs at NLMK Lipetsk BF and BOF operations.

·; Revenue decreased by 16% yoy, amid lower prices for steel products throughout the year and lower sales. The revenue shortfall was partially offset by an improved portfolio structure: the share of revenue generated by finished product sales grew by 1 p.p. yoy to 64%

·; EBITDA decreased by 36% yoy amid narrower steel/raw material spreads.

Q4 2019 highlights:

·; Sales increased by 16% qoq against the backdrop of higher semis sales following the completion of repairs at NLMK Lipetsk blast furnace and BOF operations.

·; Revenues of the Segment decreased by 3% qoq to $1.7 bn, driven by an increased share of semis in the sales portfolio and a decrease in average sales prices.

·; EBITDA decreased to $248 m amid narrower price spreads, which was partially offset by operational efficiency gains.

NLMK Russia Long

12M 2019 highlights:

·; Sales decreased by 10% yoy to 2.85 m t due to a decrease in billet exports.

·; Revenue decreased by 18% yoy due to lower sales and prices for long products.

·; EBITDA decreased by 60% yoy, following a narrowing of price spreads, which was partially offset by operational efficiency gains and a weaker ruble.

Q4 2019 highlights:

·; Sales decreased by 3% qoq, down to 0.67 m t, as billet exports were discontinued due to low margins.

·; Revenue in Q4 2019 totalled $389 m (-20% qoq), due to weak prices for long products and lower sales of billets and scrap.

·; EBITDA of the Segment was -$2 m. The decrease from $46 m last quarter was due to a narrower scrap/rebar spread and lower sales.

Mining Segment

12M 2019 highlights:

·; Sales remained flat yoy at 18.45 m t due to shipments of iron ore being redirected to 3rd parties amid a temporary decrease in demand from NLMK Lipetsk.

·; Revenue increased by 9% yoy, supported by higher iron ore sales and prices.

·; EBITDA increased by 10% yoy following the increase in revenue. EBITDA margin grew to 74%.

Q4 2019 highlights:

·; Sales of iron ore decreased by 5% qoq to 4.56 m t due to planned maintenance.

·; Revenue decreased by 21% qoq to $321 m, due to lower sales and a 5% qoq price adjustment for concentrate and a 19% price adjustment for pellets.

·; EBITDA decreased by 23% qoq to $241 m, following the decrease in revenue, which was partially offset by operational efficiency gains. EBITDA margin stood at 75% (-2 p.p. qoq).

NLMK USA

12M 2019 highlights:

·; Sales decreased by 3% yoy to 2.2 m t as demand for HRC from the pipe and tube, machine building, automotive and energy sectors declined.

·; Revenue decreased by 20% yoy, due to a steel price adjustment in the U.S.

·; EBITDA was -$37 m against last year's earnings of $253 m. The indicator took a steep dive due to a narrowing of slab/rolled steel spreads related to rolled product price adjustments, and the use of Lipetsk slabs purchased in early 2019, with a 25% import tariff priced into slabs. NLMK USA stopped purchasing Lipetsk slabs in Q2 2019. Excluding import tariffs from the stock, 2019 EBITDA would be +$27 m.

Q4 2019 highlights:

·; Sales decreased by 14% qoq to 0.47 m t, amid a seasonal weakening of steel purchases.

·; Revenue decreased by 18% qoq to $322 m (-36% yoy), due to a decrease of sales prices on the U.S. market and lower sales.

·; EBITDA was -$37 m (vs -$33 m the previous quarter) amid narrower price spreads.

NLMK Dansteel*

12M 2019 highlights:

·; Sales increased by 2% yoy to 0.5 m t, supported by an uptick in demand from the wind power industry.

·; Revenue decreased by 4% yoy, pressured by a price adjustment for steel products.

·; EBITDA was $8 m (vs. a $17 m loss the previous year), supported by a wider plate/slab price spread and product mix expansion following investment programme implementation.

Q4 2019 highlights:

·; Sales of plate grew by 9% qoq to 0.13 m t, due to the completion of planned maintenance and an uptick in demand in November and December.

·; Revenue declined by 1% qoq to $110 m due to lower plate prices.

·; EBITDA remained flat qoq at $1 m.

*NLMK Dansteel and plate distribution network.

JV performance (NBH)

12M 2019 highlights:

·; NBH sales decreased by 2% down to 2.19 m t due to lower plate sales related to NLMK Clabecq restructuring.

·; Revenue decreased by 15% yoy to $1.56 bn, mainly due to lower steel product sales prices.

·; EBITDA was -$134 m (-$111 m, excluding non-operating provisions for NLMK Clabecq accrued in Q2) vs. -$87 m the previous year, amid narrower rolled product/slab price spreads and lower plate sales.

Q4 2019 highlights:

·; NBH sales decreased by 3% qoq to 0.52 m t, due to lower HRC sales related to weaker demand in the automotive and machine building sectors, and due to high stocks on the consumer side.

·; Revenue decreased by 5% qoq, down to $0.35 bn, due to lower sales and average sales prices.

·; EBITDA was -$27 m vs. -$43 m in Q3 2019.

'000 t

Total

Sales markets

Russia

EU

North America

Middle East and Turkey

C. and S.

America

Other markets

NLMK Group

4,167

1,805

750

729

557

74

251

Division sales to third parties:

NLMK Russia Flat   

2,375

1,270

50

254

552

69

180

NLMK Russia Long

674

535

100

0

0

0

39

International subsidiaries and affiliates, incl.:

1,118

0

601

476

5

5

32

NLMK USA

472

0

0

472

0

0

0

European rolling facilities (NLMK Dansteel and NBH)

646

0

601

3

5

5

32

k t/$ million

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Steel product sales, incl.:

3,226

2,776

16%

3,557

-9%

12,460

13,516

-8%

external cutmores

2,375

2,226

7%

2,588

-8%

9,381

9,203

2%

semis to NBH

523

430

22%

577

-9%

2,104

2,379

-12%

intersegmental sales

328

119

2,7x

392

-16%

975

1,934

-50%

Revenue, incl.:

1,687

1,741

-3%

2,152

-22%

7,327

8,743

-16%

external customers

1,347

1,482

-9%

1,642

-18%

5,897

6,327

-7%

intersegmental operations

340

259

31%

510

-33%

1,430

2,416

-41%

EBITDA

248

363

-32%

568

-56%

1,490

2,339

-36%

EBITDA margin

15%

21%

-6 p.p.

26%

-11 p.p.

20%

27%

-7 p.p.

k t/$ million

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Steel product sales

674

693

-3%

841

-20%

2,850

3,185

-10%

Revenue, incl.:

389

485

-20%

568

-32%

1,757

2,152

-18%

external customers

316

359

-12%

441

-28%

1,428

1,720

-17%

intersegmental operations

73

126

-42%

127

-43%

329

432

-24%

EBITDA

(2)

46

-0.04x

38

-0,1x

89

221

-60%

EBITDA margin

-1%

9%

-10 p.p.

7%

-8 p.p.

5%

10%

-5 p.p.

k t/$ million

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Iron ore products sales, incl.:

4,560

4,784

-5%

4,751

-4%

18,446

18,377

0%

sales to Lipetsk plant

4,440

4,420

0%

4,751

-7%

17,850

18,377

-3%

Revenue, incl.:

321

406

-21%

259

24%

1,315

1,211

9%

external customers

15

42

-64%

5

3x

77

22

3,5x

intersegmental operations

306

364

-16%

254

20%

1,238

1,189

4%

EBITDA

241

314

-23%

180

34%

977

888

10%

EBITDA margin

75%

77%

-2 p.p.

69%

+6 p.p.

74%

73%

+1 p.p.

k t/$ million

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Steel product sales

472

549

-14%

504

-6%

2,205

2,285

-3%

Revenue, incl.:

322

391

-18%

504

-36%

1,715

2,134

-20%

external customers

322

391

-18%

504

-36%

1,715

2,134

-20%

intersegmental operations

-

-

0%

-

0%

-

-

0%

EBITDA

(37)

(33)

12%

49

-0,8x

(37)

253

-0,1x

EBITDA margin

-11%

-8%

-3 p.p.

10%

-21 p.p.

-2%

12%

-14 p.p.

k t/$ million

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Steel product sales

128

118

9%

120

7%

529

520

2%

Revenue, incl.:

110

111

-1%

119

-8%

491

514

-4%

external customers

110

111

-1%

119

-8%

490

513

-4%

intersegmental operations

-

-

0%

-

0%

1

1

0%

EBITDA

1

1

0%

(8)

-0,1x

8

(17)

-0,5x

EBITDA margin

1%

1%

0 p.p.

-7%

+8 p.p.

2%

-3%

+5 p.p.

k t/$ million

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Steel product sales

518

537

-3%

540

-4%

2,185

2,229

-2%

Revenue, incl.:

349

369

-5%

436

-20%

1,562

1,837

-15%

external customers

332

348

-5%

426

-22%

1,502

1,772

-15%

intersegmental operations

17.0

21.0

-19%

10.0

70%

60

65

-8%

EBITDA

(27)

(43)

-37%

(32)

-16%

(134)

(87)

54%

EBITDA margin

-8%

-12%

+4 p.p.

-7%

-1 p.p.

-9%

-5%

-4 p.p.

k t

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Pig iron

253

54

156

47

295

Slabs

1,172

1,173

1,288

1,559

1,527

Thick plates

128

118

137

146

120

Hot-rolled steel

912

852

901

1,016

827

Cold-rolled steel

473

533

498

509

476

Galvanized steel

331

338

331

348

325

Pre-painted steel

113

117

100

89

111

Transformer steel

66

63

74

71

70

Dynamo steel

50

75

68

61

53

Billet

1

60

78

173

201

Long products

596

568

570

526

578

Metalware

77

65

68

69

62

TOTAL

4,172

4,015

4,268

4,614

4,643

k t

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Russia

1,805

1,682

1,704

1,451

1,407

European Union

787

674

1,130

987

886

Middle East, including Turkey

556

633

409

709

521

North America

727

606

748

654

806

Central and South America

73

164

24

246

124

CIS

91

114

106

122

135

Asia and Oceania

69

21

61

180

639

Rest of World

64

122

85

264

126

TOTAL

4,172

4,015

4,268

4,614

4,643

Region

Q4 2019

Q3 2019

Q2 2019

$ million

share

$ million

share

$ million

share

Russia

1,073

46%

1,170

45%

1,158

41%

European Union

377

16%

376

15%

625

22%

Middle East, including Turkey

246

11%

321

12%

230

8%

North America

408

18%

427

17%

551

20%

Central and South America

40

2%

94

4%

25

1%

CIS

88

4%

100

4%

110

4%

Asia and Oceania

54

2%

29

1%

55

2%

Rest of World

26

1%

58

2%

43

2%

TOTAL

2,312

100%

2,576

100%

2,797

100%

$ million

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Operating income**

338

512

593

559

713

minus:

Depreciation and amortization

(142)

(142)

(142)

(136)

(134)

EBITDA

480

654

735

695

847

$ million

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Net cash provided operating activities

710

568

494

851

761

Interest paid

(22)

(4)

(12)

(11)

(12)

Interest received

9

1

3

16

3

Advance VAT payments on imported equipment

-

-

-

-

-

Capex

(359)

(316)

(227)

(178)

(250)

Free Cash Flow

338

249

258

678

502

$ million

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Short-term borrowings

468

389

544

224

398

Long-term borrowings

2,188

2,288

2,257

1,872

1,677

Cash and cash equivalents

(713)

(421)

(1,142)

(736)

(1,179)

Short-term deposites

(157)

(520)

(368)

(445)

(5)

Net debt

1,786

1,736

1,291

915

891

k t

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Crude steel, incl.:

3,749

3,714

3,940

4,128

4,314

Steel Segment

2,977

2,818

2,952

3,264

3,350

Long products Segment, incl.:

603

719

802

693

823

NLMK-Kaluga

215

256

349

276

363

Foreign Rolled Products Segment

169

176

185

171

141

Finished products, incl.:

2,642

2,725

2,784

2,717

2,624

Flat steel

2,058

2,071

2,129

2,129

2,023

Long steel

584

653

655

588

601

Coke (6% moisture), incl.:

1,487

1,418

1,417

1,531

1,622

Novolipetsk

652

655

644

634

650

Altai-Koks

834

762

774

897

972

k t

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Sales to 3rd parties, incl.:

648

743

579

1,118

949

Export

473

532

314

950

896

Sales to subsidiaries & associates

851

550

933

735

954

Sales to NBH

523

430

709

441

577

TOTAL

1,499

1,292

1,512

1,853

1,903

k t

Q4 2019

Q3 2019

QoQ

Q4 2018

YoY

2019

2018

YoY

Semi-finished products

726

641

13%

1,387

-48%

3,073

3,916

-22%

Pig iron

253

54

4,7x

295

-14%

510

890

-43%

Slabs

473

532

-11%

896

-47%

2,270

2,281

0%

Billets

-

55

-100%

196

-100%

293

745

-61%

Flat products

381

452

-16%

474

-20%

1,959

2,019

-3%

HRC

151

183

-17%

192

-21%

854

869

-2%

CRC

130

158

-17%

165

-21%

633

601

5%

HDG

12

5

2,3x

21

-42%

53

84

-36%

Coated

1

1

-40%

2

-68%

4

7

-40%

Dynamo

33

54

-38%

37

-10%

182

220

-17%

Transformer

54

51

5%

57

-6%

231

237

-2%

Long products

138

144

-4%

174

-21%

560

701

-20%

Total

1,245

1,237

1%

2,035

-39%

5,591

6,636

-16%

Q4 2019

Russian Flat Steel

Russian Long Products

Mining

NLMK USA

NLMK DanSteel and Plates Distribution Network

Investments in NBH

Totals

Intersegmental operations and balances

NBHdeconsoli-dation

Consolidated

$ million

Revenue from external customers

1,347

316

15

322

110

332

2,442

-

(130)

2,312

Intersegment revenue

340

73

306

-

-

17

736

(719)

(17)

-

Gross profit

395

24

230

(33)

13

(7)

622

7

20

649

Operating income/(loss)

165

(15)

212

(51)

(2)

(47)

262

15

61

338

Income / (loss) before minority interest

462

(16)

172

(82)

(3)

(53)

480

(304)

24

200

Segment assets including goodwill

7,483

1,160

2,120

840

371

1,318

13,292

(1,752)

(1,056)

10,484

Q3 2019

Russian Flat Steel

Russian Long Products

Mining

NLMK USA

NLMK DanSteel and Plates Distribution Network

Investments in NBH

Totals

Intersegmental operations and balances

NBHdeconsoli-dation

Consolidated

$ million

Revenue from external customers

1,482

359

42

391

111

348

2,733

-

(157)

2,576

Intersegment revenue

259

126

364

-

-

21

770

(749)

(21)

-

Gross profit

504

72

309

(26)

11

(13)

857

(73)

38

822

Operating income/(loss)

280

34

285

(48)

(2)

(53)

496

(62)

78

512

Income / (loss) before minority interest

660

26

232

(50)

(3)

(52)

813

(545)

76

344

Segment assets including goodwill

7,499

1,201

2,360

921

361

1,330

13,672

(2,126)

(1,168)

10,378

Novolipetsk Steel

Consolidated statement of financial position

(millions of US dollars)

As at 31 December 2019

As at 31 December 2018

As at 31 December 2017

Assets

Current assets

Cash and cash equivalents

713

1,179

301

Short-term financial investments

287

19

1,284

Trade and other accounts receivable

1,047

1,326

1,228

Inventories

1,634

1,816

1,879

Other current assets

14

10

19

3,695

4,350

4,711

Non-current assets

Long-term financial investments

5

85

2

Investments in joint ventures

223

159

205

Property, plant and equipment

6,039

4,798

5,549

Goodwill

248

224

265

Other intangible assets

162

165

164

Deferred income tax assets

101

152

84

Other non-current assets

11

11

16

6,789

5,594

6,285

Total assets

10,484

9,944

10,996

Liabilities and equity

Current liabilities

Trade and other accounts payable

1,124

1,122

1,029

Dividends payable

318

525

537

Short-term borrowings

468

398

380

Current income tax liability

32

28

53

1,942

2,073

1,999

Non-current liabilities

Long-term borrowings

2,188

1,677

1,901

Deferred income tax liability

405

346

417

Other long-term liabilities

2

14

33

2,595

2,037

2,351

Total liabilities

4,537

4,110

4,350

Equity attributable to Novolipetsk Steel shareholders

Common stock

221

221

221

Additional paid-in capital

9

10

10

Accumulated other comprehensive loss

(6,140)

(6,782)

(5,631)

Retained earnings

11,840

12,370

12,029

5,930

5,819

6,629

Non-controlling interests

17

15

17

Total equity

5,947

5,834

6,646

Total liabilities and equity

10,484

9,944

10,996

Novolipetsk Steel

Consolidated statement of profit or loss

(millions of US dollars, unless otherwise stated)

Revenue

10,554

12,046

10,065

Cost of sales

(7,303)

(7,680)

(6,798)

Gross profit

3,251

4,366

3,267

General and administrative expenses

(352)

(375)

(364)

Selling expenses

(843)

(886)

(788)

Net impairment losses on financial assets

(1)

(1)

(7)

Other operating income/(expenses), net

13

(4)

3

Taxes other than income tax

(66)

(88)

(80)

Operating profit before share of results of joint ventures, impairment of non-current assets and loss on disposals of property, plant and equipment

2,002

3,012

2,031

Loss on disposals of property, plant and equipment

(4)

(7)

(1)

Impairment of non-current assets

(30)

(4)

(17)

Share of results of joint ventures

(88)

(243)

(90)

Losses on investments, net

-

(2)

(5)

Finance income

18

21

29

Finance costs

(68)

(70)

(87)

Foreign currency exchange (loss)/gain, net

(6)

33

17

Other expenses, net

(30)

(11)

(54)

Profit before income tax

1,794

2,729

1,823

Income tax expense

(453)

(486)

(371)

Profit for the year

1,341

2,243

1,452

Profit is attributable to:

Novolipetsk Steel shareholders

1,339

2,238

1,450

Non-controlling interests

2

5

2

Earnings per share:

Earnings per share attributable toNovolipetsk Steel shareholders (US dollars)

0.2234

0.3734

0.2419

Weighted-average number of shares outstanding:

basic and diluted (in thousands)

5,993,227

5,993,227

5,993,227

Novolipetsk Steel

Consolidated statement of cash flows

(millions of US dollars)

Cash flows from operating activities

Profit for the year

1,341

2,243

1,452

Adjustments to reconcile profit for the year to net cash provided by operating activities:

Depreciation and amortisation

562

577

624

Loss on disposals of property, plant and equipment

4

7

1

Losses on investments

-

2

5

Finance income

(18)

(21)

(29)

Finance costs

68

70

87

Share of results of joint ventures

88

243

90

Income tax expense

453

486

371

Impairment of non-current assets

30

4

17

Foreign currency exchange loss/(gain), net

6

(33)

(17)

Change in impairment allowance for inventories and credit loss allowance of accounts receivable

5

1

13

Changes in operating assets and liabilities

Decrease/(increase) in trade and other accounts receivable

314

(258)

(223)

Decrease/(increase) in inventories

284

(187)

(262)

(Increase)/decrease in other operating assets

(1)

7

-

(Decrease)/increase in trade and other accounts payable

(132)

177

105

Сash provided by operations

3,004

3,318

2,234

Income tax paid

(381)

(577)

(335)

Net cash provided by operating activities

2,623

2,741

1,899

Cash flows from investing activities

Purchases and construction of property, plant and equipment and intangible assets

(1,080)

(680)

(592)

Proceeds from sale of property, plant and equipment

1

3

10

Purchases of investments and loans given

(164)

(91)

(44)

Proceeds from repayment of loans given

115

-

-

Placement of bank deposits

(933)

(305)

(1,264)

Withdrawal of bank deposits

777

1,349

1,105

Interest received

29

22

28

Contribution to share capital of joint venture

(155)

-

-

Acquisition of subsidiary, net of cash and cash equivalents acquired

-

(4)

-

Acquisition of non-controlling interest

(1)

(4)

(1)

Net cash (used in)/provided by investing activities

(1,411)

290

(758)

Cash flows from financing activities

Proceeds from borrowings

1,015

470

988

Repayment of borrowings

(500)

(643)

(1,093)

Payments on leases

(14)

-

-

Interest paid

(49)

(56)

(69)

Dividends paid to Novolipetsk Steel shareholders

(2,120)

(1,888)

(1,283)

Dividends paid to non-controlling interests

-

(2)

(2)

Net cash used in financing activities

(1,668)

(2,119)

(1,459)

Net (decrease)/increase in cash and cash equivalents

(456)

912

(318)

Effect of exchange rate changes on cash and cash equivalents

(10)

(34)

9

Cash and cash equivalents at the beginning of the year

1,179

301

610

Cash and cash equivalents at the end of the year

713

1,179

301

Supplemental disclosures of cash flow information:

Non-cash investing activities:

Conversion of debt to equity