Investor Presentaiton

En+ GROUP FINANCIAL STATEMENTS En+ Group Annual Report 2021 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS Appendices EN+ GROUP IPJSC Notes to the Consolidated Financial Statements for the year ended 31 December 2021 The following key assumptions were used to determine the recoverable amount of the CHPS CGU: Electricity sales volumes in 2022/2021 Electricity sales volumes growth till 2031/2030 Electricity sales prices in 2022/2021 Electricity sales prices growth till 2031/2030 Sales volumes of heat in 2021-2030/2022-2031 Heat tariffs in 2022/2021 Tariffs growth till 2031/2030 Post-tax discount rate Year ended 31 December 2021 2020 29 mln MWh 27 mln MWh 5% 5% USD 7-27 (RUB 544-2,011) 37%-42% USD 8-26 (RUB 568-1,916) 40%-42% 20 mln Gcal USD 16 (RUB 1,211) 20 mln Gcal USD 16 (RUB 1,186) 42% 13.0% 67% 13.0% The recoverable amount of CHP CGU is particularly sensitive to changes in forecast electricity sales prices as well as applicable discount rates. Additionally, management identified specific items of property, plant and equipment that are not considered to be recoverable amounting to USD 41 million (2020: USD 49 million). No further impairment of property, plant and equipment or reversal of previously recorded impairments was identified. (d) Security (e) The carrying value of property, plant and equipment which is subject to lien under loan agreements was USD 1,048 million at 31 December 2021 (31 December 2020: USD 1,086 million) (note 17). Hydro assets As disclosed in note 11(a)(i), the Group regularly performs an independent valuation of its hydro assets. As at 31 December 2021 a valuation by external independent appraiser was not performed because based on management's analysis, the fair value of hydro assets approximated their carrying amount at that date. As at 31 December 2020 the independent appraiser estimated the fair value of hydro assets at USD 3,443 million with an equity effect of USD 230 million and revaluation loss of USD nil million recognised in profit or loss. The valuation analysis was primarily based on the cost approach to determine depreciated replacement cost as it is the most reliable method to estimate value for assets that do not have an active market and do not generate an identifiable revenue stream by asset. This method considers the cost to reproduce or replace the property, plant and equipment, adjusted for physical depreciation, functional and economic obsolescence. Depreciated replacement cost was estimated based on internal sources and, where available, analysis of the Russian and international markets for similar property, plant and equipment. Various market data were collected from published information, catalogues, statistical data etc. In addition, cash flow testing was conducted to identify if there is any economic obsolescence of the hydro assets. Forecasts of net cash flows were determined based on the actual results for the preceding years and approved budgets. Based on the analysis results, there was no economic obsolescence as at 31 December 2021 or 2020. The fair value measurement for hydro assets have been categorised as Level 3 fair values based on the inputs to the valuation techniques used. Net book value as at 31 December 2021 according to the cost model amounted to USD 358 million (31 December 2020: USD 333 million). (f) Leases The Group assesses whether a contract is or contains a lease based on whether the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. However, for the leases of properties in which Group acts as a lessee, the Group does not separate non-lease components and account for the lease and non-lease components as a single lease component. EN+ GROUP IPJSC Notes to the Consolidated Financial Statements for the year ended 31 December 2021 The Group applies judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options, the assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised. In determining the enforceable period (i.e. the maximum lease term), the Group considers whether both it and the lessor has a right to terminate the lease without permission from the other party and, if so, whether that termination would result in more than an insignificant penalty. If a more than insignificant penalty exists, then the enforceable period extends until the point at which a no more than an insignificant penalty exists. The Group leases many assets, including land, properties and production equipment. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost and subsequently measured at cost less any accumulated depreciation and impairment losses and adjusted for certain remeasurements of the lease liability as required by IFRS 16. The cost comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset is depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The Group presents right-of-use assets as part of property plant and equipment, the same line item as it presents underlying assets of the same nature that it owns. Additions to right-of-use assets were in the amount of USD 43 million during the year ended 31 December 2021 (31 December 2020: USD 68 million). The carrying amounts of right-of-use assets are presented below. USD million Balance at 1 January 2021 Balance at 31 December 2021 Land and buildings Property, plant and equipment Machinery and equipment Total 67 4 71 36 6 42 Total depreciation charges related to the right-of-use assets for the year ended 31 December 2021 amount to USD 15 million (31 December 2020: USD 20 million). USD 15 million of right-of-use assets has been impaired during the year ended 31 December 2021 (31 December 2020: USD 2 million). The Group's total cash outflow for leases was in the amount of USD 26 million for the year ended 31 December 2021 (31 December 2020: USD 29 million). The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. In accordance with IFRS 16 variable payments which do not depend on index or rate, e.g. which do not reflect changes in market rental rates, should not be included in the measurement of lease liability. In respect of municipal or federal land leases where lease payments are based on cadastral value of the land plot and do not change until the next revision of that value or the applicable rates (or both) by the authorities, the Group has determined that, under the current revision mechanism, the land lease payments cannot be considered as either variable that depend on index or rate or in-substance fixed, and therefore these payments are not included in the measurement of the lease liability. Future cash outflows to which the Group is potentially exposed that are not recognised in right-to-use assets and are not reflected in the measurement of lease liabilities and which arise from variable lease payments not linked to index or rate are in the amount of USD 199 million as at 31 December 2021 (31 December 2020: USD 173 million). 172 173