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 As at 31 December 2021 and 31 December 2020 the Group's obligations were fully uncovered as the Group has only wholly unfunded plans. POWER The principal assumptions used in determining pension obligations for the pension plans are shown below: Discount rate Future salary increases Pension and inflation rate increases (d) Site restoration and environmental provisions (e) 31 December 2021 8.5% 5.7% 4.2% 31 December 2020 6.0% 5.5% 4.0% The Group provides for site restoration obligations when there is a specific legal or constructive obligation for mine reclamation, landfill closure (primarily comprising red mud basin disposal sites) or specific lease restoration requirements. The Group does not record any obligations with respect to decommissioning of its refining or smelting facilities and restoration and rehabilitation of the surrounding areas unless there is a specific plan to discontinue operations at a facility. This is because any significant costs in connection with decommissioning of refining or smelting facilities and restoration and rehabilitation of the surrounding areas would be incurred no earlier than when the facility is closed and the facilities are currently expected to operate over a term in excess of 50-100 years due to the perpetual nature of the refineries and smelters and continuous maintenance and upgrade programs resulting in the fair values of any such liabilities being negligible. The site restoration provision relates primarily to mine reclamation and red mud basin disposal sites at alumina refineries and ash dumps removal at coal burning electricity and heat generation stations. The principal assumptions used in determining site restoration provision are: Timing of cash outflows Years required to fill the ash dumps Discount rate for Irkutskenergo and Coal segment assets after adjusting for inflation Risk free discount rate for UC RUSAL after adjusting for inflation 31 December 2021 31 December 2020 2022: USD 130 million 2023-2027: USD 30 million 2028-2038: USD 150 million after 2038: USD 405 million 2021: USD 49 million 2022-2026: USD 33 million 2027-2037: USD 131 million after 2037: USD 374 million 26.5 18.1 4.2% 1.19% 2.8% 0.73% The risk free rate for the year 2020-2021 represents an effective rate, which comprises rates differentiated by years of obligation settlement and by currencies in which the provisions were calculated. At each reporting date management have assessed the provisions for site restoration and concluded that the provisions and disclosures are adequate. Provisions for legal claims The Group's subsidiaries are subject to a variety of lawsuits and claims in the ordinary course of its business. As at 31 December 2021, there were several claims filed against the Group's subsidiaries contesting breaches of contract terms and non-payment of existing obligations. Management has reviewed the circumstances and estimated that the amount of probable outflow related to these claims should not exceed USD 22 million (31 December 2020: USD 32 million). At each reporting date management has assessed the provisions for litigation and claims and concluded that the provisions and disclosures are adequate. 19. Derivative financial assets and liabilities Accounting policies EN+ GROUP IPJSC Notes to the Consolidated Financial Statements for the year ended 31 December 2021 The Group enters, from time to time, into various derivative financial instruments to manage its exposure commodity price risk, foreign currency risk and interest rate risk. to Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and the combined instrument is not measured at fair value through profit or loss. On initial designation of the derivative as a hedging instrument, the Group formally documents the relationship between the hedging instrument and hedged item, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80-125%. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variation in cash flows that ultimately could affect reported profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value. The measurement of fair value of derivative financial instruments, including embedded derivatives, is based on quoted market prices. Where no price information is available from a quoted market source, alternative market mechanisms or recent comparable transactions, fair value is estimated based on the Group's views on relevant future prices, net of valuation allowances to accommodate liquidity, modelling and other risks implicit in such estimates. Changes in the fair value therein are accounted for as described below. When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of a derivative is recognised in profit or loss. When the hedged item is a non-financial asset, the amount accumulated in equity is included in the carrying amount of the asset when the asset is recognised. In other cases, the amount accumulated in equity is reclassified to profit or loss in the same period that the hedged item affects profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified to profit or loss. Changes in the fair value of separated embedded derivatives and derivative financial instruments not designated for hedge accounting are recognised immediately in profit or loss. Disclosures Petroleum coke supply contracts and other raw materials Forward contracts for aluminium and other instruments Cross currency swap Total Non-current Current 31 December 2021 USD million Derivative liabilities 31 December 2020 USD million Derivative liabilities Derivative assets Derivative assets 24 15 31 43 118 26 19 9 165 133 142 206 50 185 61 20 145 30 28 157 222 120 45 196 197