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 At 31 December 2020, management analysed changes in the economic environment and developments in the aluminium industry and the Group's operations since 31 December 2019 and performed an impairment test for goodwill at 31 December 2020 using the following assumptions to determine the recoverable amount of the segment: • Total production was estimated based on average sustainable production levels of 3.8 million metric tonnes of primary aluminium, of 8.5 million metric tonnes of alumina and of 15.7 million metric tonnes of bauxite. Bauxite and alumina will be used primarily internally for production of primary aluminium; The aluminium and alumina prices were based on the long-term aluminium and alumina price outlook derived from available industry and market sources and were as follows: 2021 2022 2023 2024 2025 Aluminium sales prices, based on the long-term aluminium price outlook, USD per tonne Alumina sales prices, based on the long-term 1,919 1,906 1,927 1,955 2,003 alumina price outlook, USD per tonne Nominal foreign currency exchange rates, 295 304 307 318 335 RUB per 1USD 73.2 71.9 71.2 72.5 74.1 Inflation in RUB Inflation in USD 3.8% 1.5% 4.0% 3.9% 4.0% 4.1% 1.8% 2.2% 1.9% 2.1% Operating costs were projected based on the historical performance adjusted for inflation. Nominal foreign currency exchange rates applied to convert operating costs of the Group denominated in RUB into USD and inflation in RUB and USD assumed in determining recoverable amounts were as above: The pre-tax discount rate was estimated in nominal terms based on the weighted average cost of capital basis and was 11.4%; A terminal value was derived following the forecast period assuming a 2.0% annual growth rate. Values assigned to key assumptions and estimates used to measure the units' recoverable amount was based on external sources of information and historical data. Management believes that the values assigned to the key assumptions and estimates represented the most realistic assessment of future trends. The results were particularly sensitive to the following key assumptions: • • • A 5% reduction in the projected aluminium and alumina price levels would result in a decrease in the recoverable amount by 33% but would not lead to an impairment; A 5% increase in the projected level of electricity and alumina costs in the aluminium production would have resulted in a 25% decrease in the recoverable amount but would not lead to an impairment; A 1% increase in the discount rate would have resulted in a 11% decrease in the recoverable amount but would not lead to an impairment. Based on results of impairment testing of goodwill, management concluded that no impairment should be recorded as at 31 December 2020. POWER Goodwill primarily resulted from the acquisition of Irkutskenergo's HPPs. For the purposes of impairment testing, goodwill is allocated to the Angara HPPs CGU. It represents the lowest level within the Group at which goodwill is monitored for internal management purposes. Management performs impairment testing of goodwill annually at 31 December of the respective calendar year. The recoverable amount of Angara HPPs in 2021 and 2020 was determined by reference to its value in use derived by discounting of the future cash flows generated from continuing use of production facilities. 13. 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 Angara HPPs cash- generating unit at 31 December 2021: • The sales volumes were projected based on the approved budgets for 2021. In particular, the sales volumes of electricity in 2022 were planned at the level of 53 million MWh with a decline by 7% till 2031. Sales prices were based on the long-term price outlook derived from the available industry and market sources. The prices for electricity were estimated at the levels of USD 0.6-11.9 (RUB 45-875) per MWh depending on market segment in 2022 and increased by 37-40% respectively till 2031. Operating costs were projected based on the historical performance and the anticipated increase during the projected period was in line with inflation. The post-tax discount rate was estimated in nominal terms based on the weighted average cost of capital amounted to 13.0%. A terminal value was derived following the forecast period assuming a 4% annual growth rate. The following key assumptions were used to determine the recoverable amount of the Angara HPPs cash- generating unit at 31 December 2020: The sales volumes were projected based on the approved budgets for 2021. In particular, the sales volumes of electricity in 2021 were planned at the level of 48 million MWh with an insignificant decline by 1% till 2030. Sales prices were based on the long-term price outlook derived from the available industry and market sources. The prices for electricity were estimated at the levels of USD 0.5-11.5 (RUB 39-846) per MWh depending on market segment in 2021 and increased by 19-40% respectively till 2030. Operating costs were projected based on the historical performance and the anticipated increase during the projected period was in line with inflation. The post-tax discount rate was estimated in nominal terms based on the weighted average cost of capital amounted to 12.9%. A terminal value was derived following the forecast period assuming a 4% annual growth rate. Reasonable possible changes in key assumptions did not lead to an impairment in either 2021 or 2020. Interests in associates and joint ventures An associate is an entity in which the Group has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions. A joint venture is an arrangement whereby the Group and other parties contractually agree to share control of the arrangement and have rights to the net assets of the arrangement. An investment in an associate or a joint venture is accounted for in the consolidated financial statements under the equity method, unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Group's share of the acquisition-date fair values of the investee's identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post acquisition change in the Group's share of the investee's net assets and any impairment losses relating to the investment. Any acquisition-date excess over cost, the Group's share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in the consolidated statement of profit or loss and other comprehensive income, whereas the Group's share of the post-acquisition post-tax items of the investees' other comprehensive income is recognised in the consolidated statement of other comprehensive income, the Group's share of the post-acquisition results recorded directly in the statement of changes in equity is recognized in the consolidated statement of changes in equity as the share of other changes in equity of associate. When the Group's share of losses exceeds its interest in the associate or the joint venture, the Group's interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. 178 179