Investor Presentaiton

En+ GROUP FINANCIAL STATEMENTS En+ Group Annual Report 2021 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS Appendices (e) (f) Unrecognised deferred tax liabilities EN+ GROUP IPJSC Notes to the Consolidated Financial Statements for the year ended 31 December 2021 The Group's subsidiaries have retained earnings where dividend distributions are subject to taxation, for which deferred taxation has not been provided because remittance of the earnings has been indefinitely postponed through reinvestment and, as a result, such amounts are considered to be permanently invested. It was not practicable to determine the amount of temporary differences relating to investments in subsidiaries where the Group is able to control the timing of reversal of the difference. Reversal is not expected in the foreseeable future. Current taxation in the consolidated statement of financial position represents Net income tax payable at the beginning of the year Income tax for the year Income tax paid Translation difference Represented by: Income tax payable (note 15(c)) Income tax receivable (note 15(b)) Net income tax payable/(receivable) 11. Property, plant and equipment (a) Accounting policy (i) Recognition and measurement USD million 10 31 December 2021 31 December 2020 USD million 7 569 (529) (3) 44 7 223 (226) 62 28 (18) (21) 44 7 Until 1 January 2016 all items of property, plant and equipment were measured at cost less accumulated depreciation and impairment losses. The cost of property, plant and equipment at 1 January 2004, the date of transition to IFRSs, was determined by reference to its fair value at that date. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self- constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of periodic relining of electrolysers is capitalised and depreciated over the expected production period. Gains or losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within gain/(loss) on disposal of property, plant and equipment in profit or loss. Most of the hydro assets have long useful lives (up to 100 years) and their performance does not deteriorate significantly. Considering changes in the regulation of the Russian power sector (100% liberalisation) and the fact that hydropower is one of the most efficient sectors of the electric power industry, management believes that hydropower assets were significantly undervalued prior to 1 January 2016. On 1 January 2016 the Group identified a separate class of assets - hydro assets - and changed its accounting policy for this class from the cost to the revaluation model to provide users with more relevant information on the Group's financial position. (ii) EN+ GROUP IPJSC Notes to the Consolidated Financial Statements for the year ended 31 December 2021 Hydro assets are a class of property, plant and equipment with unique nature and use in their hydropower plants. Since 1 January 2016 hydro assets are measured at a revalued amount, being their fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are made based on periodic valuation by an external independent valuer. A class of assets may be revalued on a rolling basis provided that revaluations of the class of assets are completed within a short period and provided the revaluations are kept up to date. After an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset. A revaluation increase on hydro assets is recognised directly under the heading of revaluation surplus in other comprehensive income. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A revaluation decrease on hydro assets is recognised in profit or loss. However, the decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus. Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. (iii) Exploration and evaluation assets Exploration and evaluation activities involve the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activities include: • Researching and analysing historical exploration data; • Gathering exploration data through topographical, geochemical and geophysical studies; • Exploratory drilling, trenching and sampling; • Determining and examining the volume and grade of the resource; Surveying transportation and infrastructure requirements; and Conducting market and finance studies. Administration costs that are not directly attributable to a specific exploration area are charged to profit or loss. License costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit. Exploration and evaluation expenditure is capitalised as exploration and evaluation assets when it is expected that expenditure related to an area of interest will be recouped by future exploitation, sale, or, at the reporting date, the exploration and evaluation activities have not reached a stage that permits a reasonable assessment of the existence of commercially recoverable ore reserves. Capitalised exploration and evaluation expenditure is recorded as a component of property, plant and equipment at cost less impairment losses. As the asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where there are indicators of potential impairment, an assessment is performed for each area of interest in conjunction with the group of operating assets (representing a cash-generating unit, CGU) to which the exploration is attributed. Exploration areas at which reserves have been discovered but which require major capital expenditure before production can begin are continually evaluated to ensure that commercial quantities of reserves exist or to ensure that additional exploration work is underway or planned. To the extent that capitalised expenditure is not expected to be recovered it is charged to profit or loss. Exploration and evaluation assets are transferred to mining property, plant and equipment or intangible assets when development is sanctioned. 166 167