Committed
to the green
economy
ANNUAL REPORT 2020
CORPORATE
GOVERNANCE
“ In this unprecedented year, we have
remained committed to our vision
for a green economy and low-carbon
future. A future where innovation
creates products for tomorrow,
energy is cleaner and where
symbiosis drives cost leadership.”
Rt Hon Lord Barker of Battle,
Executive Chairman
For more on sustainability
please visit our webpage at
www.enplusgroup.com/en/
sustainability/
CORPORATE
GOVERNANCE
We are committed to…
Aluminium
for tomorrow
Generating
clean energy
Protecting
our people
Driving cost
leadership
02 04 06 08
Strategic report
02 Aluminium for tomorrow
04 Generating clean energy
06 Protecting our people
08 Driving cost leadership
10 Chairman’s statement
14 Pathway to net zero
16 Meeting consumer demand
18 The journey of our products
20 CEO’s statement
22 Our strategy
24 At a glance
26 Business model
28 Key performance indicators
30 Investment case
32 Business review
50 Financial review
66 Sustainability review
68 Supporting the UN SDGs
89 Internal Control and risk management
95 Ethics and compliance
Corporate Governance
96 Corporate Governance
104 Board of Directors
106 Committees of the Board
108 Audit and Risk Committee
112 Corporate Governance and Nominations Committee
114 Remuneration Committee
117 Compliance Committee
118 Health, Safety and Environment Committee
120 Executive Management team
123 Information for shareholders and investors
Financial statements
128 Statement of Management’s Responsibilities
129 Independent Auditors’ Report
133 Consolidated Statement of Profit or
Loss and Other Comprehensive Income
135 Consolidated Statement of Financial Position
136 Consolidated Statement of Cash Flows
138 Consolidated Statement of Changes in Equity
140 Notes to the Consolidated Financial Statements
Appendix
208 Glossary
215 Contacts
216 About the Report
Appendices
(provided as a separate document)
Appendix 1: Report on compliance with
the Russian Corporate Governance Code
Appendix 2: Information on material
transactions concluded by the
Company and its significant
subsidiaries in 2020
Appendix 3: Energy resource
consumption
Appendix 4: List of the
Company’s branches
En+Group Annual Report 2020 01
Aluminium
for tomorrow
Aluminium is a major contributor to the transition
towards a low-carbon future. En+is leading the way
and contributing to the green economy with its products.
We are committed to…
02 En+Group Annual Report 2020
x3
times more recycling by 2050
according to the International
Aluminium Institute (IAI)
150m
By 2050, the IAI expects the
world demand for aluminium
to exceed 150 million tonnes
from the current 60 million
What we are doing
We are the world’s largest producer of low-carbon aluminium.
Aluminium is considered to be the material of the future as it
has a tremendous potential to become a key material of a
carbon-neutral and circular world. Aluminium is a game changer
for the automotive industry, supporting the rise of electric and
autonomous vehicles, and resulting in enhanced fuel savings
and safety. The material also plays a vital role in the fast-evolving
sustainable construction sector and green buildings. It is a key
material for the healthcare sector, from medical equipment
and oxygen bottles to drug packaging. Moreover, its hygienic
properties and the need to drastically reduce the use of
plastics increase the already important role of aluminium in
the packaging and beverage industries. En+Group remains
strongly committed to leading the ‘hard to abate’ aluminium
industry into the green economy via nine key initiatives, stated
in the Group’s Green Aluminium Vision published in July 2020.
How this contributes to a green economy
We lead the way to decarbonisation with our ‘low-carbon’
aluminium products, ALLOW, that help customers achieve
emissions reduction targets and contribute to more transparent
climate disclosure. Aluminium is widely recycled, making it a
‘greener’ material, and supporting global sustainability efforts.
Its lightness and high recyclability contribute to reducing the
carbon footprint of entire value chains and to scaling up the
circular economy model. To lead the industry into the low-
carbon economy, we aim to develop a new asset class of ‘Green
Aluminium’ – a strategic material for a future-proof sustainable
economy which includes low-carbon primary aluminium and
recycled aluminium. We actively engage in the global discussion
around the future of the aluminium industry and the growing
demand for low-carbon aluminium, and are supporters of the
London Metal Exchange’s (LME) platform for the implementation
of mandatory reporting on carbon emissions.
p. 32 Business review
Read more about our green vision in our manifesto ‘The Green Aluminium Vision‘
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
03En+Group Annual Report 2020
STRATEGIC REPORT
>98%
of En+Group aluminium
is made with hydropower
-35%
Our commitment is to cut
greenhouse gas (GHG) emissions
by at least 35% by 2030 (Scopes
1& 2against a 2018 baseline)
What we are doing
Our Power segment operates the largest and most cost-
efficient network of power plants in the Siberian region, which
allows us to efficiently and reliably cater to our core clients in
Siberia, including the largest smelters operated by En+’s own
Metals segment. This also allows the Group to engage in all
major areas of the Russian power industry and makes En+
the largest independent hydropower producer globally.
Our Power segment is also investing in R&D in the power
generating sector, including the development of new types
of perovskite-based solar panels. We continuously undertake
investment projects to improve the reliability and safety of
the Group’s hydropower plants, and increase the amount of
energy produced from the same volumes of water passing
through the hydropower turbines.
How this contributes to a green economy
Hydropower produces roughly 70% of all renewable electricity
worldwide. Hydropower plants do not emit CO
2
in the atmosphere
and help reduce greenhouse emissions, making it a carbon-free
source of energy. We use this clean energy source to produce
low-carbon and recyclable aluminium – ALLOW – with a certified
carbon footprint. The latest IEA forecasts to 2023project that
hydropower will remain the largest source of renewable electricity,
followed by wind and solar.
p. 32 Business review
En+Group Annual Report 202004
Generating
clean energy
Hydropower generates the largest share of clean
energy worldwide. En+supports this energy transition
and maintains its leading position as an independent
hydropower producer.
We are committed to…
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
05En+Group Annual Report 2020
Protecting
our people
Our global workforce is at the heart of what we do.
Our success depends on building an inclusive and
diverse environment where our employees can thrive.
We are committed to…
06 En+Group Annual Report 2020En+Group Annual Report 202006
p. 79 Our people
c. 27%
female representation in 2020
c. 90,000
total number of employees
What we are doing
En+Group is one of the largest employers in Russia, as
well as in other countries where the Group operates large
industrial complexes, including Jamaica, Ireland and Guinea.
The Company currently employs nearly 90,000people
across two business segments in 12countries. We seek to
build a diverse workforce and are constantly striving to build
an inclusive environment. We make every effort to create
a fair working environment, provide equal employment
opportunities and reward excellent performance. The Group
has personnel training and development systems in place.
The entire training system focuses on the development of
professional skills, meeting high standards, ensuring safety
and pioneering long-term technological development in the
industry. The Company aspires to attract the best talent,
enhance their professional skills and provide them with a
variety of high-quality training tools and programmes.
How this contributes to a green economy
By developing the competencies and leadership skills of our
employees, we are creating leaders of the future. We comply
with relevant legal obligations across host jurisdictions for
people with disabilities, providing all our employees with the
appropriate working conditions. We respect individual freedoms
and human rights, provide equal opportunities to all employees
and do not tolerate any form of discrimination or child labour.
To this end, the Company respects all labour laws and
contractual obligations to its employees. En+Group adheres
to the Russian Labour Code and the Russian Constitution and
pledges to combat child labour and provide human rights
protections to all. The Company has drawn up a comprehensive
set of corporate documents to regulate ethical compliance.
We are committed to…
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
07En+Group Annual Report 2020
STRATEGIC REPORT
En+Group Annual Report 2020 07
18%
Industry leading adjusted
EBITDA margin (37% adjusted
EBITDA margin in the Power
segment, 10% adjusted EBITDA
margin in the Metals segment)
c. 80%
self sufficiency in bauxites
and nephelines; over 100%
self sufficiency in alumina
What we are doing
The symbiosis of the Power and Metals segments ensures our
cost leadership position and allows us to maintain cash flow
resilience. Cost control focus is one of our strategic objectives
and En+runs ongoing cost optimisation initiatives across the
Group. The Group’s reliance on hydropower provides for
exceptional financial efficiency. The combination with thermal
power generation supports the fundamentals of En+Group,
providing additional revenue streams. Our Metals segment
is among the three most cost-effective aluminium producers
in the world, with RUSAL continuing to implement a
comprehensive programme designed to control costs and
optimise the production process. Costs in the Metals segment
are minimised through long-term power and transport
contracts, and by achieving full bauxite and nepheline self-
sufficiency in the medium term. In-house R&D, engineering
and design capabilities enable the Metals segment to develop
new technologies that help to streamline production and cut
capital and operation costs. Cost efficiency enables En+to
achieve better EBITDA margins, in line with leading levels for
the industry globally.
How this contributes to a green economy
A substantial degree of vertical integration provides En+Group
with significant advantages and additional sources of growth.
It also supports the Group’s longer-term vision of a low-carbon
world. Our investments in the modernisation of hydropower plants
and environmental upgrades of our Metals segment’s facilities
further support a sustainable economy. From a commercial
perspective, this means En+Group is actively engaging in the
global discussion around the future of the aluminium industry
and the growing demand for low-carbon aluminium.
p. 50 Financial Review
En+Group Annual Report 202008
Driving cost
leadership
Symbiosis of the Power and Metals segments of the
En+business ensures a cost leadership position
for the Group and provides cash flow resilience.
We are committed to…
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
09En+Group Annual Report 2020
“ We are doubling down
on our commitment
to a more sustainable
economy.”
Rt Hon Lord Barker
of Battle,
Executive Chairman
Shaping the future
of green aluminium
Our Green Aluminium Vision sets
out our commitment to leading our
industry into the green economy
via nine key initiatives. These aim
to continuously improve the status
of aluminium as an environmentally
friendly and climate-resilient material
of the 21st century and represent our
vision of aluminium as the right metal
for a carbon-neutral and circular world.
The initiatives which will enable the
Green Aluminium Vision are:
1. Emissions reduction
2. ‘Low-carbon’ aluminium branding
3. Carbon footprint transparency
4. Circularity
5. Sustainability labelling
6. Liberalisation of trade in ‘low-
carbon’ primary aluminium
7. Elimination of excess capacity
to ensure fair and green trade
8. Facilitation of research
and development
9. Support to a renewed
multilateralism
Powering
the future
Uniquely placed to drive the low-carbon
economy of the future.
CHAIRMAN’S STATEMENT
10
En+Group Annual Report 2020En+Group Annual Report 202010
Solid foundations provide
strength in a challenging year
Challenging conditions and economic
restrictions as a result of the pandemic
impacted the Group’s markets across
the globe. New outbreaks and
increasing numbers of cases stifled
recovery trends, affecting our
customers’ businesses and leading
to sharp movements in both demand
and prices for aluminium. However, our
Group’s business model, our unique
asset base and the efficiency of our
operations meant we had solid
foundations from which to face this
turmoil. Meanwhile, crisis mitigation
plans swiftly implemented by our
leadership team successfully
prevented any material impact by
COVID-19 on the Group’s operations.
During the year our Power segment
increased low-carbon power generation
at its HPPs due to favourable hydrological
conditions. Aluminium production
remained stable and we maintained
effectively full production capacity
utilisation. As well as our foundational
strengths, we benefited from new and
innovative approaches to marketing
which led to better geographical
diversification of sales and a high
proportion of value-added products.
Our people and our communities
The Group has almost 90,000 employees
across four continents and I am grateful
to every single one of them for rising
to the challenge of the last year. Their
commitment, skills and resilience have
supported and carried the Company
through these difficult times and their
flexibility and ingenuity has enabled
us to continue to work efficiently
and successfully.
The welfare of our En+family was
paramount as the pandemic emerged
during the year. Among our first steps
was to move more than 15,000 office-
based staff to work from home. For
those essential employees whose roles
meant they could not work remotely,
strict health and sanitation measures
were implemented which complemented
and enhanced our existing stringent
health and safety protocols.
Dear shareholders,
For all of us, 2020 was a testing and
challenging year. At the En+Group we
have long benefited from the resilience
of our vertically integrated business
model, but 2020 was an extraordinary
testament to the resilience of our
outstanding employees, both in
Russia and right around the world.
Safeguarding our employees,
customers and communities was our
number one priority during the year.
I will explain in more detail the actions
we took, but first I will highlight our
strong business performance in 2020.
In a year of exceptional uncertainty
caused by COVID-19, our Company
demonstrated robust operational
results against a backdrop of volatile
prices and fluctuating economic trends.
We benefited from our continuing
strategic investment programme which
reinforces our position as a global leader
in low-carbon aluminium production
and hydropower generation. Our
commitment to lead the aluminium
industry into the low-carbon economy,
together with our world-class corporate
governance, our focus on health & safety
and our constant drive to improve
efficiency, helped the En+Group
continue to enhance its appeal to
investors and wider stakeholders.
We also took very seriously our duty
to the wider communities and regions
in which we operate across the globe.
We delivered food parcels to more than
16,000 elderly and retired employees
in Russia and provided funding for
healthcare services in Irkutsk where
we provided medical equipment and
PPE to seven hospitals, healthcare
institutions and social services. In
Kindia, Guinea we converted the Centre
for Epidemic and Microbiological
Research and Treatment into the
country’s first specialist COVID-19
diagnosis and treatment centre.
I am proud of the bravery and
achievements of our people during an
unprecedented year and thank them
for all they have done. I am also proud
that En+Group was able to show such
strong corporate purpose, reflecting
our belief that responsible businesses
are vital to achieving a stronger and
more sustainable world. And I send
my own sincere condolences to all
employees, stakeholders and members
of their families who have lost loved
ones to this terrible pandemic.
Corporate governance to the fore
For a business to be responsible it must
also adhere to the highest standards of
corporate governance. It must act for
the benefit of all stakeholders in a
transparent and open manner.
‘Build back better’ was a major theme in
2020, and one which we fully endorse.
Countries and responsible businesses
are motivated more than ever to take
action that will look after our planet
after the pandemic. Collaboration of
all types will be increasingly important
to drive sector and industry progress
towards meeting the Paris climate
targets. In 2020 I signed the United
Nations Global Compact (UNGC)
backed CEO statement on ‘Uniting
Business and Governments to Recover
Better’, the largest ever UNGC backed
climate advocacy initiative to urge
governments to match private sector
ambitions and commit to a net zero
recovery from COVID-19.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
11En+Group Annual Report 2020
positions occupied by highly
experienced independent non-
executive directors. Their exceptional
guidance and counsel has proven
invaluable during the last year and
I am grateful for all their work.
Very sadly, one of our colleagues,
Independent Non-Executive Director
Dr Igor Lojevsky, lost his life to the
pandemic during the year. He is greatly
missed by all those of us who were
privileged to know him.
During the year the Company moved
to simplify its ownership structure
with an innovative transaction which
saw it acquire VTB Group’s stake in
En+Group. We believe this action,
together with the final completion of
Glencore securities swap, which also
happened in early 2020, further
enhances the Company’s attractiveness
as an investment. The acquisition of
shares from VTB also provides us
with greater strategic optionality,
subject to market conditions, to
increase En+Group’s free float, thereby
broadening institutional ownership
and improving trading liquidity.
I am pleased that throughout 2020,
and despite the challenges of remote
working and travel restrictions, we
maintained strong engagement with our
stakeholders, including our customers,
industry partners and also our investors.
We continued to be recognised by ESG
ratings agencies for both our sustainable
business and approach, and our
transparency – our Metals business
receiving the top ‘A’ rating from CDP
in December in recognition of climate
risk mitigation across our entire supply
chain was a particular highlight.
A leader of the
low-carbon economy
As well as striving to ensure our own
operations are as green and efficient
as possible, En+Group has a mission
to lead its industry in sustainability
and help drive the world towards a
low-carbon future. Low-carbon
aluminium is a crucial building block for
the low-carbon economy. It is
strong, durable, infinitely recyclable and
adaptable for a range of industries from
packaging and sustainable construction
to electric vehicles and renewable
energy. As an industry we need to
make the transition to the low-carbon
economy as simple and compelling as
possible for our customers. That is why
we have called for comprehensive
labelling and universal standards for the
carbon footprint of primary aluminium.
During 2020, the London Metal
Exchange proposed voluntary
disclosure of carbon-related metrics for
aluminium and the launching of a new
spot trading platform for low-carbon
aluminium. While this was an important
step forward, we feel the proposals did
not go far enough. So we will continue
to champion mandatory carbon
emission disclosures as the only way to
ensure total transparency for buyers.
While there are some encouraging
signs that the pandemic is in retreat,
with our confidence in the improved
outlook for our business reflected
in the intention to reinstate dividend
payments in 2021, there will inevitably
be setbacks and the economic
environment will continue to remain
volatile as countries around the world
plan their post-COVID-19 recovery.
But COVID-19 is not the only challenge.
Tackling climate change has never
been more important and this year’s
COP26 summit, which will bring parties
together to accelerate action towards
the goals of the Paris Agreement and
the UN Framework Convention on
Climate Change, is a vitally important
event to which we will add our voice.
As the world builds back better from
COVID-19 En+Group is uniquely placed
– and ready – to provide the materials
and energy needed for a sustainable
low-carbon recovery, while building and
growing value for our shareholders.
Rt Hon Lord Barker of Battle,
Executive Chairman
The En+Group also led a proactive
campaign for low-carbon aluminium to
help power Europe’s COVID-19 recovery
package and the European Union’s
climate transition strategy, which is
threatened by the use of dangerously
polluting high-carbon metals.
We are working hard engaging with
regulators and other key decision
makers in major aluminium markets
to take measures that will incentivise
producers to reduce the carbon
footprint of their metals. I am proud
that we are setting a new standard
in this respect.
In January 2021 En+Group announced
its ambition to become net zero by
2050 and to reduce greenhouse gas
(GHG) emissions by at least 35% by
2030. We believe those are the boldest
carbon reduction targets yet seen in
the global aluminium industry. This
is our contribution to helping turn
the tide on climate change. Greater
transparency across the sector would
further support this; empowering
metals consumers and even end-
product purchasers to choose, and
drive demand for, products made with
sustainably produced metals. To have
a real impact, net zero strategies must
drive right the way down supply chains.
The past year has taught us to never
take anything for granted. But, during
that time the performance of the
En+Group has been considerable and
again, I thank all our people who have
made that possible. We will continue to
invest in world-beating research and
development, improve the efficiency
and productivity of our assets, innovate,
and identify new markets. The work we
have done in the last year has further
strengthened our foundations and
positioned us for future growth.
Having undergone comprehensive
restructuring and updated its
governance, En+Group has proven
its commitment to world class
corporate governance standards,
having a clear majority of Board
CHAIRMAN’S STATEMENT
12
En+Group Annual Report 2020
For more tweets visit our Twitter:
En+ Group (@EnPlus_Group) / Twitter
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
13En+Group Annual Report 2020
2030 2050
We are committed
to becoming a net zero
Company by 2050
En+Group is leading the aluminium industry into the low-carbon economy.
Our ambition
These targets cover absolute emissions across all operations
including heat and electricity production. En+Group has set
a new standard for one of the ‘hard to abate’ industries in
the global economy – the aluminium industry – and, critically,
we support our customers on their own journeys towards
emissions reduction.
To cut greenhouse
gas (GHG) emissions
by at least
35%
by 2030 (Scope 1& 2
against a 2018 baseline)
To achieve
net
zero
GHG emissions by 2050
Setting a new
standard for the global
aluminium industry
Introducing innovative
technologies
throughout the
production chain
Building partnerships
to transform the
industry together
Addressing and
compensating hard-
to-abate emissions
Watch Kevin at twitter.com/
EnPlus_Group/
status/1353552570418139137
Watch Tricia at twitter.com/
EnPlus_Group/
status/1359450320997351427
“ Sustainability is core to our business. We’re
committed to driving down emissions across
our operations by 2050 — and know we can
achieve #netzero because of the shared
ambition of our 90,000 employees in
12countries around the world!”
Kevin McMahon,
Lead Engineer of the Bauxite RUSAL Disposal Area,
Aughinish Alumina, Ireland
“ As one of the largest producers of aluminium
#netzero2050 will require hard work,
investment in science and tech, and
modernisation improvements across our
entire operations. It won’t be easy, but we
are ready to take on this challenge — for
our people and for the planet!”
Tricia McCatty,
Corporate Environment Engineer, Jamaica
Transforming the industry together
Our people from across the business speak about the importance of the new commitment.
PATHWAY TO NET ZERO
En+Group Annual Report 202014
Pathway to net zero
The Climate Change Taskforce
1
will draw on global expertise to develop our detailed pathway
to net zero, which we will publish in September 2021
RUSAL’s ALLOW average
smelter emissions
2
2.4 t
of CO
2
equivalent
per tonne of aluminium in
2019 compared to the industry
average of 12.5 t CO
2
e/t Al
Commitment to
high standards
En+Group is committed to
global corporate governance
standards that apply to both
the Power and Metals
segments.
Upgrade of
production assets
The New Energy programme
is one of the most ambitious
programmes in the range of
production asset upgrades
that the Group continuously
carries out. It will bring the
Group’s HPP efficiency to the
world’s best, providing better
reliability and quality of the
power supplied to Siberian
consumers. Additionally, it will
have a positive impact on the
environment in the Siberian
regions and help to mitigate
any negative impact on water
resources.
SBTi verification
In September 2019
En+Group joined
the Business Ambition
for 1.5°C pledge and
committed to science-
based emissions
reduction targets (or
SBT). It is expected that
the Metals segment’s
targets will be verified
and approved by the
SBTi by August 2021.
Partnerships
We work in partnership
with stakeholders, including
business and industrial
associations, peer companies
at all levels to stimulate the
global transition to the
low-carbon economy. The
Group collaborates through
its entire supply chain to
extend the partnerships
beyond technical cooperation
on the quality to sustainability
and decarbonisation.
Renewable energy for aluminium
More than 98% of our aluminium is
made using renewable hydropower.
En+Group continuously seeks to
minimise its carbon footprint at all
stages of its operations and complies
with the requirements of ISO 14001,
the international standard that sets
out the criteria for an environmental
management system.
Research & Development
RUSAL’s innovative ‘inert
anode’ technology is one
of En+Group’s key scientific
developments. Using inert
anodes completely eliminates
emissions of CO and CO
2
,
polyaromatic hydrocarbons,
benzo(a)pyrene and sulphur
from the reduction process.
Another positive result of this
technology is generating
oxygen in the aluminium
production process.
1 To manage our journey to net zero, we have created the En+Climate Change Taskforce.
2 Level 1 emissions. As defined in the Aluminium Carbon Footprint Technical Support
Document (2018).
Reduction of
environmental impact
As one of the leaders in climate action,
En+Group actively implements projects
intended to reduce the environmental
impact of its own production facilities
and decrease air emissions. The
Company also adheres to the principles
of production transparency, where
green certificates and voluntary carbon
credits play an important role, as they
reflect the environmental value of
generated energy for consumers. In
December 2020, the Group became
the first energy producer and supplier
in Russia to participate in the issuance
of I-REC International Renewable
Energy Certificates.
More on our website: netzero.ru/en#agenda
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
15En+Group Annual Report 2020
a
Driving positive change
Aluminium can offer intrinsic sustainability advantages compared with
other materials, offer greenhouse gas emissions benefits and help meet
the new generation’s demand for low-carbon products. En+is well-
positioned to meet the consumers’ demands and provide benefits of the
new application of aluminum, driving the positive change for the future.
15%
of UK consumers would be
willing to pay at least a 10%
premium for a lower carbon car
6/10
UK consumers would
be likely to choose a car
manufactured with a lower
carbon footprint
2x
as many UK consumers consider
recyclability a very important
factor when purchasing a drink
on the go compared to those
who consider the carbon
footprint very important
Where we are
>98%
More than 98% of our
aluminium is made using
renewable hydropower
11%
We reduced our GHG
emissions of electrolysis
operations by 11% in
2020 versus our
2014 baseline
USD 525 mn
We’ve invested
USD525million in
environmental initiatives
over the past 5 years
25%
We are responsible for
25% of the hydropower
produced aluminium
worldwide
2.4 CO
2
/tAl t
We produce our
ALLOW brand with
2.4tonnes of CO
2
emissions per tonne of
aluminium (Scope 1&2
smelters only) –
4times lower
than the industry
average
1 www.enplusgroup.com/en/company/glance/carbon-clarity/
En+is the world’s largest
producer of low-carbon
aluminium.
En+partnered with YouGov on a consumer survey
1
to
learn about the publics understanding and appetite
for low-carbon products. Here’s our key findings:
Automotive
– Aluminium’s lightweight properties make it ideal
for producing energy efficient vehicles
– Lightweight materials are particularly important for
electric vehicles, which need to counterbalance the
weight of their large batteries
– Low-carbon materials are essential if electric vehicles
are to be considered a truly sustainable option.
Consumer Goods
– Aluminium’s recyclability gives it an important role
in the circular economy and can help reduce carbon
emissions
– Concerns about waste have increased aluminium
demand, 1in 6 UK consumers would be willing
to pay at least a 10% premium for lower carbon
household products.
Construction
– Aluminium is the second most commonly
used construction material in the world
– Aluminium is a major component of
infrastructure around the world,
meaning decarbonisation can have
a widespread impact.
Global demand
MEETING CONSUMER DEMAND
16
En+Group Annual Report 2020
a
70%
70% of UK residents said the
government should deny new
building requests for projects
with higher carbon footprints
1in 6
UK consumers would be
willing to pay at least a 10%
premium for lower carbon
household products
“ We are determined to be at the leading edge of what
this sector, being one of the hardest to abate, can do
to transition to a low-carbon business model.”
Joan MacNaughton, Сhair of the Health, Safety and
Environment Committee
Where we aim to be
1.5°C
the Group joined
Business Ambition’s
1.5°C, committing the
business to Science
Based Targets on
emissions reduction
-35%
to cut greenhouse gas
(GHG) emissions by at
least 35% by 2030
(Scopes 1& 2against
a 2018 baseline)
net zero
to achieve net zero GHG
emissions by 2050
En+has committed to the UNGCs and Science
Based Target’s Business Ambition for 1.5C and
recognises that we need to make major changes
to the way we operate.
How we are driving positive change
En+is calling on the London Metal Exchange
to implement mandatory reporting on carbon
emissions. Here’s why:
A global precedent
As a global exchange, the LME can set an important
precedent for carbon disclosure and encourage others
such as the Shanghai Futures Exchange and Chicago
Metal Exchange to follow suit.
ESG accountability and transparency
At present, carbon disclosure by aluminium producers
occurs voluntarily and on a contract by contract basis.
By setting a clear example for the industry, a low-carbon
asset class on the LME would increase pressure for
systematic carbon reporting not just on the exchange
but also in private contacts. For a genuine sustainable
industry transformation it is absolutely crucial to move
towards certain minimum mandatory disclosures: carbon
footprint, source of energy, Aluminium Stewardship
Initiative (ASI) certification.
A credible standard for low-carbon
LME disclosure rules and definitions for low-carbon
would provide a clear standard for the aluminium
producers to meet and would help customers select
the most sustainable materials.
p.66 Sustainability review
www.enplusgroup.com/en/company/glance/carbon-clarity/
80%
of UK respondents said they
don’t feel well informed about
which building materials have
a low-carbon footprint
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
17En+Group Annual Report 2020
THE JOURNEY OF OUR PRODUCTS
Aluminium products
for the future
En+Group is the largest producer of low-carbon aluminium globally.
We are unique among natural resources companies.
The En+approach
The pure form of aluminium does not naturally occur in
nature, so it remained largely unknown until as recently
as 200years ago. Creating aluminium using electricity
was first developed in 1886and is still used to this day.
Today, the Company views its work on innovation as
an investment in the future. The Company performs
vast research and development activities to introduce
environmentally friendly technologies into production
cycles to save resources and reduce costs.
Power generation capabilities
In our power generating business, the Group
is developing perovskite solar cell technology,
a new generation of photovoltaics. We use
hydropower from Siberian rivers to create
low-carbon aluminium. We promote science-
based analysis in order to address the Baikal
issues correctly and in the most efficient ways,
we joined forces with the leading Russian
academics. The collaboration spans from the
analysis of the contamination of the lake to
creating new forecasting algorithms.
www.enplusgroup.com/en/
what-we-do/metals-segment/allow/
Power
According to IEA, renewable
capacity additions are on
track for a record expansion
of nearly 10% in 2021. With
this soaring growth, cable
industry expects increased
demand for high and extra-
high voltage cable where
aluminium is consumed.
Europacable estimates this
cable demand will reach
90,000 km driving up more
than 150 billion investment
by 2030. ‘Green’ aluminium
is key to support this
upswing in growing ‘green’
energy capacities, so that
they can flow through
‘green’ cables.
Personal goods
In this segment, leading
producers of electronics,
beauty products, and
other consumer goods,
are becoming increasingly
mindful of the lifecycle
impacts of their products.
This segment is tangibly close
to the end consumers who
become more selective with
carbon footprint of the goods
they purchase. Personal
goods market has seen an
upswing of carbon-neutral
and environmentally friendly
brands linked to corporate
carbon neutrality/carbon
negative commitments.
Being able to measure the
footprint of raw materials,
including aluminium, is key
in this regard.
Applications of
low-carbon aluminium
Since 2017, RUSAL offers customers
ALLOW, its proprietary brand of low-
carbon aluminium, crafted with renewable
hydropower. ALLOW comes with average
carbon footprint of 2.4t CO
2
e/t Al (Scope 1&2,
at smelter). This is in line with the evolving
market requirement for low-carbon aluminium
of no more than 4tCO
2
eq/t Al, which is several
times lower than the global average of around
12.5t(Scope 1&2, at smelter).
To ensure transparency, every shipment of
ALLOW comes with independently verified
carbon footprint statements from its smelter
of origin, providing full traceability to
source for customers.
18 En+Group Annual Report 2020
Aluminium refining and production facilities
We are working to develop our inert anode
technology, which has the potential to drastically
reduce the emissions associated with aluminium
production. Inert anodes replace standard carbon
anodes with inert, non-consumable materials –
ceramics or alloys, which results in a reduction
of emissions from the smelting process. Another
breakthrough advantage of this technology is the
release of oxygen in the process of producing
aluminium. One cell using inert anode technology
can generate the same volume of oxygen as
70hectares of forest.
The advantages of low-carbon aluminium
Abundant
Aluminium is the third
most abundant element
in the Earth’s crust,
making up 8%. After iron,
it is the most widely used
metal in the world.
Infinitely recycable
and durable
Aluminium retains its
quality when recycled,
making it almost
endlessly recycable
without degradation
of core properties.
Approximately 75%
of all the aluminium
ever made is still in use.
Lightweight
Aluminium is extremely
ductile and weighs a
third of steel or copper,
making it idea for
bodywork of modern
vehicles which require
lightweight components
for energy efficiency.
Conductive and
reflective
Aluminium is an effective
conductor of both heat
and electricity. It is twice
as conductive as copper
and reflects 98% of
infrared rays.
Corrosion-resistant
and impermeable
Unlike iron which
rusts, aluminium oxide
sticks to the original
metal, shielding it from
corrosion. It is also highly
impermeable so serves
as a barrier for light,
aroma, moisture
and contamination.
85%
In comparison to
full-scope industry
average emissions,
metal produced with
inert anodes has an 85%
lower carbon footprint.
+50%
We have already achieved
a reduction of greenhouse
gas emissions associated
with aluminium production
of more than 50% compared
to 1990 levels.
Aerospace and aviation
Light, strong and flexible,
it proved an ideal material
for building heavier-than-
air aircraft. All modern
spacecraft contain from 50%
to 90% of aluminium alloys
in their parts. Aluminium is
used in the body of Space
Shuttle vehicles, it is found
in the telescopic antenna of
the Hubble space telescope;
hydrogen tanks used in
rockets are made from
aluminium, the tips of rockets
use aluminium, as well as
parts of launch vehicles,
orbital stations, the fastening
units for solar panels.
Automotive
Aluminium-intensive
vehicles have 13% lower
life cycle CO
2
emissions VS
steel vehicles. Low-carbon
aluminium further reduces
life cycle emissions by 17%.
ALLOW is a reliable partner
for the emerging e-mobility
and related infrastructure.
What’s more, there is future
potential for aluminium-ion
batteries.
Packaging
Light, durable, stackable,
resistant to transportation,
and – what is most important
– almost infinitely recyclable,
aluminium is a key enabler
of reduced lifecycle impacts
in the packaging sector.
For example, CAGR in
cans market in the next
5years is set to exceed 2%.
Low-carbon footprint and
broader ESG credentials of
RUSAL’s aluminium position
our products to support
this growth.
Construction
Use of low-carbon
aluminium can reduce
embodied carbon of
buildings by up to 20%. In
commercial buildings with
traditional structures and
aluminium parts made with
low-carbon aluminium can
reduce footprint by 7%.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
19En+Group Annual Report 2020
Dear shareholders,
2020 has been an incredibly
challenging year for the global
community and economies across
the world as we have lived through
unprecedented times of uncertainty
with the coronavirus pandemic. At the
beginning of the year we saw border
closures, we saw our customers shut
down certain facilities, and imposed
transport restrictions and reduced
economic activity threatened the
financial and operational performance
of our business. Despite this we have
remained resilient and continued to
demonstrate industry leadership.
Our biggest challenge and our
priority throughout the year has been
maintaining the safety of our people.
The majority of our employees began
working remotely from March and
I am pleased to say that this relatively
seamless transition was supported by
our superior IT systems, and also the
flexibility and resourcefulness of all of
my colleagues, to whom I am very
grateful. As we provide energy for
homes and businesses across Siberia, it
has been essential that our hydropower
plants continue to operate; similarly, our
smelters cannot be left unattended.
For those colleagues needed to man
these operations on site, we established
comprehensive systems to ensure
they remained safe from infection
and that any outbreaks could be
safely controlled. We have been
very fortunate in being able safely
to maintain our operations at up to
full capacity throughout 2020.
Whilst taking every measure to keep
our workforce safe, we also recognised
our commitment to our customers and
worked very hard to maintain deliveries
to our sales markets across the world
throughout this time.
A resilient performance
in challenging times
I am proud to say that despite the
numerous challenges related to the
pandemic, En+Group delivered a solid
performance for the year. Our
aluminium production remained stable
and we increased sales of value-added
products by 11% as compared to a year
ago. The Power segment increased
electricity output by 6%, and our HPP
output increased by 8%. Our fully
vertically-integrated model proved its
resilience, and we continued to benefit
from the combination of our unique
800,000
Medical-grade masks donated
to hospitals
15,000
Office-based staff moved
to work from home
16,000
Elderly and retired employees
received food supplies
USD71 mn
Social investments and
charitable projects
Driving
change
Our performance in 2020 has only
strengthened our confidence in
business strategy focused on sustainable
development. The balanced development
of the Group meets the interests of our
employees, shareholders, investors,
and the local communities.
CEO’S STATEMENT
“ We have been very fortunate in being able safely
to maintain our operations at up to full capacity
throughout 2020.”
Vladimir Kiriukhin,
Chief Executive Officer
20 En+Group Annual Report 2020
asset base, our integrated business
model and operational excellence. In
spite of the exceptional circumstances,
we were able to maintain our leading
position as the world’s largest producer
of low-carbon aluminium.
In response to the challenging market
environment caused by COVID-19, the
Metals segment successfully adjusted
its sales mix, with a material increase in
sales to geographies where demand
was stronger, and an increase in VAP
sales to 44% of total sales, accompanied
by an 8% increase in realised premiums.
The end of 2020 was marked by a
recovery in global aluminium demand,
with a positive impact on aluminium
prices. Aluminium prices ended the year
above $2,000/t, compared to an LME
average price of $1,702/t over 2020.
Continuing to invest for the
sustainable future
We also continued to make progress
in key strategic areas, including
investments to improve the efficiency
and environmental performance of our
operations and ongoing innovations
that will help us reduce the carbon
footprint of our aluminium even further.
In 2020 we continued our
comprehensive New Energy
programme, modernising our HPPs
on the Angara and Yenisei cascade.
We were able to reduce emissions
further whilst increasing hydropower
production. The upgraded equipment
at the Group’s Bratsk, Ust-Ilimsk and
Krasnoyarsk HPPs supported an increase
in hydropower production of 454.2GWh
in 4Q 2020 (1,712.1GWh in 2020), helping
to prevent greenhouse gas emissions by
approximately 526thousand tonnes of
CO
2
e, due to the partial replacement of
prior thermal power generation volumes
(1,984thousand tonnes of CO
2
e for the
full year 2020). In November we
announced the completed replacement
of Hydroelectric Unit No.2at our Irkutsk
HPP, resulting in an increased capacity
of 105.7MW, compared to the previous
capacity of 82.8MW. The ongoing
modernisation of our HPPs’ equipment
will increase their efficiency, reduce
the cost of repair work, and improve the
performance of the units and stations in
general. We expect the New Energy
programme to result in a reduction to
the Group’s greenhouse gas emissions
of 2.3million tonnes per year by 2022.
In our Metals segment – where our
ALLOW low-carbon aluminium brand
continues to grow – we announced
plans to invest in modernising the
Sayanogorsk and Khakas aluminium
smelters to ensure their continued
high-quality sustainable production.
We have maintained our commitment
to innovation throughout this period
as this is critical to helping us and the
industry at large make a step change
in our contribution to the Paris climate
goals. We announced plans to
completely switch the reduction area
of the Krasnoyarsk aluminium smelter
to a new type of raw material, an
eco-friendly pitch. During the year
Krasnoyarsk also completed its
transition to Eco-Søderberg
technology. It also began testing a pilot
industrial electrolytic cell with inert
anodes, which completely eliminates
emissions of greenhouse gases (CO
and CO
2
), polyaromatic hydrocarbons,
benzo(a)pyrene and sulphur from the
reduction process. Another positive
result of this unique technology is
generating oxygen in the aluminium
production process. This process is a
game changer for our industry, making
carbon emissions-free aluminium
production a genuine possibility.
We plan to continue with the Aluminium
Stewardship Initiative (ASI) certification
of our facilities, in our drive to provide
our customers and stakeholders with
as much transparency as possible. A
further five of the Group’s aluminium
smelters were successfully certified to
meet the ASI standards.
We also explored new sales
opportunities. We launched a new
foundry complex at the Boguchany
aluminium smelter; with an annual
capacity of 120 thousand tonnes, it
will produce advanced alloys, which
are in high demand by the automotive
industry globally. We also announced
a partnership with BitRiver, operator
of the largest data centre offering
colocation services for bitcoin mining in
Russia, to form Bit+, a joint venture for
mining cryptocurrencies at low cost
with a low-carbon footprint. The first
phase of Bit+’s new facility, with 10 MW
of electricity committed by En+, is
currently operational, with plans to scale
the facility to approximately 40MW.
Outlook
The global COVID-19situation remains
unpredictable in the near term, and
our key priorities remain unchanged:
these are the health and safety of our
workforce, maintaining uninterrupted
operations at our facilities and
continuing to fulfil our contractual
obligations. In light of the current
circumstances, it is critical that
En+Group continues to demonstrate
operational stability and the resilience
of its business model.
We remain confident in the
fundamental long-term drivers for
demand for our low-carbon aluminium.
The trend towards sustainable
infrastructure has strengthened as the
COVID-19 pandemic brought into focus
for all the fragility of the world around
us. We are ideally positioned to help all
of our customers meet more ambitious
decarbonisation targets as we offer
them a sustainable, traceable and
entirely transparent raw material in
our low-carbon aluminium.
Vladimir Kiriukhin,
Chief Executive Officer
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
21En+Group Annual Report 2020
OUR STRATEGY
Our focus on growth
and leadership
The Group’s strategy concentrates on organic growth with a focus on capital
discipline and deleveraging. We focus on vertical integration, cost-efficiency
and industry leadership.
Vertical integration
to unlock
maximum value
Our smelters are almost
fully powered by our
own energy, which also
generates revenues
through base electricity
demand. We plan to
strengthen the synergies
between our Metals and
Power segments by
grouping CAPEX within
our core operations.
>98%
use of hydropower
for aluminium
smelting in 2020
Focus on cost
control
We run ongoing cost
optimisation initiatives
across the Group. Costs
in the Metals segment
are minimised through
long-term power and
transport contracts,
and by achieving full
bauxite and nepheline
self-sufficiency in the
medium term.
18%
Adj. EBITDA margins
for 2020
Growing
production
efficiency and
operating margins
The Metals segment
is focused on low-risk
brownfield expansion
and increasing the
share of value-added
products in its sales mix.
It will also collaborate
with partners to
stimulate growth in
aluminium consumption.
44%
share of VAPs
in total sales of
aluminium in 2020
Find out more
p. 26 Business model p. 50 Financial review p. 50 Financial review
Most relevant
UN SDGs
p. 68 UN SDGs
Our strategy Our strategic objectives
We are committed to the Group’s
green development strategy – to
achieve vertical integration and
self-sufficiency across the
aluminium value chain (energy,
raw materials and finished
products), maintain and grow our
high-margin, low-risk aluminium
production, maintain robust
financial strength and grow total
shareholder returns, including
the payment of sustainable and
attractive dividends.
22 En+Group Annual Report 2020
Explore power
industry
development
opportunities
The Power segment
conducts R&D on smart
grids, solar energy,
and small HPPs. It has
piloted a solar plant
in Abakan, Russia,
designed solar roof
panels and produced
components for solar
plants, and is also
constructing small
HPPs.
1.7TWh
additional hydropower
production by
modernised HPPs in 2020
Deleverage and
support dividend
payments through
FCF generation
En+allocates capital
conservatively
and is focused on
deleveraging. In making
recommendations to the
general shareholders
meeting on dividend
payments, the Board
will take into account
current trading and
economic conditions
in the context of the
previously announced
policy.
21.37%
of VTB’s stake in the
Group acquired for
USD1.6 bn in 2020
Continuous
improvement in
environmental
performance
In 2020, the Metals
segment’s emissions
fell to 2.04tCO
2
e/tAl
1
–
11% down from a 2014
baseline (Scope 1here
includes only electrolysis).
At the beginning of 2021,
the Company announced
its ambition to become
net zero by 2050 and to
reduce GHG emissions
by at least 35% by
2030 (Scope 1 and 2, as
benchmarked against
the Group’s 2018 GHG
emissions).
11%
reduction in GHG
emissions at smelter in
2020
1
compared to 2014
baseline
Operate
sustainably
En+Group is committed
to both health and
safety, and the
preservation of the
natural environment.
Our CHPs are legacy
assets – using fossil
fuels to heat Siberian
communities where
there is no alternative.
We are, however,
developing an emissions
reduction roadmap.
2.4 tCO
2
/tAL
average carbon
footprint for ALLOW
aluminium (Scope 1 & 2,
at smelter)
p. 66 Sustainability review
1 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
p. 50 Financial review p. 71 Performance p. 66 Sustainability review
“ Our commitment to the highest standards of corporate
governance and social responsibility supports our strategy.”
Vladimir Kiriukhin, Chief Executive Officer
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
23En+Group Annual Report 2020
AT A GLANCE
Our presence and scale
We have a well-established presence across five continents a robust
operational hub in Siberia, and about 90 thousand people employed.
Power segment
Hydropower Thermal Solar
Number of facilities 5hydropower
plants
3
16combined
heat and
power plants
Abakan SPP
Total capacity 15.1GW
3
4.4GW 5.2MW
Production level in 2020 69.3TWh
4
12.9TWh 5.5mn kWh
p. 57 Our Power segment
69.3
TWh
low-carbon hydropower
generation
4
19.5
GW
Total installed
electricity capacity
3
Metals segment
Aluminium
1
Alumina Bauxite
Number of facilities 10aluminium
smelters
10alumina
refineries
7bauxite
mines
Total capacity 3.8mtpa 10.6mtpa
2
20.6mtpa
Production level in 2020 3.8mt 8.2mt 14.8mt
p. 55 Our Metals segment
1 Excluding Boguchany Aluminium Smelter (BoAZ), a joint 50/50 project of RUSAL and RusHydro.
2 RUSAL attributable capacity.
3 Including Onda HPP.
4 Excluding Onda HPP with installed power capacity 0.08 GW and production level of 0.5TWh in 2020
(located in the European part of Russia, leased to RUSAL).
5 From external customers.
6 Adjusted EBITDA for any period represents the results from operating activities adjusted for
amortisation and depreciation, impairment charges and loss on disposal of property, plant and
equipment for the relevant period.
7 After consolidation adjustments.
No.1
aluminium producer
excluding China
6.5%
of the world’s alumina
production
Guyana
Jamaica
24 En+Group Annual Report 2020
2020
2019
966
871
993
1,861
7
2,127
7
1,127
Metals
Power
USD
10,356
mn
FY 2020 Revenue by product
5
67.3% Primary
aluminium
and alloys
5.2% Alumina
and bauxite
5.3%
Semi- finished
products and
foil
11.3% Electricity
4.1% Heat
6.8% Other
USD
10,356
mn
FY 2020 Revenue by region
5
37.4% CIS
30.3% Europe
4.5% America
15.4% Asia
12.4% Other
Adjusted EBITDA
6
by segment
(USDmn)
The importance of Lake Baikal
Declared a UNESCO World Heritage site in 1996, Eastern Siberia’s Lake Baikal is
the largest and deepest freshwater lake in the world. The lake itself and the area
along its shores provide a unique habitat for a large number of plant and animal
species, many of which are endemic to the region. The Group’s key HPPs are
located on the Angara River, the only river flowing from Lake Baikal, and
committed to harnessing the natural power in a sustainable and responsible way.
www.enplusgroup.com/en/company/glance/baikal/
p. 74 Read more in the Sustainable Economic Development section
p. 50 Financial review
Kazakhstan
Russia
Italy
Nigeria
Ireland
Guinea
Moscow
Irkutsk
Krasnoyarsk
Australia
Sweden
Armenia
Ukraine
Lake Baikal
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
25En+Group Annual Report 2020
BUSINESS MODEL
Water
5
1
hydropower plants
harness the potential
of one of the world’s
largest river systems
in Siberia
+41,000 km
of power lines in
our networks
48TWh
of electricity
distributed
Electricity transmission and distribution
Coal
13.5 mt
coal production in 2020
16
combined heat and
power plants
Thermal power
12.9TWh
of electricity
production in 2020
26.9 mn
Gcal of heat
production in 2020
Power segmentInputs
Assets
We have a total installed electricity
capacity of 19.5 GW (15. 1GW from
low-carbon hydropower generation
and 4.4 GW from thermal power).
Our aluminium production capacity
is 3.8mtpa.
Research and development
The Company performs vast research
and development activities to introduce
environmentally friendly technologies
into production cycles to save resources
and reduce costs.
Raw materials
Bauxite production capacity 20.6mtpa
and alumina production capacity
10.6mtpa. The Group is c.80% self-
sufficient in bauxites and nephelines.
More than 98% aluminium production
energy needs are met by hydro and other
carbon-free power sources.
People
We have c.90,000 employees across over
60 sites in 12countries, and considered
one of the largest employer in Russia.
Financial
Strong and resilient cash flow with
industry leading EBITDA margins.
27.8%
Strategic investment in Norilsk Nickel
(USD14.1 bn).
The power of our integrated
and sustainable business
En+Group benefits from its unique base of tightly-integrated assets that
results in a fully integrated and highly self-sufficient green business model.
A substantial degree of vertical integration provides the Group with significant
advantages and additional sources of growth.
Hydropower
69.3TWh
of electricity production
in 2020
1 Including Onda HPP
2 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
3 Excluding Boguchany Aluminium Smelter (BoAZ), a joint 50/50 project of RUSAL and RusHydro.
A commitment to high international standards of corporate governance and
social responsibility underpins our business model and strategy.
17.2TWh
sales in 2020
– USD1,169 mn
electricity
– USD426mn heat
Hydropower
from the Power
segment is
used to refine
raw materials
and produce
aluminium by the
Metals segment in
Siberia. More than
98% of aluminium
production energy
needs are met by
carbon-free power
sources.
Electricity trading and retail
– Capturing additional
margin
– Direct access to
consumers
26 En+Group Annual Report 2020
>100%
% self sufficiency
in alumina
Social
The Group remained focused on ensuring the
health and safety of its employees, maintaining
stable operations and providing support to the
regions of operations. In 2020, the Company
purchased substantial amounts of personal
protective equipment, medical equipment and
medicines for medical institutions in the regions,
in which we operate. We conducted free testing
and initiated a vaccination programme for
employees in Russia and other countries.
c. USD71 mn
total social investments and charitable
projects in 2020
Environmental
En+Group places a special emphasis on
environmental protection and global climate
change issues as sustainable development
priorities. In 2020, there were no significant
environmental incidents that led to major
contamination of soil, air, water and led to court
penalties (after all stages of appeal) with an amount
of damage in excess of USD1 million in 2020.
11%
reduction in GHG emissions at smelter
in 2020 compared to 2014
2
Financial
Against a backdrop of lower aluminium prices
and foreign exchange headwinds, Adjusted
EBITDA was USD1.9 billion, supported by a
strong operational performance, with stable
aluminium output from the Metals segment
and increased output from the Power segment.
The Group’s EBITDA margin remained strong
at 18.0% reflecting the cost benefits of the
Group’s vertically integrated model.
USD10.4 bn
revenue
Bauxite
14.8 mt
production in 2020
3.8 mt
3
production in 2020
Primary aluminium production
Nepheline
4.6mt
production in 2020
Total aluminium and VAP sales
Metals segment
3.9 mt
aluminium sales
– USD6,969 mn primary aluminium and alloys
– USD534 mn alumina and bauxite
– USD547 mn semi-finished products and foil
1.7 mt
VAP sales
Alumina
8.2 mt
production in 2020
p. 123 Information for
shareholders and investors
p. 96 Corporate Governance
p. 22 Our strategy
p. 89 Internal Control
and Risk Management
p. 32 Industry positioning
Outputs
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
27En+Group Annual Report 2020
Operating
0
20
40
60
80
100
14.9
73.2
2018 2019 2020
58.3
13.6
77. 8
64.2
12.9
82.2
69.3
0
1,000
2,000
3,000
4,000
2018 2019 2020
3,753 3,757 3,755
Financial
KEY PERFORMANCE INDICATORS
Measuring our progress
We assess our performance across a wide range of measures that are consistent with
our strategy. Our key performance indicators (KPIs) provide a set of operational,
financial and sustainability metrics that help the Board and executive management
assess performance against our strategic priorities.
In 2020, we observed favorable
hydrological conditions – increased
water reserves in the reservoirs in
the Angara cascade and Krasnoyarsk
reservoir. The Power segment
increased electricity output by 6%,
and our HPP output increased by 8%.
Total electricity production
1
(TWh)
HPPs CHPs
Revenue
(USDmn)
In 2020, revenue decreased by 11.9%
y-o-y to USD10,356 million, reflecting
a 5.0% decline in the average LME
aluminium price during the period,
a 6.0% decline in sales volumes of
primary aluminium and alloys given
normalised levels of inventories of
primary aluminium in 2020. The
revenues from the Power segment were
impacted by 11.4% rouble depreciation.
Adjusted EBITDA
2
(USDmn)
In 2020, the Group’s Adjusted EBITDA
decreased 12.5% y-o-y to USD1,861
million, reflecting the revenue impacts,
offset by tight cost control and the
positive effect of rouble depreciation
on production costs. The Group’s
Adjusted EBITDA margin for the
reporting period remained almost
unchanged at 18.0%.
Note: The Group’s financial data are provided after consolidation adjustments.
1 Excluding Onda HPP (installed capacity 0.08 GW), located in the European part of the Russian Federation, leased to RUSAL since October 2014.
2 Adjusted EBITDA for any period represents the results from operating activities adjusted for amortisation and depreciation, impairment charges and
loss on disposal of property, plant and equipment for the relevant period.
3 Capital expenditure represents cash flow related to investing activities – acquisition of property, plant and equipment and acquisition of intangible
assets, the total level of capital expenditure is provided after intersegmental elimination.
4 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
Total aluminium production
(kt)
In 2020, aluminium production
remained stable and amounted to
3,755 thousand tonnes (down 0.1%
y-o-y). Aluminium sales decreased 6.0%
y-o-y totalling 3,926 thousand tonnes.
Net Profit
(USDmn)
Net profit decreased by 22.1% in
2020 to USD1,016 million (USD1,304
million in 2019). The decrease was
driven mainly by the same factors that
influenced the decrease in EBITDA,
as well as a decrease in the share of
profit obtained by the Group from its
associates and joint ventures, impacted
by provisions made in respect of
environmental costs.
Capital expenditure
3
(USDmn)
The Group’s capital expenditure
amounted to USD1,128 million in 2020
(up 6.3% y-o-y). The Power segment’s
capital expenditure accounted for
USD237 million in 2020, as compared
to USD236 million in 2019. The
Metals segment’s capital expenditure
amounted to USD897 million in 2020 as
compared to USD848 million in 2019.
0
3,000
6,000
9,000
12,000
15,000
3,147
2018 2019 2020
10,280
2,989
9,711
2,697
12 ,378
11,752
10,356
8,566
0
500
1,000
1,500
2,000
2,500
211
2018 2019 2020
1,698
311
960
257
1,862
1, 304
1,016
759
0
1,000
2,000
3,000
4,000
1,174
2018 2019 2020
2,163
1,127
966
993
3,287
2,127
1,861
871
0
400
800
1,200
1,600
181
2018 2019 2020
834
236
848
237
1,004
1,061
1,128
897
Power
Power
Power
Power
Metals
Metals
Metals
Metals
p. 32 Business review p. 50 Financial review
28 En+Group Annual Report 2020
5 www.enplusgroup.com/en/media/news/in-focus/en-group-launches-green-aluminium-
vision/?sphrase_id=7135
6 Scope 1and 2, as benchmarked against the Group’s 2018 GHG emissions
7 Figures for Power segment were recalculated because of improvement in methodology. Preliminary
data, being verified as part of En+Group 2020 Sustainability report preparation.
Non-financial
4
Lost time injury frequency rate
(LTIFR, per 200,000 hours worked)
Lost time injury frequency rate
decreased in the Metals segment, while
this indicator for the Group overall has
increased in 2020 as compared to 2019
due to accident involving a bus carrying
Group employees in Ust-Ilimsk.
Metals Power Group
Group
GHG emissions (Scope 1and 2)
MtCO
2
e
7
The reduction of GHG emissions in the
Power segment was due to reduction
of fossil fuels consumption on CHPs
caused by the structure and volume
of heat and electric loads in 2020. The
growth of GHG emissions in the Metals
segment was due to the growth of
alumina production volumes, as well as
the introduction of the new capacity.
February
3
The Group completed the
second stage of the share swap
transaction with Glencore
12
En+ Group completed the
acquisition of VTB’s stake in
the Company
17
En+Group listed ordinary shares
on the Level One Quotation List of
the Moscow Exchange
November
5
En+Group and BitRiver
announced a JV for low-carbon
cryptocurrency mining: Bit+
9
En+Group began the upgrade
of Hydroelectric Unit No. 4 at
Krasnoyarsk HPP
23
En+Group launched the new
Hydroelectric Unit No. 2 at
Irkutsk HPP as part of the
New Energy programme
June
2
The Group’s Metals segment,
RUSAL, completed a 10-year rouble
denominated bonds placement
April
20
The Company’s GDRs were
delisted from the Moscow
Exchange (17 April 2020 was
the last trading date for the
GDRs on MOEX)
30
En+Group’s Call for Carbon
Disclosure was Recognised as one
of Fast Company’s 2020 World
Changing Ideas
July
1
En+Group launched its
‘Green Aluminium Vision’
5
August
4
En+Group completed a unique
project to install a hydraulic unit
rotor at the Irkutsk HPP
September
25
The Group’s Metals segment,
RUSAL, completed the
redomiciliation process
January
18
The Company announced targets
of at least a 35% reduction in GHG
emissions by 2030 and to be net
zero by 2050
6
19
En+Group’s Metals segment and
Mingtai Aluminium partnered to
produce low-carbon products
March
1
En+Group’s Metals segment
attracted a 45 billion rouble loan to
finance Taishet aluminium smelter
construction
10
En+Group commenced the
supply of electricity to the
Taishet aluminium smelter
February
3
En+Group’s Metals segment and
Hodaka agreed a low-carbon
aluminium partnership
11
The Metals segment, RUSAL,
announced the acquisition of the
business and assets of Aluminium
Rheinfelden GmbH
19
En+Group’s Metals segment
raised USD200 million under a
new pre-export financing linked
to the sustainability performance
indicators
25
En+Group began the replacement
of six hydroelectric units at the
Bratsk HPP
December
10
The Metals segment of En+Group
extended ASI certification
11
En+Group started the
replacement of Hydraulic Unit No.1
at the Irkutsk HPP
14
The Group’s Metals segment,
RUSAL, became the first
aluminium producer globally to
receive an ‘A’ level rating from CDP
21
En+Group commenced
trading International Renewable
Energy Certificates
2020
2021
0.0
0.1
0.2
0.3
0.4
2018 2019 2020
0.16
0.22
0.17
0.20
0.14
0.20
0.12
0.11
0.20
0
10
20
30
40
50
60
50.0
2018 2019 2020
25.9
50.9
28.1
50.6
28.6
24.2
22.8
22.0
Power Metals
p. 66 Sustainability review
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
29En+Group Annual Report 2020
INVESTMENT CASE
Our competitive advantages
The nature of the Group’s assets and activities – in terms of the industries and
the concentrated geographies in which we operate – delivers powerful strategic
synergies and competitive strengths to our Power and Metals segments.
“Best in class” equity story
characteristics
En+Group is the world’s largest
producer of low-carbon aluminium.
Our vertically integrated business
model allows the Group to achieve
unparalleled operational efficiency.
Industry position
En+Group is a global leader
in low-carbon aluminium
production and renewable
energy generation. The
Company has a well-
established presence across
five continents and a robust
operational hub in Siberia.
En+employs about 90
thousand people all over
the world.
World class asset – global
benchmark in aluminium market
No.1
aluminium producer by
production volumes in the
world (ex-China)
1
No.1
independent hydropower
producer globally
2
Cost leadership
The Company is fully self-
sufficient in alumina capacity
(with potential to supply more
to third parties) and about 80%
self-sufficient in bauxites and
nephelines. More than 98%
aluminium production energy
needs are met by hydro
and other carbon-free.
The Group aims to achieve
vertical integration and
self-sufficiency across the
aluminium value chain,
including energy, raw materials,
and finished products.
Lowest cash curve position
on integrated basis
Vertically integrated green
business model – unique
world-class power and
aluminium asset base
1 According to CRU estimates.
2 Based on the Company’s internal data and peer companies’ publicly available results, announcements, reports and other information.
p. 32 Industry positioning p. 26 Business model
30 En+Group Annual Report 2020
Strong fundamentals
of end market
Aluminium is a key enabler of
more sustainable economic
development and ‘green’
recovery worldwide. Light,
durable, and almost infinitely
recyclable, aluminium is a
critical material of our more
sustainable future.
We are seeing increasing
demand for low-carbon
aluminium across multiple
sectors worldwide, including
building and construction,
packaging and of course
electric vehicles.
Fundamental aluminium demand
drivers – structural shifts in
electric vehicles and power
infrastructure
Continued impact from Chinese
government environmental
measures
Cash generation and
growth potential
The Company supports its
financial and operational
resilience based on
complementary and agility
of its business model.
We continue to invest in
scientific advances and
critical industrial process
improvements.
Strong cash flow resiliency and
robust margins on the back of
wellinvested operationally
efficient asset base
Potential for shareholder friendly
capital allocation
Corporate governance
and management
Having undergone
comprehensive restructuring
and updated its governance,
En+has proven its
commitment to the highest
standards or corporate
accountability.
Robust corporate governance
– highly experienced majority
independent Board
Strong management team –
proven capability of delivering on
complex projects and operations
“ We are confident in both the long and the short-term drivers for
demand for low-carbon aluminium across a growing range of end
use markets. As the world looks to ‘build back better’ from the
economic crisis left by the pandemic our clean metals will be a
vital and sustainable resource.”
Lord Barker of Battle, Executive Chairman
p. 22 Our strategy
p. 34 and 43 Market
overview
p. 28 Key performance
indicators
p. 50 Financial review
p. 96 Corporate Governance
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
31En+Group Annual Report 2020
BUSINESS REVIEW
Industry positioning
En+Group is a market-leading, vertically integrated low-carbon aluminium
and hydroelectric power producer.
With a well-established presence across five continents and a strong
operational hub in Siberia, combining the assets of both our Metals and
Power segments, the Group is able to capture commercial opportunities
arising from its world-class assets and scale.
Metals segment
En+Group’s Metals segment, represented by RUSAL,
produced approximately 5.8% of global aluminium
output in 2020, and around 6.5% of the world’s
alumina production. In 2020, RUSAL remained
among the largest producers of primary aluminium
and alloys globally.
RUSAL is fully self-sufficient in alumina capacity (with
potential to supply more to third parties) and about
80% self-sufficient in bauxites and nephelines.
RUSAL’s production chain includes bauxite and
nepheline ore mines, alumina refineries, aluminium
smelters and casting houses, foil mills, packaging
and wheel production centres.
RUSAL is actively developing a groundbreaking inert
anode technology. Introducing this state-of-the-art
technology into the production process will lead to
complete the elimination of greenhouse gas and
polyaromatic hydrocarbon emissions, coupled with
Top aluminium producers globally, 2020 (mt)
1
0
1
2
3
4
5
6
7
8
Norsk Hydro
East Hope
Alcoa
SPIC
Emirates Global Aluminium
Rio Tinto
Xinfra
RUSAL
Hongqiao Group
Chinalco
2
6.6
5.7
3.8
3.3
3.2
2.5 2.5
2.3
2.2
2.1
1 Based on the Company’s internal data and peer companies’ publicly available results, announcements, reports and other information.
2 Up to 2018, Chinalco was consolidating the production of Chalco. Since 2019, Chinalco consolidates the production of Chalco and
Yunnan Aluminium Co. Ltd.
a 10% cut in operational costs through reducing
anode and energy consumption, and over a 30%
cut in greenfield projects expenditure costs.
The efficient smelting technologies together with
low-cost input material and utilities mix secure the
Company’s global leadership on the cost curve.
RUSAL has a diversified product mix with a strong share
of VAP in the portfolio (1.72million tonnes per annum out
of 3.93million tonnes of total sales).
RUSAL’s sales geography is represented by a diversified
portfolio of regions, enabling it to deliver aluminium
products to the domestic market and across all key
global consuming regions (Europe, America and South
East Asia).
32 En+Group Annual Report 2020
Power segment
The Group’s Metals segment has a well-diversified sales
platform which allows it to access and operate efficiently i
n all key aluminium markets, including the United States,
Western Europe, Japan and South East Asia. At the same
time, the Power segment operates the largest and most
cost-efficient network of hydroelectric power plants in the
Siberian region, which allows it to cater efficiently and reliably
to its core clients in Siberia, including the largest smelters
operated by the Metals segment.
The composition of the Group’s assets and operations, both
in terms of industries and geographies, enables it to achieve
strategic synergies. En+Group’s scale allows it actively to
manage the flow of aluminium products, alumina and other
raw materials within the Company and proactively plan
electricity production and consumption targets. This allows
the Group to optimise capacity utilisation and maximise
efficiency at smelters, refineries and generating assets.
Based on the current management structure and internal
reporting system, the Group has defined two business
segments:
– Metals segment: Comprising RUSAL, including the power
assets of RUSAL
– Power segment: Mainly comprising power assets
1 Based on latest filings.
2 Subsidiary of China Three Gorges Corporation.
3 State-owned China Three Gorges Corporation and CNIC own 23.3%
and 5.0% stakes, respectively.
4 Based on the Company’s internal data and peer companies’ publicly
available results, announcements, reports and other information.
5 The Company’s assets capacity provided for Siberia only. The total
Company’s capacity is 19.5 GW, including 15.1GW in hydropower.
6 BEMO (Boguchany HPP) is a 50/50 JV between UC RUSAL and
RusHydro, operated by RusHydro.
En+Group’s Power segment is the largest independent
power producer in Russia by installed capacity and the
largest independent hydropower generator globally.
Russia has a well-developed power sector, which is
essential for the country’s high-energy-consuming
economy. The total installed capacity of the Unified
Energy System of Russia was 245.3GW in 2020, with
total electricity production of 1,047.0TWh. The Russian
electricity market is dominated by thermal assets,
which represent 67% of the total installed capacity in
Russia, while the Siberian region’s capacity is roughly
equally split between hydro (49%) and thermal (51%).
The Group’s power generation assets are located in the
Eastern Siberia and Volga regions, and the Company is
engaged in all of the major areas of the power industry
in Russia: electricity and heat generation; electricity,
capacity and heat sales; heat distribution; retail energy
trading and supply; engineering services; and electricity
distribution and transmission.
Power companies by installed hydro capacity globally,
2020 (GW)
1
0
10
20
30
40
50
Engie Brasil | 39% | State
EDP | 30% | State
3
Verbund | 95% | State
Iberdrola | 27% | Private
En+ Group (Power segment) | 83% | Private
SDIC Power | 49% | State
EDF | 18% | State
Enel | 33% | State
RusHydro | 81% | State
HydroQuebec | 99% | State
China Yangtze Power | 100% | State
2
Eletrobras | 90% | State
46.2
45.5
30.8
36.7
27. 8
21.6
16.8
15.1
13.2
7.1
8.2
3.4
Company | Hydro share | Ownership
Eletrobras | 100% | State
Hydropower generation is a key area of the Power
segment’s business, with the majority of its assets
located in Siberia. In 2020, En+Group remained the
largest producer in Siberia, with a 37% share of installed
capacity. Furthermore, 77% of its capacity is represented
by hydropower assets, and it enjoys utilisation priority
over the regulatory range of thermal power plants.
Coal prices are the main driver of day-ahead market
prices since CHPs are the marginal producers. The
output of HPPs, driven by weather conditions, is also
relevant, as it affects the production volumes required
from CHPs.
Competitive landscape in Siberia by installed capacity,
2020 (GW)
4
0
5
10
15
20
En+ Group
5
RusHydro
15.0
3.9
Hydro
18.9
7.2
SGK
12.3
BEMO HPP
6
3.0
InterRAO
3.9
Thermal
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
33En+Group Annual Report 2020
BUSINESS REVIEW
Metals segment review
Market overview
1
Global aluminium demand
In 2020, countries grappled with supply chain disruptions
and severe contractions in economic activity, as the
COVID-19 pandemic spread across the world. In the
aluminium industry, this sparked a drop in end-use
demand in all major economies with the exception of
China. Moreover, the pandemic became the key driver
of change in government policies, which are now in turn
accelerating green technology shifts and amplifying the
trends that have been evolving within the aluminium
industry over a number of years. The evolution of these
trends now look set to quicken demand recovery in 2021
and will drive growth in aluminium use over the long term.
Global manufacturing continued its recovery in December
despite the latest wave of the pandemic. December’s PMIs
revealed that advanced economy manufacturing was still
expanding. Global PMI remained at a level of 53.8in
December, unchanged month-over-month. Meanwhile,
a weaker dollar, strong manufacturing data, positive
news on the development of COVID-19vaccines and
expectations of a US economic stimulus package
continued to support commodity prices. In December,
the aluminium price continued to trade above the
USD2000/tonne level.
For the full year 2020, global aluminium demand was
down by 1.7% YoY to 63.9 mt, improving from a 2.6%
decline YoY during 9M 2020. Rest of the World ex-China
(“RoW”) demand contracted by 8.9% to 26.0 mt, however
China offset this with continuous robust demand,
demonstrating strong growth of 3.9% to 37.9mt.
In 2020, the largest end-user segment of aluminium
was construction, decreasing by 4% year-on-year.
The construction sector displayed resilience during
the pandemic with construction sites in general less
impacted by lockdown closures than other industries.
Regional differences were significant, however, meaning
China’s strong levels of consumption were key in
softening the effect of sharper falls in demand seen
in areas such as South America. COVID-19-induced
stimulus packages were further positive news for
infrastructure investment worldwide and aluminium
use within the industry. The environmentally oriented
part of these packages will see more resources directed
specifically into green construction technologies where
aluminium is often the material of choice.
1 Unless otherwise stated, data for the Metals segment’s “Market overview” section is sourced from Bloomberg, CRU, CNIA, IAI, Aladdiny
and Antaike.
Lockdowns, supply shortages and diminished demand
weighed heavily on the automotive sector, which saw
both aluminium demand and light vehicle production
contract 17% YoY in 2020. This was a considerably
sharper fall in demand than observed in all other key
industries and the automotive sector consequently lost
its position as the largest consuming sector of aluminium
products for the first time in 6 years. Whilst the decline in
vehicle output impacted heavily on aluminium demand,
changes in consumer choice, emissions targets and green
recovery packages favour growth in the use of aluminium
in automotive manufacture over the longer term. As
preferences drive a growing share of SUV type vehicles
in vehicle production overall, the demand for lightweight
solutions increases in order to meet ever more stringent
CO
2
emission targets. Moreover, recovery packages
incentivise EV sales, where aluminium finds additional
applications within space frames and battery enclosures.
Packaging sector demand remained robust throughout
the year, with aluminium semi-finished product
consumption falling by just 1% year-on-year in 2020. This
resilience was the consequence of a series of unexpected
upsides from the pandemic, such as a spike in demand
for aluminium-containing pharmaceutical packaging.
Moreover, lockdowns shifted consumer eating
behaviours that led to an increase in demand for at
home foils and cans. A clear example of this included
North America, where a surge in beverage can usage
left can producers struggling to satisfy demand. Lastly,
aluminium substitution continued to benefit from its
“sustainable” image and ease of recycling, the backlash
against single-use plastic packaging and the heightened
environmental awareness of consumers. Consequently,
the substitution of glass (beer) and PET (soft drinks)
with aluminium cans accelerated, with US aluminium
can sheet demand to grow at a healthy 5-6% CAGR
over the next five years according to Harbor.
Finally, aluminium end-use demand within the electrical
sector fell by 4% year-on-year in 2020, after the
pandemic caused disruption to power infrastructure
projects and supply chains. The year did however see
the announcement of several new national CO
2
emission
targets and green stimulus packages that look set to
drive the transition of energy acquisition to renewable
sources faster and sooner. With the installation of
renewable power sources such as solar and wind often
requiring high voltage aluminium transmission cables, a
positive impact on aluminium demand over the coming
years is anticipated.
34 En+Group Annual Report 2020
Global aluminium supply, inventories
and premiums
Global aluminium production in 2020 grew by 2.3% to
65.3 mt, taking into account minimal RoW growth of
0.2% year-on-year to 28.0 mt and 3.9% growth YoY
in China, to 37.2 mt. Overall, the global market had a
surplus of 1.4 mt during 2020.
Operating capacity in China exceeded 38.7 mt. Chinese
unwrought aluminium/alloys and products exports
declined by 15.2% YoY to 4.84 mt in 2020, while
unwrought aluminium imports during 2020 amounted
to around 1.06 mt vs. 75 thousand tonnes for 2019. This
shift followed a strongly negative export price arbitrage
and reduced demand overseas due to the pandemic.
China is thus becoming an important balancing force
for the global aluminium industry, absorbing excessive
supply from the RoW markets.
In 2020, aluminium inventories at LME warehouses
declined by ~133 thousand tonnes to 1.34 mt. LME live
warrants increased to a level of 1.19 mt. Chinese regional
stocks moved in a downward trend over the period April
to December and fell by 1.06 mt to a total of 0.61 mt from
their highest level this year of 1.68 mt at the beginning of
April 2020. Chinese regional inventories remained at a
seasonally low level at 682 thousand tonnes by the end
of 2020.
LME aluminium price dynamics (USD/t)
1
1 Bloomberg data.
By the end of 2020 aluminium premiums had risen in the
US, Europe and Asia, with strong demand fundamentals
and aluminium scrap shortage outside of China supporting
a further increase in demand for primary metal.
In 1H 2020 VAP market demand reduced drastically, due
to fall of end-use demand from key consumer industries
that followed widespread lockdown measures. But by
the end of 2020 on the back of stock replenishment
across whole supply chain, postponed end-use demand
and positive expectations regarding market conditions
in 2021, VAP demand almost returned to pre-crisis level.
VAP supply adjusted through the year in line with
general market circumstances – during 1H 2020
producers switched to primary aluminium production.
And this has further contributed to primarily aluminium
stockpiling during this period.
Aluminium market outlook
Looking ahead to 2021, demand for primary aluminium
is estimated to grow by 5-6%. The speed of vaccine
rollouts, success of government stimulus packages and
the ability to contain outbreaks are each expected to
have significant impacts on global aluminium demand.
Over the long term, the acceleration of green technology
trends will help drive aluminium demand over the
coming years. The global market is expected to move
into a small deficit in 2021.
1,000
1,500
2,000
2,500
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2019 2020
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
35En+Group Annual Report 2020
BUSINESS REVIEW
Metals segment review continued
Operational performance
Aluminium
RUSAL owns ten
1
aluminium smelters, which are located
in two countries: Russia (eight plants) and Sweden (one
plant). The Company’s core asset base is located in
Siberia, Russia and accounts for approximately 93% of
the Company’s aluminium output in 2020. Among those,
BrAZ and KrAZ together account for more than half of
RUSAL’s aluminium production. The Company owns an
85% stake in a smelter located in Nigeria.
In March 2019, the launch of the second part of the first
stage of the Boguchany (BEMO) project brought the
total production capacity to almost 300thousand
tonnes per annum.
The Group’s primary aluminium production for the year
ended 31December 2020 was stable as compared to
the previous year and totalled 3,755kt.
Aluminium production, (kt)
0
1,000
2,000
3,000
4,000
142
2018 2019 2020
3,486
141
3,496
139
125
120
Other countries
117
3,753 3,757 3,755
3,499
Russia (other than Siberia)Russia (Siberia)
Alumina
The Group owns nine alumina refineries as of the end
of 2020. RUSAL’s alumina refineries are located in six
countries: Ireland (one plant), Jamaica (two plants, one
legal entity), Ukraine (one plant), Italy (one plant), Russia
(four plants), and Guinea (one plant). In addition, the
Company holds a 20% equity stake in QAL, an alumina
refinery located in Australia.
Since February 2020, anti-COVID measures were taken
to control and prevent the spread of the disease at all
plants, some of which are still in place. Thanks to these
efficient and prompt managerial actions there has been
no substantial change in production schedules or
finished goods output.
The Company’s long position in alumina capacity
secures sufficient supply for existing production and
the prospective expansion of the Company’s aluminium
production capacity, and allows the Company to take
advantage of favourable market conditions through
third-party alumina sales.
RUSAL’s total attributable alumina output was 8,182kt in
2020 and 7,858kt in 2019. Production volume increase
by 4% due to enhancement of equipment operations at
Achinsk Alumina Refinery, stabilisation of production
process at Windalco and Friguia Alumina Refinery,
output increase at Queensland Alumina Limited.
Alumina production, (kt)
2
0
2,000
4,000
6,000
8,000
10,000
182
2018 2019 2020
738
2,763
1,715
502
1,874
368
1,690
2,755
691
1,893
461
439
Ukraine
7,774
7,858
8,182
740
2,873
1,725
523
1,883
JamaicaIreland
Australia (JV)GuineaRussia
Bauxites and nephelines
Bauxites and nephelines are key raw materials for alumina
production. In 2020, the Group was approximately 80%
self-sufficient in bauxites and nephelines.
Bauxites
The Group operates seven bauxite mines. RUSAL’s
bauxite mines are located in four countries: Russia (two
mines), Jamaica (one mine), Guyana (one mine), and
Guinea (three mines). The Company’s long position in
bauxite capacity helps secure sufficient supply for
existing operations and the prospective expansion of
the Company’s alumina production capacity. In addition,
the Group sells low volumes of bauxite to third parties.
1 Nine aluminium smelters in operation (Alscon, located in Nigeria, aluminium operation is mothballed).
2 Pro-rata share of production attributable to the Group.
36 En+Group Annual Report 2020
The Group’s total attributable bauxite output
1
was
14,838kt in 2020, as compared to 16,047kt in 2019.
The decrease in own bauxite mining was caused
by the suspension of production activity in Guyana,
announced at the beginning of February 2020, and the
replacement of Guyana bauxites with higher quality and
lower price analogues. The suspension and mothballing
of operations of the Bauxite Company of Guyana (BCGI)
resulted from serious illegitimate actions that have gone
beyond the control of government and enforcement
agencies, including arson of the electricity pylon
basement and other corporate property, and blocking
of the river.
The decrease in KBK bauxite mining reflected a reduction
in supply needed by the Nikolaev Alumina Refinery
(which has switched to processing Dian-Dian bauxite).
The Windalco mining decrease was a result of sufficient
raw material stock at the beginning of the year.
The most substantial bauxite production volume growth
occurred at the Friguia and Dian-Dian mines.
Bauxite production, (kt)
2
0
5,000
10,000
15,000
20,000
2018 2019 2020
1,791
5,651
5,011
1,394
1,856
5,574
7,205
1,412
81
Guinea
13,847
16,047
14,838
7,435
5,570
1,752
GuyanaRussiaJamaica
Nephelines
RUSAL’s nepheline syenite production was 4,599kt in
2020, as compared to 4,244kt in 2019.
The increase of the production volume of nepheline
mainly reflected additional quantities required for
alumina production.
Nepheline mines (Achinsk), (kt Wet)
0
1,000
2,000
3,000
4,000
5,000
2018 2019 2020
4,294
4,244
4,599
Downstream projects
Foil and packaging
The volume of foil produced by the Group’s facilities in
2020 amounted to 103.44 kt, which was a 5.44 kt or
5.5% increase from 2019. The domestic supply of plain
foil and tape from RUSAL Ural Foil and RUSAL Sayanal
decreased by 3.87 kt in 2020 as Dozakl, a large buyer,
left the market and purchased 5.6 kt less tape than it did
in 2019. This loss was offset by additional sales to other
domestic buyers.
The output of Ural Foil, Armenal and Sayana Foil grew
8%, 16% and 21%, respectively year-on-year as a result
of equipment productivity.
1 Bauxite output data was:
– Calculated based on pro-rata share of the Company’s ownership in corresponding bauxite mines and mining complexes. The total production
of the Company’s fully consolidated subsidiary, Bauxite Company of Guyana Inc., is included in the production figures, notwithstanding that
minority interests in each of these subsidiaries are held by third parties.
– Reported as wet weight (including moisture).
2 Pro-rata share of production attributable to the Group.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
37En+Group Annual Report 2020
BUSINESS REVIEW
Metals segment review continued
The output reduction at Sayanal also reflected a higher
share of more marginal thin foil (average thickness
decreased by 1.1 µm vs. 2019). At the same time, Sayanal
increased the output of high-margin converted foil by 11%.
Foil production, (kt)
0
20
40
60
80
100
120
2018 2019 2020
45.35
49.43
88.95
98.00
103.44
56.79
43.59
48.57
46.65
Export
Domestic market (RF and CIS)
Wheel business
The output of wheels in 2020 decreased by 30% due to
a COVID-induced softening of demand on end markets
in 1H 2020. The coronavirus pandemic also forced some
suppliers to delay delivery, installation and commissioning
of equipment under expansion projects, which had an
adverse impact on production capacity in 2H 2020.
Aluminium wheels production, (thousand pcs.)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2018 2019 2020
970
3,053
2,140
Other business
Powders
The coronavirus pandemic was the main factor which
caused a decrease in the output and sales of powders
due to a sharp decline in production in the automotive
and aircraft industries. This in turn reduced the demand
for aluminium from companies supplying finished
products to these industries.
Secondary alloys
The amount of dross and aluminium-containing waste
converted into secondary aluminium reduced in 2020 by
3.9kt or 22% from the previous year due to a reduction
in both internal and external dross and waste available
for conversion.
Silicon production
Production volumes in 2020 decreased in comparison
with 2019 due to falling market prices for silicon and,
as a result, unprofitable production at LLC RUSAL
Kremny Ural, the operation of which has been halted
since 1December 2019. The personnel has been reduced
to necessary level to restart the facility when the
situation in the silicon market improves.
JSC Kremny continued operating four furnaces
throughout 2020. In 2020, plant modernisation was
completed, including the supply of a new type of
hydraulic furnace mouth tending machines. A six-year
development strategy for JSC Kremny was approved
with planned restoration of idling capacities and
improvement of environmental efficiency through the
replacement of all “wet”-type gas treatment plants with
modern dry-type treatment plants with bag filters.
Other mining assets
RUSAL owns and operates 15mines and mine complexes,
including bauxite mines (the resources of which are
described above), two quartzite mines, one fluorite mine,
two coal mines, one nepheline syenite mine and two
limestone mines.
The long position in alumina capacity is supported by
RUSAL’s bauxite and nepheline syenite resource base.
RUSAL jointly operates two coal mines with Samruk-
Energo, the energy division of Samruk-Kazyna through
a 50/50joint venture, Bogatyr Coal LLP.
Bogatyr Coal LLP
Bogatyr Coal LLP, located in Kazakhstan, is a 50/50joint
venture between RUSAL and Samruk-Energo.
Bogatyr Coal LLP, which produced approximately
43.34mt of coal in 2020, has approximately 1.66billion
tonnes of Proved and Probable Ore Reserves and has
Measured Mineral Resources and Indicated Mineral
Resources totalling approximately 2.01billion tonnes as
at 31December 2020 (reported on under JORC by SRK).
Bogatyr Coal LLP generated sales of approximately
USD248million in 2019and USD243million in 2020.
Russian and Kazakh customers contribute to
approximately 30% and 70% of sales.
38 En+Group Annual Report 2020
Investment in Norilsk Nickel
Norilsk Nickel is the world’s largest palladium producer,
the largest high-grade nickel producer, and one of the
leading producers of platinum, copper, and cobalt.
RUSAL held a 27.82% shareholding stake in Norilsk
Nickel as at the latest practicable date.
RUSAL’s shareholding in Norilsk Nickel allows for
significant diversification of earnings through Norilsk
Nickel’s exposure to PGMs
1
and non-ferrous metals
(nickel, copper, cobalt), and broadens RUSAL’s strategic
opportunities. The Company’s objective is to maximise
the value of this investment for all shareholders.
Company profile and financial results
2
As of 31December 2019, Norilsk Nickel’s resource base
on the Taimyr and Kola Peninsula consisted of 757mt
of Proved and Probable Ore Reserves and 2,020mt of
Measured and Indicated Mineral Resources. Its key assets
are located in the Norilsk Region, the Kola Peninsula, and
the Trans-Baikal Territory in Russia, and in Finland.
In 2020, Norilsk Nickel produced 236kt of nickel,
487kt of copper, 2,826koz of palladium and 695koz of
platinum. Compared to 2019, the following is to be noted:
– The growth in production of nickel (+3%) primarily
reflected an increase in the production of nickel
concentrate for sale at Kola MMC and higher
processing volumes of the Company’s Russian
feed at Norilsk Nickel Harjavalta (production of
nickel from own Russian feed also increased by 3%).
– The decline in production of copper (-2%) was
attributed to changes in saleable product mix,
reallocation of copper semi-products within the
Company’s divisions and lower processed volumes
of concentrate, which was purchased from Rostec
(production of copper from own Russian feed also
decreased by 2%).
– The decline in PGM production (-3% palladium, -1%
platinum) was attributed to the commissioning of the
new precious metals concentrate production line at the
metallurgical shop of Kola MMC, as well as a high base
effect from 2019, when Krasnoyarsk Precious Metals
Plant processed earlier accumulated work-in-progress
inventory (production of PGM from own Russian feed
decreased by 3%).
Norilsk Nickel’s metal sales are highly diversified by
region: Europe, Asia, North and South America, Russia
and the CIS; and by product: nickel, copper, palladium,
platinum, semi-products and other metals.
The market value of RUSAL’s investment in Norilsk Nickel
amounted to USD14,123 million as of 31 December 2020,
an increase in comparison with the market value as of
31December 2019 (USD13,586 million). Market
capitalisation of Norilsk Nickel was under effect from
positive trends in end metal markets and Russian rouble
depreciation, which was partly offset by negative
external market factors (due to the COVID-19 pandemic)
and internal factors (the accident at Heat and Power
Plant No 3 (HPP-3) in May 2020).
In 2020, Norilsk Nickel recognised an environmental
provision of USD2.2billion following the diesel fuel
leak at the HPP-3industrial site and in anticipation of
compensation payable in respect of the environmental
damage caused (more details below in the section
Accident at HPP-3) that led to EBITDA decreasing in 2020.
Accident at HPP-3
On 29May 2020, the fuel storage facility at heat and
power plant No. 3(HPP-3) in the Kayerkan neighbourhood
of Norilsk failed due to a sudden sinking of its support
posts, resulting in fuel leakage. According to preliminary
investigations, 21.2kt of diesel fuel leaked beyond the
bunding perimeter into a designated pit, into nearby soil
and into the Bezymianny Stream, and the Daldykan and
Ambarnaya Rivers. Special containment booms were
installed and effectively prevented the contamination of
the Pyasino Lake. No one was hurt and the city of Norilsk
was not harmed in any way.
As of the end of 2020, the spill was fully localised and
the majority of the fuel and water mixture had been
collected. Contaminated soil was placed into sealed off
hangars to prevent further environmental risks. Water-
fuel mixture collected from the Ambarnaya River and
near the power plant was placed into temporary
holding tanks.
1 PGMs are platinum group metals.
2 Production and operational data in this section are derived from www.nornik.ru/en/
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
39En+Group Annual Report 2020
BUSINESS REVIEW
Metals segment review continued
In 2021, continued clean-up and rehabilitation works
are planned. According to the Norilsk Nickel Group
assessment, total expenditure for clean-up and
rehabilitation is estimated at USD144 million
(RUB10.6billion at the RUB/USDexchange rate as at
31December 2020), from which clean-up expenses
incurred in 2020 were USD48 million. On 5 February
2021 the Arbitrazh court of the Krasnoyarsk region
ordered Norilsk Nickel to pay environmental damages
of RUB 146.177 billion (USD1,979 million at the RUB/
USDexchange rate as at 31 December 2020). On 19
February 2021, Norilsk Nickel announced that it had
decided to comply with this judgement.
As one of the main shareholders of Norilsk Nickel,
RUSAL was very concerned about the incident at HPP-3.
RUSAL supported the stringent investigation of the
circumstances on site that caused the accident and
proposed measures to the Norilsk Nickel Board of
Directors to help prevent such accidents in the future.
Norilsk Nickel’s Board of Directors supported some of
RUSAL’s proposals to strengthen the management team,
including the introduction of a Deputy President for
Environment, appointed in June 2020.
Projects
BEMO project
The Boguchany (BEMO) project involves the
construction of the 3,000MW Boguchany HPP
(average annual electricity output: 17.6billion kWh) and
Boguchany Aluminium Smelter capable of producing
600,000tonnes of metal per annum in the Krasnoyarsk
Territory in Siberia.
The construction of the Boguchany Aluminium Smelter
is divided into two stages (each stage with capacity for
298kt of aluminium per annum). The first part of the first
stage (149kt of aluminium per annum, 168pots) was
launched in 2015, and the second part of the first stage
was launched in March 2019. In May 2019, the first stage
of the smelter reached its design capacity. In 2020,
290,046tonnes of aluminium and alloys was produced,
which is 32,333tonnes more than in 2019. A total of
1,017,140tonnes of aluminium and alloys has been
produced since the start of the commissioning.
The second stage of the Boguchany Aluminium Smelter
is to be considered with a strategic partner, RusHydro,
subject to the state of the market and the availability of
project financing.
Boguchany HPP is the fourth step in the Angara
Hydroelectric Power Chain, the largest hydro project
ever completed in Russia. Construction of the power
plant was suspended in Soviet times due to the lack
of financing, but was resumed in May 2006by RUSAL
and RusHydro, after they jointly agreed to complete it.
The project’s 79-metre-high and 2,587-metre-long
composite gravity, rock-fill dam was completed at the
end of 2011, and nine 333 MW hydropower units of
Boguchany HPP commenced operation between 2012
and 2014. The total installed capacity of all nine hydro
units in operation amounts to 2,997 MW.
The hydropower plant started the commercial supply
of electricity to the wholesale electricity and capacity
market on 1 December 2012. Since its launch, Boguchany
HPP has generated 101.364TWh of electricity. In 2020,
the hydropower plant produced and delivered
17.549TWh to the wholesale electricity and capacity
market for the first time in the entire period of operation,
which exceeds the 2019 electricity output by 9.6%, or
1.535TWh.
Taishet
Construction of the Taishet aluminium smelter was
started in 2006. Due to unfavourable market conditions,
RUSAL decided to suspend the project in 2009. After
the economic recovery and improvement in market
conditions in 2016, the Board of Directors of RUSAL
decided to resume the construction of LC-1 (first series)
of the Taishet smelter and approved the start of
preliminary work. Actual construction of the Taishet
Aluminium Smelter resumed in 2017.
The project includes construction of an aluminium
smelter in Taishet in the Irkutsk Region (Eastern Siberia),
with a design production capacity of the LC-1(first
series) of 352pots, or 428.5ktpa. The total electricity
consumption by the LC-1(first series) is estimated at
6,370million kWh. We anticipate the first metal to be
produced in 2021.
40 En+Group Annual Report 2020
Assets overview
Location
Installed
capacity
2020
production
2019
production
Capacity
utilisation rate
Aluminium smelters
Bratsk aluminium smelter Russia (Irkutsk Region) 1,009 ktpa 1,004 kt 1,008 kt 100%
Krasnoyarsk aluminium smelter Russia (Krasnoyarsk
Territor y)
1,019 ktpa 1,020 kt 1,018 kt 100%
Sayanogorsk aluminium smelter Russia (Republic of
Khakassia)
542ktpa 529 kt 539 kt 98%
Novokuznetsk aluminium
smelter
Russia (Kemerovo Region) 215 ktpa 215 kt 215 kt 100%
Khakas aluminium smelter Russia (Republic of
Khakassia)
297 ktpa 308 kt 294 kt 104%
Irkutsk aluminium smelter Russia (Irkutsk Region) 422ktpa 422kt 422kt 100%
Kandalaksha aluminium smelter Russia (Murmansk Region) 76 ktpa 70 kt 72kt 92%
Volgograd aluminium smelter Russia (Volgograd Region) 69 ktpa 70 kt 69 kt 101%
KUBAL Sweden 128 ktpa 117 kt 120 kt 91%
ALSCON
1
Nigeria 24 ktpa — — 0%
Boguchany aluminium smelter
2
Russia (Krasnoyarsk
Territor y)
300 ktpa 290 kt 258 kt 98%
Alumina refineries
Achinsk Alumina Refinery
Russia (Krasnoyarsk
Territor y) 1,069 ktpa 900 kt 823 kt 84%
Bogoslovsk Alumina Refinery Russia (Sverdlovsk Region) 1,030 ktpa 990 kt 1,017 kt 96%
Urals Alumina Refinery Russia (Sverdlovsk Region) 900 ktpa 916 kt 915 kt 102%
PGLZ Alumina Refinery
3
Russia (Leningrad region) 88 ktpa 67 kt — 76%
Friguia Alumina Refinery Guinea 650 ktpa 439 kt 368 kt 68%
QAL Australia 3,950 ktpa 740 kt
4
691kt
4
94%
Eurallumina Italy 1,085 ktpa — — 0%
Aughinish Alumina Refinery Ireland 1,990 ktpa 1,883 kt 1,893 kt 95%
Windalco Jamaica 1,210 ktpa 523 kt 461kt 43%
Nikolaev Alumina Refinery Ukraine 1,759 ktpa 1,725 kt 1,690 kt 98%
Bauxite mines
Timan Bauxite Russia (Republic of Komi) 3,300 ktpa 3,310 kt 3,221kt 100%
North Urals Bauxite Mine Russia (Sverdlovsk Region) 3,000 ktpa 2,260 kt 2,353 kt 75%
Compagnie des Bauxites
de Kindia Guinea 3,500 ktpa 2,941kt 3,121kt 84%
Friguia Bauxite and Alumina
Complex Guinea 2,100 ktpa 1,423 kt 1,304 kt 68%
Bauxite Company of Guyana Inc. Guyana 1,700 ktpa 81kt 1,412kt 5%
Windalco Jamaica 4,000 ktpa 1,752kt 1,856 kt 44%
Bauxite Company of Dian-Dian Guinea 3,000 ktpa 3,071kt 2,780 kt 102%
1 Alscon aluminium production is mothballed.
2 A 50/50 joint venture of RUSAL and RusHydro. Capacity and production volumes of the BEMO project are not included in the Company’s
consolidated operating data.
3 All data is represented for September–December 2020.
4 Pro–rata share of capacity and production attributable to RUSAL.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
41En+Group Annual Report 2020
BUSINESS REVIEW
Impact of COVID-19
In 2020, En+Group, just like the entire world, faced
the challenges of the COVID-19 pandemic. In particular,
the Company faced the following main challenges:
– protecting employees while being unable to suspend
operations
– working in highly volatile macroeconomic
environment
– supplying our customers with critical heat and
electricity, as well as responding to our metals
segment customers’ needs, including re-directing
of product flows as required.
Protecting employees preserving
uninterrupted operations
The Group launched a programme at the end of
February 2020 to protect its employees against
COVID-19, drawing on the expertise gained by RUSAL
amidst the Ebola outbreak in Africa in 2014–15. The
measures included buying personal protective gear;
enhancing activities of medical units and paramedics;
disinfection and cleaning of premises; and buying air
purifying systems. Sickbays were arranged at the
premises of operating companies for employees who
might show symptoms of the disease, where they were
able to wait for an ambulance. A zonal approach was
applied at the sites to isolate the operating/auxiliary
crews from the engineering/administrative staff. HR
departments monitored potential COVID-19 cases and
assisted in arranging testing campaigns. Relevant
medicines were purchased to be distributed to
employees, if and when needed. A hotline was
established to advise employees on measures to
combat the coronavirus. A broad intra-corporate
information campaign was launched in the early
days of the pandemic to raise employee awareness of
COVID-19 prevention measures and to inform them
about what to do if they showed symptoms of the
disease. Routine testing was used to identify
asymptomatic cases.
Decline in global aluminum demand
For the full year 2020, global aluminum demand was
down by 1.7% y-o-y to 63.9 million tonnes. Rest of the
world ex-China (RoW) demand contracted by 8.9%
to 26.0 million tonnes. However, China offset this with
its robust demand recovery, demonstrating a strong
growth of 3.9% to 37.9 million tonnes.
At the same time, global aluminium production in
2020 grew by 2.3% to 65.3 million tonnes, taking
into account (i) small RoW growth of 0.2% y-o-y
to 28.0million tonnes and (ii) 3.9% growth y-o-y
in China to 37.2million tonnes.
As a results global market was in surplus by 1.4 million
tonnes during 2020. And this led to drop in aluminium
prices, down to 1,460 dollars per tonne in April/May.
Average 2020 aluminium price amounted to
1,702dollars per tonne (down 5% y-o-y).
In response to the challenging market environment
caused by COVID-19, the Metals segment successfully
adjusted its sales, with a material increase in sales
to geographies where demand was stronger. On the
backdrop of falling global demand for aluminium Metals
segment was the only key producer who increased VAP
sales to 44% of total sales in 2020 and gained VAP share
in sales portfolio.
Lower demand for electricity amidst restrictions
The restrictions imposed due to the COVID-19 pandemic
caused a major decline in power consumption from the
Russian market.
According to OJSC System Operator of the Unified
Energy System, the power consumption from Russia’s
Unified Energy System was 2.4% lower in 2020
compared to 2019. The lowest figures were shown in
May (down 5.5%) and June (down 6.0%); the remaining
months, on average, registered 1.9% decrease vs. 2019.
The most dramatic decline in the European part of
Russia was seen in the Urals Unified Energy System
(down 5.4%) and the Middle Volga Unified Energy
System (down 4.2%). The North-Western Unified Energy
System showed a smaller decline of 2.9%. The smallest
decline in figures was seen in the Central Unified Energy
System (down 0.8%) and the Southern Unified Energy
System (down 0.6%). The Siberia Unified Energy System
registered a 1.0% decline vs. 2019. The situation in Siberia
differed from the other regions as its power-intensive
operations were not suspended, preserving their normal
power consumption.
Power consumption in the key regions where the
Group has operations, i.e. the Irkutsk Region and the
Krasnoyarsk Territory, was higher when compared to
the rest of the regions connected to the Siberia UES in
2020. The Irkutsk Region registered a 0.9% increase in
consumption despite the pandemic, which is the highest
result among the Siberian regions connected to the
Unified Energy System. The energy system of the
Krasnoyarsk Territory and the Republic of Tyva showed
a decrease of 0.7%. This better performance is
attributable to the large consumers based in the
Krasnoyarsk Territory and the Irkutsk Region, where
the En+Group’s key energy assets are located, as they
maintained power consumption and did not interrupt
their operations. The western part of Siberia, i.e. the
Tomsk and the Omsk regions, demonstrated the
sharpest decline in consumption, respectively down
8.5% and 3.1% year-on-year.
Electricity sales in the retail market
The COVID-19 pandemic caused an increase in non-
payments for electricity in the retail market, which
peaked in April 2020. Some employees shifted to
working from home, while sales companies closed their
front offices in the Irkutsk and Nizhny Novgorod Regions.
For many years, the Group has developed remote and
online payment services and applications, which helped
to reduce the level of payment failures and helped avoid
a greater increase in non-payments.
42 En+Group Annual Report 2020
Power segment review
Market overview
1
Overview of the Russian power sector
The Russian Federation’s power sector is among the
largest in the world, with installed electricity capacity
of 245.3GW and electricity output of 1,047.0TWh as
of 2020. The majority of Russia’s electricity demand is
met by thermal power plants that use natural gas and
thermal coal as their primary fuel. In Siberia, thermal
power plants make up 50.9% of installed capacity with
hydropower generation making up 48.53%, remaining
0.57% are solar power plants.
The Unified Energy System (UES) of Russia covers most
of the Russian territory. Grid interconnections between
different energy systems are limited, with the Russian
wholesale power and capacity market split into two
pricing zones. The first pricing zone, the European–Ural
price zone
2
, includes the territory of the European part
of Russia (including the Urals), while the second pricing
zone, the Siberian Integrated Energy System (IES),
encompasses Siberia. The electricity prices of the two
price zones are driven by the differences in capacity
and fuel mix in the respective price zones.
The Siberian IES has an operational area of 4,944,300sq
km, with a population of approximately 19million people.
The Siberian IES comprises 115power plants with a total
installed capacity of 52.1GW, including 25.3GW of HPPs
(48.5%), 26.5GW of thermal power plants (TPP) (50.9%)
and 300.2MW of solar plants (0.57%). The grid of the
Siberian IES consists of 110, 220, 500and 1,150kV lines.
The total length of power lines is 102,614km
3
.
A unique feature of the Siberian IPS is the significant role
of HPPs in both the installed electricity capacity mix and
electricity output. Thermal power in the Siberian IES is
generated mostly through coal-fired power plants, which
are primarily located near regions where the coal is mined.
Electricity demand
Electricity consumption in the UES of Russia in 2020
decreased by 2.4% year-on-year to 1,033.7TWh (down
2.7% excluding the impact of 29February 2020).
Electricity consumption in the European–Ural price
zone
4
decreased by 3.0% to 783.7TWh (down 3.2%
excluding the impact of 29February 2020). Electricity
consumption in the Siberian IES decreased by 1.0% to
209.4TWh (down 1.3% excluding the impact of
29February 2020).
Electricity supply
The total installed electricity capacity of the UES
of Russia as of 1January 2021amounted to 245.3GW
and decreased by 1.0GW in 2020. The decrease can be
explained by a 1.86GW commissioning of new capacity, a
3.25GW decommissioning of old capacity and a 0.36GW
capacity increase linked to remarking, corrections, etc. In
the second price zone, 81MW was commissioned, 101MW
was decommissioned and there was an increase in
capacity as a result of 54MW being remarked.
In 2020, electricity output in the UES of Russia
decreased by 3.1% year-on-year to 1,047.0TWh (down
3.4% excluding the impact of 29February 2020).
Electricity output in the European–Ural price zone
decreased by 3.8% to 796.2TWh (down 4.1% excluding
the impact of 29February 2020).
Electricity output within the Siberian IES in 2020
was 207.0TWh, down 0.8% year-on-year (down 1.1%
excluding the impact of 29February 2020). Output
from HPPs in Siberia increased by 9.2% year-on-year
to 117.7TWh. In 2020 the Group’s HPPs generated
approximately 58.9% of the total electricity produced
by hydropower stations in the Siberian IES. At the same
time, thermal power plants decreased their electricity
production by 11.7% year-on-year to 89.0TWh. In 2020,
combined heat and power (CHP) plants accounted for
43.0% of full-year electricity output within the Siberian
IES, while HPPs accounted for 56.9%.
1 Unless otherwise stated, data for the Power segment’s “Market overview” section is sourced from ATS, Association “NP Market Council”,
System Operator of the Unified Energy System of the Russian Federation.
2 Comprises the Central, Central Volga, Urals, North-West and South Energy systems.
3 According to the System Operator of the Unified Power System of the Russian Federation (www.so-ups.ru/).
4 Comprises the Central, Central Volga, Urals, North-West and South Energy systems.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
43En+Group Annual Report 2020
Electricity and capacity prices
In the Siberian IES, electricity spot prices are effectively
determined by the production costs of the least efficient
coal-fired generation plants (mostly CHPs and
condensing power plants), with HPPs (and some CHPs
operating in must-run mode) acting as price takers. Over
the long term, electricity prices tend to move with prices
of thermal coal. A significant proportion of the power
generated by Siberian CHPs is produced using locally
sourced brown coal.
Due to seasonality in demand and the intermittency of
hydropower, the price of electricity can exhibit significant
fluctuations throughout the course of the year.
One of the major factors exerting significant influence in
the medium term is the water inflow to Siberian HPPs,
which determines the availability of low-cost hydropower
for the wholesale market.
In 2020, spot prices for the European–Ural price zone
decreased by 6.0% year-on-year and averaged
1,211RUB/MWh, while spot prices for the Siberian IES
decreased 2.0% year-on-year, averaging 872RUB/MWh.
While electricity prices generally reflect short-term
variations in the supply-demand balance and cover
generators’ variable costs, capacity prices cover fixed
costs and sustaining CAPEX requirements.
Reflecting the long-term nature of these decisions,
the capacity market functions rather differently to the
electricity market, with annual auctions carried out to
determine the price and availability of capacity in four
years’ time. Capacity prices are thus currently determined
through to 2026. Starting from 2018, prices are indexed
annually at the previous year’s Consumer Price Index
(CPI) minus 0.1% – the indexation is applied starting from
1 January of the year when the auction was conducted,
until 1 January of the year when the capacity is supplied
(prices were previously indexed at CPI minus 1%).
In 2019, the Ministry of Energy of the Russian Federation
defined rules for the indexation of price parameters at
competitive capacity outtake (CCO), which provide for a
20% growth in price parameters until 2024and growth
with inflation afterwards. Furthermore, the offtake period
was increased to six years instead of four and further
CCOs are conducted every year with the period of
delivery in six years: in 2021 the COO has been
conducted for 2026.
Low-carbon cryptocurrency mining: Bit+
Bit+ is a joint venture of En+Group and BitRiver,
operator of the largest data centre offering colocation
services for bitcoin mining in Russia, for mining
cryptocurrencies at low cost with a low-carbon footprint.
Under the partnership, En+Group provides low-cost
electricity from renewable energy sources to Bit+’s
new mining operations while BitRiver runs and
manages the operations. The first phase of Bit+’s new
facility, with 10MW of electricity committed by En+,
is currently operational, with plans to scale the facility
to approximately 40 MW.
The facility is located near BitRiver’s current data
centre in Bratsk, in the Irkutsk Region of Russia, and
is composed of modular cryptocurrency mining units.
Every modular unit is a specially converted shipping
container and is equivalent to a full-size cryptocurrency
mining data centre. Fourteen of these modules will be
operational in the facility’s first phase. Each module
can accommodate up to 400units of Bitmain’s latest
generation S19Pro (110Th) miners.
The Group actively supports the development of
datacentres in the Irkutsk Region. The Company’s energy
assets in the region produce low-carbon, inexpensive
electricity from renewable sources, and En+is able to
offer surplus power to Bit+. Moreover, the low average
annual temperature reduces the energy required by the
datacentres, making them more efficient and further
minimising their carbon footprint.
Power segment review continued
BUSINESS REVIEW
44
En+Group Annual Report 2020
Capacity prices
‘000 RUB/MW/month 2019 2020 2021 2022 2023 2024 2025 2026
Second price zone 190 191 225 264 267 279 303 299
The CCO price for the European–Ural price zone grew by 1.9% year-on-year in 2020 (including CPI minus 0.1%
indexation). The capacity price for the Siberian IES zone decreased by 2.1% year-on-year in 2020 (including CPI
minus 0.1% indexation).
In the second price zone, base CCO price in 2019 and 2020 was almost the same. At the same time, the 2019 COO
price is indexed for 2016-2018 inflation, and the 2020 COO price is indexed for 2017-2019 inflation. Inflation in 2016
was significantly higher than in 2019 (5.4% versus 3.0%), which translated a decrease in the indexed price by 2.1%.
2020 2019 Change, %
Capacity prices (including CPI minus 0.1% indexation)
First price zone
‘000
RUB/MW/month
126.5 124.1 +1.9%
Second price zone 209.2 213.7 -2.1%
Electricity spot prices:
First price zone RUB/MWh 1,211 1,288 -6.0%
Second price zone RUB/MWh 872 890 -2.0%
Nizhny Novgorod Region RUB/MWh 1,259 1,335 -5.7%
Irkutsk Region RUB/MWh 793 789 +0.5%
Krasnoyarsk Territory RUB/MWh 789 784 +0.6%
In 2020, the average electricity spot price on the day-ahead market in the second price zone decreased by 2.0% to
872RUB/MWh. According to NP Market Council data, this decrease reflected an increase in HPP generation coupled
with decreased demand.
In 2020, average electricity spot prices in the Irkutsk Region and Krasnoyarsk Region increased by 0.5% 793RUB/
MWh and by 0.6% to 789RUB/MWh, respectively. The reason for differing price dynamics within the Siberian IES is
the transmission constraints on the transit between East and West Siberia and changes in the demand structure in
the period from August to October.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
45En+Group Annual Report 2020
BUSINESS REVIEW
Power segment review continued
Operational performance
As at 31December 2020, the total installed electricity
capacity of the Group’s power assets amounted to
19.5GW
1
, while its total installed heat capacity amounted
to 15.6Gcal/h. As at 31December 2020, 77.5% of the
installed electricity capacity was represented by HPPs,
with the remaining 22.5% accounted for by CHPs (which
are predominantly coal-fired) and one solar plant.
The Company produced 82.2TWh
2
of electricity
in 2020, which represented 7.7% of Russia’s total
electricity generation and 39.7% of the Siberian IES’s
total electricity generation for the period.
Hydropower generation
Hydropower generation is the main focus of the
Group’s Power segment. The Group operates five HPPs
3
,
including three of the five largest HPPs in Russia and
of the twenty largest HPPs globally, in each case in
terms of installed electricity capacity. In 2020, the Power
segment’s HPPs produced 69.3TWh of electricity, which
accounted for 84.3% of the total electricity generated by
the Group.
Total electricity production
4
, (TWh)
0
20
40
60
80
100
2018 2019 2020
36.8
21.5
14.9
44.5
19.7
13.6
CHPs
73.2
77.8
82.2
47. 3
22.0
12.9
Yenisey cascade HPPs
6
Angara cascade HPPs
5
Heat generation, (mn Gcal)
0
5
10
15
20
25
30
2018 2019 2020
27. 9
27. 3
26.9
Total electricity output by the Angara cascade HPPs
(Irkutsk, Bratsk and Ust-Ilimsk HPPs) increased by 6.3%
year-on-year to 47.3TWh in 2020, due to increased
water reserves in the reservoirs of the HPPs on the
Angara cascade.
In 2020, Krasnoyarsk HPP’s total power generation
increased by 11.7%, from 19.7TWh in 2019 to 22.0TWh,
mainly due to higher water levels in the Krasnoyarsk
reservoir, in turn caused by high inflow in 2020
compared to the previous year. At the end of 2020,
the level of the Krasnoyarsk reservoir was 236.22 m,
compared to 236.03 m at the end of 2019.
Combined heat and power plants
The Group’s СHPs decreased electricity output in 2020
by 5.1% year-on-year to 12.9TWh, primarily as a result of
higher HPP production on the back of more favourable
hydrological conditions. Heat generation amounted to
26.9million Gcal (down 1.5% year-on-year).
Abakan Solar Power Plant (SPP) generated 5.5GWh in
2020 (down 11.3% year-on-year).
1 Including Onda HPP with installed power capacity of 0.08 GW (located in the European part of Russia, leased to UC RUSAL);
excluding Boguchany HPP with installed power capacity of 3,000 MW (50/50 JV between UC RUSAL and RusHydro).
2 Excluding Onda HPP with installed power capacity of 0.08 GW (located in the European part of Russia, leased to UC RUSAL);
excluding Boguchany HPP (50/50 JV between UC RUSAL and RusHydro).
3 Including Onda HPP.
4 Excluding Onda HPP with installed power capacity of 0.08 GW (located in European part of Russia, leased to UC RUSAL);
excluding Boguchany HPP with installed power capacity of 3,000 MW (50/50 JV of UC RUSAL and RusHydro).
5 Includes Irkutsk, Bratsk, Ust-Ilimsk HPPs.
6 Krasnoyarskaya HPP.
7 Includes Irkutsk, Bratsk, Ust-Ilimsk HPPs.
8 Krasnoyarsk HPP.
9 Excluding Ondskaya HPP with installed power capacity of 0.08 GW (located in European part of Russia, leased to UC RUSAL);
excluding Boguchany HPP with installed power capacity of 3,000 MW (50%/50% JV of UC RUSAL and RusHydro).
46 En+Group Annual Report 2020
Retail
The Company, through its subsidiaries LLC
Irkutskenergosbyt, JSC Volgaenergosbyt and LLC
MAREM+, purchases electricity on the wholesale market
(from both the generating facilities of the Group and
third parties) and then resells it on the retail market to
both industrial consumers that do not have access to
the wholesale market and residential consumers. The
Group is involved in heat and electricity sales directly
to end-users.
In 2007, the Group’s subsidiaries in the Irkutsk and
Nizhny Novgorod Regions were granted the status
of guaranteeing suppliers within these regions. In
accordance with this status, the Group is under an
obligation to conclude an electricity supply contract
with any consumer located within the boundaries of
these operational areas that applies for such a contract.
Electricity transmission and distribution
As at 31December 2020, the Group operated a
transmission and distribution system of approximately
41,000km of high and low voltage lines with an annual
output of approximately 48TWh. Through this system
the Group transmits electricity generated at the Angara
cascade HPPs to wholesale and retail consumers,
including RUSAL’s aluminium smelters. Other generation
facilities of the Group, such as Krasnoyarsk HPP and
Avtozavodskaya CHP, do not use this transmission
network, as they are not located within close
geographical proximity to the network.
Coal production
The Coal segment provides the Group’s CHPs with
a self-sufficient coal resource base and covers the
En+Group’s internal coal demand. A portion of the
coal production is sold to third parties both in Russia
and abroad.
Coal prices in the domestic market are determined
based on the level of competition and demand from
various categories of consumers in the region (energy,
utilities, other industrial enterprises, general population).
Projects
The New Energy modernisation programme
New Energy is a programme aimed at modernising the
power plants of the Angara and Yenisei HPP cascade
with a view to ramping up the energy output from the
same volume of water passing through the hydropower
turbines. Another objective is to reduce the Company’s
environmental footprint by curbing the greenhouse
gas emissions of the Company’s coal-fired power plants.
In 2020, the programme has enabled En+Group to
increase its power output by 1.71TWh.
The programme assumes a large-scale overhaul and
replacement of the core equipment of the Company’s
largest Siberian HPPs, i.e. Krasnoyarsk, Bratsk, Irkutsk
and Ust-Ilimsk HPPs. The programme envisages
modernisation of hydroelectric generation units;
replacement of runners. Increased efficiency will be
provided by the new runners’ improved blades and by
utilising new materials, with an efficiency rate increase
zof up to 8% depending on the runner. Higher safety and
better reliability of the HPPs is another priority of the
modernisation programme, which will mitigate the
risks associated with cavitation and address the HPP
generator wear problem.
The modernisation programme investment is expected
to total RUB 21billion in the period to 2026(around
USD284.3million as of 31December 2020
1
), including
funds already invested in the project (RUB 10 billion as
at 31 December 2020 for the above projects).
The HPP efficiency will match that of the world’s
best performers after the New Energy programme is
completed, providing for better reliability and a higher
quality power supply to our Siberian consumers. On top
of the expected economic improvement, the New Energy
programme will positively impact the environment of the
Siberian regions in which we operate. Hydroelectric
energy is used to partially replace the energy generated
by coal-fired power plants and thus prevent GHG
emissions of 1.98mt of СО
2
e in 2020. The modernised
turbines also incorporate an up-to-date runner design
that prevents turbine oil leakage into water.
Bratsk HPP
(18 generation units)
Ust-Ilimsk HPP
(16 generation units)
Krasnoyarsk HPP
(12generation units)
Irkutsk HPP
(8 generation units)
Projects completed and underway
12of 18 runners replaced
(2007–2017)
6 remaining runners to
be replaced by 2026
4 of 16 runners replaced
(2014–2018)
2of 12runners replaced
(2016–2019)
6 of 12runners to be replaced
by 2025
1 generation unit replaced
in 2020
3 of 8 generation units to
be replaced by 2023
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
47En+Group Annual Report 2020
BUSINESS REVIEW
Power segment review continued
In 2020, the Company launched a new hydroelectric
unit at the Irkutsk HPP and began works on the next
hydroelectric unit replacement. Major works began at the
Krasnoyarsk HPP as well as a project to replace seven of
the plant’s power transformers. The Company completed
a review of all equipment at the Bratsk HPP and hydraulic
power unit wheels were subsequently ordered.
CHP modernisation programme
The Group participated in the state programmes for CHP
modernisation providing us with a guaranteed return on
investment. The Capacity Allocation Contracts (CAC) will
be signed between buyers, market regulator (ATS) and
generating companies of the wholesale market, providing
the key criteria for modernisation, parameters of capacity
supply after the modernisation and return on investment.
Through this programme the Group will improve the
reliability and safety of 1,445MW of its CHP capacity
(32.9% of total CHP capacity). Total expected CAPEX for
CHPs is USD225million
1
(RUB 16.6billion) in 2020–2026.
The current approved generating facilities should be
completed and launched by 2026, with the project’s
internal rate of return at around 14%.
In 2020, the Company signed a contract for the supply
of three new-generation turbo generators with a total
capacity of 450MW to Irkutsk CHP-10in Irkutsk. At the
CHP-6in Bratsk, the main equipment will be replaced by
2022, which will increase the plant’s capacity by 5MW.
Small HPP project
As part of the state programme backed by the CAC
mechanism for renewable projects, En+Group is
implementing the small-scale Segozerskaya HPP
(8.1MW) in Karelia (Russia). Total expected CAPEX
for small HPP construction is approximately
USD19million
1
(RUB 1.4billion).
In 2020, En+Group completed design engineering works
for the small-scale Segozerskaya HPP. In 2021En+Group
plans to launch construction works on the project site.
En+Group has formed a portfolio of projects with a total
installed capacity of about 200MW. Depending on the
results of the project feasibility studies, a decision will be
made on when these projects will be implemented.
1 Source: www.autostat.ru/news/47243/
Electric vehicle charging stations in Irkutsk
En+Group installed three pilot charging stations for
electric vehicles in the Irkutsk Region. This initiative to
support the growth of clean energy vehicle use is fully
aligned with the Group’s strategic focus on climate action.
Stations were launched in December 2020 in Irkutsk
and in the village of Listvyanka on the shore of Lake
Baikal. In the initial stage, En+installed electric filling
stations for “fast” charging of electric vehicles using
CHAdeMO and CCS Combo (Type 2) connectors at
DC with power of 50kW. Fast charging makes it
possible reach 80% battery capacity within 20minutes.
Further development of the network of “fast” chargers
in Irkutsk and the Irkutsk Region will be subject to the
continued growth of the local EV market. The region
has seen a significant increase in EV use over the past
3years. According to Autostat
1
number of EVs in Russia
increased by 71% in 2020 compared to 2019 with more
than 60% of EV owners located in Siberia and Far East
of Russia.
In the medium term, En+plans to install “fast” chargers
along motorways heading to Baikalsk, Khuzhir and the
Olkhonsky district. In 2021, the Group plans to launch
five new stations.
“ As a responsible corporate citizen, En+’s primary
aim for this project is to help improve air quality in
our local communities. Our hope is that with the
launch of these charging complexes, the number
of electric vehicles used in the Irkutsk Region will
continue to grow, helping to reduce local pollution
and the region’s overall contribution to climate
change. En+is ready to expand the network of
stations in response to demand.”
Mikhail Khardikov
48 En+Group Annual Report 2020
Assets overview
Location Installed capacity 2020 production 2019 production
Hydropower plants
Irkutsk HPP Russia (Irkutsk Region) 662.4 MW 4.1TWh 4.1TWh
Bratsk HPP Russia (Irkutsk Region) 4,500 MW 22.4TWh 21.1TWh
Ust-Ilimsk HPP Russia (Irkutsk Region) 3,840 MW 20.8TWh 19.3TWh
Krasnoyarsk HPP Russia (Krasnoyarsk Territory) 6,000 MW 22.0TWh 19.7TWh
Combined heat and power plants
CHP-10 Russia (Irkutsk Region)
Electricity 1,110 MW 3.1TWh 3.8TWh
Heat 563 Gcal/h 0.4 mn Gcal 0.4 mn Gcal
CHP-9 Russia (Irkutsk Region)
Electricity 614.8 MW 1.9TWh 2.1TWh
Heat 3,198.9 Gcal/h 6.0 mn Gcal 6.1mn Gcal
Novo-Irkutsk CHP Russia (Irkutsk Region)
Electricity 726 MW 2.7TWh 2.6TWh
Heat 2,075.8 Gcal/h 5.5 mn Gcal 5.6 mn Gcal
Ust-Ilimsk CHP Russia (Irkutsk Region)
Electricity 515 MW 0.7TWh 0.9TWh
Heat 1,015.0 Gcal/h 1.6 mn Gcal 1.6 mn Gcal
CHP-11 Russia (Irkutsk Region)
Electricity 320.3 MW 0.7TWh 0.6TWh
Heat 1,056.9 Gcal/h 0.9 mn Gcal 1.0 mn Gcal
CHP-6 Russia (Irkutsk Region)
Electricity 282MW 0.7TWh 0.7TWh
Heat 2,071.2Gcal/h 3.6 mn Gcal 3.5 mn Gcal
Novo-Ziminskaya CHP Russia (Irkutsk Region)
Electricity 260 MW 1.1TWh 1.0TWh
Heat 818.7 Gcal/h 1.5 mn Gcal 1.5 mn Gcal
Avtozavodskaya CHP Russia (Nizhny Novgorod Region)
Electricity 505 MW 1.7TWh 1.6TWh
Heat 2,226.0 Gcal/h 3.3 mn Gcal 3.3 mn Gcal
Solar power plant
Abakan solar power plant Russia (Republic of Khakassia) 5.2MW 5.5 mn kWh 6.2mn kWh
Other assets
1
Electricity 142.4 MW 0.8TWh 0.6TWh
Heat 2,768.6 Gcal/h 4.2mn Gcal 4.3 mn Gcal
1 Other assets include Onda HPP and small scale generators and heat producers.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
49En+Group Annual Report 2020
FINANCIAL REVIEW
Dear shareholders,
Despite challenges caused by the
COVID-19 pandemic in 2020, En+Group
continued to make solid progress and
delivered sustainable operational
performance, which translated into
a robust financial performance.
While our first priority was to keep
our people safe and ensure business
continuity, we also continued to make
strategic and commercial progress,
increasing sales volumes of value-
added products, improving cost
efficiency and progressing our
ambitious decarbonisation strategy.
Against a backdrop of lower aluminium
prices and foreign exchange headwinds,
adjusted EBITDA was USD1.9 billion,
supported by stable aluminium output
from the Metals segment and increased
output from the Power segment. The
Group’s EBITDA margin remained
strong at 18.0%, reflecting effective
cost management, supported by the
positive impact of rouble depreciation
on production costs.
Lower sales volumes of primary
aluminium and alloys y-o-y reflected
that in 2019 we disposed of inventory
accumulated during 2018 due to OFAC
sanctions. Sales of VAPs increased
11.3% y-o-y and reached 44% of total
aluminium and alloys sales. The Power
segment was primarily affected by
rouble depreciation.
We ended 2020 with a strong balance
sheet. Our net debt at 31 December
2020 decreased by 3.7% y-o-y to
USD9,826 million. Net debt attributable
to the Metals segment decreased by
14.0% y-o-y due to continued cost
and structure optimisation of the debt
portfolio. Net debt attributable to the
Power segment increased by 14.0%
y-o-y reflecting new loan agreements
with Sberbank. In 2020, interest rates
declined globally and there was a fall
in the Central Bank of Russia’s key
rate. This translated into lower interest
rates applied to our credit portfolio,
especially in the Power segment
where all debt is rouble denominated
and the majority is on a floating base.
USD 10 bn
Revenue
18%
Adj. EBITDA margin
Strong financial
performance
While our priorities for the year were to keep
people safe, we also made progress with VAPs
sales increase, effective cost management and
investment in operational efficiency
“ In 2020, our vertically integrated business
model allowed us to deliver a healthy financial
and operational performance.”
Mikhail Khardikov,
Deputy CEO – Chief Financial Officer
50 En+Group Annual Report 2020
Key highlights
The following table provides selected data from the Group’s key financial information:
As at or year ended
31December
2020 2019
(USDmn)
Revenues 10,356 11,752
Gross profit 2,548 2,879
Gross profit margin 24.6% 24.5%
Results from operating activities (EBIT) 1,010 976
Operating profit margin 9.8% 8.3%
Pre-tax profit 1,125 1,580
Profit for the year 1,016 1,304
Net profit margin
1
9.8% 11.1%
Adjusted EBITDA
2
1,861 2,127
Adjusted EBITDA margin
3
18.0% 18.1%
Net debt
4
9,826 10,204
Net working capital
5
1,614 2,042
Free cash flow
6
968 1,614
Basic earnings per share
7
1.320 1.356
Equity attributable to shareholders of the Company 3,156 4,330
Notes:
1 Net profit margin for any period represents net profit or loss for the relevant period divided by total revenues for the relevant period
and expressed as a percentage, in each case attributable to the Group, Power segment or Metals segment, as the case may be.
2 Adjusted EBITDA for any period represents the results from operating activities adjusted for amortisation and depreciation, impairment
of non current assets and gain/loss on disposal of property, plant and equipment for the relevant period, in each case attributable to the
Group, Power segment or Metals segment, as the case may be.
3 Adjusted EBITDA margin for any period represents adjusted EBITDA for the relevant period divided by total revenues for the relevant period
and expressed as a percentage, in each case attributable to the Group, Power segment or Metals segment, as the case may be.
4 Net debt represents the sum of loans and borrowings and bonds outstanding less total cash and cash equivalents as at the end of the relevant
period, in each case attributable to the Group, Power segment or Metals segment, as the case may be.
5 Net working capital represents inventories plus short term trade and other receivables (excluding dividend receivables from related parties)
less trade and other payables as at the end of the relevant period, in each case attributable to the Group, Power segment or Metals segment,
as the case may be.
6 Free cash flow means, for any period, the cash flows generated from operating activities less net interest paid, capital expenditures, restructuring
fees and other payments related to issuance of shares, adjusted for payments from settlement of derivative instruments plus dividends from
associates and joint ventures.
7 The earnings per share calculation is based on a weighted average number of shares of 518 million and 634 million in 2020 and 2019, respectively.
We generated USD968 million
of free cash flow, which included
dividends received from Norilsk
Nickel, following lower cash flow
from operating activities and higher
capital expenditure for En+.
The Group’s capital expenditure
increased 6.3% y-o-y and amounted
to USD1,128 million, as we continued
to invest in enhancing operational
efficiency as set out below.
As a part of our “New Energy”
programme, we launched a new
hydroelectric unit at the Irkutsk HPP
and works on the next hydroelectric
unit replacement and we continued
works at the Krasnoyarsk and Bratsk
HPPs. We also launched a range
of modernisation projects at our
CHPs aimed at improving reliability,
productivity and safety of our assets
as well as our environmental footprint.
The Metals segment continued its
investment in key development
projects. Core projects include the
Taishet aluminium smelter and the
Taishet anode plant. The Taishet
aluminium smelter is expected to
produce its first metal in 2021.
Furthermore, at the beginning of 2021
we launched the Ozernaya substation,
which will provide the Taishet aluminium
smelter with clean hydropower.
In 2020, our vertically integrated
business model allowed us to deliver
a healthy financial and operational
performance. While the global economy
is still experiencing the impact of the
COVID-19 pandemic, we face the future
with increasing confidence.
Mikhail Khardikov,
Deputy CEO – Chief Financial Officer
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
51En+Group Annual Report 2020
The results of the Group’s operations are divided into
the Power and Metals segments. The Power segment
comprises the power industry, including power
generation, power trading and supply. It also includes
supporting operations engaged in the supply of coal
resources to the Group. The Metals segment consists
of RUSAL, which includes RUSAL’s equity investment
in Norilsk Nickel.
RUSAL is one of the leaders of the global aluminium
industry. In 2020, the Company accounted for around
5.8% of global production of aluminium and 6.5% of
alumina production.
The Company’s management believes that the division of
the results of the Group’s operations into the Power and
Metals segments enables investors and analysts to best
assess the parts of the Group’s business.
In its comparison of period to period results of
operations, the Group presents its results of operations
on a consolidated basis after intersegmental eliminations,
in order to analyse changes, developments and trends
by reference to the individual segment’s results of
operations (Power and Metals segments). Amounts
attributable to the segments are presented prior to
intersegmental eliminations between them.
Revenues
The following table provides the Group’s revenue from
sales, analysed by each product sold by the Group, for
the years indicated:
Year ended 31December
(USDmn) 2020 2019
Sales of primary aluminium
and alloys 6,969 7,906
Sales of electricity 1,169 1,300
Sales of alumina and bauxite 534 668
Sales of semi finished products
and foil
547 563
Sales of heat 426 462
Other revenues 711 853
Total revenues 10,356 11,752
The following table provides the Group’s revenue
by business segment for the years indicated:
Year ended 31December
(USDmn) 2020 2019
Metals segment 8,566 9,711
Power segment 2,697 2,989
Business segment revenues 11,263 12,700
Elimination of intersegmental
revenues
(907) (948)
Total revenues 10,356 11,752
The Group’s revenue is mainly attributable to the
Metals segment’s operations. In 2020 and 2019, its
revenue (before intersegmental elimination) accounted
for 76.1% and 76.5% of the Group’s revenue, respectively.
In 2020 and 2019, the Power segment’s revenue (before
intersegmental elimination) accounted for 23.9% and
23.5% of the Group’s revenue, respectively.
The Group’s revenue decreased by USD1,396 million,
or 11.9%, from USD11,752million in 2019 to USD10,356
million in 2020. This decrease was primarily due to a fall
in the Metals segment’s revenue, following a 5.0%
decrease in the LME aluminium price to an average of
USD1,702per tonne in 2020, from USD1,792per tonne
in 2019 and a 6.0% decline in the sales volumes of
primary aluminium and alloys given normalised levels of
inventories of primary aluminium in 2020. The Group’s
revenue was also affected by a decrease in the Power
segment’s revenue, mainly following the depreciation
of the rouble.
Cost of sales
The following table provides the Group’s cost of sales
by business segment for the years indicated:
Year ended 31December
(USDmn) 2020 2019
Metals segment 7,112 8,113
Power segment 1,582 1,736
Business segment cost of sales 8,694 9,849
Elimination of intersegmental
cost of sales
(886) (976)
Total cost of sales 7,808 8,873
The cost of sales in the Power and Metals segments
reflects costs incurred directly by the sale and production
of the principal products and services of each of those
business segments. For the Power segment, the cost of
sales primarily includes costs for electricity and capacity
purchased for resale, the cost of raw materials, fuel,
personnel expenses, depreciation and amortisation. For
the Metals segment, the cost of sales mainly consists of
the cost of energy, alumina, bauxite, other raw materials,
personnel expenses, depreciation and amortisation.
Financial overview
FINANCIAL REVIEW
52
En+Group Annual Report 2020
The Group’s cost of sales decreased by
USD1,065 million, or 12.0%, from USD8,873 million
in 2019 to USD7,808million in 2020.
The decrease was primarily attributable to the decrease
in the Metals segment’s cost of sales by USD1,001 million,
or by 12.3%, to USD7,112 million for the year ended
31December 2020, as compared to USD8,113 million for
the year ended 31 December 2019. The decrease was
primarily driven by a 6.0% fall in the volume of primarily
aluminium sales and the depreciation of the rouble
against US dollar between the comparable periods.
Gross profit
The Group’s gross profit for 2020 decreased by
USD331million, or 11.5%, to USD2,548 million from
USD2,879 million in 2019.
The Group’s gross profit margin increased from
24.5% in 2019 to 24.6% in 2020.
Distribution, general and administrative expenses
The Group’s distribution, general and administrative
expenses for 2020 decreased by USD151million, or
10.3%, to USD1,320 million from USD1,471million in
2019 following rouble depreciation.
Adjusted EBITDA, adjusted EBITDA margin
and results from operating activities
The following table provides a reconciliation of the
Group’s adjusted EBITDA to the Group’s results from
operating activities for the periods indicated:
Year ended 31December
(USDmn) 2020 2019
Reconciliation of adjusted
EBITDA
Results from operating activities 1,010 976
Add:
Amortisation and depreciation 781 806
Loss on disposal of property,
plant and equipment
12 24
Impairment of non current assets 58 321
Adjusted EBITDA 1,861 2,127
The Group’s results from operating activities for 2020
increased by USD34 million, or 3.5%, to USD1,010 million
from USD976 million for 2019.
Results from operating activities attributable to the
Metals segment increased by USD192million, or 220.7%,
from USD87 million in 2019 to USD279 million in 2020;
results from operating activities attributable to the Power
segment decreased by USD124 million, or 14.5%, from
USD855 million in 2019, to USD731million in 2020, as
disclosed below.
The Group’s operating profit margin increased from
8.3% in 2019 to 9.8% in 2020.
Adjusted EBITDA is defined as results from operating
activities adjusted for amortisation and depreciation,
impairment charges and loss on disposal of property,
plant and equipment.
The following table provides the Group’s
adjusted EBITDA and adjusted EBITDA margin
by segment (before intersegmental elimination)
for the years indicated:
Year ended 31December
(USDmn, except %) 2020 2019
Adjusted EBITDA
Metals segment
871 966
Adjusted EBITDA
Power segment
993 1,127
Consolidation adjustment (3) 34
Adjusted EBITDA 1,861 2,127
Adjusted EBITDA margin
Metals segment
10.2% 9.9%
Adjusted EBITDA margin
Power segment
36.8% 37.7%
Adjusted EBITDA margin Group 18.0% 18.1%
In 2020, the Group’s adjusted EBITDA decreased by
USD266 million, or 12.5%, to USD1,861million from
USD2,127 million in 2019. The decrease in 2020 as
compared to 2019 was mainly due to the same factors
that influenced the operating results of the Group.
Share of profits of associates and joint ventures
Year ended 31December
(USDmn, %) 2020 2019
Share of profit in Norilsk Nickel 930 1,587
Effective shareholding of 15.82% 15.82%
Share of profit in BEMO project 51 49
Effective shareholding of 28.44% 28.44%
Share of profit in other
associates/joint ventures
(10) 33
Share of profits of associates
and joint ventures
971 1,669
The Group has a number of associates and joint ventures,
which are accounted for in the Financial Statements
under the equity method (see Note 13 to the Annual
Financial Statements). The principal associates and joint
ventures include Norilsk Nickel, Queensland Alumina
Limited and the BEMO project.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
53En+Group Annual Report 2020
The Group’s share of the profits of its associates and joint
ventures decreased by USD698 million, or 41.8%, to
USD971million in 2020 from USD1,669 million in 2019.
The change in the share of the profits of the associates
and joint ventures in 2020 as compared to 2019 can
primarily be attributed to the decrease in profit from the
Group’s investment in Norilsk Nickel. In 2020, Norilsk
Nickel recognised an environmental provision in the
amount of USD2.2 billion due to liquidation of diesel
fuel leak at the industrial site of HPP-3 in Norilsk and
compensation of environmental damages that resulted
in a decrease in its EBITDA in 2020.
The market value of the investment amounted to
USD14,123 million and USD13,586 million as at
31December 2020 and 31December 2019, respectively,
and is determined by multiplying the quoted bid price
per share on the Moscow Exchange on the year-end
date by the number of shares held by the Group.
Finance income and costs
The Group’s finance income primarily consists of interest
income and net foreign exchange gain. The Group’s
finance costs primarily consist of interest expense on
interest bearing liabilities and net foreign exchange loss.
Year ended 31December
(USDmn) 2020 2019
Finance income
Net foreign exchange gain 98 —
Interest income 61 82
Dividend income 1 1
Total finance income 160 83
Finance costs
Interest expense (788) (987)
Net foreign exchange loss — (114)
Change in fair value of derivative
financial instruments
(226) (21)
Other finance costs (2) (26)
Total finance costs (1,016) (1,148)
The Group’s finance income for 2020 increased by
USD77 million, or 92.8%, to USD160 million from
USD83 million in 2019, mainly as a result of foreign
exchange gains.
The Group’s finance costs for 2020 decreased by
USD132 million, or 11.5%, from USD1,148 million in 2019
to USD1,016 million in 2020 as a result of a decrease in
interest expense (USD788 million in 2020 compared
to USD987 million in 2019) and result of foreign
exchange losses.
Profit before taxation
For the reasons described above, the Group recorded
a profit before taxation of USD1,125 million in 2020 as
compared to USD1,580 million in 2019. In 2020, the
Power segment generated a profit before taxation
of USD409 million compared to USD492million
in 2019. In 2020, the Metals segment generated a
profit before taxation of USD716 million as compared
to USD1,054million in 2019.
Income tax expense
The Group’s income tax expense for 2020 decreased
by USD167 million, or 60.5%, to USD109 million from
USD276 million in 2019, as a result of the lower profit
before taxation in 2020 as compared to 2019. The
current tax expense decreased by USD146 million,
or 39.6%, during this period, primarily due to a
decrease in taxable profit. Deferred tax increased by
USD21million from USD93 million in 2019, to a tax
benefit of USD114million in 2020, primarily due to the
recognition of deferred tax assets related to tax losses
incurred by various Group companies.
Profit for the year
For the reasons described above, the Group’s profit for
the year ended 31December 2020 was USD1,016 million,
as compared to profit for the year ended 31December
2019 of USD1,304 million.
Financial overview continued
FINANCIAL REVIEW
54
En+Group Annual Report 2020
In 2020 and 2019, the Metals segment accounted for
76.1% and 76.5% of the business segments’ revenues
(before adjustments), respectively. As at 31December
2020 and 31December 2019, the assets of the Metals
segment accounted for 62.2% and 60.8% of the Group’s
total assets (before adjustments), respectively.
Selected financial data
The following table provides selected data of Metals
segment (before intersegmental elimination) for the
periods indicated:
Year ended 31December
(USDmn) 2020 2019
Revenues 8,566 9,711
Gross profit 1,454 1,598
Gross profit margin 17.0% 16.5%
Pre-tax profit 716 1,054
Profit for the period 759 960
Net profit margin 8.9% 9,9%
Adjusted EBITDA 871 966
Adjusted EBITDA margin 10.2% 9.9%
Adjusted net (loss)/profit
1
60 (270)
Recurring net profit
2
990 1,273
Recurring net profit margin
3
11.6% 13.1%
Revenues
The following table provides components of the Metals
segment’s sales data (before intersegmental elimination)
for the years indicated:
Year ended 31December
2020 2019
Sales of primary aluminium
and alloys
Revenue, USDmn 7,088 8,019
Sales volumes, kt 3,926 4,176
Average sales price (USD/t) 1,805 1,920
Sales of primary alumina
Revenue, USDmn 533 664
Sales volumes, kt 1,729 1,753
Average sales price (USD/t) 308 379
Sales of foil and other aluminium
products, USDmn
381 410
Other revenue, USDmn 564 618
Total revenues 8,566 9,711
The Metals segment’s revenue decreased in 2020 by
USD1,145 million, or by 11.8%, to USD8,566 million from
USD9,711million in 2019, following a 5.0% decrease in the
average LME aluminium price.
1 Adjusted net (loss)/profit for any period represents net (loss)/profit for the relevant period adjusted for the net effect from the share in the
results of Norilsk Nickel, the net effect of embedded derivative financial instruments and the net effect of non current assets impairment.
2 Recurring net profit represents adjusted net (loss)/profit for the relevant period plus RUSAL’s effective share of Norilsk Nickel’s profits, net of tax.
3 Recurring net profit margin represents recurring net profit for the relevant period divided by total revenues, expressed as a percentage for the
relevant period attributable to the Metals segment.
Revenue from sales of primary aluminium and
alloys decreased by USD931million, or by 11.6%, to
USD7,088million in 2020, as compared to USD8,019
million in 2019, primarily due to a 6.0% decrease in the
weighted average realised aluminium price per tonne
(to an average of USD1,805 per tonne in 2020 from
USD1,920per tonne in 2019) driven by a decrease in
the LME aluminium price (to an average of USD1,702
per tonne in 2020 from USD1,792per tonne in 2019),
as well as 6.0% lower sales volumes.
Revenue from sales of alumina decreased by 19.7% to
USD533 million for the year ended 31December 2020
from USD664 million for the year ended 31December
2019, due a decrease in the average sales price of 18.7%,
together with a decrease in sales volumes of 1.4%.
Revenue from sales of foil and other aluminium products
decreased by USD29 million, or by 7.1%, to USD381million
in 2020, as compared to USD410 million in 2019, primarily
due to a decrease in sales of aluminium wheels between
the comparable periods.
Revenue from other sales, including sales of other
products, bauxite and energy services decreased by
8.7% to USD564 million for the year ended 31December
2020 as compared to USD618 million for the previous
year, due to a 9.4% decrease in sales of other materials
(such as silicon by 39.1%, soda by 26.3%, and aluminium
powder by 11.9%).
Cost of sales
The following table provides components of the
Metals segment’s cost of sales (before intersegmental
elimination) for the years indicated:
Year ended 31December
(USDmn) 2020 2019
Cost of alumina 608 764
Cost of bauxite 447 483
Cost of other raw materials
and other costs
2,298 2,515
Purchases of primary aluminium
from joint ventures
465 454
Energy costs 1,868 2,054
Depreciation and amortisation 542 549
Personnel expenses 512 499
Repair and maintenance 381 358
Net change in provisions
for inventories
(2) (16)
Change in finished goods (7) 453
Total cost of sales 7,112 8,113
Metals segment
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
55En+Group Annual Report 2020
The Metals segment’s cost of sales decreased by
USD1,001 million, or by 12.3%, to USD7,112 million for
the year ended 31 December 2020, as compared to
USD8,113million for the year ended 31 December 2019.
The decrease was primarily driven by a 6.0% fall in the
volume of primarily aluminium sales and the depreciation
of the rouble against the US dollar between the
comparable periods.
The cost of alumina decreased by USD156 million, or
by 20.4%, to USD608 million in 2020 as compared to
USD764 million in 2019, primarily due to a decrease in
the alumina purchase price of 12.1% between the periods.
The cost of bauxite decreased by USD36 million, or
by 7.5%, to USD447 million in 2020 as compared to
USD483 million in 2019.
The cost of raw materials (other than alumina and
bauxite) and other costs decreased by 8.6% for the year
ended 31 December 2020 compared to the same period
in 2019, due to a decrease in the raw materials purchase
price (prices for the raw petroleum coke decreased by
25.9%, calcined petroleum coke by 18.4%, pitch by
26.4%, and caustic soda by 17.6%).
Energy costs decreased by USD186 million, or by 9.1%,
to USD1,868 million for the year ended 31 December
2020, as compared to USD2,054 million for the year
ended 31 December 2019, due to depreciation of the
Russian rouble against the US dollar and a decrease in
the average electricity prices between the same periods.
Finished goods consist mainly of primary aluminium and
alloys (approx. 94%). The dynamic of change between
the reporting periods was driven by fluctuations in the
physical inventory of primary aluminium and alloys
between the reporting dates: a 2.6% increase in 2020
and a 38.0% decrease in 2019.
Adjusted EBITDA and adjusted EBITDA margin
In 2020, the Metals segment’s adjusted EBITDA (before
intersegmental elimination) decreased by USD95 million,
or 9.8%, to USD871million from USD966 million in 2019.
The factors that contributed to the decrease in adjusted
EBITDA margin were the same ones that influenced the
operating results.
The following table provides a reconciliation of the
Metals segment’s adjusted EBITDA to its results from
operating activities for the periods indicated:
Year ended 31December
(USDmn) 2020 2019
Reconciliation of adjusted
EBITDA
Results from operating activities 279 87
Add:
Amortisation and depreciation 570 566
Loss on disposal of property,
plant and equipment
13 22
Impairment of non current assets 9 291
Adjusted EBITDA 871 966
The following table provides a reconciliation of the
Metals segment’s adjusted net profit and recurring
net profit to its net profit for the periods indicated:
Year ended 31December
(USDmn) 2020 2019
Reconciliation of adjusted net
(loss)/profit
Net profit for the period 759 960
Adjusted for:
Share of profits and other gains
and losses attributable to Norilsk
Nickel, net of tax effect
(930) (1,543)
Change in the fair value of
derivative financial liabilities,
net of tax (20%)
222 22
Impairment of non current assets,
net of tax
9 291
Adjusted net (loss)/profit 60 (270)
Add back:
Share of profits of Norilsk Nickel,
net of tax
930 1,543
Recurring net profit 990 1,273
Adjusted net (loss)/profit for any period is defined as the
net (loss)/profit adjusted for the net effect of the Metals
segment’s investment in Norilsk Nickel, the net effect of
derivative financial instruments and the net effect of
non-current assets impairment. Recurring net profit for
any period is defined as adjusted net (loss)/profit plus the
Company’s net effective share in Norilsk Nickel’s results.
Metals segment continued
FINANCIAL REVIEW
56
En+Group Annual Report 2020
The Power segment is engaged in all aspects of the
power industry, including power generation, power
trading and supply, as well as supporting operations
engaged in the supply of coal resources to the Group.
In 2020 and 2019, the Power segment accounted for
23.9% and 23.5% of the business segments’ revenues
(before adjustments), respectively. As at 31December
2020 and 31December 2019, the assets of the Power
segment accounted for 37.8% and 39.2% of the Group’s
total assets (before adjustments), respectively.
Selected financial data
The following table provides selected data of the Power
segment (before intersegmental elimination) for the
periods indicated:
Year ended 31December
(USDmn) 2020 2019
Revenues 2,697 2,989
Gross profit 1,115 1,253
Gross profit margin 41.3% 41.9%
Results from operating
activities (EBIT)
731 855
Operating profit margin 27.1% 28.6%
Pre-tax profit 409 492
Profit for the period 257 311
Net profit margin 9.5% 10.4%
Adjusted EBITDA 993 1,127
Adjusted EBITDA margin 36.8% 37.7%
Revenues
The following table provides components of the Power
segment’s sales data (before intersegmental elimination)
for the years indicated:
Year ended 31December
(USDmn) 2020 2019
Average RUB/USDexchange rate 72,14 64,74
Sales of electricity
Revenue, USDmn 1,262 1,376
Sales volumes,TWh 97. 8 93.6
Average sales price (RUB/MWh) 931 952
Sales of capacity
Revenue, USDmn 434 487
Sales volumes, GW/year 178.5 170.4
Average sales price
(‘000 RUB/MW)
175 185
Sales of heat
Revenue, USDmn 393 425
Sales volumes, mn Gcal 23.4 23.8
Average sales price (RUB/Gcal) 1,209 1,156
Sales of semi finished
products, USDmn
180 180
Other revenues, USDmn 428 521
Total, USDmn 2,697 2,989
The Power segment’s revenue decreased by
USD292million, or 9.8%, to USD2,697 million in 2020
from USD2,989 million in 2019, mainly reflecting the
depreciation of the Russian rouble in 2020 compared to
2019 (the average RUB/USDexchange rate rose 11.4%)
and a 2.2% decrease in the average electricity sales price.
Revenue from electricity sales decreased by 8.3%
year-on-year to USD1,262million in 2020. The decrease
was mainly driven by the depreciation of the Russian
rouble in 2020 and lower electricity sales prices
compared to 2019. This was partially offset by a
4.5% increase in electricity sales volumes.
Power segment
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
57En+Group Annual Report 2020
Capacity sales decreased by 10.9% year-on-year to
USD434 million in 2020. The decrease was mainly
driven by the depreciation of the Russian rouble in
2020 and lower сapacity sales prices compared to 2019.
This was partially offset by a 4.8% increase in сapacity
sales volumes.
Heat sales decreased by 7.5% year-on-year to
USD393 million in 2020.
The Power segment’s electricity generation increased
from 77.8TWh in 2019 to 82.2TWh in 2020. In 2019,
HPPs generated 64.2TWh of electricity, or 82.5% of the
total electricity generated by the Power segment, while
in 2020 they generated 69.3TWh of electricity, or 84.3%
of the total electricity generated by the Power segment.
The increase in HPP generation can be primarily
explained by increased water reserves.
Cost of sales
The following table provides components of the
Power segment’s cost of sales (before intersegmental
elimination) for the years indicated:
Year ended 31December
(USDmn) 2020 2019
Electricity and capacity 361 399
Personnel expenses 319 334
Depreciation, depletion
and amortisation
206 234
Cost of raw materials and fuel 227 271
Aluminium 117 111
Electricity transmission costs 141 158
Other 211 229
Total cost of sales 1,582 1,736
The Power segment’s cost of sales decreased by
USD154 million, or by 8.9%, to USD1,582million for
the year ended 31December 2020, as compared to
USD1,736 million for the year ended 31December 2019.
Adjusted EBITDA and adjusted EBITDA margin
The following table provides the Power segment’s
adjusted EBITDA and adjusted EBITDA margin for
the years indicated:
Year ended 31December
(USDmn) 2020 2019
Adjusted EBITDA (HPPs) 914 978
Adjusted EBITDA (CHPs) 30 66
Adjusted EBITDA (Coal) 30 38
Adjusted EBITDA (Other
and unallocated)
19 45
Adjusted EBITDA
(Power segment)
993 1,127
Adjusted EBITDA margin
(Power segment)
36.8% 37.7%
Adjusted EBITDA margin (HPPs) 84.8% 86.0%
Adjusted EBITDA margin (CHPs) 4.4% 8.6%
Adjusted EBITDA margin (Coal) 12.8% 12.9%
In 2020, the Power segment’s adjusted EBITDA
(before intersegmental elimination) decreased by
USD134million, or 11.9%, to USD993 million, from
USD1,127 million in 2019. The decline was driven by
a decrease in average electricity spot prices and the
depreciation of the Russian rouble, but was partially
offset by the increase in electricity generation volumes.
As power operations account for a sizeable portion of the
revenues, assets and liabilities attributable to the Power
segment, and are, therefore, a predominant contributor
to the adjusted EBITDA of the Power segment, the
low-cost operation of HPPs will positively affect the
overall adjusted EBITDA of the Power segment. HPPs
accounted for 92.1% and 86.8% of the Power segment’s
adjusted EBITDA in 2020 and 2019 respectively.
The following table provides a reconciliation of the Power
segment’s adjusted EBITDA to the Power segment’s
results from operating activities for the periods indicated:
Year ended 31December
(USDmn) 2020 2019
Reconciliation of adjusted
EBITDA
Results from operating activities 731 855
Add:
Amortisation and depreciation 214 240
Loss/(gain) on disposal of
property, plant and equipment
(1) 2
Impairment of non current assets 49 30
Adjusted EBITDA 993 1,127
FINANCIAL REVIEW
Power segment continued
58 En+Group Annual Report 2020
Net assets
Year ended 31December
(USDmn) 2020 2019
Group
Non-current assets 16,062 16,813
Current assets 6,599 7,218
Non-current liabilities (12,021) (13,185)
Current liabilities (4,575) (3,474)
Net assets 6,065 7,372
RUSAL
Non-current assets 11,501 11,546
Current assets 5,877 6,268
Non-current liabilities (8,044) (8,677)
Current liabilities (2,791) (2,390)
Net assets 6,543 6,747
Power segment
Non-current assets 9,667 10,371
Current assets 903 1,138
Non-current liabilities (3,981) (4,556)
Current liabilities (1,955) (1,213)
Net assets 4,634 5,740
In 2020, the Group’s net assets decreased by
USD1,307million to USD6,065 million as at
31December 2020, from USD7,372million as
at 31December 2019.
In 2020, the Metals segment’s net assets decreased
by USD204 million, or by 3.0%, to USD6,543 million
as at 31December 2020, from USD6,747 million as
at 31December 2019. This was mainly caused by a
decrease in total assets, driven primarily by a decrease in
interests in associates and joint ventures and receivables.
In 2020, the Power segment’s net assets as at
31December 2020 decreased by USD1,106 million, or by
19.3%, to USD4,634 million, from USD5,740 million as at
31 December 2019 mainly due to the acquisition of VTB
Group’s 21.37% stake in En+Group for USD1,579 million.
Net working capital
Net working capital is defined as inventories plus
short-term trade and other receivables (excluding
dividend receivables), less trade and other payables.
The following table provides the calculation of the net
working capital of the Group, Power segment and the
Metals segment as at the dates indicated:
As at 31December
(USDmn) 2020 2019
Group
Inventories 2,339 2,542
Short term trade and
other receivables
1,431 2,082
Dividends receivable — (430)
Trade and other payables (2,156) (2,152)
Net working capital 1,614 2,042
Metals segment
Inventories 2,292 2,460
Short term trade and
other receivables
1,163 1,781
Dividends receivable — (430)
Trade and other payables (1,836) (1,770)
Net working capital 1,619 2,041
Power segment
Inventories 113 138
Short term trade and
other receivables
333 383
Trade and other payables (491) (511)
Net working capital (45) 10
As at 31December 2020, the Group’s net working
capital amounted to USD1,614 million, compared to
USD2,042million as at 31December 2019.
The decrease in inventories (by USD203 million
from USD2,542million as at 31December 2019 to
USD2,339million as at 31December 2020) was driven
by a decrease in alumina, bauxite and WIP (raw materials
cost impact).
Trade and other receivables, net of dividends receivable,
decreased by USD221million from USD1,652million
as at 31December 2019 to USD1,431million as at
31December 2020. The decline was driven by a
decrease in aluminium sales. Trade and other payables
remained flat from 2019.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
59En+Group Annual Report 2020
Liquidity and
capital resources
General
In 2020, the Group’s liquidity requirements primarily
related to funding working capital, capital expenditures
and debt service. The Group used a variety of internal
and external sources to finance operations. During the
periods under review, short and long term funding
sources predominantly included rouble and foreign
currency denominated secured and unsecured loans
from Russian and international banks, as well as debt
instruments issued in both the Russian and international
capital markets.
Liquidity was managed separately in both segments
– Power and Metals.
Dividends
During the year ended 31December 2020 the Group
did not declare or pay dividends.
Cash flows
The following table provides the Group’s selected cash
flow data for the periods indicated:
Year ended 31December
(USDmn) 2020 2019
Cash flows from
operating activities
1,890 2,561
Cash flows from/(used in)
investing activities
(77) 92
Cash flows used in
financing activities
(1,372) (1,588)
Net change in cash and
cash equivalents
441 1,065
Cash and cash equivalents at
the beginning of the period,
excluding restricted cash
2,265 1,140
Effect of exchange rate changes
on cash and cash equivalents
(157) 60
Cash and cash equivalents
at the end of the period,
excluding restricted cash
1
2,549 2,265
Free cash flow 968 1,614
Cash flows from operating activities
The Group’s cash flows from operating activities for 2020
were USD1,890 million, a decrease of USD671million,
or 26.2%, compared to USD2,561million in 2019. This
decrease was primarily due to changes in net working
capital of USD232million in 2020, compared to
USD885million in 2019, apart of EBITDA change.
Cash flows generated from/(used in)
investing activities
The Group’s cash flows from investing activities for 2020
were USD(77) million, and were primarily attributable to
capital expenditures on the acquisition of property, plant
and other investments, which were partially offset by
dividends received from associates and joint ventures
(mainly Norilsk Nickel).
Cash flows used in financing activities
The Group’s cash flows used in financing activities
for 2020 were USD1,372million, a decrease of
USD216million from USD1,588 million in 2019.
This decrease was primarily due to the lower net
repayment of debt and interest repayment driven
by a reduction of the nominal interest rate.
Free cash flow
The following table provides a reconciliation of the free
cash flow to the cash flows from operating activities for
the periods indicated:
Year ended 31December
(USDmn) 2020 2019
Reconciliation of free cash flow
Group
Cash flows generated
from operating activities
1,890 2,561
Adjusted for:
Capital expenditure
(acquisition of property,
plant and equipment and
acquisition of intangible assets)
(1,128) (1,061)
Dividends from associates
and joint ventures
1,170 1,141
Interest received 56 62
Interest paid (779) (1,021)
Restructuring fees and expenses
related to issuance of shares
(26) (42)
Settlement of derivative
financial instruments
(215) (26)
Free cash flow 968 1,614
FINANCIAL REVIEW
1 Restricted cash amounted to USD13 million and USD13 million at 31December 2020 and 31December 2019, respectively.
60 En+Group Annual Report 2020
Year ended 31December
(USDmn) 2020 2019
Reconciliation of free cash flow
Metals segment
Cash flows generated
from operating activities
1,091 1,652
Adjusted for:
Capital expenditure
(acquisition of property,
plant and equipment and
acquisition of intangible assets)
(897) (848)
Dividends from associates
and joint ventures
1,170 1,141
Interest received 26 31
Interest paid (465) (553)
Restructuring fees (12) (33)
Settlement of derivative
financial instruments
(215) (26)
Free cash flow 698 1,364
Reconciliation of free cash flow
Power segment
Cash flows generated
from operating activities
805 932
Adjusted for:
Capital expenditure
(acquisition of property,
plant and equipment and
acquisition of intangible assets)
(237) (236)
Interest received 30 31
Interest paid (314) (468)
Restructuring fees and expenses
related to issuance of shares
(14) (9)
Free cash flow 270 250
Capital expenditure
In 2020 and 2019, the Group’s capital expenditure
(comprising the acquisition of property, plant and
equipment, as well as the acquisition of intangible assets)
was USD1,128 million and USD1,061million, respectively.
The Group’s subsidiaries financed their cash requirements
through a combination of operating cash flows and
borrowings. The table below provides the capital
expenditure (before adjustments) of the Metals and
Power segments for the periods indicated:
Year ended 31December
(USDmn) 2020 2019
Metals segment 897 848
Power segment 237 236
The Metals segment recorded total capital expenditure
of USD897 million for the year ended 31December
2020. Maintenance CAPEX amounted to 56% of the
aggregate CAPEX in 2020. The Metals segment
continued its investment in key development projects
as per its strategic priority of preserving its competitive
advantages of vertical integration into raw materials and
product mix enhancements. Among the core projects
are the Taishet aluminium smelter (25% of total) and
the Taishet anode plant (8% of total).
In 2020, capital expenditure by the Power segment
amounted to USD237 million. Maintenance CAPEX
accounted for 51% of total capital expenditure. The
Power segment continued to invest in technical
connections to its power supply infrastructure
(including a new substation for the Taishet aluminium
smelter) and improve the efficiency of the Group’s
CHPs by continuing the HPP New Energy modernisation
programme, which supported an increase in electricity
generation volumes of 1,712.1 GWh in 2020.
Cash
As at 31December 2020 and 31December 2019, the
Group’s cash and cash equivalents, excluding restricted
cash, were USD2,549 million and USD2,265 million,
respectively. As at 31December 2020 and 31December
2019, the Power segment’s cash and cash equivalents
were USD333 million and USD497 million, respectively.
The Metals segment’s cash and cash equivalents were
USD2,216 million and USD1,768 million, respectively.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
61En+Group Annual Report 2020
Loans and borrowings
The nominal value of the Group’s loans and borrowings was USD9,939 million as at 31December 2020, not including
bonds, which amounted to an additional USD2,438 million.
Set out below is an overview of certain key terms of selected facilities in the Group’s loan portfolio as at 31December 2020:
Facility/lender
Principal amount
outstanding as at
31December 2020 Tenor/repayment schedule Pricing
Metals segment
Syndicated facilities
PXF facility USD1.085 bn Up to USD1.085 bn syndicated aluminium pre-export
finance term facility – until November 2024; equal
quarterly repayments starting from January 2022
3-month LIBOR plus
2.1% p.a.
Bilateral loans
Nordea Bank Abp USD200 mn January 2021, bullet repayment at final maturity date 1-month LIBOR plus
2.4% p.a.
1
Russian Regional
Development Bank
(RRDB)
USD200 mn November 2021, bullet repayment at final
maturity date
2.97% p.a.
Sberbank USD2.1bn
December 2027, quarterly repayments starting
from September 2024
3-month LIBOR plus
3.0% p.a.
RUB 106.4 bn The key rate of the
Bank of Russia plus
1.9% p.a.
Bonds
Eurobond USD512mn February 2022, repayment at final redemption date 5.125% p.a.
Eurobond USD482mn May 2023, repayment at final redemption date 5.3% p.a.
Eurobond USD498 mn February 2023, repayment at final redemption date 4.85% p.a.
RUB bonds RUB 70 bn swapped
into USD, for
equivalent
USD1.1billion (after
cross-currency
swaps)
5 tranches, the last repayment is May 2030,
repayments at final redemption dates, subject
to a bondholders’ put option exercisable within
3.0–3.5 years
2.9%–4.69% p.a.
(after cross-
currency swaps)
Power segment
Sberbank RUB 97.5 bn December 2026, quarterly repayments starting
from September 2020
The key rate of the
Bank of Russia plus
1.5% p.a.
Sberbank and VTB RUB 65.4 bn June 2023, quarterly repayments starting from
September 2019
The key rate of the
Bank of Russia plus
2% p.a. (except for
RUB 2.3 bn tranche
bearing 10.5% p.a.)
Sberbank RUB 100.8 bn December 2022(with the borrower’s unconditional
right to extend to December 2026 – with scheduled
repayments starting from 2023)
The key rate of the
Bank of Russia plus
1.65% p.a.
FINANCIAL REVIEW
1 In January 2021, the facility was refinanced by the sustainability-linked pre-export finance facility for up to USD 200 million,
interest rate 3 month LIBOR + 1.8%, with the possibility to reduce the margin if the sustainability KPIs are fulfilled.
62 En+Group Annual Report 2020
Security
As of 31December 2020, the Metals segment’s debt
(save for several unsecured loans and bonds) is secured,
among others, by the assignment of receivables under
specified contracts, certain pledges of shares of a
number of the Metals segment’s subsidiaries, designated
accounts and shares in Norilsk Nickel (representing a
25% plus 1share of Norilsk Nickel’s total nominal issued
share capital).
As of 31December 2020, the Power segment’s debt
(save for unsecured working capital loans of certain
operating companies from Gazprombank, Sberbank and
other banks) is secured, among others, by pledges of
shares (including 21.37% of En+GROUP IPJSC shares)
and interests in certain operating and non-operating
companies, properties, plant and equipment.
Key events
– In February 2020, the Group entered into two loan
agreements with Sberbank:
Loan 1– three-year RUB 100.8 billion loan agreement to
finance the acquisition of a 21.37% stake in En+Group
from VTB for USD1.6 billion.
Loan 2– loan agreement granting a right to extend the
final maturity of Loan 1for another four years during 2022.
– In August 2020, RUSAL performed the first annual
testing of the sustainability KPIs under PXF and its
verification by an independent auditor. All target levels
for the previous year were achieved or exceeded, and
the margin was subsequently decreased to 2.1%
starting from August 2020.
– In November 2020, RUSAL negotiated new terms
under the bilateral transaction with Sberbank backed
by NN shares. Final maturity was extended from 2024
to 2027, and the interest rate was reduced: on the dollar
tranche from 3m LIBOR+3.75% (with a floor on LIBOR =
1.0%) to 3m LIBOR+3.0% (without a floor on LIBOR)
and on the rouble tranche from 9.15% to the key rate of
the Bank of Russia +1.9%.
– On 28 January 2021, RUSAL signed the sustainability-
linked pre-export finance facility for up to
USD200,000,000. Following the success of the first
Russian sustainability-linked syndicated pre-export
finance facility arranged in 2019 by international and
Russian banks, RUSAL continues to pursue its
ambitious decarbonisation goals. The group of
international banks continues to support the
Company in its aim to develop low-carbon aluminium
technologies and sustainable aluminium production.
The interest rate under the facility is subject to a
sustainability discount or premium depending on
the Company’s fulfilment of the applicable key
performance indicators which will be further agreed
between the parties. The proceeds were used to
refinance more expensive debt.
– In March, RUSAL announced signing and starting the
drawdown of a syndicated loan agreement for up to
RUB45 billion with VTB and Gazprombank. As part
of the loan agreement, VTB will provide RUB30 billion,
whilst Gazprombank will provide RUB15 billion. The
term of financing is up to 15 years. The funds raised will
be used to help finance the completion of the start-up
phase of the TaAZ smelter and partial refinancing of
investments made in 2020.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
63En+Group Annual Report 2020
FINANCIAL REVIEW
Debt capital markets
– On 20 March 2020, the Group repaid the first tranche
of Panda bonds and redeemed bonds with a notional
value of CNY 320 million (USD46 million).
– On 9 June 2020, placement of the exchange-traded
rouble bonds of RUSAL Bratsk series BО-002Р-01 in
an amount of RUB 10 billion with a 6.5% coupon rate
was completed and the exchange-traded rouble
bonds commenced trading on the Moscow Exchange.
Maturity of the bonds is ten years subject to a
bondholders’ put option exercisable in June 2023.
In addition to the placement, the Group entered into
cross-currency interest rate swaps, which resulted in
an exchange-traded rouble bonds exposure in the
amount of RUB 10 billion being translated into a
US dollar exposure with a maturity of 3 years and
an interest rate of 2.90%.
– In July 2020, RUSAL launched a tender offer and
purchased from investors and redeemed Eurobonds
for a total amount of USD88.5 million.
– On 4 September 2020, RUSAL repaid and redeemed
the second tranche of Panda bonds with a notional
value of CNY 20 million (USD3 million).
Contingencies
The summary of the Group’s principal contingencies
is set out below. For a detailed discussion of the
Group’s contingencies in 2020, including environmental
contingencies, risks and considerations, see Note 22of
the Annual Financial Statements.
Taxation
Russian tax, currency and customs legislation is
subject to varying interpretations, and changes, which
can occur frequently. Management’s interpretation of
such legislation, as applied to the transactions and
activities of the Group, may be challenged by the
relevant local, regional or federal authorities. Recent
developments suggest that the Russian authorities are
becoming more active in seeking to enforce, through the
Russian court system, interpretations of tax legislation, in
particular in relation to the use of certain commercial
trading structures, which may be selective for particular
tax payers and different from the authorities’ previous
interpretations or practices. Recent events within the
Russian Federation suggest that the tax authorities are
taking a more assertive and substance-based position
in their interpretation and enforcement of tax legislation.
Tax risks attributable to the Group, together with an
estimate of the maximum possible additional amounts
which may reasonably become payable in respect of
such risks, are disclosed in Note 22(a) of the Annual
Financial Statements.
Legal contingencies
The Group’s business activities expose it to a variety of
lawsuits and claims which are monitored, assessed and
contested on an ongoing basis. Where management
believes that a lawsuit or another claim would result in
an outflow of economic benefits for the Group, a best
estimate of such outflow is included in provisions in
the consolidated financial statements (Note 22(с)).
As at 31December 2020, the amount of claims where
management assesses outflow as possible is approximately
USD21million (31December 2019: USD21million).
Financial ratios
Gearing
The Group’s gearing ratio – the ratio of total debt
(including both long-term and short-term borrowings
and bonds outstanding) to total assets – as at
31December 2020 and 31December 2019, was 54.7%
and 51.9%, respectively.
Return on equity
The Group’s return on equity – the amount of net
profit as a percentage of total equity – was 16.8%
and 17.7% as at 31December 2020 and 31December
2019, respectively.
Interest coverage ratio
The Group’s interest coverage ratio – the ratio of
earnings before interest and taxes to net interest –
for the years ended 31December 2020 and
31December 2019, was 1.4x and 1.1x, respectively.
64 En+Group Annual Report 2020
Report on payments to governments
The table below shows the amounts paid by the Group’s entities to public authorities (primarily in the form of
miscellaneous taxes and levies) in connection with their extraction activities:
Type of payment 2020 (‘000 USD)
Production
fees
Taxes or
levies on
corporate
sales,
production
or profits Royalties Dividends
Signing—on,
discovery and
production
bonuses
Licence fees,
rental
charges, entry
fees and other
consideration
for licences
and/or
concessions
Infrastructure
improvement
payments TOTAL
Russia — 36,489 — — — 4,506 2,808 43,803
Kazakhstan — 24,505 — — — 1,141 252 25,898
Ukraine — 51 — — — 36 0 88
Guinea — 5,663 — — — — — 5,663
Guyana — 48 132 — — 124 — 305
Jamaica — 214 722 — — 63 — 998
Total — 66,971 854 — — 5,871 3,060 76,755
Going concern
The Group closely monitors and manages its funding
position and liquidity risk throughout the year, including
monitoring forecast results, to ensure that it has access
to sufficient funds to meet forecast cash requirements.
Cash forecasts are regularly produced and sensitivities
considered for, but not limited to, changes in power and
aluminium prices, foreign exchange rates, production
rates and costs. These forecasts and sensitivity analyses
allow management to mitigate liquidity or covenant
compliance risks in a timely manner. After making
enquiries of management, the Directors have a
reasonable expectation that the Group can continue in
operation and meet its commitments as they fall due.
Accordingly, the Directors believe that adoption of the
going concern basis in preparing the financial statements
is appropriate.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
65En+Group Annual Report 2020
SUSTAINABILITY REVIEW
Sustainable development
As a producer of low-carbon aluminium and renewable power, sustainability
is central to everything En+Group does. We are committed to integrating
sustainable development principles and values into our daily operations and
to continuously improving our ESG practices.
In 2020, the Group adopted eight corporate policies
to support our ESG practices:
– Board of Directors Diversity Policy
– Environmental Policy
– Health, Occupational, Industrial and Fire Safety Policy
– Policy on Human Rights
– Stakeholder Engagement Policy
– Corporate Code of Ethics
– Conflict of Interest Policy
– Anti-Bribery and Corruption Policy
Corporate documents are available in English and
Russian on our website.
To download from our English website:
www.enplusgroup.com/en/investors/corporate-documents/
We recognise the importance of the transparent
disclosure of our work and progress in climate
control, environmental protection, human development,
health and safety, and community engagement. This
section of the Annual Report provides an overview
of the programmes En+Group has established to
drive continuous improvement in our sustainability
performance. Our 2020 Sustainability Report will
provide much more detailed information.
In 2020, En+Group released its second Sustainability
Report which complied with international non-financial
standards and best global practices. Our Sustainability
Reports provide our stakeholders with information about
the Group’s approach to sustainable development,
management of ESG risks, key ESG indicators and the
progress of our sustainability projects and programmes.
Our contribution to the United Nations’ Sustainable
Development Goals is covered in our Sustainability
Reports and, in significantly more detail in our annual SDG
Report. We published our second SDG Report in 2020.
To download the SDG Report from our website:
www.enplusgroup.com/upload/docs/En+%20SDG%20
Report%20ENG.pdf
To download Sustainability Report from our website:
www.enplusgroup.com/upload/iblock/5b5/
En_-Group-SR19-ENG.pdf
While the Group supports all 17 UN SDGs, we focus our
work and programmes on eight of the SDGs where we
can demonstrate the most impact.
To read more on UN SDGs p. 68-69
66 En+Group Annual Report 2020
The Group’s SDG focus can be categorised as
centred around the well-being of personnel and local
communities, the responsible use of natural resources,
the mitigation of the Company’s impact on the
environment, and climate leadership. Understanding that
partnerships and collaboration play a vital role in helping
achieve sustainability ambitions, in 2019 En+Group
added SDG 17 ’Partnerships for the Goals’ to the existing
seven SDGs as key objectives for our business.
In 2019, En+Group joined the United Nations Global
Compact (UNGC) and is firmly committed to its Ten
Principles covering human rights, labour standards,
environmental protection, and anti-corruption. In
addition, the Group is also an active member of the
UNGC Local Network in Russia and En+Group’s Director
for Sustainable Development, Anton Butmanov, was
elected to the Russian Local Network’s Governing
Council in 2020.
The Group is a member of several international
sustainability associations and initiatives established
either under the auspices of, or in partnership with, the
UNGC. These include the CEO Water Mandate, an
initiative that mobilises business leaders on issues around
water, sanitation, and sustainable use of water resources,
and focuses on SDG 6.
Since 2019, the Group has been a signatory of the
Business Ambition for 1.5°C campaign, an urgent call to
action from a global coalition of UN agencies, businesses
and industry leaders to make a valuable and necessary
contribution to limiting global temperature rise to 1.5°C
above pre-industrial levels. Pledging to align our emission
reduction targets with the 1.5°C scenario, the Group
formally committed to the Science Based Targets
initiative (SBTi), as well as to developing and submitting
the new targets for validation by August 2021.
Throughout 2020, we continued to develop our
relationship with the International Hydropower
Association (IHA) and the ‘Hydropower of Russia’
Association. The Chairs and members of the Boards of
En+Group and IHA discussed Principles of Sustainable
Hydropower and a new mission to position hydropower
at the top of energy transition discussions.
The ASI Performance Standard is widely accepted as the
exclusive sustainability standard for the entire aluminium
value chain. The Standard was developed through
interaction between industry players, consumers and
NGOs. The requirements of the Standard encompass
eleven sets of criteria, incl. business ethics, governance,
environmental aspects, human rights and social aspects.
In 2020, five of RUSAL’s smelters, i.e. Boguchansky
aluminum smelter (BoAZ), Bratsk aluminum smelter
(BrAZ), Krasnoyarsk aluminum smelter (KrAZ), KUBAL
(Kubikenborg aluminum AB) and Sayanogorsk aluminum
smelter (SAZ), were ASI certified and were included in
the effective ASI certificates of RUSAL. This brings the
number of the RUSAL’s sites certified against the ASI
Performance Standard to nine after the management
company and three RUSAL’s other facilities, i.e. Bauxite
Timana (bauxite mining), Urals Aluminium Smelter
(alumina production) and Irkutsk Aluminium Smelter
(aluminium production, casting and alloy manufacturing),
were audited for certification. RUSAL also plans to have
its other facilities certified. In 2021, Alexey Spirin, Director
of Environmental and Climate Risk Management
Department, was the successful candidate voted in
by ASI members at ASI’s annual Board elections, to
a Production and Transformation seat.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
67En+Group Annual Report 2020
SUSTAINABILITY REVIEW
Supporting the UN SDGs
The UN SDGs provide a robust framework and address the world’s most
intractable problems. We have doubled down on our work to address these issues
and make a meaningful contribution to the achievement of identified SDGs.
Safe workplaces
En+Group is
dedicated to creating
and upholding a culture
of health and safety at
every one of our facilities
around the world, with
an absolute commitment
to ongoing improvement
of H&S management
and processes.
Leading medical and emergency
healthcare in Guinea
We have Bauxite mining facilities across Guinea,
run through two separate operating divisions of
RUSAL. Both offer staff access to high quality
medical care. In addition, we have been leading
the private sector response to Ebola in Guinea
since 2014when the country experienced a
major and devastating outbreak of the deadly
disease in 2020 we also transformed the Ebola
centre to a COVID-19 treatment facility.
Clean water
and sanitation
Working with a range of
relevant stakeholders, we
collaborate on Lake Baikal
conservation programmes
built on measurable goals.
Monitoring the water quality
and ecology of Lake Baikal
In 2019, we established a scientific
programme to monitor the water
quality and ecology of Lake
Baikal. A team of environmental
experts from a range of academic
and scientific institutions have
focused on the content of
microplastic and heavy metals in
the water, disease of natural Baikal
sponges and the development of
filamentous algae Spirogyra; as
the programme progresses their
scope may extend to aquatic
biological resources, the endemic
seal population and isotopes.
Local jobs for
local people
At our facilities outside of
Russia, our strict policy is to
always recruit from the local
population first and to only
bring staff in from overseas
when the necessary skills
cannot be found among the
regional communities. All
our roles are immediately
advertised to those living
near our operations and we
provide preliminary training
for all those seeking
employment.
Decent work
and economic
growth
All our facilities
comply with our
policies on human
rights, labour rights,
and industrial safety
standards, ensuring
all staff throughout
enjoy the same level
of job security and
safe working
conditions.
Modernisation and improvement
Our ‘New Energy Programme’, launched
in 2007, is delivering wide-scale
modernisation of our largest hydropower
plants in Siberia. Through this programme
we are on track to generate 2.5TWh more
electricity from the same amount of water
passing through our turbines by 2025,
securing accessible power for the people
of Siberia and helping to reduce
C0
2
emissions by 2.5m tonnes annually
from 2025.
Affordable and
clean energy
We own and operate
some of the world’s largest
hydropower plants. We aim
to increase the efficiency
of our hydropower
infrastructure and drive
better performance through
our long-term New Energy
Programme.
68 En+Group Annual Report 2020
Read our full SDGs report 2020 at:
www.enplusgroup.com/en/sustainability/un-sdgs/
Reclamation, reuse and repurpose
of bauxite residue
At our alumina refinery at Aughinish in
Ireland, we have developed an industry-
leading approach to the management
and land rehabilitation of `bauxite residue
disposal areas’. We are now also using the
latest technology to treat the residue for
reuse, for example as an inorganic polymer
for construction materials. In 2019we
developed the capabilities to extract alkali
from bauxite residue and in 2020 we are
testing de-alkalised residue to assess its
potential uses in construction.
Responsible consumption
and production
Every part of the business has its individual
goals on reducing both the consumption
of natural resources and waste generation.
ALLOW – RUSAL’s
low-carbon aluminium
In 2017, RUSAL launched ALLOW,
its own brand of low-carbon
primary aluminium. By 2019, more
than 78% of all the aluminium
produced by RUSAL was low-
carbon. ALLOW is crafted by
renewable hydropower and is
available globally. The carbon
footprint of ALLOW (atsmelter,
Scope 1&2, which corresponds
to Level1in the International
Aluminium Institute’s Technical
Guidance Document) is less than
4tonnes of CO
2
e per tonne of
aluminium, and is approximately
four times lower than the industry
average. ALLOW aluminium
comes with independently
verified statements of its carbon
footprint, traceable to individual
smelters, ensuring transparency
and enabling customers to
make better-informed decisions
about the primary aluminium
they procure.
www.enplusgroup.com/upload/
iblock/7f5/
En_-Group-Green-Aluminium-Vision.
pdf
Climate action
We have two critical focuses:
optimising low-carbon
aluminium production
today; and investing in the
development of tomorrow’s
technologies that have
the potential to remove
GHG emissions from the
smelting process.
Environmental monitoring
We conduct a wide range of long-term projects aimed at
maintaining and preserving the biological diversity of nature
reserves. The Group has been monitoring the direct impact of
our aluminium smelters on the environment. Our comprehensive
monitoring programmes include surveys of the quality and condition
of soil, plants, water, bed sediments and snow cover. The monitoring
provides us with data that we use to assess the current condition of
the environment and to design solutions to reduce the potential
environmental impacts of our industrial facilities. Importantly, the
research results also represent a unique and regularly updated
scientific database on the ecosystems. One example is a long-term
project to assist in the study and conservation of the Snow Leopard,
a rare species that lives in the unique Altai-Sayan ecoregion.
Carbon Clarity
Our Carbon Clarity programme was
set to encourage enhanced emissions
disclosure throughout the aluminium
industry, empowering customers with the
information they need to make sustainable
choices. We also released a guide to our
own emissions and have instigated an
ongoing campaign calling on the London
Metal Exchange to implement mandatory
disclosure for all the aluminium it lists.
Partnerships for the goals
We are committed to working closely with
industry peers, policymakers, academics,
IGOs, NGOs and civil society; as well as to
sharing our data and intelligence for the
development of solutions.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
69En+Group Annual Report 2020
Since 2019, JSC Irkutskenergo has led WWF Russia’s information
transparency rating of Russian fuel and energy companies
JSC Irkutskenergo, which manages the Group’s energy assets in the Irkutsk Region, has topped
the ranking of Russian power companies for transparency on environmental responsibility for
two consecutive years. Compiled by WWF Russia, the rating covers fossil fuel powered heat
and electricity production. The rating was published on 22December 2020, the 100th anniversary
of the adoption of the Soviet plan for national economic recovery and development, GOELRO.
SUSTAINABILITY REVIEW
En+Group places special emphasis on environmental
protection and addressing global climate change issues
as sustainable development priorities. Continuous
improvements to our existing environmental management
system are based on the application of the core values of
our Environmental Policy, which was adopted by the
Board of Directors in December 2020.
We operate our facilities in accordance with local and
international legal requirements and establish voluntary
environmental projects. Every year, the Group invests in
technological development, equipment modernisation
programmes, enhanced production efficiency, and
environmental protection activities.
Main production facilities that are either owned by
En+Group entities or are under our operational control
successfully apply our environmental management
system, which is based on ISO 14001:2015 and is aimed
at the reasonable use of natural resources and mitigation
of adverse environmental impacts.
Environmental risk management is carried out in
accordance with internally approved procedures.
We record any inconsistencies identified through
governmental supervision or voluntary audits, and
develop and implement corrective measures.
Beyond the Group’s own footprint, we provide
customers with reliable access to renewable power
sources, enabling them to reduce their own carbon
footprints. In 2020, En+Group’s Krasnoyarsk HPP
became Russia’s first power plant to sell energy attribute
certificates in accordance with the I-REC Standard,
opening Russia to the I-REC market. Our Metals segment
produces more than 90% of its aluminium using low-
carbon renewable hydropower energy, substantially
reducing the carbon footprint of its products.
In 2020, there were no major
1
incidents related to
spillage, air, water or soil pollution; there were no
related claims filed and no fines imposed.
Climate change
En+Group is committed to being a world leader in
addressing climate change and environmental issues.
We are set to reduce the Group’s carbon footprint and
work with a wide range of partners to enhance our
global policy and the industry’s response. Due to the
energy-intensive nature of our businesses, minimising the
climate impacts of the production processes is one of
our most important strategic objectives. In January 2021,
the Group announced targets of a reduction of at least
35% in GHG emissions by 2030 and to be net zero by
2050. While there is already an established GHG
reduction strategy in the Metals segment, we are now
developing an integrated strategy for the entire Group
to achieve these targets.
TCFD
En+Group is currently developing its corporate format
for disclosing financial data related to climate change
based on a set of recommendations from the Financial
Stability Board Task Force on Climate-related Financial
Disclosures (the “TCFD”).
The TCFD disclosure of climate change risks project
consists of two phases:
– Disclosure of climate change risks by the Metals
segment
– Disclosure of climate change risks by the Power
segment
Under both phases, climate change risks will be identified
and recorded. After that, we will be developing more
detailed plans to minimise these risks. Our next steps are
to identify the five most significant risks and to develop
several scenarios to mitigate them. The results of this
work will be presented in the Carbon Disclosure Project
(CDP) report for 2020. We will provide more information
about the implementation of TCFD recommendations in
our Sustainability Report 2020.
1 Major incidents are incidents that cause a major contamination of soil, air or water and lead to court penalties (after all stages of appeal), with
damages in excess of USD1million. Majority (significance) is assessed in accordance with the Company’s risk management system.
Environmental management
70 En+Group Annual Report 2020
Forestry Project
In 2019, the Metals segment implemented
an initiative to plant over one million trees in
Russia, planting more than 500 thousand trees
in the Irkutsk region and 500 thousand in the
Krasnoyarsk Territory as part of our comprehensive
carbon footprint reduction programme. In 2020,
the Company continued to roll out one of Russia’s
largest reforestation and forest protection projects
and funded the planting of more than 112 thousand
trees in the Krasnoyarsk Territory and the Irkutsk
Region, and continued aerial forest protection of
more than 500 thousand hectares of the lower
Yenisei forestry in the Krasnoyarsk Territory.
New Energy Programme
In 2020, the modernisation programme enabled
En+Group to avoid GHG emissions by 2Mt by
partially replacing energy demand from coal-fired
power plants with HPP output. Our increased
renewable power generation substitutes power
produced by coal-fired plants in Siberia when
operating in condensing mode (the most
inefficient mode where only power is produced).
p. 49 Projects
1 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
2 Figures for Power segment were recalculated because of improvement in methodology.
Performance
En+Group’s total GHG emissions decreased in 2020
compared to 2019, due to a number of factors.
Gross GHG emissions (Scope 1+ 2)
1, 2
, (MtCO
2
e)
0
10
20
30
40
50
60
2019 2020
28.1
22.8
22.0
50.9
50.6
28.6
Metals
Power
A slight increase in our Metals segment’s GHG emissions
in 2020 (28,6 mln. tonnes compared to 28,1 million
tonnes in 2019) was caused by growth of alumina output.
The main source of GHG emissions in the Power
segment are the CHPs of LLC Baikal Energy Company
(until 1 September 2020, JSC Irkutskenergo) which
provides heat and electricity to consumers by burning
fossil fuels. The amount of fossil fuels burnt depends on
the mix and volume of heat and electricity loads. The
dynamics of fuel consumption for heat supply largely
depend on the outdoor temperature. Fuel consumption
for electricity supply is mainly influenced by market
demand for electricity generation through the
condensation cycle. Over the last three years, peak
electricity generation for the condensation cycle
occurred in 2018 (which was also the coldest) and
amounted to 6.1TWh (5.3TWh in 2019, 4.7TWh in
2020). This peak was also a result of a low water season
in Lake Baikal and a decrease in electricity generation
at HPPs. In 2018, the average outdoor temperature in
Irkutsk during the heating period dropped to -8.3°C
(-6.1°C in 2017, -7.1°C in 2019, -6.1°C in 2020).
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
71En+Group Annual Report 2020
SUSTAINABILITY REVIEW
Our Power segment also avoided 2,061kt of СО
2
e
emissions in 2020 by taking measures in the following
key areas:
– Raising the efficiency of HPP turbines, substituting
environmentally-damaging condensation mode
generation at CHPs with HPP output – 1,991kt of СО
2
e
– Efficient fuel use and energy saving initiatives – 70 kt
of СО
2
e
In 2020, we developed project documentation for the
Segozerskaya HPP in Russia (Karelia). Commissioning
of this small-scale HPP is slated for the end of 2022.
The Metals segment’s GHG emissions
in electrolysis operations
The Group’s Metals segment places special emphasis
on minimising climate impact by applying the highest
international standards of quality and governance to
the entire production chain, fully compliant with the
requirements of the new green economy. One of
RUSAL’s corporate targets in minimising anthropogenic
impact on the climate system is a reduction of the direct
GHG emissions per tonne of aluminium produced from
the existing electrolysis operations by 15% compared to
the 2014 baseline level by 2025. In 2020, RUSAL
achieved an 11% reduction
1
in its direct GHG emissions
per tonne of electrolysis operations versus the 2014 level,
which is fully in line with the phased schedule to achieve
these targets. The chart below shows the reduction of
direct GHG emissions per tonne in electrolysis operations.
tCO
2
e/tAl
1
0.0
0.5
1.0
1.5
2.0
2.5
2014 2018 2019 2020
2.28
2.11
2.04 2.04
1 Preliminary data, being verified as part of En+ Group 2020 Sustainability report preparation.
ALLOW
Carbon labelling is an appropriate takeaway from
the new approach to decarbonisation, based on
international, regional, national and local initiatives to
limit GHG concentrations in the Earth’s atmosphere.
The demand for climate-friendly goods is clearly
growing among consumers. In 2017, En+Group’s
unique integrated supply chain enabled its Metals
segment to start offering its proprietary aluminium
brand, ALLOW. ALLOW aluminium is manufactured
with a total level of GHG emissions from both
smelter and power generation (providing energy for
electrolysis) of less than 4 tonnes of CO
2
e per tonne
of aluminium. Industry average emissions are around
12,5tonnes of CO
2
e per tonne of aluminium. The
Group verified its primary aluminium alloys in
accordance with the criteria of the ALLOW brand
in 2020 with the help of the international audit
company, TÜV Austria. 78% of the Company’s
primary aluminium output was confirmed to be
compliant with the criteria attributed to this brand.
The calculations followed the Aluminium Carbon
Footprint Technical Support Document developed
by the International Aluminium Institute.
72 En+Group Annual Report 2020
The Company has a long-standing commitment to
investment in Research & Development and innovation.
The introduction of our unique inert anode technology will
help us to dramatically cut the environmental impact of
our aluminium production. Using inert anodes completely
eliminates emissions of greenhouse gases (CO and CO
2
),
polyaromatic hydrocarbons, benzo(a)pyrene and sulphur
from the reduction process. Another positive result of this
technology is the generation of oxygen in the aluminium
production process.
Air emissions (excluding GHG emissions)
En+Group is committed to reducing the negative impact
it may have on the atmosphere. We are implementing a
number of initiatives to ensure that technological
improvements, which contribute to emissions reduction,
are carried out in a timely manner. We comply with all
the necessary internal and government regulations in
all our countries of operation.
The Metals segment’s key initiatives to reduce its
negative impact on the atmosphere are:
– Implementing Eco-Søderberg technology (at KrAZ,
BrAZ, IrkAZ, and NkAZ)
– Constructing and modernising gas treatment plants
(at BrAZ, IrkAZ, NkAZ, KUBAL, UAZ and Achinsk
Alumina Refinery).
JSC Irkutskenergo upgraded the electrostatic
precipitators at Novo-Irkutsk CHP and Novo-Ziminskaya
CHP, and replaced ash traps at CHP-6 and UICHP to
reduce pollutant output. One of the Group’s main
projects to reduce the environmental impact of its Metals
segment is the introduction of advanced and highly
efficient dry gas treatment facilities, which will capture
up to 99.8% of both hydrogen fluoride and the solid
fluorides present in exhaust gases in the smelter’s
reduction area. This will reduce not only the gross
emissions from the production facility, but also the
amount of gas treatment waste disposed at specialised
landfills. Since 2018, we have been implementing a
comprehensive plan to reduce emissions in Russian
cities, including Krasnoyarsk, Bratsk and Novokuznetsk,
as a part of the Ecology national project and Clean Air
federal programme. The latter aims to reduce the level
of air pollution in large industrial centres, including a
reduction of at least 20% of the total emissions of
pollutants into the atmospheric air by 2024 in the
12most environmentally problematic cities of Russia:
Bratsk, Krasnoyarsk, Lipetsk, Magnitogorsk, Mednogorsk,
Nizhny Tagil, Novokuznetsk, Norilsk, Omsk, Chelyabinsk,
Cherepovets and Chita. The programme will significantly
improve the air quality in these cities (below limits) and
quality of life of the citizens. We will be contributing to
this programme’s ambitious goal.
Water resources
En+Group facilities draw water from both surface
and underground sources for operational and
production needs. Alumina refineries and power
facilities are the Group’s biggest water consumers due
to their technological requirements and processes. The
Company rarely suffers from water shortages at our
facilities and there are currently no critical water-related
risks (water consumption or disposal).
The most important areas of the Group’s efforts to
minimise our impact on water resources are:
– Reducing fresh water consumption
– Reducing wastewater discharge and concentration
of pollutants in waste water
– Increasing recycled water volumes
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
73En+Group Annual Report 2020
SUSTAINABILITY REVIEW
Beyond our efforts to push the
market towards carbon taxation and
acceptance of a greener aluminium,
the Group’s partnerships reflect our
commitment to supporting climate
change mitigation.
RUSAL leads the global aluminium
industry with ‘A-’ CDP climate rating
To demonstrate our support for global mitigation
efforts, the Group has committed to disclosing
its environmental impact through the Carbon
Disclosure Project (CDP) and the International
Aluminium Institute. RUSAL has been involved
in CDP since 2015, informing stakeholders about
its products’ carbon footprint, climate risk
assessments, and climate targets. CDP aims
to make environmental reporting and risk
management a business norm, and drive
disclosure, insight and action towards a
sustainable economy. We are also committed to
fully disclosing greenhouse gas emissions from our
aluminium, alumina, bauxite and other facilities.
The International Aluminium Institute (IAI), of which
RUSAL has been a member since 2002, collects statistical
and other relevant information, encourages and assists in
the continuous progress in the safe and environmentally
sound production of aluminium, and communicates the
views and positions of the aluminium industry to
international agencies and other relevant parties.
En+Group is a member of the Climate Partnership of
Russia, which was created on the eve of the 21st United
Nations Climate Change Conference, COP21, to
consolidate Russian businesses’ efforts to reduce
environmental impacts. In 2020, the Group participated
in sessions organised by the Partnership, where Lord
Barker joined Nigel Topping, High Level Climate Action
Champion for UNFCCC, and Ruslan Edelgiriev, Adviser
to the Russian President and Special Presidential
Representative on Climate Issues, to discuss their
vision for the upcoming COP26 climate conference.
We continue to cooperate with the Aluminium for
Climate initiative. The initiative is part of the World
Economic Forum’s Mission Possible platform, created
to accelerate the decarbonisation of hard-to-abate
industries. The initiative is a platform that brings together
the most active leaders of the international aluminium
industry and aims to achieve industry consensus on
decarbonisation by 2050. In 2020, the Aluminium for
Climate initiative worked closely with the organisational
committee of the 26th United Nations Climate Change
Conference, COP26, to bring the industry to the
forefront of the energy-intensive sectors. As
decarbonisation cannot be achieved in each industry
in isolation, both the Aluminium for Climate and the
Mission Possible platform worked to broaden cross-
sectoral collaboration in 2020.
Lake Baikal
The Group owns and manages operations at three
of the four HPPs (excluding Boguchany HPP) located
on the Angara, the only river that exits Lake Baikal.
Lake Baikal provides ca. 60% of water used by these
power plants to generate energy.
The eastern Siberian lake, declared a UNESCO
world heritage site in 1996, is the largest and deepest
freshwater lake on earth. The lake and its coastal zone
create a unique habitat for numerous plant and animal
species, many of which are endemic.
The problems facing Lake Baikal were the subject of
extensive discussions in many forums in 2020, with a
particular focus on regulating environmental restrictions
for the Central Environmental Zone of the Baikal natural
territory, which is affected by transportation
infrastructure and water level regulation.
Water level regulation is a special item on the Group’s
agenda as state regulation of the lake’s water levels
directly affects the operating modes of Irkutsk HPP.
Our long-term inflow forecasting project (ENvision)
continued in 2020 and will provide us with more precise
forecasts of the HPP output, and will help the authorities
improve the lake water level management practices.
Together with WWF Russia, the Group initiated a project
to assess and report on the environmental and social
problems of the Baikal natural territory in order to
establish wide scale dialogue and to find new solutions.
WWF Russia launched a campaign to encourage experts
to join the effort.
The Group pays special attention to the lake’s
environmental condition. Despite COVID-19 challenges,
we sponsored the implementation of a series of new
projects for monitoring and research into the condition
of the lake and its inhabitants. For instance, the Institute
of Ecology and Evolution of the Russian Academy of
Climate change mitigation
74 En+Group Annual Report 2020
Sciences, supported by the Group, established
expeditions for environmental monitoring and Baikal
seal research; and the Water Problems Institute of the
Russian Academy of Sciences has set out to establish
more accurate operating schedules for the Angara-
Yenisei HPP cascade in view of the environmental and
other limitations.
En+Group also gained the support of the state
corporation VEB.RF and the Government of the Irkutsk
Region for a programme to establish an international
centre for water resources at the former site of the
Baikal pulp and paper plant under the framework of
development of the city of Baikalsk and the Baikal region.
Waste
En+Group is passionate about increasing its recycling
and the safe disposal and storage of waste. We are
actively developing new waste management sites, as
well as renovating and modernising existing facilities
to make sure waste is disposed of and stored safely.
All our waste management sites are compliant with
the necessary regulations.
Alumina and aluminium production waste
The most significant types of waste in terms of volume
are bauxite and nepheline residue, which are considered
to be non-toxic waste. They represent over 80% of the
total waste generated by RUSAL. In cooperation with
R&D centres and institutions, RUSAL is developing and
applying new methods of specific waste reduction at its
aluminium smelting and alumina refining facilities. The
smelters and refineries are actively seeking to reduce
solid waste and residue storage facilities.
Residue volumes are directly related to the dynamics of
production and other factors, such as the depth of ore
beds and the alumina content present in processed ore
and bauxites.
Ash and slag waste
The volumes of generated ash and slag waste depend
directly on the volumes of heat and electricity generated
at CHPs, as well as coal combustion parameters. JSC
Irkutskenergo seeks out, develops and applies new
methods of ash waste disposal in cooperation with
leading R&D institutions and production companies.
We relentlessly strive to find new methods of ash waste
utilisation and treatment. The following measures are
currently in place to enhance our waste treatment:
– Raising the volume of fly ash disposal – modernisation
of Novo-Irkutsk CHP’s dry ash discharge plant
– Extracting iron bearing concentrate – a pilot plant
at CHP-9
– Sales of ash waste to manufacturers of construction
materials
– Production of ash and slag material for the reclamation
of waste disposal facilities and coal reserves
In 2020, the following additional measures were initiated:
– R&D on the use of ash and slag for road beds
– A pilot project for the environmentally safe use
of ash and slag for reclamation and backfilling
of disturbed land
– A project for dry storage of ash and slag mixtures
at the Novo-Ziminskaya CHP
– A project for dry storage of SHS of CHP-9 and CHP-10
at the ash and slag dump of CHP-9 section No. 1.
Tailing dams management
In 2019, there were major dam disasters on different
sides of the globe. En+Group operates several large
tailing dams and safety at these dams is a key priority for
us. For this reason, we closely monitor and analyse the
causes of such disastrous events in order to learn lessons
and prevent similar situations at our own facilities.
To prevent any accidents and significant impact on the
environment, bauxite and nepheline residue storage
areas together with ash and slag waste storage areas
are subject to comprehensive control.
– Hydraulic structures are inspected daily and
periodically, and their condition is constantly monitored
by instrumentation
– We carry out certification of personnel operating
the hydraulic structures and provide professional
development for technicians who perform technical
supervision of safety at hydraulic structures
– We are studying the use of the dry bauxite and
nepheline residue stacking process, which uses press
filters and eliminates the impact of the liquid phase on
the safety of mud disposal areas
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
75En+Group Annual Report 2020
Based on the investigations of accidents at other
companies’ tailing dams, En+Group has planned to
implement the following actions:
– Constant health and safety monitoring measures
aimed at maintaining the reliability of tailing dams
– The training and professional development of personnel
– A targeted audit of mud disposal areas at alumina
refineries to make sure they comply with hydraulic
structure health and safety rules
– A transition to the dry mud disposal process and
a study of the use of the dry mud disposal process,
which uses press filters and eliminates the impact of
the liquid phase on the safety of mud disposal areas
– Planning for the development of mud and ash dumps
We have formulated strategic plans to develop
mud and ash dumps which will maintain and expand
production levels, while ensuring we have enough
capacity for waste disposal.
Mine waste
The stripped overburden is usually placed back into the
mined-out openings (internal dumping), which leads to
further land rehabilitation.
Persistent organic pollutants
In line with the Russian Federation’s plan to comply
with the commitments of the Stockholm Convention
on Persistent Organic Pollutants (POPs), En+Group
developed a long-term programme for polychlorinated
biphenyl containing waste disposal to meet the
requirements for these commitments by 2025.
Land resources
Restoring disturbed land is a main focus for the
En+Group. In line with our accounting policy, the
expected costs of decommissioning facilities and
restoring the environment are reflected in our
international financial statements as reserves.
Restoration of disturbed land is carried out in the
following areas:
– Restoring disturbed terrain and soil fertility once
mining activity (open-pit mining) is finished
– Rehabilitating production and consumption waste
disposal facilities (ash dumps, landfills, etc.)
– Rehabilitating disturbed and contaminated land.
Energy
En+Group’s core strategy for energy production and
consumption is threefold: the uninterrupted supply
of electricity and heat to third-party consumers; the
increase of electricity generation at hydropower
plants; and the reduction of grid losses and internal
consumption of energy at generating facilities.
Special-purpose programmes and energy efficiency
projects are in place at all of the Group’s entities. Energy
saving technologies are widely employed – from the
optimisation of energy generation modes and equipment
designs, to the reduction of heat losses and adoption of
optimised maintenance procedures within the technical
and technological parameters of operations.
With hydropower fuelling more than 90% of RUSAL’s
aluminium output, we strive to minimise our industrial
carbon footprint through the implementation of energy
efficiency measures.
Environmental monitoring
of Lake Baikal
Lake Baikal is an important natural site within the
impact zones of the Power segment’s production
facilities. En+Group recognises its share of
responsibility for the environmental well-being
of the lake and takes efforts to support and
preserve its biodiversity. In 2020, the second
annual expedition for environmental monitoring
of Lake Baikal was carried out to obtain unbiased
data on the condition of the lake’s ecosystems.
In addition to defining the overall hydrochemical
characteristics of the lake water, the monitoring
also explored the microplastics content in
the surface water layer and included water
sampling from the Selenga River upstream and
downstream of Ulan-Ude and from the Angara
River upstream and downstream of the Irkutsk
HPP. More water samples were taken from
drinking wells in the residential areas located
on the banks of Lake Baikal.
Hydrochemical analyses of the water samples
showed that the main pollutants entered
Lake Baikal through the Selenga River. An
important result of the expedition is the
scientific confirmation of the hypothesis that
biogenic substances come to the lake through
groundwaters from the residential areas.
The key findings of the Baikal environmental
monitoring were presented at the All-Russian
Water Congress in October 2020.
SUSTAINABILITY REVIEW
Climate change mitigation continued
76 En+Group Annual Report 2020
Aughinish Alumina Ltd
waste management initiative
Aughinish Alumina Ltd. (AAL), Ireland contributes
to En+Group’s environmental best practices. For
example, AAL has achieved a 40% reduction in
tonnes of carbon per tonne of alumina production
over the past 15 years. In addition, management
of the Bauxite Residue Disposal Area (BRDA) at
AAL is an example of the Group’s best practices
in land rehabilitation and waste management.
AAL implemented best available technology to
treat the residue by using industrial mud farming
process. Vegetation and screening programmes
have been in place for many years to improve visual
perspectives. One of AAL’s priorities is to develop
ways to reuse the bauxite residue (BR).
In this regard, AAL is active in many European
projects aimed at developing bauxite reuse
technologies. It is a partner of EIT Raw Materials, a
major global commodity consortium, funded by EIT
(European Institute of Innovation and Technology),
a body of the European Union. The consortium’s
strategic goal is to turn raw materials into a
powerful force for Europe. Throughout 2020, AAL
continued to participate in the RECOVER project,
launched in 2016, to develop a new technology for
the reuse of bauxite residue for the production of
technically complex products such as inorganic
polymers. The technology used in the project is
a high temperature sintering of bauxite residue
to produce a vitrified material similar to copper
residue (called slag). The vitrified material is cooled,
ground and blended with alkali solution to produce
a dense inorganic polymer. Other additives such as
surfactant and alumina powder are used to produce
porous inorganic polymer. The products from the
process will be used in construction materials,
namely dense blocks for non-load bearing
construction, fire retardant panels and porous
blocks. The construction of a four-module pilot
plant was completed in 2020. Each module of this
pilot plant is a custom-made container equipped
with benchmark branded equipment. The first two
sections deal specifically with bauxite residue and
the last two containers are used to produce
inorganic polymer from copper residue.
In 2020, a Pilot Plant and Product Demonstration
Event was hosted at AAL. This was a significant
milestone of the RECOVER project. The event,
which took place online due to COVID-19
restrictions, showcased the flagship products
and technologies developed during the project.
Of particular interest to AAL were the artefacts
made with bauxite residue.
AAL is also part of RemovAL, which is a large
research project funded by the EU. The main
premise of RemovAL is that no single technology
option is viable for bulk reuse of bauxite residue
and that more than one element must be
combined to achieve viable and meaningful
utilisation. AAL in association with industry
partners is developing and piloting Residue
Dealkalisation to reduce the soda content of
residue to <0.5% making it usable in the iron and
cement industries. Other projects in RemovAL
include the production of Lightweight Aggregates
for building applications, converting bauxite
residue into ready-made mortar for the synthesis
of inorganic polymers and the production of pig
iron and ferro-silica alloys. In 2021, AAL will
construct and demonstrate the use of BR, along
with other waste materials such as fly ash, in road
construction. This will be demonstrated on the
BRDA at AAL.
AAL is also participating in a third EU research
project, ReActiv, launched in November 2020.
Coordinated by LafargeHoclim, the biggest cement
producer in Europe, the ReActiv project will create
a novel sustainable symbiotic value chain, linking
by-products of the alumina production industry
and the cement production industry. Through
ReActiv, modification will be made to both the
alumina production and the cement production
side of the chain, linking them through the new
ReActiv technologies. The ReActiv technologies
will modify the properties of the industrial residue,
transforming it into an active material suitable for
new, low-carbon cement products.
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77E n+Group Annual Report 2020
SUSTAINABILITY REVIEW
Biodiversity
The Group is intent on making a positive contribution
to the protection of the environment and mitigating its
impact on biodiversity in the regions where we operate.
Our core production facilities are located in Siberia which
has unique indigenous plants and wildlife. We strive to
apply the world’s best practices in the field of biodiversity.
We cooperate with research and educational institutions
and non-governmental organisations to develop effective
measures of preserving ecosystems.
Biodiversity preservation
For several years, the Group has conducted monitoring
in the regions of operations. This monitoring provides
data that we use to assess the current condition of the
environment and make adjustments to environmental
protection activities and design solutions to reduce the
negative impact of industrial development. These
research materials represent a unique and regularly
updated scientific database of the natural areas of
Russia’s northern regions.
Conservation of aquatic biological resources
For the past six years, En+Group has been successfully
carrying out the restoration of aquatic biological
resources. Over this period, more than 1.5 million young
peled (northern whitefish) have been released into the
waters of the Angara region. The species is a relative of
cisco and omul, reaching an adult weight of 2–2.5 kg. The
cultivation of young fish for replenishment of fish stocks
is carried out annually at fish hatcheries that specialise in
the reproduction of valuable fish species.
Through this programme, young Siberian sturgeons
were released into the Yenisei River in 2020 as a result of
cooperation between Krasnoyarsk HPP and the Yenisei
branch of FGUP Glavrybvod. The young fish were grown
at the Beloyarsky fish farm built in 1973 to compensate
for damage to aquatic biodiversity inflicted by the
construction of Krasnoyarsk HPP.
In total, our production facilities released about 253,000
young peled and 2,300 young sturgeons into the waters
of the Angara basin and 12,400 young Siberian
sturgeons into the Yenisei River.
Baikal seal preservation programme
The Baikal seal is the only mammal that lives in
Lake Baikal and is endemic to the region. The
seal at the top of the food chain in the Baikal
ecosystem, and its condition allows us to draw
conclusions about the quality of its habitat,
i.e. the Baikal ecosystem as a whole. That is
why it needs to be constantly monitored –
primarily, its migrations and health.
En+Group and the Severtsov Institute of Ecology
and Evolution of the Russian Academy of Sciences
signed a cooperation agreement in the end of
2019, which envisages inter alia preservation of
biodiversity, including the Baikal seal preservation
programme. En+Group and other partners of the
Institute joined a comprehensive programme to
preserve the Baikal seal through 2025. In 2019-
2020, as part of the programme, scientists carried
out an expedition to count the seal population
and to attach satellite trackers to several seals
(to monitor their migration routes); analyses were
conducted to define the health of the animals.
We also made a contribution to this work by
transferring the findings of the Lake Baikal
environmental monitoring.
Climate change mitigation continued
78 En+Group Annual Report 2020
People
En+Group provides jobs to almost 90,000 people
across all regions of operation. The total number of
employees (full-time equivalent) by each segment of the
Group is set out in the following graph
1,2
.
Total number of employees
0
20,000
40,000
60,000
80,000
100,000
2019 2020
53,678
35,733
35,099
89,411
89,075
53,796
Metals
Power
Our key HR objectives are to recruit and retain highly
skilled personnel, increase employee engagement,
and create attractive working conditions and work
environment for employees, contributing to their
professional development and the well-being of
their families.
Social security programmes
En+Group’s production facilities have developed a
system focused on building and maintaining long-term
employee motivation by providing targeted social
benefits equally to all full-time and part-time employees
of the Group.
We provide stable and competitive salaries and
comprehensive social benefits for our employees
as well as remuneration based on skills, performance
and grade. The remuneration and motivation system
also includes multiple wage and salary benefits
(time-based bonus system), incentive programmes
and other additional benefits.
The Group uses motivational systems that result in
a highly productive workforce:
– Bonuses awarded from the fund of the head of
the enterprise
– Annual performance-related bonuses
– Payments to employees who have received corporate,
state or departmental awards
– Payments to employees actively participating in our
social projects
For several years, our largest Russian assets have
been providing their employees with the following
key social benefits:
– Financial aid including: payments for the birth of a
child and parental leave until the child reaches six
months old; aid for families with three or more children
under 18 and for those with an income below the
regional minimum wage; payments for employment
anniversaries; and financial support for funerals of
close relatives
– Recreation at health resorts
– Pension benefits for employees (co-financing together
with the employee through non-state pension funds
in excess of mandatory payments by the employer);
– Medical services (including voluntary medical
insurance)
– Sports activities
– Provision of food to employees during the working
day at the production site
– Reimbursement of housing cost when managers or
highly-specialised experts need to move to the region
where the company’s operations are located, as well as
the possibility of compensation for rental housing to
young specialists with particularly valuable and rare skills
– Corporate mortgage programme for employees
– Childcare programmes (partly covering costs of children
going to health resorts and summer health camps)
– Support for non-working pensioners. Additional
benefits to state pension are provided to those who
retired before 2007 and to former heads of
departments. There is also compensation for energy
and heat supply in the apartments of retired employees
– Festive events for workers and members of their
families to mark, for example, the anniversary of the
enterprises, Day of Metallurgist, Power Engineers’ Day
and other holidays, as well as annual New Year parties
and gifts for children of employees. These were all
virtual events in 2020
– Other social expenses including subsidised transport,
additional paid social vacation under the collective
bargaining agreement and local regulations, and
compensation for work-related accidents
Additionally, in 2020 as a continuation of the programme
started in 2019, there was a differentiated increase in
wages of the employees of the Group’s enterprises, to
recognise disparities in purchasing power of wages and
the level of wages in specific enterprises in comparison
with the local labour markets.
Responsibility for employees
1 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
2 Total number of employees in 2019 is 89,411, in 2020-89,075. Average headcount in 2019 is 88,732, average headcount in 2020 is 87,458.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
79En+Group Annual Report 2020
Personnel training and development
The key objective of En+Group in personnel training is
to cultivate a set of professional skills in our employees
which meet the requisite quality and efficiency of our
production programme while ensuring safety and
fostering long-term technological development within
the industry.
In 2020, we reviewed, updated and unified the
competence model of our Metals and Power segments
to promote and cultivate an entrepreneurial environment
in the Group.
The existing mandatory personnel training system in the
power industry regulates the training and procedures
required for every position in the industry. En+Group’s
corporate training system supplements and completes
the mandatory system, by taking the specific
requirements of our external environment into account.
Our training and development programmes cover all
education levels, from that of a school pupil to a
technical manager.
Classroom programmes include:
– Professional training and skills development and
additional professional education (including talent pool
participants’ education)
– Simulator training and psychophysiological support for
operational personnel
– Corporate competitions in professional skills
– Modular programmes for internal talent pool building
and training
– Career guidance and additional targeted training, with
potential for further employment for students of
specialised universities in Siberia
In 2020, 30 project teams from the Irkutsk National
Research Technical University (INRTU), one of the
region’s leading universities, participated in the annual
Energy Lab innovative projects competition.
At the end of school year 2019/2020, more than 4,000
children from nearly 250 schools participated in the
Olympiad ‘Alchemy of the Future’.
The Group’s long-term production expertise has been
put to use in building a simulator-based training
programme, which was adopted in 2019 to ensure the
professional development of current operational staff.
In addition, we developed an innovative programme to
hone new practical skills and safe methods of working at
height in order to reduce the risk of occupational injuries.
A dedicated facility hosts the programme, which will
ensure our personnel remain professional and competent.
To foster creative thinking skills and to help colleagues
develop innovative solutions to production challenges,
training programmes based on the TRIZ approach
(Russian: the Theory of Inventive Problem Solving) have
been actively introduced.
The Metals segment is continuously developing its
personnel training systems by arranging and improving
professional training, increasing the relevance of our
functional academies, and creating targeted modular
programmes to meet our business objectives.
Our functional academies’ approach empowers
employees to enhance their skills in topics of study
relevant to the Group’s targets and strategy.
SUSTAINABILITY REVIEW
Responsibility for employees continued
80 En+G roup Annual Report 2020
Personal and professional diversity
En+Group is proactive in ensuring the diversity of its
staff in an environment offering opportunities for both
professional and personal growth.
The Board of Directors understands that our
stakeholders strive for higher personal and professional
diversity at the top management level and on the Board
Directors itself.
Workforce gender diversity
26.5% Women
2019
1,2
2020
1
73.5% Men
26.8% Women
73.2% Men
En+Group sees the complete elimination of all forms
of discrimination as essential to our success. We have
a stable rate of female participation in our labour force
of approximately 27%.
The nature of our business means that numerous
operations in the production process are classified
as highly hazardous. Female participation in such
operations is heavily regulated, especially in Russia and
CIS countries. This is to say that we are already at about
the natural level of female participation for the industry;
however, we are continuing to aim towards an ever more
inclusive and diverse working environment.
1 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
2 Figures for 2019 were recalculated because of improvement in methodology.
En+Group’s Board gender diversity
33% Women
2019 2020
67% Men
33% Women
67% Men
Senior management gender diversity
16% Women
2019
1,2
2020
1
84% Men
18% Women
82% Men
Executive management team gender diversity
25% Women
2019 2020
75% Men
25% Women
75% Men
Middle management gender diversity
28% Women
2019
1,2
2020
1
72% Men
29% Women
71% Men
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
81En+Group Annual Report 2020
Creating and ensuring equal opportunities
En+Group aspires to create an enabling and
non-discriminating working environment.
We work towards ensuring equal opportunities in hiring,
promotion, training and remuneration for all employees,
regardless of their ethnicity, nationality, religious beliefs,
gender, age, sexual orientation, marital status, disability
or any other characteristics, within the framework of the
current law.
In the event of injury, employees are provided with
permanent employment, training and vocational
assistance, whenever needed.
Health and Safety
Health and safety is at the top of the Group’s agenda.
The HSE Committee ensures that the Company has in
place a proper system for the management of health and
safety risks. Our principles and commitments are set out
in the Health, Occupational, Industrial and Fire Safety
(abbreviated as “OHS”) policy.
The Group complies with both legal health and safety
requirements and its own internal standards, which are
often stricter than the rules prescribed by legislation.
We arrange all necessary health and safety briefings and
training sessions and carry out health and safety audits
to ensure that all employees appreciate the importance
of their own safety. In order to ensure the health and
safety of our employees, we constantly review our
existing occupational health and safety management
system, and look for new and innovative ways of
promoting safe working practices among our employees.
The Group monitors, records and investigates all
incidents regardless of severity. This includes incidents
resulting in micro-injuries, and instances of employees’
health deteriorating over a period of time. The findings of
these investigations are used to develop and implement
corrective actions, intended to prevent future accidents
or occupational health impacts. Protecting human life
and health from threats related to industrial factors, or
from consequences of accidents, is our highest priority.
Health and Safety performance
En+Group deeply regrets that there were four work-
related fatalities in 2020 notwithstanding En+Group’s
commitment to the zero fatalities concept. In-depth
internal investigations were conducted into each one of
the accidents to determine critical factors and root
causes and to institute preventative measures. The HSE
Committee considers a detailed report on any incident
that has involved a fatality, as well as monitoring the
statistics and trends related to all other incidents.
Work-related employee fatalities
0
1
2
3
4
5
2019 2020
4
1
2
2
Metals segment
Power segment
For the reporting period, the Group’s overall Lost Time
Incident Frequency Rate (LTIFR)
1
was 0.20 in 2020, an
increase from 0.17 in 2019
2
. This came as the result of an
accident in Ust-Ilimsk in November 2020, involving a bus
carrying employees to the CHP. We regret to announce
that 19 people were injured. En+Group has developed
corrective and preventive actions to ensure transport safety
and to monitor the condition of the injured employees.
Lost Time Injury Frequency Rate(LTIFR)
3
0.10
0.15
0.20
0.25
2019 2020
0.17
0.11
0.22
0.20
0.20
0.20
Metals segment
En+ GroupPower segment
1 Per 200,000 hours worked.
2 The LTIFR value for En+Group was clarified for 2019 due to an improvement in the reporting processes.
3 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
SUSTAINABILITY REVIEW
Responsibility for employees continued
82 En+Group Annual Report 2020
Our efforts to ensure health and safety
In 2020, En+Group successfully continued working on
the realisation of a three-year Strategic Plan (launched in
2019) to improve its Occupational Safety Culture under
the Vision Zero concept. The main aim of this plan is the
gradual improvement of health and safety indicators
through a series of projects, some of which were
implemented in 2020.
As part of the Self-Dismissal programme, every employee
is guaranteed the right to refuse work that poses a risk of
injury. Compliance with this programme is ensured at
each of En+Group’s enterprises by our plant managers.
We developed and adopted a set of Basic and
Fundamental Safety Rules for our production facilities.
In addition we formally regulating numerous processes
to ensure the proper condition of scaffolding and
platforms, organising works involving hoisting
mechanisms, ensuring the safe traffic of vehicles and
pedestrians at production sites, using video recorders in
admission to operations, and switching power devices.
Admission to work sites in terms of employees’ blood
alcohol content prior to each work shift in line with tour
alcohol and drug zero tolerance policy continues to be
controlled. Daily medical examinations using Automated
Medical Examination software/hardware were
introduced in 2020 to detect any deterioration of
employee health at workplaces located at remote power
generation or transmission facilities in the Irkutsk Region.
A health and safety monitoring project continued in the
Power segment in 2020. The project combines reactive
and proactive health and safety performance indicators
at all production sites into one integrated metric, used
continuously to monitor and adjust health and safety
efforts. The ongoing monitoring indicator is also used
as a KPI to determine the size of the quarterly bonus.
In 2020, managers continued to hold monthly HSE
meetings by video conference, where directors of the
production facilities reported on the results of their HSE
efforts, discussed the findings of workplace audits and
shared experiences in health and safety improvements.
During the reporting period, the production safety
management system in the Metals segment was
transitioned from the OHSAS 18001: 2007 standard to
the international ISO 45001: 2018 standard, as confirmed
by the DNV GL certificate (international accredited
registrar and classification society).
In 2020, an external audit of the health and safety
management system and the level of safety culture
was conducted at four sites of the Metals segment.
Based on the assessment results, a roadmap for the
further development of the production safety
management system was developed.
To prevent accidents such as the serious damage which
occurred on the territory of CHP-3 in Norilsk, owned by
the Norilsk Nickel Company, we implemented the
following actions at the enterprises of the Metals segment:
– Expert assessment of the reliability and safety of 36
ground storage tanks, used for chemical substances
and oil products with a volume of more than 1,000 m
3
– Technical audit of hazardous production facilities at
five sites (AGK, BrAZ, IrkAZ, SAZ, KrAZ)
– Compliance verification of draft conclusions of
industrial safety examination for technical devices,
buildings and structures operated at hazardous
production facilities at five enterprises (AGK, BrAZ,
IrkAZ, SAZ, KrAZ)
Based on the results of the measures taken, the
enterprises developed and implemented corrective
actions, intended to prevent future accidents.
In 2020 the Metals segment implemented piloted an
automated information system ‘Production safety –
RUSAL’ at two sites in Krasnoyarsk (KrAZ) and
Achinsk (AGK).
Goals for 2021:
– Achieve zero fatalities
– Control and reduce all injuries, including contractors
– Improve safety culture with a priority focus on the
personal safe behaviour of each employee
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
83En+Group Annual Report 2020
We are committed to developing our local communities
and strive to make a positive contribution to social
well-being in all the regions where we operate. We invest
in community projects that align with the needs of local
people, as well as our business activities. For this reason,
our community engagement priorities lie in urban
development, healthy living, education, the environment,
and volunteering. In 2020, the En+Group allocated over
USD71 million
1
for social investments and charitable
projects. Since the beginning of 2020, the world has
faced the unprecedented challenges arising from the
coronavirus pandemic, which has had a devastating
impact on the lives of individuals, families and
communities and put national economies under
tremendous long-term pressure. We strengthened our
work to address these issues alongside the further
development of our established community initiatives.
Community engagement
Our response to the
coronavirus pandemic
Like every other company, the coronavirus pandemic
has affected our operations and, critically, has had an
impact on En+Group staff, current and former. The
health and well-being of our people has been our
number one priority and is at the heart of our
multifaceted response to the emergency.
Our first step was to take fast and decisive action to
protect our workforces around the world. More than
15,000 staff started working from home on 18 March.
Our Health and Safety Department received daily
reports on the employees working remotely. To
support them through the transition to a new
working environment, we launched an internal
communications initiative, providing links to free educational platforms, virtual museums, libraries,
and language learning sites, and we established special hotlines to address any concerns.
To protect our staff at these operational sites, we promptly established a number of special sanitary
measures. We established a programme of deep-cleaning and disinfecting of our sites and provided all
workers with personal protective equipment, including masks and gloves. We upgraded medical rooms
and paramedic support and increased the medical monitoring of all our employees. New measures were
implemented to balance the need for social distancing with enough staff availability in case of self-
isolation or individual employees becoming unwell.
The Group launched an initiative to support the elderly and retired employees, many of whom are
considered high-risk for infection and were therefore unable to leave their homes. The Group delivered
free food supplies to 16,000 of these employees in our regions of operation. We set up a dedicated phone
line where recipients could arrange purchase and delivery of additional food and medical essentials. To
support healthcare and frontline workers in the Irkutsk Region, En+Group purchased 800,000 medical-
grade masks to donate to hospitals, healthcare institutions and social services.
During the pandemic, the Group built and handed over to regional medical organisations seven medical
centres in Achinsk, Bratsk, Sayanogorsk, Shelekhov, Krasnoturinsk, Boguchany and Taishet. The
construction cost amounted to 4 billion roubles.
In Kindia, Guinea, RUSAL opened one of the country’s first specialist COVID-19 diagnosis and treatment
centres. We rapidly converted the Centre for Epidemic and Microbiological Research and Treatment
(CEMRT) – which we had built in 2015 to treat and combat the spread of Ebola – into a 60-bed in-patient
treatment facility. Following authorisation from the National Agency for Health Security, on 11 April 2020,
CEMRT received its first COVID-19 patient. RUSAL commissioned and established a multifunctional centre
for the treatment of infectious diseases alongside our medical facility in Friguia, Guinea with all necessary
medical equipment, and trained medical staff. We continue to work closely with Guinea’s health authorities
to support the local communities in Kindia and Friguia. En+Group is committed to maintaining all
initiatives designed to mitigate the impact of the pandemic for as long as needed.
SUSTAINABILITY REVIEW
1 Preliminary data, being verified as part of En+Group 2020 Sustainability report preparation.
84 En+Group Annual Report 2020
Our key programmes
Infrastructure and urban development
Infrastructure development is key for attracting
investment and ensuring the social and economic
growth of cities and towns today, especially smaller
towns. The better the conditions, the lower the outflow
of capital and workforce.
RUSAL Territory
RUSAL Territory is a programme for the social
and economic development of the regions in
which RUSAL operates, providing support for
the construction and renovation of communal
facilities, the urban environment, and socially
significant community spaces. Since its launch in
2011, the programme has supported social and
infrastructure projects in 22 cities, towns and
villages, and built or renovated hundreds of
facilities to provide the local communities with
better social infrastructure. In the 10 years since
the programme was established, 635 projects
have received support and more than 200 social
infrastructure facilities were built, repaired or
re-equipped. In 2020, the programme’s
competition resulted in 11 projects being awarded
investments of 423.2 million roubles. RUSAL also
held an open international competition to create a
concept for the development of the Central Park
in Krasnoyarsk with a prize fund for 3 winners in
the total amount of 6 million roubles.
The Power segment also started infrastructure projects
in the line with its community strategic framework. In
2020, the company constructed a children’s playground
in Ust-Ilimsk, a hockey stadium in Cheremkhovo, and a
ski base in Tulun. It also renewed five hockey rinks in
Irkutsk and started the reconstruction of the ski base in
Divnogorsk. The Group also initiated a project to create a
scaled recreation area along the dam of the Irkutsk HPP.
The dam is an arterial city road – public transport runs
along it and it is accessible to citizens. Residents use it for
running, cycling, walking and sightseeing. The project will
create convenient access to the dam, improve the
network of public transport stops, and create new
space for both active and peaceful pastimes. The Group
conducted an online survey among citizens and created
the architectural concept based on public opinion and
the city’s urban development plans. The first stage of
construction works is planned for 2021.
In Guinea, RUSAL is involved in the construction of
basic infrastructure facilities, making a vital difference
by providing locals with access to a full range of modern
amenities. In 2020, RUSAL commissioned and
completed the construction of an elementary school
building in Mambia, Kindia Prefecture. At the same time,
it built a new indoor market building for the population
in Barrage, Kindia Prefecture, and it has successfully
constructed a new road bridge across the Samou River in
Kindia Prefecture. Another project focused on providing
local people with access to drinking water and in 2020,
seven new water wells were drilled in various locations in
the Kindia and Boké regions where RUSAL operates.
Volunteering
Corporate volunteering is important to ensure the Group
remains engaged with employees and local communities
and establishes sustainable relations with both citizens
and the government. Our volunteering programmes
bring together a wide variety of people, including
production facility employees, school children, students,
and representatives from social and educational
institutions. To maximise social impact, we have
developed programmes and technology that make it
easier for local residents to volunteer.
In 2020, due to lockdown in all regions of our operations
in Russia, we launched a large-scale social campaign,
which became the main activity for hundreds of
corporate volunteers from the Group. From March to
June, employees were involved in the delivery of food
supplies to elderly and retired employees considered
high-risk for infection and unable to leave their homes.
The ban on holding public events also changed our plans
for the implementation of volunteer programmes. The
usual events were replaced by prompt assistance to
socially vulnerable groups during the pandemic. In
general, the number of events has not decreased over
the year, but the format has changed quite dramatically,
with many events switched to online mode.
The large social programme of the Metals segment –
‘Helping is Easy’ – launched in 2014 to encourage
volunteering; this programme includes annual
environmental projects, the Yenisei Day and Green Wave
projects, and the online charity game ‘Time to Help’. In
2020 our total funding of winners within the frameworks
of “Helpin is Easy” project competition was 2.8 million
roubles, and the winners raised additional 1.5 million
roubles of co-funding from their organisations and
partners. In May 2020, volunteers from RUSAL
congratulated 94 veterans of World War II on the 75th
anniversary of the Great Victory.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
85En+Group Annual Report 2020
In the Metals segment, large-scale charitable event
“From Siberia With Love”, aimed at developing a
culture of charity and raising private donations, attracted
more than 4,000 participants and spectators from
Krasnoyarsk and Achinsk.
Sports and healthy living
En+Group supports programmes to ensure healthy
living and promote the well-being of local people. One
of our largest sports and healthy lifestyle projects in
Russia is ‘Get on Your Skis Everyone!’, runs since 2016
as a partnership between En+Group, RUSAL, and
the Russian Ski Racing Federation. We have built
partnerships with regional sports authorities and ski
racing federations, and improved the quality of ski
infrastructure by upgrading ski resorts, stadiums and
other facilities. In 2020, a ski base was built in Tulun,
as part of the rehabilitation of the social infrastructure
of the city, which suffered from severe floods in the
summer of 2019. The Company also provided the
necessary sports equipment. Total investments in this
project comprised about 14.5 million rubles. New project
for construction works of the ski base in Divnogorsk also
started in 2020. En + Group and RUSAL conducted the
second ‘Best Ski Coach of the Year’ competition, through
which five trainers won scholarships. To popularise and
promote skiing to a mass audience, the project has
social networks on Instagram, VKontakte, Facebook
and YouTube, and publishes unique content for cross-
country skiing enthusiasts of all ages with the
involvement of leading Russian skiers.
Another area of focus is the improvement of healthcare
in vulnerable communities. We believe that healthy
communities encourage strong development and
perform better in all aspects of life. RUSAL has for a
long time continued to support the Guinean healthcare
system. All of RUSAL’s enterprises in Guinea have their
own medical services. This includes four dispensaries,
and a hospital with round-the-clock care teams that
examine workers before their shifts and provide
emergency medical care. Our patients receive
consultations and treatment on a regular basis, and
children are vaccinated against infectious diseases.
We provide medical staff with high-level training and
hold health education events for workers.
In July 2020, RUSAL chartered a plane stocked with
humanitarian aid medical cargo to combat the spread of
the COVID-19 pandemic to Guinea. The cargo included
dozens of items of medicines well as modern medical
equipment and supplies for the treatment of patients
with a confirmed COVID-19 infection.
Supporting community environmental programmes
Environmental safety continues to be a vital area of
En+Group’s sustainability strategy. We carry out a series
of projects aimed at protecting unique landscapes in the
territories where we operate. Our initiatives have received
positive responses from regional and federal governments,
as well as from residents who appreciate local nature.
Through environmental social projects, the Group seeks to
cooperate with local organisations to facilitate a synergetic
effect. A key environmental programme for the Group is
‘Nature Matters’, which brings together a variety of
activities to promote the protection of Lake Baikal and
other water bodies and natural territories, including
volunteering, environmental protection events, and
eco-education based on collaborations with non-profit
organisations and local activists.
In 2020, En+Group launched an annual fund to invest in
new projects to protect Lake Baikal and other water bodies
in Siberia. The fund is delivered through our Environmental
SUSTAINABILITY REVIEW
Community engagement continued
The Metals segment The Power segment
River Day
A corporate environmental clean-up campaign,
‘River Day’, was carried out to clean up river
banks in the cities where the Company operates.
In 2020, Achinsk, Bratsk, Volgograd, Kamensk-
Uralsky, Krasnoturyinsk, Krasnoyarsk,
Novokuznetsk, Sayanogorsk and Severouralsk
joined the ‘River Day’. In two hours, the action
teams collected 1,400 bags (11 tonnes) of waste.
Once sorted, 360 bags of plastic, glass and metal
were sent for recycling.
Project 360 campaign
The 360 project is part of En+Group’s
comprehensive programme to protect Lake Baikal
and the nature areas of the Russian Federation
from adverse environmental impacts. The
programme has been in place since 2011 and
includes environmental, scientific, educational
and awareness-raising projects. As part of the
360 project, in 2020 we launched an online
eco-marathon, which attracted 905 people from
all over Russia. In 2020, more than 900 volunteers
and employees from Irkutsk, Bratsk, Ust-Ilimsk,
Divnogorsk, Miass and Nizhny Novgorod took part
in the 360 project’s regular campaigns to clean up
the banks of local water bodies.
86 En+Group Annual Report 2020
Project Grant Contest, which is a transparent and effective
tool for financing innovative projects that contribute to
community development, conversation of water bodies
and climate change action. The contest invites applications
from NGOs, academics and community groups and
provides support for environmental and social
entrepreneurship, environmental educational programmes,
volunteer projects, projects to improve infrastructure to
reduce anthropogenic pressure on natural areas, and
scientific research.
In the first year of our Environmental Project Grant
Contest, we received 83 applications. Fourteen
projects from Irkutsk, Ust-Ilimsk, Divnogorsk and cities
along the shores of Lake Baikal won the competition
and received funding.
Education
En+Group carries out various activities to widen
educational opportunities for residents in our regions
of operation. Activities include support for schools and
universities, the organisation of public exhibitions and
events, and the introduction of its own programmes.
In Russia, En+Group supports the development of
robotics to provide targeted training for young people
considering a career in engineering by encouraging
the development of key skills for the future, immersing
participants in real business environments, and
identifying priority areas for regional development. In
early 2020, we ran RoboSib-2020 which was the largest
event yet. Around 800 students from five regions of
Russia and China participated, with a total of more than
5,000 attendees. Of the 164 teams of schoolchildren
and students participating in the competition, 76 won
RoboSib awards. The winners included teams from the
Irkutsk Region, Krasnoyarsk Territory, the Republic of
Buryatia, Saint Petersburg, and China.
In 2020, the Group started the development of an
educational course for schoolchildren – ‘Energy in every
drop’ – to support their learning of the principles of
hydroelectric power plant operations. The course is
scheduled to launch at schools in 2021.
The training and development programme of the Metals
segment – ‘Leaders of Urban Change’ – provides courses
in the field of social and business design, corporate
volunteering, and urban environment development, as
well as holding inter-regional gatherings of leaders.
In Ireland, AAL participates in an industry-led initiative
called Limerick for Engineering. The primary goal of
the initiative is to increase the quality and quantity of
engineering talent in the region by encouraging primary
and post-primary students to explore the world of STEM
(Science, Technology, Engineering and Mathematics)
while also promoting engineering as a career choice. In
2020, AAL participated in the virtual Limerick for
Engineering Showcase, which gave students the
opportunity to meet with industry professionals who
provided information about their chosen fields and
demonstrated some of the interesting technology they
work with. Our representatives also visited local schools
and gave talks and demonstrations about engineering
and RUSAL Aughinish. In addition, a number of students
from local schools and universities visited the plant,
where they learnt about the alumina production process.
In Sweden, Kubikenborg Aluminium AB (KUBAL) also
pays significant attention to the local educational sphere,
participating twice a year in student fairs, establishing a
scholarship for students at Sundsvall University, and
inviting students from Sundsvall University to conduct
research for their thesis at the facility.
Partnership with the Great Baikal Trail
(BBT) Association
Through its partnership with the BBT Association,
an organisation focused on environmental education
and sustainable development, En+Group supports
responsible eco-tourism in the region, creating safe
tourist trails and reducing the impact of human
activity on the fragile Baikal ecosystem.
In 2020, we collaborated with BBT Association and
invested 4 million roubles to create a navigation
system and improve a popular 54 km-long tourist
route in the Pribaikalsky National Park.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
87En+Group Annual Report 2020
Research and development (R&D)
Since 2016, the Group has been engaged in the
‘Perovskite Solar Module Development’ project in
cooperation with the Faculty of Materials Science
of Moscow State University (MSU). The project
implementation was supported by the Federal Target
Programme until 2019, and is currently supported by
the Russian Scientific Foundation. In 2020, the research
provided the following results:
1. Two patents describing methods for producing films
of a perovskite-like structure were successfully
registered in seven foreign territories, including the
United States and the European Union. One more
patent is to be registered in early 2021
2. Two more R&D results were recommended for
registration with the patent authorities of the Russian
Federation to ensure legal protection
3. In June 2020, JSC Krasnoyarsk HPP and Moscow
State University signed a new master agreement for
scientific and technical cooperation with a view to
developing perovskite-silicon solar tandems
Through our sustainable development strategy,
En+Group consistently explores the impact of water use
modes on the environment and looks for opportunities
to reduce this impact.
The first stage of research within the ’Long-Term
Forecasting of Inflow to Lake Baikal Using Machine
Learning Hydrological Modelling Methods’ project
was completed in 2020. It included an analysis of
atmospheric circulation regularity amidst physical and
geographical conditions, and an analysis of the past and
present correlations between meteorological values and
circulation components. It also predicted temperature
and precipitation anomalies in the future using machine
learning methods with artificial supplementation of the
learning sampling. As part of the project:
– A database of water consumption observations at
12hydrological posts in the basin of Lake Baikal for
1971-2016 was created and verified
– Databases of meteorological parameter observations
at the network of weather stations (63 stations) in the
basin of Lake Baikal were created using open access
databases (Pik, Aisori, GSOD, rp5) and data of VNIIGMI
for 1960-2018
– A hydrological model of the inflow was formulated to
best describe the regional processes. A model of the
water inflow to Lake Baikal was calibrated and set up
based on the SWAT modelling software
For the first time, a physical and mathematical model
of the discharge generation was developed for the
entire basin of Lake Baikal. A model of such class was
previously developed solely for the basin of the Selenga
River, based on the ECOMAG modelling software, as part
of a scientific project of the Institute of Water of the
Russian Academy of Sciences (Moreido & Kalugin, 2017).
Comparing the reproduction quality of daily water
consumptions in the Selenga River near the Mostovoy
station showed a similar quality of the models for the
calibration period, and a much better quality than the
model developed for the control and verification period.
The developed hydrological model of Lake Baikal
will be used to create a software solution for scenario
calculations of the impact of weather and climate
conditions on the inflow to Lake Baikal and will enable
scenario calculations of long-term regulation (series of
dry years, wet years, cold and warm years, long-term
climate trend in accordance with IPCC scenarios, etc.).
Sustainable economic development
SUSTAINABILITY REVIEW
88
En+Group Annual Report 2020
Audit and Risk Committee
The Board of Directors has responsibility for the
efficiency and effectiveness of the financial and
economic activities of the Group and is responsible
for maintaining and reviewing the effectiveness of the
Company’s systems of internal control system and risk
management.
The Board has established an Audit and Risk Committee
(the “A&RC”), which assists the Board in its review of the
financial statements of the Group; ensures that systems
of internal control and risk management are in place and
operating effectively; oversees the internal and external
audit processes and performs such other activities as are
requested by the Board.
p. 108 Audit and Risk Committee Report
The Company’s structure includes the Internal Audit
Directorate (the “IAD”), which is independent of
management and which reports to the A&RC and the
Board. The IAD assists the A&RC and the Board in
overseeing the financial and economic activities of the
Group and the related systems of internal control and
risk management.
The IAD reports regularly to the A&RC concerning the
results of both scheduled and unscheduled audits; any
deficiencies identified in the system of internal control;
recommendations and corrective measures to be taken
by management; identified risks and related financial
exposures and mitigation measures.
Internal control system (ICS)
The IAD seeks to provide assurance to management
and shareholders of the Company that the Group’s
assets are safeguarded and profits are maximised;
that the Company complies with the requirements
of applicable laws and regulations; and that proper
accounting records are maintained.
The IAD seeks to ensure that an effective system of
internal control is in place and operating effectively
across the Group, including:
1. Operational and financial control:
– Conducting audits of the efficiency and effectiveness
of business processes across the operating companies
in order to identify and minimise risks associated with
ineffective management, and to enhance control of
operational and technological processes, commercial
activities, personnel management, implementation of
investment projects, financing, etc.
– Conducting audits to prevent and identify fraudulent
activities by management, employees and third-party
contractors (such as fraud, misappropriation, misuse of
the Group’s assets, sub-optimal use of materials and
time), and mitigate the effects thereof.
– Exercising control over commercial activities (including
the selection of suppliers of raw materials, other
materials, and services, including construction and/or
installation works) in the interests of effective cost
management for the Group (including by participating
in the Tenders Committee and overseeing the work of
Tender committee across the Group’s operating
companies).
The operational and financial control objectives are
achieved through comprehensive audits and controls
inspections conducted by the IAD in accordance with
the annual audit plan (approved by the A&RC) using a
risk-based approach. In addition, the IAD conducts
unscheduled audits as requested by management and
provides an independent opinion in the fields and areas
requiring immediate decision-making by management.
The IAD uses audit findings to develop corrective actions
aimed at minimising or eliminating any failures or
weaknesses identified by audits, with a view to
preventing such breaches in the future. The IAD regularly
updates management and the A&RC on its audit and
review findings, and on the status and implementation of
the recommendations it has provided to management.
Internal control and
risk management
A comprehensive framework of internal controls is in place across
the Group, designed to protect the Group’s assets, improve business
processes, and ensure compliance of the Group’s operating companies
with applicable laws and regulations.
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
89En+Group Annual Report 2020
2. Compliance control
– Auditing compliance with the requirements of creditor
banks, listing rules and other financial regulators,
including with respect to sanctions, etc.
– Auditing compliance with the internal regulations and
policies of the Group, designed to ensure compliance with
the requirements of the supervisory authorities, financial
institutions and other counterparties of the Company.
3. Regulation of business processes
– Development of the Group’s system of internal control
and mitigation of risks of common process violations/
losses and particular aspects of the Group’s activities
(system of authority delegation; control over conflicts
of interest, related-party transactions, compliance
procedures; control over business travel, etc.).
– Development of uniform standards of commercial
activities (e.g. Generalised Regulations on Purchases
in accordance with applicable law and regulations;
regulations on sales of illiquid assets of the Company).
4. Development and implementation
of projects to improve ICS
– Identifying cost management opportunities in
commercial activities (e.g. sales of illiquid assets –
regulations are reviewed and tools and measures
introduced aimed at improving the Company’s
commercial services efficiency, including the
reduction in cost of goods, works, and services).
– Providing recommendations and development
of terms of reference for automation of separate
modules of the e-document flow, general accounting
and management accounting systems.
Improvement of the
corporate system
of internal control
The IAD implemented a set of key measures in 2020
to support and improve the ICS.
1. Targets for control over the Group’s
commercial activities and development
of measures to increase the efficiency of
commercial activities:
– Reduction of costs for the purchase of key
commodities and materials was achieved through
improved commercial conditions and negotiations
as part of the control of procurement activities
– Goals regarding control over commodities and
turnover of goods and materials in the Power
segment’s companies were achieved; specialised
automated forms for inventory management were
developed and implemented
– The target for the sale of the Group’s illiquid assets
was exceeded by 20%
– Development of the regulation on the rating
assessment of suppliers and contractors;
– Update of the Procurement Regulations for all
enterprises of the Company
– Definition of the procedure of the Company’s Collegial
Purchasing Bodies and cooperation with its subsidiaries
with regard to procurement procedures
2. Development and adoption of a framework
of regulations for the ICS
– A unified document management system for all of
the Group’s entities has been introduced
– A standard for official documents has been introduced
– A catalogue of standard contract templates has been
developed
– Accounting systems and electronic document
management system of En+Group companies
have been improved, an indication of the integral
assessment in the online mode (API-gateway) of
information on counterparties according to external
sources has been introduced
INTERNAL CONTROL AND RISK MANAGEMENT
90
En+Group Annual Report 2020
The Company has established a risk management
system, which is an integral part of the Company’s
internal control system and corporate governance
framework, to reduce any potential threats to the
Company’s compliance with its corporate governance
standards and ensure consistent and sustainable
business development.
The Company’s risk management system provides for
the identification, financial and probabilistic estimation
and control over any change in the risk of both the
internal and external environment with regard to the
financial and/or economic activities of the Group’s
operating companies.
The vertical principle is used to manage the risks of the
Company, based on the identification of any risks to the
business processes of standalone operating companies
with subsequent consolidation at the Business level,
and then at the Company level, in accordance with the
regulating documents that stipulate the procedure
and responsibilities of all participants in the risk
management process.
Risk maps are used to illustrate the risks of operating
companies and the Businesses. Risk maps provide details
of each risk event scenario, estimates of possible risk
impact and measures aimed at mitigating the possible
negative impact on the activities of operating
companies, Businesses and the Company. The risk map
of the Company includes a list of all possible risks that
may threaten the objectives of the Company in the next
calendar year.
Risk status monitoring is undertaken on a quarterly
basis to analyse any changes, update the estimates for
existing risks and implement measures for controlling
identified risks, as well as to search for, identify and
estimate the impact of new risks arising during the
quarter/year.
The risk monitoring results are submitted to
management, the Chief Executive Officer, A&RC and
Board. Responsibility for effective risk management
rests with the Chief Executive Officer.
Key risk management
developments of the
Company in 2020:
1. 2020 Risk Map development and monitoring
on quarterly basis over the year
The En+Group’s Regulations on Risk Management
establish the procedure for the development of Risk
Maps by all entities of the Group for the coming year and
the quarterly review and update of the developed Risk
Maps. The results are provided to the Group’s executive
management and the Board of Directors.
2. Large-scale training on risk-management
fundamentals at all En+Group entities
During the period July-October 2020, the Group’s
conducted large-scale training on the risk management
system. The training took place on the Company’s
Corporate University platform and comprised a video
course and tests at the end of the course.
The training covered 3,300 Group employees. The
distance-learning format made it possible to accomplish
the task despite the COVID-19 pandemic.
In addition, starting 1 July 2020 the En+Group Risk
Management course became mandatory for all new
employees upon completion of their probationary
period, regardless of their position.
Regular risk management training will allow the
Company to increase the culture of risk management
and allow all Company employees to apply the tools
of a risk-oriented approach.
Risk identification
As part of its strategic, business planning and risk
processes, the Group considers how a number of
macroeconomic themes may influence its principal risks.
These are factors about which the Company should be
cognisant in developing its strategy, including long-term
supply and demand trends. They include, for example,
developments in technology, demographics, climate
change, and how markets and the regulatory
environment may respond. These themes are relevant to
the Group’s assessments across a number of its principal
risks. The Group will continue to monitor these themes
and the relevant developing policy environment at an
international and national level, and will adapt its strategy
accordingly.
Since March 2020, the Company has been monitoring
the evolving situation, and consequent emerging risk,
with regard to the spread of COVID-19. The Group has
been working with a variety of stakeholders, including
industry and medical organisations, to ensure its
operational response and advice to its workforce is
appropriate and commensurate with the prevailing
expert advice and level of risk.
Risk management framework
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
91En+Group Annual Report 2020
Risk impact on the Company Changes in 2020
High Higher impact
Medium N/C No change
Low Lower impact
Risk Description
Change in
2020 Mitigation measures
External and market risks
1 Environment
Pollution of land, water courses or air
due to equipment failure or human
error giving rise to penalties and/or
fines. Suspension of operations or loss
of license to operate
N/C Group’s environmental management
system
Consistent application of the Group’s
Environmental Policy
Engagement with national and local
governments on developments in
environmental legislation
Environmental KPIs for Company
management
2 Laws and regulations
Business impact of changes in, or the
manner of enforcement of laws and
regulations in Russia and globally, incl.
antimonopoly regulation, tariff
regulation, licensing and permits,
environmental regulation, HSE
regulation
Monitoring of changes in the regulatory
frameworks Interaction with the
regulatory authorities
3 Market – supply
demand, commodity
price volatility
Business impact of volatility in supply,
demand and/or prices of commodities
fundamental to the Group’s operations:
Metals segment: aluminium, alumina,
bauxite, power
Power segment: electricity prices in
certain segments of the Wholesale
Electricity and Capacity Market
(long-term contracts, ‘day-ahead’
market)
The Group monitors its key risks, and
conducts market research & analysis,
and business & scenario planning
The Company partially hedges its
market risks by using derivative financial
instruments
The Group’s principal risks, as set out in the table
below, are those risks which could prevent the business
from executing its strategy and creating value for
shareholders, or which could lead to a significant loss
of reputation. The Committee has carried out an
assessment of the principal risks facing the Company,
including those that would threaten its business model,
future performance, solvency or liquidity.
Risk impact is based upon an estimation of the
combined impact of probability and financial effect
of a given risk (i.e. a probabilistic assessment of the risk
impact on the Group). Thus, the higher the probability,
the higher the potential impact, and vice versa.
En+Group’s key business risks
INTERNAL CONTROL AND RISK MANAGEMENT
Risk management framework continued
92 En+Group Annual Report 2020
Risk Description
Change in
2020 Mitigation measures
4 Geopolitical Risks of a negative impact on the
Group in the case that new sanctions
are imposed by foreign states
In 2020, the sanctions previously
imposed by the US authorities were not
in effect after respective agreements
had been reached
Risks of a negative impact on the
Metals segment’s operations in various
countries (Guyana, Guinea)
The Company implements a series of
measures envisaged by the ToR in order
to have sanctions restrictions removed.
Independent auditing is done on a
regular basis to ensure compliance with
the ToR provisions
Continuous monitoring of the political
situation is exercised in the countries
where the Group operates
5 Force majeure –
natural disasters,
large-scale
accidents, epidemics
The Company may suffer major
damages to its production facilities,
or suspension/discontinuance of
operations as a result of natural
disasters, epidemics, terror attacks
Scenario planning and development of
early response measures
Implementing a set of organisational and
practical measures to ensure asset safety
The COVID-19 pandemic that broke out
at the end of 2019 has led to additional
costs for the Company to protect
employees and provide assistance to
medical institutions in the regions where
the Company operates
Business and operational risks
6 Maintenance
These risks relate to equipment: failures
of equipment that may result in
damage to property, reduced output
or discontinued operations.
N/C Timely maintenance and repairs/
overhauls of equipment; modernisation
of production facilities
7 Legal
Risks that losses may be incurred
as a result of enforcement of court
judgements on claims by contractors
and shareholders of the companies of
the Group
Legal defence against lawsuits
Negotiating with the claimants
8 Commercial and
project
Risks of disruptions in supply chains
of goods and raw materials: sales of
the products from metals and coal
businesses require the use of railway
infrastructure with its uncertain
availability pattern
Risks of monopoly pricing at the
transportation market
Risks of projects not completed on
time/on budget
The implementation of large-scale
repairs has been delayed as
contractors were unable to perform
works as scheduled due to the
COVID-19 pandemic and the
restrictions imposed by the Russian
Government
Negotiating with suppliers of logistical
services
Ensuring timely supply and performance
under investment contracts in
accordance with the Group’s internal
regulations
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
93En+Group Annual Report 2020
Risk Description
Change in
2020 Mitigation measures
9 Health and safety Workforce or contractor injury due to
human error, equipment failure, or
workplace configuration, given the
endemic risks within the Power and
Metals segments relating to major
accident hazards and asset integrity
N/C The Group has arranged special-purpose
units to reduce the probability of
occupational injuries by means of
development of regulations, staff training
and ensuring compliance with the rules
relevant to complicated and hazardous
works through relevant control measures.
Supervisory authorities (the Russian
technological supervision service
ROSTECHNADZOR, and the consumer
rights compliance service
ROSPOTREBNADZOR, etc.) exercise
scheduled and ad hoc checks to control
compliance with HSE requirements
10 IT security & resilience
Risks of important data loss or damage
to components of the IT infrastructure
by hacking or malware attacks
Risks of failures of the automated
information control and management
systems of large industrial facilities
(HPPs, CHPs, etc.)
Testing the IT infrastructure for security
vulnerability detection
Use of uniform policies and procedures
for ensuring security of all Group entities
In 2020 amidst the COVID-19 pandemic,
substantial numbers of employees
shifted to home working through secure
communication channels and special-
purpose software
Financial risks
11 Financial
Financial impact of market volatility
regarding foreign exchange and
interest rates
Tax risks
N/C The Group exercises continuous control
over the financial condition of Group
companies. Monitoring of compliance
with the terms of the loan agreements
with banks is arranged at the Group’s
entities to ensure uninterrupted
operating activities. Regular control is
exercised over compliance with the
agreed financial covenants; tax planning
is undertaken, as well as control over tax
accruals and payments
Climate-related risks*
12 Transition risks
N/A
Financial or reputational impact due to
policy, legal, technology, and market
changes
N/C Constant monitoring of policy, legal,
technology, and market changes and
proactive management of this issues
13 Physical risks
N/A
Negative impact on operational
process due to climate change,
including water supply and
temperature variations
N/C Business and scenario planning; climate
research and analysis
*Climate-related risks
The Company considers and examines climate-related risks and opportunities. This year En+Group continued its
work on implementing the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
The Company aims to make its climate change reporting more transparent for stakeholders. For detailed information
please refer to the Sustainability Report.
p. 66 Sustainability review
INTERNAL CONTROL AND RISK MANAGEMENT
Risk management framework continued
94 En+Group Annual Report 2020
Commitment to the highest legal and ethical standards
is at the core of our business.
In 2020, En+Group developed and adopted a revised
version of its Code of Corporate Ethics to improve
corporate governance practices. The Code states the key
values, principles and standards of business conduct to
be adhered to by the employees and Board members;
the Code explains matters relating to employees,
third parties, customers and governmental authorities;
health, safety and environment; efficiency; ensuring
confidentiality of information; control and reporting,
and conflicts of interest. The Company maintains a
whistleblowing hotline for employees and other persons.
The Code of Corporate Ethics is publicly available in
Russian and English on the Company’s corporate website.
Corporate compliance system
En+Group operates an effective corporate compliance
system, subject to applicable laws, recommendations
issued by regulators, special requirements of the
industry and best practices. The Board of Directors has
established a Compliance Committee, which ensures the
development of and control over the Group’s compliance
management system.
Anticorruption compliance and corporate ethics
En+Group takes every opportunity to promote best
practice in fighting corruption, and consistently complies
with high standards of responsible and ethical behaviour.
In 2020, the Board of Directors adopted the Anti-Bribery
and Corruption Policy and the Policy on Conflict of
Interest of the Group. These policies provide the basis
for continuous improvement of the corporate culture
and implementation of the required components of
compliance at each and every Group company.
Sanctions compliance
En+Group is focused upon mitigating the risk of being
reincluded in the OFAC’s SDN list. A relevant compliance
programme has been devised and is being continuously
developed by the Company. The Board of Directors
approved the Sanctions Policy aimed at ensuring that
the En+Group, and its officers, directors and employees
comply with the applicable terms of sanctions removal.
To download Code of Corporate Ethics from our website:
www.enplusgroup.com/upload/iblock/98b/
Code-of-Corporate-Ethics-_Eng_.pdf
To download Anti-Bribery and Corruption Policy
from our website:
www.enplusgroup.com/upload/iblock/f78/Anti_Bribery-and-
Corruption-Policy-_Eng_.pdf
Ethics and compliance
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
95En+Group Annual Report 2020
CORPORATE GOVERNANCE
The Company has made substantial changes to its
corporate governance practices, as a result of the
OFAC Sanctions imposed on the Company and its
subsidiaries on 6April 2018 and their subsequent
removal on 27January 2019. Following these changes,
the Company has proven its commitment to high
international standards of corporate governance.
With effect from 9July 2019(the “Continuance Date”),
the Company was registered as an international public
joint-stock company in the Unified State Register of
Legal Entities of the Russian Federation and changed its
legal jurisdiction of incorporation from Jersey to Russia
(the “Continuance”). As a consequence, the Company’s
memorandum of association and articles of association
previously governed by Jersey law were superseded by
a new charter (the “Charter”), and the Company’s name
was changed to EN+ GROUP IPJSC.
Following the completion of the Continuance, the
Company’s ordinary shares were admitted to the Level
One Quotation List of the Moscow Exchange, thereby
creating a more diversified platform for investors in the
Company’s equity securities. The Company’s GDRs were
delisted from the Moscow Exchange and retained their
listing on the London Stock Exchange.
Following the Continuance, the Company aims to
comply with the recommendations of the Russian
Corporate Governance Code insofar as is appropriate
and practicable in the Group’s context. In its corporate
governance practices, the Company is also guided
by the Listing Rules of the Moscow Exchange.
As a company incorporated in Russia, with GDRs
listed on the Official List of the UK Financial Conduct
Authority and traded on the Main Market of the London
Stock Exchange, the Company is not required to comply
with the provisions of the UK Corporate Governance
Code. However, the Company has chosen to comply
with the UK Corporate Governance Code insofar as is
appropriate and practicable in the Group’s context.
Adhering to high standards of corporate governance
is an important element in attracting new investment,
strengthening the Group’s competitive position and
enhancing shareholder value. Good governance is based
on clarity of roles and responsibilities, and the Company
aims to ensure that its governance procedures are
applied to all areas of decision-making across the Group.
The Board of Directors is responsible to all of En+Group’s
stakeholders for the strategic management of the
Company. The day-to-day running of the Company falls
within the competence of the CEO
1
. However, the Board
retains responsibility for the approval of certain matters,
which affect the shape and risk profile of the Company
(see details below).
The Company’s corporate governance system outlines
the relationship between the Company’s shareholders,
the Board, the CEO and the management team, as well
as the remit and duties of the Board committees.
We consider the following corporate governance
principles to be fundamental to our operations:
– Transparency
– Open and clear decision-making
– Legal compliance, including clear and robust
compliance with requirements for the Company
to be and remain clear from the OFAC Sanctions
– Ongoing growth of the Company’s value for the
benefit of all stakeholders
1 The Charter uses the term “General Director” which is used interchangeably with the term “CEO” in public disclosures made by the Company.
Corporate governance
The Company is committed to high standards of corporate governance.
The Group intends to continue to improve in this area and to adhere to
internationally recognised standards of corporate governance, transparency,
disclosure and accountability applicable to listed companies.
96 En+Group Annual Report 2020
At a glance
12
directors
including 7independent
non-executive directors
6
Board committees
All Board
committees
are chaired by independent
non-executive directors
17 February
2020
En+ lists ordinary shares on
the Level One Quotation List
of MOEX
20 April
2020
En+ GDRs are delisted from MOEX
(17April 2020 was the last trading
date for the GDRs on MOEX)
1December
2020
the Corporate Governance and
Nominations Committee of the
Board was divided into the
Corporate Governance Committee
and the Nominations Committee
Timeline of corporate governance changes
17 February
2020
En+ Group’s ordinary shares
were admitted to trading on
the Level One Quotation List
of MOEX
20 April
2020
The Company’s GDRs were
delisted from MOEX (17April
2020 was the last trading
date for the GDRs on MOEX)
25 September
2020
The annual general
shareholders meeting of
the Company took place.
One new independent
non-executive director was
appointed to fill the vacant
position on the Board
1December
2020
The Board divided its
Corporate Governance and
Nominations Committee into
two separate committees:
the Corporate Governance
Committee and the
Nominations Committee
Corporate governance structure
The Company’s corporate governance structure includes the following key elements:
General shareholders
meeting
p. 98 for more information
Board
p. 100 for more information
CEO
p. 107 for more information
97
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
General shareholders
meeting
The general shareholders meeting (the “GSM”) is the
supreme governance body of the Company. The Charter
details the matters which fall within the powers of the GSM.
Voting at a GSM is conducted on the basis of one vote
per ordinary share. Decisions are generally passed by
a simple majority of shareholders voting in favour of a
motion at the meeting, save for a number of matters
which, under the Charter, require the adoption of a
special resolution (i.e. voting by a 2/3majority),
including, inter alia:
– The adoption of amendments to the Charter or
approval of the restated Charter
– A change in the Company’s status to non-public,
or obtaining public status
– The reorganisation of the Company by way of
consolidation, merger in the form of acquisition,
division, or divestment
– The liquidation of the Company
– The fragmentation, conversion or consolidation
of Company shares
– The acquisition of the Company’s outstanding shares
– An increase or reduction in the Company’s share capital.
The GSM is quorate if shareholders holding more than
half of the votes attached to the outstanding voting
shares in the Company participate.
If the quorum for holding of an annual GSM is not
reached, an adjourned GSM with the same agenda
shall be reconvened at a later date. If the quorum for
an extraordinary GSM is not reached, an adjourned
GSM with the same agenda may be reconvened at
a later date. An adjourned GSM is quorate if attended
by shareholders holding no less than 30per cent of
outstanding voting shares in the Company.
Resolutions of the GSM may be adopted either
in a meeting held in the form of joint presence
of shareholders or by absentee voting.
If the agenda of a GSM includes issues relating to the
election of the Board, approval of the Company’s auditor
for the audit of accounting (financial) statements prepared
under the Russian Accounting Standards (“RAS”), or
approval of the annual report and annual accounting
(financial) statements of the Company, it may be
conducted only with the joint presence of shareholders.
However, due to the COVID-19pandemic, in 2020 Russian
joint-stock companies were permitted
1
to hold GSMs with
the above-mentioned agenda via absentee voting.
An extraordinary GSM may be held based on a resolution
of the Board either adopted on its own initiative, or at the
request of a shareholder (or shareholders) holding no less
than 10per cent of voting shares in the Company as at
the date of the request. An extraordinary GSM convened
at the request of a shareholder (or shareholders) holding
at least 10per cent of voting shares in the Company shall
be held within 50days from the date of the request to
convene the extraordinary GSM.
The Charter envisages a procedure for electronic voting
at a GSM. Voting may be carried out in electronic form if
this is envisaged by the decision of the Board. In this case
ballots may be filled out in electronic form online, or sent
to the Company’s email address.
Information (materials) which are to be provided to the
GSM should be made available within 20days prior to
the GSM, and in the event of a GSM with an agenda item
on the Company’s reorganisation, within 30days prior
to the GSM.
1 In accordance with the Federal Law No. 50-FZ dated 18 March 2020 and the Federal Law No. 115-FZ dated 7 April 2020.
98 En+Group Annual Report 2020
Annual GSM
The annual GSM must be convened by the Board
between 1March and 30June of each year, and the
agenda must include the following items:
– The election of the Board members
– The approval of the Company’s auditor for the
audit of accounting (financial) statements prepared
in accordance with RAS
– The approval of the Company’s annual report
– The approval of annual accounting (financial)
statements of the Company
– The approval of distribution of profits of the Company,
including the payment (declaration) of dividends,
except for payment (approval) of any interim dividends.
The Company’s shareholders holding in aggregate at
least 2per cent of voting shares in the Company may
no later than 30days from the end of the reporting year
propose items for the agenda of the annual GSM and
candidates for election to the Board.
Due to the COVID-19pandemic, in 2020 the period
for holding an annual GSM in the Russian joint-stock
companies was extended to 30September 2020, and
their shareholders were given an additional opportunity
to propose items for the agenda of the annual GSM and
candidates to the relevant governance bodies by no later
than 27days prior to the date of the relevant annual GSM
1
.
Report on meetings held
In 2020, the first annual GSM of the Company after
the Continuance was held on 25September 2020
in the form of absentee voting.
The annual GSM considered and passed the
following resolutions:
1. “To approve the Company’s Annual Report for 2019”
2. “To approve the Company’s annual accounting
(financial) statements for the 2019 reporting year”
3. “Not to distribute the net profit received by the
Company for 2019 and not to pay dividends on
shares for 2019”
4. “To elect the Board of Directors of the Company
consisting of 12members from the list of candidates
approved by the Board of Directors of the Company:
1. Lord Barker;
2. Christopher Burnham;
3. Vadim Viktorovich Geraskin;
4. Anastasia Vladimirovna Gorbatova;
5. Nicholas Jordan;
6. Joan MacNaughton;
7. Elena Valerievna Nesvetaeva;
8. Ekaterina Vyacheslavovna Tomilina;
9. Carl Hughes;
10. Alexander Valentinovich Chmel;
11. Andrey Vladimirovich Sharonov;
12. Andrey Vladimirovich Yanovsky”
5. “To approve JSC KPMG as the auditor of the
Company (EN+ GROUP IPJSC)”
1 In accordance with the Federal Law No. 115-FZ dated 7 April 2020.
99
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Board of Directors
As at 31December 2020, there were twelve directors on
the Board, including seven independent non-executive
directors, four non-executive directors and the Executive
Chairman of the Board.
In accordance with the Barker Plan
1
and as a condition of
the removal of the Company from OFAC’s SDN List, the
Company announced on 28January 2019the immediate
appointment of seven new independent non-executive
directors, namely:
– Christopher Burnham
– Carl Hughes
– Joan MacNaughton
– Nicholas Jordan
– Igor Lojevsky
– Alexander Chmel
– Andrey Sharonov
On 8February 2019, Lord Barker was appointed as
Executive Chairman of the Board and Christopher
Burnham was appointed as Senior Independent Director.
Board composition and attendance
Board attendance and number of meetings in 2020
Appointed on Resigned on Attendance
2
Executive Chairman of the Board
Lord Barker 17.10.2017 — 20/20
Non-executive directors
Vadim Geraskin 08.02.2019 — 20/20
Ekaterina Tomilina 08.02.2019 — 20/20
Elena Nesvetaeva 08.02.2019 — 19/20
Anastasia Gorbatova 29.05.2019 — 20/20
Independent non-executive directors
Christopher Burnham 27.01.2019 — 19/20
Alexander Chmel 27.01.2019 — 20/20
Carl Hughes 27.01.2019 — 20/20
Nicholas Jordan 27.01.2019 — 20/20
Igor Lojevsky 27.01.2019 12.04.2020 3/3
Joan MacNaughton 27.01.2019 — 20/20
Andrey Sharonov 27.01.2019 — 20/20
Andrey Yanovsky 25.09.2020 — 5/6
Total number of meetings 20
During 2020, the Board held 20meetings and all of them were held in the form of absentee voting.
Lord Barker’s appointment came with additional powers
and responsibilities, designed to enhance the control of
the Board over the corporate governance systems and
procedures of the Company. The appointment was
aimed at further increasing cooperation between the
Board and the Company’s management, with the
ultimate objective of promoting the successful
performance of the Company.
The following individuals were appointed as non-
executive directors:
– Vadim Geraskin (appointed on 8 February 2019)
– Ekaterina Tomilina (appointed on 8 February 2019)
– Elena Nesvetaeva (appointed on 8 February 2019)
– Anastasia Gorbatova (appointed on 29 May 2019)
Each of the above directors, except for Igor Lojevsky
who unexpectedly passed away on 12April 2020, was
re-elected in 2020 by the annual GSM and is currently
serving on the Board. On 25September 2020, the
annual GSM also elected one new independent non-
executive director – Andrey Yanovsky. The quality and
breadth of experience of the directors, and the balance
of the Board’s composition are intended to protect and
promote the Board’s effectiveness.
1 Lord Barker’s plan regarding the removal of the OFAC Sanctions from the Company was announced on 27 April 2018 and subsequently adopted
by the Board on 18 May 2018. The plan provided for the reduction of Mr Deripaska’s shareholding to below 50% and the appointment of certain new
directors such that the Board would include a majority of newly appointed independent directors. Further details in connection with the Barker Plan
were disclosed, in particular, in the Company’s 2018 Annual Report, available on the Company’s website at www.enplusgroup.com/en/investors/
results-and-disclosure/annual-reports/.
2 The number of meetings attended/maximum number of meetings the directors could of attended.
100 En+Group Annual Report 2020
Board focus during the year
Area of focus Matters considered and decisions adopted
Strategy and risk 17 December 2020
– The Board considered an update on health and safety matters
– The Board considered an update on the situation relating to the COVID-19 pandemic
– The Board approved the Company’s Business Plan for 2021
18 November 2020
– The Board considered an update on health, safety and environmental matters
– The Board considered an update on the situation relating to the COVID-19 pandemic
18 September 2020
The Board approved the Company’s Sustainability Report 2019
18 August 2020
– The Board considered an update on health, safety and environmental matters
– The Board considered an update on the situation relating to the COVID-19 pandemic
23 June 2020
– The Board considered an update on health, safety and environmental matters
– The Board considered an update on the situation relating to the COVID-19 pandemic
15 May 2020
The Board preliminarily approved the Company’s Annual Report 2019
22April 2020
The Board considered an update on health, safety and environmental matters, including the situation
relating to the COVID-19 pandemic
26 March 2020
The Board considered an update on health, safety and environmental matters, including the situation
relating to the COVID-19 pandemic
Succession and
leadership
1December 2020
The Board updated the composition of the Compliance Committee and the Remuneration
Committee, and elected the Corporate Governance Committee and the Nominations Committee
28 September 2020
– The Board reappointed Lord Barker as a chairperson of the Board
– The Board refreshed the composition and appointed the chairpersons of all its committees
– The Board approved the terms of contracts with members of the Board
21May 2020
The Board updated the composition of the Remuneration Committee
26 March 2020
The Board approved the results of the assessment of the CEO KPI achievement for 2019
Corporate
governance
25 December 2020
The Board approved the Board of Directors Diversity Policy, the Corporate Code of Ethics, the
Policy on Human Rights, the Anti-Bribery and Corruption Policy, the Stakeholder Engagement Policy,
the Environmental Policy, the Health, Occupational, Industrial and Fire Safety Policy and Conflict of
Interest Policy.
1December 2020
– The Board divided the Corporate Governance and Nominations Committee into the Corporate
Governance Committee and the Nominations Committee and approved their Regulations
– The Board updated Regulations on the Remuneration Committee, on the Compliance Committee,
on the Corporate Secretary and on the Board of Directors
23 June 2020
The Board approved annual KPIs for the CEO for 2020
15 June 2020
The Board approved the general levels of D&O liability insurance
101
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Area of focus Matters considered and decisions adopted
Financial
performance
13 November 2020
The Board approved the standalone financial statements for the three and nine months ended
30September 2020
3 September 2020
The Board preliminarily approved the Company’s annual accounting (financial) statements for the
2019 reporting year
18 August 2020
The Board approved the consolidated interim condensed financial information for the six months
ended 30 June 2020 and the separate interim condensed financial information for the three and
six months ended 30 June 2020
15 May 2020
The Board approved the separate interim condensed financial information for the three months
ended 31March 2020
26 March 2020
The Board approved the consolidated financial statements for the year ended 31December 2019
and the separate financial statements for the year ended 31December 2019
– The convening of annual and extraordinary general
meetings of shareholders
– The establishment and termination of committees,
commissions, councils and other structural units of
the Board, approval of their personal composition
and regulations governing their operations
– The approval of internal documents of the Company
(or making amendments or additions thereto) on the
issues of environmental protection, insurance and risk
management of the Company
– The approval of the Company’s dividend policy
– The approval of certain transactions with a value
exceeding USD75 million
– The approval of share incentive plans and schemes
provided to employees, as well as annual Key
Performance Indicators for the CEO
– The approval of the Company’s auditors (for the audit
of financial statements in accordance with IFRS, or
other internationally recognised rules other than IFRS)
– The approval of the register holder of the Company
– The appointment of the sole executive body (the CEO)
of the Company.
The Board has taken steps to ensure that the members
of the Board (in particular, the non-executive directors)
develop an understanding of the major shareholders’
views about the Company. The directors, including
the Chairman, have direct face-to-face contact with
shareholders at regular investor meetings.
Directors and
officers insurance
The liability of members of the Board of Directors related
to the execution of their duties at the Company is insured
under a D&O liability insurance policy, which is renewed
annually and represents insurance against any in-scope
losses of the directors.
Board responsibilities
The matters specifically reserved for the Board under
the Charter include, inter alia, the following:
– The determination of the priority areas for the
Company’s activities
– The approval of the Company’s long-term strategy and
objectives and its overall management mechanism
– The day-to-day control over implementation of the
Company’s long-term strategy and objectives
– The approval of consolidated annual budgets and
material amendments made thereto
– Control over the Company’s core business and regular
evaluation of its business in the context of the
Company’s long-term strategy and objectives and
discharge of obligations contemplated by law and
the Charter
102 En+Group Annual Report 2020
Training and professional development
of Board members
Newly elected directors complete an induction training
programme upon their appointment.
The key elements of the programme include, inter alia:
– Personal meetings, in person or electronically, with
the CEO, the Chairman of the Board, the Corporate
Secretary, management team, and/or heads of
corporate business units
– Familiarisation with operations, including on-site visits
to the Group’s production facilities with briefings on
operational and managerial issues and meetings with
local management
– Provision of Board information packages, including
internal reporting documents for previous periods
– Provision of internal documents and Q&As with the
management team
– Mandatory training, including by external advisors,
on matters relating to insider trading, regulatory
disclosure and compliance with sanctions.
The Corporate Secretary runs the induction training
programme for newly elected directors of the Company,
and coordinates all involved parties with the assistance
of the Corporate Governance Committee and the
Nominations Committee.
As part of its Board training and professional
development efforts, the Board also regularly conducts
training sessions for Board members on various matters,
often led by external advisors. In 2020, due to the
unexpected COVID-19pandemic, all planned training
sessions were postponed until 2021.
Biographies of directors who served
on the Board in 2020 and have resigned
as at the date of this report:
Igor Lojevsky
Independent Non-Executive Director
Appointed: 27 January 2019
Resigned: 12 April 2020
Year of birth: 1957
Year of death: 2020
Dr Igor Lojevsky had extensive experience of board-level governance
in large, complex organisations with international scope of operations
in both an executive and non-executive capacity.
His past practical experience included chairmanship and membership
positions in the Strategic, Audit and Remuneration & Nomination
Committees of major banking, mining, transportation and energy
companies.
He exceled in strategic guidance, support and constructive challenge to
controlling shareholders, as well as CEOs and respective executive teams.
Mr Lojevsky served as Vice Chairman of Eastern Europe for Deutsche
Bank’s Asset & Wealth Management and Corporate Banking &
Securities divisions until his retirement in August 2014.
Mr Lojevsky originally joined Deutsche Bank in 2000 as a member
of the London corporate finance team, covering clients from the
energy industry in the countries of the former Soviet Union. He joined
Deutsche Bank from the World Bank in Washington, DC, where he was
Energy Policy Implementation Advisor for Europe and Central Asia.
Igor Lojevsky earned his PhD in Finance from EDHEC Business
School/EDHEC-Risk Institute. He was a Research Associate and a
member of the International Advisory board of EDHEC-Risk Institute
(London, Nice) and Adjunct Professor of the Higher School of
Economics (Moscow).
Dr Lojevsky co-authored a monograph on management titled Top
Management – Theory and Practice.
Dr Lojevsky remained a member of the Board until his unexpected
death on 12 April 2020.
103
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
BOARD OF DIRECTORS
A strong governance structure
Rt Hon The Lord Barker
of Battle PC
Executive Chairman
of the Board
Appointed: 17 October 2017
Appointed as Executive Chairman
of the Board: 8 February 2019
After an early career spanning both
international corporate finance and
the Russian energy sector, Lord
Barker entered the British House
of Commons in 2001through to
2015, during which time he served
as UK Minister of State for Energy &
Climate Change and Prime Minister
David Cameron’s special envoy on
Climate Change.
He was made a life Peer in 2015.
In February 2019, Lord Barker took
a leave of absence from the House
of Lords following his appointment
as Executive Chairman of the
En+Group.
Lord Barker has served on the
boards of the Environmental
Defense Fund Europe and The
Climate Group, and also chaired the
London Sustainable Development
Commission for Mayor Boris Johnson
2014-2016. He is also currently non-
executive chairman of EVN Group,
the leading UK developer of electric
vehicle infrastructure.
Lord Barker was educated at
Lancing College, London University
and London Business School.
Hon Christopher
Bancroft Burnham
Independent Non-Executive
Director, Senior Independent
Director
Appointed: 27 January 2019
Appointed as Senior Independent
Director: 8 February 2019
Christopher has a distinguished
career in government, diplomacy,
banking, and private equity. He is
a globally recognised expert in the
implementation of accountability
and transparency, having served
as Under Secretary General for
Management of the UN, Under
Secretary of State for Management
(acting), Assistant Secretary of
State for Resource Management
and CFO of the US Department
of State.
Christopher serves as Chairman
and CEO of Cambridge Global
Capital, which he co-founded. He
is the former Vice Chairman and
Managing Director of Deutsche
Asset Management.
He studied at Georgetown’s
National Security Studies Program,
graduated from Washington
and Lee University, and Harvard
University, where he earned an
MPA in 1990.
Carl D. Hughes
Independent Non-Executive
Director
Appointed: 27 January 2019
Throughout his career, Carl has
specialised in the oil and gas,
mining and utilities sectors. He
joined Arthur Andersen in 1983
and became a partner in 1993. He
was appointed the head of the
UK energy and resources industry
practice of Andersen in 1999
and subsequently of Deloitte in
2002. When Carl retired from the
partnership of Deloitte in 2015, he
was a vice-chairman, senior audit
partner and leader of the firm’s
energy and resources business
globally.
Carl holds a number of corporate
and charitable appointments. He
is a non-executive director and
chairman of the audit committee
of EnQuest Plc; a member of the
finance and audit committee of the
Energy Institute; a board member
of the Audit Committee Chairs’
Independent Forum; a member of
the General Synod of the Church
of England; and deputy chairman
of the finance committee of The
Archbishops’ Council.
He holds an MA in Philosophy,
Politics and Economics from the
University of Oxford, is a Fellow
of the Institute of Chartered
Accountants in England and Wales,
and a Fellow of the Energy Institute.
Joan MacNaughton
CB Hon FEI
Independent Non-Executive
Director
Appointed: 27 January 2019
Joan is currently Chair of The
Climate Group and of the Advisory
Board of the New Energy Coalition
of Europe. She sits on the Strategic
Advisory Boards of ENGIE UK,
the Grantham Institute at Imperial
College and LSE, London and
of the Joint Institute of Strategic
Energy Analysis in the USA.
Her former positions include Chair
of the International Energy Agency,
Executive Chair of the “World Energy
Trilemma” of the World Energy
Council and membership of many
academic and corporate Boards.
Joan held a wide range of positions
in the UK Government until 2007.
As Director General of Energy,
she played a key role in shaping UK
energy policy, including leading the
Clean Energy Action Plan of the
2005 Gleneagles G8 Summit.
Gender diversity
8 Male
4 Female
Board independence
1 Executive Chairman
7 Independent directors
4 Non-executive directors
Age
1 35–45
5 46–55
5 56–65
1 65+
Key
Committee chair
A
Audit and Risk Committee
R
Remuneration Committee
G
Corporate Governance Committee
H
Health, Safety and Environment
Committee
C
Compliance Committee
N
Nominations Committee
Full biographies can be found on the Company’s website: www.enplusgroup.com/en/company/corporate-governance/
board-of-directors/
A GA GCH R HNC C N
104 En+Group Annual Report 2020
Nicholas Jordan
Independent Non-Executive
Director
Appointed: 27 January 2019
Nicholas has more than 30 years’
experience in senior positions in
leading global financial institutions.
Nicholas serves as a Non-Executive
Director at ITI Capital. His previous
roles include Chairman of the
Supervisory Board at 4finance
Group S.A, CEO at Finstar Financial
Group, Co-CEO of Goldman Russia
and CEO of Russia & CIS at UBS
Group AG.
Nicholas worked for more than
10 years with Deutsche Bank,
becoming Vice Chairman and
Head of the Russian Office where
he was responsible for overseeing
the securities, trading and asset
management departments.
He has a BA in Political Science
from Boston University.
Ekaterina Tomilina
Non-Executive Director
Appointed: 8 February 2019
Ekaterina is currently the Director
of Corporate Finance at Basic
Element.
She joined RUSAL in 2000 as
the Head of its Structured Finance
and Capital Markets Department.
In 2012, Ekaterina was appointed
as Director of Corporate Finance
at RM Rail, which was a part of
Russian Machines, an industrial and
engineering company controlled by
Basic Element.
Ekaterina held various finance
positions at the investment company
Alfa Group and at Tyumen Oil
Company from 1997 until 2000,
where she oversaw finance, trade
and international matters.
Ekaterina is a graduate of the
Moscow State University of
International Relations (MGIMO), with
a degree in International Economics.
Andrey Sharonov
Independent Non-Executive
Director
Appointed: 27 January 2019
Andrey is a President of the
SKOLKOVO Business School,
Chairman of the Board of
NefteTransService, and the
Skolkovo Foundation, and a
member of several other boards.
He was a People’s Deputy of the
USSR, Chairman of the State
Committee for Youth Affairs,
served in the Ministry of Economic
Development and Trade, was
managing director and chairman
of the Board of Troika Dialog,
Deputy Mayor of Moscow for
Economic Policy, Chairman of the
Regional Energy Commission, and
headed the Executive Committees
of Moscow Urban and Open
Innovations Forums. He graduated
from Ufa State Aviation Technical
University and the Russian Academy
of Public Administration, and holds a
PhD in sociological science.
Elena Nesvetaeva
Non-Executive Director
Appointed: 8 February 2019
Elena has extensive experience
working on investments and in
the banking sector. She currently
heads the Investment Department
at Basic Element, which she
joined in 2009. At Basic Element
she manages the company’s
investment projects and portfolio,
and is responsible for driving the
group’s investment strategy and
asset valuation, acquisition projects
and M&A transactions.
She has worked in the banking sector
and for a timber-processing holding.
Elena graduated with distinction
from the Faculty of Economics
of the Syktyvkar State University,
the Russian Academy of National
Economy under the Government
of the Russian Federation, and the
Institute of Business and Business
Administration with a degree
in Management.
Alexander Chmel
Independent Non-Executive
Director
Appointed: 27 January 2019
Alexander is a Senior Advisor to
the Board Practice of Korn Ferry
in Russia and the CIS. He has
extensive experience working as an
independent director, chairman, and
member of the audit committees of
Russian public companies, including
ENEL RUSSIA, ChelPipe, and
Vysochaishy (GV Gold).
He spent 22years in senior
management roles in
PricewaterhouseCoopers, and
worked as an Adjunct Professor
and a Director of Corporate
Programmes at the Moscow School
of Management, SKOLKOVO. In
2016, 2019 and 2020 Alexander
was ranked as one of the Top 50
Independent Directors in Russia
in the national “Director of the
Year” rating. He holds a Diploma
in Company Direction from the
Institute of Directors (UK).
Vadim Geraskin
Non-Executive Director
Appointed: 8 February 2019
Vadim has significant experience
in government relations at both a
national and regional level.
Since September 2012, he has been
the deputy CEO for Government
Relations at Basic Element and
heavily involved in pushing the
company’s socioeconomic
development programmes in
the regions where it operates.
Vadim headed RUSAL’s Natural
Monopolies Administration for eight
years before joining Basic Element,
and previously headed RUSAL’s
transport and logistics administration
and Transport Department. From
1997 to 2000 he served as CEO
of Zarubezhcontract, a company
operating on the non-ferrous metals
market. From 1993 to 1997 he worked
for Aluminproduct Company.
Vadim graduated from Lomonosov
Moscow State University with a
degree in Physics.
Andrey Yanovsky
Independent Non-Executive
Director
Appointed: 25 September 2020
Andrey has been CEO of the
Moscow-based hospital operator
European Medical Center and a
member of its Board since 2014.
During his career, Andrey was
CEO of the Coca-Cola Company
franchise in Russia, CEO of Nidan
Juices (2003-2009), vice-president
for organisational development
and personnel at TNK-BP (2009-
2013), and Director for strategy
and organisational development
at NefteTransService (2013-2014).
Andrey graduated from the
Riga High Military School,
Kingston University, Strategic
Management, MBA.
Anastasia Gorbatova
Non-Executive Director
Appointed: 29 May 2019
Anastasia is the head of M&A
and International Projects at Basic
Element which she joined in 2013.
Anastasia has over 20 years of
professional experience with top
tier law firms and Russian key blue-
chip companies advising
on multibillion dollar cross-border
transactions on M&As, EPC, capital
markets and corporate finance.
Anastasia graduated from Moscow
State University of International
Relations (MGIMO) with a degree
in Law (cum laude).
R A AG G H AN N C R
G CHR
105
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
Overview
As at the date of this Report the Board has established
six committees to assist it in exercising its functions:
– The Audit and Risk Committee (the “A&RC”)
– The Corporate Governance Committee (the “CGC”)
– The Nominations Committee (the “NC”)
– The Remuneration Committee (the “RemCom”)
– The Health, Safety and Environment Committee
(the “HSE Committee”)
– The Compliance Committee (the “CC”)
All of the Committees are advisory bodies, whose
primary function is to make recommendations to
the Board on the matters falling within their remit.
Committee attendance and number of meetings in 2020
1
A&RC RemCom CGNC
HSE
Committee CC CGC NC
Executive Chairman of the Board
Lord Barker — — — 7/7 5/5 — —
Non-executive directors
Vadim Geraskin — — — 6/7 — — —
Anastasia Gorbatova — — — — 1/1 0/0 —
Elena Nesvetaeva — 0/0 — — — — —
Independent non-executive directors
Christopher Burnham 11/11 3/3 — — 5/5
Alexander Chmel 11/11 3/3 — 7/7 2/2 — —
Carl Hughes 11/11 1/1
2
4/4 — 5/5 0/0 0/0
Nicholas Jordan — 3/3 4/4 — — 0/0 0/0
Igor Lojevsky (until 12April 2020) — 2/2 — — 1/1 — —
Joan MacNaughton — — 4/4 7/7 3/3
3
0/0 0/0
Andrey Sharonov 11/11 — 4/4 — — 0/0 0/0
Andrey Yanovsky 3/3 0/0 — — — — —
Total number of meetings 11 3 4 7 5 0 0
The composition of the Company’s existing Board
committees was amended on 21 May 2020 and
28September 2020. They were further amended
on 1December 2020 simultaneously with the
reorganisation of the Corporate Governance and
Nominations Committee which was divided into the
Corporate Governance Committee and the Nominations
Committee. Details on each of the Committees, including
the reorganised Corporate Governance and Nominations
Committee, are set out below.
Committees of the Board
1 The number of meetings attended/maximum number of meetings the directors could have attended.
2 Until 1December 2020.
3 Until 1December 2020.
BOARD OF DIRECTORS
106
En+Group Annual Report 2020
Environmental Advisory Board
1
In order to enhance its commitment to sustainability, on
25 September 2019 the Company announced the launch
of its new Environmental Advisory Board (the “EAB”).
The EAB is chaired by Adnan Z. Amin, who was the first
Director-General of the International Renewable Energy
Agency, an intergovernmental organisation charged
with driving the transition towards the use of renewable
energy on a global scale.
The EAB function is to advise the Board on delivering
its environmental agenda and identifying emerging
environmental issues.
The members of the EAB include Joan MacNaughton,
Chair of The Climate Group and of the Advisory Board of
the New Energy Coalition of Europe, as well as external
advisors with specific expertise in both environmental
and wider sustainability issues.
Share Dealing Code
Upon admission to the Main Market of the London
Stock Exchange in November 2017, the Company
adopted a code on dealing in securities in relation to
the GDRs, the ordinary shares, and any other securities
of the Company, which is based on the requirements of
EU Market Abuse Regulation (EU) 596/2014. This code
applies to the directors and other relevant employees
of the Group (to the extent it does not contradict the
Charter and the applicable Russian law provisions).
Shareholdings of directors
As at the date of this Report Mr Carl Hughes holds
5,000 GDRs in the Company, which he acquired on
3April 2020. Aside from this, throughout 2020, none
of the directors directly or indirectly held any shares in
the Company and none of the directors concluded any
transactions with the Company shares.
Responsibility statement
The members of the Board confirm that, to the best
of their knowledge:
The consolidated financial statements, prepared in
accordance with IFRS as issued by the International
Accounting Standards Board and as adopted by the
European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Company and its subsidiaries, taken as a whole.
This Annual Report includes a fair review of the
development and performance of the business and the
position of the Company and its subsidiaries, taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
Sole executive body – CEO
Under the Charter, the CEO acts as the sole executive
body of the Company.
The CEO is responsible for directing the Company’s
day-to-day operations and holds all powers falling
outside the exclusive competence of the GSM and
the Board, including, inter alia:
– Acting on behalf of the Company without a power
of attorney (including by representing the Company
and entering into transactions on its behalf)
– Passing resolutions to establish branches and
representative offices of the Company
– Issuing powers of attorney, authorising their holders
to represent the Company.
The CEO is appointed by the Board for a period of
five years unless another term of office is established
by the Board.
Currently, the position of CEO is held by Vladimir Kiriukhin.
1 On 28 April 2020, the Board decided to temporarily suspend the work of the EAB due to COVID-19 pandemic. The Group remains committed to its
climate and broader environmental agenda.
107
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
The Audit & Risk Committee’s core
responsibilities are detailed below in
this section of the Annual Report and
can also be found on the Company’s
website (www.enplusgroup.com;
under Corporate Governance). These
responsibilities include, inter alia, to:
– Review the content and integrity
of the annual and interim financial
statements and advise the Board on
whether they are fair and balanced,
and provide the necessary information
for shareholders to assess the
Company’s performance, business
model and strategy
– Review the appropriateness of the
significant accounting policies,
judgements and estimates
– Monitor and review the effectiveness
of the systems of risk management
and internal control
– Monitor and review the effectiveness
of the Group’s IT environment,
including cyber security, ensuring
that related controls are adequate,
reliable and effective
– Monitor and review the effectiveness
of the Internal Audit Directorate
(the “IAD”)
– Oversee the relationship with the
external auditor, including fees for
audit and non-audit services; and
– Identify any matters in respect of
which it considers that action or
improvement is needed and make
recommendations to the Board as
to the steps to be taken.
Carl Hughes
Chair of the Audit & Risk Committee
Dear fellow shareholder,
The work of the Audit & Risk
Committee increased substantially
in 2020 due to the impact of the
COVID-19 pandemic on the Group
and the decision to tender our external
audit services with a view to appointing
new external auditors. However, these
additional matters did not detract from
the Committee’s focus on ensuring that
our systems of risk management and
internal control remained effective
throughout the year and continuing
attention to the Group’s financial
position and performance during this
challenging period.
This report explains how the
Committee has addressed the Group’s
financial and audit risks in the context
of the macroeconomic environment
and day-to-day operations, and how
we have taken these into account in
our oversight of risks, controls, financial
performance and debt management.
Our work in 2020 focused on the
following areas:
– Reviewing and challenging
management’s plans to address
the additional risks and financial
consequences of the COVID-19
pandemic, including reviewing and
recommending to the Board a revised
2020 Business Plan reflecting the
changed operating environment
– Overseeing the execution of our
internal audit and risk management
plans, with particular focus being
given to cyber security, financial
control effectiveness, project
management and business planning
– Reviewing and challenging key
business performance metrics and
accounting judgements, particularly
as regards the half-year and year-end
financial statements and disclosures
and
– Initiating and overseeing an external
audit tender process giving rise to
a final recommendation for the
appointment of Ernst & Young LLC
(“EY”) as the Group’s external auditor
with effect from 2021.
The external audit tender process was
a significant additional activity of the
Committee in 2020, undertaken jointly
with the audit committee of UC RUSAL
and in compliance with the Group’s
tendering requirements. Based upon
the Committee’s recommendation to
the Board, the Board has approved EY
as the Group’s external auditor for the
audit of IFRS financial statements and,
subject to approval by shareholders, EY
will also be appointed as the Group’s
external auditor for the audit of the
accounting (financial) statements
prepared under RAS, for the year
ending 31 December 2021. Therefore,
the year ended 31 December 2020 is
the final year for the exercise of audit
functions by JSC KPMG (“KPMG”).
Audit and Risk
Committee
108 En+Group Annual Report 2020
Composition
Pursuant to the Regulations on
the Audit and Risk Committee,
approved by the Board on
13December 2019, the A&RC
consists of members, all of whom
have been determined by the
Board to be independent
directors, recognised as such
pursuant to the Listing Rules
of the Moscow Exchange. The
Committee meets at least once
per quarter of the Company’s
financial year.
The current composition of the
A&RC is as follows:
– Carl Hughes, as chairman
– Christopher Burnham
– Alexander Chmel
– Andrey Sharonov
– Andrey Yanovsky
The A&RC is responsible, inter alia, for the following matters:
– Overseeing the integrity, completeness and accuracy
of the financial statements of the Company and the
consolidated financial statements of the Group
– Reviewing material aspects of the Company’s and its
subsidiaries’ accounting policies to ensure that they
are appropriate and consistently applied
– Reviewing the Company’s annual report (including
the annual consolidated financial statements) and
making recommendations to the Board with respect
to its contents
– Reviewing material matters and judgements (including
significant financial reporting estimates and
judgements) regarding the Company and the
consolidated financial statements
– Monitoring the adequacy, reliability and effectiveness of
operation of the Group’s systems of risk management
and internal control
– Reviewing and assessing the implementation of risk
management and internal control policies to ensure
that the systems of risk management and internal
control are adequate and operating effectively
– Monitoring and assessing any important new systems
(including IT systems) and ensuring that related
controls are adequate, reliable and effective
– Ensuring that the internal audit function is independent
and unbiased
– Assessing the effectiveness of the internal audit function
– Controlling the operating effectiveness of the system
for reporting potential cases of fraud by the Group’s
employees and third parties, and other violations within
the Group.
The A&RC is also responsible for reviewing the
effectiveness of the external audit process and of the
external auditor, in conjunction with any other relevant
Board committees.
109
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Role and composition of
the Audit & Risk Committee
The Board has responsibility for the efficiency and
effectiveness of the financial and economic activities
of the Group and is responsible for maintaining and
reviewing the effectiveness of the Company’s systems
of internal control and risk management.
The Board has established the Audit and Risk
Committee to assist the Board in its review of the
financial statements of the Group; ensure that systems
of internal control and risk management are in place and
operating effectively; oversee the internal and external
audit processes and perform such other activities as are
requested by the Board.
The Committee exclusively comprises independent
non-executive directors as set out above in this section
of the Annual Report.
Meetings of the Committee are normally attended by the
Chief Financial Officer, the Head of the IAD, and the lead
external audit partner. The Chief Executive Officer also
attends certain meetings as well as other management
representatives according to agenda.
The Chairman of the Committee regularly meets with
the external audit partner to discuss matters relevant
to the Company.
The Committee monitors its own effectiveness and that
of the IAD and the external auditor at least annually.
Through the annual review of the Regulations of the
Audit & Risk Committee, and regular meetings with
the IAD, key management personnel and the external
auditor, the Committee has concluded that its core
duties in relation to financial reporting, internal controls
and risk management systems, whistleblowing and
fraud, internal audit, external audit and reporting
responsibilities are being performed well.
Committee meetings during 2020
In line with the Committee’s annual schedule, the
Committee met on 5 occasions during 2020. A summary
of the main items discussed is set out below:
Financial reporting
– Key risks, judgements and uncertainties impacting the
half-year and year-end financial statements, including
reports from both management and the external auditor
– Appropriateness of the going concern assumption
– Review of half-year or full-year press release and
results statements
Internal audit, control and risk management
– Internal audit progress against the 2020 plan, including
key findings arising since the Committee’s last meeting
– Internal audit plan and budget for 2021
– Cyber security update
– Review of process and controls relating to the
development of the Group’s internal control framework
External audit
– Review of KPMG’s plan for the 2020 audit, including
key risks and planned approach
– Review of external audit fees subject to the audit plan
– Level of non-audit services provided by the
external auditor
– Evaluation of the quality, independence and objectivity
of KPMG
– Tender of external auditor services and recommending
the appointment of EY
Performance and effectiveness reviews
– The Committee and its governing Regulations
– IAD
– External audit firm
Financial reporting and significant financial
statement reporting issues
One of the Committee’s primary roles in relation to
financial reporting is to assess, amongst other things:
– The appropriateness of the accounting policies
selected and disclosures made, including whether
they comply with IFRS; and
– Those judgements, estimates and key assumptions that
could have a significant impact on the Group’s financial
performance and position, or on the remuneration of
executive and senior management.
The Committee considers these items together with both
management and our external auditor, who each provide
reports to the Committee in respect of these areas. The
main areas considered during 2020 included:
– Implications of the COVID-19 pandemic for the Group’s
operations and financial performance
– Accounting for the Group’s interest in Norilsk Nickel
– Property, plant and equipment, including valuation
of Group’s hydro assets, impairment testing and
related assumptions
Audit and Risk Committee continued
110 En+Group Annual Report 2020
– Assessment of the appropriateness of the going
concern assumption, including liquidity and loan
covenants compliance
– Separate judgements relating to the Company’s
standalone financial statements
– Judgements relating to provisions for taxation, legal,
environmental and other matters, including review of
strategic options.
A key requirement of our Annual Report is for the
report to be fair and balanced. The Committee and the
Board are satisfied that the Annual Report meets this
requirement, with appropriate weight being given to
both positive and negative developments in the year,
as a result of a robust preparatory process, including:
– Clear guidance and instructions provided to all
contributors
– Revisions to regulatory requirements communicated
and monitored
– A thorough process of review, evaluation and
verification of the content of the Annual Report
and Accounts to ensure accuracy and consistency
– External advisors, including the external auditor,
providing advice to management and the Committee
on best practice with regard to the creation of the
Annual Report and Accounts; and
– A Committee meeting was held in April 2021 to review
and approve the draft 2020 Annual Report in advance
of the sign-off by the Board.
External audit
One of the A&RC’s principal responsibilities is to monitor
the performance, objectivity and independence of the
Group’s external auditor.
KPMG has been the external auditor to the Company
since 2009. Until June 2020, the lead audit partner for
the Group was Yerkozha Akylbek; he was succeeded
by Andrei Ryazantsev.
As part of the annual external audit review, the A&RC
considers the fee proposals and, in the context of the
relevant professional and regulatory requirements, the
effectiveness of the external audit process in determining
whether to recommend the reappointment of the
external auditor. The effectiveness of KPMG was formally
evaluated by the Committee during the year and it was
concluded that the Committee continued to be satisfied
with KPMG’s performance and the firm’s objectivity
and independence.
1 Total audit fees include RUSAL’s fees disclosed in its Annual report.
Given the longevity of KPMG’s tenure as the Group’s
external auditor, the Committee initiated and oversaw
a formal tender of the Group’s external audit services
during the year, jointly with the audit committee of
RUSAL, in compliance with the Group’s tendering
requirements. As a consequence of this process the
Committee recommended to the Board that EY be
appointed as the Group’s external auditor with effect
from 2021. The lead group audit partner from EY will
be Mikhail Khachaturian. The Board has appointed EY
as the Company’s auditor for the audit of the IFRS
financial statements. The appointment of EY with
respect to the audit of accounting (financial) statements
prepared under RAS is subject to shareholder approval
at the Company’s annual GSM in 2021.
A transition plan and process has been agreed by
KPMG and EY with management and the A&RC to
ensure the smooth transition of external audit
responsibilities during 2021.
The Committee believes that the external auditor’s
independence and objectivity can potentially be affected
by the level of non-audit services provided to the
Company. However, the Committee acknowledges that
certain work of a non-audit nature is best undertaken by
the external auditor.
For the year ended 31 December 2020, the total fees for
audit and non-audit services provided by the Group’s
external auditor, KPMG, are set out below:
USDmn %
Total audit services 6.7 85%
Total non-audit services 1.2 15%
Total fees paid to the audit firm
1
7.9 100%
111
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Dear shareholders,
En+ Group is committed to the highest
standards of corporate governance,
recognising that transparency and
accountability are essential for us to
successfully create value for all our
stakeholders.
We recognise the significant advantage
attained through independent oversight
of business operations and ensure the
composition of the Board reflects the
need for constructive engagement and
evaluation across a diverse range of
issues. Seven out of the twelve directors
on our Board are independent non-
executives and all of our Board
committees are chaired by these
independent non-executive directors.
In 2020, the Company approved
a number of corporate policies
and undertook a comprehensive
restructuring to further enhance our
governance structure. For example,
in December, we reorganised our
Corporate Governance and Nominations
Committee into separate committees
focused on the two different functions.
The Company is committed to meeting
internationally recognised standards for
corporate governance. However, we
want to go further. Our aspiration is to
set a benchmark for Russian companies
listed on the London Stock Exchange.
With this goal in mind, we constantly
strive to identify global best practice
for corporate governance.
We are proud of the progress made
over the past year. The business is
committed to maintaining this
continuous improvement and will
ensure high standards of corporate
governance remain a central pillar of our
strategy for attracting new investment
and enhancing shareholder value.
Andrey Sharonov
Chair of the Corporate
Governance Committee and
the Nominations Committee
Corporate Governance
and Nominations
Committee
1
1 On 1 December 2021 the CGNC was divided into the Corporate Governance Committee and the Nominations Committee.
Composition
Corporate Governance
Committee
Pursuant to the Regulations on
the Corporate Governance
Committee approved by the
Board on 1December 2020, the
majority of Corporate Governance
Committee members are
represented by independent
directors recognised as such
pursuant to the Listing Rules of
the Moscow Exchange. The CGC
meets at least three times a year.
The current composition of the
CGC is as follows:
– Andrey Sharonov, as chairman
– Anastasia Gorbatova
– Carl Hughes
– Nicholas Jordan
– Joan MacNaughton
Nominations Committee
Pursuant to the Regulations on
the Nominations Committee
approved by the Board
on 1December 2020, the NC
members are represented by
independent directors recognised
as such pursuant to the Listing
Rules of the Moscow Exchange.
The NC meets at least three times
a year.
The current composition of the
NC is as follows:
– Andrey Sharonov, as chairman
– Carl Hughes
– Nicholas Jordan
– Joan MacNaughton
112 En+Group Annual Report 2020
Corporate Governance and
Nominations Committee
Pursuant to the Regulations on the Corporate
Governance and Nominations Committee approved
by the Board on 13 December 2019, the CGNC
consisted of four members, all being independent
directors recognised as such pursuant to the Listing
Rules of the Moscow Exchange. The CGNC met at
least three times a year.
The CGNC’s primary role was to oversee the
Company’s corporate governance matters and
determine the priorities of the Group in the area
of corporate governance.
The primary responsibilities of the CGNC were, inter alia,
the following:
– Conducting a detailed formalised self-evaluation and
external performance evaluation of the Board and its
members and the Board committees on an annual
basis and determining priority areas to improve the
Board’s capacity
– Organising external performance evaluation of the
Board and its members and of the Board committees
– Interacting with shareholders (including minority
shareholders) to develop recommendations to
shareholders regarding voting on the Board elections
– Analysing the corporate governance system and
corporate values of the Company for compliance with
the goals and objectives of the Company, and the scale
of its business and risks assumed
– Planning appointments so as to ensure continuity of
activities of the CEO, and developing recommendations
to the Board regarding nominees to the positions of
Corporate Secretary (head of the unit functioning as
the Corporate Secretary) and head of the Internal Audit
Service, and the CEO of the Company
– Assessing the independence of the Board members
– Taking part in the ongoing professional advanced
training of the Board members
– Analysing the current and expected needs of the
Company in terms of the professional qualifications of
the Company’s CEO, as dictated by the interests of the
Company’s competitiveness and development of the
Company, and succession planning for such persons.
In 2020, the CGNC held 4 meetings. The majority of
CGNC meetings have been to consider selection of
candidates as Board members of the Company or its
subsidiaries and recommendations to the Board on
approval of D&O policy.
Corporate Governance Committee
The CGC was established following the reorganisation of
the Corporate Governance and Nominations Committee
of the Board on 1 December 2020.
The CGC’s primary role is to oversee the Company’s
and the Group’s corporate governance matters.
The responsibilities of the CGC are the following:
– Determining the priorities of the Group in the area
of corporate governance
– Reviewing the corporate governance system and
corporate values of the Company for compliance with
the goals and objectives of the Company, and the scale
of its business and risks assumed.
In 2020, the CGC did not hold any meetings due to the
fact that it was only created in December 2020.
Nominations Committee
The NC was established following the reorganisation of
the Corporate Governance and Nominations Committee
on 1December 2020.
The NC’s primary role is to develop recommendations
to the Board on Board performance evaluation and
planning internal appointments.
The primary responsibilities of the NC are, inter alia,
the following:
– Conducting a detailed formalised self-evaluation and
external performance evaluation of the Board, its
members, and the Board committees on an annual
basis, and determining priority areas to improve the
Board’s capacity
– Organising external performance evaluation of the
Board and its members and of the Board committees
– Interacting with shareholders (including minority
shareholders) to develop recommendations to
shareholders regarding voting on the Board elections
– Planning appointments so as to ensure the continuity
of activities of the CEO, developing recommendations
to the Board regarding nominations for the position of
the Corporate Secretary (head of the unit functioning
as the Corporate Secretary), and head of the Internal
Audit Service, and the CEO of the Company
– Assessing the independence of the Board members
– Taking part in the ongoing advanced professional
training of the Board members
– Considering the current and expected needs of the
Company in terms of the professional qualifications of
the Company’s CEO, in the interests of the Company’s
competitiveness and development, and succession
planning for such persons.
In 2020, the NC did not hold any meetings due to the
fact that it was only created in December 2020.
113
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Dear shareholders,
In a very difficult year, which began
with a once in a life time global
COVID-19 pandemic, resulting in
excruciating social and economic
consequences, the En+ management
team excelled and worked tirelessly
on two fronts, safeguarding the safety
and health of our worldwide employees
while also ensuring the Company’s
finances remained strong. The Board
wholeheartedly thanks them for
their tremendous effort.
Despite all the challenges, the
Company continued to deliver
the robust operational performance,
resilience of its business model and
the viability of its strategy. In 2020, the
Remuneration Committee continued
its work with the aim to ensure that the
remuneration policy is directly linked
to the achievement of our strategic
goals and operational excellence.
The RemCom performed preliminary
reviews of matters relating to the
formation of effective and transparent
remuneration practices. Achievement of
the 2019 KPIs by the CEO was discussed
and relevant recommendations to the
Board were made. We also reviewed
and recommended to the Board the
2020 KPIs for the CEO.
We continue to review our
remuneration policy and approach
to assure a balance between the
achievement of short-term results of
operating activities and the long-term
objectives of the Company.
Nicholas Jordan
Chair of the Remuneration Committee
The RemCom is responsible, inter alia, for the
following matters:
– Developing and revising from time to time the
Company’s remuneration policy approaches applicable
to the Board members, the CEO, the Corporate
Secretary, the head of the IAD, and developing
parameters of short-term and long-term incentive
programmes for the CEO
– Supervising the introduction and implementation
of remuneration policy and various incentive
programmes in the Company, and revising the
policy and programmes as and when necessary
– Performing preliminary year-end performance
evaluation of the CEO in the context of the established
remuneration criteria, and performing a preliminary
assessment of achievement by the CEO of the targets
under the long-term incentive programme
– Developing recommendations to the Board on
determining the amount of remuneration and
principles of bonus payment for the Company’s
Corporate Secretary, performing a preliminary year-
end performance evaluation of the Company’s
Corporate Secretary, and issuing proposals on bonus
payments to the Company’s Corporate Secretary
– Supervising the disclosure of remuneration
policies and procedures, and of the ownership
of the Company shares by Board members and
the person acting as the CEO in the annual report
and on the Company’s website.
In 2020, the RemCom held three meetings and mainly
considered KPIs of the CEO.
Remuneration
Committee
Composition
The RemCom consists of a
majority of independent directors.
The RemCom meets at least three
times during the Company’s
financial year. The current
composition of the RemCom
is as follows:
– Nicholas Jordan, as chairman
– Christopher Burnham
– Elena Nesvetaeva
– Andrey Yanovsky
114 En+Group Annual Report 2020
1 Accrual basis.
2 Calculated based on a EUR/USDexchange rate of 1.23 as at 31 December 2020.
3 The CGC members (including the chairman) do not receive compensation for membership (chairmanship) in the CGC, if they at the same time
participate in the NC of the Board and receive relevant compensation for participation in (chairing) the NC of the Board.
4 Mandatory payments (pension provision, mandatory health insurance, etc.) as required by the legislation of Russian Federation.
Total annual remuneration of the members of the Board of Directors in 2020
1
Year ended 31 December 2020
Directors’ fee USD million
Discretionary bonuses
USD million
(% of total compensation) (% of total compensation) Total USD million
Executive Chairman
2,0 2,0 4,0
50% 50%
Independent Non-executive Directors
2,1 — 2,1
100%
Non-executive Directors
0,9 — 0,9
100%
Total
5,0 2,0 7,0
71% 29%
Remuneration
Disclosure Report
Objectives of the remuneration policy
Our remuneration policy is based on the
following principles:
– Attract, remunerate and retain qualified specialists
who will, in their turn, enable the Company to achieve
its strategic objectives
– Provide for a balance between the achievement
of short-term operating results and the long-term
objectives of the Company
– Create value for our shareholders, given the risks that
may impact the variable component of remuneration.
Remuneration structure
The Group’s remuneration structure is designed to ensure
a balance between engaging and retaining highly qualified
managers and the interests of our shareholders. The
established remuneration system comprises fixed and
variable components. The fixed component consists of
base salary, which is set in line with the market to ensure
retention of key executives, and reflects the level of
competence, experience, responsibility and personal
achievements of the respective manager. The variable
component consists of annual bonuses and may also
include one-off and target bonus payments and other
payments, that are determined based on the performance
against pre-set key performance indicators (KPIs).
Remuneration of executive management
1
In 2020, the remuneration of the key management
personnel, including the CEO, amounted to USD12million.
This remuneration includes base salary in the amount
of USD6million and bonuses in the amount of
USD6 million.
Remuneration of Board members
In 2019, the Board considered and approved the general
levels of compensation for Board members.
All members of the Board, except for the Executive
Chairman, are entitled to receive remuneration of EUR
215 thousand (c. USD264 thousand)
2
gross per annum,
paid monthly.
All members of the Board, except for the Executive
Chairman, are entitled to receive additional remuneration
for serving on a committee or other structural unit of
the Board
3
:
– EUR 26 thousand (c. USD32 thousand)
2
gross per
annum for chairing a committee or other structural
unit of the Board
– EUR 18 thousand (c. USD22 thousand)
2
gross per
annum for participation in each committee or other
structural unit of the Board as a member
The aggregate amount of remuneration to Board
members in 2020 amounted to USD7 million, excluding
social insurance
4
.
In addition, in 2020, the Company paid a total of
USD0.3million as reimbursement of expenses incurred
by Board members in connection with the performance
of their functions.
115
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Structure of remuneration:
Element of remuneration Approach Indices and dependencies
Key changes
during the year
Base salary
Base salary is stipulated by
the agreements concluded
with each member of the
Group’s management team
and is aimed at attracting
and retaining high calibre
professionals
– Salary is set to ensure competitiveness
with other comparable Russian and
foreign industry peers
– Fixed remuneration reflects the level of
competence, responsibility and personal
achievements of the respective manager,
and his/her professional experience
Not applicable No changes
made during
the year
Benefits
Provided to support
successful fulfilment
of responsibilities by
compensation of additional
expenses associated with
these responsibilities
– The company ensures a competitive total
compensation portfolio for its employees,
providing them with meal expenses, certain
other reimbursements and medical insurance
Not applicable No changes
made during
the year
Pension
Retirement funding provision
– We do not fund any pension contributions
or retirement benefits, except for mandatory
contributions to the pension fund of the
Russian Federation, as required by Russian
law, which permits retiring employees to
receive a defined monthly pension for life
from the statutory pension fund
Not applicable No changes
made during
the year
Annual bonus
Ensures focus on and
alignment with strategic
goals of the Group
– Bonus payments for achieving personal KPIs
– KPIs for the CEO are developed by the
Remuneration Committee and approved
by the Board
– KPIs are set at the beginning of each
financial (calendar) year
– KPIs are regularly reviewed and updated to
ensure that they align with the Group’s goals
Examples:
– Financial performance – Adjusted
EBITDA; Free Cash Flow
– HSE & sustainability – Lost Time
Injury Frequency Rate (LTIFR);
ensuring the absence of
environmental incidents, accidents
or violations
– Strategy – Achievement of
strategic goals and successful
realisation of development projects
– Other objectives – In accordance
with the manager’s area of
responsibility
No changes
made during
the year
Board of Directors
members’ fee (excluding
Chairman of the Board
of Directors)
For participation in/chairing
board committees in
addition to payments as
Board members
– The objective in setting the fees paid to
Board of Directors members (excluding
Chairman of the Board) is to be competitive
with other comparable, listed peer companies
– Members of the Board receive a fixed
fee for participation in/chairing each
Board committee
1
Not applicable No changes
made during
the year
Additional compensation
and benefits
Optional bonus payments
for achievements beyond
the scope of the KPIs for
the relevant year
Paid for achievements that are important
for the Company, but which are outside the
main KPIs
Task specific No changes
made during
the year
Remuneration for other
risk-taking employees
To attract and retain high
calibre professionals
– Top managers of En+ Group subsidiaries
are considered as risk-taking employees
– Application of the Group’s executive
remuneration policy
– Aligned with the Group’s executive
remuneration structure
No changes
made during
the year
Remuneration Committee continued
116 En+Group Annual Report 2020
Compliance
Committee
The primary responsibilities of the CC are, inter alia,
the following:
– Ensuring the formation of a compliance management
system within the Group
– Taking part in the development of policies and other
internal regulations of the Company relating to matters
of compliance, and consistently following up on their
observance
– Ensuring that adequate compliance control is in place
in the Group
– Conducting due diligence in the event of any
reasonable doubt regarding observance of
compliance requirements and the provisions
of compliance documents.
The СС reviews its own performance and reassesses
the adequacy of procedures and guidelines in respect
of regulatory compliance.
In 2020, the CC held five meetings and considered
regular compliance reports and goals for 2021.
Composition
The CC was established following
the removal of the Company from
OFAC’s SDN list. The CC holds
meetings at least once per
quarter of the Company’s
financial year.
The current composition
of the CC is as follows:
– Christopher Burnham,
as chairman
– Lord Barker
– Anastasia Gorbatova
– Carl Hughes
Dear shareholders,
Corporate governance is foundational
to business success. With more than
thirty years’ experience in the area,
and as Chairman of the Compliance
Committee, this is something I take
extremely seriously. I am very proud of
the progress En+ has made over the
last two years in corporate governance.
In all areas the Company is led by a set
of fundamental principles: we are
committed to transparency, legal
compliance and to clear and open
decision-making. Furthermore, we
are focused on value creation for
the benefit of all shareholders and
stakeholders and ensure everything we
do reflects our responsibility to protect
the environment and safeguard the
health and wellbeing of our employees.
In 2020, we enhanced our high
standards further through new
corporate policies focused on,
among other things, our code
of ethics, conflicts of interest,
anti-bribery and anti-corruption.
An important part of the Board
of Directors’ remit is continued
compliance with the terms of sanctions
removal agreed with OFAC. OFAC
described the measures undertaken
by the Company as delivering
“unprecedented transparency”—a
standard to which we remain fully
committed. We are in regular dialogue
with OFAC and uphold a continuous
process of regular extensive audits and
monthly certification.
Adherence to the terms of
sanctions removal is just part of our
comprehensive compliance regimen.
As is expected for a group of our size,
complexity and international presence,
this regimen covers every aspect of our
business. It is supported through an
independent compliance function
which reports directly to the Board
and the Compliance Committee.
En+ is committed to setting the
standard of global governance, as we
continuously seek to attract investment,
strengthen our competitive position
and enhance shareholder value.
Christopher Burnham
Chair of the Compliance Committee
117
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
As a Group, we were among the first
aluminium producers to commit to a
1.5°C pathway by 2050. In January 2021,
we announced the aluminium industry’s
most ambitious greenhouse gas
emissions reduction targets: a 35%
decrease by 2030 (compared with 2018
levels) for Scope 1&2 emissions and a
pledge to be net zero by 2050. To ensure
our strategy for achieving these goals is
robust, and reflects the diverse interests
of our stakeholders, we are undertaking
in-depth consultations. The newly
created En+ Climate Change Taskforce
led by our Chief Operating Officer and
reporting to the Executive Chairman will
help drive the transformative change
required by the business. We intend
to outline our net zero pathway in
September 2021, which will be verified
and approved by the Science Based
Targets Initiative.
Joan MacNaughton
Chair of the Health, Safety and
Environment Committee
Dear shareholders,
The HSE Committee had a particularly
busy year in 2020. As well as reinforcing
management efforts to strengthen
health and safety performance, the HSE
Committee reviewed environmental
risks at its facilities in the wake of the
diesel spill at Norilsk Nickel, given that
warming temperatures appear to have
been a factor. The Committee were
satisfied that all risks were being closely
monitored and necessary actions were
in place to address them. The
Committee also oversaw the evolution
of a unified environmental strategy for
the Group, which is fundamental to our
success as a business and to our leading
role in delivering a sustainable future.
We deeply regret that there were four
fatal accidents involving En+ Group
employees during the year. We have
comprehensively reviewed each
accident to determine critical factors
and root causes, and to ensure that all
appropriate actions are taken to prevent
similar incidents occurring again.
While our lost time injury frequency
rate decreased for the Metals segment,
it increased overall in 2020 owing to an
accident involving a bus carrying our
employees in Ust-Ilimsk. Fortunately, all
those involved are safe. Preventative
measures have been implemented.
We have clear HSE policies and
management systems at all facilities,
with results and performance indicators
discussed at monthly top management
meetings and training regularly reviewed
to ensure employees are fully equipped
to operate safely. The HSE Committee
keeps a close watch on performance
and supports management efforts to
embed a strong health and safety
culture throughout our operations.
This year we have strengthened our
position as an environmental leader
and have continued to drive progress
towards greater emissions transparency
for aluminium.
Health, Safety
and Environment
Committee
118 En+Group Annual Report 2020
Composition
The HSE Committee meets at
least once per quarter of the
Company’s financial year.
The current composition of the
HSE Committee is as follows:
– Joan MacNaughton, as chair
– Lord Barker
– Alexander Chmel
– Vadim Geraskin
The primary responsibilities of the HSE Committee are,
inter alia, the following:
– Reviewing leading international research and best
practices in the area of health, safety and environment,
and, if necessary, assessing their impact and preparing
respective strategic recommendations to the Board in
relation to the Group
– Preparing recommendations to the Board on
formulating Group strategies, policies and instructions
in the areas of health, safety and environment
– Taking part in the development of policies and other
bylaws of the Company regarding health, safety and
environment
– Preparing recommendations to the Board on possible
participation, cooperation and consultations on health,
safety and environmental matters with government
authorities, NGOs and other companies or associations
– Controlling the Company’s compliance with
international standards, applicable laws and the
Company bylaws on health, safety and environment
– Benchmarking the Group’s operating results on
occupational safety and environment against global
best practices, and considering the results of such
benchmarking.
In 2020, the HSE Committee held seven meetings and
considered measures to prevent COVID-19 infection,
the diesel spill in Norilsk and actions to be taken by
the management, Health, Occupational, Industrial and
Fire Safety Policy, and the environmental and climate
strategy development plan.
119
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
EXECUTIVE MANAGEMENT TEAM
Our leadership team
Vladimir Kiriukhin
Chief Executive Officer (CEO)
Appointed: 1 November 2018
Joined the Group: January 2000
Vladimir oversees the Company’s
long-term strategy, business
development and cooperation
with key external stakeholders,
including regulators.
A long-serving member of
En+ Group, previously Vladimir
held several senior positions at
EuroSibEnergo, including CEO.
He held senior positions at Russian
Aluminium and MAREM+. Vladimir
was also a Chairman of the Board
at Irkutskenergo, Chairman of the
Board at Krasnoyarsk HPP, served
in the Board of RUSAL.
He is a member of the
Governmental Commission on
Electric Power Sector Development,
which coordinates regulatory
decisions on key issues facing the
Russian electric power industry.
He graduated from the All-
Union Institute of Interindustrial
Information with a PhD in
engineering, having previously
obtained a major in mathematics
from the Higher Naval School of
Radio Electronics.
Vladimir does not hold any shares
in the Company and has not
entered into any transactions with
the Company shares during 2020.
Mikhail Khardikov
Deputy CEO –
Chief Financial Officer
Joined the Group: November 2010
Mikhail is responsible for finance,
tax, treasury and supervision of
budget, reporting and consolidation
of subdivisions on the Group level,
as well as operational management
of the Power segment.
He joined the Company’s subsidiary
EuroSibEnergo in 2010 as Investor
Relations Director, and then served
as Corporate Finance Director. In
2014, he was appointed as CFO and
in 2018 as a CEO of EuroSibEnergo.
Mikhail was appointed as Deputy
CEO – Chief Financial Officer of
En+ Group in 2019.
Prior to that Mikhail held senior
positions at Bashkirenergo, OGK-3,
HC Metalloinvest and COALCO.
Mikhail graduated from the
Academy of Public Administration
under the President of the
Russian Federation with a PhD
in economics in 2009, having
previously obtained a major in
Business Administration from the
Academy of National Economy
under the Government of the
Russian Federation in 2007.
Vyacheslav Solomin
Deputy CEO –
Chief Operating Officer
Joined the Group: November 2007
Vyacheslav focuses on day-
to-day operations and project
management, implementation
of management best practices,
and digital strategy, as well
as strengthening the Group’s
environmental practices
and overlooking sustainable
development strategy.
He joined the Group in 2007
as CFO of EuroSibEnergo, where
he was appointed as Deputy CEO
in 2010. In 2014, he was appointed
as CEO of EuroSibEnergo.
Before joining EuroSibEnergo,
he held senior positions with
the financial departments of
INTER RAO UES Power
Generating Company and
SIBUR Holding. He also worked
for PricewaterhouseCoopers for
nine years.
Vyacheslav graduated from
Far Eastern State University,
Vladivostok and the University of
Maryland University College (USA).
Natalia Albrekht
Deputy CEO –
Chief People Officer
Joined the Group: September 2019
Before to joining the Group, Natalia
was Executive Vice President for
Organisational Development and
Human Resources at VimpelCom
for six years.
Prior to that, she headed the HR
department of VTB Bank as a
Senior Vice President, held the
position of Vice President of
Rostelecom, was Deputy General
Director for Organisational
Development, Human Resources
and Administrative Issues in CTC
Media holding. She also served
as Director of the Subscription
Services Department at NTV Plus,
Deputy Director General for Sales
and Development of the Federal
Sales Center and General Director
of Integrated Settlement Center.
Natalia graduated from Bauman
Moscow State Technical University,
majoring in Applied Mechanics.
Natalia has an international CIPD
certification in HR management.
Gender diversity
9 Male
3 Female
Age Tenure
6 35–45
5 46–55
1 56+
4 1-3 years
1 4-9 years
7 10+ years
120 En+Group Annual Report 2020
Yulia Chekunaeva
Director for Capital Markets
and Strategic Initiatives
Joined the Group: September 2016
Yulia is responsible for capital
markets, investor relations,
international strategic partnerships,
stakeholder management, ESG,
sustainability reporting and Climate
Change initiatives.
She is serving as an Independent
Non-Executive Director at
Nordgold since March 2021. Yulia
was Executive Director of Goldman
Sachs Global Investment Research
and Head of Metals and Mining
Corporate lending in Sberbank CIB.
She graduated from Harvard
Business School Advanced
Management Program.
Yulia holds an MSc from Warwick
Business School (Economics and
Finance), a BSc in Economics from
Higher School of Economics, and
a BSc in Banking and Finance from
The London School of Economics
and Political Sciences.
Vera Kurochkina
Deputy CEO for
Public Relations
Joined the Group: February 2003
Vera is responsible for developing
and implementing communications
strategy, supporting the company’s
key projects through the media,
charity and social programmes,
internal communications, establishing
cooperation with industrial and non-
commercial associations.
Vera served as PR Director of
RUSAL. Between 2003 and 2006,
she was head of RUSAL’s media
relations department. She also
managed a group of projects at
Mikhailov & Partners, a strategic
communications agency. Prior
to this, she was a marketing and
communications manager at
PricewaterhouseCoopers.
Vera graduated from the Peoples’
Friendship University of Russia
with honours, and from the Finance
Academy under the Government
of the Russian Federation.
Georgy Borisov
Chief Compliance Officer
Joined the Group: September 2019
Georgy oversees compliance with
Group policies, standards and
procedures, provides guidance
to En+ Group businesses and
drives compliance with regulatory
obligations.
He is a transactional lawyer with
25 years of post-qualification
experience in Russia and in the
UK, holding Russian and US law
degrees. For many years prior to
joining En+ Group he practiced
law as an associate and later as a
partner at various international law
firms including Baker Botts, Latham
Watkins and K&L Gates.
Georgy graduated from the
international law faculty of
the Moscow State Institute of
International Relations in 1995,
and received his LLM degree in
1996 from The John Marshall Law
School in Chicago, Illinois, USA.
Igor Galanin
Human Resources Director
Joined the Group: June 2010
Igor is responsible for HR
management strategy, the
implementation of staff
engagement policies and the
management of recruitment
programmes.
From 2015 until 2019, he served
as Human Resources Director at
Irkutskenergo. Prior to that, Igor
has had extensive experience in
human resource management,
in a range of industries.
Igor graduated with a degree
in Engineering from the Nizhny
Novgorod State University of
Architecture and Civil Engineering
in 1998. He also received a degree
in economics from Lobachevsky
State University, Nizhny Novgorod,
in 2000. He obtained his MBA
degree (Personnel Management)
from Nizhny Novgorod State
Technical University in 2005.
Andrey Lymarev
Chief Technical Officer
Joined the Group: January 2017
Andrey is in charge of the
development of a medium- and
long-term technical strategy for
the Company. He manages the
maintenance of the Company’s
energy assets and oversees the
accident rate reduction strategy.
Before joining the Group, Andrey
was Deputy Chief Engineer for
Repairs and then Deputy Chief
Engineer for Maintenance at
INTER RAO Electricity Generation
Management from 2015 to 2016.
Prior to that, he worked his way up
from a turbine inspection operator
to Chief Technical Officer at the
Siberian Energy Company.
Andrey was awarded the Gratitude
of the Ministry of Energy of the
Russian Federation in 2008 and
an Honorary Diploma from the
Ministry of Energy of the Russian
Federation in 2012.
Egor Ivanov
Head of Control and
Internal Audit
Joined the Group: July 2001
Egor is responsible for the
implementation, structuring
and improvement of the internal
control system, supporting the
risk management system and
implementation and maintenance of
internal control over the purchasing
activities of the Company.
From 2012 to 2017, he served as
Head of Control, Internal Audit and
Business Coordination at RUSAL.
Previously he led RUSAL’s planning
and budgeting department, and
served as the Company’s First
Deputy CFO.
Prior to joining RUSAL, Egor
worked at ITERA Group.
Egor graduated with a degree
in accounting, analysis and
business auditing from the Financial
Academy under the Government
of the Russian Federation.
David Pogosbekov
Commercial Director
Joined the Group: June 2008
David’s responsibilities
include price optimisation in
procurement by streamlining and
consolidating purchases across
the Company, the development
of a unified procurement policy,
and the development of uniform
engagement standards for
suppliers and contractors.
He joined En+ Group in
2008 as a tax manager of the
Company’s hydropower segment,
EuroSibEnergo, where he was
appointed as Commercial Director
in 2011. David subsequently became
the CEO of EuroSibEnergo Trading
House in 2015. He started his career
in tax consulting with both Russian
and international consultancies
including Deloitte.
David graduated from the Financial
Academy under the Government
of the Russian Federation with a
degree in Finance and Credit.
Alexander Danilov
General Counsel
Joined the Group: July 2018
Alexander is responsible for
legal support to the Company’s
business/projects, legal
proceedings and general
supervision of legal functions
at En+ Group’s businesses.
Before joining the Company,
he held various legal positions
at LUKOIL Overseas Group. Prior
to his experience with LUKOIL,
he was a Partner at Akin Gump
Strauss Hauer & Feld LLP from
December 2006.
Alexander graduated cum laude
from the international law faculty
of the Moscow State Institute of
International Relations in 1995,
and received his LLM from the
University of Michigan Law School
in 2000, along with an MBA degree
from the University of Chicago
Booth School of Business in 2016.
121
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Sergey Makarchuk
Corporate Secretary
Corporate Secretary
Pursuant to the Regulations on the Corporate Secretary,
the Corporate Secretary of the Company is responsible
for the Company’s efficient ongoing interaction with
shareholders, coordination of the Company’s activities
in protecting the rights and interests of shareholders,
and support of the effective operation of the Board
and Board Committees.
The functions of the Corporate Secretary include,
inter alia:
– Participation in preparation and holding of GSMs
– Supporting the activities of the Board and the
Board Committees
– Implementing the Company’s disclosure policy
and ensuring the storage of the Company’s
corporate documents
– Liaisons between the Company and its shareholders,
and preventing corporate conflicts
– Improving the corporate governance system and
practices of the Company.
Sergey Makarchuk (year of birth: 1982) was appointed as
Secretary of the Board on 10April 2019and Corporate
Secretary of En+ on 14November 2019.
After working at various law firms, Sergey Makarchuk
worked for RUSAL Group in 2007–2010at the Corporate
Governance Department of RUSAL Global Management
B.V., responsible for legal corporate procedures, as well
as compliance of the Group’s foreign entities, the RUSAL
Board, and Board Committee support. He was also
involved in the Hong Kong SE & NYSE Euronext IPO
of RUSAL, and served as Secretary to the Disclosure
Committee of RUSAL, established in accordance with
HK Listing Rules compliance requirements.
In 2011–2014, after his experience with RUSAL,
MrMakarchuk was Deputy Director of the Corporate
Governance Department at JSC TNK-BP Management,
in charge of support of the TNK-BP Office of the Board
Secretary and other departments on legal corporate
matters, registration procedures, approvals, compliance,
document flow, the development of corporate
governance system methodology, and coordinating
shareholders representatives relations.
After the acquisition of TNK-BP by Rosneft, MrMakarchuk
continued working at Rosneft as Deputy Head of the
Foreign Assets Department/Project Director of the
Corporate Governance Department, with a similar remit.
Sergey Makarchuk graduated from the law faculty of
Lomonosov Moscow State University in 2004, where he
also obtained a special certificate in legal English translation.
The Corporate Secretary can be contacted with any
queries at: CS@enplus.ru.
Shareholdings of CEO and management team
As at the date of this Report, neither the CEO nor members
of the management team directly or indirectly hold any
shares in the Company. Throughout 2020, neither the
CEO nor members of the management team concluded
any transactions with the shares of the Company.
Conflicts of interest and loans issued
to members of the Board and the CEO
In 2020 and up to the date of this Report, the Company
has not been aware of any conflicts of interest affecting
any member of the Board or the CEO (including in
connection with their participation in the managing
bodies of the Company’s competitors).
In 2020, no loans have been issued by the Company
(or any Group company) to members of the Board
or the CEO.
122 En+Group Annual Report 2020
Ordinary shares
As at 31December 2020, the share capital of En+ Group
was divided into 638,848,896ordinary shares with the
par value of USD0.00007each.
Following the completion of the Lord Barker Plan,
67,420,324new shares in the form of Global Depositary
Receipts (GDRs) were issued to a subsidiary of Glencore
International AG, representing approximately 10.55%
of the enlarged share capital of the Company
(638,848,896shares), in exchange for the transfer to the
Company by Amokenga Holdings Limited of its 8.75%
holding in RUSAL in two stages. The first stage was settled
on 31January 2019, and 1.97% of RUSAL’s shares were
transferred to the Company following the removal of the
Company and RUSAL from the SDN list. The second stage
was settled on 3February 2020, and the remaining 6.78%
of RUSAL’s shares were transferred to the Company.
En+ Group voting and shareholder structure as at 31December 2020
Note: percentages may not add up to 100% due to rounding.
1 Independent trustees, who exercise voting rights attaching to certain shares of the Company (37.68% in total), as required by OFAC: D.J. Baker,
David Crane, Arthur Dodge, Ogier Global Nominee (Jersey) Limited.
2 Shares acquired from VTB by En+ Group’s subsidiary as per Company’s announcements on 6 and 12February 2020. Voting rights in respect
of 14.33% of shares are held by an independent trustee, while the remaining voting rights in respect of 7.04% of shares are exercised by
Executive Chairman of the Board, Lord Barker, at the Board’s direction.
3 Directly or indirectly. Under the agreement between the Company and OFAC, the major shareholder’s share cannot exceed 44.95% and the
voting rights cannot exceed 35%
On 18February 2020, En+ Group’s ordinary shares
started to be traded on the Moscow Exchange under
the trading ticker ENPG. The Moscow Exchange
included ordinary shares of the Company in its Level One
Quotation List. This listing created a diversified platform
for investors in equity securities of the Company, and
increased the accessibility of the Company to capital
markets. The Company’s GDRs are listed on the London
Stock Exchange. Investors are given optionality: they
may trade their preferred form of the Company’s
securities on their preferred stock exchange.
Information for
shareholders and investors
44.95%
Mr Deripaska
3
35.00%
Mr Deripaska
3
Voting rightsShareholding
9.95% Independent trustee
1
7.04% En+ Group’s Executive
Chairman of the Board
2
14.33%
Independent trustee
1
10.55%
Glencore
10.55%
Glencore
21.37%
En+ Group
2
6.64% Independent trustee
1
3.22% Volnoe Delo
3.42% Other shareholders
6.75% Former family members
6.75% Independent trustee
1
9.73%
Free Float
9.73%
Free Float
123
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
1 ISIN (International Securities Identification Number) – international identification number of the share.
2 Common Code – a nine-digit identification code issued jointly by CEDEL and Euroclear.
3 CUSIP (Committee on Uniform Security Identification Procedures) – identification number given to the issue of shares
for the purposes of facilitating clearing.
The Company’s management is not aware of any holdings
in excess of 5% of the Company’s share capital save for
those disclosed by the Company immediately above.
Global Depositary Receipts
En+ Group’s ordinary shares, in the form of GDRs, are
listed on the London Stock Exchange (ticker: ENPL).
One GDR represents one share.
Until 17April 2020 inclusive, En+ Group’s GDRs were
listed on the Moscow Exchange (ticker: ENPL), and were
included in the Level One Quotation List. The GDRs were
subsequently delisted from the Moscow Exchange on
20April 2020.
Financial calendar 2021
8 February 2021 4Q and FY 2020 Trading update
25 March 2021 FY 2020 Financial results
27 April 2021 1Q 2021 Trading update
27 July 2021 2Q and 1H 2021 Trading update
19 August 2021 1H 2021 Financial results (date TBC)
27 October 2021 3Q and 9M 2021 Trading update
En+ Group’s international securities identification numbers
London Stock Exchange
Rule 144A GDR Regulation S GDR
Ticker ENPL ENPL
ISIN
1
US29355E1091 US29355E2081
Common Code
2
171560667 170465199
CUSIP
3
29355E109 29355E208
Moscow Exchange
Regulation S GDR
(until 17 April 2020 inclusive) Ordinary shares
Ticker ENPL ENPG
ISIN US29355E2081 RU000A100K72
Instrument Trading platform Bloomberg code
GDRs London Stock Exchange ENPL LI
GDRs
Moscow Exchange (until 17
April 2020 inclusive) ENPL RM
Ordinary shares
Moscow Exchange (since 18
February 2020) ENPG RM
Depositary bank
The Company’s depositary bank is Citibank N.A.,
registered address: 388Greenwich Street New York,
New York 10013, United States of America.
The contact details of Citibank N.A. are:
Citibank N.A.
Tel: +1(212) 7235435
E-mail: CitiADR@Citi.com
Website: www.citiadr.factsetdigitalsolutions.com/www/
drfront_page.idms
Registrar
The Company’s registrar is Joint Stock Company
“Interregional Registration Center” (the “IRC”).
Contact details of IRC are:
JSC “IRC”
Tel: +7(495) 2344470
E-mail: info@mrz.ru
Website: www.mrz.ru
p. 30 Our competitive advantages
124 En+Group Annual Report 2020
The price of En+ Group’s GDRs on the LSE increased
from USD10as at 2January 2020 to USD10.4as at
31December 2020. En+ Group’s market capitalisation
increased from USD6.4billion at the beginning of the
Source: Bloomberg.
Source: Bloomberg.
The En+ Group’s GDR price on the Moscow Exchange
increased from RUB 646.6 as at 3 January 2020 to
RUB770 per ordinary share as at 30 December 2020.
En+ Group’s market capitalisation increased from
RUB413.1 billion at the beginning of the year to
RUB491.9billion on 30 December 2020. The
average daily trading volume during the year was
38,255 GDRs/ordinary shares.
Share repurchases
In the reporting period the Company has undertaken
the transaction discussed in more detail in the section of
this Annual Report entitled “Acquisition of VTB’s Stake”.
Save in relation to this transaction, during the reporting
period, the Company did not, either itself or through a
person acting in their own name but on the Company’s
behalf, repurchase any of the Company’s own shares,
and did not, either itself or through a person acting in
their own name but on the Company’s behalf, hold any
shares in treasury.
En+ Group share performance and trading volumes
London Stock Exchange
Moscow Stock Exchange
year to USD6.6billion on 31December 2020. The
average daily trading volume during that period was
6,817GDRs.
Analyst coverage
As at the end of 2020, eleven banks were covering
En+ GDRs, with seven investment banks issuing
a ‘BUY’ recommendation:
– Aton
– BofA Securities
– Citi
– Credit Suisse
– Gazprombank
– J.P. Morgan
– Renaissance Capital
– Sberbank CIB
– Societe Generale
– SOVA Capital
– UBS
En+ Group’s IR team interfaces with remaining brokers in
order to extend analyst coverage, while monitoring and
regularly communicating analyst consensus to the
Company’s Board of Directors and top management.
0
100
200
300
400
500
600
700
800
900
0
30
60
90
120
150
180
210
240
270
Trading volume, ths GDRs and ODRs (RHS)
Jan
2020
Feb Mar Apr May June July Aug Sept Oct Nov Dec
2020
GDR price, RUB per GDR (LHS)ODR price, RUB per ODR (LHS)
0
3
6
9
12
15
18
0
10
20
30
40
50
60
Trading volume, ths GDRs (RHS)
Jan
2020
Feb Mar Apr May June July Aug Sept Oct Nov Dec
2020
GDR price, USD per GDR (LHS)
125
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
CORPORATE GOVERNANCE
Credit rating
En+ Group credit rating:
– As at 31December 2020, the Group had the Fitch
rating ‘B+’, Outlook Stable
RUSAL credit ratings:
– Fitch: ‘B+’, Outlook Stable
– Moody’s: ‘Ba3’, Outlook Stable
– CCXR (Chinese rating agency): ‘AAA’, Outlook Stable,
assigned due to Panda Bonds issued in mainland China
Acquisition of VTB’s stake
On 12February 2020, the Company simplified its
ownership structure through the USD1.58billion
acquisition of VTB Group’s 21.37% stake in En+ Group.
En+ Group acquired 136,511,122shares from VTB Group
for cash at a price of USD11.57per share, a significant
discount to En+ Group’s fundamental valuation. The
removal of the VTB Group’s overhang causes no
disruption to arrangements made under the Barker Plan.
The acquisition was financed by a RUB 100.8billion loan
from Sberbank.
The deal provides future optionality to further simplify
the Group’s ownership structure. All or part of the shares
acquired may be used:
– In connection with strategic activity; and/or
– To undertake a secondary offering to increase free
float, broaden institutional ownership and improve
liquidity, subject to market conditions.
Dividend policy
On 14November 2019, the Board approved the
Regulations on Dividend Policy, which provide that when
determining the size of the dividends recommended to
the GSM, the Board shall calculate the minimum
dividends as:
– One hundred per cent (100%) of dividends received
from RUSAL
1
(as long as the Company is a RUSAL
shareholder), and
– Seventy-five per cent (75%) of Free Cash Flow of the
En+ Power Segment, but in any event at least USD250
million per year.
The Regulations on Dividend Policy is available on the
Company’s website.
Dividend payments
During 2020, the GSM of the Company did not approve
any dividend distributions. The Company anticipates that
dividend payments shall be resumed as soon as market
condition allow.
Information disclosure
The Company pays considerable attention to ensure that
any relevant information is delivered to all shareholders
and analysts at the same time, in accordance with the
applicable provisions of Russian law and the Moscow
Exchange disclosure requirements, as well as the Market
Abuse Regulations and the FCA’s Disclosure Guidance
and Transparency Rules.
Information is distributed through the following channels:
– The Moscow Exchange and UK regulatory news service
(RNS): the Company’s price-sensitive information is
disclosed through information disclosure systems
– The Company’s website: the Company publishes
releases on key events as well as operational and
financial results
– The Company’s webpage on the Russian regulatory
newsfeed (Interfax e-Disclosure).
Diversity
The Company is committed to promoting a diverse and
inclusive workforce, and recognises and embraces the
benefits of having a diverse Board to enhance the quality
of its performance.
The Board recognises the desire of stakeholders to have
greater diversity in senior management and on boards.
In 2020 En+ adopted the Board of Directors Diversity
Policy which aims to set out the Company’s approach
to promoting and maintaining the diversity of the Board.
To download the Diversity Policy from our website:
www.enplusgroup.com/upload/iblock/c86/
Board-of-Directors-Diversity-Policy-_Eng_.pdf
Inclusion
En+ aims to create an environment of inclusion, where
everyone is treated without discrimination.
We are working to ensure equal opportunity in
recruitment, promotion, training and reward for all
employees regardless of ethnicity, national origin,
religion, gender, age, sexual orientation, marital status,
disability, or any other characteristic protected by
applicable laws.
In the unfortunate event that existing employees should
become disabled, our ambition is to provide continued
employment, training and occupational assistance
where needed.
Email
The Investor Relations Department can be contacted
with any queries at: ir@enplus.ru
1 RUSAL’s dividend policy: annual payout of up to 15% of Covenant EBITDA, subject to compliance with relevant regulations and loan agreements.
Covenant EBITDA is defined as UC RUSAL’s EBITDA on an LTM basis as defined in the relevant credit agreements, adding dividends declared by
Norilsk Nickel and attributable to the shares owned by UC RUSAL.
126 En+Group Annual Report 2020
FINANCIAL STATEMENTS
Contents
Statement of Management’s Responsibilities 128
Independent Auditors’ Report 129
Consolidated Statement of Profit or Loss and Other Comprehensive Income 133
Consolidated Statement of Financial Position 135
Consolidated Statement of Cash Flows 136
Consolidated Statement of Changes in Equity 138
Notes to the Consolidated Financial Statements 140
EN+ GROUP IPJSC
Consolidated Financial Statements
for the year ended 31 December 2020
127
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
The following statement, which should be read in conjunction with the auditors’ responsibilities stated in the
auditors’ report on the audit of the consolidated financial statements set out on pages 129-132, is made with
a view to distinguishing the respective responsibilities of management and those of the auditors in relation to
the consolidated financial statements of EN+ GROUP IPJSC and its subsidiaries.
Management is responsible for the preparation of the consolidated financial statements for the year ended
31December 2020 in accordance with International Financial Reporting Standards (“IFRS”).
In preparing the consolidated financial statements, management is responsible for:
– selecting suitable accounting principles and applying them consistently;
– making judgements and estimates that are reasonable and prudent;
– stating whether International Financial Reporting Standards have been followed, subject to any material
departures disclosed and explained in the consolidated financial statements; and
– preparing the consolidated financial statements on a going concern basis, unless it is inappropriate to
presume that the Group will continue in the business for the foreseeable future.
Management, within its competencies, is also responsible for:
– designing, implementing and maintaining an effective system of internal controls throughout the Group;
– maintaining statutory accounting records in compliance with local legislation and accounting standards
in the respective jurisdictions in which the Group operates;
– taking steps to safeguard the assets of the Group; and
– detecting and preventing fraud and other irregularities.
These consolidated financial statements were approved by the Board of Directors on 24 March 2021 and
were signed on its behalf by:
General Director of Vladimir Kiriukhin
EN+ GROUP IPJSC
Statement of Management’s
Responsibilities for the
Preparation and Approval of the
Consolidated Financial Statements
for the year ended 31December 2020
128 En+Group Annual Report 2020
To the Shareholders of EN+ GROUP IPJSC
Opinion
We have audited the consolidated financial statements of EN+ GROUP IPJSC (the “Company”) and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at 31 December 2020, the consolidated
statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended,
and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at 31 December 2020, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with the independence requirements that are
relevant to our audit of the consolidated financial statements in the Russian Federation and with the International Ethics
Standards Board for Accountants International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the
requirements in the Russian Federation and the IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Independent Auditors’ Report
Audited entity: EN+ GROUP IPJSC.
Registration number. in the Unified State Register of Legal Entities:
No. 1193926010398.
Kaliningrad, Russia.
Independent auditor: JSC “KPMG”, a company incorporated under
the Laws of the Russian Federation, a member firm of the KPMG
global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited
by guarantee.
Registration number. in the Unified State Register of Legal Entities:
No.1027700125628.
Member of the Self-regulatory Organization of Auditors Association
“Sodruzhestvo” (SRO AAS). Principal registration number of
the entry in the Register of Auditors and Audit Organizations:
No.12006020351.
129
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
Valuation of property, plant and equipment
Please refer to the Note 11 in the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
The Group has significant property, plant and
equipment balance which is material to the
consolidated financial statements as at
31December 2020.
Current global market conditions, including
fluctuations in LME aluminium prices, сoal prices,
market premiums and alumina purchase prices,
uncertainty regarding volumes and tariffs for
electricity transmission, together with their
long-term forecasts, may indicate that some
property, plant and equipment items may be
subject to either impairment loss or reversal of
previously recognised impairment loss. This is in
particular related to such cash generating units
(CGUs) as aluminium and alumina plants, bauxite
mines, coal mines, Irkutsk GridCo and CHP.
As at the reporting date management performs
valuation of the recoverable amount of the
Group’s assets and cash generating units as
their value in use.
Due to the inherent uncertainty involved in
forecasting and discounting future cash flows,
which are the basis of the assessment of
recoverability, this is one of the key judgmental
areas that our audit is concentrated on.
For aluminium, alumina, bauxite, coal, Irkutsk GridCo and CHP CGUs
we evaluated the reasonableness of the expected cash flow forecasts
by comparing them with the latest budgets approved by the Board of
Directors, externally derived data as well as our own assessments in
relation to key inputs such as production levels, forecasted aluminium
sales prices, forecasted coal sales prices, forecasted volumes and
tariffs of electricity transmission and electricity and heat sales,
forecasted alumina and bauxite purchase prices, costs inflation,
foreign currency exchange rates, discount rates and terminal growth
rates. We also considered the historic accuracy of management’s
forecasts by comparing prior year forecasts to actual results.
We used our own valuation specialists to assist us in evaluating the
assumptions and methodology used by the Group.
In particular, we challenged:
– aluminium and alumina smelters, bauxite mines costs projections by
comparing them with historical results and industry peers;
– coal prices, tariffs for electricity transmission and electricity and
heat sales by comparing them with historical data, economic and
industry forecasts;
– volumes of electricity transmission by comparing them with
historical volumes and potential Taishet aluminium smelter demand;
– the key assumptions for long term revenue and costs growth rates
in the forecasts by comparing them with historical results, economic
and industry forecasts; and
– the discount rates used. Specifically, we recalculated the Group’s
weighted average cost of capital using market comparable information.
We also performed sensitivity analysis on the discounted cash flow
forecasts and assessed whether the Group’s disclosures about the
sensitivity of the outcome of the impairment assessment to changes
in key assumptions reflected the risks inherent in the valuation of
property, plant and equipment.
Revaluation of hydro assets
Please refer to the Note 11(e) in the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
The Group has a significant class of assets
which is material to the consolidated financial
statements as at 31 December 2020 and is
measured under revaluation model.
Changes in macroeconomic environment
including, but not limited to discount rates and
inflation, as well as a two year period from last
revaluation may indicate that as at 31 December
2020 carrying amount of hydro assets could be
different from their fair value.
As at the reporting date management
performed arevaluation of hydro assets
involving independent valuer.
Due to the significant judgement required to
determine depreciated replacement costs
(“DRC”) as well as inherent uncertainty
involved in forecasting and discounting future
cash flows used to test DRC for economic
obsolescence, this is one of the key judgmental
areas that our audit is concentrated on.
We evaluated competence, capabilities and objectivity of the
independent valuer used by the Group.
We used our own valuation specialists to assist us in evaluating the
assumptions and methodology used by the Group.
In particular, we challenged:
– methodology used for different types of assets;
– key assumptions including costs to reproduce or replace property,
plant and equipment, adjustments for physical depreciation and
functional obsolescence;
– reliability and appropriateness of market data sources used by
independent valuer;
– volumes of electricity sales and tariffs as well as costs projections by
comparing them with historical data, approved budgets and
economic and industry forecasts;
– the key assumptions for long term revenue growth rates in the
forecasts by comparing them with historical results, economic and
industry forecasts; and
– the discount rates used.
We also assessed whether the Group’s disclosures about the
revaluation of hydro assets are adequate.
EN+ GROUP IPJSC
Independent Auditors’ Report
Page 2
130 En+Group Annual Report 2020
EN+ GROUP IPJSC
Independent Auditors’ Report
Page 3
Other Information
Management is responsible for the other information. The other information comprises the information included in the
Group’s Annual Report but does not include the consolidated financial statements and our auditors’ report thereon. The
Group’s Annual Report is expected to be made available to us after the date of this auditors’ report.
Our opinion on the consolidated financial statements does not cover the other information and we will not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
identified above when it becomes available and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
Responsibilities of Management and Those Charged with Governance for the
Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
– Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.— Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
– Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
– Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
amanner that achieves fair presentation.
– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
131
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
The engagement partner on the audit resulting in this independent auditors’ report is:
Andrei Ryazantsev
JSC “KPMG”
Moscow, Russia
24 March 2021
EN+ GROUP IPJSC
Independent Auditors’ Report
Page 4
132 En+Group Annual Report 2020
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to, and forming part of,
theconsolidated financial statements set out on pages 140 to 207.
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
for the year ended 31 December 2020
Note
Year ended 31 December
2020
USD million
2019
USD million
Revenues 5
Cost of sales
Gross profit
Distribution expenses
General and administrative expenses
Impairment of non-current assets
Net other operating expenses 6 (111 )
Results from operating activities 976
Share of profits of associates and joint ventures 13 1,669
Finance income 8 160 83
Finance costs 8
Profit before tax
Income tax expense 10 (276 )
Profit for the year
Attributable to:
Shareholders of the Parent Company 684 860
Non-controlling interests 16(g) 332 444
Profit for the year
Earnings per share
Basic and diluted earnings per share (USD) 9
133
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
Note
Year ended 31 December
2020
USD million
2019
USD million
Profit for the year
Other comprehensive income/(loss)
Items that will never be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on post-retirement benefit plans 18(b) 3 (17 )
Revaluation of non-current assets 11(e) 230 —
Тахation 10(c) —
(17 )
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences on foreign operations 202
Foreign currency translation differences for equity-accounted investees 13 450
Disposal of subsidiary — 4
Change in fair value of cash flow hedge 19 34
Change in fair value of financial assets (1 ) (2 )
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income for the year 272
Attributable to:
Shareholders of the Parent Company 405
Non-controlling interests 16(g)
Total comprehensive income for the year 272
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to, and forming part of,
theconsolidated financial statements set out on pages 140 to 207.
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
for the year ended 31 December 2020 (continued)
134 En+Group Annual Report 2020
Note
31 December
2020
USD million
2019
USD million
ASSETS
Non-current assets
Property, plant and equipment 11
Goodwill and intangible assets 12
Interests in associates and joint ventures 13
Deferred tax assets 10(b) 165
Derivative financial assets 19 20 33
Other non-current assets 15(e) 208 108
Total non-current assets
Current assets
Inventories 14 2,339
Trade and other receivables 15(b)
Short-term investments 237 241
Derivative financial assets 19 30 75
Cash and cash equivalents 15(d)
Total current assets
Total assets 22,661
EQUITY AND LIABILITIES
Equity 16
Share capital — —
Share premium 1,516 1,516
Treasury shares —
Additional paid-in capital
Revaluation reserve
Other reserves 169 198
Foreign currency translation reserve
Accumulated losses
Total equity attributable to shareholders of the Parent Company 4,330
Non-controlling interests 16(g) 2,909
Total equity
Non-current liabilities
Loans and borrowings 17
Deferred tax liabilities 10(b)
Provisions — non-current portion 18 518 536
Derivative financial liabilities 19 28 27
Other non-current liabilities 121
Total non-current liabilities
Current liabilities
Loans and borrowings 17
Provisions — current portion 18 89 71
Trade and other payables 15(c)
Derivative financial liabilities 19 157 27
Total current liabilities
Total equity and liabilities
The consolidated statement of financial position is to be read in conjunction with the notes to, and forming part of, the consolidated financial
statements set out on pages 140 to 207.
Consolidated Statement
of Financial Position
as at 31 December 2020
135
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
Note
Year ended 31 December
2020
USD million
2019
USD million
OPERATING ACTIVITIES
Profit for the year
Adjustments for:
Depreciation and amortisation 11,12 781 806
Impairment of non-current assets 58 321
Net foreign exchange (gain)/loss 8 114
Loss on disposal of property, plant and equipment 6 12 24
Share of profits of associates and joint ventures 13
Interest expense 8 1,000
Interest income 8
Dividend income 8 (1 ) (1 )
Income tax expense 10 109 276
Impairment/(reversal of impairment) of inventories 3
Impairment of trade and other receivables 6 10 2
Provision for legal claims 10 22
Change in fair value of derivative financial instruments 8 226 21
Operating profit before changes in working capital 1,884
Decrease in inventories 212 535
Decrease/(increase) in trade and other receivables 166
(Decrease)/increase in trade and other payables 588
Cash flows from operations before income tax
Income taxes paid 10(f) (444 )
Cash flows from operating activities
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
The consolidated statement of cash flows is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set
out on pages 140 to 207.
136 En+Group Annual Report 2020
The consolidated statement of cash flows is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set
out on pages 140 to 207.
Note
Year ended 31 December
2020
USD million
2019
USD million
INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment 19 46
Acquisition of property, plant and equipment
Acquisition of intangible assets (37 )
Other investments (77 )
Return of prepayment for investment in associate — 44
Interest received 56 62
Dividends from associates and joint ventures
Dividends from financial assets 4 5
Proceeds from disposal of financial assets — 15
Return from/(contribution to joint venture) 1 (78 )
Acquisition of subsidiaries (1 )
Change in restricted cash — 30
Cash flows (used in)/from investing activities (77 ) 92
FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Acquisition of own shares 16(b) —
Acquisition of non-controlling interest — (5 )
Interest paid
Restructuring fees and expenses related to issuance of shares (26 )
Settlement of derivative financial instruments
Cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year, excluding restricted cash
Effect of exchange rate changes on cash and cash equivalents 60
Cash and cash equivalents at end of the year, excluding restricted cash 15(d)
Restricted cash amounted to USD 13 million and USD million at 31 December 2020 and 31December 2019,
respectively.
137
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial
statements set out on pages 140 to 207.
USD million
Attributable to shareholders of the Parent Company Attributable to shareholders of the Parent Company
Non-controlling
interests
Total
equityShare premium
Treasury share
reserve
Additional
paid-in capital
Revaluation
reserve Other reserves
Foreign currency
translation reserve
Accumulated
losses Total
Balance at 1 January 2019 — (62) (5,024) (5,143) 2,655 2,747 5,402
Comprehensive income
Profit for the year — — — —
— — 860 860 444 1,304
Other comprehensive income — — — — 9 367 — 376 295 671
Total comprehensive income for the year — — — — 9 367 860 1,236 739 1,975
Transactions with owners
Change in effective interest in subsidiaries (16(а)) 543 — — 4
251 (836) 477 439 (444) (5)
Total transactions with owners — — 4 251 (836) 477 439 (444) (5)
Balance 31 December 2019 1,516 — 198 (5,493) (3,806) 4,330 3,042 7,372
Balance at 1 January 2020 1,516 — 198 (5,493) (3,806) 4,330 3,042 7,372
Comprehensive income
Profit for the year — — — —
— — 684 684 332 1,016
Other comprehensive (loss)/income for the year: — — — 180 (29) (430) — (279) (465) (744)
Revaluation of hydro assets as at 31 December 2020
(16(f),11(e))
Taxation ( 10(с)) — — — — — — (45) (1) (46)
Other comprehensive loss — — — — (29) (430) — (459) (469) (928)
Total comprehensive income for the year — — — 180 (29) (430) 684 405 (133) 272
Transactions with owners
Acquisition of own shares (1(a)) — — —
— — — (1,579) — (1,579)
Total transactions with owners — — — — — — (1,579) — (1,579)
Balance 31 December 2020 1,516 169 (5,923) (3,122) 3,156 2,909 6,065
Consolidated Statement
of Changes in Equity
138 En+Group Annual Report 2020
USD million
Attributable to shareholders of the Parent Company Attributable to shareholders of the Parent Company
Non-controlling
interests
Total
equityShare premium
Treasury share
reserve
Additional
paid-in capital
Revaluation
reserve Other reserves
Foreign currency
translation reserve
Accumulated
losses Total
Balance at 1 January 2019 973 — 9,193 2,718 2,655
Comprehensive income
Profit for the year — — — —
Other comprehensive income — — — — 9 367 — 295
Total comprehensive income for the year — — — — 9 367 860 739
Transactions with owners
Change in effective interest in subsidiaries (16(а)) 543 — — 4
Total transactions with owners 543 — — 4 251 439 (444 ) (5 )
Balance 31 December 2019 1,516 — 9,193 2,722 198
Balance at 1 January 2020 1,516 — 9,193 2,722 198
Comprehensive income
Profit for the year — — — —
Other comprehensive (loss)/income for the year: — — — 180 —
Revaluation of hydro assets as at 31 December 2020
(16(f),11(e))
— — — 225 — — — 225 5
Taxation ( 10(с)) — — — (45) — — — (1 )
Other comprehensive loss — — — — —
Total comprehensive income for the year — — — 180 684 405 (133 )
Transactions with owners
Acquisition of own shares (1(a)) — (1,579) — —
Total transactions with owners — (1,579) — — — — — —
Balance 31 December 2020 1,516 (1,579) 9,193 2,902 169
139
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
1. Background
(a) Organisation
legislation of the British Virgin Islands on 30 April 2002 under the name of Baufinanz Limited. On 18 March 2004,
the Parent Company registered a change of its legal name to Eagle Capital Group Limited. On 25 August 2005, the
Parent Company changed its domicile to Jersey and was renamed to En+ Group Limited. On 1 June 2017, the Parent
On 8 November 2017, the Parent Company successfully completed an initial public offering of global depositary
receipts on the London Stock Exchange and the Moscow Exchange. On 17 February 2020, the Parent Company’s
ordinary shares were included into the “Level 1” part of the list of securities admitted to trading on Moscow
Exchange. On 20 April 2020, Company’s GDRs were delisted from the Moscow Exchange.
EN+ GROUP IPJSC is the parent company for a vertically integrated aluminium and power group, engaged in
aluminium production and energy generation (together with the Parent Company referred to as “the Group”).
As at 31 December 2020, Mr. Oleg Deripaska beneficially controls and exercises voting rights in respect of 35% of
the voting shares of the Company and his direct or indirect shareholding cannot exceed 44.95% of the shares of
the Company.
The other significant holders as at 31 December 2020 were as follows:
Shareholding Voting rights
Parent Company’s subsidiary 21.37% 7.04%
Citi (Nominees), including 14.10% 14.10%
Glencore Group Funding Limited 10.55% 10.55%
Other shareholders 19.58% 6.18%
Independent trustees — 37.68%
Glencore Group Funding Limited is a subsidiary of Glencore Plc.
Related party transactions are detailed in note 23.
In February 2020, the Group acquired 21.37% of its shares from VTB for cash at a price of USD11.57 per share.
The voting rights in respect of acquired shares representing 14.33% of Parent Company’s issued share capital are
retained with independent trustees. Votes attaching to the remaining 7.04% of shares are voted by the Chairman
of the Parent Company’s Board at the Board’s direction.
Based on the information at the Group’s disposal at the reporting date, there is no individual that has an indirect
prevailing ownership interest in the Parent Company exceeding 50%, who could exercise voting rights in respect
of more than 35% of the Parent Company’s issued share capital or has an opportunity to exercise control over the
Parent Company.
Notes to the Consolidated
Financial Statements
for the year ended 31December 2020
140 En+Group Annual Report 2020
(b) Operations
The Metals segment operates in the aluminium industry primarily in the Russian Federation, Ukraine, Guinea,
Jamaica, Ireland, Italy and Sweden and is principally engaged in the mining and refining of bauxite and nepheline
ore into alumina, the smelting of primary aluminium from alumina and the fabrication of aluminium and aluminium
alloys into semi-fabricated and finished products.
The Power segment engages in all major areas of the power industry, including electric power generation, power
trading and supply. It also includes supporting operations engaged in the supply of coal resources to the Group.
The Group’s principal power plants are located in East Siberia and Volga Region, the Russian Federation .
(c) Business environment in emerging economies
The Russian Federation, Ukraine, Jamaica and Guinea have been experiencing political and economic changes that
have affected, and may continue to affect, the activities of enterprises operating in these environments. Consequently,
operations in these countries involve risks that typically do not exist in other markets, including reconsideration of
privatisation terms in certain countries where the Group operates following changes in governing political powers.
Starting in 2014, the United States of America, the European Union and some other countries have imposed and
gradually expanded economic sanctions against a number of Russian individuals and legal entities. The imposition
of the sanctions has led to increased economic uncertainty, including more volatile equity markets, a depreciation
of the Russian rouble, a reduction in both local and foreign direct investment inflows and a significant tightening in
the availability of credit. As a result, some Russian entities may experience difficulties accessing the international
equity and debt markets and may become increasingly dependent on state support for their operations. The
longer-term effects of the imposed and possible additional sanctions are difficult to determine. The COVID-19
coronavirus pandemic has further increased uncertainty in the business environment (note 1(e)).
The consolidated financial statements reflect management’s assessment of the impact of the Russian, Ukrainian,
Jamaican and Guinean business environments on the operations and the financial position of the Group. The future
business environment may differ from management’s assessment.
(d) OFAC sanctions
On 6 April 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated,
amongst others, the Parent Company, JSC EuroSibEnergo (“EuroSibEnergo”) and UC RUSAL Plc (from 25 September
2020 UC RUSAL IPJSC, “UC RUSAL”,) as Specially Designated Nationals (“SDN”) (the “OFAC Sanctions”).
As a result, all property or interests in property of the Parent Company and its subsidiaries located in the United
States or in the possession of U.S. Persons were blocked, frozen, and could not have been transferred, paid,
exported, withdrawn, or otherwise dealt in. Several general licenses were issued at the time of the designation and
subsequently certain transactions were authorised with the Parent Company, EuroSibEnergo and UC RUSAL,
and with their respective debt and equity.
On 27 January 2019, OFAC announced the removal of the Parent Company and its subsidiaries, including UC RUSAL
and EuroSibEnergo, from OFAC’s SDN list and Blocked Persons with immediate effect. The removal was subject to
and conditional upon the satisfaction of a number of conditions including, but not limited to:
– ending Mr Oleg Deripaska’s control of the Group, through the reduction of his direct and indirect ownership
interest in the Parent Company to below 50%;
– establishing independent voting arrangements for the Parent Company’s shares held by certain shareholders;
– corporate governance changes, including, inter alia, overhauling the composition of the EN+ Board to ensure that
independent directors constitute the majority of the Board, and ongoing reporting and certifications by the Parent
Company and UC RUSAL to OFAC concerning compliance with the conditions for sanctions’ removal.
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FINANCIAL STATEMENTS
(e) COVID-19
The first months of 2020 have seen significant global market turmoil triggered by the outbreak of the novel
coronavirus. Along with other factors, including a sharp decrease in the price of oil, this has resulted in high volatility
on the stock market, with a considerable drop of indices, as well as a depreciation of the Russian rouble. As a result
of the COVID-19 outbreak in the first half of 2020, aluminium prices deteriorated. These factors had an adverse
impact on the revenue and profitability of the Group during second and third quarter of 2020, partially offset by
rouble depreciation, decreases in costs of raw materials linked to the oil price, and relatively stable electricity
consumption in Siberia region. During that period, considering depressed level of aluminium prices, management
is implementing a number of measures including, but not limited to, cost and working capital optimization. By the
start of December 2020, aluminium prices mostly recovered back to the pre-COVID and pre-sanctions level which
was also supported by the recovery of global aluminium demand and production. The current consensus is that
forecast aluminium prices will continue to remain at a slightly depressed level compared to the spot price as of early
December 2020 with subsequent recovery in the long-term. The global demand and production of aluminium is
also expected to demonstrate positive trends but may be affected by further COVID-19 developments. At the date
of these consolidated financial statements, the Group continues to assess the impact of the above factors on its
financial position and future cash flows and thoroughly monitors all developments. Considering the current Group
cash flows forecasts, management has concluded that the Group and the Parent Company will continue in
operation and be able to meet their obligations as they fall due. To mitigate the risks of potential COVID-19
developments on the Group’s operations management has implemented and continues to maintain a number of
measures including those related to production and supply processes continuity, staff safety and support of local
medical infrastructure in areas where the Group operates.
2. Basis of preparation
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”), which collective term includes all International Accounting Standards and related interpretations
promulgated by the International Accounting Standards Board (“IASB”).
Preparation of these consolidated financial statements is also regulated by Russian Federal Law 208-FZ dated
27July 2010 “On consolidated financial statements” in all aspects, except for language and functional and
presentation currencies, which are regulated by Russian Federal Law 290-FZ dated 3 August 2018 “On international
companies and international funds”.
The following amended standards and interpretations are effective from 1 January 2020 but did not have a
significant impact on the Group’s consolidated financial statements:
– Amendments to References to Conceptual Framework in IFRS Standards;
– Definition of Material (Amendments to IAS 1 and IAS 8);
– Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4);
– Interest Rate Benchmarking Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).
The Group applied Definition of a Business (Amendments to IFRS 3) to business combinations whose acquisition
dates are on or after 1 January 2020 in assessing whether it had acquired a business or a group of assets. The details
of accounting policies and details of the Group’s acquisition of subsidiary during the year ended 31 December 2020
are set out in notes 12 and 15(e).
A number of new standards are effective for annual periods beginning after 1 January 2021 and earlier application
is permitted; however, the Group has not early adopted the new or amended standards in preparing these
consolidated financial statements.
– Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
– Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16);
– COVID-19-Related Rent Concessions (Amendment to IFRS 16);
– Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
– Reference to Conceptual Framework (Amendments to IFRS 3);
– Classification of liabilities as current or non-current (Amendments to IAS 1);
– Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10
and IAS 28);
– IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.
142 En+Group Annual Report 2020
The above new standards, except for IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts,
are not expected to have a significant impact on the Group’s consolidated financial statements. The Group is
currently assessing the potential impact of IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance
Contracts on the Group’s consolidated financial statements.
(b) Basis of measurement
The consolidated financial statements have been prepared in accordance with the historical cost basis except as set
out in the significant accounting policies in notes 11, 15(e) and 19.
(c) Functional and presentation currency
The Parent Company’s functional currency is the United States Dollar (“USD”) as it reflects the economic substance
of the underlying events and circumstances of the Parent Company. The functional currencies of the Group’s significant
subsidiaries are the currencies of the primary economic environment and key business processes of these subsidiaries
and include USD, Russian Roubles (“RUB”), Ukrainian Hryvna and Euros (“EUR”). The consolidated financial
statements are presented in USD, rounded to the nearest million, except as otherwise stated herein.
(d) Use of judgements, estimates and assumptions
The preparation of consolidated financial statements in conformity with IFRSs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and reported amounts
of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements,
and the reported revenue and costs during the relevant period.
Management bases its judgements and estimates on historical experience and various other factors that are
believed to be appropriate and reasonable under the circumstances, the results of which form the basis of making
the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions and conditions.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRSs that have a significant effect on the consolidated
financial statements and estimates with a significant risk of material adjustment in the next year are discussed
innote25.
(e) Consolidation of OJSC Irkutsk Electric Grid Company (“Irkutsk GridCo”)
In December 2009, the Group sold to third parties under share purchase contracts all the shares in two Cypriot
companies of the Group controlling 34.16% of the shares in Irkutsk GridCo; subsequently the Group purchased
19.9% of the shares in Irkutsk GridCo. The arrangements attached to the share purchase contracts enable the Group
to retain certain rights with respect to the disposed shares and the sale did not result in deconsolidation. As at
31December 2020, the effective interest in Irkutsk GridCo held by the Group is 52.4% (31 December 2019: 52.4%).
As laws and regulations in the electricity sector in Russia are continuing to develop there is uncertainty with
respect to the legal interpretation of the existing arrangements which enables the Group to control Irkutsk GridCo
and, consequently, these may be interpreted by the Russian regulatory authorities as noncompliant with applicable
legislation upon enforcement. Management believes that such arrangements are compliant with the legislation
and therefore the Group has the ability to control Irkutsk GridCo as described above. Should the arrangements be
found non-compliant upon their enforcement, the Group may be required to unwind the arrangements subsequent
to their enforcement and sell Irkutsk GridCo to a third party at that time.
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FINANCIAL STATEMENTS
3. Significant accounting policies
Significant accounting policies are described in the related notes to the consolidated financial statements captions
and in this note.
The accounting policies and judgements applied by the Group in these consolidated financial statements are
the same as those applied by the Group in its consolidated financial statements as at and for the year ended
31 December 2019.
(a) Basis of consolidation
(i) Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. When assessing control, potential voting rights that presently are exercisable are taken into account.
The consolidated financial statements of subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases. The accounting policies of subsidiaries have been
changed when necessary to align them with the policies adopted by the Group.
Non-controlling interests represent the portion of the net assets of subsidiaries attributable to interests that are not
owned by the Group, whether directly or indirectly through subsidiaries, and in respect of which the Group has not
agreed any additional terms with the holders of those interests which would result in the Group as a whole having a
contractual obligation in respect of those interests that meets the definition of a financial liability.
Non-controlling interests are presented in the consolidated statement of financial position within equity, separately
from equity attributable to the equity shareholders of the Group. Non-controlling interests in the results of the
Group are presented on the face of the consolidated statement of profit or loss and other comprehensive income
as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling
interests and the equity shareholders of the Group.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even
if doing so causes the non-controlling interests to have a deficit balance.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions, whereby adjustments are made to the amounts of controlling and non-controlling-interests within
consolidated equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain
or loss is recognised.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary,
with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the
date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition
of a financial asset (refer to note 15) or, when appropriate, the cost on initial recognition of an investment in an
associate or joint venture (refer to note13).
(ii) Acquisitions of non-controlling interests
The acquisition of an additional non-controlling interest in an existing subsidiary after control has been obtained is
accounted for as an equity transaction with any difference between the cost of the additional investment and the
carrying amount of the net assets acquired at the date of exchange recognised directly in equity.
The issue of a put option (a mandatory offer) to acquire a non-controlling interest in subsidiary, after control has
been obtained and accounted for by the Group as an equity transaction, results in the recognition of a liability for
the present value of the expected exercise price and the derecognition of non-controlling interests within
consolidated equity. Subsequent to initial recognition, changes in the carrying amount of the put liability are
recognised within equity. If the put option expires unexercised then the put liability is derecognised and non-
controlling interests are recognised.
144 En+Group Annual Report 2020
For a written put or forward option with the non-controlling shareholders in an existing subsidiary on their equity
interest in that subsidiary, if the non-controlling shareholders do not have present access to the returns associated
with the underlying ownership interest, the contract is accounted for as an anticipated acquisition of the underlying
non-controlling interests, as if the put option had been exercised already or the forward had been satisfied by the
non-controlling shareholders.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with
equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence
of impairment.
(b) Foreign currencies
(i) Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group entities at the
exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The
foreign currency gain or loss on monetary items is the difference between the amortised cost in the functional
currency at the beginning of the period, adjusted for effective interest and payments during the period, and the
amortised cost in foreign currency translated at the exchange rate at the end of the reporting period. Non-monetary
items in a foreign currency are measured based on historical cost and are translated using the exchange rate at the
date of transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for
differences arising on the retranslation of qualifying cash flow hedges to the extent the hedge is effective, which is
recognised in other comprehensive income.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated from their functional currencies to USD at the exchange rates ruling at the reporting date. The income
and expenses of foreign operations are translated to USD at exchange rates approximating exchange rates at the
dates of the transactions.
Foreign currency differences arising on translation are recognised in other comprehensive income and presented in
the currency translation reserve in equity. For the purposes of foreign currency translation, the net investment in a
foreign operation includes foreign currency intra-group balances for which settlement is neither planned nor likely
in the foreseeable future and foreign currency differences arising from such a monetary item are recognised in the
statement of profit or loss and other comprehensive income.
When a foreign operation is disposed of, such that control, significant influence or joint control is lost, the cumulative
amount of the currency translation reserve is transferred to profit or loss as part of the gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining
control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group
disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining
significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor
likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered
to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and
presented in the translation reserve in equity.
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FINANCIAL STATEMENTS
4. Segment reporting
(a) Reportable segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are reviewed regularly by the Group’s key executive
management to make decisions about resources to be allocated to the segment and assess its performance and
for which discrete consolidated financial statements are available.
Individually material operating segments are not aggregated for financial reporting purposes unless the segments
have similar economic characteristics and are similar in respect of the nature of products and services, the nature of
production processes, the type or class of customers, the methods used to distribute the products or provide the
services and the nature of the regulatory environment. Operating segments which are not individually material may
be aggregated if they share a majority of these criteria.
Based on the current management structure and internal reporting the Group has identified two operating segments:
(a) Metals. The Metals segment comprises UC RUSAL with disclosures being based on the public financial statements
of UC RUSAL. All adjustments made to UC RUSAL, including any adjustments arising from different timing of
IFRS first time adoption, are included in “Adjustments” column. The Power assets of UC RUSAL are included
within the Metals segment.
(b) Power. The Power segment mainly comprises the power assets, as described in note 1(b).
These business units are managed separately and the results of their operations are reviewed by the key executive
management personnel and Board of Directors on a regular basis.
In 2019, the Board of Directors has commissioned a full review of strategic options with respect to the Irkutsk-region
coal and coal-fired power assets as part of the Group’s commitment to minimising its carbon footprint. At the date
of these consolidated financial statements the Group has completed the spin-off of the Irkutsk region coal-fired
heat business unit into an 100% Irkutskenergo subsidiary owned as the first step.
(b) Segment results, assets and liabilities
For the purposes of assessing segment performance and allocating resources between segments, the Group’s
senior executive management monitor the results, assets and liabilities and cash flows attributable to each
reportable segment on the following bases:
– Total segment assets include all tangible, intangible assets and current assets.
– Total segment liabilities include all current and non-current liabilities.
– Revenue and expenses are allocated to the reportable segments with reference to sales generated by those
segments and the expenses incurred by those segments or which otherwise arise from the depreciation or
amortisation of assets attributable to those segments.
– The measure used for reporting segment results is the net profit and Adjusted EBITDA (key non-IFRS financial
measure used by the Group as reference for assessing operating effectiveness). Segment profit or loss and
Adjusted EBITDA are used to measure performance as management believes that such information is the most
relevant in evaluating the results of certain segments relative to other entities that operate within these industries.
– Adjusted EBITDA for any period represents the results from operating activities adjusted for amortisation
and depreciation, impairment charges and gain/(losses) on disposal of property, plant and equipment for the
relevant period.
In addition to receiving segment information concerning segment results, management is provided with segment
information concerning revenue (including inter-segment revenue), the carrying value of investments and share of
profits/(losses) of associates and joint ventures, depreciation, amortisation, interest income and expenses, other
finance income and costs, income tax, gains/(losses) on disposal of property, plant and equipment, impairment of
non-current assets and additions of non-current segment assets used by the segments in their operations. Inter-
segment pricing is determined primarily on a consistent basis using market benchmarks.
146 En+Group Annual Report 2020
Year ended 31 December 2020
USD million Metals Power Adjustments Total
Consolidated statement of profit or loss and other
comprehensive income
Revenue from external customers 8,440 1,916 — 10,356
Primary aluminium and alloys 6,969 — — 6,969
Alumina and bauxite 534 — — 534
Semi-finished products and foil 381 166 — 547
Electricity 60 1,109 — 1,169
Heat 39 387 — 426
Other 457 254 — 711
Inter-segment revenue 126 781 (907) —
Total segment revenue 8,566 2,697 (907) 10,356
Operating expenses (excluding depreciation and
loss on disposal of PPE)
(7,695) (1,704) 904 (8,495)
Adjusted EBITDA 871 993 (3) 1,861
Depreciation and amortisation (570) (214) 3 (781)
(Loss)/gain on disposal of PPE (13) 1 — (12)
Impairment of non-current assets (9) (49) — (58)
Results from operating activities 279 731 — 1,010
Share of profits and impairment of associates and
joint ventures
976 (5) — 971
Interest expense, net (43 1) (298) — (729)
Other finance costs, net (108) (19) — (127)
Profit before tax 716 409 — 1,125
Income tax expense 43 (152) — (109)
Profit for the year 759 257 — 1,016
Additions to non-current segment assets during
the year
(987) (262) 7 (1,242)
Consolidated statement of financial position
Segment assets, excluding cash and cash
equivalents and interests in associates and jointly
ventures
11,327 5,632 (692) 16,267
Investment in Metals segment — 4,595 (4,595) —
Cash and cash equivalents 2,229 333 — 2,562
Interests in associates and jointly ventures 3,822 10 — 3,832
Total segment assets 17,378 10,570 (5,287) 22,661
Segment liabilities, excluding loans and borrowings
and bonds payable
3,043 1,340 (175) 4,208
Loans and borrowings 7,792 4,596 — 12,388
Total segment liabilities 10,835 5,936 (175) 16,596
Total segment equity 6,543 4,634 (5,112) 6,065
Total segment equity and liabilities 17, 378 10,570 (5,287) 22,661
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En+Group Annual Report 2020
FINANCIAL STATEMENTS
USD million Metals Power Adjustments Total
Consolidated statement of cash flows
Cash flows from operating activities 1,091 805 (6) 1,890
Cash flows from/(used in) investing activities 128 (211) 6 (77)
Acquisition of property, plant and equipment,
intangible assets
(897) (237) 6 (1,128)
Other investments (191) (7) — (198)
Dividends from the jointly controlled entities and
other associates
1,170 — — 1,170
Interest received 26 30 — 56
Other investing activities 20 3 — 23
Cash flows used in financing activities (694) (678) — (1,372)
Interest paid (4 65) (314) — (779)
Restructuring fee and expenses related to issuance
of shares
(12) (14) — (26)
Settlements of derivative financial instruments (215) — — (215)
Other financing activities (2) (350) — (352)
Net change in cash and cash equivalents 525 (84) — 441
Year ended 31 December 2019
USD million Metals Power Adjustments Total
Consolidated statement of profit or loss and other
comprehensive income
Revenue from external customers 9,593 2,159 — 11,752
Primary aluminium and alloys 7,906 — — 7,906
Alumina and bauxite 668 — — 668
Semi-finished products and foil 410 153 — 563
Electricity 61 1,239 — 1,300
Heat 44 418 — 462
Other 504 349 — 853
Inter-segment revenue 118 830 (948) —
Total segment revenue 9,711 2,989 (948) 11,752
Operating expenses (excluding depreciation and
loss on disposal of PPE)
(8,745) (1,862) 982 (9,625)
Adjusted EBITDA 966 1,127 34 2,127
Depreciation and amortisation (566) (240) — (806)
Loss on disposal of PPE (22) (2) — (24)
Impairment of non-current assets (291) (30) — (321)
Results from operating activities 87 855 34 976
Share of profits of associates and joint ventures 1,669 — — 1,669
Interest expense, net (557) (361) — (918)
Other finance costs, net (145) (2) — (147)
Profit before tax 1,054 492 34 1,580
Income tax expense (94) (181) (1) (276)
Profit for the year 960 311 33 1,304
Additions to non-current segment assets during
the year
(887) (327) 23 (1,191)
148 En+Group Annual Report 2020
USD million Metals Power Adjustments Total
Consolidated statement of financial position
Segment assets, excluding cash and cash
equivalents and interests in associates and jointly
ventures
11,793 6,409 (697) 17,505
Investment in Metals segment — 4,595 (4,595) —
Cash and cash equivalents 1,781 497 — 2,278
Interests in associates and jointly ventures 4,240 8 — 4,248
Total segment assets 17, 814 11,509 (5,292) 24,031
Segment liabilities, excluding loans and borrowings
and bonds payable
2,820 1,534 (177) 4,177
Loans and borrowings 8,247 4,235 — 12,482
Total segment liabilities 11,067 5,769 (177) 16,659
Total segment equity 6,747 5,740 (5,115) 7, 372
Total segment equity and liabilities 17,814 11,509 (5,292) 24,031
Consolidated statement of cash flows
Cash flows from operating activities 1,652 932 (23) 2,561
Cash flows from/(used in) investing activities 246 (177) 23 92
Acquisition of property, plant and equipment,
intangible assets
(848) (236) 23 (1,061)
Other investments (85) 8 — (77)
Dividends from the jointly controlled entities and
other associates
1,141 — — 1,141
Interest received 31 31 — 62
Other investing activities 7 20 — 27
Cash flows used in financing activities (949) (639) — (1,588)
Interest paid (553) (468) — (1,021)
Restructuring fee and expenses related to issuance
of shares
(33) (9) — (42)
Settlements of derivative financial instruments (26) — — (26)
Other financing activities (337) (162) — (499)
Net change in cash and cash equivalents 949 116 — 1,065
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CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
(i) Geographic information
The Group’s operating segments are managed on a worldwide basis, but operate in four principal geographical
areas: the CIS, Europe, Africa and the Americas. In the CIS, production facilities operate in Russia and Ukraine. In
Europe, production facilities are located in Italy, Ireland and Sweden. African production facilities are represented
by the bauxite mines and an alumina refinery in Guinea. In the Americas the Group operates one production facility
in Jamaica, one in Guyana and a trading subsidiary in the United States of America.
The following table sets out information about the geographical location of the Group’s revenue from external
customers and the Group’s property, plant and equipment, intangible assets, interests in associates and joint
ventures and goodwill (“specified non-current assets”). The geographical location of customers is based on the
location at which the services were provided or the goods delivered. The geographical location of the specified
non-current assets is based on the physical location of the asset. Unallocated specified non-current assets
comprise mainly goodwill and interests in associates and joint ventures.
Revenue from external customers
Year ended 31December
2020
USD million
2019
USD million
Russia 3,873 4,235
Turkey 956 1,052
Netherlands 727 985
China 615 119
USA 471 652
Japan 471 440
South Korea 329 577
Poland 338 457
Greece 236 188
Italy 228 573
Germany 211 235
Taiwan 185 53
France 164 209
Sweden 146 162
Norway 134 203
Other countries 1,272 1,612
10,356 11,752
Revenue from external customers
31December
2020
USD million
2019
USD million
Russia 11,870 12,587
Ireland 606 655
Guinea 225 230
Ukraine 229 158
Unallocated 3,132 3,183
16,062 16,813
150 En+Group Annual Report 2020
5. Revenues
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.
The details of significant accounting policies in relation to the Group’s various goods and services are set out below:
Sales of goods: comprise sale of primary aluminium, alloys, alumina, bauxite and other products. Customers obtain
control of the goods supplied when the goods are delivered to the point when risks are transferred based on
Incoterms delivery terms stated in the contract. Invoices are generated and revenue is recognised at that point in
time. Invoices are usually payable within 60 days or in advance. Under certain Group sale contracts, the final price
for the goods shipped is determined a few months later than the delivery took place. Under current requirements
the Group determines the amount of revenue at the moment of recognition based on estimated selling price at the
date of the invoice issued. At price finalisation the difference between estimated price and actual one is recognised
as other revenue.
Rendering of transportation services: as part of sales of goods the Group also performs transportation to the
customer under contract terms. In certain cases, the control of goods delivered is transferred to customers prior
to transportation being completed. In these cases rendering of transportation services from when the control of
goods has been transferred is considered as a separate performance obligation.
Rendering of electricity supply services: The Group is involved in sales of energy to third and related parties. Invoices
are issued once a month at the end of month and paid within 30 days. Revenue is recognised over time during the
month of energy supply.
Year ended 31December
2020
USD million
2019
USD million
Sales of primary aluminium and alloys 6,969 7,906
Third parties 6,660 5,338
Related parties — companies capable of exerting significant influence 298 2,554
Related parties — other 9 13
Related parties — associates and joint ventures 2 1
Sales of alumina and bauxite 534 668
Third parties 314 301
Related parties — companies capable of exerting significant influence 12 161
Related parties — associates and joint ventures 208 206
Sales of semi-finished products and foil 547 563
Third parties 547 563
Sales of electricity 1,169 1,300
Third parties 1,137 1,259
Related parties — companies capable of exerting significant influence — 1
Related parties — other 5 6
Related parties — associates and joint ventures 27 34
Sales of heat 426 462
Third parties 407 438
Related parties — companies capable of exerting significant influence 2 2
Related parties — other 17 22
Other revenues 711 853
Third parties 587 711
Related parties — companies capable of exerting significant influence 5 9
Related parties — other 8 16
Related parties — associates and joint ventures 111 117
10,356 11,752
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CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
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FINANCIAL STATEMENTS
The Group’s customer base is diversified and includes only one major customer – Glencore International AG
(amember of Glencore International Plc Group which is a shareholder of the Parent Company with shareholding of
10.55% at the reporting date) with whom transactions have exceeded 10% of the Group’s revenue. In 2020, revenue
from sales of primary aluminium and alloys to this customer amounted to USD1,259 million (2019: USD2,325 million).
All revenue of the Group relates to revenue from contracts with customers.
6. Net other operating expenses
Year ended 31December
2020
USD million
2019
USD million
Impairment of trade and other receivables (10) (2)
Charity (71) (41)
Loss on disposal of property, plant and equipment (12) (24)
Other operating expenses, net (67) (4 4)
(160) (111)
7. Personnel costs
Personnel costs comprise salaries, annual bonuses, annual leave and cost of non-monetary benefits. Salaries,
annual bonuses, paid annual leave and cost of non-monetary benefits are accrued in the year in which the
associated services are rendered by employees. Where payment or settlement is deferred and the effect would
be material, these amounts are stated at their present values.
The employees of the Group are also members of retirement schemes operated by local authorities. The Group
is required to contribute a certain percentage of their payroll to these schemes to fund the benefits.
The Group’s total contribution to those schemes charged to profit or loss during the years presented is shown
below.The Group’s net obligation in respect of defined benefit pension and other post-retirement plans is
calculated separately for each plan by estimating the amount of future benefit that employees have earned
in return for their service in the current and prior periods. That benefit is discounted to determine its present
value and the fair value
of any plan assets are deducted. The discount rate is the yield at the reporting date on government bonds that
have maturity dates approximating the terms of the Group’s obligations. The calculation is performed using the
projected unit credit method. When the calculation results in a benefit to the Group, the recognised asset is limited
to the present value of any future refunds from the plan or reductions in future contributions to the plan.
Where there is a change in actuarial assumptions, the resulting actuarial gains and losses are recognised directly
in other comprehensive income.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees
is recognised in profit or loss immediately.
The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the
curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value
of plan assets, any change in the present value of the defined benefit obligation, any related actuarial gains and
losses.The Group also makes contributions for the benefit of employees to Russia’s and the Ukrainian State’s
pension funds. The contributions are expensed as incurred.
Year ended 31December
2020
USD million
2019
USD million
Contributions to defined contribution retirement plans (225) (254)
Contributions to defined benefit retirement plans (5) (4)
Total retirement costs (230) (258)
Wages and salaries (1,023) (1,058)
(1,253) (1,316)
152 En+Group Annual Report 2020
8. Finance income and costs
Finance income comprises interest income on funds invested, dividend income and foreign currency gains.
Interest income is recognised as it accrues, using the effective interest method.
Finance costs comprise interest expense on borrowings, foreign currency losses and changes in the fair value of
financial assets at fair value through profit or loss. All borrowing costs are recognised in profit or loss using the
effective interest method, except for borrowing costs related to the acquisition, construction and production of
qualifying assets which are recognised as part of the cost of such assets.
Foreign currency gains and losses are reported on a net basis. Foreign exchange gain on loans and borrowing for
the year ended 31 December 2020 amounted to USD 291 million (2019: loss of USD 213 million).
Year ended 31December
2020
USD million
2019
USD million
Finance income
Net foreign exchange gain 98 —
Interest income 61 82
Dividend income 1 1
160 83
Finance costs
Interest expense (788) (987)
Change in fair value of derivative financial instruments (refer to note 19) (226) (21)
Net foreign exchange loss — (114)
Other finance costs (2) (26)
(1,016) (1,148)
9. Earnings per share
The calculation of basic earnings per share is based on the profit attributable to ordinary equity shareholders for the
years ended 31 December 2020 and 31 December 2019.
Year ended 31December
2020 2019
Issued ordinary shares at beginning of the year 638,848,896 571,428,572
Issuance of shares (note 16(a)(i)) — 67,420,324
Acquisition of own shares (note 1(a)) (136,511,122) —
Weighted average number of shares 518,002,985 634,231,066
Profit for the year attributable to the shareholders of the Parent Company, USD million 684 860
Basic and diluted earnings per share, USD 1.320 1.356
Acquisition of own shares (note 1(a)) was accounted for in the weighted average numbers of shares calculation for
the year ended 31 December 2020 only.
There were no outstanding dilutive instruments during the years ended 31 December 2020 and 31December 2019.
153
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FINANCIAL STATEMENTS
10. Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the statement of profit
or loss and other comprehensive income except to the extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the
following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.
New information may become available that causes the Group to change its judgement regarding the adequacy of
existing tax liabilities. Such changes to tax liabilities will impact tax expenses in the period that such a determination
is made. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority
and the Group has both the right and the intention to settle its current tax assets and liabilities on a net or
simultaneous basis.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability
to pay the related dividends is recognised.
(a) Income tax expense
Year ended 31December
2020
USD million
2019
USD million
Current tax expense
Current tax for the year (223) (369)
Deferred tax expense
Origination and reversal of temporary differences 114 93
(109) (276)
On 9 July 2019, the Parent Company redomiciled to Russia’s SAR (special administrative region) and became a
Russian tax resident. Companies which register in the SAR as part of the continuance out of a foreign jurisdiction
(such as the Parent Company) may have a number of tax benefits, subject to certain conditions. Before redomiciliation,
the Parent Company was a tax resident of Cyprus.
The Parent Company and subsidiaries pay income taxes in accordance with the legislative requirements of their
respective tax jurisdictions. For companies domiciled in Russia the applicable tax rate is 20%; in Ukraine of 18%;
Guinea of 0%; China of 25%; Kazakhstan of 20%; Australia of 30%; Jamaica of 25%; Ireland of 12.5%, Sweden of 21.4%
and Italy of 27.9%. For the Group’s subsidiaries domiciled in Switzerland the applicable tax rate for the year is the
corporate income tax rate in the Canton of Zug, Switzerland, which differs depending on the company’s tax status.
The rate consists of a federal income tax and a cantonal/communal income and capital taxes. The latter includes
a base rate and a multiplier, which may change from year to year. Applicable income tax rate is 11.91% for Swiss
subsidiaries. For the UC RUSAL’s significant trading companies, the applicable tax rate is 0%. The applicable tax
rates for the year ended 31 December 2019 were the same as for the year ended 31 December 2020 except for
tax rates for subsidiaries domiciled in Switzerland which amounted to 9.55% and 14.35% accordingly.
154 En+Group Annual Report 2020
Reconciliation of effective tax rate
Year ended 31 December
2020 2019
USD wion % USD million %
Profit before taxation 1,125 (100) 1,580 (100)
Income tax at tax rate applicable for the Parent Company (225) 20 (316) 20
Other non-deductible/taxable items, net 115 (10) (27) 2
Effect of changes in investment in Norilsk Nickel 186 (17) 154 (10)
Change in unrecognised deferred tax assets (243) 22 (49) 3
Effect of reversal/(accrual) of impairment 30 (3) (79) 5
Income tax related to prior periods, including provision (2) —
Effect of different income tax rates 28 (2) 43 (3)
Income tax (109) 10 (276) 17
(b) Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following items:
USD million
Assets Liabilities Net
31 December 31 December 31 December
2020 2019 2020 2019 2020 2019
Property, plant and equipment 72 84 (1,287) (1,391) (1,215) (1,307)
Inventories 65 100 (15) (13) 50 87
Trade and other receivables 40 34 (24) (19) 16 15
Financial instruments 8 7 (6) (8) 2 (1)
Tax loss carry-forward 187 78 — — 187 78
Others 498 368 (433) (318) 65 50
Tax assets/(liabilities) 870 671 (1,765) (1,749) (895) (1,078)
Set off of tax (626) (506) 626 506 — —
Net deferred tax assets/(liabilities) 244 165 (1,139) (1,243) (895) (1,078)
(c) Movement in temporary differences during the year
USD million
1January
2020
Recognised
in profit or
loss
Recognised
in equity
Currency
translation
31
December
2020
Property, plant and equipment (1,307) 12 (46) 126 (1,215)
Inventories 87 (37) — — 50
Trade and other receivables 15 2 — (1) 16
Financial instruments (1) 3 — — 2
Tax loss carry-forwards 78 113 — (4) 187
Others 50 21 — (6) 65
(1,078) 114 (46) 115 (895)
155
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
USD million
1January
2019
Recognised
in profit or loss
Currency
translation 31 December 2019
Property, plant and equipment (1,254) 30 (83) (1,307)
Inventories 43 44 — 87
Trade and other receivables 13 1 1 15
Financial instruments (2) 1 — (1)
Tax loss carry-forwards 52 25 1 78
Others 54 (8) 4 50
(1,094) 93 (77) (1,078)
Recognised tax losses expire in the following years:
Year of expiry
31 December 31 December
2020
USD million
2019
USD million
Without expiry 187 78
187 78
(d) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
31 December 31 December
2020
USD million
2019
USD million
Deductible temporary differences 976 855
Tax loss carry-forwards 444 337
1,420 1,192
Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable
profits will be available against which the Group can utilise the benefits therefrom. Tax losses expire in the following
years:
Year of expiry
31 December 31 December
2020
USD million
2019
USD million
Without expiry 443 335
From 2 to 5 years — 2
Up to 1 year 1 —
444 337
(e) Unrecognised deferred tax liabilities
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.
156 En+Group Annual Report 2020
(f) Current taxation in the consolidated statement of financial position represents:
31 December 31 December
2020
USD million
2019
USD million
Net income tax payable/ (receivable) at the beginning of the year 10 116
Income tax for the year 223 369
Income tax paid (226) (424)
Dividend withholding tax — (57)
Translation difference — 6
7 10
Represented by:
Income tax payable (note 15(c)) 28 38
Income tax receivable (note 15(b)) (21) (28)
Net income tax payable/(receivable) 7 10
11. Property, plant and equipment
(a) Accounting policy
(i) Recognition and measurement
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 1January 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 recent 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 thathydropower assets were significantly undervalued prior to 1January 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.
157
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
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.
(ii) 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.
158 En+Group Annual Report 2020
(iv) Stripping costs
Expenditure relating to the stripping of overburden layers of ore, including estimated site restoration costs,
is included in the cost of production in the period in which it is incurred.
(v) Mining assets
Mining assets are recorded as construction in progress and transferred to mining property, plant and equipment
when a new mine reaches commercial production.
Mining assets include expenditure incurred for acquiring mineral and development rights and developing new
mining operations.
Mining assets include interest capitalised during the construction period, when financed by borrowings.
(vi) Depreciation
The carrying amounts of property, plant and equipment (including initial and any subsequent capital expenditure)
are depreciated to their estimated residual value over the estimated useful lives of the specific assets concerned, or
the estimated life of the associated mine or mineral lease, if shorter. Estimates of residual values and useful lives are
reassessed annually and any change in estimate is taken into account in the determination of remaining depreciation
charges. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not
depreciated.
Any accumulated depreciation at the date of the revaluation is eliminated against the gross amount of the assets,
and the net amount is restated to the revalued amount of the asset.
The property, plant and equipment is depreciated on a straight-line or units of production basis over the respective
estimated useful lives as follows:
– Hydro assets predominantly 49 to 62 years;
– Buildings and constructions predominantly 15 to 50 years;
– Machinery and equipment 4 to 50 years;
– Electrolysers 4 to 15 years;
– Mining assets units of production on proven and probable reserves;
– Other 1 to 30 years.
159
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
(b) Disclosure
USD million
Land and
buildings
Machinery
and
equipment Electrolysers
Hydro
assets
Mining
assets
Construction
in progress Other Total
Cost/Deemed cost
1 January 2019 4,506 7,522 2,544 3,578 590 2,072 358 21,170
Additions 25 56 131 — 13 964 2 1,191
Acquired through business
combinations
4 — — — — 2 — 6
Disposals (24) (312) (8) — (2) (28) (56) (430)
Transfers 171 331 42 10 4 (575) 17 —
Change in estimate of site
restoration provision
— — — — 14 — — 14
Translation difference 164 182 4 438 54 83 20 945
At 31 December 2019 4,846 7,779 2,713 4,026 673 2,518 341 22,896
Additions 67 4 120 — 31 1,020 — 1,242
Acquired through business
combinations
10 8 — — — 2 1 21
Disposals (14) (97) — — (10) (18) (6) (145)
Transfers 137 360 43 4 1 (684) 139 —
Revaluation of hydro assets
as at 31 December 2020
— — — 65 — — — 65
Change in estimate of site
restoration provision
— — — — (2) — — (2)
Translation difference (256) (262) (8) (652) (77) (145) (42) (1,442)
At 31 December 2020 4,790 7,792 2,868 3,443 616 2,693 433 22,635
Depreciation and
impairment losses
1 January 2019 (2,360) (5,213) (2,210) — (473) (1,276) (266) (11,798)
Depreciation charge (152) (384) (144) (95) (10) — (17) (802)
(Impairment losses)/
reversal of impairment
(106) (76) (32) — (39) (11) 5 (259)
Disposals 4 106 5 — 1 — 7 123
Transfers 5 8 — — — — — 13
Translation difference (83) (106) (4) (4) (46) (36) (11) (290)
At 31 December 2019
(2,692) (5,665) (2,385) (99) (567) (1,323) (282) (13,013)
Depreciation charge (148) (361) (156) (83) (8) — (24) (780)
(Impairment losses)/
reversal of impairment
26 (30) (3) — (21) 17 3 (8)
Disposals 6 86 — — 3 — 4 99
Transfers 1 1 — (1) — — — 1
Revaluation of hydro assets
as at 31 December 2020
— — — 165 — — — 165
Translation difference 133 169 8 18 65 60 25 478
At 31 December 2020 (2,674) (5,800) (2,536) — (528) (1,246) (274) (13,058)
Net book value
At 1 January 2019 2,146 2,309 334 3,578 117 796 92 9,372
At 31 December 2019 2,154 2,114 328 3,927 106 1,195 59 9,883
At 31 December 2020 2,116 1,992 332 3,443 88 1,447 159 9,577
160 En+Group Annual Report 2020
Depreciation expense of USD738 million (2019: USD775 million) has been charged to cost of goods sold,
USD6million (2019: USD10 million) to distribution expenses and USD27 million (2019: USD17 million) to
administrative expenses.
Interest capitalised for the years ended 31 December 2020 and 31 December 2019 was USD12 million and
USD28million, respectively.
Included in construction in progress at 31 December 2020 and 31 December 2019 are advances to suppliers of
property, plant and equipment of USD 145 million and USD 102 million, respectively.
Disposals of property, plant and equipment with net book value of USD 153 million represent cancellation of
lease agreements in 2019.
(c) Impairment
Management reviewed the carrying amount of the Group’s non-financial assets at the reporting date to
determine whether there were any indicators of impairment or reversal of impairment.
Management identified several factors that indicated that for a number of the Group’s CGUs previously recognised
impairment losses may require reversal and for a number of CGUs impairment losses may need to be recognised.
These include a significant decrease of aluminium and alumina prices during the year as a result of LME depreciation
and overall market instability, fluctuations of coal sale prices and additional volumes of electricity transmission set in
further periods as well as separation of new CHPs CGU (refer below). Despite LME recovery during last quarter of
2020, market forecasts demonstrate slightly depressed level of prices compared to the spot prices as at reporting
date. In aluminium production, the Group benefited from decreases in cash costs due to depreciation of the Russian
rouble against the USD as almost all aluminium plants of the Group are located in Russia. For alumina cash generating
units, the major influences were a decrease in alumina prices and favourable dynamics in energy prices being a
significant part of cash cost. For bauxite cash generating units, bauxite sales prices were generally stable. For Irkutsk
GridCo cash generating unit the regulated tariffs were set for additional volumes of electricity transmission from 2021.
For the purposes of impairment testing, value in use of each cash generating unit was determined by discounting
expected future net cash flows of the cash generating unit. Values assigned to key assumptions and estimates used
to measure the units’ recoverable amount was based on external sources of information and historic data.
Management believes that the values assigned to the key assumptions and estimates represented the most realistic
assessment of future trends. The risk factors related to future COVID-19 uncertainties have been incorporated into
the discount rates applied.
METALS
At 31 December 2020 and 31 December 2019, management identified several indicators that a number of the
Group’s CGUs may be impaired or that previously recognised impairment losses may need to be reversed.
Based on results of impairment testing as at 31 December 2020, management has concluded that a reversal of
previously recognised impairment loss relating to property, plant and equipment should be recognised in these
consolidated financial statements in respect of Taishet aluminium smelter (aluminium smelter under construction)
and Mykolaiv alumina refinery in the amount of USD 158 million.
Based on results of impairment testing as at 31 December 2019, management concluded that a reversal of previously
recognised impairment losses relating to property, plant and equipment should be recognised in respect of Aughinish
and Cobad cash generating units in the amount of USD 363 million. Additionally, management concluded that
impairment losses in respect of KAZ, VgAZ, BAZ and UAZ, Kubal, Kremny and Windalco cash generating units, in
the amount of USD 545 million should be recognised.
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FINANCIAL STATEMENTS
The pre-tax discount rates applied to the above mentioned cash generating units, estimated in nominal terms based
on an industry weighted average cost of capital, are presented in the table below.
Year ended 31 December
2020 2019
Taishet aluminium smelter 11.8% 10.7%
Mykolaiv alumina refinery 18.7% 16.0%
Kubikenborg Aluminium (Kubal) 19.8% 11.1%
Windalco 27.0% 18.6%
BAZ and UAZ (Bogoslovsk and Ural aluminium smelters) 15.0% 12.5%
KAZ (Kandalaksha aluminium smelter) 15.5% 12.5%
VgAZ (Volgograd aluminium smelter) 14.8% 12.0%
Compagnie de Bauxites de Dian-Dian (Cobad) 20.0% 20.0%
Aughinish Alumina 11.9% 12.0%
The results are particularly sensitive to the following key assumptions:
– A 5% reduction in the projected aluminium price level would have resulted in the decrease in the recoverable
amount of aluminium plants of UC RUSAL and would lead to the impairment in the total amount of up to 5% of
carrying amount of property, plant and equipment of UC RUSAL;
– A 5% reduction in the projected aluminium sales volumes would have resulted in the decrease in the recoverable
amount of aluminium plants of UC RUSAL and would lead to the impairment in the total amount of up to 3% of
carrying amount of property, plant and equipment of UC RUSAL;
– A 5% increase in the projected level of electricity costs in the aluminium production would have resulted in the
decrease in the recoverable amount of aluminium plants of UC RUSAL but would not lead to an impairment of
property plant and equipment of UC RUSAL;
– A 5% increase in the projected level of alumina prices would have resulted in the decrease in the recoverable
amount of aluminium plants of UC RUSAL, would have resulted in the increase in the recoverable amount of
alumina plants of UC RUSAL and would not lead to an impairment of carrying amount of property plant and
equipment of UC RUSAL;
– A 1% increase in each of the discount rates applied would have resulted in the decrease in the recoverable
amount of all cash generating units by 11% but would not lead to an impairment of property, plant and equipment
of UC RUSAL;
– A 10% appreciation of the Russian rouble would have resulted in the decrease in the recoverable amount of all
Russian–based plants of UC RUSAL by 26% but would not lead to an impairment of property, plant and equipment
of UC RUSAL.
Additionally, management identified specific items of property, plant and equipment that are no longer in
use and therefore are not considered to be recoverable amounting to USD 117 million at 31December 2020
(2019:USD49million). These assets have been impaired in full. No further impairment of property, plant and
equipment or reversal of previously recorded impairment was identified.
POWER
The Irkutsk region coal-fired heat business (note 4(a)) was spin-off during the year thus creating two CGUs
from Irkutskenergo CGU, CHPs and Angara HPPs, requiring separate analysis and impairment testing. The main
assumptions used to determine the recoverable amount of the Angara HPPs CGU are disclosed in note 12(d).
At 31 December 2020 and 2019, management identified several indicators that property, plant and equipment of
the Coal, Irkutsk GridCo and CHPs cash-generating units (CGUs) may be impaired or that previously recognised
impairment losses may need to be reversed.
Based on results of impairment testing as at 31 December 2020 and 31 December 2019, management concluded
that no impairment losses or reversal of previously recognised impairment losses should be recognised.
162 En+Group Annual Report 2020
The following key assumptions were used to determine the recoverable amount of the Coal CGU:
Year ended 31 December
2020 2019
Sales volumes of coal in 2021/2020 12,885 ths tonnes 14,825 ths tonnes
Expected growth of sales volumes of coal till 2030/2029 12% 2%
Weighted average price for coal in 2021/2020
USD 12
(RUB 890)
USD 14
(RUB 929)
Weighted average price growth after 2021/2020 4% 4%
Post-tax discount rate 12.5% 13%
The recoverable amount of the Coal CGU is particularly sensitive to changes in forecast of sales volumes, coal prices
and applicable discount rates. A 1% increase of the discount rate applied would have resulted in the decrease in the
recoverable amount of Coal CGU but would not lead to an impairment.
The following key assumptions were used to determine the recoverable amount of the Irkutsk GridCo CGU:
Year ended 31 December
2020 2019
Sales volumes of electricity transmission in 2021/2020 50 mln MWh 46 mln MWh
Expected growth of sales volumes till 2030/2029 10.0% 15,7%
Tariffs for electricity transmission in 2021/2020
USD 6 -9
(RUB 400-629)
USD 6 -10
(RUB 393-628)
Tariffs growth till 2030/2029 42% 40%
Post-tax discount rate 12.0% 12.3%
The anticipated price/tariffs growth included in the cash flow projections for the years from 2022 to 2030 has been
based on the publicly available forecasts of Ministry of Economic Development of the Russian Federation.
The recoverable amounts estimated at 31 December 2020 and 31 December 2019 includes cash flows from sales of
electricity transmission to Taishet aluminium smelter starting from 2021. If the Taishet aluminium smelter is not
commissioned, a significant impairment of property, plant and equipment may need to be recognised.
The recoverable amount of the Irkutsk GridCo CGU is also particularly sensitive to changes in forecast electricity
transmission volumes and tariffs, as well as applicable discount rates.
The following key assumptions were used to determine the recoverable amount of the CHPs CGU:
Year ended
31 December 2020
Electricity sales volumes in 2021 27 million MWh
Electricity sales volumes growth till 2030 5%
Electricity sales prices in 2021
USD 8-26
(RUB 568-1,916)
Electricity sales prices growth till 2030 40%-42%
Sales volumes of heat in 2021-2030 20 million Gcal
Heat tariffs in 2021
USD 16
(RUB 1,186)
Tariffs growth till 2030 67%
Post-tax discount rate 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 USD49 million (2019: USD30 million). No further impairment of property, plant and
equipment or reversal of previously recorded impairments was identified.
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En+Group Annual Report 2020
FINANCIAL STATEMENTS
(d) Security
The carrying value of property, plant and equipment which is subject to lien under loan agreements was
USD1,086 million at 31 December 2020 (31 December 2019: USD1,262 million) (note 17).
(e) Hydro assets
As disclosed in note 11(a)(i), the Group regularly performs an independent valuation of its hydro assets. As at
31December 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 2020 or 2019.
The fair value measurement for hydro assets have been categorised as Level 3 fair values based on the inputs to
the valuation techniques used.
As at 31 December 2019, 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.
Net book value as at 31 December 2020 according to the cost model amounted to USD 333 million
(31 December 2019: USD 404 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.
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 aright-
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.
164 En+Group Annual Report 2020
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 68
million during the year ended 31 December 2020(31December 2019: USD 9 million). The carrying amounts of
right-of-use assets are presented below.
Property, plant and equipment
USD Million Land and buildings
Machinery and
equipment Total
Balance at 1 January 2020 34 7 41
Balance at 31 December 2020 67 4 71
Total depreciation charges related to the right-of-use assets for the year ended 31 December 2020 amount to
USD20 million (31December 2019: USD 11 million).
USD 2 million of right-of-use assets have been impaired during the year ended 31 December 2020 (31 December
2019: USD 8 million). The Group’s total cash outflow for leases was in the amount of USD 29 million for the year
ended 31 December 2020 (31 December 2019: USD 15 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 173 million as at 31 December 2020 (31 December
2019: USD 145 million).
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payment made. It is remeasured when there is a change in future lease payments arising from a change in an
index or rate, achange in the estimate of the amount expected to be payable under a residual value guarantee,
or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to
be exercised oratermination option is reasonably certain not to be exercised.
The Group presents lease liabilities as part of other payables and other non-current liabilities in the statement of
financial position depending on the period to which future lease payments relate. Total non-current part of lease
liabilities as at 31 December 2020 amounted to USD 57 million (31 December 2019: USD 33 million).
Total interest costs on leases recognised for the year ended 31 December 2020 amount to USD 9 million
(31December 2019: USD 6 million).
The Group does not recognise right-of-use assets and lease liabilities for some leases of low-value assets and
short-term leases. The Group recognises the lease payments associated with these leases as an expense on
astraight-line basis over the lease term. The expense relating to short-term leases in the amount of USD 18 million
is included in cost of sales or administrative expenses depending on type of underlying asset for the year ended
31December 2020 (31 December 2019: USD 34 million).
When the Group is an intermediate lessor the sub-leases are classified with reference to the right-of the use asset
arising from the head lease, not with reference to the underlying asset.
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FINANCIAL STATEMENTS
12. Goodwill and intangible assets
(a) Accounting policy
(i) Goodwill
On the acquisition of a subsidiary, an interest in a joint venture or an associate or an interest in a joint arrangement
that comprises a business, the identifiable assets, liabilities and contingent liabilities of the acquired business (or
interest in a business) are recognised at their fair values unless the fair values cannot be measured reliably. Where
the fair values of assumed contingent liabilities cannot be measured reliably, no liability is recognised but the
contingent liability is disclosed in the same manner as for other contingent liabilities.
The Group accounts for business combinations using the acquisition method when the acquired set of activities
and assets meets the definition of a business and control is transferred to the Group. In determining whether a
particular set of activities and assets is a business, the Group assesses whether the set of assets and activities
acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to
produce outputs.
The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired
set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value
of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date
on which control is transferred to the Group.
Goodwill arises when the cost of acquisition exceeds the fair value of the Group’s interest in the net fair value of
identifiable net assets acquired. The Group measures goodwill at the acquisition date as the fair value of the
consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree less the
net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. The
consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such
amounts are generally recognised in profit or loss. Transaction costs, other than those associated with the issue of
debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
Goodwill is not amortised but is tested for impairment annually. For this purpose, goodwill arising on a business
combination is allocated to the cash-generating units expected to benefit from the acquisition and any impairment
loss recognised is not reversed even where circumstances indicate a recovery in value.
In respect of associates or joint ventures, the carrying amount of goodwill is included in the carrying amount of the
interest in the associate and joint venture and the investment as a whole is tested for impairment whenever there is
objective evidence of impairment. Any impairment loss is allocated to the carrying amount of the interest in the
associate and joint venture.
When the fair value of the Group’s share of identifiable net assets acquired exceeds the cost of acquisition, the
difference is recognised immediately in profit or loss.
(ii) Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge
and understanding, is recognised in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and
processes. Development expenditure is capitalised only if development costs can be measured reliably, the product
or process is technically and commercially feasible, future economic benefits are probable and the Group intends to
and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised
includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset
for its intended use and capitalised borrowing costs. Other development expenditure is recognised in profit or loss
when incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated
impairment losses (refer to note 11(c)).
166 En+Group Annual Report 2020
(iii) Other intangible assets
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less
accumulated amortisation and accumulated impairment losses (refer to note 11(c)).
(iv) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is
recognised in profit or loss when incurred.
(v) Amortisation
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible
assets, other than goodwill, from the date that they are available for use. The estimated useful lives are as follows:
– software 5 years;
– other intangible assets 2-8 years.
The amortisation method, useful lives and residual values are reviewed at each financial year end and adjusted if
appropriate.
(b) Disclosure
USD million Goodwill
Other
intangibleassets Total
Cost
Balance at 1 January 2019 2,528 612 3,140
Additions — 43 43
Disposals — (22) (22)
Foreign currency translation 158 12 170
Balance at 31 December 2019 2,686 645 3,331
Additions 33 27 60
Disposals — (4 8) (48)
Foreign currency translation (234) (19) (253)
Balance at 31 December 2020 2,485 605 3,090
Amortisation and impairment losses
Balance at 1 January 2019 (450) (495) (945)
Amortisation charge — (4) (4)
Foreign currency translation — (6) (6)
Balance at 31 December 2019 (450) (505) (955)
Amortisation charge — (10) (10)
Disposals 48 48
Foreign currency translation — 8 8
Balance at 31 December 2020 (450) (459) (909)
Net book value
At 1 January 2019 2,078 117 2,195
At 31 December 2019 2,236 140 2,376
At 31 December 2020 2,035 146 2,181
Goodwill additions for the year ended 31 December 2020 relate to acquisition of PGLZ LLC (note 15(e)) and was
determined as the difference between the consideration paid and the fair value of acquired assets and liabilities.
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FINANCIAL STATEMENTS
(c) Amortisation charge
The amortisation charge is included in cost of sales and administrative expenses in consolidated statement of
profit or loss and other comprehensive income.
(d) Impairment testing of goodwill and other intangible assets
For the purposes of impairment testing, goodwill is allocated to the following cash-generating units. These units
represent the lowest level within the Group at which the goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each business, and the related impairment losses
recognised, are as follows:
USD million
Allocated goodwill
2020
Accumulated
impairment loss
2020
Allocated goodwill
2019
Accumulated
impairment loss
2019
UC RUSAL 2,273 (4 49) 2,429 (449)
Angara HPPs (Irkutskenergo) 211 — 256 —
Strikeforce Mining and Resources Limited (“SMR”) 1 (1) 1 (1)
2,485 (450) 2,686 (450)
METALS
For the purposes of impairment testing, the entire amount of goodwill is allocated to the aluminium segment of
UC RUSAL’s operations, except for goodwill arisen from PGLZ LLCacquisition (note 15(e)). The aluminium segment
represents the lowest level within UC RUSAL at which goodwill is monitored for internal management purposes.
The recoverable amount represents value in use as determined by discounting the future cash flows generated
from the continuing use of the plants within UC RUSAL’s aluminium segment.
Similar considerations to those described above in respect of assessing the recoverable amount of property,
plant and equipment apply to goodwill.
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;
– Aluminium sales prices were based on the long-term aluminium price outlook derived from available industry
and market sources at USD 1,919 per tonne for primary aluminium in 2021, USD 1,906 in 2022, USD 1,927 in 2023,
USD 1,955 in 2024, USD 2,003 in 2025. Alumina prices were derived from the same sources as aluminium prices
at USD 295 per tonne for alumina in 2021, USD 304 in 2022, USD 307 in 2023, USD 318 in 2024, USD 335 in 2025.
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 were RUB 73.2 for one USD in 2021, RUB 71.9 in 2022, RUB 71.2 in 2023, RUB 72.5 in 2024, RUB 74.1 in
2025. Inflation of 3.8%–4.1% in RUB and 1.5%–2.2% in USD was assumed in determining recoverable amounts;
– 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 historic 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.
168 En+Group Annual Report 2020
Based on results of impairment testing of goodwill, management concluded that no impairment should be recorded
as at 31 December 2020.
At 31 December 2019, management analysed changes in the economic environment and developments in the
aluminium industry and the Group’s operations since 31 December 2018 and performed an impairment test for
goodwill at 31 December 2019 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 8.2 million metric tonnes of alumina and of 15.4 million metric tonnes of bauxite. Bauxite
and alumina are primarily used internally for the production of primary aluminium;
– Sales prices were based on the long-term aluminium price outlook derived from available industry and market
sources at USD 1,802 per tonne for primary aluminium in 2020, USD 1,860 in 2021, USD 1,952 in 2022, USD 2,028
in 2023, USD 2,099 in 2024. Alumina prices were derived from the same sources as aluminium prices at USD 301
per tonne for alumina in 2020, USD 311 in 2021, USD 322 in 2022, USD 341 in 2023, USD 349 in 2024. 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 were RUB 65.8 in 2020, RUB 65.4 in 2021, RUB 63.9 in 2022, RUB 63.0 in 2023, RUB 63.6 in 2024.
Inflation of 4.0%–4.6% in RUB and 1.7%–2.1% in USD was assumed in determining recoverable amounts;
– The pre-tax discount rate was estimated in nominal terms based on the weighted average cost of capital basis
and was 11.3%;
– A terminal value was derived following the forecast period assuming a 1.7% 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 historic 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 44% and would lead to an impairment in the amount of USD 1,241 million;
– A 5% increase in the projected level of electricity and alumina costs in the aluminium production would have
resulted in a 21% 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 2019.
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. In 2019 goodwill was allocated to Irkutskenergo CGU (see note 11(c)).
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 2020 and Irkutskenergo in 2019 was determined by reference to its
value in use derived by discounting of the future cash flows generated from continuing use of production facilities.
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 in 2020 were projected based on the approved budgets for 2021. In particular, the sales volumes
of electricity in 2021 and 2022 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 (RUB39–846) 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.
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FINANCIAL STATEMENTS
The following key assumptions were used to determine the recoverable amount of the Irkutskenergo cash-generating
unit at 31 December 2019:
– The sales volumes in 2020 were projected based on the approved budgets for 2020. In particular, the sales
volumes of electricity in 2020 and 2021 were planned at the level of 70 million MWh. The expected growth till
2029 was estimated as 1.1% as compared to 2020. The sales volumes of heat in 2020 were planned at the level of
20 million Gcal and no growth till 2029 is expected.
– 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 0.5–27.2 (RUB34–1,759) per MWh depending on
market segment in 2020 and increased by 17–51% respectively till 2029. The tariffs for heat were estimated as USD
17.5 (RUB 1,133) per Gcal in 2020 and grew by 52% till 2029. Operating costs were projected based on the historical
performance of Irkutskenergo 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.
Reasonable possible changes in key assumptions will not lead to an impairment.
13. Interests in associates and joint ventures
An associate is an entity in which the Group or Company 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 or Company 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.
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.
Unrealised profits and losses resulting from transactions between the Group and its associates and joint venture are
eliminated to the extent of the Group’s interest in the investee, except where unrealised losses provide evidence of
an impairment of the asset transferred, in which case they are recognised immediately in profit or loss.
If an investment in an associate becomes an investment in a joint venture or vice versa, retained interest is not
remeasured. Instead, the investment continues to be accounted for under the equity method.
In all other cases, when the Group ceases to have significant influence over an associate or joint control over a joint
venture, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being
recognised in profit or loss. Any interest retained in that former investee at the date when significant influence or joint
control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of
afinancial asset.
In the Group’s statement of financial position, investments in associates and joint ventures are stated at cost less
impairment losses, unless classified as held for sale (or included in a disposal group that is classified as held for sale).
170 En+Group Annual Report 2020
An impairment loss in respect of an investment in an associate or joint venture is calculated as the difference
between its carrying amount after application of the equity method of accounting and its recoverable amount.
The recoverable amount of such investment is the greater of its value in use and its fair value less cost to sell. In
determining the value in use of the investment the Group estimates: (a) its share of the present value of the estimated
future cash flows expected to be generated by the investee, including the cash flows from the operations of the
investee and the proceeds on the ultimate disposal of the investment; or (b) the present value of the estimated future
cash flows expected to arise from the dividends to be received from the investee and from its ultimate disposal
depending on which available information with respect to each investee is more reliable. An impairment loss is
reversed to the extent that the recoverable amount of the investment subsequently increases and the resulting
carrying amount does not exceed the carrying amount that would have been determined, after application of the
equity method, had no impairment loss previously been recognised.
31 December
2020
USD million
2019
USD million
Balance at the beginning of the year 4,248 3,701
Group’s share of profits, impairment and reversal of impairment 971 1,669
Acquisition and contribution to investments 9 78
Return of prepayment for shares (11) (41)
Dividends (718) (1,609)
Foreign currency translation (667) 450
Balance at the end of the year 3,832 4,248
Goodwill included in interests in associates 2,034 2,428
The following list contains only the particulars of associates, all of which are corporate entities, which principally
affected the results or assets of the Group.
Proportion of ownership interest
Name of associate/ joint venture
Place of
incorporation and
operation
Particulars of
issued and paid up
capital
Group’s effective
interest
Group’s nominal
interest Principal activity
PJSC MMC Norilsk Nickel
Russian
Federation
158,245,476
shares,
RUB1 par value
15.82% 27.82%
Nickel and other
metals
production
Queensland Alumina Limited Australia
2,212,000 shares,
AUD2 par value
11.38% 20%
Production of
alumina under
atolling
agreement
BEMO project
Cyprus, Russian
Federation
BOGES Limited
and BALP
Limited – 10,000
shares EUR1.71
each
28.44% 50%
Energy/
Aluminium
production
The summary of the consolidated financial statements of associates and joint ventures for the year ended
31December 2020 is presented below:
PJSC MMC
Norilsk Nickel
Queensland
AluminaLimited
BEMO project
Other associates
andjointventures
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Non-current assets 5,206 12,147 199 777 1,420 2,680 248 428
Current assets 2,381 8,559 35 181 132 255 70 169
Non-current liabilities (2,959) (10,619) (92) (359) (945) (1,890) (101) (201)
Current liabilities (1,506) (5,412) (142) (478) (67) (134) (47) (117)
Net assets 3,122 4,675 — 121 540 911 170 279
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FINANCIAL STATEMENTS
PJSC MMC
Norilsk Nickel
Queensland
AluminaLimited
BEMO project
Other associates
andjointventures
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Revenue 4,325 15,545 123 617 364 728 258 748
Profit/(loss) and impairment
from continuing operations
930 3,634 — (20) 51 52 (10) 61
Other comprehensive
income/(loss)
(562) (699) — 1 (95) (189) (10) (20)
Total comprehensive
income/(loss)
368 2,935 — (19) (44) (137) (20) 41
The summary of the consolidated financial statements of associates and joint ventures for the year ended
31December 2019 is presented below:
PJSC MMC
Norilsk Nickel
Queensland
AluminaLimited
BEMO project
Other associates
andjointventures
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Non-current assets 5,868 12,899 163 535 1,528 2,942 260 488
Current assets 1,829 6,575 33 169 151 302 65 162
Non-current liabilities (2,726) (9,765) (64) (202) (1,012) (2,024) (70) (142)
Current liabilities (1,509) (5,422) (132) (373) (83) (166) (53) (136)
Net assets 3,462 4,287 — 129 584 1,054 202 372
PJSC MMC
Norilsk Nickel
Queensland
AluminaLimited
BEMO project
Other associates
andjointventures
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Group share
USD million
100%
USD million
Revenue 3,774 13,563 124 620 365 729 306 879
Profit/(loss) and impairment
from continuing operations
1,587 5,966 — 4 49 (128) 33 69
Other comprehensive
income/(loss)
383 484 — (1) 61 123 6 2
Total comprehensive
income/(loss)
1,970 6,450 — 3 110 (5) 39 71
(a) PJSC MMC Norilsk Nickel
The Group’s investment in Norilsk Nickel is accounted for using equity method and the carrying value as at
31December 2020 and 31 December 2019 amounted USD 3,122 million and USD 3,462 million, respectively. The
market values amounted USD 14,123 million and USD 13,586 million as at 31December 2020 and 31 December 2019,
respectively, determined by multiplying the quoted bid price per share on the Moscow Exchange on the year-end
date by the number of shares held by the Group.
(b) Queensland Alumina Limited
The carrying value of the Group’s investment in Queensland Alumina Limited as at both 31December 2020 and
31 December 2019 amounted to USD nil million. At 31 December 2020 management did not identify any impairment
reversal indicators relating to the Group’s investment in QAL and as a result no detailed impairment testing was
performed in relation to this investment.
172 En+Group Annual Report 2020
(c) BEMO project
The carrying values of the Group’s investment in BEMO project as at 31December 2020 and 31December 2019
amounted USD 540 million and USD 584 million, respectively.
For the purposes of impairment testing, the BEMO project was separated into two cash generating units – the
Boguchansky Aluminium Smelter (“BoAZ’) and the Boguchansky Hydropower Plant (“BoGES”).The recoverable
amount was determined by discounting the expected future net cash flows of each cash generating unit.
At 31 December 2020, management did not identify any impairment indicators relating to the Group’s investment
in BoGES nor any impairment reversal indicators relating to investments in BoAZ and as a result no detailed
impairment testing was performed in relation to this investment.
At 31 December 2020, accumulated losses of USD 443 million (2019: USD 651 million) related to impairment
charges at BoAZ have not been recognised because the Group’s investment has already been fully written down
to USD nil million.
Additional financial information of the Group’s effective interest in BEMO project for the year ended 31 December
2020 and 31 December 2019 is presented below (all in USD million):
31 December
2020
USD million
2019
USD million
Cash and cash equivalents 30 60
Current financial liabilities (43) (41)
Non-current financial liabilities (859) (929)
Depreciation and amortisation (17) (17)
Interest income 1 3
Interest expense (15) (18)
Income tax expense (13) (12)
14. Inventories
Inventories are measured at the lower of cost or net realisable value.
The cost of inventories is determined under the weighted average cost method, and includes expenditure incurred
in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition. In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of
completion and selling expenses.
Production costs include mining and concentrating costs, smelting, treatment and refining costs, other cash costs
and depreciation and amortisation of operating assets.
31 December
2020
USD million
2019
USD million
Raw materials and consumables 1,127 1,247
Work in progress 591 669
Finished goods and goods for resale 778 789
2,496 2,705
Provision for inventory obsolescence (157) (163)
2,339 2,542
Inventories at 31 December 2020 and 31 December 2019 are stated at cost.
Inventories with a carrying value of USD 738 million and USD 383 million were pledged as collateral for secured bank
loans at 31 December 2020 and 31December 2019, respectively (note 17).
173
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
15. Non-derivative financial instruments
Non-derivative financial instruments comprise investments in securities, trade and other receivables (excluding
prepayments and tax assets), cash and cash equivalents, loans and borrowings and trade and other payables
(excluding advances received and tax liabilities).
Non-derivative financial instruments except for trade and other receivables are recognised initially at fair value
plus any directly attributable transaction costs. Trade and other receivables are recognised at transaction price.
A financial instrument is recognised when the Group becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial
assets expire or if the Group transfers the financial asset to another party without retaining control or substantially
all risks and rewards of the asset. Financial liabilities are derecognised if the Group’s obligations specified in the
contract expire or are discharged or cancelled.
IFRS 9 Financial Instruments sets out requirements for recognising and measuring financial assets, financial liabilities
and some contracts to buy or sell non-financial items. The details of significant accounting policies are set out below.
Classification and measurement of financial assets and financial liabilities
IFRS 9 specifies three principal classification categories for financial assets: measured at amortised cost, fair value
through other comprehensive income (“FVOCI”) and fair value through profit or loss (“FVTPL”). The classification
of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and
its contractual cash flow characteristics. Under IFRS 9, derivatives embedded in contracts where the host is a
financial asset in the scope of the standard are never bifurcated. Instead, the hybrid financial instrument as a whole
is assessed for classification.
The Group’s financial assets mostly fall within category of financial assets measured at amortised cost. The only
exception is derivative financial assets measured at fair value through profit or loss and cash flow hedges accounted
through other comprehensive income (note 19) and other investments measured at fair value through profit or loss
(note 15(e)). The same applies to the Group’s financial liabilities.
(a) Impairment of trade receivables
Under IFRS 9, loss allowances (expected credit losses – ECL) are measured on either of the following bases:
– 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting
date; and
– lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for bank balances for which credit
risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly
since initial recognition. The Group measures loss allowances for trade receivables at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and
when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available
without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the
Group’s historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
The Group considers a financial asset to be in default when:
– the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions
such as realising security (if any is held); or
– the financial asset is more than 90 days past due, but additional analysis is conducted for each such receivable
and assessment is updated accordingly.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group
is exposed to credit risk.
174 En+Group Annual Report 2020
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash
flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset in
case of long-term assets.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired.
Afinancial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the
assets. Impairment losses related to trade and other receivables are presented as part of net other operating expenses.
The following analysis provides further detail about the calculation of ECLs related to trade receivables. The Group
uses an allowance matrix to measure the ECLs of trade receivables from the customers. Loss rates are calculated
using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency
to write-off. The ECLs were calculated based on actual credit loss experience over the past two years. The Group
performed the calculation of ECL rates separately for the customers of each key trading company of the Group.
Exposures within each trading company were not further segmented except for individually significant customers
which bear specific credit risk depending on the repayment history of the customer and relationship with the Group.
METALS
The following table provides information about determined ECLs rates for trade receivables both as at 1 January
2020 and 31 December 2020.
Weighted-average loss rate
Credit-impaired1 January 2020 31 December 2020
Current (not past due) 1% 1% No
1–30 days past due 4% 4% No
31–60 days past due 11% 10% No
61–90 days past due 80% 71% No
More than 90 days past due 92% 86% Yes
POWER
The following table provides information about determined ECLs rates for trade receivables both as at 1 January
2020 and 31 December 2020.
Weighted-average loss rate
Credit-impaired1 January 2020 31 December 2020
Current (not past due) 1% 1% No
1–90 days past due 1% 1% No
90
–180 days past due 30% 30% No
More than 180 days past due 100% 100% Yes
Fluctuations reflect differences between economic conditions during the period over which the historical data has been
collected, current conditions and the Group’s view of economic conditions over the expected lives of the receivables.
Impairment losses in respect of trade receivables are recorded using an allowance account unless the Group is
satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade
receivables directly.
175
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
(b) Trade and other receivables
31 December
2020
USD million
2019
USD million
Trade receivables from third parties 610 715
Trade receivables from related parties, including 63 115
Related parties — companies capable of exerting significant influence 50 82
Related parties — other 2 2
Related parties — associates and joint ventures 11 31
VAT recoverable 364 447
Advances paid to third parties 120 135
Advances paid to related parties, including 67 46
Related parties — companies capable of exerting significant influence 1 —
Related parties — associates and joint ventures 66 46
Other receivables from third parties 224 218
Other taxes receivable 30 26
Income tax receivable 21 28
Dividends receivable from related parties — 430
Related parties — associates and joint ventures — 430
Other current assets 8 7
1,507 2,167
Allowance for doubtful debts (76) (85)
Total short-term receivables 1,431 2,082
(i) Ageing analysis
Included in trade and other receivables are trade receivables (net of allowance for doubtful debts) with the following
ageing analysis as of the statement of financial position dates:
METALS
31 December
2020
USD million
2019
USD million
Current 372 448
Past due 0
–30 days
77 99
Past due 31
–60 days
2 30
Past due 61
–90 days
1 —
Past due over 90 days 11 4
Amounts past due 91 133
463 581
176 En+Group Annual Report 2020
POWER
31 December
2020
USD million
2019
USD million
Current 146 165
Past due 0
–30 days
14 18
Past due 31
–60 days
6 9
Past due 61
–90 days
6 6
Past due 91
–180 days
6 8
Past due over 180 days 1 —
Amounts past due 33 41
179 206
Trade receivables are on average due within 60 days from the date of billing. The receivables that are neither past
due nor impaired (i.e. current) relate to a wide range of customers for whom there was no recent history of default.
The Group has concluded that there is no material impact of COVID-19 related matters described in note 1(e) on the
expected credit losses assessment as at 31 December 2020.
Further details of the Group’s credit policy are set out in note 20(e).
(c) Trade and other payables
31 December
2020
USD million
2019
USD million
Accounts payable to third parties 687 630
Accounts payable to related parties, including 52 49
Related parties — companies capable of exerting significant influence 3 3
Related parties — associates and joint ventures 49 46
Advances received from third parties 903 562
Advances received from related parties, including — 392
Related parties — companies capable of exerting significant influence — 392
Other payables and accrued liabilities 224 224
Income tax payable 28 38
Other taxes payable 262 257
2,156 2,152
All of the trade and other payables are expected to be settled or recognised as income within one year or are
repayable on demand.
(c) Cash and cash equivalents
31 December
2020
USD million
2019
USD million
Bank balances, USD 1,027 1,310
Bank balances, RUB 701 329
Bank balances, EUR 109 118
Bank balances, other currencies 33 21
Short-term bank deposits 679 476
Other cash equivalents — 11
Cash and cash equivalents in the consolidated statement of cash flows 2,549 2,265
Restricted cash 13 13
Cash and cash equivalents in the consolidated statement of financial position 2,562 2,278
177
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
As at 31 December 2020 and 31 December 2019 included in cash and cash equivalents was restricted cash
of USD 13 million and USD 13 million, respectively, pledged under a Swiss Law Pledged Agreement with BNP
Paribas (Suisse) SA.
(e) Other non-current assets
31 December
2020
USD million
2019
USD million
Long-term deposits 111 —
Investments in equity securities measured at fair value through profit and loss 75 1
Prepayment for subsidiary acquisition — 71
Other non-current assets 22 36
208 108
In September 2020, the Group obtained control of PGLZ LLC (note 26) by acquiring 99.9% of its shares. The Group
has determined that together the acquired inputs and processes significantly contribute to the ability to create
revenue and has concluded that the acquired set is a business. Total consideration paid amounted to USD 71 million
and was paid in cash as at 1 January 2020. Fair value of acquired assets and liabilities amounted to USD 24 million
from which USD 21 million related to property, plant and equipment (note 11).
16. Equity
(a) Share capital, additional paid-in capital and transactions with shareholders
As at 31 December 2020, the Parent Company’s share capital is divided into 638,848,896 ordinary shares with a
nominal value of USD 0.00007 each. The Parent Company may also issue 75,436,818.286 ordinary shares.
As at 31 December 2020 and 31 December 2019, all issued ordinary shares were fully paid.
(i) Glencore deal
On 26 January 2019, the Parent Company issued 67,420,324 shares with a par value of USD 0.00007 each with a
subsequent issue of GDRs on these shares, to Glencore Group Funding Limited pursuant to a securities exchange
agreement in exchange for 8.75% shares in UC RUSAL (“Glencore deal”).
Due to certain regulatory requirements, under the securities exchange agreement, Glencore has agreed to transfer
its stake in UC RUSAL to the Parent Company in two stages. The first stage was settled on 31 January 2019 and
1.97% of RUSAL’s shares was transferred to the Parent Company following the removal of the Parent Company and
UC RUSAL from the SDN list (see note 1(d)), the remaining 6.78% of UC RUSAL’s shares were transferred on 3
February 2020.
Under the Group’s accounting policy, the Glencore deal was accounted for under the anticipated-acquisition
method, as if the remaining 6.78% of UC RUSAL’s shares had already been transferred. Fair value of the
consideration transferred was determined with reference to market quotations on the London Stock Exchange.
As a result of the Glencore deal, non-controlling interests decreased by USD 435 million with respective increases
of share premium of USD 543 million and other reserves of USD 251 million, and decreases of foreign currency
translation reserve and accumulated losses by USD 836 million and USD 477 million, respectively.
(ii) Acquisition of non-controlling interests
In 2019, the Group acquired 0.4% of Irkutskenergo shares for USD 5 million, respectively. As a result the Group’s
shareholding as at 31 December 2019 in Irkutskenergo increased to 93.2%.
178 En+Group Annual Report 2020
(b) Treasury share reserve
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly
attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are
classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or
reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or
deficit on the transaction is presented in additional paid-in capital.
The reserve for the Group’s treasury shares comprises the cost of the Parent Company’s shares held by the
Group (note 1(a)). At the reporting date the Group held 136,511,122 (31 December 2019: nil) of its own shares.
(c) Currency translation reserve
The currency translation reserve comprises all foreign exchange differences arising from the translation of the
consolidated financial statements of foreign operations. The reserve is dealt with in accordance with the a
ccounting policies set out in note 3(b).
(d) Other reserves
Other reserves include the cumulative unrealised actuarial gains and losses on the Group’s defined post-retirement
benefit plans, the effective portion of the accumulative net change in fair value of cash flow hedges, the Group’s
share of other comprehensive income of associates and cumulative unrealised gains and losses on Group’s financial
assets which have been recognised directly in other comprehensive income.
(e) Dividends
During the years ended 31 December 2020 and 31 December 2019, the Group did not declare and pay dividends.
Following redomiciliation in July 2019, the Parent Company may distribute dividends from retained earnings
and profit for the reporting period in compliance with the current legislation of the Russian Federation and the
provisions of its Charter.
(f) Revaluation reserve
The revaluation reserve comprises the cumulative net change in the fair value of hydro assets at the reporting date
and is dealt with in accordance with the accounting policies set out in note 11(a)(i).
An independent valuation analysis of hydro assets was carried out as at 31 December 2020, the fair value of hydro
assets was estimated at USD 3,443 million (note 11(e)).
As a result of this fair value valuation, the Group recognised an additional revaluation reserve in the amount of
USD184 million net of tax (including USD 180 million attributable to shareholders of the Parent Company).
(g) Non-controlling interests
The following table summarises the information relating to each of the Group`s subsidiaries that has material
non-controlling interest:
179
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
31 December 2020
UC RUSAL
Irkutskenergo
Group*
OJSC Irkutsk
Electric Grid
Company Total
NCI percentage 43.1% 6.8% 47.6%
Assets 16,894 5,176 517
Liabilities (10,835) (3,200) (165)
Net assets 6,059 1,976 352
Carrying amount of NCI 2,613 129 167 2,909
Revenue 8,566 1,598 309
Profit 759 24 8
Other comprehensive income (963) 104 —
Total comprehensive income (204) 128 8
Profit attributable to NCI 327 2 3 332
Other comprehensive income attributable to NCI (41 5) (18) (32) (465)
(133)
Cash flows generated from operating activities 1,091 178 60
Cash flows generated from/(used in) investing
activities
128 (1,688) (64)
Cash flows (used in)/generated from financing
activities
(694) 1,539 4
Net increase in cash and cash equivalents 525 29 —
* Net assets of Irkutskenergo Group were adjusted for the effect of Irkutskenergo investments in Irkutsk GridCo, Krasnoyarsk HPP and LLC KRAMZ.
31 December 2019
UC RUSAL
Irkutskenergo
Group*
OJSC Irkutsk
Electric Grid
Company Total
NCI percentage 43.1% 6.8% 47.6%
Assets 17, 330 4,265 590
Liabilities (11,067) (2,064) (177)
Net assets 6,263 2,201 413
Carrying amount of NCI 2,701 145 196 3,042
Revenue 9,711 1,811 342
Profit 960 172 19
Other comprehensive income 578 (4) —
Total comprehensive income 1,538 168 19
Profit attributable to NCI 418 19 7 444
Other comprehensive income attributable to NCI 267 7 21 295
739
Cash flows generated from operating activities 1,652 213 91
Cash flows generated from/(used in) investing
activities
246 (10) (84)
Cash flows used in financing activities (949) (176) (16)
Net increase/(decrease) in cash and cash
equivalents
949 27 (9)
180 En+Group Annual Report 2020
* Net assets of Irkutskenergo Group were adjusted for the effect of Irkutskenergo investments in Irkutsk GridCo, Krasnoyarsk HPP and LLC KRAMZ.
17. Loans and borrowings
This note provides information about the contractual terms of the Group’s loans and borrowings. For more information
about the Group’s exposure to interest rate and foreign currency risk refer to notes 20(c)(ii) and 20(c)(iii), respectively.
31 December
2020
USD million
2019
USD million
Non-current liabilities
Secured bank loans
7,756 7,626
Unsecured bank loans 22 1,086
Bonds 2,437 2,546
10,215 11,258
31 December
2020
USD million
2019
USD million
Current liabilities
Current portion of secured bank loans 462 376
Current portion of unsecured bank loans 3 2
465 378
Secured bank loans 260 210
Unsecured bank loans 1,387 509
Accrued interest 60 72
Bonds 1 55
1,708 846
2,173 1,224
181
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
(a) Loans and borrowings
31 December
2020
USD million
2019
USD million
Non—current liabilities
Secured bank loans
Variable
USD — 3M Libor + 2.10–2.25% 1,073 1,070
USD — 3M Libor + 3.00–3.75% 2,097 2,089
USD — 1M Libor + 3.60% — 54
EUR — 6M Euribor + 1.75% — 1
RUB — CBR + 1.50%–2.00% 4,585 2,581
Fixed
RUB — fixed at 8.75%–9.15% — 1,792
RUB — fixed at 10.00%–10.50% 1 39
7,756 7,626
Unsecured bank loans
Variable
RUB — CBR + 1.00% — 696
RUB — other 13 —
USD — 1M Libor + 2.40% — 200
EUR — 6M Euribor + 0.67% 9 —
Fixed
RUB — fixed at 5.00%–7.25% — 190
22 1,086
Bonds 2,437 2,546
10,215 11,258
Current liabilities
Current portion of secured bank loans
Variable
USD — 1M Libor + 3.60% 54 —
EUR — 6M Euribor + 1.75%–1.95% — 2
RUB — CBR + 1.5%–2.00% 367 321
Fixed
RUB — fixed at 8.75%–11.5% 41 53
462 376
Current portion of unsecured bank loans
Variable
EUR — 6M Euribor + 0.67% 1 —
RUB — other 2 —
Fixed
RUB — fixed at 5%–8.75% — 2
3 2
182 En+Group Annual Report 2020
31 December
2020
USD million
2019
USD million
Secured bank loans
Variable
USD — 3M Libor + 1.35%–1.65% 260 210
260 210
Unsecured bank loans
Variable
USD — 1M Libor + 2.40% 200 —
RUB — CBR + 0.85%–1.00% 570 230
RUB — CBR + 1.20%–2.00% 397 14
Fixed
USD — fixed at 2.97%–3.60% 200 200
RUB — fixed at 5.75%–8.06% 20 65
1,387 509
Accrued interest 60 72
Bonds 1 55
1,708 846
2,173 1,224
The bank loans are secured as at 31 December 2020 and 31 December 2019 by the following:
– rights, including all monies and claims, arising out of certain sales contracts between the Group’s trading
subsidiaries and its ultimate customers, were assigned to secure the syndicated Pre-Export Finance Term
Facility Agreement (PXF) dated 25 October 2019;
– properties, plant and equipment – refer to note 11(d);
– inventories – refer to note 14;
– shares of the Group companies as described below.
METALS
As at 31 December 2020, UC RUSAL through its subsidiaries had outstanding REPO loans backed by1,123,968
Norilsk Nickel shares amounting to USD 260 million and maturing in June 2021.
As at 31 December 2019, UC RUSAL through its subsidiaries had outstanding REPO loans backed by1,017,000
Norilsk Nickel shares amounting to USD 210 million and maturing in June 2020.
On 25 October 2019, UC RUSAL entered into new five-year sustainability-linked pre-export finance facility for USD
1,085,000,000. The interest rate is subject to a sustainability discount or premium depending on UC RUSAL’s
fulfilment of the sustainability key performance indicators (KPI). The proceeds were partly used to refinance the
principal outstanding under the existing pre-export finance facility of up to USD2billion.
During the year ended 31 December 2019, UC RUSAL made a principal repayment of USD1,700million and RUB
32,769 million (USD 512 million) under the syndicated Pre-Export Finance Term Facility Agreement (PXF) and
credit facilities with Sberbank and Gazprombank, respectively.
The nominal value of UC RUSAL’s loans and borrowings was USD 5,329 million at 31 December 2020
(31 December 2019: USD 5,612 million).
As at 31 December 2020 and 31 December 2019, the secured bank loans are secured by certain pledges of shares
of a number of UC RUSAL’s subsidiaries and 25% +1 share of Norilsk Nickel (Group’s associate).
183
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
POWER
In February 2020, the Group entered into 2 loan agreements with Sberbank:
Loan 1 – 3-year RUB 100.8 billion loan agreement to finance the acquisition of a 21.37% stake in the Parent Company
for USD 1.6 billion from VTB (note 1(a)).
Loan 2 – loan agreement allowing the extension of the final maturity of the Loan 1 by another 4 years during 2022.
In December 2019, EuroSibEnergo entered into a 7-year RUB 99.5 billion (USD 1.6 billion) loan agreement with
Sberbank to fully refinance its existing obligations on more favorable commercial terms.
The nominal value of Power loans and borrowings was USD 4,610 million at 31 December 2020 (31December 2019:
USD 4,243 million).
As at 31 December 2020 and 31 December 2019, the secured bank loans are secured by certain pledges of shares
of a number of Parent Company’s subsidiaries, including LLC ESE–Hydrogeneration – 100% (2019: 100%), JSС
Krasnoyarsk Hydro-Power Plant – 100% (2019: 50%+1 share), PJCS Irkutskenergo – 77.43% (2019: 67.70%) and JSC
EuroSibEnergo – 50%+1 share (2019: nill). In December 2020, 21.37% shares of the Parent Company were pledged
under RUB 100.8 billion loan agreement described above.
The fair value of the Group’s liabilities measured at amortised cost approximate their carrying values as at
31December 2020 and 31 December 2019.
(b) Bonds
On 20 March 2020, UC RUSAL repaid Panda bonds issuance (the first tranche) and redeemed bonds with notional
value CNY 320 million (USD 46 million).
On 9 June 2020, placement of the exchange-traded rouble bonds of PJSC RUSAL Bratsk series BО-002Р-01 in
the amount of RUB 10 billion with a coupon rate 6.5% was completed and the exchange-traded rouble bonds
commenced trading on the Moscow Exchange. Maturity of the bonds is ten years subject to a bondholders’ put
option exercisable in June 2023. In addition to the placement, UC RUSAL entered into cross-currency interest
rate swaps, which resulted in the exchange-traded rouble bonds exposure of RUB 10 billion being translated into
an US-dollar exposure with a maturity of 3 years and an interest rate of 2.90%. As at 31 December 2020, cross-
currency interest rate swaps in respect of rouble bonds issued during the year ended 31 December 2019 and the
year ended December 2020 were in force which resulted in the exchange-traded rouble bonds exposure being
translated in full into an US-dollar exposure with a maturity of 3-3.5 years and an interest rate of 2.90%–4.69%.
Total foreign exchange gains on bonds for the year ended 31 December 2020 are accounted for in other
comprehensive income as part of the cash flow hedge result and amounted to USD 167 million.
As at 31 December 2020, 27,751 series 08 bonds, 37,817 series BO-01 bonds, 15,000,000 series BO-001P-01 bonds,
15,000,000 series BO-001P-02 bonds, 15,000,000 series BO-001P-03 bonds, 15,000,000 series BO-001P-04
bonds, 10,000,000 series BO-002P-01 bonds were outstanding (traded in the market).
The closing market price at 31 December 2020 was RUB 988, RUB 980, RUB 1,033, RUB 1,037, RUB 1,029 and
RUB 1,020, RUB 999 per bond for the seven tranches, respectively.
In July 2020, UC RUSAL launched the tender offer and purchased from investors and redeemed Eurobonds for the
total amount of USD 88.5 million.
On 4 September 2020, the Group repaid and redeemed the second tranche of Panda Bonds with notional value
CNY 20 million (USD 3 million).
184 En+Group Annual Report 2020
18. Provisions
(a) Accounting policy
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The unwinding of the
discount is recognised as finance costs.
(i) Site restoration
The mining, refining and smelting activities of the Group can give rise to obligations for site restoration and
rehabilitation. Restoration and rehabilitation works can include facility decommissioning and dismantling, removal
or treatment of waste materials, land rehabilitation, and site restoration. The extent of work required and the
associated costs are dependent on the requirements of law and the interpretations of the relevant authorities.
Provisions for the cost of each restoration and rehabilitation program are recognised at the time that environmental
disturbance occurs. When the extent of disturbance increases over the life of an operation, the provision is increased
accordingly. Costs included in the provision encompass obligated and reasonably estimable restoration and
rehabilitation activities expected to occur progressively over the life of the operation and at the time of closure in
connection with disturbances at the reporting date.
Routine operating costs that may impact the ultimate restoration and rehabilitation activities, such as waste material
handling conducted as an integral part of a mining or production process, are not included in the provision. Costs
arising from unforeseen circumstances, such as the contamination caused by unplanned discharges, are recognised
as an expense and liability when the event gives rise to an obligation which is probable and capable of reliable
estimation.
Restoration and rehabilitation provisions are measured at the expected value of future cash flows, discounted to
their present value and determined according to the probability of alternative estimates of cash flows occurring
for each operation. Discount rates used are specific to the country in which the operation is located. Significant
judgements and estimates are involved in forming expectations of future activities and the amount and timing of the
associated cash flows. Those expectations are formed based on existing environmental and regulatory requirements.
When provisions for restoration and rehabilitation are initially recognised, the corresponding cost is capitalised as
an asset, representing part of the cost of acquiring the future economic benefits of the operation. The capitalised
cost of restoration and rehabilitation activities is amortised over the estimated economic life of the operation on a
units of production or straight-line basis. The value of the provision is progressively increased over time as the
effect of discounting unwinds, creating an expense recognised as part of finance expenses.
Restoration and rehabilitation provisions are also adjusted for changes in estimates. Those adjustments are accounted
for as a change in the corresponding capitalised cost, except where a reduction in the provision is greater than the
unamortised capitalised cost, in which case the capitalised cost is reduced to nil and the remaining adjustment is
recognised in profit or loss. Changes to the capitalised cost result in an adjustment to future amortisation charges.
Adjustments to the estimated amount and timing of future restoration and rehabilitation cash flows are a normal
occurrence in light of the significant judgements and estimates involved. Factors influencing those changes
include revisions to estimated reserves, resources and lives of operations; developments in technology; regulatory
requirements and environmental management strategies; changes in the estimated costs of anticipated activities,
including the effects of inflation and movements in foreign exchange rates; and movements in general interest rates
affecting the discount rate applied.
185
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En+Group Annual Report 2020
FINANCIAL STATEMENTS
(ii) Legal claim
In the normal course of business, the Group may be involved in legal proceedings. Where management considers
that it is more likely than not that proceedings will result in the Group compensating third parties, a provision is
recognised for the best estimate of the amount expected to be paid. Where management considers that it is more
likely than not that proceedings will not result in the Group compensating third parties or where, in rare circumstances,
it is not considered possible to provide a sufficiently reliable estimate of the amount expected to be paid, no
provision is made for any potential liability under the litigation but the circumstances and uncertainties involved are
disclosed as contingent liabilities. The assessment of the likely outcome of legal proceedings and the amount of any
potential liability involves significant judgement. As law and regulations in many of the countries in which the Group
operates are continuing to evolve, particularly in the areas of taxation, sub-soil rights and protection of the
environment, uncertainties regarding litigation and regulation are greater than those typically found in countries
with more developed legal and regulatory frameworks.
(b) Disclosure
USD million Pension liabilities Site restoration
Provisions for
legal claims Tax provisions Total
Balance at 1 January 2019 89 411 10 20 530
Non-current 82 377 — — 459
Current 7 34 10 20 71
Provisions made during the year 13 47 24 — 84
Provisions reversed during the
year (10) (25) — — (35)
Actuarial losses 17 — — — 17
Provisions used during the year (8) (2) — (20) (30)
Change in estimates — 14 — — 14
Translation difference 10 14 3 — 27
Balance at 31 December 2019 111 459 37 — 607
Non-current 104 432 — — 536
Current 7 27 37 — 71
Provisions made during the year 13 59 10 — 82
Provisions reversed during the
year (1) (23) — — (24)
Actuarial gains (3) — — — (3)
Provisions used during the year (7) (3) (9) — (19)
Change in estimates — (1) — — (1)
Translation difference (14) (15) (6) — (35)
Balance at 31 December 2020 99 476 32 — 607
Non-current 91 427 — — 518
Current 8 49 32 — 89
99 476 32 — 607
186 En+Group Annual Report 2020
(c) Pension liabilities
As at 31 December 2020, the pension liability is represented by UC RUSAL USD 55 million (31December 2019:
USD60million) and Power USD 43 million (31 December 2019: USD51million).
The provision for pensions mainly comprises lump sum payments at retirement by aluminium plants located in
Russia and Ukraine, and by electricity generating companies. The Group also provides pension benefits to eligible
participants at facilities located outside of the Russian Federation and Ukraine.
METALS
Group subsidiaries in the Russian Federation
The Group voluntarily provides long-term and post-employment benefits to its former and existing employees
including death-in-service, jubilee, lump sum upon retirement, material support for pensioners and death-in-pension
benefits. Furthermore, the Group provides regular social support payments to some of its veterans of World War II.
The above employee benefit programs are of a defined benefit nature. The Group finances these programs on a
pay-as-you-go basis, so plan assets are equal to zero.
Group subsidiaries in Ukraine
Due to legal requirements, the Ukrainian subsidiaries are responsible for partial financing of the state hardship
pensions for those of its employees who worked, or still work, under severe and hazardous labour conditions
(hardship early retirement pensions). These pensions are paid until the recipient reaches the age of entitlement to
the State old age pension (55-60 years for female (dependent on year of birth) and 60 years for male employees).
InUkraine, the Group also voluntarily provides long-term and post-employment benefits to its employees including
death-in-service, lump sum benefits upon retirement and death-in-pension benefits.
The above employee benefit programs are of a defined benefit nature. The Group finances these programs on a
pay-as-you-go basis, so plan assets are equal to zero.
Group subsidiaries outside the Russian Federation and Ukraine
At its Guinean entities, the Group provides a death-in-service benefit and lump-sum benefits upon disability and
old-age retirement.
At its Guyana subsidiary, the Group provides a death-in-service benefit.
At its Italian subsidiary (Eurallumina), the Group only provides lump sum benefits upon retirement, which relate to
service up to 1 January 2007.
In Sweden (Kubikenborg Aluminium AB), the Group provides defined benefit lifelong and temporary pension
benefits. The lifelong benefits are dependent on the past service and average salary level of the employee, with an
accrual rate that depends on the salary bracket the employee is in. The liability relates only to benefits accrued
before 1 January 2004.
The number of employees in all jurisdictions eligible for the plans as at 31 December 2020 and 2019 was 48,548 and
46,581, respectively. The number of pensioners in all jurisdictions as at 31December2020 and 2019 was 43,422 and
41,699, respectively.
The Group expects to pay under the defined benefit retirement plans an amount of USD 4 million during the
12 month period beginning on 1 January 2021.
187
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En+Group Annual Report 2020
FINANCIAL STATEMENTS
Actuarial valuation of pension liabilities
The actuarial valuations of UC RUSAL and the portion of UC RUSAL’s funds specifically designated for the UC
RUSAL’s employees were completed by a qualified actuary, Robert van Leeuwen AAG, as at 31December 2020,
using the projected unit credit method as stipulated by IAS 19.
The key actuarial assumptions (weighted average, weighted by DBO) are as follows:
31December 2020
% per annum
31December 2019
% per annum
Discount rate 5.7 6.4
Expected return on plan assets N/A N/A
Future salary increases 7.1 8.4
Future pension increases 3.6 5.1
Staff turnover 4.7 4.7
Mortality
USSR population table for 1985, Ukrainian
population table for 2000
USSR population table for 1985, Ukrainian
population table for 2000
Disability
70% Munich Re for Russia; 40% of death
probability for Ukraine
70% Munich Re for Russia; 40% of death
probability for Ukraine
As at 31 December 2020 and 31December 2019, 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:
31December 2020 31December 2019
Discount rate 6.0% 6.3%
Future salary increases 5.5% 5.6%
Pension and inflation rate increases 4.0% 4.1%
(d) Site restoration and environmental provisions
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:
31December 2020 31December 2019
Timing of cash outflows
2021: USD49 million
2022-2026: USD33 million
2027-2037: USD131 million
after 2037: USD374 million
2020: USD26 million
2021-2025: USD223 million
2026-2036: USD125 million
after 2036: USD240 million
Years required to fill the ash dumps 18.1 16.7
Discount rate for Irkutskenergo and Coal segment assets after
adjusting for inflation
2.8% 2.6%
Risk free discount rate for UC RUSAL after adjusting for inflation 0.73% 1.96%
188 En+Group Annual Report 2020
The risk free rate for the year 2019-2020 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 the Directors have assessed the provisions for site restoration and concluded that the
provisions and disclosures are adequate.
(e) 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 2020, 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 32 million (31 December 2019:
USD37 million).
At each reporting date management has assessed the provisions for litigation and claims and concluded that the
provisions and disclosures are adequate.
(f) Tax provisions
The Group generally provides for current tax based on positions taken (or expected to be taken) in its tax returns.
Where it is more likely than not that upon examination by the tax authorities of the positions taken by the Group
additional tax will be payable, the Group provides for its best estimate of the amount expected to be paid (including
any interest and/or penalties) as part of the tax charge.
At each reporting date management has assessed the provisions for taxation and concluded that the provisions
and disclosures are adequate.
19. Derivative financial assets and liabilities
Accounting policies
The Group enters, from time to time, into various derivative financial instruments to manage its exposure to
commodity price risk, foreign currency risk and interest rate risk.
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.
189
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable
to aparticular 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
31 December 2020 31December 2019
USD million USD million
Derivative assets Derivative liabilities Derivative assets Derivative liabilities
Petroleum coke supply contracts and other raw
materials 31 43 39 36
Forward contracts for aluminium and other
instruments 19 9 21 18
Cross currency swap (note 17(b)) — 133 48 —
Total 50 185 108 54
Non-current 20 28 33 27
Current 30 157 75 27
Derivative financial instruments are recorded at their fair value at each reporting date. Fair value is estimated in
accordance with Level 3 of the fair value hierarchy based on management estimates and consensus economic
forecasts of relevant future prices, net of valuation allowances to accommodate liquidity, modelling and other risks
implicit in such estimates. The Group’s policy is to recognise transfers between levels of fair value hierarchy as at the
date of the event or change in circumstances that caused the transfer. The following significant assumptions were
used in estimating derivative instruments:
2021 2022 2023 2024 2025
LME Al Cash, USD per tonne 1,991 2,029 2,077 2,122 2,164
Platt’s FOB Brent, USD per barrel 51 50 50 49 -
The movement in the balance of Level 3 fair value measurements of derivatives is as follows:
31 December
2020
USD million
2019
USD million
Balance at the beginning of the year 54 11
Unrealised changes in fair value recognised in statement of profit or loss (finance
(expense)/income) during the year (226) (21)
Unrealised changes in fair value recognised in other comprehensive income (cash flow
hedge) during the year (53) 34
Realised portion of electricity, coke and raw material contracts and cross currency swap 90 30
Balance at the end of the year (135) 54
190 En+Group Annual Report 2020
During the year 2020, there have been no changes in valuation techniques used to calculate the derivative financial
instruments compared to prior year.
Management believes that the values assigned to the key assumptions and estimates represented the most realistic
assessment of future trends. The results for the derivative instruments are not particularly sensitive to any factors
other than the assumptions disclosed above.
UC RUSAL entered into various petroleum coke supply contracts and other raw materials where the price of coke
is determined with reference to the Brent oil price, LME aluminium price and average monthly aluminium quotations.
UC RUSAL also sells products to various third parties at prices that are influenced by changes in London Metal
Exchange aluminium prices. From time to time UC RUSAL enters into forward sales and purchase contracts for a
portion of its anticipated primary aluminium sales and purchases to reduce the risk of fluctuating prices on these
sales. During the year ended 31 December 2020, the Group recognised a total net loss of USD 226 million in relation
to the above contracts (31 December 2019: loss of USD 21 million). Unrealised changes in fair value recognised in
other comprehensive income (cash flow hedge) during the period are fully attributable to cross currency swaps
(note 17(b)).
20. Financial risk management and fair values
(a) Fair values
Management believes that the fair values of financial assets and liabilities approximate their carrying amounts.
The methods used to estimate the fair values of the financial instruments are as follows:
Trade and other receivables, short-term investments, cash and cash equivalents, current loans and borrowings and
trade and other payables: the carrying amounts approximate fair value because of the short maturity period of the
instruments.
Long-term loans and borrowings, other non-current liabilities: the fair values of other non-current liabilities are based
on the present value of the anticipated cash flows and approximate carrying value, other than Eurobonds and RUSAL
Bratsk bonds issued.
Derivatives: the 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. Option-based
derivatives are valued using Black-Scholes models and Monte-Carlo simulations. The derivative financial instruments
are recorded at their fair value at each reporting date.
The following table presents the fair value of Group’s financial instruments measured at the end of the reporting
period on a recurring basis, categorised into the three-level fair value hierarchy as defined by IFRS 13, Fair value
measurement. The level into which a fair value measurement is classified is determined with reference to the
observability and significance of the inputs used in the valuation technique as follows:
– Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets
for identical assets or liabilities at the measurement date.
– Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and
not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.
– Level 3 valuations: Fair value measured using significant unobservable inputs.
191
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
As at 31 December 2020
Note
Carrying amount Fair value
Designated
at fair value
USD million
Financial
assets at
amortised
cost
USD million
Other
financial
assets/
(liabilities)
USD million
Total
USD million
Level 1
USD million
Level 2
USD million
Level 3
USD million
Total
USD million
Financial assets
measured at fair
value
Petroleum coke
supply contracts
and other raw
materials
19 31 — — 31 — — 31 31
Forward contracts
for aluminium and
other instruments
19 19 — — 19 — — 19 19
Other non-current
assets
15(e) — — 75 75 75 — — 75
50 — 75 125 75 — 50 125
Financial assets not
measured at fair
value*
Trade and other
receivables
15(b) — 1,247 — 1,247 — 1,247 — 1,247
Short-term
investments
— 237 — 237 — 237 — 237
Cash and cash
equivalents
15(d) — 2,562 — 2,562 — 2,562 — 2,562
— 4,046 — 4,046 — 4,046 — 4,046
Financial liabilities
measured at fair
value
Cross currency
swaps
19 (133) — — (133) — — (133) (133)
Petroleum coke
supply contracts
and other raw
materials
19 (43) — — (43) — — (43) (43)
Forward contracts
for aluminium and
other instruments
19 (9) — — (9) — — (9) (9)
(185) — — (185) — — (185) (185)
Financial liabilities
not measured at fair
value*
Loans and
borrowings
17(a) — — (9,950) (9,950) — (9,788) — (9,788)
Unsecured bond
issue
17(b) — — (2,438) (2,438) (972) (1,574) — (2,546)
Trade and other
payables
15(c) — — (1,253) (1,253) — (1,253) — (1,253)
— — (13,641) (13,641) (972) (12,615) — (13,587)
* The Group considers that the carrying amounts of short-term trade receivables and payables are a reasonable approximation of fair values.
192 En+Group Annual Report 2020
As at 31 December 2019
Note
Carrying amount Fair value
Designated
at fair value
USD million
Financial
assets at
amortised
cost
USD million
Other
financial
assets/
(liabilities)
USD million
Total
USD million
Level 1
USD million
Level 2
USD million
Level 3
USD million
Total
USD million
Financial assets
measured at fair
value
Petroleum coke
supply contracts
and other raw
materials
19 39 — — 39 — — 39 39
Forward contracts
for aluminium and
other instruments
19 21 — — 21 — — 21 21
Cross currency
swaps
19 48 — — 48 — — 48 48
108 — — 108 — — 108 108
Financial assets not
measured at fair
value*
Trade and other
receivables
15(b) — 1,901 — 1,901 — 1,901 — 1,901
Short-term
investments
— 241 — 241 — 241 — 241
Cash and cash
equivalents
15(d) — 2,278 — 2,278 — 2,278 — 2,278
— 4,420 — 4,420 — 4,420 — 4,420
Financial liabilities
measured at fair
value
Petroleum coke
supply contracts
and other raw
materials
19 (36) — — (36) — — (36) (36)
Forward contracts
for aluminium and
other instruments
19 (18) — — (18) — — (18) (18)
(54) — — (54) — — (54) (54)
Financial liabilities
not measured at fair
value*
Loans and
borrowings
17(a) — — (9,881) (9,881) — (10,038) — (10.038)
Unsecured bond
issue
17(b) — — (2,601) (2,601) (1,002) (1,700) — (2,702)
Trade and other
payables
15(c) — — (1,198) (1,198) — (1,198) — (1,198)
— — (13,680) (13,680) (1,002) (12,936) — (13,938)
* The Group considers that the carrying amounts of short-term trade receivables and payables are a reasonable approximation of fair values.
193
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
FINANCIAL STATEMENTS
(b) Financial risk management objectives and policies
The Group’s principal financial instruments comprise bank loans and trade payables. The main purpose of these
financial instruments is to raise finance for the Group’s operations. The Group has various financial assets such as
trade receivables and cash and short-term deposits, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, foreign
currency risk and credit risk. Management reviews and agrees policies for managing each of these risks which are
summarised below.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group,
through its training and management standards and procedures, aims to develop a disciplined and constructive
control environment in which all employees understand their roles and obligations.
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising returns.
(i) Tariffs and commodity price risk
During the years ended 31 December 2020 and 31 December 2019, the Group has entered into certain commodity
derivatives contracts in order to manage its exposure of commodity price risks.
The tariffs for electricity, heat and transmission services applied by the Group’s significant subsidiaries are currently
partially determined by government bodies. The Group cannot directly influence or mitigate the risks in relation to
the change in tariffs.
A significant portion of the Group’s generation activities is based on coal burning stations. A change in coal prices
may have a significant impact on the Group’s operations. To mitigate the risk of fluctuations in coal prices, the Group
has historically increased its internal coal production through acquisition of coal mines and licences in the Eastern
Siberia region.
(ii) Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt
obligations with floating interest rates (note 17). The Group’s policy is to manage its interest costs by monitoring
changes in interest rates with respect to its borrowings.
The following table details the interest rate profile of the Group’s and the Company’s borrowings at the reporting date.
31 December 2020 31 December 2019
Effective interest
rate %
USD
million
Effective interest
rate %
USD
million
Fixed rate loans and borrowings
Loans and borrowings (note 17(a)) 0.01%-10.5% 2,700 0.01%-11.5% 4,942
2,700 4,942
Variable rate loans and borrowings
Loans and borrowings (note 17(a)) 0.67%-6.25% 9,628 1.75%-8.25% 7,468
9,628 7,468
12,328 12,410
194 En+Group Annual Report 2020
The following table demonstrates the sensitivity to cash flows from interest rate risk arising from floating rate
non-derivative instruments held by the Group at the reporting date in respect of a reasonably possible change in
interest rates, with all other variables held constant. The impact on the Group’s profit before taxation and equity and
retained profits/accumulated losses is estimated as an annualised input on interest expense or income of such
achange in interest rates. The analysis has been performed on the same basis for all years presented.
Increase/ decrease
in basis points
Effect on profit
before taxation for
the year
USD million
Effect on equity for
the year
USD million
As at 31 December 2020
Basis percentage points +100 (96) (77)
Basis percentage points -100 96 77
As at 31 December 2019
Basis percentage points +100 (75) (60)
Basis percentage points -100 75 60
(iii) Foreign currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other
than the respective functional currencies of group entities, primarily USD but also the Russian Rouble, Ukrainian
Hryvna and Euros. The currencies in which these transactions primarily are denominated are RUB, USD and EUR.
Borrowings are primarily denominated in currencies that match the cash flows generated by the underlying operations
of the Group, primarily USD but also RUB and EUR. This provides an economic hedge.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net
exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to
address short-term imbalances or entering into currency swap arrangements.
The Group’s exposure at the reporting date to foreign currency risk arising from recognised assets and liabilities
denominated in a currency other than the functional currency of the entity to which they relate is set out in the table
below. Differences resulting from the translation of the financial statements of foreign operations into the Group’s
presentation currency are ignored.
USD million
USD-denominated vs. RUB
functional currency
31 December
RUB-denominated vs. USD
functional currency
31 December
EUR-denominated vs. USD
functional currency
31 December
Denominated in other
currencies vs. USD
functional currency
31 December
2020 2019 2020 2019 2020 2019 2020 2019
Non-current assets — — — 3 1 — — 8
Derivative financial
assets
— — 31 40 — — — —
Trade and other
receivables
1 1 582 662 64 55 31 43
Cash and cash
equivalents
1 26 508 85 104 125 25 35
Loans and borrowings (314) (54) (1,433) (1,980) — — — —
Provisions — — (78) (66) (27) (26) (12) (14)
Derivative financial
liabilities
— — (32) (11) (6) — — —
Income tax — — (2) (2) — — (6) (8)
Non-current liabilities — — (1) (1) (6) (6) — —
Short-term bonds — — (1) (7) — — — (49)
Trade and other
payables
— — (404) (351) (49) (42) (88) (74)
Net exposure arising
from recognised
assets and liabilities
(312) (27) (830) (1,628) 81 106 (50) (59)
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CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
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FINANCIAL STATEMENTS
Foreign currency sensitivity analysis
The following tables indicate the change in the Group’s profit before taxation (and accumulated losses) and other
comprehensive income that could arise if foreign exchange rates to which the Group has significant exposure at the
reporting date had changed at that date, assuming all other risk variables remained constant.
Year ended 31 December 2020
Change in
exchange rates
Effect on profit
before taxation for
the year
USD million
Effect on equity for
the year
USD million
Depreciation of USD vs. RUB 15% (78) (79)
Depreciation of USD vs. EUR 10% 8 8
Depreciation of USD vs. other currencies 5% (3) (3)
Year ended 31 December 2019
Change in
exchange rates
Effect on profit
before taxation for
the year
USD million
Effect on equity for
the year
USD million
Depreciation of USD vs. RUB 15% (240) (240)
Depreciation of USD vs. EUR 10% 11 11
Depreciation of USD vs. other currencies 5% (3) (3)
Results of the analysis as presented in the above tables represent an aggregation of the effects on the Group entities’
profit before taxation and other comprehensive income measured in the respective functional currencies, translated
into USD at the exchange rates ruling at the reporting date for presentation purposes.
The sensitivity analysis assumes that the change in foreign exchange rates had been applied to re-measure those
financial instruments held by the Group which expose the Group to foreign currency risk at the reporting date.
The analysis excludes differences that would result from the translation of other financial statements of foreign
operations into the Group’s presentation currency. The analysis has been performed on the same basis for all years
presented.
(d) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of
committed credit facilities to meet its operating and financial commitments.
The following tables show the remaining contractual maturities at the reporting date of the Group’s non-derivative
financial liabilities, which are based on contractual undiscounted cash flows (including interest payment computed
using contractual rates, or if floating, based on rates current at the reporting date) and the earliest the Group can be
required to pay, except loans presented as payable on demand due to breach of covenant:
31 December 2020
Contractual undiscounted cash outflow
Within 1year or
on demand
USD million
More than
1year but less
than 2 years
USD million
More than
2years but less
than 5 years
USD million
More than
5years
USD million
TOTAL
USD million
Carrying
amount
USD million
Trade and other payables to third
parties
1,201 — — — 1,201 1,201
Trade and other payables to related
parties
52 — — — 52 52
Bonds, including interest payable 153 1,251 1,356 — 2,760 2,438
Loans and borrowings, including
interest payable
2,541 2,433 3,282 3,260 11,516 9,950
3,947 3,684 4,638 3,260 15,529 13,641
Financial guarantees issued: Maximum
amount guaranteed
69 45 — — 114 —
196 En+Group Annual Report 2020
31 December 2019
Contractual undiscounted cash outflow
Within 1year or
on demand
USD million
More than
1year but less
than 2 years
USD million
More than
2years but less
than 5 years
USD million
More than
5years
USD million
TOTAL
USD million
Carrying
amount
USD million
Trade and other payables to third
parties
1,149 — — — 1,149 1,149
Trade and other payables to related
parties
49 — — — 49 49
Bonds, including interest payable 219 161 2,720 — 3,100 2,601
Loans and borrowings, including
interest payable
1,763 2,528 6,825 1,005 12,121 9,881
3,180 2,689 9,545 1,005 16,419 13,680
Financial guarantees issued: Maximum
amount guaranteed
69 67 — — 136 —
At 31 December 2020 and 31 December 2019, UC RUSAL’s contractual undertaking to provide loans under the loan
agreement between UC RUSAL, PJSC RusHydro and BoAZ is included at maximum exposure for the Group in the
liquidity risk disclosure above (note 22(d)).
(e) Credit risk
The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who
wish to trade on credit terms are subject to credit verification procedures. The majority of the Group’s third party
trade receivables represent balances with the world’s leading international corporations operating in the metals
industry. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure
to bad debts is not significant. Goods are normally sold subject to retention of title clauses, so that in the event of
non-payment the Group may have a secured claim. The Group does not require collateral in respect of trade and
other receivables. The details of impairment of trade and other receivables are disclosed in note 15. Cash balances
are held with high credit quality financial institutions. The extent of the Group’s credit exposure is represented
by the aggregate balance of financial assets and financial guarantees and loan commitments given.
At 31 December 2020 and 31 December 2019, the Group has no concentration of credit risk within any single largest
customer but 5.2% and 14.6% of the total trade receivables were due from the Group’s five largest customers.
(f) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The Board of Directors monitors the return on capital, which
the Group defines as net operating income divided by total shareholders’ equity, excluding non-controlling interests.
The Board of Directors also monitors the level of dividends to ordinary shareholders.
The Board seeks to maintain a balance between higher returns that might be possible with higher levels of borrowings
and the advantages and security afforded by a sound capital position.
There were no changes in the Group’s approach to capital management during the year.
The Company and its subsidiaries were subject to externally imposed capital requirements in the both years
presented in these consolidated financial statements.
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FINANCIAL STATEMENTS
(g) Master netting or similar agreements
The Group may enter into sales and purchase agreements with the same counterparty in the normal course of
business. The related amount receivable and payable do not always meet the criteria for offsetting in the statement
of financial position.
The following table sets out the carrying amounts of recognised financial instruments that are subject to the above
agreements.
Year ended 31 December 2020
Trade receivables
USD million
Trade
payables
USD million
Gross amounts 71 (61)
Net amounts presented in the statement of financial position 71 (61)
Amounts related to recognised financial instruments that do not meet some or all of the
offsetting criteria (23) 23
Net amount 48 (38)
Year ended 31 December 2019
Trade receivables
USD million
Trade
payables
USD million
Gross amounts 99 (77)
Net amounts presented in the statement of financial position 99 (77)
Amounts related to recognised financial instruments that do not meet some or all of the
offsetting criteria (33) 33
Net amount 66 (44)
21. Commitments
(a) Capital commitments
METALS
UC RUSAL has entered into contracts that result in contractual obligations primarily relating to various construction
and capital repair works. The commitments at 31 December 2020 and 31December 2019 approximated
USD490million and USD 298 million, respectively. These commitments are due over a number of years.
POWER
The Power segment had outstanding capital commitments which had been contracted for at 31December2020
and 31 December 2019 in the amount of USD 269 million and USD 326 million, respectively. These commitments are
due over a number of years.
(b) Purchase commitments
Commitments with third parties for purchases of alumina, bauxite, other raw materials and other purchases in
2021-2034 under supply agreements are estimated from USD 3,256 million to USD4,644 million at 31December
2020 (31 December 2019: USD 3,257 million to USD 4,135) depending on the actual purchase volumes and
applicable prices.
Commitments with related parties for purchases of primary aluminium, alloys and other purchases in 2021-2030
under supply agreements are estimated from USD 4,741 million to USD 6,964 million at 31 December 2020
(31 December 2019: USD 5,134 million to USD 8,636 million) depending on the actual purchase volumes and
applicable prices.
198 En+Group Annual Report 2020
(c) Sale commitments
Commitments with third parties for sales of alumina and other raw materials in 2021-2034 are estimated
from USD 865 million to USD 1,375 million at 31 December 2020 (31 December 2019: from USD 962 million to
USD1,292million) and will be settled at market prices at the date of delivery. There are no commitments with
related parties for sales of alumina as at 31 December 2020. Commitments with related parties for sales of
alumina in 2020-2024 approximated from USD 413 million to USD 771 million at 31 December 2019.
Commitments with related parties for sales of primary aluminium and alloys in 2021 are estimated from
USD224million to USD 269 million at 31 December 2020 (31December 2019: from USD 375 million to
USD563million). Commitments with third parties for sales of primary aluminium and alloys in 2021-2025 are
estimated to range from USD 7,738 million to USD 11,602 million at 31 December 2020 (31 December 2019:
from USD 1,720 million to USD 2,559 million).
(d) Social commitments
The Group contributes to the maintenance and upkeep of the local infrastructure and the welfare of its employees,
including contributions toward the development and maintenance of housing, hospitals, transport services,
recreation and other social needs of the regions of the Russian Federation where the Group’s production entities
are located. The funding of such assistance is periodically determined by management and is appropriately
capitalised or expensed as incurred.
22. Contingencies
(a) Taxation
Russian tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur
frequently. Management’s interpretation of such legislation as applied to the transactions and activities of the
Group may be challenged by the relevant local, regional and federal authorities. Notably recent developments
in the Russian environment suggest that the authorities in this country are becoming more active in seeking to
enforce, through the Russian court system, interpretations of the tax legislation, in particular in relation to the
use of certain commercial trading structures, which may be selective for particular tax payers and different from
the authorities’ previous interpretations or practices. Recent events within the Russian Federation suggest that the
tax authorities are taking
a more assertive and substance-based position in their interpretation and enforcement of tax legislation.
The Russian taxation system is continually evolving and is subject to frequent changes, starting from 1 January 2015,
changes aimed at regulating tax consequences of transactions with foreign companies and their activities were
introduced, such as the concept of beneficial ownership of income, taxation of controlled foreign companies, tax
residency rules, country-by-country reporting etc. This legislation and practice of its application is still evolving
and the impact of legislative changes should be considered based on the actual circumstances.
All these circumstances may create tax risks in the Russian Federation that are substantially more significant than in
other countries. Management believes that it has provided adequately for tax liabilities based on its interpretations
of applicable Russian tax legislation, official pronouncements and court decisions. However, the interpretations of
the tax authorities and courts, especially due to reform of the supreme courts that are resolving tax disputes, could
differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their
interpretations, could be significant.
In addition to the amounts of income tax the Group has provided, there are certain tax positions taken by the Group
where it is reasonably possible (though less than 50% likely) that additional tax may be payable upon examination
by the tax authorities or in connection with ongoing disputes with tax authorities. The Group’s best estimate of the
aggregate maximum of additional amounts that it is reasonably possible may become payable if these tax positions
were not sustained at 31December 2020 is USD 36 million (31 December 2019: USD 34 million).
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FINANCIAL STATEMENTS
(b) Environmental contingencies
The Group and its predecessor entities have operated in the Russian Federation, Ukraine, Jamaica, Guyana, the
Republic of Guinea and the European Union for many years and certain environmental problems have developed.
Governmental authorities are continually considering environmental regulations and their enforcement and the
Group periodically evaluates its obligations related thereto. As obligations are determined, they are recognised
immediately. The outcome of environmental liabilities under proposed or any future legislation, or as a result of
stricter enforcement of existing legislation, cannot reasonably be estimated. Under current levels of enforcement
of existing legislation, management believes there are no possible liabilities, which will have a material adverse
effect on the financial position or the operating results of the Group. However, the Group anticipates undertaking
significant capital projects to improve its future environmental performance.
(c) Legal contingencies
The Group’s business activities expose it to a variety of lawsuits and claims which are monitored, assessed and
contested on an ongoing basis. Where management believes that a lawsuit or another claim would result in the
outflow of the economic benefits for the Group, a best estimate of such outflow is included in provisions in the
consolidated financial statements (note 18(e)). As at 31December 2020, the amount of claims, where management
assesses outflow as possible approximates USD 21 million (31 December 2019: USD 21 million).
(d) Other contingent liabilities
Where the Group enters into financial guarantee contracts to guarantee the indebtedness of related parties, the
Group considers these to be insurance arrangements and accounts for them as such. In this respect, the Group
treats the guarantee contract as a contingent liability until such time as it becomes probable that the Group will be
required to make a payment under the guarantee.
In September 2013, UC RUSAL and PJSC RusHydro entered into an agreement with BoAZ to provide loans, if the
latter is unable to fulfil its obligations under its credit facilities. The aggregate exposure under the agreement is
limited to RUB 16.8 billion (31 December 2020 and 2019 USD 227 million and USD 272 million, respectively) and
is split between the Group and PJSC RusHydro in equal proportion.
23. Related party transactions
(a) Accounting policy
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Group’s parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i) The entity and the Group are members of the same group (which means that each parent, subsidiary and
fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member
of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(iv) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity
related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management
personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to
the group or to the group’s parent.
Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.
200 En+Group Annual Report 2020
(b) Transactions with related parties
The Group transacts with related parties, the majority of which are under control of SUAL Partners Limited or its
shareholders, associates and joint ventures and other related parties.
Sales to related parties for the year are disclosed in note 5, trade receivables from related parties are disclosed
in note 15(b), accounts payable to related parties are disclosed in note 15(c).
Purchases of raw materials and services from related parties for the period were as follows:
Year ended 31 December
2020
USD million
2019
USD million
Purchase of raw materials (480) (533)
Companies capable of exerting significant influence (15) (54)
Other related parties — (25)
Associates and joint ventures (465) (454)
Energy costs (63) (46)
Companies capable of exerting significant influence (27) (5)
Other related parties (1) (1)
Associates and joint ventures (35) (40)
Other services (114) (126)
Other related parties (2) (2)
Associates and joint ventures (112) (124)
(657) (705)
(c) Related parties balances
At 31 December 2020, included in non-current assets are balances of related parties — associates and joint ventures
of USD 4 million (31December 2019: USD 2 million). At 31 December 2020, included in non-current liabilities are
balances of related parties – associates and joint ventures of USD 12 million (31December 2019: USD 11 million).
(d) Remuneration to key management
For the year ended 31 December 2020, remuneration to key management personnel comprised short-term benefits
and amounted to USD 19 million from which Board members received USD 7 million (year ended 31December2019:
USD 22 million from which Board members received USD 10 million).
24. Events subsequent to the reporting date
On 28 January 2021, UC RUSAL entered into new three-year sustainability-linked pre-export finance facility for up
to USD 200 million. The interest rate is subject to a sustainability discount or premium depending on the UC RUSAL’s
fulfilment of the sustainability key performance indicators (KPI). The proceeds were used to refinance the principal
outstanding under the existing debt.
In December 2020, Taishet aluminium smelter signed a 15 years syndicated loan agreement for up to RUB 45 bln
with VTB and Gazprombank to finance project construction, including refinancing of own expenses made in 2020.
Drawdowns commenced in February 2021 and shall be made further on in accordance with the disbursement schedule.
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FINANCIAL STATEMENTS
25. Accounting estimates and judgements
The Group has identified the following critical accounting policies under which significant judgements, estimates
and assumptions are made and where actual results may differ from these estimates under different assumptions
and conditions and may materially affect financial results of the financial position reported in future periods.
Property, plant and equipment – recoverable amount
In accordance with the Group’s accounting policy, each asset or cash generating unit is evaluated every reporting
period to determine whether there are any indications of impairment. If any such indication exists, a formal estimate
of recoverable amount is performed and an impairment loss is recognised to the extent that carrying amount
exceeds recoverable amount. The recoverable amount of an asset or cash generating group of assets is measured
at the higher of fair value less costs to sell and value in use.
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction
between knowledgeable and willing parties, and is generally determined as the present value of the estimated future cash
flows expected to arise from the continued use of the asset, including any expansion prospects, and its eventual disposal.
Value in use is also generally determined as the present value of the estimated future cash flows, but only those
expected to arise from the continued use of the asset in its present form and its eventual disposal. Present values
are determined using a risk-adjusted pre-tax discount rate appropriate to the risks inherent in the asset. Future cash
flow estimates are based on expected production and sales volumes, commodity prices (considering current and
historical prices, price trends and related factors), reserves (refer “Reserve estimates” below), operating costs,
restoration and rehabilitation costs and future capital expenditure. This policy requires management to make these
estimates and assumptions which are subject to risk and uncertainty; hence there is a possibility that changes
in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such
circumstances, some or all of the carrying value of the assets may be impaired and the impairment would be
charged against the profit or loss.
Property, plant and equipment – hydro assets – fair value
In accordance with the Group’s accounting policy, hydro assets are carried 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 with sufficient regularity to ensure that the carrying amount does
not differ materially from that which would be determined using fair value at the end of the reporting period.
The valuation analysis is primarily based on the cost approach to determine depreciated replacement cost. This
method considers the cost to reproduce or replace the property, plant and equipment, adjusted for physical
depreciation, functional and economic obsolescence.
This policy requires management to make estimates and assumptions regarding both costs, as there is no active
market for used assets of that type, and macroeconomic indicators to assess economic obsolescence which are
subject to risk and uncertainty; hence there is a possibility that changes in circumstances will alter these estimates,
which may impact the fair value of hydro assets. In such circumstances, the fair value of hydro assets may be lower
with any consequential decrease in revaluation reserve recognised through other comprehensive income.
Inventories – net realisable value
The Group recognises write-downs of inventories based on an assessment of the net realisable value of the
inventories. A write-down is applied to the inventories where events or changes in circumstances indicate that
the net realisable value is less than cost. The determination of net realisable value requires the use of judgement and
estimates. Where the expectation is different from the original estimates, such a difference will impact the carrying
value of the inventories and the write-down of inventories charged to the profit or loss in the periods in which such
estimate has been changed.
202 En+Group Annual Report 2020
Goodwill – recoverable amount
In accordance with the Group’s accounting policy, goodwill is allocated to the Group’s reportable business segments
as they represent the lowest level within the Group at which the goodwill is monitored for internal management
purposes and is tested for impairment annually at 31 December by preparing a formal estimate of recoverable
amount. Recoverable amount is estimated as the value in use of the business segment.
Similar considerations to those described above in respect of assessing the recoverable amount of property, plant
and equipment apply to goodwill.
Investments in associates and joint ventures – recoverable amount
In accordance with the Group’s accounting policies, each investment in an associate or joint venture is evaluated
every reporting period to determine whether there are any indications of impairment after application of the
equity method of accounting. If any such indication exists, a formal estimate of recoverable amount is performed
and an impairment loss recognised to the extent that the carrying amount exceeds the recoverable amount. The
recoverable amount of an investment in an associate or joint venture is measured at the higher of fair value less
costs to sell and value in use.
Similar considerations to those described above in respect of assessing the recoverable amount of property, plant
and equipment apply to investments in associates or joint ventures. In addition to the considerations described
above the Group may also assess the estimated future cash flows expected to arise from dividends to be received
from the investment, if such information is available and considered reliable.
Legal proceedings
In the normal course of business, the Group may be involved in legal proceedings. Where management considers
that it more likely than not that proceedings will result in the Group compensating third parties a provision is
recognised for the best estimate of the amount expected to be paid. Where management considers that it is more
likely than not that proceedings will not result in the Group compensating third parties or where, in rare circumstances,
it is not considered possible to provide a sufficiently reliable estimate of the amount expected to be paid, no
provision is made for any potential liability under the litigation but the circumstances and uncertainties involved are
disclosed as contingent liabilities.
The assessment of the likely outcome of legal proceedings and the amount of any potential liability involves significant
judgement. As law and regulations in many of the countries in which the Group operates are continuing to evolve,
particularly in the areas of taxation, sub-soil rights and protection of the environment, uncertainties regarding
litigation and regulation are greater than those typically found in countries with more developed legal and regulatory
frameworks.
Provision for restoration and rehabilitation
The Group’s accounting policy requires the recognition of provisions for the restoration and rehabilitation of each
site when a legal or constructive obligation exists to dismantle the assets and restore the site. The provision
recognised represents management’s best estimate of the present value of the future costs required. Significant
estimates and assumptions are made in determining the amount of restoration and rehabilitation provisions. Those
estimates and assumptions deal with uncertainties such as: changes to the relevant legal and regulatory framework;
the magnitude of possible contamination and the timing, extent and costs of required restoration and rehabilitation
activity. These uncertainties may result in future actual expenditure differing from the amounts currently provided.
The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances
available at the time. Changes to the estimated future costs for operating sites are recognised in the statement of
financial position by adjusting both the restoration and rehabilitation asset and provision. Such changes give rise to
a change in future depreciation and interest charges. For closed sites, changes to estimated costs are recognised
immediately in profit or loss.
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FINANCIAL STATEMENTS
Taxation
The Group’s accounting policy for taxation requires management’s judgement in assessing whether deferred tax
assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets,
including those arising from carried forward tax losses, capital losses and temporary differences, are recognised
only where it is considered more likely than not that they will be recovered, which is dependent on the generation
of sufficient future taxable profits. Deferred tax liabilities arising from temporary differences in investments, caused
principally by retained earnings held in foreign tax jurisdictions, are recognised unless repatriation of retained
earnings can be controlled and is not expected to occur in the foreseeable future.
Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on
management’s estimates of future cash flows. These depend on estimates of future production and sales volumes,
commodity prices, reserves, operating costs, restoration and rehabilitation costs, capital expenditure, dividends and
other capital management transactions. Assumptions are also required about the application of income tax
legislation. These estimates and assumptions are subject to risk and uncertainty, hence there is a possibility that
changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred
tax liabilities recognised on the statement of financial position and the amount of other tax losses and temporary
differences not yet recognised. In such circumstances, some or all of the carrying amount of recognised deferred
tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to profit or loss.
The Group generally provides for current tax based on positions taken (or expected to be taken) in its tax returns.
Where it is more likely than not that upon examination by the tax authorities of the positions taken by the Group
additional tax will be payable, the Group provides for its best estimate of the amount expected to be paid (including
any interest and/or penalties) as part of the tax charge.
Reserve estimates
Reserves are estimates of the amount of product that can be economically and legally extracted from the Group’s
properties. In order to calculate reserves, estimates and assumptions are required about a range of geological,
technical and economic factors, including quantities, grades, production techniques, recovery rates, production
costs, transport costs, commodity demand, commodity prices and exchange rates.
The Group determines ore reserves under the Australasian Code for Reporting of Mineral Resources and Ore
Reserves September 1999, known as the JORC Code. The JORC Code requires the use of reasonable investment
assumptions to calculate reserves.
Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies or fields to be
determined by analysing geological data such as drilling samples. This process may require complex and difficult
geological judgements and calculations to interpret the data.
Since economic assumptions used to estimate reserves change from period to period, and since additional
geological data is generated during the course of operations, estimates of reserves may change from period to
period.
Changes in reported reserves may affect the Group’s financial results and financial position in a number of ways,
including the following:
– Asset carrying values may be affected due to changes in estimated future cash flows.
– Depletion charged in profit or loss may change where such charges are determined by the units of production
basis, or where the useful economic lives of assets change.
– Decommissioning, site restoration and environmental provisions may change where changes in estimated reserves
affect expectations about the timing or cost of these activities.
Exploration and evaluation expenditure
The Group’s accounting policy for exploration and evaluation expenditure results in certain items of expenditure
being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or
where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.
This policy requires management to make certain estimates and assumptions as to future events and circumstances,
in particular whether an economically viable extraction operation can be established. Any such estimates and
assumptions may change as new information becomes available. If, after having capitalised the expenditure under
the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be
written off to profit or loss.
204 En+Group Annual Report 2020
Development expenditure
Development activities commence after project sanctioning by the appropriate level of management. Judgement
is applied by management in determining when a project has reached a stage at which economically recoverable
reserves exist such that development may be sanctioned. In exercising this judgement, management is required to
make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation
expenditure. Any such estimates and assumptions may change as new information becomes available. If, after
having commenced the development activity, a judgement is made that a development asset is impaired, the
appropriate amount will be written off to profit or loss.
Defined benefit retirement and other post retirement schemes
For defined benefit pension schemes, the cost of benefits charged to the profit or loss includes current and past
service costs, interest costs on defined benefit obligations and the effect of any curtailments or settlements, net of
expected returns on plan assets. An asset or liability is consequently recognised in the statement of financial position
based on the present value of defined obligations, less any unrecognised past service costs and the fair value of plan
assets.
The accounting policy requires management to make judgements as to the nature of benefits provided by
each scheme and thereby determine the classification of each scheme. For defined benefit pension schemes,
management is required to make annual estimates and assumptions about future returns on classes of scheme
assets, future remuneration changes, employee attrition rates, administration costs, changes in benefits, inflation
rates, exchange rates, life expectancy and expected remaining periods of service of employees. In making these
estimates and assumptions, management considers advice provided by external advisers, such as actuaries. Where
actual experience differs to these estimates, actuarial gains and losses are recognised directly in the statement of
profit or loss and other comprehensive income.
Impairment of assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that are not yet available
for use, the recoverable amount is estimated at each reporting date.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely
independent from other asset groups. Impairment losses are recognised in profit or loss. Impairment losses
recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a
pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised.
Goodwill that forms part of the carrying amount of an investment in an associate or a joint venture is not recognised
separately and, therefore, is not tested for impairment separately. Instead, the entire amount of the investment is
tested for impairment as a single asset when there is objective evidence that the investment in an associate or a
joint venture may be impaired.
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En+Group Annual Report 2020
FINANCIAL STATEMENTS
26. Significant subsidiaries
The significant entities of the Group, included in these consolidated financial statements, are as follows:
Name
Place of incorporation and
operation Principal activities
Ownership and equity interest
31 December
2020 2019
UC RUSAL
United Company RUSAL IPJSC
(formerly United Company
RUSAL Plc)
Russian Federation
(formerly Jersey)
Holding company 56.9% 56.9%
Compagnie Des Bauxites De
Kindia S.A.
Guinea Bauxite mining 100.0% 100.0%
Friguia SA Guinea Alumina 100.0% 100.0%
JSC RUSAL Achinsk Russian Federation Alumina 100.0% 100.0%
Mykolaiv Alumina Refunery
Company Ltd
Ukraine Alumina 100.0% 100.0%
JSC RUSAL Boxitogorsk
Alumina
Russian Federation Alumina 100.0% 100.0%
Eurallumina SpA Italy Alumina 100.0% 100.0%
PJSC RUSAL Bratsk Russian Federation Smelting 100.0% 100.0%
JSC RUSAL Krasnoyarsk Russian Federation Smelting 100.0% 100.0%
JSC RUSAL Novokuznetsk Russian Federation Smelting 100.0% 100.0%
JSC RUSAL Sayanogorsk Russian Federation Smelting 100.0% 100.0%
LLC RUSAL RESAL Russian Federation Processing 100.0% 100.0%
JSC RUSAL SAYANAL Russian Federation Foil 100.0% 100.0%
CJSC RUSAL ARMENAL Armenia Foil 100.0% 100.0%
LLC RUS-Engineering Russian Federation Repairs and maintenance 100.0% 100.0%
JSC Russian Aluminium Russian Federation Holding company 100.0% 100.0%
RUSAL Global
Management B.V.
Netherlands Management company 100.0% 100.0%
JSC United Company RUSAL
Trading House
Russian Federation Trading 100.0% 100.0%
RUSAL America Corp. USA Trading 100.0% 100.0%
RS International GmbH Switzerland Trading 100.0% 100.0%
RUSAL Marketing GmbH Switzerland Trading 100.0% 100.0%
RTI Limited Jersey Trading 100.0% 100.0%
Alumina & Bauxite Company
Limited
British Virgin Islands Trading 100.0% 100.0%
JSC Bauxite-Timana Russian Federation Bauxite mining 100.0% 100.0%
JSC Severo-Uralsky Bauxite
Mine
Russian Federation Bauxite mining 100.0% 100.0%
JSC RUSAL URAL Russian Federation
Primary aluminium and
alumina production
100.0% 100.0%
L LC S U A L- P M Russian Federation
Aluminium powders
production
100.0% 100.0%
JSC Kremniy Russian Federation Silicon production 100.0% 100.0%
206 En+Group Annual Report 2020
Name
Place of incorporation and
operation Principal activities
Ownership and equity interest
31 December
2020 2019
LLC RUSAL-Kremniy-Ural Russian Federation Silicon production 100.0% 100.0%
UC RUSAL Alumina Jamaica
Limited
Jamaica Alumina 100.0% 100.0%
Kubikenborg Aluminium AB Sweden Smelting 100.0% 100.0%
RFCL Limited (formerly RFCL
S.ar.l)
Cyprus (formerly
Luxembourg)
Finance services 100.0% 100.0%
ILLC AKTIVIUM Russian Federation
Holding and investment
company
100.0% 100.0%
Aughinish Alumina Ltd Ireland Alumina 100.0% 100.0%
LLC RUSAL Energo Russian Federation Electric power 100.0% 100.0%
Limerick Alumina Refining Ltd. Ireland Alumina 100.0% 100.0%
JSC RUSAL Management Russian Federation Management company 100.0% 100.0%
LLC RUSAL Taishet Russian Federation Smelting 100.0% 100.0%
LLC UC RUSAL Anode Plant Russian Federation Anodes 100.0% 100.0%
RUSAL Products GmbH Switzerland Trading 100.0% 100.0%
Casting and mechanical plant
«SKAD» Ltd.
Russian Federation
Other aluminum
production
80.0% 90.0%
LLC PGLZ Russian Federation Alumina 99.9% 0.00%
POWER
ILLC EN+ HOLDING (formerly
En+ Holding Limited)
Russian Federation
(formerly Cyprus)
Holding company 100.0% 100.0%
JSC EuroSibEnergo Russian Federation Management company 100.0% 100.0%
JSC Krasnoyarsk Hydro-Power
Plant
Russian Federation Power generation 100.0% 100.0%
LLC MAREM + Russian Federation Power trading 99.95% 99.95%
PJSC Irkutskenergo Russian Federation Power generation 93.2% 93.2%
OJSC Irkutsk Electric Grid
Company
Russian Federation
Power transmission and
distribution
52.4% 52.4%
LLC EuroSibEnergo –
Hydrogeneration
Russian Federation Power generation 100.0% 100.0%
LLC Avtozavodskaya TEC Russian Federation Power generation 96.5% 96.5%
LLC EuroSibEnergo-
engineering
Russian Federation Engineering services 100.0% 100.0%
LLC Kompaniya VostSibUgol Russian Federation Coal production 93.2% 93.2%
LLC Razrez Cheremkhovugol Russian Federation Coal production 93.2% 93.2%
LLC KRAMZ Russian Federation
Manufacturing of semi-
finished products from
primary aluminium
94.0% 94.0%
The nominal ownerships indicated in the table above are the effective holdings, except for UCRUSAL shareholdings
where 56.88% is held by the Parent Company.
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En+Group Annual Report 2020
APPENDIX
Units of measurement
bn Billion
EUR Euro
Gcal Gigacalorie, a unit of measurement for heating energy
Gcal/h Gigacalorie per hour, a unit of measurement for heating power capacity
GW Gigawatt (one million kilowatts)
GWh Gigawatt-hour (one million kilowatt-hours)
kA Kilo-amperes
km Kilometre
koz thousand troy ounces
kt Thousand metric tonnes
ktpa Thousand tonnes per annum
kV Kilovolt
kW Kilowatt
kWh Kilowatt-hour, a unit of measurement for produced electricity
mn Million
mt Million metric tonnes
mtpa Million tonnes per annum
MW Megawatt (one thousand kilowatt), a unit of measurement for electrical power capacity
MWh Megawatt-hour (one thousand kilowatt-hours), a unit of measurement for produced electricity
pp Percentage point
RUB Rouble
ths Thousand
t, tonne One metric tonne (one thousand kilograms)
tpa Tonnes per annum
TW Terawatt (one billion kilowatts)
TWh Terawatt-hour (one billion kilowatt-hours)
USD United States dollar
Glossary
208 En+Group Annual Report 2020
Terms and abbreviations
Adjusted EBITDA For any period represents the results from operating activities adjusted for amortisation and
depreciation, impairment charges and loss on disposal of property, plant and equipment for
the relevant period
Adjusted net profit For any period is defined as the net (loss)/profit adjusted for the net effect of the Company’s
investment in Norilsk Nickel, the net effect of derivative financial instruments and the net effect
of non-current assets impairment
ALSCON Aluminium Smelter Company of Nigeria Ltd., a company incorporated in Nigeria and in which
UC RUSAL indirectly holds an 85% interest
ARC The Audit and Risk Committee of the Board
ATS Joint-stock company “Administrator of the trading system of the wholesale electricity market”
Basic Element Basic Element Limited, a company incorporated in Jersey, of which Mr. Oleg Deripaska is the
ultimate beneficial owner
BEMO,
BEMO project
Boguchany Energy and Metals Complex, involving the construction of the Boguchany Hydropower
Plant (Boguchany HPP) and the Boguchany Aluminium Smelter (BoAZ, Boguchany AS), a joint
50/50 project of UC RUSAL and RusHydro.
BoAZ project involves the construction of a 600 thousand tpa greenfield aluminium smelter on
a 230 hectare site, located approximately 8 km to the south-east of the settlement of Tayozhny
in the Krasnoyarsk Region and approximately 160 km (212 km by road) from the Boguchany HPP
Board, Board of
Directors
Board of Directors of the Company
BrAZ Bratsk Aluminium Smelter or PJSC “RUSAL Bratsk”, a company incorporated under the laws
of the Russian Federation, which is a wholly owned subsidiary of UC RUSAL
CC Compliance Committee of the Board
CCO Competitive capacity outtake
CGC The Corporate Governance Committee of the Board
CHP Combined heat and power plant
CIS The Commonwealth of Independent States
CO
2
Carbon dioxide
CO
2
e CO
2
equivalent
Continuance Date 9 July 2019, when:
– The Company was registered as an international public joint-stock company in the Unified
State Register of Legal Entities of the Russian Federation and changed its legal jurisdiction
of incorporation from Jersey to Russia (the “Continuance”)
– The Company’s name was changed from EN+ GROUP PLC to EN+ GROUP IPJSC
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APPENDIX
DAM, day-ahead
market
The competitive selection of price bids of suppliers and buyers conducted by ATS a day before the
actual delivery of electricity with the determination of prices and volumes of delivery for each hour
of the day
DTRs The FCA’s Disclosure Guidance and Transparency Rules
En+, En+ Group¸
we, the Company,
the Group
EN+ GROUP International public joint-stock company / EN+ GROUP IPJSC and its subsidiaries
whose results are included in the consolidated financial statements prepared in accordance with
the International Financial Reporting Standards (or, where relevant, in relation to the Company
prior to the Continuance, EN+ GROUP PLC)
EuroSibEnergo JSC EuroSibEnergo is a 100% subsidiary of En+ Group, managing its power assets
FCA The UK’s Financial Conduct Authority
FCF Free Cash Flow
GDR Global depositary receipt
GHG Greenhouse gas emissions
GHG
emissions Scope 1
Direct GHG emissions occur from sources that are owned or controlled by the company, for example,
emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from
chemical production in owned or controlled process equipment. Direct CO
2
emissions from the
combustion of biomass shall not be included in scope 1 but reported separately. GHG emissions
not covered by the Kyoto Protocol, e.g. CFCs, NOx, etc. shall not be included in scope 1 but may
be reported separately
GHG
emissions Scope 2
Scope 2 accounts for GHG emissions from the generation of purchased electricity consumed by
the company. Purchased electricity is defined as electricity that is purchased or otherwise brought
into the organisational boundary of the company. Scope 2 emissions physically occur at the facility
where electricity is generated
GSM General shareholders meeting
HPP Hydropower plant
HSE Health, safety and environment
HSE Committee The Health, Safety and Environment Committee
IAI International Aluminium Institute
ICS Internal Control System
IES Integrated energy system – an aggregated production and other electricity property assets,
connected via a unified production process (including production in the form of the combined
generation of electrical and heat) and the supply of electrical energy under the conditions of a
centralised operating and dispatch management
IFRS The International Financial Reporting Standards
IPO Initial public offering
Irkutskenergo Irkutsk Public Joint Stock Company of Energetics and Electrification, a power generating company
controlled by En+ as to more than 30% of its issued share capital
210 En+Group Annual Report 2020
IrkAZ Irkutsk Aluminium Smelter, a branch of RUSAL Bratsk in Shelekhov
ISO 9001 ISO 9001:2015 is an international standard “Quality management systems – Requirements” by
International Organisation for Standardisation that sets out the criteria for a quality management
system and is the only standard in the family that can be certified to
ISO 14001 ISO 14001:2015 is a standard “Environmental management systems – Requirements with guidance for
use” by International Organisation for Standardisation that sets out the criteria for an environmental
management system and can be certified to
ISO 45001 ISO 45001:2018 is a standard “Occupational health and safety management systems – Requirements
with guidance for use” by International Organisation for Standardisation that sets out the criteria for
a health and safety management systems and can be certified to
JORC Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australasian
Institute of Geoscientists & the Minerals Council of Australia
KUBAL Kubikenborg Aluminium AB, a company incorporated in Sweden, which is a wholly owned subsidiary
of UC RUSAL
LIBOR In relation to any loan:
– the applicable screen rate (being the British Bankers’ Association Interest Settlement Rate for
dollars for the relevant period, displayed on the appropriate page of the Reuters screen); or
– (if no screen rate is available for dollars for the interest period of a particular loan) the arithmetic
mean of the rates (rounded upwards to four decimal places) as supplied to the agent at its request
quoted by the reference banks to leading banks in the London interbank market, as of the specified
time (11:00 am in most cases) on the quotation day (generally two business days before the first day
of that period unless market practice differs in the Relevant Interbank Market, in which case the
quotation day will be determined by the agent in accordance with market practice in the Relevant
Interbank Market) for the offering of deposits in dollars and for a period comparable to the interest
period for that loan.
LME London Metal Exchange
LME aluminium price Represents the average daily closing official LME spot prices for each period
LR The Listing Rules published by the UK’s Financial Conduct Authority in its capacity as competent
authority under the Financial Services and Markets Act 2000 (as amended) and the FCA’s Disclosure
Guidance and Transparency Rules
LSE London Stock Exchange
LTIFR The Lost Time Injury Frequency Rate which was calculated by the Group as a sum of fatalities
and lost time injuries per million man-hours
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APPENDIX
Market Council The non-commercial organisation formed as a result of a non-commercial partnership, which is
intended to unite energy market participants and major consumers of electrical energy through
membership of that body. The council is intended to ensure the proper functioning of commercial
market infrastructure and effective exchanges between the wholesale and retail electrical energy
markets. Additionally, it is intended to promote investment in the electrical energy industry by
creating a healthy market and even playing field for participants of both the wholesale and retail
electrical energy markets, when drafting new rules and regulations concerning the electrical energy
industry, and facilitate self-regulation of the wholesale and retail trade in electrical energy, power and
other products and services which is permissible in the wholesale and retail electrical energy markets.
The council’s aim is to ensure the security of energy supply in the Russian Federation, unity within the
economic space, economic freedom and competition in the wholesale and retail electrical energy
markets, by striking a balance between the interests of suppliers and buyers and the needs of society
in general in terms of having a reliable and stable source of electrical energy
Metals segment The Metals segment is comprised of UC RUSAL (56.88% owned by En+ Group). The power assets
of UC RUSAL are included into the Metals segment
Mineral Resource A concentration or occurrence of material of intrinsic economic interest in or on the earth’s crust
in such form, quality and quantity that there are reasonable prospects for eventual economic
extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral
Resource are known, estimated or interpreted from specific geological evidence and knowledge.
Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred,
Indicated and Measured categories.
– Inferred Mineral Resource
Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of
confidence. It is inferred from geological evidence and assumed but not verified geological and/or
grade continuity. It is based on information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality
and reliability
– Indicated Mineral Resource
The part of a Mineral Resource for which tonnage, densities, shape, physical characteristics,
grade and mineral content can be estimated with a reasonable level of confidence. It is based
on exploration, sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely
or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely
enough for continuity to be assumed
– Measured Mineral Resource
A Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral
content can be estimated with a high level of confidence. It is based on detailed and reliable
exploration, sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely
enough to confirm geological and grade continuity
MOEX The Moscow Exchange
N\A Not applicable
212 En+Group Annual Report 2020
NC The Nominations Committee of the Board
Net debt The sum of loans and borrowings and bonds outstanding less total cash and cash equivalents as
at the end of the relevant period, in each case attributable to the Group, Power or Metals segment,
as the case may be
NkAZ Novokuznetsk Aluminium Smelter or JSC “RUSAL Novokuznetsk”, a company incorporated under
the laws of the Russian Federation, which is a wholly owned subsidiary of UC RUSAL
OFAC The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury
OFAC Sanctions The designation by OFAC of certain persons and certain companies which are controlled or deemed
to be controlled by some of these persons into the Specially Designated Nationals List
OHSAS 18001 Occupational Health and Safety Assessment Series 18001:2007 is a standard, that sets out the
criteria for a health and safety management systems. OHSAS 18001 has been withdrawn and
replaced by ISO 45001
Ore Reserves The economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting
materials and allowances for losses, which may occur when the material is mined. Appropriate
assessments and studies have been carried out, and include consideration of and modification by
realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and
governmental factors. These assessments demonstrate at the time of reporting that extraction could
reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable
Ore Reserves and Proved Ore Reserves.
– Probable Ore Reserve
The economically mineable part of an Indicated, and in some circumstances, a Measured Mineral
Resource. It includes diluting materials and allowances for losses which may occur when the coraterial
is mined. Appropriate assessments and studies have been carried out, and include consideration of
and modification by realistically assumed mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors. These assessments demonstrate at the time of
reporting that extraction could reasonably be justified
– Proved Ore Reserve
The economically mineable part of a Measured Mineral Resource. It includes diluting materials and
allowances for losses which may occur when the material is mined. Appropriate assessments and
studies have been carried out, and include consideration of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors.
These assessments demonstrate at the time of reporting that extraction could reasonably be justified
pcs. Pieces
PM Krasnoturyinsk SUAL-PM-Krasnoturyinsk, a branch of LLC «SUAL-PM»
Power segment The Power segment is predominantly comprised of power assets and operations, owned by
En+Group. The Power segment engages in all aspects of the power industry, including electric
power generation, power trading and supply
QAL Queensland Alumina Limited, a company incorporated in Queensland, Australia, in which UC RUSAL
indirectly holds a 20% equity interest
R&D Research and development
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En+Group Annual Report 2020
APPENDIX
RemCom The Remuneration Committee of the Board
RoW Rest of the World ex-China
RUSAL,
the Metals segment
United Company RUSAL Plc, incorporated under the laws of Jersey with limited liability (56.88%
owned by En+ Group)
SDN List,
Specially Designated
Nationals List
List of Specially Designated Nationals and Blocked Persons, published by OFAC. US persons are
generally prohibited from dealing with assets of persons designated in the SDN List which are subject
to the US jurisdiction, subject to certain exemptions and exclusions set out in licenses issued by OFAC
SAZ Sayanogorsk Aluminium Smelter or RUSAL Sayanogorsk or Sayanogorsk smelter or JSC “RUSAL
Sayanogorsk”, a company incorporated under the laws of the Russian Federation, which is a wholly
owned subsidiary of UC RUSAL
SPP Solar power plant
Taskforce En+ Climate Change Taskforce led by Chief Operating Officer Vyacheslav Solomin will be responsible
for the planning and implementation of the Company’s climate change strategy. The Taskforce will
report to the Executive Chairman, Lord Barker
TPP Thermal power plant
UES Unified Energy System
VAP Value-added products. Includes wire rod, foundry alloys, billets, slabs, high purity and others
Wholesale electricity
and capacity market
Sphere for the turnover of electric energy and capacity within the framework of Russia’s integrated
energy system within the country’s unified economic space with the participation of large electricity
producers and consumers that have the status of wholesale market objects, confirmed in full
accordance with the Russian Federal Law “On the electric power industry” (by the Russian
Government). The criteria for including large electricity producers and consumers in the category
of large producers and large consumers are also established by the Russian government
y-o-y Year-on-year
214 En+Group Annual Report 2020
Kaliningrad
8, Oktyabrskaya St., office 34, Kaliningrad, Kaliningrad Region, 236006, Russia
Tel: +7 401 269 7436
Fax: +7 401 269 7437
Moscow
1 Vasilisy Kozhinoy St., Moscow, 121096, Russia
Tel: +7 495 642 7937
Fax: +7 495 642 7938
London
8 Cleveland Row, London SW1A 1DH, UK
Tel: +44 20 7747 4900
Fax: +44 20 7747 4910
Website
www.enplusgroup.com
For investors
IR Department
Tel: +7 495 642 7937
Email: ir@enplus.ru
Media enquiries
PR Department
Tel: +7 495 642 7937
Email: press-center@enplus.ru
Registrar
JSC “IRC”
Tel: +7 495 234 4470
Email: info@mrz.ru
Website: www.mrz.ru
Depository Bank
Citibank N.A.
Tel: +1 212 723 5435
Email: CitiADR@Citi.com
Website: https://citiadr.factsetdigitalsolutions.com/www/drfront_page.idms
All necessary contacts can also be found on the Company’s website: https://enplusgroup.com/en/
Contacts
215
CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDIXSTRATEGIC REPORT
En+Group Annual Report 2020
APPENDIX
In this annual report (the “Annual Report” or the
“Report”), the terms “En+”, “En+ Group”, “we”, the
“Company” and the “Group” in various forms shall mean
EN+ GROUP international public joint-stock company/
EN+ GROUP IPJSC (or, where relevant, in relation to the
Company prior to the Continuance (as defined in the
Corporate Governance section of this Report), EN+
GROUP PLC) and its subsidiaries whose results are
included in the Group’s consolidated financial statements
prepared in accordance with the IFRS.
The Annual Report outlines, inter alia, the Company’s
strategy, business model and corporate governance
structure, as well as its internal control and risk
management processes. The Group’s consolidated
financial statements for the year ended and as at
31December 2020, prepared in accordance with
IFRS and accompanied by a report from the Group’s
auditors, are included in the Report.
This Report has been prepared in accordance with
the following laws and regulations:
– Federal Law No. 39-FZ On Securities Market dated
22April 1996
– Regulations No. 454-P On Disclosure of Information
by Securities Issuers dated 30 December 2014
– The Code of Corporate Governance, recommended
for use by joint-stock companies by the Bank of
Russia, Letter No. 06-52/2463 dated 10 April 2014
(the “Russian Corporate Governance Code”)
The information presented in this Annual Report only reflects the
Company’s position during the review period from 1 January 2020 to
31December 2020 (the “Review Period”), unless otherwise specified.
Accordingly, all forward-looking statements, analyses, reviews,
discussions, commentaries, and risks presented in this Annual Report
(excluding this disclaimer and the Corporate Governance section, or
unless otherwise specified) are based on the financial information
available to the Company covering the Review Period only.
This Report may include statements that are, or may be deemed to be,
“forward-looking statements”. These forward-looking statements may
be identified by the use of forward-looking terminology, including the
terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”,
“intends”, “may”, “will” or “should” or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy,
plans, objectives, goals, future events or intentions. Forward-looking
statements may, and often do, differ materially from actual results. Any
forward-looking statements reflect the Company’s current view with
respect to future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to the Group’s
business, results of operations, financial position, liquidity, prospects,
growth or strategies. Many factors could cause the actual results of the
Group to differ materially from those set forth in the forward-looking
statements contained herein, including, among others, macroeconomic
conditions, political events, the competitive environment in which the
– The Listing Rules (the “LRs”) published by the UK’s
Financial Conduct Authority (the “FCA”) in its capacity
as a competent authority under the Financial Services
and Markets Act 2000 (as amended) and the FCA’s
Disclosure Guidance and Transparency Rules (the
“DTRs”). The LRs and the DTRs are hereinafter together
referred to as the “Rules”, unless otherwise specified
Unless stated otherwise, financial results included in the
Annual Report 2020 are presented and calculated based
on the consolidated financial statements prepared in
accordance with IFRS.
Due to rounding, some totals in the tables, charts and
diagrams in this Report may not correspond with the
sum of the separate figures. This Report may also
contain discrepancies in the calculation of shares,
percentages, and total amounts as a result of the
application of different rounding methods. Data
provided in the Annual Report may differ marginally
from previous disclosures, also as a result of rounding.
Approval of the Report
This Annual Report was preliminarily approved
by the Board on 21 April 2021 (Minutes No. 34 dated
21 April 2021). This date is referred herein as the date
of this Report.
Group operates, the impact of the COVID-19 pandemic and any other
outbreaks, epidemics or pandemics, foreign exchange fluctuations and
changes in financial and equity markets, as well as many other risks
specifically related to the Group and its operations. Forward-looking
statements speak only as of the date they are made.
To the extent available, the industry, market and competitive
position data contained in this Report comes from official or third-party
sources. Third-party industry publications, studies and surveys generally
state that the data contained therein has been obtained from sources
believed to be reliable, but that there is no guarantee of the accuracy or
completeness of such data. While the Company reasonably believes that
each of these publications, studies and surveys has been prepared by a
reputable party, neither the Company nor any of its respective directors,
officers, employees, affiliates, advisors or agents, have independently
verified the data contained therein. In addition, certain industry, market
and competitive position data contained in this Report comes from the
Company’s internal research and estimates based on the knowledge
and experience of the Company’s management in the markets in which
the Company operates. While the Company reasonably believes that
such research and estimates are reasonable, they, and their underlying
methodology and assumptions, have not been verified by any
independent source for accuracy or completeness and are subject
to change. Accordingly, reliance should not be placed on any of the
industry, market or competitive position data contained in this Report.
About the Report
Disclaimer
216 En+Group Annual Report 2020
CORPORATE
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