EVRAZ : Annual report 2021

ANNUAL REPORT & ACCOUNTS 2021

MEET EVRAZ

EVRAZ in figures

Strategic report

Corporate governance

Financial statements

Additional information

ANNUAL REPORT & ACCOUNTS 2021

MEET EVRAZ

Report boundaries

• In construction and railway product markets in Russia.
• In production of rails and large diameter pipes in North America.
• In coking coal production in Russia.

Global footprint

Office	Steel segment	Steel, North America segment Coal segment
			Russia
		Moscow	Nizhny Tagil
Canada
		Novokuznetsk
		London Czech Republic	Kazakhstan
		Switzerland
USA Chicago
	FOR OUR		FOR OUR
	PARTNERS		PEOPLE

13	mt	71,591m
steel products sales	Employees (as of 31 December 2021)

CONTENTS

Meet EVRAZ

	EVRAZ in figures	4
	Strategic report	6
	Chairman's introduction	7
	CEO letter	10
	EVRAZ business model	14
	Operational model	16
	Decarbonisation Pathway	18
	ESG highlights	19
	EVRAZ Business System	20
	Market outlook	22
	Strategic priorities	26
	Impact of COVID-19	32
	Key performance indicators	34
	Financial review	36
	Business review	48
	Sustainability	54
	Sustainable R&D	79
	Digital transformation	83
	Risks and risk management	84
	Viability statement	97
	Statement in accordance with
	S172 of the Companies Act	98
	Non-financial reporting	100
	Corporate governance report	102
	Board of Directors	104
	Managment	109
	Corporate governance report	114
	Audit Committee Report	126
	Remuneration report	140
	Director's report	154
	Director's responsibility statement	162
→ Financial statements	164
	Independent auditor's report
	to the members of EVRAZ PLC	166
→ Additional information	284
	TCFD compliance statement and index	284
	Stock performance indicators
	and shareholder information	288
	Unsolicited telephone calls
	and correspondence	289
	Electronic shareholder communications	289
	Definitions of selected alternative
	performance measures	290
	Data on mineral reserves	293
	Short summary of relevant
	anti-corruption policies	294
	Terms and abbreviations	296
	Legal disclaimer	303
	Contact details	304

This annual report ("the Report") presents the results for EVRAZ plc and its subsidiaries for 2021 divided into segments: Steel, Steel North America and Coal. It details the Group's operational and financial results and sustainability activities in 2021.

The Report has been prepared in accordance with the disclosure requirements of the United Kingdom and the Financial Conduct Authority: the Companies Act 2006, the Listing Rules, the Disclosure Guidance and Transparency Rules, and the Competition and Market Authority. The Report has also been prepared taking into account the International Integrated Reporting Framework, and sustainability reporting best practices.

Sustainability management	54
Health, safety and environment	58
Our approach	58
Occupational health and safety	61
Climate change and GHG emissions	62
Environmental management	67
Our people	71
Community relations	74
Anti-corruption and anti-bribery	76

FOR OUR

COMMUNITY

US$ 35m

Social and social infrastructure maintenance expenses

2

3

Meet EVRAZ

EVRAZ IN FIGURES

Strategic report

Corporate governance

Financial statements

Additional information

ANNUAL REPORT & ACCOUNTS 2021

EVRAZ IN FIGURES

FINANCIAL HIGHLIGHTS

CSR HIGHLIGHTS	SHAREHOLDER
STRUCTURE

Total segment revenues1

US$m

14,159 Read more on page 36

2021 14,159

20209,754

2019 11,905

Total segment EBITDA2

US$ 5,015m

2021

2020				2,212
2019					2,601

	Diversity, % (number of people)				Men		Women	Geographic dispersion of institutional
Read more on										shareholders, % of voting rights
page 36	3		10	73		303	19,573		51,637
	23%		77%	19%		81%	27%		73%
5,015

																	Board		Senior Management		Employees
	Steel	Coal	Steel,	Other	Eliminations and			Steel	Coal	Steel,	Other	Eliminations and
				NA	operations	unallocated subsidiaries					NA	operations	unallocated subsidiaries
																				9.2%
2021	10,188		2,321	2,324		535	(1,209)	2021	3,609	1,292	321		19	(226)
																						United Kingdom
2020	6,969		1,490	1,779		410	(894)	2020	1,930	400	(28)		15	(105)	Read more on page 71
						0.2%
2019	8,143		2,021	2,500		483	(1,242)
		2019	1,795	843	38		18	(93)
									Russia

Net debt

CAPEX3

Net profit

Employees by region

10.2%

5.2%

1.5%

Europe

US$ 2,667m

US$ 920m

US$ 3,107 m

North America

(excl. UK, Russia)

Asia&Pacific

1.9%

↓21% YoY

↑40% YoY

↑3.6X YoY

94.8%

5.0%

0.2%

Other

1. Total revenues include those from continuing operations (US$13,486 million in 2021 and US$9,452 million in 2020) and discontinued operations (US$673 million in 2021

Russia and CIS

North America

Europe

and US$302 million in 2020). See more in Note 3 of consolidated financial statements on page 202 and see page 290 for definition.

2. Total EBITDA includes that from continuing operations (US$3,692 million in 2021 and US$1,830 million in 2020) and discontinued operations (US$1,323 millon in 2021

and US$382 million in 2020). See more in Note 3 of consolidated financial statements on page 202 and see page 290 for definition..

3. Including payments on deferred terms recognised in financing activities.

OPERATING HIGHLIGHTS

Crude steel output	Steel products output4	Iron ore products output	LTIFR (excluding fatalities)	Total air emissions
13,569kt	12,418kt	14,399kt	1.21 hours	(including key emissions)
370.69kt
			per million

2021	13,569	2021			12,418	2021	14,399	2021	1.21		2021	370.69	Ultimate
2020	13,630	2020			12,768	2020	14,205	2020	1.35		2020	381.57	beneficial owners,
2019	13,814	2019			13,230	2019	13,765	2019		2.04	2019	396.22	% of voting rights4
								Read more on	page 61		Read more on	page 68
Raw coking coal production		Coking coal concentrate production	Gross vanadium slag production5	EVRAZ GHG emissions		Freshwater intake for production needs
23,272 kt	15,962 kt		20,058mtV	42.13 MtCO2e		199.42 m m3	Alexander Abramov6	Maxim Vorobyev8
													Roman Abramovich6	Gennady Kozovoy7
													28.64%	5.74%
2021	23,272	2021	14,448	1,514	15,962	2021	20,058	2021		42.13	2021	199.42	19.32%	3.01%
2020	20,653	2020	13,598	1,930	15,528	2020	19,533	2020		43.48	2020	206.20	Alexander Frolov6	Free-float
2019	26,140	2019	13,975	1,947	15,923	2019	18,380	2019		43.14	2019	205.32	9.65%	33.64%

	Coal segment	Steel segment	Read more on page 62	Read more on	page 69
4	4. Net of re-rolled volumes.	6.	The number of shares per dealing notification dated 20 June 2019.	5
5. In tonnes of pure vanadium.
	7.	The number of shares is as per TR-1 Form: Notification of major interest in shares dated 6 February 2013. For Mr Kozovoy, includes shares held directly.
		8.	The number of shares per dealing notification dated 23 July 2021

Strategic report

FOR A BETTERFUTURE

ANNUAL REPORT & ACCOUNTS 2021

CHAIRMAN'S INTRODUCTION

Environment

Alexander Abramov

Non-Executive Chairman

Last year was one of considerable turbulence, as COVID-19 continued to disrupt many aspects of life for numerous individuals. In this reality, our people demonstrated tremendous resilience, and I am proud of their dedication and the results that we achieved together.

Amid an exponential increase

in focus on the environment, the issue of climate change is more prominent than ever on the global agenda. EVRAZ recognises the contribution that it should make to particular actions

in this area. In 2021, we pressed ahead with evaluating our climate-related risks in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. As part

of this, we have performed an update of the qualitative assessments,

and scheduled the further financial analysis of climate change risks.

For more details, see page 62

Continued

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7

Meet EVRAZ

EVRAZ in figures

STRATEGIC REPORT

Corporate governance

Financial statements

Additional information

ANNUAL REPORT & ACCOUNTS 2021

To maintain focus and drive progress

in this area, the Group regularly reviews its environmental strategy based on sustainable business practices and environmental principles. In turn, we endeavour to embed these into every part of our value chain

to ensure compliance and mitigate impact.

In February 2021, EVRAZ presented its new environmental strategy, which includes goals for 2030. These include reducing our GHG emissions per tonne of steel

by 20% compared with 2019, the base year, which is in line with the current pledges of the transition to a low-carbon economy.

Later in the reporting period, we identified several measures to support our decarbonisation efforts between now and 2025, with the main focus on energy efficiency. In addition, we have already begun formulating our next steps to reduce GHG emissions between 2025 and 2030. While this will clearly depend on harnessing some new technologies currently under development, by working with the right partners, we are believe that we can make it happen.

For more details, see page 63

Social

Our first priority in ESG is to maintain

a sustainable, well run business, one that places the safety of our people at the heart of everything that we do, both employees and contractors. Regretfully, there

were 8 fatalities in 2021, which is tragic and unacceptable. In response, EVRAZ is redoubling its work to ensure a culture of the utmost care and attention regarding safety practices at all enterprises. Our ultimate strategic goal remains to reduce fatalities to zero.

For more details, see page 61

Central to achieving our goals is keeping our culture aligned with our purpose and values (as detailed on pages 71-73), and the Board devotes considerable effort to this. The main

tool here is employee engagement surveys, which are reviewed and used to inform actions needed by the management.

With over 71 thousand employees, EVRAZ recognises that the success of its business depends on its people. In this light, we place great emphasis

on social programmes. In 2021, we further developed existing initiatives focusing on employee health, engagement

and training, as well as introducing new ones. We also provide support through various means in the areas of education, sport, environment, urban development and charity. In the reporting period,

the Group continued to dedicate significant effort to helping employees and local communities as part of its COVID-19 prevention and response measures.

For more details, see pages 32-33

Governance

Board diversity

In 2021, assisted by its Nominations Committee, the Board considered diversity across the Group in detail. As a result, EVRAZ has adopted an updated policy regarding board diversity that covers both gender and ethnic diversity. The Board recognises that the Group's business operations, which are predominantly

in Russia and North America, should have workforces that closely represent the diversity of the communities where its enterprises are based.

The Board has discussed the Parker review and its recommendations to FTSE 100 boards. When recruiting members, it will take into account these and the recommendations of the Hampton-Alexander review

(the predecessor of the FTSE Women Leaders Review) and ensure that female representation on the Board never drops below two members. Equally, the Board is mindful that any appointment needs to be based on merit and that the Group's

operations are outside the UK. As such, there may be a requirement for other experience that better reflects a diversity of views for the benefit of the Board and EVRAZ stakeholders.

Appointment of Aleksey Ivanov as CEO

In the reporting period, the Board appointed Aleksey Ivanov, a senior vice president,

as CEO to take over from Alexander Frolov, who remains as a non-executive director. Alexander Frolov did a tremendous job for 12 years, and the Board is confident that Aleksey will build on and develop

his good work. The Board appointed him

as a director of the Company and a member of the Sustainability Committee

on 1 February 2022.

Changes in Board composition

On 15 June 2021 Ms Sandra Stash,

Mr Stephen Odell and Mr James Rutherford were appointed by shareholders at the 2021 Annual General Meeting (AGM) as independent non-executive directors of EVRAZ. Ms Stash became chair of the Sustainability (formerly

the Health, Safety and Environment Committee, which was renamed on 14 December 2021) Committee and a member of the Remuneration Committee, Mr Odell became a member of the Audit Committee, the Remuneration Committee and the Nominations Committee and Mr Rutherford became

a member of the Nominations Committee and the Audit Committee. The three new directors bring additional vision and expertise across the Group's key geographic regions, as well as industry- specific knowledge, including of the global energy market, mining and the automotive sector.

Additionally, on 1 February 2022, Ms Maria Gordon was appointed by the Board

as an independent non-executive director of the Company and became a member

of the Sustainability Committee and Audit Committee. She will not only enhance the Board expertise in finance and capital markets, but also assist the current independent non-executive team with her wide knowledge of Russian markets

and industry. Ms Gordon will seek election by shareholders as an independent director at the upcoming AGM in June 2022.

Although Karl Gruber and Sir Michael Peat had both completed nine years' service as independent non-executive directors, the Board was pleased that they had agreed to remain in their posts to support the newly appointed directors while the proposed demerger of PJSC Raspadskaya (hereafter Raspadskaya) was finalised. The Board deemed that both directors continued

to be independent in accordance with the UK Corporate Governance Code. The Company has announced that they are expected

to retire as directors with effect from 31 March 2022. I would like to thank both Karl and Sir Michael for their significant contribution

to the Group.

In December 2021, the HSE Committee was transformed into the Sustainability Committee to reflect the Board's increasing focus on driving sustainability across

the Group, as well as the body's increased responsibility and scope of work. In addition, the terms of references for the Sustainability Committee and Audit Committee

were updated to provide increased scrutiny of the Company's activities in this area.

On 1 February 2022 Alexander Frolov was appointed as a member of the Nominations Committee.

Raspadskaya demerger

In 2021, the Board and management of EVRAZ conducted a comprehensive review of the rationale and feasibility of the demerger of Raspadskaya, under which the Group's metallurgical coal assets are consolidated. They concluded that the separation of the two businesses

serves the long-term interests of EVRAZ' shareholders, employees, clients and other stakeholders.

The demerger will result in the creation of two distinct publicly listed businesses with leading positions in their respective fields, allowing each to pursue tailored strategic, capital allocation and sustainability objectives.

On 11 January 2022, at General Meeting, EVRAZ shareholders approved the terms of the demerger and related matters.

This marks another major milestone in the transaction timeline.

Investment Programme

In mid December 2021, the Board approved the capital investment programme

of US$1.1 billion a year to 2026, the largest in the Group's history. Successful realisation of such ambitious plans will be among the top priorities for the Board and management.

For more details, see pages 26-27

Dividends

EVRAZ' dividend policy continues to envisage dividend payments

to shareholders of a minimum amount of US$300 million a year, provided that the Group's net debt/EBITDA ratio remains below 3.0x.

In the reporting period, the Board discussed proposals to pay interim dividends of US$0.30 per ordinary share, totalling US$437 million, on 7 April 2021; US$0.20 per share, equivalent

of US$292 million, on 25 June 2021; US$0.55 per share, equivalent of US$802 million, on 10 September 2021, US$0.20 per share, equivalent of US$292 million, on 14 January 2022.

In recognition of its record performance in 2021, EVRAZ has announced another interim dividend. On 24 February 2022, the Board voted to disburse US$0.50 per share, totalling US$729 million, with a record date of 11 March 2022 and payment date of 30 March 2022.

Alexander Abramov

Non-Executive Chairman

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