3Q and 9M 2017 Operational and Financial Results - enplus.ru · En+ Group undertakes no obligation to update or revise the information or any forward-looking statements in the presentation

3Q and 9M 2017 Operational and

Financial Results

4 December 2017

2

Disclaimer

THIS DOCUMENT AND ITS CONTENTS ARE CONFIDENTIAL AND ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN OR ANY JURISDICTION WHERESUCH DISTRIBUTION IS UNLAWFUL, WHETHER TO SECURITIES ANALYSTS OR ANY OTHER PERSONS.

This presentation may contain “forward-looking statements”, which are statements related to the future business and financial performance andfuture events or developments involving the En+ Group. Such forward-looking statements are based on the current expectations and certainassumptions of the En+ Group’s management, and, therefore, should be evaluated with consideration taken into of risks and uncertaintiesinherent in the En+ Group’s business. A variety of factors, many of which are beyond the En+ Group’s control, can materially affect the actualresults, which may differ from the forward-looking statements.

This presentation includes information presented in accordance with IFRS, as well as certain information that is not presented in accordancewith the relevant accounting principles and/or that has not been the subject of an audit. En+ Group does not make any assurance, expressed orimplied, as to the accuracy or completeness of any information set forth herein. Past results may not be indicative of future performance, andaccordingly En+ Group undertakes no guarantees that its future operations will be consistent with the information included in the presentation.En+ Group accepts no liability whatsoever for any expenses or loss connected with the use of the presentation. Please note that due torounding, the numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolutefigures.

Information contained in the presentation is valid only as at the stated date on the cover page. En+ Group undertakes no obligation to update orrevise the information or any forward-looking statements in the presentation to reflect any changes after such date.

This presentation is for information purposes only. This presentation does not constitute an offer or sale of securities in any jurisdiction orotherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities of the En+ Group. Ifthis presentation is provided to you in electronic form, although reasonable care was used to prepare and maintain the electronic version of thepresentation, En+ Group accepts no liability for any loss or damage connected to the electronic storage or transfer of information.

2524169

Presentation plan

3

4 5Key highlights

En+ Group overview

Energy segment

Metals segment

Management strategic outlook

Contacts Appendix

• Key highlights • Financial highlights

• Revenue and EBITDA breakdown

• Delivering on the dividend commitment

• Power market update

• Hydro production and water inflows

• Energy generation volumes

• Revenue breakdown

• EBITDA margin analysis

• Capex

• Debt

• Global Aluminiummarket

• Aluminiumproduction and sales

• Revenue and EBITDA breakdown

• Capex

• Debt

• Management strategic outlook

• Contacts

• Income statement

• Business segments

• Balance sheet

• Cash flow statement

• EBITDA reconciliation

• Free cash flow

Key highlights En+ Group overview Energy segment Metals segment Management outlook Contacts / Appendix4

Key highlights

• En+ Group successfully completed its IPO both on the LSE and MOEX on 8 November 2017

• Largest IPO of a Russian company in London since 2012 and the largest IPO in the Metals & Mining and Utilities sectors worldwide to date in 2017

• Primary IPO proceeds used to fully repay the USD942 mn VTB debt-facility in the Energy segment after period end. As a result, segment’s total debt decreased to USD4,661 mn on a pro-forma basis post-IPO

• Further improvement of Metals segment debt cost and maturity profile

Implementation of best corporate governance practices is on track:

• Lord Barker appointed Independent Chairman in October 2017

• Commitment to appoint an additional independent director bringing total number of INEDs to three

• Appointment of representative of AnAn Group – Guang Ming Zhao, as a Non-Executive Director in December 2017

• Intention to further increase the number of directors on the Board to 13, with 6 not appointed by the majority shareholder

• En+ Group’s newly adopted dividend policy has the following parameters:

- 75% of Free Cash Flow of the Energy segment, subject to a minimum of USD250 mn per year

- 100% of dividends received from UC RUSAL

• Declared USD125 mn of interim dividends in October 2017; record date of 30 November 2017; payment date 20 December 2017

USD1.5 bn IPO in November

Continuing focus on deleveraging

Dividends in line with new dividend policy

Board appointments

Key highlights En+ Group overview Energy segment Metals segment Management outlook Contacts / Appendix

68.2%

6.2%

4.5%

10.6%

3.7%6.8%

Primary aluminium and alloys Alumina and bauxite

Semi-finished products and foil Electricity

Heat Other

5

En+ Group – financial highlights

• The En+ Group’s total revenue for 9M 2017 reached USD8,716 mn, increasing by 21% YoY. In 3Q 2017, total revenue accounted for USD2,875 mn, increasing by 17% compared to 3Q 2016

• Key factor contributing to this substantial growth was the increase in realised aluminium prices, driven by LME component growth

• On the back of top-line growth and a continuous focus on operational efficiencies, 3Q 2017 En+ Group EBITDA increased by 41% as compared to 3Q 2016, reaching USD803 mn

• Despite RUB appreciation and inflationary pressures impacting the aluminium cost base, En+ Group EBITDA margin expanded by 5pp and reached 28% in 3Q 2017

• The Group’s net debt2 decreased to USD13,103 mn at the end of 3Q 2017 from USD13,811 mn at the end of 2Q 2017

USD mn 9M 16 9M 17 Change, % 3Q 16 3Q 17 Change, %

Revenues 7,203 8,716 21.0% 2,455 2,875 17.1%

Adj. EBITDA1 1,622 2,316 42.8% 571 803 40.6%

Adj. EBITDA margin 23% 27% 4 pp 23% 28% 5 pp

Net profit 561 898 60.1% 244 350 43.4%

Net profit margin 8% 10% 2 pp 10% 12% 2 pp

9M 2017 revenue breakdown by products

(1) 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

(2) Sum of loans and borrowings, bonds outstanding, guarantee for a related party and deferred liability for acquisition of PJSC Irkutskenergo (the Group’s subsidiary) shares less total cash and cash equivalents

USD8,716 mn


En+ Group – segments’ financial highlights

USD mn 9M 16 9M 17 Change 3Q 16 3Q 17 Change

Revenues 1,711 2,308 34.9% 559 709 26.8%

Adj. EBITDA 545 829 52.1% 150 257 71.3%


Net profit 27 160 492.6% (29) 40 -

Net profit margin 2% 7% 5 pp - 6% -

Energy segment 1

Metals segment 1

USD mn 9M 16 9M 17 Change 3Q 16 3Q 17 Change

Revenues 5,956 7,224 21.3% 2,060 2,460 19.4%

Adj. EBITDA 1,077 1,534 42.4% 421 549 30.4%


Net profit 534 782 46.4% 273 312 14.3%

Net profit margin 9% 11% 2 pp 13% 13% -

As an integrated business, En+ Group captured the benefits of both higher prices for electricity in Siberia, as well as favourable dynamics in the aluminium market

(1) The Metals segment includes UC RUSAL (48.1% owned by En+ Group), the Energy segment is predominantly comprised of power assets and operations, owned by En+ Group, including, but not limited to coal mining, logistics and other


803

549

237 9 11 4

( 4) ( 3)

Metals Power Coal Logistics Other Unallo-cated

Consoli-dation

adj.

Adj.EBITDA

7

En+ Group – revenue and EBITDA breakdown

3Q 2017 revenue build-up(USD mn)

3Q 2017 adj. EBITDA1 build-up(USD mn)

(1) Results from operating activities adjusted for amortisation and depreciation, impairment charges and loss on disposal of property, plant and equipment for the relevant period(2) Including elimination of Energy segment revenue(3) Elimination of interco revenues between Metals and Energy segments

9M 2017 revenue build-up(USD mn)

9M 2017 adj. EBITDA1 build-up(USD mn)

2,316

1,534

802 23 27 3

( 26) ( 47)


Consoli-dation

adj.

Adj.EBITDA

8,716

7,224

1,946 236 82 221

( 177)( 816)


Consoli-dation

adj.

Revenue

2,8752,460

575 77 24 77

( 44)( 294)


Consoli-dation

adj.

Revenue

2,308

829

709

257

Energy segment

Energy segment

Energy segment

Energy segment

2

2 2

2

3

3 3

3


Delivering on the dividend commitment

USD125 mn

IPO commitment

Interim dividends: USD125 mn

USD0.21875 per GDR (or ordinary share)

Record date: 30 November 2017

Payment date: 20 December 2017

USD201 mn

Pre-IPO in 2017

Interim dividends: USD201 mn

- USD144 mn from UC Rusal

- USD57 mn from Energy segment

Declared and paid

USD201 mn + USD125 mn = USD326 mnTotal amount of dividends to be paid in 20172

Pay a dividend on at least a semi-annual basis equal to the sum of:

• 100% of dividends received from UC Rusal1; and

• 75% of Free Cash Flow of Energy segment, subject to a minimum of USD250 mn per annum

(1) UC Rusal dividend policy: annual payout of up to 15% of Covenant EBITDA subject to compliance with relevant regulation and loan agreements. Covenant EBITDA is defined as EBITDA on LTM basis as defined in the relevant credit agreements, adding dividends declared by Norilsk Nickel and attributable to the shares owned by the Group.

(2) Under new dividend policy (excluding USD47 mn paid in 2017 for 2016)

New Dividend Policy adopted in 2Q 2017


Power market update

Electricity spot prices 2, Rb/MWh

th. RUB/MW/month 2016 2017 2018 2019 2020 2021

2nd price zone 189 182 186 190 191 225

Capacity prices 3

Average market price, RUB/MWt 9M 16 9M 17

2nd price zone 849 857

Irkutsk region 813 807

Krasnoyarsk region 790 791

Average electricity spot prices 2

(1) System Operator of the Unified Power System: provided data for 2016 include 29 February 2016 (leap year)(2) Day ahead market prices, data from ATS and Association “NP Market Council”(3) Capacity price is defined by supply-demand balances, set in real terms and linked to CPI-1% till 2017 and CPI-0.1% since 2018

GWh 9M 16 9M 17

Production in Siberia 149,948 147,549

HPPs production 74,316 71,046

Consumption 149,849 149,698

Power supply and demand in Siberia 1

520

620

720

820

920

1,020

1,120

Jan'16 Apr'16 July'16 Oct'16 Jan'17 Apr'17 Jul'17 Oct'17

2nd price zone Irkutsk Krasnoyarsk


900

1,100

1,300

1,500

1,700

1,900

2,100

Jan Feb March Apr May June July Aug Sept Oct Nov Dec

Avg. (1977-2017) 2014 2015 2016 2017

2,000

2,500

3,000

3,500

4,000

4,500


Avg. (1977-2017) 2014 2015 2016 2017

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000


Average (1977-2017) 2014 2015 2016 2017

10

Hydro production and water inflows

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


Average (1977-2017) 2014 2015 2016 2017

Water level, m Normal 9M 16 9M 17

Irkutsk 457 456.4 456.3

Bratsk 402 398.6 396.7

Ust-Ilimsk 296 296.5 295.7

Water level, m Normal 9M 16 9M 17

Krasnoyarsk 243 241.2 239.4

Water inflows Angara cascade (m3 per sec.) Water inflows Yenisey cascade / KHPP (m3 per sec.)

Production trend at Yenisey cascade / KHPP (GWh)Production trend at Angara cascade1 (GWh)

Source: the Group(1) Hydro production and water inflows data for Angara cascade include Irkutsk, Bratsk and Ust-Ilimsk HPPs


7.7 8.8 10.9 9.7 8.1 9.4 9.4

27.4 26.93.7 4.8

5.4 5.34.7 4.9 5.1

14.7

11.413.6

16.3 15.012.8 14.3 14.5

41.3 41.6

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 9M16 9M17

Angara cascade (incl. Irkutsk, Bratsk and Ust-Ilimsk HPPs) Yenisey cascade (KHPP)

11

Energy generation volumes

Hydro power generation1

14.0

9M long-term average

35.0

33.6 57.5

Load factor (%)

Production (TWh)

47.5 48.6

(TWh)

(1) (Excluding Ondskaya HPP(2) (9M average since 1970 for Krasnoyarsk HPP and since 1977 for Angara cascade

CHP electricity generation Heat generation

4.8

2.2

1.3

4.5 4.6

2.0 2.3

8.38.9

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 9M16 9M17

10.8

4.22.6

9.8 10.2

4.42.9

17.6 17.5

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 9M16 9M17

(TWh) (mn Gcal)

2

13.9


28.736.6

87.6

112.6

10.5

28.7

5.8 6.2

13.5 16.2

3Q 2016 3Q 2017 9M 2016 9M 2017

Regulated contracts

Free bilateral contracts

KOM

8.54.3

22.116.01.1

1.3

2.9

3.7

6.89.9

19.326.7

1.1 1.3

2.93.1

3.3 3.3

12.412.4

3Q 2016 3Q 2017 9M 2016 9M 2017

Retail

Regulated contracts

Free bilateralcontracts

Balancing market

Spot market

12

Electricity and capacity revenue breakdown

Electricity sales Capacity sales1

(TWh) (GW)

(1) Capacity sales volume equals sellable capacity multiplied by 12 months(2) Day ahead market(3) Including capacity supply contracts / DPM (Abakan SPP) and must run generation. Siberian hydro capacity prices (excl. regulated contracts) are 100% liberalized from May 2016

• Electricity and capacity revenue benefit from liberalisation of Siberian hydro capacity prices and new long-term contracts with UC Rusal

‐ In October 2016, the Energy segment entered into new long-term power supply agreements with UC Rusal, with up to 37.6TWh ofelectricity to be supplied annually, replacing previous arrangements. Under those long-term contracts electricity price set at a rate3.5% below electricity spot price

‐ Siberian hydro capacity prices (excluding regulated contracts) are 100% liberalised since May 2016 allowing the Group to sell capacityat Siberian capacity (KOM) prices

20.8

42.8

129.8 128.8

61.959.6

20.1 45.03

2


447 545 545

19 79 13 18

(31)

HPPs CHPs Other Power Coal Logistics Other, unallocatedand interco

Total

81 4 38nm 8 24 32nm

13

Energy segment EBITDA margin analysisEnergy segment adj. EBITDA in 9M 2017(USD mn)

692

802 829

3377 23 27

(23)

HPPs CHPs Other Power Coal Logistics Other, unallocatedand interco

Total

84 6 nm 1041 33 36nm

Energy segment adj. EBITDA in 9M 2016(USD mn)

HPPs form the vast majority of Energy segment earnings and have the highest margins

Note: The segmental information is unaudited and unreviewed, and as such is subject to adjustment(1) For presentation purposes, revenue excluding retail sub-segment is net of its costs related to the purchase of electricity from the market. The calculations are for illustrative purposes only

and based on management accounts

EBITDA margin (%)

50 1

50 1

42 1

40 1


Energy – capital expenditures

• In 9M 2017, capex was flat in RUB terms or RUB6.0 bn

• Energy segment continues investing into operational efficiency of its assets in accordance with the adopted schedule, including HPPs equipment modernisation (replacement of runners and generating units) and grids infrastructure development in Irkutsk and Krasnoyarsk regions

Source: En+ Group’s IFRS statements, En+ Group management accountsNote: Converted to RUB at USD/RUB rate of 68.37 and 58.33 for 9M 2016 and 9M 2017 respectively;(1) Capital expenditure represents cash flow related to investing activities – acquisition of property, plant and equipment and intangible assets

Capex1

Key investment projects:

Period Project Status

2011 – 2017 Bratsk HPP: 12 runners replacement Completed

2014 – 2018 Ust-Ilimsk HPP: 4 runners replacement 1 runner commissioned in July 2017. The last one is under construction

2015 – 2018 Krasnoyarsk HPP: 12 hydropower generating units and

2 runners replacement

12 hydropower generating units replacement was completed; all equipment in open switchgears was modernised

2 runners were produced in August 2017 and being transported to Krasnoyarsk HPP. Work in progress

2017 – 2022 Irkutsk HPP: 3 hydropower generating units replacement Approved 3 runners replacement with total budget RUB2.6 bn

In 2017-2021, Energy segment’s investment programme estimated to not exceed RUB12 bn(c. USD200 mn) per annum

3.5

2.6

2016

RUB 6.1 bn

50.0

39.0

USD equivalent

89 mn

RUB 6.0 bn

3.4

2.6

2017

USD equivalent

103 mn

58.0

45.0

3Q1H

9M 2016 9M 2017


72

1,012 1,314 1,058

365291

502

4Q 2017 2018 2019 2020 2021 2022 2023

15

Energy – debt overview

Key debt metrics (USD mn)

31 Dec 2016 IFRS

30 Sep 2017IFRS

Pro-Forma Post-IPO

Loans and borrowings 5,240 5,441 4,499

Guarantee for a related party 1 108 - -

Deferred liability 2 295 162 162

Total debt 5,643 5,603 4,661

Cash and cash equivalents 125 92 92

Net debt 5,518 5,511 4,569

Net debt / adj. LTM EBITDA 6.7x 5.0x 4.1x

Nominal debt maturity profile as at 30 September 2017 4

(USD mn)

Debt portfolio3 breakdown as at 30 September 2017

By currency

By interest rate

RUB72.2%

EUR0.2%

USD27.7%

Fixed rate48%

Floating rate 52%

(1) In September 2017, the guarantee was terminated(2) Deferred liability for acquisition of PJSC Irkutskenergo shares (the Group’s subsidiary)(3) Nominal debt – USD5,394 mn(4) Maturity profile includes USD162 mn future disbursements of the loans to finance repayments of deferred liabilities

50 122

892

2,206

USD942 mn wasrepaid out of IPO

proceeds


30

50

70

90

110

130

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

dayskt

Reported Stocks, lhs Reported Stocks Consumption Ratio, rhs

16

Global aluminium market to stay in deficit• The company estimates that the global aluminum market deficit

will reach around 2.0 mn tonnes per annum over the course of2018-21

• Global aluminium demand CAGR is forecasted at 4-5% pa over2017-21

• On the supply side:

‐ There are no new significant supply projects outside of Chinabeyond 2017 (excluding projects of UC Rusal)

‐ Chinese primary aluminium metal supply to be challenged byenvironmental regulation, supply side reform and significantcost inflation

• Through 2017 ROW reported stocks have declined to pre-2008crisis level as production grew at moderate pace

ROW reported stocks

Global Supply and demand balance is to further tighten

57.059.2

62.0 63.866.8

70.072.3

56.659.6

63.165.9

68.771.6

74.2

415

-412

-1,124

-2,139

-1,887

-1,513

-1,875

2015 2016 2017 2018 2019 2020 2021

Mln

mt

Production Consumption Balance (in kmt)

ROW primary Aluminium production

Source: CRU, LME, companies data, EN+ Group analysis, UC Rusal research

22

23

24

25

26

27

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F

Mln

mt

CAGR 0.4%


China is actively cutting aluminium and alumina production

30.4 32.7

2.33.8

2.4-6.2

2015 1H2016 2H2016 1H2017 2H2017 E 2017 E

China’s vows on curtailing illegal capacity and winter season cuts are currently strictly implemented. That has put an end to unreasonablesupply expansion, as well widening primary metal deficit and potentially opening a window for aluminium imports into China.

In 2017, Complete reversal of Aluminium operating capacity growth trend occurred in China (MT)

Effect of cuts during winter season 2017-18 on aluminium and alumina production (MT)1

• The government has identified ~4.5 Mt of illegal capacity

• Of which ~4.3 Mt has already been curtailed as of 30 September 2017

• Negative growth of operating capacity in 2H 2017 nullified capacityexpansion in 2H 2016 and 1H 2017

• Companies strictly follow governmental orders and maintain productiondiscipline

• There are clear signs of supply currently matching demand

• In addition to the winter cuts policy, starting from October 2017, MEP hasapplied “special air emission standard” to “2+26” area. Shanxi province,including large alumina producer Lvliang, has announced joining thewinter cuts policy. Stricter permissible air pollutants concentration putadditional environmental pressure on refineries, smelters and theircaptive power plants

• Winter cuts implementation reveals higher-than-expected effect oncapacity closures

• The effect of winter cuts on alumina by far exceeds the effect onaluminium production

• Some regions launch the curtailment period ahead of the general timeline

• Government officials and industry analytics forecast the recurrence of thewinter cut policy for 2018-19 winter season

0.4

1.90.6

2.8

1.0

4.7

Aluminium Alumina

2017

2018

Source: Aladdiny, MEP, UC RUSAL research(1) Impacted by “2+26” regulation capacities for aluminium stand at c. 3 mn tonnes and for alumina at c. 13 mn tonnes


0

50

100

150

200

250

300

350

400

450

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17

154

278

207

504

270

565

380

679

0

100

200

300

400

500

600

700

90%

120%

150%

180%

210%

240%

GPC CPCPitch Anodes

18

Rising costs currently nullify production margins in China

• Starting from July 2017, the profitability of aluminium producers inChina has been nullified by raw material cost inflation

• In the short-term, there is no room for aluminium price decrease asthe smelters currently operate at zero margins

• One of the main factors creating costs production growth in 2017was carbon materials cost inflation, with the strongest growthobserved for pitch

• In addition, all smelters with captive power plants now cannotavoid payments to curtain governmental funds that total USD1.9cents per kWh. This will considerably increase aluminium smeltingcosts

Increased costs will lead to additional pressure onaluminium production and export volumes from China

Raw materials cost experienced ongoing growth sinceJanuary, 2017

China aluminum smelters‘ profit margin shrinks

Prices ($/t)

Growth rate (%)

Source: CRU, LME, companies data, EIU, SMM. UC RUSAL Research(1) GPC (green petroleum coke)(2) CPC (calcined petroleum coke)

Chinese Semis Exports by products (HS 7603 – 7609)

1 2

(RHS)

kt

-10.3% Q-Q


Aluminium production and sales

866 868 869 878 860 869 875

20 20 20 21 21 21 2530 31 31 31 30 31 31

916 919 920 930 910 921 931

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17

Russia Siberia Russia European Part Sweden

(kt)

The average smelter utilisation rate has remained stable at full efficient capacity of 95%

Aluminium production 1

(1) “Total production” may not equal to the arithmetic addition of the numbers above presented in the table. The difference arises due to the roundoff of exact numbers (incl. decimals).

918 927 895 852 906 925 889

39 31 4131

33 37 3745

3946 40 42

957 958 981922

985 1,002 968

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17

Aluminium Rusal Aluminium BoAZ Third parties

(kt)Aluminium sales

9M 16 9M 17 Chg 3Q 16 3Q 17 Chg

Aluminiumproduction (kt)

2,755 2,762 0.3% 920 931 1.2%

Aluminium sales (kt) 2,896 2,955 2.0% 981 968 (1.3)%

Aluminium avg.released prices ($/t)

1,711 2,051 19.9% 1,754 2,124 21.1%


2,060166 62 111

1,721

Primaryaluminiumand alloys

Alumina Foil and otheraluminiumproducts

Otherrevenue1

Totalrevenue

2,460172 91 141

2,056

Primaryaluminiumand alloys

Alumina Foil and otheraluminiumproducts

Otherrevenue

Totalrevenue

Source: En+ Group(1) Including energy and bauxite

20

Metals segment – revenue and EBITDA breakdown

3Q 2017 revenue build-up

3Q 2016 revenue build-up

(USD mn)

(USD mn)

(USD mn)

510 (12)44 (21) 28 549

2Q 2017EBITDA

Premiums /Aluminum

salesstructure

Effect of LMEand

quotationperiod

Aluminumsales

volumes

Change incash cost

3Q 2017EBITDA

+$39 mn(+7.6%)21% 22%

1

1

Key drivers of performance• In 3Q 2017 production from core operations stood at 931kt (+1.1% QoQ).

Smelters average utilisation rate remained at full efficient capacity of 95%

• Aluminium sales decreased to 968kt (-3.4% QoQ) on the back of increaseof goods in transit due to ports/vessels availability (volumes to be realizedin the next period)

• The continuous rise of realised aluminium price by 2.1% QoQ, largelydriven by LME component growth, offset the decrease in aluminium salesvolumes. Total revenue in 3Q 2017 was USD2.5 bn (+19.4% YoY and flatQoQ)

• The 3Q 2017 EBITDA totalled USD549 mn (+7.6% QoQ) continuing asequential growth trend which started in 4Q 2016 driven by the favorablemomentum in the aluminium market

• 9M 2017 EBITDA totalled USD1,534 mn (+42.4% growth over 9M 2016)with EBITDA margin of 21%, up 3% over 9M 2016

• Metals segment remained the largest contributor to the Group EBITDAaccounting for 66% in 9M 2017


Metals segment – capital expenditures

Capex dynamics• In 3Q 2017 capex totalled USD226 mn (+18% QoQ, +6% YoY),including maintenance capex of USD114 mn

• The segment continued its investment into key projects as per itsstrategic priorities of preserving its competitive advantages ofvertical integration into raw materials and product mixenhancements:

‐ Bauxite self-sufficiency: Dian-Dian in Guinea

‐ Alumina capacities expansion: Friguia relaunch

‐ Carbon materials self-sufficiency: Volgograd calcined coke andanode plant and Taishet anode plant

‐ Growth of value added products: Modernization of Hertwich line atKhakas smelter

(USD mn)

145160

84110

213

168

129

192

226

3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

2015 2016 2017

Approximate projects launch schedule H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 2H 2019

Raw materials self-sufficiency projects

Dian-Dian bauxite mine Middle of 2018

Existing alumina capacities upgrade/expansion

Friguia alumina complex Planned

Volgograd anode plant and calcined coke capacity

Planned

New calcined coke capacity at Irkutsk smelter

Taishet anode plant Planned

VAP capacities projects

New large diameter billet line at Krasnoyarsk smelter

New foundry alloys Properzi line at Khakas smelter

Modernization of Hertwich line at Khakas smelter

Planned


Metals segment – debt overview

Gross debt evolution

• As at the end of 3Q 2017 gross debt declined to USD8.7 bn, ascompany net settlements during the 9M 2017 totalled(c. USD250 mn):

‐ Rusal made settlements of the PXF (c. USD2.6 bn),c. USD300 mn under bilateral facilities with Russian banks,NN backed REPO – USD141 mn, Ruble bonds USD113 mn andothers

‐ Rusal raised USD1.1 bn through two tranches of Eurobonds,USD220 mn through panda bonds and USD1.7 bn via New PXFand others

• On the back of its solid financial performance cash and cashequivalents grew to USD1.1 bn as at end of 3Q 2017 up fromUSD0.5 bn at the beginning of the year, hence Net Debt declined tobelow USD7.6 bn

• All in all the company continues to deliver on its key priority in thecapital allocation policy and notes a significant reduction of its grossdebt levels that stood at c. USD11.3 bn in FY 2012 to USD8.7 bn as ofthe end of 3Q 2017

‐ Rusal reiterates its commitment to reduce this gross debt levelto c. USD7 bn by 2020

• The achievements of the company has been recognized by creditrating agencies: in September Moody's Investors Service improvedthe company’s outlook on the Ba3 rating and adjusted the outlook to“Positive” from “Stable”, this was followed by an October upgradefrom Fitch Ratings, who upgraded Metals segment rating to “BB-”from “B+”, with “Stable” outlook

10,4039,149 8,960

7,525 7,532 8,073

9311,676

447 1,355 1,433 642

11,334 10,825

9,407 8,880 8,965 8,715

FY 12 FY 13 FY 14 FY 15 FY 16 3Q 17 FY 20LT debt ST debt

(USD mn) 2020 target

gross debt level of

USD7 bn

Gross debt reduction of 23%

Net debt change

8,4217,592548

1,181 112 84

FY 16 Operating CF Investment CFincl. divsreceived

Financing CFexcl. debt

settlements

Other factors 9M 17

(USD mn)

Substantial reduction of net debt in 3Q 2017


Metals segment – debt profile

Portfolio structure

• By 30 September 2017 Rusal made multiple improvements to its debt portfolio by actively pursuing capital markets opportunities andengaging with its strategic financial partners:

‐ In August 2017 a new amendment to facility agreement with Sberbank of Russia was concluded extending the maturity profile to 2024,reducing the interest rate and aligning the covenants package with principles implemented in other bilateral facilities;

‐ In September 2017 the second tranche of panda bonds in the amount of RMB500 million was placed for 3 years (subject to put theoption after 2 years) and coupon rate 5.5% p.a.

• As of September 30, the Leverage ratio under Eurobonds stands at 2.7x (incurrence test only) and differs from Leverage ratio introduced byNew PXF and other bilateral facilities, which stands at 1.4x

• Optimised debt structure provides for lesser risks of refinancing and greater operational flexibility

• Part of the USD1.1 bn of cash balance has been used towards dividend distribution of c. USD300 mn in 4Q 2017 and will be further directedon debt repayment as per existing debt maturity profile and including up to c. USD300 mn voluntary prepayments ahead of schedule usingexcess free cash flow

Debt maturity as of the end of 3Q 2017

(1) Sberbank debt is secured by pledge of NN shares and is excluded from the Leverage ratio calculation for most of the credit facilities in the portfolio when applied save for Eurobond transactions

USD93%

RUB2%

EUR3%

RMB2%

By currency, end of 3Q 2017

By type, end of 3Q 201794%

82%

6%18%

2016 3Q 2017

Secured Unsecured

(1.1)

0.3 0.3

0.8 0.7

1.61.8

1.6 1.6

2017 2018 2019 2020 2021 2022 2023 2024

PCF Sberbank1 GBP Eurobond Panda bond Others

(USD mn)

Cash and equivalents

1


Management strategic outlook

(1) 50/50 JV-partnership with RusHydro(2) Project feasibility is under review to complete 1st phase of project subject to non-recourse project financing/JV-partnership

Metals

Energy

Dividends

CAPEX

Leverage

Corporate governance

• Increase in self-sufficiency in bauxites and anodes

• Growing share of VAPs with target of 60% in sales mix by 2021

• Develop low-cost and low-risk brownfield expansion: BEMO1 and Taishet2

• The Energy segment is well positioned to deliver sustainable performance through the cycle and to capture regional electricity demand upside potential on the back of brownfield expansion projects’ completion in the Metals segment

• Commitment to pay dividends on at least semiannual basis as a sum of:

‐ 75% of Free Cash Flow of Energy segment (min. - USD250 mn per year)

‐ 100% of dividends received from UC RUSAL

• Stable and controlled capex in Metals segment directed towards optimisation of core operations and delivery on strategic priorities (vertical integration and VAPs)

• Energy segment capex level consistent with historical average

• Continued focus on deleveraging, decreasing of cost of debt and extension of maturity in both segments

• Commitment to appoint an additional independent director bringing total number of INEDs to three

• Adherence to best corporate governance practices

Vertically integrated low carbon business model with unique asset base and operational excellence


Contacts

For further information, please visit http://www.enplus.ru/investors/index.jspor contact:

Daria Fadeeva1 Vasilisy Kozhinoy St, Moscow, 121096, RussiaT: +7 (495) 642 7937 E: [email protected]

http://www.enplus.ru/investors/index.jsp

mailto:[email protected]


En+ Group income statement

Income Statement

USD mn

Three months ended Nine months ended

30-Sep-2017

(unaudited)

30-Sep-2016

(unaudited)

30-Sep-2017

(unaudited)

30-Sep-2016

(unaudited)

Revenue 2,875 2,455 8,716 7,203

Cost of sales (1,890) (1,649) (5,799) (5 112)

Gross profit 985 806 2,917 2,091

Distribution expenses (152) (174) (470) (413)

General and administrative expenses (191) (174) (590) (511)

Impairment of non-current assets (59) (46) (144) (105)

Other operating (expenses)/income, net (30) (52) (96) (33)

Results from operating activities 553 360 1 617 1,029

Share of profits of associates and joint ventures 198 216 495 655

Finance income 6 4 53 58

Finance costs (346) (303) (1,113) (1,027)

Profit before tax 411 277 1,052 715

Income tax expense (61) (33) (154) (154)

Profit for the period 350 244 898 561

Attributable to:

Shareholders of the Parent Company 174 92 453 229

Non-controlling interests 176 152 445 332

Profit for the period 350 244 898 561


En+ Group business segments

Income Statement by Business segment

USD mn

Three months ended

30-Sep-2017

Nine months ended

30-Sep-2017

En+ Group

Consolidated

Metals

segment Adjustments

Energy

segment

En+ Group

Consolidated

Metals

segment Adjustments

Energy

segment

Revenue 2,875 2,460 (294) 709 8,716 7,224 (816) 2 308

Cost of sales (1,890) (1,770) 269 (389) (5,799) (5,248) 747 (1,298)

Gross profit 985 690 (25) 320 2,917 1,976 (69) 1 010

Distribution expenses (152) (111) 22 (63) (470) (321) 22 (171)

General and administrative expenses (191) (129) - (62) (590) (421) - (169)

Impairment of non-current assets (59) (58) - (1) (144) (139) - (5)

Other operating (expenses)/income,

net(30) (29) - (1) (96) (72) - (24)

Results from operating activities 553 363 (3) 193 1,617 1,023 (47) 641

Share of profits of associates and

joint ventures198 198 - - 495 495 - -

Finance income 6 - (9) 15 53 18 - 35

Finance costs (346) (223) 9 (132) (1,113) (700) - (413)

Profit before tax 411 338 (3) 76 1,052 836 (47) 263

Income tax expense (61) (26) 1 (36) (154) (54) 3 (103)

Profit for the period 350 312 (2) 40 898 782 (44) 160

Attributable to:

Shareholders of the Parent Company 174 312 (164) 26 453 782 (450) 121

Non-controlling interests 176 - 162 14 445 - 406 39

Profit for the period 350 312 (2) 40 898 782 (44) 160


En+ Group balance sheet

Balance Sheet Balance Sheet (cont’d)

USD mn 30-Sep-2017 31-Dec-2016

ASSETS

Non-current assets

Property, plant and equipment 9,632 9,355

Goodwill and intangible assets 2,385 2,300

Interests in associates and joint ventures 4,300 4,156

Long-term investments 25 25

Trade and other receivables 27 149

Deferred tax assets 83 108

Derivative financial assets 50 51

Other non-current assets 12 7

Total non-current assets 16,514 16,151

Current assets

Short-term investments 38 38

Inventories 2,312 2,034

Trade and other receivables 1,385 1,401

Prepaid expenses and other current assets 16 14

Derivative financial assets 36 16

Cash and cash equivalents 1,215 669

Assets held for sale 5 7

Total current assets 5,007 4,179

Total assets 21,521 20,330

USD mn30-Sep-

2017

31-Dec-

2016

EQUITY AND LIABILITIES

Equity

Share capital - -

Additional paid-in capital 9,193 9,193

Revaluation reserve 2,471 2,456

Other reserves (70) (63)

Foreign currency translation reserve (4,584) (4,683)

Accumulated losses(6,179)

(6,503)

Total equity attributable to shareholders of

the Parent Company831 400

Non-controlling interests 2,138 1,785

Total equity 2,969 2,185

Non-current liabilities

Loans and borrowings 12,554 12,095

Deferred tax liabilities 1,307 1,394

Provisions – non-current portion 537 618

Derivative financial liabilities 52 3

Other non-current liabilities 192 177

Total non-current liabilities 14,642 14,287

Current liabilities

Loans and borrowings 1,602 2,110

Provisions – current portion 46 64

Trade and other payables 2,203 1,652

Derivative financial liabilities 59 32

Total current liabilities 3,910 3,858

Total equity and liabilities 21,521 20,330


En+ Group cash flow statement

Source: En+ Group

Cash Flow Statement Cash Flow Statement (cont’d)

Nine months ended

USD mn 30-Sep-2017 30-Sep-2016

(unaudited) (unaudited)

OPERATING ACTIVITIES

Profit for the period 898 561

Adjustments for:

Depreciation and amortization 548 486

Impairment loss 144 105

Foreign exchange (gain)/loss (30) 120

Loss on disposal of property, plant and equipment 7 2

Share of profits of associates and joint ventures (495) (655)

Interest expense 885 774

Interest income (15) (56)

Change in fair value of derivative financial instruments 214 133

Unwinding of discount of trade and other receivables (7) -

Unwinding of discount of other payables 14 -

Income tax expense 154 154

Dividend income (1) (2)

Impairment of inventory - 4

Impairment of receivables 23 -

Provision/(reversal of provision) for legal claims 4 (1)

Environmental provision (1) 2

Operating profit before changes in working capital and

pension provisions 2,342 1,627

(Increase)/ decrease in inventories (248) 55

(Increase)/ decrease in trade and other receivables (92) 22

Increase/ (decrease) in trade and other payables and

provisions7 (163)

Cash flows generated from operations before income

taxes paid2,009 1,541

Income taxes paid (214) (114)

Cash flows generated from operating activities 1,795 1,427

Nine months ended

USD mn 30-Sep-2017 30-Sep-2016

(unaudited) (unaudited)

INVESTING ACTIVITIES

Proceeds from disposal of property, plant and equipment

29 14

Acquisition of property, plant and equipment (638) (487)Acquisition of intangible assets (12) (9)Interest received 9 22 Dividends from associates and joint ventures 642 333 Dividends from available-for-sale investments 7 2 Proceeds from disposal of available-for-sale investments

- 39

Proceeds from long-term investments - 11 Acquisition of promissory notes - (21)Proceeds from promissory notes 9 31 Acquisition of a subsidiary (4) -Loans issued (10) (59)Cash flows used in investing activities 32 (124)

FINANCING ACTIVITIESProceeds from borrowings 6,526 5,463 Repayment of borrowings (6,579) (4,587)Payment for acquisition of non-controlling interest (188) (771)Restructuring fees (36) (14)Interest paid (762) (617)Settlement of derivative financial instruments (127) (320)Dividends to shareholders (104) (90)Other distributions (15) (272)Cash flows used in financing activities (1,285) (1,208)Net change in cash and cash equivalents 542 95 Cash and cash equivalents at beginning of period, excluding restricted cash

656 577

Effect of exchange rate fluctuations on cash and cash equivalents

- 14

Cash and cash equivalents at end of the period, excluding restricted cash

1,198 686


EBITDA reconciliation

Reconciliation of adj. EBITDA for 9M 2017

Reconciliation of adj. EBITDA for 3M 2017

Nine months ended 30 September 2017

Nine months ended 30 September 2016

USD mn En+ Group Metals Energy En+ Group Metals Energy

Results from operating activities 1,617 1,023 641 1,029 624 405

Add:

Amortisation and depreciation 548 364 184 486 349 137

Loss on disposal of property, plant and equipment

7 8 (1) 2 3 (1)

Impairment of non-current assets 144 139 5 105 101 4

Adjusted EBITDA 2,316 1,534 829 1,622 1,077 545

Three months ended 30 September 2017

Three months ended 30 September 2016

USD mn En+ Group Metals Energy En+ Group Metals Energy

Results from operating activities 553 363 193 360 256 104

Add:

Amortisation and depreciation 183 121 62 164 118 46

Loss on disposal of property, plant and equipment

8 7 1 1 1 -

Impairment of non-current assets 59 58 1 46 46 -

Adjusted EBITDA 803 549 257 571 421 150


En+ Group 9M 2017 – free cash flow

46186

614

139

966

249

1,181

732

333

642

( 286)

( 89)

( 372)

( 103)

( 309)

( 407)( 14)

( 320)

( 381)

( 547)( 36) ( 127)

1,760 ( 595)

( 496)

335

2,437 ( 753)

( 650)

871

0

500

1,000

1,500

2,000

2,500

3,000

OpCF anddividends

fromassociates

and JVs

Net interest Capex Restructuringfee

Paymentsfrom

settlement ofderivative

instruments

FCF (excl.derivatives)

OpCF anddividends

fromassociates

and JVs

Net interest Capex Restructuringfee

Paymentsfrom

settlement ofderivative

instruments

FCF (excl.derivatives)

Energy segment Metals segment Dividends from associates and JVs

(1) Adjusted EBITDA (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 for the changes in net working capital, adjustments for non-cash items, income taxes paid

(2) Cash interest paid less cash interest received (3) Capital expenditure represents cash flow related to investing activities – acquisition of property, plant and equipment and intangible assets(4) Calculated as operating cash flow less net interest paid and less capital expenditure adjusted for payments from settlement of derivative instruments plus dividends from associates and joint

ventures

En+ Group free cash flow and capex(USD mn)

9M 2016 9M 2017

1 2 3

4

1 2 3

4

Documents

3Q and 9M 2017 Operational and Financial Results - enplus.ru · En+ Group undertakes no obligation to update or revise the information or any forward-looking statements in the presentation