Thank you very much. Good afternoon, ladies and gentlemen.

Thank you for joining us to hear about EVRAZ's first half 2021 results. On this call today, Nikolay Ivanov and myself will be guiding you through our presentation and answering your questions.

I will briefly discuss the key market trends and walk you through the Company's highlights. So let's start with Slide 5.

In the reported period, both iron ore and coking coal prices spiked to new heights. Demand, especially from China, remains solid.

At the same time, the availability of both products on the spot market was limited. Price increased for steelmaking inputs quickly, translating into finished steel and final product prices.

We witnessed healthy demand levels across the market where the Company operates. Price differential between slabs and billets favored flat-rolled products as global economy gradually opens after COVID-19 by then.

Slide 6 illustrates final results -- financial results, sorry, for the first half of the year. Revenue increased by 24% to $6.2 billion.

EBITDA almost doubled to $2.1 billion, and EBITDA margin improved to 34%. Even better results on the cash side.

Despite higher CapEx and working capital outflow, our free cash flow reached $836 million. We prudently managed our debt position with some reduction of debt and refinancing efforts, leading to a net debt-to-EBITDA ratio of 1x, a comfortable level for the Company.

This set of results allowed to the Board of Directors to distribute $802 million of dividends or $0.55 per share. Now moving to the next slide on safety, which is our core value.

Regretfully, I have to report that we have lost six people in the first half of this year. Root causes of the fatalities have been thoroughly investigated and corrective measures were introduced to mitigate future risks.

Our lost time injury frequency rate is now on the level eight -- 1.16 and it is well below our internal target of 1.36. We are currently rolling more tools to prevent the incidence across the Company as part of our risk management project.

More on strategic execution. Next, Slide 8.

Just a reminder, we have a few pillars that we constantly monitor. Low cost position in the industry, product portfolio and customers.And on financial side, debt, CapEx and dividends.

I'm glad to report that our cost-cutting projects helped us to save $82 million. Customer-driven initiatives improved profitability by $174 million.

We kept CapEx and leverage in check, and we were able to distribute almost $700 million of dividends during the first half of 2021. Looking forward into the second half of the year, iron ore and coking coal prices will continue to stay on elevated levels, while steel prices can cool off somewhat on the back of, first, some demand weakening, following rapid growth in the first half of the year; and secondly, Chinese government efforts to bring, like they say, unreasonable commodity prices to the lower levels.

Overall, market continues to remain supportive to company profits as we speak. In terms of investment projects, our focus in the second half of this year will be on the construction of new rail mill in North America and on the upgrade of rail and beam mill in Nizhny Tagil.

On a separate note, I would like to comment a few other matters that are not part of this presentation. We have made progress with the demerger of our Coal business and confirm our intention to complete transaction by the end of the year, subject to receiving all necessary approvals, of course.

Further details will be announced later in due course. And a few words about announcements that we made today, construction of new vanadium plant.

The main idea of this project is to build a new vanadium oxide processing unit. The plant is designed using the best available technologies in line with EVRAZ's environmental strategy for 2030.

So the development of vanadium production in two regions will increase, let's say, our integration level, will create new jobs and will decrease our processing costs. With that, I turn the floor over to Nikolay.

Thank you.

Well, thank you, Alexander, and good afternoon. I'm on Slide 11 of the presentation.

In the first half of 2021, we reported EBITDA of almost $2.1 billion as compared to $1.1 billion in the first six months of 2020. The increase was primarily attributable to higher steel, vanadium and coal product sales prices as well as better sales of flat-rolled steel products resulting from improving market demand in North America.

In Steel segment, revenues rose by 34% year-on-year to $4.6 billion. High prices for construction, semifinished products and vanadium almost doubled the steel segment's EBITDA despite increasing cost of sales.

EBITDA of the segment amounted to $1.8 billion in H1 2021. In Coal, revenues rose by 6.4% year-on-year to $0.8 billion, mainly due to a decline in coal product sales volumes by 7.7%, which was partly offset by a 14.1% increase in sales prices.

EBITDA rose 57% year-on-year and amounted to $342 million. For Steel North America segment, revenues decreased by 5.4% year-on-year and amounted $1 billion.

However, EBITDA increased, driven by a significant reduction of cost of sales, which more than offset a [minor] decrease in revenues. EBITDA of the segment amounted to $53 million in H1 2021.

Turning your attention to free cash flow on Slide 12. In the reporting period, we were able to deliver strong free cash flow of $836 million, an increase of 165% year-on-year.

Free cash flow generation was supported by EBITDA growth, however, was partly offset by working capital outflow as well as increase in capital expenditures in the first half of 2021. Moving to the next slide, Slide 13.

Efficiency and cost cutting remain a primary focus for us. We continued to implement our efficiency improvement program, which is a performance system that aims to generate and implement initiatives with an annual EBITDA effect of at least 3% from the cost of goods sold.

EBITDA effects from cost-cutting initiatives totaled $82 million in the first six months of 2021. We also remained committed to executing our projects with the aim to improve our product portfolio, as well as to enhance our efforts in supply and logistics functions.

In H1 2021, the customer-focus program generated an EBITDA effect of $174 million. Moving to the next slide and the CapEx.

During the reporting period, EVRAZ capital expenditures rose by 27.6% to $430 million comparing to $337 million last year. And that's driven by higher development expenses.

Out of $430 million, $258 million was spent on development projects and the rest on maintenance. We continue to implement our main investment projects.

In Russia, EVRAZ NTMK continued the design work for the upgrade of the rail and beam mill and started initial construction. In June, EVRAZ returned to the discussion about integrated flat casting and rolling facility at EVRAZ ZSMK.

We are currently reviewing the options for this project, and we'll make a final decision on resuming its implementation later. In North America, EVRAZ Pueblo's new long rail mill project continued according to schedule.

The general contractor for the construction and installation work has been selected. Looking to full year 2021, our CapEx target is in the area of $1 billion.

Moving to the next slide, Slide 15. During the reporting period, we started our debt management efforts with the repayment of capital markets maturity coming due in [indiscernible] 2021.

In January, we repaid at maturity $735 million in outstanding principal of its eurobonds during 2021. And in March, we repaid a maturity of [$201 million] in outstanding principal of its ruble-denominated bonds due in 2021.

Also in June, we repurchased $40 million in outstanding principal of our eurobonds due in 2022. Talking about our efforts with the bank debt, in February EVRAZ ZSMK signed a new $200 million credit facility with Sberbank.

Later in March, it used $67 million of the available funds. Also in March, to compensate for the reduction in liquidity, we withdrew $750 million under the committed syndicated facility that was signed with a group of international banks in early 2020.

Additionally, EVRAZ NTMK and EVRAZ ZSMK repaid a total of around $517 million of their outstanding bank debt in varying maturities. During first half of 2021, we successfully continued preparation for the potential demerger of our Coal business.

We obtained necessary credit approvals, including Eurobond consent solicitation from the majority of holders of its eurobonds due in 2022, 2023 and 2024. It also should be noted that Raspadskaya took a $200 million long-term loan with Alfa Bank and a $200 million long-term loan with Sberbank with the interest rate linked to certain ESG metrics.

As a result of these actions as well as scheduled repayments of bank loans in H1 2021, our total debt fell by $307 million to $4.7 billion as of June 30, 2021. And net debt dropped by $95 million to $3.2 billion compared to $3.3 billion at the beginning of the year.

Interest expense amounted to $108 million during the period compared with $147 million in the first half of 2020. The repayment of the Eurobond due in 2021 and ruble bonds due in 2021, which had high coupon rates, together with the management's efforts to reduce total debt and refinance indebtedness in favorable terms, led to a significant reduction of interest expense compared with the prior year.

Additionally, the higher EBITDA amid a strong market recovery and lower net debt resulted in a significant reduction of our major leverage metrics. The ratio of net debt to the last 12 months EBITDA is at 1.0 as of the end of the year -- as end of -- the end of 6-month period.

As of June 30, 2021, cash and cash equivalents amounted to $1.4 billion, while short-term loans and the current portion of loan debt amounted to $536 million. Cash balances and committed credit facilities available comfortably cover upcoming debt maturities.

Moving to Slide 16. As Alexander mentioned, on August 4, 2021, the Board approved an interim dividend in the total amount of $802 million, $0.55 per share, to be paid on the 10th of September 2021.

With this, I would like to thank you for listening to the presentation. As usual, I have a few more slides on our operational performance and then on ESG, which we decided not to talk through but give you more time for your questions.

Now we are ready for your questions.

Just a couple of questions from me, both on the same theme. Firstly, how do you see the European carbon border adjustment mechanism potentially impacting your steel business going forward?

And secondly, following on from that, does the demerger of the coal assets give the Steel business sort of more freedom, if you like, to pursue carbon reduction across your portfolio and what might some of your plans be in that regard?

Look, in terms of carbon border taxation, I don't think that EVRAZ will have a direct impact because of that. The reason being that we do not export too much material directly to Europe.

On the other hand, these measures may influence steel flow, so that may also create impact on the other markets where we are more present. So -- but we need more time to understand that better.

Now in terms of demerger, I believe that even though, let's say, splitting coal with the steel business would allow us, let's say, to address CO2 emissions more precisely for each segment of the business. But at the same time, I guess, the potential for reduction is strong on both sides, and even to some extent, it's stronger on the coal side if I speak about emissions, which go in line with the production, mainly methane, because we have a lot of opportunities, let's say, to capture it and utilize, which we are not doing at the moment.

And I guess this would lead to a significant reduction of greenhouse -- not exactly CO2 emission from the Coal business. So making the story short, I guess that two different strategies, but there is potential on both sides to reduce greenhouse gas emissions in the future.

Quick number crunching exercise. You reported that your cash cost on an integrated basis is under $300 a tonne, I believe, $285 or so.

At this level, highly hypothetically, will it be more profitable for you to convert more material for the domestic market? Or will you have any issue rerolling this extra audience and selling it on the domestic market?

I think the situation is the following. It's very simple.

Our rolling capacity is utilized fully. So that's why even we would want, we will not be able to provide more material for the domestic market.

We'll just sell as much as we can. And demand is quite healthy even though.

We think that because in our segment and -- meaning construction demand -- have some seasonality. So we may see some cooling of the market towards the end of the year.

And one follow-up. If we look at export even with new export taxes that kicks in at the beginning of August, I believe you're highly profitable if we look at slab exports.

So I think you are right, even though slab prices has gone down in comparison with the billet prices recently. But yes, slab is more favorable still to export.

Yes. Do you hear me?

Yes, sure.

I have three questions. First of all is on additional taxation that was introduced just recently.

We know the numbers for the second half of this year, but maybe you could share your view on what could happen in January 2022. What would be the long-term implications, whether the state might introduce this excessive profit taxation in the longer run?

Or if prices go down, this will solve the problem automatically? What's your view on this additional taxation potential?

Well, I guess this answers this question. We don't know anything which would not be publicly known.

And just currently, the previous step was made out of the blue and the companies who are not aware, largely that these changes are coming, but these times around for these longer-term changes -- are these respective ministries working with companies? Or are they -- do they work kind of on their side and companies are not involved?

Well, look, again, at least it's my understanding and just take this into consideration that currently, they do the internal work. We, of course, expect that there will be some discussions about potential changes.

And the companies will be involved in that discussion. But we will see.

I guess it will not happen before September, October.

Okay. My second question is also based on the first one.

In case there is just -- hypothetically, once again, in case there is a mechanism introduced by the state, which urges companies to spend more in CapEx and making dividends less favorable, would EVRAZ be ready to materially increase CapEx and add more projects to its pipeline to avoid this additional taxation.

Well, I guess it's a very hypothetical question. What I could say is that we always have a number of projects, which we are investigating as a potential investment opportunities.

So in case it would be more favorable to deploy capital on the investment side, I guess we will be ready for that, at least in terms of that we don't have a lack of ideas. On the other hand, again, I would rather prefer to wait and see whatever actually happen then and what kind of measures would be finally proposed.

But just hypothetically, do you have a long line of potential projects in addition to what is known to the market? Or not really -- that's a big work to produce these projects?

No, for sure. We have some, again, in early stage.

So that -- and again, no commitment. But again, as the list of ideas, we have quite expansive list to work on.

Yes, for sure.

Okay. And my last question, I just wanted to clarify one in thing on this Raspadskaya demerger.

I know you mentioned it during the call, but in your press release dated 15th of April, there is a paragraph stating that the Company intends for a mechanism to be made available to EVRAZ shareholders providing them with the opportunity to sell for cash the shares and also that the Company's intention that such mechanism will not be dependent on findings from postdemerger EVRAZ Group's steel and -- as major shareholders, which leaves basically a couple of options. Either another big shareholder comes potentially, buying shares from Raspadskaya shareholders who would not want to hold them or the Company itself can announce a buyback to collect the shares from these unwilling shareholders.

Can you maybe clarify this statement for us in order to understand what did you mean really by saying this?

Well, look, I guess the statement you just quoted remains 100% valid. On the other hand, we are not yet ready to have these further details.

We just need a little bit more time for that, and we don't want to come out with kind of semi-final propositions.

But is it just something technical that has to be done? Or there are some conceptual hurdles and the yield might not go through due to some conceptual complications?

No, no. As we said, we are pretty confident that demerger will take place by the end of the year.

Congratulations on very good results for the first half. A few questions from my side, please.

Firstly, on Coal division, I think you had guidance for 2021 of 25 million tons of coal mining volumes, [tons]. Do you reiterate it?

Is the first question. And a follow-up for this, what is the expected coal sales volumes for this year given some issues with logistics?

Well, look, I think that we prefer not to give, let's say, guidance for the future. One thing we expect that, let's say, the risks, which we currently have in production, mainly in Raspadskaya mine, and to some extent, the Esaulskaya mine, those risks will be mitigated.

And because of that, we expect that there will be some catch-up on production volumes in the second half of the year. In terms of transportation, you're absolutely right, unfortunately, but on the other hand, it's probably the same situation every year.

Summertime is not the best time for transporting material mainly because Russian railways use this time for their regular maintenance. And that's why the ability to get materials through is less than it would be for the rest of the year.

But again, I think that we don't see any kind of major impact of transportation and -- as such on our ability to ship and sell.

Okay. That's clear.

My second question is also on coal. I think you mentioned in the press release that you tried to increase spot sales of coal to China.

The question is, what was your share of Chinese spot sales in the first half of this year? And what is probably a feasible target share of sales to China?

Well, look, I think that our policy is to have 80% to 20% split, meaning 80% long-term contracts and 20% spot. I guess, for the first half of the year, share of spot, which in a way means China, was a little lower than that with the target to catch up in the second half.

Follow-up on this. Did I understand you correctly that all your spot sales to exports is basically China?

Yes, absolutely.

Okay. And my last question is on your -- yes, on your few recently announced projects.

Firstly, on vanadium plant. And I think there was a comment in media about Timir iron ore projects.

The question is, does your CapEx guidance of $1 billion per annum at 2023 include these two projects?

Well, I guess that Tula project would not make any major, let's say, contribution to our overall CapEx. So that's why we don't expect that because of that, our guidance should be changed.

It remains. Timir, of course, is not there.

But even though I have said this morning on the conference call with the media that we come back to this project, and we have started some more active work on developing it, it's too early to speak about timing and potential spending.

I have just two questions from my side. Well, first, can you please advise on what your CapEx target for next year?

And the second question relates to dividend. You already announced in two installments 130% of free cash flow to dividends this year.

And your dividend policy is not very explanatory on how you allocate cash for dividends. You said on the minimum level.

How should we be thinking about dividend payout in the future?

Could you repeat your first question because I'm not quite sure that I understood it correctly?

What is your CapEx guidance for 2022?

CapEx guidance?

Yes. Yes, capital investments.

Again, as I said earlier, what we have announced, basically the number or the level of $1 billion, this guidance remains for the next two, three years. So we do not expect any substantial deviation from that.

On dividend side, I guess, Nikolay would explain better because I'm not sure that your reading of our dividend, 130% of cash available, is correct.

I think -- yes, thank you. So the dividend policy, which we have stated that EVRAZ guarantees a minimum payment of $150 million every six months.

But the Board has an opportunity to pay larger amounts and pay it more often as we did this year, for example, if we have good financial results. So I believe that if you look at our cash dividend policy during the last few years, you will see that -- and if you look at a year -- on a full year basis, you will see that our free cash outflow is approximately 89% to 90%, okay?

So I think that your estimation of 130% is correct, taking another interim dividend of $0.20, which we paid in June. But I think it's better to look at the picture for the whole year.

And for the whole year, shall we be thinking about 100% payout for the full year?

Well, I think it's for the Board to decide. I don't think I can give you any guidance on this right now.

Maybe can you give us the logic, what do you discuss when recommend dividends? For example, even the end of the year, we see that steel prices are high and company's cash generation in the first half of 2022 will be strong.

Can we expect the Company to allocate 100% of free cash flow?

Look, we can only repeat the answer. It's at full discretion of the Board to decide how big dividend to distribute based on strategic priorities and financial results of the Company in this particular moment.

Otherwise, we can only refer to the policy.

I have several questions. My first question relates to working capital increase, which exceeded $250 million in the first half of this year.

As I understand, it was driven by higher prices for steel, mainly. If the prices stabilize and start declining, would you expect some reversal of this amount in the second half?

Yes. Let me take this one.

Yes, I think you are absolutely correct. So there was some working capital release in the first six months, and it's driven primarily by the increase in prices.

And first of all, the steel prices -- prices in steel. But also let me mention another factor, a significant increase in operations in our North American segment of the business.

So there are some volumes increase in inventories there as well, so that's another factor that needs to be taken into account. And yes, obviously, if there will be a decrease in prices in the second half of the year, we do expect that, that will affect the working capital, yes.

I have a second question regarding your new vanadium plant. Will it replace some of the existing vanadium processing facilities?

Or it will be a new processing fertility on top of the current capacity? And if this is the case, will the share of vanadium in slag sales decrease once we complete this plant.

I think the answer to all your questions is yes. So it will decrease third-party sales of vanadium slag, and it will not impact current processing capacities, which we already have into.

It will be on the top of that, and both plants would allow us to process 100% of vanadium slag we produce in Nizhny Tagil.

Okay. And my last question relates to your announced decision to reconsider your flat casting and rolling facility investment plan.

We'll come back to this plan actually. Previously, you were talking about building a 2.5 million ton plant with the total CapEx of about $650 million.

If I remember correctly, this plan was announced about two years ago. Will you come back to this exact figures or you may change it?

Well, look, in terms of projected capacity, there will be no change. Talking about budget, of course, there is some risk of the number increase because of higher steel prices, higher prices for construction material; and let's say, cost of services, which at least as of the moment has gone up substantially if we compare with the situation two years ago.

But we need to evaluate all of that before we make a final commitment to move further on.

And when do you expect to make the final investment decision?

Well, our current plan is to do it until the end of the year. So...

Just two brief follow-up questions from our side. First on this newly approved vanadium plant in Tula, so could you please comment how much volumes can we expect the plant to give EVRAZ Group merchant vanadium production?

Well, just to give you an idea, I mean, current processing capacity is equivalent to 8,000 to 9,000 tons of vanadium in slag per year. The new facilities will be capable of processing 12,000 tons of vanadium slag per year.

So it's more than doubling your current existing vanadium processing capacity. Is that correct?

Yes, it would be correct way to look at it.

And the second quick follow-up question is, you commented earlier that you have a selection of investment projects in your pipeline. Could you remind us what are your IRR threshold levels to consider an investment project an attractive investment?

20%.

I'm just wondering if you've had any thoughts about your plans for financing coming into year-end and with the maturity of your 2022s in early next year. So any comments around that would be very interesting.

Nikolay?

Yes, I will take -- yes, yes. So you're right.

Our first, also significant debt repayment is coming on January of next year, and that actually would be the only big refinancing we need to do next year. We are currently investigating different options, and we haven't decided yet which option to follow.

So we are looking at different opportunities. We expect to come to a decision in September with regards to that.

Yes. In May, you announced that Alexander will step down as President, and Nikolay will take his role.

So I wonder how will those changes actually change the whole corporate structure. And what will be the further role of Alexander in the Company?

Well, look, let me answer. First of all, I guess there is some misunderstanding on your side, and we are sorry about that.

It's not going to be Nikolay. Unfortunately, it's going to be Aleksey Ivanov, Senior VP for Commerce and Business Development.

I do not expect any major organizational changes in the Company, and I would not expect any big change in strategy either. Talking about myself, I would continue to be a member of EVRAZ and currently in the Board of EVRAZ and I'm also currently Chairman of Raspadskaya Board of Directors.

So I would continue these two main activities if you talk about EVRAZ's main activities.

You actually mentioned that the billet prices traded at quite a large discount to slab price. So I wonder your views on the nature of this difference and whether it's a logical or fair to expect this discount to billet to decrease to 0.

Our reading of that, it's probably more related to increase in demand in flat products after the pandemic in comparison with the long ones. To say about future, I would expect that we gamble now.

I note there historically, and I don't see fundamental reason for the current situation to continue.

And a follow-up on this topic. With regards to your capacity of billets and slabs, is it possible for you to quickly switch to slabs on 100% basis of your semi-finished product sales?

No. I think that we have several limitations in terms of switching, let's say, 100% to slabs.

But we have some flexibility, which we quite often use and used actually in the past depending on the price for each type of product.

I've just got a couple of follow-ups on the previous talk. Just firstly on the vanadium plant.

You're obviously having this new capacity. What's the sort of uplift in terms of EBITDA per ton from processing for final products?

That's the first question. Secondly, just on the flat rolling mill.

Is 20% the right sort of IRR that you'd be looking at on that project? Or can you give us some idea for your expectations for what you would -- you'd expect or want to get to proceed that project?

And then just thirdly, on the taxation. Is -- I mean, you obviously don't know the form that's going to take.

But if you were advising the government or if you had discussions with the government in the coming months and they are intent on taxing the sector more, what form of additional taxation would you be recommending to them? I mean would it be through continuation of some sort of export tax with some revisions?

Or would it be on a revenue basis? What sort of taxation would you think would be palatable to the industry and government regulators as well?

Look, just starting from your last question, I would not give any advice on that because I don't see myself as a specialist in whatever taxation matters and also I'm not a specialist on forming the country's budget. So as I said before, we expect that there will be some discussion with the businesses, in particular with steel makers, before those measures will be introduced.

Talking about the vanadium project, IRR is above the threshold. And I guess knowing the CapEx number you could probably guess yourselves what kind of EBITDA this project should have on an annual basis in order to improve cash flow capability.

Okay. But is it -- I mean, should we be taking that minimum as a reasonable number?

Or is -- could that -- could the IRR significantly exceed that?

Well, you can take 20% as a benchmark and build the, let's say, calculation on that for simplification.

Ladies and gentlemen, yes, I see that there are no further questions. So I would like to finish this call and thank you for your participation today.

Have a great evening ahead. Thank you very much.

Thank you.

Bye-bye.

Thank you. Bye-bye.