PJSC Mechel : Mechel Reports the 3Q2019 Financial Results

Consolidated revenue – 74.9 bln rubles (-5% compared to 2Q2019)
EBITDA* – 13.7 bln rubles (-9% compared to 2Q2019)
Loss attributable to equity shareholders of Mechel PAO – 0.6 bln rubles

MOSCOW, RUSSIA / ACCESSWIRE / November 19, 2019 / Mechel PAO (MOEX: MTLR, NYSE: MTL), a leading Russian mining and steel group, announces financial results for the 3Q2019.

Mechel PAO's Chief Executive Officer Oleg Korzhov commented:

"Consolidated EBITDA went down by 9% in 3Q2019 quarter-on-quarter. This was due mainly to the weakness of coal markets, as well as a decrease in steel output and steel product sales because of repairs at our facilities, including overhaul of one of Chelyabinsk Metallurgical Plant's blast furnaces. Major planned repairs at our steel facilities will continue to affect our operational performance in the medium run, but they are essential for ensuring stable output in the future.

"I would like to draw your attention to the Group's success in restoring coal mining volumes and iron ore concentrate production. This trend, which became apparent in 2Q2019, persisted into this reporting period. In 3Q2019, our mining facilities increased coal mining by 15% and iron ore raw materials production by 27% quarter-on-quarter. This enabled us to improve sales volumes of nearly all of the mining division's products quarter-on-quarter.
"Since steel output decreased, the steel division's facilities focused on producing the high value-added products, namely structural shapes from Chelyabinsk Metallurgical Plant's universal rolling mill, including rails, as well as stainless longs and flats. The overall decline in output mostly affected sales volumes of less profitable products, such as rebar and wire rod.

"As principal debt payment amortization draws near, we are actively negotiating the postponement of our debt's maturity with our key creditor banks. Sberbank's transfer of its rights to debt payment on the loan denominated in rubles and US dollars, granted to the Group's subsidiaries Chelyabinsk Metallurgical Plant, Southern Kuzbass Coal Company and Bratsk Ferroalloy Plant, for a total of 49 billion rubles, to VTB Bank increased part of VTB Bank in the Group's debt portfolio up to 51%."

Consolidated Results For The 3Q2019 and 9M2019

Mln rubles
3Q' 19
2Q' 19
%
9M' 19
9M' 18
%

Revenue
from contracts with external customers
74,865
78,470
-5%
228,191
237,003
-4%

Operating profit
8,179
9,922
-18%
28,938
47,802
-39%

EBITDA
13,720
15,025
-9%
44,067
60,646
-27%

EBITDA, margin
18%
19%

19%
26%

Profit / (loss)
attributable to equity shareholders of Mechel PAO
(571)
1,409
-141%
12,174
10,997
11%

Mechel PAO's Chief Financial Officer Nelli Galeyeva commented:

"Consolidated EBITDA for 9M2019 totaled 44.1 billion rubles. Profit attributable to equity shareholders of Mechel PAO went up by 1.2 billion rubles year-on-year and reached 12.2 billion rubles over these nine months. Dynamics of foreign exchange gains on foreign currency obligations had a major impact on this indicator in connection with the ruble strengthening against US dollar and euro in this reporting period.

"The operating cash flow went up to 15.8 billion rubles in 3Q2019 as compared to 12.8 billion rubles in 2Q2019 and remains sufficient for both the Group's operational needs and decreasing debt leverage.

"In 3Q2019, the Group's financial expenses went down by 0.4 billion rubles from 9.9 billion rubles in 2Q2019 to 9.5 billion rubles, which was due to a lower Central Bank of the Russian Federation key interest rate and other floating rates. We paid a total of 8.0 billion rubles interest in 3Q2019, including capitalized interest and lease interest, which corresponds with the average quarterly value of this indicator. Current average interest rate and average paid interest rate is 7.4%.

"The Group's net debt excluding fines and penalties on overdue amounts and options went down by 15 billion rubles as compared to December 31, 2018, and amounted to 408 billion rubles.

"The Net Debt to EBITDA ratio amounted to 6.9 at the end of 3Q2019 as compared to 6.4 at the end of 2Q2019. This figure grew due to EBITDA decrease compared to the previous reporting period. The debt portfolio's structure remained largely unchanged, with 65% of our debt nominated in rubles and the remainder in foreign currency. Russian state-controlled banks account for 89% of our lenders."

Mining Segment

Revenue from contracts with external customers in 3Q2019 went down by 7% quarter-on-quarter as global coal markets weakened and due to decreased sales volumes of coking coal concentrate. The division's revenue in 9M2019 was stable year-on-year due to a slight decrease in coal product sales volumes while prices went higher.

The division's EBITDA in 3Q2019 demonstrated a 9% decrease quarter-on-quarter, with the main negative factor being the decrease in prices for the division's entire product range except iron ore concentrate. The lower EBITDA in 9M2019 year-on-year was due to increased production and sales costs due to outrunning stripping volumes and the division's sweeping repairs program.

Mechel Mining Management OOO's Chief Executive Officer Igor Khafizov noted:

"In 3Q2019 we continued to increase coal mining volumes. Mining at Southern Kuzbass Coal Company grew by 36% quarter-on-quarter, and the division's overall mining went up by 15%. We are not leaving it at that and will continue to restore our production indicators. Iron ore concentrate's output at Korshunov Mining Plant went up 27% quarter-on-quarter. Our facilities are keeping up fast-paced preparations of our coal and iron ore reserves for mining, with stripping volumes up by 19% quarter-on-quarter.

"This advanced pace of increasing stripping and mining coal and iron ore was due to our mining equipment fleet modernization as well as bringing in contractors with mining equipment of their own.

"I would like to note that as the division's mining volumes and sales grow, we see a stable downward trend in unit production costs across almost all our facilities since 2Q2019. This enables us to keep up stable efficiency even with current high volatility at metallurgical commodity markets. Price weakness was largely due to coal import restrictions in Chinese ports. It is expected that early next year those restrictions will be cancelled, which will have a positive impact on global metallurgical coal markets by this year's end."

Mln rubles
3Q' 19
2Q' 19
%
9M' 19
9M' 18
%

Revenue
from contracts with external customers
23,425
25,258
-7%
73,228
73,316
0%

Revenue
inter-segment
10,002
10,258
-2%
29,733
28,460
4%

EBITDA
10,590
11,588
-9%
33,164
36,582
-9%

EBITDA, margin
32%
33%

32%
36%

Steel Segment

Revenue from contracts with external customers in 3Q2019 went down by 3% quarter-on-quarter and by 7% in 9M2019 year-on-year as overall output volumes and steel products sales decreased due to a sweeping program of current and capital repairs to the equipment at the division's facilities.

The division's EBITDA in 3Q2019 demonstrated a 30% drop quarter-on-quarter, while EBITDA in 9M2019 went down by 51% year-on-year. This was mostly due to decreased steel output and sales, as well as higher iron ore prices.

Mechel-Steel Management Company OOO's Chief Executive Officer Andrey Ponomarev noted:

"Due to our facilities undertaking extensive repairs, including capital repairs of key equipment such as Chelyabinsk Metallurgical Plant's blast furnace #4, steel output went down both quarter-on-quarter and over 9M2019 year-on-year. With this in mind, in 3Q2019 the division adjusted its output and sales structure to arrange efficient use of its resources and maximize financial results. Output of the least profitable products went down. As a result, sales of rebar and wire rod went down quarter-on-quarter by 19% and 28% respectively. At the same time, output of high value-added products increased. Sales of rails spiked by 75% quarter-on-quarter, sales of other structural shapes at Chelyabinsk Metallurgical Plant's universal rolling mill went up by 5%. Sales volumes of stainless flats went up by 15% and stainless forgings by 17%. Sales of the most expensive types of nickel-containing longs and wire ropes also increased.

"Average sales prices of the most profitable products demonstrated primarily positive dynamics quarter-on-quarter, while prices for rebar and wire rod peaked in the end of 2Q2019 and early 3Q2019 and took a downward turn. These negative dynamics for construction product range was due to limited export alternatives, increased competition and market offers and seasonal decline in demand.

"The repairs program at the division's facilities continues. This includes scheduled for the end of this year replacement of Chelyabinsk Metallurgical Plant's converter #1 and capital repairs of Urals Stampings Plant's press #2. Wire-rope production facility modernization program and stranded ropes output mastering are being successfully implemented at Beloretsk Metallurgical Plant. These projects will help to raise our equipment's reliability and efficiency and to improve quality of our products, and also to reduce impact on the environment."

Mln rubles
3Q' 19
2Q' 19
%
9M' 19
9M' 18
%

Revenue
from contracts with external customers
45,479
46,750
-3%
134,291
143,842
-7%

Revenue
inter-segment
1,335
1,441
-7%
4,371
4,211
4%

EBITDA
3,060
4,376
-30%
10,695
21,960
-51%

EBITDA, margin
7%
9%

8%
15%

Power Segment

Mechel-Energo OOO's Chief Executive Officer Denis Graf noted:

"As our facilities decreased their capacity utilization and demand for our division's products saw a seasonal decline typical for summer period, revenue in 3Q2019 demonstrated negative dynamics quarter-on-quarter. Nevertheless, EBITDA in this reporting period showed a major increase as cost of sales went down.

"Revenue for 9M2019 went up year-on-year primarily due to increased sales volumes, but growing cost of sales brought down EBITDA and EBITDA margin."

Mln rubles
3Q' 19
2Q' 19
%
9M' 19
9M' 18
%

Revenue
from contracts with external customers
5,960
6,462
-8%
20,671
19,845
4%

Revenue
inter-segment
3,349
3,665
-9%
11,414
11,173
2%

EBITDA
593
47
1 162%
874
1,380
-37%

EBITDA, margin
6%
0%

3%
4%

***
Alexey Lukashov
Director of Investor Relations
Mechel PAO
Phone: 7-495-221-88-88
Fax: 7-495-221-88-00
alexey.lukashov@mechel.com

***
Mechel is an international mining and steel company. Its products are marketed in Europe, Asia, North and South America, Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products.

***
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.

Attachments to the Press Release

Attachment A

Non-IFRS financial measures. This press release includes financial information prepared in accordance with International Financial Reporting Standards, or IFRS, as well as other financial measures referred to as non-IFRS. The non-IFRS financial measures should be considered in addition to, but not as a substitute for the information prepared in accordance with IFRS.

Adjusted EBITDA (EBITDA) represents profit (loss) attributable to equity shareholders of Mechel PAO before Depreciation and amortisation, Foreign exchange (gain) loss, net, Finance costs including fines and penalties on overdue loans and borrowings and lease payments, Finance income, Net result on the disposal of non-current assets, Impairment of goodwill and other non-current assets, Write-off of trade and other receivables, Allowance for expected credit losses on financial assets, Provision (reversal of provision) for doubtful accounts, Write-off of inventories to net realisable value, Net result on the disposal of subsidiaries, Profit (loss) attributable to non-controlling interests, Income tax expense (benefit), Effect of pension obligations, Other fines and penalties, Gain on restructuring and forgiveness of trade and other payables and write-off of trade and other payables with expired legal term and Other one-off items. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of our Revenue. Our adjusted EBITDA may not be similar to EBITDA measures of other companies. Adjusted EBITDA is not a measurement under IFRS and should be considered in addition to, but not as a substitute for the information contained in our interim condensed consolidated statement of profit (loss) and other comprehensive income. We believe that our adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While depreciation, amortisation and impairment of goodwill and other non-current assets are considered operating expenses under IFRS, these expenses primarily represent the non-cash current period allocation of costs associated with non-current assets acquired or constructed in prior periods. Our adjusted EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry.

Our calculation of Net debt, excluding fines and penalties on overdue amounts** is presented below:

Mln rubles
30.09.2019
31.12.2018

Current loans and borrowings, excluding interest payable, fines and penalties on overdue amounts
376,508
402,417

Interest payable
7,912
7,749

Non-current loans and borrowings
8,763
6,538

Other non-current financial liabilities
47,336
44,510

less Cash and cash equivalents
(2,947)
(1,803)

Net debt, excluding lease liabilities, fines and penalties on overdue amounts
437,572
459,411

Current lease liabilities
9,805
5,880

Non-current lease liabilities
7,473
2,413

Net debt, excluding fines and penalties on overdue amounts
454,850
467,704

EBITDA can be reconciled to our interim condensed consolidated statement of profit (loss) and other comprehensive income as follows:

Consolidated Results

Mining Segment ***

Steel Segment***

Power Segment***

Mln rubles
9m 2019
9m 2018

9m 2019
9m 2018

9m 2019
9m 2018

9m 2019
9m 2018

Profit (loss) attributable to equity shareholders of Mechel PAO
12,174
10,997

9,485
10,414

6,033
727

(909)
365

Add:

Depreciation and amortisation
11,268
10,159

6,325
5,702

4,569
4,088

374
369

Foreign exchange (gain) loss, net
(15,889)
18,604

(3,010)
11,467

(12,860)
7,124

(19)
13

Finance costs including fines and penalties on overdue loans and borrowings and lease payments
29,439
31,729

18,297
22,707

11,252
9,732

488
414

Finance income
(534)
(20,561)

(740)
(19,090)

(368)
(1,808)

(24)
(783)

Net result on the disposal of non-current assets, impairment of goodwill and other non-current assets, write-off of trade and other receivables, allowance for expected credit losses on financial assets, provision (reversal of provision) for doubtful accounts and write-off of inventories to net realisable value
2,565
2,257

1,794
867

513
651

259
739

Net result on the disposal of subsidiaries
–
–

–
(3)

–
3

–
–

Profit attributable to non-controlling interests
1,253
933

634
224

555
585

64
124

Income tax expense (benefit)
2,219
6,188

(91)
4,516

499
326

41
109

Effect of pension obligations
143
108

121
88

19
18

3
2

Other fines and penalties
1,522
602

396
(49)

527
620

599
31

Gain on restructuring and forgiveness of trade and other payables and write-off of trade and other payables with expired legal term
(93)
(370)

(47)
(261)

(44)
(106)

(2)
(3)

EBITDA
44,067
60,646

33,164
36,582

10,695
21,960

874
1,380

EBITDA, margin
19%
26%

32%
36%

8%
15%

3%
4%

Consolidated Results

Mining Segment ***

Steel Segment***

Power Segment***

Mln rubles
3q 2019
2q 2019

3q 2019
2q 2019

3q 2019
2q 2019

3q 2019
2q 2019

(Loss) profit attributable to equity shareholders of Mechel PAO
(571)
1,409

(146)
3,644

(886)
(16)

55
(744)

Add:

Depreciation and amortisation
4,085
3,525

2,314
1,942

1,637
1,465

134
118

Foreign exchange (gain) loss, net
(1,259)
(2,651)

545
(944)

(1,805)
(1,705)

1
(2)

Finance costs including fines and penalties on overdue loans and borrowings and lease payments
9,450
9,904

5,793
6,257

3,699
3,678

158
167

Finance income
(44)
(258)

(129)
(349)

(106)
(99)

(8)
(8)

Profit (loss) attributable to non-controlling interests
564
311

248
205

188
170

128
(65)

Income tax expense (benefit)
51
1,037

574
294

286
290

118
(35)

Effect of pension obligations
41
54

34
47

6
7

1
1

Other fines and penalties
285
797

123
148

6
320

157
329

Gain on restructuring and forgiveness of trade and other payables and write-off of trade and other payables with expired legal term
(23)
(15)

(4)
(2)

(18)
(12)

(1)
–

EBITDA
13,720
15,025

10,590
11,588

3,060
4,376

593
47

EBITDA, margin
18%
19%

32%
33%

7%
9%

6%
0%

*** including inter-segment operations

Income tax, deferred tax related to the consolidated group of taxpayers are not allocated to segments as they are managed on the group basis.

Attachment B

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT (LOSS)
AND OTHER COMPREHENSIVE INCOME for the nine months ended September 30, 2019

(All amounts are in millions of Russian rubles, unless stated otherwise)

Nine months ended September 30,

Nine months ended September 30,

2019

2018

(unaudited)

(unaudited)

Revenue from contracts with customers

228,191

237,003

Cost of sales

(141,795)

(131,757)

Gross profit

86,396

105,246

Selling and distribution expenses

(41,596)

(41,939)

Allowance for expected credit losses on financial assets

(384)

(806)

Taxes other than income taxes

(3,311)

(3,685)

Administrative and other operating expenses

(12,744)

(11,951)

Other operating income

577

937

Total selling, distribution and operating income and (expenses), net

(57,458)

(57,444)

Operating profit

28,938

47,802

Finance income

534

20,561

Finance costs including fines and penalties on overdue loans and borrowings and lease payments

(29,439)

(31,729)

Foreign exchange gain (loss), net

15,889

(18,604)

Share of profit (loss) of associates, net

32

38

Other income

94

401

Other expenses

(402)

(351)

Total other income and (expense), net

(13,292)

(29,684)

Profit before tax

15,646

18,118

Income tax expense

(2,219)

(6,188)

Profit for the period

13,427

11,930

Attributable to:

Equity shareholders of Mechel PAO

12,174

10,997

Non-controlling interests

1,253

933

Other comprehensive income

Other comprehensive (loss) income that may be reclassified to profit or loss in subsequent periods, net of income tax:

(1,351)

79

Exchange differences on translation of foreign operations

(1,351)

79

Other comprehensive loss not to be reclassified to profit or loss in subsequent periods, net of income tax:

(327)

(5)

Re-measurement of defined benefit plans

(327)

(5)

Other comprehensive (loss) income for the period, net of tax

(1,678)

74

Total comprehensive income for the period, net of tax

11,749

12,004

Attributable to:

Equity shareholders of Mechel PAO

10,502

11,071

Non-controlling interests

1,247

933

Earnings per share

Weighted average number of common shares

416,270,745

416,270,745

Basic and diluted, profit for the period attributable to common equity shareholders of Mechel PAO (Russian rubles per share)

29.25

26.42

INTERIM CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION as of September 30, 2019
(All amounts are in millions of Russian rubles)

September 30, 2019

December 31, 2018

(unaudited)

Assets

Non-current assets

Property, plant and equipment

196,342

189,879

Mineral licenses

31,299

32,068

Goodwill and other intangible assets

16,819

16,883

Investments in associates

324

293

Deferred tax assets

8,393

5,488

Other non-current assets

581

630

Non-current financial assets

232

244

Total non-current assets

253,990

245,485

Current assets

Inventories

40,462

43,423

Income tax receivables

43

121

Trade and other receivables

19,027

17,612

Other current assets

7,153

8,673

Other current financial assets

345

508

Cash and cash equivalents

2,947

1,803

Total current assets

69,977

72,140

Total assets

323,967

317,625

Equity and liabilities

Equity

Common shares

4,163

4,163

Preferred shares

833

833

Additional paid-in capital

24,378

24,378

Accumulated other comprehensive income

99

1,771

Accumulated deficit

(263,989)

(274,186)

Equity attributable to equity shareholders of Mechel PAO

(234,516)

(243,041)

Non-controlling interests

11,021

9,846

Total equity

(223,495)

(233,195)

Non-current liabilities

Loans and borrowings

8,763

6,538

Lease liabilities

7,473

2,413

Other non-current financial liabilities

47,336

44,510

Other non-current liabilities

108

120

Pension obligations

4,176

3,819

Provisions

4,656

3,719

Deferred tax liabilities

14,205

13,506

Total non-current liabilities

86,717

74,625

Current liabilities

Loans and borrowings, including interest payable, fines and penalties on overdue amounts of RUB 10,385 million and RUB 9,877 million as of September 30, 2019 and December 31, 2018, respectively

386,893

412,294

Trade and other payables

37,084

34,800

Lease liabilities

9,805

5,880

Income tax payable

8,508

6,425

Taxes and similar charges payable other than income tax

8,490

6,106

Advances received and other current liabilities

4,351

5,096

Pension obligations

793

772

Provisions

4,821

4,822

Total current liabilities

460,745

476,195

Total liabilities

547,462

550,820

Total equity and liabilities

323,967

317,625

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine months ended September 30, 2019
(All amounts are in millions of Russian rubles)

Nine months ended September 30,

Nine months ended September 30,

2019

2018

(unaudited)

(unaudited)

Cash flows from operating activities

Profit for the period

13,427

11,930

Adjustments to reconcile profit to net cash provided by operating activities

Depreciation of property, plant and equipment and amortisation of mineral licenses and other intangible assets

11,268

10,159

Foreign exchange (gain) loss, net

(15,889)

18,604

Deferred income tax (benefit) expense

(2,146)

2,234

Changes in allowance for expected credit losses and write-off of trade and other receivables and payables, net

264

454

Write-off of inventories to net realisable value

1,663

1,107

Impairment of goodwill and other non-current assets and loss on write-off of non‑current assets

615

307

Finance income

(534)

(20,561)

Finance costs including fines and penalties on overdue loans and borrowings and lease payments

29,439

31,729

Provisions for legal claims, taxes and other provisions

2,922

1,956

Other

16

59

Changes in working capital items

Trade and other receivables

(2,490)

(41)

Inventories

(1,706)

(4,236)

Trade and other payables

3,393

43

Advances received

(822)

1,868

Taxes payable and other liabilities

4,025

1,269

Other current assets

1,200

(41)

Income tax paid

(2,068)

(3,062)

Net cash provided by operating activities

42,577

53,778

Cash flows from investing activities

Interest received

67

142

Royalty and other proceeds associated with disposal of subsidiaries

17

3

Proceeds from loans issued and other investments

313

9

Proceeds from disposals of property, plant and equipment

211

140

Purchases of property, plant and equipment

(4,499)

(3,321)

Purchases of intangible assets

–

(150)

Interest paid, capitalised

(194)

(310)

Net cash used in investing activities

(4,085)

(3,487)

Cash flows from financing activities

Proceeds from loans and borrowings, including proceeds from factoring arrangement of RUB 478 million and RUB 1,959 million for the nine months ended September 30, 2019 and 2018, respectively

7,008

67,228

Repayment of loans and borrowings, including payments of factoring arrangement of RUB 2,066 million and RUB 37 million for the nine months ended September 30, 2019 and 2018, respectively

(16,511)

(83,904)

Repayment of other current financial liabilities

–

(442)

Dividends paid to shareholders of Mechel PAO

(1,515)

(1,386)

Dividends paid to non-controlling interests

(7)

(7)

Interest paid, including fines and penalties

(23,724)

(25,302)

Repayment of lease obligations

(1,615)

(2,172)

Effect of sale and leaseback transactions

243

–

Deferred payments for acquisition of assets

(213)

(540)

Deferred consideration paid for the acquisition of subsidiaries in prior periods

(361)

(3,340)

Net cash used in financing activities

(36,695)

(49,865)

Foreign exchange (gain) loss on cash and cash equivalents, net

(592)

364

Changes in allowance for expected credit losses on cash and cash equivalents

4

(32)

Net increase in cash and cash equivalents

1,209

758

Cash and cash equivalents at beginning of period

1,803

2,452

Cash and cash equivalents, net of overdrafts at beginning of period

380

1,223

Cash and cash equivalents at end of period

2,947

2,777

Cash and cash equivalents, net of overdrafts at end of period

1,589

1,981

There were certain reclassifications to conform with the current period presentation. These interim condensed consolidated financial statements were prepared by Mechel PAO in accordance with IFRS and have not been audited by the independent auditor. If these interim condensed consolidated financial statements are audited in the future, the audit could reveal differences in our consolidated financial results and we cannot assure that any such differences would not be material.

* EBITDA – Adjusted EBITDA. Please find the calculation of the Adjusted EBITDA and other non-IFRS measures used here and hereafter in Attachment A.

**[ Calculations of Net debt could be differ from indicators calculated in accordance with loan agreements upon dependence on definitions in such agreements.

SOURCE: PJSC Mechel

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