ANNUAL REPORT 2019 The Report of Public Joint Stock Company ALROSA (PJSC ALROSA, ALROSA, the Company) for 2019 includes operating performance of the Company and its affiliates hereinafter referred to as ALROSA Group. PJSC ALROSA, ALROSA Group, the Group, ALROSA, and the Company used herein are deemed equivalents and refer to ALROSA Group as a whole, PJSC ALROSA and/or its affiliates as the context may require. PJSC ALROSA is a parent company of ALROSA Group, and for the purpose of this Report it submits consolidated information of the operations and financial activities of key business units and lines. The Report is based on the operating data of the consolidated IFRS figures (unless otherwise is stated). IN TERMS OF DISCLOSURE, THE REPORT COMPLIES WITH: — Federal Law No. 208-FZ “On Joint-Stock Companies” dated December 26, 1995; — Federal Law No. 39-FZ "On the Securities Market" dated April 22, 1996; — Regulation of the Bank of Russia No. 454-P “On the Disclosure of Information by Issuers of Securities” dated December 30, 2014; — Information letter of the Bank of Russia No. IN-06-52/8 dated February 17, 2016 “On Joint Stock Companies Disclosing the Report of Compliance with the Principles and Recommendations of the Corporate Governance Code in the Annual Report” — Resolution of the Government of the Russian Federation No. 1214 dated December 31, 2010 “On Improving the Management of Joint Stock Companies with Federally-Owned Shares, and Federal Unitary Enterprises”, as it reads now. The Report of ALROSA for 2019 was approved by the PJSC ALROSA Annual General Meeting of shareholders on June 24, 2020 (Minutes No. 42, dated June 25, 2020) and was pre-approved by the Supervisory Board, Minutes No. 01/311-ПР-НС dated April 22, 2020. The reliability of the data presented in the Report has been confirmed by the Audit Commission. FORWARD- LOOKING STATEMENTS This report, in addition to actual historical data, presents some forward-looking statements. Such statements include, but are not limited to, statements of future operational performance, plans and/or forward-looking statements about future economic and financial metrics, and the goals and tasks of the Company development plans, including ALROSA’s target KPIs for three years (2020-2022) — Compliance with the key performance indicators subsection of the Development Strategy section of Chapter 2, Strategic Report. Statements on future performance include, but are not limited to, information related to the forecasted or expected income, profit (loss), and net profit (loss) in relation to shares, dividends, capital structure and other financial matters. The content of such statements is forward-looking and is expressed through the words “expected”, “supposed”, “planned”, “intended”, etc. By nature, forward-looking statements are associated with general and particular risks and uncertainties. There is the risk that future actual performance may differ significantly from the plans, goals, expectations, estimates and intentions expressed in such forward- looking statements, or may fail to be implemented because of a number of factors. MESSAGE FROM THE CHAIRMAN OF THE SUPERVISORY BOARD DEAR SHAREHOLDERS, ALROSA is well on track with its strategy and its commitment to solidify a leadership standing in the global diamond market. The Company's updated Strategy and Long-Term Development Program reflect current trends and focus on digitalization and marketing as the Company’s important areas. ALROSA is working on programs to track the history of polished diamonds and provide guarantees of their origin. To that end, an electronic trading platform has been deployed. The Company is also rolling out digital "Of special note is the gradual improvement in the quality of governance at the Company. solutions for diamond buyers. In 2019, this aspect received the Best Corporate Governance Practices award. Currently, ALROSA is working to replenish its resource base, focusing primarily on Yakutia as the key area five of the fifteen members of the Supervisory Board are independent directors. of operation. The Company is actively developing projects in Africa, with operations now kicking off in Zimbabwe, a new and promising region. The Company is regularly recognised and praised for its exceptional transparency, including in disclosure of social and environmental aspects". Of special note is the gradual improvement in the quality of governance at the Company. In 2019, this aspect received the Best Corporate Governance Practices award. Currently, five of the fifteen members of the Supervisory Board are independent directors. The Company is regularly recognised and praised for its exceptional transparency, including in disclosure of social and environmental aspects. Despite the difficulties that the global diamond industry faced in 2019, ALROSA acted as a responsible market player. In order to support its customers, the Company relaxed its payment terms so that up to 45% of initially contracted diamond volumes can remain unpurchased. This move helped the cutting sector to stay afloat. Still, we need to be well prepared for new negative developments and new trends in consumer sentiment going forward. Today, customers want to know everything about the history of the stone, including where it was mined and produced and whether there were any issues involved in the process. They want complete transparency and full digitalization. Strong focus on these areas is needed to maintain consumer trust in the Company's products and, ultimately, help maintain demand for rough diamonds. A. G. Siluanov On behalf of the Supervisory Board, I want to thank the management and all the employees at ALROSA for their professionalism and dedication. CHAIRMAN OF THE SUPERVISORY BOARD PJSC ALROSA 4 5 MESSAGE FROM THE CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE EXECUTIVE COMMITTEE DEAR SHAREHOLDERS, INVESTORS AND EMPLOYEES OF ALROSA, The year of 2019 was a major challenge for the entire diamond market. The financing problems faced by the diamond-cutting sector in India, trade wars between the USA and China, slowdown in global economic growth, devaluation of national currencies, protests in Hong Kong, and a number of other negative factors contributed to the deterioration of consumer sentiment and a reduction in the price and demand for diamonds. In turn, this led to overstocking and a serious drop in sales for all the major diamond mining companies. ALROSA Group's revenue for the year fell by 26% to USD 3.3 bln. In this tough environment, we pursued a flexible sales policy based on the “price over volume” principle. Lower diamond supply caused a decrease in diamond reserves among manufacturers, which resulted in signs of stabilization in demand at the end of the year as the market was gradually recovering its state of balance. designed to boost operational efficiency and financial to individuals, organizations and settlements. Last year, performance in this area of business. ALROSA's social expenditures amounted to RUB 8.6 bln, Alongside this, we concentrated on improving the efficiency of our production processes and automation while and this area of our activity will remain one of the top also focusing on introducing digital technologies. A large-scale project to improve efficiency at the Nyurba Mining ALROSA Group ended the year with positive financial priorities for us going forward. and Processing Division proved successful, helping to increase the Division’s diamond mining by one third over the results. EBITDA amounted to RUB 107.1 bln, net profit came year, which in monetary terms exceeded USD 200 mln. Similar projects were launched at the Udachny and Aikhal in at RUB 62.7 bln, and free cash flow totalled RUB 47.6 bln. I want to thank our shareholders for their support, and our Divisions in the second half of the year. As part of a consistent effort, the Company embarked on introduction The net debt/EBITDA ratio at the end of the year stood at employees for their dedicated work and contribution to the of remote control technologies in the most complex areas of underground mines. In geological exploration, 0.74x, which is in line with the leverage target. In October, success and growth of ALROSA. We will continue our efforts unmanned aeromagnetic systems were tested, delivering good results. The first digital tenders were launched, with the Company used 100% of its free cash flow for 1H 2019 to to drive profitability for the benefit of our shareholders customers now able to decide whether to purchase raw materials after studying a full digital copy of each diamond pay dividends for the period — RUB 28.3 bln, or RUB 3.84 while also honoring our social obligations both to our in the box in the form of a 3D scan. per share. personnel and to society at large. The rough diamond mining volume of ALROSA Group went up by 5% for the year to 38.5 mln carats. The rise in As before, ALROSA takes a very responsible approach to production is associated with the design capacity reached at the Verkhne-Munskoye deposit and an increase in developing its areas of operation, especially the Republic extraction at the Nyurba Division. At the Aikhal Division, operations at the new Zarya primary deposit began. At the of Sakha (Yakutia), where our main production sites are same time, given the unfavorable market conditions, we were forced to lower our production forecasts for 2020, located. ALROSA remains the largest employer of the S. S. Ivanov mainly due to the restriction on mining at alluvial deposits. republic, providing jobs to more than 3,000