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UC RUSAL Financial and Operational Highlights

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UC RUSAL Financial and Operational Highlights www.rusal.com UC RUSAL Financial and Operational Highlights unless otherwise USD million specified 2010 2009 2008 2007 2006 Revenue 10,979 8,165 15,685 13,588 8,429 Adjusted EBITDA 2,597 596 3,526 4,620 3,680 Adjusted EBITDA Margin 23.7% 7.3% 22.5% 34.0% 43.7% EBIT 2,031 (63) (1,228) 3,647 3,312 Income from Associates 2,435 1,417 (3,302) (14) (16) Pre Tax Profit/(Loss) 3,011 839 (6,053) 3,225 3,223 Net Profit/(Loss) 2,867 821 (5,984) 2,806 2,897 Net Profit/ (Loss) Margin 26.1% 10.1% (38.2%) 20.7% 34.4% Earnings/(Loss) Per Share (in USD) 0.19 0.06 (0.49) 0.32 NA* Total Assets 26,525 23,886 24,005 22,063 9,252 Equity Attributable to Shareholders of the Company 11,456 6,332 4,488 10,095 3,078 Net Debt 11,472 13,633 13,170 8,395 4,319 * Earnings/Loss Per Share was not calculated for the year ended 31 December 2006, since transfer of the interest in RUSAL was not completed until 27 March 2007 MANAGED PRODUCTION FINANCIAL PERFORMANCE THROUGH THE RECOVERY AND DEBT REDUCTION 4.1MLN T 2,867 MLN USD Aluminium Net production profit 7.8 MLN T 1,738 MLN USD Alumina Net operating production cash flow FOCUS ON MLN USD PROFITABILITY 367 Capital 24% expenditure EBITDA margin 11,472 MLN USD TIMES Net 3 debt Increase in earnings per share vAluable growth ANNUAL REPORT 2010 UC RUSAL UC RUSAL ANNUAL REPORT 2010 content Corporate Profile 03 Chairman’s Statement 07 CEO’s Review 011 Business Overview 015 Management Discussion and Analysis 029 Profiles of Directors and Senior Management 053 Directors’ Report 069 Corporate Governance Report 101 Independent Auditors’ Report 112 Glossary 194 Appendix A - Principal terms of the Shareholders’ Agreement with the Company 201 Appendix B - Principal terms of the Shareholders’ Agreement between Major Shareholders Only 203 Corporate Information 208 2010 0.8 MLN T +52% Russia & The Other CIS Countries Aluminium Consumption SOURCE: UC RUSAL 2010 VALUABLE GROWTH ANNUAL REPORT UC RUSAL Our Global Footprint 2010 VALUABLE GROWTH ANNUAL REPORT UC RUSAL Corporate ALUMINA PRODUCTION IN Profile 2010 Within its upstream business, UC RUSAL is vertically integrated to a high degree, having secured substantial supplies of bauxite and alumina production capacity. The Company’s core smelters, located in Siberia, Russia, benefit from access to stranded low cost hydro generated electricity enabling it to be one of the lowest cost producers of aluminium globally with principal Siberian facilities in close proximity to important UC RUSAL IS THE WORLD’S LARGEST PRODUCER of primary Chinese and Asian markets. aluminium, alloys and value-added products with a particular focus on the production and sale of primary aluminium, which is the higher margin upstream segment of the industry. IN 2010 UC RUSAL In 2010, UC RUSAL maintained its position as the MAINTAINED ITS POSITION largest aluminium producer in the world. AMONG THE LEADING COMPANIES ON THE PRIMARY ALUMINIUM ALUMINIUM COST CURVE PRODUCTION IN 2010 * The methodology used by Brook Hunt (an independent research and consulting firm specialising in the mining and metals industries) to UC RUSAL is one of the industry leaders in alumina calculate the C1 costs used in the preparation of the aluminium cost production. production curve presented differs from the methodology used by UC RUSAL for the calculation of its Cash Operating Cost (FOB basis). Specifically, Brook Hunt does not include in C1 costs, corporate overheads (including selling, general and administrative expenses) and casthouse costs. 03 2010 ANNUAL REPORT Vertically integrated asset base Key Shareholders1 Our scale, upstream focus and position on the cost curve provide unique exposure to the aluminium industry. UC RUSAL operates bauxite and nepheline ore mines, alumina refineries, aluminium smelters, foil mills and packaging production centres as well as power- generating facilities. The Company employs more than 72,000 people who work in 19 countries over 5 continents. In 2010 UC RUSAL produced the following: Production, 2010 Mining Refineries Smelters * Amokenga Holdings is ultimately controlled by Glencore International AG. ** Including 0.22% directly held by the CEO of the Company 11.7 MLN T bauxite Key customers 4.9 MLN T 7.8 MLN T 4.1 MLN T The favourable location of UC RUSAL’s Siberian assets nepheline alumina aluminium has enabled UC RUSAL to develop a strong client base on all 5 continents spanning the major construction, packaging and automotive consumption segments. In SOURCE: UC RUSAL internal company report 2010, the Company sold primary aluminium, alloys and value added products to almost 50 countries. The In addition, UC RUSAL produced approximately 81,400 regional breakdown of these sales are shown below. tonnes of aluminium foil and foil-containing packaging materials. 2010 revenue split Key facts The table below indicates sales of primary aluminium, alloys and value-added products to end-users, excluding In 2010, UC RUSAL accounted for about 10% of the world’s global traders: aluminium output and about 10% of the world’s alumina production generated from the following facilities located throughout the world: > 16 aluminium smelters > 12 alumina refineries > 8 bauxite mines > 4 foil mills > 2 cathode plants UC RUSAL is listed on The Stock Exchange of Hong Kong Limited and is also listed on Euronext Paris in the form of Global Depositary Shares and on MICEX and RTS in the form of Russian Depository Receipts. Looking to the future, UC RUSAL wishes to further develop sales to key customers in the major growth regions with an emphasis on establishing direct exposure to end-use segments for UC RUSAL’s products, tied to a broader suite of service options. As a consequence, the role of global trading companies in the overall sales portfolio will reduce, while regional distributors will adopt a stronger role in the portfolio. 1 Source: This On a regional basis, the net deficit markets of information was taken Europe and North America will remain key targets for UC from www.rusal.com on RUSAL’s value added products. UC Rusal expects to see a 31 March 2011. strong shift in sales to Asia due to growth in this 2 Source: CRU, based on region, in particular, in China. It is anticipated that by production in 2010 2015, 30% of the Company’s exports will be sold to support growing urbanisation and infrastructure demand in Asia. 04 VALUABLE GROWTH UC RUSAL Strong technology base UC RUSAL has developed its own in-house R&D, design and engineering centres and has RA-300 and RA-400 smelting technologies. Further, new energy efficient and environmentally friendly RA-500 technology is under design. Commodity diversification through significant investments > UC RUSAL has a 25% plus one share interest in Norilsk Nickel, the largest nickel and palladium producer2 and one of the leading producers of platinum and copper in the world. > UC RUSAL’s 50/50 LLP Bogatyr Komir coal joint venture in the Ekibastuz coal basin, one of the largest coal basins in the CIS, provides UC RUSAL with a natural energy hedge. Near-term growth projects > BEMO Project that involves the construction of the 3,000 megawatt BEMO HPP and Boguchansky aluminium smelter in the Krasnoyarsk region which has a design capacity of 588,000 tonnes of aluminium per annum. In 2010, UC RUSAL and RusHydro received credit funds from VEB and resumed works at the construction site in January 2011. > Taishet aluminium smelter in Irkutsk region with 750,000 tonnes of aluminium per annum of design capacity. The company is in the process of negotiating project financing from various lenders. 05 2020 65% 2015 56% 2010 47% Chinese Urbanisation Rate SOURCE: WORLD BANK 2010 VALUABLE GROWTH ANNUAL REPORT UC RUSAL Chairman’s Statement pp07–09 Dear Shareholders, pleasure in welcoming our new investors and look forward to sharing the future success of the Company with you. I am pleased to present the Annual Report of United 2010 was the first year for us as a listed company and Company RUSAL Plc for the year ended 31 December 2010. we have made considerable efforts to meet market 2010 was another year of significant development standards of disclosure and investor relations as well and progress for UC RUSAL, our first as a listed company as the requirements of regulatory authorities and following the successful listing of the Company’s Shares stock exchanges. on the Hong Kong Stock Exchange and Global Depositary During the past year, we reduced the initial minimum Shares on the Euronext in Paris. Despite the first part board lot size on the Hong Kong Stock Exchange from of 2010 being affected by the global economic crisis, we 24,000 Shares to 1,000 Shares. This resulted in a were able to maintain our global leadership position in substantial increase in Asian retail investor activity the aluminium production industry. The Company’s and improvements in Share liquidity. During the fourth strategy and core values of efficiency, transparency and courage enabled us to deliver significant value, not just for our Shareholders but also for our partners across the globe. As a result of our operational THE COMPANY’S STRATEGY AND flexibility, diversified assets and sustainable low cost production, we were able to meet the rising demand for CORE VALUES OF EFFICIENCY, aluminium by increasing production volumes at many of our economically and environmentally efficient TRANSPARENCY AND COURAGE facilities. UC RUSAL’s listing was a historic event and we are ENABLED US TO DELIVER extremely proud to be the first company with Russian assets to be listed on the Hong Kong Stock Exchange and SIGNIFICANT VALUE, NOT JUST to conduct a simultaneous listing on exchanges in Hong Kong and Paris.
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