Annual Report 2О2о

ANNUAL REPORT 2О2О | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES II PROFILE REPORT AND INVESTORS GOVERNANCE 1

This report of the public joint stock company PJSC ALROSA ( the Company) for 2020 covers the results of the operations of the Company and its subsidiaries, together referred to as the ALROSA Group.

The terms “ALROSA”, “the ALROSA Group”, “the Group”, and “the Company” used in the report are considered equivalent and refer to the ALROSA Group as a whole, PJSC ALROSA, and/or its subsidiaries, depending on context.

PJSC ALROSA is the parent company of the ALROSA Group, provides consolidated information for this report on the operating and financial activities of key business units and lines of business. This report has been prepared based on an analysis of the operating data of the consolidated IFRS indicators (unless specified otherwise).

In terms of information disclosures, this Report complies with:

−−Federal Law No. 208-FZ dated 26 December 1995 “On Joint Stock Companies”; −−Federal Law No. 39-FZ dated 22 April 1996 “On the Securities Market”; −−Bank of Russia Regulation No. 454-P dated 30 December 2014 “On Information Disclosure by Issuers of Marketable Securities”; −−Bank of Russia Informational Letter No. IN-06-52/8 dated 17 February 2016 “On the Disclosure in the Annual Report of a Public Joint Stock Company of a Report on Compliance with the Principles and Recommendations of the Code of Corporate Governance”; −−Russian Government Resolution No. 1214 dated 31 December 2010 “On Improving the Governance of Joint Stock Companies, Shares in Which Are Held in Federal Ownership, and of Federal Unitary Enterprises”, as currently amended.

This 2020 Report of the public joint stock company PJSC ALROSA has been approved by the PJSC ALROSA Annual General Meeting of shareholders, Minutes No. 43 dated 17 June 2021, and has been given preliminary approval by the Supervisory Board of PJSC ALROSA, Minutes No. 01/332-PR-NS dated 28 April 2021. The accuracy of the data provided in the report has been confirmed by the Audit Commission. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 2 PROFILE REPORT AND INVESTORS GOVERNANCE 3

FORWARD-LOOKING STATEMENTS

In addition to factual data for past periods, this report makes certain forward-looking statements. In particular, these include statements on the future results of production activity, plans and/or forecasts relating to future economic and financial indicators, goals and objectives of the Company regarding development plans, including target values for the KPI of the ALROSA Group for the next three years (2021–2023) – in the sub-section “Achievement of Key Performance Indicators” of the section “Development Strategy” of Chapter “Strategic Report”.

Statements about future results may include information on forecast or expected income, earnings (losses), net profit (losses) in respect of shares, dividends, capital structure, and other financial matters. The content of such statements is anticipatory in nature, and is generally accompanied by words such as “expected”, “presumed”, “planned”, “intended”, and so on. Forward-looking statements are inherently associated with risks and uncertainty, both in general and in particular aspects. There is a risk that actual future results may differ substantially from the plans, goals, expectations and intentions expressed in such statements, or may not be achieved by virtue of a number of different factors. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 4 PROFILE REPORT AND INVESTORS GOVERNANCE 5

TABLE OF CONTENTS

A MESSAGE FROM THE CHAIRMAN OF THE FOR SHAREHOLDERS AND INVESTORS 94 SUPERVISORY BOARD 6 Factors in the investment appeal of ALROSA, 96 Share capital and dividend policy, 97 A MESSAGE FROM THE CHIEF EXECUTIVE Shareholder and investor relations, 100 OFFICER – CHAIRMAN OF THE MANAGEMENT BOARD 8 CORPORATE GOVERNANCE 104 Structure and results of the activity of corporate governance bodies, 106 COMPANY PROFILE 10 General Meeting of Shareholders, 108 About the Company, 12 Supervisory Board, 109 Key results of 2020, 13 Executive management bodies, 133 Contribution to fighting the spread of the COVID-19, 16 Corporate Secretary, 138 Sustainability, 18 Risk management system, 139 Corporate governance, 20 Control system, 150 Where we operate, 22 Information disclosure system, 157

Business model , 24 Glossary, 158 Contact information, 162 STRATEGIC REPORT 26 Market overview, 28 Appendices 164 Development strategy, 33 Financial statements (IFRS) of PJSC ALROSA for 2020, 166 Investing activity, 40 Subsidiaries and associates, 176 Increasing efficiency, 43 List of local internal regulations, 182 Report of the independent auditor on implementation of the Long-Term Development Program, 183 PERFORMANCE 50 Statistics on sales of rough and polished diamonds, 185 Information on disposal of non-core assets, 186 Reserves and exploration, 52 Information on the execution of the orders of the President and Government of the Russian Federation, 188 Operating performance, 55 Information on major transactions and interested-party transactions, 190 Financial performance, 65 Report on compliance with the principles and recommendations of the Corporate Governance Code, 198 International industry cooperation, 71 Report of the Audit Commission, 220 Procurement management, 72 Pending court proceedings, 227 Government support, 228 SUSTAINABILITY 76 Information on the meetings of the Supervisory Board and committees, 230 ESG ratings and awards, 79 Sustainability management, 80 People, 81 Occupational health and safety, 85 Community Engagement, 87 Environment, 90 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 6 PROFILE REPORT AND INVESTORS GOVERNANCE 7

A MESSAGE FROM THE CHAIRMAN OF THE SUPERVISORY BOARD

Dear Shareholders,

2020 proved ALROSA’s ability to maintain efficient operations in the face of major challenges. The Company implemented a set of anti-crisis measures that ensured its continued financial resilience and support for the personnel. A focus on digitalization enabled a prompt transition of many business processes to online. Despite the fall in demand for diamonds and jewelry during the pandemic, ALROSA was able to not just maintain, but also reinforce its positions. This is borne out by the fact that the Company retained investment-grade ratings from three international agencies, and the bond offering in the middle of 2020 went down in history as the most successful in the sector in the past five years. ALROSA’s own online jewelry store, where consumers can purchase diamonds and jewelry with a Company-guaranteed provenance, opened its virtual doors in 2020. This was another important step on the road to improving the transparency of the supply chain. I would like to highlight the Company’s active efforts to integrate ESG principles into its operations. During the reporting year, we created a Working Group on Sustainability, and at the start of 2021 the Supervisory Board made the decision to add sustainability to the remit of the committee responsible for strategic planning. All of these served as appropriate and time- 2020 proved ALROSA’s ability to maintain efficient ly measures to improve the governance system and to address operations in the face of major challenges. The Company the growing demands for transparency from clients, share- implemented a set of anti-crisis measures that ensured holders, and investors. ALROSA maintains its leading position on the world diamond its continued financial resilience and support for the market while remaining true to the principles of responsible personnel. business. On behalf of the Supervisory Board, I would like to thank the management and all employees of ALROSA for contributing to the Group’s development and for their professionalism.

Anton Siluanov CHAIRMAN OF THE SUPERVISORY BOARD, PJSC ALROSA | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 8 PROFILE REPORT AND INVESTORS GOVERNANCE 9

A MESSAGE FROM THE CHIEF EXECUTIVE OFFICER – CHAIRMAN OF THE MANAGEMENT BOARD Dear ALROSA shareholders, investors, and employees,

This reporting year was a difficult one for the entire world – Despite the drop in production, ALROSA retained its the COVID-19 pandemic was a serious test for all countries, leadership on the global diamond production market. all companies, and for every individual. The restrictions as- A milestone for the year was the creation of the ALROSA sociated with coronavirus led to lockdowns, economic cri- Jewelry Group. ses, and a reduction in demand on the global market for ALROSA continues to refine and reform its internal pro- diamonds and diamond products. cesses. In the reporting year, the Company launched a Digital Production program dedicated to transforming the Company’s production segment with the help of digital Measures against the COVID-19 pandemic and its solutions. ALROSA launched a large-scale upgrade of the consequences equipment maintenance and repair system and continued From the very beginning of the pandemic, ALROSA took automating various production processes. The pandemic a responsible approach and implemented the necessary was in many ways instrumental in accelerating the imple- measures to fight COVID-19. Total expenses in this area ex- mentation of new solutions. For example, due to the bor- ceeded RUB 1 billion. More than 95% of this amount went der crossing restrictions, we launched the ALROSA Video towards anti-coronavirus measures in Yakutia, where the Viewer service, which allowed clients to examine rough di- Group’s main production facilities are located. amonds remotely and in real time. Digital bidding and auctions became much more prominent, with the respective The Company paid great attention to protecting and sup- revenues reaching almost USD 35 mln. porting employees: it shifted some office personnel to remote working, purchased personal protective equipment and disinfectants, and organized free testing. Financial performance it. In 2020, ALROSA made great progress: in addition to one of the ALROSA Group’s priorities. In order to maintain the stability of the business and restore The ALROSA Group ended the year with positive financial getting recertified for compliance with the new Code of balance to the diamond market, ALROSA reduced its out- results: EBITDA was RUB 87.6 bln, net profit – RUB 32.2 bln, I would like to express our gratitude to our employees, Practices (2019) of the Responsible Jewellery Council (RJC), put targets and suspended production at deposits with the and free cash flow amounted to RUB 79.5 bln (up 67% partners, shareholders, and investors for their cooperation creating a Working Group on Sustainable Development, lowest margins. The Company adopted a very flexible ap- versus 2019). and support in this difficult year. We will continue our work and resolving to expand the remit of the Supervisory proach to sales and took measures to support the diamond towards achieving strategic goals, improving the Company, Board’s Strategy and Sustainability Committee, we set to market during the crisis period. ALROSA allowed clients to The recovery in sales at year end allowed us to make early shoring up its position on the global market, and boosting work on developing a Sustainability Program in accordance defer purchases under long-term contracts from April–July repayment of two bank loans totaling USD 275 mln and to its shareholder value. to later periods, and our “price over volume” strategy made redeem the remainder of the 2010 Eurobond issue in the with best international practices and defined a number of it possible to move away from the price discounts seen on amount of USD 494 mln. Because of this, net debt / EBITDA key ESG goals and metrics. at the end of 2020 decreased to 0.4x. the market. These and other measures to address the cri- ALROSA remains committed to developing the regions sis helped to restore demand for diamonds on the global where it operates, creating jobs and improving living market, which then allowed us to maintain a stable financial conditions. The Company is the largest employer in the position and meet our obligations to the government, to Contribution to sustainable development in our regions of Republic of Sakha (Yakutia). As part of the Local WorkForce shareholders and to the employees of ALROSA. operation for Industry project, more than 1,500 people from Yakutia ALROSA adheres to the principles of responsible business found employment in 2020, and more than 1,700 peo- and strives to meet the highest global standards, including ple were hired from the local population in the regions of Operating activity in the field of sustainability. The Company also contributes operation. The majority of ALROSA enterprises that suspended op- to achieving the UN Sustainable Development Goals. The Company provides substantial tax revenues to the erations due to the pandemic had already resumed their In 2021, the Company became a signatory to the UN budgets of various levels, helps to develop social infrastruc- work by the end of 2020. Despite all the difficulties, the Global Compact (UNGC) – a voluntary initiative of lead- ture, and finances regional development programs. In addi- Company continued to develop its resource base and pro- ers in development, implementation, and communication, we actively promote environmental initiatives and seek duction assets. ALROSA expanded the scale of its domes- tion of best business practices in the field of sustainable to minimize our environmental impact. Creating conditions Sergey Ivanov tic diamond field exploration in the Krasnoyarsk Territory, development. for sustainable development in our regions of operation is Irkutsk Region, and Yakutia. In the reporting year, we also CHIEF EXECUTIVE OFFICER – CHAIRMAN OF THE We are working to establish an effective sustainable devel- began exploration work in Zimbabwe, obtaining the rele- MANAGEMENT BOARD, PJSC ALROSA opment management system and make improvements to vant licenses and certificates to work in three provinces. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 10 PROFILE REPORT AND INVESTORS GOVERNANCE 11

COMPANY PROFILE

ABOUT THE COMPANY 12

KEY RESULTS 2020 13

CONTRIBUTION TO FIGHTING THE SPREAD OF THE COVID-19 16

SUSTAINABILITY 18

CORPORATE GOVERNANCE 20

WHERE WE OPERATE 22

BUSINESS MODEL 24

IVAN AKSENOV, Head of processing plant No. 16 of the Nyurba Division. Honored Worker of PJSC ALROSA - 2020. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 12 PROFILE REPORT AND INVESTORS GOVERNANCE 13

ABOUT THE COMPANY KEY RESULTS OF 2020

28% Global ALROSA is the world's largest EBITDA CAPEX Revenue including Sale of rough and diamond income from subsidies polished diamonds mining diamond mining company 87.6 17.0 221.5 201.7 billion RUB billion RUB billion RUB billion RUB

The Company's main assets are located in Russia – in Republic of Free Capitalization Declared Reserves Sakha (Yakutia) and Arkhangelsk Oblast. ALROSA has the world's larg- cash f low dividends1 est rough diamond reserves. ALROSA is a public company whose shares are traded on the Moscow Exchange. The percentage of shares in free float is 34%, with the 79.5 724 19.4 1.1 billion RUB billion RUB billion RUB billion carats 90% Russian Federation, Republic of Sakha (Yakutia) and the municipalities diamond of the Republic of Sakha (Yakutia) holding a 66% share. Market capitali- mining in Russia zation at the end of 2020 equaled RUB 724 billion ($9.8 billion). Production Employees Social Expenses on 2 More than 30,000 employees work at the ALROSA Group. ALROSA expenses environmental protection is committed to the principles of sustainable development and international standards of corporate social responsibility. The Company's achievements have been recognized with high ratings and a place in 30.0 32 10.2 5.6 million carats thousand people billion RUB billion RUB the FTSE4Good, MSCI ESG, Sustainalytics and WWF Russia ratings.

1957 1969 1987 1992 2011 2013 2016

Yakutalmaz Trust created Yakutalmaz Trust Yakutalmaz Association ALROSA Joint Stock ALROSA reorganized ALROSA placed its The second placement reorganized as an reorganized as a Company (CJSC) as a public joint stock shares on the Moscow of ALROSA securities association Production and Research founded company. Company Exchange as part of its on the Moscow Association (NPO) shares put in free float privatization Exchange is successfully on the financial market concluded

1 Dividends approved In 2020 based on the results for H2 2019. 2 Social expenses include the Company's withholdings to the NPF Almaznaya Osen in the amount of RUB 4.4 billion. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 14 PROFILE REPORT AND INVESTORS GOVERNANCE 15

22 May June 24 June ALROSA successfully places Leading int ernational PJSC ALROSA held its exchange-traded bonds worth rating agencies confirmed annual General Meeting of RUB 25 billion ALROSA's investment-grade Shareholders The total amount of the issue was RUB rating Company shareholders decided 25 billion with a coupon rate of 5.75% They include S&P Global Ratings to pay dividends based on the per annum, maturity on May 10, 2030 (BBB-), Fitch Ratings (BBB-) and results for 2019 in the amount of and the envisaged put option in five Moody's (Baa2). The outlook for RUB 2.63 per share and elected years, in May 2025. all ratings is «stable». the new Supervisory Board. 10 March 13 March 7 May ALROSA holds The Supervisory Board of Expert RA assigns The Strategic Planning 25 June Investor Day ALROSA reelects Sergey PJSC ALROSA a ruAAA credit Committee of the Supervisory Ivanov rating Board recommended that ALROSA completed Company management talked the placement of 7-year about the challenges the industry ALROSA lower its production to the position of Chief This is the highest rating of credit- Eurobonds worth faced in 2019 and the efforts made Executive Officer - Chairman of worthiness, financial stability and target to overcome them, the financial re- $500million the Management Board of the reliability an issuer can receive on The recommendation was made by the sults for 2019, and progress made Company for a five-year term. the national scale for the Russian Committee in response to the emerg- The coupon rate was set at 3.1% in the implementation of strategic Federation. The rating outlook is ing crisis on the global rough and pol- per annum. initiatives. «stable». ished diamond market. At the end of 2020, diamond mining equaled 30 million carats, compared to an initial plan of around 34 million carats.

QUARTER I QUARTER II

2 July 21 July 8 October 22 October 15 February 2021 ALROSA launched a large- The Joint Venture of ALROSA ALROSA implemented the ALROSA was among the three leading public ALROSA improves its corporate governance in scale project to change its and ZCDC began exploration ALROSA Video Viewer system companies in the Metals & Mining sector in all the area of sustainable development management approach to the work in Zimbabwe for remote showings of rough nominations of the Institutional Investor rating The Supervisory Board decided to officially include sus- system of technical servicing Geological survey and explo- diamonds. The Company took first place in five of the seven nomi- tainability issues in the competence of the committee responsible for strategic planning. and repair of equipment ration work is planned in the This service allows clients to remote- nations according to international investors and investment banks. The economic effect from the im- Masvingo, Matabeleland South and ly examine rough diamonds in re- plementation of the project over the Matabeleland North Provinces. al-time with the help of an ALROSA next five years is estimated at specialist. RUB 3.2 billion.

13 July 24 July 12 October 3 November Anton Siluanov was reelect- The shares of NPF Almaznaya The Chief Executive Officer - ALROSA redeemed in full 2010 Eurobonds ed as the Chairman ofthe Osen were sold to a core Chairman of the Management worth $1 billion at a coupon yield of 7.75% Supervisory Board of ALROSA investor Board of PJSC ALROSA held per annum His deputies were also elected and a working meeting with the Using its own funds, the Company redeemed the 10- the members of the core commit- President of the Russian year Eurobond issue worth $494 million. In 2018- 2019, tees of the Supervisory Board were Federation the Company partially bought back the securities under determined. the issue worth a total of $506 million. Vladimir Putin and Sergey Ivanov discussed the Company's position on the global diamond market, the challenges facing it and its future plans.

QUARTER III QUARTER IV AFTER REPORTING DATE | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 16 PROFILE REPORT AND INVESTORS GOVERNANCE 17

CONTRIBUTION TO FIGHTING THE SPREAD OF THE COVID-19

SUPPORT FOR AREAS OF PRESENCE SUPPORT FOR THE ROUGH AND POLISHED DIAMOND MARKET

Curtailing of production ALROSA spends more than RUB 1 billion to fight the made it possible to avoid t he formation of low liquidity balances spread of COVID-19 made it possible to maintain current liquidity and a stable financial More than 95% of this amount was spent on measures in Yakutia position at a level sufficient to meet obligations to shareholders, the budget, extrabudgetary funds and staff without resorting to state support measures RUB 184 million were used to help hospitals and to purchase medical goods and equipment

RUB 10 million were spent on the work of the Support Digital tenders Center for people who were experiencing hardship in connection with retained the ability to purchase diamonds despite t he restrictions the coronavirus infection pandemic associated with COVID-19 made it possible for clients to access detailed information on diamonds The Medical Headquarters and temporary isolation units and

observation facilities were organized to reduce the risk of the Flexible sales approaches infection being introduced at remote production sites and shift camps made it possible to restore demand for products at the end of 2020 STAFF SUPPORT ensured the sale of rough and polished diamonds worth $1.8 billion in H2 2020 transfer of part of office staff to remote work

Adaption of the supply system provision of personal protective equipment ensured the reliable work of the supply chain despite the restrictions associated with COVID-19 provision of disinfectants for use throughout the day made it possible to provide all required resources for production activity in a timely manner

regular temperature checks

free PCR and antibody testing for COVID-19, medical assistance at production sites

supplemental pay for work during the pandemic for the staff of the ALROSA medical center | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 18 PROFILE REPORT AND INVESTORS GOVERNANCE 19

SUSTAINABILITY

KEY TOPICS KEY ESG RATINGS

FTSE4Good Index FTSE Russel ESG Rating MSCI ESG Ratings Sustainalytics ESG Risk Rating

Participant since 2016. 3.71 BB 35.82 Development of human capital

Occupational health World Wildlife Fund (WWF) S&P Global CSA3 RAEX-Europe ESG and safety Corporate Rating

11th in the rating of 34 out of 100 6th place in the Metals & environmental transparency Mining sector of mining companies in Russia of the WWF

Environmental protection

ISS ESG Corporate Rating ISS E&S Quality Score Bloomberg ESG Disclosure CDP Climate change Score Environment – 2, D+ Social – 4, 50,83 D (Disclosure) Governance – 3

Development of areas of presence

Governance and business AWARDS AND CERTIFICATES ethics

Successful recertification for compliance with the re- best employers in Russia, in part in recognition of the quirements of the new Code of Practices (2019) of the Company's considerable contribution to the Responsible Jewellery Council (RJC). The audit covered the socio-economic prosperity of the areas where it operates; subsidiary ALROSA (ZIMBABWE) Limited, which became Top 3 ESG rating for public companies based on the re- the first ever RJC certified company in Zimbabwe sults of a survey of investors by Institutional Investor 2nd place in the Forbes magazine rating of the 50 (as part of the 13th annual competition of annual reports of the Moscow Exchange)

1 Assessment performed on 22 March 2021 2 Assessment performed on 4 March 2021 3 Before 2021 SAM CSA | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 20 PROFILE REPORT AND INVESTORS GOVERNANCE 21

CORPORATE GOVERNANCE

ALROSA strives to implement corporate CORPORATE GOVERNANCE STRUCTURE governance best practices.The Company

has approved a Corporate Governance EXTERNAL CONTROL BODIES GENERAL MEETING EXECUTIVE BODIES Code that incorporates global best SHAREHOLDERS CEO - Chairman of the Audit Commission Management Board practice SUPERVISORY BOARD Exeternal independent Management Board auditor Committees of the Supervisory Board «Leading corporate Overall average assessment of Internal Control Department 1 Strategy and sustainability governance practices» the performance efficiency of the Committee1 2 Supervisory Board Risk Management Department Audit Committee

Corporate Secretary HR and Remuneration Committee Internal Audit Department 8 NRCG level 3.68 of 4

1 National Rating of Corporate Governance of the Russian Institute of Directors (RID) 1 Before 15 February 2021- by decision of the Supervisory Board, minutes No. 01/327-PR-NS, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the 2 Based on the results of self-assessment of the performance efficiency of the Supervisory Board at the and of 2020 Strategy and Sustainability Committee | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 22 PROFILE REPORT AND INVESTORS GOVERNANCE 23

WHERE WE OPERATE Aikhal, Russia Aikhal Mining and Moscow, Russia Processing Divizion 9 COUNTRIES 8 RUSSIAN REGIONS • Branch "Single sales entity" • Branch of ALROSA Diamonds 6 MINING AND PROCESSING ENTERPRISES Nakyn, Russia Udachny, Russia Udachny Mining and Nyubra Mining and Processing Divizion 3 DIAMOND MINING ENTERPRISES Processing Divizion/PJSC ALROSA-Nyubra PROPRIETARY JEWELRY MANUFACTURE Arkhangelsk, Russia PJSC Severalmaz Smolensk, Russia Kristall PC ALROSA Jewelry Group

Barnaul, Russia ALROSA Diamonds LCC Yakutsk, Russia Antwerp, Belgium • JSC Almazy Anabara ALROSA Belgium NV • YAPTA branch

Mirny, Russia • Mirny Mining and Processing Divizion Vladivostok, Russia

• Vilyuiskaya GRE Vladivostok branch

• R&PDW New York, USA • ALROSA Spetsbureniye LLC ALROSA USA Inc. • Kommeral Enterprise

Hong Kong, PRC ALROSA Hong Kong Ltd.

Mumbai, India Geological survey/exploration work Representative office in India Dubai, UEA Minine and processioe ALROSA East DMCC

Sorting, evaluation and sales Angola Ramat Gun, Israel • Katoka Ltd. ALROSA Israel Ltd. Jewelry manufacture Mining Company • Luashe

• Branch in the Repablic Polished diamond production of Angole

Trading companies

Harare, Zimbabwe Branches and representative offices ALROSA (Zimbabwe) Limited | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 24 PROFILE REPORT AND INVESTORS GOVERNANCE 25

BUSINESS MODEL

RESOURCES PRODUCTION AND SALES ACTIVITY CREATING VALUE

NATURAL FINANCIAL VALUE GEOLOGICAL EXPLORATION AND SALES AND MARKETING −−1.1 billion carats - rough diamond reserves −−RUB 201.7 billion – revenue from the APPRAISAL −−$2.8 billion in revenue from the sale of 2 sale of rough and polished diamonds −−67 licenses to use the subsoil for diamond rough and polished diamonds mining −−11.6 mln carats — reserve growth1 −−RUB 87.6 billion – EBITDA −−32.2 milion carats volume of diamonds −−RUB 5.6 billion – environmental protection sold −−RUB 79.5 billion – free cash flow expenses DIAMOND MINING −−RUB 32.2 billion – net profit CUTTING AND POLISHING −−RUB 43.1 billion – taxes and PRODUCTION −−30.0 mln carats — mined −−Production of unique polished diamonds, mandatory payments −−6 mining and processing complexes −−1 carat/ton — diamond content primarily cut by hand −−RUB 8.5 billion – interest payments −−8 open-pit mines −−RUB 19.4 billion – declared −−3 underground mines dividends3 SORTING AND EVALUATION JEWELRY MANUFACTURE −−8 alluvial deposits −−stable financial position: −−into 16 size and weight groups and −−The jewelry company joined the 0.4 net debt/EBITDA ratio −−3 diamond polishing companies more than 8,000 positions ALROSA Group −−proprietary jewelry manufacture NON-FINANCIAL VALUE PRODUCTS FINANCIAL −−more than RUB 120 thousand - −−Gem-quality diamonds average salary of ALROSA Group RUB 17.0 billion – capital expenditures −− −−Polished diamonds employees INTELLECTUAL −−Diamond jewelry −−4.6% - share of social expenses4 in −−Industrial diamonds revenue −−ALROSA Video Viewer service for remote SUSTAINABILITY showing of rough diamonds −−2.5% - share of environmental protection expenses in revenue −−0.5% - share of innovation expenses in revenue DEVELOPMENT OF HUMAN CAPITAL GOVERNANCE AND BUSINESS ETHICS −−around 92% – share of renewable energy in energy consumption −−50% - share of automation of grouping and ALROSA strives to build a corporate culture that ALROSA endeavors not only to meet the highest standards of sorting of rough diamonds facilitates the creation of a close-knit team of conscientious business practices but also to actively participate in −−more than 500 projects and initiatives professionals united by common goals, ambitions and improving and promoting best practices and standards of industry to support local communities and values, guaranteeing the fullest possible realization self-regulation, developing international partnership charity HUMAN and development of the professional potential and facilitating the exchange of knowledge and experience. of employees and ensuring equal opportunities, −−creation of a Sustainable 32 thousand employees −− inclusivity and respect for human rights. Development Working Group DEVELOPMENT OF AREAS OF PRESENCE −−around 12% - representative of indigenous peoples ALROSA seeks to ensure a decent quality of life for the OCCUPATIONAL HEALTH AND SAFETY general population and supports socio-economic and cultural advancement in its areas of presence. SOCIAL AND REPUTATIONAL ALROSA tries to foster a safe production culture based on the responsible behavior of employees at all levels −−participation in international and Russian ESG 1 Not including depletion of reserves. The issue of whether it is ratings of management and Company counterparties, and ENVIRONMENTAL PROTECTION economic to develop a specific deposit or plot is determined on an each production process meets high occupational individual basis and depends on a multitude of factors ALROSA is committed to steadily improving its system of −−partnership agreements with regional health and safety standards. 2 management, implementing cutting-edge technologies and Licenses to use the subsoil related to the exploration, assess- authorities ment, geological survey and mining of diamonds improving the environmental awareness of stakeholders 3 −−largest taxpayer in the Republic of Sakha in order to minimize the risks of Its operations having an Dividends approved in 2020 based on the results for 2019 (Yakutia) adverse impact on the environment. 4 Social expenses include the Company’s withholdings to NPF Almaznaya Osen

THE GROUP'S STRATEGIC PRIORITIES

Focus on the diamond Replenishing the depleted Improving productivity Meeting high standards and Stimulating consumer demand for Gradual withdrawal from noncore High level of social responsibility in all business mineral raw materials base fostering a culture of produc- natural diamonds through generic businesses areas of presence tion and environmental safety marketing | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 26 PROFILE REPORT AND INVESTORS GOVERNANCE 27

STRATEGIC REPORT

share of ALROSA on the global market

MARKET OVERVIEW 28

DEVELOPMENT STRATEGY 33

INVESTING ACTIVITY 40

INCREASING EFFICIENCY 43 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 28 PROFILE REPORT AND INVESTORS GOVERNANCE 29

MARKET OVERVIEW Key events in the global diamond industry in 2020

Company Event

ALROSA ––ALROSA began drilling work to further study the Mir pipe as part of the strategic investment Russia continues to hold 1st place project to resume diamond production at the field. worldwide in total rough diamond ––The ALROSA Investment Committee approved the financing of preliminary design and exploration work at the Jubilee mine of Aikhal Division. This will make it possible to update production. the documentation necessary for any future decision on the transition from open-pit mining to underground mining. General characteristics ––ALROSA received a positive opinion from the Russian Main State Directorate of Expert Review for the project on opening up and working the reserves of the upper horizons of the International underground mine. The full exploitation of these reserves will take about ALROSA produces about 90% of all diamonds in pandemic, the ALROSA Group maintained its 28% 10 years. Russia in physical terms, and is the leader on the market share in physical terms. global market of the diamond mining industry. ––Geologists of ALROSA began the study of a new kimberlite body not far from Aikhal in the By a preliminary estimate, global sales of rough dia- Despite the ~21% drop in global diamond produc- Mirny district of Yakutia. monds in 2020 were about $8.6 bln, a drop of about tion in 20201, which was due to the drop in demand 29% compared to 2019. De Beers ––De Beers announced 12 sustainability goals to 2030. These included the achievement by 2030 for rough diamonds as a result of the COVID-19 of gender equality among employees, support for 10,000 female entrepreneurs in partner diamond-producing countries, achieving neutrality of carbon dioxide emissions, and a 50% reduction in water consumption. In 2020 the ALROSA Group produced Rio Tinto ––In November 2020 after 37 years of operation, Rio Tinto wound up production at the Argyle field in Australia due to the depletion of commercial reserves. Production at Argyle accounted 30 mln carats of rough diamonds and for about 10% of global diamond production in volume terms. is the leader in this respect among the Dominion Diamond ––Dominion Diamond sold the Canadian Ekati field and the majority of the company’s other assets (other than a 40% share in the Diavik field) to Arctic Canadian Diamond Company Ltd. world’s major diamond producers. (Arctic). Petra Diamonds ––Petra Diamonds transferred a controlling shareholding of 91% to the company’s creditors in return for debt restructuring.

Main competitors ALROSA’s main competitors on the world diamond market over the past several years have been De Beers, Rio Tinto Trends in the global diamond market and Petra Diamonds2. in 2020

Global diamond production and market share of key companies МIn 2020 the world’s diamond industry was affected by its long-term clients the option to defer purchases of con- the consequences of the novel coronavirus infection tracted volumes of rough diamonds to subsequent periods. COVID-19, which led to a de facto temporary suspension In addition, during 2020 the majority of companies tempo- 0 20 40 60 80 100 120 140 160 of the industry’s operations in Q2–Q3 2020. To support the rarily suspended production at their assets that were nonre- mln market, major rough diamond producers implemented a munerative at a time of falling demand and prices for dia- carats “price-over-volume” strategy with the aim of preventing a 2.3% 2.7% monds, with the aim of preventing the spread of COVID-19. 24.7% 23.8% 12.4% 34.1% further glut of the polishing sector (midstream), and offered 2018 148.4 2.4% 27.9% 22.3% 12.3% 2.8% 32.3%

2019 138.2

27.5% 23.0% 13.5% 30.1% THE MAIN TRENDS IN THE DEVELOPMENT OF THE DIAMOND INDUSTRY IN 2020 2.9% 3.0% 109.0 TOOK SHAPE UNDER THE INFLUENCE OF THE NOVEL CORONAVIRUS INFECTION 2020 COVID-19: −−falling demand for diamond jewelry on all markets as a result of national lockdowns 0 10 20 30 40 50 60 70 80 90 100 % of global and an unstable economic situation; prodaction −−contraction of reserves of finished products in the cut gem and jewelry segments as a result of a decrease in purchases of rough diamonds and in sales of diamond ALROSA Rio Tinto Mountain Province Total annual jewelry; global diamond De Beers Petra Diamonds Other production −−falling demand for unprocessed diamonds due to the negative state of end-user sales markets.

1 Preliminary estimate 2 For more details on ALROSA’s main competitors and their geography of operation, see p. 26–27 of the 2019 ALROSA Annual Report | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 30 PROFILE REPORT AND INVESTORS GOVERNANCE 31

Diamond jewelry market Global sales of diamond jewelry, $ bln1 Growth in the margin at midstream2 -15% ↑ 2.5 x.

The start of 2020 was marked by stable demand for rough mainland China. In the USA results for the first half of 2020 diamonds on the part of cutting and polishing companies, showed a drop in sales of 20% year-on-year. Starting from which replenished inventories given positive retail sales of June and on into the third quarter of 2020, signs of sales 83 86 85 More then diamond jewelry in Q4 2019. However, in the middle of growth began to appear among both independent jew- 73 5% January 2020, it became known that a novel coronavirus elers and chain stores. In India in the first half of 2020 de- 2% was rapidly spreading in China, where an outbreak of the mand for diamond jewelry contracted by more than 30% as disease led to the imposition of a quarantine and, conse- a result of a 50% drop during the lockdown period of April– quently, the closure of about 75% of the country’s jewelry May. In the fourth quarter sales of diamond jewelry grew stores for almost two months. By the mid-March, when the steadily, as the holiday season approached and consumer 2017 2018 2019 2020 2010-е 2020 pandemic was declared, strict self-isolation regimes (lock- demand was partially restored. downs) had been introduced in virtually all countries, with Many US retailers began their holiday sales early, in or- the closure of all non-essential infrastructure (including der to ensure a more stable distribution of demand and 3 shopping malls and stores other than grocery stores) and Midstream (cutting and polishing sector) Level of outstanding debt of the Indian polishing sector, $ bln to comply with social distancing requirements. As a result, the restriction of free movement, as well as the cancellation the holiday sales season in the United States began with As the COVID-19 pandemic spread, trading on the dia- of international flights and closing of borders. ↓ 2x active online sales, since the pandemic motivated consum- mond market came to a virtual halt in March 2020. The op- As a result of the pandemic and the subsequent lockdowns, ers to make purchases over the Internet. Another persistent eration of all cutting and polishing plants in India was also stock markets became more volatile, global economic ac- trend in retail was the stable recovery of sales in continen- suspended in March; in the middle of May some enterpris- tivity was sharply curtailed, and household incomes con- tal China, where Chinese consumers began to spend more es began to operate at a lower capacity, with social 15 distancing requirements in place. tracted. All of this led to a drop in consumer demand for money within the country, due to travel restrictions. The 10 diamond jewelry, which meant that cutting and polishing trend of growing spending on jewelry at the end of 2020 With the restoration of end customer demand on key sales 7-8 centers had an inventory glut; this led to a lack of demand and start of 2021 can be explained by the fact that some of markets and the removal of a number of lockdown meas- for rough diamonds. the income that was previously spent on travel and other ures associated with the pandemic, by the third quarter of experiential purchases was freed up due to transportation 2020 India’s cutting and polishing industry gradually re- It is estimated that demand for diamond jewelry in China and social restrictions caused by the pandemic. Overall vived. Thanks to the flexibility offered by major diamond in the first quarter of 2020 fell by 45% year on year, while global sales of diamond jewelry in 2020 are estimated to 2000s 2010s 2020 producers, including ALROSA, the midstream segment an unsteady recovery began in the second quarter due to have fallen 15% to 2019 level. pent-up demand, while in the third quarter the country’s was able to retain the financial stability with which it began main retailers were already showing year-on-year growth in 2020. Inventories of rough diamonds at midstream decreased, and for some categories of diamonds a shortage Inventory level in the Indian polishing sectors, emerged; however, India’s industry organizations contin- indexed level (2010-18=100)4 ued to call on plants to limit purchases of rough diamonds in accordance with real demand and taking accumulated Sales trends on the main diamond jewelry markets in в 20201 inventories into account. In the fourth quarter of 2020 the -2.5-3 $ majority of the country’s cutting and polishing centers re- USA sumed full operation, including Surat – the world’s leading diamond cutting and polishing center – while retaining the 17% 16% Personal 14% 14% 12% restrictions and rules introduced in connection with the 100 7% 8% 76 consumption 2% 4% pandemic. For 2020, India’s imports of rough diamonds 63 expenditures on were 28% lower in value terms than in 2019. jewelry in the USA in 2020, On the whole, over the past decade India’s cutting and pol- year-on-year ishing industry has substantially reinforced its position on -21% the market, despite the financial crisis it faced in 2018-19 2010-18 2019 2020 -27% related to the decline in the banking sector’s confidence due to the illegal actions of certain players. The price cor- -51% rection for rough diamonds by diamond producers in the middle of 2020 with the aim of maintaining recovery of de- Net exports of polished diamonds from India, $ bln5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec mand allowed diamond polishing companies to increase their margins. In the view of the Company and a number of -38% industry analysts, midstream entered 2021 with historically China low stocks and a low level of debt. 25% Sales of jewelry 19.2 15% 13% 17% 12.0 in China in 2020, 8% 12% year-on-year

-4% -7% -12% 2019 2020

-30% -41%

1 Source: ALROSA estimate 2 Source: Company estimate, AWDC Bain report “The Global Diamond Industry 2020-21” 4 Source: Company estimate, AWDC Bain report “The Global Diamond Industry 2020-21” 1 Source: Bureau of Economic Analysis (USA), National Bureau of Statistics of China 3 Source: Company estimate, AWDC Bain report “The Global Diamond Industry 2020-21” 5 Source: customs statistics | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 32 PROFILE REPORT AND INVESTORS GOVERNANCE 33

Rough diamond market Estimated global rough diamond sales, $ bln1 DEVELOPMENT STRATEGY Many producers were forced to suspend production as a -29% result of the drop in demand for diamonds. From March to May 2020 about 20 diamond fields were shifted to technical maintenance status or reduced their output. Approximately half of these fields had resumed production by the end of the first half of 2020, and by the fourth quar- 12.0 8.6 ter of 2020 the majority of the suspended fields had restarted operations. It is estimated that global diamond sales by the major companies in 2020 contracted 29% compared to 2019. 2019 2020 The mission of the ALROSA Group is to be a Starting March 2020, ALROSA introduced a flexible approach to sales, allowing clients to defer purchases of global leader in the diamond industry, consist- rough diamonds stipulated by long-term contracts from April–July to later periods. Medium-sized and smaller pro- ently pursuing the long-term interests of share- ducers continued to sell rough diamonds in the first half of the year for specific orders, with a select range of goods at holders thanks to the efficient use of its mineral prices that were 15%–40% lower than prices at the start of 2020. resources. Forecast In 2018 the Company developed the ALROSA Group The key postulates of the Strategy are: Strategy for 2018–2024 (the “Strategy”), including measura- The underlying factors in the growth of the global diamond Industry participants are pursuing various initiatives to stim- ble strategic development goals, a targeted financial −−retention of a leading position on the global diamond market; jewelry market remain positive. Developing countries (in- ulate demand for natural diamond jewelry, including in- business model, and strategic measures1. cluding China and India) account for one-third of the plan- creased generic marketing as part of the advertising cam- −−focus on the diamond business; et’s population, and these markets are the future for further paign of the Natural Diamond Council, as well as offering development of the jewelry industry. In the longer term, customers jewelry with the history of the diamond, track- −−effective management of a socially responsible business stable growth is predicted for diamond jewelry demand on ing it from the mine to the final product (tracing), and us- with the goal of pursuing the long-term interests of developed and developing markets, buoyed by favorable ing modern communications (the Internet, social networks, shareholders. economic underpinnings. At the same time, diamond pro- etc.) to promote jewelry among the younger generation of duction will continue at levels 20-25% lower than pre-pan- consumers. demic levels, which is due to the exhaustion of a number KEY STRATEGIC PRIORITIES of fields and the time needed to bring new fields into production. Strategic priorities Description

Focus on the diamond business ALROSA plans to keep to a single-product strategy and focus on the most attractive and highest-margin segment of the diamond industry – exploration and production of rough diamonds. Replacing declining mineral resources ALROSA plans continuing investments in the exploration and development of to ensure the long-term growth of the new fields and in maintaining existing fields to ensure continuity of operations ALROSA Group in the longer term. The Russian Federation continues to be the main region of production, while African countries are considered to be promising regions for growth. The Group intends to improve its prospecting technologies and to implement new methods to make its exploration efforts more effective. Raising labor productivity by ALROSA regularly monitors new production and treatment technologies in order continuously improving production to optimize its cost structure at all stages of the production process. Improvements processes and implementing new are planned for the processes of logistics, sorting and classification of rough technologies diamonds. Consideration is being given to increasing liquidity by reducing the turnover period for warehouse inventories to the minimum. Complying with the highest standards Since health and safety are key priorities for ALROSA, one of the Group’s strategic and creating a culture of industrial and goals is to completely eliminate accidents and emergencies, together with environmental safety achieving a 100% commitment of managers in resolving issues of production safety. ALROSA is seeking to minimize its adverse environmental impact, ensure rational use of mineral assets, economize resources, and comply with the requirements of international standards in environmental protection and environmental safety. Fostering consumer demand for natural The goal of the Group is to create long-term demand for natural-origin diamonds diamonds through generic marketing under conditions of volatile preferences of the target audience, and to shape an emotional need for diamonds of natural origin.

1 Source: company reports, ALROSA estimates 1 Development strategy of the ALROSA Group for 2018–2024 (the “Strategy”) was approved by the Supervisory Board of PJSC ALROSA, Minutes No. A01/283-PR-NS dated 16 November 2018 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 34 PROFILE REPORT AND INVESTORS GOVERNANCE 35

Strategic priorities Description Policy measures Main results of 2020

Gradual withdrawal from non-core lines ALROSA is concentrating on the diamond business as much as possible, and ––A Health and Safety strategy for 2021–2025 was developed and approved. of business divesting from non-core assets. ––Aikhal Division implemented the Problem Solving Board project, which is to be High level of social responsibility in all ALROSA is shaping its social policy on the principle of socially responsible further spread to other divisions of ALROSA. regions where the Company operates business and mutually beneficial cooperation with state authorities and local governments in the regions where it operates. Preserving investments in regional ––The revised standard “Three-Level Control of the State of Occupational Health development, maintaining its own social facilities, charitable and sponsorship work and Safety at ALROSA facilities” was circulated to all divisions of the Group. – these are key areas in the long-term planning of ALROSA’s social policy. ––Implementation was completed of the revised standard “Work Order System in the Divisions of PJSC ALROSA". ––The SAP ТОРО module was launched to organize the rapid elimination of Health and Safety (H&S) violations of Health and Safety requirements that involve the personnel of the Shared Service Centers and Maintenance Centers. ALROSA Long-Term Development ––A project was launched to implement H&S knowledge monitoring terminals with Program pre-shift testing for working personnel. ––A project was launched to digitize key processes encompassing the three-level control and work-order system standards. The Long-Term Development Program of the ALROSA diamond market, thanks to the effective use of its mineral Group for 2018–2024 was drafted and approved in 2018 to resources and compliance with the highest standards of ––Tests were performed of the system for monitoring the condition of drivers implement the Strategy. This program, designed to ensure doing business. at Mirny Division, and an assessment is being conducted of the feasibility of the achievement of strategic goals, contains a list of policy extending this to other divisions of PJSC ALROSA. measures and expected operating results in the long term1. ОLeading efficiency indicators will be achieved while maintaining the scope of social support and investment in envi- РThe implementation of strategic measures will allow the ronmental protection in the regions where we operate, and ––The final stage of implementation is underway for a project to automate the ALROSA Group to retain its leading positions on the global also while upholding occupational safety standards. target end-to-end process of supporting production for all divisions of ALROSA, as well as the automation of the centralized management of target levels of the insurance and emergency-service reserve. ––Work is underway to automate the allocation of inventories and planning of materials and equipment movements. A pilot project was carried out on Procurement and supply ALROSA LONG-TERM DEVELOPMENT PROGRAMА implementing an IT warehouse management system at the site of the Material and Equipment Supply Management Department in the city of Lensk in the Republic of Sakha (Yakutia) – the Company’s largest warehouse. The project Policy measures Main results of 2020 included the implementation of bin location warehousing at the distribution warehouse, bar coding, and work to systematize materials acceptance and Exploration work performed in full, with 11.6 mln carats of diamonds booked. –– shipping processes. ––Contouring of a new kimberlite body not far from Aikhal in Mirny district. ––Start of drilling work for additional study of the Mir kimberlite pipe as part of the ––In 2020, PJSC ALROSA took first place in the industry group “Ore Mining and strategic investment project to resume diamond production at the field. the Chemical Industry: Ores and Chemicals” and seventh place in the Interfax- ERA environmental and energy efficiency rating of the 150 largest companies of ––Approval of financing of preliminary design and exploration work at the Jubilee Russia and Kazakhstan. Exploration and production mine of Aikhal Division. Georadar surveying was put into operation in 2020, Environmental protection operations and detailed area surveys were conducted at the Mirny and Verkhne-Munskoye ––In the Environmental Responsibility Transparency Rating of Mining and Metals kimberlite fields. Companies of Russia, prepared by WWF Russia in conjunction with the European Union and the UN Environment Programme, the Company took 11th place ––Positive results were obtained from field trials of the offset refraction correlation among 40 participants. method. Plans include the use of this technology at the Mirny kimberlite field. Positive results have also been obtained from field trials of electrotomography – magnetic surveying using drones.

––A project was carried out to raise the equipment utilization rate (UTE) of mining trucks at the Jubilee mine of Aikhal Division. A centralized dispatch service was organized using dynamic scheduling to manage mining work. An arrangement was implemented for the work of mining trucks that was designed to reduce downtime. Operating efficiency program ––The Group defined the development strategy for the Maintenance and Repair (M&R) system with a planning horizon to 2024. As part of the strategy, a new management operating model was implemented at ALROSA’s mining and processing complexes.

1 The Long-Term Development Program of the ALROSA Group for 2018–2024 was approved by the Supervisory Board of PJSC ALROSA, minutes No. A01/283-PR-NS dated 16 November 2018 For more details of the policy measures of the Long-Term Development Program of the ALROSA Group for 2018–2024 please see the 2019 Annual Report of ALROSA, p. 33 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 36 PROFILE REPORT AND INVESTORS GOVERNANCE 37

Policy measures Main results of 2020 Policy measures Main results of 2020.

––A number of measures were implemented in 2020 as part of sales operations: ––In 2019 the ALROSA Group acquired JSC Kristall PC; in 2020 measures were taken to integrate the enterprise in the cutting and polishing unit of the an increase in client orientation by providing a large amount of information –– ALROSA Group. Among other things, in 2020 measures were taken to transfer to clients on the products of the ALROSA Group, decreasing the minimum the enterprise to a tolling system for processing rough diamonds, and the unified contract allocation level to zero, deferring contracted volumes to later sales and distribution function was moved entirely to a branch periods in connection with the difficult market situation due to the of ALROSA Diamonds. pandemic; ––In 2020 the Company successfully sold a unique diamond – The Spirit of the Rose, sales via video-channels (ALROSA Video Viewer); –– with a mass of 14.8 carats – through the Sotheby’s auction house. –– sale of “stock” diamonds (before 2019) of Kristall PC, including Smolensk ––The True Colours auction was held online for the first time in 2020 on the Diamonds; Company’s online platform, with a digital passport with the history of provenance –– improvement of diamond distribution algorithms (focus on end users) and being attached to each diamond. More than 20 new participants were attracted. additional offerings as part of trading sessions; ––In 2020 ALROSA continued to finance projects in the field of generic marketing of the Natural Diamond Council ((NDC) (the renamed Diamond Producers’ Sales –– confirmed “price-over-volume” sales approach; Association, DPA)), which showed strong results in work on promoting the –– conduct of international auctions during the pandemic, new multimodal category of natural diamonds in the premium consumption segment. Despite logistics routes; pandemic restrictions, the NDC launched a global advertising campaign with –– sales of diamonds through digital (online) sales; the participation of rising movie star Ana de Armas, which was received very positively in the industry and made it possible to attract a large number of –– development of the functionality of the online trading platform; retailers to the activities of the NDC. –– supporting cross-functional collaboration of users of the CRM system; ––A number of initiatives aimed at promoting the industry’s image in the area of ESG were successfully implemented. –– formation of a group of client managers. ––In 2020 the budget for marketing spending on the launch of the ALROSA Group’s –– In 2020, the share of certifiable diamonds output from mechanized sorting as a own brands was substantially optimized. Autumn 2020 saw the pilot launch of final product was increased from 30 to 35%. the Luminous Diamonds project (a project aimed at fostering demand among –– In 2020, the share of rough diamonds box assembly increased from 0 to 50%. end consumers for jewelry with fluorescent diamonds) in partnership with the major American retailer Signet in the Jared chain, in the affordable jewelry segment, with an average price of $1,500–2,000, and also with the company SDC of the MSuresh group (a long-term client of PJSC ALROSA) in the High-End Polishing business and marketing Independents segment, selling jewelry with an average price of $3,500–7,000. ––The pilot launch of the OhMyDiamond project (to promote jewelry with small diamonds) began in partnership with Richline in an online format. ––The pilot project of Diamonds That Сare (to increase the appeal of the product category of brown diamonds by popularizing the charitable activity of PJSC ALROSA) was launched on the major American Internet platform Brilliant Earth. ––Sales to individuals under the Private Banking program doubled compared to 2019. ––Sales of diamonds to individuals in Russia over the Internet began; large-scale PR support was provided in domestic media as part of the campaign to launch the work of the website. ––In 2020, in addition to diamonds, a range of more than 3,500 pieces of jewelry by the ALROSA Jewelry Group (formerly the Smolensk Diamonds Jewelry Group) was offered on the Internet platform. ––In 2020 the diamond tracing process was set up, and the product ALROSA Diamond Passport was launched, which tracks diamonds cut at the enterprises of clients of PJSC ALROSA. ––The Provenance section was launched for the rough diamonds of PJSC ALROSA on the website get-diamonds.com, and integration was launched of this same section with the trading platforms UNI Diamonds and IDEX. ––The project for developing technology for the laser marking of diamond crystals is successfully being implemented.

Operations in Africa ––25 licenses were received for prospecting and exploration work in Zimbabwe. As a joint venture, Alrosa (Zimbabwe) Ltd. began prospecting work and preparations for the exploration of bedrock diamond fields. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 38 PROFILE REPORT AND INVESTORS GOVERNANCE 39

Policy measures Main results of 2020 Achievement of key performance indicators

Divestment of non-core assets ––In 2020 the ALROSA Group divested seven non-core assets for a total of The system of key performance indicators (KPI) of the Since 2015 KPIs have been integrated into the existing RUB 2.2 bln. Shares in JSC NPF Almaznaya Osen and six real estate properties ALROSA Group was drafted and approved by the executive incentive program with the establishment of a were sold. Supervisory Board in December 2014. The main goal of im- direct link between the amount of remuneration of the plementing a system of KPI is to transfer prospective plans Company’s CEO and collegial executive body and the ––In 2020 the ALROSA Group also carried out preparations for the sale of 1 and strategy of the ALROSA Group to the form of quantita- achievement of target KPIs set by the shareholders. LLC Lenskoye PTES (this asset was included in the Sales Plan for 2021 ) and tive and qualitative indicators, on the basis of which an Prometey Health Center. Changes were made to the ALROSA KPI system in objective assessment can be made of work performance 2019–2020 to take into account the requirements of the HR policy ––As part of the priority republican project “Local Staff in Industry”, in 2020 for each reporting period. Methodological Guidelines1 and directives of the Russian PJSC ALROSA hired 1,587 local residents in the Republic of Sakha (Yakutia), Government2. which is 14% more than the 2019 figure. ––In 2020, 44,800 workers, specialists, and managers of the ALROSA Group took ACHIEVEMENT OF ALROSA KPI various types of training. ––The Management and Operating Faculties of the PJSC ALROSA Corporate Indicator Unit 20193 2020 2020 University implemented a number of integrated programs (“ALROSA Potential”, deviation from “ALROSA Asset”, “ALROSA Achievement”, “ALROSA Leaders”, and more), as well target, % as a number of specialized programs (Theory of Solving Invention Objectives, target4 report Lean Approaches to Office Processes, Business Process Optimization, and others), in which about 4,000 people were trained. Dividends RUB mln - 19,370 19,370 - ––In 2020 PJSC ALROSA took second place in the Forbes list of the 50 best Return on equity (ROE) % 25.0 6.1 12.5 +105 employers in Russia. The magazine noted that the Company’s expenses on Margin on “Earnings before deduction” % - 40.1 39.6 -1 charitable activity and support for local communities was one of the highest among all participants in the list. Labor productivity % - 5.0 -1.5 - ––The programs “Health” (which included measures to prevent the spread of Reduction in operating expenses % - -3.8 -7.9 +108 coronavirus), “Leisure and Recovery”, “Culture and Sports” were implemented. Run-of-mine ore ,000 m3 82,286 55,114 54,939 0 Social responsibility ––Under the Agreement on Social-Economic Development (SED) with the Republic Integrated KPI for innovation activity % 100 >95 1005 - of Sakha (Yakutia), PJSC ALROSA contributed RUB 910 mln to the Special Fund for Future Generations for the construction, repair, and reconstruction of schools Revenues from sales of core products $ mln 3,335 2,012 2,802 +39 and education institutions, housing, dormitories, art schools, a museum, an Output of rough diamonds ,000 carats 38,485 29,869 30,020 +1 esthetics center, a spirituality center, hospitals, social rehabilitation centers, a residential school, sports facilities, and cultural and development facilities, as well “Earnings before deduction” RUB mln 107,054 63,638 87,644 +38 as for research work and the implementation of the state program “Development Bonus reduction indicators of the Water Supply Systems of Vilyuysky Group of Uluses in 2019–2024”. Net debt/“Earnings before deduction”6 ratio 0.7 1.9 0.4 -81 ––Under the SED Agreement, RUB 324.8 mln were spent with Nyurba Ulus and RUB 100.1 mln with Oleneksky Ulus. Existence of debt on employee wages yes/no - no no - ––The subsidiaries of PJSC ALROSA additionally contributed RUB 162 mln for Accident frequency rate7 rate - 0.30 0.29 -3 regional development programs in 2020. Organizational and corporate ––The National Corporate Governance Rating confirmed PJSC ALROSA at level development 8 “Leading Corporate Governance Practices”. ––In 2020 PJSC ALROSA continued to work with rating agencies to maintain its credit ratings. This work resulted in the confirmation of all international ratings (S&P, Fitch, and Moody’s) at investment grade with a stable outlook, as well as the receipt of a first credit rating from the Russian agency Expert RA at the highest level. ––All mining and processing facilities and divisions were transferred to servicing by Shared Service Center (SSC), which from the start of the project in October 2018 has generated substantial savings on comparable costs.

1 Methodological Guidelines on the Application of Key Performance Indicators by State-Owned Corporations, State-Owned Companies, Unitary State Enterprises, and Businesses in Which the Participation Interest of the Russian Federation Exceeds 50% in Aggregate 2 The principles for creating a system of key performance indicators, the method for their calculation, and the procedure for approval, monitoring, and control over the achievement of indicators was approved as part of the ALROSA Group Regulations on the KPI System in December 2019. The corresponding amendments and addenda to the ALROSA Regulation on Executive Compensation was approved by the Supervisory Board of PJSC ALROSA. 3 In connection with changes to the KPI system, values for 2019 are given only for those indicators that were part of the KPI list in 2019, the method for calculating the values for which did not change. 4 Adjusted budget approved by the Supervisory Board of PJSC ALROSA on 18 September 2020 (Minutes No. 01/320-PR-NS) 5 Preliminary estimate of the indicator. The estimate of the achievement of the component “Quality of development (updating) of IDTMP/ achievement of the IDTMP” will be provided by the Ministry of Economic Development of Russia no earlier than the third quarter of 2021. 6 “Earnings before deduction” - earnings before the deduction of expenses on interest, taxes, depreciation, and amortization, adjusted for non-recurring components. 1 Supervisory Board Minutes No. 01/326-PR-NS dated 30 December 2020 7 Calculated as the total number of injuries (including fatal injuries)/total number of man-–hours worked * 200,000 (for PJSC ALROSA, JSC Almazy Anabara , and PJSC Severalmaz) | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 40 PROFILE REPORT AND INVESTORS GOVERNANCE 41

The target values for the key performance indicators of the products lie outside the scenario conditions underlying the calculation of Structure and trends in total capital investments of the ALROSA Group in 2018–2024 ALROSA Group for the medium term of 2021–2023 are es- indicators when the ALROSA Group Long-Term Development Program at the forecast price level, RUB bln1 tablished by the ALROSA Group Long-Term Development for 2018–2024 was prepared. 27.8 3.8 0.4 Program for 2018–2024, approved by the Supervisory Due to the high volatility of the market and uncertainty of the external Board of PJSC ALROSA in November 2018. environment in 2020, on 18 September 2020 the Supervisory Board of 2018 31.9 The period of 2019 was distinguished by crisis events in the PJSC ALROSA decided (Minutes No. 01/320-PR-NS), based on Directive jewelry industry as a result of trade wars by major diamond No. 6739p-P13 of the Government of the Russian Federation dated 21.9 5.3 1.6 consumers and the crisis of overproduction in the cutting 30 July 2020, to suspend the effect of Directive No. 4955p-P13 of the and polishing sector in India. Government of the Russian Federation dated 17 July 2014 on ensuring 2019 28.8 the annual update of the ALROSA Group Long-Term Development The deterioration of the market situation and economic in- Program. dicators in 2020 were affected by the COVID-19 pandemic, 18.2 4.0 4.2 which was accompanied by activity on the diamond mar- An update of the ALROSA Group Long-Term Development Program, ket shrinking to a minimum as a result of lockdowns, the taking into consideration an analysis of the current situation on the 2020 26.4 contraction of diamond production and the cancellation global diamond market, an assessment of options for the development of trading sessions, which had a general effect on demand of the jewelry industry and demand for jewelry with natural diamonds 16.4 4.6 7.2 and price dynamics. in the main sales market, and the overall state of the global economy, is planned for 2021. Among other things, the target values of the key per- 2021 28.2 The destabilization of the global market in the face of ne- formance indicators of the ALROSA Group will be updated. gative factors and the record drop in demand for diamond 13.9 3.3 2.7

2022 19.9

10.4 4.0 0.5

2023 14.9 INVESTING 14.2 3.8 2024 18.0 ACTIVITY

Investments in the diamond mining Investments in other lines of Potential projects of the Long-term investment program segment business Group

The ALROSA Group Long-Term Investment Program to The total funds directed by the ALROSA Group to capital investments (non-financial assets) in 2018–2024 under IFRS 20241 (hereinafter the “Investment Program”) determines plan for diamond mining and the financial and production equal RUB 160.1 bln. The bulk of investments broken down by ALROSA Group assets in accordance with the Investment 2 the priority areas of the Group’s investing activity. goals in accordance with the Group’s investment policy and Program are aimed at the development of Udachny Division and Aikhal Division . The Investment Program supports the fulfilment of the within the framework of its development strategy.

Structure of ALROSA’s capital investments in non-financial assets in 2018–2024 under IFRS, RUB bln The main goals of the Investment Program 16.5 122.9 Indicator RUB bln Investments Potential are the sustainable development of the in the diamond mining investment projects segment of the Group Investments 122.9 ALROSA Group and the growth of the in the diamond mining Company’s shareholder value. 28.7 segment Investments in other Investments in other lines of 28.7 lines of business business Potential investment projects of 16.5 The total capital investments of the ALROSA Group in the Group non-financial assets in the period 2018–2024 under IFRS will be RUB 168.0 bln (including investments of RUB 155.3 bln in the Far Eastern Federal District).

In 2021, as part of the ALROSA Strategy Day, an updated investment forecast was presented; for more detailed information, please see the Presentation on the Company website, p. 38

1 The ALROSA Group Long-Term Investment Program to 2024 was prepared further to the List of Mandates (No. Pr-3086 dated 27 December 2013, Clause 1, Sub-Clause 32) on the Implementation of the Address of the President of the Russian Federation to the Federal Assembly of the Russian Federation dated 12 December 2013. Approved by the Supervisory Board of 1 Data of the Long-Term Investment Program approved in 2018; 2018 – target, 2019-2024 – forecast. Data are shown cumulatively not including capitalized interest. PJSC ALROSA (SB Minutes No. A01/283-PR-NS dated 15 November 2018). 2 For more details on the structure and key projects of the ALROSA Investment Program, see the Company's 2018 Annual Report, p. 90 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 42 PROFILE REPORT AND INVESTORS GOVERNANCE 43

INCREASING EFFICIENCY

Information on investments, expected return on which is more ALROSA is taking a set of measures aimed at increasing the −−ntroduction of automated systems in the main production efficiency of the business, including: and support processes; than 10% per year −−implementation of the Program to Raise Operational −−implementation of the Innovative Development and Efficiency and Decrease Expenses (hereinafter the Technological Modernization Program (hereinafter the “POEDE”); IDTMP).

INFORMATION ON INVESTMENTS Program to raise operating efficiency and decrease Subsidiary/associate (S&A) Financial Dividends Return on Purpose investments in the accrued to the investment in of investing expenses charter capital of Company in 2020 2020 the S&A as of 31 (RUB ,000) (% p.a.) POEDE1 has become an important tool for introducing −−increase in the energy efficiency of production; December 2020 initiatives in the area of optimizing costs, minimizing losses, −−increase in labor productivity; (RUB ,000) and increasing the efficiency of asset utilization and the JSC Almazy Anabara 1,501,6481 3,679,762 245 To generate manageability of the Company’s divisions. −−structural changes to support divisions (construction profit The main areas for reducing operating costs are as follows: and geological assets, the repair function, etc.). −−optimization of the processes of extracting and LLC ALROSA Diamonds 130,214 140,000 108 To generate processing ore; The setting up of the POEDE project management system profit from idea to implementation with the aim of reducing the −−improvement in the technical operating indicators of operating costs of the ALROSA Group is being carried out JSC ALROSA-LENA 137,826 27,753 20 To generate equipment, mining equipment, and mining trucks; in eight main areas of production activity. Shipping Company profit LLC Almazdortrans 3,636,942 388,575 11 To generate profit

Sociedade Mineira de Catoca, 34,080 4,118,375 12,084 To generate Limitada profit LLC ALROSA-Okhrana 55,082 39,537 72 To generate profit Eight main areas of ALROSA’s production activity ALROSA Belgium NV 3,653 11,395 312 To generate profit PROCESSING ENERGY MINING EXPANSION OF INDUSTRY OPERATION CAPACITY

1 3 5 7 OVERALL POOL OF PROJECTS, POEDE PROGRAMS 2 4 6 8

ORGANIZATIONAL TRANSPORTATION AUTOMATION REPAIR OPERATIONS STRUCTURE

The POEDE is subject to annual review by the Supervisory Board of PJSC ALROSA, during which the report on the execution of POEDE policy measures is approved and the action plan for the upcoming three years is updated and approved, taking a 10-year planning horizon into consideration.

1 The balance sheet estimate of financial investments takes into account the amount of provisions for impairment of financial investments 1 Created by directive of the Russian Government in 2014. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 44 PROFILE REPORT AND INVESTORS GOVERNANCE 45

IMPLEMENTATION OF THE MES SYSTEM AT NYURBA DIVISION PROJECT “IMPROVING THE OPERATIONAL EFFICIENCY OF AIKHAL DIVISION”

Goals and objectives of the implementation of the MES system: Goal of the project: Reducing labor costs (creation of operational, statistical, and analytical To achieve at least 81% as an annual average value of the equipment production reporting) utilization rate of mining trucks with a capacity of 136 metric tons at the Jubilee pit, by ensuring minimal time losses in downtime Ensuring the accuracy of data (transparency of production processes)

Main ways of reducing downtime: Supporting decision-making (improving the timeliness and quality of data) ––Organization of the work of the mining equipment of the Jubilee pit in “Perfect Shift” mode, with the initiatives “Pit Stop”, “Hot Sit” and “Shift Change”; ––Creation of a centralized dispatch service to manage the mining work at the Chronology of the project at Nyurba Division in 2020: Jubilee pit; ––unification of times for closing shifts in the complex; ––Improve the quality of work of the Wenco automated management system ––limitation of capabilities of adjusting factual indicators; and the configuration of the “Dynamic Scheduling” mode; ––implementation of automatic notification of managers of shift results and daily ––Change in the wage system for drivers of mining trucks with a capacity of results; 136 metric tons. ––line personnel included in the process of entering operating data in Reduced expenses on equipment purchases by doing without the purchase of the system; three new mining trucks. ––creation of a technical support team for the system to expand capabilities; ––development of analytical information slices; ––development of an automatic daily report on the work of the complex, with automatic mailing; ––development of an automatic planner for the furnace charge to be provided REORGANIZATION OF REPAIR OPERATIONS to supply PP No. 16; Goal of the project: ––integration of accounting processes with the functionality of the SAP TORO system, on planning repairs, identifying and analyzing downtime. Centralization of management functions and introduction of a reliability- oriented approach to M&R, improvement in the quality of planning, diagnostics, analysis, execution, and control of equipment repairs and maintenance Essence of the project: Effect from implementation: Localization of responsibility for the condition of equipment, separation of Transparency of Systematization and Preservation of a the operating and expert units, operating management and specialization of information system analysis of downtime single storehouse for resources by type of repair work, systemic work on improving the reliability of statistics production data equipment, high level of standardization, mechanization of repair work, unified information system for equipment maintenance and repair (M&R). Project period: Integration, equalization, Rapidity of information 2020-2023 systematization among information communication and decision-making systems of all horizons As of 2021, the main key objectives have been achieved in the transition to the target model for M&R, and concept and measures have been developed for the reorganization of repair operations. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 46 PROFILE REPORT AND INVESTORS GOVERNANCE 47

Implementation of automated systems in the main production and support processes

MAIN RESULTS FROM THE INTRODUCTION OF AUTOMATED SYSTEMS IN 2020 TRANSFORMATION OF THE IT FUNCTION Area Main results

Industrial automation and ––Introduction of a traffic-light system to manage traffic and systems for preventing One of the strategic areas for the development of IT at ALROSA is the consolida- communications FAME collisions – improvement to labor safety in unground mining at the tion of IT specialists as well as the development of IT competencies on the basis of Company’s mines. a new legal entity – LLC ALROSA IT. The implementation of this initiative will make it possible to ensure: ––Pilot operation of the Blastmaker system for managing drilling and blasting operations at the quarries of Nyurba Division. −−faster implementation of new standards and processes; ––Nyurba Division and Aikhal Division mining trucks equipped with weighing systems −−efficient development of corporate software for the consolidated needs of the to prevent over- and underloading. Company; ––Modernization of the dispatcher’s office of the Internatsionalny mine as regards the −−the ability to effectively automate end-to-end and interrelated processes at visualization systems of the real-time dispatch management system. ALROSA; IT infrastructure and information ––Fiber-optic communications channels were set up at the fields of Verkhne-Munskoye −−the conditions for managing the unified IT resource and thus meet deadlines for security and Nakyn – a stable connection was established between industrial facilities and IT objectives and maintaining IT services at the appropriate level. the corporate information systems and resources. ––A secure connection to the Company’s infrastructure was set up for employees State registration Accreditation of Centralization of IT transferred to remote work. of ALROSA IT ALROSA IT with Repairs and maintenance ––As part of the program to transform the repair service, a repair support system was the Ministry of implemented at all of the Company’s repair units. Communications Supply, logistics, and MTS ––The Lensk Logistics Management Department introduced automated systems for 450 employees supporting warehouse operations, bin location warehousing, and mobile terminals. Work is underway to apply these solutions to the Company’s other warehouses. Oct 2019, Dec 2019 2020 Jan 2021 Sales, marketing, and polishing ––The level of automation of sorting and grouping of diamonds was increased. Novosibirsk Udachny, Aikhal, Lensk, ––Work is underway to develop and implement a system to confirm the provenance of Ust-Kut, Moscow, diamonds as a way of supporting tracing. Formation of Regional Novosibirsk Human resources management ––The introduction of the HR Boss Information System is underway at the Service Centers of ALROSA Group enterprises. ALROSA IT Document flow ––Work is underway to create an electronic data warehouse (EDW) for the prompt storage and processing of source documents under the aegis of the Shared Service Center (SSC). Centralization of IT

Apr 2021, 700-750 employees Mirny

Dec 2021, Dec 2021 Yakutsk, Saint Petersburg, Smolensk, Arkhangelsk, Centralization of IT and other ALROSA locations

The Group is implementing a strategy of digitalization in the following areas: Production, Diamond Sales, M&R, Logistics and Supply, F&E, HR, Yakutniproalmaz R&D Institute. To support growing needs for digital transformation, the IT Function has moved to a matrix model of management and strengthened IT competencies. The Company has created a Development Center where unique software products will be created that have no equivalents and which are designed to make the Company’s business processes more efficient. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 48 PROFILE REPORT AND INVESTORS GOVERNANCE 49

Financing of program measures and achievement of the Innovative Development and integrated key performance indicator for innovation at PJSC ALROSA Technological Modernization Program The actual amount of financing of the Innovative Development and Technological Modernization Program of PJSC ALROSA in 2020 was RUB 2,266.4 mln, an increase of 2% compared to 2019. IDTMP was updated in 2020 for the period up to 20241 It is not possible to achieve strategic development bench- For maximum focus and to make more efficient the organ- marks without implementing digital technologies, and for izational and financial resources directed to implementing maximum effect and to generate synergies in these areas it innovations, the Company has defined five integrated is essential to have consistent digital integration of produc- FINANCING OF THE IDTMP, RUB MLN areas, the development of which, in ALROSA’s opinion, will tion processes. Accordingly, digital technologies will be- allow the Company to maintain its competitive advantage come the main driver of the ALROSA IDTMP. Indicator 2018 2019 2020 Change, % on the market in the medium and long term horizon. R&D financing 961.8 984.3 931.2 -5.4 ↓ Capital and other investments 1,257.3 1,232.8 1,335.2 +8.2 ↑ Total 2,219.1 2,217.1 2,266.4 +2.2 ↑ Main results of IDTMP projects in 2020

MAIN IDTMP RESULTS IN 2020 ALROSA’s integrated key performance indicator (hereinafter “IKPI”) was achieved1. Area Main results

Technology of remote/ automated ––Start of the Digital Production program and launch of the transformation of PERFORMANCE OF THE IKPI management of the production production operations.. process Indicator 2019 2020 Technology for processing rough ––Results were obtained from the modernization of the separators to extract Ratio of R&D costs to revenues, % 0.5 0.5 diamonds additional 2a-type diamonds: in 2020 an additional 295 diamonds were extracted with a total weight of 2,122.8 carats, with a value of more than $1.2 mln. Share of procurements of innovative products (goods, work, services) in total 1.4 1.4 procurements, % Technology of improve H&S ––An automated wireless monitoring system was installed on the hydraulic facilities of indicators PP No. 14. Underground mining. Productivity, volume of production per employee of core 1.5 1.9 operations, thousand metric tons/person . ––A concentration unit was launched at PP No. 12 of Udachny Division. Open-pit mining. Productivity, volume of mined rock per employee of core 39.2 32.6 Pilot testing of a technology of intensive dehydration and deposition of tailings –– operations, thousand m3/person. using geocontainers at Nyurba Division. Quality of development (updating) of the IDTMP/performance of the IDTMP, % 94.1 90–1002 New technologies for the client ––Creation of the ALROSA digital platform, serving as the basis for introducing experience/client relations services and products to the market. Total IKPI, % 100 100 ––Launch of an online jewelry store.

1 Developed and approved further to Directive No. 1472p-P13 dated 3 March 2016. The composition and target values of the IKPI of PJSC ALROSA for 2022 were approved by the Intergovernmental Working Group on Technological Development of the Government Commission on the Modernization of the Economy and Innovative Development of Russia (Minutes No. 10-D01 dated 2 July 2020) 1 The Program was updated in accordance with the decision of the Russian Government Commission on the Modernization of the Economy and Innovative Development of Russia (Minutes No. 2 dated 22 October 2018) and was approved by the Supervisory Board of PJSC ALROSA (Minutes No. 01/312-PR-NS dated 30 April 2020) 2 At the time of writing, the quality of performance of the IDTMP for the previous period had not yet been assessed by independent experts of the Interagency Commission | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 50 PROFILE REPORT AND INVESTORS GOVERNANCE 51

PERFORMANCE

RESERVES AND EXPLORATION 52

OPERATING PERFORMANCE 55

FINANCIAL PERFORMANCE 65

INTERNATIONAL INDUSTRY COOPERATION 71

PROCUREMENT MANAGEMENT 72

diamond reserves

diamond production bln carats

mln carats | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 52 PROFILE REPORT AND INVESTORS GOVERNANCE 53

RESERVES AND EXPLORATION new licenses

The preservation and expansion of its resource base is one a case-by-case basis, using technical solutions that are cre- 30 Exploration of ALROSA’s strategic priorities. The issue of the economic ated taking into account the demand for rough diamonds viability of developing specific fields or blocs is resolved on on the international market. ALROSA conducts geological exploration work (hereinafter target, reserve growth was achieved in the amount of 11.6 “GEW”) in the Republic of Sakha (Yakutia) and Arkhangelsk mln carats (not taking depletion of reserves into considera- Region, as well as in Angola and Zimbabwe in Africa. tion). The reserve replacement ratio in 2020 was 38.5%. The ALROSA Group seeks to ensure that its reserves grow Exploration work was performed in 2020 by the ALROSA Reserves by at least the amount of average production over a five- divisions Vilyuyskaya GRE and NIGP; drilling and mining year period. The Company’s target for exploration work in work was performed under contract by 2020 was to update the development of the mineral re- LLC ALROSA-Special Drilling and the subsidiaries Almazy As of 1 January 2021, using the source base in the most promising regions. As part of this Anabara and Severalmaz. standards of Russian National Reserves Committee, the diamond reserves on the Group’s balance sheet totaled Exploration budget, RUB mln. 5,974 1,694

1,089,425.7 thousand carats. 2018 7,667

Diamond reserves as of 1 Jan 2021, thousand carats 5,687 1,824 2019 7,551

72,254 1,017,172 Indicator thousand carats 6,345 1,846 Alluvialи Primary Primary 1,017,172 2020 8,191 Alluvial 72,254

Geological exploration Operational exploration work

START OF PROSPECTING AND EXPLORATION WORK IN ZIMBABWE DIAMOND RESERVES USING RUSSIAN NRC STANDARDS, THOUSAND CARATS A joint venture of ALROSA and the Zimbabwe Consolidated Diamond Company (ZCDC) launched prospecting work and preparations for geological exploration of pri- Company 1 Jan 2019 1 Jan 2020 1 Jan 2021 Change, % mary diamond fields in the Zimbabwean provinces of Masvingo, Matabeleland South, and Matabeleland North. PJSC ALROSA 751,196 732,905 864,457 +18 ↑ After receiving licenses from the Ministry of Mines and Mining Development, 1 PJSC ALROSA-Nyurba 164,551 154,147 0 - ALROSA Zimbabwe Limited prepared an environmental impact assessment and JSC Almazy Anabar 32,681 32,137 32,590 +1 ↑ received the corresponding environmental certificates from the Environmental Management Agency. PJSC Severalmaz 199,195 195,086 192,379 -1 ↓ Start date for large-scale sampling and drilling: 2021 Total 1,147,623 1,114,275 1,089,426 -2 ↓ Total investments by ALROSA in Zimbabwe in 2020–2022: ≈$12 mln

1 In June 2020 the transfer of licenses for diamond mining from PJSC ALROSA-Nyurba to PJSC ALROSA was completed. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 54 PROFILE REPORT AND INVESTORS GOVERNANCE 55

Key measures of the geological exploration unit of the Development and investments in the creation of ALROSA Group in 2020 intangible prospecting assets: OPERATING PERFORMANCE In support of long-term competitiveness: −−growth in reserves of 11.6 mln carats: −−update of the long-term exploration program for ––Jubilee pipe – 5.0 mln carats (PJSC ALROSA); 2019–2035; ––Kumakh-Yuryakh with tributaries – 5.1 mln carats (new −−development of the GEW Development Strategy in the alluvial deposit); “Gold” segment; ––Daldyn River – 1.4 mln carats (JSC Almazy Anabara ) −−continuation of the geological exploration unit −−exploration of the deep horizons of the Mir, Udachny, (hereinafter “GEU”) reform program; and Jubilee pipes; −−expansion of the geography of prospecting for Production of rough and polished −−exploration of the Yursky bloc of the Irelyakh River diamond fields in Krasnoyarsk Territory and Yakutia; alluvial diamond field; diamonds −−a new kimberlite body (Mutnoye Lake) was identified −−field work completed on the exploration of the Zarnitsa during scheduled prospecting work; pipe; Diamond production during the COVID-19 pandemic −−licenses: ALROSA decided to reduce its diamond production plan −−new system developed for GEW price formation. The majority of producers suspended or reduced diamond for 2020 to 30 mln carats from the previous target of 34 mln ––PJSC ALROSA : four prospecting licenses were production due to the pandemic and the subsequent lock- African region: carats. Production was temporarily suspended at certain received for subsoil usage rights for diamonds; downs from March to April–May 2020. Under conditions of uncertainty, some companies called back their production low-margin assets with a relatively low content and value of licenses to study the Nyurba pipe and the Botuoba licenses received and scheduled prospecting and explora- plans for 2020, while other lowered previously published diamonds. pipe were reissued; tion work begun in Zimbabwe. forecasts. ––JSC Almazy Anabara: three licenses were received for the prospecting and evaluation of gold deposits and ASSETS SUSPENDING WORK DURING THE PANDEMIC two licenses for the geological study, exploration, and production of diamonds. Deposit Division Period of production suspension in 2020

In the area “Innovations in GEU“: Aikhal Aikhal 15 May – 1 October −−innovative methods for diamond prospecting were Zarya Aikhal 15 May to present1 developed and implemented: Verkhne-Munskoye Udachny 1 June – 1 October −−pilot operation of a unified information web portal was completed; Zarnitsa Udachny 1 May to present2 −−a program was completed to develop the pumping Arkhangelskaya Lomonosovsky (PJSC Severalmaz) 13 May – 1 September system for shaft and drainage water of the Udachny field Karpinskogo-1 Lomonosovsky (PJSC Severalmaz) 13 May – 21 October deposits for the period of underground mining.

Diamond mining The ALROSA Group mines diamonds in Russia in the ALROSA diamond production by types of mining in 2020 Republic of Sakha (Yakutia) and Arkhangelsk Region. Diamond production in 2020 was 30 mln carats. 24% 51% Alluvial deposits Open pit Diamond production (rough diamonds extracted), mln carats

36.7 38.5 30.0

2018 2019 2020 25% Underground

Indicator %

Open pit 51 Underground 25 Alluvial deposits 24 1 As of 1 March 2021

2 As of 1 March 2021 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 56 PROFILE REPORT AND INVESTORS GOVERNANCE 57

Structure of diamond production by the mining divisions of the ALROSA Group in 2020 PRODUCTION AND PROCESSING OPERATIONS IN 2020

Asset Ore and sand Ore and sand Diamond Diamond grade, 7.8% 27.6% production, processing, production, carats/ton Mirny Division Nyurba Division mln tons mln tons mln carats (change vs 2019) 9.3% Indicator % (change vs 2019) (change vs 2019) (change vs 2019) Lomonosovsky Division Nyurba Division 27.6 (PJSC Severalmaz) Aikhal Division 6.7 (+8%) 7.6 (-17%) 8.1 (-20%) 1.1 (-4%) Aikhal Division 27.0 11.8% Mirny Division 3.9 (-19%) 3.8 (-25%) 2.4 (-22%) 0.6 (+5%) Almmazy Anabara Udachny Division 16.5 Udachny Division 6.4 (-33%) 5.5 (-37%) 5.0 (-13%) 0.9 (+39%) Almazy Anabara 11.8 Nyurba Division 3.0 (+8%) 2.5 (+0%) 8.3 (-19%) 3.4 (-20%) Lomonosovsky Division 9.3 16.5% 27.0% JSC Almazy Anabara 6.9 (-49%) 8.1 (-34%) 3.5 (-32%) 0.4 (+3%) Mirny Division 7.8 Udachny Division Aikhal Division PJSC Severalmaz 1.8 (-50%) 2.2 (-38%) 2.8 (-34%) 1.3 (+7%) Total 28.8 (-29%) 29.7 (-28%) 30.0 (-22%) 1.0 (+8%)

The decrease in diamond production figures at all mining A reorganization of Kristall was begun in 2020, with optimi- PRODUCTION TOTALS OF THE ALROSA GROUP and processing divisions in 2020 compared to 2019 is re- zation measures aimed at improving quality and efficiency lated to the implementation of anti-crisis measures by the and reducing costs on processing rough diamonds, as well Indicator Unit 2018 2019 2020 Change, % ALROSA Group with the aim of reducing costs: as making production more flexible and regular in pace. Ore and sand production mln tons 38.6 40.6 28.8 -29 ↓ The enterprise was transferred to processing rough dia- −−reduction in planned processing volumes; monds on a tolling basis, and the process of unifying pro- 29.7 -28 ↓ Ore and sand processing mln tons 40.5 41.3 −−extended downtime at PP No. 3 and No. 12; duction facilities was started. Diamond production mln carats 36.7 38.5 30.0 -22 ↓ −−suspension of mining work at several assets Given the substantial drop in global consumption of di- $ mln 3,501.5 3,536.8 2,260.7 -36 ↓ amond jewelry on international markets caused by the The slight increase in average diamond content in the ore is spread of COVID-19, from April 2020 a regime of forced Diamond grade carats/ton 0.91 0.93 1.01 +8 ↑ related to the change in the production structure. downtime was introduced at the enterprises of the ALROSA Group’s polishing facilities. The enterprises resumed operations in the second half of 2020, and in Diamond polishing December the largest facility in Smolensk returned to a five- day working week with full capacity for rough diamonds. The decrease in production figures in 2020 compared to 2019 was due to the decision to reduce diamond production КALROSA’s key diamond cutting and polishing assets are: (including the suspension of production at certain fields) in connection with the market crisis caused by the coronavirus the branch of ALROSA DIAMONDS (Moscow) and pandemic. LLC ALROSA Diamonds (Barnaul), as well as Kristall (Smolensk), Europe’s largest polished-diamond producer, which became part of the ALROSA Group at the end of 2019.

carats carats 236 207.3

THE LARGEST COLORED DIAMOND FOUND IN YAKUTIA CUTTING THE “CHILDREN OF ASIA” DIAMOND In August 2020, a crystal weighing 236 carats with a deep yellow-brown color was The processing of the Children of Asia diamond used innovative equipment and tech- found at the Ebelyakh field in the north of Yakutia. This is the largest colored diamond nologies intended for the processing of especially large diamonds. A total of nine di- ever found in Russia. By preliminary estimates, the precious stone is 120 to 230 mln amonds were obtained, the largest of which was a diamond of 100.9 carats, emerald years old. cut, of D/IF color and quality, which is the highest level in the GIA classification. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 58 PROFILE REPORT AND INVESTORS GOVERNANCE 59

Diamond sales Average monthly rough diamond sales by the ALROSA Group, $ mln diamond sales 527 Sales during the COVID-19 pandemic В In the first half of 2020 the global diamond market was 381 368 329 352 294 316 in a depressed state – trading in diamonds virtually ceased 265 275 287 271 from March 2020. 221 200 184 mln ALROSA introduced flexible approaches to sales and took the following measures to support the diamond market in .1 carats 25 the crisis period: 32 −−maintaining flexible conditions for clients under long- −−declining publication of price offers and mailings of Q1 Q2 Q3 Q4 for the year term contracts; specifications for commodity items;

−−continuing work on orders; −−implementation of a number of sales incentive 2018 2019 2020 programs; −−conducting in-person showings of diamonds in Moscow and Dubai; −−flexible conditions for participants in the ALROSA ALLIANCE when calculating the itemized rating. During the first three quarters of 2020, there was a change coronavirus. The company was able to significantly reduce −−conducting online showings (providing the opportunity in the sales structure of rough diamonds and powders its rough diamond inventories in the fourth quarter of 2020 to examine goods by video); by the ALROSA Group due to changes in demand struc- in light of positive market trends. ture and market trends related to the increasing spread of

Thanks to the measures taken, the Company ALROSA rough diamond sales ALROSA rough diamond sales was able to maintain demand and achieve in volume terms, mln carats in value terms, $ mln 26.5 11.6 4,324.6 87.1 second half total sales of $1.8 bln, of which 38.1 4,411.7 rough diamonds accounted for $1.7 bln. 2018 2018 24.1 9.3 3,185.6 61.8

2019 33.4 2019 3,247.4

Proceeds from rough and polished diamond sales by the 23.8 8.3 2,601.1 50.9 ALROSA Group1 in 2020 were equal to $2,802.2 mln, which is 16% lower than in 2019. 2020 32.1 2020 2,652.0

Rough diamonds Gem quality diamonds Industrial diamonds Sales of rough diamonds by the ALROSA Group in 2020 were equal to $2,652.0 mln (-18% year-on-year). Rough diamond sales by the ALROSA Group in physical terms in 2020 fell by 4% compared to 2019 and were equal to 32.1 mln carats. Sales of gem-quality diamonds of special sizes (+10.8 carats) in 2020 were equal to $193.0 mln.1 SHOWINGS OF GEM-QUALITY +10.8 CARATS DIAMONDS AS PART OF CLOSED ALROSA Group rough diamond sales, $ mln2 In 2020 the foreign market accounted for 92.1% of the INTERNATIONAL AUCTIONS IN 2020 Group’s rough diamond sales in value terms and 98.7% by volume. Rough diamond sales on the foreign market auctions 4,450.2 4,900.6 4,392.1 4,411.7 reached $2,442.0 mln, which is 15% lower than the same 4,273.7 4,794.8 4,169.9 figure for 2019. On the domestic market2 sales were $210.0 mln (-43% year-on-year). ALROSA’s main sales markets in 2020 were Belgium, India, and the UAE – in aggre- 3,337.8 3,247.4 gate these countries accounted for more 84% of sales. The share of the Russian domestic market in 2020 fell from 3,437.1 2,652.0 11.3% to 7.8%. 25 9 – in Moscow 4 – in Dubai 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 6 – in Israel 1 –in New York 4 –iin Antwerp 1 –in Vladivostok

1 Under IFRS, not including intragroup transactions (IGT). From Q4 2019, in connection with the acquisition of Kristall by the PJSC ALROSA, the Kristall Group’s sales are taken into account as regards sales of polished diamonds. 1 Taking into account sales by subsidiaries and associates of the ALROSA network 2 From 2016 – IFRS data; previously – RAS data 2 Taking into account the sale of Kristall PC JSC | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 60 PROFILE REPORT AND INVESTORS GOVERNANCE 61

Geographical structure of the ALROSA Group’s rough diamond sales in value ($) Polished diamonds terms1 2019 2020 In 2020 the ALROSA Group 3.9% 0.6% proceeds from sales of polished Hong Kong +China 0.4% 5.5% Hong Kong +China 0.2% 7.3% CIS CIS Israel Israel diamonds were $150.2 mln. 1.3% 7.8% 1.3% Other Russia Other 10.6% The foreign market accounts for the bulk of sales of UAE polished diamonds. Sales of polished diamonds by the ALROSA Group on the foreign market in 2020 equaled $142.6 mln, and on the domestic market $7.6 mln. 11.3% 47.5% 22.3% 39.1% Russia Belgium UAE Belgium

UNIQUE PINK DIAMOND “SPIRIT OF THE ROSE” SOLD AT AUCTION BY SOTHEBY’S 17.8% 23.3% FOR $26 MLN India India

The oval-cut diamond with a mass of 14.8 The oval-cut diamond has a vivid Indicattor 2019 2020 carats has a vivid purple-pink shade, which purple-pink shade with a mass is combined with flawless purity. The Spirit Belgium 47.5% 39.1% of the Rose was prepared at the Group en- India 17.8% 23.3% terprise ALROSA Diamonds, from the largest pink diamond ever mined in Russia, with UAE 10.6% 22.3% a mass of 27.9 carats. The Spirit of the Rose Russia 11.3% 7.8% is the most expensive Russian polished diamond in history. Israel 7.3% 5.5% 14.8 carats Hong Kong + China 3.9% 0.6% CIS 0.4% 0.2% Other 1.3% 1.3%

Under the crisis conditions of 2020, ALROSA offered its cli- sales with the prospect of signing new long-term agree- In 2020, 174 companies purchased polished diamond ALROSA subsidiaries and associates, 12 under direct con- ents flexible conditions on purchasing diamonds and con- ments. As at the end of 2020, a total of 60 long-term agree- products from the ALROSA Group, representing the main tracts with Kristall, and 46 through the Smolensk Diamonds tinued to work to attract new customers, with testing in spot ments to supply diamonds had been signed. world trading centers for polished diamonds. Of these, network. On the domestic market, products were pur- 98 companies purchased under direct contracts with a chased by 97 jewelry companies, as well as private individu- branch of ALROSA DIAMONDS, 86 through the network of als when buying certified diamonds.

ALROSA Group rough diamond sales channels by value ($) ALROSA Group sales of polished diamonds breakdown, $ mln 1,2

78.2 1.9 15.2 75% 19% 6%

2018 2018

66.1 6.9 14.6 76% 19% 5% 2019 2019

84.2 7.6 58.4 77% 12% 11% 2020 2020

Export Domestic market ALROSA foreign network Long-term agreements Tenders Spot market

1 Taking into consideration sales of Kristall PC JSC during the fourth quarter of 2019 1 Others includes sales in the USA, Botswana, the UK, Switzerland, sales through ALROSA’s foreign network, and also sales of diamonds by Kristall PC JSC. 2 Taking into consideration the sales of Smolensk Diamonds NV | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 62 PROFILE REPORT AND INVESTORS GOVERNANCE 63

Geographical structure of polished diamond sales by the ALROSA Group in 2019 and 2020 in value terms1 Trends on the global diamond market 2019 2020 that affect ALROSA’s marketing 18% Other activities: 35% 39% 27% Israel Israel Other −− 4% people’s growing commitment to the principles of Hong Kong responsible consumption – preference is given to brands 4% and products that provide social support to society and that India 12% are environmentally aware; 4% UAE Switzerland −−during a crisis, concerned people seek alternative ways 6% 11% to invest that are guaranteed to retain their value even in UAE Belgium 3% unstable conditions; 8% 7% 10% USA 5% 7% Russia Belgium USA Russia Hong Kong −−the coronavirus pandemic accelerated the development of Internet solutions and online trading, making the consumer experience not only convenient, but safe and secure as well. Indicator 2019 2020

Israel 35 27 UAE 6 12 Belgium 11 7 Hong Kong 4 7 Marketing during the COVID-19 pandemic Diamonds with guaranteed provenance Russia 8 5 Due to the coronavirus crisis, the launch of jewelry items As the sole producer with an integrated production chain, USA 10 3 in the USA was deferred to a later date and began only ALROSA can guarantee the provenance of diamonds, Switzerland 4 - in summer 2020 as jewelry sales on this market revived. possesses information on the place and time of extrac- Initiatives on the Chinese market were also deferred inde- tion and cutting. This information can be provided to both India 4 - finitely. Flight restrictions significantly reduced opportuni- B2B and B2C customers at any stage. Guaranteed prove- Other 18 39 ties to conduct showings of diamonds, including color and nance means a promise of safety not only for the end user exclusive diamonds, even in the centers of the global but also for partners in the B2B segment, since for any of diamond trade. them the appearance of lab-grown diamonds or diamonds whose provenance is insufficiently “ethical” among their product offerings represents a stain on their reputation. Brands In parallel with the promotion of guaranteed provenance, Marketing approach and In partnership with foreign retailers and jewelry manufactur- ALROSA continues to work on instrumental methods for positioning of products ers, in 2020 we launched three brands of jewelry featuring tracking diamonds, both on its own and in partnership with ALROSA diamonds: other industry participants. on the market −−Luminous Diamonds and Brilliance Within – two lines of jewelry with fluorescent diamonds in different price Unique and colored diamonds ALROSA is today the sole company that covers the entire The Company makes marketing efforts at every stage of the categories; cycle from exploration and extraction of rough diamonds movement of gemstone from the mine to the store display Clear polished diamonds of large mass and with good −−Diamonds That Care – a brand of socially responsible to the production and sale of jewelry under the brand case: promotion of rough diamonds in B2B trading, promo- characteristics, like colored diamonds, appear on the mar- jewelry launched on the US market in the online ALROSA Jewelry Group. tion of diamonds cut and polished by the company in B2B ket fairly rarely, since rough diamonds suitable for their segment together with the retailer Brilliant Earth. Ten and B2C trading, generic marketing of polished diamonds manufacture make up an extremely small percentage of percent from the sale of each piece is directed to to reinforce consumer demand and promote jewelry that total production. The Company’s job is to ensure that such charitable causes, including the fight against COVID-19; includes them. diamonds are sold in the most effective way possible, by −−OhMyDiamond – a project to promote jewelry products announcing a transparent auction and attracting a large with smaller diamonds in partnership with Richline in an number of participants to it. online format. Customers of high-quality and colored ALROSA diamonds include not only industry participants but also the private banking clients of major Russian banks through the special program Alrosa Diamond Exclusive. Program participants have access to viewings of diamonds, as well as the ability to participate in auction on an equal footing with industry experts.

1 The category “Others” includes sales of diamonds in the United Kingdom, Japan, Australia, Canada, Turkey, South Africa, and sales through the foreign network of ALROSA and Smolensk Diamonds NV | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 64 PROFILE REPORT AND INVESTORS GOVERNANCE 65

FINANCIAL PERFORMANCE

Generic marketing ALROSA Jewelry Group Effect of the COVID-19 pandemic Based on the evaluation performed to comply with the terms of current obligations in the foreseeable future, the To guarantee stable demand for diamond jewelry in the ALROSA obtained its own jewelry producer as part of the on the financial indicators of the Group does not expect any default or any breaches of loan medium and long term, the industry needs to conduct acquisition of the Smolensk company Kristall PC. During obligations. a generic diamond marketing program, promoting dia- 2020, after consolidation of capacities it was renamed ALROSA Group monds as a product with its own values, without emphasiz- ALROSA Jewelry Group and underwent a rebranding and ing any particular brand. To do so, the Diamond Producers integration of the online shop in ALROSA’s overall trading Association was founded in 2015, which included major platform The restrictions introduced worldwide to fight the novel coronavirus infection COVID-19 led to a drop in demand Consolidated key financial diamond producers, including ALROSA. The association 1 conducted a global rebranding in 2020, renaming itself the for rough diamonds and diamond jewelry, and kept trading indicators Natural Diamond Council and moving from its image as an in diamonds on all world platforms to a minimum. industry association to an image as an expert on natural Company management took all necessary measures to en- The ALROSA Group’s consolidated revenues in 2020, in- diamonds and the source of any current information on sure the sustainability of Group operations, render support cluding income from grants, contracted by 7% and was diamond jewelry. to its clients and employees, continue current sales and equal to RUB 221.5 bln. EBITDA dropped by 18% to production processes, and to preserve liquidity and RUB 87.6 bln, while the EBITDA margin fell from 45% to solvency. These measures included: 40%. Net earnings of the ALROSA Group contracted by −−cutting costs; 49% and were equal to RUB 32.2 bln. −−temporary suspension of work at some mines; Free cash flow increased by 67% in 2020 to RUB 79.5 bln. The growth in operating cash flow in the second half of LAUNCH OF THE ALROSA ONLINE JEWELRY STORE −−providing flexible conditions for long-term contracts; 2020, the reduction in investments and diamond reserves by the end of the year made it possible to achieve growth At the end of 2020 ALROSA launched an online jewelry store, the first in its history. −−expanding digital sales channels; in free cash flow, despite the negative effect of the pan- The purpose was to promote diamonds with a guaranteed provenance, improve −−negotiating with suppliers on deferrals of payments; demic and lockdown. Net debt/EBITDA fell to 0.4 the knowledge of the Russian consumer, and fight fraud on the market. (2019 – 0.7) at the end of 2020, which is evidence of a con- −−raising additional borrowings (issue of bonds, receipt of The online store at alrosadiamond.ru offers more than a thousand pieces of jewelry. traction in the debt load. bank loans); In addition to finished pieces, there is the possibility of acquiring unmounted dia-

monds or ordering an individual piece of jewelry with the help of a special build- −−optimization of the investment program, including your-own service. deferral of a number of projects.

Customer satisfaction CONSOLIDATED KEY FINANCIAL INDICATORS

The United Selling Organization of ALROSA regularly sur- successful passage of the recertification audit for Indicator 2018 2019 2020 Change, % veys clients with the aim of identifying customer opinions GOST R ISO 9001–2015 in 2021. 2 on key aspects of their interaction with the Company. Revenue from sales , RUB bln 299.6 238.2 221.5 -7 ↓ In 2020 ALROSA asked clients to complete questionnaires The results of the survey are an important part of projects online on their satisfaction with the goods and services pro- Cost of sales, RUB bln (126.5) (119.1) (117.0) -2 ↓ aimed at refining the product range, raising the level of vided, with the preparation of a full-scale marketing report service provided, and improving the perception of the cus- EBITDA, RUB bln 156.0 107.1 87.6 -18 ↓ by the international research company IPSOS. The research tomer experience. Seven surveys aimed at studying the covered 458 clients; responses were received from 240 EBITDA margin, % 52 45 40 -5 pp ↓ product range were conducted in 2020. clients, which is five times more than the 2019 question- Net profit, RUB bln 90.4 62.7 32.2 -49↓ In addition, the Company conducts an assessment of cus- naire. Based on the research a roadmap was prepared to tomer satisfaction for compliance with the internal require- increase satisfaction and customer loyalty in the Company’s Net profit margin, % 30 26 15 -11 pp ↓ ments of the USO ALROSA quality management system, as goods and services. Free cash flow, RUB bln 92.3 47.6 79.5 +67 ↑ well as external requirements, for the preparations for and Net debt/EBITDA 0.4 0.7 0.4 -52 ↓

1 Based on the 2020 consolidated IFRS financial statements of the ALROSA Group 2 Taking into account income from subsidies | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 66 PROFILE REPORT AND INVESTORS GOVERNANCE 67

Revenue COST OF SALES BY COST ELEMENT, RUB BLN

Indicator 2018 2019 2020 Change, % The revenue of the diamond segment accounted for 93% Most of the revenue of the diamond segment (98%) came of the total revenue of the ALROSA Group in 2020, and from sales of gem-quality rough diamonds and polished Wages, salaries and other staff costs 43.7 48.5 43.4 -11 ↓ decreased by 6% compared to 2019 to RUB 201.7 bln. diamonds. Depreciation and amortization 21.4 24.1 23.1 -4 ↓ Extraction tax 20.6 21.9 13.0 -41 ↓

ALROSA REVENUE STRUCTURE Fuel and energy 13.5 17.6 13.7 -22 ↓ Materials 12.3 13.7 11.7 -14 ↓ Item 2018 2019 2020 Change, % Services 8.7 6.4 5.9 -7 ↓ Diamond segment 278.1 215.4 201.7 -6 ↓ Transport 1.7 1.4 0.8 -40 ↓ Non-core lines of business 15.8 17.5 15.4 -12 ↓ Other 1.4 1.3 2.5 +98 ↑ Transportation 8.4 8.5 6.1 -29 ↓ Total production costs 123.3 134.8 114.1 -15 ↓ Social infrastructure 2.3 2.1 1.9 -9 ↓ Movements in inventory of diamonds, ore, and sands 3.2 (18.5) 1.9 - Gas sales 1.0 0.1 0.1 -6 ↓ Cost of diamonds for resale 0.0 2.8 1.0 -63 ↓ Energy sales 0.9 3.4 4.3 +27 ↑ Total cost of sales 126.5 119.1 117.0 -2 ↓ Other operations 3.2 3.3 3.0 -9 ↓ Total 293.9 232.9 217.1 -7 ↓ EBITDA

EBITDA for 2020 was RUB 87.6 bln, a drop of 18% com- effect from cost optimization measures, as well as the ef- Cost of production pared to 2019, primarily due to the decrease in sales, and fect of exchange rates. The EBITDA margin fell from 45% in also sales prices, which was partially compensated by the 2019 to 40% in 2020. Expenses on the item “Wages, salaries and other staff during the spread of the pandemic, and also in connection costs” fell by 11% in 2020 compared to 2019 and were with the review of the price list of the Russian Ministry of equal to RUB 43.4 bln; the decrease in production led Finance. CALCULATION OF EBITDA, RUB BLN to a cost reduction of RUB 3.5 bln, and a decrease in the The 22% reduction of expenses on the item “Fuel and ener- amount of work by non-core subsidiaries led to a further re- Indicator 2018 2019 2020 Change, % duction of RUB 0.9 bln. Optimization measures to cut costs gy” was due to the decrease in the amount of production, and the transfer of functions to service centers led to a re- the decrease in the number of airline flights, and optimiza- Profit for the year 90.4 62.7 32.2 -49 ↓ tion measures on cost cutting. duction of costs on the item by RUB 0.8 bln and Corporate income tax expense 24.2 18.7 11.8 -37 ↓ RUB 0.7 bln, respectively. Expenses on the item “Materials” fell by 14%, mainly due Financing (income)/expenses, net 15.9 (2.8) 29.1 - Expenses on the item “Depreciation and amortization” fell to the decrease in production and repairs, but also due to by 4% in 2020, due mainly to the reduction in amortization optimization measures by management taken during the Share in net profit of associates and joint ventures (3.4) (3.5) (3.7) +7 ↑ pandemic. charged by the tonnage method, due to the suspension of Depreciation and amortization 21.6 24.5 23.5 -4 ↓ production at a number of fields. Expenses on the items “Services” and “Transport” fell by 7% Gain on disposal of property, plant and equipment - (2,0) - - R&D expenses fell by RUB 8.9 bln in 2002 (by 41%) in con- and 40%, respectively, due to the decrease in the number -64 ↓ nection with the reduction in the amounts of primary eval- of airline flights and the decrease in production and repairs. Loss from the disposal of property, plant and equipment 0.4 2.0 0.7 uation of diamonds due to forced employee downtime Loss from the write-off of property, plant and equipment lost as a 7,8 - - - result of the accident at the Mir mine Impairment of property, plant and equipment - 2.5 - - Restoration of impairment provisions for property, plant and (0.1) - (0.1) - equipment (Income)/loss from divestment from subsidiaries 1.8 (0.2) (2.1) by 11.8 р ↑ Change in fair value of financial assets measured through profit 0.6 0.2 0.0 -95 ↓ and loss (Income)/loss from exchange-rate differences attributable to (3.3) 2.1 (3.9) - operating activity, net Termination of recognition of financing guarantee - (1.5) - - Loss from impairment of goodwill on the acquisition of the Kristall - 0.9 - - Group Expenses related to the termination of operation of the - 3.4 - - processing plant No. 8 of Aikhal Division EBITDA 156.0 107.1 87.6 -18 ↓ EBITDA margin 52% 45% 40% -5 pp ↓ | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 68 PROFILE REPORT AND INVESTORS GOVERNANCE 69

Net profit FINANCING OF CAPITAL EXPENDITURES, RUB BLN

Item 2018 2019 2020 Change, % Net profit for 2020 equaled RUB 32.2 bln, a 49% drop compared to 2019, due to the reduction in revenues and the adverse effect Maintaining mining facilities 15.9 8.0 4.7 -41 ↓ of exchange-rate differences with the weakening of the rouble Technical retrofitting and replacement of worn-out 8.7 8.3 7.1 -15 ↓ exchange rate. equipment Infrastructure development 3.2 3.6 5.2 +43 ↓

CALCULATION OF NET PROFIT, RUB MLN Total 27.8 20.0 17.0 -15 ↑

Net profit for 2019 62.7

Reduction in EBITDA (19.4) Growth in expenses on exchange differences (24.6) MAIN AREAS OF FINANCIAL INVESTMENTS IN MAINTAINING MINING FACILITIES IN 2020

Reduction in corporate income tax expense 6.9 Area of financing, RUB bln 2020 Reduction in amortization charges 1.0 Construction of the Internatsionalny underground mine 1.5 Reduction in expenses on the disposal and impairment of property, plant and equipment 1.8 Construction of the Udachny underground mine» 1.2 Reduction in expenses related to the termination of operations at processing plant No. 8 of 3.4 Reconstruction of the tailings dam of PJSC Severalmaz 0.5 Aikhal Division Reconstruction of the grounds of the recirculating water supply of PP № 122 0.4 Other 0.4 Other 1.1 Net profit for 2020 32.2 Total 4.7

Cash flow Liquidity and financial stability The Group’s free cash flow is positive and is sufficient to quarter of 2020 mainly due to the reduction in stocks and support the Group’s liquidity and solvency. the growth in advances from customers, a reduction of The net debt of the ALROSA Group (including lease obliga- The debt portfolio (not including lease obligations) at the RUB 5.5 bln in corporate income tax paid, and the reductions) over 2020 decreased to RUB 31.2 bln (by 61%) with end of 2020 consisted of obligations denominated in both The growth in free cash flow to RUB 79.5 bln (by 67%) in tion of RUB 3.0 bln in the investment program. growth in overall debt by 43%, mainly due to growth in the foreign currencies (79%) and Russian roubles (21%). 2020 is related to working capital freed up in the fourth balances of cash and equivalents and bank deposits at the end of 2020. Net debt/EBITDA at the end of 2020 equaled 0.4 (compared to 0.7 at the end of 2019). At the end of 2020, the debt portfolio represented two issues of Eurobonds with a par value of $500 mln each and . ANALYSIS OF FREE CASH FLOW, RUB BLN five series of exchange-traded bonds of RUB 25 bln, as well as bank loans totaling $872 mln, with the bulk (98%) Indicator 2018 2019 2020 Change, % maturing in 2021–2022. Cash flow from operating activity before changes to 156.7 107.2 90.6 -15 ↓ working capital and taxes Investments in working capital (6.7) (22.9) 17.1 - Corporate income tax paid (29.8) (16.7) (11.2) -33 ↓ ANALYSIS OF THE CONSOLIDATED DEBT PORTFOLIO +43 ↑ Net cash receipts from operating activity 120.1 67.6 96.5 Indicator 31 Dec 2018 31 Dec 2019 31 Dec 2020 Change, % Purchase of property, plant and equipment (27.8) (20.0) (17.0) -15 ↓ Long-term portion, RUB bln 65.0 84.2 125.2 +49 ↑ Free cash flow 92.3 47.6 79.5 +67 ↓ Short-term portion, RUB bln 41.7 33.1 42.7 +29 ↑ Total debt, RUB bln 106.7 117.3 167.8 +43 ↑ % of the long-term portion 61 72 75 +4 ↑ Capital expenditures (CAPEX) Total debt, $ bln 1.5 1.9 2.3 +20 ↑ Net debt, RUB bln 67.4 79.6 31.2 -61 ↓

В Total capital expenditures in 2020 fell by 15% and facilities, mainly related to the completion of construction Total debt / EBITDA 0.7 1.1 1.9 +75 ↑ equaled RUB 17.0 bln. This reduction occurred chiefly as a of facilities at the Verkhne-Munskoye field and the perfor- Net debt / EBITDA 0.4 0.7 0.4 -52 ↓ result of a decrease in investments in maintaining mining mance of main development work at the Zarya pipe field. EBITDA / accrued interest 24.6 13.2 10.4 -21 ↓ | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 70 PROFILE REPORT AND INVESTORS GOVERNANCE 71

INTERNATIONAL INDUSTRY COOPERATION

Credit ratings International cooperation during the Guidelines. The toolkit considers the company’s size, operating segment, and source of rough diamonds. This impor- COVID-19 pandemic tant element in industry self-regulation is intended to give In 2020 the Company continued to work with ratings agen- response to the effects of the coronavirus pandemic in participants in the diamond industry detailed guidance on cies to maintain its credit rating. This work resulted in con- 2020 aimed at maintaining the Company’s stable financial how to ensure compliance with existing requirements, and The circumstances prevailing in 2020 in connection with firmation by all the international agencies (S&P, Fitch and position and position on the global market. provide sample policies to be adopted and followed. Moody’s) of an investment-grade rating with a stable out- the COVID-19 pandemic had an extremely negative effect On 15 June 2020 Moody’s Investors Service confirmed its look, despite the reduction in financial indicators in the on or entirely paralyzed many aspects of the daily life of the Participation in the Natural Diamond Council long-term rating of the Company at the level of Baa2 (out- second quarter of 2020 associated with the adverse effect global community, especially international contacts. look – “stable”). The agency noted that the Company’s high Through its participation in the Natural Diamond Council of the COVID-19 pandemic, as well as the receipt for the margins, prudent financial policy, and leading position in ALROSA continued strengthening bilateral cooperation (NDC) ALROSA has made a substantial contribution to the first time of a rating from the Russian agency Expert RA at the global industry allowed ALROSA to maintain high cred- with leading countries and national organizations in the fundamental transformation of the NDC’s generic mar- the highest level, which made it possible to access the lo- it metrics and access to domestic foreign capital markets, global diamond industry and promoting the industry keting campaign for polished diamonds, and has cal debt capital market with an offering of exchange-traded despite the fall in demand associated with adverse conse- agenda through intergovernmental cooperation between contributed to the implementation of programs aimed bonds. quences for the world’s leading economies caused by the Russia and foreign states. at promoting natural diamonds and the integrity of On 7 May 2020 for the first time the Expert RA agency as- spread of the coronavirus. the diamond industry. Together NDC member companies signed PJSC ALROSA a credit rating of ruAAA with a “sta- have developed a unified approach to achieving On 27 July 2020 S&P Global Ratings confirmed its long- ble” outlook. While acknowledging the difficulties faced in International cooperation activities and events the UN Sustainable Development Goals. term rating of the Company at the level of BBB- (outlook 2020, Expert RA noted the Company’s strong positions on – “stable”). The stable outlook reflects the agency’s confi- The mechanisms and channels for international coopera- To support general industry efforts for more effective dif- the global market, its high return on assets, and also the dence that ALROSA’s credit metrics will recover in tion were adapted to the new realities and moved online. ferentiation between the markets for natural and synthetic stable financial position of the ALROSA Group. The agency 2021-2022 after the downturn caused by the COVID-19 Despite the deferral or cancellation of about 35 in-person diamonds, ALROSA has amended the ALROSA ALLIANCE expressed confidence in the Company’s ability to ensure an pandemic in 2020, given the Company’s proactive ap- meetings in 2020, the Company took part in the following Guidelines on responsible business practices by adding the adequate level of operating cash flow, taking into consid- proach to compensating for the negative effects of the sit- activities: provisions on regulatory and physical differentiation of the eration the balance of cash to finance capital expenditures, uation on its cash flows. Among these S&P Global Ratings relevant operations. service debt obligations, and make dividend payments. −−15 board meetings of the international member industry mentioned the reduction in capital expenditures and cur- organizations; On 11 June 2020 Fitch Ratings confirmed its long-term rat- tailing of production. ing of the Company at the level of BBB- (outlook – “stable”). −−87 meetings of the intergovernmental and industry organizations’ specialized working bodies; The agency mentioned Company management’s proactive Ensuring compliance with the RJC Code of Practices −−24 online industry events; In 2020, ALROSA underwent the second re-certification −−59 bilateral meetings; audit of the Responsible Jewellery Council (RJC2). For the first time, the assurance scope covered Joint-Stock −−90 webinars and conferences Company “Production Corporation “Kristall” and subsidiary ALROSA (ZIMBABWE) Limited, which became the first certified company in Zimbabwe in the history of the RJC. ALROSA CREDIT RATINGS Participation in the World Diamond Council and the Kimberley Process ALROSA is one of the first companies in the industry to confirm compliance with the requirements of the updated International ratings agencies Credit rating Outlook Date of assignment/ In 2020 ALROSA provided expert support to the Russian confirmation RJC Code of practices (2019) by bringing the provisions on delegation to the Kimberley Process (KP)1 . On behalf of the due diligence in line with the Organisation for Economic Expert RA ruAAA Stable 7 May 2020 World Diamond Council (WDC), ALROSA coordinated the Co-operation and Development (OECD) Due Diligence work to establish a permanent secretariat in order to in- S&P BBB- Stable 27 July 2020 Guidance for Responsible Supply Chains of Minerals from crease the efficiency and professionalism of KP activities. Conflict-Affected and High-Risk Areas. In addition, ALROSA Moody’s Baa2 Stable 15 June 2020 Under the leadership of ALROSA a new online tookitl was has adopted Regulations on Responsible Diamond Supply Chain Management that comply with the Guidelines. Fitch BBB- Stable 11 June 2020 developed and launched to perform a self-assesment for compliance with the updated WDC System of Warranties

1 The Kimberley Process (KP) is an international forum aimed at stemming the flow of conflict diamonds into international market 2 The Responsible Jewellery Council (RJC) is an international non-profit created to strengthen consumer trust in the supply chain for jewelry, increase corporate social responsibility, and promote ethical business | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 72 PROFILE REPORT AND INVESTORS GOVERNANCE 73

PROCUREMENT MANAGEMENT

Approach to procurement Procurements in 2020 management ВIn 2020 PJSC ALROSA conducted 6,890 procurement Procurement procedures in 2020 resulted in a consolidated procedures for goods, work, and services; these resulted in economic effect of RUB 2.7 bln. ALROSA seeks to secure sustainable growth in the effi- the conclusion of contracts in a total amount of ciency of the processes of procurement management. RUB 64.5 bln. Procurement management aims at the timely, efficient and transparent provision of the Company with goods, work, The Company continued to centralize its procurement func- and services of appropriate quality in the necessary tion by increasing the number of procurement support di- quantity and on the best possible terms. visions in the Shared Services Center in Novosibirsk, as well as by developing strategies for procurement of significant One of the key principles in procurement categories of resources. procedures is to ensure openness and competitiveness. Number of procurement procedures Contract value, RUB bln

69.5 9,280 67.6 64.5 7,825 6,890

The adverse consequences of the coronavirus pandemic in- unique suppliers cluded disruption of logistics processes, suppliers’ inability and contractors to meet commitments, and fluctuations in exchange rates.

The Company took a number of measures to adapt the 2018 2019 2020 2018 2019 2020 supply system to the new working conditions:

Procurements in 2020 were made mainly from the manufac- −−understandings were reached on the supply of the turers of products and official dealers – these accounted for additional insurance reserve of inventories; 121 96% of procurements. −−the scope of joint consolidated procurement within the 3, ALROSA Group was increased; Structure of procurements by PJSC ALROSA by value in 2020 −−some deliveries were deferred to 2021; −−preventative measures were taken with vehicles and total procurement from small and 4% ships when transporting cargo; medium enterprises Intermediaries

−−scenarios were developed for employee actions in the Показатель % event of illness and quarantine; 53% Product manufacturers 53 −−meetings of collegial procurement bodies were moved Product manufacturers to remote mode. Official dealers 43 RUB Intermediaries 4 14.6 bln

43% Official dealers | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 74 PROFILE REPORT AND INVESTORS GOVERNANCE 75

Support for small and medium Procurements by the Company from SME in the Far Eastern Federal District in 2020, RUB bln enterprises (SME) 0.4 Other regions of RS (Ya) 1.6 Indicator RUB bln In accordance with government policy, commercial en- ALROSA engages actively with SME and regularly informs Myrny District terprises in which the Russian federal government or a re- them about issues on participation in the Company’s pro- Mirny District 1.6 gional government is a shareholder must support small curement procedures. In 2020 Group representatives took Other regions of the FEFD 0.7 and medium enterprises (SME) by making a certain share part in four seminars on issues of ensuring that SME have of procurements from such enterprises. ALROSA complies access to procurements by major customers, conduct- Other regions of RS (Ya) 0.4 fully with this requirement and makes procurements from ed with the support of representatives of the Ministry of SME. Enterprise, Trade, and Tourism of the Republic of Sakha (Yakutia), the Administration of Mirny District, and JSC SME Procurement categories are not limited to a specific area of 0.7 Corporation. supplies or a narrow range of services; ALROSA approach- Other regions es market analysis responsibly and engaged SME partners of the FEFD to supply goods and services in the areas of health & safety, environmental monitoring, and innovation. Import substitution Logistics management

The Company has drafted and approved the ALROSA In 2020 a pilot project was carried out on the implemen- Import Substitution Program, which defines the areas for tation of a warehouse management IT project at the Total procurements by PJSC ALROSA from developing import substitution activity in 2020–2025. Company’s largest warehouse. This project involved the im- ALROSA has in place a Commission to consider matters of plementation of bin location warehousing at a distribution SME in 2020 equaled RUB 14.6 bln. the purchase of imported material inventories and equip- warehouse, bar coding, and work on systematizing the pro- ment with the aim of making reasoned decisions on the cesses of accepting and shipping materials. possibility of replacing them with domestic equivalents. Also launched were a number of projects aimed at raising The following purchases were made in 2020 as regards the level of maturity and automation of logistics manage- import substitution: ment, with completion in 2021–2022: Structure of procurements from SME in 2020, RUB bln −−software – purchase of additional licenses for software −−work on rolling out the automated inventory already in use and new licenses for the PhishMan 3.4 management system (WMS class) to all of the automated remote learning system and the Directum Other Company’s major distribution warehouses; 3.9 Indicator RUB bln smart system for managing digital processes and Services documents; −−project to automate the transport management system. Services 3.9 −−Inventories and equipment – a test run of domestic In 2020 two oil tank barges built in 2019 had their first runs. Equipment 3.1 tires for pit trucks was purchased, a domestically The specific feature of these barges is that their structure 0.6 manufactured bulldozer was purchased for testing at takes into account the risk of shallow spots in the river – in PPE Spare parts 2.4 the Company’s production sites, and the decision was 2020 they carried about 30% of the Company’s fuel. Materials 0.8 made to primarily use Russian-made drilling tools. 0.5 Work continued to improve the efficiency of use of the ve- Tires Tires 0.5 hicle fleet of the subsidiary LLC Almazdortrans. Measures 0.8 PPE 0.6 were taken aimed at the more efficient use of vehicles: the Materials 3.1 technical condition of vehicles was improved, the payload Equipment Other 3.4 factor was increased, and the cost per metric ton of cargo 2.4 carried was decreased. Spare parts | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 76 PROFILE REPORT AND INVESTORS GOVERNANCE 77

SUSTAINABILITY

ESG RATINGS AND AWARDS 79

SUSTAINABILITY MANAGEMENT 80

PEOPLE 81

OCCUPATIONAL HEALTH AND SAFETY 85

COMMUNITY ENGAGEMENT 87

2019 2020 ENVIRONMENT 90

Number of people hired under the program “Local Staff in Industry” | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 78 PROFILE REPORT AND INVESTORS GOVERNANCE 79

ESG RATINGS AND AWARDS

Key ESG ratings and rankings

1 32,475 employees – ALROSA Group average headcount FTSE4Good Index FTSE Russel ESG Rating MSCI ESG Ratings Sustainalytics ESG Risk Rating 69.8% – employee retention rate Index member since 2016 3.71 BB 35.82 People 31% – female employees at PJSC ALROSA – one of the best industry indicators 91% – PJSC ALROSA employees trained 31 hours - average hours of training per employee per year

2 0.24 – LTIFR for the ALROSA Group World Wildlife Fund (WWF) S&P Global CSA3 RAEX-Europe ESG Corporate Rating Health and safety 23% reduction in the number of accidentsв 11th in the rating of 34 of 100 6th in the mining and metals RUB 2.1 bln – ALROSA Group invested in H&S environmental transparency sector of mining companies in Russia of the WWF 92% of renewable energy in electricity use of PJSC ALROSA Environment RUB 5.6 bln – ALROSA Group invested in environmental protection

ISS ESG Corporate Rating ISS Governance Quality Bloomberg ESG Disclosure CDP Climate change Score Score RUB 43.1 bln – taxes and mandatory payments paid to budgets of various levels Environment – 2, Social – 4, 50.83 D (Disclosure level) RUB 10.2 bln – ALROSA Group social investment3 D+ Communities Governance – 3 30% – share of local procurement of the Group’s diamond facilities 4.6% of consolidated revenues – share of social investment

ALROSA’s activity in the area of sustainability and corporate among other things in recognition of the Company's social responsibility in 2020 was recognized on both the significant contribution to the social and economic Russian and the international level: welfare of the operating regions; −−ALROSA reconfirmed its certificate of compliance −−ALROSA became one of the top three public companies with the Code of Practices (2019) of the Responsible in ESG based on a survey of investors by Institutional Jewellery Council (RJC). The assurance scope included Investor as part of the 13th annual competition of annual the subsidiary ALROSA (ZIMBABWE) Limited, which reports of the Moscow Stock Exchange became the first certified Zimbabwe company in the history of the RJC; −−ALROSA took 2nd place in the rating of the 50 best employers of Russia according to Forbes magazine,

1 Actual number of employees of the ALROSA Group, including Russian and foreign assets 1 Assessment made on 22 March 2021 2 Lost Time Injury Frequency Rate (LTIFR) = number of lost-time injuries/number of man–hours worked × 200,000 man–hours 2 Assessment given as of 4 March 2021 3 Social spending includes remittances of RUB 4.4 bln by the Company to the Almaznaya Osen (Diamond Autumn) non-state pension fund. 3 Before 2021 SAM CSA | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 80 PROFILE REPORT AND INVESTORS GOVERNANCE 81

In 2021, the functions of the Strategic Planning Committee sustainable development, ALROSA strives to establish SUSTAINABILITY were expanded by management of sustainability issues, open, respectful, and mutually beneficial relations with which was reflected in its new name – the Strategy and stakeholders, as well as keeping them informed on the MANAGEMENT Sustainability Committee1; a specialized working group was Company’s activities. In 2020, stakeholder engagement was set up under this committee to consider issues related to affected by the limitations caused by COVID-19 pandemic. defining and achieving Company's goals in the area of sus- Nonetheless, ALROSA used all available opportunities by tainable development. moving some of its communications to an online format.

More detailed information on the sustainability management Stakeholder engagement system and stakeholder relations can be found in the 2020 Sustainability Report. ALROSA contributes to sustainable development by seek- In 2020, ALROSA focused its efforts on setting the basis and Understanding that an effective stakeholder engagement ing to ensure and maintain a long term socioeconomic framework for an effective system for managing sustainabil- is an integral and essential element of the Company’s prosperity and a healthy natural environment in the oper- ity issues. Comprehensive analysis and assessment of the ating regions, creating jobs and improving the living concurrent state sustainability management system in compari- ditions of the local communities, making substantial tax son to the requirements of major international sustainability payments to budgets of all levels, developing social in- standards and guidelines, regulatory requirements, the de- frastructure, and protecting the environment, and as well mands of rating agencies, and best industry practices. contributing to the achievement of the UN Sustainable Development Goals, preventing and mitigating the possible adverse impacts of its operations. KEY IMPROVEMENTS TO SUSTAINABILITY PEOPLE MANAGEMENT SYSTEM Sustainability principles are an essental element of ALROSA’s operations and are integrated in the Company's mission and strategy to 2024, and also other internal −−Creation of a Working Group on Sustainability involving regulations. specialized divisions of the Company In order to define its approach to sustainability and key sus- −−Drafting of the ALROSA Group Sustainability Program Human resources policy Personnel tainability pillars ALROSA considers the requirements of ap- for 2021–2025, which the Supervisory Board plans to plicable Russian and international law, the principles of the approve in 2021 UN Global Compact, and the UN Sustainable Development Understanding that employees are a key asset of the In 2020, the ALROSA Group had 32,475 employees, which Goals for the period to 2030, and also the provisions of −−ЗLaunch of work to perform an audit of the current Company, ALROSA works to ensure decent working con- is 6% fewer than in 2019. The reduction in personnel head- other international standards and initiatives in this area. system for collecting and disclosing information in the ditions and the opportunity for professional development. count is due first and foremost to the strategic goals of area of sustainable development and ESG The Company's key objectives in the field of human re- business development and the reorganization measures sources management in 2020 were: conducted by the Company. In particular, operations were terminated at the Komsomolsky pit of Aikhal Division due −−organizational changes and scheduled reorganization; to the reduction of production. The COVID-19 pandemic −−retaining highly qualified specialists when transferring to and the resulting measures to reorganize work also had a As a result of this work, a target model for the sustainability management system at the ALROSA subsidiaries and associates of the ALROSA Group; significant effect. Group was approved, including the management structure, a system of regulatory documents, and a system for collecting data and disclosing nonfinancial information. −−carrying out measures for the social support of employees transferring to subsidiaries and associates; Average number of personnel of the ALROSA Group −−drafting and implementation of measures to fight the Sustainability management system spread of COVID-19 and to protect personnel and members of their families; 34,579 34,532 32,475 General Meeting of Shareholders −−organization of work on the professional orientation of youth, adaptation of young specialists, the study of Supervisory Board reasons for personnel turnover, trends in changes in the workforce, and development of measures for stabilizing The Audit Committe The HR and Remunerations The Strategy and Sustainability and improving the social and demographic structure of Committe Committe the Company's personnel; 2018 2019 2020 Sustainability Task Force −−implementation of the project “Local Staff in Industry”;

−−implementation of the regional program “Improving the The average age of Company employees in all categories is Mobility of Labor Resources”. 41.4 years old. Key objective – preliminary study of sustainability issues within the Committe competence and preparations of draft resolution of the Committe such issues

Chaif Executive Officer – Chairman of Executive Committe

Executive Committe

Sustainability Working Group Include 16 representatives of subject matter departments. Key objective - implementation of ALROSA Grroup Sustainability Programme 2021-2025

Departments 1 Decision of the Supervisory Board, dated 15 February 2021, Minutes No. 01/327-PR-NS | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 82 PROFILE REPORT AND INVESTORS GOVERNANCE 83

The staff turnover ratio of PJSC ALROSA in 2020 was 13.6%, Human rights and equal Training and development which is 6 percentage points higher than in 2019, which was due to both scheduled reorganization as well as to un- opportunities scheduled reductions in connection with the suspension of Employees’ training and development is one of the and occupational guidance. The educational process in- operations at some enterprises due to the COVID-19 pan- Company’s key priorities. ALROSA implements the most cludes training, retraining and professional development of ALROSA is dedicated to international business standards. In demic. Some personnel were dismissed from Company di- effective and advanced educational practices in the field of managers, specialists, and workers. its human rights and antidiscrimination activities, ALROSA visions in connection with their transfer to another employ- production efficiency, industrial safety, human rights, health, is guided by the Russian legislation and international prin- er (Article 77, Clause 5 of the Russian Labor Code) in the ciples set out in the Universal Declaration of Human Rights, new institutions of subsidiaries. A total of 224 employees the ILO Declaration on Fundamental Principles and Rights were transferred in 2020, of which 86% of employees were at Work, the UN Global Compact, and the UN Guiding transferred to subsidiaries. Principles on Business and Human Rights, and the World Education level of PJSC ALROSA personnel in 2020 Diamond Council System of Warranties Guidelines. The Company pursues the principle of equal opportunity and rejects all forms of discrimination on the basis of sex, 39.6% 19.2% Indicator % Staff turnover ratio of PJSC ALROSA, % race, skin color, ethnicity, language, origin, wealth, family Post-secondary Secondary professional Post-secondary 39.6 status, social and job position, age, place of residence, reli- 13.6 gious attitude, convictions, membership or lack of member- Secondary professional 19.2 ship in any public association or any social groups, and also 8.3 7.6 other circumstances unrelated to the business qualities of Primary professional 17.8 the employee. Secondary 22.1 All employees can communicate their issues through vari- Primary 1.3 ous channels, including a call center, a message to the CEO 17.8% Primary professional – Chairman of the Executive Committee of PJSC ALROSA, 2018 2019 2020 and self-service terminals at production sites. In order to im- 1.3% pove the feedback mechanism and risk assessment of hu- Primary man rights violations the dedicated trainings are conducted for the employees. In 2020, PJSC ALROSA conducted first 22.1% Among Company personnel, the ratio of men to women in Secondary 2020 was 69% and 31%, respectively. series of training sessions on human rights and antidiscrimination for the employees.

Participants in the training included managers and special- 17,131 employees underwent various forms of training in ists of structural and functional divisions of the Company 2020, which is 66% more than in 2019. The average annual in Moscow and Mirny, including the Head Office, USO, TRAINING PROGRAM AT THE CORPORATE Gender structure of personnel of PJSC ALROSA training time per employee was more than 31 hours. ALROSA Diamonds, and the Medical Center. In all, 64 peo- UNIVERSITY ple took the training. We plan to conduct this training at the In 2020 there was a significant increase in 65% 35% Company and its subsidiaries of the Diamond Mining and the number of programs and events held Processing Operations on an annual basis. by PJSC ALROSA under the aegis of the 2018 PJSC ALROSA employees trained Corporate University. The transfer of personnel to remote work and other restrictions as- 68% 32% Wages 18,370 sociated with the spread of the coronavirus 2019 17,131 underlined the need to develop online train- As a responsible employer, ALROSA seeks to provide its ing. The training programs of the Corporate University cover such areas as Leadership, 69% 31% employees with appropriate wages. In 2020 the average 10,295 wage of employees of the ALROSA Group was Legacy, and Potential. 2020 RUB 120,900 per month. ALROSA Group companies A new program was added in 2020 – regularly indexes the wages and have also introduced “ALROSA Mentorship”. The program is a bonus system. aimed at developing the competencies of Men Women mentors, training them in the skills of inter- 2018 2019 2020 acting with their mentees, and approaches Average wages in the ALROSA Group, RUB thousand to and methods of training, development,

and motivation. 124.0 120.9 Training is conducted in the main professions and various 117.8 types of permits as part of training, retraining, and professional development. One of the main areas of training is training in occupational health and safety.

2018 2019 2020 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 84 PROFILE REPORT AND INVESTORS GOVERNANCE 85

RESULTS OF THE WORK OF THE CORPORATE UNIVERSITY OCCUPATIONAL HEALTH Programs Graduates AND SAFETY 2019 2020 ALROSA Leaders 77 84 ALROSA Legacy 42 115 ALROSA Potential 28 39 ALROSA Mentorship 0 136 Management approach to occupational health and safety

In total, 1,217 people received training in the programs and through the events of the Corporate University in 2020, which is 2.5 times more than in 2019. ALROSA strives to continuously improve its occupational −−a permanent standard “Three-Level Control over health and safety at its facilities and in its production pro- Occupational Health and Safety at the Facilities of Number of trainees in the programs of the Corporate University cesses. The Company’s strategic goal is to have no acci- PJSC ALROSA” was introduced; dents and a zero injury rate among employees. The broad −−a special assessment was made of working conditions at 1,217 geography of our divisions, the specifics of the production process, and the varying level of parameters of harmfulness job sites in all divisions. and hazardousness of elements of the production environ- In 2020 total spending on implementing various H&S meas- ment are all reasons to continuously improve the system for ures at PJSC ALROSA were RUB 1.8 bln (or RUB 92,500 per 480 managing occupational health and safety (hereinafter H&S). employee); in 2019 these figures were RUB 777.2 mln and RUB 35,500, respectively. The Group’s aggregate expendi- As part of its cooperation with postsecondary and specia- As part of the H&S management system, PJSC ALROSA tures on H&S in 2020 were RUB 2.1 bln. lized secondary educational institutions, ALROSA is active has standing committees under the CEO, the executive di- in hiring promising young specialists. PJSC ALROSA hired rector, and managers of enterprises. Involving managers in Plans for further development of the H&S system include 59 young specialists in 2020. monitoring and resolving H&S issues is an important area of stronger controls over the work of contracting organizations 2019 2020 work. at facilities and job sites, and also the performance of joint and regular reviews of the state of H&S at production facili- As part of the ongoing implementation of the program of ties and work sites. Safety issues are communicated to em- the strategic plan to develop the Company’s H&S system ployees of contracting organizations. The Company aims in 2019–2020, the following objectives on improving pro- to increase the level of involvement of contractors in H&S cesses and procedures of the system and its elements were procedures; in 2020 employees of contractor organizations Social programs for personnel achieved in 2020: were involved in the procedure of identifying risks at hazard- −−the injury rate indicator (LTIFR) and accident indicator ous production facilities. ALROSA strives to provide its employees with an attractive were made part of managers’ performance assessment; The state of the occupational health and safety system is social package and a strong social safety net. −−communications support is provided for all H&S monitored by the Profalmaz trade union. In 2020, 24 trade procedures with the publication of articles in the union representatives were members of safety committees. corporate newspaper, interviews in messenger apps and In addition, the Company has created the institution of spe- on the “Almaznyi Krai” radio station; cial safety inspectors – 267 people. These inspectors performed approximately 1100 reviews in 2020. KEY AREAS OF SOCIAL PROGRAMS −−a system has been developed and implemented for a risk-oriented approach to the reviews of the state of Each Company employee and each employee of contract- H&S; ing organizations has the ability to report on any violations discovered at the production site, to submit an issue, or Program 2020 results −−a standard on the “Work Order System in the Divisions” share their proposals for ensuring safe working conditions has been developed and implemented; Health ALROSA cares about the health of its employees and their families, providing by sending an anonymous report to the email address supplementary health insurance and concluding agreements with medical −−work on risk assessment at hazardous production prombez@alrosa.ru. institutions. facilities; More than RUB 360 mln was spent in this area in 2020; more than 2200 employees, children, and pensioners received help through supplementary health insurance. Treatment at health resorts ALROSA provides its employees with subsidized packages to spend leisure time at preventative-care resorts, as well as at children’s summer camps. Spending on convalescence and leisure in 2020 exceeded RUB 240 mln. Culture and sports ALROSA supports employees and their family members taking part in recreational sports and maintaining a healthy lifestyle. More than RUB 1 bln was spent to finance this area in 2020. Housing The housing program received RUB 54 mln in financing in 2020. The housing program is designed to help attract and retain highly qualified personnel to ALROSA. In 2020 expenses on providing compensation under the mortgage lending program totaled RUB 41 mln. About 340 people took part in the program. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 86 PROFILE REPORT AND INVESTORS GOVERNANCE 87

Prevention of accidents and COMMUNITY emergencies ENGAGEMENT В In 2020 there were 56 occupational accidents in the ALROSA is taking measures to improve of the health and ALROSA Group, as a result of which 58 people were in- safety management system among other things, an in- jured. Thanks to the consistent implementation of measures centive system in the area of safety has been developed to improve the health and safety system, the number of ac- for managers of various levels, including mining foremen. The ALROSA Group strives to make a positive contribu- representatives of the local communities. The cidents fell by 23% compared to 2019. LTIFR remained un- Managers’ performance is assessed on a quarterly basis; as- tion to the social and economic development of the re- Company’s operations contribute to the economic changed from the 2019 level, and was equal to 0.24. sessment criteria include results in preventing injuries and gions where it operates. The Company pays taxes to fed- growth of the regions of operations. accidents and measures undertaken to minimize risks, as eral and local budgets, finances social projects, and hires well as the results of reactive measures when investigating accidents, emergencies, incidents, collisions, and unusual hazardous situations. KEY INDICATORS OF ALROSA’S ECONOMIC CONTRIBUTION TO THE REGIONS LTIFR for the ALROSA Group WHERE IT OPERATES Total number of registered injuries in the ALROSA Group1 0.24 0.24 0.22 Indicator 2018 2019 2020

3 13 50 Taxes and mandatory payments, RUB bln, of which: 69.7 61.3 43.1

2018 to the federal budget, RUB bln 1.8 -1.0 -4.1 to regional budgets, RUB bln 54.9 48.3 34.4 2 4 68 to off-budget funds, RUB bln 13.0 14.0 12.8 2019 Dividends paid, RUB bln, of which: 80.7 57.5 19.0

2018 2019 2020 1 7 50 to the federal budget, RUB bln 27.2 19.3 6.4 to regional budgets, RUB bln 27.1 19.3 6.4 2020 Average wage of employees of the ALROSA Group, RUB ,000/month 117.8 124.0 120.9 Ratio of average wage of ALROSA Group employees to average wage in 1.7 1.7 1.6 Fatal Serious Light the Republic of Sakha (Yakutia) Ratio of average wage of ALROSA Group employees to average wage in 2.7 2.6 2.4 Russia as a whole Social spending by the ALROSA Group1, RUB bln 16.3 12.6 10.2 Social spending as a share of revenues, % 5.4 5.3 4.6

Development of infrastructure In order for the regions where the Group operates to develop efficiently and equitably, the Company provides financ- in the operating regions ing with the aim of supporting individual districts. In 2020, ALROSA directed RUB 680 mln for the development of agricultural villages of Mirny District, and also to increase the ALROSA Group employees work in cities that are located a competitiveness of agricultural products and ensure food considerable distance from major community centers, and security. for this reason the Company ensures that employees and other residents of these cities have well-developed infra- Thanks to ALROSA’s active measures in the socioeconomic structure and are given opportunities to live comfortably in development of the regions where it is present, a number the region. Socio-economic projects are financed through of significant projects have been implemented to improve the non-profit Special Fund for Future Generations of the infrastructure. In addition, ALROSA provided financial as- Republic of Sakha (Yakutia) pursuant to an agreement con- sistance and support for hospitals during the COVID-19 cluded with Yakutia for the period 2011–2020. In 2020, the pandemic. Company fully met all of its assumed commitments to provide payments to the Fund free of charge. Total remittances For more details on ALROSA’s socioeconomic projects, please see to the Fund in 2020 equaled RUB 910 mln. the 2020 Sustainability Report.

1 Based on the results of an investigation, one injury was transferred from 2019 to 2018. Another injury that occurred in 2019 at Yakut Generating Company was identified in 2020 . 1 Social spending includes payments made by the Company to the NPF Almaznaya Osen non-state pension fund | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 88 PROFILE REPORT AND INVESTORS GOVERNANCE 89

Sponsorships and charity Contribution to employment in the Sakha (Yakutia) have had a signed Agreement on mutual cooperation in implementing the high-priority project “Local Staff in Industry” for the period ending 2022. Under The ALROSA Group’s charitable activities are aimed at cre- signed agreements, ALROSA provides targeted charitable regions of operations this project, 1,587 people were hired in 2020. Expenses on ating and shaping a favorable social environment for sus- assistance to the uluses (municipalities) of Yakutia in retraining employees of the project totaled more than tainable development. In its charitable and sponsorship sponse to one-time requests, which are earmarked in the The Company understands the need to create jobs in RUB 3.5 mln. In all, 1,735 people from the Republic of activities, the emphasis is on principles of feasibility, trans- budgets of the ALROSA Group for the planning period and the regions where it operates, and to support the level of Sakha (Yakutia) were given jobs in 2020. parency, and practical effectiveness. approved by the Supervisory Board. employment of local residents. Since 2018, PJSC ALROSA and the State Employment Committee of the Republic of ALROSA contributed a total of RUB 4 bln in targeted charitable contributions in 2020. In addition to financing under

Number of people hired under the program “Local Staff in Share of representatives of indigenous minorities of Yakutia Industry” among total employees hired

SIGNIFICANT AREAS OF CHARITABLE FINANCING IN 2020 1,587 Area Purpose Financing, RUB mln 1,392 15% 15% Special Fund for Future Implementation of projects in the areas of education, healthcare, culture 700 950 11% Generations and sports, science, ecology, infrastructure development, construction, and repairs and reconstruction of buildings and structures

Special Fund for Future Co-financing of measures to provide the population of the Vilyuyskaya 150 Generations group of uluses with high quality drinking water 2018 2019 2020 2018 2019 2020 Special Fund for Future Upgrading the facilities of the Cholbodukov Preventative-Care Resort 60 Generations in the city of Kempendyay to comply with regulations In the reporting year, PJSC ALROSA structural divisions Almazik Preschool Support for charter activity 593 hired a total of 2,603 employees, of which 11% were representatives of indigenous minorities of Yakutia. As of the end of 2020, 2,234 representatives of indigenous minorities Mirny District Financing of the current operations of agricultural organizations 200 were employed in the divisions of the Company. in the village of Arylakh

Mirny District Targeted financing to create an agricultural complex in the village of Arylakh 796 Support for indigenous minorities

Mirny District Assistance to hospitals in fighting COVID-19 184 ALROSA operates in regions with indigenous minorities, ALROSA provides charitable support to the uluses of the Lensky District and the operations of its divisions and subsidiaries affect “diamond province” in pursuing agriculture and tradition- Yakutsk their interests. As part of its contribution to regional devel- al handicrafts/occupations, financing charitable events for opment, the Company makes special efforts to support trib- children, and also projects to preserve the languages and al communities of reindeer herders and fishermen in the culture of the indigenous minorities of the North. In addition to financing various projects, ALROSA promotes corporate volunteerism. A Council of Young Specialists has most northerly districts of the Republic. The Company facil- been created, which encourages public works and the organization of large-scale cultural and sports events. itates employment of the population and the growth of its income, and makes a substantial contribution to improving the social stability of the entire diamond-producing region.

Contribution to fighting the The Company provided active assistance to the public medical institutions of the Republic of Sakha (Yakutia). COVID-19 coronavirus pandemic Medical goods and equipment were purchased in 2020 ILKEN, A PORTAL FOR NORTHERN INDIGENOUS MINORITIES for hospitals in Mirny, Aikhal, Lensk, Udachny, Yakutsk, and Nyurba. ALROSA sent assistance to ensure hospitals had In February 2020, the ALROSA Group enterprise Diamond of Anabar became a part- ALROSA spent more than RUB 1 bln fighting the spread of supplies of medicines, equipment and PPE for medical ner in the Ilken web portal, aimed at preserving the languages and culture of the indig- COVID-19 in 2020. More than 95% of this amount was used personnel. enous minorities of the North. The portal will publish materials in five minority languag- for anti-epidemic measures in Yakutia. es, as well as in Russian and English. The website will broadcast news from all districts In addition, the Company, in conjunction with the Profalmaz of the republic. The site has topical sections on the literature, education, history and In April 2020, a Medical Headquarters was organized under trade union, created a Center to provide support to people culture of the peoples of the North. the Company’s leadership, which included the chief physi- in a difficult situation due to the coronavirus pandemic. cians of hospitals, Rospotrebnadzor, the Center for Hygiene and Epidemiology, and the head of the municipality. In 2020 ALROSA created a corps of volunteers to perform A system of comprehensive measures was set up to or- the day-to-day work to give assistance to people in the pan- ganize temporary isolation facilities. ALROSA supported demic. Company employees delivered groceries and med- the work of the government isolation facilities required to icines to employees and the general population of Mirny Over the effective term of the agreement, concluded by PJSC ALROSA with 9 uluses – Mirny, Verkhnevilyuysky, reduce the risk of carrying the infection to remote produc- District who were in lockdown, and distributed educational Oleneksky, Anabarsky, Suntarsky, Vilyuysky, Lensky, Nyurbinsky and Kobyaysky – in the period from 2011 to 2020 tion facilities and shift camps of Nyurba Division and the information. the Company allocated RUB 870 mln to various socio-economic support measures, including RUB 93.3 mln in 2020. Verkhne-Munskoye fields. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 90 PROFILE REPORT AND INVESTORS GOVERNANCE 91

ENVIRONMENT Structure of spending by the ALROSA Group on environmental protection, RUB mln 47.0 R&D on reducing adverse anthropogenic impact on the environment

90.7 Protecting the atmosphere and preventing climate 30.5 change Payments to the budget Approach 579.9 Collecting and purifying effluent 30.1 ALROSA recognizes its responsibility to preserve the eco- complied with the requirements of the international standard Other logical balance, and therefore strives to achieve the stra- ISO 14001:2015 and the national standard tegic goal of maintaining environmental security and min- GOST R ISO 14001–2016. imizing its impact on the surrounding environment at all The Company continues to act in accordance with the stages of its production activity. This goal is reflected in the Integrated Program on Environmental Protection and ALROSA Group Environmental Policy, which was updated in Security for 2019–2023, which was adopted in 2019. 3,470.3 2020 and published in 2021. In 2020 the ALROSA Group’s investments in measures aimed Waste processing In 2020 ALROSA underwent an annual inspection of its en- at protecting the environment totaled RUB 5,610 mln, which vironmental management system, and confirmed that it is equal 2.5% of consolidated revenues. 1,361.6 Protecting and restoring land, Expenses of the ALROSA Group on environmental protection, surface and RUB mln underground water

7,664.8

5,610.0 5,148.5

RUB bln .4 Indicator RUB Indicator RUB 29 bln bln ALROSA’s investments under the Integrated Waste processing 3,470.3 R&D on reducing adverse anthropogenic 47.0 Program on Environmental Protection and impact on the environment 2018 2019 2020 Protecting and restoring land, surface and 1,361.6 Security for 2019 - 2023. underground water Payments to the budget 30.5

Collecting and purifying effluent 579.9 Other 30.1 Protecting the atmosphere and preventing 90.7 climate change

Environmental impact

The Company is active in various aspects of environmental reduce the impact on water and atmospheric ecosystems, protection, including through initiatives aimed at fighting and also to improve our approach to managing wastes and climate change, which consist in improving energy efficien- land resources, making employees better informed and cy and the responsible consumption of energy resourc- developing their competencies in environmental issues. es by the Group. In addition, measures are being taken to | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 92 PROFILE REPORT AND INVESTORS GOVERNANCE 93

Energy efficiency and energy saving AIR EMISSIONS

Energy consumption by the ALROSA Group in 2020 In the process of ALROSA’s operations, effluent is created ALROSA reduced its air emissions by 6% in 2020, to totaled 11,738.8 TJ, which is 21.4% lower than in 2019. that is diverted to the tailings storage fields of process- 12.4 thousand metric tons. The share of extremely Thanks to energy-saving initiatives, energy savings were ing plants, ponds, or reservoirs, or is pumped into under- hazardous and highly hazardous substances (classes I 903 TJ, which translated into a cost saving of RUB 1.1 bln. ground horizons. In 2020 the Group released 65,292.1 and II) made up 0.18% of this amount. thousand m3 of effluent; the mass of pollutants discharged Energy consumption, TJ with the effluent was equal to 13.7 thousand metric tons. Structure of atmospheric emissions of the ALROSA Group, thousand metric tons 14,328.2 14,944.0 11,738.7 Discharge of effluents, thousand3 m 10.4 4.1

2018 81,567.1 81,252.8 78,218.3 65,292.1 61,290.5 62,640.3 9.0 4.2 2018 2019 2020 2019

Water and efficient use of water resources 8.6 3.8

2020 The actual uptake of water from natural sources in 2020 was 3,746.7 thousand m3, which is 87% of the permitted Gas and liquid substances Solid particles (dust, smoke) amount. The reduction in water consumption is related to the reduction in the uptake of water for production needs 2018 2019 2020 by Mirny Division and the forced downtime of Company facilities during the COVID-19 pandemic. Permitted Actual Industrial and consumption wastes The total volume of reused and recycled water use in 2020 3 was 111 mln m . The share of reused and reused and The process of waste handling at ALROSA is strictly reg- recycled water was 95% of total water consumption. ulated, based on the hazard class and other factors. The Group’s total mass of production and consumption waste Total area of reclaimed land of the ALROSA Group, ha Uptake of water from natural sources, thousand m3 in 2020 was 80.9 mln metric tons. More than 99% of wastes fall into hazard classes IV and V – overburden (extraction wastes) and tailings (waste from the processing of 1,567 1,572 6,913.5 1,306 diamond-bearing ore).

5,017.5 4,664.0 4,300.6 Protection of natural resources 3,746.7 2,836.7 The work performed by the Company is associated with the 2018 2019 2020 disruption of the surface in six districts of Yakutia. In 2020 the area of reclaimed land decreased by 16.9% against the previous year and reached 1,306 ha.

2018 2019 2020

Permitted Actual | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 94 PROFILE REPORT AND INVESTORS GOVERNANCE 95

FOR SHAREHOLDERS AND INVESTORS

The ALROSA share price rose by

The Company’s TSR was1

Dividends were 2

RUB bln

FACTORS IN THE INVESTMENT APPEAL OF ALROSA 96

SHARE CAPITAL AND DIVIDEND POLICY 97

SHAREHOLDER AND INVESTOR RELATIONS 100

1 Over the period 2013–2020. 2 Dividends approved in 2020 based on the results of the second half of 2019 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 96 PROFILE REPORT AND INVESTORS GOVERNANCE 97

FACTORS IN THE INVESTMENT SHARE CAPITAL APPEAL OF ALROSA AND DIVIDEND POLICY

Global leadership ALROSA is one of the largest diamond producers in the world. Share capital in resources and Considering the finite nature of the global resource base, the level 1 production of resources held by ALROSA is sufficient to continue production for Analysis of share structure more than 20 years. ALROSA Shares in free float account for 34%; of which 29% 300 minority shareholder investment funds. Ten funds hold is held by institutional investors, representing more than 15% of the Company’s shares. Profitability The profitability of the business is more than double the industry average. The Company consistently generates a positive free cash flow. STRUCTURE OF THE COMPANY’S SHARE CAPITAL Strong The high position in the Institutional Investor ranking in the fairly management competitive Metals and Mining sector is evidence that the Company Russian Federation 33% team has built an effective dialogue with shareholders and investors, and Republic of Sakha (Yakutia) 25% its system of corporate governance as a whole is at a high level. In 2020 investors appreciated not only the efforts by manage- Administration of districts (uluses) of the Republic of Sakha (Yakutia) 8% ment to minimize the effects of the COVID-19 crisis, but also how Free float 34% the Company communicated the implementation of its strategy to shareholders1. As of 31 December 2020, Group subsidiaries owned to the shareholder structure in terms of investment style. Corporate High standards and quality of corporate governance. In November 156,059,800 Company shares. There was a slight growth in shareholders oriented to dividend yield. governance 2020, the Russian Institute of Directors confirmed the National An analysis conducted in 2020 to identify the owners of Corporate Governance Rating of ALROSA at level 8 “Leading corpo- securities showed that there were no substantial changes rate governance practices”2.

Responsible business ALROSA is dedicated to the principles of sustainable develop- OWNERSHIP STRUCTURE OF SHARES IN FREE CIRCULATION IN 2020 ment and international standards of corporate social responsibility. The Company is listed in the ratings of FTSE4Good, MSCI ESG, Investment funds with a long-term investment strategy 64% Sustainalytics, and WWF Russia. Index funds 14% Transparent capital Focus only on the Company’s key activity. Dividend yield focused funds 10% utilization strategy Investments in modernization of existing facilities and in projects with a profit margin of 20% or more. Other 12% Regular dividend payments from free cash flow.

High shareholder return The world leader among global mining companies in growth of to- Investors from the USA own a large part of the ALROSA shares in free circulation. tal shareholder return since 2013. Dividend yield in 2020 was 3.1% (based on dividends paid for 2019 with due account of dividends already paid for the first half of 2019). The decision on the distri- CONCENTRATION OF SHARES IN FREE FLOAT BY GEOGRAPHY IN 2020 bution of annual dividends for 2020 will be made at the Annual General Meeting in June 2021. USA 33% Europe and the United Kingdom 22% Middle East 3% Russia 14% Other regions 27%

1 More details on the research of Institutional Investor are available on the official website, in the Press Releases section 2 More details on the rating are available on the official website, in the Press Releases section | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 98 PROFILE REPORT AND INVESTORS GOVERNANCE 99

Trends in the trading of company shares ALROSA TSR compared to global peers, in USD1

Company shares have been traded on the Moscow Exchange 250% since 2011, with the ticker ALRS. As of the end of 2020 the Company’s shares were included in the first-tier listing. +96% 200% VOLUMES AND TRENDS IN TRADING OF COMPANY SHARES 150% +40% Indicator 2018 2019 2020

Daily average trading volume, $ mln 18.0 16.0 22.0 100% +1% Lowest price, RUB 74.8 68.9 54.0

Highest price, RUB 107.9 104.6 98.3 50% Price at year end, RUB 98.6 84.3 98.3

Shares in free float, number of shares 2,502,161,810 2,502,161,810 2,502,161,810 0% Index of yield Index total shareholder Shares in free float, % 34.0 34.0 34.0 Oct-2013 Jan-2015 Mar-2016 Jun-2017 Aug-2018 Nov-2019 Jan-2021 Capitalization1 at year end, $ mln 10,455 10,011 9,832

ALROSA Moscow Diversified mining companies, Exchange Index including other diamond producers The increase in share prices and daily average trading unprecedented decrease in sales of core products from volumes in 2020 was related to improvements in investor April to July. Share prices grew at the end of the year on the relations activity, and also the actions of Company man- back of increased activity in all segments of the diamond ON 31 DECEMBER 2020 ALROSA SHARES WERE INCLUDED IN THE CALCULATION BASE FOR THE agement throughout the year, which was notable for the value chain and, as result, recovery of ALROSA’s sales. FOLLOWING MAJOR RUSSIAN AND FOREIGN INDEXES:

Name of index Symbol Weighting in index, %

Trends in the market price for ALROSA shares compared with the MICEX index in 2020 International indexes MSCI Russia Index MSCI Russia 1.51 ALROSA’s share price grew by 17% in 2020, whereas the MICEX index rose by 8% over the same period. MSCI Russia 10/40 MSCI Russia 10/40 3.09 Indexes of the Moscow Exchange

rub Moscow Exchange index and RTS index MICEXINDEXCF, RTSI 1.40 101 3,500 ИIndex of Mining and Metals shares MICEX M&M, 13.40 +17% RTS mm +8% Broad Market Index MICEXBMI 1.35 91 3,100 MICEX 10 Index MICEX10INDEX 8.43 Responsibility and Transparency Index MRRT 2.48 Sustainability Vector Index MRSV 7.64 81 2,700

Company dividend policy 71 2,300

In accordance with the Company’s Dividend Policy, the min- of the Company’s free cash flow for the period. Taking into imum level of dividends is set at the level of 50% of annual account the RUB 28.3 bln in dividends payed for the first 61 1,900 net income under IFRS. The basis for calculating dividends half of 2019 (RUB 3.84 per share), dividends for the full year is free cash flow for the period, which takes into account 2019 totaled RUB 47.7 bln, or RUB 6.47 per share. the cash flow from operating activity net of capital expenditures. The calculation of dividends takes into account the Taking into account the loss made of RUB 8.3 bln on the indicator “free cash flow” for the first half of 2020, there were 51 1,500 Company’s leverage (Net Debt/EBITDA). Dividends are paid twice2 a year . no conditions to pay interim dividends. The decision on the annual dividends for 2020 will be made by the Annual Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec On 24 June 2020, the annual general meeting of share- General Meeting of Shareholders in June 2021 holders decided to pay RUB 2.63 per share as a final dividend for 2019. Declared dividends for the second half of 2019 equaled RUB 19.4 bln, which corresponds to 100% ALROSA share MICEX index price

1 Diversified mining companies include Anglo American, Rio Tinto, BHP, Glencore, Vale, Gem Diamonds, Petra Diamonds, Lucara, Firestone Diamonds, Mountain Province Diamonds, and Stornoway Diamond 2 A detailed description of ALROSA’s dividend policy, as well as the current version of the Regulations on the ALROSA Dividend Policy is available on the corporate website in the section 1 The Company’s market capitalization at the end of each reporting period, data from the Moscow Exchange at the Bank of Russia exchange rate on the last day of trading Shareholders and Investors | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 100 PROFILE REPORT AND INVESTORS GOVERNANCE 101

DIVIDEND PAYMENTS INTERNATIONAL INVESTORS’ ASSESSMENT OF THE WORK OF ALROSA MANAGEMENT Dividend period Date of Dividends Total accrued, Of which paid for the given IN 2020 declaration per share, RUB RUB mln dividend period in the reporting period1 , RUB mln ALROSA was one of the top three public companies in the Metals & Mining sector in all categories of the Institutional Investor ranking, prepared based on voting by international inves- 2012 29/06/2013 1.11 8,175 8,123 tors and investment banks. According to the assessment of investors (buy-side), the Company 2013 28/06/2014 1.47 10,826 10,828 took the top spot in five of the seven categories. The annual rating looked at public companies in the EMEA (Europe, Middle East and Africa) region. 2014 25/06/2015 1.47 10,826 10,824 ALROSA was listed as one of the three best companies in Russia in the area of Environment, 2015 30/06/2016 2.09 15,392 15,381 Social Responsibility, and Corporate Governance (ESG) according to international inves- 2016 30/06/2017 8.93 65,769 65,688 tors. ALROSA’s ESG efforts were recognized with an award from the Moscow Exchange and Institutional Investor magazine, taking second place among Russian public companies. 2017 26/06/2018 5.24 38,592 82,2382 ALROSA’s program for investor relations and Investor Day in 2020 were also declared H1 2018 30/09/2018 5.93 43,674 Best in the Sector. 3 2018 26/06/2019 4.11 30,270 Sergey Ivanov was declared best CEO in the Metals & Mining sector, Alexey Philippovskiy best 58,4934 H1 2019 30/09/2019 3.84 28,281 CFO, and Sergey Takhiev best IR specialist. 2019 5 24/06/2020 2.63 19,370 19,346

SHAREHOLDER AND INVESTOR Investor Day Site visits RELATIONS ALROSA regularly holds Investor Day, in which a presenta- The Company regularly organizes visits of representatives tion is given for the investing community on the Company’s of the investing community to production sites in Yakutia strategy and progress in its implementation, management’s and Arkhangelsk Region. However, ALROSA forewent this vision regarding the development of diamond market, format in 2020 in connection with lockdowns imposed in Investor relations the Company’s positioning, and also its capital allocation response to the COVID-19 pandemic. In its work with shareholders and representatives of the in- strategy. regular dialogue with representatives of the investing com- Participation in conferences and NDR – meetings with rep- vesting community, the Company pursues the important munity, thereby achieving one of the high-priority objec- In March 2020 in view of the active spread of the COVID-19 resentatives of the investing community task of increasing its investment appeal, including by im- tives of the approved ALROSA development strategy. pandemic, the event’s format was adjusted – Company proving information transparency and following a balanced Company management takes an active part in meetings management was split into two teams, and Investor Day in- capital allocation strategy. Company management takes an The Company’s work in the field of investor relations com- with investors and analysts. A total of 349 meetings were cluded three main events: active role in all investor relations events and maintains a plies with global best practices. held in 2020. Due to the spread of the COVID-19 pandem- −−analyst briefing – an in-person meeting in two locations ic, all conferences and meetings were moved online and (Moscow and London) in an open audio conference were held using various video conferencing platforms. format; For the first time the Company also took part in a confer- −−a conference call following the publication of 2019 ence for ESG investors organized by Barclays Bank. Event ALROSA ALROSA Global practice financial results; The ALROSA IR2 team gave its first presentation in webcast (number of events in (number of events in (number of events per format on the Company’s competitive environment and 2020) 2019) year) −−a series of meetings with investors in London and a business for private investors (individuals), whose share in series of calls with investors from the USA. the shareholder structure rose by 50% over the past two Investor Day 1 1 1 More than 50 representatives of the investing community years. took part in the events. Meetings with shareholders and investors 349 358 325 Based on the rating of Institutional Investor in 2020, the Participation in conferences and NDR 21 17 24 ALROSA Investor Day held in 2020 was declared the best in Site visits to production facilities 06 2 4 the sector1. Conference calls and webcasts following IFRS 4 4 4 results publications

1 According to the financial statements of PJSC ALROSA . 2 Dividends paid in 2018 for operations in 2017 and the first half of 3 Dividends declared for operations in 2018, not including dividends declared for the first half of 2018. The total declared dividends for 2018 were RUB 73.944 bln 4 Dividends paid in 2019 for operations in the second half of 2018 and the first half of 2019. 5 Dividends declared for operations in 2019, not including dividends declared for the first half of 2019. The total declared dividends for 2019 were RUB 47.651 bln 1 For more details see the press release on the achievements of ALROSA in the Institutional Investors rating for 2020 6 The Company did not organize production site visits in 2020 in connection with the lockdowns resulting from the COVID-19 pandemic 2 IR – Investor Relations | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 102 PROFILE REPORT AND INVESTORS GOVERNANCE 103

Relations with analysts of investment banks and expansion of Growth in the coverage of ALROSA by investment banks the Company’s analytical coverage ALROSA communicates with the analysts of investment banks, regularly providing data on the Company’s operating and finan- Number of analysts performing fundamental analysis of shares cial performance. The Company’s securities are analyzed by 18 and/or debt instruments of ALROSA analysts. −−In 2020 the IR team continued to work to further expand the 18 17 number of financial institutions that perform a fundamental 14 analysis of the sector and the Company. One new bank began 13 to cover ALROSA: Raiffeisenbank. −−There has been a noticeable change in the quality of understanding of the Company’s business, which has led to a positive trend in analysts’ recommendations – an increase in the quantity and improvement of the quality of relations with analysts (collection of feedback, detailed materials). ALROSA Average for ALROSA ALROSA 1 Jan 2018 the industry 31 Dec.2019 31 Dec 2020

Change in analysts’ recommendations on ALROSA shares ANALYSTS OF INVESTMENT BANKS THAT PERFORM A FUNDAMENTAL ANALYSIS OF ALROSA SHARES

23% 54% 23% Jan Investment bank Analyst Contact information 2018

Alfa-Bank Boris Krasnozhenov [email protected] 29% 64% 7% Aton Andrey Lobazov [email protected] Jan 2019 Bank of America Merrill Lynch Anton Fedotov [email protected] 47% 47% 6% BCS Oleg Petropavlovskiy [email protected] Jan Citi Amit Lahoti [email protected] 2020

Gazprombank Natalia Sheveleva natalia.sheveleva@gazprombank.ru 44% 56%

Goldman Sachs Nina Dergunova [email protected] Jan 2021 J.P. Morgan Anna Antonova [email protected]

Morgan Stanley Dan Shaw [email protected] Hold Buy Sell

Raiffeisen Centrobank Mikhail Solodov [email protected]

Renaissance Capital Steven Friedman [email protected]

Sber Irina Lapshina [email protected]

Société Générale Sergey Donskoy [email protected] INVESTOR RELATIONS PLAN FOR 2021 −−Investor Day will be held online, with the participation of the Company’s senior SOVA Capital Yuriy Vlasov [email protected] executives; UBS Daniel Major [email protected] −−participation in the conferences of investment banks; UniCredit Sergey Bolshakov [email protected] −−organization of a series of meetings of Company management with Russian and international investors, including from Europe, the UK, the USA, and Asia; VTB Capital Boris Sinitsyn [email protected] −−organization of site-visits to the Company’s production facilities (depending on the epidemiological situation); −−publication of information the Company’s operations and on the industry; quarterly conference calls involving management following the disclosure of financial results; −−voluntary and mandatory disclosure of information in accordance with the requirements of Russian regulators and domestic and international best IR practices. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 104 PROFILE REPORT AND INVESTORS GOVERNANCE 105

CORPORATE GOVERNANCE overall average rating of effectiveness of the Supervisory Board 3.68 из 41

STRUCTURE AND RESULTS OF THE ACTIVITY OF CORPORATE GOVERNANCE BODIES 106

GENERAL MEETING OF SHAREHOLDERS 108

SUPERVISORY BOARD 109

EXECUTIVE MANAGEMENT BODIES 133

CORPORATE SECRETARY 138

RISK MANAGEMENT SYSTEM 139

CONTROL SYSTEM 150

INFORMATION DISCLOSURE SYSTEM 157

1 According to the results of a self-assessment of the activity of the Supervisory Board for 2020 . | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 106 PROFILE REPORT AND INVESTORS GOVERNANCE 107

Regarding the organization of and support for the work of −−complete, up-to-date, and reliable information on the STRUCTURE AND RESULTS OF the Supervisory Board: Company is promptly disclosed in order to ensure that shareholders and investors are able to make well- the Corporate Secretary provides for effective relations −− founded decisions; THE ACTIVITY OF CORPORATE with shareholders, coordination of the Company’s actions in protecting the rights and interests of −−information and documents are provided at the request GOVERNANCE BODIES shareholders, and supporting the effective work of the of shareholders in accordance with the principles of Supervisory Board. equal and unhindered access.. Regarding the development and implementation of Principles of corporate governance THE COMPANY ADHERES TO THE FOLLOWING the system for the remuneration of the members of the PRINCIPLES OF CORPORATE GOVERNANCE: Supervisory Board and the executive bodies: Structure of corporate governance −−a fair level of compensation is paid by the Company The system of corporate governance at PJSC ALROSA has Regarding securing the rights of shareholders and the equality of conditions for shareholders: to attract, motivate, and retain persons who have the The Company's corporate governance system consists of a been established in full compliance with the norms and re- required competencies and qualifications; quirements of Russian legislation, including corporate law, well-conceived organizational structure of management and −−all shareholders are provided with the right to control bodies with clear mechanisms for interaction. anti-corruption law, and legislation on the securities market, participate in the management of the Company by −−the system for the remuneration of the executive bodies as well as in accordance with international standards and making decisions on the most important issues; and other key management employees of the Company The supreme management body of the Company is the recommendations. Consistently developing all elements of enshrines the principle that remuneration depends on General Meeting of Shareholders. the system, and adjusting them in response to new require- −−all shareholders are provided with the equal and fair the results of the Company’s work and their personal ments and the challenges of the external environment, the opportunity to participate in the distribution of the contribution to the achievement of results. The Supervisory Board provides strategic management and Company unswervingly follows the key principles of cor- Company’s profits through the receipt of dividends; controls the work of the Management Board, which pro- Regarding the organization and functioning of the system porate governance enshrined in the Code of Corporate vides operational management. −−all shareholders are given equal conditions and an of risk management and internal control: Governance. equal approach is taken to them; The Chief Executive Officer (single-person executive body) −−an effective functioning system of risk management and Compliance with the highest standards of corporate gov- is also the chairman of the Management Board. −−all shareholders have the opportunity to receive internal controls has been created in the Company; ernance is one of the Company’s strategic priorities. The effective protection. The Supervisory Board has three committees: on strategy management of PJSC ALROSA believes that ensuring the −−the Company organizes the performance of an internal and sustainability1, on audit, and on human resources Regarding the organization of and support for the work of growth of shareholder value in the longer term is impossi- audit for a systematic independent assessment of and remuneration. The work of the committees is aimed the Supervisory Board: ble without the full-fledged protection of the interests of all the reliability and efficiency of the system of risk at improving the efficiency and quality of the work of the shareholders. −−the Supervisory Board provides strategic management management and internal control. Supervisory Board. Information transparency is one of the most important ele- of the Company, defines the main principles and Regarding the disclosure of information on the Company: The company has implemented an effective system of inter- ments of corporate governance, and is a substantial factor approaches to organizing the systems of risk nal and external control and audit: the Audit Commission affecting the Company’s investment appeal. management and internal control, monitors the activity −−the Company and its operations are transparent for shareholders, investors, and other stakeholders; and the independent auditor, the Internal Audit of the Company’s executive bodies, and also the Department, and the Risk Management Department. PJSC ALROSA makes every effort to comply with the prin- performance of other key functions; ciples of corporate governance enshrined in the Code of Corporate Governance recommended by the Bank of −−the Supervisory Board is accountable to the shareholders Russia1, and intends to continue working to implement key of the Company; principles and recommendations of the Code of Corporate −−the Supervisory Board is effective and professional, Governance in the Company's activity2. capable of making objective, independent judgments Structure of corporate governance at ALROSA On 19 October 2020, the Russian Institute of Directors, and making decisions that respond to the interests of the based on monitoring of the Company's corporate govern- Company and its shareholders; ance over the previous year, confirmed that PJSC ALROSA GENERAL MEETING OF −−the members of the Supervisory Board include a sufficient EXTERNAL EXECUTIVE BODIES had earned a rating of NRCG level 8 “Leading Corporate SHAREHOLDERS number of independent directors; CONTROL BODIES Governance Practices” using the methodology of the National Rating of Corporate Governance (NRCG). −−the Supervisory Board receives support for effective CEO – Chairman of the Audit Commission activity in the process of calling and holding meetings Management Board In 2020 in connection with the COVID-19 coronavirus pan- (remote voting), preparation for meetings, and SUPERVISORY BOARD demic the decision was made at the legislative level that it participation in meetings by members of the Supervisory was possible for joint stock companies to hold their annual External Board; Management Board general meetings of shareholders in the form of remote vot- independent auditor ing; the deadline for holding the meeting was also deferred −−the Supervisory Board creates committees for the Committees of the to the end of September 2020. preliminary consideration of the most important issues. Supervisory Board Internal Control The Company held its Annual General Meeting of Department Shareholders on 24 June 2020 in the form of remote voting. Strategy and Sustainability Committee In the fourth quarter of 2020 the decision was made to car- Risk Management ry out a self-assessment of the Supervisory Board and its Department committees. Audit Committee

Corporate Secretary HR and Remuneration Committee Internal Audit Department 1 National Rating of Corporate governance of the Russian Institute of Directors (RID) 2 The Code of Corporate Governance recommended in Bank of Russia Letter No. 06–52/2463 dated 10 April 2014 for application by joint stock companies whose securities have been admitted to organized trading 1 3 On 15 February 2021 by decision of the Supervisory Board, Minutes No. 01/327-PR-NS, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the Strategy and A detailed report on compliance with the principles and recommendations of the Code of Corporate Governance is given in Appendix 9 Sustainability Committee of the Supervisory Board of PJSC ALROSA ) | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 108 PROFILE REPORT AND INVESTORS GOVERNANCE 109

7. On the payment of remuneration for work on the 9. Election of the members of the Audit Commission GENERAL MEETING OF Five Commission to the non-state employees who are of PJSC ALROSA. members of the Audit Commission, in an amount es- 10. Approval of the auditor PJSC ALROSA. SHAREHOLDERS tablished by the internal documents of PJSC ALROSA. No extraordinary General Meetings of Shareholders of 8. Election of the members of the Supervisory Board PJSC ALROSA were conducted during 2020. of PJSC ALROSA.

Information on the conduct of the General Meeting of Shareholders

The General Meeting of Shareholders is the supreme man- −−decisions on consent to perform or on subsequent agement body of PJSC ALROSA, acting on the basis of approval of interested-party transactions in cases SUPERVISORY BOARD Russian legislation, the Charter, and the Regulation on the stipulated by the Federal Law “On Joint Stock General Meeting of Shareholders of PJSC ALROSA. Companies”; In accordance with provisions of the Federal Law “On Joint −−decisions on consent to perform or on subsequent Stock Companies” and the Company Charter, the annu- approval of transactions in cases stipulated by the al General Meeting of Shareholders of the Company is Federal Law “On Joint Stock Companies”; The First Deputy and Deputy of the Chairman of the held each year at least two months and not more than General information on the −−participation in financial–industrial groups, associations, Supervisory Board are elected by the members of the six months after the end of the financial year. The annual and other unions of commercial organizations; Supervisory Board Supervisory Board from among their number by a majority General Meeting of Shareholders approves the Company's of votes of the members of the Supervisory Board. annual report, annual financial statements, and distribution −−reorganization of the Company; of earnings (including the payment (declaration) of divi- Members of the Supervisory Board are elected by the dends) and losses based on results of the reporting year, −−liquidation of the Company, appointment of the General Meeting of Shareholders for a term extending to elects members of the Supervisory Board and the Audit liquidation commission, and approval of the interim and the following Annual General Meeting of Shareholders. Regulation on the Supervisory Board final liquidation balance sheets; Commission, approves the auditor of the Company, and The Supervisory Board acts on the basis of Russian legis- may also resolve other issues assigned to the competence −−establishment of remuneration and decisions on the lation, the Charter, and the Regulation on the Supervisory of the General Meeting of Shareholders. A new version of the Regulation on the Supervisory Board payment of remuneration and/or compensation of Board of PJSC ALROSA. of PJSC ALROSA was approved by decision of the Annual expenses to members of the Supervisory Board and the 1 Extraordinary General Meetings of Shareholders may be The competency of the Supervisory Board includes de- General Meeting of Shareholders on 26 June 2019 . conducted in addition to the annual General Meeting of Audit Commission related to the performance of their duties. cisions on issues of the general management of the Shareholders.. Company's activity, except for decisions on issues that the The competence of the General Meeting of Shareholders The Annual General Meeting of Shareholders of Federal Law “On Joint Stock Companies” and the Company Members of the Supervisory Board includes the following main issues: PJSC ALROSA took place on 24 June 2020 and was Charter assign to the competence of the General Meeting conducted in the form of remote voting. of Shareholders and the executive bodies. −−election of members of the Supervisory Board and Audit The following changes to the Supervisory Board were Agenda of the Annual General Meeting of Shareholders of In accordance with provisions of the Company Charter, Commission of the Company; made on 24 June 2020 in connection with the election PJSC ALROSA: 15 members are elected to the Supervisory Board. −−approval of the Company's annual reports and annual by the Annual General Meeting of Shareholders of a new financial statements; 1. Approval of the Annual Report of PJSC ALROSA. The Chairman of the Supervisory Board is elected by the board and the termination of the authorities of the previous members of the Supervisory Board from among their num- board: −−distribution of the Company's profits and losses based 2. Approval of the annual financial statements of PJSC ALROSA. ber by a three-quarters majority of the members of the on results of the reporting year; Supervisory Board taking part in the meeting. −−payment (declaration) of dividends; 3. Approval of the distribution of the profits of PJSC ALROSA for 2019. −−approval of the auditor of the Company; 4. Approval of the distribution of retained earnings of Four members left the Supervisory Board: Four new members were elected to the Supervisory Board: −−amendments and addenda to the charter or approval of previous years. a new version of the charter; Sergey Donskoy Natalia Guryeva 5. On the size of dividends, dates and form of their −−approval of internal regulations governing the activity of payment based on operations for 2019 and establish- Andrey Karkhu Alexey Noskov the bodies of the Company; ment of the date on which persons entitled to receive dividends are determined. Galina Makarova Vladimir Rashevsky −−determination of the quantity, par value, and category of declared shares and the rights conferred by these 6. On the payment of remuneration for work on the Vladimir Solodov Maksim Tereshchenko shares; Supervisory Board to the non-state employees who are members of the Supervisory Board in an amount −−share splits and consolidation; established by the internal documents of increase and reduction in the charter capital of the PJSC ALROSA. −− On average, members of the Supervisory Board remain on Company; the board for three years. −−placement through open subscription of convertible marketable securities that may be converted into. ordinary shares;

1 Information on major transactions and interested-party transactions” is given in detail in Appendix 8 1 Minutes No. 40

2 Minutes No. 42 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 110 PROFILE REPORT AND INVESTORS GOVERNANCE 111

Members of the Supervisory Board operating in 2020 Brief biographical information on the members of the Supervisory Board of the Company (as of 31 December 2020) 1 January 2020 – 24 June 2020 24 June 2020 – 31 December 20201

Anton Siluanov Anton Siluanov Anton SILUANOV Chairman Chairman Chairman of the Supervisory Board

Aisen Nikolayev Aisen Nikolayev Date and place of birth Born in Moscow on 12 April 1963. First Deputy Chairman First Deputy Chairman Education Sergey Ivanov Sergey Ivanov Graduated from the Moscow Financial Institute with a degree in Banking and Finance in 1985. Deputy Chairman Deputy Chairman Graduated from the Russian National Tax Academy of the Ministry of Maria Gordon Maria Gordon Finance of the Russian Federation in 2007.

Senior Independent Director Senior Independent Director Graduated from the Financial University of the Government of the Russian Federation in 2010. Evgenia Grigorieva Evgenia Grigorieva Doctor of Economic Sciences (8 November 2012). Kirill Dmitriev Natalia Guryeva Recent work experience: Andrey Donets Kirill Dmitriev Period Position Sergey Donskoy Andrey Donets Jan 2020 to present Minister of Finance of the Russian Federation Andrey Karkhu Dmitry Konov (independent director) 2020 to present Member of the Supervisory Board of the State Corporation for Dmitry Konov (independent director) Sergey Mestnikov Assistance to Development, Production and Export of Advanced Technology Industrial Product Rostec Galina Makarova (independent director) Alexey Moiseev 2020 to present Chairman of the Supervisory Board of Sberbank of Russia PJSC Sergey Mestnikov Alexey Noskov (independent director) 2012–2018 Minister of Finance of the Russian Federation Alexey Moiseev Vladimir Rashevsky 2018 – 01.2020 First Deputy Chairman of the Government of the Russian Federation, Minister of Finance of the Russian Federation Vladimir Solodov Maksim Tereshchenko 2015 to present Governor from the Russian Federation (Board of Governors) in the New Oleg Fedorov (independent director) Oleg Fedorov Development Bank of BRICS 2012 to present Governor from the Russian Federation in the International Monetary Fund

Supervisory Board of ALROSA as of 31 December 2020 2012 to present Plenipotentiary of the Russian Federation in the Council of the Eurasian Development Bank 2012 to present Member of the Supervisory Board of the Management Company of 1 JSC Russian Direct Investment Fund Executive 11 Non-executive 2011 to present Chairman of the National Financial Council of the Central Bank of the Russian Federation 3 Independent 2011 to present Chairman of the Board of the Eurasian Fund for Stabilization and Development 15 2011 to present Member of the Supervisory Board of the State Development memders Indicator Corporation VEB.RF Non-executive 11 Participates in the development of the social sphere, science, and Independent 3 education as a member of the Board of Guardians of the Charitable Executive 1 Foundation for the Restoration of the Resurrection New Jerusalem Monastery of the Russian Orthodox Church, a member of the Academic Council of the Financial University of the Government of the Russian Federation, member of the Board of Guardians of the Non-Profit Organization Development Fund of the Center for the Development and Commercialization of New Technologies. Does not own shares in PJSC ALROSA.

1 Biographical summaries for members of the Supervisory Board who were members of the board on 31 December 2019 and had left the board as of 31 December 2020 are given in the 2019 Annual Report. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 112 PROFILE REPORT AND INVESTORS GOVERNANCE 113

Aysen NIKOLAYEV Sergey IVANOV First Deputy Chairman of the Supervisory Board Deputy Chairman of the Supervisory Board Date and place of birth Date and place of birth Born in Leningrad on 22 January 1972. Born in Moscow on 23 October 1980. Education Education Graduated from Lomonosov Moscow State University with a degree in Physics in Graduated from Moscow State Institute of International Relations (University) of 1994. the Ministry of Foreign Affairs of Russia with a degree in Economics in 2001. Graduated from the Academy of the National Economy of the Government of Graduated from Moscow State Institute of International Relations (University) of the Russian Federation with a degree in Financial Management in 1994. the Ministry of Foreign Affairs of Russia with a degree in Banking and Finance in 2002. Candidate of Economic Sciences, Plekhanov Russian Economic University (21 October 2011).

Recent work experience: Recent work experience:

Period Position Period Position

2018 to present Head of the Republic of Sakha (Yakutia) 2017 to present Chief Executive Officer – Chairman of the Management Board of PJSC ALROSA 2012–2018 Head of the City of Yakutsk municipal district 2016–2017 Senior Vice-President – Director of Wealth Management, Sberbank PJSC 2011–2016 Chairman of the Management Board, member of the Board of Directors, JSC SOGAZ Does not participate in the elected management and control bodies of other 2005–2011 Vice-President, First Vice-President, Deputy Chairman of the Management Board, organizations. OJSC Gazprombank Does not own shares in PJSC ALROSA. Participation in the elected management and control bodies of other organizations: Member of the Board of Directors of JSC Gazprombank, member of the Board of Directors of JSC GAZFOND PPF, member of the Board of Directors of JSC Rosneftegaz, member of the Board of Directors of JSC NPF Almaznaya Osen (Diamond Autumn), Chairman of the Board of Directors of JSC Almazy Anabara, Chairman of the Board of Directors of PJSC Severalmaz, member of the Board of Directors of the Natural Diamond Council Limited (formerly the Diamond Producers Association (DPA), member of the Management Board of the Russian Union of Industrialists and Entrepreneurs, member of the Central Board and the Bureau of the Central Board of the Union of Machine Engineers of Russia LLC. Information on the acquisition or disposal of ordinary shares in PJSC ALROSA in 2020: As of 1 January 2020, Sergey Ivanov owned 611,310 ordinary shares in PJSC ALROSA (0.0083% of the charter capital of the Company). On 2 April 2020 Sergey Ivanov disposed of 305,655 shares; after this, Sergey Ivanov owned 305,655 shares (0.00415%). As of 31 December 2020, Sergey Ivanov owned 305,655 ordinary shares in PJSC ALROSA (0.00415% of the charter capital of the Company). | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 114 PROFILE REPORT AND INVESTORS GOVERNANCE 115

Maria GORDON Natalia GURYEVA Senior independent director Date and place of birth Born in Verkhnevilyuysk, Verkhnevilyuysky District, Yakutsk ASSR on 16 February Date and place of birth 1952. Born in Vladikavkaz, Republic of North Ossetia-Alania on 13 February 1974. Education Education Graduated from Kemerovo State Institute of Culture with a degree in Library Graduated from Lomonosov Moscow State University with a degree in Science–Bibliography in 1975. Journalism in 1994. Graduated from Khabarovsk Academy of Culture and Arts with a degree in From 1994 to 1995 she studied at the University of Wisconsin, USA, earning a BA Economics and Social Administration, Manager–Economist, Lecturer in 1995. in Political Science. Graduated from the Management Institute of the President of the Republic of Graduated from the Fletcher School of Law and Diplomacy at Tufts University, Sakha (Yakutia) with a degree in Public and Municipal Administration in 2005. USA, with a Master’s in Law and Diplomacy in 1998.

Recent work experience: Recent work experience:

Period Position Period Position

2010–2014 Chief portfolio manager for Pacific Investment Management Co. (PIMCO) for stocks 2019 to present Acting Deputy Head of Administration of the Municipal District Verkhnevilyuysky in developing countries, and investment activity Ulus (District), Republic of Sakha (Yakutia) 2014–2019 Chairman of the Chamber of Control and Accounts of Municipal District Participation in elected management bodies of other organizations: Verkhnevilyuysky Ulus (District), Republic of Sakha (Yakutia) Member of the Supervisory Board of Moscow Exchange PJSC and member of the Board of Directors of Polyus PJSC. Does not participate in the elected management and control bodies of other organizations. Does not own shares in PJSC ALROSA. Does not own shares in PJSC ALROSA.

Evgeniya GRIGORIEVA Date and place of birth Born in the village of Nyurba, Leninsky District, Yakut ASSR on 19 August 1965. Education Graduated from the Riga Civil Aviation Engineers Institute with a degree in Electronic Computers – Systems Engineering in 1988. Graduated from Ammosov Yakutsk State University with a degree in Law in 1998. In 2001 took professional retraining at the Far Eastern Academy of Public Service with a degree in Public and Municipal Administration.

Recent work experience:

Period Position

2011 – May 2020 Minister of Property and Land Relations of the Republic of Sakha (Yakutia)

Participation in elected management bodies of other organizations: Member of the Supervisory Board of JSC Almazergienbank, member of the Board of Directors of JSC Komdragmetall of the Republic of Sakha (Yakutia), and member of the Board of Directors of AEB Capital LLC. Does not own shares in PJSC ALROSA. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 116 PROFILE REPORT AND INVESTORS GOVERNANCE 117

Kirill DMITRIEV Andrey DONETS Date and place of birth Date and place of birth Born in Kiev on 12 April 1975. Born in Ekaterinoslavka, Oktyabrsky District, Amur Region on 11 February 1967. Education Education Graduated from Stanford University, Stanford, California, USA in 1996. Graduated from Blagoveshchensk State Pedagogical Institute with a degree in History and Soviet Law in 1989. Graduated with an MBA from the Harvard School of Business, Cambridge, Massachusetts, USA in 2000.

Recent work experience: Recent work experience:

Period Position Period Position

2011 to present Chief Executive Officer, JSC MC RDIF 2018 to present Deputy CEO, First Deputy CEO, Far Eastern Agency for Investments and Export Support ANP 2012 to present Member of the Supervisory Board, JSC MC RDIF 2015–2018 Deputy Chairman, Government of Amur Region 2012 to present Chairman of the Management Board, JSC MC RDIF 2014–2015 Deputy Head of Administration, Blagoveshchensk 2013 to present Representative of the Russian Federation on the BRICS Business Advisory Council 2012–2013 CEO, Amur Land Surveying Design and Engineering OJSC 2016 to present Representative of the Russian Federation on the APEC Business Advisory Council

Does not participate in the elected management and control bodies of other Participation in elected management bodies of other organizations: organizations. Participates in the management bodies of various organizations in the field Does not own shares in PJSC ALROSA. of strategic development, education, and the social sphere, investment and banking, international relations, as a member of the Board of Directors of the Mother and Child Group (MD Medical Group Investment plc), the Russia-China Investment Fund, Gazprombank, Rostelecom, Russian Railways, Transneft, Rosset, member of the Management Board of RUIE, member of the Board of Guardians of Lomonosov Moscow State University, member of the Management Board of the Roscongress Fund, RCTIF General Partner Limited (Russia-China Technology Investment Fund), RCTIF Investment Advisor Limited (Russia-China Technology Investment Fund). Does not own shares in PJSC ALROSA. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 118 PROFILE REPORT AND INVESTORS GOVERNANCE 119

Dmitry KONOV Alexey MOISEEV Independent member of the Supervisory Board Date and place of birth Born in Moscow on 6 March 1973. Date and place of birth Born in Moscow on 2 September 1970. Education Graduated from the Ordzhonikidze State Academy of Management with a de- Education gree in International Economics in 1995, and from University of Rochester with Graduated from the Moscow State Institute of International Relations of the an MA and MBA in 1998. Russian Ministry of Foreign Affairs with a degree in International Economic Relations in 1994. In 2013 took professional development courses at the Financial University of the Government of the Russian Federation. Earned an MBA from the International Institute for Management Development in 2000. In 2016 took professional development course at the Russian Academy of National Economy and Public Administration of the President of the Russian

Federation.

Recent work experience: Recent work experience:

Period Position Period Position

2007 to present Chairman of the Management Board, member of the Board of Directors of PJSC 2012 to present Deputy Minister of Finance of the Russian Federation SIBUR Holding. 2010–2012 Deputy Director of Department, Head of Administration, VTB Capital CJSC 2009 to present Chairman of the Management Board, CEO (from 2011 to 2016) of LLC SIBUR

Participation in elected management bodies of other organizations:

Member of the Board of Directors of JSC NIPIGAZ. Participation in elected management bodies of other organizations: Does not own shares in PJSC ALROSA. Chairman of the Board of Directors of JSC GOZNAK, member of the National Financial Council of the Central Bank of Russia, member of the Board of Directors of the State Corporation Deposit Insurance Agency, member of the Supervisory Board of JSC DOM.RF, member of the Supervisory Board Sergey MESTNIKOV of the Public Law Company Fund for the Protection of the Rights of Citizens Date and place of birth Participating in Shared-Equity Construction, member of the Supervisory Board Born in Borogontsy, Ust-Aldansky District, Yakut ASSR on 22 July 1981. of PJSC Bank Otkritie Financial Corporation, member of the Supervisory Board of PJSC TRUST National Bank, member of the Board of Directors of Education JSC Russian Hippodromes, member of the Supervisory Board of LLC Banking Graduated from Ammosov Yakutsk State University with a degree in Law in 2003. Sector Consolidation Fund Management Company, member of the Financial Graduated from the Russian Academy of National Economy and Public Ombudsmen Service Council of ANP Ombudsman for Financial Services Administration of the President of the Russian Federation with a degree in Anti- Consumers Support Service, Chairman of the Board of Directors of Crisis Management of Enterprises, Regions, and Industries in 2013. JSC FTA Almazyuvelirexport, member of the Board of Directors of the Foundation of the Integrated Housing Development Institution, Chairman of the Board of Directors of JSC Bank.DOM.RF, member of the Supervisory Board of PJSC VTB Bank. Does not own shares in PJSC ALROSA.

Recent work experience:

Period Position

05.2020 to present Deputy Chairman, Government of the Republic of Sakha (Yakutia) 2016 – May 2020 General Director of the Special Fund for Future Generations of the Republic of Sakha (Yakutia) 2012–2016 First Deputy Ministry of Property and Land Relations of the Republic of Sakha (Yakutia) 2012 to present Chairman, member of the Supreme Council of the Special Fund for Future Generations of the Republic of Sakha (Yakutia)

Does not participate in the elected management and control bodies of other organizations. Does not own shares in PJSC ALROSA. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 120 PROFILE REPORT AND INVESTORS GOVERNANCE 121

Alexey NOSKOV Maksim TERESHCHENKO Independent member of the Supervisory Board Date and place of birth Born in Irkutsk on 21 May 1981. Date and place of birth Born in Yansky, Verkhoyansky District, Yakut ASSR on 29 January 1963. Education Graduated from the National Technical University of Ukraine “Kiev Polytechnical Education Institute” with a degree in Informatics and Computer Technology in 2002. Graduated from Irkutsk Polytechnical Institute with a degree in Technology and Integrated Mechanization of Underground Mining in 1987. Graduated from the National Technical University of Ukraine “Kiev Polytechnical Institute” with a degree in Corporate Management in 2003. Graduated from the National Technical University of Ukraine “Kiev Polytechnical Institute” with a degree Computing Machines, Complexes, Systems and Networks in 2004. Completed a graduate degree at the Technical Institute (Neryungri Branch) of Ammosov Northeastern Federal University in 2009. Recent work experience: Completed an MBA at Kingston University of London in 2011.

Period Position

2016 to present Managing Director, JSC Polyus Aldan Recent work experience: 2015–2016 CEO, OJSC Aldanzoloto GRK Period Position

Does not participate in the elected management and control bodies of other 2018 to present Minister of Industry and Geology of the Republic of Sakha (Yakutia) organizations. 2010–2018 Deputy Director for Personnel, Head of HR, Yakutugol HC OJSC Does not own shares in PJSC ALROSA. Does not participate in the elected management and control bodies of other organizations. Does not own shares in PJSC ALROSA. Vladimir RASHEVSKY Date and place of birth Born in Moscow on 29 September 1973. Education Oleg FEDOROV Graduated from the Financial Academy of the Government of the Russian Federation with a degree in International Economics in 1995. Date and place of birth Born in Moscow on 30 August 1968. Candidate of Economic Sciences (1998). Education Graduated from Lomonosov Moscow State University with a degree in Mathematics, Applied Mathematics in 1992.

Recent work experience:

Period Position

09.2020 to present Chief Executive Officer, member of the Management Board of EuroChem Group AG, CEO of MCC EuroChem JSC Recent work experience: 2004 – May 2020 CEO, Chairman of the Management Board of Siberian Coal Energy Company Period Position (JSC SUEK) 2012–2014 Adviser to the Director of the Federal State Property Management Agency

Participation in elected management bodies of other organizations:

Member of the Management Board of the Russian Union of Industrialists and Participation in elected management bodies of other organizations: Entrepreneurs, member of the Board of Directors of JSC SUEK, member of the Board of Directors of LLC Siberian Generating Company and Chairman Member of the Board of Directors of PJSC IDGC of North-West, member of of the Management Board of the Regional Socioeconomic Support Fund the Management Board of the Pestovo Cottage Settlement Improvement SUEK-REGIONS. Association. Does not own shares in PJSC ALROSA. Does not own shares in PJSC ALROSA. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 122 PROFILE REPORT AND INVESTORS GOVERNANCE 123

KEY COMPETENCIES OF THE MEMBERS OF THE SUPERVISORY BOARD (SB)

Participation in Key competencies committees of the SB

1 Share in No. Name Status, independence CC, % Strategy and Strategy Sustainability Audit HR & Remuneration ofDate election to the SB planning Strategic International cooperation/business Risk management Marketing Law activity ь Operating Industry Analysis of financial statements Human resources management and incentive systems ИInnovation, Information technology Knowledge of regions the Company where operates administration Public

1 Anton Siluanov Chairman, nonexecutive 25/06/2015 + + + * + + * + + * + + None

2 Maria Gordon Independent director v C v 25/06/2015 + + + ** * ** ** + + ** - ** None

3 Evgenia Grigorieva Non-executive v C 25/06/2015 * - ** ** + * ** * + * + + None

4 Natalia Guryeva Non-executive 24/06/2020 * ** ** ** - ** ** * ** ** ** * None

5 Kirill Dmitriev Non-executive v 30/06/2017 + + + * * + * + + + + + None

6 Andrey Donets Non-executive v 26/06/2019 + + + + * * + + + * + + None

7 Sergey Ivanov Deputy Chairman, v 30/06/2017 + + + * ** - + * + * + * 0.00415 executive director

8 Dmitry Konov Independent director v v 30/06/2017 + + + * ** * + + + * ** ** None

9 Sergey Mestnikov Non-executive v 30/06/2017 * ** * * + * ** * * * + + None

10 Alexey Moiseev Non-executive C 26/06/2018 + ** + * ** + ** + + ** ** + None

11 Aisen Nikolaev First Deputy Chairman, v 22/10/2018 + + + + + + + + + + + + None non-executive

12 Alexey Noskov Independent director v v v 24/06/2020 * - * ** ** + * * * ** * - None

13 Vladimir Rashevsky Non-executive v 24/06/2020 + + * * * + ** + + * * * None

14 Maksim Tereshchenko Non-executive v 24/06/2020 + * + * * + * + + + + * None

15 Oleg Fedorov Non-executive v 29/06/2013 + * ** ** * ** ** * + ** * + None

Legend: C Chairman of a committee of the Supervisory Board; + expert; - none; v participates in the work of a committee of the * has experience; t - has an extended period of service on the Supervisory Board Supervisory Board; ** has a working knowledge;

1 On 15 February 2021 by decision of the Supervisory Board, Minutes No. 01/327-PR-NS, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the Strategy and Sustainability Committee of the Supervisory Board of PJSC ALROSA | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 124 PROFILE REPORT AND INVESTORS GOVERNANCE 125

Meetings of the Supervisory Board In 2020 the Supervisory Board considered 92 issues in the following areas:

В Supervisory Board events in 2020 were mainly held re- In the reporting year the Supervisory Board held 21 corpo- 3 3 Indicator Control, risks On the Company's participation in motely, due to the restrictions caused by the spread of the rate events, of which 20 involved remote voting and one other organization Corporate governance 22 coronavirus infection. was a meeting held as a videoconference. 8 Personnel and remunaration 22 Approval/amendment of internal 15 Corporate governance documents Strategy and prioprity areas of 14 activity 12 Transactions Consideration of reports 13 PARTICIPATION IN MEETINGS BY THE MEMBERS OF THE SUPERVISORY BOARD IN 20201 Transactions 12

Participation in corporate events in 2020 Personnel and remuneration 8 Control, risks 3 of which 13 15 Concideration of reports Approval/amendment of On the Company's participation in 3 No. Name total in-person/ remote internal documents other organizations video conf. 14 Members of the Supervisory Board who left the board on 24 June 2020 Strategy and priority areas of activity 1. Andrey Karkhu 11 0 11

2. Sergey Donskoy 11 0 11 A list of meetings and the issues considered is given in Appendix 14 3. Galina Makarova 11 0 11

4. Vladimir Solodov 11 0 11

Members of the Supervisory Board who were elected to the board on 24 June 2020 Information on the performance by the Supervisory Board of duties related

1. Natalia Guryeva 10 1 9 to its role in the organization of an effective system of risk management and

2. Alexey Noskov 10 1 9 internal controls

3. Vladimir Rashevsky 10 1 9 In 2020, the Supervisory Board considered and approved In the reporting year, the Supervisory Board also considered the Annual Critical Risk Report for 2019 and approved the and approved new versions of the Risk Management Policy 4. Maksim Tereshchenko 10 1 9 Action Plan to Minimize Critical Risks for 2020. of PJSC ALROSA and the Regulation on Risk Management of PJSC ALROSA, as well as the Internal Control Policy of Members of the Supervisory Board who were on the board throughout 2020 The Annual Critical Risk Report includes the following PJSC ALROSA. These documents were initially considered information: 1. Maria Gordon 21 1 20 by the Audit Committee. −−a list of critical risks; 2. Evgenia Grigorieva 21 1 20 The Company's internal documents are drafted with the aim −−a map of critical risks; of ensuring that they comply with the approved approaches 3. Kirill Dmitriev 21 1 w.o.2 20 to organizing risk management and internal controls. −−a report on the implementation of the Action Plan to 4. Andrey Donets 21 1 20 Minimize Critical Risks;

5. Sergey Ivanov 21 1 20 −−the implementation status of measures to minimize critical risks and the effect from measures already taken. 6. Dmitry Konov 21 1 w.o.3 20

7. Sergey Mestnikov 21 1 20

8. Alexey Moiseev 21 1 20

9. Aysen Nikolayev 21 1 20

10. Anton Siluanov 21 1 20

11. Oleg Fedorov 21 1 20

1 The Company has not established minimum requirements on attendance at meetings of the Supervisory Board

2 w.o. – written opinion

3 w.o. – written opinion | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 126 PROFILE REPORT AND INVESTORS GOVERNANCE 127

Report of the Supervisory Board on the results of the Company’s develop- −−financial reporting; Department, the Audit Commission, and the external auditors, control over their independence and objectivity, and −−risk management and internal control procedures; ment in priority areas of activity overseeing the quality of their work. −−independent external audit, internal audit; In accordance with the Regulation on the Audit Committee В This reporting year was extremely difficult for the The draft Consolidated Project received preliminary approv- −−fighting against unethical practices by Company of the Supervisory Board of PJSC ALROSA, the committee Company in connection with the worldwide spread of the al by the Strategy and Sustainability Committee4. employees and third parties; consists of three members, all of whom are independent COVID-19 pandemic, which among other things led to a In 2021, the Company continues to implement measures members of the Supervisory Board. If for objective reasons sharp decrease in consumer demand for diamond jewel- −−risks related to the completeness of information aimed at cutting costs, increasing the productivity of equip- it is not possible to create a committee of only independent ry and the virtual suspension of polishing and cutting fa- disclosures. ment and personnel, and reducing expenses on material members of the Supervisory Board, the majority of com- cilities. The attention of Company management and the resources. Increased sales, in conjunction with cost optimi- The Audit Committee plays a key role in ensuring the mittee members must be independent members of the Supervisory Board was focused mainly on addressing vitally zation measures, will make it possible to improve the effective functioning of the Internal Audit Department, Supervisory Board, while the remaining members may be important issues for the Company and its shareholders. financial and economic indicators of the ALROSA Group's the Risk Management Department, the Internal Control non-executive members of the Supervisory Board. On 6 May 2020, as part of its preparations for holding the operations. Annual General Meeting of Shareholders of Company for The Supervisory Board also considered the following 2019, the Supervisory Board1 made the decision to direct high-priority documents in 2020: 100% of the free cash flow for the second half of 2019 to the payment of dividends. This issue was given preliminary −−Report on the implementation in 2019 of the Program to consideration by the Audit Committee and received its Raise the Operational Efficiency and Decrease Expenses approval. of the ALROSA Group in 2017–2019 and the Program to In 2020 the following changes were made to the Audit Committee of the Supervisory Board of PJSC ALROSA: On 18 September 2020, the Supervisory Board2 decided to Raise the Operational Efficiency and Decrease Expenses adjust the Company’s 2020 Consolidated Budget, the tar- of the ALROSA Group in 2020–2022 and for the Period to 2029; get figures for KPI of the ALROSA Group, and to optimize 01 Jan 2020 – 24 Jun 2020 10 Jul 2020 – 31 Dec 2020 (current committe) social expenditures. −−Report on the implementation in 2019 of the Innovative Maria Gordon Maria Gordon With the aim of maintaining financial stability and produc- Development and Technological Modernization Chairman (independent director) Chairman (independent director) tion potential, the Company was forced to take a number Program for 2019 and the Innovative Development and Technological Modernization Program of PJSC ALROSA of anticrisis measures: reduction in the volume of produc- Galina Makarova (independent director) Dmitry Konov (independent director) tion, review of the investment program, and cuts to current to 2024; spending and the creation of liquidity provisions. −−the results of work on the Company’s Quality Oleg Fedorov (independent director) Alexey Noskov (independent director) The adjustment of the limit on social spending took into ac- Management System for 2019; count the estimate of expected results of 2020 operations −−approval of the PJSC ALROSA Sales and Marketing and optimization measures, as well as unscheduled spend- Policy. The Committee considered 44 issues in 2020. A list of meetings and the issues considered is given in Appendix 13. ing on measures to fight the spread of coronavirus. The Consolidated Budget of the Company for 2021 was approved by the Supervisory Board on 29 December 20203. PARTICIPATION BY THE MEMBERS OF THE AUDIT COMMITTEE IN MEETINGS IN 2020

Participation in the work of the Audit Committee in 2020

Name total in-person/video remote Committees of the Supervisory Board and their members conf. Members of the Supervisory Board who were on the Committee throughout 2020. Regulations on specialized committees of the Supervisory Audit Committee Board Maria Gordon 7 5 2 The Audit Committee was created on 20 April 2010 for the The Regulations on the Strategy and Sustainability purposes of improving the effectiveness and quality of the Members of the Supervisory Board who left the Committee on 24 June 2020 Committee, the Audit Committee, and the HR & work of the Supervisory Board as regards control over the Remuneration Committee of the Supervisory Board of Company’s financial and business activities, ensuring open Oleg Fedorov 3 2 1 PJSC ALROSA were approved by decision of the communication with the Company’s auditors and the Audit Galina Makarova 4 3 1 Supervisory Board dated 22 June 20185, while amend- Commission, branches, representative offices, and services ments to these regulations were made by decision of the of the Company by means of the preliminary consideration Members of the Supervisory Board who were elected to the Committee on 10 July 2020. Supervisory Board on 10 July 20186 . and drafting of recommendations to the Supervisory Board on issues within the competence of the Committee in the Dmitry Konov 3 2 o.w.1. 1 КIn addition, the Regulation on the HR & Remunerations following areas: Committee of the Supervisory Board of PJSC ALROSA was Alexey Noskov 3 2 1 amended by decision of the Supervisory Board on 9 September 20187, 9 July 20198 and 10 July 20209.

1 Minutes No. 01/313-PR-NS 5 Minutes No. A01/273-PR-NS 2 Minutes No. 01/320-PR-NS 6 Minutes No. A01/275-PR-NS 3 Minutes No. 01/326-PR-NS 7 Minutes No. A01/282-PR-NS 4 On 15 February 2021 by decision of the Supervisory Board, Minutes No. 01/327-PR-NS, 8 Minutes No. 01/297-PR-NS the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed 9 the Strategy and Sustainability Committee of the Supervisory Board of PJSC ALROSA Minutes No. 01/317-PR-NS 1 w.o. – written opinion | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 128 PROFILE REPORT AND INVESTORS GOVERNANCE 129

Strategy and Sustainability Committee1 PARTICIPATION BY THE MEMBERS OF THE STRATEGY AND SUSTAINABILITY COMMITTEE AT ITS MEETINGS IN 2020 The Strategy and Sustainability Committee (previously the −−integration policy; Strategic Planning Committee) was created on 20 April 2010 of which: with the aim of improving the efficiency and quality of work −−dividend policy; of the Supervisory Board through the preliminary considera- −−strategic documents of the Company related Name total in-person/ remote tion and preparation of recommendations to the Supervisory to sustainability, including the ALROSA Group video conf. Board on issues relating to priority areas of the Company’s Program for Sustainable Development; activity, the most important of which are: Members of the Supervisory Board who were on the Committee throughout 2020 −−Improvement of corporate relations, including proposals −−identification of the strategic goals and strategic risks aimed at improving corporate governance practices Alexey Moiseev 5 4 1 of the Company's activity, including in the area of (based on an assessment of corporate governance 11 sustainability; assessment of the Company’s financial practices) and proposals on appropriate amendments Maria Gordon 5 4 (1 w.o.) 1 and nonfinancial risks (including operating risks, social to the Charter and other internal documents of the Evgenia Grigorieva 5 4 1 risks, risks in the area of health and safety, environmental Company, as well as proposals on the corresponding protection, the development of human capital and the personnel decisions for the Company’s executive Kirill Dmitriev 5 4 w.o. 1 regions where the Company operates, responsible bodies; business practices, and other nonfinancial risks, as well Andrey Donets 5 4 1 as establishing acceptable levels of risk), approval of a −−approval of Company internal documents related to the strategy (long-term program) for the development of functions of the Committee, including the Regulation on Sergey Ivanov 5 4 1 the group, and attracting long-term investments; Procurements; Sergey Mestnikov 5 4 1 −−consideration of issues related to defining and −−analysis and forecasting of scientific and technical achieving the Company’s strategic goals in the area development, and an assessment of the level of Aysen Nikolayev 4 3 1 of sustainability, including issues of health and safety, modernization and optimization of the technologies in Oleg Fedorov 5 4 1 environmental protection, the development of human use at the Company; capital and the regions where the Company operates, −−Company participation in international initiatives, Members of the Supervisory Board who left the Committee on 24 June 2020 and responsible business practices; organizations, and associations on issues of Sergey Donskoy 3 2 1 −−approval of long-term, medium-term, and short-term sustainability and responsible business practices. financial and business plans: The number of members of the Strategy and Sustainability Andrey Karkhu 3 2 1 Committee is determined by decision of the Supervisory −−investment policy; Dmitry Konov 3 2 1 Board, but may not be less than three members of the −−credit policy; Supervisory Board. Vladimir Solodov 3 2 w.o. 1

Members of the Supervisory Board who were elected to the Committee on 10 July 2020.

Alexey Noskov 2 2 (1 w.o.) 0

Vladimir Rashevsky 2 2 0 In 2020, a new Supervisory Board was elected by decision of the annual General Meeting of Shareholders, and accordingly the Strategy and Sustainability Committee was updated as Maksim Tereshchenko 2 2 0 well: The Committee considered 11 issues in 2020. A list of meetings and issues considered is given in Appendix 14. 1 January 2020 – 24 June 2020 10 July 2020 – 31 December 2020 (current committee)

Alexey Moiseev Alexey Moiseev HR & Remuneration Committee Chairman Chairman The HR & Remuneration Committee was created on Maria Gordon (independent director) Maria Gordon (independent director) Board, and other Company officials, a list of which is deter- 20 April 2010 for the purposes of improving the efficien- mined by the Supervisory Board. Evgenia Grigorieva Evgenia Grigorieva cy and quality of the work of the Supervisory Board and the decisions made thereby, through the preliminary con- In accordance with the Regulation on the HR & Remuneration Kirill Dmitriev Kirill Dmitriev sideration and preparation of recommendations to the Committee of the Supervisory Board of PJSC ALROSA, the Andrey Donets Andrey Donets Supervisory Board on issues relating the formation of an Committee consists of four (4) members, all of whom are in- efficient and transparent practice of remuneration, the for- dependent directors. If for objective reasons it is not possi- Sergey Donskoy Sergey Ivanov mation of the main directions of human resources policy at ble to create a committee of only independent members of Sergey Ivanov Sergey Mestnikov the Company, with the aim of reinforcing the professional the Supervisory Board, the majority of committee members staff and the effectiveness of the work of the Supervisory must be independent members of the Supervisory Board, Andrey Karkhu Aisen Nikolayev Board, as well as the payment of remuneration to the mem- while the remaining members may be other members of the Dmitry Konov (independent director) Alexey Noskov (independent director) bers of the Supervisory Board, the members of the Audit Supervisory Board who are not the CEO – Chairman of the Commission, the members of the Management Board, the Management Board and/or members of the Management Sergey Mestnikov Vladimir Rashevsky Chief Executive Officer – Chairman of the Management Board. Aisen Nikolayev Maksim Tereshchenko Vladimir Solodov Oleg Fedorov Oleg Fedorov (independent director) -

1 On 15 February 2021 by decision of the Supervisory Board, Minutes No. 01/327-PR-NS, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the Strategy and Sustainability Committee of the Supervisory Board of PJSC ALROSA 1 w.o. – written opinion | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 130 PROFILE REPORT AND INVESTORS GOVERNANCE 131

In 2020, a new Supervisory Board was elected by decision With the aim of identifying the personnel needs of the −−the Company has created conditions to allow of the annual General Meeting of Shareholders, and Supervisory Board and its committees, in accordance with shareholders to use electronic communications to accordingly the HR & Remuneration Committee was the recommendations of the Bank of Russia, in the report- exercise their rights; updated as well: ing year the HR & Remuneration Committee, in conjunction −−a senior independent director is elected on the with the Corporate Secretary of the Company, performed Supervisory Board; an assessment of the members of the Supervisory Board of 1January 2020 – 24 June 2020 10 July 2020 – 31 December 2020 (current committee) PJSC ALROSA from the standpoint of professional speciali- −−the Company has comprehensive regulations to address zation, experience, independence, and commitment to the conflicts of interests of members of the Supervisory Galina Makarova – Chairman (independent director) Evgenia Grigorieva – Chairman work of the Supervisory Board. Board and the executive bodies; Maria Gordon (independent director) Maria Gordon (independent director) In order to preserve and develop best practices at the −−the competency of the Supervisory Board has been Company, the Committee plays an active role in the perfor- expanded as regards approval of major transactions; Dmitry Konov (independent director) Dmitry Konov (independent director) mance of all necessary measures to assist in the orientation −−the Company provides for insurance of the liability Sergey Mestnikov Alexey Noskov (independent director) of members of the Supervisory Board who have been elected members for the first time. of members of the Supervisory Board and the Vladimir Solodov - Management Board; The Committee considers progress towards achieving Oleg Fedorov (independent director) - the key performance indicators of the ALROSA Group, −−the Company has developed and put into operation and makes recommendations to the Chairman of the a regulatory and methodological framework for risk Supervisory Board and the Supervisory Board on assessing management; As of 31 December 2020, the HR & Remuneration The Committee considered 29 issues in 2020. The list of the work of management, in order to make decisions on Committee consists of four members of the Supervisory meetings and issues considered is given in Appendix 14. −−the Internal Audit Department has been made the payment and amount of bonuses to members of the functionally accountable to the Supervisory Board; Board, of whom three are independent members. Management Board of the Company. −−the Company has created the effectively functioning position of Corporate Secretary; Main results of the assessment of the −−PJSC ALROSA discloses full information on the PARTICIPATION BY THE MEMBERS OF THE HR & REMUNERATION COMMITTEE AT ITS MEETINGS IN 2020 ownership structure of the Company; work of the Supervisory Board −−the Company discloses all of the main forms of Participation in the work of the HR & Remuneration Committee in 2020 financial statements prepared in accordance with IFRS. of which: National Rating of Corporate Governance (NRCG) Financial statements are disclosed together with the corresponding auditors' reports; With the aim of determining the corporate governance Name total in-person/video conf. remote rating using the scale of the National Rating of Corporate −−PJSC ALROSA discloses interim financial statements Members of the Supervisory Board who were on the Committee throughout 2020 Governance (NRCG) of the Russian Institute of Directors, prepared under IFRS, as well as annual IFRS financial since 2015 an analysis of the Company’s corporate govern- statements before the annual General Meeting of Maria Gordon 10 3 7 ance practices has been performed each year. The anal- Shareholders is held to consider the results of the ysis is performed in four main areas, in which both posi- corresponding year; Dmitry Konov 10 3 (1 w.o.) 1 7 tive sides and areas that require further development are determined: −−the Company actively implements corporate social Members of the Supervisory Board who left the Committee on 24 June 2020 projects for its employees, the populace of the areas −−shareholder rights; where the Company operates, as well as charitable and Galina Makarova 6 2 4 sponsorship projects; −−work of the management and control bodies; Sergey Mestnikov 6 2 4 −−the operations of PJSC ALROSA are certified for −−information disclosure; compliance with ISO 9001 and ISO 14001:2004; Vladimir Solodov 6 2 (1 w.o.) 4 −−activity in the interests of other stakeholders and −−the Company prepares a social report that meets GRI corporate social responsibility. Oleg Fedorov 6 2 4 standards. On 19 October 2020, based on monitoring of the Members of the Supervisory Board who were elected to the Committee on 10 July 2020 Constraining factors that require further efforts include the Company’s corporate governance practices over the pre- following: Evgenia Grigorieva 4 1 3 vious year, the Russian Institute of Directors confirmed the rating of PJSC ALROSA at the level of NRCG 8 “Leading −−a large number of meetings of the Supervisory Board Alexey Noskov 4 1 3 corporate governance practices” using the methodology of are held in the form of remote voting; the National Rating of Corporate Governance (NRCG). −−the HR & Remuneration Committee includes non- NRCG 8 means that the Company complies with require- executive directors; Report of the HR & Remuneration Committee of the Supervisory Board on ments of Russian legislation on corporate governance and follows a substantial portion of the recommendations of the −−during its meetings, the Supervisory Board of the results of the Committee’s work Russian Code of Corporate Governance. The risks of losses PJSC ALROSA did not consider issues of the for owners is related to the quality of corporate governance implementation of the Company’s information policy. During the reporting year, the Committee continued to Implementation of the norms of the Regulation on are negligible. Taken together, the recent events did not have a substantial work on important aspects of human resources manage- Succession of the Members of the Supervisory Board will effect on the assessment of the corporate governance prac- ment, including succession planning for both Company help to shape, preserve, and develop the skills, experience, In the practice of the Company's corporate governance, the following key positive aspects are maintained: tice at PJSC ALROSA, and for this reason on management and members of the Supervisory Board. and qualifications of Board members that the Supervisory 19 October 2020 the Russian Institute of Directors upheld Board requires to effectively exercise its authorities, and will The Committee considered and recommended to −−the Company has a positive dividend history; the Company's rating unchanged, confirmed at the level of also promote the continuity and consistency of the work of the Supervisory Board for approval the Regulation on NRCG 8. the Supervisory Board, and a balanced composition of the −−generally recognized audit firms, chosen on a Succession of the Members of the Supervisory Board. Supervisory Board with the annual rotation of membership. competitive basis, are engaged for the audit of the IFRS and RAS financial statements;

1 w.o. – written opinion | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 132 PROFILE REPORT AND INVESTORS GOVERNANCE 133

Results of the self-assessment/external assessment of the Remuneration of members of the Report on the practical implementation of the remunera- Supervisory Board and its committees from the standpoint tion policy for members of the Supervisory Board of working efficiency Supervisory Board The annual General Meeting of Shareholders of The total amount of remuneration payments to the mem- In order to maintain the trust of shareholders and the in- PJSC ALROSA held on 24 June 20201 decided to pay bers of the Supervisory Board at the end of the 2019-2020 terest of investors in the Company, the Supervisory Board Regulation on the remuneration of members of the remuneration to non-state employees for their work as corporate year equaled RUB 64,948,214.3 (sixty-four mil- has created a transparent system for assessing its activities Supervisory Board of the Company members of the Supervisory Board of PJSC ALROSA dur- lion nine hundred forty-eight thousand two hundred four- in accordance with the principles of corporate governance ing the 2019-2020 corporate year in the amount and ac- teen roubles). A new version of the Regulation on Remuneration of and best corporate governance practices. cording to the procedure established by the Regulation Members of the Supervisory Board of PJSC ALROSA (here- on Remuneration of Members of the Supervisory Board of The assessment is performed for the purposes of: inafter the “Regulation”) was approved by decision of the PJSC ALROSA. Annual General Meeting of Shareholders of the Company −−obtaining well-considered information on the level on 26 June 20194. of effectiveness of the Supervisory Board and its AMOUNT OF REMUNERATION PAID TO MEMBERS OF THE SUPERVISORY BOARD IN 2020, RUB committees, and how well their work meets the needs of ВIn accordance with Regulation, remuneration may be paid to members of the Supervisory Board of the Company for the Company’s development; Maria Gordon 11,800,000.0 participating in the work of the Supervisory Board (prin- −−improving the practices of the Supervisory Board and cipal remuneration) and for performing the functions of Kirill Dmitriev 6,364,285.7 developing the system of corporate governance at the Chairman of the Supervisory Board, senior independent Company; director, and also for chairmanship and/or membership Andrey Donets 6,942,857.1 −−reinforcing trust in the Company on the part of in committees of the Supervisory Board (supplementary Sergey Donskoy 7,200,000.0 shareholders and potential investors; remuneration). Andrey Karkhu 7,200,000.0 −−reinvigorating the work of the Supervisory Board; Members of the Supervisory Board are also paid compensation for transportation expenses, accommodation ex- Dmitry Konov 7,376,785.7 −−identifying areas where the activity of the Supervisory penses, and expenses on technical services enabling them Galina Makarova 9,000,000.0 Board and its committees can be improved, and factors to participate in meetings of the Supervisory Board and/or standing in the way of effective work. the committees of the Supervisory Board held in the form Oleg Fedorov 9,064,285.7 In accordance with the recommendations of the Code of of video conferencing and/or using other technological means of communication. Corporate Governance and the recommendations of the This remuneration was paid to the members of the In addition to the remuneration paid at the end of the 1 Bank of Russia , on the basis of the Regulation on Assessment Remuneration and compensation are not paid to members Company’s Supervisory Board in full by the established due 2019-2020 corporate year, the members of the Supervisory 2 of the Activity of the Supervisory Board of PJSC ALROSA , of the Supervisory Board in the following cases: date. Board were also paid compensation totaling and in execution of the decision of the Supervisory Board RUB 33 thousand during the reporting period dated 6 November 20203, in December 2020 a self- −−to the chairman and members of the Supervisory Board assessment was performed of the activity of the Supervisory who have the status of a government or municipal Board and the committees of the Supervisory Board civil servant – in accordance with applicable Russian (hereinafter the “assessment”). legislation; The assessment was performed by having members of the −−to the chairman and members of the Supervisory Board Supervisory Board complete a questionnaire. Of 15 elected who also hold a federal official position of the Russian EXECUTIVE MANAGEMENT BODIES members of the Supervisory Board, 14 participated in the Federation, an official position with a constituent entity of the Russian Federation, a municipal position, or a assessment. The Chief Executive Officer – Chairman of the Management The Management Board of PJSC ALROSA has the number position in a federal state agency, a state agency of Board (single-person executive body) and the Management of members determined by the Supervisory Board of The analysis resulted in the following data: a constituent entity of the Russian Federation, or a Board (collegial executive body) are responsible for the PJSC ALROSA. position in a municipal agency (hereinafter “government −−the majority of members of the Supervisory Board rate day-to-day management of the Company’s operations. The positions or positions in government agencies”); Based on the Supervisory Board’s decision dated 26 August the efficiency of operation of the Supervisory Board competence of the Company’s executive bodies includes 2019, the membership of the Management Board was set fairly highly; −−members of the Supervisory Board who are all issues of day-to-day management of operations, except at six people. As of 31 December 2020, there are six simultaneously the chief executive officer or a member for those issues that have been assigned to the General −−the assessment confirms the efficiency of the work of members on the Management Board of PJSC ALROSA the Supervisory Board in 2020, and also demonstrates of the collegial executive body of the Company. Meeting of Shareholders and the Supervisory Board. The Chief Executive Officer – Chairman of the Management Issues considered by the Management Board in 2020 positive changes in the assessment of the activity of Remuneration to members of the Supervisory Board is paid Board and the Management Board implement the de- the Supervisory Board compared to the assessment based on work performance for the period from the time a cisions of the General Meeting of Shareholders and the The Management Board considered 72 issues in 2020. performed in 2019. The overall average assessment of candidate is elected as a member of the Supervisory Board Supervisory Board and are accountable thereto. the efficiency of operation of the Supervisory Board in up to the time of the election of a new Supervisory Board. 2020 (3.68 out of 4) was higher than in 2019 (3.65 out If a new Supervisory Board is elected at an extraordinary of 4); General Meeting of Shareholders, the remuneration of Breakdown of issues Amount −−recommendations on further improvements to the the newly elected (departing) members of the Supervisory activity of the Supervisory Board were provided for Board is determined proportional to the time worked Issues requiring preliminary consideration before being referred to the Supervisory Board, 13 consideration to the HR & Remuneration Committee during the corporate year. except for transactions and the Supervisory Board. Preliminary consideration of transactions (including charity and sponsorship transactions) 9

Determining the areas of implementation of the Company’s goals, strategies, policies and 11 programs Human resources and social issues 25 Consideration of the Company’s internal documents 12

1 Informational Letter No. IN-06-28/41 of the Bank of Russia dated 26 April 2019 Risk management 2 2 Approved on 14 December 2018, Minutes No. A01/285-PR-NS 3 Minutes No. 01/323-PR-NS 4 Minutes No. 40 1 Minutes No. 42 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 134 PROFILE REPORT AND INVESTORS GOVERNANCE 135

Brief biographical information

Sergey IVANOV Sergey BARSUKOV Chief Executive Officer – Chairman of the Management Board Deputy Chief Executive Officer, member of the Management Board Date of appointment to the position: 14 March 2017 Date of appointment to the position: 14 August 2017 Brief biographical information Brief biographical information Born in Moscow on 23 October 1980. Born in Kalinin on 2 September 1971. Graduated from Moscow State Institute of International Relations with a degree Graduated from the Mozhaysky Military and Aerospace Engineering Academy in Economics in 2001. with a degree in Mathematical Support of Automated Data Processing Systems in 1993. Graduated from Moscow State Institute of International Relations with a degree in Banking and Finance in 2002. Graduated from Saint Petersburg State University with a degree in Public and Regional Administration in 2005. Graduated from Plekhanov Russian University of Economics in 2011. Candidate of Economic Sciences.

Трудовая деятельность за последние годы: Recent work experience:

Period Position Period Position

2017 to present Chief Executive Officer – Chairman of the Management Board of PJSC ALROSA 2017 to present Deputy Chief Executive Officer of PJSC ALROSA (manages and is responsible for representing the Company’s interests in relations with the government 2016–2017 Senior Vice President – Head of Wealth Management at PJSC Sberbank authorities and administrations, public organizations, developing external 2011–2016 Chairman of the Board of JSC Sogaz relations, implementing the Company’s global operations development policy, and representing the Company’s interests in relations with international trade associations of the global diamond mining and processing industry, licensing of all lines of business of the Company and the Russian S&A) Information on transactions involving the acquisition or disposal of shares is published as an announcement of a corporate action and in the "Information on 2010–2017 Director of the Financial Policy Department of the Ministry of Finance of the Russian the members of the Supervisory Board" section of the Company’s website. Federation

Does not own shares in PJSC ALROSA. Did not perform any transactions i nvolving the acquisition or disposal of shares in 2020. Evgeny AGUREEV Deputy Chief Executive Officer and Director of USO ALROSA, member of the Management Board Date of appointment to the position: 3 August 2017 Igor SOBOLEV Brief biographical information Born in Vienna (Austria) on 31 January 1978. First Deputy Chief Executive Officer – Executive Director, member of the Management Board Graduated from Lomonosov Moscow State University with a degree in Date of appointment to the position: 1 January 2012 Economics in 1999. Graduated from Lomonosov Moscow State University with a degree in Brief biographical information Management in 2001. Born in Kimovsk, Tula Region, on 16 November 1969. Graduated from Tula State Technical University with a degree in Mining Engineering and Construction in 1993.

Recent work experience:

Period Position

2019 to present Deputy Chief Executive Officer of PJSC ALROSA and Director of USO ALROSA (manages and is responsible for the performance by the Company of rough diamond sales plans, ensuring Recent work experience: the timely receipt of rouble and foreign currency revenue for the products sold (rough diamonds), and forming and implementing the Company’s rough diamond sales policy) Period Position 2017–2019 Director of USO ALROSA, a branch of PJSC ALROSA 2018 to present First Deputy Chief Executive Officer – Executive Director of PJSC ALROSA (manages and is responsible for the Company’s main production activity and related business 2009–2017 Head of the International Reporting Division, Deputy Head of the Planning and Reporting operations in the Company’s areas of presence, including in the Republic of Sakha Department of the Finance Department, Head of the Planning and Reporting Department, (Yakutia)) Senior Managing Director of the Finance Department, Vice President – Director of the Finance Department of PJSC Sberbank of Russia 2012–2018 First Vice President – Executive Director of PJSC ALROSA

Does not own shares in PJSC ALROSA. Did not perform any transactions Does not own shares in PJSC ALROSA. Did not perform any transactions i involving the acquisition or disposal of shares in 2020. nvolving the acquisition or disposal of shares in 2020. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 136 PROFILE REPORT AND INVESTORS GOVERNANCE 137

Alexey PHILIPPOVSKIY Remuneration of members of the specific performance assessment indicators of the Long- Term Development Program of the ALROSA Group into Deputy Chief Executive Officer, member of the Management Board executive body short-term (one-year) and medium-term (three-year) peri- Date of appointment to the position: 1 September 2017 ods and to form links between the achievement of performance indicators and the remuneration to be received by Brief biographical information Regulation on remuneration of the Company’s executive the Company’s management personnel. Born in Yekaterinburg on 28 December 1972. bodies The KPI for the Chief Executive Officer – Chairman of the Graduated from the University of California, Los Angeles with a Master of Remuneration is paid to the Chief Executive Officer – Management Board and the members of the Management Business Administration in 2002. Chairman of the Management Board and the members of Board were established in the Regulation on the System of the Management Board based on the new versions of the Graduated from the Maxwell School of Public Administration, New York, USA, Key Performance Indicators of PJSC ALROSA: with a Master of Public Administration in 2015. Regulation on Remuneration of the Chief Executive Officer – Chairman of the Management Board and the Regulation −−quarterly: revenue from the sale of core products, on Remuneration of the Members of the Management production of rough diamonds, earnings before Board approved by the Supervisory Board on 27 December deductions; 2019. The Regulations contain the procedure for calculating annual and quarterly remuneration for the actual −−annual: dividend flow, return on equity, return on Recent work experience: short-term and operating KPI achieved during the year and sales based on earnings before deductions, labor productivity, decrease in operating expenses, the Period Position ensure a direct link between the achievement of target KPI and the level of remuneration of the Chief Executive volume of run-of-mine ore, integrated KPI of innovations 2017 to present Deputy Chief Executive Officer of PJSC ALROSA (manages and is responsible for Officer – Chairman of the Management Board and the In addition to annual KPI, bonus reduction indicators are the Company’s accounting and reporting, corporate finance and treasury, planning level of remuneration of each member of the Company’s also established: net debt/earnings before deductions, and analysis, rationing of labor resources, and coordination of risk management) Management Board. payroll arrears to employees, accident frequency rate. 2015–2017 Chief Financial Officer of LLC Siberian Generating Company The new versions of the regulations were adopted due to the approval by the Supervisory Board of PJSC ALROSA on 10 December 2019 of the Regulation on the System of Report on the practical implementation of the principles Key Performance Indicators of PJSC ALROSA, drafted in of the remuneration policy of the Company’s executive accordance with the requirements of the Methodological body Does not own shares in PJSC ALROSA. Did not perform any transactions Recommendations approved by Order No. 1388-r of the involving the acquisition or disposal of shares in 2020. The total amount of remuneration paid to the members Government of the Russian Federation dated 27 June of the executive body in the 2019-2020 corporate year 2019. The Regulation on the System of Key Performance equaled RUB 575,216 thousand (five hundred seventy-five Indicators of PJSC ALROSA establishes the list of key per- thousand two hundred sixteen roubles). formance indicators of the ALROSA Group, the method for their calculation, and the specifics of their application. The main goal of instituting a system of KPI is to convert the Andrey CHEREPNOV

Chief Engineer, member of the Management Board REMUNERATION OF THE MEMBERS OF THE MANAGEMENT BOARD IN 2020, RUB THOUSAND Date of appointment to the position: 29 June 2015 Brief biographical information Indicators 2018 2019 2020 Born in Irkutsk on 4 January 1966. Graduated from Irkutsk Polytechnic Institute with a degree in Mine Surveying in 1988. Current remuneration – amounts due and payable during the reporting 327,719 859,237 575,216 period and within 12 months after the reporting date, including: wages for the reporting period, annual paid vacation for work in the 281,000 738,053 493,460 reporting period, payments for medical treatment, healthcare services, utilities, and other payments to key management personnel accrued taxes and other mandatory payments to the corresponding 46,719 121,184 81,756 budgets and extrabudgetary funds

Recent work experience:

Period Position

2015–present Chief Engineer of PJSC ALROSA (manages and is responsible for the Company’s unified technical policy, compliance by the Company with technological requirements and regulations on subsoil protection and preservation of mineral raw materials at all stages of production and processing, improving the efficiency of open pit and underground mining, construction work, environmental safety, improving the quality of products, work and services, development and examination of feasibility studies) 2012–2015 Deputy Chief Engineer for Production of PJSC ALROSA

Ordinary shares in PJSC ALROSA: 0.0004%. Did not perform any transactions involving the acquisition or disposal of shares in 2020 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 138 PROFILE REPORT AND INVESTORS GOVERNANCE 139

CORPORATE SECRETARY RISK MANAGEMENT SYSTEM

The Corporate Secretary is an official at PJSC ALROSA who −−to ensure compliance by the Company’s executive Risk management approaches heads the Corporate Governance Department and is in- bodies and employees with legislative requirements, To ensure the Company’s sustainable development despite Internal regulatory documents were drafted with due ac- cluded in the persons holding management positions at the Company charter and other internal documents of the uncertainties and constant changes to the external en- count of the requirements of international risk management the Company. the Company guaranteeing the exercise of rights and guidelines (including COSO ERM and ISO 31000:2018) observance of the lawful interests of shareholders; vironment, ALROSA strives to continuously improve the ef- By decision of the Supervisory Board, Maksim Razdolkin has fectiveness of the risk management system. and the demands and recommendations of national reg- held the position of Corporate Secretary at the Company −−to support the activity of the General Meeting of ulators, and determine the structure of and procedure for Risk management at ALROSA is a consistent and systemic since 28 September 2018. Shareholders, Supervisory Board, the committees of organizing the risk management system (RMS). the Supervisory Board, the Management Board and the process taking place at all levels of the Company and inte- In particular, they establish the principles, goals and objec- The Corporate Secretary performs his activity in close coop- Audit Commission; grated with key business processes, focused on improving tives, common terminology, key elements, functions and eration with all Company divisions and services and is gov- the quality of management decisions. The Company iden- roles of participants in the risk management process, as erned by the legislation of the Russian Federation and the −−to assist the members of the Supervisory Board to tifies, monitors, analyzes, assesses and responds to risks on well as the main stages of the risk management process, Company’s regulations. perform their functions, including the instatement of an ongoing basis, including through systemic planning of distribution of roles, functions, authorities, responsibilities newly elected members of the Supervisory Board; measures to reduce the level of risks and ensure control The duties, rights and obligations of the Corporate and cooperation within the RMS. over their implementation. Secretary were established by the Regulation on the −−to develop the Company’s corporate governance Corporate Secretary of PJSC ALROSA, approved by the system in line with the interests of all shareholders and Supervisory Board on 25 March 2020. the Company; The Corporate Secretary’s primary tasks are: −−to increase the Company’s investment appeal and assist in its sustainable development. −−to ensure the observance of the rights and property interests of shareholders, assist shareholders in Functionally the Head of the Corporate Governance KEY INTERNAL REGULATORY DOCUMENTS GOVERNING RISK MANAGEMENT exercising their rights, and maintain a balance of Department – Corporate Secretary Maksim Razdolkin PROCESSES AT ALROSA interests between participants in corporate legal is subordinate and accountable to the Company’s relations; Supervisory Board, and administratively to the Chief Executive Officer – Chairman of the Management Board of Risk Management Policy1 Informational regulation on risk PJSC ALROSA. management containing a Risk Classifier, Regulation on Risk Management2 the Method of Risk Identification and Maksim RAZDOLKIN Assessment, and Templates of reporting documents in the RMS3 Born in 1976. Graduated from Peoples’ Friendship University of Russia in 1998. Became a candidate of legal sciences (Peoples’ Friendship University of Russia) in 2003. ALROSA performed a series of measures in 2020 to −−a project was initiated to develop pilot business He has extensive experience in corporate governance, management work, and work improve the RMS: continuity plans; experience as a member of the boards of directors of several joint stock companies. −−the Company’s critical risk list and the assessments of −−a project was initiated to assess the risks associated with He was elected to the Share Issuers Committee of PJSC Moscow Exchange on risk levels were updated; the thawing of permafrost; 3 March 2021 (minutes No. 20 of the Supervisory Board of PJSC Moscow Exchange dated 3 March 2021). −−planned measures were performed to manage critical −−measures were performed to mitigate the operating production risks and the assessments of production risks risks of airlines and airports in Mirny. were updated;

Recent work experience:

Period Position

28 September 2018–present Head of the Corporate Governance Department – Corporate Secretary of PJSC ALROSA August 2018–September 2018 Assistant to the CEO of PJSC ALROSA 2013–August 2018 Corporate Secretary of X5 Retail Group N.V. 2010–2013 Chief of Staff of the President of OJSC TNK-BP Management 2007–2010 Chief Specialist, Deputy Director of the Office of the Corporate Secretary of OJSC TNK-BP Management

He has no family ties with persons who are members of the Remuneration of the Corporate Secretary management bodies or financial and economic supervisory In 2020, the Corporate Secretary received remuneration in bodies of PJSC ALROSA. accordance with the Regulation on the Corporate Secretary He does not own shares of PJSC ALROSA. and the Company's internal regulatory documents governing the system of wages and material incentives for Company employees, including those holding 1 Based on the decision of the Supervisory Board dated 29 December 2020, minutes No. 01/326-PR-NS. management positions. 2 Based on the decision of the Supervisory Board dated 29 December 2020, minutes No. 01/326-PR-NS. 1 Minutes No. 01/310-PR-NS 3 Order No. 01/355-P dated 31 December 2020 "On Approving the Informational Regulation on Risk Management" | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 140 PROFILE REPORT AND INVESTORS GOVERNANCE 141

RISK MANAGEMENT PRINCIPLES

Principle Description

Integration Risk management is an important component of corporate governance and an integral part of the Company’s overall management system. Risk management processes should be integrated into key business processes, including business planning and goal setting. Risk management affects all business processes and structural units Consistency and continuity Risk management is a consistent and continuous process made up of the regular and sustained performance of risk-management procedures and adapts to changing conditions in the external and internal environment MAIN FUNCTIONS AND TASKS OF SPECIALIZED BODIES WITHIN THE FRAMEWORK OF THE RMS Integrity The management of certain risks and implementation of various risk management processes are performed within the overall system of risk management RMS participant Tasks Functions Economic expedience The risk management system must correspond to the Company’s size, organizational structure, strategy and goals. The risk management process must maintain a Supervisory Board ––plays a strategic and supervisory role ––approves internal regulatory documents: the reasonable balance between risk management costs and the cumulative impact of in the risk management process Risk Management Policy, Regulation on Risk risks on the Company, with due account of the probability of risks (cumulative level Management ––determines risk management goals of risks). Financial and other resources are earmarked for risk mitigation actions and and tasks and the principles of ––approves the annual critical risk report and the measures, with consideration given to the significance of the risk for the Company organization and functioning of the annual Action Plan to mitigate critical risks and the expected effect of the measure RMS Responsibility Risk management is the responsibility of all structural divisions, bodies, officials and ––approves the preferred level of risk (risk appetite) employees of the Company ––monitors the effectiveness of the risk annually management methods and measures ––approves the report of the Internal Audit used by the Company Department on the results of assessment of the reliability and effectiveness of the RMS

Audit Committee ––monitors risks ––approves the annual critical risk report and the Participants, duties and areas of responsibility annual Action Plan to mitigate critical risks ––ensures control over the reliability Organizational structure of the risk management system at ALROSA and effectiveness of the RMS ––considers the preferred level of risk (risk appetite) ––considers the report of the Internal Audit Department on the results of assessment of the reliability and effectiveness of the RMS Audit Commission SUPERVISORY BOARD

Executive bodies ––responsible for ensuring the ––regular monitoring of the Company’s overall risk External auditor Annual risk report Audit Committee (CEO – Chairman of the uninterrupted functioning of the exposure (overall level of risk), monitoring of Management Board RMS and implementation of the critical risks and new risks and the members of the Supervisory Board’s risk management ––adopt decisions on critical risk management, Management Board) decisions appoint the persons responsible for performing Internal Control Department ––responsible for the Company’s measures and exercising control over the Internal Audit Department timely and effective identification, performance of measures Chief Executive Officer – assessment and response to risks Chairman of the Management ––approve regulatory documents and guidelines Board ––allocate the required resources to on risk assessment and management Risk Management Department ensure the functioning of the risk ––develop and consider recommendations of the management system Audit Committee on the approval of internal risk ––adopt decisions to achieve risk management documents (Risk Management management goals and objectives Policy, Regulation on Risk Management), consider Risk owners Management Board the report of the Internal Audit Department on the results of assessment of the reliability and effectiveness of the RMS

Participants in risk management processes:

Management and control bodies Employees of the structural divisions and functional services Decision-making Center Administrative subordination Risk owners (owners of the risk management process) Functional and administrative subordination Center for Aggregation of Risk Information and RMS Management Functional subordination | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 142 PROFILE REPORT AND INVESTORS GOVERNANCE 143

RMS participant Tasks Functions RMS participant Tasks Functions

Risk owners, in particular ––esponsible for the day-to-day ––identify and assess supervised risks ––performs a self-assessment of the effectiveness the CEO – Chairman of management of risks within their of the RMS ––prepare, maintain and update critical risk the Management Board, area of competence, determining passports and provide them to the Risk ––organizes risk management training deputy CEOs and the risk response methods, developing Management Department heads of the structural and implementing risk mitigation divisions or functional measures, and identifying and ––develop and implement risk mitigation measures, Internal Audit Department ––collects information on risks and ––analyzes business processes to identify risks services assessing risks in the respective including emergency risk response measures control procedures to mitigate the and document the performance of control functional areas ––participate in the drafting of regulatory identified risks at the level of business procedures processes documents and guidelines on assessment and ––discusses the identified risks with the Risk management of certain types of risk ––facilitates the regular exchange of Management Department to assess the identified ––approve the Informational Regulation on Risk information on identified risks with risks and form the requirements on the control Management the Risk Management Department procedures to be performed ––promptly notify the supervising director, owner ––tests the operating efficiency of existing control of the risk management process and/or the Chief procedures Executive Officer – Chairman of the Management ––prepares proposals on improving the quality of Board of the Company of material changes the control environment in business processes in critical risks, new and realized risks or other material aspects of management of supervised risks Internal Audit Department ––performs regular independent ––assesses the effectiveness of the key elements of assessment of the reliability and the RMS effectiveness of the RMS Risk Management Division ––coordinates the risk management ––organizes the identification and assessment of ––participates in the identification of risks, violations – Risk Management process critical risks, hold discussions with Company ––provides a report on the results and non-compliance with the regulatory Department management and, if necessary, with the of assessment of the reliability documents on risk management, analyzes ––collects information on risks management of subsidiaries and effectiveness of the RMS and the information on realized risks during the ––assists in the regular exchange of recommendations on improving the performance of audits ––provides methodological support for and RMS to the Supervisory Board (Audit information on risks ––assesses the reliability and effectiveness of the coordinates risk management activity in the Committee) ––acts as the RMS management structural divisions and subsidiaries RMS at least once a year, prepares a report on command center ––assists the Company’s executive the results of assessment of the reliability and ––collects, aggregates and analyzes the information bodies and employees to develop effectiveness of the RMS and provides it for the on risks provided by risk owners measures to improve the RMS consideration of the executive bodies and the ––compiles and updates the Critical Risk List, the Audit Committee. The report is approved by the Risk Map and the Risk Register, prepares the Supervisory Board annual critical risk report ––prepares reasoned proposals on the preferred level of risk (risk appetite) ––compiles the consolidated annual Action Plan to mitigate critical risks based on the information received from risk owners ––monitors the performance of approved procedures, internal regulatory documents and guidelines on risk management at the Company ––prepares draft risk management documents and standard reporting forms ––provides information on risks to the structural divisions and functional services responsible for relations with shareholders, investors and the general public | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 144 PROFILE REPORT AND INVESTORS GOVERNANCE 145

Risk management methods Key groups of risk ALROSA applies certain management methods to each identified risk, taking into account the characteristics and results of The Company pays special attention to the management for management of other risks that would potentially lead risk assessment, as well as the degree of risk controllability based on an expert approach1. of critical risks, i.e., risks that could have a significant impact to less damage does not require the involvement of the on the achievement of the Company’s goals. The Company Management Board and is implemented as part of ordinary undertakes the most economical and effective measures operating activity. The Company’s critical risk list was Risk mitigation Risk acceptance Risk transference Risk rejection to mitigate these risks. Critical risks are considered and as- updated in 2020: (lowering the level of risk) (risk retention) (reassignment of risk) sessed and mitigation methods are discussed at the meet- −−risk 2.7 “Failure to achieve planned replenishment of ings of the Management Board. The effectiveness of criti- A risk is impacted through Includes primarily the monitoring Includes tools such as transferring Includes the rough diamond reserves for the ALROSA Group” was cal risk management is assessed by the Audit Committee preventive measures and of the risk level risk to a third party, risk insurance, termination of added and the Supervisory Board. The established procedure measures to minimize the etc. the activity under probability of risk realization and/ which the risk or to minimize damage from a appears realized risk. Includes mandatory Critical risk map on 1 January 2021 development of risk mitigation measures and introduction of additional control procedures Very high (5)

Risk mitigation measures must The level of risk and the Risk exposure is transferred to be developed and additional effectiveness of existing a third party, for example, to a control procedures introduced, control procedures within the counterparty. These risks are High (4) along with a formalized relevant business processes also included in summary risk procedure for preparing regular are monitored. These risks reporting 1.4. 1.1. risk reports (with an approved are included in summary risk format, content and frequency of reporting for the purpose of risk submission) monitoring Average (3) 1.2. 1.3. 2.4. 2.6. 1.10. 1.5. 2.1. 2.5. 2.7. 1.6. 2.2. This method is applicable to risks This method is more applicable This method is applicable to risks of any level. to risks with a low level of of any level. Low (2) This method is recommended for materiality The choice of this method is 1.7.

risks of medium, high and critical driven by the possibility to Probability 1.9. 2.3. materiality levels transfer the performance of a function (business process) to an outside organization without Very low (1) reducing the effectiveness of performance of this function 1.8. or causing damage to the Company’s reputation and without the conclusion of an Very low (1) Low (2) Average (3) High (4) Very high (5) insurance contract

Effect

The most expedient risk mitigation measures and control procedures are determined based on the weighted value of the risk assessment (level of risk).

1 The degree of risk controllability is understood as a measurement of the Company's ability to influence risk factors and consequences. The degree of control over individual risks is determined by risk owners together with the specialists of the Financial Control and Risk Management Department using an expert method and/or based on the available statistics and is used to determine the risk management method. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 146 PROFILE REPORT AND INVESTORS GOVERNANCE 147

CRITICAL RISK MANAGEMENT IN 2020 Risk materiality, Risk management measures change over the Description of risk Risk materiality, Risk management measures year Description of risk change over the year ––Implementation of the Company’s social policy ––Implementation of the price over volume and customer support strategy, ––Development of a system of staff succession planning. Approval of including the cancellation of the minimum sampling percentage of regulations on the system of succession planning. Implementation of a goods during trading sessions and deferral of payment periods for part 1.5. Shortage of directors school of mentors of the contracted goods to a later date and specialists with the ––Fulfilment of the plan for training, retraining and professional ––Adoption and implementation of a corporate decision to reduce rough required qualifications development of directors, specialists and employees through the Staff diamond production in 2020, regular external communications and unique expertise Training Center 1.1. Change in the ––Introduction of new logistics routes when shipping goods to foreign ––Updating and approval of the Regulation on Staff Recruitment, training balance of supply and buyers of specialized employees. Use of the corporate competence models for demand for rough directors and specialists when recruiting and selecting personnel diamonds ––Development of virtual sales and remote video showings (sales) of rough diamonds using the ALROSA Video Viewer 1.6. Failure to fulfil the ––Performance of the action plan for 2020 in the Republic of Angola and planned scenario of the Republic of Zimbabwe, including approval of the GEW program, ––Enhancing the customer-oriented approach by launching projects to activities in Africa performance of exploration and mining work improve the quality of products (reduce the volatility of color and price characteristics) and developing marketing initiatives ––Equipping secured facilities with modern engineering and technical 1.7. Intentional damage security equipment ––Implementation of sales incentive programs during a period of growing to assets due to terrorist demand attacks or sabotageй ––Constant monitoring, performance of anti-terrorist measures ––Preemptive monitoring of the threat of sanctions 1.2. Geopolitical risks, ––Streamlining the Company’s costs, reducing production volume, negative impact of ––Maintaining a broad client base and proactive work to attract new buyers, reconsideration of the investment program (deferral of the launch of new sanctions and restrictive development of a system of long-term contracts projects), payroll optimization (temporary lay-off of part of personnel, measures on the reduction in the work week) Company's operations ––Reduction in debt capital and an increase in the average maturity of the ––A program of measures to mitigate risks that could result in a loss of 1.8. Liquidity risk loan portfolio brand reputation (in the areas of production safety, the environment, air ––Placement in May 2020 of exchange-traded bonds worth RUB 25 billion transportation, etc.) for a term of 10 years, with a stipulated offer after five years, and the issue ––Development of crisis response measures in case of the onset of risk of Eurobonds worth $500 million in June 2020 maturing in seven years 1.3. Loss of brand scenarios and events reputation ––Work with rating agencies to maintain an investment grade rating, ––Proactive monitoring of events in the region, country and the world to thereby ensuring access to the international debt capital market analyze negative trends ––Quarterly disclosure of financial and production results, publication of ––Ensuring the functioning and improvement of the quality management analytical materials, improved quality of disclosed information on the system (QMS) at USO ALROSA company and the market

––Implementation of a set of measures to improve the security of ––Holding audio conferences with the participation of top management 1.4. Loss of data information systems (including with account taken of current legislation) Work with new groups of investors, including funds focused on integrity and suspension 1.9. Decrease in –– of production due investment appeal investments in socially responsible and environmentally friendly to cyberattacks on companies (ESG investors) information systems and/ ––Work to improve the company’s ESG ratings by ensuring the or the malfunctioning of transparency of the Company’s activity IT systems ––Preparations for joining international ESG initiatives | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 148 PROFILE REPORT AND INVESTORS GOVERNANCE 149

Risk materiality, Risk management measures Risk materiality, Risk management measures Description of risk change over the Description of risk change over the year year

––Consideration by the Investment Committee of all new investment Performance of measures to address concerns raised and follow the 2.4. Risk that flights projects with the assignment of the corresponding KPI on a project-by- recommendations made based on the reviews of compliance with the between Company project basis requirements of ISAGO and IOSA standards performed in 2019: divisions will stop due ––Ongoing and post-investment monitoring of all key projects to accidents involving ––drafting of internal documents based on the requirements of the aircraft of international standards 1.10. Risk of a deviation ––Ensuring the use of a standard methodology to assess investment JSC ALROSA Air ––change in the staffing tables, staff training, from the indicators projects within the Group and verification of calculations by the Company and/or the of investment, Investment Department imposition of restrictions ––ensuring apron management services during ground handling on flights and/or the organizational, and ––Continued development of the project management system under operations with aircraft innovation projects realization of risks the approved Regulation on Project Management, including the associated with the ––improving the Aviation Safety Management System (ASMS) performance of internal reviews of the implementation of certain projects construction of the new Mirny Airport ––implementation of certain procedures established by the approved ––System-wide monitoring of project implementation by the Investment Operational Regulations for Airlines, etc. Committee ––Monitoring of the condition of the HS ––Regular emergency response training for operating personnel for hands- 2.1. Risk of a long ––Updating of assessments of critical operating (production) risks, on experience in evacuation of HPP personnel in case of various accident shutdown due to including with the engagement of outside experts scenarios at the HS accidents at an underground mine, ––Monitoring of the implementation of the Action Plans to mitigate risks at ––Regular technical maintenance and repair of ground gates accidents during production facilities 2.5. Risk of destruction of the earth-and-rockfill ––Constant monitoring of the level of the reservoir by on-duty operating open-pit mining, fires, ––Technical audit of the Company’s tank farms the impact of natural dam on the left bank personnel factors, accidents at HS, of the Svetly HPP ––Ensuring the safe throughflow of floodwater and navigation of ships emergency situations at (JSC Viluyskaya HPP-3) through the HS the Company’s tank farms ––Drilling of additional thermometric and pressure observation wells 2.2. Risk of the failure ––Conclusion of cargo shipment contracts with outside carriers for to supply inventories, shipments that cannot be covered using internal transportation capacity ––Echo-sounding of the discharge channel fuel and other types of energy resources and the ––Commissioning of two new towed oil barges ––Log-inject-log and geophysical surveying risk of late transportation ––Timely and quality repair of ships during anchorage between trips ––Digitalization of environmental aspects: implementation of of personnel due to a a geoinformation system for environmental monitoring breakdown of logistics processes 2.6. Risk of adverse ––Initiation of a project to implement the Program for machine verification 1 environmental impact of production (critical) risk factors at the HS of the Company, installation ––Diagnostic assessment of the condition and timely repair of gas and of a computerized system at the HS of the tailings dam of ore-processing 2.3. Risk of residential, boiler equipment and heating networks plant No. 14 of Aikhal Division social and industrial ––Technical retrofitting (replacement) of key technical and pumping 2.7. Failure to achieve the Implementation of organizational measures at OMP, monitoring of facilities freezing in the equipment –– winter planned indicators for complete implementation of GEW projects ––Introduction of a modular gas boiler in the village of Dorozhny (Aikhal) replenishment of rough diamond reserves at the ALROSA Group

Risk materiality level (assessment No change

Change in the risk level over the year2 Risk included in the current version of the register, no assessment as of the previous reporting date

1 As part of sustainable development risk management at ALROSA, in addition to the risk of adverse environmental impact, risks of impact on climate, biodiversity, social risks (social impact, industrial safety (labor protection), public safety (impact on the health of local residents) have been identified.

2 The actual (absolute) changes in risk levels (probability and consequences) were indicated. Changes associated exclusively with a change in corporate scoring systems were not indicated, in order to show the actual changes to risk levels (scoring systems for risk probability and consequences were updated in 2021: the range of scores was changed from 1 to 3 to 1 to 5 in accordance with the Regulation on Risk Management) | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 150 PROFILE REPORT AND INVESTORS GOVERNANCE 151

Realized risks in 2020 A recovery in demand was seen in Q3 and continued in Q4 (participants in ALROSA ALLIANCE) with the governance systems to the Supervisory Board (Audit 2020. ALROSA took several measures to minimize the con- requirements of the Regulation on the Procedure and Committee) and the Chief Executive Officer – Chairman Impact of the spread of the novel coronavirus infection sequences of risk realization, including the continuation of Terms of Sales of Natural Diamonds by PJSC ALROSA; of the Management Board; (COVID-19) the price over volume and customer support strategy (can- −−exercising control over the reasonableness of the −−organizing internal audit at controlled companies. The spread of the novel coronavirus infection started in cellation of the minimum sampling percentage of goods decisions taken by the Company’s procurement late 2019, affecting every country in the world and lead- during trading sessions, deferral of payment periods for The main areas of decision-making activity of the Internal committees; ing the WHO to declare a pandemic in March 2020. The part of the contracted goods to a later date) and the intro- Audit Department are: spread of the infection and a series of measures taken by duction of new logistics routes when shipping goods to for- −−collection, aggregation and analysis of information −−assessment of the reliability and effectiveness of the risk the governments of all main sales markets caused a sharp eign buyers. The development of virtual sales and remote on internal control at the level of business processes management and internal control systems; decline in demand for diamond jewelry in Q2 2020. The video showings of rough diamonds (through the ALROSA provided by business process owners; development of the situation in the USA and China and VIDEO VIEWER) continued in 2020, as did work to enhance −−assessment of corporate governance. the suspension of diamond processing facilities in India the customer-oriented approach by launching projects to −−methodological support, coordination of activities and were the most critical consequences for the Company. improve the quality of products. Sales incentive programs training of Company employees in ICS issues; To perform its set tasks and achieve its goals, the Internal Audit Department performs the following functions: were initiated during a period of growing demand. −−monitoring of the performance of approved procedures, internal regulatory documents and −−assessment of the reliability and effectiveness of the guidelines on internal control at the Company; risk management and internal control systems, and evaluation of corporate governance; −−performance of a self-assessment of the effectiveness of ICS. −−drafting of the annual work plan of the Internal Audit Department, including a risk-oriented plan of audits determining the priorities of internal audit based on the CONTROL SYSTEM Internal audit Company’s goals, and updating of the plan in case of material changes in the Company’s activity or the results The main goal of internal audit activity at PJSC ALROSA is of risk reassessment; to assist the Supervisory Board and the Company’s execu- Internal control −−to ensure support for the executive body during tive bodies in improving the Company’s management effi- −−conducting internal audits on the basis of the approved decision-making and the monitoring of the achievement The Company has developed and approved an Internal ciency and enhancing its performance, including through work plan of the Internal Audit Department; of key performance indicators through the regular a systematic and consistent approach to analysis and as- Control Policy that determines the principles, approaches, collection and provision of up-to-date information on −−advising the Supervisory Board (Audit Committee) and goals and objectives of internal control, as well as the roles sessment of the risk management, internal control and internal control; corporate governance systems as tools to ensure reason- the Company’s executive bodies on risk management, and authorities of participants in the internal control system internal control and corporate governance issues and the procedure for their cooperation. −−to review compliance with organizational procedures able assurance that the goals set for the Company will be achieved. (subject to requirements on maintaining the and rules concerning work to counter and prevent independence and objectivity of internal audit The aim of internal control at the Company is to ensure corruption; the achievement of strategic goals, the continuity of all The Regulation on Internal Audit at PJSC ALROSA, which activities); business activity in the interests of shareholders, the provi- −−to identify and prevent the legalization of monetary determines the goals, tasks, duties and accountability of internal audit, is in effect at the Company. −−monitoring the implementation at the Company of sion of reasonable assurance that the control procedures funds received through criminal means (money action plans to eliminate shortcomings and enhance performed in business processes are effective, compli- laundering). According to the Regulation, the internal audit function the risk management and internal control systems ance with legislative requirements, and a risk-oriented ap- To facilitate the development of the internal control sys- at the Company is performed through the creation of a and corporate governance based on the results of the proach to the preparation and implementation of control tem, an internal control division (the Internal Control separate division, the Internal Audit Department of the internal audits performed; procedures. Company, the head of which is administratively account- Department) has been created at the Company to handle −−assisting the Company’s executive bodies to investigate The internal control objectives are:: these tasks. able to the Chief Executive Officer – Chairman of the Management Board of the Company and functionally ac- bad faith or unlawful actions of employees and third −−to organize and exercise internal control over business The duties of the Internal Control Department include: countable to the Supervisory Board (through the Audit parties within the Department’s competence; operations, keep accounts and prepare financial Committee of the Supervisory Board). −−project management over the development of the −−preparation and presentation at least once a year of statements; internal control system – a description of business The Internal Audit Department (IAD) has 19 staff mem- a report on the results of internal audit activity and −−to give reasonable assurance that the Company’s goals processes, preparation of risk matrixes and control bers and is made up of three divisions: the Operational on the results of the assessment of the reliability and will be achieved; procedures, identification of operating risks in business Audit Division, the Corporate Audit Division, and the effectiveness of the risk management, internal control processes, determination of control procedures Methodology and Monitoring Division. and corporate governance systems to the Supervisory to ensure the integrity of the Company’s assets; −− to mitigate risks, and computerization of control Board (Audit Committee) and the Chief Executive The tasks of the Internal Audit Department are: Officer – Chairman of the Management Board; −−to ensure the completeness and accuracy of the procedures together with the owners of business Company’s financial, statistics and management processes; −−assisting the Company’s executive bodies and −−informing the Supervisory Board (Audit Committee) reporting; −−process-based testing of the internal control system: employees to develop and monitor the performance on the organization of internal audit at controlled of procedures and measures to improve the systems companies, preparation of the position of a shareholder −−to exercise control over compliance with legislative process-based monitoring of the performance of of risk management, internal control and corporate on the organization and functioning of internal requirements and the Company’s internal regulatory control procedures, preparation of reports on the governance at the Company; audit at controlled companies, taking into account documents; performance of control procedures for the owners of the applicable requirements of legislation and the business processes, performance analysis of the design −−coordinating the work with the Company’s external −−to create a risk-oriented culture and an integrated regulatory bodies; of control procedures; auditor, as well as with other parties providing audit and system of risk management and internal control that consulting services on risk management, internal control −−interaction with the Company’s external auditor, as well involves each Company employee in the internal control −−coordination of the activity of the Company’s structural and corporate governance; as with other parties providing audit and consulting process, making them fully aware of their duties and divisions, functional services and subsidiaries to services on risk management, internal control and responsibilities to act in the interests of the Company computerize control procedures and build IDM and −−conducting internal audit in accordance with the corporate governance; and its shareholders; GRC systems to enhance the development of the established procedure; internal control system; −−drafting and updating of the internal regulatory −−to improve the effectiveness of the Company’s overall −−preparing and presenting the report on the results documents governing internal audit activity (internal internal control actions and the effectiveness of resource −−review the compliance/non-compliance of the financial of internal audit activity and the results of the audit methodology), including the Regulation on distribution and use for internal control measures; stability of long-term rough diamond buyers and assessment of the reliability and effectiveness of the Internal Audit. candidates for the conclusion of long-term agreements risk management, internal control, and corporate | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 152 PROFILE REPORT AND INVESTORS GOVERNANCE 153

Other measures: The Internal Audit Department performed 64 −−monitoring of corrective measures implemented assignments in 2020, including 43 scheduled based on previously performed audits of key business processes of logistics subsidiaries, the activity of foreign assignments. Unscheduled reviews made up To ensure systematic control and assessment of the quality trade companies, the procurement procedures of a 33% of all assignments performed. subsidiary, procedures for identifying and disposing of of internal audit, an internal regulatory document has been MAIN TARGET TASKS (KEY PERFORMANCE unnecessary assets, implementation of the investment drafted and approved at the Company that determines INDICATORS) OF THE INTERNAL AUDIT project to modernize the processing plant; the Internal Audit Assessment and Quality Enhancement DEPARTMENT IN 2020: Program, as well as the criteria and procedure for assess- −−performance of annual reviews of the financial and −−development of a target vision for the internal ment of internal audit and preparation of an Action Plan to business activity of 14 subsidiaries to confirm the Based on the results of the assignments performed, short- audit function; improve the activity of the Internal Audit Department. reliability of the companies’ financial statements and comings and risks were defined, discussions were held with Company management, and recommendations on elimi- In accordance with the Internal Audit Assessment and −−bringing the structure of internal audit into line check the actual state of the main control functions over with the resource model; their key business processes; nating shortcomings and revising (optimizing) the existing Quality Enhancement Program, the staff of the IAD perform business processes were developed based on the results of continuous monitoring and quality control procedures. −−updating the internal regulatory documents −−organization and participation in investigations into bad the audits. Internal quality assessments are conducted annually; ex- governing internal audit activit. faith actions of ALROSA Group employees; ternal quality assessments are carried out by an external The target tasks and the work plan of the Internal Audit expert or group of experts at least once every five years, −−updating of internal regulatory documents governing Department for 2020 were performed in full. or more often by decision of the Supervisory Board (Audit internal audit; Committee). −−recruitment and selection of personnel based on the internal audit resource model approved by the Audit Committee Improving the activity of the Internal Audit Department Audits and consulting projects: As part of the work to improve the activity of the IAD, in the −−audit of the project "Automation of the sorting and reporting year the Company performed a diagnostic as- grouping processes for the core product" to be sessment of the state of this function and determined the performed at the sales divisions of ALROSA Group; Audit Commission areas of internal audit that needed improvement. A target −−review of geological survey processes at the structural vision for the internal audit function that takes advantage In accordance with the legislation of the Russian Federation and the Company Charter, the Audit Commission is elected divisions of ALROSA Group; of applicable best practice, the requirements of regulators by the annual General Meeting of Shareholders to oversee the Company’s financial and economic activities and its and the expectations of the Audit Committee was devel- −−analysis of the operating indicators of mining and compliance with the legal acts of the Russian Federation. oped based on the results of this work. The target vision for transport equipment with the setting of benchmarks; Five people are elected as members of the Audit Commission for a term of office lasting until the Company’s next annual the internal audit function is focused on creating a progres- General Meeting of Shareholders. sive service of internal auditors, the use of flexible planning −−audit of the implementation of the project to convert tools and digital technology, and forming an organizational the power plant of the ore mining and processing plant and target staff structure that ensures the optimal function- from diesel to oil; ing of internal audit. The Action Plan to improve the activity −−analysis of the implementation of projects on the MEMBERS OF THE AUDIT COMMISSION OF PJSC ALROSA SERVING UP TO 24 JUNE 20201 of the IAD includes measures to achieve the target vision to construction of modular production lines for sheathed be performed before 2022. and packaged emulsion explosives; PSHENICHNIKOV Chairman of the Audit Commission, The following measures were performed in 2020 −−analysis of the project on technical retrofitting of the Alexander Deputy Director of the Department for State Regulation in Production, Processing and Circulation of Precious Metals and Gems and Currency ore processing plant of the Lomonosov ore mining and −−the methodology of the IAD for performing internal Control of the Ministry of Finance of the Russian Federation processing plant; audits and for assessment of the risk management, PUSHMIN Deputy Chairman of the Audit Commission, internal control, and corporate governance systems was −−monitoring of the procedure for accounting for work in Viktor Deputy Finance Minister of the Republic of Sakha (Yakutia) updated; progress in the production and accounting information systems of the R&D company; VASILCHENKO Director of the Government Relations Department of JSC Russian Post −−a competency model for internal auditors was Alexander developed; −−monitoring of expenses to prevent the spread of the novel coronavirus infection COVID-19; IVANOV Chief Specialist of the Department for Industry, Transport, −−the planning system was amended and the strategic Nikolay Communications and Finance of the Ministry of Property and Land audit plan was drafted; −−analysis of access rights to the information system for Relations of Republic of Sakha (Yakutia) accounting of the core product; −−a project management system was introduced for POZNYAKOV Associate Professor of the Management Department, Deputy Chair of the planning and control over the performance of audits −−performance of audit assignments for certain lines of Konstantin Specialized Department of PricewaterhouseCoopers Finance University and other tasks. business of the structural divisions of ALROSA Group under the Government of the Russian Federation Key measures in 2020 determined based on indicators of deviations from target indicators or processes. Based on the work plan of the Internal Audit Department and the target tasks, the Department performed the following measures in 2020:

1 Elected by the General Meeting of Shareholders on 26 June 2019, minutes No. 40 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 154 PROFILE REPORT AND INVESTORS GOVERNANCE 155

MEMBERS OF THE AUDIT COMMISSION OF PJSC ALROSA SERVING UP TO 31 DECEMBER 20201 Audit Commission in the 2019-2020 corporate year in the remuneration paid to the members of the Company’s Audit amount and according to the procedure established based Commission for the 2019-2020 corporate year equaled on the Regulation on Remuneration of Members of the RUB 2,954,758 (two million nine hundred fifty-four thou- MARKIN Chairman of the Audit Commission, Audit Commission of PJSC ALROSA. The total amount of sand seven hundred fifty-eight roubles) Alexander First Deputy Chairman of the Association of Gold Refineries BAGYNANOV Deputy Chairman of the Audit Commission, Pavel First Deputy Minister of Finance of Republic of Sakha (Yakutia) Member of the Audit Commission Amount of remuneration (roubles)

IVANOV Chief Specialist of the Department of Corporate Technologies of Republic Alexander Vasilchenko 1,105,296 Nikolay of Sakha (Yakutia) Konstantin Pozdnyakov 1,285,160 LOGINOVA Deputy Director of the Department for Territorial Development Planning Viktor Pushmin 564,302 Olga of the North Caucasian Federal District of the Ministry of Economic Development of Russia PSHENICHNIKOV Resigned from the Audit Commission on 5 February 2021 Alexander The remuneration was paid to the members of the Audit Commission of PJSC ALROSA in full and by the established deadline

External auditor Tender organizer

Measures performed by the Audit Commission in 2020 −−review of the performance of the instructions and PricewaterhouseCoopers Audit Joint Stock Company The executive body of the Company. directives of the President and Government of the (JSC PwC Audit) ВIn the reporting year, the Audit Commission conducted an Subject of the tender Russian Federation; INN: 7705051102 OGRN: 1027700148431 annual audit (review) of the financial and economic The right to perform the statutory audit of the Company’s finan- activities of PJSC ALROSA for 2019. review of the performance by PJSC ALROSA of the −− Address: 10 Butyrsky Val, Moscow 125047 cial statements prepared in accordance with Russian law and recommendations set forth in the previous Act of The audit was conducted from 30 March to 10 April 2020. the consolidated financial statements of ALROSA Group pre- the Audit Commission (section 13 of the Act of the Telephone: +7 (495) 967-6000 pared in accordance with IFRS at the end of the year. The audit plan included the following issues: Company’s Audit Commission for 2018); Fax: +7 (495) 967-6001 Objective of the tender −−analysis and audit of the financial and business activity −−recommendations of the Audit Commission on of PJSC ALROSA and its annual financial statements for eliminating shortcomings/violations as part of the audit Identification of the audit organization offering the best terms 2019; of financial and business activity for 2019. Membership of the auditor in self-regulatory organizations of for performance of the statutory audit of the Company’s finan- auditors cial statements prepared in accordance with Russian law and −−analysis of achievement of key production indicators The report of the Audit Commission on the audit of the fi- the consolidated financial statements of ALROSA Group pre- and planning and economic indicators, including an nancial and economic activities of PJSC ALROSA for 2019 Self-Regulatory Organization of Auditors Association pared in accordance with IFRS. analysis of the financial indicators actually achieved; was presented to the Company’s annual General Meeting Sodruzhestvo (SRO AAS) of Shareholders2. Tender commission −−analysis of expenditure of net profit; JSC PwC Audit was entered in the Register of Auditors and Audit Organizations of SRO AAS under the primary registration entry For the purpose of holding a public tender, a tender commis- −−review of the procedure for calculating the amounts and number (ORNZ) 12006020338 sion is approved by an order of the Company. The Commission the accuracy of calculation, accrual and allocation of Amount of remuneration of members of the Audit includes managers and specialists of the Company and dividends of PJSC ALROSA; Commission (From 21 September 2009 to 19 October 2016, it was a member representatives of the Federal Agency for State Property of the self-regulatory organization of auditors Non-Commercial −−analysis of the results of the sales policy of In accordance with the Regulation on Remuneration and Management, the Ministry for Property Relations of the Partnership Auditors Chamber of Russia, ORNZ 10201003683 PJSC ALROSA on domestic and foreign markets in Compensation of Members of the Audit Commission of Republic of Sakha (Yakutia) and the Ministry of Finance of the 2019; PJSC ALROSA, remuneration can be paid to the members From 20 October 2016 to 30 January 2020, it was a member Russian Federation. of the Audit Commission for participating in the work of the of the self-regulatory organization Russian Union of Auditors −−analysis of the results of implementation of the system Drafting and approving the tender documentation Audit Commission and for performing additional duties re- (Association), ORNZ 11603050547) of key performance indicators of PJSC ALROSA and lated to the chairmanship of the Audit Commission. To hold a public electronic tender in 2019, the Company top management, as well as the links between the drafted tender documentation based on the requirements of achievement of approved KPI and the remuneration Based on the current legislation of the Russian Federation, Procedures used to select external auditors and ensure their Federal Law No. 44-FZ dated 5 April 2013 "On the Contract of the members of the Supervisory Board and the remuneration shall not be paid to the Chairman and mem- independence and objectivity, and information on the remu- System for Procurements of Goods, Work and Services for management of PJSC ALROSA; bers of the Audit Commission who have the status of Government and Municipal Needs", Resolution No. 1085 of a state or municipal employee. neration of external auditors for audit and non-audit services −−analysis of the information on progress in implementing the Government of the Russian Federation dated 28 November In 2020, there were no factors that could influence the auditor's the investment program of PJSC ALROSA; For the 2019-2020 corporate year, five people were elect- 2013 "On Approving the Rules for Assessment of Bids and ed to the Audit Commission, three of whom were not civ- independence from the Company, including significant inter- Final Offers of Participants in Procurements of Goods, Work −−analysis of procurement activity at PJSC ALROSA during il servants as of 30 March 2020: Alexander Vasilchenko, ests linking the auditor (or the auditor's executives) with the and Services for Government and Municipal Needs", and the 2019; Konstantin Pozdnyakov, and Viktor Pushmin. Company (Company executives). Company’s regulatory documents. The tender documentation is agreed with the Federal State Property Management Agency −−analysis of the performance by PJSC ALROSA of the Starting from 2019, public electronic tenders have been held to The annual General Meeting of Shareholders of (as the main shareholder). instructions of the supervisory bodies (FTS of Russia, PJSC ALROSA held on 24 June 20201 adopted a decision select the audit firm to perform the statutory audit of the finan- Prosecutor General’s Office of the Russian Federation to pay remuneration for participation in the work of the cial statements prepared in accordance with Russian law and and others); the consolidated financial statements prepared in accordance with IFRS at the end of the year.

1 Elected by the General Meeting of Shareholders on 24 June 2020, minutes No. 42 2 Minutes No. 42 dated 24 June 2020 1 Minutes No. 42 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 156 PROFILE REPORT AND INVESTORS GOVERNANCE 157

Publication and posting of the notice on the tender and tender documentation INFORMATION DISCLOSURE SYSTEM In 2019, the Notice on holding a public electronic tender and There are no deferred or overdue payments for the services rendered the tender documentation were posted and published on by the auditor. the official website of the Unified Informational System for The decision to approve the auditor for the statutory audit of the finan- Information policy Procurements www.zakupki.gov.ru and ETP Sberbank-AST. cial statements of PJSC ALROSA prepared in accordance with Russian ALROSA pays great attention to improving its media rela- needs of its target audience and strives to disclose impor- Tender winner law and the consolidated financial statements of ALROSA Group pre- tions and maintaining a high level of openness and trans- tant information to them in a timely manner. pared in accordance with IFRS for 2020 was passed by the annual parency. The Company carefully analyzes the information The audit firm that receives the most points is declared the General Meeting of Shareholders. winner of the tender. - There are no participation shares of the auditor (or the auditor's exec Principles of ALROSA’s information policy The Supervisory Board of the Company refers the issue of ap- utives) in the authorized (charter) capital (unit trust) of the Company. proving the tender winner to the annual General Meeting of Shareholders. The Company has not extended any loans to the auditor (or the audi- A reasonable balance be- tor’s executives). Completeness and tween openness and pro- Regularity and timeliness Accessibility The audit stipulates the performance of procedures to obtain accuracy tection of its commercial There are no close business relations (participation in the promotion of audit evidence regarding the numerical data and information interests contained in the financial statements. The selection of pro- products (services), participation in joint business activities, etc.), or cedures is based on the auditor's professional judgment, in- family relations. cluding an assessment of the risks of material misstatement in There is no information on the Company's executives being executives Information disclosure channels the financial statements, whether due to fraud or error. When of the auditor. assessing the aforementioned risks, the auditor considers the ОOne of the main communication channels is the organizations. Concurrently, information is posted on the internal control system used during the preparation and fair Company’s official website at www.alrosa.ru, containing English version of the website at eng.alrosa.ru. presentation of the financial statements in order to develop not only news and financial statements, but also detailed In 2020, JSC PwC Audit also provided the following services: In addition to the corporate website, the Company also audit procedures that are appropriate in the circumstances, information about ALROSA’s production, marketing and fi- uses the website of the information agency Interfax – but not for the purpose of expressing an opinion on the effec- −−advisory services on the preparation of nancial activity and corporate social responsibility, the glob- Corporate Information Disclosure Center for mandatory tiveness of the internal control system. The audit also includes recommendations on accounting principles for al market for rough and polished diamonds and industry disclosures. an assessment of the appropriateness of the accounting poli- JSC Kristall PC, to bring them into line with the cies used and the reasonableness of the accounting estimates Company’s IFRS accounting policy, and an analysis of made by management, as well as the overall presentation of the tax issues of JSC Kristall PC for the period Disclosure channel Information/audience the financial statements. 2017-2019 – RUB 6.2 million (net of VAT); ––Charter and main internal documents of the Company; The remuneration payable to the auditor for the last completed −−compliance assurance services regarding the ––information on material facts, affiliates; financial year for which the auditor conducted an independent requirements of the Code of Responsible Practices of ––information on the Company’s securities, payment of audit is determined by the agreement between the auditor and the Responsible Jewellery Council (RJC) (a decision dividends; the Company and comprised: on certification of the Company’s compliance with RJC standards is issued based on the results of the assurance ––quarterly, annual and CSR reports (sustainable −−RUB 7.03 million (net of VAT) for the review of the Corporate website procedures performed by the RJC) – RUB 4.8 million development reports); interim financial statements of ALROSA Group prepared http://www.alrosa.ru (net of VAT); in accordance with IAS No. 34 "Interim Financial ––annual and interim financial statements; Reporting", for the reporting period from 1 January −−professional services on drafting the report on the ––materials for the General Meeting of Shareholders 2020 to 31 March 2020; results of the non-financial audit of the Social and and the decisions taken at the meetings, as well as the Environmental Report of ALROSA Group for 2019 – decisions taken at the meetings of the Supervisory −−RUB 35.0 million (net of VAT) for the audit of the RUB 2.0 million (net of VAT). Board; Company’s financial statements prepared in accordance ––press releases with Russian law and the consolidated financial The total amount of audit and non-audit services provided dur- statements of ALROSA Group prepared in accordance ing 2020 equals RUB 55.1 million (net of VAT), with the pay- News line and the Company page on the website of the ––mandatory information disclosures; with IFRS for 2020. ment for non-audit services accounting for 24% of this amount. information agency Interfax – Corporate Information Disclosure ––disclosure of information to analysts, shareholders and Center representatives of the investment community in Russian and English on the Company's performance, financial Corporate website subsection "Information disclosure" statements, implementation of major investment projects and strategic priorities; Corporate website subsection For investors and shareholdersi (versions in Russian and English) ––information in English for members of the investment community; ––disclosure of information to analysts of investment banks

Protection of insider information To prevent abuses in the form of misuse of insider informa- Amendments to Certain Legislative Acts of the Russian tion, the Company has enacted the Regulation on Insider Federation"1, persons with access to the insider information Information. In accordance with the Regulation, Company of ALROSA specified in the List of Information Designated insiders are obliged to take all measures in their power to as Insider Information of the Company are required to no- protect and prevent the misuse and dissemination of insid- tify of their transactions with the Company’s securities and er information. on the conclusion of derivative contracts, the price of which depends on the Company’s securities, in the manner pre- Subject to the Federal Law "On Preventing Misuse scribed by the legislation of the Russian Federation. of Insider Information and Market Manipulation and

1 Federal Law No. 224-FZ dated 27 July 2010 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 158 PROFILE REPORT AND INVESTORS GOVERNANCE 159

GLOSSARY NPF Non-state pension fund NCGS National corporate governance score SB Supervisory Board JSC Joint stock company OJSC Open joint stock company INPO Independent non-profit organization UAE United Arab Emirates AREOPAD Board management software system UN United Nations ASSR Autonomous Soviet Socialist Republic LLC Limited liability company VC Video conferencing PT Pilot testing SRC State Reserves Commission H&S Occupational health and safety GOST State standard of the Russian Federation SSC Shared service center OMP Ore mining plant PP Processing plant MC Mining company OECD Organisation for Economic Co-operation and Development GEW Geological survey and exploration work PJSC Public joint stock company GSE Geological survey expedition IDTMP Innovative Development and Technological Modernization Program HS Hydraulic structure CRE Controlled and related legal entities of the Company HPP Hydraulic power plant SW Software S&A Subsidiaries and affiliates POEDE Program to Raise Operational Efficiency and Decrease Expenses LTDP Long-term development program PE Production and engineering association RABC Russia–Angola Business Council PCR test In the Report: a test to detect the COVID-19 coronavirus infection EAEU Eurasian Economic Union IP Intellectual property EU European Union RID Russian Institute of Directors USO United Selling Organization RAS Russian accounting standards CJSC Closed joint stock company RS (Ya) Republic of Sakha (Yakutia) Integrated KPI, IKPI Integral key performance indicators RF Russian Federation Price index An index showing the change in the average rough diamond price within a comparable sales RTsB Rynok Tsennykh Bumag [Securities Market] magazine structure (the index does not cover rough diamonds larger than 10.8 carats) ICS Internal control system IT Information technology FAME Fully automated mining equipment IS Information system MM Mass media UTE Equipment utilization rate QMS Quality management system IM Indigenous minorities JV Joint venture KP Kimberley process Average price of sale Revenue from sales in US dollars, divided by the volume of sales in carats KPI Key performance indicators ASMS Aviation safety management system CSR Corporate social responsibility RMS Risk management system MICEX Moscow Interbank Currency Exchange (now MOEX) USA United States of America Mun. Municipality M&R Equipment maintenance and repair SME Small and medium-sized enterprise RCCI Russian Chamber of Commerce and Industry IFRS International Financial Reporting Standards FS Feasibility study INV Inventories IAD Internal audit department VAT Value-added tax Ulus District, an administrative and territorial division of Republic of Sakha (Yakutia) WIP Work in progress AC Authorized capital RGED Research and geological exploration division FADN of Russia Federal Agency for Ethnic Affairs R&D Research and development work SFI State-funded institution NPO Non-profit organization SDG UN sustainable development goals to 2030 NCA Non-core assets EEM Emulsion explosive materials RPD Research and production division EDS Electronic document storage | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 160 PROFILE REPORT AND INVESTORS GOVERNANCE 161

ETP Electronic trading platform SAM CSA SAM Corporate Sustainability Assessment – an assessment of the corporate sustainability practices at a company RSA Republic of South Africa SAP Software to automate and optimize various business operations YaPTA Yakutsk Diamond Trading Enterprise SIC Short Interval Control — a structured process to continuously identify opportunities to improve ALROSA Video A service for the remote, online showing of products production efficiency Viewer Sustainalytics A company that rates the sustainability of listed companies based on their environmental, social and B2B Business-to-business corporate governance (ESG) performance indicators B2C Business-to-consumer TSR Total Shareholder Return C1 (category) Reserves of very complex proven deposits and poorly explored mineral reserves WDC World Diamond Council C2 (category) Potential unexplored reserves WMS Warehouse Management System CAPEX Capital expenditure WWF World Wildlife Fund CDP Carbon Disclosure Project – an international non-profit organization that assists companies and cities in disclosing their environmental impact CEO Chief Executive Officer COVID-19 The novel coronavirus infection, first discovered in China, which caused the 2020 pandemic ct Carat Abbreviations DEF Diamond Empowerment Fund

DOR Diamond Origin Report ha hectare DPA Diamond Producers Association '000 thousand DTG Diamond Terminology Guideline mln million EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization bln billion EMEA Europe, the Middle East and Africa m2 square meter ESG Environmental, social and governance m3 cubic meter FCF Free cash flow RUB Russian roubles ppl people Free-float Shares in free circulation USD/$ US dollars FTSE4Good Series of ethical investment stock market indexes launched in 2001 by the FTSE Group GfK Market research organization GIA Gemological Institute of America GRI Global Reporting Initiative, which publishes standards for non-financial reporting (GRI Standards) GRC Governance, Risk and Compliance – an integrated management system IDM Identity Management System IDR Issuer Default Rating IPO Initial Public Offering ISO International Organization for Standardization – an international standard-setting body that publishes international standards for management systems IR Investor Relations LTIFR Lost Time Injury Frequency Rate MBA Master of Business Administration MSCI ESG MSCI ESG index NDR Non-deal road-show NDC Natural Diamond Council Price over volume A trading strategy that prioritizes price over volume of sales RJC Responsible Jewellery Council Road Show An element of a company’s preparations for an issue of its securities (bonds, shares, etc.), including through an IPO, consisting of a series of meetings with potential investors and analysts in key cities worldwide ROE Return on Equity — the ratio of net income for the period to average shareholder’s equity | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 162 PROFILE REPORT AND INVESTORS GOVERNANCE 163

CONTACT INFORMATION

Head office of PJSC ALROSA (Moscow) Head office of PJSC ALROSA (Mirny) Address: 24 Ozerkovskaya Naberezhnaya, Moscow 115184 Address: 6 ulitsa Lenina, Mirny, Republic of Sakha (Yakutia) Telephone: +7 (495) 620-92-50, +7 (495) 411-75-25 678174 Fax: +7 (495) 411-75-15 Telephone: +7 (41136) 3-00-30 Telex: 113258 "Almaz" RU Fax: +7 (41136) 3-04-51 Email: [email protected] Email: [email protected]

ABOUT THE COMPANY

Full name of the Company ALROSA Joint Stock Company (Public Joint Stock Company) Dividends in arrears to the federal budget in the reporting There were no dividends in arrears to the federal budget as of period 31 December 2020 Number and date of issue of the certificate of state Certificate No. 1 dated 13 August 1992 issued by the registration as a legal entity Administration of Mirny District of the Republic of Sakha Allocation to the Company’s reserve fund (RUB, % of net No allocations were made to reserve capital (Yakutia) (Resolution No. 554 dated 13 August 1992) profit) Constituent entity of the Russian Federation in which the Republic of Sakha (Yakutia) Allocations to other funds of the Company (RUB, % of net No allocations were made to other funds Company was registered profit) Address (place of business) 6 ul. Lenina, Mirny, Mirny ulus, Republic of Sakha (Yakutia) Other use of net profit No other use of net profit is stipulated 678175 Full name of the registrar Joint Stock Company VTB Registrar Main line of business According to the information on types of economic activities Address of the registrar 23 ul. Pravdy, Moscow 127015 under the Russian Classification of Economic Activities (OKVED OK 029-2001 KDES, ver. 1), the main line of business Information on the placement by the Company of additional Company shareholders holding more than a 5 percent share is mining of rough diamonds, code 14.50.22 (OKVED OK shares and the movement of capital during the year (change in authorized capital (as of 31 December 2020): 029-2014 (KDES ver. 2) – 08.99.32) in the persons having the right to cast, directly or indirectly, - the Russian Federation, represented by the Federal at least five percent of the votes conferred by the Company’s State Property Management Agency – 33.0256% share in Staff strength 20,363 people voting shares) authorized capital (2,432,321,953,17185/50,000 ordinary Information on inclusion in the list of strategically important ALROSA was included in the list of strategically important shares); enterprises and joint stock companies enterprises and joint stock companies based on Executive - Republic of Sakha (Yakutia), represented by the Ministry of Order No. 1009 of the President of the Russian Federation Property and Land Relations of the Republic of Sakha (Yakutia) dated 4 August 2004 – 25.0002% share in authorized capital (1,841,259,772 ordinary shares) Amount of authorized capital (roubles) 3,682,482,815 No changes in the persons having the right to cast, directly Total number of shares outstanding 7,364,965,630 or indirectly, at least five percent of the votes conferred by the Company’s voting shares took place during the reporting Class of shares Ordinary, registered, uncertificated period.. Nominal value of ordinary shares (roubles) 0.5 Information on the number of treasury shares held by There are no treasury shares held by the Company. the Company, as well as the number of Company shares The number of Company shares belonging to legal entities State registration number of the issue of ordinary (preferred) 1-03-40046-N, 25 August 2011 belonging to legal entities controlled by the Company controlled by the Company is 156,059,800.. shares and the date of their state registration

State registration number of the additional issue of ordinary none Number of shares held by the Russian Federation 2,432,321,953,17185/50000 ordinary shares. (preferred) shares and the date of their state registration (on 31 December 2020) (if, on the date of preliminary approval of the Company’s annual report by the Supervisory Board, the registration Share of the Russian Federation in authorized capital, with an 33.0256% of the ordinary shares making up the authorized authority failed to cancel the individual number (code) of indication of the share of ordinary and preferred shares (on capital of PJSC ALROSA. There are no preferred shares. the additional issue of ordinary (preferred) shares of the 31 December 2020) Company) Company shareholders holding more than two percent of The Russian Federation, represented by the Federal State Number of preferred shares none authorized capital (on 31 December 2020) Property Management Agency; Nominal value of preferred shares (roubles) - Republic of Sakha (Yakutia), represented by the Ministry of Property and Land Relations of the Republic of Sakha Existence of a special right on participation of the Russian none (Yakutia). Federation in Company management (golden share) Full name of the Company auditor Joint Stock Company PricewaterhouseCoopers Audit (JSC PwC Audit) INN: 7705051102 OGRN: 1027700148431 Address of the Company auditor Legal/postal address: Address: 10 Butyrsky Val, Moscow 125047 Telephone: +7 (495) 967-6000 Fax: +7 (495) 967-6001 Dividend amount paid to the federal budget in the reporting The dividend amount for 2019, accrued and paid to the RF period federal budget in 2020 equals RUB 6,397,006.7 thousand. | ANNUAL REPORT 2020 COMPANYПРОФИЛЬ STRATEGICСТРАТЕГИЧЕСКИЙ PERFORMANCEРЕЗУЛЬТАТЫ SUSTAINABILITYУСТОЙЧИВОЕ FORАКЦИОНЕРАМ SHAREHOLDERS КОРПОРАТИВНОЕCORPORATE ПРИЛОЖЕНИЯAPPENDICES 164 КОМПАНИИPROFILE REPORTОТЧЕТ ДЕЯТЕЛЬНОСТИ РАЗВИТИЕ ANDИ ИНВЕСТОРАМ INVESTORS УПРАВЛЕНИЕGOVERNANCE 165

APPENDICES

Financial statements (IFRS) of PJSC ALROSA for 2020 166

Subsidiaries and associates 176

List of local internal regulations 182

Report of the independent auditor on implementation of the Long-Term Development Program 183

Statistics on sales of rough and polished diamonds 185

Information on divestment of non-core assets 186

Information on the execution of the orders of the President and Government of the Russian Federation 188

Information on major transactions and interested-party transactions 190

Report on compliance with the principles and recommendations of the Corporate Governance Code 198

Report of the Audit Commission 220

Pending court proceedings 227

Government support 228

Information on the meetings of the Supervisory Board and committees 230 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 166 PROFILE REPORT AND INVESTORS GOVERNANCE 167

FINANCIAL STATEMENTS (IFRS) OF PJSC ALROSA FOR 2020

Independent Auditor’s Report Our audit approach Overview

To the Shareholders and Supervisory Council of Public Joint Stock Company ALROSA: Overall Group materiality: Russian Roubles (“RUB”) 4,000 million, which represents 5% of average profit before tax for the last three

Materiality years. Our opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the • We conducted audit work at the parent company of the Group – PJSC ALROSA. In respect of the other Group entities, we consolidated financial position of Public Joint Stock Company ALROSA (the “Company” or PJSC Group ALROSA) and its subsidiaries (together – the “Group”) as at 31 December 2020, and the Group’s scoping performed audit procedures over significant financial statements consolidated financial performance and consolidated cash flows for the year then ended in line items and analytical procedures. accordance with International Financial Reporting Standards (IFRS). • The Group engagement team visited the divisions of the What we have audited Key audit companies of the Group in Moscow and Mirny (Republic of Sakha matters (Yakutia)). The Group’s consolidated financial statements comprise: • Our audit scope addressed 91% of the Group’s revenues and 90% • the consolidated statement of financial position as at 31 December 2020; of the Group’s absolute value of underlying profit before tax and elimination adjustments for intragroup operations. • the consolidated statement of profit or loss and other comprehensive income for the year then ended; Key audit matter • the consolidated statement of cash flows for the year then ended; • Impairment assessment of non-current assets • the consolidated statement of changes in equity for the year then ended; and • the notes to the consolidated financial statements, which include significant accounting policies As part of designing our audit, we determined materiality and assessed the risks of material and other explanatory information. misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates Basis for opinion that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls including, among We conducted our audit in accordance with International Standards on Auditing (ISAs). Our other matters, consideration of whether there was evidence of bias that represented a risk of material responsibilities under those standards are further described in the Auditor’s responsibilities for the misstatement due to fraud. audit of the consolidated financial statements section of our report. Materiality We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material Independence misstatement. Misstatements may arise due to fraud or error. They are considered material if We are independent of the Group in accordance with the International Code of Ethics for Professional individually or in aggregate, they could reasonably be expected to influence the economic decisions of Accountants (including International Independence Standards) issued by the International Ethics users taken on the basis of the consolidated financial statements. Standards Board for Accountants (IESBA Code) and the ethical requirements of the Auditor’s Based on our professional judgement, we determined certain quantitative thresholds for materiality, Professional Ethics Code and Auditor’s Independence Rules that are relevant to our audit of the including the overall Group materiality for the consolidated financial statements as a whole as set out consolidated financial statements in the Russian Federation. We have fulfilled our other ethical in the table below. These, together with qualitative considerations, helped us to determine the scope responsibilities in accordance with these requirements and the IESBA Code. of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the consolidated financial statements as a whole.

Overall Group materiality RUB 4,000 million

How we determined it 5% of average profit before tax for the last three years

Rationale for the materiality We chose profit before tax as the benchmark because, in our benchmark applied view, it is the benchmark against which the performance of the Group is most commonly measured by users and is a generally

AO PricewaterhouseCoopers Audit 2 White Square Office Center 10 Butyrsky Val Moscow, Russian Federation, 125047 T: +7 (495) 967 6000, F:+7 (495) 967 6001, www.pwc.ru | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 168 PROFILE REPORT AND INVESTORS GOVERNANCE 169

accepted benchmark. We chose 5% which is consistent with assets. Based on the test performed, no need underlying the model are within the forecasted quantitative materiality thresholds used for profit-oriented for recognising impairment of non-current range; companies in this sector. Since the pre-tax profit demonstrates assets was identified as at 31 December 2020. significant volatility from period to period, we decided to average - we examined the methodology for calculating the this benchmark over the last three years. We focused on this matter due to materiality of the carrying amounts of these CGUs’ assets, used discount rate and its components; Key audit matters which were worth RUB 189,322 million at Key audit matters are those matters that, in our professional judgment, were of most significance in 31 December 2020 and given the high degree - we identified assumptions, to the change of our audit of the consolidated financial statements of the current period. These matters were addressed of uncertainty around the pandemic’s effect on which management’s future cash flow projection is in the context of our audit of the consolidated financial statements as a whole, and in forming our the Group’s operations after the reporting date. most sensitive, and analysed results of testing for opinion thereon, and we do not provide a separate opinion on these matters. reasonable changes in these assumptions. Our In addition, management’s calculation of the sensitivity analysis of the impairment test results Key audit matter How our audit addressed the key audit matter CGUs’ “value in use” is based on significant included diamond price index data, projected judgements and estimates with regard to future diamond sales, capital expenditures required to Impairment assessment of non-current assets financial performance, capital expenditure maintain the existing assets and discount rate. We

Together with our in-house valuation team, we required to maintain the existing assets, sales verified that the impact of a reasonably possible Refer to Note 2 to the consolidated financial volume, diamond prices and discount rate. changes in the above assumptions on the test statements. performed a review of the future cash flow projection model prepared by management for results was appropriately disclosed in the consolidated financial statements. In 2020, the World Health Organization their diamond mining CGUs. As part of our review, we performed the following procedures: declared the COVID-19 outbreak a global We also checked whether disclosure provided in pandemic. In response to the pandemic, - we reviewed the inputs applied in future cash Note 2 to the consolidated financial statements Russian authorities have taken a range of flow projections used to calculate the “value in was adequate under the IFRS requirements. measures to curb the spread and mitigate the use”, including planned capital expenditures and impact of COVID-19, such as bans and forecasted sales volume by comparing them How we tailored our Group audit scope restrictions on movement, quarantine, self- against the Group’s budget for 2021; We tailored the scope of our audit in order to perform sufficient work to enable us to provide an isolation, and restrictions on commercial opinion on the consolidated financial statements as a whole, taking into account the structure of the activities, including the closure of businesses. Group, the accounting processes and controls, and the industry in which the Group operates. - we verified that ore reserves by deposit included Restrictions imposed worldwide to combat the in the total ore production volume provided in the In accordance with ISA 600, Special Considerations – Audits Of Group Financial Statements new COVID-19 coronavirus infection led to a model matching to the ore reserves proven by an (Including The Work Of Component Auditors), our risk assessment, and materiality analysis of the drop in demand for rough diamonds and independent expert adjusted for the ore mined Group companies’ financial information line items, we identified PJSC ALROSA as a significant diamond jewellery and brought down the trade after the valuation date; component of the Group and the remaining entities as insignificant components. We conducted an audit of the significant component’s financial information and performed audit procedures on individual in rough and cut diamonds in all global significant financial statement line items and analytical procedures for insignificant components. marketplaces to a minimum in Q2 and Q3 of - we verified that the methodology underlying 2020, followed by gradual market recovery future cash flow projections complies with IAS 36, Other information from August 2020. Impairment of Assets, including recoverable Management is responsible for the other information. The other information comprises PJSC Management decided to reduce their mining amount calculation and some other methodology ALROSA’s Annual Report for 2020 and Issuer’s Report for the first quarter of 2021 (but does not plan for 2020, suspend mining activities at a aspects; include the consolidated financial statements and our auditor’s report thereon), which are expected to number of the Group’s mines in May and June be made available to us after the date of this auditor’s report. 2020 and gradually resume operations from - we checked that the diamond price growth rate Our opinion on the consolidated financial statements does not cover the other information and we will September 2020. is in line with the forecasts provided by not express any form of assurance conclusion thereon. independent analysts; In connection with our audit of the consolidated financial statements, our responsibility is to read the Management considered the COVID-19 other information identified above when it becomes available and, in doing so, consider whether the developments that had a significant impact on other information is materially inconsistent with the consolidated financial statements or our knowledge - we compared macroeconomic assumptions for the diamond industry as an asset impairment obtained in the audit, or otherwise appears to be materially misstated. indicator and tested the Group's diamond consumer price index and producer price index, mining companies’ non-current assets for expected USD/RUB exchange rate and inflation When we read PJSC ALROSA’s Annual Report for 2020 and Issuer’s Report for the first quarter of impairment by calculating “value in use” of the with forecasts of independent analysts well known 2021, if we conclude that there is a material misstatement therein, we are required to communicate cash generating units (CGUs) in accordance in the market and ensured that the assumptions the matter to those charged with governance. with IAS 36, Impairment of Assets, and comparing it to the carrying amounts of these

3 4 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 170 PROFILE REPORT AND INVESTORS GOVERNANCE 171

Responsibilities of management and those charged with governance1 for the • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial consolidated financial statements statements. We are responsible for the direction, supervision and performance of the Group audit. Management is responsible for the preparation and fair presentation of the consolidated financial We remain solely responsible for our audit opinion. statements in accordance with IFRS, and for such internal control as management determines is We communicate with those charged with governance regarding, among other matters, the planned necessary to enable the preparation of consolidated financial statements that are free from material scope and timing of the audit and significant audit findings, including any significant deficiencies in misstatement, whether due to fraud or error. internal control that we identify during our audit. In preparing the consolidated financial statements, management is responsible for assessing the We also provide those charged with governance with a statement that we have complied with relevant Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going ethical requirements regarding independence, and to communicate with them all relationships and concern and using the going concern basis of accounting unless management either intends to other matters that may reasonably be thought to bear on our independence, and where applicable, liquidate the Group or to cease operations, or has no realistic alternative but to do so. actions taken to eliminate threats or safeguards applied. Those charged with governance are responsible for overseeing the Group’s financial reporting From the matters communicated with those charged with governance, we determine those matters process. that were of most significance in the audit of the consolidated financial statements of the current Auditor’s responsibilities for the audit of the consolidated financial statements period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare Our objectives are to obtain reasonable assurance about whether the consolidated financial circumstances, we determine that a matter should not be communicated in our report because the statements as a whole are free from material misstatement, whether due to fraud or error, and to issue adverse consequences of doing so would reasonably be expected to outweigh the public interest an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is benefits of such communication. not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic The certified auditor responsible for the audit resulting in this independent auditor’s report is Tatiana decisions of users taken on the basis of these consolidated financial statements. Viktorovna Sirotinskaya. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk 1 March 2021 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the Moscow, Russian Federation override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. T.V. Sirotinskaya, certified auditor (licence No. 01-000527), AO PricewaterhouseCoopers Audit • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Audited entity: Public Joint Stock Company ALROSA Independent auditor: AO PricewaterhouseCoopers Audit Registered by the Administration of Mirninsky district (ulus) of the Registered by the Government Agency Moscow Registration Chamber • Conclude on the appropriateness of management’s use of the going concern basis of accounting Republic of Sakha (Yakutia) on 13 August 1992 under Nо. 1 on 28 February 1992 under Nо. 008.890 and, based on the audit evidence obtained, whether a material uncertainty exists related to events Record made in the Unified State Register of Legal Entities on 17 July Record made in the Unified State Register of Legal Entities on or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. 2002 under State Registration Number 1021400967092 22 August 2002 under State Registration Number 1027700148431 If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s Taxpayer Identification Number 1433000147 Taxpayer Identification Number 7705051102 report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to 6, Lenin Street, Mirny, 678175, Republic of Sakha (Yakutia), Russia Member of Self-regulatory organization of auditors Association «Sodruzhestvo» the date of our auditor’s report. However, future events or conditions may cause the Group to Principal Registration Number of the Record in the Register of Auditors cease to continue as a going concern. and Audit Organizations – 12006020338 • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

5 6 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 172 PROFILE REPORT AND INVESTORS GOVERNANCE 173

Consolidated statement of financial position Consolidated statement of profit or loss and other comprehensive income

PJSC ALROSA IFRS consolidated financial statements for the year ended 31 December 2020 (in millions of Russian roubles, unless otherwise stated)

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Year ended Year ended Notes 31 December 2020 31 December 2019 Revenue 20 217,128 232,856 Income from government grants 16 4,356 5,330 Cost of sales 21 (116,999) (119,071) Royalty 19 (1,209) (1,209) Gross profit 103,276 117,906 General and administrative expenses 22 (16,111) (12,830) Selling and marketing expenses 23 (2,749) (2,794) Other operating income 24 12,536 6,734 Other operating expenses 25 (27,489) (33,873) Operating profit 69,463 75,143 Finance income 2сс, 26 7,101 14,723 Finance costs 2сс, 27 (36,202) (11,895) Share of results of associates and joint ventures 5.2 3,725 3,485 Profit before income tax 44,087 81,456 Income tax 19 (11,842) (18,726) Profit for the year 32,245 62,730 Other comprehensive (loss) / income: Items that will not be reclassified to profit or loss: Remeasurement provision of pension obligations, net of deferred tax 17, 19 (2,823) 1,417 Total items that will not be reclassified to profit or loss (2,823) 1,417 Items that may be reclassified subsequently to profit or loss: Currency translation differences, net of deferred tax 647 (236) Total items that may be reclassified subsequently to profit or loss 647 (236) Total other comprehensive (loss) / income for the year (2,176) 1,181 Total comprehensive income for the year 30,069 63,911 Profit attributable to: Owners of PJSC ALROSA 31,783 62,026 Non-controlling interest 31 462 704 Profit for the year 32,245 62,730 Total comprehensive income attributable to: Owners of PJSC ALROSA 29,806 63,072 Non-controlling interest 263 839 Total comprehensive income for the year 30,069 63,911

Basic and diluted earnings per share for profit attributable to the owners of PJSC ALROSA (in Roubles) 12 4.41 8.60

The accompanying notes on pages 5 to 60 are an integral part of these consolidated financial statements. 2 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 174 PROFILE REPORT AND INVESTORS GOVERNANCE 175

Consolidated statement of cash flows Consolidated statement of changes in equity

PJSC ALROSA PJSC ALROSA IFRS consolidated financial statements for the year ended 31 December 2020 IFRS consolidated financial statements for the year ended 31 December 2020 (in millions of Russian roubles, unless otherwise stated) (in millions of Russian roubles, unless otherwise stated)

Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity

Year ended Year ended Attributable to owners of PJSC ALROSA Notes 31 December 2020 31 December 2019 Number of Net Cash Inflow from Operating Activities 28 96,466 67,560 shares Other Non- Cash Flows from Investing Activities outstanding Share Share Treasury reserves Retained controlling Total Purchase of property, plant and equipment (17,006) (19,974) (units) capital premium shares (note 12) earnings Total interest equity Proceeds from sales of property, plant and equipment 147 2,011 Balance at Interest received 1,343 1,969 1 January 2019 7,208,905,830 12,473 10,431 (264) (31,355) 256,331 247,616 (39) 247,577 Sale of financial assets at fair value through profit or loss 24 2,255 385 Comprehensive income Proceeds from disposal of subsidiaries, net of cash disposed of - 1,566 Profit for the year - - - - - 62,026 62,026 704 62,730 Cash transfer to deposit accounts (115,588) (76,944) Other comprehensive income - - - - 1,046 - 1,046 135 1,181 Cash transfer from deposit accounts 94,683 62,231 Total comprehensive income Acquisition of Kristall group, net of cash acquired 5.3 - (1,286) for the year - - - - 1,046 62,026 63,072 839 63,911 Proceeds from sale of assets available for sale 5,132 - Transactions with owners Dividends received from associates 30 6,071 5,739 Dividends (note 12) - - - - - (57,311) (57,311) (213) (57,524) Government grants for investing activity - 693 Change in ownership in Net Cash Outflow used in Investing Activities (22,963) (23,610) subsidiaries ------2 2 Cash Flows from Financing Activities Total transactions with Repayments of loans (61,896) (53,324) owners - - - - - (57,311) (57,311) (211) (57,522) Loans received 86,781 63,692 Balance at Repayment of lease obligations (1,525) (1,361) 31 December 2019 7,208,905,830 12,473 10,431 (264) (30,309) 261,046 253,377 589 253,966 Interest paid (8,463) (7,465) Dividends paid to non-controlling shareholders (1) (215) Dividends paid 12 (18,992) (57,246) Balance at Net Cash Outflow used in Financing Activities 13 (4,096) (55,919) 1 January 2020 7,208,905,830 12,473 10,431 (264) (30,309) 261,046 253,377 589 253,966 Net Decrease in Cash and Cash Equivalents 69,407 (11,969) Comprehensive income / Cash and cash equivalents at the beginning of the year 13,315 27,437 (loss) Effect of exchange rate changes on cash and cash equivalents 4,150 (2,153) Profit for the year - - - - - 31,783 31,783 462 32,245 Cash and Cash Equivalents at the End of the Year 7 86,872 13,315 Other comprehensive loss - - - - (1,977) - (1,977) (199) (2,176) Total comprehensive income / (loss) for the year - - - - (1,977) 31,783 29,806 263 30,069

Transactions with owners Dividends (note 12) - - - - - (18,960) (18,960) (1) (18,961) Total transactions with owners - - - - - (18,960) (18,960) (1) (18,961) Balance at 31 December 2020 7,208,905,830 12,473 10,431 (264) (32,286) 273,869 264,223 851 265,074

The accompanying notes on pages 5 to 60 are an integral part of these consolidated financial statements. The accompanying notes on pages 5 to 60 are an integral part of these consolidated financial statements. 3 4 | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 176 PROFILE REPORT AND INVESTORS GOVERNANCE 177

SUBSIDIARIES AND ASSOCIATES

Information on subsidiaries and associates of PJSC ALROSA on 31 December 2020.

Direct participation in for-profit organizations

Financial Impairment Financial investments investments in provision in the authorized the authorized for financial capitals of Share in Dividends capitals of investments subsidiaries, less the authorized accrued for the Net profit/ subsidiaries, in authorized impairment provision, capital, % Company in Revenue, (loss), Name Purpose of participation Main line of business RUB ‘000 capital, RUB ‘000 RUB ‘000 2020, RUB ‘000 RUB ‘000 RUB ‘000 Investments in subsidiaries 112,794,269 10,194,377 102,599,892 - 4,366,839 - - LLC Heat and Water Supply Enterprise Generating profit Steam and hot water generation (thermal energy) 6,970,376 - 6,970,376 100.0000 - 4,311,746 (1,052,705) Lensk Municipal Heat and Electric Networks Generating profit Steam and hot water generation (thermal energy) 2,039,218 1,456,218 583,000 100.0000 - 612,444 (91,287) Enterprise JSC ALROSA Air Company Generating profit Air transportation 1,216,312 1,216,312 100.0000 - 6,397,410 28,432 JSC Kristall PC Generating profit Polishing and other processing of gems 1,886,000 1,886,000 0 100.0000 - 7,860,866 (108,146) ALROSA OVERSEAS S.A. Generating profit Financial operations 567,895 - 567,895 100.0000 - 90,209 (1,437) Production of jewelry and industrial products from LLC ALROSA Diamonds Generating profit 130,214 - 130,214 100.0000 140,000 87,332 224,442 precious metals and gems, coins and medals LLC ALROSA-Spetsbureniye Generating profit Drilling and blasting operations, construction 1,232,014 - 1,232,014 100.0000 59,941 1,885,489 8,182 LLC ALROSA-Okhrana Generating profit Security services 55,082 - 55,082 100.0000 39,537 1,441,481 74,433 ALROSA USA Inc. Generating profit Market research 451,902 448,077 3,825 100.0000 - 2,272,830 (16,772) JSC ALROSA-Torg Generating profit Wholesale and retail trade 23,300 - 23,300 100.0000 - 872,739 (56,360) ALROSA Hong Kong Ltd. Generating profit Market research 8,527 - 8,527 100.0000 - 531,719 (20,467) ALROSA Belgium Generating profit Market research 3,653 - 3,653 100.0000 11,395 157,736 5,424 ALROSA EAST DMCC Generating profit Market research 2,935 - 2,935 100.0000 - 337,531 10,487 ALROSA Israel Ltd. Generating profit Market research 277,546 - 277,546 100.0000 9,775 852,977 20,033 LLC ALROSA Private Security Company Generating profit Security services 10,000 - 10,000 100.0000 136 121,372 13,398 LLC Prometey Health Center Generating profit Health resort services 1,384,801 714,801 670,000 100.0000 - 125,261 (76,276) LLC Almazdortrans Generating profit Road cargo transportation 3,636,942 - 3,636,942 100.0000 388,575 5,146,693 352,786 LLC Mirny Airport Generating profit Airport operations 1,000 - 1,000 100.0000 - - (1,580) JSC Almazy Anabara Generating profit Production of rough diamonds 4,413,967 2,912,318 1,501,648 99.9999 3,679,762 22,915,514 9,822,331 JSC ALROSA-Gaz Generating profit Production and transportation of natural gas 1,409,652 - 1,409,652 99.9995 - 1,010,319 (439,870) JSC Viluyskaya HPP-3 Generating profit Generation and distribution of electricity 5,510,353 - 5,510,353 99.7313 - 9,414,281 1,028,867 PJSC Severalmaz Generating profit Production of rough diamonds 35,123,261 2,776,963 32,346,297 99.6564 - 10,080,641 671,578 JSC ALROSA-LENA Shipping Company Generating profit Marine cargo transportation 137,826 - 137,826 99.5617 27,753 787,403 142,150 PJSC ALROSA-Nyurba Generating profit Production of rough diamonds 46,170,198 - 46,170,198 97.4878 - 35,545,289 17,275,001 JSC IC Bourevestnik Generating profit Instrument manufacture 129,728 - 129,728 92.0764 9,965 830,353 (686,446) HIDROCHICAPA S.A. Generating profit Generation and distribution of electricity 1,568 - 1,568 55.0000 - 1,071,321 243,512 Investments in associates 4,947,226 4,755,713 191,513 - 4,122,102 - - Mining of iron ore (not engaged in main line of CJSC MMC Timir Generating profit 4,755,713 4,755,713 0 48.9999 - - (48,041) business) | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 178 PROFILE REPORT AND INVESTORS GOVERNANCE 179

INVESTMENT PROJECTS

Financial Impairment Financial investments investments in provision in the authorized the authorized for financial capitals of capitals of investments subsidiaries, less the subsidiaries, in authorized impairment provision, Project Purpose of participation Main line of business RUB ‘000 capital, RUB ‘000 RUB ‘000 Pilot ore dressing unit (FGUP Mining and Chemical - - 19,950 19,950 0 Combine), with a Company share of 35.6%

Indirect participation in for-profit organizations

Name Purpose of participation Main line of business Share in authorized capital, % Revenue, RUB ‘000 Net profit/(loss), RUB ‘000 LLC ALROSA IT Generating profit IT services 100 (through LLC Terra) 964,354 23,138 LLC Aikhaltransgaz Generating profit Transportation of natural gas 100 (through LLC Terra) 79,941 11,636 Research and development, instrument LLC Almazny Research & Development Center Generating profit 100 (through LLC Terra) 7,594 (26,085) manufacture LLC Zarnitsa Generating profit Hotel business 100 (through LLC Terra) 173,108 56,140 Smolensk Diamonds NV Generating profit Market research 100 (through JSC Kristall PC) 1,023,154 (368,023) Smolensk Diamonds Asia Limited Generating profit Market research 100 (through JSC Kristall PC) 384,758 (29,725) Kristall (Middle East) DMCC Generating profit Market research 100 (through JSC Kristall PC) - 6,156 21.46 (through JSC Kristall PC) Smolensk Diamonds Israel LTD Generating profit Market research - - 78.54 (through Smolensk Diamonds Public Limited Company (Belgium)) LLC YUG ALROSA Generating profit Manufacture of jewelry 99.9949 (through JSC Kristall PC) 359,943 116,901 LLC ALMAZ SERVICE Generating profit Production and restoration of polishing discs 100 (through JSC Kristall PC) 29,082 (7,490) LLC Gagarin Generating profit Lease of premises (not in operation) 67.57 (through JSC Kristall PC) 644 (2,072) Smolensk Diamonds USA, Inc. Generating profit Market research 100 (through Smolensk Diamonds Public Limited Company) 327,406 (36,378) LLC Kristall Jewelry Center Generating profit Manufacture of jewelry (not in operation) 50 (through LLC YUG ALROSA) n/d n/d | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 180 PROFILE REPORT AND INVESTORS GOVERNANCE 181

Name Purpose of participation Main line of business Share in authorized capital, % Revenue, RUB ‘000 Net profit/(loss), RUB ‘000 Accounting, treasury management and HR 99 (through LLC ALROSA Diamonds) LLC ALROSA Business Service Generating profit 1,053,973 85,598 accounting services 1 (through JSC IC Bourevestnik) 99 (through PJSC Severalmaz) LLC Terra Generating profit Management of holding companies 1,900 19,813 1 (through LLC Almazdortrans) LLC ALMAZ-Okhrana Center Generating profit Security services 99 (through LLC ALROSA-Okhrana) n/d n/d LLC YaGC Generating profit Generation of electricity 100 (through JSC Almazy Anabara) 3,058,809 676,705 ALROSA (ZIMBABWE) LIMITED Generating profit Geological survey 100 (through ALROSA OVERSEAS S.A.) - (178,056) Sunland Trading S.A. Generating profit Financial services 100 (through ALROSA OVERSEAS S.A.) - (1,230) KIMANG, LDA Generating profit Geological survey 50 (through ALROSA OVERSEAS S.A.) - (43,253) Alrosa Finance S.A. Generating profit Financial services 100 (through ALROSA OVERSEAS S.A.) - 6,749 COLLADE MANAGEMENT LIMITED Generating profit Financial operations 100 (through ALROSA OVERSEAS S.A.) n/d n/d Attracting investors to investment projects in the JSC Southern Yakutia Development Corporation Generating profit 14.7 (through CJSC MMC Timir) n/d n/d Republic of Sakha (Yakutia) LLC YaEGC Generating profit Distribution of electricity 100 (through Viluyskaya HPP-3) 515,295 1,994 VARGAN HOLDINGS LIMITED Generating profit Financial services 100 (through ALROSA OVERSEAS S.A) - 3,656,908 LLC Almaz Private Security Company Generating profit Security services 99 (through LLC Almaz-Okhrana Center) n/d n/d

Participation in non-profit organizations

Name Purpose of participation Main line of business Share in authorized capital, % PJSC ALROSA is a co-founder of the organization and participates Implementation of social Autonomous non-profit preschool Almazik Preschool education in co-financing in equal shares with the Ministry of Education of policy Mirny District of Republic of Sakha (Yakutia) | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 182 PROFILE REPORT AND INVESTORS GOVERNANCE 183

LIST OF LOCAL INTERNAL REPORT OF THE INDEPENDENT REGULATIONS AUDITOR ON IMPLEMENTATION OF THE LONG-TERM DEVELOPMENT PROGRAM

The following local internal regulations of PJSC ALROSA −−Regulation on Remuneration of the Chief Executive served as grounds for the preparation of this annual report: Officer – Chairman of the Management Board of the Company; −−Charter of PJSC ALROSA (as amended on 1 26 June 2019); −−Regulation on Remuneration of the Members of the Practitioner's summary in respect of validity Management Board of the Company; −−Corporate Governance Code of the Company; of the actual indicators for 2020 presented −−Regulation on the Corporate Secretary of the −−Code of Corporate Ethics of the Company; Company; in ALROSA Group's Long-Term Development 2 −−Regulation on the General Meeting of Shareholders of −−Information Policy of the Company; Program for 2018–2024 PJSC ALROSA (as amended on 26 June 2019); −−Regulation on Insider Information of the Company; −−Regulation on the Supervisory Board of PJSC ALROSA We believe that the evidence obtained during the audit (Appendix, Section 53) provides sufficient grounds for (as amended on 26 June 2019); −−Regulation on the Dividend Policy of the Company; expressing the opinion presented in the current section regarding the validity of the actual values of key performance indicators given in the ALROSA Group's Long-Term Development Program for the period 2018- −−Regulation on the Audit Committee of the Supervisory −−Regulation on Information Disclosure of the Company; 2024, for 2020. Board of the Company; −−Anti-Corruption Policy of the Company2; The actual values of ALROSA Group's key performance indicators for 2020 and the extent to which the target values are achieved are shown in the table below. −−Regulation on the HR and Remuneration Committee of the Supervisory Board of the Company; −−Regulation on Internal Audit of the Company; Table 41. Key performance indicators of ALROSA Group in 2020

−−Regulation on the Strategy and Sustainability −−Risk Management Policy of the Company; KPI Target (LTDP) Actual p.p., KPI Committee of the Supervisory Board of the % to target achievement Company1; −−Environmental Policy of the Company; Financial and economic KPI > ∆ MOEX −−Regulation on Risk Management; Market return per share, % 6.9% 6.9 p.p. yes −−Regulation on Remuneration of the Members of the Index4 Supervisory Board of the Company; 3 −−Internal Control Policy of the Company ; Growth of the dividend flow, RUB mln 19,558 -53,396 -273.0% no −−Regulation on the Management Board of the −−Regulation on the Occupational Health and Safety Return on equity (ROE), % 28% 12.5% -15.5 p.p. no Company; Management System of the Company; Adjusted EBITDA, RUB bln 125,173 87,644 70.0% no −−Regulation on the Audit Commission of the Company; −−Sustainable Development and Corporate Social Industry KPIs −−Regulation on Remuneration and Compensation Responsibility Policy of the Company. Core product sales revenue, USD mln 4,106 2,802 68.2% no of the Members of the Audit Commission of the Rough diamond production, thousand carats 37,148 30,020 80.8% no Company; Volume of rock mass, thousand m3 85,797 54,939 64.0% no Integral KPI of innovative activities > 95% 100% - yes Bonus cancellation

Net debt/Adjusted EBITDA ≤ 0.7 0.4 yes Productivity, RUB mln / person 11.8 11.0 93.1% no Reduction (+)/growth (-) of operating expenses, %5 -2.2% 2.9% 5.1 p.p. yes

1 The practitioner is LLC FBK (an audit firm performing an assurance engagement other than an audit and a review of historical financial information). 2 This document is an extract from the 2020 Audit Report on Implementation of ALROSA Group's Long-term Development Program for 2018–2024 dated April 9, 2021 (the Report) (Appendix, Section 6). In this extract, the references to the Report's Appendix and sections, as well as abbreviated terminology, have not been changed in any way compared to the original text of the Report. The extract has been provided for consideration at the meeting of the Strategic Planning Committee under the Supervisory Board of PJSC ALROSA and subsequent publication in PJSC ALROSA Annual Report 2020. 3 Appendix to the 2020 Audit Report on Implementation of ALROSA Group's Long-term Development Program 2018–2024. 1 On 15 February 2021, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the Strategy and Sustainability Committee of the Supervisory Board of PJSC ALROSA by decision of the Supervisory Board, minutes No. 01/327-PR-NS 4 Relative change of the market return per share ratio is more than relative growth of MOEX index for year (in case of the MOEX Index growth) and less then relative reduction of MOEX index for year (in case the MOEX index falls down) 2 Approved by the Supervisory Board of PJSC ALROSA on 10 March 2021, minutes No. 01/328-PR-NS. Before 10 March 2021, the Policy for Countering Corruption and Bribery of the Company was in force. 5 The value was determined in accordance with the methodology approved by Order of the President of PJSC ALROSA No. А01/128-П of May 5, 2017. 3 Approved by the Supervisory Board of PJSC ALROSA on 29 December 2020, minutes No. 01/326-PR-NS | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 184 PROFILE REPORT AND INVESTORS GOVERNANCE 185

STATISTICS ON SALES OF ROUGH AND POLISHED DIAMONDS

SUMMARY DATA ON THE SALES OF ROUGH AND POLISHED DIAMONDS BY ALROSA GROUP

No material misstatements were identified when verifying the reliability of the actual KPI values provided in the Sales of rough diamonds 2020 Report on Implementing ALROSA Group's Long-term Development Program for 2018–2024 and the Value (contractual), USD million1 achievement of the key performance indicators. Change 2018 2019 2020 At the end of 2020, the target values of four of the eleven ALROSA Group KPIs approved by the decision of the ALROSA Group 4,411.7 3,247.4 2,652.0 -18% Supervisory Board of PJSC ALROSA as part of ALROSA Group's Long-term Development Program for 2018–2024 (Minutes No. А01/283-ПР-НС of 16.11.2018) were achieved, including: “Market return per share”, Domestic market 524.5 365.8 210.0 -43% “Integral KPI of innovative activities”, “Net debt/Adjusted EBITDA”, “Reduction (+)/growth (-) of operating including Gokhran of Russia (the State Depository 0.4 2.2 3.9 +83% expenses”. for Precious Metals of Russia) Other target KPIs were not achieved by ALROSA Group. The failure to achieve KPI targets is due to the global Export 3,887.3 2,881.7 2,442.0 -15% diamond market crisis, which has led to a significant drop in sales and lower average prices for rough and including: polished diamonds. PJSC ALROSA2 3,107.8 2,024.3 1,739.3 -14% • We believe the evidence obtained during the audit (Appendix, sections 4 and 56) provides sufficient grounds for expressing the opinion: Domestic market 477.5 285.8 156.5 -45% On the absence of material misstatements in the actual indicators of ALROSA Group performance provided including Gokhran of Russia - 1.7 3.3 +91% in the 2020 Audit Report on Implementation of ALROSA Group's Long-term Development Program for 2018– 2024 and the achievement of key performance indicators, based on the results of the audit in all material Export 2,630.4 1,738.4 1,582.8 -9% respects; PJSC ALROSA-Nyurba 690.7 759.2 485.3 -36% • On implementation of key activities scheduled for 2020, aimed at the achievement of goals of ALROSA Domestic market 43.7 73.0 17.1 -77% Group's Long-term Development Program for 2018–2024, in all material respects; including Gokhran of Russia - - 0.6 - • On the targeted use of funds by ALROSA Group during the reporting period for the purpose of implementing Export 647.0 686.2 468.2 -32% the measures stipulated by the LDP, in full compliance with the terms and restrictions on their provision. JSC Almazy Anabara 459.5 304.1 276.9 -9% Domestic market 1.7 6.2 33.6 5.4 times including Gokhran of Russia - - - Export 457.8 297.9 243.3 -18% PJSC Severalmaz 152.0 158.2 135.5 -14% I. O. Livkin Executive Director, LLC FBK, Auditor Qualification Certificate Domestic market 1.6 0.7 0.4 -40% No.06-000361 dated 31.03.2016 including Gokhran of Russia 0.4 0.4 - - Primary registration entry number (ORNZ) 21606020201 Export 150.4 157.5 135.0 -14% Engagement Leader ALROSA structural divisions outside of Russia 1.7 1.7 2.9 +72% Date of extract: 9 April 2021 Domestic market - - - - Export 1.7 1.7 2.9 +72% JSC Kristall PC3 12.1 Domestic market - - 2.4 - Export - - 9.7 - Sales of polished diamonds Value (contractual), USD million Change 2018 20194 2020 Total 95.3 87.6 150.2 +72%

1 Here and elsewhere the data for 2018-2020 are given in accordance with IFRS (net of intragroup turnover).

2 Due to the receipt of diamond mining rights at the Nyurba and Botuobinskaya fields, from 1 June 2020 the diamonds of the Nyurba ulus of Republic of Sakha (Yakutia) belong to PJSC ALROSA (before June 2020, they belonged to PJSC ALROSA-Nyurba).

3 Due to the acquisition by PJSC ALROSA of JSC Kristall PC in October 2019, the sales of the ALROSA Group for Q4 2019 take account of the consolidation of the Kristall Group as concerns the purchase and sale of polished diamonds. 6 Appendices to the 2020 Audit Report on Implementation of ALROSA Group's Long-term Development Program for 2018–2024 4 With due account of the sales of JSC Kristall PC in Q4 2019. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 186 PROFILE REPORT AND INVESTORS GOVERNANCE 187

INFORMATION ON DIVESTMENT OF INFORMATION ON THE DIVESTMENT OF NON-CORE ASSETS BY PJSC ALROSA IN 2020 NON-CORE ASSETS Account (considering Difference analytics) reflecting between actual the income and realizable value Reason for the difference expense from Book value and book value between the actual During 2020, non-core assets (NCA) were divested in accord- −−provision of a quarterly report to the Company’s asset divestment of the asset, Actual realizable of the asset, realizable value and ance with the provisions of the Program to Divest Non-Core Supervisory Board on the progress being made in Name of asset (91.1ххх/91.2ххх) RUB ‘000 value, RUB ‘000 RUB ‘000 book value of the asset Assets of the Company (hereinafter the Program), approved implementing the Program. in December 2019 (minutes No. A01/305-PR-HS of the Part 1. Controlled legal entities The Company’s key is focused on the core diamond busi- Supervisory Board dated 30 December 2019). According ness and the divestment of all non-core assets, provided 99.75 % of shares 9113421000/ to the Program, there were 32 assets in the Register of Non- that divestment is economically expedient. in JSC NPF 9123423000/ 149,625 2,150,000 2,000,375 Sold at above book value. Core Assets (hereinafter the Register) scheduled for divest- Almaznaya Osen 9123424000 ment by 2022, with a book value of RUB 12,184.6 million. Non-core assets are divested in accordance with the prin- Part 2. Real estate register ciples, procedure and methods of sale set forth in the In August 2020, the Supervisory Board amended the An auction and sale Program, which aims to achieve the following outcomes: Land plot Program, adding two real estate assets to Part 2 of the through a public offer (area 30,807 m2) Register (minutes No. 01/318-PR-NS dated 17 August −−optimization of the structure of owned assets; with a gradual reduction Southern Industrial 2020). After the amendments, the Register contained 34 as- in price did not take place Zone, Leningradsky 9113100000/ sets for divestment with a total book value of −−improving the effectiveness of use of assets; 23,563 28 -23,535 due to the lack of bids. prospect, Mirny, 9123110000 Sold in six stages (sale RUB 12,239.9 million. −−improving capitalization. Republic of Sakha with an unannounced (Yakutia) On 29 December 2020, the Supervisory Board of The main principles facilitating the achievement of the price) at the price offered PJSC ALROSA decided to amend the Program to Divest expected outcomes of divestment of non-core assets are by the sole participant. Non-Core Assets by updating the Register (minutes observed with due account of the following provisions: An auction and sale No. A01/326-PR-NS dated 30 December 2020). −−an asset may be divested at a price below its book through a public offer Land plot under with a gradual reduction The Supervisory Board approved the main principles of the value in those cases where the estimated value of the Program together with the Register of Non-Core Assets in a tank farm in price by 25% to the asset is lower than its book value; (area 76,362 m2) cut-off price did not take 2013 in execution of Executive Order No. 596 of 9113100000/ Southern Industrial 45,194 3,531 -41,663 place due to the lack −−a non-core asset may be retained in those cases where 9123110000 the President of the Russian Federation dated Zone, Mirny, of bids. Sold in three the expenses on its divestment or write off would be 7 May 2012 "On Long-Term State Policy". The Program Republic of Sakha stages (sale with an was subsequently amended and appended in accord- higher than the potential income from its divestment. (Yakutia) unannounced price) at ance with Order No. Pr-348 of the President of the Russian The Company divested a total of five NCA in 2020, the price offered by the Federation, Resolution No. 894-r of the Government of the including the termination of participation in the authorized sole participant. Russian Federation dated 10 May 2017 "On Approving capital of JSC Non-State Pension Fund Almaznaya Osen Land plot for the Methodological Recommendations on Identification and the divestment of four real estate assets (three land placement of a and Divestment of Non-Core Assets", letter No. 11/29083 plots were sold and one item of construction in progress cement warehouse of Federal Agency for State Property Management was transferred into municipal ownership free of charge). base (area (Rosimushchestvo) dated 14 July 2016, and the Charter of 71,800 m2) 4519000110 12,461 17,037 4,576 Sold at above book value. PJSC ALROSA. Of the five divested assets, three were divested at a loss ul. Pobedy, (two land plots and the one item of construction in 50 m from The Program was revised significantly in 2019: the wording progress). The number and outcome of the procedures to 115 ul. Pobedy, of provisions were clarified and new provisions were divest non-core assets were impacted by the objective dif- Lensk, Republic of introduced. In particular, by analogy with those of the larg- ficulties affecting the period of sale, prices and the financial Sakha (Yakutia) est state-funded companies, value criteria were established result from the divestment of assets: The method of for inclusion of assets in the Register of Non-Core Assets divestment (gratuitous Work in progress: (a cadastral value of more than RUB 20 million for real es- −−a fall in business activity in 2020 due to the restrictions transfer) does not Community center tate assets), the asset perimeter was limited to the produc- caused by the pandemic, against a backdrop of low 9125410000 49,216 - -49,216 stipulate income. The on the Chuonalyr tion sphere, and assets that can only be divested through entrepreneurial activity in the region; asset was transferred into River liquidation were excluded. the municipal ownership −−the specialized nature of the assets; of the City of Mirny. The main stages of management of non-core assets −−the remote location of the assets; include: Total 280,059 2,170,596 1,890,538 −−the low market value of the assets based on the reports −−identification of the Company’s non-core assets subject of independent appraisers; to divestment according to the rules of the Program; −−the existence of offers at reduced prices (below the −−creation and updating of the Register; estimated value of the assets). −−approval of the Action Plan to divest non-core assets; Of the five assets divested by the Company in 2020, four −−performance of measures to divest non-core assets; of them were sold with a book value of RUB 230.8 million. Revenue from the sales equaled RUB 2,170.6 million. −−quarterly publication of information on the divestment of non-core assets on the Interagency State Property Group subsidiaries divested two non-core assets in 2020. Management Portal; | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 188 PROFILE REPORT AND INVESTORS GOVERNANCE 189

Certain Indicators of the National Project 'Labor −−implementation of automated systems in core INFORMATION ON THE EXECUTION Productivity and Employment Support', Having production and auxiliary processes and technical Established 2019 as the Base Year'"; retrofitting of production equipment; OF THE ORDERS OF THE PRESIDENT −−approved the target labor productivity indicator for −−development of the production system at the 2020, setting it at an amount at least 5% (unadjusted for Company's mining and processing divisions; inflation) over the 2019 base year; AND GOVERNMENT OF THE RUSSIAN −−improving corporate performance through −−instructed that provisions be made to ensure the organizational changes and corporate FEDERATION inclusion (updating) of measures to improve labor development at the Company; productivity in the Long-Term Development Program −−professional development of staff through of ALROSA Group, including target indicators for an corporate training and personnel development During 2020, the Supervisory Board of PJSC ALROSA took decisions based on the directives of the Government of increase in labor productivity by at least 5% (unadjusted programs together with the implementation of key the Russian Federation received by the Company. for inflation) per year over the 2019 base year, with an initiatives to improve the human resources policy. indication of the tools and resources used to improve labor productivity: −−instructed that provisions be made to ensure the On the national project "International Cooperation and Export" submission of data for the calculation of labor −−innovative development as part of the productivity indicators in accordance with the implementation of the Innovative Development norms of Order No. 659 of the Ministry of Economic In execution of Directive No. 10357p-P13 dated The main goals of the National Project are to transition from and Technological Modernization Program; Development of Russia dated 15 October 2019. 14 November 2019, the issue "On the possible integration trade in raw materials for export to non-resource-based improving production efficiency as part of of PJSC ALROSA and its subsidiaries into the national pro- goods and high value-added goods, create competitive −− the implementation of the Program to Raise ject (program) 'International Cooperation and Export'" was products for sale both inside the country and abroad, im- Operational Efficiency and Decrease Expenses; considered twice: prove freight logistics, update the support measures for ex- porters, and develop tourist, educational, medical and other −−on 27 December 2019, minutes No. 01/305-PR-NS, the services. Supervisory Board gave Company management 30 days to analyze the measures of the federal projects The national project includes five federal projects: "Industrial included in the national project (program) "International Export", "Export of Products of the Agro-industrial Complex", Cooperation and Export", regarding the possible "Logistics of International Trade", "Export of Services", and On assessing the existence or absence of ongoing or planned major integration of PJSC ALROSA into the project measures, "Systemic Measures to Develop International Cooperation and to analyze the Company’s export activity and/or and Export", i.e., it is oriented toward the development of in- investment projects the possibility to export goods and services stipulated dustries engaged in non-resource-based and non-energy ex- by the codes of the EAEU CN of FEA in the official port of products and services. statistics methodology for calculating the indicators The main line of business of PJSC ALROSA and its diamond In execution of Directive No. 12119p-P13 dated of information on the ongoing and planned major of the passports of the national project "International mining subsidiaries is the mining and sale of rough dia- 25 December 2019, on 5 February 2020, minutes investment projects, the total initial capital expenditures Cooperation and Export", approved by Order monds. All other Company subsidiaries support diamond No. 01/306-PR-NS, the Supervisory Board took note of in- during the investment stage of which exceed No. 1464 of the Ministry of Industry and Trade of Russia mining activity and either do not engage in export or their formation on ongoing major investment projects at RUB 10 billion; dated 23 April 2019. If PJSC ALROSA performs export PJSC ALROSA, with total initial capital expenditures at the export operations are one-off in nature and project-based, −−if ALROSA Group begins to implement new investment activity and/or there is the possibility to export goods investment stage of more than RUB 10 billion: Udachny un- aimed at the development of the ALROSA Group’s foreign projects with total initial capital expenditures of more and services, management was instructed to develop derground mine and International mine. Penetration and projects on the African continent. than RUB 10 billion, to provide the data on these (update) an action plan and target export growth rate mining of reserves at a depth of -790 m - 1250 m. indicators for the period up to 2024 and present it The analysis of the measures of the federal projects included projects for the consideration of the Supervisory Board for the approval of the Supervisory Board. It was also in the National Project showed the inability for PJSC ALROSA Based on the requirements of the directive, the Supervisory with the subsequent submission of the information on instructed to determine the key performance indicators and its subsidiaries to integrate into the measures of the Board instructed Company management: these projects to the Ministry of Economic Development of Russia and Rosimushchestvo, after the adoption of an of the Company influencing the determination of the projects, mainly due to the fact that the National Project is to ensure the provision twice a year (in April and −− investment decision on the implementation of the given amount of remuneration for its management personnel, oriented toward the development of industries engaged in October, by the 25th of the month) to the Ministry of investment project. for their inclusion in the export growth indicators, and non-resource-based and non-energy export of products and Economic Development of Russia and Rosimushchestvo to update (if necessary) the long-term development services. program; Having considered the results of the analysis, the Supervisory −−on 5 February 2020, minutes No. 01/306-PR-NS, Board agreed that PJSC ALROSA and its subsidiaries could Company management submitted the results of the not integrate into the measures of the national project (pro- performed analysis of the measures of the federal gram) "International Cooperation and Export" and recog- projects included in the national project (program) nized the low probability that PJSC ALROSA and its On the possible transition to tax monitoring "International Cooperation and Export" to the subsidiaries would develop export activity in non-resource- Supervisory Board. based and non-energy products and services. In execution of the requirements of Directive On 25 September 2020, minutes No. 01/321-PR-NS, No. 11528p-P13 dated 13 December 2019, the Supervisory the Supervisory Board took note of information on the On improving labor productivity Board twice considered the issue "On the possible transi- possible transition of PJSC ALROSA and its subsidiaries to tion of the joint stock company to tax control through tax tax control through tax monitoring and instructed Company monitoring". management to inform the Supervisory Board once a year In execution of Directive No. 12153p-P13 dated of Russia dated 15 October 2019 "On Amending the on the progress being made in measures aimed at the pos- On 5 February 2020, minutes No. 01/306-PR-NS, 25 December 2019, the Supervisory Board took Method for Calculating the Labor Productivity Indicators sible performance of a gradual transition of the Company the Supervisory Board instructed management to explore the following decisions on 5 February 2020, minutes of Enterprises, Industries, and Constituent Entities of and its subsidiaries to tax control through tax monitoring, the possible transition of PJSC ALROSA and its subsidiaries No. 01/306-PR-NS: the Russian Federation, approved by Order No. 748 and to submit for the consideration of the Supervisory of the Ministry of Economic Development of Russia to tax control through tax monitoring, with due account of approved the new version of the Regulation on the Board the issue of transitioning to tax control through tax −− dated 28 December 2018 'On Approving the Method the norms of Article 105.26 of the Tax Code of the Russian System of Key Performance Indicators of PJSC ALROSA, monitoring when the possibility for this transition appears. for Calculating the Labor Productivity Indicators of Federation, No. 146-FZ dated 31 July 1998, as well as the taking into account the updated method for calculating Enterprises, Industries, and Constituent Entities of the level of technical and organizational preparedness, and to labor productivity indicators in accordance with Order Russian Federation and the Method for Calculating provide the results for the consideration of the Supervisory No. 659 of the Ministry of Economic Development Board. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 190 PROFILE REPORT AND INVESTORS GOVERNANCE 191

On assessing the implementation of the Long-Term Development Program and Key Performance Indicators of the ALROSA Group

In execution of Directive No. 6739p-P13 dated Long-Term Development Programs and Achievement of 30 July 2020, on 2 September 2020, minutes Key Performance Indicators of Joint Stock Companies draft- No. 01/319-PR-NS, the Supervisory Board approved ed by the Ministry of Economic Development of Russia. the new versions of the Standard for Assessment of The Supervisory Board also instructed Company Implementation of the Long-Term Development Program management to assess the implementation of the Long- of ALROSA Group and Achievement of Key Performance Term Development Program of ALROSA Group and Indicators and the Technical Terms of Reference for the Achievement of Key Performance Indicators on an annual Assessment of Performance of the Long-Term Development basis, starting from 2021 (based on the results for 2020) Program of ALROSA Group and Achievement of Key with due account of the Technical Terms of Reference. Performance Indicators. The documents drafted based on the results of analysis of the Standard and Technical The Company provided the required reports and in- Terms of Reference on the Review of Implementation of formation under previously received directives of the the LTDP in effect since 2014 were brought into line with Government of the Russian Federation based on the in- the Model Standard for Assessment of Implementation of structions of the Supervisory Board on their performance

INFORMATION ON MAJOR TRANSACTIONS AND INTERESTED-PARTY TRANSACTIONS

Information on major transactions

No major transactions were performed by the Company (in will lead to the emergence of a corporate obligation for accordance with Federal Law No. 208-FZ dated the company to make a binding offer in accordance with 26 December 1995 "On Joint Stock Companies" (as Chapter XI of this Federal Law), where the price or book amended on 31 July 2020)) involving the acquisition, dis- value equals 25 percent or more of the book value of the posal or possible disposal of property (either directly or Company’s assets as determined based on the data from its indirectly, including through a loan, credit facility, pledge, financial statements as of the most recent reporting date on surety, acquisition of a number of shares or other public 31 December 2020. securities convertible to shares of a public company that

Report on interested-party transactions performed by PJSC ALROSA in 2020

Parties recognized as parties interested in the Contract price in rouble transaction at the time when consent is given to its Management body authorizing Name of counterparty Contract Material terms of the transaction equivalent (RUB) conclusion the transaction/Notice PJSC VTB Bank Surety agreement The Surety (Company) secures in full the performance 1,000,000,000.00 Member of the Management Board of the Company Notice No. KP01-AF-462/28 dated (Bank) of the obligations of the Principal, which is a subsidiary and member of the Board of Directors of the 18 November 2019 JSC ALROSA Air Company of the Surety and a beneficiary under the transaction, to beneficiary Igor Sobolev. No requirement to obtain consent (approval) for (Principal) the Bank under the Agreement concluded between the Chairman of the Supervisory Board of PJSC ALROSA the performance of the transaction was received Bank and the Principal. The surety is effective up to and simultaneously Chairman of the Supervisory Board 31 December 2027. The agreement is effective up to of the Counterparty Anton Siluanov 31 December 2024. LLC ALROSA-Spetsbureniye Work contract (construction contract) Performance of a set of mining and drilling operations, 1,792,516,211.00 Member of the Management Board of the Company Supervisory Board, minutes No. 01/305-PR-NS (Contractor) geological survey and related work from 1 January 2020 and member of the Board of Directors of the dated 30 December 2019 to 31 December 2020. counterparty Andrey Cherepnov LLC Almazdortrans Supplementary agreement to contract Change in the scope of work for 2020. 4,881,529,000.00 Member of the Management Board of the Company Supervisory Board, minutes No. 01/305-PR-NS (Contractor) No. 1990001312 dated and member of the Board of Directors of the dated 30 December 2019 23 December 2018 counterparty Igor Sobolev (p. 1 and 3 of section I of appendix No. 3-1 to the minutes) LLC Almazdortrans Supply contract Supply of POL from 1 January 2020 to 718,327,785.14 Member of the Management Board of the Company Supervisory Board, minutes No. 01/305-PR-NS (Buyer) 31 December 2020. and member of the Board of Directors of the dated 30 December 2019 counterparty Igor Sobolev PJSC Severalmaz Supplementary agreement No. 2 to Extending the loan term to 28 December 2022. 2,482,300,000.00 Member of the Management Board of the Company Supervisory Board, minutes No. 01/305-PR-NS (Borrower) loan agreement No. 1 dated and member of the Board of Directors of the dated 30 December 2019 9 January 2017 counterparty Igor Sobolev Chief Executive Officer – Chairman of the Board, member of the Supervisory Board of the Company and simultaneously member of the Board of Directors of the counterparty Sergey Ivanov PJSC Sberbank Surety agreement The Surety (Company) secures in full the performance 1,000,000,000.00 Member of the Management Board of the Company Notice No. KP01-AF-462/28 dated (Bank) of the obligations of the Principal, which is a subsidiary and member of the Board of Directors of the 18 November 2019 JSC Innovation Center of the Surety and a beneficiary under the transaction, to beneficiary Andrey Cherepnov No requirement to obtain consent (approval) for Bourevestnik the Bank under the Agreement concluded between the the performance of the transaction was received. (Beneficiary) Bank and the Principal. The surety is effective up to 31 December 2027. The agreement is effective up to 31 December 2024. PJSC VTB Bank Surety agreement The Surety (Company) secures in full the performance 1,000,000,000.00 Member of the Management Board of the Company Notice No. KP01-AF-462/28 dated (Bank) of the obligations of the Principal, which is a subsidiary and member of the Board of Directors of the 18 November 2019 JSC Innovation Center of the Surety and a beneficiary under the transaction, to beneficiary Andrey Cherepnov No requirement to obtain consent (approval) for Bourevestnik the Bank under the Agreement concluded between the Chairman of the Supervisory Board of PJSC ALROSA the performance of the transaction was received. (Beneficiary) Bank and the Principal. The surety is effective up to and simultaneously Chairman of the Supervisory Board 31 December 2027. The agreement is effective up to of the Counterparty Anton Siluanov 31 December 2024.

PJSC Sberbank Surety agreement The Surety (Company) secures in full the performance 1,000,000,000.00 Member of the Management Board of the Company Notice No. KP01-AF-462/28 dated (Bank) of the obligations of the Principal, which is a subsidiary and member of the Board of Directors of the 18 November 2019 PJSC Severalmaz of the Surety and a beneficiary under the transaction, to beneficiary Igor Sobolev No requirement to obtain consent (approval) for (Beneficiary) the Bank under the Agreement concluded between the Chief Executive Officer – Chairman of the Board, the performance of the transaction was received. Bank and the Principal. The surety is effective up to member of the Supervisory Board of the Company and 31 December 2027. The agreement is effective up to simultaneously member of the Board of Directors of 31 December 2024. the counterparty Sergey Ivanov PJSC VTB Bank Surety agreement The Surety (Company) secures in full the performance 1,000,000,000.00 Member of the Management Board of the Company Notice No. KP01-AF-462/28 dated (Bank) of the obligations of the Principal, which is a subsidiary and member of the Board of Directors of the 18 November 2019 PJSC Severalmaz of the Surety and a beneficiary under the transaction, to beneficiary Igor Sobolev No requirement to obtain consent (approval) for (Beneficiary) the Bank under the Agreement concluded between the Chief Executive Officer – Chairman of the Board, the performance of the transaction was received. Bank and the Principal. The surety is effective up to member of the Supervisory Board of the Company and 31 December 2027. The agreement is effective up to simultaneously member of the Board of Directors of 31 December 2024. the counterparty Sergey Ivanov Chairman of the Supervisory Board of PJSC ALROSA and simultaneously Chairman of the Supervisory Board of the Counterparty Anton Siluanov JSC Innovation Center Supplementary agreement No. 1 to Increasing the amount of the loan agreement (from 1,700,000,000.00 Member of the Management Board of the Company Supervisory Board, minutes No. 01/305-PR-NS Bourevestnik loan agreement No. 35 dated RUB 1.1 billion to RUB 1.7 billion), extending the term and member of the Board of Directors of the dated 30 December 2019 (Borrower) 13 February 2018 (from 28 December 2020 to 28 December 2025), counterparty Andrey Cherepnov increasing the period of repayment of each tranche (from 185 to 365 days). JSC Innovation Center Supplementary agreement No. 1 to Increasing the amount of the loan agreement (from 1,700,000,000.00 Member of the Management Board of the Company Supervisory Board, minutes No. 01/305-PR-NS Bourevestnik loan agreement No. 36 dated RUB 1.1 billion to RUB 1.7 billion), extending the term and member of the Board of Directors of the dated 30 December 2019 (Lender) 13 February 2018 (from 28 December 2020 to 28 December 2025), counterparty Andrey Cherepnov increasing the period of repayment of each tranche (from 185 to 365 days). | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 194 PROFILE REPORT AND INVESTORS GOVERNANCE 195

JSC ALROSA-Lena Shipping Supplementary agreement No. 1 to Increasing the amount of the loan agreement 550,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS Company loan agreement No. 122 dated (from RUB 0.35 billion to RUB 0.55 billion), extending Company and member of the Board of Directors dated 30 December 2019 (Borrower) 30 March 2018 the term (from 28 December 2020 to 28 December of the counterparty Igor Sobolev 2025), increasing the period of repayment of each tranche (from 185 to 365 days). JSC ALROSA-Lena Shipping Supplementary agreement No. 1 to Increasing the amount of the loan agreement (from 550,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS Company loan agreement No. 121 dated RUB 0.35 billion to RUB 0.55 billion), extending the Company and member of the Board of Directors dated 30 December 2019 (Lender) 30 March 2018 term (from 28 December 2020 to 28 December 2025), of the counterparty Igor Sobolev increasing the period of repayment of each tranche (from 185 to 365 days).

LLC ALROSA-Spetsbureniye Supplementary agreement No. 2 to Extending the term (from 28 December 2020 to 1,350,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Lender) loan agreement No. 125 dated 28 December 2025), increasing the period of Company and member of the Board of Directors dated 30 December 2019 30 March 2018 repayment of each tranche (from 270 to 365 days). of the counterparty Andrey Cherepnov LLC ALROSA-Spetsbureniye Supplementary agreement No. 2 to Extending the term (from 28 December 2020 to 1,350,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Borrower) loan agreement No. 126 dated 28 December 2025), increasing the period of Company and member of the Board of Directors dated 30 December 2019 30 March 2018 repayment of each tranche (from 270 to 365 days). of the counterparty Andrey Cherepnov JSC ALROSA Air Company Supplementary agreement No. 1 to Increasing the amount of the loan agreement 3,800,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Borrower) loan agreement No. 131 dated (from RUB 1.8 billion to RUB 3.8 billion), extending the Company and member of the Board of Directors dated 30 December 2019 30 March 2018 term (from 28 December 2020 to 28 December 2025), of the counterparty Igor Sobolev increasing the period of repayment of each tranche (from 180 to 365 days). JSC ALROSA Air Company Supplementary agreement No. 2 to Increasing the amount of the loan agreement 3,800,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Lender) loan agreement No. 625 dated (from RUB 2.8 billion to RUB 3.8 billion), extending the Company and member of the Board of Directors dated 30 December 2019 28 December 2017 term (from 28 December 2020 to 28 December 2025), of the counterparty Igor Sobolev increasing the period of repayment of each tranche (from 180 to 365 days). LLC Almazdortrans Supplementary agreement No. 1 to Extending the term (from 28 December 2020 to 3,150,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Borrower) loan agreement No. 614 dated 28 December 2025), increasing the period of Company and member of the Board of Directors dated 30 December 2019 26 October 2018 repayment of each tranche (from 180 to 365 days). of the counterparty Igor Sobolev LLC Almazdortrans Supplementary agreement No. 1 to Extending the term (from 28 December 2020 to 3,150,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Lender) loan agreement No. 614 dated 28 December 2025), increasing the period of Company and member of the Board of Directors dated 30 December 2019 26 October 2018 repayment of each tranche (from 180 to 365 days). of the counterparty Igor Sobolev PJSC Severalmaz Supplementary agreement No. 1 to Increasing the amount of the loan agreement 7,000,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Lender) loan agreement No. 43 dated (from RUB 4.5 billion to RUB 7 billion), extending the Company and member of the Board of Directors dated 30 December 2019 16 February 2018 term (from 28 December 2020 to 28 December 2025), of the counterparty Igor Sobolev increasing the period of repayment of each tranche Chief Executive Officer – Chairman of the (from 180 to 365 days). Board, member of the Supervisory Board of the Company and simultaneously member of the Board of Directors of the counterparty Sergey Ivanov PJSC Severalmaz Supplementary agreement No. 1 to Increasing the amount of the loan agreement 7,000,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Borrower) loan agreement No. 44 dated (from RUB 4.5 billion to RUB 7 billion), extending the Company and member of the Board of Directors dated 30 December 2019 16 February 2018 term (from 28 December 2020 to 28 December 2025), of the counterparty Igor Sobolev Chief Executive increasing the period of repayment of each tranche Officer – Chairman of the Board, member of (from 180 to 365 days). the Supervisory Board of the Company and simultaneously member of the Board of Directors of the counterparty Sergey Ivanov JSC Almazy Anabara Supplementary agreement No. 1 to Increasing the amount of the loan agreement 13,000,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Borrower) loan agreement No. 45 dated (from RUB 7 billion to RUB 13 billion), extending the Company and member of the Board of Directors dated 30 December 2019 16 February 2018 term (from 28 December 2020 to 28 December 2025), of the counterparty Igor Sobolev increasing the period of repayment of each tranche Chief Executive Officer – Chairman of the (from 180 to 365 days). Board, member of the Supervisory Board of the Company and simultaneously member of the Board of Directors of the counterparty Sergey Ivanov According to the information available at PJSC ALROSA, on the transaction date the participation interest of interested party Sergey Ivanov in the authorized capital of PJSC ALROSA was 0.00415% and of the legal entity acting as a party to the transaction – 0%; the participation interest of interested party Igor Sobolev in the authorized capital of PJSC ALROSA and the legal entity acting as a party to the transaction was 0%; | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 196 PROFILE REPORT AND INVESTORS GOVERNANCE 197

Parties recognized as parties interested in the Contract price in rouble transaction at the time when consent is given to Management body authorizing Name of counterparty Contract Material terms of the transaction equivalent (RUB) its conclusion the transaction/Notice JSC Almazy Anabara Supplementary agreement No. 2 to Increasing the amount of the loan agreement 13,000,000,000.00 Member of the Management Board of the Supervisory Board, minutes No. 01/305-PR-NS (Lender) loan agreement No. 46 dated (from RUB 12.5 billion to RUB 13 billion), extending the Company and member of the Board of Directors dated 30 December 2019 16 February 2018 term (from 28 December 2020 to 28 December 2025), of the counterparty Igor Sobolev increasing the period of repayment of each tranche Chief Executive Officer – Chairman of the (from 180 to 365 days). Board, member of the Supervisory Board of the Company and simultaneously member of the Board of Directors of the counterparty Sergey Ivanov According to the information available at PJSC ALROSA, on the transaction date the participation interest of interested party Sergey Ivanov in the authorized capital of PJSC ALROSA was 0.00415% and of the legal entity acting as a party to the transaction – 0%; the participation interest of interested party Igor Sobolev in the authorized capital of PJSC ALROSA and the legal entity acting as a party to the transaction was 0%; JSC ALROSA Air Company Agreement on comprehensive ground Provision of paid services for airport and ground 563,199,988.34 Member of the Management Board of the Supervisory Board, minutes No. 01/326-PR-NS (Client) handling services of aircraft at Mirny handling services of aircraft at Mirny Airport of the Mirny (approximate and subject to Company and member of the Board of Directors dated 30 December 2020 Airport Aviation Division of PJSC ALROSA, provision of paid adjustment at the end of the of the counterparty Igor Sobolev services on fueling and takeoff and landing support for contract term) aircraft at the Nakyn airfield. Period of service under the contract, from 1 January 2021 to 31 December 2021. JSC ALROSA Air Company Supply contract Supply of POL from 1 January 2021 to 507,710,588.88 Member of the Management Board of the Supervisory Board, minutes No. 01/326-PR-NS (Buyer) 31 December 2021. (approximate and subject to Company and member of the Board of Directors dated 30 December 2020 adjustment at the end of the of the counterparty Igor Sobolev contract term) 433,261,490.30 (taking into account the concluded supplementary agreement) | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 198 PROFILE REPORT AND INVESTORS GOVERNANCE 199

REPORT ON COMPLIANCE WITH THE PRINCIPLES AND RECOMMENDATIONS OF THE CORPORATE GOVERNANCE CODE

Report on compliance by PJSC ALROSA with the principles and recommendations of the Corporate Governance Code in 2020

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 1.1.6 The procedure established by the Company for holding a general meeting ensures an equal opportunity for all persons 1. In the reporting period, sufficient time to make reports on сompliant attending the meeting to voice their opinion and to ask the questions of interest to them. the agenda items and to discuss these issues was provided at the general meeting of shareholders in the form of a meeting (the joint presence of shareholders). 2. Nominees to the management and supervisory bodies of the Company were available to answer the questions of shareholders at the meeting where their nominations were put to vote. 3. When making decisions related to the preparation and holding of general meetings of shareholders, the Board of Directors considered the issue of using telecommunications to provide remote access to shareholders for participation in the general meetings held in the reporting period. 1.2 Shareholders were given equal and fair opportunities to participate in the profits of the company through dividends. 1.2.1 Shareholders were given equal and fair opportunities to participate in the profits of the company through dividends. 1. The Company has developed and disclosed the dividend сompliant policy, approved by the Board of Directors. 2. Where the Company’s dividend policy uses the Company’s financial statements to determine the amount of the dividends, it is the Group's consolidated financial statements that shall be taken into account in the relevant provisions of the dividend policy. 1.2.2 The Company does not decide on the payment of dividends if such a decision, while formally not breaching the limits set 1. The Company’s dividend policy provides clear guidance сompliant by the law, would be economically unfeasible or lead to a false perception of the Company’s performance. on the financial and economic circumstances in which the Company shall not pay dividends. 1.2.3 The Company does not allow a lessening of the dividend rights of existing shareholders. 1. In the reporting period, the Company took no actions that сompliant would lessen the dividend rights of the existing shareholders. 1.2.4 The Company tries to rule out the use by shareholders of any other ways of obtaining profit (gain) at the expense of the 1. To prevent ways for shareholders to generate profit (gain) сompliant Company other than dividends and distribution of liquidation value. at the expense of the Company other than dividends and distribution of liquidation value, the internal documents of the Company have set up controls that ensure the timely identification of transactions with parties affiliated (associated) with substantial shareholders (persons entitled to cast the votes conferred by voting shares) and a procedure for approval of these transactions, for those cases where the law does not formally recognize such transactions as interested-party transactions. 1.3 The system and practices of corporate governance ensure equal terms and conditions for all shareholders owning shares of the same class (category), including minority (small) and foreign shareholders, as well as their equal treatment by the Company. 1.3.1 The Company has created conditions for fair treatment of each shareholder by the management bodies and controlling 1. In the reporting period, the procedures for managing сompliant persons, including the inadmissibility of any abuse of the rights of minority shareholders by major shareholders. potential conflicts of interest of major shareholders proved to be effective, and the Board of Directors paid proper attention to the conflicts between shareholders, if any. 1.3.2 The Company does not perform any acts which will or might result in artificial redistribution of corporate control. 1. There were no quasi-treasury shares or they did not сompliant participate in voting procedures in the reporting period. 1.4 The shareholders are provided with reliable and efficient means of recording their rights to shares, as well as with the opportunity to freely dispose of such shares in a non-onerous manner. 1.4.1 The shareholders are provided with reliable and efficient means of recording their rights to shares, as well as with the 1. The quality and reliability of the Company registrar’s сompliant opportunity to freely dispose of such shares in a non-onerous manner. operations to maintain the registry of security holders conform to the requirements of the Company and its shareholders. 2.1 The board of directors performs strategic management of the Company, determines the main principles of and approaches to the creation of a risk management and internal control system within the Company, monitors the activity of the Company’s executive bodies, and carries out other key functions. 2.1.1 The Board of Directors is responsible for decisions related to the appointment of members of executive bodies and their 1. The Board of Directors has the authority stipulated by the сompliant dismissal from their posts, including in connection with their failure to properly perform their duties. The Board of Directors Charter to appoint, dismiss and determine the terms of also exercises control over the Company’s executive bodies to ensure that they act in accordance with the approved contracts with the members of the executive bodies. development strategy and in the main areas of focus of the Company’s activity. 2. The Board of Directors has considered the report(s) of the sole executive body and the members of the collective executive body on implementation of the Company’s strategy. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 202 PROFILE REPORT AND INVESTORS GOVERNANCE 203

2.3.1 Only persons with impeccable business and personal reputation and having the knowledge, skills and experience 1. The procedure in place at the Company for assessing сompliant necessary to make decisions that fall within the purview of the Board of Directors and required for the effective the work efficiency of the Board of Directors includes performance of its functions should be elected to the Board of Directors. an assessment of the professional qualifications of the members of the Board of Directors. 2. In the reporting period, the Board of Directors (or its Nomination Committee) assessed candidates to the Board of Directors to ensure that they had the required experience, knowledge, business reputation, absence of conflict of interest, etc. 2.3.2 The members of the Board of Directors are elected through a transparent procedure that allows shareholders to receive 1. In all cases when a general meeting of shareholders сompliant sufficient information about the candidates to form an opinion on their personal and professional qualities. involving the election of the Board of Directors was held in the reporting period, the Company invariably submitted biographical information on all of the nominees to the Board of Directors, the results of their assessment by the Board of Directors (or the Nomination Committee), information on their conformance with the independence criteria set forth in recommendations 102–107 of the Code, and the written consent of the nominees for election to the Board of Directors. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 204 PROFILE REPORT AND INVESTORS GOVERNANCE 205

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 2.3.3 The Board of Directors is well balanced, including as concerns the qualifications of its members, their experience, 1. As part of the procedure for assessing the work of the сompliant knowledge and competencies, and enjoys the trust of shareholders. Board of Directors in the reporting period, the Board of Directors examined their own needs as regards professional qualifications, experience and business skills. 2.3.4 The numerical strength of the Board of Directors of the Company enables the most efficient organization of the activity of 1. As part of the assessment of the Board of Directors during сompliant the Board of Directors, including manning the committees of the Board of Directors, and also ensures the possibility for the reporting period, the Board of Directors considered significant minority shareholders of the Company to elect a candidate of their choice to the Board of Directors. the adequacy of the numerical strength of the Board of Directors to meet the needs of the Company and ensure the interests of shareholders. 2.4 The Board of Directors includes a sufficient number of independent directors. 2.4.1 An independent director means any person who has the required professional skills and expertise and is able to form his/ 1. In the reporting period, all independent members of the сompliant her own position and make objective and bona fide judgments, free from the influence of the Company’s executive bodies, Board of Directors met all independence criteria specified any individual group of shareholders or other stakeholders. It should be noted that ordinarily a nominee (an elected in recommendations 102–107 of the Code or were member of the Board of Directors) related to the Company, a major shareholder thereof, major counterparty or competitor recognized as independent by the decision of the Board of of the Company or associated with the State cannot be regarded as independent. Directors. 2.4.2 The compliance of candidates to the Board of Directors with the independence criteria is assessed. The Company 1. In the reporting period, the Board of Directors (or its сompliant also conducts a regular analysis of the conformity of the independent members of the Board of Directors with the Nomination Committee) formed an opinion on the independence criteria. When carrying out such an evaluation, substance should take precedence over form. independence of each nominee to the Board of Directors and presented the corresponding conclusion to the shareholders. 2. During the reporting period, the Board of Directors (or its Nomination Committee) performed at least one review of independence of the current members of the Board of Directors indicated by the Company as independent directors in the annual report. 3. The Company has developed procedures determining the required actions of a member of the Board of Directors in case of a change in his/her "independent" status, including the obligation to duly notify the Board of Directors of this fact. 2.4.3 Independent directors make up at least one third of the Board of Directors. 1. Independent directors make up at least one third of the partially compliant The annual General Meeting of Shareholders Board of Directors. of the Company (24 June 2020) elected three independent directors. Taking into account the numerical strength of the Supervisory Board (15 people), shareholders are advised to elect at least five independent directors. On an annual basis, when candidates are nominated to the Supervisory Board, the Company (Supervisory Board, HR and Compensation Committee of the Supervisory Board and the executive bodies) performs work with shareholders, including the Russian Federation and the Republic of Sakha (Yakutia), to ensure the nomination of more independent directors for their election to the Supervisory Board at the General Meeting of Shareholders. In the reporting year, the Supervisory Board approved the Regulation on Succession of the Members of the Supervisory Board (minutes No. 01/312-PR-NS dated 6 May 2020), based on which: - the intention of the Company and its shareholders to ensure that independent directors make up at least one third of the elected members of the Supervisory Board (point 2.2) was included in the principles of succession. - the HR and Compensation Committee ensures the identification of the Supervisory Board’s need for additional expertise (with due account of the annual assessment of the work of the Supervisory Board and committees), an assessment of candidates for compliance with the requirements and principles of the Regulation, and the provision of recommendations to the | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 206 PROFILE REPORT AND INVESTORS GOVERNANCE 207

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle Supervisory Board for the adoption of corporate decisions (approval of the list of candidates and recommendations of shareholders on voting on the issue of election of members of the Supervisory Board at the meeting) (point 4.1). These measures were performed and in 2021 the candidates proposed by the HR and Compensation Committee who meet the independence criteria will be included alongside the candidates nominated by the shareholders of PJSC ALROSA in the list of candidates for election to the Supervisory Board by decision of the Supervisory Board. 2.4.4 Independent directors play a key role in the prevention of internal conflicts at the Company and the performance by the 1. Independent directors (with no conflict of interest) conduct сompliant Company of major corporate actions. a pre-assessment of any major corporate actions bearing any possibility of a conflict of interest, and the results of this assessment are presented to the Board of Directors. 2.5 The Chairman of the Board of Directors facilitates the most efficient possible performance of the functions placed on the Board of Directors. 2.5.1 An independent director was elected as the Chairman of the Board of Directors or a senior independent director was 1. The Chairman of the Board of Directors is an independent сompliant Of the two alternative approaches allowed by appointed from among the elected independent directors to coordinate the work of the independent directors and to director, or a senior independent director was appointed this principle, the Company implemented the interact with the Chairman of the Board of Directors. from among the elected independent directors. appointment of a senior independent director 2. The role, rights and obligations of the Chairman of from among the independent directors. In the Board of Directors (and, if applicable, of a senior the Company’s opinion, the choice of this independent director) are duly defined in the Company’s approach most closely corresponds to the internal documents. structure of the Company’s share capital. 2.5.2 The Chairman of the Board of Directors ensures that board meetings are held in a constructive atmosphere and that any 1. In the reporting period, the work performance of the сompliant items on the meeting agenda are discussed freely. The Chairman also monitors the fulfilment of the decisions made by the Chairman of the Board of Directors was assessed as part of Board of Directors. the procedure for assessing the performance of the Board of Directors. 2.5.3 The Chairman of the Board of Directors takes any and all measures required to provide the board members in a timely 1. The duty of the Chairman of the Board of Directors to take сompliant fashion with the information required to make decisions on agenda items. measures to ensure the timely delivery of materials to the members of the Board of Directors on the agenda items of a meeting of the Board of Directors is stipulated by the Company’s internal documents. 2.6 Board members, being sufficiently informed, act reasonably and in good faith in the best interests of the Company and its shareholders, with due care and diligence. 2.6.1 Board members make decisions after considering all available information, in the absence of a conflict of interest, treating 1. The Company’s internal documents stipulate that a сompliant shareholders of the Company equally, and assuming normal business risks. member of the Board of Directors must notify the Board of Directors in case he/she has any conflict of interest in relation to any item on the agenda of the meeting of the Board of Directors or any of its committees before deliberation starts on the respective agenda item. 2. The Company’s internal documents stipulate that a member of the Board of Directors shall abstain from voting on any issue where he/she has a conflict of interest. 3. The Company has established a procedure allowing the Board of Directors to seek professional consultations on the issues in its competence at the Company’s expense. 2.6.2 The rights and duties of board members are clearly stated and documented in the Company’s internal documents. 1. The Company has adopted and published an internal сompliant document clearly defining the rights and duties of the members of the Board of Directors. 2.6.3 Board members have sufficient time to perform their duties. 1. In the reporting period, the individual attendance rate at сompliant the meetings of the Board of Directors and its committees, as well as the time spent on preparations for participation in the meetings, were considered during the assessment of the Board of Directors. 2. The Company’s internal documents stipulate that members of the Board of Directors must notify the Board of Directors of their intent to join the management bodies of other entities (except controlled and associated entities of the Company), and of the fact of such appointment. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 208 PROFILE REPORT AND INVESTORS GOVERNANCE 209

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 2.6.4 All board members have equal opportunity to access the Company’s documents and information. Newly elected board 1. The Company’s internal documents stipulate that members сompliant members should be provided with sufficient information on the Company and the work of its Board of Directors as soon as of the Board of Directors are entitled to access documents practicable. and make queries related to the Company and controlled entities, and the executive bodies of the Company must provide them with the respective information and documents. 2. The Company has a documented orientation program in place for newly elected members of the Board of Directors. 2.7 Meetings of the Board of Directors, preparation for them, and participation of board members in them ensures the efficient work of the Board of Directors. 2.7.1 Заседания совета директоров проводятся по мере необходимости, с учетом масштабов деятельности и стоящих 1. The Board of Directors held at least six meetings in the сompliant перед обществом в определенный период времени задач. reporting year. 2.7.2 The Company’s internal documents set forth a procedure for preparing for and holding meetings of the Board of Directors 1. The Company approved an internal document determining сompliant that enables the shareholders to get properly prepared for such meetings. the procedure for preparing for and holding meetings of the Board of Directors that stipulates, among other things, that the notice on the holding of such meetings must be sent at least five days in advance. 2.7.3 The form of the meeting of the Board of Directors is determined based on the importance of the agenda items to be 1. The Charter or an internal document of the Company сompliant considered at the meeting. The most important items are considered at in-person meetings. stipulates that the most important issues (listed in recommendation 168 of the Code) must be considered at in-person meetings. 2.7.4 Decisions on the most important issues relating to the Company’s business are made at a meeting of the Board of Directors 1. The Company Charter stipulates that the decisions on the compliant by a qualified majority vote or by a majority vote of all elected board members. most important issues listed in recommendation 170 of the Code must be adopted at a meeting of the Board of Directors by a qualified majority of at least three fourths of votes or by the majority of votes of all elected members of the Board of Directors. 2.8 The Board of Directors forms committees for preliminary consideration of the most important issues of the Company’s business. 2.8.1 An Audit Committee comprised of independent directors was created for the preliminary consideration of any matters of 1. An Audit Committee comprised exclusively of independent сompliant control over the Company’s financial and business activities. directors has been set up by the Board of Directors. 2. The Company’s internal documents determine the Audit Committee’s duties, including those listed in recommendation 172 of the Code. 3. At least one independent director in the Audit Committee must have experience and expertise in the preparation, analysis, assessment and audit of the financial statements. 4. In the reporting period, the meetings of the Audit Committee were held at least once per quarter. 2.8.2 A Remuneration Committee comprised of independent directors and chaired by an independent director who is not 1. The Board of Directors has set up a Remuneration partially сompliant For the due performance of its duties, the concurrently the Chairman of the Board was created for the preliminary consideration of any matters related to the Committee comprised exclusively of independent HR and Remuneration Committee includes development of efficient and transparent remuneration practices. directors. four members. All independent directors (3) 2. The Remuneration Committee is headed by an and one non-executive director who is not independent director who is not the Chairman of the Board the Chairman of the Board of Directors have of Directors. been elected to the HR and Remuneration 3. The Company’s internal documents determine the Committee. The non-executive director is the Remuneration Committee’s duties, including those listed in Chairman of the Committee. recommendation 180 of the Code. All members of the Supervisory Board, including the independent directors, voted unanimously to elect the non-executive director as a member and as the Chairman of the Committee, which attests to the recognition by the Supervisory Board of this non-executive director’s extensive professional experience, necessary skills, organizational capabilities and ability to make a considerable contribution to the Committee’s work, as well as to the recognition that this non- executive director does not formally meet the independence criteria but that this fact does not affect his ability to make independent and objective judgments free from the influence of the Company, any individual groups of shareholders or other stakeholders. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 210 PROFILE REPORT AND INVESTORS GOVERNANCE 211

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 2.8.3 A Nominations (Appointments, Staff) Committee, the majority of the members of which are independent directors, was 1. A Nomination Committee made up primarily of сompliant The duties of the Nominations Committee created for the preliminary consideration of any matters relating to human resources planning (succession planning), independent directors was created by the Board of are performed by the HR and Remunerations professional composition and work efficiency of the Board of Directors. Directors (or its duties, as stipulated by recommendation Committee. 186 of the Code, are implemented within another committee). 2. The Company’s internal documents determine the duties of the Nomination Committee (or another committee with extended functions), including those listed in recommendation 186 of the Code. 2.8.4 Taking account of its scope of activities and the levels of related risks, the Board of Directors of the Company verified 1. The Board of Directors considered the adequacy of the сompliant Additionally, the Strategy and Sustainability that the composition of its committees is adequate to achieve the goals of the Company’s activity. Additional committees composition of its committees for the tasks and duties of Committee of the Supervisory Board was have either been formed or are deemed unnecessary (Strategy Committee, Corporate Governance Committee, Ethics the Board of Directors and the Company’s business goals created1. Committee, Risk Management Committee, Budget Committee, Committee on Health, Safety and Environment, etc.). in the reporting period. Additional committees have either been formed or were deemed unnecessary. 2.8.5 The composition of the committees was determined in such a way that it allows a comprehensive discussion of issues 1. The Committees of the Board of Directors are headed by partially compliant The Chairman of the Strategy and being considered on a prelim-inary basis with due account of dif-fering opinions. independent directors. Sustainability Committee2 and the HR and 2. The Company’s internal documents (policies) contain Remuneration Committee are independent provisions stipulating that non-members of the Audit directors. Committee, Nomination Committee and Remuneration All members of the Supervisory Board, Committee can attend the meetings of these committees including the independent directors, voted only on the invitation of the Chairman of the respective unanimously to elect them as the Chairmen committee. of the Committees, which attests to the recognition by the Supervisory Board of these non-executive directors’ extensive professional experience, necessary skills, organizational capabilities and ability to make a considerable contribution to the Committees’ work, as well as to the recognition that these non- executive directors do not formally meet the independence criteria but that this fact does not affect their ability to make independent and objective judgments free from the influence of the Company, any individual groups of shareholders or other stakeholders. 2.8.6 The Chairmen of the Committees regularly inform the Board of Direc-tors and its Chairman of the work of their committees. 1. In the reporting period, the Chairmen of the Committees compliant reported regularly on the work of their Committees to the Board of Directors. 2.9 The Board of Directors ensures an evaluation of the quality of its work and that of its Committees and board members. 2.9.1 The evaluation of the quality of the Board of Directors’ work was aimed at determining how efficiently the Board of 1. Self-assessment or third-party assessment of the work of compliant Directors, its Committees and board members work and whether their work meets the Com-pany’s needs, as well as at the Board of Directors was conducted during the reporting making their work more intensive and identi-fying areas for improvement. period and included an assessment of the work of the Committees, some members of the Board of Directors and the Board of Directors in general. 2. The results of self-assessment or third-party assessment of the Board of Directors during the reporting period were considered at an in-person meeting of the Board of Directors. 2.9.2 The quality of the work of the Board of Directors, its Committees and board members is evaluated on a regular basis, at 1. An outside organization (consultant) was engaged at compliant least once a year. It is recommended that an outside or-ganization (consultant) be brought in at least once every three years least once in the preceding three years to conduct an to carry out an independent evaluation of the quality of the Board of Direc-tors’ work. independent assessment of the quality of work of the Board of Directors. 3.1 The Corporate Secretary of the Company is responsible for effective interaction with shareholders, coordination of the Company’s actions to protect the rights and interests of its shareholders, and support of the effective operation of the Board of Directors. 3.1.1 The Corporate Secretary has knowledge, experience, and qualifi-cations sufficient for the perfor-mance of his/her duties, an 1. The Company has adopted and made public an internal compliant impec-cable reputation, and enjoys the trust of the shareholders. document - the Regulation on the Corporate Secretary. 2. The Corporate Secretary’s biographical information is made available on the website of the Company on the Internet and in the annual report, with the same level of detail as the members of the Board of Directors and Company executives.

2 On 15 February 2021, by decision of the Supervisory Board, minutes No. 01/327-PR-NS, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the Strategy and Sustainability Committee of the Supervisory Board of PJSC ALROSA | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 212 PROFILE REPORT AND INVESTORS GOVERNANCE 213

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 3.1.2 The Corporate Secretary is sufficient-ly independent of the Company’s executive bodies and has the powers and resources 1. The Board of Directors approves the appointment, partially compliant With respect to the quarterly remuneration required to perform his/her tasks. dismissal and additional remuneration of the Corporate of the Corporate Secretary, the Regulation Secretary. on the Corporate Secretary (hereinafter the Regulation) stipulates that the Chairman of the Supervisory Board evaluates the Corporate Secretary’s work on a quarterly basis, based on the recommendations of the HR and Remuneration Committee of the Supervisory Board, by approving reports on the achievement of targets and assessing the performance by the Corporate Secretary of his/her functional duties. The final assessment ratio for the quarter and the amount of the quarterly remuneration are calculated based on the ratios approved by the Chairman of the Supervisory Board in accordance with the Company’s current internal regulations.. By approving the Regulation, the Supervisory Board delegated the authority to determine part of the additional remuneration to the HR and Remuneration Committee and the Chairman of the Supervisory Board. 4.1 The level of remuneration paid by the Company is sufficient to enable it to attract, motivate, and retain persons having the required skills and qualifications. The remuneration of the board members, executive bodies, and other key managers of the Company is paid in accordance with the Remuneration Policy adopted at the Company. 4.1.1 The level of remuneration paid by the Company to its board members, executive bodies, and other key managers is 1. The Company has adopted an internal document (or compliant sufficient to motivate them to work efficiently and enables the Company to attract and retain knowledgeable, skilled, and documents), i.e. a policy (or policies) on remuneration of duly qualified persons. That being said, the Company avoids setting the lev-el of remuneration any higher than necessary, the members of the Board of Directors, executive bodies and does not create an excessively large gap between the level of remuneration of any of the above persons and that of and other top managers, which clearly states (state) the the Com-pany’s employees. approaches to remuneration of the abovementioned parties. 4.1.2 The Company’s remuneration policy was developed by the Remuneration Committee and approved by the Board of 1. In the reporting period, the Remuneration Committee compliant Directors. With the support of the Remuneration Committee, the Board of Directors oversees the im-plementation and considered the remuneration policy (policies) and the fulfilment of the Company’s remuneration policy and, if necessary, revises and makes ad-justments to the policy. practice of its (their) implementation and, where necessary, presented the respective recommendations to the Board of Directors. 4.1.3 The Company’s remuneration policy contains transparent mechanisms for determining the amount of remu-neration due to 1. The Company’s remuneration policy (policies) contains compliant the members of the Board of Directors, executive bodies, and other key managers of the Company, and regulates any and (contain) transparent mechanisms for determining the all types of payments, benefits, and privileges provided to any of the above persons. amount of remuneration due to the members of the Board of Directors, executive bodies, and other top managers of the Company, and regulates (regulate) all types of payments, benefits, and privileges provided to the abovementioned parties. 4.1.4 The Company determines a policy for reimbursement of expenses (compensation) that contains a spe-cific list of 1. The Remuneration Policy (Policies) or other internal compliant reimbursable expenses and specifies the level of service that the members of the Board of Direc-tors, executive bodies, documents of the Company define the rules of and other key managers of the Company can ex-pect to receive. This policy can form part of the Company’s remuneration compensation of expenses of the members of the Board of policy. Directors, executive bodies and other top managers of the Company. 4.2 The system of remuneration of board members ensures the alignment of the financial interests of directors with the long-term financial interests of shareholders. 4.2.1 The Company pays a fixed annual remuneration to the members of the Board of Directors. 1. The fixed annual remuneration was the only monetary form compliant of remuneration of the members of the Board of Directors for their work on the Board of Directors in the reporting period. 4.2.2 The Company does not pay remu-neration for participation in individu-al meetings of the Board of Directors or its 1. Where the internal document(s), i.e. remuneration policy compliant Committees. The Company does not use any form of short-term incentives or additional financial in-centives in respect of (policies) of the Company, stipulate the allocation of the members of the Board of Directors. Company shares to the members of the Board of Directors, clear rules on the holding of shares by the members of the Board of Directors must be laid out, aimed at promoting the long-term holding of these shares. 4.2.3 Long-term ownership of shares in the Company contributes most to align-ing the financial interests of board members 1. The Company does not provide for any additional compliant with the long-term inter-ests of the Company’s shareholders. However, the Company does not make the right to dispose of allowance or compensation in the event of early dismissal shares dependent on the achievement by the Company of certain performance results, and board members do not take of board members in connection with a change of control part in the Company’s option plans. over the company or other circumstances. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 214 PROFILE REPORT AND INVESTORS GOVERNANCE 215

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 4.3 The system of remuneration of the members of the executive bodies and other key managers of the Company stipulates that their remuneration is dependent on the Company’s performance results and their personal contributions to the achievement of these results. 4.3.1 Remuneration of the members of the executive bodies and other key managers of the Company is de-fined in such a 1. In the reporting period, the annual performance indicators compliant way that it ensures a reasonable and justified ratio of the fixed and variable part of the remu-neration, depending on the approved by the Board of Directors were used to Compa-ny’s performance and the employ-ee's personal (individual) contribu-tion to the final result. determine the variable part of the remuneration of the members of the executive bodies and other key managers of the Company. 2. In the latest examination of the remuneration system for the members of the executive bodies and other top managers of the Company, the Board of Directors (the Remuneration Committee) ascertained that the Company applied an effective ratio of the fixed and variable parts of the remuneration 3. The Company has a procedure in place that ensures the return to the Company of bonuses improperly received by the members of the executive bodies and other top managers of the Company. 4.3.2 The Company has introduced a long-term incentive program for the members of the executive bodies and other top 1. The Company has introduced a long-term incentive compliant managers of the Company using the Company’s shares (options or other derivatives using the Company shares as the program for the members of the executive bodies and underlying asset). other top managers of the Company using the Company’s shares (financial instruments based on the Company shares). 2. The long-term incentive program for the members of the executive bodies and other top managers of the Company stipulates that recipients can exercise their right of sale of shares and other financial instruments allocated under this program no earlier than three years after their allocation. Besides, the right to sell is conditional on the achievement of certain performance indicators by the Company. 4.3.3 The amount of severance pay (the golden parachute) payable by the Company in the event of the early termination of 1. In the reporting period, the amount of compensation (the compliant the authority of the members of an executive body or other key manager at the initiative of the Company, provided that golden parachute) payable by the Company in the case there have been no bad faith actions on the part of these persons, should not exceed two times the fixed portion of his/her of early termination of the authority of the members of an annual remuneration. executive bodies or key manager at the initiative of the Company, provided that there have been no bad faith actions on their part, did not exceed twice the fixed part of the annual remuneration. 5.1 The Company has created an efficient risk management and internal control system designed to provide reasonable assurance that the company’s goals will be achieved. 5.1.1 The Board of Directors determines the principles of and approaches to the creation of the risk management and internal 1. The functions of various management bodies and business compliant control system at the Company. units of the Company within the risk management and internal control system are clearly defined in the internal documents or the respective policy of the Company approved by the Board of Directors. 5.1.2 The Company’s executive bodies ensure the establishment and con-tinuing operation of an efficient risk management and 1. The Company’s executive bodies have ensured the compliant internal control system at the Company. allocation of functions and powers in relation to risk management and internal control among the managers (heads) of business units and departments accountable to them. 5.1.3 The Company’s risk management and internal control system allows an objective, fair and clear view of the current 1. The Company has approved the Anti-Corruption Policy. compliant condition and prospects of the Company, the integrity and transparency of its accounts and re-ports, and the 2. The Company has organized an accessible way of reasonableness and acceptability of the risks being as-sumed by the Company. informing the Board of Directors or the Audit Committee of the Board of Directors of any violations of legislation, internal procedures or the Code of Ethics of the Company. 5.1.4 The Board of Directors of the Com-pany takes the required measures to ascertain that the risk management and internal 1. In the reporting period, the Board of Directors or the compliant control system of the Company conforms to the principles and approaches to its organization defined by the Board of Audit Committee of the Board of Directors assessed the Directors and operates efficiently. performance of the Company’s risk management and internal control system. Information on the key results of the assessment were included in the annual report of the Company. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 216 PROFILE REPORT AND INVESTORS GOVERNANCE 217

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 5.2 To independently evaluate, on a regular basis, the reliability and efficiency of the risk management and internal control system and corporate governance practices, the Company arranges for internal audits. 5.2.1 To conduct internal audits, the Company established a separate structural division or an independent outside organization 1. To conduct an internal audit, the Company established compliant is engaged. a separate internal audit department that is functionally The functional and administrative subordination of the internal audit department are segregated. Functionally the internal accountable to the Board of Directors or the Audit audit department reports to the Board of Directors. Committee, or engaged an independent third party on the same accountability principle. 5.2.2 The internal audit department evaluates the efficiency of the internal control and risk management system as well as the 1. In the reporting period, the efficiency of the internal control compliant corporate governance system. and risk management system was assessed as part of the The Company applies generally accepted standards of internal audit. internal audit procedure. 2. The Company applies generally accepted approaches to internal control and risk management. 6.1 The Company and its operations should be transparent to its shareholders, investors, and other stakeholders. 6.1.1 The Company has developed and implemented an information policy enabling the company to efficiently exchange 1. The Board of Directors of the Company approved the compliant information with its shareholders, investors, and other stakeholders. Company’s information policy, developed with due account of the recommendations of the Code. 2. The Board of Directors (or one of its Committees) considered issues related to the Company’s compliance with its information policy at least once within the reporting period. 6.1.2 The Company discloses information on its system and practice of corpo-rate governance, including detailed information on 1. The Company discloses information on the system of compliant compliance with the principles and recommendations of the Code. corporate governance at the Company and the general principles of corporate governance adopted at the Company, including on its website. 2. The Company discloses information on the composition of the executive bodies and the Board of Directors, the independence of the members of the Board, and their membership in the Committees of the Board of Directors (as defined in the Code). 3. If there is a person controlling the Company, the Company publishes a memorandum of the controlling person concerning this person’s plans regarding corporate governance at the Company. 6.2 The Company discloses timely, full, updated and reliable information about itself to give its shareholders and investors the ability to make informed decisions. 6.2.1 The Company discloses information following the principles of regularity, consistency and timeliness, as well as 1. The Company’s information policy defines the approaches compliant accessibility, accuracy, completeness and comparability of the disclosed data. to and criteria for identifying information that could have a considerable impact on the value of the Company and its securities, as well as procedures for ensuring due disclosure of this information. 2. If the Company’s securities are traded on any foreign regulated market, disclosure of any material information in the Russian Federation and in such markets is concurrent and equivalent throughout the reporting year. 3. If foreign shareholders hold a substantial number of the Company’s shares, throughout the reporting year information is disclosed not only in Russian but also in one of the most widespread foreign languages. 6.2.2 The Company avoids using a formal-istic approach to information disclo-sure; it discloses material information on its 1. In the reporting period, the Company made public its compliant activities, even if disclosure of this information is not required by law. annual and half-year IFRS financial statements. The annual report of the Company for the reporting period includes the annual IFRS financial statements and the auditor’s report. 2. The Company discloses full information on the Company’s capital structure in its annual report and on the Company’s website in accordance with Recommendation 290 of the Code. 6.2.3 The annual report, one of the most important tools for information ex-change with shareholders and other stakeholders, 1. The Company’s annual report contains information on key compliant contains information that makes it possible to assess the Company’s performance results for the year. aspects of its operations and its financial performance. 2. The Company’s annual report contains information on the environmental and social aspects of the Company’s operations. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 218 PROFILE REPORT AND INVESTORS GOVERNANCE 219

Status of compliance with the corporate Explanation of deviations from the criteria for Criteria for assessment of compliance with the corporate governance assessment of compliance with the corporate No. Corporate governance principle governance principle principle governance principle 6.3 The Company provides information and documents at the request of its shareholders in adherence with the principle of equal and unhindered access. 6.3.1 The Company provides information and documentation at the request of shareholders in adherence with the principles of 1. The Company’s information policy stipulates a procedure compliant equal and unhindered access. for unhindered access of shareholders to information, including, upon request, information on the entities controlled by the Company. 6.3.2 When providing information to its shareholders, the Company main-tains a reasonable balance between the interests of 1. In the reporting period, the Company did not refuse any compliant individual sharehold-ers and its own interests, as it is inter-ested in keeping confidential sensi-tive business information that requests of shareholders for information, or such refusals might have a material impact on its com-petitiveness. were justified. 2. In some cases defined by the Company’s information policy, shareholders are warned of the confidential nature of information and assume confidentiality obligations. 7.1 Any actions which will or may materially affect the Company’s share capital structure and its financial position and, accordingly, the position of its shareholders (major corporate actions) should be taken on fair terms and conditions ensuring the observance of the rights and interests of the shareholders as well as other stakeholders. 7.1.1 Major corporate actions include re-organization of the Company, pur-chase of 30 or more percent of the voting shares 1. The Company Charter defines a list of transactions or other compliant of the Company (take-over), major transactions of the Company, an increase or decrease of the authorized capital of the actions that are major corporate actions and the criteria Com-pany, listing or delisting of the Company’s stock, as well as other actions that could lead to a consider-able change in for their identification. Decisions on major corporate the shareholders’ rights or infringement on their inter-ests. The Company Charter includes a list of (criteria for identifying) actions are referred to the competence of the Board of trans-actions or other actions falling within major corporate actions, as well as a list of actions assigned to the compe-tence Directors. In those instances when the execution of these of the Company’s Board of Directors. corporate actions is directly referred to the competence of the general meeting of shareholders by law, the Board of Directors issues the respective recommendations to the shareholders. 2. At a minimum, major corporate actions include: reorganization of the Company, purchase of 30 or more percent of the voting shares of the Company (takeover), major transactions of the Company, an increase or decrease of the authorized capital of the Company, and listing or delisting of the Company’s stock. 7.1.2 The Board of Directors plays a key role in making decisions and devel-oping recommendations in relation to major 1. The Company has a procedure in place for independent compliant corporate actions; the Board of Directors relies on the position of the Company’s independent direc-tors. directors to state their position on major corporate actions before their approval. 7.1.3 When taking any major corporate actions which would affect the rights or legitimate interests of the Com-pany’s 1. Considering the specifics of the Company’s business, compliant shareholders, equal terms and conditions are ensured for all share-holders; if statutory mechanisms de-signed to protect the minimal criteria for referring its transactions to major the rights of share-holders prove insufficient for that purpose, additional measures should be taken to protect the rights corporate actions as determined by the Company Charter and legitimate interests of the Compa-ny’s shareholders. In such instances, the Company should seek not only to comply are lower than those stipulated by law. with the formal require-ments of law but should also be guided by the principles of corpo-rate governance set out in this 2. In the reporting period, all major corporate actions were Code. subject to a pre-approval procedure. 7.2 The Company provides a procedure for taking major corporate actions that enables its shareholders to receive full information about such actions in due time, giving them the chance to influence the decision on taking such actions and guaranteeing that the rights of shareholders are observed and duly protected in the course of taking such actions. 7.2.1 Information on major corporate ac-tions is disclosed with explanations of the reasons for, conditions and consequences of 1. In the reporting period, the Company disclosed timely and compliant such actions. detailed information on major corporate actions, including the reasons for and terms of taking such actions. 7.2.2 The rules and procedures on the performance of major corporate ac-tions by the Company were set out in its internal 1. The Company’s internal documents stipulate the procedure compliant documents. for engaging an independent appraiser to determine the value of the property disposed of or acquired under a major transaction or an interested-party transaction. 2. The Company’s internal documents stipulate the procedure for engaging an independent appraiser to determine the value of the purchase or sale of Company shares. 3. The Company’s internal documents provide an extended list of grounds for recognizing members of the Board of Directors of the Company and other persons stipulated by law as parties interested in the Company’s transactions. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 220 PROFILE REPORT AND INVESTORS GOVERNANCE 221

REPORT OF THE AUDIT COMMISSION

REPORT 2 of PJSC ALROSA Audit Commission on the results of auditing PJSC ALROSA 3. Order on the accounting policy for 2020 for financial accounting purposes (in financial and economic activities electronic form), order on the accounting policy for 2020 for tax purposes (in electronic form). for 2020 4. Financial statements of the Company for 2020: - Balance Sheet marked by the tax office; Moscow 5 April 2021 - Statement of Financial Performance; - Statement of Changes in Equity; PJSC ALROSA Audit Commission elected by the annual General Shareholders’ - Cash Flow Statement; Meeting of PJSC ALROSA on 24 June 2020, consisting of: - Notes to the Financial Statements. Alexander Vladimirovich Markin - Chairman of the Audit Commission, 5. Report on the formation, distribution and use of the Company's net profit for 2020. Pavel Nikolaevich Bagynanov - Deputy Chairman of the Audit Commission, 6. Information on dividends accrued and paid in 2020. Nikolai Petrovich Ivanov - member of the Audit Commission, 7. Table “Analysis of PJSC ALROSA indicators based on the results of 2020.” Olga Vasilievna Loginova - member of the Audit Commission 8. Statement of elimination of deficiencies identified during the previous audit. 9. Results of the Company's sales policy on the domestic and foreign markets in 2020. performed an annual audit (hereinafter the "audit") of the financial and economic 10. Summary of the Company's import/export of rough and polished diamonds (both activities of PJSC ALROSA (hereinafter the "Company") for 2020. physical and monetary), including export under commission agreements. The audit was performed in accordance with the requirements of Federal Law No. 208- 11. Report on diamond extraction in the ALROSA Group for 2019-2020 (broken down FZ of 26 December 1995 “On Joint Stock Companies”, the Company’s Charter, the Regulations by enterprises, GOKs, deposits). on the Audit Commission of the Company, and the accounting and reporting rules in effect in 12. Report on diamond extraction according to the UTO assessment for the ALROSA the Russian Federation. Group in 2018-2019 for the assortment of OKPD 14.50.21.120 and OKPD 14.50.22.110 (with The audit was performed in accordance with the Audit Commission's Program for a breakdown into months, licensees, in carats and US dollars). Auditing Financial and Economic Activities of PJSC ALROSA: 13. Consolidated budget of labor costs for the Company for 2019-2020 broken down by structural divisions (breakdown of the headcount, payroll fund, average remuneration). 1. Analysis and review of the financial and economic activities of PJSC ALROSA and 14. Results of implementing the key performance indicators system of PJSC ALROSA its annual financial statements for 2020. and its senior management, as well as the link between the achievement of approved KPIs and 2. Analysis of the achievement of key production indicators, economic planning the remuneration of members of the Supervisory Board and management of PJSC ALROSA. indicators, including analysis of the financial indicators actually achieved. 15. Report on the progress in implementing PJSC ALROSA investment program. 3. Review of net profits spending. 16. Information on the implementation by PJSC ALROSA of the instructions issued by 4. Review of the procedure for calculating the size and correctness of calculating, inspection authorities (Federal Tax Service of Russia, General Prosecutor's Office of the accruing and transferring dividends of PJSC ALROSA. Russian Federation, Rostekhnadzor, and Rosprirodnadzor). 5. Analysis of the results of the sales policy of PJSC ALROSA on the domestic and foreign markets in 2020. General information. 6. Analysis of the results of implementing the key performance indicators system of The joint-stock company ALROSA (public joint-stock company), abbreviated as PJSC ALROSA and its senior management, as well as the link between the achievement of PJSC ALROSA (hereinafter the "Company"), is registered under No. 1 by Regulation No. 554 approved KPIs and the remuneration of members of the Supervisory Board and management of the Head of the Administration of Mirny district of the Republic of Sakha (Yakutia) dated of PJSC ALROSA. 13.08.1992. 7. Analysis of information on the progress in implementing PJSC ALROSA The Company is a public joint stock company and acts on the basis of the Charter, laws investment program. and other regulatory legal acts of the Russian Federation and the Republic of Sakha (Yakutia). 8. Analysis of PJSC ALROSA procurement activity for 2020. Location of the Company: 6 Lenin Street, Mirny, Republic of Sakha (Yakutia), Russian 9. Analysis of the implementation by PJSC ALROSA of the instructions issued by Federation. inspection authorities (Federal Tax Service of Russia, General Prosecutor's Office of the The information was entered in the Unified State Register of Legal Entities for Russian Federation, Rostekhnadzor, Rosprirodnadzor). AK ALROSA (CJSC) on 17.07.2002, the main state registration number (OGRN) – 10. Review of the implementation of directives of the Russian Federation Government. 1021400967092. 11. Review of the implementation by PJSC ALROSA of the recommendations Information on the legal entity related to the change of the Company's type (public joint reflected in the previous Protocol of the Audit Commission (section 12 of the Protocol of the stock company) was registered by Interdistrict Tax Office of the Federal Tax Service No. 1 for Company’s Audit Commission for 2019). the Republic of Sakha (Yakutia) on 06.07.2015 under No. 2151436036156. 12. Recommendations of the Audit Commission on the elimination of The main purpose of the Company's activity is to generate profits and serve the interests deficiencies/violations as part of the audit of financial and economic activities for 2020. of its shareholders, for this purpose the Company performs the following types of activities: development of diamond deposits, including diamond extraction, processing and sale of During the audit, the Audit Commission considered and analyzed the following diamonds (polished and rough) and the manufacture and sale of any type of natural diamond documents submitted by the Company: products (both production and technical, and consumer purposes), development of deposits of 1. PJSC ALROSA draft Annual Report for 2020. other minerals, extraction and enrichment of iron ores and ores of other metals by open and 2. Auditors’ report on the financial statements for 2020. underground methods, marketing (sale) of minerals, enriched ore and metals, as well as other | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 222 PROFILE REPORT AND INVESTORS GOVERNANCE 223

3 4 activities covering environmental, investment, social, legal, scientific and technical areas of RUB 44,895 million mainly due to changes in the value of shares of PJSC ALROSA-Nyurba activity. listed on the stock exchange to the market price determined in accordance with the established procedure by the trading organizer, equal to RUB +30,806 million, amid increasing exchange Annual financial statements. differences (- RUB 22,936 million). The Company's accounting records are kept in accordance with the requirements of the The result of PJSC ALROSA activity for 2020 is net profit of RUB 12,264 million (the net regulatory legal acts governing accounting and reporting in the Russian Federation and the profit for 2019 amounted to RUB 26,664 million (-54%)). Republic of Sakha (Yakutia) and the Company's Accounting Policy. The financial statements for 2020 were prepared in accordance with the provisions of The analysis of changes in the net profit for 2020 compared to 2019 is given in the table Federal Law No. 402-FZ “On Accounting” of 06.12.2011, the Regulations on Accounting and below: Reporting in the Russian Federation approved by Order of the RF Ministry of Finance No. 34n RUB million of 29.07.1998, Order No. 66n “On the Forms of Financial Statements of Organizations” of the RF Ministry of Finance of 02.07.2010, as well as other regulations. Net profit for 12 months of 2019 26,664 decrease in gross profit (16,755) Based on the results of the financial statements for 2020: exchange difference (22,936) The carrying amount of assets increased by RUB 127,239 million (+ 25%) mainly due decrease in income from equity participation in other entities (8,297) to an increase in cash and deposits balances by RUB 100,940 million, an increase in property, revaluation of PJSC ALROSA-Nyurba shares 30,806 plant and equipment value by RUB 15,237 million as a result of revaluation performed as at other 2,782 31.12.2020, an increase in inventories by RUB 17,584 million mainly in respect of work in Net profit for 12 months of 2020 12,264 progress balances (ore and sands, rough and polished diamonds) in connection with re- registration of subsoil licenses for the Company: Nyurbinskaya and Botuobinskaya pipes, In 2020, the Company’s capital and reserves rose by RUB 9,989 million to RUB 311,199 against the background of a decrease in debt on loans issued to subsidiaries million. (-RUB 15,538 million). The reserve capital in the amount of RUB 737 million (0.2% of the total capital) was created Liabilities increased by RUB 117,250 million (+ 56%) mainly due to an increase in from the Company’s net profits according to the Charter. It is intended to cover the Company’s loans and borrowings of RUB 91,743 million, an increase in accounts payable in respect of losses, to redeem bonds or buy back its shares if no other means are available and cannot be advances received for diamond products equal to RUB 16,995 million, an increase in deferred used for any other purpose. tax liabilities of RUB 8,434 million. The charter capital of ALROSA formed in accordance with the Charter amounts to RUB 3,682 Capital and reserves increased by RUB 9,989 million (+ 3%) and amounted to million (1% of total capital). It is divided into 7,364,965,630 ordinary registered shares with a RUB 311,199 million. par value of 50 kopecks each. Revenues decreased by RUB 15,722 million (-10%) compared to 2019. Sales recovered The Company's additional capital in 2020 increased by RUB 12,992 million to RUB 106,367 in Q4 2020 as a result of increased demand from end consumers in the US and China following million (34% of total capital) due to revaluation of property, plant and equipment as at 31 a decline in volumes due to the consequences of the coronavirus pandemic and lockdown in Q2 December 2020. 2020. Retained earnings decreased by RUB 3,003 million. The revenue of the diamond segment equaled 89% of the total revenue for 2020 (82.3% for 2019) and decreased by 3% compared to 2019 to RUB 128,312 million. The analysis of changes in retained earnings for 2020 compared to 2019 is given in the table Revenues from other activities decreased by RUB 12,191 million (-43%) compared to below: 2019 mainly due to a reduction in intragroup revenues under contracts with RUB million PJSC ALROSA-Nyurba on the extraction, sorting, processing and sale of diamonds in Retained earnings for 12 months of 2019 203,416 connection with the re-registration of licenses for the Company. net profit for 2020 12,264 The cost of sold products, work, services, commercial and management expenses reclassification from additional capital related to disposed 4,043 decreased by RUB 690 million compared to 2019 (-1%). property, plant and equipment The result for other income and expenses in 2020 was a loss of RUB 22,993 million, in payments made in accordance with decisions of the General (19,370) 2019 the loss amounted to RUB 23,800 million. Meeting of Shareholders, incl. dividends Income from participation in other entities decreased by RUB 8,297 million (-49%) due reversal of dividends not called for by shareholders 62.6 to a reduction in dividends from the Company's equity participation in Russian entities. other (3) Retained earnings for 12 months of 2020 200,413 Other income in 2020 increased by RUB 4,523 million (+ 26%) and reached RUB 21,682 million mainly due to income from the sale of shares in JSC NPF Almaznaya Osen and Cash flows from operating activities in 2020: partial repayment of units in the closed-end investment fund – combined fund Kimberlite. - receipts – RUB 170,352 million, including RUB 158,226 million from the sale of products, - In 2020 other expenses decreased by RUB 8,573 million ( 16%) and amounted to goods, works, services; | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 224 PROFILE REPORT AND INVESTORS GOVERNANCE 225

5 6 - payments – RUB 139,036 million, including RUB 60,413 million paid to suppliers In 2020, the mining divisions of the ALROSA Group extracted 28.8 million tons of ore (contractors) for materials, works, services; RUB 32,855 million in wages to employees; and sand (-29% vs 2019), processed 29.7 million tons of ore and sand (-28% vs 2019) and RUB 21,412 million in taxes, RUB 392 million in income tax. extracted 30.0 million carats of rough diamonds (-22% vs 2019). The decrease in diamond production figures at all mining and processing complexes in Cash flows from investing activities in 2020: 2020 compared to 2019 is related to the implementation of anti-crisis measures by the ALROSA - receipts – RUB 139,477 million, including RUB 120,667 million from the repayment of loans Group with the aim of reducing costs: provided, from the sale of debt securities; RUB 10,804 million from dividends, interest on debt • reduction in planned processing volumes financial investments and similar proceeds from equity participation in other entities; • extended downtime at PP No. 3 and No. 12 RUB 1,936 million from the sale of non-current assets (other than financial investments); • suspension of mining work at several fields RUB 2,154 million from the sale of shares in other entities (equity interests); - payments – RUB 145,460 million, including RUB 19,307 million in connection with the The Company’s efforts helped support demand at the end of 2020 and ensure sales in acquisition, creation, modernization, reconstruction and preparation for use of non-current the second half of the year in the amount of USD 1.8 billion, of which diamonds accounted for assets; RUB 275 million in connection with the acquisition of shares in other entities (equity USD 1.7 billion. interests); RUB 125,859 million to acquire debt securities, provide loans to other parties. The total sales of the ALROSA Group's diamond products in 2020 amounted to Cash flows from financing activities in 2020: USD 2.8 billion (-16% vs 2019), including USD 2.65 billion in diamond sales. - receipts: loans and borrowings – RUB 245,413 million; The consolidated revenue of the ALROSA Group, including income from subsidies, dropped by 7% to RUB 221.5 billion in 2020. - payments – RUB 198,724 million, including RUB 19,354 million in dividends and other profit disbursements to the owners; RUB 179,370 million to repay loans and borrowings The Group’s net profit plummeted by 49% to RUB 32.2 billion due to the decrease in received. revenues, as well as the negative effect of foreign exchange differences resulting from the weakening rouble. The net cash flow for the reporting period is RUB 72,022 million. The revenue of the diamond segment equaled 93% of the total revenue of Cash and cash equivalents at the beginning and at the end of the period amount to the ALROSA Group in 2020 decreasing by 6% compared to 2019 to RUB 201.7 billion. Sales RUB 10,705 million and RUB 85,819 million, respectively. of gem and cut diamonds account for the majority of revenues of the diamond segment (98%). Free cash flow representing the net cash flows from operating activities less payments for the Revenue from the sale of gem diamonds decreased by 6% in 2020 compared to 2019, while acquisition, creation, modernization, reconstruction and preparation for use of non-current sales of gem diamonds in carats decreased by just 1%. assets for the 2020 year amounted to RUB 12,009 million (2019: RUB 14,846 million). The Group's free cash flow for the reporting year is positive and sufficient to ensure the On 24 June 2020, the Annual General Meeting of PJSC ALROSA Shareholders Group's liquidity and solvency. (Minutes No. 42) was held, where decisions were taken on the disbursement of net profit for The growth in free cash flow to RUB 79.5 billion (by 67% vs 2019) in 2020 is related 2019, retained earnings of the previous years and on the payment of dividends based on the to working capital freed up in the fourth quarter of 2020 mainly due to the reduction in stocks results of 2019. and the growth in advances from customers, a reduction of RUB 5.5 billion in corporate income Totally, in 2020, the Company paid dividends on its shares in the amount of RUB tax paid and the reduction of RUB 3.0 billion in the investment program. 19,346,339 thousand for 2019, including RUB 6,397,007 thousand to the Russian Federation represented by the Federal Agency for State Property Management, RUB 4,842,513 thousand Conclusion of the Audit Commission based on the results of the audit of financial to the Republic of Sakha (Yakutia) represented by the Ministry of Property and Land Relations and economic activities of PJSC ALROSA for 2020 of the Republic of Sakha (Yakutia) and RUB 8,106,819 thousand to others. The annual audit of the Company’s 2020 financial statements prepared in accordance Operating performance with the Russian Accounting Standards was conducted by the Company’s auditor, Joint-Stock In 2020, due to the COVID-19 pandemic and the subsequent restrictions imposed Company PricewaterhouseCoopers Audit approved by the Annual General Meeting of worldwide to fight the new coronavirus infection, which led to a fall in demand for diamonds Shareholders of ALROSA held on 24 June 2020, Minutes No. 42. and diamond jewelry, the Company decided to reduce the diamond production plan for 2020 to The Company’s auditor confirms that the financial statements of PJSC ALROSA 30 million carats from the previously planned 34 million carats. Production on several of the present fairly, in all material respects, the financial position of the Company as at 31 December least profitable assets with relatively low diamond content and value was suspended. 2020 and its financial performance and its cash flows for the year then ended in accordance The reduction in production, along with other measures taken by the Company in with the Russian Accounting Standards (RAS). response to the pandemic, made it possible to avoid the formation of low-liquid stocks that are least in demand on the market, and to maintain the current liquidity and stable financial position The Company’s 2020 Annual Report is prepared in compliance with the Russian at a level sufficient to meet ALROSA’s commitments with respect to dividend payments, taxes legislation in effect. and contributions to extra-budgetary funds, to pay wages in a timely manner without the use of The Audit Commission notes that the Annual Report of PJSC ALROSA not only includes potential state support measures (in the form of Gokhran of Russia's acquisition of ALROSA’s data on PJSC ALROSA, but also on legal entities of the ALROSA Group, and is prepared using rough diamonds for the State Fund of Precious Metals and Precious Stones of the Russian the consolidated financial statements of the ALROSA Group prepared in accordance with the Federation). International Financial Reporting Standards. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 226 PROFILE REPORT AND INVESTORS GOVERNANCE 227

PENDING COURT PROCEEDINGS

7 The Audit Commission, based on the analysis of documents submitted by PJSC Information on pending court proceedings of PJSC ALROSA in 2020 ALROSA and random audits, affirms that the data presented in the annual financial statements for 2020, the 2020 Annual Report and the Report on Related Party Transactions in 2020 are reliable and complete, and finds it appropriate to recommend that the General Meeting of Shareholders approve the Annual Report, the annual financial statements and distribution of As of 31 December 2020, 13 pending cases where −−One pending case where the Company acts as the the Company’s profit for 2020. the Company acts as the claimant under claims on debt respondent under a claim on debt recovery in the recovery in the amount of RUB 816,171 thousand were amount of RUB 34.77 billion in favor of a Company No violations of regulations of the Russian Federation in performing financing and being considered in arbitration courts and general subsidiary. If this claim is satisfied (on 2 December 2020 economic activities by PJSC ALROSA were recorded in 2020. jurisdiction courts of various instances. the court of first instance dismissed the claim), 97.5% of the recovered amount will be returned to the Company, In the reporting year, the Audit Commission sent no requests to convene meetings of meaning that the outflow of funds from the As of 31 December 2020, nine pending cases where the ALROSA Group will equal no more than RUB 874 million the Supervisory Board or an Extraordinary General Meeting of Shareholders of the Company. Company acts as the respondent under claims on debt (i.e., less than 0.14% of the book value of the Company’s recovery were being considered in arbitration courts and assets) general jurisdiction courts of various instances, including: Chairman of the Audit Commission A. V. Markin −−Eight pending cases where the Company acts as the respondent under claims on debt recovery in the amount of RUB 27,644 thousand;

Members of the Audit Commission: P. N. Bagynanov

N. P. Ivanov

O. V. Loginova | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 228 PROFILE REPORT AND INVESTORS GOVERNANCE 229

GOVERNMENT SUPPORT Use of funds as at the end of the reporting period, Brief project description/allocation of subsidies Current status RUB million LLC Lensk HENE Provision of subsidies to reimburse lost earnings due to the Agreement No. 137-ya with State Public 79.64 establishment of preferential rates for utilities services for the Institution of the Republic of Sakha general public (Yakutia) Subsidies Agency dated 30 April 2019 on the provision of Information on the subsidies provided, their purpose, and information on subsidies to reimburse lost profit due to the establishment of preferential rates the use of funds as at the end of 2020 for utilities services Agreement No. 119-ya with State Public 541.83 Institution of the Republic of Sakha Use of funds as at the end (Yakutia) Subsidies Agency dated of the reporting period, 13 March 2020 on the provision of Brief project description/allocation of subsidies Current status RUB million subsidies to reimburse lost profit due to the establishment of preferential rates PJSC ALROSA for utilities services Provision of subsidies as incentives for employers that Subsidies of RUB 1.1 million were used, 1.1 JSC ALROSA Air Company earmark and/or create jobs for citizens expe-riencing the remaining subsidies in the amount difficulties in finding a job and for in-ternships for young of RUB 0.6 million will be used in Provision of subsidies from the federal budget to reimburse The funds were received and used for 207.32 specialists in demand on the job market Q1 2021 lost earnings on the performance of air transportation (FATA) current operations Provision of subsidies for partial compensation of expenses The funds were received and used in full 12.4 Provision [of subsidies] from the federal budget of the The funds were received and used for 24.30 caused by a reduction in the earnings of Russian airports Republic of Sakha (Yakutia) to finance (re-imburse) the costs current operations and organizations included in one corporate group with associated with state regula-tion of rates for air passenger Russian airports in connection with a decline in passenger transportation along socially important routes of the air trans-portation due to the spread of the novel Republic of Sakha (Yakutia) (Ministry of Transportation and corona-virus infection Roads of the Republic of Sakha (Yakutia)) Provision of subsidies for services under the comprehensive The funds were received and used in full 5.4 Provision of subsidies from the federal budget to Russian The funds were received and used to 63.88 health insurance program airlines in accordance with Resolution No. 661 of the pay the wages of flight and cab-in crews Government of the Russian Federation dated Provision of subsidies for servicing flights of the aircraft of The funds were received and used in full 7.1 13 May 2020 for partial reimbursement of expenses caused the Emergencies Ministry by the reduction in the earn-ings of these companies as a Provision of subsidies to reimburse costs on the The funds were received and used in full 9.4 result of the decline in passenger air transportation due to maintenance of temporary medical observation facilities the spread of the novel coronavirus infection for contact tracing of persons from novel coronavirus JSC IC Bourevestnik infection hotbeds, as well as persons from countries with an unfavorable epidemiological situation Provision of subsidies to reimburse part of the costs on The funds were received and used for 0.75 participation in international exposition and trade fairs current operations Provision of subsidies for incentive payments to people from Subsidies of RUB 4.9 million were used, 4.9 groups at risk of novel coronavirus infection and people the remaining subsidies in the amount Provision of subsidies to reimburse costs associ-ated with The funds were received and used for 0.55 employed in medical observation facilities for special of RUB 0.1 million will be used in the performance of the legislative re-quirements of an current operations working conditions and additional workload Q1 2021 importing country necessary for the export of goods (work, services) Provision of subsidies from the state budget of the Republic Subsidies of RUB 4.7 million were used, 4.7 of Sakha (Yakutia) to an employer participating in the the remaining subsidies in the amount Provision of subsidies to reimburse part of the costs The funds were received and used for 0.2 regional program to improve the mobility of labor resources of RUB 9.3 million will be used in 2021 associated with the training, retraining and professional current operations development of staff JSC VHPP-3 LLC Almazdortrans Reimbursement of lost earnings in connection with the RUB 2,653.3 million 2,470.38 reduction of prices (rates) for electricity (capacity) to the Provision of subsidies as incentives for employers that Subsidies of RUB 9.2 million were used, 9.2 regulated baseline prices (rates) for electricity (capacity) for earmark and/or create jobs for citizens expe-riencing the remaining subsidies in the amount 2020 planned for the next period on the territory of the Far difficulties in finding a job and for in-ternships for young of RUB 0.2 million will be used in Eastern Federal District specialists in demand on the job market Q1 2021 LLC HWSE JSC Kristall PC Provision of subsidies to reimburse lost earnings due to the The subsidies for 2020 were not 1,249.86 Provision of subsidies to reimburse an employer for The funds were received and used in full 1.8 establishment of preferential rates for utilities services received in full during 2020. expenses on the partial payment of wages during the The subsidies for October-December organization of temporary job place-ment of company were deferred to Q1 2021 employees at risk of dismissal | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 230 PROFILE REPORT AND INVESTORS GOVERNANCE 231

3. On the inclusion of candidates nominated by share- 3. On approving the Work Plan of the Internal Audit INFORMATION ON THE MEETINGS holders of PJSC ALROSA in the list of candidates for Department of PJSC ALROSA for 2021, as well as infor- election to the Audit Commission of PJSC ALROSA. mation on key performance indicators of the Internal Audit Department in 2021. OF THE SUPERVISORY BOARD AND 4. On preliminary approval of the Annual Report of PJSC ALROSA for 2019. Human resources and remuneration COMMITTEES 5. On the results of assessment of the work of the Supervisory Board and committees of PJSC ALROSA. 1. On terminating the authorities and electing the head of the Internal Audit Department of PJSC ALROSA. 6. On approving the reports on the work results of the committees of the Supervisory Board of PJSC ALROSA. 2. On electing the Chief Executive Officer – Chairman of the Management Board of PJSC ALROSA. Supervisory Board Strategy and priority lines of business 7. On the recognition of Maria Vladimirovna Gordon as an independent candidate nominated for election to the 3. On approving the supplementary agreement to the 1. On the possible transition of PJSC ALROSA and its Supervisory Board of PJSC ALROSA. employment contract with the Chief Executive Officer – In connection with the restrictions put in place due to the subsidiaries to tax control through tax monitoring. Chairman of the Management Board of PJSC ALROSA. spread of the coronavirus infection, the meetings of the 8. On the inclusion of an item in the agenda of the annual 2. On improving labor productivity. Supervisory Board were held remotely in 2020. General Meeting of Shareholders of PJSC ALROSA. 4. On the recommendations to the annual General Meeting of Shareholders of PJSC ALROSA on the issue 3. On assessment of the existence or absence of ongoing 9. On the inclusion of a candidate in the list of candidates Meetings or planned major investment projects. of payment of remuneration for work on the Supervisory for election to the Supervisory Board of PJSC ALROSA. Board of PJSC ALROSA to the non-state employees −−05/02/2020, minutes No. 01/306-PR-NS (remote voting); 4. On considering the results of analysis of the possible in- 10. On approving the agenda of the annual General who are members of the Supervisory Board in the tegration of PJSC ALROSA and its subsidiaries into the Meeting of Shareholders of PJSC ALROSA. amount established by the internal documents of −−13/02/2020, minutes No. 01/307-PR-NS (remote voting); national project (program) "International Cooperation PJSC ALROSA. −−12/03/2020, minutes No. 01/308-PR-NS (remote voting); and Export". 11. On the annual financial statements of PJSC ALROSA for 2019. 5. On the recommendations to the annual General −−20/03/2020, minutes No. 01/309-PR-NS (remote voting); 5. On amending the decision on remote voting of the Meeting of Shareholders of PJSC ALROSA on the Supervisory Board (minutes No. 01/289-PR-NS dated 12. On the proposal to the annual General Meeting of issue of payment of remuneration for work on the Audit −−25/03/2020, minutes No. 01/310-PR-NS (remote voting); 15 February 2019) on the item "On the acquisition of Shareholders of PJSC ALROSA to approve the candi- Commission of PJSC ALROSA to the non-state a multifunctional office complex for the branch of Joint date for auditor. −−21/04/2020, minutes No. 01/311-PR-NS (remote voting); employees who are members of the Audit Commission Stock Company ALROSA "United Selling Organization 13. On the recommendations to the annual General in the amount established by the internal documents of −−30/04/2020, minutes No. 01/312-PR-NS (remote voting); of ALROSA". Meeting of Shareholders of PJSC ALROSA on the PJSC ALROSA. −−06/05/2020, minutes No. 01/313-PR-NS (remote voting); 6. On approving the plan to counteract the negative con- distribution of profit based on the results of 2019, 6. On the holding by Chief Executive Officer – Chairman of sequences of the coronavirus epidemic, including including the amount of the dividends on the shares of the Management Board of PJSC ALROSA Sergey Ivanov −−13/05/2020, minutes No. 01/314-PR-NS (remote voting); measures to protect the employees of PJSC ALROSA PJSC ALROSA and the procedure for their payment. of the position of a member of the Board of Directors of from the spread of coronavirus and to ensure the −−09/06/2020, minutes No. 01/315-PR-NS (remote voting); 14. On convening the annual General Meeting of JSC Non-State Pension Fund Almaznaya Osen. stability of their work. −−22/06/2020, minutes No. 01/316-PR-NS (remote voting); Shareholders of PJSC ALROSA. 7. On the holding by Chief Executive Officer – Chairman 7. On the non-application of sanctions and the possible 15. On the election of the Chairman of the Supervisory of the Management Board of PJSC ALROSA Sergey −−10/07/2020, minutes No. 01/317-PR-NS (remote voting); extension of the term of performance of contracts and Board of PJSC ALROSA. Ivanov of positions in the management bodies of other −−14/08/2020, minutes No. 01/318-PR-NS (remote voting); adjustment of prices in 2020 in case of violations of organizations. obligations by contractors due to the consequences of 16. On the election of the First Deputy Chairman of the −−02/09/2020, minutes No. 01/319-PR-NS (remote voting); the spread of the novel coronavirus infection. Supervisory Board of PJSC ALROSA. 8. On the holding by Chief Executive Officer – Chairman of the Management Board of PJSC ALROSA Sergey −−18/09/2020, minutes No. 01/320-PR-NS (remote voting); 8. On raising long-term investments at PJSC ALROSA. 17. On the election of the Deputy Chairman of the Ivanov of positions in the management bodies Supervisory Board of PJSC ALROSA. of Russian National Public Organization Union of −−25/09/2020, minutes No. 01/321-PR-NS (remote voting); 9. On purchases of automotive products in 2020. Mechanical Engineers of Russia. 18. On the HR and Remuneration Committee of the −−09/10/2020, minutes No. 01/322-PR-NS (remote voting); 10. On adjusting the Consolidated Budget of Supervisory Board of PJSC ALROSA. −−06/11/2020, minutes No. 01/323-PR-NS (remote voting); PJSC ALROSA and the target KPI for 2020. Approval/amendment of internal documents 19. On the Audit Committee of the Supervisory Board of 11. On the level of net foreign exchange holdings. −−25/11/2020, minutes No. 01/324-PR-NS (remote voting); PJSC ALROSA. 1. On approving the new version of the Regulation on the 12. On rate setting for procurements of goods, work and Corporate Secretary of PJSC ALROSA. −−23/12/2020, minutes No. 01/325-PR-NS (meeting); 20. On the Strategy and Sustainability Committee1 of the services at PJSC ALROSA. Supervisory Board of PJSC ALROSA. 2. On approving the new version of the Orientation −−29/12/2020, minutes No. 01/326-PR-NS (remote voting). 13. On material issues concerning the operations of Program for Newly Elected Members of the Supervisory 21. On Approving the Work Plan of the Supervisory Board PJSC Severalmaz: on the termination of Board of PJSC ALROSA. Issues considered of PJSC ALROSA for the 2020-2021 corporate year. PJSC Severalmaz’s public status. 3. On approving the Regulation on Succession of the 22. On the assessment of the work of the Supervisory On the participation of the Company in other 14. On approving the Consolidated Budget of Members of the Supervisory Board of PJSC ALROSA. Board of PJSC ALROSA and the committees of the organizations PJSC ALROSA and the target KPI for 2021. Supervisory Board. 4. On eliminating excessive internal regulations. 1. On a change in the level of participation of Corporate governance 5. On amending the Program to Divest Non-Core Assets PJSC ALROSA in ALROSA ISRAEL LTD Control, risks of PJSC ALROSA. 2. On approving the material terms and conditions for the 1. On the inclusion at the request of shareholders of 1. On consideration of the report on the work results of the 6. On approving the Regulation on Charity Activity, Other sale of 99.75% of shares of JSC Non-State Pension Fund PJSC ALROSA of items in the agenda of the annual Internal Audit Department of PJSC ALROSA for 2019. Gratuitous Transactions and Sponsorship Activity at Almaznaya Osen. General Meeting of Shareholders of PJSC ALROSA. 2. On approving the Annual Report on critical risks for PJSC ALROSA. 2. On the inclusion of candidates nominated by share- 3. On a change in the level of participation of 2019, approved by the Action Plan to mitigate critical holders of PJSC ALROSA in the list of candidates for 7. On approving the Sales Policy of the ALROSA Group. PJSC ALROSA in Alrosa Belgium NV. risks in 2020. election to the Supervisory Board of PJSC ALROSA.

1 On 15 February 2021, by decision of the Supervisory Board, minutes No. 01/327-PR-NS, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the Strategy and Sustainability Committee of the Supervisory Board of PJSC ALROSA | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 232 PROFILE REPORT AND INVESTORS GOVERNANCE 233

8. On amending the Program to Divest Non-Core Assets 12. On the results of procurement activity at PJSC ALROSA 2. On the results of review of the implementation of the On risk management of PJSC ALROSA. during Q1-3 2020. investment project "Udachny Division. Processing plant No. 12. Plot for water supply, concentration, transporta- 1. Consideration of the report on environmental risk assess- 9. On approving the Action Plan for the Sale of Non-Core 13. On approving the Report on the achievement of annual tion and storage of waste products". ment of hydraulic structures, including tailing dams. Assets of PJSC ALROSA for 2021. key performance indicators of the ALROSA Group during 2019. 3. On the results of procurement activity at PJSC ALROSA 2. Approving the annual risk report for 2019, approving the 10. On approving the new version of the Information Policy during 2019. action plan to mitigate critical risks in 2020. of PJSC ALROSA. Transactions 4. Information on post-investment analysis of imple- 3. Interim results of the work to manage the critical risks of 11. On approval of the new version of the internal docu- 1. On approving the performance of a gratuitous transac- mentation of the project for developing the Verkhne- PJSC ALROSA in 2020. ments of the Company determining its risk manage- tion between PJSC ALROSA and the Republic of Sakha Munskoye ore field "Diamond mining structural division ment policy. 4. On approving the new versions of the Risk Management (Yakutia). at the Verkhne-Munskoye deposit". Policy at PJSC ALROSA and the Regulation on Risk 12. On approving the new version of the Regulation on 2. On consideration of the report on the work results of 5. On consideration of the report on the work results of Management at PJSC ALROSA. Internal Audit of PJSC ALROSA. the Internal Audit Department of PJSC ALROSA for the Internal Audit Department of PJSC ALROSA for 5. On approving the new version of the internal documents 13. On approving the Internal Control Policy of 2019. 2019. of PJSC ALROSA establishing the risk management PJSC ALROSA. 3. On approving the report on the performance of inter- 6. Plan to ensure uninterrupted production activity of policy. 14. On approving the new versions of the Risk ested-party transactions by PJSC ALROSA in 2019. PJSC ALROSA. Consideration of financial statements Management Policy of PJSC ALROSA and the 4. On approving the performance of a gratuitous 7. On the internal audit resource model: status. Regulation on Risk Management of PJSC ALROSA. 1. On preliminary approval of the Annual Report of transaction. Development plans for the function, totals for H1 2020. PJSC ALROSA for 2019. 15. On approving the Standard for Assessment of 5. On approving the performance of a transaction. 8. Results of review of the activity of subsidiaries based on Implementation of the Long-Term Development the results for 2019. 2. On the recommendations to the annual General Meeting Program of ALROSA Group and Achievement of Key 6. On approving the performance of gratuitous of Shareholders of PJSC ALROSA on the distribution of Performance Indicators and the Technical Terms of transactions. 9. On the key results of the audit of the project profit based on the results of 2019, including retained Reference for the Assessment of Performance of the "Computerization of sorting and grouping of rough earnings of previous years, and the amount of the divi- 7. On approving the performance of a transaction be- Long-Term Development Program of ALROSA Group diamonds". dends on the shares of PJSC ALROSA and the procedure tween PJSC ALROSA and the Republic of Sakha and Achievement of Key Performance Indicators. for their payment. (Yakutia) on the divestment of a non-core asset. 10. Results of analysis of the technical retrofitting of the explosives bulk storage warehouse at the Udachny 3. On the annual financial statements of PJSC ALROSA. Consideration of reports 8. On approving the performance of a transaction. Division. 4. On approving the report on interested-party transactions 9. On approving the performance of gratuitous 1. Report on the progress in performance of the Program 11. Information on the work of the Internal Audit concluded by PJSC ALROSA in 2019. to Divest Non-Core Assets for Q4 2019. transactions. Department for Q1-3 2020. 5. On the results of procurement activity at PJSC ALROSA 10. On approving the performance of gratuitous transac- 2. On the results of procurement activity of PJSC ALROSA 12. On the target vision of the internal audit function, in- during Q1 2020. during 2019. tions and the conclusion of the sponsorship contracts cluding on the need for additional resources of experts. stipulated in the Consolidated Budget of PJSC ALROSA 6. Report on the work to counter corruption and fraud at 3. Report on the implementation in 2019 of the Action for 2021. 13. On approving the Work Plan of the Internal Audit PJSC ALROSA. Plan for the transition of PJSC ALROSA to the use of pri- Department of PJSC ALROSA for 2021, and informa- marily Russian-made software, including Russian-made 11. On approving the performance of interested-party tion on key performance indicators of the Internal Audit 7. On the results of procurement activity at PJSC ALROSA office software, during the period from 2019-2021. transactions. Department for 2021. during H1 2020. 4. On approving the report on the implementation of the 12. On approving the material terms and conditions of the 14. On approving the new version of the Regulation on 8. On the results of procurement activity at PJSC ALROSA Innovative Development and Technical Modernization documentation on the sale of the property of Aikhal Internal Audit at PJSC ALROSA. during Q1-3 2020. Construction Materials Plant of PJSC ALROSA. Program of PJSC ALROSA for 2019 and the Innovative 9. On management of office real estate. Development and Technical Modernization Program of 15. On the key results of audit of geological survey processes. PJSC ALROSA up to 2024. Audit Committee Other issues 5. On approving the report on the implementation of the On management of external audit and control 1. On the key results of monitoring of expenses on meas- Program to Raise Operational Efficiency and Decrease Meetings ures to prevent the spread of the novel coronavirus Expenses of the ALROSA Group in 2017-2019 and the infection. Program to Raise Operational Efficiency and Decrease −−10/02/2020, minutes No. 71 (remote voting); 1. On the annual consolidated IFRS financial statements for Expenses of the ALROSA Group in 2020-2022 and for 2019. 2. Information on the status of and strategy for cybersecurity. the period up to 2029. −−04/03/2020, minutes No. 72 (meeting); 2. Assessment of the performance of external audit and the independence of the external auditor. 6. Report on the progress in performance of the Program −−17/04/2020, minutes No. 73 (meeting); 3. Information and status of insurance programs at the ALROSA Group. to Divest Non-Core Assets in Q1 2020. 3. On the proposal to the annual General Meeting of −−16/06/2020, minutes No. 74 (meeting); 7. On considering the work results of the Quality Shareholders of PJSC ALROSA to approve the candidate 4. On the system of internal regulatory documents at for auditor. PJSC ALROSA. Management System of PJSC ALROSA based on the −−30/09/2020, minutes No. 75 (meeting); consolidated report on its functioning. 4. On the Opinion and Report of the Audit Commission of 5. Other (information on the status of the lawsuit related to 8. On the results of procurement activity at PJSC ALROSA −−15/12/2020, minutes No. 76 (meeting); PJSC ALROSA based on the results of the audit of the fi- the liquidation of PJSC ALROSA-Nyurba). during Q1 2020. nancial and business activity of PJSC ALROSA for 2019. −−15/12/2020, minutes No. 77 (remote voting). 6. On approving the performance of interested-party 9. Report on the progress in performance of the Program 5. On approving the Audit Plan for the consolidated IFRS transactions. to Divest Non-Core Assets in Q2 2020. Issued considered financial statements of PJSC ALROSA and its controlled companies and the individual RAS financial statements of 7. On organizing the work on sustainable development 10. On the results of procurement activity at PJSC ALROSA PJSC ALROSA for 2020. (ESG) at the ALROSA Group. during H1 2020. On management of internal audit 6. On approving the Internal Control Policy of 8. On approving the new version of the Information Policy. 1. On terminating the authorities and electing the head of 11. Report on the progress in performance of the Program PJSC ALROSA. 9. On approving the Work Plan of the Audit Committee. to Divest Non-Core Assets in Q3 2020. the Internal Audit Department of PJSC ALROSA. | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 234 PROFILE REPORT AND INVESTORS GOVERNANCE 235

HR and Remuneration Committee for work on the Audit Commission of PJSC ALROSA to 25. On the holding by Chief Executive Officer – Chairman Issues considered the non-state employees who are members of the Audit of the Management Board of PJSC ALROSA Sergey Commission in the amount established by the internal Ivanov of positions in the management bodies of other 1. Liquidity and economic outlook of PJSC ALROSA for documents of PJSC ALROSA". Meetings organizations". 2020, in conditions of falling demand. 11. On assessing the independence of the candidates 26. On consideration of the Report on the achievement −−13/02/2020, minutes No. 76 (remote voting); 2. Information on the measures to be performed by nominated to the Supervisory Board of PJSC ALROSA. of individual quarterly indicators and assessment of PJSC ALROSA to optimize the budget for 2020 (in that −−28/02/2020, minutes No. 77 (meeting); the labor activity (performance of job duties) of the 12. On consideration of the Report on the achievement part unrelated to the production profile), and on attract- Corporate Secretary of PJSC ALROSA during Q3 2020 of individual quarterly indicators and assessment of ing financing. −−20/03/2020, minutes No. 78 (remote voting); (cumulative total). the labor activity (performance of job duties) of the 3. On the production profile of the ALROSA Group for −−07/04/2020, minutes No. 79 (meeting); Corporate Secretary of PJSC ALROSA during Q1 2020 27. On the recommendations to the Chairman of the 2020–2023. −−21/04/2020, minutes No. 80 (remote voting); (cumulative total). Supervisory Board of PJSC ALROSA on the item "On the report on the achievement of quarterly key perfor- 4. On approving the proposals on the results of the 13. On the recommendations to the Supervisory Board −−15/06/2020, minutes No. 81 (remote voting); mance indicators of the ALROSA Group during audit of implementation in 2019 of the Long-Term of PJSC ALROSA on the item "On approving the new Q3 2020". Development Program of the ALROSA Group for the −−30/07/2020, minutes No. 82 (remote voting); version of the Orientation Program for Newly Elected period 2018–2024. −−27/08/2020, minutes No. 83 (remote voting); Members of the Supervisory Board of PJSC ALROSA". 28. On the recommendations to the Supervisory Board of PJSC ALROSA on the item "On the holding by Chief 5. On adjusting the Consolidated Budget of 14. On the recommendations to the Supervisory Board −−30/10/2020, minutes No. 84 (meeting); Executive Officer – Chairman of the Management Board PJSC ALROSA and the target KPI indicators for 2020. of PJSC ALROSA on the item "On approving the of PJSC ALROSA S.S. Ivanov of positions in the manage- −−24/11/2020, minutes No. 85 (remote voting). Regulation on Succession of the Members of the 6. On approving the Consolidated Budget of ment bodies of Russian National Public Organization Supervisory Board of PJSC ALROSA". PJSC ALROSA for 2021 and the target KPI indicators for Union of Mechanical Engineers of Russia". Issues considered 2021. 15. Information on the results of implementation of the new 29. Assessment of the professional specialization of the wage payment system using grades for MSC, as well as 7. On approving the performance of gratuitous transac- 1. On assessing the level of performance of target tasks members of the Supervisory Board of PJSC ALROSA. and the level of performance of functional duties by the the system of temporary remuneration of the staff of the tions and the conclusion of sponsorship contracts stipu- Corporate Secretary of PJSC ALROSA during Q4 2019 Divisions based on the results for 2019. lated by the Consolidated Budget of PJSC ALROSA for (cumulative total). 2021. 16. On the recommendations to the Chairman of the 2. On the Collective Bargaining Agreement of Supervisory Board of PJSC ALROSA on the item "On Strategy and Sustainability 8. On approving the Sales Policy of the ALROSA Group. PJSC ALROSA for 2020-2022. the report on the achievement of quarterly key perfor- 1 Committee 9. On the results of interaction of the management of mance indicators of the ALROSA Group during PJSC ALROSA with investors. 3. On the recommendations to the Supervisory Board of Q1 2020". PJSC ALROSA on the item "On the results of assess- 10. On amending the Program to Divest Non-Core Assets ment of the work of the Supervisory Board and commit- 17. On the implementation of the provisions of the Meetings of PJSC ALROSA. tees of PJSC ALROSA". Standard of social support for employees of PJSC ALROSA in case of accidents at work (on-the-job 11. On approving the Action Plan to divest non-core assets 4. On the recommendations to the Supervisory Board of −−07/04/2020, minutes No. 52 (meeting); injuries or fatalities). of PJSC ALROSA in 2021. PJSC ALROSA on the item "On approving the new −−13/05/2020, minutes No. 53 (meeting); version of the Regulation on the Corporate Secretary of 18. On the recommendations to the Supervisory Board of PJSC ALROSA". PJSC ALROSA on the item "On the holding by Chief −−22/05/2020, minutes No. 54 (remote voting); Executive Officer – Chairman of the Management Board −−26/08/2020, minutes No. 55 (meeting); 5. On assessing the independence of the members of the of PJSC ALROSA Sergey Sergeyevich Ivanov of the po- Supervisory Board of PJSC ALROSA. sition of a member of the Board of Directors of −−15/12/2020, minutes No. 56 (meeting). 6. On the action plan for implementation of the key corpo- JSC Non-State Pension Fund Almaznaya Osen". rate governance initiatives of PJSC ALROSA in 2020. 19. On consideration of the Report on the achievement 7. On confirming the compliance of the persons nominat- of individual quarterly indicators and assessment of ed as candidates to the Supervisory Board of the labor activity (performance of job duties) of the PJSC ALROSA with the requirements of clause 5.3 of Corporate Secretary of PJSC ALROSA during Q2 2020 the Corporate Governance Code of PJSC ALROSA. (cumulative total). 8. On the recommendations to the Supervisory Board 20. On approving the Work Plan of the HR and of PJSC ALROSA on the items: "On the report on the Remuneration Committee of the Supervisory Board of achievement of quarterly key performance indicators of PJSC ALROSA for the 2020-2021 corporate year. the ALROSA Group during Q4 2019" and "On the report on the achievement of the annual key perfor- 21. On the recommendations to the Chairman of the mance indicators of the ALROSA Group during 2019". Supervisory Board of PJSC ALROSA on the item "On the report on the achievement of quarterly key perfor- 9. On the recommendations to the Supervisory Board mance indicators of the ALROSA Group during of PJSC ALROSA on the item "On the recommenda- Q2 2020 (cumulative total from the start of the year)". tions to the annual General Meeting of Shareholders of PJSC ALROSA on the issue of payment of remunera- 22. Current information on human resources work at tion for work on the Supervisory Board of PJSC ALROSA PJSC ALROSA. to the non-state employees who are members of the Supervisory Board in the amount established by the in- 23. On the system of succession at PJSC ALROSA. ternal documents of PJSC ALROSA". 24. On the recommendations to the Supervisory Board of 10. On the recommendations to the Supervisory Board of PJSC ALROSA on the item "On assessing the work of PJSC ALROSA on the item "On the recommendations the Supervisory Board of PJSC ALROSA and the com- to the annual General Meeting of Shareholders of mittees of the Supervisory Board". PJSC ALROSA on the issue of payment of remuneration 2 On 15 February 2021, by decision of the Supervisory Board, minutes No. 01/327-PR-NS, the Strategic Planning Committee of the Supervisory Board of PJSC ALROSA was renamed the Strategy and Sustainability Committee of the Supervisory Board of PJSC ALROSA) | ANNUAL REPORT 2020 COMPANY STRATEGIC PERFORMANCE SUSTAINABILITY FOR SHAREHOLDERS CORPORATE APPENDICES 236 PROFILE REPORT AND INVESTORS GOVERNANCE 237 | ANNUAL REPORT 2020 238

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