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Дата раскрытия:  16.03.2023
Polymetal International plc
4. SEGMENT INFORMATION

The Group has identified five reportable segments:

• Kazakhstan (Varvara, Komar, Kyzyl);
• Magadan (Omolon, Dukat, Mayskoye);
• Ural (Voro);
• Khabarovsk (Amursk POX, Albazino, Svetloye, Veduga, Kutyn);
• Yakutia (Nezhda, Prognoz).

Reportable segments are determined based on the Group’s internal management reports, which are separated based on the Group’s geographical structure. Minor companies and activities (management, purchasing and other companies) which do not meet the reportable segment criteria are disclosed within "Сorporate and other" segment. Each segment is engaged in gold, silver or copper mining and related activities, including exploration, extraction, processing and reclamation. The Group’s reportable segments are based in the Russian Federation and Kazakhstan.
The measure which management and the Chief Operating Decision Maker (the CODM) use to evaluate the performance of the Group is segment Adjusted EBITDA, which is an Alternative Performance Measure (APM). For more information on the APMs used by the Group, including definitions, please refer to page 68.
Revenue shown as "Corporate and other" comprises, principally, intersegment revenue relating to the supply of inventories, spare parts and fixed assets, and rendering management services to the Group’s production entities. The Group recognises Revenue and related Cost of sales in the segment where the source ore was mined, regardless of whether it was processed on behalf of that segment at production facilities related to another hub, Revenue and Cost of sales of the production entities are reported net of any intersegmental Revenue and Cost of sales related to the intercompany sales of ore and concentrates, as well as intercompany smelting services, as this presentation is more meaningful from a management and forecasting perspective.
Business segment current assets and liabilities, other than current inventory, are not reviewed by the CODM and therefore are not disclosed in these condensed consolidated financial statements. The segment adjusted EBITDA reconciles to the profit before income tax as follows:

4. SEGMENT INFORMATION (CONTINUED)
Year ended 31 December 2022 (US$m) KAZAKHSTAN RUSSIA Total reportable segments Corporate and other Total
MAGADAN KHABAROVSK URAL YAKUTIA Total
Revenue from external customers 933 996 565 177 130 1,868 2,801 - 2,801
Cost of sales, excluding depreciation, depletion and write-down of inventory to net realisable value 340 549 306 85 75 1,015 1,355 - 1,355
Cost of sales 415 690 380 93 112 1,275 1,690 - 1,690
Depreciation included in Cost of sales (75) (103) (62) (9) (23) (197) (272) - (272)
Write-down of metal inventory to net realisable value - (38) (13) - (14) (65) (65) - (65)
Reversal of previous write-down of non-metal inventory to net realisable value - 1 - - - 1 1 - 1
Rehabilitation expenses - (1) 1 1 - 1 1 - 1
General, administrative and selling expenses, excluding depreciation, amortization and share-based compensation 27 44 38 11 16 109 136 152 288
General, administrative and selling expenses 29 45 39 12 16 112 141 170 311
Depreciation included in SGA (2) (1) (1) (1) - (3) (5) (5) (10)
Share-based compensation - - - - - - - (13) (13)
Other operating expenses excluding additional tax charges 26 48 23 6 8 85 111 30 141
Other operating expenses, net 28 48 22 6 8 84 112 30 142
Bad debt and expected credit loss allowance - - - 1 - 1 1 - 1
Additional tax charges/fines/penalties (2) - 1 (1) - - (2) - (2)
Share of loss of associates and joint ventures - - - - - - - - -
Adjusted EBITDA 540 355 198 75 31 659 1,199 (182) 1,017
Depreciation expense 77 104 63 10 23 200 277 5 282
Rehabilitation expenses - 1 (1) (1) - (1) (1) - (1)
Write-down of non-metal inventory to net realisable value - (1) - - - (1) (1) - (1)
Write-down of metal inventory to net realisable value - 38 13 - 14 65 65 - 65
Impairment of non-current assets - - 106 - 695 801 801 - 801
Impairment of investment in associate - - - - - - - 24 24
Share-based compensation - - - - - - - 13 13
Bad debt and expected credit loss allowance - - - (1) - (1) (1) - (1)
Additional tax charges/fines/penalties 2 - (1) 1 - - 2 - 2
Operating loss 461 213 18 66 (701) (404) 57 (224) (167)
Foreign exchange gain/(loss), net (32)
Loss on disposal of subsidiaries, net (2)
Change in fair value of financial instruments (20)
Finance expenses (119)
Finance income 8
Loss before tax (332)
Income tax 44
Loss for the year (288)
Current metal inventories 111 264 182 25 123 594 705 - 705
Current non-metal inventories 46 132 90 14 28 264 310 42 352
Non-current segment assets:
Property, plant and equipment, net 696 413 1,358 306 540 2,617 3,313 79 3,392
Goodwill - 14 - - - 14 14 - 14
Non-current inventory 34 33 52 3 11 99 133 - 133
Investments in associates - - - - - - - 13 13
Total segment assets 887 856 1,682 348 702 3,588 4,475 134 4,609
Additions to non-current assets:
Property, plant and equipment 108 135 436 86 107 764 872 11 883
Acquisition of subsidiaries - - 19 29 - 48 48 1 49

4. SEGMENT INFORMATION (CONTINUED)
Year ended 31 December 2021 (US$m) KAZAKHSTAN RUSSIA Total reportable segments Corporate and other Total
MAGADAN KHABAROVSK URAL YAKUTIA Total
Revenue from external customers 983 1,103 641 163 - 1,907 2,890 - 2,890
Cost of sales, excluding depreciation, depletion and write-down of inventory to net realisable value 318 456 238 63 - 757 1,075 - 1,075
Cost of sales 396 550 292 69 - 911 1,307 - 1,307
Depreciation included in Cost of sales (78) (74) (48) (6) - (128) (206) - (206)
Write-down of metal inventory to net realisable value - (20) (5) - - (25) (25) - (25)
Reversal of previous write-down of non-metal inventory to net realisable value - - 1 - - 1 1 - 1
Rehabilitation expenses - - (2) - - (2) (2) - (2)
General, administrative and selling expenses, excluding depreciation, amortization and share-based compensation 23 33 29 7 11 80 103 99 202
General, administrative and selling expenses 25 34 30 7 11 82 107 119 226
Depreciation included in SGA (2) (1) (1) - - (2) (4) (4) (8)
Share-based compensation - - - - - - - (16) (16)
Other operating expenses excluding additional tax charges 12 56 35 7 7 105 117 32 149
Other operating expenses, net 13 57 33 7 7 104 117 32 149
Bad debt and expected credit loss allowance - (1) - - - (1) (1) - (1)
Additional tax charges/fines/penalties (1) - 2 - - 2 1 - 1
Share of loss of associates and joint ventures - - - - - - - - -
Adjusted EBITDA 630 558 339 86 (18) 965 1,595 (131) 1,464
Depreciation expense 80 75 49 6 - 130 210 4 214
Rehabilitation expenses - - 2 - - 2 2 - 2
Write-down of non-metal inventory to net realisable value - - (1) - - (1) (1) - (1)
Write-down of metal inventory to net realisable value - 20 5 - - 25 25 - 25
Share-based compensation - - - - - - - 16 16
Bad debt and expected credit loss allowance - 1 - - - 1 1 - 1
Additional tax charges/fines/penalties 1 - (2) - - (2) (1) - (1)
Operating profit 549 462 286 80 (18) 810 1,359 (151) 1,208
Foreign exchange gain/(loss), net 5
Gain on disposal of subsidiaries, net 3
Change in fair value of financial instruments 4
Finance expenses (66)
Finance income 7
Profit before tax 1,161
Income tax (257)
Profit for the year 904
Current metal inventories 108 228 117 50 50 445 553 - 553
Current non-metal inventories 35 92 50 8 17 167 202 26 228
Non-current segment assets:
Property, plant and equipment, net 728 376 1,045 126 938 2,485 3,213 101 3,314
Goodwill - 14 - - - 14 14 - 14
Non-current inventory 30 25 38 2 1 66 96 - 96
Investments in associates - - - - - - - 28 28
Total segment assets 901 735 1,250 186 1,006 3,177 4,078 155 4,233
Additions to non-current assets:
Property, plant and equipment 93 117 437 67 152 773 866 5 871
Acquisition of subsidiaries - - - - - - - 16 16

5. REVENUE

Year ended 31 December 2022
Volume shipped (unaudited) Volume payable (unaudited) Average price ($ per oz/t payable) (unaudited) US$m



Gold (thousand ounces) 1,408 1,376 1,738 2,392
Silver (thousand ounces) 18,973 18,542 20.7 383
Copper (tonnes) 3,810 3,399 7,650 26
Total 2,801

Year ended 31 December 2021
Volume shipped (unaudited) Volume payable (unaudited) Average price ($ per oz/t payable) (unaudited) US$m



Gold (thousand ounces) 1,421 1,386 1,768 2,450
Silver (thousand ounces) 17,860 17,482 24.0 419
Copper (tonnes) 2,403 2,093 10,032 21
Total 2,890


Geographical analysis of revenue by destination is presented below:

Year ended
31 December 2022 31 December 2021
US$m US$m
Sales to Kazakhstan 1,205 1,008
Sales to Asia 1,284 490
Sales within the Russian Federation 296 1,271
Sales to Europe 16 121
Total 2,801 2,890


Included in revenues for the year ended 31 December 2021 are revenues which arose from the sales to the Group’s largest customers, whose contribution to the Group’s revenue presented 10% or more of the total revenue. In 2022 revenues from such customers amounted to US$ 754 million, US$ 446 million, US$ 452 million and US$ 233 million respectively (2021: US$ 833 million, US$ 638 million, US$ 369 million and US$ 279, respectively).
Presented below is an analysis per revenue streams:

Year ended
31 December 2022 31 December 2021
US$m US$m
Bullions 1,104 1,341
Concentrate 915 897
Dore 754 652
Ore 28 -
Total 2,801 2,890




6. COST OF SALES
Year ended
31 December 2022 31 December 2021
US$m US$m
Cash operating costs
On-mine costs (Note 7) 741 516
Smelting costs (Note 8) 567 383
Purchase of ore and concentrates from third parties 69 130
Mining tax 136 152
Total cash operating costs 1,513 1,181

Depreciation and depletion of operating assets (Note 9) 324 229
Rehabilitation expenses (1) 2
Total costs of production 1,836 1,412

Increase in metal inventories (216) (132)
Write-down of inventories to net realisable value (Note 18) 64 24
Idle capacities and abnormal production costs 6 3

Total 1,690 1,307

7. ON-MINE COSTS
Year ended
31 December 2022 31 December 2021
US$m US$m
Services 363 254
Labour 175 130
Consumables and spare parts 196 126
Other expenses 7 6
Total (Note 6) 741 516

8. SMELTING COSTS
Year ended
31 December 2022 31 December 2021
US$m US$m
Consumables and spare parts 242 164
Services 213 145
Labour 110 72
Other expenses 2 2
Total (Note 6) 567 383


9. DEPLETION AND DEPRECIATION OF OPERATING ASSETS
Year ended
31 December 2022 31 December 2021
US$m US$m
On-mine 228 161
Smelting 96 68
Total in cost of production (Note 6) 324 229
Less: absorbed into metal inventories (52) (23)
Depreciation included in cost of sales 272 206


Depreciation of operating assets excludes depreciation relating to non-operating assets (included in general, administrative and selling expenses) and depreciation related to assets employed in development projects where the charge is capitalised. Depreciation expense, which is excluded from the Group’s calculation of Adjusted EBITDA (see Note 4), also excludes amounts absorbed into unsold metal inventory balances.

10. GENERAL, ADMINISTRATIVE AND SELLING EXPENSES
Year ended
31 December 2022 31 December 2021
US$m US$m
Labour 243 171
Share-based compensation 13 16
Depreciation 10 8
Services 15 10
Other 30 21
Total 311 226
including
Mine site expenses 141 107
Corporate head office expenses 170 119
Total 311 226


11. OTHER OPERATING EXPENSES, NET

Year ended
31 December 2022 31 December 2021
US$m US$m
Exploration expenses 62 72
Social payments 44 28
Expenses related to the investment in Special Economic Zone 14 20
Taxes, other than income tax 15 11
Additional tax charges/fines/penalties 2 (1)
Change in estimate of environmental obligations (2) 2
Other expenses 7 17
Total 142 149


For the operations held in the Special Economic Zone of the Russian Far East, Omolon Gold Mining Company LLC and Magadan Silver JSC are entitled to the decreased statutory income tax rate of 17%, as well as decreased mining tax rate (paying 60% of standard mining tax rates). In return for obtaining this tax relief the members of the regional free Economic Zone are obliged to invest 50% of their tax savings each year in the Special Economic Zone Development Programme, amounting to US$ 14 million in 2022 (2021: US$ 20 million).
Operating cash flow spent on exploration activities amounts to US$ 61 million (2021: US$ 71 million).

12. FINANCE EXPENSES
Year ended
31 December 2022 31 December 2021
US$m US$m
Interest expense on borrowings 94 51
Unwinding of discount on lease liabilities (Note 6, 24) 7 3
Unwinding of discount on environmental obligations 8 4
Unwinding of discount on contingent consideration liability (Note 24) 10 8
Total 119 66

During the year ended 31 December 2022 interest expense on borrowings excludes borrowing costs capitalised in the cost of qualifying assets of US$ 35 million (2021: US$ 13 million). These amounts were calculated based on the Group’s general borrowing pool and by applying an effective interest rate of 4.53% (2021: 2.91%) to cumulative expenditure on such assets.
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13. INCOME TAX
The amount of income tax expense for the years ended 31 December 2022 and 31 December 2021 recognised in profit and loss was as follows:



Year ended
31 December 2022 31 December 2021
US$m US$m
Current income taxes 164 261
Deferred income taxes (208) (4)
Total (44) 257
Increased deferred income tax credit resulted from deferred tax benefit of US$ 149 million related to impairment of non-current assets (Note 14).
A reconciliation between the reported amounts of income tax expense attributable to income before income tax is as follows:
Year ended
31 December 2022 31 December 2021
US$m US$m
Profit before income tax (332) 1 161
Theoretical income tax expense at the tax rate of 20% (66) 232
Effect of Special Economic Zone and Regional Investment project decreased tax rates 19 (33)
Tax effect of WHT on intercompany dividends (15) 33
Non-taxable net foreign exchange gains (25) -
Effect of different tax rates of subsidiaries operating in other jurisdictions (9) 5
Change in unrecognised deferred taxes 14 3
Non-deductible interest expense 6 10
Other non-taxable income and non-deductible expenses 27 10
Adjustments in respect of prior periods 5 (3)
Total income tax expense (44) 257

The actual tax expense differs from the amount which would have been determined by applying the statutory rate of 20% for the Russian Federation and Kazakhstan to profit before income tax as a result of the application of relevant jurisdictional tax regulations, which disallow certain deductions which are included in the determination of accounting profit. These deductions include social related expenditures and other non-production costs, certain general and administrative expenses, financing expenses, foreign exchange related and other costs.
Additionally, the Group has a number of tax concessions, the most significant of which are detailed below.
Omolon Gold Mining Company LLC and Magadan Silver JSC are entitled to the decreased statutory income tax rate of 17% for the operations held in the Special Economic Zone of the Russian Far East, the rate of 17% was used in calculation of income tax provision and deferred tax positions for those entities. Amursk Hydrometallurgical Plant LLC is entitled to an income tax rate of 0% in 2022, a tax rate of 13% during 2023-2027. South-Verkhoyansk Mining Company JSC received tax relief as a Regional Investment Project and is entitled to the statutory income tax rate of 10% for 5 first years and 13.5% for 2 years from the date of eligibility.
Following an agreement reached by the Finance Ministers from the G7 in July 2021 backing the creation of a global minimum corporate tax rate of least 15%, over 140 countries and jurisdictions have agreed to the OECD/G20 Inclusive Framework on BEPS, also referred to as BEPS 2.0, including Russia and Kazakhstan. The new framework aims to ensure that large multinational enterprises pay a fair share of tax wherever they operate and to set a global minimum tax rate. Earliest possible implementation is on 1 January 2023 and it is expected that implementation in key countries will commence soon. Neither Russia or Kazakhstan have yet announced any details regarding the adjustment of their local tax legislation. We are monitoring information in this regard.
Based on the current understanding of the anticipated changes to the global tax landscape as a result of implementation of BEPS 2.0 rules, the Group is assessing the impact of these rules on its future tax obligations once adjustments are made to relevant local tax legislation. The Group’s future effective tax rate is expected to continue to exceed the minimum rate of 15% and not significantly increase by virtue of these new rules.


Tax exposures related to the income tax
In 2022 and 2021 no individual material exposures were identified as probable and therefore provided for. Management has identified a total exposure in respect of contingent liabilities (Note 20) (covering taxes and related interest and penalties) of approximately US$ 122 million being uncertain tax positions (31 December 2021: US$ 157 million) which relate to income tax. This is connected largely to the more assertive position of the Russian tax authorities in their interpretation of tax legislation in several recent court cases for other taxpayers. Fiscal periods remain open to review by the tax authorities in respect of taxes for the three and five calendar years preceding the year of tax review for Russia and Kazakhstan respectively. In case of Regional Investment Project in Russian Federation fiscal period remains open to review for five years as well. While the Group believes it has provided adequately for all tax liabilities based on its understanding of the tax legislation, the above facts may create additional financial risks for the Group.
Management does not anticipate a significant risk of material changes in estimates in these matters in the next financial year.
Income tax amounts included in other comprehensive income
An analysis of tax by individual item presented in the condensed consolidated statement of comprehensive income is presented below:


Year ended
31 December 2022 31 December 2021
US$m US$m
Net foreign exchange gains/(losses) on net investment in foreign operation
Current tax expense 5 2
Deferred tax expense - -
Total income tax recognised in other comprehensive income 5 2

Current and deferred tax assets recognised within other comprehensive income relate to the tax losses originated by foreign currency exchange losses, allowable for tax purposes and generated by monetary items that form part of the intragroup net investment in the foreign operation. These foreign currency exchange losses are recognised in the condensed consolidated financial statements within the foreign currency translation reserve.
Deferred taxation
Deferred taxation is attributable to the temporary differences that exist between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the reporting period.
Mineral rights Exploration in progress Borrowings and other liabilities Environmental obligation Tax losses Unremmited earnings Other Total
US$m US$m US$m US$m US$m US$m US$m

At 1 January 2021 (189) (42) 18 8 81 (15) (7) (146)
Charge to income statement 2 (24) - 3 19 (7) 11 4
Exchange differences 3 - - - - - - 3
At 31 December 2021 (184) (66) 18 11 100 (22) 4 (139)
Charge to income statement 88 12 (40) 1 103 22 22 208
Exchange differences (22) (9) 2 - 3 - (8) (34)
At 31 December 2022 (118) (63) (20) 12 206 - 18 35

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following analysis shows deferred tax balances presented for financial reporting purposes:



Year ended
31 December 2022 31 December 2021
US$m US$m
Deferred tax liabilities (107) (206)
Deferred tax assets 142 67
Total 35 (139)

The Group believes that recoverability of the recognised deferred tax asset (DTA) of US$ 206 million at 31 December 2022 (2021: US$ 100 million), which is related to the tax losses carried forward, is more likely than not based upon expectations of future taxable income in the Russian Federation and Kazakhstan.
In accordance with Russian Federation tax law regarding loss carryforwards, loss carryforwards are limited to 50% of taxable profit in tax years through to 2024. From 2025 the limitation will expire and it will be possible to fully utilise loss carryforwards against the corporate tax base in a given year and losses incurred from 2007 can be carried forward for an indefinite period until fully utilised.
Tax losses carried forward represent amounts available for offset against future taxable income generated predominantly by Polymetal JSC and JSC South-Verkhoyansk Mining Company. Each legal entity within the Group represents a separate tax-paying component for income tax purposes. The tax losses of one entity cannot be used to reduce taxable income of other entities of the Group.
Losses incurred in certain taxable entities in recent years have created a history of losses as of
31 December 2022. The Group has concluded that there is sufficient evidence to overcome the recent history of losses based on forecasts of sufficient taxable income in the carry-forward period.
The Group’s estimate of future taxable income is based on established proven and probable reserves which can be economically developed. The related detailed mine plans and forecasts provide sufficient supporting evidence that the Group will generate taxable earnings to be able to fully realise its net DTA even under various stressed scenarios. The amount of the DTA considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced due to delays in production start dates, decreases in ore reserve estimates, increases in environmental obligations, or reductions in precious metal prices.
No deferred tax asset has been recognised in respect of US$ 95 million (2021: US$ 84 million) of losses as it is not considered probable that there will be future taxable profits against which the losses can be utilised.
In 2022 the Group paid withholding income tax of US$ 7 million (2021: US$ 25 million) related to intercompany dividends, which were remitted during the year. As of 31 December 2022 the Group did not recognise any deferred tax liability (31 December 2021: US$ 22 million) for the undistributed retained earnings of certain of the Group subsidiaries, which are expected to be remitted from these subsidiaries in foreseeable future (judged to be one year). No deferred tax liabilities for taxes that would be payable on the unremitted earnings of the Group subsidiaries is recognised where the Group determines that the undistributed profit of its subsidiaries will not be distributed in the foreseeable future (judged to be one year). The temporary differences associated with investments in subsidiaries, for which deferred tax liabilities have not been recognised, amount to US$ 4.1 billion (2021: US$ 3.2 billion).

14. IMPAIRMENT OF NON-CURRENT ASSETS
During the year ended 31 December 2022, due to the appreciation of Russian Rouble against US Dollar resulting in the increased carrying value of non-current assets, as well as a post tax real discount rate increase, the Group carried out an impairment review of its property, plant and equipment. As a result of this review, total impairment loss of US$ 801 million was recognised, which comprised the following:


Nezhda-Prognoz Kutyn Veduga Total
US$m US$m US$m US$m
Property, plant and equipment
Development assets 315 2 13 330
Mining assets 341 7 64 412
Capital construction in-progress 36 3 18 57
Non-mining assets 2 - - 2
Total PPE 694 12 95 801

Nezhda-Prognoz CGU relates to Yakutia reporting segment, while Kutyn and Veduga CGUs are included in Khabarovsk reporting segment (Note 4).

After the related tax credit of US$ 149 million, the post-tax impairment charge amounts to US$ 652 million.

The recoverable amount of the relevant cash-generating units is determined based on a value in use calculation. The impairment testing procedure, related assumptions and sensitivities are described in detail in Note 2 “Use of estimates” section above.


15. PROPERTY, PLANT AND EQUIPMENT

Development assets Exploration and evaluation assets Mining assets Non-mining assets Capital construction in-progress Total
US$m US$m US$m US$m US$m US$m
Cost
Balance at 1 January 2021 418 62 2,801 65 543 3,889
Additions 65 14 305 10 477 871
Transfers (98) (11) 343 1 (235) -
Change in environmental obligations - - 2 - 1 3
Acquisitions - 16 - - - 16
Eliminated on disposal of subsidiaries - (6) - - - (6)
Disposals and write-offs including fully depreciated mines - - (64) (1) - (65)
Translation to presentation currency (1) (1) (44) (1) (3) (50)
Balance at 31 December 2021 384 74 3,343 74 783 4,658
Additions 65 19 255 11 533 883
Transfers (13) - 245 2 (234) -
Change in environmental obligations - - 12 - 8 20
Acquisitions (Note 3) 29 1 - - 19 49
Eliminated on disposal of subsidiaries (Note 3) - (8) (10) - - (18)
Disposals and write-offs including fully depreciated mines - - (152) - (1) (153)
Translation to presentation currency 35 (1) 50 6 39 129
Balance at 31 December 2022 500 85 3,743 93 1,147 5,568

Development assets Exploration and evaluation assets Mining assets Non-mining assets Capital construction in-progress Total
US$m US$m US$m US$m US$m US$m
Accumulated depreciation, amortisation
Balance at 1 January 2021 - - (1,118) (33) - (1,151)
Charge for the period - - (260) (7) - (267)
Disposals and write-offs including fully depreciated mines - - 59 - - 59
Translation to presentation currency - - 15 - - 15
Balance at 31 December 2021 - - (1,304) (40) - (1,344)
Charge for the period - - (345) (9) - (354)
Eliminated on disposal of subsidiaries (Note 3) - - 10 - - 10
Impairment recognised during period (Note 14) (334) (2) (418) (4) (43) (801)
Disposals and write-offs including fully depreciated mines - - 148 - - 148
Translation to presentation currency 82 - 75 - 8 165
Balance at 31 December 2022 (252) (2) (1,834) (53) (35) (2,176)
Net book value
31 December 2021 384 74 2,039 34 783 3,314
31 December 2022 248 83 1,909 40 1,112 3,392

Mining assets, exploration and development assets at 31 December 2022 included mineral rights with a net book value which amounted to US$ 713 million (31 December 2021: US$ 1,016 million) and capitalised stripping costs with a net book value of US$ 277 million (31 December 2021: US$ 249 million). Mineral rights of the Group comprise assets acquired upon acquisition of subsidiaries. As of 31 December 2022 capital construction in progress includes prepayments made for equipment and construction works amounting to US$ 210 million (2021: US$ 162 million).
Included within the US$ 153 million of assets disposed of and written off were fully depreciated items of US$ 121 million (year ended 31 December 2021: US$ 65 million and US$ 19 million, respectively).
No property, plant and equipment was pledged as collateral at 31 December 2022 or at 31 December 2021.
16. LEASES

Movements of the right-of-use assets for the year ended 31 December 2022 are as follow:

Year ended
31 December 2022 31 December 2021
Right-of-use assets US$m US$m
At 1 January 33 32
Additions 122 9
Depreciation charge for the period (8) (6)
Disposals (1) (4)
Accumulated depreciation of assets disposed 1 1
Translation to presentation currency (16) 1
At 31 December 131 33


The leases of the Group are represented by the office leases and the lease of the overhead power line, supplying electricity to the Nezhda production site, which commenced in July 2022. The Group has a right to acquire the power line after the end of the lease term.

Movements of the lease liabilities for the year ended 31 December 2022 are detailed in Note 24. The Group’s lease commitments related to the variable lease payments are disclosed in Note 20.
The Group excluded the following lease agreements from the right-of-use assets and lease liabilities and recognises the lease payments associated with those leases as expenses on a straight-line basis over the lease term:
• Lease agreements with variable payments;
• Lease agreements of land plots to explore for or use minerals and similar non-generative resources;
• Short-term lease agreements that expire within 12 months from the date of initial application;
• Lease agreements of low value assets (of US$ 5,000 or less).
Amounts recognised in profit and loss for the year ended 31 December 2022 are as follows:
Year ended
31 December 2022 31 December 2021
US$m US$m
Expenses related to lease exemptions (5) (3)
Unwinding of discount on lease liabilities (7) (3)
Depreciation of right-of-use assets (8) (6)
Total lease expenses (20) (12)

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
31 December 2022 31 December 2021
Voting power % Carrying Value Voting power % Carrying Value
US$m US$m

Interests in associates and joint ventures
Tomtor (ThreeArc Mining Ltd) 9.1 - 9.1 20
Individually immaterial investments 6 4
Total 6 24

Loans forming part of net investment in joint ventures
Individually immaterial investments 7 4
Total 7 4

Total investments in associates and joint ventures 13 28
Movement during the reporting periods was as follows:

Year ended
31 December 2022 31 December 2021
US$m US$m

At 1 January 28 24
Impairment recognised (24) -
Acquisitions 3 1
Consolidated as subsidiaries - (1)
Loans advanced forming part of net investment 4 4
Currency translation adjustment 2 -
Total at 31 December 13 28

Tomtor (ThreeArc Mining Ltd)
ThreeArc owns 100% Tomtor niobium and rare-earth metals exploration project (Tomtor). The project is comprised of the Tomtor open-pit deposit and the Krasnokamensk Hydrometallurgical Facility which was planned to be built near the town of Krasnokamensk.
The Group determined that it exercised significant influence over the investee through participation in policy and decision-making processes, and therefore ThreeArc constituted an associate under IAS 28 Investments in Associates and Joint Ventures. The investment was accounted for using the equity method.

During the year ended 31 December 2022 the project was suspended at an early development stage, and, therefore the investment in Tomtor was fully provided for, resulting in impairment loss of US$ 24 million recognised within income statement. During the year ended 31 December 2021, no significant share of profit/(loss) from Tomtor was recognised by the Group.
Summarised financial position of the investments
The Group holds a number of individually immaterial investments in joint arrangements to explore and develop several deposit in Russia and Kazakhstan. The following table summarises the aggregate financial position of the investments on a 100% basis. The summarised financial information below represents amounts in the associate's consolidated financial statements prepared in accordance with IFRS, adjusted for fair value adjustments at acquisition and differences in accounting policies. As of 31 December 2022, consistent with as of 31 December 2021, none of the entities held any significant cash balances and did not record any significant amounts of revenue or expenses, depreciation and amortisation, interest income and expenses, income tax.


31 December 2022 31 December 2021
Non-significant investments Tomtor Non-significant investments
US$m US$m US$m

Non-current assets 13 307 10
Current assets 5 3 3
Non-current liabilities (5) (91) (5)
Current liabilities (1) (1) -
Net assets 12 218 8

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18. INVENTORIES
Year ended
31 December 2022 31 December 2021
US$m US$m

Inventories expected to be recovered after twelve months
Ore stock piles 89 70
Copper, gold and silver concentrate 10 -
Consumables and spare parts 34 26
Total non-current inventories 133 96

Inventories expected to be recovered in the next twelve months
Сopper, gold and silver concentrate 287 182
Ore stock piles 229 221
Work in-process 111 115
Dore 55 26
Metal for refining 20 9
Refined metals 3 -
Total current metal inventories 705 553

Consumables and spare parts 352 228
Total current inventories 1,057 781

Write-downs of metal inventories to net realisable value
The Group recognised the following write-downs and reversals to net realisable value of its metal inventories:
Year ended
31 December 2022 31 December 2021
US$m US$m
Ore stock piles (28) (28)
Ore in heap leach piles (31) 3
Сopper, gold and silver concentrate (6) -
Total (65) (25)

The key assumptions used as of 31 December 2022 in determining net realisable value of inventories (including the commodity price assumptions for long-term stockpiles) are described in Note 3 “Use of estimates” section. For short-term metal inventories, applicable quoted forward prices as of 31 December 2022 were used: gold and silver prices of US$ 1,874 per ounce (2021: US$ $ 1,836) and US$ 24.6 per ounce (2021: US$ 23.5), respectively.
During the year ended 31 December 2022 the Group recognised a reversal of previous write-down of consumables and spare parts inventory of US$ 1 million (year ended 31 December 2021: reversal of US$ 1 million).
The amount of inventories held at net realisable value at 31 December 2022 is US$ 95 million (31 December 2021: US$ 49 million).
19. BORROWINGS
Actual interest rate at 31 December 2022 31 December 2021
Type of rate 31 Dec 2022 31 Dec 2021 Current Non-current Total Current Non-current Total
Secured loans from third parties US$m US$m US$m US$m US$m US$m
US Dollar denominated fixed 2.68% 3.04% 33 158 191 100 191 291
Total secured loans from third parties 33 158 191 100 191 291
Unsecured loans from third parties
US Dollar denominated floating 5.69% 1.35% 149 339 488 298 378 676
US Dollar denominated fixed 3.75% 3.52% 43 1,206 1,249 2 948 950
Euro denominated floating 0.98% 0.45% 2 19 21 - 24 24
Euro denominated fixed n/a 0.60% - - - 2 - 2
RUB denominated floating 9.35% n/a 132 518 650 -
RUB denominated fixed 8.03% 6.67% 3 202 205 44 77 121
CNY denominated fixed 5.99% n/a 83 - 83 - - -
CNY denominated floating 3.50% n/a 69 70 139 - - -
Total unsecured loans from third parties 481 2,354 2,835 346 1,427 1,773
Total loans from third parties 514 2,512 3,026 446 1,618 2,064
Bank loans
The Group has a number of borrowing arrangements with various lenders. These borrowings consist of unsecured and secured loans and credit facilities as detailed above. Where security is provided it is in form of a pledge of revenue from certain sales agreements.
Movements in borrowings are presented in Note 24. The Group complied with its debt covenants throughout 2022 and 2021.

The table below summarises maturities of borrowings:
Year ended
31 December 2022 31 December 2021
US$m US$m
31 December 2022 - 446
31 December 2023 514 177
31 December 2024 737 372
31 December 2025 561 220
31 December 2026 411 390
31 December 2027 459 170
31 December 2028 164 139
31 December 2029 168 139
31 December 2030 8 8
31 December 2031 2 3
31 December 2032 2 -
Total 3,026 2,064


20. COMMITMENTS AND CONTINGENCIES
Commitments
Capital commitments
The Group’s contractual expenditure commitments as of 31 December 2022 amounted to US$ 279 million (2021: US$ 270 million).
Nezhda power line
In June 2020, the Group entered into a preliminary lease agreement to lease on pre-agreed terms the single-circuit 110 kV grid power line running from Khandyga to the Nezhda production site and the related substation. Construction was completed and state registration was completed in July 2022, which was determined as a commencement date of the lease (Note 16).
The Group’s lease commitments related to the variable lease payments, representing reimbursement of maintenance costs are estimated at US$ 36 million (undiscounted), which will be expensed as incurred.
Forward sale commitments
The Group has certain physical gold and silver forward sale commitments which are priced at the prevailing market price, calculated with reference to the LBMA or LME gold and silver price, which are accounted for as executory contracts as the Group expects to, and has historically, physically delivered into these contracts.
Contingent liabilities
Taxation
Russian and Kazakhstan tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Management’s interpretation of such legislation as applied to the transaction and activity of the companies of the Group may be challenged by the relevant regional and federal authorities and as a result, significant additional taxes, penalties and interest may be assessed. Fiscal periods remain open to review by the tax authorities in respect of taxes for three and five calendar years preceding the year of review for Russia and Kazakhstan respectively. Under certain circumstances reviews may cover longer periods.
Management has identified a total exposure (covering taxes and related interest and penalties) of US$ 125 million in respect of contingent liabilities (2021: US$ 157 million), mainly related to income tax as described in Note 13.
21. FINANCIAL INSTRUMENTS

Major categories of financial instruments
Year ended
31 December 2022 31 December 2021
US$m US$m
Financial assets
Derivatives designated in hedge relationships
Interest rate swaps 16 -

Financial assets at FVTPL
Receivables from provisional copper, gold and silver concentrate sales 54 44
Contingent consideration receivable 17 36
Shares held at FVTPL 1 5

Financial assets at amortised cost, including cash and cash equivalents
Cash and cash equivalents (Note 24) 633 417
Other receivables 49 35
Non-current loans and receivables 15 12
Total financial assets 785 549

Financial liabilities
Financial liabilities at FVTPL
Contingent consideration liability (Note 24) 36 63
Royalty payable (Note 24) 24 21

Financial liabilities at amortised cost
Borrowings (Note 19) 3,026 2,064
Deferred consideration (Note 24) 85 79
Trade and other payables 171 147
Total financial liabilities 3,342 2,374

The Group’s principal financial liabilities comprise borrowings, derivatives, trade and other payables. The Group has various financial assets such as accounts receivable, loans advanced and cash and cash equivalents.
Trade and other payables exclude employee benefits and social security.
Interest expense, calculated using effective interest method, arising on financial liabilities at amortised costs is disclosed in Note 24.
The main risks arising from the Group’s financial instruments are foreign currency and commodity price risk, interest rate, credit and liquidity risks.
At the end of the reporting period, there are no significant concentrations of credit risk for receivables at FVTPL. The carrying amount reflected above represents the Group's maximum exposure to credit risk for such receivables.
Presented below is a summary of the Group’s accounts receivable with embedded derivative recorded on the condensed consolidated balance sheet at fair value.
As of 31 December 2022, accounts receivable with embedded derivatives recognised at fair value amounted to US$ 53 million (31 December 2021: US$ 44 million) and represented receivables from provisional metal concentrate sales. In 2021 gain recognised on revaluation of these instruments approximates to US$ 17 million (2021: nil) and is recorded within revenue.
Fair value of financial instruments
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable as follows:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
At 31 December 2022 and 31 December 2021, the Group held the following financial instruments:

31 December 2022
Level 1 Level 2 Level 3 Total
US$m US$m US$m US$m

Receivables from provisional copper, gold and silver concentrate sales - 54 - 54
Contingent consideration receivable - - 17 17
Shares held at FVTPL 1 - - 1
Royalty liabilities payable (Note 24) (24) (24)
Contingent consideration liability (Note 24) - - (36) (36)
Total 1 54 (43) 12

31 December 2021
Level 1 Level 2 Level 3 Total
US$m US$m US$m US$m

Receivables from provisional copper, gold and silver concentrate sales - 44 - 44
Contingent consideration receivable - - 29 29
Shares held at FVTPL 5 - - 5
Royalty liabilities payable (Note 24) (21) (21)
Contingent consideration liability (Note 24) - - (63) (63)
Total 5 44 (55) (6)

During the reporting year, there were no transfers between Level 1 and Level 2.
The Group recognised the following gains and loss from revaluation of its Level 3 financial instruments:
Year ended
31 December 2022 31 December 2021
US$m US$m
Gain on contingent consideration receivable revaluation 17 1
Gain/(loss) on contingent consideration payable revaluation (Note 24) (3) 4
Change in fair value of shares held at FVTPL 4 -
Gain/(loss) on royalty payable revaluation (Note 24) 2 (1)
Total change in fair value of financial instruments 20 4

The carrying values of cash and cash equivalents, trade and other receivables, trade and other payables and short-term debt recorded at amortised cost approximate to their fair values because of the short maturities of these instruments. The estimated fair value of the Group’s debt, calculated using the market interest rate available to the Group as of 31 December 2022, is US$ 2,615 million (2021: US$ 1,849 million), and the carrying value as of 31 December 2022 is US$ 3,027 million (2021: US$ 2,064 million) (see Note 19).
As of 31 December 2022 the Group held several interest rate swap contracts, recognised within non-current accounts receivables and other financial instruments in the amount of US$ 16 million (31 December 2021: US$ 1 million). All interest rate swap contracts to pay fixed and receive floating interest payments are designated as cash flow hedges to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. As the critical terms of the interest rate swap contracts and their corresponding hedged items are the same, the Group performs a qualitative assessment of effectiveness and it is expected that the value of the interest rate swap contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying interest rates. As of 31 December 2022 it was determined that there is no hedge ineffectiveness identified and therefore change of fair value was recognised within other comprehensive income.
Receivables from provisional copper, gold and silver concentrate sales
The fair value of receivables arising from copper, gold and silver concentrate sales contracts that contain provisional pricing mechanisms is determined using the appropriate quoted forward price from the exchange that is the principal active market for the particular metal. As such, these receivables are classified within Level 2 of the fair value hierarchy.
Valuation methodologies used in the measurement of fair value for Level 3 financial assets and financial liabilities
The main level 3 inputs used by the Group in measuring the fair value of contingent consideration assets and liabilities, represented by various royalties and net smelter returns (NSR), are derived and evaluated as follows:
• The relevant valuation model simulates expected production of metals at respective mines and are based on life of mine models prepared using applicable ore reserves and mineral resource estimations;
• Commodity prices - Commodity prices are based on latest internal forecasts, benchmarked against external sources of information. The prices applied are consistent with those described in Note 3.
• Discount rates – The Group used a post-tax real discount rate of 14.1% (2021: 8.0%). For the Monte-Carlo modelling, where inflation is incorporated into volatility estimation, a nominal discount rate of 16% (2021: 10.7%) is applied.
• Where the percentage of net smelter return (NSR) or royalty receivable or payable depends on commodity prices or foreign exchange rates reaching certain levels, the Group applies the Monte-Carlo modelling to incorporate the volatility measure into the valuation, which is applied to the prevailing market prices/rates as of the valuation date. The Monte-Carlo modelling is applied to Prognoz (NSR) contingent considerations payable and all contingent considerations receivable.
The key assumptions used in the Monte-Carlo calculations are set out below:

Price as of valuation date per ounce/tonne, $US Volatility, %% Constant correlation to gold, %%
Gold 1,812 13.65%-14.58% n/a
Silver 23.945 27.18%-28.25% 80.43%
Copper 8,387 24.97% 62.77%
Zinc 3,025 29.73% 54.09%
RUB rate 70.3375 19%-20.98% 50.8%-63.69%

The Directors consider that a reasonably possible change in a valuation assumption would not have a material impact on the condensed consolidated financial statements for contingent considerations receivables and payable.

22. STATED CAPITAL ACCOUNT AND RETAINED EARNINGS
The movements in the Stated Capital account in the year were as follows:
Stated capital account Stated capital account Treasury shares
no. of shares US$m no. of shares

Balance at 31 December 2020 471,818,000 2,434 -
Issue of shares in accordance with DSA and LTIP plans 1,808,239 16 -
Balance at 31 December 2021 473,626,239 2,450 -
Own shares exchanged during period (39,070,838) - 39,070,838
Own certificated shares issued in exchange 39,070,838 - -
Balance at 31 December 2022 473,626,239 2,450 39,070,838

On 3 June 2022, the EU imposed sanctions on the National Settlement Depository (“NSD”), which effectively blocked the operations between Euroclear and NSD. Euroclear is the operator of CREST, the relevant system for paperless settlement of share transfers and the holding of shares in uncertificated form. As a result of the sanctions, shareholders who hold their shares through NSD (which the Company estimates to be, in aggregate, approximately 22% of the Company's issued share capital), had been unable to receive dividends and/or take part in any corporate actions of the Company.
On 22 September 2022, the Board announced its intention to conduct an exchange offer. The exchange offer invited shareholders whose rights have been affected by the sanctions imposed on NSD, subject to fulfilling eligibility criteria, to tender such shares for exchange in consideration for the issuance of a certificated share, on a one-for-one basis.
Eligible shareholders who successfully participated in the exchange offer regained the enjoyment of their rights in the Company, albeit where such rights are evidenced in certificated form. The certificated shares have the same rights and ISIN as, and are fungible with, the Ordinary Shares in all respects.
As of 31 December 2022, 39,070,838 Ordinary Shares (the "First Exchanged Shares") have been repurchased by the Company in connection with the Exchange Offer, in consideration for the issuance of 39,070,838 Ordinary Shares (the "First Certificated Shares")
The transaction represents an exchange of Ordinary Shares in the Company for Certificated Shares in connection with the Company’s Exchange Offer. The exchange of shares did not give rise to any cash settlement and hence does not give rise to any financial liability. The shares were exchanged at par, on a one-for-one basis and does not affect the Company’s net asset and resources position or capital structure.
As of 31 December 2022 the total number of voting rights in the Company is 473,626,239 Ordinary Shares of no par value, each carrying one vote (31 December 2021: 473,626,239). As of 31 December 2022 the Company holds the First Exchanged Shares in treasury and such shares do not enjoy any voting or economic rights (31 December 2021: none).
The shares exchanged during the year ended 31 December 2022 relate to the significant shareholder of the Group and therefore an exchange of 39,070,838 ordinary shares represents a transaction with the related party.
Weighted average number of shares: Diluted earnings per share
Both basic and diluted earnings per share were calculated by dividing profit for the year attributable to equity holders of the parent by the weighted average number of outstanding common shares before/after dilution respectively. The calculation of the weighted average number of outstanding common shares after dilution is as follows:
Year ended
31 December 2022 31 December 2021

Weighted average number of outstanding common shares 473,626,239 473,048,821
Dilutive effect of share appreciation plan - 6,809,043
Weighted average number of outstanding common shares after dilution 473,626,239 479,857,864


There were no adjustments required to earnings for the purposes of calculating the diluted earnings per share during the year ended 31 December 2022 (year ended 31 December 2021: nil).
No outstanding Long-Term Incentive Plan (LTIP) awards issued under 2019-2021 tranches represent dilutive potential ordinary shares with respect to earnings per share from continuing operations as these are out of money as of the reporting date (31 December: 2019 – 2021 tranches were dilutive).
Dividends
During the year ended 31 December 2022 the Group did not recognise or pay any dividends (2021: dividends of US$ 635 million were deducted from equity and paid). Final dividend for 2021, declared in March 2022, was later rescinded by the Board due to changes in operating conditions and therefore was not deducted from equity during reporting period. No final dividend was proposed in relation to the reporting period.

23. RELATED PARTIES
Related parties are considered to include shareholders, affiliates, associates, joint ventures and entities under common ownership and control with the Group and members of key management personnel.
During the period ended 31 December 2022 transactions with the related parties represented by equity method investments comprise by miscellaneous purchases of US$ 1.7 million (period ended 31 December 2021: US$ 1.4 million) and various sales to the related parties of US$ 0.5 million (period ended 31 December 2021: US$ 0.7 million).
Outstanding balances with related parties as of 31 December 2022 are represented by accounts receivable of US$ 1.2 million (31 December 2021: US$ 0.3 million) to equity method investments.
Loans provided to equity method investments, classified as loans forming part of net investment in joint ventures, are presented in Note 17.
The remuneration of directors and other members of key management personnel during the periods was as follows:
Year ended
31 December 2022 31 December 2021
US$m US$m
Share-based payments 1 2
Short-term benefits of board members 3 2
Short-term employee benefits 6 3
Total 10 7


24. SUPPLEMENTARY CASH FLOW INFORMATION
Year ended Year ended
Note 31 December 2022 31 December 2021
US$m US$m

Profit before tax (332) 1,161
Adjustments for:
Depreciation and depletion recognised in the statement of comprehensive income 4 7 214
Write-down of inventories to net realisable value 18 64 24
Share-based compensation 10 13 16
Finance expenses 12 119 66
Finance income (8) (7)
Change in fair value of financial instruments 21 20 (4)
Foreign exchange (loss)/gain, net 32 (5)
Impairment of non-current assets 14 801 -
Impairment of investment in associate 17 24 -
(Loss)/gain on disposal of subsidiaries, net 3 2 (3)
Other non-cash expenses 12 10
1,029 1,472
Movements in working capital
Change in inventories (269) (123)
Change in VAT receivable (15) 3
Change in trade and other receivables (18) (10)
Change in prepayments to suppliers (31) (15)
Change in trade and other payables (29) 1
Change in prepayments received (134) 127
Change in other taxes payable 23 20
Cash generated from operations 556 1,475
Interest paid (123) (60)
Interest received 7 6
Income tax paid (234) (226)
Net cash generated by operating activities 206 1,195
As a result of consolidation of 100% interest in Albazino power line (Note 3) the Group assumed debt of US$ 161 million and acquired corresponding cash balances of US$ 150 million. Cash acquired is presented within investing activities as net cash inflow on acquisitions.
There were no significant non-cash transactions during the year ended 31 December 2022, other than in respect of share-based payments and exchange of the ordinary shares under the exchange offer (Note 22) (2021: drawdowns under factoring arrangements of US$ 48 million and share-based compensation of US$ 16 million).
Cash outflows related to capitalised exploration amounted to US$ 15 million for the year ended 31 December 2021 (2021: US$12 million). During the year ended 31 December 2022, the capital expenditure related to the new projects, increasing the Group’s operating capacity amounts to US$ 208 million (2021: US$ 556 million).




Cash and cash equivalents
31 December 2022 31 December 2021
US$m US$m
Bank deposits -USD 468 224
- other currencies 90 58
Current bank accounts - USD 68 131
- other currencies 7 4
Total 633 417

At the reporting date the cash balances include US$ 118 million of cash and cash equivalents held in Russia, that are subject to certain legal restrictions and are therefore not available for general use of the Company (but fully available for use by its Russian subsidiaries). The Group determined that these restrictions would not have any material effect on the Group’s liquidity position and its ability to finance its obligations.
Bank deposits as of 31 December 2022 are mainly presented by the US Dollar deposits, bearing an average interest rate of 3.9% per annum (2021: US Dollar deposits, bearing an average interest rate of 0.2% per annum).
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities from financing activities are those for which cash flow were, or future cash flows will be, classified in the Group's condensed consolidated cash flow statements as cash flows from financing activities.

31 December 2022
Borrowings Contingent consideration payable at fair value Deferred consideration payable at amortised cost Royalty payable Lease liabilities

1 January 2,064 63 79 21 36
Cash inflow 3,885 - - - -
Cash outlow (3,029) (27) - - (18)
Changes from financing cash flows 856 (27) - - (18)

Additions as a result of acquisitions 161 - - - -
Change in fair value, included in profit or loss - (3) - 3 -
Unwind of discount - 3 6 - 7
Arrangement fee amortisation 1 - - - -
New leases - - - - 123
Lease termination - - - - (1)
Net foreign exchange losses (19) - - (2) -
Exchange differences on translating foreign operations (37) - - 2 (16)
Other changes 106 - 6 3 113

31 December 3,026 36 85 24 131

Less current portion (33) (9) - (5) (25)
Total non-current liabilities at 31 December 2,993 27 85 19 106

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31 December 2021
Borrowings Contingent consideration payable at fair value Deferred consideration payable at amortised cost Royalty payable Lease liabilities

1 January 1,737 87 74 - 33
Cash inflow 3,360 - - 20 -
Cash outlow (3,080) (33) - - (7)
Changes from financing cash flows 280 (33) - 20 (7)

Additions as a result of acquisitions - 10 - - -
Factoring arrangement 48 - - - -
Change in fair value, included in profit or loss - (4) - 1 -
Unwind of discount - 3 5 - 3
Arrangement fee amortisation - - - - -
New leases - - - - 9
Lease termination - - - - (3)
Net foreign exchange losses 6 - - - -
Exchange differences on translating foreign operations (7) - - - 1
Other changes 47 9 5 1 10

31 December 2,064 63 79 21 36

Less current portion (446) (31) - (5) (7)
Total non-current liabilities 1,618 32 79 16 29


25. SUBSEQUENT EVENTS
There were no subsequent events.

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ALTERNATIVE PERFORMANCE MEASURES
Introduction
The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to complement measures that are defined or specified under International Financial Reporting Standards (IFRS). APMs should be considered in addition to, and not as a substitute for, measures of financial performance, financial position or cash flows reported in accordance with IFRS.
The Group believes that these measures, together with measures determined in accordance with IFRS, provide the readers with valuable information and an improved understanding of the underlying performance of the business.
APMs are not uniformly defined by all companies, including those within the Group’s industry. Therefore, the APMs used by the Group may not be comparable to similar measures and disclosures made by other companies.
Purpose
APMs used by the Group represent financial KPIs for clarifying the financial performance of the Group and measuring it against strategic objectives, given the following background:
- Widely used by the investor and analyst community in the mining sector and, together with IFRS measures, provide a holistic view of the Group;
- Applied by investors to assess earnings quality, facilitate period to period trend analysis and forecasting of future earnings, and understand performance through eyes of management;
- Highlight key value drivers within the business that may not be obvious in the financial statements;
- Ensure comparability of information between reporting periods and operating segments by adjusting for uncontrollable or one-off factors which impact upon IFRS measures;
- Used internally by management to assess the financial performance of the Group and its operating segments;
- Used in the Group’s dividend policy;
- Certain APMs are used in setting directors’ and management’s remuneration.
APMs and justification for their use
Group APM Closest equivalent IFRS measure Adjustments made to IFRS measure Rationale for adjustments
Underlying net earnings • Profit/(loss) for the financial period attributable to equity shareholders of the Group • Write-down of metal inventory to net realisable value (post-tax)
• Write-down of development and exploration assets (post-tax)
• Foreign exchange (gain)/loss (post-tax)
• Change in fair value of contingent consideration liability (post-tax)
• Gains/losses on acquisition, revaluation and disposals of interests in subsidiaries, associates and joint ventures (post-tax)
• Excludes the impact of key significant one-off non-recurring items and significant non-cash items (other than depreciation) that can mask underlying changes in core performance.
Underlying earnings per share • Earnings per share • Underlying net earnings (as defined above)
• Weighted average number of outstanding common shares • Excludes the impact of key significant one-off non-recurring items and significant non-cash items (other than depreciation) that can mask underlying changes in core performance.
Underlying return on equity • No equivalent • Underlying net earnings (as defined above)
• Average equity at the beginning and the end of reporting year, adjusted for translation reserve • The most important metric for evaluating a company’s profitability
• Measures the efficiency with which a company generates income using the funds that shareholders have invested.
Underlying return on assets • No equivalent • Underlying net earnings (as defined above)1 before interest and tax
• Average total assets at the beginning and the end of reporting year • A financial ratio that shows the percentage of profit a company earns in relation to its overall resources.

Adjusted EBITDA • Profit/(loss) before income tax • Finance cost (net)
• Depreciation and depletion
• Write-down of metal and non-metal inventory to net realisable value
• Write-down of development and exploration assets
• Impairment/reversal of previously recognised impairment of operating assets
• Share based compensation
• Bad debt allowance
• Net foreign exchange gain/losses
• Change in fair value of contingent consideration liability
• Rehabilitation costs
• Additional mining taxes, VAT, penalties and accrued interest
• Gains/losses on acquisition, revaluation and disposals of interests in subsidiaries, associates and joint ventures • Excludes the impact of certain non-cash element, either recurring or non-recurring, that can mask underlying changes in core operating performance, to be a proxy for operating cash flow generation.
Net debt • Net total of current and non-current borrowings
• Cash and cash equivalents • Not applicable • Measures the Group’s net indebtedness that provides an indicator of the overall balance sheet strength.
• Used by creditors in bank covenants.
Net debt/EBITDA ratio • No equivalent • Not applicable • Used by creditors, credit rating agencies and other stakeholders.
Free cash flow • Cash flows from operating activity less cash flow from investing activities • Excluding acquisition costs in business combinations and investments in associates and joint ventures
• Excluding loans forming part of net investment in joint ventures
• Excluding proceeds from disposal of subsidiaries • Reflects cash generating from operations after meeting existing capital expenditure commitments.
• Measures the success of the company in turning profit into cash through the strong management of working capital and capital expenditure.
Free cash flow post M&A • Cash flows from operating activity less cash flow from investing activities • Not applicable • Free cash flow including cash used in/received from acquisition/disposal of assets and joint ventures.
• Reflects cash generation to finance returns to shareholders after meeting existing capital expenditure commitments and financing growth opportunities.
Total cash costs (TCC) • Total cash operating costs
• General, administrative & selling expenses • Depreciation expense
• Rehabilitation expenses
• Write-down of inventory to net realisable value
• Intersegment unrealised profit elimination
• Idle capacities and abnormal production costs
• Exclude Corporate and Other segment and development assets
• Treatment charges deductions reclassification to cost of sales • Calculated according to common mining industry practice using the provisions of Gold Institute Production Cost Standard.
• Gives a picture of the company’s current ability to extract its resources at a reasonable cost and generate earnings and cash flows for use in investing and other activities.
All-in sustaining cash costs (AISC) • Total cash operating costs
• General, administrative & selling expenses • AISC is based on total cash costs, and adds items relevant to sustaining production such as other operating expenses, corporate level SG&A, and capital expenditures and exploration at existing operations (excluding growth capital). After tax all-in cash costs includes additional adjustments for net finance cost, capitalised interest and income tax expense. All-in costs include additional adjustments on that for development capital. • Includes the components identified in World Gold Council’s Guidance Note on Non?GAAP Metrics – All?In Sustaining Costs and All?In Costs (June 2013), which is a non?IFRS financial measure.
• Provides investors with better visibility into the true cost of production.