Polyus Finance Plc: financial statements for the year ended 31 december 2023

London (pta026/20.05.2025/13:55 UTC+2)

Polyus Finance PLC

STRATEGIC REPORT

The Directors present their strategic report for the year ended 31 December 2023.

Review of the business

The principal activity of the Company is to act as a financing company of PJSC Polyus and its subsidiaries (the "Polyus Group" or the "Group"): to borrow money from investors of publicity traded bonds and to issue loans to the Group companies, to receive interest and principal amounts on issued loans to Group companies and to pay interest on borrowings and principal to investors.

Results and performance

The results of the Company for the period are set out on page 13. The Company generated a profit on ordinary activities before taxation of USD 6,220 thousand (2022: loss of USD 179,500 thousand) and net cash outflow from operations of USD 38,929 thousand (2022: inflow of USD 14,742 thousand). The profit during the year is mostly a result of decrease in provision for expected credit loss on the loan receivable from Group companies amounting to USD 13,945 thousand (2022: increase in USD 174,094 thousand due to withdrawal of the Group credit rating by rating agencies) with loans at and close to maturity.

Business environment

The Polyus Group is a top five global gold mining company by production volumes and the largest gold miner in terms of attributable gold ore reserves.

As a consequence of military operation of Russia in Ukraine, the US, UK, EU and other countries announced an extension of sanctions on certain Russian officials, businessmen, companies and governmental bodies, including the Central Bank of Russia. In response, the Russian Government has announced a series of measures including a change in the Central Bank key financing rate and certain foreign currency exchange and transfer restrictions.

These developments may result in reduced access of the Russian businesses to international capital and export markets, weakening of the Russian Rouble, decline in financial markets and other negative economic consequences. At the date these financial statements are authorised for issuance the above sanctions have affected the Group's and consequently the Company's operations, including with respect to ordinary business. Also, there is a significant level of uncertainty regarding the impact of these events and possible subsequent changes in the economic situation on future operations and financial position of the Group and the Company. The Group is monitoring the geopolitical situation, and it will keep the market appraised of any developments that may impact operations. Polyus Krasnoyarsk (the parent entity) has paid the interest for underlying Notes of the company (see note 13).

Strategy

The Group's strategy is focused on value creation through organic growth. This is accomplished through the efficient execution of expansion projects and the development of projects at new gold deposits.

The Group's financial policy is prudent and aims to achieve the right balance between targeted investments for growth and appropriate cash returns to shareholders, including maintaining company's stability to repay existing obligations.

Key performance indicators ('KPIs')

Key performance indicators are debt ratio and cash flows generated from investing activities with JSC Polyus Krasnoyarsk: at 31 December 2023, as well as at 31 December 2022, relation of total liabilities to total assets was approximately 1 showing that the Company's debt is totally secured by the underlying assets. Since May 2023, the Company has not received any cashflows on the loans provided to JSC Polyus Krasnoyarsk. JSC Polyus Krasnoyarsk continue to pay outstanding dues to Noteholders directly in accordance with the terms of the loan Notes.

Promoting the success of the Company

Section 172(1) of the Companies Act 2006 provides that a director of a company must act in a way that they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to various other stakeholder interests – below are the six key factors:

Polyus Finance PLC

STRATEGIC REPORT

• the likely consequences of any decision in the long term;
• the interests of the company's employees;
• the need to foster the Company's business relationships with suppliers, customers and others;
• the impact of the Company's operations on the community and the environment;
• the desirability of the Company maintaining a reputation for high standards of business conduct; and
• the need to act fairly as between members of the Company.

In discharging our Section 172 duties we have regard to the factors set out above. We also have regard to other factors which we consider relevant to the decision being made. Those factors, for example, include the interests and views of members of the Polyus Group, bondholders and service providers. The Directors remain conscious that their decisions could have an impact on other stakeholders where relevant. By considering the Company's purpose, vision and values together with its strategic priorities and having a process in place for decision-making, we aim to make sure that our decisions are consistent and appropriate in all the circumstances.

The Directors consider the Company's activities and make decisions.

For example, each year we assess the strength of the Company's balance sheet and future prospects relative to market uncertainties. In making our decision we considered a range of factors including the long-term viability of the Polyus Group; its expected cash flow and financing requirements; the ongoing need for strategic investment in our business and the expectations of our shareholder as the supplier of long-term equity capital to the Company as well as sanctions effect on commercial activity of the Company even while commercial activity of the Company is eventually on hold due to sanctions.

On a regular basis we also manage the Company's relationship with its service providers. Key interactions, for example the appointment of the Company's auditors, lawyers, accountants, company secretarial service providers, are a matter for the Directors and these are kept under regular review. The Directors also meet directly with its accountants and auditors as part of the preparation of the annual financial statements of the Company.

As the principal activity of the Company is to act as a financing company of the Group and most of its functions are outsourced, it does not have any other employees except for the Directors, therefore its main stakeholders are limited to the ones listed above.

Principal risks and uncertainties

Difficulties in new borrowing on foreign markets due to additional sanctions imposed by the United States, United Kingdom, European Union and other countries.

The Company continues to monitor the development of any new economic sanctions. Moreover, these risks are constantly being monitored, see risk management policies in Directors' report (page 4).

Future developments

JSC Polyus Krasnoyarsk is financially stable and generates sufficient cashflows to cover interest and principal payments to the Company and has one of the world's largest reserves bases, which provides a solid platform to repay the debts in full. The Polyus Group introduced the processes to monitor potential exposures to the restrictive measures caused by the current geopolitical situation in order to respond proactively to emerging changes in the sanctions regime and to prevent any operational disruptions.

The Polyus Group has rolled out an integrated sustainable development management system, which includes environmental protection initiatives. The improved environmental management system has led to a significant reduction in environmental impact charges.

The strategic report is approved by the Board on 19 May 2025 and is signed by:

Sergei Nossoff

Executive Director 19 May 2025

For the additional information please refer the below link https://data.fca.org.uk/artefacts/NSM/Portal/NI-000120688/NI-000120688.pdf

(end)