United Company RUSAL Plc : Annual Results Announcement for the Year Ended 31 December 2012

  United Company RUSAL Plc : Annual Results Announcement for the Year Ended 31
  December 2012

Business Wire

HONG KONG -- March 3, 2013

Regulatory News :

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the whole or any part of the contents of this announcement.

                           UNITED COMPANY RUSAL PLC
        (Incorporated under the laws of Jersey with limited liability)
                              (Stock Code: 486)

                         ANNUAL RESULTS ANNOUNCEMENT
                     FOR THE YEAR ENDED 31 DECEMBER 2012

Key highlights

  *The operating profitability and underlying results of aluminium industry
    for the year ended 31 December 2012 were seriously affected by low LME
    aluminium price as a result of investor sentiment. Average LME aluminium
    price decreased by 15.7% from USD2,395 per tonne for the year ended 31
    December 2011 to USD2,018 per tonne for the same period of 2012. However,
    thanks to savings in procurement, cost reduction and working capital
    optimization initiatives undertaken by the management supported by product
    mix improvement, weakened local currency and growing premiums, United
    Company RUSAL Plc (the “Company” or “UC RUSAL”) (Paris:RUSAL) (Paris:RUAL)
    demonstrated Aluminium segment EBITDA margin of 12.1%.
  *Primary aluminium production was almost flat at 4,173 thousand tonnes for
    the year ended 31 December 2012 compared to 4,123 thousand tonnes for the
    preceding year. Total aluminium output in the fourth quarter of 2012
    decreased by 2.1% to 1,038 thousand tonnes compared to 1,060 thousand
    tonnes in the fourth quarter of 2011.
  *Share of value-added products output increased to 39% of total aluminium
    production in comparison with 36% for the previous year.
  *Revenue in the fourth quarter of 2012 increased to USD2,624 million (by
    2.4%) as compared to USD2,563 million for the third quarter of 2012 in
    line with a slight rebound in metal prices and historically high premiums
    of USD249 per tonne.
  *Aluminium segment cost per tonne reduced to USD1,946 per tonne (by 1.9%)
    in 2012 as compared to USD1,984 in 2011 supported by a decrease in power
    tariffs by 9% to USc.3,17/KWh in 2012 as compared to USc.3,48/KWh in 2011.
  *Adjusted EBITDA comprised USD915 million for the year ended 31 December
    2012 with a margin of 8.4%. In the fourth quarter of 2012 adjusted EBITDA
    improved to USD221 million compared to USD130 million in the previous
    quarter of the year backed by stronger revenue and lower costs.
  *The Company maintained a robust cash position with USD999 million of free
    cash flow^1 generated for the year ended 31 December 2012 and a reduction
    in working capital by 20.0% primarily due to stock optimization.
  *Cost control and working capital reduction efforts allowed the Company to
    decrease the net debt position by USD220 million as at 31 December 2012 as
    compared to the beginning of the year.
  *In the fourth quarter of the year ended 31 December 2012 the Company
    signed the agreement with major Norilsk Nickel shareholders improving
    corporate governance and providing increased guaranteed dividend flow.


An identical form of this announcement, to which the audited consolidated
financial statements of UC RUSAL for the year ended 31 December 2012 will not
be attached, will be disseminated to the French Autorité des marchés
financiers, Euronext Paris and the French market via Business Wire
simultaneously with this announcement.

____________
^1  Free Cash Flow is defined as Net cash flow generated from operating
     activities plus Net cash flows used in investing activities.
     

Statement of the CEO

2012 remained particularly challenging for the aluminium industry. Despite
global aluminium consumption rising by 6% in 2012 to 47.4 million tonnes
negative investor sentiment lead to LME prices for aluminium decreasing by
15.7% year-on-year, taking a large share of the global production capacity to
or below break-even level. Whilst UC RUSAL’s long-term focus on operational
efficiency and cost control has allowed the Company to address these
challenges, the unfavourable market conditions and lower LME price has
inevitably impacted the operating results of the Company.

In an environment of depressed prices the Company focused its efforts to
efficiently manage costs which succeeded in reducing aluminium segment cost
per tonne in 2012 by 1.9% to USD1,946. As a result, UC RUSAL’s EBITDA margin
was 8.4% which is in line with the global peers, while EBITDA margin in
aluminium segment was 12.1% allowing the Company to maintain a premier
position in the industry.

In 2012, UC RUSAL enhanced its financial flexibility and made debt repayment
exceeding USD1 billion with USD441 million being paid out of the Company’s
cash flows. Importantly the Company maintained its robust cash position with
USD999 million of free cash flows being generated in 2012.

An undoubted milestone of 2012 was the signing of an agreement between UC
RUSAL, Interros, and Millhouse aimed at settling the shareholders’ conflict in
MMC Norilsk Nickel. All parties’ efforts will be integrated to deliver
improved corporate governance and to increase the value of Norilsk Nickel in
the interest of all its shareholders.

Through its lower cost smelters and capacity to optimize production, the
Company has demonstrated its ability to respond to the challenging market
conditions of the past 12 months. Continued focus on cost control, together
with our longer term growth projects and robust financial position means we
remain confident in our ability to deliver value and growth for all
stakeholders.

Oleg Deripaska
CEO
4 March 2013

                                                                                            
Financial and Operating Highlights
                                                                    
                                        Change                 Change
                Quarter ended           quarter                quarter
                31 December             on         Quarter     on         Year ended          Change
                                        quarter,   ended 30    quarter,                       year-on-
                                       %          September   %          31 December         year,
                                        (4Q to                 (4Q to
                                        4Q)                    3Q)
                2012       2011                   2012                   2012  2011   %
                unaudited   unaudited              unaudited
                                                                                    
Key operating
data
(‘000 tonnes)
Aluminium       1,038       1,060       (2.1%)     1,042       (0.4%)     4,173     4,123     1.2%
Alumina         1,806       2,082       (13.3%)    1,740       3.8%       7,477     8,154     (8.3%)
Bauxite         2,788       3,288       (15.2%)    2,864       (2.7%)     12,365    13,473    (8.2%)
                                                                                              
(‘000 tonnes)
Sales of
primary         1,011       1,006       0.5%       1,030       (1.8%)     4,203     4,017     4.6%
aluminium and
alloys
                                                                                              
(USD per
tonne)
Aluminium
segment cost    1,934       1,952       (0.9%)     1,936       (0.1%)     1,946     1,984     (1.9%)
per tonne^2
Aluminium
price per       1,997       2,090       (4.5%)     1,918       4.1%       2,018     2,395     (15.7%)
tonne quoted
on the LME^3
Average
premiums over   249         159         56.6%      226         10.2%      208       160       30.0%
LME price
Average sales   2,222       2,362       (5.9%)     2,115       5.1%       2,218     2,592     (14.4%)
price
Alumina price   326         329         (0.9%)     316         3.2%       319       374       (14.7%)
per tonne^4
                                                                                              
Key selected
data from the
consolidated
statement of
income
(USD million)
Revenue         2,624       2,806       (6.5%)     2,563       2.4%       10,891    12,291    (11.4%)
Adjusted        221         382         (42.1%)    130         70.0%      915       2,512     (63.6%)
EBITDA
margin (% of    8.4%        13.6%       NA         5.1%        NA         8.4%      20.4%     NA
revenue)
Net Profit
/(Loss) for     62          (974)       NA         (118)       NA         (55)      237       NA
the period
Adjusted Net
(Loss)/Profit   (138)       111         NA         (248)       (44.3%)    (498)     987       NA
for the
period
Recurring Net
Profit          131         214         (38.8%)    (76)        NA         274       1,829     (85.0%)
/(Loss) for
the period

____________
     For any period, “Aluminium segment cost per tonne” is calculated as
^2  aluminium segment revenue less aluminium segment results less
     amortisation and depreciation divided on sales volume of the aluminium
     segment.
     Aluminium price per tonne quoted on the LME representing the average of
^3   the daily closing official London Metals Exchange (“LME”) prices for each
     period.
     The average alumina price per tonne provided in this table is based on
^4   the daily closing spot prices of alumina according to Non-ferrous Metal
     Alumina Index FOB Australia USD per tonne.
     


Key selected data from consolidated statement of financial position
                                                               
                                     As at                       Change
                                     31 December  31 December   year-on-year,
                                     2012          2011          %
                                                                 
(USD million)
Total assets                         25,586        25,345        1.0%
Total working capital^5              1,893         2,367         (20.0%)
Net Debt^6                           10,829        11,049        (2.0%)
                                                                 
Key selected data from consolidated statement of cash flows
                                                                 
                                                  Year ended    Change
                                     31 December   31 December   year-on-year,
                                     2012          2011          %
                                                                 
(USD million)
Net cash flows generated from        1,092         1,781         (38.7%)
operating activities
Net cash flows used in investing     (93)          (299)         (68.9%)
activities
of which dividends from Norilsk      267           279           (4.3%)
Nickel
of which CAPEX^7                     (501)         (622)         (19.5%)
Interest paid                        (610)         (551)         10.7%

____________
^5  Total working capital is defined as inventories plus trade and other
     receivables minus trade and other payables.
     Net Debt is calculated as Total Debt less cash and cash equivalents as at
^6   the end of any period. Total Debt refers to UC RUSAL’s loans and
     borrowings and bonds outstanding at the end of any period.
^7   CAPEX is defined as payment for the acquisition of property, plant and
     equipment and intangible assets.
     

Overview of trends in industry and business

Aluminium industry in 2012

Global aluminium consumption rose by 6% in 2012 to 47.4 million tonnes. While
aluminium demand in Europe remained subdued, this was offset by strong
consumption growth in China and the US in the fourth quarter of 2012 which has
continued into the first quarter of 2013 and ensures positive sentiment for
the year ahead.

Aluminium consumption in the US grew by 5.4% in 2012 to 5.9 million tonnes.
Demand in the fourth quarter of 2012 was boosted by increased production
across the automotive industry, of particular relevance due to increasing
levels of aluminium parts being used in the manufacture of cars and a
significant uplift in construction sector activity.

In China, continued spending on large infrastructure projects combined with
domestic economy stimulus led to improved growth in the Chinese economy in the
fourth quarter of 2012 to 7.9% and industrial production to 10.3%. Chinese
automotive production grew by 6.3% year-on-year to 20.6 million units in 2012.
Chinese aluminium consumption grew by 9.3% in 2012 to 21.8 million tonnes.

Japanese aluminium consumption grew by 3.1% to 2 million tonnes in 2012 while
consumption in South Korea grew by 3% to 1.3 million tonnes for the same
period. Other Asian economies are expected to benefit from continued growth in
Chinese economic activity and as a result of growth in the export of products
containing aluminium.

2013 Outlook

UC RUSAL expects that the uncertainties seen in 2012, namely the current
Eurozone financial crisis and slowdown in Chinese growth, will lessen during
2013 thanks to the strong financial stimulus programs that have been adopted
by central banks in key regions and improving data from China.

Global primary aluminium consumption is forecast to reach 50 million tonnes
(6% growth), with China the largest growing market (9.5% growth), followed by
India (6% growth), Asia excluding China (5.8% growth), North America (5%
growth) and Russia & CIS (4% growth). Consumption growth in Europe in 2013 is
expected to be 2% lower than 2012 levels.

As a consequence UC RUSAL forecasts the global aluminium market to be balanced
in the current year.

China

Chinese infrastructure investments were boosted by 20.6% in 2012. The
continued urbanization process will require significant investment in
infrastructure, including housing, transportation, and social services in
2013.

According to official statistics real estate sales in China were strong
towards the end of 2012 with sales in October and November by floor area
increasing by 23% and 30% year-on-year respectively, suggesting improved
economic sentiment as freer credit conditions allowed households to get access
to loans.

According to WardsAuto forecast, Chinese car production is expected to exceed
European production in 2013. China is forecasted to manufacture 19.6 million
cars and light vehicles in 2013 (a 10% increase year-on-year). The emerging
economies like China and India should be the ultimate beneficiaries of
aluminium demand from the car sector given that the aluminium penetration in
those countries remains well below the level in North America and Europe.

China’s stimulus program for home appliance purchases in rural areas boosted
sales of products containing aluminium like televisions, air-conditioners,
washing machines and refrigerators.

Other Asia

The trend of Japan’s automotive and electronics’ plants moving to low-cost
countries in South East Asia or to North America and Eastern Europe continued
and were a negative factor for aluminium demand in the past year. This is
likely to impact the level of consumption growth in Japan in the medium to
long-term. The strong value of the YEN against the USD also affected exports
in 2012. In addition to this, geopolitical tensions between China and Japan
affected production of aluminium die casters in Japan. Aluminium stock
adjustments in Q1 2013 will result in a fall in imports in Q1 but growth is
expected as the stimulus plans announced in December resulted in a 13%
devaluation of the YEN, which will be positive for exports and the consumption
of aluminium.

South Korea’s consumption growth is estimated at 3% in 2012 due to weaker
demand in the fourth quarter as a result of a negative impact on demand for
aluminium semis and goods in the US and especially in Europe for
export-oriented sectors. The ongoing recovery in the US and strong demand in
SE Asia is expected to support exports and aluminium consumption in 2013. The
new government is reacting to the 2012 slowdown by increasing public
infrastructure investment, which will in turn increase domestic demand.
Renewable energy projects are planned and the transmission lines associated
with the new generation capacity will have a positive influence on aluminium
demand.

Primary aluminium consumption in India increased by about 5.5% in 2012. The
electrical power sector is the largest aluminium consumer sector, responsible
for 40% of total aluminium consumption in India in 2012. In the medium and
long term, there are several electrification plans that will continue to boost
aluminium demand from this sector. The transportation sector is also a large
consumer of aluminium in the country. Demand from transportation will show the
highest year-on-year percentage increase in the future.

North America

According to WardsAuto passenger car production increased by 17.5% to 15.4
million units in 2012 compared to 13.1 million units in 2011. The level of
automotive production capacity utilization reached 92.7% in the third quarter
of 2012 compared to 78.7% in the third quarter of 2011.

According to Ducker Worldwide Research, the aluminium content in American cars
has now reached 150 kg per vehicle in 2012 and will continue to grow at a
compound annual growth rate (CAGR) of 3.7% until 2020.

The North American building and construction sectors supported the demand for
aluminium in 2012. The US construction market as a whole continues to show
solid growth. According to official statistics US housing demand climbed by
12.1% month-on-month in December, continuing to signal a recovery in demand
for the construction sector. In annual terms US housing rose by 36.9% in
December to 954,000 units and by 27.7% year-on-year in 2012.

Europe

While the US, China and rest of Asia are expected to drive aluminium demand in
2013, our view on the European consumption of aluminium remains negative for
2013. Despite the efforts taken by the European Central Bank (ECB) to solve
the debt problem, European countries are still suffering from weak economic
activity, large budget deficits and cuts in capital spending which are
unlikely to stimulate economic growth and consumption activity. Aluminium
consumption in Europe declined by 3% to 7.7 million tonnes in 2012.

The automotive industry, a key aluminium end-user, remains depressed in
Europe. According to EUROSTAT, in 2012, new car registrations totalled around
12 million units, a decrease of 8.2% from 2011. The demand for new cars fell
to the lowest level recorded since 1995. After two years of production growth,
unit production started to fall again in 2012 (-7%), under-shooting the
pre-crisis level from 2007 by around 15%. It is expected that there will be a
further, albeit less pronounced, decline of car production in 2013. However
any reduction is expected to be partially offset by an increase in the
aluminium content in cars, which has increased to 135 kg per vehicle in 2012.

LME stocks and premiums

LME stocks have sustained the 5.2 million tonnes level seen at the end of
2012. The current warehouse incentives in Europe and the US will continue to
attract surplus metal which will be supported by strong contangoes resulting
from ongoing low costs of finance and renewed interest from the hedge funds.

Financial deals continue to be a dominant factor for LME aluminium pricing. As
more than 65% of LME stocks are locked in financial deals, ongoing low costs
of finance and renewed interest from the hedge funds increase financial
trading of aluminium contracts which is significantly exceeding a physical
demand. Fundamental pricing factors including rising producers’ costs and real
demand growth for physical metal are currently less defining for aluminium
price.

The increase in demand and the tight metal availability continued to push
regional premiums to historical highs in all major regional markets in 2012
and this trend will possibly continue in 2013. As at the end of December, the
Japanese premium stood at USD254 per tonne, the US Mid-West premium was at
USD248 per tonne and the European Rotterdam in-warehouse premium was reported
to be at USD285 per tonne.

Business review

Aluminium production

Total aluminium output reached 4,173 thousand tonnes in 2012, an increase of
1% compared to 2011 mainly due to the recovery to full production capacity at
Sayanogorsk aluminium smelter partially interrupted in 2011 following a
railway bridge collapse. Total aluminium output in the fourth quarter of 2012
decreased by 2% to 1,038 thousand tonnes compared to 1,060 thousand tonnes in
the fourth quarter of 2011.

Alumina production

Alumina output totaled 7,477 thousand tonnes in 2012, a decrease of 8%
compared to 2011 in line with production optimization program. Alumina output
in the fourth quarter of 2012 decreased by 13% to 1,806 thousand tonnes
compared to 2,082 thousand tonnes in the fourth quarter of 2011.

Bauxite production

Bauxite production totaled 12,365 thousand tonnes in 2012, a decrease of 8%
compared to 2011 to support the decrease in alumina production. Bauxite output
in the fourth quarter of 2012 decreased by 15% to 2,788 thousand tonnes
compared to 3,288 thousand tonnes in the fourth quarter of 2011.

Financial Overview

Revenue                                        
                                                 
                 Year ended                      Year ended

                 31 December 2012                31 December 2011
                                 Average                       Average
                                   sales price                     sales price
                 USD       kt      (USD/tonne)   USD       kt      (USD/tonne)
                 million                         million
                                                                   
Sales of primary
aluminium and    9,323     4,203   2,218         10,414    4,017   2,592
alloys
Sales of alumina 503       1,582   318           664       1,837   361
Sales of foil    302       80      3,775         309       75      4,120
Other revenue    763       —       —             904       —       —
                                                                   
Total revenue    10,891                          12,291
                                                

Total revenue decreased by 11.4% to USD10,891 million in 2012 compared to
USD12,291 million in 2011. The decrease in total revenue primarily resulted
from the decrease in sales of primary aluminium and alloys due to the decline
in the LME aluminium price. Sales of primary aluminium and alloys accounted
for 85.6% and 84.7% of UC RUSAL’s revenue for the years 2012 and 2011,
respectively.

                                                                                   
            Quarter ended           Change     Quarter     Change       Year ended          Change
            31 December             quarter    ended 30    quarter      31 December         year-on-
                                    on                     on
                                    quarter,   September   quarter,                         year,
                                    %                      %
                                    (4Q to                 (4Q to
                                    4Q)                    3Q)
            2012       2011        2012       2012        2011                            %
            unaudited   unaudited              unaudited
                                                                                            
Sales of
primary
aluminium
and
alloys
USD         2,246       2,376       (5.5%)     2,178       3.1%         9,323    10,414     (10.5%)
million
kt          1,011       1,006       0.5%       1,030       (1.8%)       4,203    4,017      4.6%
Average
sales       2,222       2,362       (5.9%)     2,115       5.1%         2,218    2,592      (14.4%)
price
(USD/t)
Sales of
alumina
USD         89          156         (42.9%)    132         (32.6%)      503      664        (24.2%)
million
kt          283         476         (40.5%)    429         (34.0%)      1,582    1,837      (13.9%)
Average
sales       314         328         (4.3%)     308         1.9%         318      361        (11.9%)
price
(USD/t)
Sales of
foil (USD   82          80          2.5%       78          5.1%         302      309        (2.3%)
million)
Other
revenue     207         194         6.7%       175         18.3%        763      904        (15.6%)
(USD
million)
                                                                             
Total
revenue     2,624       2,806       (6.5%)     2,563       2.4%         10,891   12,291     (11.4%)
(USD
million)
                                                                             

Revenue from sales of primary aluminium and alloys decreased by USD1,091
million, or by 10.5%, to USD9,323 million in 2012, as compared to USD10,414
million in 2011, despite an increase in volumes of the primary aluminium and
alloys sold. This decrease resulted primarily from the sharp decline in
weighted-average realised aluminium price, by 14.4% in 2012 as compared to
2011, due to the weak performance of the LME aluminium price (which decreased
to an average of USD2,018 per tonne from USD2,395 per tonne for the years 2012
and 2011, respectively). The decrease in average LME aluminium prices was
slightly offset by a 30.0% growth in premiums above the LME price in the
different geographical segments (to an average of USD208 per tonne from USD160
per tonne for the years 2012 and 2011, respectively).

Revenue from sales of alumina decreased by 24.2% to USD503 million in 2012 as
compared to USD664 million in 2011, due to an 11.9% decrease in alumina
weighted-average sales prices (which was in line with the overall weaker
aluminium price performance in 2012) as well as a 13.9% decrease in alumina
sales volume.

Revenue from sales of foil decreased by 2.3% to USD302 million in 2012, as
compared to USD309 million in 2011, primarily due to a decrease in average
realised price driven by the decline in LME aluminium prices.

Revenue from other sales, including transportation, energy and bauxite,
decreased by 15.6% to USD763 million in 2012 as compared to USD904 million in
2011, primarily due to the change in scope of consolidation after the disposal
in September 2011 of a 50.0% share in the transportation business in
Kazakhstan.

Cost of sales

The following table shows the breakdown of UC RUSAL’s cost of sales for the
periods ended 31 December 2012 and 2011:

                                                                   Share of

                               Year ended                          costs for
                                                               
                               31 December         Change          the year
                                                   year-on-year,
                                                   %               ended

                                                                   31 December
                               2012  2011                   2012,

                                                                   %
                                                                   
(USD million)
Cost of alumina                1,352     1,052     28.5%           14.6%
Cost of bauxite                530       513       3.3%            5.7%
Cost of other raw materials    3,148     3,145     0.1%            34.1%
and other costs
Energy costs                   2,592     2,535     2.2%            28.1%
Depreciation and               515       492       4.7%            5.6%
amortisation
Personnel expenses             914       860       6.3%            9.9%
Repairs and maintenance        147       149       (1.3%)          1.6%
Change in asset retirement     (2)       7         NA              0.0%
obligations
Net change in provisions for   36        33        9.1%            0.4%
inventories
                                                                 
Total cost of sales            9,232     8,786     5.1%            100.0%
                                                                 

Total cost of sales increased by USD446 million, or 5.1%, to USD9,232 million
in 2012, as compared to USD8,786 million in 2011. The increase was primarily
driven by the 4.6% (or 186 thousand tonnes) growth in the aggregate aluminium
sales volumes.

Cost of alumina increased in 2012 (as compared to 2011) by 28.5%, primarily as
a result of an increase in the volumes of externally purchased alumina
following the decrease of self-produced alumina as well as the slight growth
in transportation tariffs.

Cost of bauxite increased by 3.3% in 2012 as compared to 2011, primarily as a
result of an increase in the purchased volume.

Costs of raw materials (other than alumina and bauxite) and other costs were
almost flat during 2012 (as compared to 2011).

Energy cost was almost flat during 2012 year (as compared to 2011), as of the
increase in sales volumes of aluminium was offset by the decrease in
weighted-average electricity tariffs and depreciation of the Russian Ruble
against the US dollar.

Distribution, administrative and other expenses

Distribution expenses decreased by 13.6% to USD527 million in 2012, compared
to USD610 million in 2011, mainly due to the change in scope of consolidation
after the disposal in September 2011 of a 50% share in the transportation
business in Kazakhstan, where distribution expenses represented the key
component of operating expenses. The fluctuation of the Russian Ruble within
the comparable periods also facilitated a decrease in distribution expenses.

Administrative expenses decreased by 5.4% to USD718 million in 2012, compared
to USD759 million in 2011. The decrease was primarily the result of the cost
optimization programme.

Impairment of non-current assets increased by USD59 million in 2012 to USD304
million as a result of impairment of the alumina and bauxite plant in Guinea
and the recognition of impairment charge relating to the specific assets of
the Group.

Other operating expenses decreased by 70.4% to USD42 million in 2012, compared
to USD142 million in 2011. The significant drop in other operating expenses
was driven by the reduction in the provisions for tax and legal contingencies.

Adjusted EBITDA and Results from operating activities
                                                              
                                             Year ended          Change
                                                                 year-on-year,
                                             31 December         %
                                             2012  2011
                                                                 
(USD million)
Reconciliation of Adjusted EBITDA
Results from operating activities            60        1,749     (96.6%)
Add:
Amortisation and depreciation                543       518       4.8%
Impairment of non-current assets             304       245       24.1%
Loss on disposal of property, plant and      8         —         100.0%
equipment
                                                                 
Adjusted EBITDA                              915       2,512     (63.6%)
                                                      

A sharp decrease in the results from operating activities and Adjusted EBITDA
for the year ended 31 December 2012 to USD60 million and USD915 million,
respectively, as compared to the results from operating activities and
Adjusted EBITDA of USD1,749 million and USD2,512 million, respectively for the
corresponding period in 2011, reflected primarily low aluminium prices, the
weaker macro-economic environment and an overall increase of certain raw
materials purchase prices and transportation tariffs.

Segment reporting

The Group has four reportable segments, as described in the annual report of
the Company, which are the Group’s strategic business units: Aluminium,
Alumina, Energy, Mining and Metals.

The core segments are Aluminium and Alumina.

                          Year ended 31 December
                          2012                 2011
                          Aluminium  Alumina   Aluminium  Alumina
                                                            
(USD million)
Segment revenue
kt                        4,299       6,122     4,096       6,977
USD million               9,515       2,043     10,600      2,444
Segment result            722         (190)     2,072       (24)
Segment EBITDA^8          1,150       (86)      2,472       76
Segment EBITDA margin     12.1%       (4.2%)    23.3%       3.1%
                                                            
Total capital expenditure 327         155       416         223
                                                         

For the year ended 31 December 2012 and 2011 respectively, segment result
margins (calculated as the percentage of segment result to total segment
revenue) from continuing operations were 7.6% and 19.5% for the aluminium
segment, and negative 9.2% and 1.0% for the alumina segment. Key drivers for
the decrease in margin in the aluminium segment are disclosed in “Revenue”,
“Cost of sales” and “Adjusted EBITDA and Results from operating activities”
sections above. Detailed segment reporting can be found in the consolidated
financial statements for the year ended 31 December 2012.

____________
^8  Segment EBITDA for any period is defined as segment result adjusted for
     amortisation and depreciation for the segment.
     

Finance income and expenses                                    
                                           
                                             Year ended          Change
                                                                 year-on-year,
                                             31 December         %
                                             2012  2011
                                                                 
(USD million)
Finance income
Interest income on loans and deposits        19        7         171.4%
Foreign exchange gain                        —         58        (100.0%)
Change in fair value of derivative           —         416       (100.0%)
financial instruments, including
Change in fair value of embedded             —         499       (100.0%)
derivatives
Revaluation of financial instruments
linked to the share price of Norilsk         —         (97)      (100.0%)
Nickel
Change in other derivatives instruments      —         14        (100.0%)
Interest income on provisions                6         40        (85.0%)
                                                      
                                                                 
                                             25        521       (95.2%)
                                                                 
Finance expenses
Interest expense on bank loans and company
loans wholly repayable within five years,    (682)     (1,319)   (48.3%)
bonds and other bank charges, including
Nominal interest expense                     (590)     (664)     (11.1%)
Excess of effective interest rate charge
over nominal interest rate charge on         —         (560)     (100.0%)
restructured debt
Bank charges                                 (92)      (95)      (3.2%)
Foreign exchange loss                        (66)      —         100.0%
Change in fair value of derivative           (107)     —         100.0%
financial instruments, including
Change in fair value of embedded             (113)     —         100.0%
derivatives
Change in other derivatives instruments      6         —         100.0%
Interest expense on provisions               (65)      (17)      282.4%
                                                                 
                                             (920)     (1,336)   (31.1%)
                                                      

Finance income decreased by USD496 million to USD25 million in 2012 as
compared to USD521 million in 2011, as finance income in 2011 was affected by
a gain on the change in fair value of derivative financial instruments of
USD416 million, of which USD499 million was represented by a gain on the
revaluation of embedded derivative financial instruments. For the main reason
of such significant change, please refer to Results Announcement for the first
quarter of 2011 (accessible on UC RUSAL’s website at
http://www.rusal.ru/en/investors/hkse).

Finance expenses decreased by 31.1% to USD920 million in 2012 as compared to
USD1,336 million in 2011 primarily due to the decrease in interest expenses
partially compensated by the negative foreign exchange effect.

Total interest expenses on bank and company loans decreased in the year ended
31 December 2012 mainly due to the completed refinancing of the Company’s
outstanding debts during the year ended 31 December 2011. As at the date of
refinancing, the excess of effective interest rate charges over nominal
interest rate charges on restructured debt in amount of USD320 million was
recognised. Nominal interest expenses decreased by 11.1% within the comparable
periods as a result of the reduction in the principal amount payable to
international and Russian lenders and in the overall interest margin.

Finance expenses in 2012 were also affected by the foreign exchange loss of
USD66 million, as compared to a foreign exchange gain of USD58 million during
2011. The difference was driven by fluctuations in the exchange rate between
the Russian Ruble and the US dollar and their effect on the working capital
items of several Group companies denominated in currencies other than their
functional currencies in the respective comparable periods.

Share of profits of associates and jointly controlled entities
                                                              
                                             Year ended          Change
                                                                 year-on-year,
                                             31 December         %
                                             2012  2011
                                                                 
(USD million)
Share of profits/(losses) of Norilsk         772       (336)     NA
Nickel, with
Effective shareholding of                    30.27%    30.27%
Share of profits                             772       943       (18.1%)
Result from changes in the underlying net
assets following treasury share              —         (1,279)   NA
transactions
Share of losses of other associates          (21)      (13)      61.5%
                                                      
                                                                 
Share of profits/(losses) of associates      751       (349)     NA
                                                                 
Share of profits of jointly controlled       55        25        120.0%
entities
                                                      

The Company’s share of the results of associates for the years ended 31
December 2012 and 2011 included a gain of USD751 million and loss of USD349
million, respectively. Share in results of associates in both periods resulted
primarily from the Company’s investment in Norilsk Nickel, which amounted to
profit of USD772 million and loss of USD336 million for 2012 and 2011,
respectively. The Company’s share of Norilsk Nickel results for 2011 included
a loss of USD1,279 million recognized by the Company as a result of a decrease
in the carrying value of the Company’s share of net assets of Norilsk Nickel.
This change in carrying value was attributable to sales and purchases by
Norilsk Nickel of its own shares during this period and in particular to the
combined effect of the prices at which such transactions took place and the
changes in the Company’s proportionate share of Norilsk Nickel resulting from
the reduction and increase in Norilsk Nickel treasury stock as a consequence
of the transactions.

As at the date of these consolidated financial statements, the Group was
unable to obtain consolidated financial statements of Norilsk Nickel for the
year ended 31 December 2012. Consequently, the Group estimated its share in
the profits and other comprehensive income of Norilsk Nickel for the year
ended 31 December 2012 based on publicly available information reported by
Norilsk Nickel. The information used as a basis for these estimates is
incomplete in many respects. Once the consolidated financial statements of
Norilsk Nickel for the year ended 31 December 2012 become available, they will
be compared to the management´s estimates. If there are significant
differences, adjustments may be required to restate the Group´s share of
profits, other comprehensive income and the carrying value of the investment
in Norilsk Nickel which has been previously reported.

Share of profits of jointly controlled entities was USD55 million in 2012 as
compared to USD25 million in 2011. This represents the Company’s share of
results in the Company’s joint ventures — BEMO, LLP Bogatyr Komir, Mega
Business and Alliance (transportation business in Kazakhstan) and North United
Aluminium Shenzhen Co., Ltd.

(Loss)/Profit before income tax

UC RUSAL incurred a loss before income tax of USD29 million for the year ended
31 December 2012, as compared to a profit before income tax USD610 million for
the year ended 31 December 2011 for the reasons set out above.

Income tax

Income tax expense decreased by USD347 million to USD26 million in 2012, as
compared to an income tax expense of USD373 million in 2011.

Current tax expenses decreased by USD35 million, or 21.1%, to USD131 million
as at 31 December 2012, compared to USD166 million as at 31 December 2011 due
to a decrease in the taxable profit period-on-period.

The deferred tax benefit was USD105 million in 2012 as compared to a deferred
tax expense of USD207 million in 2011. The deferred tax benefit for the year
ended 31 December 2012 primarily resulted from reversal of previously
recognized provisions in respect of certain deferred tax assets. The deferred
tax expense for the year ended 31 December 2011 was primarily represented by
the tax effect of the revaluation of energy embedded derivative liabilities
recognized in the first half of 2011 in amount of USD148 million.

Net (Loss)/Profit for the period

As a result of the above, the Company recorded a net loss of USD55 million in
2012, as compared to a net profit of USD237 million in 2011.

Adjusted and Recurring Net (Loss)/Profit
                                                              
                                             Year ended          Change,
                                                                 year-on-year,
                                             31 December         %
                                             2012  2011
                                                                 
(USD million)
Reconciliation of Adjusted Net
(Loss)/Profit
Net (loss)/profit for the period             (55)      237       NA
Adjusted for:
Share of profits and other gains and
losses attributable to Norilsk Nickel, net
of tax effect (9.0%),
with                                         (772)     534       NA
Share of profits, net of tax                 (772)     (842)     (8.3%)
Result from changes in the underlying net
assets following treasury share              —         1,279     (100.0%)
transactions
Revaluation of financial instruments
linked to the share price of Norilsk         —         97        (100.0%)
Nickel
Change in fair value of embedded
derivative financial instruments, net of     25        (589)     NA
tax (20.0%)
Excess of effective interest rate charge
over nominal interest rate charge on         —         560       (100.0%)
restructured debt
Impairment of non-current assets, net of     304       245       24.1%
tax
                                                                 
Adjusted Net (Loss)/ Profit                  (498)     987       NA
                                                                 
Add back:
Share of profits of Norilsk Nickel, net of   772       842       (8.3%)
tax
                                                                 
Recurring Net Profit                         274       1,829     (85.0%)
                                                      

Adjusted Net Loss/Profit for any period is defined as the net loss/profit
adjusted for the net effect of the Company’s investment in Norilsk Nickel, the
net effect of embedded derivative financial instruments, the excess of
effective interest rate charges over nominal interest rate charges on
restructured debt and the net effect of non-current assets impairment.
Recurring Net Profit for any period is defined as Adjusted Net Loss/Profit
plus the Company’s net effective share in Norilsk Nickel results. Adjusted Net
Loss and significant reduction of the Recurring Net Profit in 2012 in
comparison of the corresponding period of the prior year were primarily driven
by the decrease in the Company’s result from operating activities.

Assets and liabilities

UC RUSAL’s total assets increased by USD241 million, to USD25,586 million as
at 31 December 2012 as compared to USD25,345 million as at 31 December 2011.
The increase in total assets mainly resulted from the increase in the carrying
value of the investment in Norilsk Nickel.

Total liabilities decreased by USD328 million, or 2.2%, to USD14,478 million
as at 31 December 2012 as compared to USD14,806 million as at 31 December
2011. The decrease was mainly due to the decrease in the outstanding debt of
the Group.

Cash flows

The Company generated net cash from operating activities of USD1,092 million
for the year ended 31 December 2012 as compared to USD1,781 for the previous
year. Net decrease in working capital and provisions contributed USD287
million to the operating cash flow for 2012 unlike the previous year when the
net increase in working capital and provisions comprised USD644 million.

Net cash used for the investing activities decreased to USD93 million for 2012
as compared to USD299 million for the previous year primarily due to the
enhanced control over the capital expenditures.

The above mentioned initiatives allowed the Company to assign USD441 million
of the own cash flows for the debt repayment that together with the interest
payments of USD610 million represent the main components of the cash used in
the financing activities with the total amount of USD1,131 million for 2012.

Capital expenditure

UC RUSAL recorded total capital expenditures of USD501 million for the year
ended 31 December 2012. UC RUSAL’s capital expenditure in 2012 was aimed at
maintaining existing production facilities.

                                Year ended
                            
                                31 December
                                2012  2011
                                          
(USD million)
Growth project
Taishet smelter                 76        89
                                          
                                76        89
                                         
                                          
Maintenance
Pot rebuilds costs              134       181
Re-equipment                    291       352
                                          
Total capital expenditure       501       622
                                         

The Company notes that its auditor, ZAO KPMG, has provided a qualified opinion
on its audit of the consolidated financial statements of the Company for the
year ended 31 December 2012 as it was unable to obtain and review the
consolidated financial statements of Norilsk Nickel for the year ended 31
December 2012. An extract from the review report provided by ZAO KPMG on the
consolidated financial statements of the Company is as follows:

“Basis for Qualified Opinion

As explained in Note 17 to the consolidated financial statements, the Group
has estimated its share of profit and other comprehensive income of its
associate, OJSC MMC Norilsk Nickel (“Norilsk Nickel”), for the year ended 31
December 2012 based on the latest publicly available information reported by
Norilsk Nickel adjusted by the Group to account for Norilsk Nickel’s
performance in the remaining part of the reporting period. As a result of the
consolidated financial statements of Norilsk Nickel for the year ended 31
December 2012 not being available, we were unable to obtain sufficient
appropriate audit evidence in relation to the Group’s estimate of the share of
profit and other comprehensive income of Norilsk Nickel of USD772 million and
USD145 million, respectively, for the year ended 31 December 2012, and the
carrying value of the Group’s investment in Norilsk Nickel of USD10,213
million as at 31 December 2012 and the summary financial information of
associates disclosed in Note 17. As a result, we were unable to determine
whether adjustments might have been found to be necessary in respect of
interests in associates, and the elements making up the Consolidated Statement
of Income, the Consolidated Statement of Comprehensive Income and the
Consolidated Statement of Changes in Equity.

Qualified Opinion

In our opinion, except for the possible effects of the matter described in the
Basis for Qualified Opinion paragraph, the consolidated financial statements
give a true and fair view of the state of affairs of the Group and of the
Company as at 31 December 2012 and of the Group’s net loss and its cash flows
for the year then ended in accordance with International Financial Reporting
Standards, and have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991 and the disclosure requirements of the Hong Kong
Companies Ordinance.

Matters on which we are required to report by exception

Other than the matter described in the Basis for Qualified Opinion, we have
nothing to report in respect of the following matters where the Companies
(Jersey) Law 1991 requires us to report to you if, in our opinion:

  *adequate accounting records have not been kept by the Company; or
  *the financial statements of the Company are not in agreement with the
    accounting records; or
  *we have not received all the information and explanations we require for
    our audit.”

Consolidated financial statements

The following section contains the audited consolidated financial statements
of UC RUSAL for the year ended 31 December 2012 which were approved by the
directors of UC RUSAL (the “Directors”) on 1 March 2013, and reviewed by the
Audit Committee.

The full set of audited consolidated financial statements of UC RUSAL,
together with the report of the independent auditor is available on UC RUSAL’s
website at http://www.rusal.ru/en/investors/financial_stat.aspx.

Purchase, sale or redemption of UC RUSAL’s listed securities

There has been no purchase, sale or redemption of UC RUSAL’s listed securities
during 2012 by UC RUSAL or any of its subsidiaries.

Code of Corporate Governance Practices

UC RUSAL adopted a Corporate Code of Ethics on 7 February 2005. Based on the
recommendations of the European Bank for Reconstruction and Development and
the International Finance Corporation, UC RUSAL further amended the Corporate
Code of Ethics in July 2007. The Corporate Code of Ethics sets out UC RUSAL’s
values and principles for many of its areas of operations.

UC RUSAL formally adopted a corporate governance code which is based on the
Code on Corporate Governance Practices as set out in Appendix 14 to the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
(“Hong Kong Listing Rules”) then in force on 11 November 2010. The Directors
consider that save for code provisions A.1.7 (physical board meeting and
independent non-executive directors’ participation when considering matters
with conflict of interest), A.4.1 (specific term of non-executive directors)
and A.4.2 (specific term of directors) for reasons set out below and also on
page 90 of UC RUSAL’s interim report for six months ended 30 June 2012, UC
RUSAL has complied with the code provisions as set out in Appendix 14 to the
Hong Kong Listing Rules then in force during the period from 1 January 2012 to
31 March 2012, and the code provisions in the Corporate Governance Code and
Corporate Governance Report in the existing Appendix 14 to the Hong Kong
Listing Rules (the “CG Code”) during the period from 1 April 2012 to 31
December 2012.

The Board has generally endeavored throughout the twelve-month period ended 31
December 2012 to ensure that it does not deal with business by way of written
resolution where a substantial shareholder or a Director has disclosed an
interest in a matter to be considered by the Board which the Board has
determined to be material. As a result, there was only one occurrence (out of
the 18 written resolutions the Board passed during the period) when urgent
business was dealt with by the Board by way of written resolution where a
material interest of a Director had been disclosed. In that instance, the
Board was asked to resolve on an administrative matter that required an urgent
confirmation from the Board rather than in respect of any operational
business. The Director involved did not vote nor was he counted in the quorum.

Of the 13 Board meetings held in the twelve-month period ended 31 December
2012 where one or more Director(s) had disclosed a material interest, there
were 5 of those meetings where not all the independent non-executive Directors
(who had not disclosed material interests in the transaction) were present.
Given the size of the Board and the amount of urgent business transacted by
the Company where Directors and substantial shareholders have material
interests, it is difficult to rearrange any scheduled Board meeting or
postpone the discussion of such business in order to ensure all of the
independent non-executive Directors are present. The Board meetings on those
occasions were therefore proceeded with despite the fact that certain
independent non-executive Directors were not able to attend but on each
occasion at least half of the independent non-executive Directors (none of
whom had disclosed material interests on any of those occasions) was present.

Audit Committee

The Board established an audit committee (the “Audit Committee”) to assist it
in providing an independent view of the effectiveness of the Company’s
financial reporting process, internal control and risk management systems and
to oversee the audit process. The Audit Committee consists of a majority of
independent non-executive Directors. Members of the Audit Committee are as
follows: three independent non-executive Directors, being Dr. Peter Nigel
Kenny (Chairman), Mr. Philip Lader and Ms. Elsie Leung Oi-sie and two
non-executive Directors, Mr. Dmitry Yudin and Mr. Christophe Charlier. The
Audit Committee has reviewed the financial results of the Company for the year
ended 31 December 2012.

Material events since the end of the year

                    UC RUSAL announced that the Company has entered into a
31 January 2013   syndicated credit facility agreement of up to USD400
                    million with various international banks aimed at the
                    early partial debt prepayment.
                    
8 February 2013     UC RUSAL announced its key production data for 2012.
                    

Forward-looking statements

This announcement contains statements about future events, projections,
forecasts and expectations that are forward-looking statements. Any statement
in this announcement that is not a statement of historical fact is a
forward-looking statement that involves known and unknown risks, uncertainties
and other factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. These
risk and uncertainties include those discussed or identified in the prospectus
for UC RUSAL. In addition, past performance of UC RUSAL cannot be relied on as
a guide to future performance. UC RUSAL makes no representation on the
accuracy and completeness of any of the forward-looking statements, and,
except as may be required by applicable law, assumes no obligations to
supplement, amend, update or revise any such statements or any opinion
expressed to reflect actual results, changes in assumptions or in UC RUSAL’s
expectations, or changes in factors affecting these statements. Accordingly,
any reliance you place on such forward-looking statements will be at your sole
risk.

By Order of the board of directors of

United Company RUSAL Plc
                                         
Vladislav Soloviev

Director

4 March 2013

As at the date of this announcement, the executive Directors are Mr. Oleg
Deripaska, Ms. Vera Kurochkina, Mr. Maxim Sokov and Mr. Vladislav Soloviev,
the non-executive Directors are Mr. Dmitry Afanasiev, Mr. Len Blavatnik, Mr.
Ivan Glasenberg, Mr. Maksim Goldman, Ms. Gulzhan Moldazhanova, Mr. Christophe
Charlier, Mr. Artem Volynets, Mr. Dmitry Yudin, Mr. Vadim Geraskin, and the
independent non-executive Directors are Mr. Barry Cheung Chun-yuen, Dr. Peter
Nigel Kenny, Mr. Philip Lader, Ms. Elsie Leung Oi-sie and Mr. Matthias Warnig
(Chairman).

All announcements and press releases published by the Company are available on
its website under the links http://www.rusal.ru/en/investors/info.aspx and
http://www.rusal.ru/en/press-center/press-releases.aspx, respectively.

Contact:

United Company RUSAL Plc
 
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