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TMK Announces IFRS Results for Q1 2020

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Inside Information: This press release does not contain inside information.

Forward-looking statements: The information contained in this press release includes forward-looking statements events. These statements are based on the current opinions and assumptions of the Company's management, taking into account known and unknown risks and uncertainties.

PJSC TMK (“TMK” or the “Group”), one of the world's leading producers of pipes for the oil and gas industry, announces interim consolidated results of operations for the three months ended March 31, 2020. , in accordance with International Financial Reporting Standards (IFRS).

TMK Group's management has decided to change the presentation currency of the consolidated financial statements from the US dollar to the Russian ruble, starting from January 1, 2020. The functional currency of PJSC TMK and most of its subsidiaries (taking into account the completion of the IPSCO sale) is the Russian ruble. In light of significant fluctuations in the exchange rate of the Russian ruble against the US dollar, the presentation of financial indicators in Russian rubles reduces the volatility of these indicators caused by changes in the exchange rate, provides users with more accurate information about the financial results, financial position and cash flows of the TMK Group.

Q1 2020 Highlights

Financial Results

- Q1 Revenue 2020 decreased by 33% y-o-y and 21% y-o-y to RUB 55.3 billion, mainly due to the American division disposal

- Adjusted EBITDA amounted to RUB 8.7 billion, down 24% yoy mainly due to the retirement of the American division and 22% qoq due to weaker results from the Russian and European divisions ov

- Adjusted EBITDA margin of 16% in Q1 2020

vs. 14% Q1 2019 and 16% in the 4th quarter of 2019

- Net debt as of March 31, 2020 amounted to 108.6 billion rubles

- The ratio of net debt to EBITDA as of March 31, 2020 was 2.62 times.

Key events of the Company for the 1st quarter of 2020 and after the reporting date

- В In February, TMK completed the placement of a seven-year Eurobond issue in the amount of USD 500 million at a coupon rate of 4.30% per annum. The Group's successful return to the international bond market follows the completion of the IPSCO sale, which marked the beginning of the structural transformation of the Group's business. The proceeds from the placement of Eurobonds were used to refinance TMK's USD 500 million Eurobond issue due in April 2020.

- At a meeting on April 8, 2020, the TMK Board of Directors approved the program for the acquisition of the Company's ordinary shares. TMK's Board of Directors also assessed the prospects for maintaining the listing of the Company's global depositary receipts on the London Stock Exchange and decided that listing of global depositary receipts is no longer a strategic priority for the Company. The Board of Directors approved the delisting of the GDRs on the London Stock Exchange following the completion of the TMK common share acquisition program. The program for the purchase of ordinary shares will be carried out by Volzhsky Pipe Plant (VTZ), a wholly owned subsidiary of TMK, by submitting a voluntary offer in accordance with the legislation of the Russian Federation.

On May 18, 2020, TMK received a voluntary VTZ offer for 358,758,064 outstanding ordinary shares of the Company, which represent all outstanding ordinary shares of the Company, excluding ordinary shares held by VTZ and its affiliates, including some subsidiaries of TMK, TMK's controlling shareholder (TMK Steel Holding Limited) and some members of the boards of directors and management of VTZ, TMK and TMK group. Voluntary offer was sent by VTZ to all holders of TMK ordinary shares, except for the indicated individuals and legal entities.

The purchase price of ordinary shares is RUB 61 per ordinary share and must be paid for in cash. The term for accepting a voluntary offer is 70 days from the date of receipt of a voluntary offer by the Company (that is, from May 19, 2020 to July 27, 2020 inclusive).

- In April, TMK completed the placement of exchange-traded bonds in the amount of 10 billion rubles with a circulation period of 2 years. The bonds were placed under the 001P Series Exchange Traded Bonds Program. The coupon rate was 8.35% per annum, while the issue provides for the payment of semi-annual coupons.

Forecast for the second quarter of 2020 <

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