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INVESTING TO UNITE2013

SCM Group Sustainability Summary Report

Investment in organic growth of companies

(modernisation)

Dear Ladies and Gentlemen,

The SCM Group Sustainability Report demonstrates our commitment to sustainable development in action. It shows both our effectiveness on the pathway towards sustainable development, and how important this is for our stakeholders.

Our success is built on our commitment to continuous investment in business growth, where social investment isakey component.

For many years we have been reinvesting almost all SCM Groups profits to modernise our businesses and contribute to the social development of the local communities we are a part of. For example, in 2013 alone our investment in modernisation and upgrades amounted to over UAH18billion. The social investments in health, safety andtraining of our staff, environment protection and energy efficiency, infrastructure of the cities and towns of our operations and development of business environment totalled around UAH8 billion.

Our investments led to the concrete actions covered in this report that brought together and benefited hundreds of thousands of our employees and millions of the residents in our communities.

In 2014, we will continue to reinvest our earnings. In the current situation, our major social role is to ensure the continuous operation of our companies, keep existing jobs and create new ones. A major portion of our investments will be spent repairing damaged production facilities, restoring the power supply in Donbas and supporting our employees and the residents of Donetsk and Luhansk regions who are in trouble. These investments are absolutely essential and vital, so dividing them into capital and social spending isimpossible. The quality of peoples lives, the sustainability ofSCMs business, and the further development of the national economy equally depend on these investments.

I believe that every big business in Ukraine is in the same situation today. If a business understands its civil responsibility, if it wants to benefit the country, not by word but by deed, it must be disciplined in paying taxes and continue to invest, even in the very difficult situation we face today.

At SCM Group we do understand this very well.

Oleg PopovChief Executive Officer,

SCM

SCM Group SuStainable developMent by nuMberS, 2013

320employees

OVEr

Ukraine the United Kingdom Italy Bulgaria the United Statesrussia Switzerland7COUNTrIES

100businesses

OVEr

8UAH BIllION

employee development, health and safety

environment and energy efficiency

development of local communities and business environment

ABOUT

18 UAH BIllION

UAH BIllION

OVEr

28paid in taxes

Investment in sustainable development OVEr

THOUSANd

SCM Group Sustainability Summary Report 2013

3 www.scmholding.com

About us

BANKING ANd INSUrANCE

First Ukrainian International Bank (FUIB) is a universal bank specialising in commercial, retail and investment banking. Renaissance Capital Bank focuses on retail consumer finance for individuals and operates under the Renaissance Credit trademark. The bank belongs to FUIB Banking Group.ASKA is a foremost insurance company in Ukraine and a market leader for more than 24 years offering property, casualty, car and health insurance.ASKA-Life is one of Ukraines leading full-service life insurance companies.

rEAl ESTATE

ESTA Group is one of the biggest players in Ukraines real estate market. Focused on developing and investing in commercial property, the Groups portfolio includes office centres, malls, hotels and other real estate operations. The Groups current projects include the Donbas Palace Hotel (Donetsk), the Opera Hotel (Kyiv), Park Inn by Radisson Donetsk, the Pushkinsky business centre (Donetsk), and the second stage of the Leonardo business centre (Kyiv). The Group is also engaged in the reconstruction of the Kyiv TSUM shopping mall and a cultural centre in Andriyivsky Descent in Kyiv.

FOOTBAll ClUB SHAKHTAr ANd dONBAS ArENA

Football Club Shakhtar Donetsk is the leader in the Ukrainian football league and one of Eastern Europes top clubs. The team enjoys a highly developed sports infrastructure including a modern training centre and a football academy.Donbas rena is an elite stadium, the home ground of FC Shakhtar. Launched on 29 August 2009, it can seat 52,667 people.

HEAVY ENGINEErING

Corum Group (formerly known as Mining Machines) is an expert in mining business. Corum operates seven heavy engineering plants, repair bays and sales offices in Ukraine, Russia, Kazakhstan, Vietnam and Poland. The group focuses on modern integrated solutions, production and maintenance of the equipment used in mining, processing and transportation of mineral resources, as well as construction of mines.

TElECOMMUNICATIONS

Vega Telecommunications Group is a leading fixed-line operator in Ukraine providing broadband Internet access and data transmission services.Ukrtelecom1 is one of the biggest national telecom companies offering a full range of modern services throughout Ukraine with the strongest positions in Internet access and fixed-line telephony.

MINErAl MATErIAlS PrOdUCTION

United Minerals Group Limited (UMG) is a multi-minerals holding that effectively realises Ukraines resource potential internationally. The company operates in clay, flux limestone and dolomite industry as well as promising sectors of raw materials production.

MEdIA

Media Group Ukraine is a holding that includes Ukraina national general-interest TV channel, NLO TV channel, Futbol 1 and Futbol 2 thematic channels, the Regional Media Group (TV channels Donbas, 34, Sigma and Sfera), Mediapartnership sales house, Digital Screens (oll.tv), Tele Pro production company, Front Cinema, Aid+Help TV and Segodnya Multimedia holding2.The holding manages newspapers Segodnya, Vecherkom, Vechirny Donetsk, Pryazovsky Robitnyk, RIO, Donetski Novyny, etc., nd runs printing shops in Vyshgorod (Kyiv Oblast) and Mariupol (Donetsk Oblast). Furthermore, the holding operates news websites www.segodnya.ua, www.dnews.donetsk.ua, www.pr.ua, www.vecherka.donetsk.ua and publishes the My Weekend magazine available for iPad.

AGrICUlTUrE

HarvEast Holding manages agricultural assets in Donetsk Oblast and the Autonomous Republic of Crimea and is focused on growing crops, dairy farming, compound feed production and seed cultivation. The holdings total land bank is 197,000 hectares.

GrOCErY rETAIl

Ukrainsky Retail develops SCMs grocery retail business under the Brusnychka brand in central and eastern Ukraine. The chain includes 134 stores located in Donetsk, Kharkiv, Dnipropetrovsk, Luhansk, Zaporizhia and Poltava oblasts. The company aims to establish one of the biggest retail chains in the country.

FIllING STATIONS

Parallel-M Ltd is the leading wholesaler and retailer of oil products in eastern Ukraine operating a network of 117 filling stations. The company has two large oil terminals in Donetsk Oblast and owns a fleet of modern petrol and gas trucks.

ABOUT US

SCM is Ukraines biggest private diversified group investing in the development of the national economy. We consolidate hundreds of businesses that are vital for the stability and incomes of millions of Ukrainians. SCM is fully owned by Ukrainian businessman Rinat Akhmetov.

MINING ANd METAlS

METINVEST is an international vertically integrated mining and steel group that manages every link in the value creation chain from producing coal and iron ore to making semi-finished and finished steel products. The Group includes mining and steel companies located in Ukraine, Europe and the United States with a sales network covering all key global markets.

ENErGY

DTEK is the largest Ukrainian energy company bringing businesses into an efficient production chain from coal production and preparation to electric power generation and sales. The company also realises a range of promising alternative energy and oil&gas projects.

TrANSPOrTATION

PoRTINVEST Holding manages SCMs port assets and implements a range of investment projects in Ukraines transport industry. Its companies tranship cargo in sea ports, forward freight, offer shipping agency, vessel chartering and other services.Lemtrans is Ukraines biggest private freight forwarder that offers the full gamut of rail freight transport services.Transinvest Holding develops operations in construction and repair of railway tracks, firstly, for SCM Groups transport infrastructure.



Playing by business rules

A big business is a big responsibility. Our production plants and companies pay taxes thus making a significant contribution to the national budget. Fiscal revenues are essential for the government to meet their social obligations to people and make public investments to develop the economy of Ukraine. Our businesses give jobs to tens of thousands of employees. Their careers and the welfare of their families depend on the success of our companies. Many of our

plants are major employers and economic mainstays in their towns and regions, so the future of these communities is closely connected with operation of the factories.

Last year we described our vision of responsibility in a fundamental corporate document, the How We Work code of business conduct. This is the foundation for our relations with each other, our partners, competitors and the Ukrainian society in general. The document shows how we manage our business, how we behave in easy and challenging situations and what we think is right or unacceptable. All seven key principles of How We Work are equally important for us.

Our businesses took the principles of SCM Group as a basis and last year most of them harmonised their codes of ethics with How We Work. A number of companies formulated their rules of conduct for the first time ever. We expect that all our employees, and that is more than 320,000 people, comply with the approved standards. We also encourage our contractors, partners, customers and competitors to follow the principles we have suggested.

Last year we established a group-wide Trust Line to ensure the most effective acceptance of our rules, firstly, inside our companies. Everyone, who sees a violation of laws, norms and corporate ethical standards can report and help us to become better.

Our principles

OUR PRINCIPLES

our viSion:to Create throuGh developMentWe create efficient businesses and manage them applying the best global standards and practices, ensuring long-term return on investment and making contribution to the development of the communities where we operate and Ukraine as a whole.

our MiSSion:drivinG toGether to SuCCeSSBy investing in the continuous growth and effectiveness of our business we contribute to the economic and social development of our entire society.

our valueS: - honesty and integrity- responsibility- effectiveness- professionalism

People, firstly our employees and residents of our communities, are at the heart of the SCM Groups sustainability strategy. We invest to develop not only our busi-ness but all of Ukraine. This fundamental goal shapes our priorities, investment areas and expected results.

IN TAxES to the national and local budgets in 2013

28 UAHbillion

For full text of How We Work please go to www.scmholding.com section Corporate governance

Trust Line contacts:

0800-60-0777(all calls are toll-free within the borders of Ukraine)

E-mail:[email protected]

TRUST LINE

SCM GROUPpaid over

SCM Group key principles

5 76Zero tolerance for bribery and corruption

Sustainable development and social responsibility

legitimacy and the rule of law

1 2 3 4Honesty and good faith in relations within the company

Integrity in relations with customers and business partners

respect for the individual and observance of human rights

Transparency and openness

http://www.scmholding.com/en/about-us/governance/principles/



development for next generations

One of the principles outlined in the How We Work code covers our role in the sustainable development of the society and practical implementation of SCM Groups social responsibility. To deliver on the strategic goals, we un-rolled the principle into a standalone Sustainability Policy3. Approved as a framework document early in 2014, it positions us as a business that follows a sustainable development model in its operations.

What it means for usSustainable development goals make an integral part of SCM Groups

general development strategy. Chief executives of all of our companies and industrial plants must manage production processes so that to achieve strong financial performance and meet the interests of the society.

Our strategic goals in the area of sustainability set specific benchmarks to which our businesses are moving irrespective of their market conditions, current financial standing and production capacities.

What it means for societyThe commitment to sustainable development means stability, safety

and progress. It is a permanent drive to higher living standards in our local communities and the whole of Ukraine. It is about preserving the environment and using energy and natural resources more efficiently. It is a contribution to the development of next generations.

We believe that our shareholder, partners, staff with their families and all Ukrainian people are equally interested in it.

The sustainable development goals of SCM Group also refer to the programmes that we are implementing for the society. By rolling out social initiatives, we develop the infrastructure, raise the quality of education and health care and establish new opportunities for small and medium-size enterprises. We are open to cooperation with those who share our vision, want and are able to contribute to building a common stable future.

We back our commitment to the sustainable development strategy with practical actions covered in this report.

SCM Group Sustainability Goals

SAfETy Of OUR EMPLOyEESWe have taken every effort to bring safety incidents at our companies down to zero.

HEALTH Of OUR EMPLOyEESOur companies have systems in place to protect health and ensure safety of staff and extend their employment longevity.

GOOd wORkING CONdITIONSOur companies are the most attractive employers in their industries and the regions where they operate. They provide good working conditions and competitive salaries.

IMPROvING THE qUALITy Of EdUCATIONWe make a strong contribution to improving the quality of education offered to the students of Ukraines universities and vocational schools and ensuring it meets the needs of the real economy.

LOCAL COMMUNITIESOur companies create good living conditions in the regions of their operations.

ENvIRONMENTOur industrial businesses meet EU air emission standards. Our industrial businesses apply the best global practices in terms of the quality of discharged waste water and waste management.

ENERGy EffICIENCyOur industrial businesses meet the best global practices in the area of the efficient use of fuel and energy.

BUSINESS ETHICSOur companies meet the highest international standards of business ethics.

SCM and biggest companies of the Group engaged in the UN Global Compact in Ukraine

Projects for local communities consolidated into a single Social Partnership Programme

2009-2011

SCM Group mission and values approved

SCM Group CSr policy approved Initiatives in the education

sector realised First sustainability reports

of SCM Group produced

2006-2008

A model for sustainable development of SCM Group established

Ethical principles and values of SCM Group (How We Work) formulated

Strategic SCM Group Sustainability Goals are determined

SCM Group Sustainability Policy being developed

2012-2013

Our way towards a sustainable development model

Our principles



Our employees: Building a successful company together

OUR EMPLOyEES: BUIldING A SUCCESSFUl COMPANY TOGETHEr

SCM Group employs around 320,000 people4 that accounts for almost 1.5% of all jobs in Ukraine5. Stability of our companies is essential for the welfare of many Ukrainians. Therefore, establishing good working conditions for our staff, caring for their health and safety and offering opportunities for professional and career development are our priorities. Training and attracting employees for the future are equally important too.

The people working at SCM Group companies are their most valuable asset. All of our HR and work management decisions seek to ensure good and safe working conditions so that our staff are proud of their companies, feel interested in their growth and, certainly, can develop own potential too. Indeed, a strong trust and commitment to a shared goal always brings a shared success.

SAfETy AT wORkPLACE

All industrial businesses of SCM Group:

cover 100% needs of staff for modern personal safety equipment and clothing

introduce safety standards for contractors

audit their health and safety management systems.

HEALTH Of EMPLOyEES

All industrial businesses of SCM Group:

introduce a system to encourage our staff to lead a healthy lifestyle

adopt corporate programmes to prevent cardiovascular diseases

adopt corporate standards / policies to offer first aid, emergency and quality medical assistance to the staff.

GOOd EMPLOyMENT CONdITIONS

All businesses of SCM Group:

introduce remuneration policies in line with the best international practices

put systems in place to attract and retain talented staff.

IMPROvING THE qUALITy Of EdUCATION IN UkRAINE

work with universities to implement the occupational standards developed under the SCMs Skills Passport project.

The biggest plants of SCM Groups industrial holdings (Metinvest, DTEK):

use health and safety management systems in line with OHSAS 18001:2007

introduce corporate health and safety standards

adopt occupational medicine strategies to raise the quality of medical services offered to the Groups staff.

Corum Group applied a benchmark model of health and safety management system and revised its Health and Safety Policy.

In 2013, Avlita (POrTINVEST) introduced a health and safety management system in line with OHSAS 18001:2007.

A range of plants of DTEK, Metinvest, Corum Group and POrTINVEST adopted a grade-based payment policy.

Talent pool programmes are available at SCM, DTEK, Metinvest, Corum Group, POrTINVEST and HarvEast Holding.

SCM, DTEK, Metinvest and Media Group Ukraine contribute to developing and introducing of new educational standards.

GoALs AcHievements



We offer good working conditions firstly by modernising our factories and installing modern equipment. We also build a straightforward and fair system of remuneration and social support to our employees. In this respect our companies mostly look to gear their compensation practices to the best European approaches.

To make working conditions safer, SCM Groups industrial holdings are committed to building modern world-class

systems of health and safety management. In particular, they seek to improve the quality of medical services for their employees and prevent occupational diseases.

In 2013, we achieved big results with initiatives to create jobs for the youth and attract professionals to our companies.

We are proud that recognised consultancies and recruiting agencies called our businesses the best employers in the country.

SCM, Metinvest and DTEK ranked in TOP EMPLOYERS

IN UKRAINE 2013 according to the opinions of skilled candidates surveyed by

Ernst & Young

Breakdown of SCM Group employees by business areas, 2013

EnergyMining and metals TelecommunicationsHeavy engineeringFinanceAgricultureGrocery retailTransportationFilling stationsMineral productionMediaFootballReal estate

Average salary at SCM Group industrial holdings

Ukraines industry average salary (according to the State Statistics Committee of Ukraine)

Average salary at SCM Group industrial holdings against average salary in Ukraines industry, 20112013, UAH

4,560

3,1072011

3,478

2012

4,800

3,763

2013

5,500




SCM initiated the Skills Passport project in 2011 as part of its national programme Contemporary Education to develop occupational standards. The passports clearly outline the skills and knowledge a graduate needs to be easily hired, have a good salary and career opportunities.

In 2013, our partner universities rolled out a pilot and began to adopt the standards by developing new and adapting old curricula. In particular, that reduces the number of general courses in favour of increased vocational training to meet the needs of the real production industry. The

first students immersed into the new programmes in autumn 2013 and our businesses are being very active in introducing the standards.

Jobs today and tomorrowA good job and an opportunity to get it are stability factors in a society. This is especially true for young people as finding a job

without an employment record is quite a challenge. SCM Group helps the youth the future Ukrainian professionals to get modern education necessary for a strong career and good pay. In 2013, we continued our Skills Passport project and were implementing new educational standards for the professions in mining and steel, energy and journalism in a range of Ukrainian universities.

A Skills Passport

mykola HrebcHenkodean, Electric Technology department, donetsk National Technical University

I believe the students motivated to become highly-skilled professionals will feel positive about any occupational standard that improves the educational process and the quality of training. It will help to boost competitiveness of the graduates in the labour market.

We developed

8new occupational standards

in steel and energy production and digital journalism

Dmytro iLiUsHcHenkosenior lecturer, Pryazovsky State Technical University

Ive had an excellent opportunity to take internship at Azovstal, one of the biggest plants of Metinvest. The mill is widely applying innovations including energy saving solutions that I am studying as a scientist. So, I think I was very lucky to learn from the skilled specialists who had initiated many successful energy-saving projects in the plate production shop.

The steel mills of Metinvest are also partnering with universities to adopt the new occupational standards. For example, Azovstal cooperates with Mariupol Pryazovsky State Technical University to improve training for professions of converter supervisor and converter engineer. Lecturers took a month-long study tour to learn operations of nine departments at the plant, deeply reviewed the production processes in shops, listened to a report of the CEO and attended a seminar about fundamentals of effective HR management.

As a result, they developed and approved curricula for five professions: ferrous metallurgy, pig iron and steel production, physical and chemical processes in steel production, metal treatment under pressure and heat power industry. Since the academic year of 2013 the students majoring in steel making at the Pryazovsky University have been studying in line with the new standard of converter engineering.

DTEK has contributed to adopting the occupational standards of electrical engineer in a power supply company and electrical engineer in mining. Lecturers of four vocational schools in Donetsk, Dniprodzerzynsk, Dnipropetrovsk and Kyiv are working to update curricula in line with the standards.

As Donetsk National Technical University is one of the partners, its faculty members took training at DTEK Power Grid. They discovered how a control centre and a modern video panel work, visited substations and learnt about the applied technologies and power equipment maintenance. Later the standard was presented to students of the electrical technology department with new study groups established to embrace the new curricula.

The Skills Passport project aims to RAISE THE QUALITY OF HIGHER EDUCATION in Ukraine

SCM Group INvESTED over

in staff education in 2013

112 UAHmillion




Corum Group and Donetsk State Ma-chine Building Academy started a joint project in 2012 to hold a national olympi-ad on heavy engineering technologies for the students of relevant universities. The winners receive bullion contracts from Corum Group and can get jobs at Corums enterprises.

In 2013, the Ministry of Education and Science and Donbas State Machine Build-ing Academy also joined the project. The Academy also set up a branch of its de-partments for machine building technol-ogy and mining machines at Corum Kryvy

Rih Mining Equipment Plant. In the future Corum is going to launch similar branches at Corum Druzhkivka Heavy Engineering Plant and Corum Svit Shakhtaria Heavy Engineering Plant.

Bullion contracts for novice machine builders

A first field for future agronomists

In 2013, HarvEast Holding launched the Cooperation with Schools programme attracting students to take internships and offering them employment outlooks. Luhansk National University of Agriculture and Mariupol Vocational School of Agriculture No.141 were the first partners to join the initiative.

In the future the company plans to establish HarvEast groups in relevant universities that would teach students to a special curriculum adjusted to the needs of a modern agricultural business. Along with the internships they can defend diploma papers about important

issues in the current agricultural industry prepared with help of skilled mentors from HarvEast. The graduates of the HarvEast groups will be well awaited at the management company and operational businesses of the holding.

In fact, SCM Group has been establishing such industry-specific groups at schools for long. Our previous reports described DTEK groups set up at universities offering degrees in power generation and the secondary school-university-plant programme preparing staff for ore mines and steel mills of Metinvest. So, now we can call this cooperation our good tradition.

oleksandr kUzycHevstudent, Pryazovsky State Technical University

The project trains us in all areas of the port industry. We can practice the knowledge acquired at the university. In my case this is mechanics, transport vehicles and mechanisms.

In 2013, POrTINVEST received more than

100 applications from candidates

and selected the best

30

SCM Group cooperates with relevant universities paying attention to talented and committed students. Our companies have launched various programmes and contests enabling to start a career while still being an undergraduate. We count on the youth and are seeing the results already as more and more young specialists are coming to work at our plants and building successful careers year after year.

Helping young employees SCM Group cooperates with 150

schools throughout Ukraine.

2,700graduates of Ukrainian

universities and vocational schools chose our businesses as their first employer in 2013

In 2013, the Olympiad attracted

67 students from

30 Ukrainian universities.

Three winners got a chance to find employment

at Corum Group

17 students of the vocational

school and

2 undergraduates accepted the invitation of HarvEast.

Almost all of them got jobs at the holding within a year

developing future engineers for the port industryOur last report covered the launch of

a long-term educational project The Fairway to Success that PORTINVEST had started for future engineers of the port industry. The initiative offers senior students of relevant universities addi-tional practice-oriented training that would raise their chances to find jobs at successful port businesses right after graduation.

In 2012, PORTINVEST signed cooperation agreements with a number of schools in Odesa, Sevastopol and Mar-iupol and continued the project in 2013 with the Mariupol Port and Yuzhny Port as new partners.

Alongside traditional internships and work placements the company worked in the new formats of discussion clubs

organised for the undergraduates of Mariupol and Odesa. The students could show their creative potential in a contest The Fairway to Success: Heading towards Innovations and in their comprehensive diploma papers to be defended in 2014. PORTINVEST also helped the students from Mariupol to visit an exhibition at the International Investment Summit in Donetsk.

Under the project the students master their professions, address actual produc-tion issues, learn the specificities and development trends in the port sector. They also bid in innovations contests, take part in technology games, meet senior executives of the industry leaders, gain practical skills and take internships at port businesses and PORTINVEST.

yevhen bAsHkovvice President for Science, Professor, donetsk National Technical University

Corum, through its support and commitment, gives students an opportunity to assess their capacity and makes a big contribution to promoting engineering and technology professions in Ukraine.




Protecting health and safety of the employees is our main goal. We take every effort to bring safety incidents at our companies down to zero. In 2013, we continued investments to make our production businesses safer. We invested significantly to introduce modern personal safety kits, raise

the quality of medical services for our staff and prevent occupational diseases.

We improve safety by adopting modern facilities and solutions and instilling a safety culture among our employees.

For the staff it means new, more comfortable and effective sets for personal safety, straightforward standards and mandatory health and safety training.

Our industrial holdings also prioritise the quality of medical services offered to the staff. It is important that medical teams and, indeed, employees have necessary knowledge to provide effective first aid. At the same time health posts must have required equipment to be able to give quality and timely help to an affected person.

HealtH and safety first aid as a mandatory skill

The work of power engineers, nevermind miners, is challenging and so they must always be in a strong physical and psychological shape. The experts at DTEK decided to change the approach to employee health monitoring carried out under the corporate occupational medicine strategy6. The concept is simple bringing medical help closer to a person. It means that one and the same doctor should be treating the person both at the company and in the local hospital, e.g. a GP receiving patients at a hospital in the morning and at a corporate health post in the afternoon. A doctor thus would be

always aware of the patients health condition, could engage other specialists whenever necessary and offer follow-up care when the person is back at work.

In 2013, the occupational medicine department of DTEK Service (coordinates medical facilities across DTEK including health posts) embarked on the journey. The company made first steps in the area of emergency help to ensure that everyone knows how to keep an injured person alive until doctors arrive. The company hired an expert to train the staff emergency assistance skills by European standards and prepared a DTEK First Aid Memo.

svitlana meDveDHealth Post Head, Stashkov Mine (dTEk Pavlohradvuhillia)

A medical worker must be able to provide all necessary help to an injured. A big advantage of the training programme is that it is focused on practical skills, because the muscle memory lasts longer and helps to do emergency actions in a real-life situation automatically and correctly.

dTEK provides medical services to its staff at

29 health posts established

at production facilities and

9 health resorts

2011 2012 2013

1.3621.596 1.630

SCM Group investment in health and safety, 2011-2013, billion UAH

2011 2012 2013

1.3621.596 1.630

LTAFT FAFR

0.540.46 0.46

0.029 0.022 0.0192011 2012 2013

Lost-time accident frequency rate (LTAfR) and fatal accident frequency rate (fAfR) at SCM Group enterpises, 2011-2013




New standards of personal safety

For the past five years Metinvest and DTEK have been updating the arsenal of personal safety kits available for their staff.

Employees get special working clothes and personal protective equipment (PPE) of high quality that meet international health and safety norms, are comfortable to wear and offer better protection.

Azovstal (Metinvest) has fully replaced the PPE to comply with the corporate standard. Woollen suits gave way to fire-proof fabrics that protect employees from splashes and sparks of liquid metal,

while aluminised clothes keep them from flows of hot air. In the past such protection was never used.

The workers also wear new safety shoes with hard caps saving toes from injuries and also heat-insulated or special boots instead of felt footwear to avoid burns or damage. Instead of glass, their goggles now have polycarbonate lenses. They are more solid and resistant to flying parts and ensure the widest visibility that is important in production. Also, they fit protective masks and other PPE.

enver tskitisHviLiChief Executive Officer, Azovstal (Metinvest)

Our major goal in health and safety is to manage current risks and ensure safe conditions at workplaces.

As of 2013, ALL production plants of Metinvest and MOST of coal businesses of dTEK INTROdUCEd CORPORATE STANdARdS Of PERSONAL SAfETy kITS

keeping heart in shape

Diseases of heart, vessels and respiratory organs are the most frequent illnesses of steel makers and miners. Preventing and treating them is a priority of the Metinvests strategy to improve health protection systems7. In particular, Metinvest installs new facilities at its health posts and raises the skills of doctors. For example, doctors at the treatment and diagnostic centre of MMK Illicha operate high-precision and lab equipment and can make an accurate diagnosis quickly. In

fact, they not only treat but also teach workers to care for their health and not harm it with incorrect actions.

Metinvest conducts in-depth medical check-ups of their staff to detect and treat cardiovascular diseases at early stages. This is firstly done for the workers on so-called critical jobs, i.e. those vital for the life and health of the people around and the production process. Their condition is monitored according to the corporate standard adopted at Metinvest in 2013.

oleh vAtAnskyChief of Medical Service department, krasnodon Coal (Metinvest)

Our employees undergo a medical check before every shift. They can start working only if everything is good. The approach helps us, firstly, to shield an ill person from possible emergencies and consequences (and enables them to monitor own health), and secondly, to save people, who depend on such a person.

99%of Metinvest companies

conducted full medical checks of the critical job staff (almost 21,000) in 2013




DTEK Academy is the foundry of managers for businesses of the holding. We described its activities and versatile programmes many times in our previous reports. The choice is truly impressive: from business education (Talent Pool and TOP 508) to distance thematic courses (30 available on the Academys website) that prepare successors for executive and management positions at the company.

In 2013, the Talent Pool covered DTEKs production businesses too and now is available for the staff working in mines, thermal power plants and power distribution companies. More than 500 people joined the project already. The company also prepared a DTEK Career Management Concept and

an intellectual talent search system that would facilitate recruitment of managers for its plants.

The Corporate University atMetinvest also continues to train managers. One of its achievements was the launch of the Management DNA programme that teaches first-line and mid-level managers at dedicated centres established at its production businesses.

Metinvest pays particular attention to developing its sales staff by rolling out a Sales Academy. The first three modules were launched in 2013.

In 2013, around 8,000 managers of 19 production plants, 4 sales outlets and the management company of Metinvest Holding attended the Management DNA.

profession and careerWe value professionalism of our staff and help to develop their potential. In

2013, most of SCM Groups investments in staff development were focused on training managers and advancing educational programmes for operational staff and production workers. We have established a talent pool in the management companies of our leading industrial holdings - Metinvest and DTEK - and that is our first success.

The training programmes at most of our industrial companies are designed for all employees including senior managers, operational staff and production workers. They can gain knowledge at original courses, master new professions, attend top study centres in Ukraine or improve professional skills at their companies.

Preparing managers

yevhen bonDArenkodeputy HR director, dTEk

The training system at dTEK covers all employees from an entry-level worker to a director. With the in-house approach DTEK can save significant funds and guarantee quality education in line with its needs.

oleksandr kALAbindeputy manager, coal preparation shop No.1, Avdiivka Coke

I talk a lot to my subordinates during a shift, so, my ability to set an objective and monitor its execution is instrumental. One of the training workouts, Effective Management of Goals and Human Resources, helped me to look at myself from the outside and see how I talk to my colleagues and subordinates. Sometimes its useful to have such a mirror to realise what I should focus on as a manager.

144 dTEK employees completed corporate MBA programmes

in 2013

Employees trained at dTEK Academy took

85% of management

vacancies at dTEK

135 talent pool participants have

attended the Metinvests leadership Academy and

54 already got new jobs

For senior managers:

DTEK Academy, Metinvest Corporate University, TOP-50 and training courses at Corum Group

For operational staff and production workers:

corporate study centres and internal coaching institutes at DTEK and Metinvest

Internal Coaching Institute (FUIB) VegaBusinessShool (Vega)

For creative professions:

mentorship offered by more experienced colleagues corporate training sessions studies of the best international practices and standards

All SCM Group companies: partnership with universities and training companies

Corporate training

External training




Not only managers, but also entry-level workers and operational employees enjoy opportunities for professional growth at our companies. DTEK and Metinvest are widely modernising their plants (see chapter Production: develop with care for environment), so the staff should be able to grasp new technologies and equipment in good time.

Our businesses prepare special retraining and upskilling programmes provided at in-house study centres. So, in 2013 DTEK developed a corporate standard and curriculum for a core profession in the mining industry an underground miner. Twenty two

employees of DTEK Sverdlov Anthracite already began the studies. At power distribution companies the operational staff take a number of new programmes on work safety.

The corporate study centres also have an Internal Coaching Institute where employees of DTEKs businesses serve as trainers. This is an innovative approach that works very well. DTEK employs about 140,000 people, so offering them quality education requires a sufficient number of professional coaches who know the holdings companies in detail. Finding such experts in the labour market is simply impossible. The internal coaches

took a special course to strengthen their competences as trainers at DTEK Academy and every year share their knowledge with thousands of employees.

Metinvest also runs an Institute of Internal Health and Safety Coaches at its production facilities. Back in 2009, Metinvest was the first in Ukraine and the CIS to hire internal coaches from among its retired staff, who have huge production expertise and strong communications skills. In 2013, they focused on teaching corporate health and safety standards.

FUIB started an Internal Coaching Institute in 2013 to train coaches from

among its employees who are ready later to teach colleagues different corporate standards.

In 2013, the staff at the News Department of Ukraina TV could learn about journalism standards from the biggest international broadcasting corporation BBC. Journalists and editors studied how to prepare stories using digital technologies effectively and how to deal with social networks. Later they developed own editorial standards of Media Group Ukraine.

Vega Telecommunications Group launched VegaBusinessSchool in 2013 where its employees perform as internal coaches. The first trainees chose to study how to develop professionally and personally in the areas not related directly with their duties, e.g. sales during maintenance requests or project management. The gained knowledge will help them to build further career in the company.

Liudmyla DoncHenkolead specialist at customer service department, Southern Branch, vega

Thats great and interesting! The training systemises experience and knowledge for the use in further work. It gives only necessary and thoroughly filtered information, nothing inappropriate. The session was very dynamic and emotional and gave answers to the questions I had. So, it is a very effective practice.

olena kostetskA Head of Manager Training Center, Azovstal (Metinvest)

Internal coaches are expected to help the staff to adapt faster to the company and understand its underlying principles and standards. But the most important thing is to show the opportunities that every employee has not only in his structural unit but globally across the entire holding.

The team of internal coaches at dTEK grew to

277 employees in 2013 effectively

combining their main job with teaching

In 2013, FUIB Internal Coaching Institute prepared

37 internal coaches

They developed

58 programmes and taught

1,656 bank employees

53 internal coaches

trained

8,839 Metinvests employees

in 2013

Training production workers and operational staff

For more about journalism standards of Media Group Ukraine please go to: www.sobytiya.tv/ru/standarts


http://sobytiya.tv/ru/standarts



LOCAL COMMUNITIES: WOrKING TOGETHEr TO MAKE OUr CITIES BETTEr

Local communities: Working together to make our cities better

Expanded the geography and scope of SCM Groups Social Partnership Programme (SPP). In 2013, we rolled out SPPs in more than 118 localities of 11 oblasts of Ukraine as well as in the Crimea and Kyiv.

developed SPP initiatives to improve business environment.

Increased engagement of participants into the grant programmes We improve the city (Metinvest) and Your hometown in your hands (dTEK).

Gained initial experience in implementing mid-term strategies of social partnership.

developed and activated a corporate volunteering programme across SCM Group.

Establish platforms for continuous cooperation with stakeholders in SCM Groups regions of operations.

develop social partnership programmes jointly with local communities and civil groups in all areas of our operations.

Help to develop organisations and implement local and regional development projects in the regions where we are based.

GoALs

AcHievements

Our operations are somehow or other connected with 25 million people living in the cities and towns where we are based. The number has a twofold meaning for us.

On the one hand, we understand that we need to put a lot of efforts to improve the living standards for so many people. And we are doing a lot already today by implementing projects within the Social Partnership Programmes to build new parks, sports and childrens playgrounds and to bring modern equipment to hospitals and schools. We give talented young people new opportunities to tap their potential and get education.

We create opportunities. The opportunities to develop entrepreneurship. The opportunities for original craftsmen to enter new markets. The opportunities to transform an idea into a common good, especially if it is a playground for children with special needs.

On the other hand, we see that almost every second Ukrainian is our potential partner. If each of them, with or without our help, does something small yet useful for their towns, they will change, right before our eyes, into comfortable places to live in.

The SCM Groups businesses operate in hundreds of cities and towns in Ukraines east, west, south and centre. It is important for us that our local communities have modern hospitals and schools, that small and medium-sized enterprises develop and that young people feel confident about their future. We believe that our Social Partnership Programme along with concerted efforts of SCM Groups companies, local authorities and proactive citizens make our cities more comfortable, thus raising the living standards for millions of Ukrainians.

SCM Group social investments in corporatecitizenship, 2011-2013, million UAH

2011 2012 2013

109.4163.0

260.0

SCM Group social investments in corporatecitizenship by areas, 2013

Investments in local communities (main instrument Social Partnership Programmes) Partnership (supporting international, expert and non-governmental organizations) Development of business environmentCorporate volunteering

SCM Group social investments in corporatecitizenship, 2011-2013, million UAH

2011 2012 2013

109.4163.0

260.0



oUr social partnersHip programme

A fair initiative must be encouraged this principle underlies the large-scale grant programmes We improve the city9 (Metinvest) and Your hometown in your hands10 (DTEK) to support the commitment of proactive individuals, organizers and authors of creative ideas. The grant programmes help to select, on a competitive basis, the most interesting proposals opening up exciting development opportunities for our

cities and towns. They largely look to improve the local infrastructure, develop talented children and youth, promote sports and a healthy lifestyle and help the vulnerable. The first successes have led to a new wave of ideas with trust in the future and self-belief being at their core.

This chapter includes case studies of projects suggested and implemented by residents of SCM Groups local communities.

natalia yemcHenkodirector of Public Relations and Communications, SCM

Little by little, a lay view of You all owe me but I dont owe you/dont want/wont do anything is gradually receding into the past. It is being replaced with a civic position: Ask our advice. Get us involved. dont do anything FOr us WITHOUT us.

Investing in infrastructure, raising the quality and access to medical services and education and developing the business environment are among key priorities for the SCM Groups Social Partnership Programme. We partner with local authorities, NGOs and residents to implement our projects thus sharing a common goal of improving the living standards for millions of people in almost 800 Ukrainian cities and towns.

SCM Group investments in Social PartnershipProgramme by areas, 2013

Social infrastructure developmentHealthEnvironmental culture and energy efficiencyEducationSportsDevelopment of businessenvironmentCultureLocal community engagementOther

In 2013, SCM GROUP IMPLEMENTEd more than

under the Social Partnership Programme

560projectswith the total INvESTMENT of almost

240 UAHmillion

In 2013, METINVEST and DTEK aggregately funded over

200 projects under the grant

programmes to the amount of

UAH 6.6 million

More than

10,000 residents from

26 localities of Donetsk,

Dnipropetrovsk, Luhansk, Zaporizhia, Lviv, Vinnytsia

and Ivano-Frankivsk oblasts took part in the grant tenders

organized by Metinvest and dTEK in 2013




Small playgrounds for big wins A nook for play and health

Football for children and youth and outdoor sportsgrounds are a very effective way of promoting a healthy lifestyle. We believe that everybody should have access to stadiums, playing fields and sports equipment and so the initiatives related to sports development have an important role to play in SCM Groups social projects. Our previous reports covered the Children and Youth Football Development programme promoted by Metinvest and the projects supported

by DTEK. In 2013, our drive continued and evolved into new initiatives. For example, Futbol 1 and Futbol 2 TV channels (Media Group Ukraine) supported a football tournament United for Peace organised in July 2013 in Donetsk for the children deprived of parental care.

The residents of our local communities find it important to help young people to make healthy lifestyle choices. Today not only football but also other sports are getting a platform to develop on. For example, Metinvest helped a Makiivka-based school No. 49 to build a first streetball ground where both students and other locals can play.

New opportunities for cyclists opened up in Kryvy Rih: a cycling class for schoolchildren, a campus for cycling in the Komsomol Ukrainy park and a dedicated park Polyhon in Damansky district. All three found support with Metinvest and are widely popular among bikers.

The people who enjoy rock climbing also have a place for practice. Last year DTEK bought a new rock climbing wall for Pavlohrad and Metinvest for Yenakiieve to help climbers to work out all year round. Designed by an NGO Tourism, Alpinism and Rock Climbing the project is a true revival of the local school for mountain climbing that was famous in Yenakiieve a while ago.

A sportsground for children with special needs at Yenakiieve Department for Social Rehabilitation is a special case. Now kids have a nook to play and develop without feeling embarrassed by their more agile peers. Along with traditional swings and slides the play space has exercise equipment helping parents to improve their childrens health.

Meanwhile, even healthy children need a psychological aid or correction of their psychophysiological development. Metinvest supported committed people to launch a psychological art studio Harmoniya in Avdiivka and the first multi-sensory centre in Mariupol where children can release emotional tension and develop skills by doing gymnastics and exercising.

oleh HoLovinChair, Makiivka Basketball federation

We had no special ground to play streetball in Makiivka. Metinvests tender inspired us, so we quickly prepared the project and found a nice place to roll it out. A waste land near school No. 49 is just perfect for our ground.

natalia tovkAiLoleader of NGO Lets Make a Sports Ground Together, yenakiieve

It was just a plain area, all grass and trees, and we decided to make a cosy nook for recreation and fun. Children need to play outdoors and parents need to be able to relax and chat. So, parents joined in to set up an NGO. Taking care of a disabled kid is a challenge but now that we are together we can address them together and support each other.

roman AkALmAzleader of Adrenalin Team, kryvy Rih

Our dream has come true and we are happy that the cycling campus will become a recreation spot for many children.

oleksandr iLiyenkoa leader of NGO City Tourists, Pavlohrad

The construction of the rock climbing wall began in mid-September. Initially we prepared necessary components at our place and then assembled the construction set at Shkurenko sports centre. It took us 1.5 weeks altogether.

zynoviya DmytriyevAHead of Education department, Mariupol City Council

Our multi-sensory centre is the first example for all pre-school institutions in our town to follow. It is a true welfare nook.

projects for cHildren and youtH

Corum Group installed goalposts at a sportsground of school No. 50 in Horlivka and repaired a sports centre in Druzhkivka. HarvEast Holding jointly

with local residents built a playing field for children and adults in the village of Vasylivka, Starobesheve district, Donetsk Oblast.

Projects supported outside grant competitions




developing villages

water and new pipes

Water supply has been a major concern for many citizens in the south of Donetsk Oblast. The shortage is mainly due to worn-out pipes and pumps, while stable supply is often out of the question. During the watering season the issue is twice as important. So, HarvEast Holding decided to focus its social investment on upgrading water supply pipes in villages. Since 2012 the company had been doing repairs gradually providing the locals with unlimited access to water.

In 2013, the holding repaired water supply networks in nine localities including Konkove, Bakhchevyk (Telmanove district), Kyrylivka,

Starchenkove, Kremenivka (Volodarsky district), Vilne, Kalinine, Zachatovka (Volnovakha district) and Pervomaiske (Yasynuvata district).

valery mArUnkevycHChair, volnovakha Agricultural Cluster

Water supply has been a major issue in the villages of the region, therefore we certainly responded to the request from the locals. Now that we have bought a transformer, well link it to the water well in the Anadol village and resume the supply. We also provided funds to repair water pipes in the village of Vilne so that people could have drinking water.

Dmytro cHernytsAMayor, yalta village, donetsk Oblast

I would like to thank HarvEast Holding for spending over UAH 70,000 to buy and install water pipes and sewage systems and remove obsolete sewage facilities in our Yalta hospital. Today all of our doctors have not just cold but also hot water.

In 2012-2013, HarvEast Holding repaired or built new water

facilities in

21 villages in donetsk Oblast

HarvEast Holding helped to replace more than

50 km of water pipes

Projects supported outside grant competitionsSCM Groups businesses help the elderly and people with disabilities outside the Social Partnership Programme.

Thus, in 2013 Metinvest launched a programme Hello, Veterans! to provide social services to its labour veterans andpensioners. Altogether the initiative supported over 5,500 veterans.

Azovstal received a computer lab where its labour veterans learn computer literacy skills from the young staff.

In Mariupol Metinvest built a beach adapted for disabled visitors with wheelchair ramps, handrails leading up to the sea,comfortable change rooms, shower cabins and sunshades.

projects for older generation

Being old and feeling happy

Respect for the old people gives the youth a chance to learn from wisdom and experience, while attention and care for the elderly is more important than a thousand words. Thanks to the social projects implemented by Metinvest in Krasnodon, Kryvy Rih and Mariupol, the ties between generations have becomestronger.

Recently, Krasnodon Town Hospital No. 2 opened a nursery for the elderly care who can stay there round the clock. Today the nursery can house tens of patients. Metinvest approved a grant for the project developed by the hospital doctors to make comfortable recreation rooms fitted with TV, soft furniture and home appliances just like home; even doors and windows are new.

In Kryvy Rih there is a centre called Granddad Online, Grandma Online where lonely and elderly people can come and learn how to use computer. Metinvest supported both projects. New skills will come in handy for all pensioners as computer literacy is needed every day. Besides, they will be able to communicate online with their friends and family who live in other cities or abroad.

Hrigory rAstorHUievChief Physician, krasnodon Town Hospital No. 2

On behalf of our patients and medical staff I want to thank Metinvest for their respect for the elderly and their needs. Other kind-hearted residents of Krasnodon looked at you and followed suit.

More than 5,000 dISABLEd PEOPLE from 27 Ukrainian localities visited the beach in Mariupol during just one summer.




quality medical services for everyone serhiy sopyLniAkChief Physician, Burshtyn Municipal Hospital

Small-town hospitals and high-profile clinics of big cities have different medical equipment. Thanks to dTEK we feel that weve moved to a new level. Our patients can consult the best hospitals of Kyiv, Uzhhorod, Lviv, Simferopol and Donetsk via video. If necessary, we can get advice from doctors in Krakw, Munich and other cities abroad.

In 2012-2013, DTEK helped

9 medical institutions in

6 Ukrainian towns to join the

telemedicine network

In 2011-2013, DTEK spent over

UAH 12 million to support the Telemedicine

project

HarvEast Holding put to good effect the former administration building of farm No. 39 in the village of Mykhailivka, Telmanovsky district, Donetsk Oblast. As the facility was not used as designed, the company reconstructed it into a new family outpatient clinic.

In addition, HarvEast Holding bought new furniture and equipment to meet the needs of rural medicine, while the local authorities purchased some of the medical instruments and a new Niva car for the clinic. Now Telmanovsky district has seven primary health care facilities.

Other SCM Groups businesses also contribute to improving the quality of medical services in Ukraine. For example, Corum Group repaired the building of the Kharkiv-based Institute of Therapy of the Academy of Medical Sciences of Ukraine. Vega provided a free high-speed internet to Dnipropetrovsk Regional Childrens Hospital.

family medicine in villages

Halyna zHernokLeyevAChief Nurse, Mykhailivka Hospital

It was so good to move from an old health post to a repaired clinic. It is an excellent present of the holding to both our medical staff and patients.

The hospital in Mykhailivka will serve

2,200 residents from

9 neighbouring villages

caring for HealtH

SCM Group is implementing a range of big projects helping people, especially residents of small towns and villages, to access quality medical services as sometimes a lack of specialty doctors can be a serious problem.

telemedicine Our last reports described the

Telemedicine project funded by DTEK and supported by Rinat Akhmetov Foundation for Development of Ukraine. The project connects hospitals to a shared professional network than enables doctors to efficiently exchange information over a distance, send medical data, test results, establish diagnoses and

prescribe treatment. Also, doctors can receive advice from dedicated specialists and organise video conferences, TV workshops and lectures.

In 2013, the project moved to a new level as six more hospitals joined the network. Along with three facilities in Lviv, the network includes now a municipal hospital in Burshtyn, a medical institution in Ladyzhyn, municipal hospital No. 4 and a maternity hospital in Pavlohrad and medical institutions of Dobrotvir and Dobropillia.

By the end of 2015, DTEK is set to integrate 41 hospitals across 22 of its local communities into the telemedicine network.




conditions for entrepreneurial people

Being your own boss

In 2013, segodnya.ua and DTEK launched a special joint project, Monocities, to talk about the towns that evolved around local economic mainstays www.segodnya.ua/monocities

Ukraine has many ambitious people with entrepreneurial skills but sometimes they do not have something little yet important: self-confidence and support to make a first step and start a business. DTEK decided to address the issue by establishing Local Economic Development Agencies in 15 Ukrainian cities to make the locals more engaged in small and medium-sized business. Along with a micro-lending programme, the agencies help to create conditions for moving forward by advising start-upers on how to pick a promising area for future business development. Development and employment

have always been major issues for mono-towns that grew around one big production business in their areas. Therefore, creating favourable conditions for the development of small and medium-sized enterprises is a bigger priority there. Our Social Partnership Programme seeks to promote business environment in the regions of our operations as this is a keystone to sustainable growth of towns in the future.

DTEK was the first business in Ukraine to use a new strategic format for the development of SMEs local economic development agencies. They are non-profit non-governmental organisations with a wide range of functions: from helping individuals to start a business to blueprinting extensive plans for the development of an entire town with big

investors and partners. The agencies assist those who want to be their own boss by providing necessary counselling, teaching and writing a good business plan. They also help to borrow small loans for the most promising start-ups with a special focus on giving a hand to the youth as they have many years ahead and need a good start.

The first three agencies were initiated in 2012 in Burshtyn, Ladyzhyn and Dobrotvir. In 2013, DTEK helped to establish twelve more in Schastia, Dobropillia, Pavlohrad, Ternovka, Pershotravensk, Enerhodar, Zelenodolsk, Petrivka, Zuhres, Rovenki, Kurakhove and Sverdlovsk.

petro kUrLiAkMayor of Burshtyn

Cooperation with dTEK means not just solving some of the regions financial problems. This is sort of a push to change the life of every citizen. When people see that they have a future, their desire to work revives.

ihor kUDriAfirst deputy Mayor, dobropillia

local Economic development Agencies provide a significant support to local authorities as our town has a string of projects that could attract investors.

The agencies delivered first results very quickly. The one in Ladyzhyn helped to set up four private businesses including a 3D cinema and a company collecting solid domestic waste. In Dobrotvir businessmen received micro-loans to launch milk-processing shops and fish-farms. Entrepreneurs in Zuhres and Burshtyn are going to develop travel business.

Special offers for women are there too: in Kamianka-Buzky district (Lviv oblast) they can attend training on how to set up own sewing business.

SMEs can help big companies too by performing their orders. For instance, local businessmen submitted 30 offers to DTEK when the company announced extra benefits at its tenders to those enterprises that create at least ten new jobs. So, the most important thing is not to be scared to try.

6 companies

in dobrotvir and ladyzhyn already created

20 new jobs

The Dobrotvir- and Burshtyn-based agencies for

local economic development raised over

UAH 250,000 in investments from partners

to support small business

8 social entrepreneurs11 received loans in Rovenky, Sverdlovsk,

Zuhres and dobropillia planning to create

37 jobs, with 22 of them launched

already in 2013

15 local Economic

development Agencies established with dTEK support are working in

8 regions of Ukraine

For more information about local Economic development Agencies please go to dTEKs social partnership website spp-dtek.com.ua


http://spp-dtek.com.ua/



The agricultural business can be really profitable that is strongly confirmed by successful initiatives of small business entrepreneurs. Private investments, new production technologies and management approaches counter the statements that the industry makes only losses.

With this in mind HarvEast Holding offers help to the individuals prepared to become farmers. In particular, the company leases some of its non-core assets to local residents who can thus start a business on affordable conditions: they pay just a token price

of UAH 1 to rent agricultural equipment and farm buildings. HarvEast also advises them on business development and offers discount prices to buy farms machinery and livestock.

And some people have got interested in the offering. Our last report described a goose farm of Ivan Shyshman in the village of Chermalyk, Donetsk Oblast. Now a farmer Olha Popova has a pig farming business in this village. First she rented three pigsties and a land to grow feed, while HarvEast helped to buy piglets. Today Olha has 800 pigs on her farm: 750 young ones and 50 sows.

In Fedorivka (Volodarsky district, Donetsk Oblast) HarvEast helped to set up a dairy cooperative Nadiya that every day buys about 700 litres of milk from more than 30 households in the villages of Starchenkove, Fedorivka, Boyove, Respublika, Zeleny Yar and others. The cooperation is easy and practical for villagers, and the milk is well sold later in Mariupol stores.

Mykola Fateyev, a resident of Suzhenka, Volodarsky district, embarked on a new agri-business to provide

services to his fellow villagers and the neighbourhood. Soon he became popular and is regularly asked to bring coal, cultivate a vegetable garden or reap a harvest. Volodymyr Roza, a businessman from the village of Kasianivka, is also well in demand when locals need to plough soil, sow farm crops or grind grain the common things if you live in a village. Volodymyrs business now covers five areas: his home village of Kasianivka, Kreminivka, Topoline, Shevchenko and Oktiabrske.Encouraging initiatives in agriculture

In 2013, HarvEast Holding rented out

4 industrial estates and over

150 machines to local residents

on discount conditions

olha popovAbusinesswoman, Chermalyk village

HarvEast Holding helped to buy young cattle and compound feed and leased 83 hectares of land sown with barley. Of course, it is a troublesome business, just like any other. But my husband and I are getting on with it. I am a livestock expert and he is a vet. I like my job and do not regret that I agreed to become a farmer.

volodymyr rozA farmer, kasianivka village

Starting a business in a village is a challenge but the assistance of HarvEast Holding makes it possible. You need to be diligent, know what to do, be professional and committed.

HarvEast Holding helped to establish

14 small agri-businesses:

two pig and sheep farms, goose farms and beef cattle

ranches, a dairy cooperative and seven local service firms




tHe new look of Ukrainian cities

In 2013, ESTA Holding delivered on its two promises given to Kyiv residents a year ago: it repaired the staircase leading to the Castle Hill (Zamkova Hora) and developed a navigation project for Andriyivsky Descent.

The company is going to install information boards and signs at the beginning and at the end of Andriyivsky guiding to its main sights and landmarks. Boards produced in a similar style will stay next to the most famous buildings displaying short stories and historical images. The project has been

prepared and is to be implemented in the near future. In January 2013, the reconstructed staircase to the Castle Hill was opened for the visitors willing to take a top view on the districts of Podol and Vozdvyzhenka. The project is a part of the initiative to build a new pedestrian infrastructure at Andriyivsky. ESTA Holding built missing steps and decorations on the staircase, installed new wooden handrails, cleaned and painted metalwork and laid on electricity within three months. All the works were completed as initially planned.

vladyslava osmAka kyiv studies expert

The repaired staircase to the Castle Hill will make the tourist infrastructure at Andriyivsky descent much better. Today the backyards of the Painters Street are closed for visitors but people are interested in both the faade and secluded areas of Andriyivsky. After reconstruction the staircase will be safe and offer exciting views on the descent from the Castle Hill.

The way to the Castle Hill

everyone can make tHe world a better place

To make the world around us better, we do not need to take gigantic efforts or spend a lot of money. One will realise how much he or she can do out of heart just by helping selflessly the people in need. SCM Group welcomes volunteering activities our employees take part in. In 2013, we adopted a single Corporate Volunteering Policy to address concerns of the society and unite tens of thousands of our employees around a common goal changing the world for better.

In 2013, SCM Group organised

42 volunteering events where

more than

30,000 employees took place




The Run Under the Chestnut Trees

Every year FUIB and Vega employees and their families take part in The Run Under the Chestnut Trees, a sports and charity marathon arranged to mark the Day of Kyiv. Launched by a few enthusiasts, the initiative has taken place already for several years. Last Sunday of May people go to a start line on the Independence Square in Kyiv sharing a common goal of helping children with heart diseases. All raised funds are donated to the centre of infant cardiology and cardiac surgery at the Ministry of Healthcare of Ukraine to buy necessary equipment and supplies for children with congenial heart disease. The newspaper Segodnya and www.segodnya.ua cover the run on their pages.

The Good deeds Campaign

Competition is also a way to support people in need. The Good Deeds Campaign, a Metinvests corporate volunteering programme, shows that the spirit of competition only spurs on contestants. The companys volunteers in 11 localities of Donetsk, Dnipropetrovsk, Luhansk and Kirovohrad oblasts compete on three stages. First, they compete manually help to improve childrens playgrounds, make repairs and dig gardens for the elderly. Every action counts. The second stage includes intellectual and sports games, master classes for orphaned children, schoolers and

students. The third stage is the most responsible as on New Years Eve the campaigners fulfil wishes of children who live in orphanages or found themselves in hard life situations.

In 2013, volunteers of Inhulets Iron Ore delivered more than 15 thematic master classes for children in four schools and a kindergarten of Kryvy Rih and made over 150 childrens New Year wishes come true. They won the team event and donated the award of UAH 15,000 to two schools. The Krasnodon Coal team also handed their award to a 5-year old girl fighting a rare disease.

serezha pincHUka third-grader, school No. 5, Avdiivka

The changing rooms at our gym have been repaired because Metinvest organized a Good deeds Campaign here.

A Box of Good deeds

The volunteering programme run by Corum Group, A Box of Good Deeds, is similar to the Metinvests Good Deeds Campaign. As part of the initiative, volunteers from among the group organise celebrations, collect clothes for orphans, help war veterans, build childrens playgrounds and do other good things. In 2013, Corum Group presented laptops with speech recognition software to Donetsk Centre for Child Psychoneurology and Kharkiv Regional Child Care Centre No. 2.

The Live project At PORTINVEST the corporate

volunteering is in the making. To support a worthy cause, in 2013 the management company of the holding arranged a campaign with a telling name Live for the staff to raise funds and buy medication for children having cancer. In this way PORTINVEST supported a national volunteering movement launched by the Tabletochki charity foundation12.

FUIB annually takes part in a charitable indoor football tournament held by Krab foundation to raise funds for children living with cancer. The newspaper donetski Novyny, a part of Segodnya Multimedia, raised funds to treat children with cancer and help the Centre of Childrens Social and Psychological rehabilitation in the village of Velyka Novosilka, Donetsk Oblast.

Metinvests Good deeds Campaign won the Improving living Standards category in the National Corporate Volunteering Contest 2013.


http://www.tabletochki.org/http://www.tabletochki.org/



The flying dutchman: a grand opera staged in Ukraine

New opportunities for Ukrainian craftsmen

Richard Wagner is seen as a reformer of opera in the history of music. In 2013, SCM supported the production of The Flying Dutchman to mark the 200th birthday of the great German composer. The opera became a true highlight in the cultural life of Ukraine and proved to the world that our nation values and develops art.

The premiere of The Flying Dutchman in Ukraine was staged in Donbas Opera (Donetsk Solovianenko National Opera). It filled the city with a spirit of creativity

brining Donetsk residents closer to the European culture through the legacy of Richard Wagner. Later this tie included other Ukrainian cities such as Kyiv, Odesa and Lviv where the opera was staged in the summer of 2013. At SCM we believe that all big wins start with a first step. Now there is no doubt that Ukraine can create productions able to embellish the national opera and the best stages of Vienna, Berlin or Warsaw and allow viewers to breathe in unison with the whole world.

The project Gifts with the Ukrainian Soul was designed by SCM to introduce Ukraines original and distinctive craftsmen to the world and help them to find new opportunities and new markets. Huta-glass blowers, patchwork and embroidery artists, toy makers and other talented people found their way to a wider audience.

In 2012, SCM presented 1,200 bespoke huta-glass plates as New Year gifts to its partners around the world, thus changing a common tradition of corporate presents. In 2013, the project

continued as the company arranged a contest for the best art ceramics.

The exhibitions under a well-known name Gifts with the Ukrainian Soul took place in Kyiv and Donetsk presenting the artworks made by various Ukrainian artisans. Some visitors found that the masterpieces were a true discovery.

Another award for twelve winners was the order they received to produce corporate gifts for SCM, DTEK and Media Group Ukraine that we gave later to hundreds of our partners and clients around the world.

klaus ziLLikensGerman Consul General in donetsk

The production gave a strong impulse to the development of the Ukrainian opera. It showed that donbass is not just a mining and metals region and a big industrial hub but also a land of culture because an opera was staged here on a European level.

tHe art open to tHe world

THE fLyING dUTCHMAN was highly acclaimed by experts and wON THE TARAS SHEvCHENkO NATIONAL PRIzE

SCM helps creative people to believe in themselves, show their worth in the contemporary art and attract audiences to the national arts.

276 craftsmen presented

524 artworks at Gifts

with the Ukrainian Soul exhibitions in Kyiv

and donetsk




In 2013, our production holdings continued their environmental programmes to cut air emissions and water consumption, improve the quality of wastewater treatment, reduce production of waste and reuse it more efficiently.

To make the air cleaner, DTEK and Metinvest upgrade and repair air cleaning equipment in their towns (for more please read Clean Production for an Industrial Town).

We minimise our environmental impact on rivers and streams by repairing and building new waste treatment facilities. We also imple-ment programmes to recover more waste at our production plants. For more please read social reports of DTEK and Metinvest for 2010-2013.

Making our factories more energy efficient and developing alterna-tive energy have also been in our spotlight. Metinvests technological strategy looks to increase energy efficiency of its steel plants to Euro-pean levels. DTEK enhances energy security ofUkraine by developing the wind power industry (for more please read Wind Brings Light).

Corum Group also contributes to better environment by offering innovative engineering solutions that can reduce waste generated by coal preparation plants, cut air emissions during its combustion and significantly reduce energy use.

SCM Group non-industrial companies continue to implement green office principles by saving electricity, water, paper and other resources used in their daily operations.

In 2013, our staff launched first volunteering campaigns where thousands of people came together to improve the urban environment (for more please read Lets Make Ukraine Clean Together and the Green City). 2 bnUAH

Production: Develop with care for environment

PROdUCTION: dEVElOP WITH CArE FOr ENVIrONMENT

SCM Group continued to upgrade its production facilities:

dust content in air emissions reduced to European levels at eight power generation units of DTEK in Donetsk, Dnipropetrovsk, Zaporizhia and Ivano-Frankivsk oblasts.

Metinvest completed preparations for modernisation of the sintering facility at MMK Illicha in Mariupol.

DTEK completed Botiieve wind farm in the village of Prymorsky Posad, Zaporizhia Oblast.

Our employees carried out two volunteering campaigns to landscape their towns.

Our businesses partner with local authorities in their communities to develop and roll out the programmes to:

cut emissions of dust and harmful substances

improve the quality of wastewater treatment

increase recovery of waste including ash and slag.

All SCM Group production companies have energy management systems in place in compliance with ISO 50001.

GoALs

AcHievements

We are working hard to ensure a clean and healthy environment for the local communities of our production plants.We make extensive investments to upgrade our factories and strive to making them modern, effective and eco-friendly.Already today we care about the future by developing alternative energy and environmental culture in the society.

SCM Group investment in environmental protection, 2011-2013, billion UAH

4.482

2011 2012 2013

5.358

4.216 4.4825.358

In 2013, SCM GROUP INvESTMENT IN ENERGy

EffICIENCy exceeded

SCM Group investment in environmental protection, 2011-2013, billion UAH

4.482

2011 2012 2013

5.358

4.216 4.4825.358



clean production for an indUstrial townThe world has seen many examples of people and industrial production happily co-existing side by side. Hundreds of

thousands of Ukrainians are deeply connected with production plants in many towns. Therefore, finding solutions to better the environment in our local communities and make them more comfortable for living is a strategic objective for SCM Group.

Every year our plants and companies invest in big projects to upgrade production thus raising their environmental performance and reducing the footprint.

Getting younger over the years

Azovstal upgraded the blast furnace shop bringing the dust

content in 1 cubic metre of discharged air to

36-39 mg/m3 against the norm of 50 mg/m3

dTEK upgraded

13 power generation units

by the end of 2013 increasing the total number of upgraded

units across Ukraine to 15

igor syry Chief Executive Officer, Metinvest (in 2013)

Metinvest continues to upgrade its sintering facilities to clean the air in its local communities.despite the current challenges in the steel market, we realise that the investment will help us to have a world-class, competitive and environmentally-friendly production in the longer term.

maxim timcHenko Chief Executive Officer, dTEk

We see modernisation not just as some technology and economic improvements.It is about extending the service life of companies, which means stable jobs for thousands of our employees. It is about delivering on our social programmes in communities and the development of the national economy.

In 2013, Metinvest and DTEK went on with broad modernisation of their steel mills and thermal power plants.

Metinvest makes major investments to upgrade sintering and blast-furnace facilities at its steel plants. The holding is completing preparations for modernisation of the sintering plant at MMK Illicha in Mariupol to conform to European standards on air emissions. Azovstal is revamping waste treatment facilities at blast furnaces. In 2013, the mill installed a system for nitrogen-assisted dust trapping on blast furnace No. 5 and was preparing for repairs of blast furnace No. 4.

DTEK continued to reconstruct electricity generation units at its thermal power plants. The investment projects rolled out at power units No. 6 of Kurakhivska TPP, No. 4 of Zuivska TPP, No. 1 of Zaporizka TPP, No. 5 of Burshtynska TPP and No. 11 of Prydniprovska TPP ensured the dust content in air emissions

ofupto50 mg/m3 that meets the European Directive 2001/80/. The next move will be a gradual installation of SOx and NOx removal equipment. Dobrotvirska TPP is completing a large project to replace obsolete gas cleaners with modern electric filters at its power generation unit No. 8 to significantly reduce annual emissions. In 2014-2022, DTEK is going to reconstruct another 25 power units by investing UAH 3 billion in dust control and UAH 21.4 billion in gas cleaning (if the National Emissions Reduction Plan is approved).

Local solutions can also make plants friendlier to the environment. So, replaced dust trappers at a boiler house of Dobrotvirska TPP cut noticeably the dust content in air emissions. DTEK also reconstructed a waste-gas chimney of boiler facility Moskovska-3 (Kyivenergo) by extending it from 30 to 46 metres to make the air cleaner in the residential area next to the boiler as emissions now do not get to the lower atmosphere.

Production: Develop with care for environment



A major reconstruction of the sintering facility at MMK Illicha is not just the biggest project Metinvest has planned under its Mariupol Environment Protection Programme for 2012-2020. We could well say that it is the biggest environmental initiative in the history of the independent Ukraine. The sinter plant indeed accounts for the largest portion of air emissions in the city and its upgrade will be a significant improvement for the local environment ensuring a cleaner air for the residents.

Late in 2012, senior managers and experts of MMK Illicha joined scientists from Hipromez Institute to choose the best reconstruction project benefiting both the town and the plant. Later they developed a shared vision and announced a tender for international well-experienced companies won by Italy-based Termokimik Corporation in 2013. The contractor is a leading supplier of environmental protection technologies and has designed know-hows recognised by the global metals industry. In the near future

Termokimik Corporation is starting the engineering works to be followed by reconstruction after the equipment is delivered.

On the first stage all 12 sinter machines will be gradually replaced. New cleaner facilities will be installed to better the air quality in Mariupol noticeably as early as in 2016. The project will be completed by 2020.

Compared to steel production and energy generation, printing plants and editorial offices have a much smaller footprint on the environment. Yet it is still possible to make production processes eco-friendlier.

In 2013, the print house of Segodnya Multimedia adopted an innovation they started using printing plates without a developing agent that contains hazardous chemical substances. The solution halved the volume of toxic fluids subject to disposal. The facility also uses nature-friendly synthetic or oil-based colours made in Europe.

Journalists make a strong contribution too by using e-media

in their offices instead of optical and magnetic discs that release toxic substances when burnt for recycling purposes.

However, some processes are still being done in the same old way. Scrap paper is a major waste product in the printing industry. It includes both paper waste that cannot be avoided when making hard-copy magazines and newspapers, and unsold copies. The company carefully collects the waste from distribution warehouses, puts it into special containers and sends to recyclers who make it into packaging board.

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