Evraz Plc · LSE:EVR
Evraz — FY2005 Earnings Presentation
29 slides from Evraz's earnings presentation, May 2006
Slide 1: Excellent Progress Against IPO Commitments
EXCELLENT PROGRESS AGAINST IPO COMMITMENTS 2005 Preliminary Results May, 2006
Slide 2: Disclaimer
Ii] . Disclaimer This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Evraz Group S.A. (Evraz) or any of its subsidiaries in any jurisdiction or an inducement to enter into investme
Slide 3: Agenda
Ii] Agenda Summary 2005 Results Strategy and Outlook Q&A Annex
Slide 4: Evraz Highlights
i, Evraz Highlights = Among the 15 largest steel producers in the world = Russia’s largest producer of long steel products = Vertically integrated steel and mining business = Produced 13.9 mt of steel in 2005 = Consolidated revenues of US$6.5 billion in 2005, EBITDA US$1.9 billion in 2005
Slide 5: Top Russian Steel Producer
“ Top Russian Steel Producer Evraz’s Main Locations Top Russian Steel Producers Output? (million tonnes) Main Russi, — rankingy--Company 2003 2004 2005 products 11.5 9.9 11.3 11.3 Flat/long 10.8 Flat/long .4 Flat Severstal NLMK 5 Mechel Source: Chermet, Evraz Note: Crude steel output 46 5.5 ‘St. Pet
Slide 6: Excellent Progress since IPO
Ii] i, Excellent Progress since IPO Delivering superior growth = 9.7% growth in Group sales = 18.3% growth in Russian sales = Acquisition of high quality international downstream assets Expanded mining platform = Strong growth in mining segment, with revenues up 61.9% and EBITDA up 180.4% = Increase
Slide 7: Agenda
Ii] Agenda Summary 2005 Results Strategy and Outlook Q&A Annex
Slide 8: Show Strong Financial Results
AShow Strong Financial Results Revenue Total Assets 8,000 7 $min 6,654 80% 8000) ¢min 6,508 / 6 000 5,933 6,000 60% 4,253 4.000 4,000 A 40% 2,168 a 2000 1,540 | 2,000 4 1,222 20% , = ,_ = | o% 2002 2003 2004 2005 2002 2003 2004 2005 qm Total assets —e— ROCE***,% EBITDA . 2,017 1,860 Net Profit 2,000
Slide 9: Summary Income Statement
Ii] (US$ million, unless otherwise shown) 2005 Revenues +10% 6,508 Cost of Revenues +18% (4,160) SGRA +22% (658) EBITDA * (8%) 1,860 EBITDA Margin 28.6% Profit from Operations (14%) 1,584 Net Profit ** (23%) 905 Earnings per Share — US$ *** 8.03 * Profit from operations plus depreciation and amortis
Slide 10: Strong Financial Position
Strong Financial Position = Low-levered company with Net Debt/EBITDA below 1.0x = Share of Unsecured Debt increased to 60% in 2005 vs. 48% in 2004 = Multiple upgrades: = Ba3 by Moody’s = BB- by Fitch = B+/Positive Outlook by S&P Total Debt and Net Debt/EBITDA Significantly Improved Debt Maturity Pro
Slide 11: Excellent Cash Flow Generation
Fos, Excellent Cash Flow Generation = Net Operating Cash Flow improved by +58% from US$946 million in 2004 to US$1,496 million in 2005 = Stronger Operating Cash Flow supported by enhanced Working Capital management = Conversion of EBITDA to Net Operating Cash Flow much stronger reaching 81% 2005 Cas
Slide 12: Capital Expenditure
Capital Expenditure = Ongoing capex programme to improve efficiency = Total capex spending in 2005 of US$695 million | Project capex c.US$600 million = Key projects delivered on time = 2006 capex budgeted to be c.US$435 million Key Capital Investment Projects 2005 2006 Actual Planned NTMK: Moderniza
Slide 13: Agenda
Ii] Agenda Summary 2005 Results Strategy and Outlook Q&A Annex 12
Slide 14: Strategy
Strategy = Advance long product leadership = Enhance cost leadership position position in Russia and CIS ; = Increase efficiency through operational = Leverage construction product range improvements and ongoing realization breadth, effective distribution and of asset synergies customer service . =
Slide 15: Market Share Opportunity
a =a Market Share Opportunity = Russian sales grew to 60% of total revenues in 2005 vs. 55% in 2004 Russian sales increased by 18% from US$3,288.1 million in 2004 to US$3,889 million in 2005 = Pursuing downstream integration to secure access to attractive export markets Stratcor (2006) 2005 Non-Russ
Slide 16: Well-positioned
Well-positioned * jin High Growth Domestic Market = Reinforcing long product leadership in Russia and CIS = Exposed to high growth markets = Construction growth in Russia and CIS continues to outperform GDP cca = Rail product growth driven by US$21 billion investment in railway infrastructure and ro
Slide 17: Enhance Margin Profile
Enhance Margin Profile = Active arbitrage and management of semis exposure through portfolio flexibility = Resolving quality issues and improving customer service and logistics — key to realize benefits from premium slab capacity Slab/ Billet Portfolio Flexibilit Portfolio Management Opportunity US$
Slide 18: Major Acquisitions in 2005
Major Acquisitions in 2005 Palini e Bertoli Vitkovice Steel Evraz acquired 75% in Aug 2005 = Evraz acquired 98.96% of Vitkovice Target markets — Middle East, Western Steel in Nov, 2005 Europe and North Africa | Total sales — ca 350,000 tonnes of rolled products in 2005 = Total sales in 2005 > 853,00
Slide 19: Successful Integration of Downstream Assets
Successful Integration of Downstream Assets = Highly cash generative businesses. = Consolidated only in the 2nd half 2005 = All integration benefits will be fully realised in 2006 onwards Selected Preliminary Financial Data 2005 Palini e Bertoli US$" 000* US$' 000 Income Statement 2005E** Consolidat
Slide 20: Low Cost Producer
7) 2) 3) 4) 5) Low Cost Producer Lowest cost producer of steel in Russia and CIS Substantial level of vertical integration and self-sufficiency in iron ore and coal with benefit from vertical integration growing by a factor of 4.3x on pro-forma basis Mines located close to steel production sites Ben
Slide 21: Major Acquisitions in 2005
Major Acquisitions in 2005 Yuzhkuzbassugol = 50% stake acquired from Evraz shareholders to simplify corporate structure and improve transparency regarding related parties | Leading coal producer in Russia, operating 10 mines, 2 washing plants, 3 machinery plants, 3 transportation companies and a num
Slide 22: Corporate Governance
Ii] a Corporate Governance Highly professional pro-active Board 3 independent directors chairing the following committees: = Strategy Committee = Audit Committee = Remuneration Committee Chairman and CEO positions split by decision of the Board in November, 2005 High quality entrepreneurial manageme
Slide 23: Agenda
Ii] Agenda Summary 2005 Results Strategy and Outlook Q&A Annex 22
Slide 24: Agenda
Ii] Agenda Summary 2005 Results Strategy and Outlook Q&A Annex 23
Slide 25: LP Steel Segment - Continued Growth
LP Steel Segment - oe Continued Growth = The positive pricing momentum for construction and railway products added rr a to steel segment revenues growth Pig Iron 6 11.5 = Contribution of newly acquired Palini e Change, Y-0-Y (0.9%) Bertoli (since Aug 2005) and Vitkovice Steel 13.7 13.9 Steel (since
Slide 26: Mining Segment - Strong Growth
Aj om, Mining Segment — Strong Growth Production Revenue Mining Segment v0 $989 m Iron ore - ge 800 $611m = Concentrate 2.5 2.7 GB 600 Change, Y-0-Y 10.1% > 400 oe O Iron ore - Sinter 7.9 8.8 - Change, Y-0-Y 11.2% 2004 2005 Iron ore - | Third Party m@Inter-Company Pellets 3.3 5.2 Change, Y-0-Y 56.2%
Slide 27: Cost Structure
Cost Structure ® Evraz’s consolidated cost of revenues amounted to US$4,160 million and US$3,514 million in 2005 and 2004, respectively Steel Segment, 2005 Mining Segment,2005 7% 20% 9 7% 28% 4% 9% 63% 24% 10% 21% 7% GRaw materials O Staff costs Depreciation @eEnergy @ Other GRaw materials @Transpor
Slide 28: Net Income
Net Income = Impacted by growing depreciation charge and income tax expense 2005 2004 Net Income, US$ million 1,043 1,345 Depreciation, depletion and amortisation 243 168 Income tax expense 476 377 Interest expense, net 127 96 (Income)/Loss from associates (45) (43) Loss on disposal of property, pla
Slide 29: Evraz Group
=) EVRAZ GROUP