2. 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 investment activity. No part of
this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment
decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness,
accuracy, completeness or correctness of the information or the opinions contained herein. None of the Evraz or any of its affiliates, advisors or
representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its
contents or otherwise arising in connection with the document.
This document contains “forward-looking statements”, which include all statements other than statements of historical facts, including, without
limitation, any statements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”,
“anticipates”, “would”, “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond Evraz’s control that could cause the actual results, performance or achievements of Evraz to be
materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the
achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain
necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock
markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions.
Such forward-looking statements are based on numerous assumptions regarding Evraz’s present and future business strategies and the environment in
which Evraz Group S.A. will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which
they are made, and Evraz expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements
contained herein to reflect any change in Evraz’s expectations with regard thereto or any change in events, conditions or circumstances on which any
such statements are based.
Neither Evraz, nor any of its agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the
forward-looking statements contained in this document.
The information contained in this document is provided as at the date of this document and is subject to change without notice.
2
3. Evraz Highlights
n Vertically integrated steel and mining business, among the 15 largest
steel producers in the world
n 2005 Production of 13.9 million tonnes of crude steel and 12.1 million
tonnes of rolled products
n 1H06 Revenue grew 5.3% to $3,825 mln reflecting 23% increase in
sales volumes to 8.3 million tonnes
n 1H06 EBITDA flat at $1.1 bn, EBITDA margin remains strong at 29%
n Leader in Russian long products market with 30-100% market share
n High level of vertical integration and self-sufficiency in iron ore and
coal
n One of the lowest cost producers of steel in Russia and CIS with mines
located close to steel production sites
n Strong commitment to high standards of corporate governance
3
4. EVRAZ GROUP’S MAIN LOCATIONS
KGOK VGOK Raspadskaya
YKU Neryungriugol
Moscow Mine 12
Luxembourg NTMK NKMK EvrazRuda
ZapSib
Vitkovice Steel
Nakhodka
Sea Port
Palini e Bertoli
Stratcor
Steel mills
Iron ore mining
Coal mining
Sea ports
Vanadium
Export countries
Stratcor Highveld (24.9%)
4
5. VISION AND STRATEGIC GOALS
Our Vision is to be a world class steel and mining company
and one of the Top 5 most profitable steelmakers globally by
ROCE and EBITDA margin through:
n Leadership in CIS construction and railway steel product
markets
n Strengthened positions in global flat product markets
n Lowest costs secured by superior efficiency and 100% self-
sufficiency in raw materials
n Growing vanadium business
5
6. 1H 2006 HIGHLIGHTS
n Revenue grew 5.3% to $3,825 mln backed by sales volumes
increase of 23%
n 23% growth in Russian construction products sales volumes
n Favourable domestic steel pricing environment
n 5.0x increase in non-Russian sales to mature European and US markets to $714 mln
n EBITDA flat at $1.1 bn, EBITDA margin remains strong at 29%
n Consolidated cash cost per tonne increased by 6.8% to $235
n $262 mln capital investment to improve efficiency
n Continued focus on developing mining segment with additional
$225 mln investments in OAO Raspadskaya
6
7. 1H 2006 SUMMARY PERFORMANCE
Volumes (‘000 tonnes) 8,300 +23%
Revenue ($ mln) 3,825 +5%
EBITDA ($ mln) 1,096 (2)%
Net Profit* ($ mln) 571 (7)%
*Net profit attributable to equity holders of Evraz Group S.A.
7
8. 1H 2006 RESULTS OVERVIEW
$ mln unless
otherwise stated 1H 2006 1H 2005 Change,%
Revenue 3,825 3,632 5.3%
Cost of revenue (2,520) (2,251) 11.9%
SG&A (339) (334) 1.5%
EBITDA* 1,096 1,119 (2)%
EBITDA margin 28.7% 30.8%
Net Profit** 571 612 (6.7)%
Net Profit margin 14.9% 16.9%
EPS (USD per GDR) 1.63 1.88 (13.8)%
Sales volumes***
(‘000 tonnes) 8,300 6,750 23%
*EBITDA represents profit from operations plus depreciation and amortisation, impairment of assets and loss (gain) on disposal of PP&E
** Net profit attributable to equity holders of Evraz Group S.A. *** Steel Segment sales volumes
8
9. CASH FLOW GENERATION
n Record net cash flow from operating activities of $904 mln
n Strong conversion of EBITDA to Net Operating Cash Flow at 82.4%
n Cash balance, including $287 mln in short-term deposits, grew 17%
to $769 mln
1H 2006 Cash Flow
1800
$ mln Short-term
1600 103 deposits
190 at banks
1400
611
1200
1000
800 769
657 772
16 287
600
264
400 45 18
641
482
200
0
C ash at Net Profit Adj. to C hanges in C F used in Short-term C F from Effect of C ash at end
beginning of reconcile WC investing deposits at financing exchange of period
period OpC F before activities banks activities rate changes
WC
9
10. STRONG BALANCE SHEET
n Total Debt-to-EBITDA remains comfortably within stated target of 1.5x,
while Net Debt1/EBITDA equals 1.0x
n Current credit ratings: BB by Fitch; Ba3 by Moody’s; BB-/Stable Outlook
by S&P
n Well-capitalised balance sheet to fund future growth
Net Debt-to-EBITDA Ratio Total Assets
3,000 1.2 8,000 80%
1.0 $ mln
$ mln 7,000 67% 70%
2,500 0.9 1
7,317
2,652 6,000 60%
2,394
6,663
2,000 0.8
5,000 50%
1,883
0.5 4,000 40%
1,500 1,736 0.6
4,253
1,374 3,000 27% 30%
1,000 0.4
1,094
2,000 20% 20%
500 0.2
1,000 10%
0 0 0 0%
2 2004 2005 LTM 2
2004 2005 LT M
3
1 Total Assets ROCE
Total Debt Net Debt Net Debt/EBITDA
1Net debt equals total debt less cash & cash equivalents and short-term bank deposits
2Evraz have not prepared audited or reviewed financial statements for the 12 month period ended 30 June 2006. Financial indicators presented under LTM (last twelve months)
are calculated as a sum of 1H06 financial results and FY05 less 1H05 financial results
3ROCE represents profit from operations plus profit from equity investments less income tax over total equity plus interest bearing loans and lease average for the period 10
11. BALANCE SHEET HIGHLIGHTS
30 June 31 December
$ millions 2006 2005
Total non-current assets 4,635 4,019
Incl. PP&E 3,278 2,960
Total current assets 2,682 2,644
Incl. Cash & cash equivalents 482 641
Total assets 7,317 6,663
Total non-current liabilities 2,102 1,870
Incl. LT loans 1,742 1,515
Total current liabilities 1,625 1,896
Incl. ST loans & current portion of LT loans 860 835
Equity 3,373 2,707
Total equity and liabilities 7,317 6,663
11
12. EBITDA
n EBITDA margin remains strong at 29% Steel Segment EBITDA
fuelled by steel segment performance $ mln
+12.1% 957
n Steel segment EBITDA growth driven by 854
volume increase and cost management
n Mining segment EBITDA slipped on the back
of softer pricing in the Russian market
1H05 1H06
Consolidated EBITDA Mining Segment EBITDA
$ mln 11 10
$ mln
99 (10) (3)
241
137
1,096
(47.4)%
611
253
133
Ne t Profit DD&A Inc ome t ax Net int erest Profit s from Loss on Impairment of Ot her non- EBIT DA 1H05 1H06
expense expense assoc iat es d isposal of asset s operat ing
PPE inc ome
12
13. STEEL SEGMENT
n Consolidated steel products sales volume up 23% to 8.3 mln tonnes
n Excellent performance of the Russian construction market (+23%)
n Sales into attractive European and US markets increased by a factor of 5
Steel Segment Sales by Regions Prices for Main Steel Products
$/tonne
North and
South CIS
3% 600
America
Russia Non-Russia
3%
500
Europe
16%
400
1H04
2H04
300 1H05
Russia 2H05
50% 1H06
200
100
Asia
28%
0
Rebars Sections Rails Billets Slabs
13
14. STEEL SALES BY PRODUCT
n 21% increase in semi-finished sales volumes driven by organic growth and
world steel market demand
n Strong plates sales growth due to acquisitions of premium Vitkovice Steel and
Palini e Bertoli plate mills
(in volume terms)
Products (‘000 tonnes) 1H 2006 1H 2005 %
Semi-finished 4,164 3,443 21%
Construction 2,197 2,106 4%
Plates 830 194 328%
Railway 789 828 (5)%
Mining 139 123 13%
Other* 181 56 223%
Total 8,300 6,750 23%
*Includes rounds, cut shapes, strips and other products
14
15. RUSSIAN AND CIS MARKETS
n Russia remains key market contributing 50% to total steel segment revenue
n Total sales volumes increased by 13.8% to 3.65 million tonnes
n Favourable pricing environment set to continue in 2H 2006 and beyond
Sales Mix Average Market Prices
‘000 tonnes $/tonne
950
714
+20%
597 800
-1% 871
879 650
+8% 541
499 500
+18%
784
663 350
+30%
573 744
200
1H05 1H06 Aug- Nov- Feb- May- Aug- Nov- Feb- May- Aug- Nov- Feb- May-
03 03 04 04 04 04 05 05 05 05 06 06
Rebars Sections Rails Other finished Semis
H-beams (50B) Channels Angles Rebars
Source: Metall Courier
15
16. WELL-POSITIONED
IN DOMESTIC MARKET
n Construction growth in Russia and Russian market share by volume, 2005
CIS continues to outperform GDP 100% 100%
84%
n Russian and CIS steel consumption 80% #1
#1
remains below global benchmarks 60%
49%
n Enhanced leadership position in the 40% #1
30% 28%
rapidly growing construction market 20% #1
#2
with estimated market share of 38% 0%
Rails H-beams Chanels Rebars Rail-wheels
Construction Output Forecast
Steel Consumption Growth Structure
to Exceed GDP Growth
400
39,9
2002 =100% 100% 37,3
350 35,1
33,4 18%
GDP 80 30,5 31,6
300 Construction: Pipes
Rebar consumption 21%
250 60 43%
200 40
42% Long Products
150 39%
20
38% Flat Products
100
0
2002
2008
2009
2004
2006
2010
2003
2005
2007
2005 2006 2007 2008 2009 2010
Source: Evraz, EIU, Chermet, Metall Expert
16
17. NON-RUSSIAN SALES
n Steel sales volumes increased by 31.8% to 4.65 million tonnes
n Continued diversification of sales in favour of European and US markets
n Construction steel export volumes shifted to attractive Russian market
n Strong price recovery in 2Q 2006
Non-Russian Sales Product Mix Non-Russian Prices for Slabs & Billets
‘000 tonnes 600 $/tonne
110
669 500
42 416
71 -28% 400
580 617
62%
380 300
1,342
27%
1,053 200
6%
1,491
100
1,412
0
1H05 1H06 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06
Billets Slabs Other semis
Billet (FOB, Far East) Slab (FOB, Far East)
Construction Plates Other finished
Source: SBB
17
18. EUROPEAN ASSETS
n European assets (Vitkovice Steel and Palini e Bertoli) successfully
integrated and contributed $454 mln to consolidated revenue
n Production volumes increased by 25% in 1H 2006
European Assets Revenues and Costs European Assets Production Growth
$ mln ‘000 tonnes
+14%
455
132
399
96 +57%
322
212
228
135
Revenue Costs Vitkovice Steel Palini e Bertoli
Vitkovice Steel Palini e Bertoli
1H05* 1H06
* 1H05 not included in Evraz Group S.A. consolidated Financial Statement
18
19. Attractive Plate/Slab Margin
n Semis export markets remain volatile
n Flat product market presence provides exposure to the benefits and a
possible platform for regional consolidation process
Prices for Flat products and Semis in Europe
US$
1000
800
600
400
200
0
3
4
5
6
03
Ja 3
04
04
05
05
06
03
04
05
06
03
03
M 4
04
05
05
06
06
l0
l0
l0
l0
0
0
ay
ay
ay
ay
p
p
p
p
ov
ov
ov
ar
ar
ar
ar
n
Ju
n
Ju
n
Ju
n
Ju
Ja
Ja
Ja
Se
Se
Se
Se
M
M
M
M
M
M
M
N
N
N
EU export fob plate Black Sea slab
Source: SBB 06
19
20. MINING SEGMENT
n Mining segment revenues decreased by 19.2% to $480 mln
n Iron ore sales volumes flat at 8.4 mln tonnes
n Decline in average prices of iron ore and coal
n Iron ore self-sufficiency remains strong at 78%
Mining Segment Performance Iron Ore Production
$ mln ‘000 tonnes
1,397 1,18 1
594
2,898 2,79 4
480
253 4,41 8
4,198
41 133 10
1H05 1H06
1H05 1H06 Kachkanarsky GOK Evraz ruda Vysoko gorsky GOK
Revenues EBITDA Profit from assoc iates
20
21. EXPANDING INTEREST IN COAL
n Evraz owns 49% beneficial interest in OAO Raspadskaya, the second-largest coking coal
company in Russia
n In June 2006, OAO Raspadskaya completed acquisition of two mining assets:
Mezhdurechenskaya Coal Company-96 and Razrez Raspadsky with fair value of $769 mln
n Evraz provided $225 mln in cash plus $300 mln in short-term financial guarantees for
OAO Raspadskaya
Proved and Probable Reserves Target Output
mln tonnes mln tonnes
20
16
CAGR = 12%
6.0
M UK-96 and 12
Razre z
304 Old 8 3.3
Raspadskaya 11.0
478 4
6.4
0
2005 2010
Raspadskaya MUK-96 & Raz rez
Source: IMC Reserve Audit Report 2006 Source: OAO Raspadskaya
21
22. NATURE OF VANADIUM MARKET
n Best strength to weight ratio of common engineering materials
n With 0.1% addition of vanadium in structured steel, strength can be increased by 10 to 20%;
structures’ weight can be reduced by 15 to 25%
n Steel industry (90%)
n High strength low alloy (HSLA) Steels
World Vanadium Market
n Full Alloy Steels
n Tool Steels / Stainless Steel Chemicals,
3%
n Carbon Steels Alloys, 7%
Sheet,
n Airspace industry (7%) Bars, 9% 27%
n Titanium alloys for jet engine parts,
airframes, rockets, nuclear
n New alloys for modern aircrafts Sections,
and jets totals 20% of the weight 14%
(A380 and B787)
n Chemicals and Batteries (3%)
n Catalyst for sulphuric acid and plastics
n Dietary, glasses, pigments Plate, 40%
Source: CRU
22
23. GROWING VANADIUM BUSINESS
n 1H06 Vanadium slag sales totaled $83 mln
n In June Evraz acquired 24.9% in Highveld
n In August Evraz acquired 72.84% in Strategic Minerals Corporation
(Stratcor)
n Diversified processing base allows Evraz to capture more value from
vanadium slag
Vanadium consumption growth rate V as proportion of steel prices
m tonnes ‘000 tonnes
1550 80 80 20.0%
FeV, $/kg
Steel production
Vanadium consumption
1450
Steel production 70
Vanadium consumption 70
1350
15.0%
60
1250 60
50
1150
50 10.0%
1050 40
950 40
30
5.0%
850
30 20
750 * European hot rolled coil price
650 20 10 0.0%
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 1995 2004 2005 2006f
Cost of V ($/t steel) V as % of product value
Source: CRU, Evraz
23
24. COST STRUCTURE
n Cost of revenues up 11.9% to $2,520 mln as a result of higher steel sales
volumes, lower raw material prices and acquisitions impact
n Consolidation of volumes of European assets contributed $253 mln to cost
increase
n SG&A expenses remain flat due to strict cost management
n Risk of further cost increase concentrated in energy and labour expenses
Steel Segment Costs Mining Segment Costs
Depreciation SG&A
Energy
3% 11% Raw mate rials
7%
Staff 20%
8% Othe r
18%
Other
8%
Raw materials
54% Staff
SG&A 20%
10%
Ene rgy
Transport 24% Depre ciation
10% 7%
24
25. COST MANAGEMENT
n Consolidated cash cost per tonne increased by 6.8% to $235 t reflecting
mainly impact of European mills consolidation
n Benefits from integration in mining and vanadium slag sales were lower due
to softer raw materials pricing
n Transportation, staff and energy costs per tonne remain flat
Consolidated Costs Steel Cost Items
$/tonne 1) $/tonne 36.6 36.1
283
261 1)
43 16
10 28.0 26.9
20 24.9
24.4
220 235
1H05 1H06 Transportation Staff Energy
Benefit from integrat ion into mining 4)
1H05 1H06
Benefit from vanadium slag sales 3)
Consolidated steel produc ts cost per t onne 2)
1) Steel segment cost per tonne estimated as (Revenue from steel products only – (Steel segment EBITDA - Vanadium slag sales) - Transport expense in Steel segment COS (export) -
Steel segment Selling and Distribution costs) / Total steel products shipments
2) Consolidated steel products cost per tonne estimated as steel segment cost per tonne less benefits from vanadium slag sales and integration into mining
3) Estimated as vanadium slag sales over total steel products shipments
4) Estimated as (Mining segment EBITDA + Profit from associates (coal assets)) / Total steel products shipments
25
26. CAPEX
n Key focus on efficiency improvement at the front end of steel production
n Implementation of major projects on track
n Capital spending of $262 mln in 1H06 vs. $280 mln in 1H05
n FY2006 capex annual budget estimated at $550 mln
Project Status
Revamp of BF5 at NTMK Complete
Revamp of CB5 at NTMK Complete
Reconstruction of converter shop at NTMK On-going
Revamp of EAF at NKMK On-going
Revamp of BF3 at ZapSib On-going
Installation of ISSM at Vitkovice Steel On-going
26
27. 9 MONTHS 2006 TRADING UPDATE
Pig Iron, ‘000 tonnes Rolled Products, ‘000 tonnes Steel, ‘000 tonnes
+22.3% 12,013
10,847 +17.6%
10,213
PeB+VS 992 4,013
9,669 8,868
987 organic
8,498 +13.8% 3,721 3,205
2,865
3Q
3, 288
2, 546 3Q 1H
1H
9M 2005 9M 2006 9M 2005 9M 2006 9M 2005 9M 2006
IRON ORE ‘000 tonnes COAL, ‘000 tonnes
(6.4)%
1 2 ,3 5 4
1 1 ,5 6 2
12,612 12,715
3,932 4,378 +30.8%
9M05
6,2 10
3Q 9M06
1H 4,7 47
+65.2%
38 5 63 6
9M 2005 9M 2006
Mine 12 Raspadskaya Y uzhkuzbassugol
* Mine 12 operational results are consolidated into the Group since April 2005.
Operational results of Yuzhkuzbassugol are consolidated into the Group since December 31, 2005.
27
