core sector communique

Evraz Announces Audited Financial Results for 1H 2011

  1H 2011 Highlights: Financials:

• Consolidated revenue US$8,380 million (+31% vs. 1H 2010)
• Consolidated adjusted EBITDA US$1,629 million (+41%)
• Net profit of US$263 million (+49%). Without the effects of one-off transactions net profit would have been US$494 million*
• Operating cash flow US$1,594 million (+114%)
• Net debt US$6,042 million (-15% vs. 31 December 2010)
• Short-term debt US$604 million (-15% vs. 31 December 2010)
• Interim dividend of US$89 million and special dividend of US$402 million announced

Steel segment:

• Crude steel production 8.6 million tonnes (+4%)
• Total external steel sales volumes 7.9 million tonnes (+3%)
• Steel segment revenue US$7,492 million (+29%)

Mining segment:

• Iron ore production 10.4 million tonnes (+8%)
• Raw coking coal production 3.6 million tonnes (-2%)
• Raw steam coal production 1.5 million tonnes (-37%)
• Mining segment revenue US$2,040 million (+82%)

Vanadium segment:

• Primary vanadium production 10,158 tonnes (-3%)
• External vanadium product sales volumes 11,088 tonnes (+6%)
• Vanadium segment revenue US$320 million (+10%)

Corporate developments:

• Launch of Yerunakovskaya-VIII coking coal mine development
• Capacity and product mix expansion in the North American tubular sector
• Improvement of Broad-Based Black Economic Empowerment (B-BBEE) contributor rating in South Africa from Level 8 to Level 5

Financial management:

• Issuance of US$850 million eurobonds at a coupon rate of 6.75% due 2018
• Early redemption of US$622 million of 2013 eurobonds
• Issuance of RUB20 billion (approx. US$710 million) 5-year Rouble bonds
• Conversion of US$650 million convertible bonds originally due in 2014
• Rating upgrades by Standard & Poor’s and Fitch to “B+” and “BB-“ respectively

CAPEX:

• CAPEX for 1H 2011 of US$462 million compared with US$397 million for 1H 2010
• CAPEX guidance for FY2011 is maintained at approximately US$1.2 billion

Dividends:

• Dividend policy amended to pay not less than 25% of the adjusted consolidated net income
• EVRAZ declares for the first time since 2008 an interim dividend of US$0.60 per share/US$0.20 per GDR (a total of US$89 million) and a special dividend of US$2.70 per share/US$0.90 per GDR (a total of US$402 million)
• Dividends record date – 28 October 2011; payment – no later than 30 days after the record date

* - One-off losses of US$231 million in 1H 2011 were caused by the conversion and early repurchase of debts