These statements include Severstal’s and Severstal’s spun off companies’ financial statements.

Severstal-group was registered in March 2002 as part of rationalizing Severstal’s business. Severstal-group is focusing its activities on three types of business - steel making, raw materials, and car making. Besides that it has a partnership with Severstaltrance - one of the three largest transportation companies in Russia.

According to Mikhail Noskov, deputy general director of Severstal-group, ”In order to have comparable results in the future we have assumed that restructuring and rationalizing of business was completed on December 31, 1999. So, these financial statements show financial performance of the Group after it has been rationalized. Severstal’s main lines of business are sales and production of steel products, as well as providing insurance and financial services.

Types of business	Location	Business profile
Manufacturing and sales of rolled steel
Severstal Export GmbH	Switzerland	Sales of metal products
Severstal trade Inc.	USA	Sales of metal products
Severstallat	Latvia	Sales of metal products
ChSPZ	Russia	Production of steel
Domnaremont	Russia	Maintenance and repairs
Metallurgremont	Russia	Repairs
NIIER	Russia	Analytical work
Insurance services
Sheksna Insurance company	Russia	Insurance
Sheksna M	Russia	Medical insurance
Financial Services
Metcombank	Russia	Banking
Promlizing	Russia	Leasing

According to consolidated reporting, sales in 2001 dropped by 11% as compared with 2000 . This was caused by a decline in export and domestic markets. A drop in prices of products of ferrous metallurgy, especially in the second half of 2001 followed.

US $ million	2000	2001	change
Sales	2248	2009	-11%
Cost of sales	-1283	1485	16%
Operational profit	658	91	-86%
Operational margin	29%	5%
EBITDA	856	293	-66%
EBITDA margin	38%	15%
Net profit	460	-15
Net margin	20%	-1%

A drop in operational profit in 2001 was due to a decrease in sales as a result of drop in prices and growth of production costs.

Production costs in 2001 grew mainly because of the prices raises for raw materials, fuel, electrical energy, and labor costs.

Severstal’s Balance Sheet at the end of 2001 shows that net debt is still low, which allowed to draw outside financing, while maintaining high level of liquidity and decreasing capital costs.

US $ Million	2000	2001
Working assets	1,005	839
Cash and equivalents	203	101
Non current assets	2,203	2,162
Total assets	3,208	3,001
Short term liabilities	293	325
Long term liabilities	571	443
Minority shares	44	48
Capital and reserve	2,300	2,184
Total liabilities and capital	3,208	3,001

Preliminary data shows that sales in 2002 grew by 8% which was mainly due to growth in export sales. Sales has gone down in the domestic market a little. Cost of sales has grown by 4% in 2002.

Consolidated reporting was presented to investors via telephone conference, arranged by Troika Dialogue Investment company.

28 March 2003