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GENERATOR

Annual Report & Accounts 2012

Information for shareholders

Our relationship with the investor community is particularly important to us. For NLMK, our high level of investor transparency is a testament to our strength, offering a test of the soundness of the day-to-day work carried out by the management team.

This is a very important component of the self-discipline that we have consciously embarked upon: if our plans and our course are clear to the market, we can be confident that we are moving in the right direction. Our investor relations programme ensures that any enquiries can be answered swiftly. Information on the Group’s activities, its strategy, its competitive advantages, investment projects and risks, and the market situation – all of this can be delivered promptly.

We aim to give clear, timely explanations to our investors of everything that is going on. We share our analysis of where we think the industry is going. The market’s high regard for our IR programme is evidence that we are moving in the right direction.

Anton Bazulev

Director of External Communications

 

Ordinary shares

The Group’s share capital is divided into 5,993,227,240 shares with a nominal value of RUB 1 each. NLMK’s shares are traded on the MICEX and RTS trading platforms of the Moscow Stock Exchange, as well as in the form of Global Depositary Shares (GDS) (1 GDS = 10 ordinary shares) on the London Stock Exchange (LSE).

Company’s share listings

RTS (Moscow) Ticker Code

NLMK

MICEX (Moscow) Ticker Code

NLMK

LSE (London) Ticker Code

NLMK

Bloomberg Ticker Code

• NLMK LI for GDS traded on the LSE

• NLMK RM for shares traded on the MICEX platform of the Moscow Exchange

• NLMK RU for shares traded on the RTS platform of the Moscow Stock Exchange

Reuters Ticker Code

• NLMKq.L for GDS traded on the LSE

• NLMK.MM for shares traded on the MICEX platform of the Moscow Stock Exchange

• NLMK.RTS for shares traded on the RTS platform of the Moscow Stock Exchange

Indices that include NLMK shares (as of March 2013):

• Moscow Stock Exchange (RTS-MICEX) (NLMK’s share: 1.02%)

• Moscow Stock Exchange (RTS-MICEX) Metals & Mining (NLMK’s share: 15%)

Structure of share capital as at 31 December 2012

Fletcher Group Holdings Limited

Deutsche Bank Trust Company Americas
(global depositary shares traded on the LSE)

Other shareholders (including shares floating
on Russian stock exchanges, companies
of which NLMK managers are beneficiaries)

Download graph

Global Depositary Shares (GDS)

The ratio of Global Depositary Shares to ordinary shares is 1:10. The volume of Global Depositary Shares issued by NLMK and traded on the London Stock Exchange amounted to 7.49% of share capital as of 31 December 2012. On 31 December 2012, GDS were trading at US$ 20.30.

The Company’s depositary bank is Deutsche Bank Trust Company Americas.

Share price

Ordinary NLMK shares on RTS

2012

2011

Share price (US$)

Maximum

2.19

4.37

Minimum

1.80

1.95

Mean

2.06

3.25

End of year

2.01

1.95

Average volume of daily trade (‘000 US$ /day)

141.4

145.2

Ordinary NLMK shares on MICEX*

2012

2011

Share price (RUB)

Maximum

78.67

146.53

Minimum

49.54

60.13

Mean

61.58

98.89

End of year

61.15

62.87

Average volume of daily trade (RUB m/day)

442.39

338.53

NLMK Global Depositary Shares on the London Stock Exchange*

2012

2011

Price of GDS (US$)

Maximum

26.7

51.0

Minimum

14.9

18.4

Mean

20.0

34.3

End of year

20.3

19.6

Average volume of daily trade (US$ m/day)

14.55

21.27

* The Company’s shares were listed on the London Stock Exchange in the form of Global Depositary Shares on 15 December 2005

For more information for our shareholders please visit Investor Relations section of the corporate website

Market capitalization

In early 2012, NLMK shares recovered slightly, but towards the end of Q1, the Group’s capitalization saw a downward trend against a background of deteriorating market conditions in the steel sector. However, by the end of 2012, the value of the Group’s securities had increased to around US$ 2.00 per share, in line with the level at the end of 2011.

By the end of 2012, shares on the London Stock Exchange were trading at US$ 2.00 per share (US$ 20.25 per GDS), consistent with capitalization of US$ 12.1 billion. NLMK’s market capitalization was in line with the general trends seen in the share prices of global steel companies.

Taxation

In accordance with Russian legislation, the rate of taxation of dividend payments for shareholders who are residents of the Russian Federation is 9%; for non-residents, it is 15% (rate valid from 1 January 2008). Where an avoidance of double taxation agreement is in effect, tax payments are made in accordance with the rates specified in the agreement.

Note: Information on taxation is provided for general information purposes only. Potential and existing investors should consult with their own advisors regarding the tax consequences of investing in the Company’s shares, including Global Depositary Shares (GDS).

Dividends

Our dividend policy

The Group’s dividend policy, the latest version of which was approved in June 2011, is designed to provide shareholders and all interested parties with as much clarity as possible regarding the Group’ strategy for the distribution and utilization of NLMK’s net profit. In accordance with the dividend policy, providing that they do not impact the stability of the Group’s financial situation and prospects for development, dividend payments may not be less than 20% of net income, determined in accordance with US GAAP. In addition, the Group aims to achieve an average dividend payout of at least 30% of net income, determined in accordance with US GAAP.

Net gains on the sale of investments in equity securities that do not provide a significant level of influence or control over the issuing company can be put towards the payment of dividends in full, providing there is no need to raise money for investment.

The amount of dividends payable for each period is approved by the Group’s shareholders on the recommendation of the Board of Directors, and will depend on the Group’s financial position, operating results, cash flow, outlook, general economic conditions, and other factors.

Declared dividends are paid to shareholders within 60 days of the date of their announcement, unless a shorter period is specified by decision of the General Meeting of Shareholders on the payment of dividends.

Dividends payable to GDS holders

Any dividends paid on shares certified by GDS will be declared and paid to the Depositary in roubles or foreign currency, converted into US dollars by the Depositary (in the case of dividend payment in a currency other than US dollars), and distributed to the holders of GDS, net of fees and Depositary expenses.

Dividend history** (US$ m)

Declared dividends for the year

Interim dividends

Dividend payout ratio (dividend/net profit), rhs

Download graph

*   The total dividend payment for the year 2012 is subject to approval by the Annual General Meeting of Shareholders, to be held in June 2013

**  Dividends were declared in Russian roubles. The dividend amount per share, as specified in dollars, is based on the Central Bank’s rouble to dollar exchange rate on the date on which the dividend is declared

*** In May 2004, as a result of a revaluation of its fixed assets, NLMK issued an additional 5,987,240,000 ordinary shares with a par value of RUB 1 each. Prior to this issue, the share capital of NLMK consisted of 5,987,240 ordinary shares. These additional ordinary shares were distributed among all the shareholders of NLMK according to their share of ownership on the date of the distribution, so that each shareholder received an additional 1,000 shares for each share already owned

Proposals regarding distribution of profits

Number of issued shares

5,993,227,240

Dividends on one issued share with nominal value of RUB 1, RUB (projection)*

0.62

Total dividends based on 2012 results, RUB (projection)*

3,715,800,889

* The amount of dividend payment for 2012 is subject to approval by the Annual General Meeting of Shareholders to be held in June 2013

The Board of Directors recommends that the Annual General Meeting of NLMK Shareholders announce 2012 dividends for ordinary shares in the amount of RUB 0.62 in cash per share.

The Board of Directors recommends that the profit remaining after payment of the dividend is directed towards the implementation of investment programmes and the payment of dividends in subsequent periods.

Corporate documents

The Group’s corporate documents, including the Company Charter, are available at http://nlmk.com.

Financial reporting and disclosure

The Group posts announcements of financial results on the London Stock Exchange website via the regulatory news service (RNS) and then publishes them on the Group website in the form of press releases, and distributes them to the .

The Company publishes its financial results on a quarterly basis.

The annual report is published in electronic form on the Group website, http://nlmk.com, on the day of its official publication. The Group shall give notice of this date in a specially issued press release. A hard copy of the annual report is available on request in the office of the Register of Shareholders and in the office of the Group’s PR consultant in London.

Financial calendar

Date*

Event

30 January

2013

• Q4 2012 trading update

18 March 2013

• 12M 2012 financial results for the Group’s major companies (under Russian Accounting Standards, RAS)

26 March

2013

• 12M 2012 consolidated financial results (US GAAP)

• Conference call

• Analysts’ meeting

16–23 April

2013

• Meeting of the Board of Directors (BoD)

• FY 2012 dividend recommendation and notice of the Annual General Meeting of Shareholders

18 April

2013

• Q1 20132 trading update

19 April

2013

• Q1 2013 financial results for the Group’s major companies (under Russian Accounting Standards, RAS)

13–17 May

2013

• Q1 2013 consolidated financial results (US GAAP)

• Conference call

4–11 June

2013

• Annual General Meeting of Shareholders

18 July 2013

• Q2 2013 trading update

22 July 2013

• Q2 2013 financial results for the Group’s major companies (under Russian Accounting Standards, RAS)

5–9 August

2013

• H1 2013 interim financial results (US GAAP)

• Conference call

• Analysts’ meeting

17 October

2013

• Q3 2013 trading update

18 October

2013

• Q3 2013 financial results for the Group’s major companies (under Russian Accounting Standards, RAS)

4–8

November

2013

• 9M 2013 interim financial results (US GAAP)

• Conference call

* Dates subject to change

If you wish to be notified by email when new events are added to our calendar, please subscribe to our press releases and announcements

Contacts for shareholders

Registrar

The register of holders of NLMK securities is maintained by the Regional Independent Registrar Agency (RIR Agency)

Registered address: 10 B Ul. 9 Maya, Lipetsk 398017, Russia

Depositary bank

Deutsche Bank Trust Company Americas

New York Headquarters

60 Wall St., New York, NY 10005

USA

London office

Winchester House

1 Great Winchester St.

London EC2N 2DQ

United Kingdom

Valery Loskutov

Head of Shareholders’ Equity Department

Corporate Secretary

Tel: +7 (4742) 44 49 89

Email: loskutov_va@nlmk.ru

Sergey Takhiev

Head of Investor Relations

Tel: +7 (495) 915 15 75

Email: ir@NLMK.com

How we communicate with our shareholders

NLMK strives to comply with best international information disclosure practice in order to provide a clear understanding of its business, industry position, and growth strategy. The Group achieves this by making active use of all available channels of communication, including its corporate website, social , and face-to-face management meetings.

The effectiveness of this all-round approach is evident from the list of Russian and international awards received by the Company in 2012:

Second place in IR Magazine Russia & CIS Awards, ‘Best Investor Relations’

Eighth place in Thomson Reuters Extel Survey Europe, ‘Leading Pan-European Investor Relations for Industrial Companies’

IR Global Rankings, ‘Best Financial Disclosure’

‘Best Annual Report 2011’, a series of prizes in nationwide (5 awards and 5 nominations) and international competitions (silver Digital Impact Award)

‘Best Corporate Website’, in the King Worldwide rating of Russian websites

In the words of one Company shareholder, a portfolio manager: The strategy is strong because it builds off what the company has been doing over a long period of time.