Annual Report 2007 - Severstal

Financial statements
OAO Severstal and subsidiaries
Notes to the consolidated financial statements
for the year ended December 31, 2007
(Amounts expressed in thousands of US dollars, except as otherwise stated)
Segmental income statements for the year ended December 31, 2006:
Russian Severstal Inter
Mining Steel Lucchini North Metalware Financing segment
segment segment segment America IPM segment segment transactions Consolidated
Sales
Sales – external 539,886 5,352,801 3,182,119 1,868,426 – 780,086 – – 11,723,318
Sales – to related parties 951,105 964,694 175,347 – – 58,837 – (1,424,269) 725,714
1,490,991 6,317,495 3,357,466 1,868,426 – 838,923 – (1,424,269) 12,449,032
Cost of sales (965,799) (3,804,762) (2,807,210) (1,711,899) (24) (736,568) – 1,425,035 (8,601,227)
Gross profit 525,192 2,512,733 550,256 156,527 (24) 102,355 – 766 3,847,805
General and
administrative expenses (137,299) (264,884) (191,282) (27,561) (2,879) (31,082) – – (654,987)
Distribution expenses (96,165) (456,340) (101,243) – – (43,560) – – (697,308)
Indirect taxes and contributions (48,369) (52,742) (37,190) – (826) (2,982) – – (142,109)
Share of associates’ (losses)/profits – (2,644) 202 2,971 – (1,722) – – (1,193)
Net income/(loss) from
securities operations 7,087 20,605 3,713 – (80) 314 – (3,376) 28,263
(Loss)/gain on disposal of
property, plant and equipment (11,642) (24,147) (3,412) 469 (407) (153) – – (39,292)
Net other operating
(expenses)/income (1,079) (12,518) (13,141) 1,827 2,440 5 – (4,643) (27,109)
Profit from operations 237,725 1,720,063 207,903 134,233 (1,776) 23,175 – (7,253) 2,314,070
Impairment of property,
plant and equipment (16,372) (8,222) (9,778) – – (23,364) – – (57,736)
Net gain on restructuring
of tax liabilities 14,669 – – – – – – – 14,669
Negative goodwill/
(goodwill impairment), net 224 (187) – – – 1,650 – 2,526 4,213
Net other non-operating expenses (11,408) (40,867) – – – (1,261) – – (53,536)
Profit before financing
and taxation 224,838 1,670,787 198,125 134,233 (1,776) 200 – (4,727) 2,221,680
Interest income 11,090 99,440 11,589 4,485 67 898 – (25,167) 102,402
Interest expense (48,706) (137,554) (58,778) (13,747) – (7,306) – 21,114 (244,977)
Foreign exchange difference (3,197) 37,553 1,638 – (1,445) (1,225) – – 33,324
Profit before income tax 184,025 1,670,226 152,574 124,971 (3,154) (7,433) – (8,780) 2,112,429
Income tax (expense)/benefit (82,101) (459,753) (53,790) (41,355) 87 1,440 – 174 (635,298)
Profit from continuing
operations 101,924 1,210,473 98,784 83,616 (3,067) (5,993) – (8,606) 1,477,131
Profit from discontinued operations – – 22,212 – – – 6,565 4,072 32,849
Profit for the year 101,924 1,210,473 120,996 83,616 (3,067) (5,993) 6,565 (4,534) 1,509,980
Additional information:
Depreciation expense 190,495 252,028 117,911 8,327 724 25,262 – – 594,747
Capital expenditures 350,863 554,357 126,687 82,778 127,413 10,144 60 20 1,252,322
Intersegment sales
(incl. in sales to related parties) 853,045 392,710 169,371 – – 9,143 – (1,424,269) –
106 Severstal Annual Report 2007