Annual Report 2007 - Severstal

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Governance Board of Directors Top left to right: Christopher Clark Alexey Mordashov Martin Angle Ronald Freeman Anatoly Kruchinin Peter Kraljic Vadim Makhov Mikhail Noskov Rolf Stomberg Vadim Shvetsov 64 Severstal Annual Report 2007
Christopher Clark Independent Chairman of the Board of Directors, Member of the Nomination and Remuneration Committee Chris Clark, 66, is a leading industrialist and brings extensive business knowledge to the Board. Chris’s career spans 40 years at Johnson Matthey plc, the specialty chemicals and precious metals Group, where he became Chief Executive in 1998. He led the Group into the FTSE 100 in 2002. Since his retirement in 2004, Chris has taken a number of non-executive positions. He currently chairs: Associated British Ports; Urenco Limited, the leading international supplier of enriched uranium to the power generating industry; and Wagon plc, the European manufacturer of metal components for the automobile industry. Chris is a graduate in metallurgy; he studied at Trinity College, Cambridge and Brunel University, London. Alexey Mordashov CEO, Severstal, Member of Nomination and Remuneration Committee Alexey Mordashov, 42 , has worked for Severstal since 1988. He started his career as a senior shop economist, becoming Chief Financial Officer in 1992. In December 1996, he was appointed as Severstal’s Chief Executive Officer. In June 2002, he was also elected Chairman of Severstal’s Board of Directors. Alexey is a graduate of the Leningrad Engineering and Economics Institute and holds an MBA degree from Newcastle Business School of Northumbria University (Newcastle, UK). Martin Angle Independent Director, Chairman of the Audit Committee Martin Angle, 57, holds a number of non-executive directorships in addition to JSC Severstal, including Savills plc, a leading international property adviser; Dubai International Capital LLC; the Chairmanship of The National Exhibition Group in the UK; and the Chairmanship of Celerant Consulting, a leading international, operational management consultancy. He also sits on the Board of the Warwick Business School and the Governing Council of the University of Warwick. During his career, Martin has held senior executive positions in investment banking, industry and most recently private equity, where he was an Operational Managing Director of Terra Firma Capital Partners and a director of various of its portfolio companies. This includes the Waste Recycling Group, the largest end disposer of waste in the UK where he was Executive Chairman; and Le Méridien hotel group, where he was Deputy Chairman. Prior to that, Martin was for a number of years the Group Finance Director of TI Group plc, a specialised engineering company in the UK FTSE 100 with activities in over 50 countries. Before that, he spent 20 years working in investment banking, where he held a number of senior positions with SG Warburg & Co Ltd, Morgan Stanley and Dresdner Kleinwort Benson. Martin is a graduate in physics, a Chartered Accountant, a Member of the Securities Institute and a Fellow of the Royal Society of Arts. Ronald Freeman Independent Director, Member of the Audit Committee Ronald Freeman, 68, is a member of the Board of Directors, a Consulting Partner and stockholder of the Moscow-based Troika Dialog investment bank. He is also a member of the Supervisory Board and the Human Resources Committee of truck manufacturer, KAMAZ, a member of the board of directors of Volga Gas, a member of the Executive Committee of the Atlantic Council, and a member of the board of directors of Polish Telecom. He is a member of the International Advisory Committee of Columbia Law School and the Development Committee of Mansfield College (Oxford, UK). Between 1991 and 1997, Ronald was Head of the Banking Department of the European Bank for Reconstruction and Development (EBRD). He was responsible for debt and equity financing in the private sector in 23 countries of the former Soviet Union, with a total annual funds commitment of Euro 2 billion. Prior to that, Ronald was vice-chairman of Citigroup European investment banking and a general partner of Salomon Brothers. Ronald holds a BA degree from Lehigh University, and an LLB from the Law School of Columbia University. He was admitted to the New York Bar. Anatoly Kruchinin CEO, Cherepovets Steel Mill Anatoly Kruchinin, 47, began his career at Severstal in 1982. In 1993, he became Chief Power Engineer and in March 1999, he was made Commercial Director. From 2002, Anatoly worked as Executive Director of Severstal, becoming the company’s CEO later in 2002. Since 2006, he has been Chief Executive Officer of Cherepovets Steel Mill. Anatoly is a graduate of the Ivanovo Power Engineering Institute and holds an MBA degree from National Economic Academy under the Government of Russia. Peter Kraljic Independent Director, Member of the Audit Committee Peter Kraljic, 68, is a Director Emeritus at McKinsey, where he spent 32 years and held a number of senior positions until his retirement in 2002. Focused mainly on industrial clients in the chemicals, pharmaceuticals, automotive assembly, and steel and aluminium sectors, he was also a member of McKinsey’s Personnel Development Committee and has managed the company’s activities in France as a General Director. Peter has also written a number of scientific and business articles for publications such as the Harvard Business Review and Le Figaro Economic. He has also recently led special projects aimed at economic growth and job creation in Germany and Brazil. Peter graduated from the University of Ljubljana, Slovenia (Faculty of Metallurgy), and Polytechnic University in Hannover, Germany. He also holds a Masters degree in business management from the INSEAD business school, France. Vadim Makhov Chairman, Severstal North America, Vice Chairman, Lucchini Vadim Makhov, 35, has worked at Severstal since 1994 as Deputy Head of the Economic Research Laboratory and Head of Severstal’s Strategic Department. From June 2002, Vadim served as Deputy Chief Executive Officer of the Severstal Group. Since 2004, he has been Chairman of the Board of Directors of Severstal North America, and Deputy Chief Executive Officer of Severstal Group for Strategy and Business Development. In 2007, he was also appointed as Deputy Chief Executive Officer of Severstal for Strategy and Business Development. Vadim is a graduate of the State Management Academy named after Sergo Ordzhonikidze, and holds an MBA degree from Newcastle Business School of Northumbria University (Newcastle, UK). Mikhail Noskov CFO, Severstal Mikhail Noskov, 44, worked at the International Moscow Bank between 1989 and 1993. From 1994, he was Trade Finance Director of Credit Suisse (Moscow). He has worked for Severstal since February 1997 as Head of Corporate Finance and from 1998 as Finance and Economics Director. In June 2002, he was made Deputy CEO for Finance and Economics of the Severstal Group, and in January 2007, he was appointed Deputy CEO for Finance and Economics of Severstal. Mikhail graduated from the Moscow Institute of Finance. Rolf Stomberg Senior Independent Director, Chairman of the Nomination and Remuneration Committee Rolf Stomberg, 67, is Chairman of the Supervisory Board of LANXESS AG, a global chemical company which was formed after reorganisation of Bayer AG. He is Senior Independent Director of the UK-Netherlands Publishing and information group Reed Elsevier Plc, and of medical equipment producer Smith & Nephew Plc. He is also a member of the Supervisory Board of TNT NV, and Chairman of the Management Consulting Group Plc. His executive career was with BP (British Petroleum) where he held the position of Managing Director and CEO of BP’s downstream business on the main Board of the company. Rolf is an economics graduate from Hamburg University. Vadim Shvetsov Executive Director Vadim Shvetsov, 40, has worked at the Cherepovets Steel Mill since 1986. Between 1993 and 1996, he worked for Severstal-Invest as Commercial Director and, later, as Chief Executive Officer. From 1996 to 2000, Vadim served as deputy of the Cherepovets City Council. In 1997, he became Head of Severstal’s Sales Department. From 2002, he combined the positions of First Deputy CEO of Severstal Group and CEO of Severstal-Auto. In March 2002, he became CEO of Severstal-Auto, and in January 2007, he was appointed Deputy Director of the Metalware segment. Vadim is a graduate of the Cherepovets Wood Processing Technical School, and the Moscow Institute of Steel and Alloys. He also holds an MBA degree from Newcastle Business School of Northumbria University (Newcastle, UK). Severstal Annual Report 2007 65
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Annual Report 2007
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We are a leading international stee
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Sales by delivery destination 2007
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Corporate structure In April 2008,
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Dividend payments were 40.1% of 200
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Our strategy for growth is to: - Re
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Principal events of 2007 January Ch
Page 15 and 16: Reconstructed in 1996 using steel p
Page 17 and 18: The mining area of Vorkutaugol cons
Page 19 and 20: Severgal, Cherepovets is equipped w
Page 21 and 22: A process technician at Spartan Ste
Page 23 and 24: Severstal Annual Report 2007 21
Page 25 and 26: Severstal Annual Report 2007 23
Page 27 and 28: In 2007, Izhora Pipe Mill produced
Page 29 and 30: Crude steel production Million tonn
Page 31 and 32: Pipe industry In 2007, the steel co
Page 33 and 34: Risks Operational risks Investment
Page 35 and 36: Severstal revenue by segments,* 200
Page 37 and 38: Mining Severstal’s Mining segment
Page 39 and 40: Mining segment, sales by products,
Page 41 and 42: Mining segment, export sales, FCA b
Page 43 and 44: Russian Steel Crude steel productio
Page 45 and 46: Sales by products 2007 2006 Change
Page 47 and 48: Costs 2007 2006 US$ % of US$ % of C
Page 49 and 50: Key performance indicators 2007 200
Page 51 and 52: SNA revenues by industries Automoti
Page 53 and 54: Sales by products 2007 2006 Change
Page 55 and 56: Metalware Sales by industry in Russ
Page 57 and 58: Izhora Pipe Mill Production of larg
Page 59 and 60: Severstal on the capital markets Sh
Page 61 and 62: Eurobond issues Interest Date Date
Page 63 and 64: Corporate social responsibility Our
Page 65: Clockwise from above: We have spons
Page 69 and 70: When joining the Board, Directors a
Page 71 and 72: OAO Severstal and subsidiaries Cons
Page 73 and 74: Independent Auditors’ Report Boar
Page 79 and 80: OAO Severstal and subsidiaries Note
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OAO Severstal and subsidiaries Note
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Shareholder information and financi
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