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OAO Severstal and subsidiariesOAO Severstal and subsidiariesNotes to the consolidated financial statementsfor the years ended December 31, 2008, 2007 and 2006(Amounts expressed in thousands of US dollars, except as stated otherwise)Notes to the consolidated financial statementsfor the years ended December 31, 2008, 2007 and 2006(Amounts expressed in thousands of US dollars, except as stated otherwise)converted into ordinary shares on September 24, 1993 and sold by the Government at privatization auctions.Share issue 2006The Parent Company issued shares in June 2006 in consideration for the mining companies acquired from theMajority Shareholder. As discussed in note 30, certain shareholders exercised their pre-emptive rights in connectionwith the share issue for acquisition of mining companies. Total proceeds for such shares issued for cash in June2006 were US$ 162,179 thousand and comprised of US$ 5 thousand of increase in share capital and US$ 162,174thousand of increase in share premium.In November 2006, the Parent Company completed the listing of its global depositary receipts (‘GDRs’) on theLondon Stock Exchange. The Group’s Majority Shareholder placed 85,000,000 GDRs in an initial public offering(‘IPO’) at a price of US$ 12.50 per GDR (one GDR represents one share). The Parent Company was not issuing newshares and has not received any proceeds in connection with this initial public offering.short-term bank deposits, divided by shareholder’s equity. The level of dividends is also monitored by the Board ofDirectors of the Group.There were no changes in the Group’s approach to capital management during the year.DividendsThe maximum dividend payable is restricted to the total accumulated retained earnings of the Parent Companydetermined according to Russian law. As at the balance sheet date, reserves available for distribution of US$ 5,047.2million, were not yet approved by the Board of Directors (December 31, 2007: US$ 5,894.9 million; December 31,2006: US$ 4,667.6 million).On June 9, 2006, the Meeting of Shareholders approved the annual dividend of RUR 4.0 (US$ 0.15 at June 9, 2006exchange rate) per share in respect of 2005. Owners of 551.9 million shares were entitled to these dividends.However, as a part of this process, the Parent Company initiated the issue of up to 85,000,000 additional sharesin the fourth quarter of 2006. On November 14, 2006, the Board of Directors set the price for pre-emptive rightspurchases equal to the IPO price less pro rata expenses for the IPO transaction – RUR 322.81 per share (US$ 12.13at November 14, 2006 exchange rate). The Board of Directors also decided that shares for which pre-emptive rightswere not exercised would be offered through open subscription at the IPO price of RUR 332.74 per share (US$ 12.50at November 14, 2006 exchange rate).On September 25, 2006, the Meeting of Shareholders approved an interim dividend of RUR 3.6 (US$ 0.13 atSeptember 25, 2006 exchange rate) per share for the first half of 2006. Owners of 930.8 million shares were entitledto these dividends.On December 25, 2006, the Meeting of Shareholders approved an interim dividend of RUR 2.0 (US$ 0.075) per shareand GDR for the third quarter of 2006. Owners of 930.8 million shares were entitled to these dividends.The Group received RUR 24,829 million (US$ 943.0 million at December 18, 2006 exchange rate – the date ofclosing of share issue) for 76,916,692 shares placed under pre-emptive rights subscription. The Group did notreceive applications under the open subscription. Total proceeds for such shares issued for cash in December 2006comprised of US$ 29 thousand of increase in share capital and the remaining amount was recorded as an increasein share premium.On June 15, 2007 the Meeting of Shareholders approved the annual dividend of 5.0 rubles (US$ 0.2 at June 15,2007 exchange rate) per share and per GDR in respect of 2006.On June 29, 2007 the Meeting of Shareholders approved an interim dividend of 2.6 rubles (US$ 0.1 at June 29,2007 exchange rate) per share and per GDR for the first quarter of 2007.Consequently, the total value of issued share capital presented in these consolidated financial statementscomprises:On September 28, 2007 the Meeting of Shareholders approved an interim dividend of 10.0 rubles (US$ 0.4 atSeptember 28, 2007 exchange rate) per share and per GDR for the first half of 2007.Number of shares, thsd. US$’000Share capital at December 31, 2006 1,007,701 3,311,288Share capital at December 31, 2007 1,007,701 3,311,288Share capital at December 31, 2008 1,007,701 3,311,288All shares carry equal voting and distribution rights.Capital managementThe Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidenceand to sustain future development of the business. This policy includes compliance with certain externally imposedminimum capital requirements. The Group’s management constantly monitors profitability and leverage ratios andcompliance with the minimum capital requirements. The Group uses the return on assets ratio which is definedas profit from operations divided by total assets (averaged over the measurement period) and the leverage ratiocalculated as net debt, comprising of long-term and short-term indebtedness less cash, cash equivalents andOn December 20, 2007 the Meeting of Shareholders approved an interim dividend of 2.5 rubles (US$ 0.1 atDecember 20, 2007 exchange rate) per share and per GDR for the third quarter of 2007.On June 27, 2008 the Meeting of Shareholders approved the annual dividend of 4.0 rubles (US$ 0.2 at June 27,2008 exchange rate) per share and per GDR in respect of 2007.On June 27, 2008 the Meeting of Shareholders approved an interim dividend of 5.2 rubles (US$ 0.2 at June 27,2008 exchange rate) per share and per GDR for the first quarter of 2008.On September 30, 2008 the Meeting of Shareholders approved an interim dividend of 18.35 rubles (US$ 0.7 atSeptember 30, 2008 exchange rate) per share and per GDR for the first half of 2008.On December 26, 2008 the Meeting of Shareholders approved an interim dividend of 7.17 rubles (US$ 0.2 atDecember 26, 2008 exchange rate) per share and per GDR for the third quarter of 2008.152153