1. 1 Merger of PM and UHM as an example of the globalization of the Russian economy London April 2004 Pavel G Skitovich Deputy General Director Strategy and Corporate Affairs

2. 2 Integration synergies, achieved through the creation of a large unified machine building company will enhance the value of the company substantially above the simple sum of parts Reason for UHM making the offer a longer history as a public company an existing listing on the London Stock Exchange Merger objective

3. 3 Potential synergies Improved efficiency of capital expenditures and R&D Development of new technologies Improved terms of financing Optimisation of the use of production sites Cost reduction

4. 4 Focus on core business Short-term divestiture Shipbuilding Drilling equipment Oil & gas equipment Excess property Nuclear power engineering Production of specialty steels Power-generating equipment Sales proceeds will be directed to the expansion of PGE and nuclear businesses Non-core assets Long-term divestiture Mining equipment Lifting and transportation equipment

5. 5 Aims of focused strategy Ability to provide comprehensive solutions for power generation plants, hence increasing economic efficiency Improving product competitiveness and extending the existing product portfolio with new competitive offerings Strengthening key market positions and advancing in new product / geographic market segments

6. 6 Growth in economic efficiency Evidence from around the world shows that higher business specialisation as well as the ability to offer comprehensive product solutions allow companies to achieve better efficiency and higher market valuation* * Source: company

7. 7 Leadership in nuclear power engineering Technological leadership -Experience in the construction of a 1500 MW channel-type reactor in Lithuania -Production of the most powerful steam turbine (1200 MW) in the world, with a possibility to increase its capacity up to 1500 MW - Development of equipment for a 1500 MW water-cooled power reactor Market outlook -The bulk of nuclear reactor construction in the near future will take place in Asia (mainly China and India) where the company has strong established market positions (45 GW of additional nuclear generating capacity will be introduced by 2025) -In Russia, a program of constructing nuclear power plants (up to 54GW) in the remote areas of the country is currently under development The merged company will achieve a leading position in the nuclear energy market

8. 8 Market potential PM-UHM plans to take advantage of the new focused strategy and the synergies derived from the merger to accelerate growth in the attractive energy market: World PGE market capacity is 120-140 GW annually ($100-120 bn per year) Russian PGE market capacity is $4,5 bn per year during 2004-2010 and $10,5 bn per year during 2011-2020 Prices charged by PM-UHM are 15-20% lower than those of western competitors

9. 9 Geographic expansion of the company The merger between PM and UHM has initiated the development of a plan to set up engineering and production capacities in Eastern Europe and South-East Asia PM-UHM is becoming a multi-national company with ensuing advantages: - favourable terms in the competitive environment - reduction of currency risks - absence of customs barriers

10. 10 Shareholding structure Well balanced shareholding structure

11. 11 PM-UHM and “blue chips” PM-UHM will become one of the very few Russian “blue- chip” companies, where the majority shareholder has a stake less than 50% Norilsk Nickel RAO UES YUKOS Surgutneftegas MTS Majority shareholder with more than 50% of all shares