2007 Business and financial performance May 8, 2008 Content 1. - - PowerPoint PPT Presentation

ZŁOMREX S.A.

2007 Business and financial performance

May 8, 2008

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Content

• 1. Introduction
• 2. Business overview
• 3. 2007 outlook
• 4. Q&A

Appendix Pro forma financial statements

ZŁOMREX S.A.

Introduction

Section 1

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[To come]

Krzysztof Walarowski Member of the Board Age – 52 5 yrs with Złomrex Krzysztof Zola CFO Age – 36 7 yrs with Złomrex Dominik Barszcz Chief Accountant Age - 32 8 yrs with Złomrex

Introduction

Speakers

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Introduction

2007 Highlights

• Issuance of EUR 170m high yield bonds: January 2007
• Closing of three big acquisitions:
• voestalpine Stahlhandel GmbH, Austria (VASTH): March 2007;
• Stalexport S.A., Poland (STX): October 2007;
• Zeljezara Split d.d., Croatia (ZJEL): December 2007;
• Organic growth:
• two new scrap branches: in Zabrzydowice and in Gdańsk
• 7% steel melting capacities increase at Ferrostal Łabędy (FERR) up to 375 thousand

tonnes,

• new product line at HSW-HSJ (HSJ) – special application sheets
• Financial markets collapse, downgrades of ZŁOMREX (ZLX) ratings.
• Change in steel seasonality profile: strong H1 and weak H2 2007

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Introduction

2007 Highlights

135 731 60 117 172 880 216 759 EBITDA

• 19 339
• 22 112
• 34 622
• 60 281

Depreciation and amortyzation 204 883 16 870 97 100 205 837 Profit for the period

• 3 659
• 4 098
• 22 009
• 20 457

Income tax expense 208 542 20 968 119 109 226 294 Profit before tax 101 036 5 894 119 653 Excess in the net fair value of acquired assets over cost

• 8 886
• 17 037
• 25 043
• 49 837

Net financing costs

• 17 647
• 20 852
• 34 904
• 106 213

Financial expenses 8 761 3 815 9 861 56 376 Financial income 116 392 38 005 138 258 156 478 EBIT

• 2 861
• 4 725
• 14 447
• 22 335

Other expenses

• 36 866
• 40 598
• 75 421
• 136 519

Administrative expenses

• 22 083
• 15 691
• 31 650
• 125 041

Distribution expenses 2 772 3 531 5 472 10 590 Other income 175 430 95 488 254 304 429 783 Gross profit 1 194 898 976 236 1 942 514 3 366 004 Revenue '000 PLN Y 2004 Y 2005 Y 2006 Y 2007 INCOME STATEMENT

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Introduction

2007 Highlights

1,4 3,3 2,3 4,4 Net debt / EBITDA 184 861 197 685 392 649 943 351 Net debt 277 820 294 980 409 078 689 568 Equity 17,1% 1,7% 5,0% 6,1% Nett profit margin 11,4% 6,2% 8,9% 6,4% EBITDA margin 46 58 55 56 Receivables turnover (days) 40 43 62 86 Inventories turnover (days) 0,68 0,70 0,53 0,68 Quick ratio 1,17 1,13 1,00 1,28 Liquidity ratio Y 2004 Y 2005 Y 2006 Y 2007 MAIN METRICS

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Introduction

Strategy

• Emphasis on distribution of steel products – further development and integration of

retail division

• Strengthening the position in production of special application and niche products
• Decrease of indebtedness and strengthening equity base before any material acquisitions
• r expansionary CAPEX.

ZŁOMREX S.A.

Business overview

Section 2

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Business overview

Business environment

1 069,0 1 142,0 1 244,0 8% 1 344,0 World 280,5 355,8 422,7 16% 489,2 China 202,3 195,5 207,6 1% 210,2 EU (27) 10,1 8,3 10,0 6% 10,6 Poland ‘000 000 tonnes Y 2004 Y 2005 Y 2006 % YoY Y 2007 CRUDE STEEL PRODUCTION

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Business overview

Business environment

5,4 4,6 5,6 4% 5,8 long produts 4,4 3,6 4,4 1% 4,5 flat products 9,8 8,1 10,0 3% 10,3 Poland, thereof: ‘000 000 tonnes Y 2004 Y 2005 Y 2006 % YoY Y 2007 PRODUCTION OF FINISHED PRODUCTS 3,7 3,6 4,8 23% 5,9 long produts 4,0 3,8 5,0 23% 6,1 flat products 7,7 7,4 9,7 23% 12,0 Poland, thereof: ‘000 000 tonnes Y 2004 Y 2005 Y 2006 % YoY Y 2007 STEEL USE

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Business overview

Business environment

Another year with a positive steel business environment with strong demand in China, India, Russia, Central Europe and Middle East; growth in global production and consumption. Strong demand reflected in increase in production and in unit prices In Polish market unit prices under pressure resulting from strengthening zloty. Only in 2007 prices reached 2004 level after 2005’s downturn. In 2007 zloty denominated unit prices increased more than the rate of inflation Spread between scrap price and billets and bars price widened allowing good production profitability.

1 965 1 565 1 833 9% 2 000 Bars 1 471 1 387 1 483 13% 1 672 Billets 775 631 719 7% 771 Scrap metal PLN / Tonne Y 2004 Y 2005 Y 2006 % YoY Y 2007 AVERAGE UNIT PRICES

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Business overview

Business environment

EUR / PLN: 24% during 2004-2007 USD / PLN: 35 % during 2004-2007

• 20%

9%

• 11%
• 16%

% change 3,74 2,99 3,26 2,91 2,44 USD/PLN

• 14%
• 5%
• 1%
• 7%

% change 4,72 4,08 3,86 3,83 3,58 EUR/PLN PLN Dec-2003 Dec-2004 Dec-2005 Dec-2006 Dec-2007 EXCHANGE RATES

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Business overview

2007 performance drivers

497 067 369 101 38 616 330 485 542 855 911 956 FINISHED PRODUCTS 207 168 4 587 4 587 204 519 209 106 BILLETS 297 484 194 989 194 989 SCRAP Tonnes TOTAL ZJEL STX VASTH REPORTED NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX AS IN 2006 REPORTED 2006 2007 SALES 357 981 393 308 393 308 OTHER 1 063 269 1 148 140 112 988 1 035 152 1 324 295 2 472 435 FINISHED PRODUCTS 307 290 7 669 7 669 341 868 349 537 BILLETS 213 974 150 302 150 302 SCRAP 000 PLN TOTAL ZJEL STX VASTH REPORTED NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX AS IN 2006 REPORTED 2006 2007 SALES

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Business overview

2007 performance drivers

213 974 150 302 150 302 SALES ('000 PLN) 297 484 194 989 194 989 SALES 606 116 712 398 712 398 INTERNAL USE 882 420 880 465 880 465 PURCHASES Tonnes TOTAL ZJEL STX VASTH REPORTED NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX AS IN 2006 REPORTED 2006 2007 SCRAP 307 290 7 669 7 669 341 868 349 537 SALES ('000 PLN) 207 168 4 587 4 587 204 519 209 106 SALES 444 739 446 558 446 558 INTERNAL USE 521 977 622 311 622 311 PRODUCTION 129 930 33 353 33 353 PURCHASES Tonnes TOTAL ZJEL STX VASTH REPORTED NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX AS IN 2006 REPORTED 2006 2007 BILLETS

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Business overview

2007 performance drivers

1 063 269 1 148 140 112 988 1 035 152 1 324 295 2 472 435 SALES ('000 PLN) 101 820 230 227 19 195 211 032 166 344 396 571 RETAIL SALES 395 247 138 874 19 421 119 453 376 511 515 385 BULK SALES 387 106 393 518 393 518 PRODUCTION Tonnes TOTAL ZJEL STX VASTH REPORTED NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX AS IN 2006 REPORTED 2006 2007 FINISHED PRODUCTS 357 981 393 308 393 308 SALES 000 PLN TOTAL ZJEL STX VASTH REPORTED NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX AS IN 2006 REPORTED 2006 2007 OTHER

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Business overview

2007 Quarterly Performance

82 131 140 44 RETAIL SALES 146 130 125 114 BULK SALES 64 48 45 52 BILLETS 40 47 60 48 SCRAP ‘000 Tonnes Q 4 Q 3 Q 2 Q 1 SALES 26 361 50 999 73 391 65 381 EBITDA 845 588 951 215 980 530 588 711 SALES 000 PLN Q 4 Q 3 Q 2 Q 1 SALES AND EBITDA

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Business overview

Proforma Numbers

200 491 PRO FORMA

• 198

VASTH exchange rate Pro forma adjustments, thereof:

• 9 477

STX

• 22 797

ZJEL Subgroups for non-consolidation periods with negative EBITDA, thereof: 1 670 Other 14 534 VASTH Q1 2007 Subgroups for non-consolidation periods with positive EBITDA, thereof: 216 759 REPORTED

• 14 214

Settlement of fair value of VASTH inventories at the acquisition to the P&L statement Consolidation adjustments, thereof:

• 1 670

Other

• 14 534

VASTH Q1 2007 Subgroups for non-consolidation periods with positive EBITDA, thereof: 247 177 ADJUSTED PRO FORMA '000 PLN EBITDA

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Business overview

Proforma Metrics

4,5 Net debt / ADJUSTED PRO FORMA EBITDA 5,5 Net debt / PRO FORMA EBITDA 5,1 Net debt / EBITDA 247 177 ADJUSTED PRO FORMA EBITDA 200 491 PRO FORMA EBITDA 216 759 EBITDA 1 104 128 NET DEBT 149 404

• free cash

114 012

• restricted & limited

263 416 TOTAL CASH, thereof: 46 765 VASTH DEFERRED PAYMENT 1 206 767 DEBT Y 2007 PROFORMA METRICS

Adjusted pro forma (APF) EBITDA the best indicator of ZLOMREX profitability in 2007 APF EBITDA to be increased by positive STX and ZJEL EBITDAS in 2008

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Business overview

Progressive integration of acquired businesses

• All retail companies consolidated under ZSS. Integration process is pending
• voestalpine Stahlhandel GmbH– positive performance in 2007
• Zeljezara Split d.d. – complete change of management and working capital injection lead

ZJEL on positive territory in March 2008;

• Stalepxport – changes of management and other necessary layoffs. The company became

profitable at EBITDA level since Q4 2007.

ZŁOMREX S.A.

2008 outlook

Section 3

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Business 2008 outlook

2008 steel business outlook

• Moderate growth on major steel consuming markets in 2008, but at a slower pace than in

2007(1) – steel consumption booming in Russia, Ukraine and China – growth in India also in infrastructural sector – little growth in Western Europe, Japan and in the USA – strong growth in Central Europe; new EU applicants; utilization of structural funds in new EU members

• Very strong Polish market in years to come(2)

– investment and consumption driven GDP growth in Poland – construction, home appliances and automotive sectors making most of the demand – green-field projects, absorption of EU subsidies, EURO 2012

• Production capacities hardly meeting stronger demand
• 2008 sharp increase in steel prices and scarp prices following

(1) Source: ZŁOMREX estimate (2) Source: HIPH (Polish Steel Association) monthly reports on Polish market (3) Source: ZŁOMREX estimate

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2008 outlook

Financials

• The business development in 1st quarter of 2008 indicates good ZŁOMREX

performance in all 2008

• The Management expects higher sales and EBITDA than in 2007
• 2008 Financial policy requires a substantial decrease in indebtedness,

especially short term.

• Q1 2008 EBITDA is expected to be above PLN 60 million. No change to LTM

pro forma EBITDA; substantial improvement in net debt / EBITDA expected in Q3 and Q4.

ZŁOMREX S.A.

Q&A

Section 4