Press release - Stemcor

Press release
London, April 9th 2008: Stemcor announces full year results 2007
Highlights
Record turnover and tonnage:
• Turnover up from £3,308m to £ 4,254m (+29%)
• Operating profit up from £79m to £92m (+16%)
• Pre-tax profit up from £52m to £65m (+27%)
o Exceptional profit £16m (2006: nil)
• Steel up from 9.4m tonnes to 9.8m tonnes (+3%)
• Raw materials up from 9.5m tonnes to 10.5m tonnes (+11%)
Salient points:
• Achieved over 40% growth in tonnage sold in Continental Europe.
• Acquired international stockholder Steel Plate & Sections (SPS).
• Divested Savage River iron ore operations in Tasmania, retaining 10% stake.
• Invested in iron ore mining and pelletisation operations in India.
• Launched Stemcor Risk Management to use the new steel futures exchanges to manage price
risk both for Stemcor and for our partners.
• Strong prospects for 2008, with solid forward order book.
• In March 2008, acquired UK stockholder Barclay & Mathieson.
Chairman's statement
It is pleasing to be able to report another successful year, both in terms of results and strategic
progress. The underlying numbers are not as good as the headline figures, because of the
exceptional capital gains booked during the year. This was, however, a record performance.
We again earned an after-tax return of over 40% on shareholders’ funds at the beginning of
the year. Most of this return is retained within the company and our shareholders funds are
£150 million.
Our growth in recent years has resulted from our ability to adapt to a changing world by reinventing
ourselves through new strategies. One such important strategy has been to go downstream and
provide more value-added services, including holding stock for quick or just-in-time delivery and
processing prior to delivery. In Germany, our distribution, stockholding and processing subsidiaries -
OKS, S+B Flachstahl and WSK - hold planned stocks in 12 different locations. In the USA, 2007
was the first full year of ownership of our stockholding subsidiary, Kenilworth, in Warren, Ohio and

we also hold stocks at a number of port locations. In France, Italy and Central Europe, our fast
expanding businesses now hold unsold stocks at various ports, as we have done for many years in the
UK. In 2007 we purchased a well established steel stockholder and processor, SPS, which is
headquartered in Birmingham, England, but has an international business with special focus on the
offshore oil and gas industry. SPS holds stock in Birmingham, Glasgow, Rotterdam, Dubai and
Singapore. We are planning further acquisitions and, although we fully intend to go global in
stockholding, we believe this will be more easily accomplished by initially building up a strong base
in the developed world. With this in mind we have just completed the acquisition of Barclay &
Mathieson, a general steel stockholding group with 12 depots in the UK.
We monitor and control the level of unsold stocks very closely and every unit has to operate within
limits set by our risk director. Our unsold stocks amount to just 3% of the total steel tonnage we sell
annually. We focus on the length of time material has been in stock to ensure minimum stock levels
with maximum stock-turns. Any stock that is more than six months old is subject to obsolescence
provisions, which are among the more conservative in the industry. This also serves to motivate our
unit managers to ensure that our stock really does turn over quickly.
Prices that go up can also come down. Stockholders benefit from stock appreciation in a rising
market but, even if they are skilled in controlling stock levels and anticipating price movements, they
will still suffer when prices fall. This price risk has been difficult to avoid in the absence of a futures
market and is one of the many reasons that we welcome the introduction of steel futures at the LME
and other futures exchanges. We look forward to being able to hedge at least part of our price risk on
our own steel stocks through futures markets. Steel futures will take time to become generally
accepted but we are confident that they will take hold and have major implications for our industry.
Apart from the ability to hedge trading positions we believe that more and more sales in future will
be linked to exchange prices. We are exploring further activities we could undertake in the new
world of steel futures and we have set up a specialist team for this purpose.
2007 was a very strong year for steel trading. The unprecedented rise in the cost of freight, however,
did have a substantial negative effect on our profitability. We do hedge our freight exposure as
appropriate, but it is often not possible to do so effectively. Volatility in our markets is becoming
more pronounced and increasingly it will become necessary for a steel trading company to hedge its
risk exposure both to steel and to freight prices.
Raw materials also saw strong growth in 2007. The disposal of the majority of our holding in Savage
River in Australia might look premature in view of the recently announced steep rise in iron ore
pricing, but we are re-investing the proceeds into iron ore projects in Orissa in India, where we
believe we can obtain a better long-term return.
Our portfolio today extends beyond traditional trading into financial services. One example was our
advisory role in the successful restructuring and privatisation of the Georgian ferro-manganese
industry. This was a transaction that any investment bank would have been proud to accomplish. Our
fee-based consultancy services in offset also had a good year.
Overall, 2007 was a mixed year for the global steel industry as the arrival of increased Chinese
exports affected prices in the second half, despite the world-wide construction boom and the growth
in world steel consumption. At the beginning of 2008 clear evidence that China was intent on
controlling and reducing steel exports started an upward spike in steel prices, which is continuing as
I write, and which has been described by one commentator as a price volcano. Other commentators

are suggesting that without Chinese exports the rest of the world now faces a structural shortage in
steel capacity, which will further fuel the rise in prices we have experienced in the first quarter.
Never has there been a more striking contrast or disconnect between the financial world with its
credit problems and the real world of steel with its apparent growing demand. The question is how
much longer can these two different worlds inhabit the same universe? The past history of the steel
industry suggests that prices will not go on climbing for ever and the bigger the rise, the greater the
risk of a correction. If the credit crisis continues, it will reduce both the purchase of consumer
durables like cars and requirements for new retail and commercial construction. There will be an
adverse impact on investment in general and therefore on the demand for steel. We therefore retain a
healthy caution about what the future may bring. As far as our own prospects are concerned, we are
confident that we have put in place the building blocks for continued success. We expect further
growth and another good year in 2008, based on strong current trading and our substantial forward
order book.
My thanks again to our customers, our suppliers and our bankers for their continued support and to
our dedicated staff for all their hard work. We look forward to our future together with confidence.
Ralph Oppenheimer
Executive Chairman
4 th April 2008
Editors’ notes
Consolidated profit and loss account
For the year ended 31 December 2007
Ends
Year to Year to
31/12/2007 31/12/2006
£'m £'m
Turnover 4,254 3,308
Cost of sales (4,075) (3,157)
Gross Profit 179 151
Distribution costs and administrative expenses (87) (72)
Operating profit 92 79
Exceptional Items 16
Net interest payable (43) (28)
Profit on ordinary activities before tax 65 52
Taxation (20) (15)
Profit on ordinary activities after tax 45 37
Minority Interests (1) (4)
Profit attributable to shareholders 44 33

Consolidated balance sheet
31 December 2007
31/12/2007 31/12/06
£'m £'m
Fixed assets 40 47
Current assets
Stocks 417 317
Debtors 821 575
Cash at bank and in hand 169 77
1,406 969
Creditors: amounts falling due within one year
Bank loans and overdrafts (848) (520)
Creditors and accruals (397) (340)
(1,245) (860)
Net current assets 161 109
Total assets less current liabilities 201 156
Creditors: amounts falling due after more than one
year (51) (51)
Net assets 150 105
Shareholders' funds 150 102
Minority interests 0 3
Total equity 150 105
All the financial information set out above is extracted from the audited financial statements of
Stemcor Holdings Limited.
Stemcor profile
Stemcor is the world’s largest independent steel trader.
Stemcor plays a pivotal role in the steel industry, acting as a trading intermediary between producers
and purchasers and providing a range of associated services. Steel goods traded include a wide range
of long, flat, tube and semi-finished products. Raw materials for the production of steel include iron
ore, pig iron, coal, coke, ferroalloys and scrap.
Stemcor now employs more than 1,000 people in its network of 70 offices in 40 countries across the
globe. For the financial year ending 31 December 2007, Stemcor traded 20.2 million tonnes of steel
and associated raw materials, with turnover of £4.2 billion (US$8.5 billion).

Stemcor’s services span every step in the steel supply chain, from the provision of steel-making raw
materials to producers through to the delivery of processed steel to end-users. The company’s core
competencies - steel trading, raw materials trading, distribution, stockholding and finance - are
interlinked and apply to all its business units across the world. Stemcor’s breadth of expertise affords
a unique perspective, enabling it to offer integrated solutions that improve its partners’ business
performance.
Stemcor does not own any steel mill, nor is any mill a shareholder in the company. This
independence ensures that it is objective in matching exact customer needs in terms of quality,
specifications, financial terms and delivery.
Stemcor was formed in London in 1951 and is a privately owned company. The majority of shares
are held by the Oppenheimer family, represented by Ralph Oppenheimer (Executive Chairman) and
Philip Edmonds (Deputy Chairman), with the balance of shares held by employees. The company
prides itself on the quality of its people, its risk management and its track record.
Trading names: Barclay + Mathieson, Eurosteel, Kenilworth, L.W. Lambourn, OKS Otto Knauf,
Samac, Schmolz + Bickenbach Flachstahl, SPS, Stemcor, Uldry Trading, WSK.
Contact
Patrick Pearson
Head of Communications
Stemcor Holdings Limited
Level 27, CityPoint
1 Ropemaker Street
London EC2Y 9ST
Direct tel: +44 (0)207 7753594
Email: patrick.pearson@uk.stemcor.com