Key Data of the Salzgi Annual Report 1998/99 Crude steel production Sales Steel Production Division Steel Trading Division Raw Materials and Services D Flat rolled products Sections Share of exports Employees Personnel expenses Workforce (annual average) Personnel expenses/employee Result from ordinary operation Net income for the year Balance sheet total Fixed assets Current assets Inventories Shareholders’ equity Borrowings Special reserves with an equit Provisions Liabilities thereof due to banks Investments3) Depreciation3) Key figures Income before interest and tax EBIT before depreciation (EBIT Return on capital employed (R Cash earnings to DVFA/SG 1) All data have been adjusted to the 2) EBIT in relation to balance sheet t 3) Without financial assets Key Data of the Salzgitter Gro u p 1995/961) 1996/971) 1997/98 1998/99 Crude steel production 1,000t 3,935 4,635 4,928 4,725 Sales DM million 5,141 5,402 6,245 5,272 Steel Production Division DM million 1,985 2,124 2,532 2,208 Steel Trading Division DM million 2,712 2,876 3,319 2,725 Raw Materials and Services Division DM million 444 402 394 339 Flat rolled products DM million 2,909 3,094 3,672 2, 9 0 5 Sections DM million 910 1,050 1,101 977 Share of exports % 41 45 46 45 Employees Personnel expenses DM million 977 994 1,079 1,104 Workforce (annual average) 11,885 11,693 11,536 12,349 Personnel expenses/employee KDM 82 85 94 89 Result from ordinary operations DM million 47 142 287 97 Net income for the year DM million 21 88 148 50 Balance sheet total DM million 3,111 3,199 3,477 3,310 Fixed assets DM million 1,306 1,309 1,260 1,324 Current assets DM million 1,805 1,890 2,217 1,986 Inventories DM million 768 789 961 884 Shareholders’ equity DM million 1,127 1,165 1,252 1,260 Borrowings DM million 1,984 2,034 2,225 2,050 Special reserves with an equity portion DM million - - - 7 Provisions DM million 1,457 1,370 1,491 1,544 Liabilities DM million 527 664 734 499 thereof due to banks DM million 21 15 50 88 Investments3) DM million 288 211 156 216 Depreciation3) DM million 185 206 216 210 Key figures Income before interest and tax (EBIT) DM million 91 191 342 151 EBIT before depreciation (EBITDA) DM million 276 397 558 362 Return on capital employed (ROCE)2) % 4.2 8.8 14.6 6.1 Cash earnings to DVFA/SG DM million -- 392 289 1) All data have been adjusted to the new Group structure introduced 1997/98 and to the changed presentation 2) EBIT in relation to balance sheet total less other provisions (without tax) and liabilities (without loans and liabilities to banks) 3) Without financial assets Highlights of the Fiscal Year 1998/99 March 15, 1 9 9 9 111th Supervisory Board Meeting focusing on the resignation of Professor Dr. Selenz as Chairman and member of the Executive B o a rd. Approval of the investment “Extension of building elements pro d u c t i o n ” totaling DM 58 million. March 16, 1 9 9 9 Annual Shareholders’ Meeting focusing on: election of Supervisory Board of Salzgitter October 1, 1 9 9 8 AG; changeover of corporate byelaws to SZAG was awarded the “Formula Q”-Prize e u ro; authorization of Executive Board to for excellence in quality, re l i a b i l i t y, and issue bonds subject to Supervisory Board mutual cooperation by Vokswagen AG. a p p roval; creation of a contingent captial (II) for servicing option and conversion rights October 15, 1 9 9 8 e x e rcised; authorization of Executive Board 109th Supervisory Board Meeting focusing to purchase and sell own shares subject to on approval of investments totaling DM 50 Supervisory Board appro v a l . million and on discussion of corporate plan- n i n g . March 16, 1 9 9 9 Constituent Meeting of the Supervisory N ovember 9/December 14, 1 9 9 8 B o a rd electing Dr. Wilfried Lochte as its Ad hoc information with key data of annual C h a i r m a n . financial statements 1997/98. April 19-24, 1 9 9 9 J a n u a ry 21, 1 9 9 9 P resentation of Salzgitter AG at the 110th Supervisory Board Meeting with the Hanover Fair. focus on balance sheet approval and on the a p p roval of additional purchases of further April 26, 1 9 9 9 S D I - s h a re s . P resentation of Salzgitter AG as participant in the new SMAX stock exchange segment J a n u a ry 25, 1 9 9 9 in Frankfurt. Ye a r-end press conference in Salzgitter. J a n u a ry 26/27, 1 9 9 9 Analysts conferences in Frankfurt and L o n d o n . March 11, 1 9 9 9 Ad hoc information on first quarter re s u l t s 1 9 9 8 / 9 9 . May 5, 1 9 9 9 Ad hoc information on first half re s u l t s . May 5/6, 1 9 9 9 Analysts conference on first half results in Frankfurt (DVFA) and London. July 15, 1 9 9 9 112th Supervisory Board Meeting focusing May 10, 1 9 9 9 on the election of Mr. Horst Schmitthenner Ad hoc information on the conclusion of as Vice Chairman of the Supervisory Board , talks with ARBED S.A. After looking into the the adoption of the growth strategy of advantages, feasibility, and consequences Salzgitter AG, the approval of investments of various concepts towards a full or part totaling DM 64 million, and the approval of integration of Salzgitter AG into the ARBED- acquiring a participation in Oswald G roup, it was decided in coordination with H y d roforming GmbH & Co. KG. the Company’s major shareholders not to continue the talks. July 19, 1 9 9 9 P ress conference on Salzgitter AG’s strat- June 2, 1 9 9 9 egy which is essentially characterized by its Opening of the tailored-blanks production of concept of independence and gro w t h Salzgitter Europlatinen GmbH at the oriented planning on the basis of an invest- Salzgitter location. ment and acquisition program totaling DM 1.2 billion. June 17, 1 9 9 9 Start of a series of technical information August 12, 1 9 9 9 events with Salzgitter AG demonstrating its Roadshow in Great Britain together with competence and innovative strength as a Morgan Stanley. steel and technology partner for the auto- motive industry. Start-up meeting with August 27, 1 9 9 9 Volkswagen AG. Release of third quarter 1998/99 re s u l t s . June 28/29, 1 9 9 9 Roadshows in To ronto, Montreal, and New September 28/29, 1 9 9 9 York. Salzgitter AG and Morgan Stanley P resentation of Salzgitter AG at the invest- i n t roduced the Company to investors and ors conference “Metals and Mining” in a n a l y s t s . New York, organized by Morgan Stanley. July 7, 1 9 9 9 P resentation of Salzgitter AG during the Investors Congress EUROPLACE, organized by Banque Nationale de Paris (BNP) in P a r i s . 2 G roup Structure 3 P reface by the Exe c u t i ve Board 6 S t ra t e g y 1 0 I n vestors Affairs Management Report of the Salzgitter Group 1 4 and of Salzgitter AG 1 4 Business A c t i v i t i e s 3 1 Research and Development 3 5 Risk Management System 3 8 A p p r o p r i ation of Earnings, Legal Relat i o n s 4 1 O u t l o o k 4 4 D i v i s i o n s 4 4 Steel Production 5 0 Steel Tr a d i n g 5 5 R aw Materials and Serv i c e s 6 1 Industrial Investments 6 5 E m p l oye e s 6 9 E n v i ronmental Protection 7 1 Report of the Supervisory Board 7 4 B o a rd s , Personal Data 7 7 G roup Ye a r-End Financial Statements C o n t e n t s 1 The Salzgitter Group is braced for future challenges: Group Structure efficient plant and equipment, excellent market positioning, qualified and motivated employees are our strategic basis. DIVISIONS Preface by STEEL PRODUCTION STEEL TRADING the Executive Board SALZGITTER WORKS SALZGITTER HANDEL F l at steel products ( 1 0 0 % ) PEINE WORKS Steel Trading Germany Dear Share h o l d e r : Sections 21 companies The fiscal year 1998/99 was altogether sat- ILSENBURG W O R K S Steel Trading Western Europe isfactory for the Salzgitter Group. The major P l at e s 13 companies outcomes of the fiscal year were the posi- practically all Group companies. These tive income before tax of DM 97 million and joint efforts led to a year-end result which International Steel Trading a corporate strategy mutually supported by made the payment of an adequate dividend 10 companies the Boards and the major shareholders of p o s s i b l e . RAW MATERIALS AND the Company towards future oriented per- SERVICES HÖVELMANN & LUEG spectives for the benefit of share h o l d e r s It became known at the turn of the year ( 9 5 % ) and employees alike.