SESIÓN 536, 22 DE JUNIO DE 1970 21.18 LUNES

The following presentation of the business activity of the Company and the Klöckner & Co Group respectively is only a summary. Please refer to the annual report 2007 for further in- formation on the business activity (accessible on the internet at www.kloeckner.de). 2.2.1 Core business

Klöckner & Co Group is one of the world’s leading distributors of steel and metal which operates independently from producers and takes a leading position in the combined market of Europe and North America. The focus of the business activity of Klöckner & Co Group is on the purchase of huge amounts of materials from about 70 main suppliers worldwide as well as on the delivery to customers  tai- lored to their needs  from local warehouses. Klöckner & Co Group thus consti- tutes the link in the value added chain between steel and metal production and small and medium-sized customers. The independence of Klöckner & Co Group from individual steel producers thus, on the one hand, allows for high flexibility and provides a good basis for negotiations with suppliers and, on the other hand, the annual purchase volume of about 6m tonnes allows for the building of strategic partnerships as well as for the negotiation of attractive framework agreements. 2.2.2 Core competencies and product programme

One of the core competencies of Klöckner &Co Group is the storage and distribu- tion of steel products (accounting for 79% of total turnover in the business year 2007), aluminium products (7% of total turnover in the business year 2007) and other products (14% of total turnover in the business year 2007), such as non- ferrous metals and professional equipment for craftsmen. In addition to un- machined materials and intermediate products, Klöckner & Co Group offers its cus- tomers extensive services, including cutting and splitting steel strip, cutting to length, flame-cutting and surface treatments.

The product range of Klöckner & Co Group consists of long products (e.g. steel girders for the construction industry), flat products (e.g. sheet steel for machine builders), hollow sections (e.g. for structural purposes), stainless and quality steel (e.g. high alloy round steel rods for machinery engineering applications), aluminium products (e.g. sectional rods for plant construction) and special products, such as plastics, ironware and accessories.

2.2.3 Locations, employees, group structure and customers

Klöckner & Co Group is represented in 15 countries worldwide with about 260 sites in Europe and North America and, on 31 December 2007, had a total of approxi- mately 10,600 employees worldwide, approximately 1,800 of whom were working in Germany, with another approximately 5,600 employed in other EU Member States. The holding company of Klöckner & Co Group is Klöckner & Co AG, which has its seat in Duisburg and has a total of about 130 subsidiaries in Europe and North America. The distribution of the products of Klöckner & Co Group as well as their processing (e.g. cutting and splitting steel strip, cutting to length, flame-cutting and surface treatments) as well as the provision of further services is performed di-

rectly by the subsidiaries of Klöckner & Co Group in the respective countries. Klöckner Global Sourcing GmbH, Duisburg, is responsible for purchasing world- wide.

In the business year 2007, Klöckner & Co Group served a total of approx. 210,000 active customers in Europe and North America with its comprehensive range of products and services. The customers of Klöckner & Co Group come from a large number of industries. with the focus being for example on the construction, ma- chinery and mechanical engineering industries.

2.2.4 Business development

The business development of Klöckner & Co Group in the last two business years 2006 and 2007 was as follows:

Key corporate data 2007 (IFRS) 2006 (IFRS)

Turnover in €m 6,274 5,532

EBITDA in €m 371 395

EBIT in €m 307 337

Accounting profit in €m 210 273

Net income in €m 156 235

Result per share in € 2.87 4.44

Return on turnover in % 4.9 6.1

Balance sheet total in €m 2,966 2,552

Shareholders’ equity in €m 845 799

Equity ratio (ratio between shareholders’ equity and balance sheet total)

in % 28 31

Net cash indebtedness in €m 746 365

Debt-equity ratio (ratio between net cash in- debtedness and shareholders’ equity)

0.88 0.46

Investments in tangible assets and intangible assets

in €m 417 92

Number of employees at year end 10,581 9,688

(i) Turnover

In 2007, Klöckner & Co Group generated a turnover of approx. EUR 6.3bn compared to a turnover of approx. EUR 5.5bn in 2006. In 2007, 83% of the turnover of Klöckner & Co Group was generated in Europe (69% thereof within the EU) and 17% in North America.

(ii) Result of business activity

Compared to the previous year, the result of the business activity in 2007 decreased by 9% from EUR 337m to EUR 307m. In relation to turnover, the

result of the business activity reached 4.9% compared to 6.1% in the previ- ous year (business year 2006).

2.2.5 Corporate strategy

Core elements of the corporate strategy of Klöckner & Co Group are expansion, based on external and organic growth, as well as optimising business processes. The focus of the expansion strategy is on external growth. Special attention is paid to the acquisition of small and medium-sized competitors in the core markets, which may be purchased at attractive prices and can be integrated rapidly; how- ever, larger acquisitions are not excluded. The activities are concentrated on ex- panding the geographic presence, customer base and product range.

In addition to external growth, Klöckner & Co Group is also targeting substantial organic growth. In this respect, the activities are focused on expanding the range of products, further increasing the level of vertical integration, extending the customer base through a segmented sales approach and geographically expanding in East- ern Europe. The existing network of branches in the Czech Republic, Romania and Lithuania is to be extended.

The second pillar of the corporate strategy of Klöckner & Co Group is the continu- ous optimisation of business processes. One focus is on the activities re. purchas- ing and sales as well as optimising the distribution network, net working capital, the difference between inventories and customer receivables on the one hand and supplier liabilities on the other hand, which were combined within the scope of the firm-wide STAR performance programme already initiated in 2005. It is planned to initiate and respectively further enhance the concentration of the purchasing activi- ties at European level and the utilisation of international sources of supply via Klöckner Global Sourcing GmbH, Duisburg.

2.3 Capital and shareholders