Annual Report

Transcription

1 Annual Report 2005

2 Annual Report

3 2

4 Table of Contents 1. Summary Financial Results Information for the Compilation of the Annual Report and the Company s Auditors General Information Regular Certified Accountants-Auditors General Information Regarding SIDMA S.A. and its Share Capital General Information Brief History Share Capital Evolution Shareholders Structure Sector Information General Sector characteristics Position of the Company in the Market Information Regarding the Actinities of SIDMA S.A Lines of Business Product Categories Sales Network Clients Outstanding Litigation Fixed Assets Guarantees & Charges on Property Human Resources Investments of SIDMA S.A. and the Group Management - Administrator - Supervision of the Company Transactions with Affiliate Companies Stock Data Information of Article 10 of Law 3401/ Appendix

5 1. Summary Financial Results The following tables present a summary of the financial results on both a stand-alone and consolidated basis for the fiscal years 2004 and Group Company Profit & Loss (in million euros) Sales Revenue / Turnover from: Industrial Activity 88,445 89,642 74,244 72,480 Commercial Activity 44,422 33,933 44,169 34,000 Service Provision Total Sales Revenue / Turnover 133, , , ,119 Gross Profit 25,854 16,371 23,396 12,799 Earnings before Interest, Taxes, Depreciation & Amortization 19,417 8,970 17,679 6,984 Earnings before Taxes & Finance Expenses 17,818 7,008 16,529 5,538 Net Results (profit) before Taxes 15,414 4,406 14,648 3,516 Net Results (profit) after Taxes 11,414 2,745 10,889 2,246 Distributed to: Shareholders 11,214 2,563 Minority Weighted Average Number of Ordinary Shares 7,500,000 9,166,667 7,500,000 9,166,667 Earnings per Share (Euro) Profit before Tax Profit after Tax Group Company Balance Sheet Total Fixed Assets 34,165 35,872 29,152 32,173 Inventory 27,371 21,904 23,868 19,650 Account Receivable 68,511 77,038 59,548 65,938 Other 3,355 4,066 3,117 2,116 Cash 814 9, ,593 Total Assets 134, , , ,469 Owners' Equity 38,773 51,503 38,752 51,170 Minority Interests 1,511 1,397 Long -Term Liabilities to Banks 47,024 1,138 45, Other Long -Term Liabilities 3,368 4,595 2,743 3,229 Short -Term Liabilities to Banks 10,429 61, ,991 Other Short -Term Liabilities 33,112 28,527 29,105 24,026 Total Liabilities & Equity 93,932 95,878 77,727 78,299 Total Liabilities & Equity 134, , , ,469 Book Value per Share

6 1. Group Company Ratio Analysis Evolution Ratios (%) Turnover 31.04% -7.02% 23.83% % Profit before Taxes % % % % Profit after Taxes & Employee Bonus % % % % Fixed Assets 6.49% 2.79% 6.66% 1.00% Invested Capital 23.53% 10.85% 20.37% 11.15% Margin Ratios (%) Gross Profit margin (before depreciation) 19.35% 13.18% 19.64% 11.95% Net Profit margin (before depreciation) 11.54% 3.55% 12.29% 3.28% Profitability Ratios (before taxes) (%) Return on Equity (Average) 45.18% 9.76% 42.76% 7.82% Return on Invested Capital (Average) 15.03% 5.34% 15.90% 4.95% Asset Management Ratios (days) Debtor Days * Creditor Days Inventory Days Leverage Ratios (1:1) Total Liabilities / Shareholder's Equity Total Liabilities to Banks / Shareholder's Equity Liquidity Ratios (1:1) ** Current Ratio Quick Ratio Debt Management Ratios (%) Interest Charges / Gross Margin 10.96% 19.26% 9.85% 20.05% Interest Charges / Profit before Tax & Interest Charges 15.53% 41.71% 13.60% 42.19% * In order to calculate this ratio, the total sales (including the consignment ones) have to be taken into consideration, as the receivables for the consignment sales are included in company s account receivables. That is, the company bears the risk of collecting the money from the clients that buy agency products. The euro amount of the consignment sales is shown at the face of the published financial statements of the company. ** Liquidity ratios seem to have been worsened during 2005 due to the fact that the syndicated loan (noted as Long term liability previously) fall due in 2006 and as a result this amount (x 45 million) was stated under Short-term liabilities as at

7 2. Information for the Compilation of the Annual Report and the Company s Auditors 2.1 General Information The compilation and distribution of this Annual Bulletin is in accordance with the provisions of decision no. 5/204/ (article 8) of the Board of Directors of the Hellenic Capital Markets Committee, as amended by decision no. 7/372/ (article 1) of the Board of Directors of the Hellenic Capital Markets Committee and is in effect. Investors may obtain a copy of the Annual Bulletin from the offices of MACEDONIAN STEEL PRODUCTS TRADING SIDMA S.A. (henceforth SIDMA S.A. or the Company ) at 39 Petrou Rallis st, Tavros (information is available from the Shareholder Service Department, tel , contact Ms. Maria- Anna Botonaki) as well as by accessing the Company s web site ( Officers responsible for the compilation The following officers of the Company are responsible for the compilation of the Annual Bulletin as well as for the accuracy of the figures included: Mr. Michalis Samonas, Chief Financial Officer and Mr. Paris Papageorgiou, Chief Accountant, 39 Petrou Ralli st, Tavros, tel The aforementioned officers, who are responsible for the compilation of the Annual Bulletin, ascertain that as far as they know: a. All the information and the figures included in it are complete and true. b. There is no other information and no other events have taken place, which if withheld or omitted could render the entire figures and information contained in the Annual Bulletin, or parts thereof, misleading. c. There are no pending litigation or arbitration cases against the Company and the companies in which it has a controlling interest, which could have a material impact on their financial position. 2.2 Regular Certified Accountants-Auditors Certified auditors audit the Company. The audit of the financial statements for the financial year 2005 (on a stand-alone and a consolidated basis) was undertaken by the Certified Auditor Accountant Mr. Sotiris Vardaramatos (B.C.A.A.R.N ) of the Associated Certified Accountants audit firm (Address: 3 Fokionos Negri, Athens tel ), with Mr. Christos Kokotinis (B.C.A.A.R.N ) of the same audit firm designated as alternate. The Company has also compiled consolidated financial statements for fiscal years 2003 (first consolidated financial statements), 2004 and The financial statements of SIDMA S.A. (on a stand-alone and consolidated basis) for fiscal year 2005 are presented in the Appendix to this Annual Bulletin. Moreover, the Company compiled interim financial statements (balance sheet income statement) in accordance with the IFRS on a stand-alone and a consolidated basis, as of , and , 6

8 2. as required by the Athens Stock Exchange regulations. The interim financial statements (on a stand-alone and a consolidated basis) as of , and are presented at the website of SIDMA S.A. at the following internet address The Certified Auditor s report on the annual financial statements for the year 2005 is presented in the Appendix of this Annual Bulletin. The Certified Auditor s report on the semi-annual financial statements, for the year 2005, is presented at the website of SIDMA S.A. at the following internet address 7

9 3. General Information Regarding SIDMA S.A. and its Share Capital 3.1 General Information The company was established in 1981 under the company name ETEM TRADE REPRESENTATIONS SA TRADING AND TRADE REPRESENTATIONS OF ALUMINUM PUBLIC LIMITED COMPANY (Gov. Gazette no. 4222/ ). In 1999 the Company absorbed the trading sector of KEM Metals Processing Center SA as well as the steel production and trading sector of Macedonian Steel Products Trading SIDMA S.A., which was dissolved and had been founded in 1931 by the Amariglio brothers. Together with the sector obtained from the dissolved company Macedonian Steel Products Trading SIDMA S.A., the Company also assumed its name (the dissolved company will henceforth be referred to as the old SIDMA in order to avoid confusion). Initially the headquarters of the Company were located in the Municipality of Athens, on 115 Kifissias Ave., and upon establishment it was registered in the Public Limited Companies Register under no. 7946/03/B/86/225. Following a decision of the General Meeting of the shareholders held on , art. 2 of the statutes were amended and the headquarters of the company were relocated to the Municipality of Egaleo, at 96 Kifissou st, Egaleo (Gov. Gazette No. 3234/ ). Following the completion of the absorption of the steel products production and trading sector from the dissolved company Macedonian Steel Products Trading SIDMA S.A. ( old SIDMA ), and in accordance with the decision taken during the Emergency General Meeting of the shareholders held on , the Company assumed the name of the split-up company, that is it was renamed to Macedonian Steel Products Trading SIDMA S.A. (Gov. Gazette No. 58/ ), as previously mentioned. During the same Emergency General Meeting of the shareholders held on , it was decided to relocate the headquarters of the Company to the Municipality of Tavros in Attica and specifically to 39 P. Ralli Ave., where the split-up old SIDMA was based (Gov. Gazette No. 58/ ). This is where the Company is currently based. Currently, the Company is registered in the Public Limited Companies Register of the Prefecture of Athens (SA Reg. No7946/01/B/86/40(00)) under the precise company name MACEDONIAN STEEL PRODUCTS TRADING SIDMA SOCIETE ANONYME. During the Extraordinary General Meeting of the shareholders held on it was decided that the trading name of the company would be SIDMA S.A.. The duration of the Company has been set to 50 years from its establishment that is until When the Company was established in 1981, its purpose was the trading and trade representations of aluminum and related products as well as any related or relevant activity. Following the decision taken during the Extraordinary General Meeting of the shareholders held on (Gov. Gazette No. 58/ ), the purpose of the Company was amended and currently, as stated in art. 4 of its statutes, is as follows: «The main purpose of the Company is: 1. To import from abroad, procure domestically and trade in a) steel products, b) stainless steel products and any other related item. 2. To sell such products on behalf of third parties. 3. To industrialize, process and treat any of these products 4. To act as trade representatives for foreign firms and 5. To participate in companies, which have been or will be established and engage in similar trading. 8

10 3. The secondary purpose of the Company is: 1. To trade in sanitary ware, sell it on behalf of third parties and to act as trade representatives for such products or to participate in such companies. The operation permits of the Company and its Branches are as follows: Site Permit no. Expiry date Headquarters of the Company 39 P. Ralli Ave., Tavros º4100/694/ Aspropyrgos, Attica branch, Mavri Giora site 2137/º14 ƒ3145/00 Indefinite Oraiokastro Thessaloniki branch, 15/º /11/7367 Indefinite Palaiokastro site /1/8734/ Brief History The company was established in 1981(Gov. Gazette no. 4222/ ) under the company name ETEM TRADE REPRESENTATIONS SA. It started its activities, which were trade and trade representation for aluminium products, immediately. On the year it was established it entered into a private agreement with ELVAL SA to sell the products produced by the latter, in its facilities located in 96 Kifissou st., for a commission. It is noted however that the Company has a history of more than 70 years, since the old SIDMA, whose steel products processing and trading sector was undertaken by the Company in 1999 when the latter was dissolved, traces its roots back to 1931 when the Amariglio brothers founded the first iron trading company in Thessaloniki. Following the decision taken during the Emergency General Meeting of the shareholders of the Company held on , its purpose was widened to include, besides trading and acting as trade representatives, the processing of aluminium and related products. On the Company entered into a contract with ETEM SA thereby undertaking to act as a trade representative for the latter for a commission. Until 1998 commissions that the Company received from ELVAL SA and ETEM SA were the main source of revenue for the Company. In 1999, the absorption of the trading sector of KEM METALS PROCESSING CENTER SA (Gov. Gazette no. 7970/ ) and of the iron processing and trading sector of the old SIDMA (Gov. Gazette no. 54/ ) were completed. In 2001, aiming to achieve economies of scale, the Company merged the two Steel Service Centers in Thessaloniki, by stopping the operation of the one in Sindos and transferring its equipment in the second center in Oraiokastro. In 2001 SIDMA acquired the majority (62%) of the newly formed company «PANELCO S.A.» a company maintaining the largest continues production line of polyurethane steel sandwich panels in Greece, whose operation began in mid

11 In 2004 the Company extended its activities in Balkans, selling from its warehouses located in Thessaloniki while in parallel researching the markets of Romania and Bulgaria in order to establish subsidiaries. In May 2005 the Company listed its shares in the Main Market of Athens Stock Exchange. In the same year it expanded its participation in «PANELCO S.A.» to 78%. Also, it established its subsidiaries in Bulgaria and Romania. The subsidiary in Romania was established at the end of the second quarter of 2005 under the name SID- PAC Steel and Construction Products SRL and started operating the 3 rd quarter of The subsidiary in Bulgaria was established at the end of the third quarter of 2005 under the name SID-PAC Bulgaria S.A., and started operating during April of Share Capital Evolution The share capital of the Company was set at its foundation at 14, x (or 5,000,000 drachmas) which was paid fully in cash, distributed to 5,000 common registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each (Gov. Gaz. No. 4222/ Δ / P ). From the foundation of the Company till today the share capital evolution as follows: Following the decision made by the Extraordinary General Shareholders Meeting on , the share capital increased by 5, x (or 1,800,000 drachmas) paid in cash, with the issue of 1,800 new registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each. Thus, the share capital of the Company amounted to 19, x (or 6,800,000 drachmas), divided in 6,800 common registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each (Gov. Gaz. 3798/ ). Following the decision made by the Extraordinary General Shareholders Meeting on , the share capital increased by 26, x (or 9,200,000 drachmas) with the issue of 9,200 new registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each. Following the increase, the share capital of the Company amounted to 46, x (or 16,000,000 drachmas), divided in 16,000 common registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each (Gov. Gaz. 3211/ ). Following the decision made by the Extraordinary General Shareholders Meeting on , the share capital increased by 3,876, x (or 1,320,946,000 drachmas) as a result of the absorption of the Company s commercial segment named «ª METAL PROCESSING CENTER S.A.» having a value of 3,876, x (or 1,320,945,251 drachmas) as was found by the auditors report Mr. Pasioti Dim. on and the payment, for rounding reasons, 2.19 x (or 749 drachmas) with the issue of 1,320,946 new registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each. Following this increase, the share capital of the Company amounted to 3,923, x (or 1,336,946,000 drachmas), divided in 1,336,946 common registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each (Gov. Gaz. 7950/ ). Following the decision made by the Extraordinary General Shareholders Meeting on , the share capital increased a) by 3,217, x (or 1,096,241,850 drachmas) as a result of the absorption of a Company s segment named «MACEDONIAN STEEL TRADING SIDMA S.A.» (Soc. Anon. Reg. No. 242/01/B/86/242) in accordance with the provisions of articles 81, paragraph 2 and of the C.L. 2190/1920 and the articles 1-5 of the L. 2166/1993 and b) by x (or 12,150 drachmas) paid in cash for rounding purposes by the shareholders of «MACEDONIAN STEEL TRADING SIDMA S.A.», therefore 3,217, x (or 1,096,254,000 drachmas) in total with the issue of 1,096,254 new common registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each. Following this increase, the share capital of the Company amounted to 7,140, x (or 2,433,200,000 drachmas), divided in 2,433,200 common registered shares having a nominal value of 2.93 x (or 1,000 drachmas) each (Gov. Gaz. 54/ ). 10

12 3. Following the decision made by the Extraordinary General Shareholders Meeting on , the share capital increased by 1,663, x (or 566,800,000 drachmas) with the issue of five hundred sixty six thousand and eight hundred (566,800) new shares having a nominal value of 2.93 x (or 1,000 drachmas) each, resulting from the capitalisation of Company s reserves and specifically 1) reserves from various revaluation of participations and securities amounting to 313, x (or 106,936,323 drachmas) 2) reserve from various revaluations of other assets resulting by the share premium account of 1,207, x(or 411,514,458 drachmas) resulting from the merger based on L. 1297/79 3) reserve from the revaluation of assets base on L. 2065/92 amounting to x (or 11,674 drachmas) and 4) tax exempt reserve based on article 22 of L. 1828/89 amounting to 141, x (or 48,337,545 drachmas) that resulted from the absorption of the commercial sector of KEM S.A. With the same decision made by the Extraordinary General Shareholders Meeting on the nominal value of shares was reduced from 2.93 x (or 1,000 drachmas) per share to 1.17 x (or 400 drachmas) per share with the increase of the total number of shares from 3,000,000 shares to 7,500,000 shares (GOV. GAZ. 4885/ ). The General Shareholders Meeting on decided, among other decisions, to change the nominal value of shares and the share capital of the company from drachmas to euro and the share capital increase by x 1,320, Specifically, the General Shareholders Meeting on decided the change of share capital from 3,000,000,000 drachmas to 8,804, x and the nominal value of share from 400 drachmas to 1.17 x. Also, it decided the share capital increase by 1,320, x with the capitalisation of a) the reserve «Revaluation Differences of other assets» amounting to 1,320, x and b) 804,96 million x from the reserve account «Goodwill deriving from merger» for rounding purposes, and the increase of the nominal value of share from 1.17 euro per share to 1.35 euro per share without the issue of new shares. Following this increase, the share capital of the Company amounted to 10,125,000 euro (ten million one hundred and five thousand euro) divided in 7,500,000 (seven million five hundred shares) shares having a nominal value of 1.35 euro per share. The Board of Directors of the Company during its meeting on certified the aforementioned share capital increase. A copy of the minutes of this BoD meeting was published in Gov. Gaz. No. 8063/ The Extraordinary General Shareholders Meeting of «SIDMA S.A.» on decided the listing of Company s shares in the Main Market of Athens Stock Exchange. For this reason it decided: a) The share capital increase by 3,375,000 x paid in cash and the issue of 2,500,000 new common registered shares having a nominal value of 1.35 x each. From the new shares 119,000 were issued through a Private Placement to workers and associates of the Company while the remaining 2,381,000 were issued to the Public through a Public Offering. The difference between the issue price and the nominal value of new shares was credited to the account «Share premium», b) the resignation of the old shareholders from the preference right, c) the authorisation to company s BoD to approve in cooperation with the principal underwriter the price range for the issue of new shares, d) the right of new shareholders to receive dividend for the earnings of the financial year 2004 if the process for the share capital increase is completed before the General Shareholders Meeting that would approve the annual financial statements for 2004, e) the amendment of article 5 of the Company s articles of association. 11

13 The issue price for the new shares of the Company is set by the Principal Underwriter, based on the Book building and in cooperation with the BoD of the Company, to 5.30 x per share, equal to the starting trading price of the shares. The difference between the issue price and the nominal value of new shares was credited to account «Share premium». The trading of the Company s shares in the main market of Athex started on May the 10nth As of today, the share capital of the Company amounts to thirteen million five hundred thousand (13,500,000) euro divided in ten million (10,000,000) common registered shares having a nominal value of 1.35 euro each. 3.4 Shareholders Structure The shareholders structure of «SIDMA S.A.» following the listing if its shares in Athens Exchange, according to its shareholders registrar of are reported in the following table: SHAREHOLDERS Shareholders records Number of Shares Percentage (%) Andreas Pisante, son of Haim 690, % Lola-Julia Amariglio, daughter of Sam 262, % Sandy Amariglio daughter of Andreas 85, % Neli Amariglio daughter of Daniel Andreas 298, % David Amariglio son of Daniel Andreas 200, % SIDACIER HOLDING S.A. 1,568, % RAPALLO INVEST HOLDING S.A. 785, % VIOHALCO S.A. 28, % SOVEL S.A. 2,821, % SIDENOR S.A. 650, % PROSIDER S.A. 150, % OTHER INVESTORS 2,459, % Total 10,000, % The only shareholdrers of Rapallo Invest Holding S.A. is the Springflower foundation. Also, the shareholders of the company «SIDACIER HOLDING S.A.» are by 62.5% the Danell Foundation and by 37.5% the Spring flower foundation. The beneficiaries of Spring flower foundation and Danell Foundation are members of the Amariglio family. According to a statement of the representatives of Spring flower foundation and Danell Foundation none of the Amariglio family members «controls» these foundations under the concept of the provision of articles 7 and 8 of the P.D. 51/1992. Therefore, if none of the Amariglio family members «controls» these foundations under the concept of the provision of articles 7 and 8 of the P.D. 51/1992, the voting rights of these foundations, indirectly through the companies «RAPALLO INVEST HOLDING S.A.» and «SIDACIER HOLDING S.A.», on the shares of the Company are controlled only by them. 12

14 3. It is noted that «SIDMA S.A.» is consolidated by the company «SIDENOR S.A.» using the equity method. Also, the company «SOVEL S.A.» participates in the share capital of the Company with a percentage of 28.21%. «SIDENOR S.A.» and «SOVEL S.A.» are companies belonging to the VIOHALCO group of companies. The legal position of the Company s shareholders is according to the laws and regulations in which they are liable to. 13

15 4. Sector Information 4.1 General The Company is active in the sector of metal products operating intergraded Steel Service Centers. The main categories of its products are analysed below: ñ Steel Profiles, a significant part of which is produced by the factory of SIDENOR in Thessaloniki and is mainly used in light constructions. ñ Hollow sections and tubes that are used in various constructions such as industrial buildings, greenhouses and fencing. ñ Flat products of different quality (hot rolled, cold rolled, galvanised etc.) having many uses in manufacture and industry. ñ Steel beams mainly used in the production of industrial buildings, bridges etc. ñ Steel wire products having a widely used in fencing and agriculture. According to E.S.Y.E. classification, the main sectors of the Company s activity are the following: Code Description Wholesale Trading of Metals and Minerals Production of basic iron and steel and iron alloy (and more specifically production of flat rolled iron and steel products) Production of Steel Pipes (and more specifically production of pipes and curved profile pipes). Regarding its subsidiary «PANELCO S.A.», its activity is complimentary to SIDMA s. SIDMA, until recently, had the ability to provide materials for the metal frame of buildings to its customers construction and technical companies-, however it could not provide the materials for their overlay. The customers of PANELCO are mostly customers of SIDMA. To these customers is offered, through PANELCO, a wide range of complete solution. Henceforth, the SIDMA group of companies is able to offer a wider ranger of products compared to what SIDMA was able to do on its own. According to E.S.Y.E. classification, the main activity of PANELCO S.A. is taking place in the following economic sectors: Code Description Construction of Structural Metal Products and their parts Wholesale Trading of Metals and Minerals In the context of its strategic expansion and development of its activities outside Greece, SIDMA S.A. established two subsidiaries in 2005 in Romania and Bulgaria. The investments in these countries were materialised through the 100% subsidiary in Cyprus "SIDMA WORLDWIDE LIMITED". SIDMA participates by 50% in the share capital of «SID-PAC Steel and Construction Products SRL» that is based in Romania, and by 75% in the share capital of «SID-PAC Bulgaria S.A.» that is based in Bulgaria. The business activities of the subsidiaries are similar to those of the Parent and will focus in the trade and manufacturing of steel products. 14

16 Sector characteristics The steel sector is characterised by companies of different sizes. The prices of steel products are mainly affected by the international steel market and by the competition in domestic market. The international market has a relative cyclicality with periods of high prices and demand for steel and periods of recession. With the globalisation of the steel market, any economic change automatically affects the price and the supply of materials. The phenomenon of the price variability in the domestic market for steel creates turbulences in the market, and therefore a company or a sector that is in a position to mitigate these abrupt changes has a competitive advantage. SIDMA, because of its size, experience, leading position in the sector and the long-term relationship it maintains with the main Greek and international suppliers, is in a position to detect the potential market changes and to adapt its strategy limiting the negative effects of any crises observed in the global steel market. Finally, regarding the Greek market, the demand for steel products is related to the country s economic activity. Sectors whose growth strengthens the demand for steel are Real Estate, infrastructure, public and private investments, shipping and agriculture. 4.3 Position of the Company in the Market As already mentioned in previous paragraphs, the Company is active in the steel sector operating Steel Service Centers. The largest steel companies that operate such centers offering products and services similar to those of SIDMA are the listed company in Main market of Athex «KALIPINIS-SIMOS N. A.E.B.E.», the listed company in Parallel Market of Athex «KORDELOS BROS..μ..» as well as the listed company in the Main Market of Athex «BITROS..μ..». It is noted that the Company holds the leading position in the steel sector for a number of years. The following table reports the turnover evolution of the largest representatives of the sector for the period : COMPANIES Share % Amounts in thous. x SIDMA S.A. 97,148 96, , ,120 SIDMA total turnover 144, , , ,430 35% (own and on behalf of third parties) BITROS..μ.. 137, , , ,956 31%. KALPINIS -. SIMOS..μ.. 71,369 78, , ,247 24% KORDELOU BROS..μ.. 29,322 32,891 46,899 45,011 10% Total turnover * 382, , , , % * The total turnover includes the turnover of SIDMA on behalf of third parties. 15

17 Further to the main representative of the sector operating Steel Service Centers, the Company is competing with a number of smaller in size companies that are active in specific product categories. Indicatively, the main competitors of SIDMA per product category are: Company Main Sector of Activity l. TZIRAKIAN PIPEWORKS S.A. PIPEWORKS THIVON PIPEWORKS S.A. PIPEWORKS MAVISO S.A. PIPEWORKS SOLAM.μ... PIPEWORKS TRIGONIS..μ.Δ.. TRADE OF STEEL PRODUCTS SIDIROS S.A. FLAT PRODUCTS AND IRON VRÀ S.A. FLAT PRODUCTS PIPEWORKS IΔ PIPEWORKS It is noted that the companies «L. TZIRAKIAN PIPEWORKS», «THIVON PIPEWORKS» and «ª VπSO S.A.» have production lines for flat products. In the latest years, SIDMA S.A., further to the trade, manufacturing and industrial sector, invests significant amounts in equipment and new installations. This turn, common in many other companies in the sector, has the following direct results on the Company: ñ Greater market penetration having the ability to sell material to final consumers and constructors. ñ Greater independency in the supply of raw materials. ñ Smaller inventories ñ Better gross profit margins. ñ Increase of domestic value added. 16

18 5. 5. Information Regarding the Activities of SIDMA S.A. 5.1 Lines of Business Product Categories SIDMA S.A. is active in the steel products sector and operates integrated Steel Service Centers. Its activities can be classified into industrial activities, trading, provision of services and other activities. Industrial activities comprise: a) the processing of steel coils and their conversion into steel sheets and strips, b) the cutting of thick steel sheets in special dimensions and the cutting of long products in specific lengths (this activity started in 2004) and c) the removal of external rust from metallic elements and their protection through special painting (this activity also started in 2004). Also, at the SIDMA Group level, industrial activities include the production and construction of metal and heat-insulating elements (panels) that are used to cover buildings and drapes of any kind and other related products. This activity is undertaken by the 78% subsidiary of the Group, PANELCO SA. Trading activities comprise the trading of steel products processed or not own or acting as trade representatives. Finally the provision of services and other activities comprise the processing of products on behalf of third parties and the selling of scrap material. It is noted that SIDMA S.A., in parallel with its main activity, sells products on behalf of other companies, with which it has entered into relevant contracts. More specifically, SIDMA S.A. has entered into trade agency contracts with companies in the BIOHALKO Group (SIDENOR, ERLIKON, PROSAL, CORINTH PIPEWORKS) as well as PROSIDER regarding the promotion of their products in the Greek market. Sales are made in the name of SIDMA S.A. on behalf of the company represented, while SIDMA S.A. is entitled to a commission on the sales made as a fee for the services rendered. Regarding the accounting treatment, net commission fees for the representation of the aforementioned products are included in the Other Operating Income account of SIDMA S.A., while sales made through the trade agency contracts are not included in the turnover of SIDMA S.A.. As the Company, according to the contracts, bears the risk of collection, it has entered into credit insurance contracts in order to cover this risk. In this way the Company does not bear the entire risk stemming from the collection of the amounts relating to consinment sales, but only the amount that is not reimbursed in accordance with the insurance contract. It is noted that the insurance company expenses (premiums) are eventually covered by the companies represented. These companies reimburse SIDMA S.A., which has already paid the incurance fees. 17

19 The following table presents the development of the turnover of SIDMA S.A. by activity: industrial, trading and provision of services, for the Greek and foreign markets, during the period : Total BREAKDOWN OF ACTIVITES (in x thousands) % Greece Industrial activities 57,980 71,378 68, , % Trading activities 34,257 41,830 31, , % -Wholesale 34,248 41,814 31, , % -Retail % Provision of Services 1, , % Sales in Greece 93, , , , % Abroad Industrial activities 2,076 2,866 3,770 8, % Trading activities 863 2,339 2,045 5, % -Wholesale 863 2,339 2,045 5, % -Retail % Provision of Services % Sales abroad 2,947 5,220 5,877 14, % Total Turover 96, , , , % Moreover, the following table presents a breakdown of the turnover of SIDMA S.A. for fiscal years , using the statistical codification system STAKOD 2003: TURNOVER BREAKDOWN BY ACTIVITY ACCORDING TO THE STAKOD CLASSIFICATION (amounts in x thousands) "Production of basic iron and steel and iron alloys" 60,651 73,510 70, "Wholesale Trading of Metals and Minerals " 35,500 44,447 34, "Production of Steel tubes" 65 1, "Processing and overlaying of metals 0 0 2,472 Total 96, , ,119 The following table presents a breakdown of the turnover of PANELCO SA for fiscal years , using the statistical codification system STAKOD 2003: TURNOVER BREAKDOWN BY ACTIVITY ACCORDING TO THE STAKOD CLASSIFICATION (amounts in x thousands) "Construction of metal structures and parts of metal structures " 6,346 14,307 17, "Wholesale Trading of Metals and Minerals " Total 6,566 14,719 17,695 The main product categories that the SIDMA Group focus on, are the following: Flat Products: steel sheets or hot rolled steel sheets, pickled and oiled steel sheets, cold rolled steel sheets, galvanized steel sheets, prepainted, corrugated trapezoidal, shipbuilding plates special quality steel sheets and stainless steel sheets. Flat products are mainly used in small and large industries. Long Products: commercial iron products (flats corner plates squares round etc.), beams (IPN UPN IPE HEB - HEA), hollow beams, tubes, cold formed profiles. Long products are mainly used in construction, metal structures, metal products industries, fence making etc. 18

20 5. Wire Products: wires (black - galvanized plastic-coated), wire meshes, fencing rolls. Wire products are widely used in fence making, flood control projects, supporting projects and in agriculture. Panels: through PANELCO SA, are mainly used to cover industrial buildings. The products that the Company trades in are either imported or domestically produced and are purchased both as finished products (e.g. commercial iron products, beams etc.) and as raw materials (rolls) that undergo processing. In this case the raw materials are converted into steel sheets or into narrower rolls (steel strips). The following table presents the development of the turnover of SIDMA S.A. for the period , per main product category. Total turnover for each year agrees with the figures included in the published financial statements. Breakdown of Turnover by Product Category (in x thousand) Total No. Product Category Percentage 1 Flat Products (kgrs) 71,897 84,997 82, , % 2 Long Products (kgrs sq. m.) 23,160 33,415 24,142 80, % 3 Wire Products (kgrs sq. m. pieces) % 4 Other items (kgrs pieces) % 5 Provision of Services 1, , % Total 96, , , , % The business activity of SIDMA S.A. does not exhibit seasonality. The observed decline in the sales of the Company during August, December, January and April or May (the Easter month) is due to the reduction in the activities of the industrial and construction sectors. The firms in these sectors tend, the last few years, to shut their operations down for a few days during these months. 5.2 Sales Network The sales and distribution network of the Company comprises two separate Sales Departments that operate in Athens and Thessaloniki. The geographical allocation was made based on the following criteria: a) the prompt servicing of the areas selected with the least possible cost for the Company and b) the full coverage of the Greek market. The Sales Departments of the Company report to the central management of the Sales Division, based in Athens, so that the pricing and credit policy, the effort to increase the market share, the coordination of sales, the servicing of clients and the general commercial conduct of the Company can be uniform and of the highest possible level. Sales-people are responsible for specific clients that have been assigned to them. They report to and cooperate closely with the sales supervisors of each department, who in turn are in direct contact with the Sales Division of the Head-office. 19

21 Each Department s effort to achieve its goals is based on the following elements: ñ Pricing policy, which is flexible, so as to meet both the requirements and the capacity of the client as well as the general challenges of the highly competitive environment. ñ Prudent credit policy, based on a system of credit limits per client. The limits for each client are set based on the volume of transactions and the business behavior of the client, while relevant information obtained from credible market agencies, which are specialized in credit assessment, is constantly considered. The Company has entered into credit insurance contracts for the sale of its own products, while the same coverage is in place for products represented on behalf of SIDENOR, ERLIKON, CORINTH PIPEWORKS, PROSAL and PROSIDER. ñ Constant market research for new potential market segments, related to the trading of steel products, that could be exploited, and for extension of the client base. ñ Client service. Client satisfaction remains a basic principle of the operation of the Company, a fact that enhances its competitiveness considerably. In this context, the Company follows practices such as regular contact with clients, in person or by phone, recording of client opinions regarding the Company, exchange of commercial views and information, provision of technical and commercial advice regarding the material quality and price, and certification of the quality of the products through the necessary documents. The Company has 3 product distribution points, 2 of which, in Aspropyrgos and Oreokastro in Thessaloniki, are both storage and distribution centers as well as steel processing centers, while the third one (Athens Center) is solely a distribution center. In this way the requirements of the clients are met according to their geographical location, the size of the order, the required delivery time and the type of product, so as to achieve faster, fuller and more economical service. The Oreocastro facility in Thessaloniki services Macedonia, Thrace, the Northern Aegean and clients in neighboring Balkan countries while the Athens and Aspropyrgos facilities service the rest of Greece. The factories of SIDENOR, ERLIKON, CORINTH PIPEWORKS and PROSAL attend to the proper supply of the distribution centers as well as the direct dispatch of goods to clients. Additionally, the Company cooperates with trade representatives, who operate either based on geographical criteria or with relation to specific client and product sectors. The following table presents a geographical breakdown of sales for fiscal years : 20

22 5. District Geographical breakdown of turnover (in x thousand) Total % CENTRAL GREECE 41,943 48,585 40, , % PELOPONESE 3,481 3,968 3,531 10, % AEGEAN ISLANDS 3,266 4,942 3,137 11, % MACEDONIA 34,795 41,722 39, , % THRACE N.AEGEAN ISLANDS 1,874 1,959 1,217 5, % THESSALIA 6,473 10,923 12,105 29, % EPIRUS IONIAN ISLANDS 1,436 1,824 1,859 5, % ABROAD 2,948 5,221 5,514 13, % Total 96, , , , % 5.3 Clients The Company s clientele is particularly wide (more than 2,500 active clients) given the wide use of its products. The clientele is classified in the following main categories: ñ Iron products, steel sheets and wire products merchants ñ Metal element builders and machine-works ñ Construction companies and joint ventures that undertake public and private projects ñ Public Sector Agencies (Public Power Corporation-DEH SA, Athens Water Supply and Sewerage Company- EYDAP SA, National Railway Company-OSE SA etc.) ñ Large and small industries ñ Public Sector Agencies or Utilities (DEH, EYDAP, OSE etc.) The following table presents a breakdown of sales for fiscal year 2005 by client category: Client categories (sales of own products and trade agency sales) Ammounts in x thousand No 2005 Percentage 1 Small and Large Industries 65,566 39% 2 Iron and wire products merchants 66,710 40% 3 Metal element constructors and machine works 27,228 16% 4 Construction companies and joint ventures that undertake 6,103 4% Public and Private projects 5 Public Sector Agencies 570 0% Total 166, % No client of SIDMA S.A. represents more than 2% of its total turnover. As a result, possible loss of one of its major clients will not have a material negative impact on the income of the Company. 21

23 5.4 Outstanding Litigation The litigation cases, relating to amounts in excess of x200,000, that SIDMA S.A. or its subsidiary PANELCO SA are involved in, are set out below: ) SIDMA S.A. KOTSOPOULOS partnership Case Disputed amount: The disputed amount is x 891,039. x 584,673 out of this amount relate to sales made on credit that are secured by checks issued by this partnership while the amount of x 306,366 relates to similar sales that are not covered by any security. No payments have been made. Assessment regarding the outcome of the case by the lawyer handling it: The lawyer handling the case considers that the debtor company will be obliged to pay the outstanding amount. However, the timing of the finalization of the case cannot be determined due to its multiple aspects and the large amount involved. Fine Imposed from the Capital Market Commission The Hellenic Capital Market Commission imposed a fine of x to SIDMA S.A. because the company did not warn investors, during the Initial Public Offering of its shares, about the first quarter of 2005 decline of its profit before tax by 40% compared to the one of first quarter of The company believes that a. similar declines are not important for companies operating in the steel service sector and b. in the prospectus of the IPO it was made clear to the investors that the steel sector is cyclical and that FY 2004 was an extremely good year. Thus, the company, although has paid the fine and made the proper accounting entries, appealed to court in order to cancel the decision of the Capital Market Commission. μ) PANELCO SA There are no outstanding litigation or arbitration cases against the company or the companies controlled by it, which could have a significant effect on their financial position. 5.5 Fixed Assets Guarantees & Charges on Property Trademarks The Company has submitted application no / for the registration of a domestic trademark. The application was approved with decision no. 3577/1989 of the Trademark Administrative Committee. The company name and the trade name of the Company have been lawfully registered with the Athens Chamber of Commerce and Industry, with Register no Real Estate Property Owned Buildings The real estate property owned (100%) by SIDMA S.A., is as follows: Facilities Owned Surface (sq. M) Date of Purchase Location Land Buildings Use of the Land Aspropyrgos, Attica 35,344 13,547 Processing Center 1973 Storage Areas Came into SIDMA s possession in 1999 through absorption Oreokastro, Thessaloniki 52,855 20,736 Processing Center 1996 Office Space Storage Areas Thessaloniki Industrial Area 31,803 8, Came into SIDMA s possession in 1999 through absorption The two (2) Steel Service Centers currently owned by the Company are located in the Aspropyrgos and Oreokastro, Thessaloniki facilities. The facilities in the Thessaloniki Industrial Area are not currently in use and the Company is examining the most beneficial way to use them. 22

24 5. The subsidiary company PANELCO SA owns a 26,180 sq. m. plot of land at the Lamia Industrial Area. A 9, sq. m. industrial facility and a sq.m. office building have been built on this land. Leased Property - Buildings Further to the facilities it owns, SIDMA S.A. also leases two buildings in order to cover its increased needs for storage and office space. Leased Facilities Surface (sq. m.) Location Land Buildings Use End of Lease Athens 39 P. Ralli 16,291 6,347 Offices Storage area Neochoropoulo, Ioannina Storage area The subsidiary company PANELCO SA leases the following buildings: Leased Facilities Surface (sq. m.) Location Land Buildings Use End of Lease Oreokastro, Thessaloniki - 20 Office Keramikos, Attica (134 Meg. Alexandrou st) Office Company Head Office Machinery The Company is equipped with machinery of conventional as well as state-of-the-art technology and of the highest standards. The production lines are constantly upgraded, so as to be in a position to meet the constantly increasing standards set by the clients. The main machinery owned by SIDMA S.A., grouped according to the industrial facility where it is located, is presented in the following table: No Type of line Country Year of Year of Technological Degree of Origin manufacture acquisition level of obsolescence A. Aspropyrgos 1 Cutting Italy Semi-automatic 20% 2 Cutting Italy High 18% 3 Slitting Italy Automatic 19% 4 Shot blasting Germany High 15% 5 Saw Germany High 15% 6 Flame cutting Germany High 22% 7 Tube machine Italy Conventional 20% 23

25 No Type of line Country Year of Year of Technological Degree of Origin manufacture acquisition level of obsolescence B. Oreokastro 1 Cutting England High 17% 2 Cutting France High 17% 3 Cutting Italy Conventional 40% 4 Slitting Germany Semi-automatic 100% 5 Cutting Italy Semi-automatic 20% 6 Slitting Italy Semi-automatic 20% 7 Slitting Italy Semi-automatic 9% 8 C-and Z- profiling line Italy High 3% The following table presents the main machinery owned by PANELCO SA : No Type of line Country Year of Year of Technological Degree of Origin manufacture acquisition level of obsolescence Lamia 1 Panel machine Italy Automatic 21% 2 Trapezoidal sheets Italy Automatic 8% conversion machine Charges on property No mortgages, prenotations, guarantees or any other charges have been registered on property owned by SIDMA S.A.. A prenotation charge has been registered on behalf of the bank under the name National Bank of Greece for the amount of x 2,365,000 on the property owned by PANELCO SA in the Lamia Industrial Area. 5.6 Human Resources The following table presents the development of the average number of Company employees throughout the period : Category of Employees Administrative staff (clerks) Workers Total Employees The following table sets out the development of the staff, by education level: Level of Education University Technical Institution Graduates High school Total

26 5. The Company runs a corporate insurance plan for its employees through the Aspis insurance company. The Company has established an Internal Employment Regulation for its employees, according to the decision of the Labour Inspection Corps dated (Register no. 1930). 5.7 Investments of SIDMA S.A. and the Group SIDMA S.A. The following table describes the investments of the company in fixed assets and participating interests, as reported in the published balance sheets and annexes for the fiscal years : (amounts in x thousand) Land Plots 0 0 Buildings and Technical Projects Machinery Technical facilities & Other Equipment 1,572 1,100 Vehicles Furniture & Other Equipment Fixed Assets under construction Total Fixed Asset Investment 2,669 1,624 Intangible Fixed Assets Total Investment in Participation Interests 0 2,178 Grand Total 2,682 4,382 PANELCO SA The following table presents the investments of the subsidiary PANELCO SA, which is included in the consolidated financial statements of SIDMA S.A., during fiscal years : (amounts in x thousand) Land Plots 0 0 Buildings and Technical Projects 0 5 Machinery Technical facilities & Other Equipment Vehicles 0 0 Furniture & Other Equipment Fixed Assets under construction 12 0 Total Fixed Asset Investment Intangible Fixed Assets 94 4 Total Investment in Participating Interests 0 0 Grand Total

27 6. Management Administration Supervision of the Company 6.1 Organisation chart of the Company The Company has established a modern organisation, which is the basis for its industrial and trading activity. The existing organisational structure meets the operational and internal communication needs of the company to a large degree, allowing communication free of bureaucratic procedures, quick decision-making, monitoring of the operation of the system and avoiding the overlap of duties. The organizational structure of SIDMA S.A. is set out in the following organisation chart: 26

28 6. Investor Relations and Corporate Announcements Department Accounting Board of Directors Internal Audit General Management Quality Assurance Department Quality Control Department Thessaloniki Branch Management Athens - Thessaloniki Sales Division Thessaloniki Sales Department Thessaloniki Logistics Department Thessaloniki Warehouse Administration Athens Sales Department Athens Department Athens Warehouse Administration SIDMA S.A. ORGANISATION CHART Marketing and Product Development Division Technical Division Procurement Division Development Division Foreign Sales Department Aspropyrgos Thessaloniki Production Department Procurement Department Maintenance Department Imports Exports Department IT Division Computerization Department Finance and Human Resources Division Treasury Credit Control Department 27

29 6.2 Board of Directors Management - Supervision The Board of Directors was appointed following a decision of the Regular General Meeting of the Shareholders on (Ministry of Development Announcement / ) and has nine members. The composition of the BoD, according to the minutes of the BoD meeting held on (Government Gazette no / ), is as follows: Name Position in the B.o.D Profession MARCEL HARIS AMARIGLIO son of LEON Chairman Businessman MENELAOS TASOPOULOS son of ATHANASIOS Vice Chairman Private sector employee DANIEL BENARDOUT son of DAVID Member Private sector employee IOANNIS STAVROPOULOS son of STAVROS Member Private sector employee KONSTANTINOS KARONIS son of DIMITRIOS Member Private sector employee ANASTASIOS KOLYVANOS son of NIKOLAOS Member Private sector employee HAIM NAHMIAS son of MOISES Member Private sector employee GEORGIOS KATSAROS son of SPYRIDON Independent Member Private sector employee ALEXANDRA NICOLITSA daughter of ATHANASIOS Independent Member Freelance Professional The term of the Board of Directors of the Company is one year. The term of the members of the Board of Directors begins the day after the General Meeting of the year when they are appointed and ends on the day of the Regular General Meeting during which the financial statements of the year of their departure are approved. According to article 17 of the Statutes of SIDMA S.A., the Board of Directors represents the company in and out of court and is authorized to decide on any matter related to the management of the Company, the management of its assets and the general pursuit of its purpose, without any limitation or prejudice, for any case that under the provisions of the law or the Statutes of the Company does not fall under the authority of the General Meeting. The Board of Directors during the meeting held on delegated its authority, as provided for by the Statutes, except for the issues on which collective action is required, to one or more of its members or to employees of the Company, who act separately or jointly. The authority assigned to each person has been registered in detail, by type of action for which authority has been assigned, in the Public Limited Companies Register on , with registration number / (Government Gazette 10100/ ). The members of the Board of Directors did not receive any remuneration for their services during the fiscal year It is noted that during the fiscal year 2005 some of the members of the B.o.D. received remuneration from PANELCO SA. The Company compiles consolidated financial statements which, besides the Company, include PANELCO SA and SIDMA WORLDWIDE LIMITED, based in Cyprus. The latter participates in turn in the newly established company SID-PAC Steel and Construction Products SRL based in Romania and the newly established SID-PAC Bulgaria S.A. based in Bulgaria. The members of the Board of Directors, Mr. Daniel Benardout and Mr. Anastasios Kolyvanos, are employed by the Company and receive payment from the Company for their services. This payment is approved by the Regular General Meeting of the Shareholders where the financial statements are approved, as required by law. The total annual payments made to the members of the Board of Directors employed by the Company for the fiscal year 2005 amounted to x thousand. These payments are partly included in the administration and distribution expenses figure appearing on the income statement and partly in the distribution of profits table. The amount included in the administration and distribution expenses figure relates to the employees gross salaries (before social security contributions, taxes etc.) while the amount paid out of profits, which appears in the distribution of profits table, has already been taxed. It is noted that the members of the B.o.D did not receive any benefits in kind during the year

30 6. The Board of Directors is composed of: Marcel Amariglio Chairman, aged 56. Mr. Amariglio holds a BSc degree and an MSc degree in Mechanical Engineering from the University of Sussex in Great Britain and an Executive MBA from the Kelogg University (USA). Businessman. Menelaos Tassopoulos Vice Chairman, aged 44. Mr. Tassopoulos is a graduate Chemical Engineer of the National Technical University of Athens. He also holds a PHd in Chemical Engineering from Yale University (USA) and a Master s degree in Industrial Business Administration from the Columbia University in USA. He has been a member of the Management team of Viohalco Group since Currently, he is the General Manager of Halcor S.A. Daniel Benardout General Manager, aged 52. Mr. Benardout holds a Bachelor's and Master's Degree in Civil Engineering from Technion Institute of Technology (Israel) and an MBA from the Athens University of Economics and Business. He joined SIDMA in Ioannis Stavropoulos Member of the Board, aged 60. Mr. Stavropoulos is a graduate of the Higher School of Industrial Studies in Piraeus. Mr Stavropoulos is a Member of the Board of Directors of Corinth Pipeworks S.A. Konstantinos Karonis Member of the Board, aged 47. Mr. Karonis is a graduate of the Athens Higher School of Commercial Studies and a graduate of the Law School. He joined Viohalco in Anastasios Kolyvanos Commercial Manager and Member of the Board, aged 54. Mr. Kolyvanos holds a Bachelor's Degree in Mathematics from the University of Athens and a Master's degree in Operations Research from the University of Sussex (U.K.). He joined the company in Haim Nahmias Member of the Board, Managing Director of Subsidiary PANELCO S.A, aged 51. Mr. Nahmias holds an Electrical Engineering Degree from Technion Institute of Technology (Israel). He joined SIDMA in 1983 and until 2002 served as Chief Financial Officer. Georgios Katsaros Member of the Board, aged 57. Mr. Katsaros is a graduate of the Economics department of the Law School of the University of Athens. He also holds a Master s degree in Industrial Economics from Sussex University (U.K.) and an MBA from INSEAD (France). He has been working as Administration Consultant in EFG Eurobank Ergasias since Alexandra Nicolitsa Member of theboard, aged 36. Mrs Nicolitsa is a distinguished graduate in Economics from Warwick University (U.K.). She holds a Master s degree (M.Phil) in Finance from Cambridge University (U.K.) and a Master s degree (M.Sc.) in Human Resources Strategic Management from ALBA University. She works as a finance consultant. 29

31 The company management is composed of (other than the ones already mentioned): Michael Samonas Chief Financial Officer, age 36. Mr. Samonas holds a BSc in Applied Accounting from Oxford Brooks University (U.K) as well as a BSc in Physics from Aristotle University of Thessaloniki. He also holds an MBA from University of LaVerne and a PhD from the Electronic and Electrical Engineering Department of the University of Surrey (U.K.).He is a qualified member of the Association of Chartered Certified Accountants (ACCA) and joined the company in Elias Moissis Manager of Corporate Development, age 40. Mr. Moissis holds a Bachelor's Degree in Management Science from the Massachusetts Institute of Technology (U.S.A.) and an MBA from the Haas School of Business of the University of California at Berkeley (U.S.A.). He joined the company in Panos Koutsardakis Manager of Thessaloniki Branch, age 53. Mr. Koutsardakis is a graduate of the Aristotle University of Thessaloniki School of Agriculture. He joined SIDMA in Elias Naar Purchasing Manager, age 42. Mr. Naar is a graduate of the University of Athens Department of Physics and holds Master's and Doctoral Degrees in Theoretical Nuclear Physics from the University of Manchester (U.K). He joined the company in John Skarafigas Manager of Information Systems, age 53. Mr. Skarafigas holds a Bachelor's Degree in Mathematics from the Aristotle University of Thessaloniki. He joined the company in Paris Papageorgiou Head of Accounting, age 42. Mr. Papageorgiou is a graduate of the University of Piraeus School of Business. He joined SIDMA in Andreas Toliopoulos Manager of Marketing Development, age 43. Mr. Toliopoulos is a graduate of the National Technical University of Athens Faculty of Chemical Engineering and holds a Master's Degree in Materials Engineering from the University of Oklahoma (U.S.A.). He joined SIDMA in 2005 coming from the SIDENOR Group. Maria - Anna Botonaki Head of Investor Relations, age 28. Ms Botonaki holds a Bacherlor's Degree in Corporate Communication from the Nottingham Trent University (U.K.) and a Master's Degree in Marketing from the University of Leicester (U.K.). She joined the company in The Company has an internal audit department. The Internal Auditor of the Company is Ms. Eleni Nikolantou, who was appointed at the meeting of the Board of Directors held on She is 28 years old. She is a graduate of the Business Administration department of the Athens University of Economics and Business (formerly ASOEE). She has completed the two-year professional training program of the Certified Auditors-Accountants Corps Training Institute. She worked for auditing firm Grant-Thornton from September 2000 until October 2005, when she left, having risen to the grade of Assistant Auditor-Accountant. She has been employed by the Company since

32 6. During the fiscal year 2005, total annual compensation of the Senior Executives of the Company mentioned above (including the executives who are members of the Board of Directors) amounted to x 976 thousand. An amount of x 595 thousand of the total is included in the operating cost figure while x 380 thousand relates to Senior Executive compensation distributed through the distribution of profits table. It is noted that the amount included in the operating cost figure (administration and distribution expenses) relates to the employees gross salaries (before social security contributions, taxes etc.) while the amount paid out of profits, which appears in the distribution of profits table, has already been taxed. It is noted that other than the compensation and transactions reported in this Prospectus, no other fee, business relation or transaction took place during the previous fiscal year with the management and administrative officers of SIDMA S.A. as well as its related companies in which it has a participating interest and with which it forms a group. It is also noted that SIDMA S.A. has not granted any loans or offered any guarantees to members of its Board of Directors or to Senior Executives. Some management and administrative officers hold shares in SIDMA S.A. while options on the stock of the company have not been issued to anyone. The total number of SIDMA S.A. shares held by its staff is 151,200 shares. It is noted that no member of the B.o.D. and no Senior Executive of the Company has been convicted for disgraceful acts, financial crimes or is involved in outstanding litigation relating to bankruptcy, criminal acts or the prohibition of conducting: a) business activity, b) stock market transactions and c) the profession of investment advisor, bank and insurance company executive, share issuance underwriter, securities company executive etc. All the Senior Executives of the Company have Greek citizenship and nationality. The postal address of the member of the Board of Directors and the executives of the company is: 39 P. Ralli, Tavros, As regards the family relationships among the shareholders, the members of the Board of Directors and the Senior Executives of SIDMA S.A., we note the following: Mr. Andreas Pisante is the former husband of Ms. Lola-Julia Amariglio. They are the parents of Ms. Sandy Amariglio. Ms. Sandy Amariglio, widow of Daniel Andreas Amariglio, is the mother of Nelly Amariglio and David Amariglio, who at the same time are the grandchildren of Mr. Andreas Pisante and Ms. Lola-Julia Amariglio. Mr. Marcel Haris Amariglio is cousin of Ms. Lola-Julia Amariglio and uncle of Ms. Sandy Amariglio. Finally, Mr. Daniel Benardout is the brother in law of Mr. Haim Nahmias. 31

33 6.3 Participation of Members of the B.o.D. and of Main Shareholders in the Management and/or the Capital of Other Companies The following table presents the companies in the Management or the capital of which the members of the Board of Directors and the Main Shareholders of SIDMA S.A. (shareholders with a holding of more than 10%) participate in, with a participating interest of more than 10%: Member of the B.o.D. Company in which Position in Participating or Main Shareholder of SIDMA S.A. they participate the B.o.D. interest Marcel Amariglio Menelaos Tasopoulos TEPRO STEEL SA Vice Chairman - AEIFOROS SA Vice Chairman - ERLIKON SA Member - ATTICA METALWORKS SA Member - STOMANA INDUSTRY (Bulgaria) Member - PROSAL SA Chairman 30.00% PRAKSYS SA Member - BET SA Member - DIABIPETHIV SA Member - AEIFOROS BULGARIA Chairman - PROSAL TUBES S.A. (Bulgaria) Chairman - PANELCO SA Vice Chairman - Ioannis Stavropoulos EVIA PROPERTIES SA Member - HELENIC CABLES SA Member - CORINTH PIPEWORKS SA Member - TELECABLES SA Member - Daniel Benardout PROSIDER SA Chairman - PANELCO SA Member - Anastasios Kolyvanos PANELCO SA Member - Haim Nahmias PANELCO SA Managing Director - and Chairman Konstantinos Karonis ERGOSTEEL SA Vice Chairman - ETAL SA Member - EDE SA Member - STEELMET EXPORTS SA Chairman - STEELMET SA Vice Chairman - TEKA SYSTEMS SA Member - Georgios Katsaros EFG TELESIS FINANCE SA Member - JUMBO SA Member - Alexandra Nicolitsa SIDACIER HOLDING SA PROSIDER SA % SOVEL SA BET SA % ETAL SA % BEAT SA % STEELMET SA % THESSALIA TECHOLOGICAL PARK SA % EVETAM SA % 32

34 7. 7. Transactions with Affiliate Companies The appendix reports the minutes from the BoD decision of the company regarding the transactions with the affiliate companies, in accordance with the provisions of article 2 4, L. 3016/2002 as well as the article 4 of the Hellenic Capital Market Commission Decision 5/204/2000 as amended by 3/348/2005, for the period till

35 8. Stock Data The shares of the company were listed for trading in Athens Stock Exchange on following its BoD decision No 43-07/22/2004. The following table reports the closing price of the share, its volume and transaction value at the last trading day of each month for the period Date Share Price Total monthly Total monthly volume (shares) transaction value (EUR) ,640 3,552, ,340 2,645, ,692 1,302, ,010 1,332, ,130 1,343, , , , , , ,819 The following table reports the share distribution and the relevant percentages. Shares Number of shareholders Number of shares Percentage 0 5,000 4,403 1,218,275 12% 5, , ,849 10% > 100, ,793,876 78% Total 4,476 10,000, % The following graphs report the share price evolution, the volume and the variation of the price in comparison to the General Index for the period from till

36 /05/ /5/2005 7/6/ /6/2005 6/7/ /7/2005 3/8/ /8/2005 1/9/ /9/ /9/ /10/ /10/ /11/ /11/2005 9/12/ /12/ Volume Price 0% 20% 40% 60% 80% 100% 120% 140% 10/5/ /5/2005 7/6/ /6/2005 5/7/ /7/2005 2/8/ /8/ /8/ /9/ /9/ /10/ /10/2005 8/11/ /11/2005 6/12/ /12/2005 SIDMA General Index

37 9. Information of Article 10 of Law 3401/2005 The Company, applying the law, published, and therefore made available to the public, in its website as well as in the website of the Athens Stock Exchange the following information regarding the financial year of SUBJECT SITE WHERE IT WAS POSTED DATE Press release - Start of trading of SIDMA Steel Products shares / Press release SIDMA S.A. is listed on the Main Merket of the Athens Stock Exchange / Press release Public Offering of SIDMA S.A. between April 12th and April 15th / Press release Completion of the Public Offering for the Share Capital Increase of SIDMA S.A. / Announcement regarding the listing of the shares in the ASE for the first time following a public offering / Press release Results for fiscal year / Notification for the change in the participation percentage of a shareholder in a listed company / Pre-announcement of the Annual General Meeting / Press release Announcement regarding business developments in the company / Press release Announcement regarding business developments in the company / Announcement regarding other important events / Notification regarding the dividend cut-off date and the dividend payment date / General Meeting resolutions / Notification regarding a change in the composition of the Board of Directors / Press release First quarter 2005 results / Figures from the Financial Statements according to IAS for the first quarter of / Additional financial reporting information / Clarifications regarding press reports / Press release estimates regarding results for the first semester of / Announcement regarding business developments in the company / Press release Results for the first semester of / Figures from the Financial Statements according to IAS for the first semester of / Announcement regarding comments on the financial / accounting statements / Notification regarding the decision to change the use of funds drawn / Announcement of the use of funds drawn table / Notification regarding the decision to change the use of funds drawn / Announcement regarding a change in the composition of the Board of Directors / Announcement regarding business developments in the company / Press release Third quarter 2005 results / Announcement of the use of funds drawn table / Figures from the Financial Statements according to IAS for the third quarter of /

38 Appendix TABLE OF CONTENTS 10.1 Invitation to the Annual Shareholders Meeting Auditors Report for the Annual Financial Statements of Management Report Consolidated Financial Statements as of December 31, 2005 According to International Financial Standards ( IFRS ) Annual Financial Statements as of SIDMA PANELCO Allocation of Funds Raised from the ipo Listing Decision of the Board of Directors Regarding Intra-company Transactions Report

39 10.1 Invitation to the Annual Shareholders Meeting of the Societe Anonyme SIDMA SA STEEL PRODUCTS Reg. No / 06 / B / 86 / 2 According to Law 2190/1920 as it is currently in effect and the Company s Articles of Association, the Board of Directors invites the Company s shareholders to the Annual Shareholders Meeting on June 8th, 2006, Thursday, at 14:00, in Athens, Athens Imperial Hotel, Achileos Kolonou St. and M. Alexandrou St., Karaiskaki Square. The Meeting will discuss and approve the following subjects of the daily agenda: 1) Submission for approval of the Board of Directors Management Report and Sworn Auditor s Report for the Annual Financial Statements, which have been compiled in accordance with the International Financial Reporting Standards, and concern financial year 2005 ( ). 2) Approval of the Annual Financial Statements, which have been compiled according to the International Financial Reporting Standards, and concern financial year 2005 ( ). 3) Approval of profit s distribution for the financial year 2005 ( ). 4) Release of the Board of Directors and Sworn Auditor from any compensation concerning their financial actions for year ) Election of Sworn Auditors, ordinary and deputy, for the audit of financial year and approval of their fees. 6) Approval of fees paid to Directors of the Board, with a full-time employment, during the financial year 2005, and in advance approval of fees for the financial year of ) Granting permission, according to article 23, paragraph 1 of Law 2190/20, to the Directors of the Board, General Management and to the Company s directors for their participation in the Boards of Directors or the management of the Group s companies. 8) Approval of an alteration in the utilization of funds raised in the Company s initial public offering. 9) Election of new members of the BoD and appointment of independent members, according to the provisions of Law 3016/2002 concerning corporate governance, amended by the Law 3091/ ) Approval of an Ordinary Bond Loan ranging from EUR 50,000,000 to EUR 60,000,000 and BoD authorization for the settlement of the special bond terms, according to the provisions of Law 3156/2003 and Law 2190/ ) Other subjects Announcements. All shareholders are entitled to participate in the Meeting and vote, either on person or via delegate. Each share corresponds to one voting right. The Company s shareholders, who wish to participate in the Annual Shareholders Meeting on person or via a delegate, must deposit their total shares or part of their shares via the account operator to the Clearing Paperless System (PCS), and receive a relevant deposit certificate. In turn, shareholders must present the relevant certificate at the Company s shareholders service department (39 Petrou Ralli St., 1st floor, Tavros, postal code ), at least five (5) calendar days prior to the date, which is on 2 June 2006, of the Annual Shareholders Meeting. In the case of shares held in the Special Account, their holders must deposit through a relevant statement their total shares or part of their shares in the Central Securities Depository S.A. (Mavrokordatou Square and 17 Acharnon St.), and receive a Securities Deposit Certificate. In turn, shareholders must present the relevant certificate at the Company s shareholders service department (39 Petrou Ralli St., 1st floor, Tavros, postal code ), at least five (5) calendar days prior to the date, which is on 2 June 2006, of the Annual Shareholders Meeting. Shareholders must deposit the relevant deposit certificates and the delegation documents at the Company s shareholders service department within the same deadline. Tavros, 11 May 2006 THE BOARD OF DIRECTORS 38

40 Auditors Report for the Annual Financial Statements of 2005 To: The Shareholders of SIDMA S.A STEEL PRODUCTS We have audited the accompanying financial statements as well as the consolidated financial statements of SIDMA S.A STEEL PRODUCTS, as of and for the year ended 31 December These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Greek Auditing Standards, which are based on the International Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, evaluating the overall financial statement presentation as well as assessing the consistency of the Board of Directors' report with the aforementioned financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the aforementioned financial statements give a true and fair view of the financial position of the Company and that of the Group (of which this Company is the holding company), as of 31 December 2005, and of the results of its operations and those of the Group and their cash flows and changes in shareholders' equity for the year then ended in accordance with the International Financial Reporting Standards that have been adopted by the European Union and the Board of Directors' Report is consistent with the aforementioned financial statements. Without qualifying our opinion, we draw your attention to the fact that some balances of the Interim Financial Statements were restated. These balances are shown at comment no 10 of the notes accompanying the Financial Statements. Athens, March 29, 2006 The Certified Public Accountant Sotiris Ger.Vardaramatos SOEL Reg.No SOL S.A. SOEL Reg.No

41 10.3 Management Report of the Board of Directors or SIDMA S.A. STEEL PRODUCTS for the Fiscal Year 2005 The Management Report of the BoD concerns the fiscal year 2005 and was compiled according to the principles of the International Financial Reporting Standards (IFRS), applied in Greece since 1/1/2005. The Management Report contains the major information sections, which provide essential elements regarding the activities and financial results of the Company and the Group during 2005, as well as the prospects and targets for the current fiscal year Athens, March 2006 CONTENTS 1. REVIEW OF MAJOR EVENTS REGARDING THE COMPANY AND THE GROUP DURING Listing on the Athens Stock Exchange New Investments International Activity Market circumstances Factors affecting the Company FINANCIAL RESULTS Transition from Greek GAAP to IFRS Financial Results Risk Management Share Price Performance Participation in Sector Indices - Dividend STRATEGY GROWTH DRIVERS TARGETS AND PROSPECTS FOR

42 REVIEW OF MAJOR EVENTS REGARDING THE COMPANY AND THE GROUP DURING Listing on the Athens Stock Exchange During 2005, the Company completed its listing on the Athens Stock Exchange successfully. The public offering took place from 12 until 15 April The trading debut of SIDMA stock was scheduled for 10 May The Share Capital Increase concerned the issuance of 2,500,000 (CR) new shares with a nominal value of EUR 1.35 per share, whereas the total proceeds after the deduction of the listing expenses amounted to EUR 12,550,000. Of the total proceeds raised, 25% (or amount x 3,063 thousand) was utilized within 2005, while the remaining proceeds will be invested within 2006, mainly in production units and for the purchase of a land as well as the construction of new storage and office facilities in the broader Attica area. 1.2 New Investments The Company continued to implement its investment plan during 2005, with investments in fixed assets, as well as in subsidiaries, targeting stronger expansion in the Balkans and Romania. Total investments reached x 4,390 thousand on parent basis, whereas an amount of x 229 thousand was channeled to subsidiary PANELCO for investment in machinery equipment. Investments in fixed assets amounted to x 2,218 thousand approximately, of which x 1,573 thousand derived from the share capital increase following the Company s listing on the Athens Exchange. Total investments concerned the following: Investments in large-scale projects - markets ñ purchase of machinery, ñ repayment of software SAP, ñ purchase of packaging system for the sletting unit in Thessaloniki, Investments in current equipment ñ upgrade of the sletting unit in Thessaloniki, ñ purchase of a bundle machine for C-to-Length unit in Thessaloniki, ñ purchase of machinery equipment in the various facilities of the Company. Building surrounding area improvements in the Company s facilities in Thessaloniki. Investments in participation interests amounted to x 2,172 thousand approximately, of which x 1,490 thousand concerned the establishment of subsidiaries in Bulgaria and Romania, with capital raised from the Company s share capital increase following its listing on the Athens Exchange. The remaining amount of x 669 thousand financed the acquisition of an additional stake, 16%, of PANELCO from the Company (current participation stake stands at 78%). 41

43 1.3 International Activity In the context of the strategic expansion and stronger growth of the Company s activities in the foreign markets, SIDMA S.A. proceeded during 2005 with the establishment of two subsidiaries in Romania and Bulgaria. SIDMA WORLDWIDE LIMITED, a Cyprus based subsidiary of the Company, implemented the above investments. Following its investments, SIDMA has participated by 50% in the share capital of SID-PAC Steel and Construction Products SRL in Romania and by 75% in the share capital of SID-PAC Bulgaria S.A. in Bulgaria. Packer Plada Ltd owns the remaining stakes of the above two companies. Packer Plada Ltd was established in 1934 and operates as a processor and trader of steel products. This company is leader in the steel market of Israel and listed in Tel Aviv Stock Exchange since The share capital of SID-PAC Steel and Construction Products SRL amounts to x 950 thousand, whereas the share capital of SID-PAC Bulgaria S.A. to x 1,361 thousand approximately. The above capitals have financed part of the total investment for the construction of modern Steel Service Centers. Specifically, in Bulgaria, SID- PAC Bulgaria purchased a land of a total area 39,000 square meters in the old industrial area of Sofia. The land has also storage facilities of a total area 4,500 square meters, with maintenance works currently under way, whereas further expansion of the facilities is still to materialize. In Romania, the Company proceeded with the purchase of land, 35,000 square meters, which is located in the Industrial Area of Bucharest. Works for the construction of an Integrated Steel Service Center are expected to commence in the second half of SID-PAC Steel and Construction Products SRL already commenced its commercial activities during 2005, completing the financial year with x 2.4 million turnover. 1.4 Market circumstances Factors Affecting the Company The Company s sector is cyclical with periods of skyrocketing prices and demand on the one hand, and with periods of recession on the other hand. Specifically, product prices within the sector are mainly affected from conditions in the international steel market and domestic competition. The Company s gross profit margin is (positively or negatively) affected from changes in steel prices. This is the case as changes in sale prices of steel products cannot synchronize with purchase prices of steel products and inventories for the Company. Specifically, sale prices are immediately affected from international price trends. However, from ordering the steel materials (the time of purchase price agreement) until receiving the actual merchandise, there is a time lag. For this reason, purchase prices recorded in the Company s books at delivery time may differ from those observed in the international market. Moreover, the acquisition cost of inventories is determined by the weighted average price methodology. Therefore, while purchase and sale prices follow a similar trend, the pace of increase in sale prices is not the same with the one is purchase prices. As a result, in periods of rising prices, the Company s gross profit margin is icnreasing, whereas in periods of weakening prices, the gross profit margin is decreasing. The above introduction explains the fundamentals behind the price fall during 2005 as compared to the previous year, and their effect on the Company s financial results: Specifically: 1. Following a favorable 2004, and a satisfactory first quarter in 2005, the market turned unexpectedly bearish, with international steel prices remaining low for the rest of the year. 2. For a long period of time, the Company continued to purchase materials at high prices and at the same time adjusted sale prices downward, thus its gross profit margin was decreased. 42

44 The above resulted in a significant reduction of the Company s earnings, starting in Q1 2005, as compared with Q Despite the above unfavorable developments, the Company s financial results for 2005, without deducting extraordinary expenses (such as the amount of x 900 thousand for its listing on the Athens Stock Exchange and the penalty of x 290 thousand imposed by HCMC), exceed the annual average earnings of the last five years, without taking in to consideration FY FINANCIAL RESULTS 2.1 Transition into IFRS The Company adopted and applied the International Financial Reporting Standards for the first time in The Group promptly took the necessary actions for the transition of its accounts from the Greek Generally Accepted Accounting Principles (GAAP) into the IFRS, whereas the IFRS based accounts implied an improved financial status on both parent and consolidated basis. Specifically, SIDMA S.A. completed in 2004, via Athinaiki Oikonomiki the valuation of its fixed assets for both subsidiary Panelco and parent company, assuming their fair value as the historic cost, according to IFRS 1 with regard to the first transition. According to the relevant valuation reports, both the real estate assets as well as the Company s machinery equipment realized significant premiums. The above event in conjunction with the Company s share capital increase resulted into significantly higher book value per share, from EUR 3.7 per share in 2004 to EUR 5.0 per share in Financial Results 2005 The major financial accounts of the financial year are presented below: GROUP CH. (%) Turnover 124,213, ,597, % Operating Results (EBITDA) 9,295,933 19,416, % Earnings before taxes 4,406,223 15,414, % Net Earnings after Taxes 2,745,283 11,413, % EBITDA Margin 7.5% 14.5% -48.5% Net Profit Margin 3.5% 11.5% -69.3% COMPANY CH. (%) Turnover 107,119, ,144, % Operating Results (EBITDA) 6,983,665 17,679, % Earnings before taxes 3,516,253 14,647, % Net Earnings after Taxes 2,245,996 10,888, % EBITDA Margin 6.5% 14.8% -56.1% Net Profit Margin 3.3% 12.3% -73.3% 43

45 From the above financial accounts, the steel market s cyclical effect on the Company s financial results becomes evident. Despite the fact that during 2005 turnover posted a downward trend, earnings before taxes and extraordinary expenses (Athens Exchange listing expenses and HCMC penalty of approximately x 1.2 million) reached x 5.6 million on group basis and x 4.7 million on parent basis. As mentioned previously, the above results exceed the average results of the past five years, of course with the exception of 2004, which was a record year for the steel industry worldwide. The major reasons behind the drop of turnover are presented below: 1. The price reduction as compared to the year The excess inventories created by the customers at the end 2004, due to fears of lack of inventories in the global market. 3. The abrupt price fall in the international market in March 2005 brought an upheaval in customer base. Consumption contracted and came back in the normal levels of 2004 after a period of 6 months. 4. The post-olympics period saw construction companies with cash flow problems and lack of large-scale projects. 5. Lack of liquidity, which was the case to a large extent for the customer base, inevitably increased creditors days in the market. At the same time, insurance companies gradually reduced the credit limits for a large number of our customers. By following a similar policy, our Company limited sales to the above customers. 2.3 Risk Management The major financial risks and the corresponding actions taken by the Company are presented below: Risk Company s Projections 1. Credit Risk The parent company applies an insurance credit policy in co-operation with (Risk associated with insurance companies. Approximately 75%-80% of the customer receivables doubtful customers) are insured and as result no significant credit risk exists. At the same time, the Company operates a credit risk control department, which exclusively deals with customers credit rating and determines the appropriate credit limits. 2. Interest Rate Risk The Company has applied transactions for interest rate risk management, in (affects financing cost) co-operation with various banks. As a result, the current upward trend in interest rates, provided that remains within normal ranges, does not affect the Company s financing cost. Specifically, 40% of its long-term debt is based on fixed rates, whereas the remaining debt is hedged against further increase of the interest rates. 3. Liquidity Risk ñ The Company in co-operation with banks ensures the necessary credit limits. ñ Case by case, the Company may utilize various financial techniques, such as leasing, etc. ñ The Company limits its risk via the significant dispersion of its customer base. It is worth noting that the Company has over 2,700 active clients and none of them represent more than 2% of the Company s total turnover. 4. Foreign Exchange Risk It does not exist. 5. Volatility of Raw Material Prices Volatility in sale prices does not follow changes in acquisition cost of inventories. The above results in higher gross profit margin in periods of upward price trends, and in lower gross profit margin in periods of downward price trends. In view of the above situation, the Company applies a stable inventory policy, whereas through its long-term co-operation with its suppliers, the Company is promptly informed on upward or downward trends in raw material prices. 44

46 Share Price Performance Participation in Sector Indices Dividend I. The Company s stock followed a downward trend during 2005, and by the end of the financial year closed at EUR 3.10 per share. Since May 2005, SIDMA stock is constituent of the indices FTSE/ASE 140 and Small Cap 80. II. Following the decision of Athens Exchange Board of Directors on 24 November 2005, concerning the adoption of a new sector classification model FTSE Dow Jones Industry Classification Benchmark (ICB) with commencement date on 2/1/2006, the Company s stock is classified under the industry Steel, along with the following 8 companies: 1. HALIVDOFILON SA 2. N. LEVENTERIS SA 3. BITROS HOLDINGS SA 4. KORDELLOU BROS SA 5. CORINTH PIPEWORKS SA 6. TZIRAKIAN PROFIL SA 7. A. KALPINIS N. SIMOS SA 8. SIDENOR SA III. The Company s Board of Directors, taking into consideration the financial results of 2005, the Company s financial status, prospects and in view of the broader economic environment, intends to propose a dividend distribution of x 1,200,000 or x 0.12 per share, to the Annual Shareholders Meeting, scheduled during the first two weeks of June The proposed dividend implies a dividend yield of 3.9%, based on the share price as of 31st December STRATEGY GROWTH DRIVERS Aiming at the constant and sustained growth for both the Company and the Group in 2006, the Management has set the following growth drivers and strategies: ñ The Company s industrialization: Over the last few years, SIDMA has shifted its attention to the manufacturing and industrial activity. The Company invests significant amounts for the completion and modernization of its machinery equipment, as well as the modernization of its building facilities. Specifically, over the past three years, the Company s fixed asset investments have exceeded x 7 million. The above shifting resulted into the following: Greater penetration in the market, based on the ability to sell materials not only to consumers but also to constructors. Greater independence on raw material supplies. Lower inventory volumes. Better gross profit margins. Higher added value domestically. 45

47 ñ Expansion of the Company s activities: SIDMA s strategic goal is to expand activities and increase production output in conjunction with the production of new products, currently not produced within the Company s facilities. In this context, the Management considers the prospects of various other metallurgy sub-sectors, where the Company has the ability to benefit from synergies and new partnerships or synergies. The implementation of the above strategy led SIDMA to acquire 78% of PANELCO in PANELCO operates in the industrial production sector, manufacturing metallic and thermo-proofing units, operating at the same time the largest non-stop production line in Greece. By participating in PANELCO, the Company is in position to provide construction companies with a broader range of products and total solutions, since it now offers both materials for the metallic body of industrial buildings, and coverage parts. ñ Expansion in international markets: The Company s objective is to sustain the positive course of the past years through investments, which will allow SIDMA to depend to a smaller extent on Greek economy. Over the next 5 years, the Company targets to assume a dynamic position in the Balkans, similar with one currently held in the Greek market, and benefit from the strong GDP growth rates of the neighboring markets. Specifically, the Company wishes to expand activities and capture opportunities in the Balkan countries. As of today, SIDMA has established subsidiaries in Romania, Bulgaria with major strategic partners, aiming at becoming one of the major processing centers in the broader region. SIDENOR Group s presence in the above markets facilitates the Company s efforts to achieve its strategic goals. From its activity expansion and its entrance into new markets, the Company anticipates stronger turnover and profitability growth. ñ Constant improvement of existing procedures: The constant reviewing of existing procedures aims at efficiency gains, greater diffusion of information to every level within the company, and further cost contraction. In this context, the Company proceeded with an upgrade of its IT infrastructure via the introduction of the corporate information system SAP, as well as of the corporate web-site ( encompassing greater information on the Company and its operations. 46

48 TARGETS AND PROSPECTS FOR 2006 With regard to the first half of 2006, expectations for the steel market are positive. Specifically, steel demand in both global and Greek market recovered during the first quarter 2006, following a relatively modest The increasing demand for the sector s products is also the case in the neighboring Balkan markets, which continue to demonstrate especially high growth. Far East continues to absorb a significant percentage of the global production and affect international market trends. Generally, the international market provides signs of recovery following the contraction during Demand in several countries favors higher prices and steel plants have been steadily adjusted prices upward. In favor of the above, are also the higher mineral prices, steel scrap prices, as well as the price of zinc. Greek market continues to suffer from weak liquidity and at the same time no significant projects are expected in the near future. This situation makes more difficult the rise in prices in a similar pattern with the one of international markets. In any case, we anticipate a more balanced market by the end of first half. 47

49 10.4 Consolidated Financial Statements as of December 31, 2005 According to International Financial Reporting Standards ( IFRS ) TABLE OF CONTENTS 1 Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Reconciliation between Greek GAAP and IFRS Notes on the Financial Statements of SIDMA S.A. as of December 31, General Information about the Company and the Group Principal Accounting Policies Financial risk management Critical accounting estimates and judgements Transition to IFRS Basis for the Transition to IFRS Reconciliation between Greek GAAP and IFRS Additional information and explanations Property Plant and Equipment Intangible Assets Investments in Subsidiaries Investments in Associates Inventories Trade Receivables Other Receivables Cash and Cash Equivalents Share Capital Reserves Net profit for the period Minority Interests Loans & Financial Leases Government Grants Deferred Tax Pensions obligations Trade and other payables Revenues Cost of Sales Other Income Administrative Expenses Selling Expenses Other Expenses Finance Cost (Net) Loss from Associated Company Taxes

50 Earnings per share and dividends Dividends Non-audited Fiscal Years Number of Personnel Adjustments to the Published Interim Financial Statements Related Party Transactions Member of the Board and Manager Fees Post Balance Sheet Event

51 SIDMA S.A. FINANCIAL STATEMENTS AS AT DECEMBER 31, 2005 The attached financial statements were approved by the Board of Directors of SIDMA S.A. on March 24, 2006 and they are posted on the internet at the company s site « The attention of the reader is drawn to the fact that the extracts published in the press aim at providing the public with certain elements of financial information but do not present a comprehensive view of the financial position and the results of operations of the Company and the Group, in accordance with International Financial Reporting Standards. MARCEL L. AMARIGLIO CHAIRMAN OF THE BOARD SIDMA S.A. 50

52 Consolidated Balance Sheet SIDMA S.A. Balance Sheet for the period from 1st January to 31st December 2005 amounts in euros Notes Group Company Assets Non Current Assets Tangible Assets ,087, ,134, ,944, ,677, Intangible assets , , , , Investments in subsidiaries ,622, ,443, Investments in associates , Other non current assets 62, , , , Current Assets 35,933, ,226, ,212, ,192, Inventories ,904, ,370, ,649, ,867, Trade receivables ,037, ,510, ,937, ,547, Other receivables 8.7 4,003, ,293, ,076, ,077, Cash and cash equivalents 8.8 9,898, , ,592, , ,844, ,989, ,256, ,286, Total Assets 148,778, ,216, ,468, ,478, EQUITY Shareholders of the mother company: Share Capital ,500, ,125, ,500, ,125, Share Premium 8.9 9,875, ,875, Reserves ,710, ,551, ,668, ,542, Retaining Earnings ,417, ,096, ,126, ,084, Minority: ,397, ,510, Liabilities 51,503, ,772, ,169, ,751, ,900, ,283, ,169, ,751, Non Current Liabilities Bank Loans & obligations under ,138, ,023, , ,425, finance leases Grants for investments in fixed assets ,257, , Deferred Tax Liabilities ,425, ,021, ,332, ,899, Provision for Retirement , , , , benefit obligation 5,733, ,391, ,281, ,168, Current Liabilities Bank overdrafts & obligations ,617, ,428, ,991, , under finance leases Trade Payables ,873, ,341, ,665, ,289, Other Payables ,065, ,309, ,643, ,698, Income tax and duties ,588, ,461, , ,116, ,144, ,540, ,017, ,558, Total Equity and Liabilities 148,778, ,216, ,468, ,478,

53 2. Consolidated Income Statement SIDMA S.A. Profit & Loss Statement for the period from 1st January to 31st December 2005 amounts in euros Notes Group Company Turnover (sales) ,213, ,597, ,119, ,144, Cost of Sales ,099, ,691, ,100, ,291, Gross Profit 15,114, ,905, ,019, ,852, Other income ,763, ,608, ,207, ,369, Administrative Expenses ,077, ,286, ,345, ,013, Distribution/Selling Expenses ,998, ,197, ,268, ,482, Other expenses ,466, ,211, ,075, ,197, Operating Profit (EBIT) 7,333, ,818, ,537, ,528, Finance Costs (net) ,601, ,403, ,021, ,881, Losses resulted from the , consolidation of the associations with the equity method Profit before taxation 4,406, ,414, ,516, ,647, Less: Income Tax Expense ,660, ,000, ,270, ,758, Profit after taxation 2,745, ,413, ,245, ,888, Attributable to: Shareholders of the mother Company 2,562, ,214, Minority Rights 182, , ,745, ,413, Profit after taxes per share - (x) Depreciation & Amortization Expense 1,961, ,598, ,446, ,150, EBITDA 9,295, ,416, ,983, ,679, Proposed dividend per share

54 3. Consolidated Statement of Changes in Equity SIDMA S.A. Consolidated Statement of changes in equity for the period from 1st January to 31st December 2005 Group SHAREHOLDERS's EQUITY amounts in euros Notes Share Share Difference Legal Extraordinary Tax free Retained Equity Minority Total Capital Premium from the Reserve Reserves reserves Earnings of the Equity revaluation shareholders of assets Balance at (according to Greek GAAP) 10,125, ,403, ,019, , ,038, ,123, ,950, ,311, ,261, Adjustment to IFRS 7.2 9,505, ,505, ,505, Balance at ,125, ,403, ,019, , ,038, ,629, ,456, ,311, ,767, (according to IFRS) Adjustments charged -1, , , directly to equity Dividends distributed -930, , , Manager fees distributed -400, , , Profit/ (Loss) from -755, , , valuation of SWAPS -adjustments charged directly to equity Deffered tax adjustment 188, , , for SWAP Total adjustments ,897, ,897, ,897, to the Equity Profit after income tax 439, ,410, ,364, ,214, , ,413, Balance at ,125, ,403, ,458, , ,449, ,096, ,772, ,510, ,283, Balance at ,125, ,403, ,458, , ,449, ,096, ,772, ,510, ,283, (IFRS) Dividends distributed -2,860, ,860, ,860, Manager fees distributed -496, , , Profit/ (Loss) from 372, , , valuation of SWAPS -adjustments charged directly to equity Deffered tax adjustment -93, , , for SWAP Purchase of extra % -4, , , , of subsidiary company's share capital Acquisition of new , , subsidiary (in Bulgaria) Share Capital Increase 3,375, ,375, ,375, Share premium 9,875, ,875, ,875, Total adjustments 3,375, ,875, ,082, ,167, , ,871, to the Equity Profit after income tax 158, ,404, ,562, , ,745, Balance at ,875, ,403, ,617, , ,449, ,335, ,503, ,397, ,900,

55 SIDMA S.A. Statement of changes in equity for the period from 1st January to 31st December 2005 Company amounts in euros Notes Share Share Difference Legal Extraordinary Tax free Retained Total Equity Capital Premium from the Reserve Reserves reserves Earnings revaluation of assets Balance at (according to Greek GAAP) 10,125, ,403, ,019, , ,038, ,252, ,079, Adjustment to IFRS 7.2 9,680, ,680, Balance at ,125, ,403, ,019, , ,038, ,933, ,760, (according to IFRS) Adjustments charged -1, , directly to equity Dividends distributed -930, , Manager fees distributed -400, , Profit/ (Loss) from valuation -755, , of SWAPS -adjustments charged directly to equity Deffered tax adjustment 188, , for SWAP Total adjustments to the Equity ,897, ,897, Profit after income tax 429, ,410, ,048, ,888, Balance at ,125, ,403, ,449, , ,449, ,084, ,751, Balance at (IFRS) 10,125, ,403, ,449, , ,449, ,084, ,751, Dividends distributed -2,860, ,860, Manager fees distributed -496, , Profit/ (Loss) from 372, , valuation of SWAPS -adjustments charged directly to equity Deffered tax adjustment for SWAP -93, , Share Capital Increase 3,375, ,375, Share premium 9,875, ,875, Total adjustments to the Equity 3,375, ,875, ,077, ,172, Profit after income tax 126, ,119, ,245, Balance at ,500, ,875, ,403, ,575, , ,449, ,126, ,169,

56 Consolidated Statement of Cash Flows amounts in euros Operating Activities SIDMA S.A. Cash Flow Statement for the period from 1st January to 31st December 2005 Group Company Profit before taxation 4,406, ,414, ,516, ,647, Adjustments for: Depreciation & amortization 1,960, ,600, ,444, ,152, Provisions 351, , , , Other non cash income -711, , , , Finance Costs 3,155, ,832, ,566, ,304, Adjustments for changes in working capital Decrease/(increase) in inventories 5,466, ,050, ,218, ,682, Decrease/(increase) in receivables -7,843, ,930, ,752, ,862, (Decrease)/increase in payables 1,660, ,447, ,353, ,160, (except bank loans and overdrafts) Less: Financial Costs paid -3,155, ,832, ,566, ,304, Taxes paid -7,222, ,505, ,329, ,380, Total inflows / (outflows) -1,932, ,911, ,161, ,759, from operating activities (a) Investing activities Acquisition of subsidiaries -1,057, , ,178, , Purchase of tangible and intangible assets -3,419, ,759, ,217, ,897, Proceeds on disposal of tangible 10, , , , and intangible assets Total inflows / (outflows) from -4,466, ,669, ,385, ,805, investing activities (b) Financing Activities Share Capital Increase 13,250, ,250, New bank loans raised 6,135, ,183, ,474, , Repayments of loans -545, ,785, , ,393, Dividends paid -3,356, ,330, ,356, ,330, Total inflows / (outflows) from 15,483, ,068, ,346, ,644, financing activities ( c) Net Increase/(Decrease) in cash and 9,084, , ,799, , cash equivalents (a) +(b) + ( c) Cash and cash equivalents 814, , , , at the beginning of the period Cash and cash equivalents 9,898, , ,592, , at the end of the period 55

57 5. Reconciliation between Greek GAAP and IFRS Adjustments to Profit and Loss Group Company Total Profit after Tax according to Greek GAAP 9,483,636 9,059,221 Adjustments of International Financing Reporting Standards (IFRS) Adjustment for write-off of formation and other capitalised expenses 205,171 3,199 Adjustment for the depreciation of Fixed Assets under IFRS -104,539-66,172 Impact from the consolidation of subsidiaries 10,623 Impact from recognition of Leasing as Fixed Assets 4,165 4,165 Adjustment for the retirement benefit obligations under IAS , ,583 Provision for income tax for Non-audited Fiscal Years -120,000-90,000 Adjustment for provision for bad debts 425, ,789 Recognition of deferred tax 655, ,163 Profit according to IFRS 11,413,515 10,888, Notes on the Financial Statements of SIDMA S.A. as of December 31, General Information about the Company and the Group The mother company, SIDMA S.A., is a Société Anonyme which operates in processing and trading steel products in Greece. The company s headquarters are located at 39 P. RALLI ST., ATHENS, its site is The company is listed on the Athens Stock Exchange under the category of Basic Metals. In the Consolidated financial statements the following companies are included: 1. PANELCO S.A (78% subsidiary). The company "PANELCO Production of Overlay Materials and Drapes is located in Athens (134 M. Alexandrou Str., Keramikos). Its area of activity is the industrial production and manufacturing of metal and thermo-insulating elements, used in covering buildings, industrial and refrigeration chambers, and generally in modern metal structures. The company also seeks to produce and build drapes of all forms, and any related products, while also pursuing the trading, application, import and export of such products. 2. SIDMA WORLDWIDE LIMITED (100% Subsidiary) whose sole purpose is to participate in SIDMA s subsidiaries in the Balkans Area. 3. SID-PAC Steel and Construction Products SRL (50% subsidiary through SIDMA WORLDWIDE LIMITED ). SID-PAC was founded in Romania in March 2005 as a joint venture with the Packer Plada group and is involved in trading steel products as well as the production and promotion of polyurethane steel sandwich panels. 4. SID-PAC BULGARIA S.A.. (75% subsidiary through SIDMA WORLDWIDE LIMITED ). SID-PAC was founded in Bulgaria in August 2005 in cooperation with the Packer Plada group and will serve as an autonomous Steel Service Center and distribution network for the local market. All of the above companies are consolidated in full except from "SID-PAC Steel and Construction Products SRL" which is equity consolidated. 56

58 Principal Accounting Policies The principal accounting policies used in the preparation of the accompanying financial statements, which are consistently applied by the Company, are as follows: Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards. IFRS 1, First-time Adoption of International Financial Reporting Standards, has been applied in preparing the Company s and Group s financial statements with effect from 1st January The policies set out below have been consistently applied to all the years presented. Reconciliation and description of the effect of the transition from Greek GAAP to IFRS on the Group s equity is presented in section 7.2. The preparation of financial statements, in conformity with IFRS, requires the use of critical accounting estimates. It also requires management to exercise its judgement in applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed throughout the notes Basis of consolidation The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries (companies in which SIDMA S.A. directly or indirectly has an interest of more than one half of the voting rights or otherwise has power to exercise control over their operations) have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Company and cease to be consolidated from the date on which control is transferred out of the Company. All significant inter-company balances and transactions have been eliminated. Where necessary, accounting policies for subsidiaries have been revised to ensure consistency with the policies adopted by the Company. The Company s investment in its associate ("SID-PAC Steel and Construction Products SRL") is accounted for under the equity method of accounting Segment reporting Geographical segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those of components operating in other economic environments. Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Regarding business segments, the group is divided into the following activities: Transformation activity: This includes the processing of steel coils of various qualities, to transform them into steel sheets or narrower coils (strips). In addition, following the installation of a new processing unit, the company can achieve the removal of external oxidation from steel elements and add a protective coating. Moreover, the new equipment enables cutting of high thickness steel plates into custom sizes, as well as cutting long products at custom lengths. 57

59 Commercial activity: This activity includes trading of steel products. Services: These include processing materials for third parties as well as commission revenues from the sale of third-party products. Other activities: These mostly concern the sale of production scrap. PANELCO s activity: industrial production and manufacturing of metal and thermo-insulating elements, for use in covering buildings, industrial and refrigeration chambers, and generally in modern metal structures. Please refer to paragraph 8.18 for a breakdown of group revenues according to the above activities as dictated by the Greek statistical classification of economic activities (STAKOD). Regarding geographic segment, the majority of group sales take place in Greece. Nevertheless the portion of sales outside Greece is growing rapidly. Amounts in thousands x Group's Companies Greece Foreign counties Grand Total Parent company SIDMA S.A. 101,030 5, ,544 Subsidiary company PANELCO S.A. 15,258 2,373 17,631 SID-PAC Bulgaria Group's turnover 116,288 7, , Foreign currency translation A. Functional and presentation currency Items included in the financial statements of each entity in the Group are stated in the functional currency, which is the currency of the primary economic environment in which each Group entity operates. The financial statements are presented in Euros, which is the functional and presentation currency of the Company and of the Group. B. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement Property, plant and equipment Property, plant and equipment is stated at historical cost less subsequent depreciation and impairment, except for land, which is shown at cost less impairment. Cost includes expenditure that is directly attributable to the acquisition of the items. The parent company elected to calculate its Land, Buildings, Plants and Equipment at the date of transition to IFRSs at their fair value and used that fair value as their deemed cost at that date. The fair values were estimated by independent property appraisers. The mechanical equipment of PANELCO SA is stated at historical cost since it was recently acquired ( ). Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. Subsequent costs are depreciated over the remaining useful life of the related asset or to the date of the net major subsequent cost, whichever is the sooner. Depreciation is calculated on the straight-line method to write off the assets to their residual values over their estimated useful lives as follows: 58

60 10. Buildings (Offices & Warehouses) Plants Production machinery Other machinery Motor vehicles Computer equipment and software Office equipment, furniture and fittings 33 years 20 years 10 years 5 years 6,5 to 9 years 4 years 6,5 years Land is not depreciated. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Wherever the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. The management is responsible to define the estimated useful life and the depreciation of the property, plant and equipment. The management does not expect significant changes to the useful life of the abovementioned. Nevertheless, it will increase the depreciation in case the useful life is smaller compared to the one arising from previous estimations, or decrease the book value of any fixed asset which have been technologically disregarded or abandoned Intangible assets A. Goodwill Goodwill represents the excess of the cost of acquisition over the fair value of the Group s share of the net assets of the acquired subsidiary, joint venture and associate at the date of acquisition. Goodwill on acquisitions of subsidiaries and joint ventures are included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cashgenerating units represents a separate Group investment. Negative goodwill is recognised when the fair value of the Group s interest in the net assets of the acquired entity exceeds the cost of acquisition and is taken to income immediately. B. Computer software Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Software licences are stated at historical cost less subsequent depreciation. Depreciation is calculated on the straight-line method over their estimated useful lives which are 4 years. The SAP application, which was launched on July of 2005, is depreciated over its useful life which was set up by the Board of Directors to 8 years. 59

61 6.2.7 Impairment of assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised, as an expense immediately, for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units) Investments Equity investments in subsidiaries and associates are measured at cost less impairment. The mother company participates with 78% in the share capital of PANELCO S.A. and 100% in the share capital of "SIDMA WORLDWIDE LIMITED". "SIDMA WORLDWIDE LIMITED" participates with 50% in the share capital of "SID- PAC Steel and Construction Products SRL" located in Romania and with 75% in the share capital of "SID-PAC BULGARIA S.A. located in Bulgaria Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less Share capital I. Ordinary shares and non-redeemable non-voting preferred shares with minimum statutory nondiscretionary dividend features are classified as equity. II. Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. III. Where the Company or its subsidiaries purchases the Company s own equity share capital, the consideration paid including any attributable incremental external costs net of income taxes is deducted from total shareholders equity as treasury shares until they are cancelled. Where such shares are subsequently sold or re-issued, any consideration received is included in shareholders equity. 60

62 Loans Loans are recognised initially at fair value, net of transaction costs incurred. Loans are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the loans using the effective interest method. Loans are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the costs they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities and are credited in the income statement on a straight-line basis over the expected lives of the related assets Deferred income taxes Deferred income tax is provided in full using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit and loss, it is not taken into account. The differed taxes are calculated with a tax rate of 25%, which is the rate expected to be valid during the year of recovery. Deferred income tax assets are recognised only to the extent that is it probable that taxable profits will be available against which deductible temporary differences can be utilised Employee benefits I. Current obligations The current obligations of the Group towards its personnel, in monetary terms, are recognised directly as an expense as soon as they accrue. II. Pension obligations The Group has defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due. 61

63 Revenue recognition Revenue comprises the fair value of the sale of goods and services, net of value-added tax, rebates and discounts and after eliminating sales within the Group. Revenue is recognised as follows: I. Sales of goods wholesale Sales of goods are recognised when a Group entity has delivered products to the customer; the customer has accepted the products; and collection of the related receivables is reasonably assured. II. Sales of services Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. III. Interest income Interest income is recognised on a pro-rata basis using the effective interest method. IV. Dividend income Dividend income is recognised when the right to receive payment is established Leases Leases for which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis. Leases of property, plant and equipment, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in the liabilities. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term Dividends Dividends are recorded in the financial statements when declared. 6.3 Financial risk management The Group is exposed to certain financial risks, i.e.: credit risk, liquidity risk and cash flow risk. The Group uses derivative financial instruments, such as futures, forwards, interest rate swaps and cross currency swaps to hedge certain risk exposures. I. Credit risk The company in order to eliminate the credit risk as much as possible insures all of its sales to two credit insurance companies in Greece. Moreover, a separate credit department ensures that sales of products are made to customers with an appropriate credit history. Sales have a high degree of diversification and no single customer participates by more than 2% in the annual sales turnover. II. Liquidity risk Liquidity risk is kept at low levels, as the Group maintains sufficient cash and credit lines available. The company s policy is to use up to 70% of the credit lines available from the various banks. 62

64 10. III. Cash flow and fair value interest rate risk The Group does not have material interest bearing assets on its balance-sheet, so does not suffer from substantial changes in market interest rates. The Group s cash flow interest rate risk arises from long-term loans. Loans issued at variable rates expose the Group to cash flow interest rate risk. Loans issued at fixed rates expose the Group to fair value interest rate risk. The Group s policy is to maintain part of the long term loans in fixed rate instruments and part in floating rate. At December 2005, 41% of the long term loans were at fixed rates and the rest at floating. The Group manages its cash flow interest rate risk by using interest rate swaps and Quanto swaps. The above derivative items qualify for hedge accounting (cash flow hedges), according to paragraph 88 of IAS 39 so any fluctuations in market value do not impact income for the period throughout the term of the derivative. Market value fluctuations are reported in the appropriate reserve account without affecting income (paragraph 95 of IAS 39). According to IAS 39, all derivative financial instruments are to be reported at market value at the reporting date. The valuation of the above derivative financial instruments for the year ending on revealed a gain of x 372, The total cumulative loss as of is x 382, Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Nevertheless there are not any estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. 7. Transition to IFRS 7.1 Basis for the Transition to IFRS Adoption of IFRS 1 Group financial statements as of are the first that were prepared according to IFRS. These financial statements are consistent with IFRS 1 First time adoption of International Financial Reporting Standards as they comprise the first financial statements to be prepared and published on this basis. The transition date of IFRS is January 1st of For the preparation of financial statements the Group has adopted some of the exemptions and exceptions to retrospective application of specific IFRSs according to IFRS Exemptions from other IFRSs I. Business combinations The Group will apply the Exemption of IFRS 1 regarding business combinations and will not determine the fair values of identifiable assets and liabilities acquired before the date of transition to IFRSs ( ). II. Fair value or revaluation as deemed cost The Group elected to measure its property, plant and equipment at the date of transition to IFRSs at its fair value and use that fair value as its deemed cost at that date ( ). III. Employee benefits The Group elected to recognize all cumulative actuarial gains and losses at the date of transition to IFRSs. 63

65 7.2 Reconciliation between Greek GAAP and IFRS Amounts in thousands x Group Company Total equity according to Greek G.A.A.P. (excluding minority interests) 26,369 19,950 26,162 20,080 Adjusments from revaluation of assets 13,018 13,018 12,298 12,298 Adjustments from write-off of formation and other capitalised expenses Recognition of allowances for doubtful receivables Accrued retirement benefit obligations under IAS Recognition of deferred taxation -2,835-2,835-2,784-2,784 Reclassification of grants (from equity to non current liabilities) Adjustments to Profit and Loss resulting from t he transition from Greek GAAP to IFRS for FY , ,830 0 Adjustments from write-off of the revaluation of assets according to the Greek G.A.A.P (law 2065/1992) Losses from the valuation of swaps under IAS Recognition of dividends at the period that are approved by the General Assembly of the Shareholders 3,357 1,330 3,357 1,330 Total equity according to IFRS's (excluding minority interests) 38,773 29,456 38,752 29,760 64

66 Additional information and explanations 8.1 Property Plant and Equipment Group Land Machinery Other Assets under Grand & buildings equipment construction Total Book value/deem cost 24,858,183 9,948,382 1,942, ,944 36,957,800 Accumulated depreciation & impairment -478,559-1,012,711-1,320,764-10,990-2,823,024 Carrying amount ,379,624 8,935, , ,954 34,134, Carrying amount ,379,624 8,935, , ,954 34,134,776 Additions 1,115,897 1,372, ,316 3,621 2,729,573 Depreciation -500,894-1,105, ,541-1,776,465 Carrying amount ,994,626 9,203, , ,575 35,087, Company Land Machinery Other Assets under Grand & buildings equipment construction Total Book value/deem cost 20,919,558 6,059,950 1,693, ,955 28,871,355 Accumulated depreciation & impairment -313, ,930-1,267, ,193,917 Carrying amount ,605,880 5,447, , ,955 26,677, Carrying amount ,605,880 5,447, , ,955 26,677,438 Additions 180,208 1,165, ,687-30,145 1,531,776 Depreciation -335, , ,610-1,264,679 Carrying amount ,450,305 5,818, , ,810 26,944,535 At the date of transition to IFRS, the Company has valued its land, buildings and machinery at their fair values. The valuation for land, buildings and machinery has been made by independent appraisers. The fair values have been considered as cost according to IFRS 1 as at 1st January 2004 and the difference that has occurred has been transferred to retained earnings. The equipment of PANELCO SA is stated at historical cost since it has been recently acquired ( ). There are no pledges on the parent company s assets. There is a pledge of x 2,365,000 on PANELCO s assets referring to bank loans that on amounted to x 1,001,

67 8.2 Intangible Assets Group Consolidation differences as Software goodwill programms Grant Total Book value 0 89,610 89,610 Accumulated depreciation & impairment 0 59,089 59,089 Carrying amount ,521 30, Carrying amount ,521 30,521 Additions 28, , ,776 Depreciation 0-100, ,994 Carrying amount , , ,303 The Goodwill of amount x 28,041 resulted from the increase of SIDMA s shareholding to Panelco from 62% to 78%. Company Consolidation differences as Software goodwill programms Grant Total Book value 0 89,610 89,610 Accumulated depreciation & impairment 0 59,089 59,089 Carrying amount ,521 30, Carrying amount ,521 30,521 Additions 0 672, ,667 Depreciation 0-96,926-96,926 Carrying amount , , Investments in Subsidiaries The Company s subsidiaries that were consolidated in the accompanying financial statements are shown at the following table: Consolidated Subsidiary Ownership Country of Principal Interest Incorporation Activities PANELCO S.A. 78% Greece Panel Production SIDMA WORLDWIDE LIMITED 100% Cyprus Holding SID-PAC Steel and Construction Products SRL 50% Romania Steel Trading SID-PAC BULGARIA S.A 75% Bulgaria Steel Trading All of the above companies are fully consolidated apart from SID-PAC Steel and Construction Products SRL which is equity consolidated. 8.4 Investments in Associates This amount has to do with the 50% shareholding of SIDMA in SID-PAC Steel and Construction Products SRL. The shareholding is through SIDMA WORLDWIDE LIMITED in Cyprus. 66

68 Inventories Group Company Inventories Merchandise 6,009,543 7,807,667 5,968,373 7,747,654 Finished & Semi finished Products 6,277,619 6,350,040 5,745,401 5,969,564 Raw Material & Perishable & Spare Parts 9,617,148 13,203,201 7,935,910 10,142,452 Advance-payments for Stock purchases 0 9, ,130 Grand Total 21,904,309 27,370,870 19,649,684 23,867, Trade Receivables Group Company Trade receivables Trade debtors 33,927,939 33,240,265 30,555,779 29,936,598 less: allowances for doubtful receivables Notes receivables 861, , , ,015 Cheques receivables (post-dated) 42,248,377 34,728,445 34,520,292 29,069,074 Grand Total 77,037,856 68,510,725 65,937,610 59,547,687 The fair values of the above receivables are approximately the same with their book values. 8.7 Other Receivables Group Company Other receivables Doubtful - Disputed customers & other debtors 2,443,000 2,673,477 2,080,125 2,528,295 less: allowances for doubtful & disputed receivables -1,881,956-2,528,295-1,694,956-2,528,295 Other debtors-tax receivables 2,919,573 3,031,625 1,602,692 2,984,093 Other receivables 143,883 24,963 13,401 24,732 Prepayments 290,750 Accrued income 88,492 92,228 75,377 68,182 Grand Total 4,003,742 3,293,998 2,076,639 3,077, Cash and Cash Equivalents Group Company Cash & cash equivalents Cash in hand and at banks 9,898, ,162 9,592, ,671 The effective interest rate of short term investments is 2.18 %. They have a maturity of 15 days and are eligible for immediate cancellation without receiving any interest for the last deposit period. 67

69 8.9 Share Capital Group Company Share Capital Share Capital ( shares * 1,35 ) 13,500,000 10,125,000 13,500,000 10,125,000 Share premium 9,875, ,875,000 0 Grand Total 23,375,000 10,125,000 23,375,000 10,125,000 The share capital of SIDMA S.A. consists of (10,000,000) ordinary shares with a par value of x All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders meeting of the company. The company increased its Share Capital during 2005 through a Public Offering via book building (from 12 to 15 of April 2005), based on the decision of the EGM and No 2/315/ 26/12/2004 decision of the Capital Market Committee, by issuing 2,500,000 shares, at par value of x The issued shares are listed at the Athens Stock Exchange. The share premium amount shown above resulted from the difference between the value received for each new share (x 5.3) and the par value of the share, that is 2,500,000 shares x (x 5.3 x 1.35) Reserves Group Company Reserves Revaluation surplus from merger of companies in the year ,403,658 1,403,658 1,403,658 1,403,658 Legal Reserves 1,617,386 1,458,492 1,575,229 1,449,031 Extraordinary Reserves 239, , , ,720 Tax Free Reserves Under Special Laws 8,449,773 8,449,773 8,449,773 8,449,773 Grand Total 11,710,538 11,551,643 11,668,381 11,542,183 The tax free reserves were formed during fiscal years and according to tax laws are tax free as soon as they will not be distributed as dividends to shareholders. SIDMA S.A. is not going to distribute the aforementioned reserves and for this reason no tax was charged Net profit for the period Group Company Retained Earnings Retained Earnings carried forward 12,668,720 7,983,238 12,356,771 8,175,797 Consolidation differences -304, , Proposed dividend & Manager Fees 1,650,000 2,860,000 1,650,000 2,860,000 Profit after tax 2,404,017 6,557,843 2,119,799 6,048,535 Grand Total 16,417,762 17,096,107 16,126,570 17,084, Minority Interests Group Minority Interests Share Capital 1,510,935 1,311,599 Reserves -636,183 Retained Earnings carried forward 340,182 Profit after tax 182, ,335 Grand Total 1,397,305 1,510,935 68

70 Loans & Financial Leases Group Company Loans and Leases Non-current Liabilities Bank Loans 588,115 46,251,866 52,752 45,425,255 Financial Leasing Liability 549, , Total Non-current Liabilities 1,138,009 47,023,911 52,752 45,425,255 Current Liabilities Bank Loans 61,225,139 9,315,991 50,991, ,474 Later than 1 Year and not later than 2 Years 392, ,448 Financial Leasing Liability 0 800, Total Current Liabilities 61,617,215 10,428,861 50,991, ,474 Grant Total of Current & Non-Current Liabilities 62,755,223 57,452,772 51,043,826 45,878,730 The maturity of long term loans is as follows: Group Company Loans and Leases to 2 years 588,115 46,251,866 52,752 45,878,730 2 to 5 years 549, , More than 5 years Grand Total 1,138,009 47,023,911 52,752 45,878, Government Grants The amount of x 1,257, refers to Government Grants of the subsidiary PANELCO S.A.. This grant is related to capital expenditure realized by the subsidiary in its Lamia plant. The specific capital expenditure was incorporated in the governmental development law 2601/98 that had to do with the construction of a plot for the production of metal and thermo-insulating elements. 69

71 8.15 Deferred Tax The Group has chosen to set off the deferred tax assets against the deferred tax liability of the same taxable entity if, and only if, they relate to income taxes levied by the same taxation authority and the entity has a legally enforceable right to do so. Deferred taxes arising from temporary differences can be summarised as follows: Group Company Deferred Taxation Deferred Tax Assets ñ Non current assets 619,804 1,223, ,445 1,064,371 ñ Current assets 95, , ,516 1,223, ,158 1,064,371 Deferred Tax Liabilities ñ Non current liabilities 3,140,962 3,244,082 2,936,508 2,963,046 ñ Current liabilities 2, , ,140,962 3,244,582 2,939,178 2,963,546 Deferred tax liabilities (after the offset) 2,425,446 2,021,413 2,332,021 1,899, Pensions obligations The liabilities recognised for pensions in the balance sheet and their movement including the components of pension expenses due to defined contribution arrangements can be reconciled as follows: Retirement Benefits Group Company Accrued retirement benefit obligations , ,128 Current service cost ,873 47,639 Current interest cost ,283 36,283 Retirement benefits paid Accrued retirement benefit obligations , ,050 Current service cost ,397 68,049 Current interest cost Retirement benefits paid ,363-15,363 Accrued retirement benefit obligations , ,736 For determination of the pension liability, the following actual assumptions were used: Discount Rate 4.5% 5.0% Future salaries increase 4.0% 4.0% Death - rate ( Swiss Index ) EVK2000 EVK2000 The average number of employees at the end of the reporting period was 262 for the group and 200 for the parent company respectively. 70

72 Trade and other payables Group Company Trade Payables Trade Suppliers 22,873,334 20,341,587 19,665,743 17,289,775 Social Security Payable 324, , , ,135 Advances from trade debtors 217, , , ,753 Tax & Duties Payable 1,588,758 7,461, ,534 7,116,418 Notes Payable 1,974,342 3,419,621 1,974,342 3,419,621 Other creditors 1,424,388 1,107,066 1,186, ,415 Dividends payable Accrued Expenses 122,538 44,580 79,640 17,794 Deferred Income 1, Other Accruals & Deferred Income Grand Total 28,527,120 33,108,753 24,026,464 29,104,910 Both SIDMA S.A. and PANELCO S.A. have been tax audited by the tax authorities until the fiscal year of Revenues Sales for the period ended , in x thousand, are analysed by category of products and services (using Greek Statistical Service Codes) as follows: Amounts in thousands x STAKOD-03 Heading Group Company Manufacture of basic iron, steel and ferro-alloys 69,922 70, Wholesale of metals and metal ores 34,636 34, Manufacture of metal structures and parts of structures 17, Treatment and coating of metals 2,472 2, Manufacture of steel tubes Grand Total 124, ,120 Moreover, the parent company performed on behalf of third parties, during FY 2005, (Consignment) sales amounted to x 59,059 thousand compared to x 64,951 thousand during FY 2004 respectively. 71

73 8.19 Cost of Sales Amounts in x 000' Group Company Cost of Sales Cost of Goods 104, ,177 92,621 94,236 Payroll & Related Expenses 1,739 1, Third Party Fees & Related Expenses Utilities - Services Taxes - Stamp Duties Various Expenses Depreciation 1, Grand Total 109, ,692 95,100 96, Other Income Amounts in x 000' Group Company Other Income Income from rendering services to third parties Agency Fees 2,213 2,340 2,213 2,340 Rentals Invoiced expenses for dispatching goods 1, Incidental activity income Non-operating income 1,901 1,771 1,614 1,687 Prior year's income Non-operating gains Income from Government Grants Other non-operating income Income from prior years' provisions 1,337 1,283 1,337 1,283 Grand Total 5,763 5,608 5,207 5, Administrative Expenses Amounts in x 000' Group Company Administrative Expenses Payroll & Related Expenses 1,807 1,460 1,521 1,339 Third Party Fees & Related Expenses Utilities - Services Taxes - Stamp Duties Various Expenses Depreciation Provisions Grand Total 4,078 2,287 3,345 2,014 72

74 Selling Expenses Amounts in x 000' Group Company Selling Expenses Payroll & Related Expenses 3,374 3,107 3,184 2,985 Third Party Fees & Related Expenses Utilities - Services 1,249 1,155 1,226 1,144 Taxes - Stamp Duties Various Expenses 2,302 2,594 1,932 2,151 Depreciation Provisions Grand Total 7,998 8,197 7,268 7, Other Expenses Amounts in x 000' Group Company Other Expenses Prior year's expenses 20 1, ,327 Non-operating losses Other non-operating expenses Allowances for doubtful receivables and employee benefits 1, Grand Total 1,467 2,211 1,075 2, Finance Cost (Net) Amounts in 000' Group Company Finance Expenses (Net) Credit interest and similar income Income from bank deposits Interest Expense -3,128-2,795-2,564-2,267 Financial leasing expense Grand Total -2,602-2,404-2,021-1, Loss from Associated Company The amount presented is the share of SIDMA s loss accounted of the associate in Romania, SID-PAC Steel and Construction Products SRL (SIDMA s share is 50%). 73

75 8.26 Taxes Group Company TAX (Income - Deferred) Income Tax -1,226,238-4,397, ,648-4,230,372 Deferred Tax -311, , , ,163 Amount resulting from 2003 Tax Audit -104, ,706 Provision for Tax Audit Differences for Fiscal Years 2004 & , ,000-80,000-90,000 Other Taxes -22,860-34,428-20,801-28,813 Grand Total -1,660,941-4,000,969-1,270,257-3,758, Earnings per share and dividends The earnings per share have been calculated using the net results attributable to shareholders of SIDMA S.A. as numerator. The weighted average number of outstanding shares used for earnings per share as denominator, amounted to shares and took into account the share capital increase by the issue of new shares. Group Company Earnings per share Profit after tax concerning the shareholders of the parent company (1) 2,562,911 11,214,179 2,245,996 10,888,948 Weighted average number of shares (2) 9,166,667 7,500,000 9,166,667 7,500,000 Profit after tax per share (1)/(2) Dividends The dividend paid during 2005 was x (x 0,286 per share), referred to the net results of 2004 and has been approved by the Annual General Meeting of the shareholders of the company on 16/06/2005. Regarding 2005, a dividend of x (x 0,12 per share) will be proposed to the Annual General Meeting Non-audited Fiscal Years The Company and its subsidiary Panelco have been audited by the competent tax authorities until, and including, A provision for tax audit differences that will result from the tax authorities audit for the fiscal years 2004 and 2005 has been taken and accounts to x Number of Personnel Number of personnel employed at the end of the current period: Group 268 and Company

76 Adjustments to the Published Interim Financial Statements The following table refers to a list of restated accounts of the Balance-Sheet that has been published in the interim financial statements: GROUP COMPANY A. CURRENT LIABILITIES (1) Other Payables (published amounts) 5,805,767 5,705,691 6,961,958 3,633,759 5,195,393 5,083,038 5,669,318 2,939,191 Minus (-) Manager fees approved by the General Assembly of Shareholders ( ). -496, , , ,675 Other payables (restated) 5,309,092 5,209,016 6,961,958 3,633,759 4,698,718 4,586,363 5,669,318 2,939,191 (2) Income tax and duties (published amounts) 7,341,399 7,576,023 6,196,823 4,516,027 7,026,418 7,116,718 6,357,316 3,989,101 Plus (+) Provision for tax audit differences (fiscal years 2004 & 2005) 120, , , ,000 90,000 90,000 90,000 90,000 Income tax and duties (restated) 7,461,399 7,696,023 6,316,823 4,636,027 7,116,418 7,206,718 6,447,316 4,079,101 Total adjustment of CURRENT LIABILITIES -376, , , , , ,675 90,000 90,000 B. EQUITY (1) Retained Earnings (published amounts) 5,223,824 6,749,964 7,382,680 16,022,401 5,041,731 6,447,718 6,886,562 15,609,380 Plus (+) Deferred tax adjustment 1,001,304 1,001,304 1,001,304 1,001,304 Plus (+) Manager fees approved by the General Assembly of Shareholders ( ). 496, , , ,675 Minus (-) Provision for tax audit differences (fiscal years 2004 & 2005) -120, , , ,000-90,000-90,000-90,000-90,000 Plus (+) Provision for tax audit differences of PANELCO 11,400 11,400 11,400 11,400 Retained Earnings (restated) 6,613,203 8,139,343 7,274,080 15,913,801 6,449,711 7,855,697 6,796,562 15,519,380 (2) Minority rights (published amounts) 1,522, , ,344 1,373,128 Minus (-) Provision for tax audit differences of PANELCO -11,400-11,400-11,400-11,400 Minority rights (restated) 1,510, , ,944 1,361,728 Total adjustment of EQUITY 1,377,979 1,377, , ,000 1,407,979 1,407,979-90,000-90,000 C. NON-CURRENT LIABILITIES Deferred Tax Liabilities (published amounts) 3,022,718 2,894,998 2,900,479 2,761,907 Minus (-) Deferred tax adjustment -1,001,304-1,001,304-1,001,304-1,001,304 Deferred Tax Liabilities (restated) 2,021,413 1,893, ,899,175 1,760,

77 10. Related Party Transactions The following tables provide the related party transactions according to: a. Article 42e of Codified Law 2190/1920 and b. Article 4 of the decision no 5/204/2000 of the Hellenic Capital Market Commission as was modified with the decision no 3/348/2005 for the fiscal year COMPANY Sales of Goods/Services (Amounts in x) TOTAL SIDENOR S.A. 1,882,643 SOVEL S.A. 11,391 STOMANA S.A. 148,338 ETIL S.A. 168,328 BET S.A. 2,527 AEIFOROS S.A. 1,638 PANELCO S.A. 605,214 CORINTH PIPEWORKS S.A. 122,974 METALLOURGIA ATTIKIS S.A. 631,484 PROSIDER S.A. 161,684 PROSAL S.A. 180,389 ERLIKON WIRE PROCESSING S.A. 401,869 S.C.SID PAC 257,590 TEKA SYSTEMS S.A. 141 ANTIMET S.A. 135,772 HELLENIC CABLES S.A. 2,690 ETEM S.A. 29,385 VITRUVIT S.A. 391 ANAMET S.A. 265 FITCO S.A. 6,452 VIOMAL S.A. 53,985 HALCOR S.A. 32,891 SIGMA S.A. 59,097 ARGOS S.A. 163,846 ELVAL S.A. 30,655 GRAND TOTAL 5,091,638 76

78 10. COMPANY Purchase of Goods/Services (Amounts in x) TOTAL SIDENOR S.A. 1,076,466 SOVEL S.A. 3,140 STOMANA S.A. 2,866,997 ETIL S.A. 12,930 PANELCO S.A. 64,633 PROSIDER S.A. 387,957 VEKTOR S.A. 56,804 TEKA SYSTEMS S.A. 631,506 VIOHALCO S.A. 1,595 HELLENIC CABLES S.A. 2,199 VITRUVIT S.A. 126 VIOMAL S.A. 2,000 STEELMET S.A. 1,310 VIEKSAL LTD 10,419 HALCOR S.A. 15,649 GRAND TOTAL 5,133,731 COMPANY Payables (Amounts in x) TOTAL SIDENOR S.A. 3,000,649 SOVEL S.A. 7,607 STOMANA S.A. 15,795 PANELCO S.A. 7,740 CORINTH PIPEWORKS S.A. 679,122 PROSIDER S.A. 1,546,817 ERLIKON WIRE PROCESSING S.A. 543,427 PROSAL S.A. 1,357,134 VEKTOR S.A. 39,531 TEKA SYSTEMS S.A. 46,051 VIOHALCO S.A. 1,889 VITRUVIT S.A. 2,044 STEELMET S.A. 17,331 VIEKSAL LTD 2,139 HALCOR S.A. 19,766 GRAND TOTAL 7,287,042 77

79 COMPANY Receivables (Amounts in x) TOTAL SIDENOR S.A. 29,233 SOVEL S.A. 10,209 STOMANA S.A. 69,291 ETIL S.A. 56,299 BET S.A. 1,097 AEIFOROS S.A. 14,505 PANELCO S.A. 416,779 CORINTH PIPEWORKS S.A. 75,802 METALLOURGIA ATTIKIS S.A. 199,695 PROSAL S.A. 13,679 ERLIKON WIRE PROCESSING S.A. 18,298 S.C.SID PAC 54,667 VEKTOR S.A. 109 ANTIMET S.A. 94,974 HELLENIC CABLES S.A. 1,473 ETEM S.A. 5,000 VITRUVIT S.A. 115 FITCO S.A. 108 STEELMET S.A. 32 HALCOR S.A. 9,813 SIGMA S.A. 10,969 ARGOS S.A. 14,759 ELVAL S.A. 20,341 GRAND TOTAL 1,117, Member of the Board and Manager Fees The member of the board fees and the senior manager fees accounted to x496,675 at Company level and to x 670,890 at Group level for the fiscal year Post Balance Sheet Events There are no such events that could affect the amounts presented in the above financial statements of the company. ATHENS - March 24, 2006 PRESIDENT OF THE BOARD OF DIRECTORS MARCEL L. AMARIGLIO VICE PRESIDENT OF THE BOARD OF DIRECTORS MENELAOS A. TASOPOULOS THE GENERAL DIRECTOR THE CHIEF FINANCIAL OFFICER ACCOUNTING DEP. HEAD DANIEL D. BENARDOUT MICHAEL C. SAMONAS PARIS G. PAPAGEORGIOY 78

80 Annual Financial Statements as of

81 80

82 81

83 82

84 83

85 10.6 Allocation of Funds Raised from the IPO Listing SIDMA S.A. HEAD OFFICE: 39 P. RALLI ST., ATHENS, GREECE, VAT N : EL ALLOCATION OF FUNDS RAISED FROM THE IPO LISTING According to the No 43-22/07/2004 decision of the A.S.E., the company announced that: the Share Capital Increase of SIDMA S.A. (Public Offering via book building from 12 to 15 of April 2005), based on decision of the EGM and No 2/315/ 26/10/2004 decision of the Capital Market Committee resulted to Net Proceeds of EURO 12,550,000 (EURO 13,250,000 minus IPO Expenses of EURO 700,000) by issuing 2,500,000 shares, as certified by the decision of the Board of Directors of Following the decision of the Board of Directors of (for the modification of the investment program), the allocation of the Net Proceeds until is as follows: a/a Investment Category ALLOCATION OF FUNDS ALLOCATION OF FUNDS ALLOCATION ALLOCATION ALLOCATION FUNDS (amounts in RAISED FROM THE IPO RAISED FROM THE IPO LISTING OF FUNDS OF FUNDS OF FUNDS TO BE thousands EURO) LISTING AS DESCRIBED AS HAS BEEN MODIFIED BY UNTIL FROM FROM ALLOCATED IN THE IPO PROSPECTUS THE BOD DECISION ON TOTAL TOTAL 1st 2nd 1st 1st 2nd 1st 2nd Semester Semester Semester Semester Semester Semester Semester A Investment in Equipment 1,200 1, , ,135 1,150 3, ,386 Equipment for polishing, grinding and cutting of Stainless Steel , , ,000 Equipment for drilling of beams and small plates Line for C and Z profiles Packing line for strips Revamping of Siemi cut to length line Revamping of Fimi slitter Purchase of two lift trucks Semi-automatic packing system for Novastilmec CTL line New uncoiler for Auxmet Cut-To-Length line Installation of Barcode system Sawing machine B New land acquisition & construction of warehouse and offices 3,850 2,070 1,180 7, ,230 2,570 7, ,030 Land acquisition 3, , , , ,780 Warehouse construction 0 1, , ,770 2, ,450 Office construction Modification of the surrounding area Installation of equipment (bridge cranes) C Expansion to Bulgaria 1, , , , , Land acquisition Warehouse & Office construction

86 10. D Expansion to Romania Land acquisition Warehouse & Office construction E Installation of ERP system Licence for 60 users Hardware Installation of application software and user training Application software maintenance for fiscal years 2005 & Project team training TOTAL 6,676 3,779 2,095 12,550 1,318 2,077 5,400 3,755 12,550 1,318 1, ,487 1) The delay in the materialization of the investments in category A, B and C is due to the later than expected collection of the amount of the increase of the share capital ( ). For this reason the company with its BoD decision on carried forward the investment plan. 2) The amount of x 1,490 thousand regarding the Investments of categories C & D (expansion to Bulgaria and Romania respectively) has to do with the indirect (through 100% subsidiary in Cyprus) participation to the share capital of foreign companies located in Romania and Bulgaria which in turn will perform the aforementioned investments. 3) The non-allocated funds amounting to x 9,487 thousand approximately, are invested in short-term low-risk investments (time deposits). ATHENS - MARCH 24, 2006 PRESIDENT OF THE BOARD VICE PRESIDENT OF THE BoD THE GENERAL DIRECTOR THE CHIEF FINANCIAL OFFICER ACCOUNTING DEP. HEAD OF DIRECTORS (BoD) MARCEL L. AMARIGLIO MENELAOS A. TASOPOULOS DANIEL D. BENARDOUT SAMONAS MICHAEL PAPAGEORGIOY PARIS I.D /71 I.D /88 I.D. ª324679/81 I.D /96 I.D /98 Licence Reg. No 4618 CERTIFIED AUDITOR'S- ACCOUNTANT'S REPORT We have audited the above data of. "SIDMA S.A.", by applying the standards and requirements accepted by the Greek Institute of Certified Auditors-Accountants. From our audit, we ascertained that the above data result from the accounting books and records, which the company kept, as well as from the approved by the A.S.E. Prospectus as this has been modified by the decision of the Board of Directors on 09/21/2005. ATHENS - MARCH 29, 2006 THE CERTIFIED AUDITOR - ACCOUNTANT SOTIRIOS GER. VARDARAMATOS SOEL Reg. No SOL S.A. Certified Auditors Accountants 85

87 10.7 Dicision of the Board Directors regarding Intra-company transactions report MINUTES Of the Board of Directors meeting of the Societe Anonym MACEDONIAN STEEL PRODUCTS TRADING SIDMA S.A. on 17 MARCH 2006 In Tavros, today on Friday 17 March 2006 and time 11.30, the members of the Board of Directors of the company MACEDONIAN STEEL PRODUCTS TRADING SIDMA S.A. met in the offices of the company in 39 P. Rally Str., Tavros, after the invitation of the chairman in order to discuss on the subject of the agenda: The members that took part in the meeting were: 1) MARCEL - HARIS, SON OF LEON AMARIGLIO 2) MENELAOS TASOPOULOS SON OF ATHANASIOS 3) DANIEL BENARDOUT, SON OF DAVID 4) IOANNIS STAVROPOULOS, SON OF STAVROS 5) KONSTANTINOS KARONIS, SON OF DIMITRIOS 6) ANASTASIOS KOLYVANOS, SON OF NIKOLAOS 7) HAIM NAHMIAS, SON OF MOISIS 8) GEORGIOS KATSAROS, SON OF SPYRIDON, and 9) ALEXANDRA NICOLITSA, DAUGTHER OF ATHANASIOS All the members are present and the discussion on the single matter of the agenda begins. AGENDA: Approval of the intra-company transactions for 2005 in accordance with the provisions of article 42 e of the C.L. 2190/1920 and the article 4 of the Hellenic Capital Market Commission decision 5/204/2000 as amended by the decision 3/348/2005 Following the Chairman s proposal Mr. Amariglio Marcel, the members of the Board in accordance with the provisions of article 4 of the Hellenic Capital Market Commission decision 5/204/2000 as amended by the decision 3/348/2005, and article 2, par. 4 of L /2002 «For Corporate Governance», unanimous decided to approve the intra-company transactions report that is reported below based on the provision of article 42 e of the C.L. 2190/1920, for the year 2005 and also to submit the report to the Generals Shareholders Meeting and to the relevant Regulatory Authorities as the Law states: 86

88 10. INTRA-COMPANY TRANSACTION OF SIDMA WITH ITS ASSOCIATES OF THE C.L. 2190/1920, ARTICLE 42 e COMPANY Sales of Goods/Services (Amounts in x) TOTAL SIDENOR S.A. 1,882,643 SOVEL S.A. 11,391 STOMANA S.A. 148,338 ETIL S.A. 168,328 BET S.A. 2,527 AEIFOROS S.A. 1,638 PANELCO S.A. 605,214 CORINTH PIPEWORKS S.A. 122,974 METALLOURGIA ATTIKIS S.A. 631,484 PROSIDER S.A. 161,684 PROSAL S.A. 180,389 ERLIKON WIRE PROCESSING S.A. 401,869 S.C.SID PAC 257,590 TEKA SYSTEMS S.A. 141 ANTIMET S.A. 135,772 HELLENIC CABLES S.A. 2,690 ETEM S.A. 29,385 VITRUVIT S.A. 391 ANAMET S.A. 265 FITCO S.A. 6,452 VIOMAL S.A. 53,985 HALCOR S.A. 32,891 SIGMA S.A. 59,097 ARGOS S.A. 163,846 ELVAL S.A. 30,655 GRAND TOTAL 5,091,638 87

89 COMPANY Purchase of Goods/Services (Amounts in x) TOTAL SIDENOR S.A. 1,076,466 SOVEL S.A. 3,140 STOMANA S.A. 2,866,997 ETIL S.A. 12,930 PANELCO S.A. 64,633 PROSIDER S.A. 387,957 VEKTOR S.A. 56,804 TEKA SYSTEMS S.A. 631,506 VIOHALCO S.A. 1,595 HELLENIC CABLES S.A. 2,199 VITRUVIT S.A. 126 VIOMAL S.A. 2,000 STEELMET S.A. 1,310 VIEKSAL LTD 10,419 HALCOR S.A. 15,649 GRAND TOTAL 5,133,731 COMPANY Payables (Amounts in x) TOTAL SIDENOR S.A. 3,000,649 SOVEL S.A. 7,607 STOMANA S.A. 15,795 PANELCO S.A. 7,740 CORINTH PIPEWORKS S.A. 679,122 PROSIDER S.A. 1,546,817 ERLIKON WIRE PROCESSING S.A. 543,427 PROSAL S.A. 1,357,134 VEKTOR S.A. 39,531 TEKA SYSTEMS S.A. 46,051 VIOHALCO S.A. 1,889 VITRUVIT S.A. 2,044 STEELMET S.A. 17,331 VIEKSAL LTD 2,139 HALCOR S.A. 19,766 GRAND TOTAL 7,287,042 88

90 10. COMPANY Receivables (Amounts in x) TOTAL SIDENOR S.A. 29,233 SOVEL S.A. 10,209 STOMANA S.A. 69,291 ETIL S.A. 56,299 BET S.A. 1,097 AEIFOROS S.A. 14,505 PANELCO S.A. 416,779 CORINTH PIPEWORKS S.A. 75,802 METALLOURGIA ATTIKIS S.A. 199,695 PROSAL S.A. 13,679 ERLIKON WIRE PROCESSING S.A. 18,298 S.C.SID PAC 54,667 VEKTOR S.A. 109 ANTIMET S.A. 94,974 HELLENIC CABLES S.A. 1,473 ETEM S.A. 5,000 VITRUVIT S.A. 115 FITCO S.A. 108 STEELMET S.A. 32 HALCOR S.A. 9,813 SIGMA S.A. 10,969 ARGOS S.A. 14,759 ELVAL S.A. 20,341 GRAND TOTAL 1,117,245 The Board of Director, after a discussion unanimous approve all the aforementioned intra-company transactions and submits them in the General Shareholders Meeting. The meeting terminated since no other issue was proposed for discussion. THE CHAIRMAN MARCEL-HARIS L. AMARIGLIO THE MEMBERS DANIEL D. BENARDOUT IOANNIS S. STAVROPOULOS KONSTANTINOS D. KARONIS ANASTASIOS N. KOLYVANOS HAIM M. NAHMIAS GEORGIOS S. KATASAROS ALEXANDRA A. NICOLITSA THE VICE-CHAIRMAN MENELAOS A. TASOPOULOS 89

91 Design Production Tel:

92