International multi-specialist in the distribution of specialised steels 2005 Annual Results Information meeting 6th March 2006
LEADING DISTRIBUTOR OF SPECIAL STEELS IN EUROPE 2-33 vf
OUR BUSINESS: AN ECONOMIC ROLE WITH ADDED VALUE Being the inescapable intermediary between suppliers of specialised steels and end users: Suppliers Clients / Users Number 100 40 000 Shipments 25 tonnes 400 kg Delivery time 3 months 48 hours References 1 000 40 000 Choosing the right steel and advising clients Optimising the sums invested by clients: No inventories First transformation 3-33
LEADER OF A VERY FRAGMENTED MARKET Specialised steel market in Europe : 25 million tonnes, including 18 MT sold directly by manufacturers to large users 7 MT retail selling by a fragmented and independent distribution by producers IMS market share: 7% by volume (8% in cash terms) Market consolidation: IMS will be a major player in this consolidation 4-33
IMS IN FIGURES 500 000 T distributed to around 40 000 clients via 40 000 references A presence in 15 countries via 21 subsidiaries and 49 distribution and transformation centres 1 500 employees including a sales force of close to 550 people 100 international suppliers 1.2 million billing lines a year 5-33
3 PRODUCT LINES Abrasion 16% of 2005 revenues 80 000 tonnes Corrosion 45% of 05 revenues 100 000 tonnes Engineering 39% of 05 revenues 290 000 tonnes Mines, quarries, construction and public works Armoured sheeting Petrochemical and food industries Chemical & decoration Bearings and security parts Machine tools Tool steel 6-33
GEOGRAPHICAL SPLIT OF SITES 49 storage centres: 46 in Europe and 3 in North America 3 new centres have been opened over the last two years 3 new centres planned for 2006 2 in Eastern Europe. 1 in Spain Storage centres New centres 7-33
2005 KEY FACTS 8-33
REMINDER OF THE SITUATION IN 2005 Steel prices continued to rise over the first half of the year, stabilising then falling slightly over the second half - Lower volatility for specialised steels than for standard steel - Inversion of the windfall effect - Prices maintained at high levels Weak growth in European industrial output (+1.5%) 9-33
REMINDER OF ACTION IN 2005 (March 05) 1 Consolidation of European n 1 position 2 A more homogenous group 3 Improvement in performances 10-33
CONSOLIDATION OF EUROPEAN N 1 POSITION Further gains in market share (Italy, France, Belgium) - Volume effect: + 5% Continuation of the targeted external growth strategy: - March 2005: acquisition of KUPA (Inox) in Slovakia (2004 revenues: 9 million / consolidation from 1/01/05) - July 2005: acquisition of PMA (Produits Métallurgiques des Ardennes 2004 revenues: 15M / consolidation from 1/07/05) - December 2005: negotiation with ALURA (Inox) in Spain (2005 revenues: 13 million) Activity across the board - Development of corrosion-resistant steels in Southern Europe - Development of tool steels 11-33
A MORE HOMOGENOUS GROUP May 2005: divestment of ULDRY (trading) Switzerland 2004 revenues of 47 million July 2005: divestment of TACKE + LINDEMANN (industrial supplies) Germany 2004 revenues of 15 M September 2005: partial divestment of IMS UK (oil activities) United Kingdom 2004 revenues of 44 M Refocusing of the Group s activities in Europe and on its core business lines in order to optimise synergies between its subsidiaries 12-33
IMPROVEMENT IN PERFORMANCES ( millions) Revenues 2005 844.6 2004 769.8 19% Operating charges 21.2% Operating profit Operating margin 68.3 8.1% 60.9 7.9% 13-33
FINANCIAL ELEMENTS 14-33
CHANGES IN SCOPE IN 2005 Tonnes Revenues ACQUISITIONS (thousands of euros) IMS Kupa (2005) 2,600 9,000 PMA (2004) 15,000 15,000 s/total 17,600 24,000 DIVESTMENTS (2004 figures) Uldry 61,000 47,000 Tacke - 15,000 IMS UK oil activity 21,000 44,000 s/total 82,000 106,000 NET TOTAL (disinvestment) 64,400 82,000 15-33
Q4 2005 RESULTS ( millions) Q4-2005 Q4-2004 Change Revenues 189.7 206.3-8.0% Gross margin 25.1% 29.1% Charges 39.0 43.4-10.2% Operating profit 8.6 16.6-47.8% Operating margin 4.6% 8.0% Net profit 6.1 9.1-33.3% Net margin 3.2% 4.4% 16-33
CONSOLIDATED ANNUAL RESULTS ( millions) 2005 2004 Change Revenues 844.6 769.8 +9.7% Gross margin 27.1% 29.1% Operating profit 68.3 60.9 +12.1% Operating margin 8.1% 7.9% Financial profit/loss - 6.9-5.5-25.0% Net profit of consolidated group 41.2 34.7 +18.5% Net margin 4.9% 4.5% 17-33
REVENUES BY GEOGRAPHICAL ZONE At 31st December 2005 Other 22% Germany 24% UK 7% At 31st December 2004 Spain 11% Italy 17% France 19% Other 26% Germany 27% UK 6% Spain 10% Italy 14% France 17% IMS records 81% of its revenues from outside France 18-33
2005 - PRICE & VOLUME EFFECT ON REVENUES Abrasion Corrosion Engineering Other TOTAL Volume 0.0% 4.5% 5.1% 19.3% 4.6% Base price 32.1% 4.3% 18.4% 10.1% 13.3% Alloy effect 0.0% 0.4% 0.0% 0.0% 0.2% Forex effect 0.0% 1.0% -0.1% 0.0% 0.4% Constant scope 32.1% 10.2% 23.4% 29.4% 18.5% Scope effect 0.0% -0.6% -18.0% -43.3% -8.8% True scope 32.1% 9.6% 5.4% -13.9% 9.7% 19-33
DETAILED CHARGES comparable scope and forex ( millions) 2005 2004 Change Variable charges 32.6 31.4 +3.8% Personnel charges 75.0 74.0 +1.4% Rents Depreciation expenses 22.9 19.4 +17.5% Other general costs 28.4 27.3 +4.5% Provisions - 0.2 0.6 NS Capital + / - on building divestments - 0.2-0.8 NS Net charges 158.5 151.9 +4.3% 20-33
CONDENSED BALANCE SHEET (in M) 31/12/05 31/12/04 Non-current assets 106.8 112.8 Working capital 249.6 205.3 Total assets invested 356.4 318.1 Shareholders equity 236.0 192.7 Provisions, deferred taxes, non-current liabilities 17.1 18.1 Net debt 103.3 107.3 Capital employed 356.4 318.1 21-33
CHANGE IN WORKING CAPITAL (in M) 2005 2004 Global working capital 249.6 205.3 Working capital in n of days of revenue 106 96 Operating working capital 269 236 Operating working capital in n of days of revenue 115 110 Inventories (12 months rolling) in days 130 135 Clients (calculated historically) 72 66 Suppliers (calculated historically) 60 55 22-33
IMPROVEMENT IN INVENTORY MANAGEMENT Retards Supplier fournisseurs delays (t) Stocks Inventories (t) Thousands of Tonnes 240 230 220 210 200 190 180 170 160 150 140 130 44 44 181 181 181 172 25 161 120 110 100 janv-05 févr-05 mars- 05 avr-05 mai-05 juin-05 juil-05 août- 05 Gradual reduction in supplier delivery delays Downward trend in inventory levels sept- 05 oct-05 nov-05 déc-05 23-33
EVOLUTION OF DEBT & GEARING IN 2005 160 140 120 100 61-4 6-5 133-20 11-25 15 107-11 - 33 103 80 60 40 20 0 24-33 2004 debt Self-financing Change in operating working capital Change in other working capital Investments Divestments H1 2005 debt Self-financing Change in operating working capital Change in other working capital Investments Divestments H2 2005 debt
RETURN ON CAPITAL EMPLOYED (ROCE) 2005 2004 2004 2003 thousands IFRS IFRS NF NF Operating profit 68 334 60 934 56 087 7 498 (before tax and after GW amortization) Average capital employed 330 824 285 756 244 966 212 396 RCE before tax 20.7% 21.3% 22.9% 3.5% Operating profit 45 784 38 145 34 071 4 394 (after tax and after GW amortization) RCE after tax 13.8% 13.3% 13.9% 2.1% 25-33
STRATEGY AND PROSPECTS 26-33
2006 ACTION 1 Strengthening of the European leadership position: - in all countries - across the three product lines 2 Development of Group synergies 27-33
INCREASE IN EUROPEAN LEADERSHIP BY COUNTRY AND BY PRODUCT LINE Situation as of 31/12/05 France Germany Italy Spain United Kingdom Belgium Netherlands Portugal Sweden Poland Czech Republic Hungary Austria Slovakia Abrasion Corrosion Engineering Leadership position Medium position Weak position Opportunity 28-33
INCREASE IN EUROPEAN LEADERSHIP BY COUNTRY AND BY PRODUCT LINE By organic growth Corrosion-resistant steel in Italy and France Engineering steel in Belgium Abrasion-resistant steel in Germany and Eastern Europe Tool steel in France and Spain By external growth Corrosion-resistant steel in Spain Engineering steel in Northern and Eastern Europe 29-33
PROSPECTS 2006 Assumptions: Stable European market in terms of volume Prices stable at Q4 2005 levels 1. Continuation of organic growth: +5% by volume 2. Revenues of around 830 million Operating margin between 6 and 8% 30-33
ANNEXES 31-33
IMS AND THE MARKET STOCK MARKET DATA (12 months, rolling) Volume: 25 255 shares/day High: 18.54 (23/02/06) Low: 9.10 (4/04/05) Market Cap: 334 million N of shares: 18 057 010 Index: Small 90 Figures as of 28/02/2006 Capital structure FINANCIAL AGENDA: Financière Mistral Publication of 1st and 2nd quarter revenues 28th April and 28th July 2006 45% 51% Company Publication of 1st and 2nd quarter full results 1st June and 11th September 2006 4% Public, including 6% held by the European Renaissance Fund) 32-33