2011 Business and Financial Performance

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March 27, 2012

2011 Business and Financial

Performance

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Content

1. Introduction

2. Business overview

3. Financials

4. Divestitures and Internal Reorganization

5. 2012 outlook

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Section 1

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Introduction

Speaker

Krzysztof Zoła

CFO

Age – 40

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Introduction

2011 Highlights

• Improved demand, prices and margins for all products particularly in H1. H2 weaker in terms of automotive

sectors (HSJ). Q4 zloty weakening made a positive contribution to sales of semi-products (Ferrostal)

• 59% yoy revenues increase; sharp increase of profitability; EBITDA at PLN 144,7m from PLN 10,4 million in 2010

• Better market conditions reflected in growth in capacities’ utilization:

• GDP growth over 4% in Poland

• Polish steel production up by 10% yoy

• Closing of two major divestment transactions regarding distribution business and finalization of internal

reorganization

54% 59%

79% 86%

86% 86%

84% 636 000

COMBINED

37% 52%

70% 86%

72% 58%

71% 261 000

HSJ

66% 64%

85% 86%

96% 105%

93% 375 000

FERR

Y 2009 Y 2010

Q1 2011 Q2 2011

Q3 2011 Q4 2011

Y 2011

UTYLIZATION RATE ANNUAL CAPACITY

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Section 2

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Business Overview

Environment

793 959

1 148 rebars / scrap diff.

1 439 1 829 18% 2 165 Rebars (Fi18) 777 880 1 268 bars / scrap diff.

1 423

1750 31%

2 285 Bars (flat, plain, squares)

666 759

1 021 billet / scrap diff.

1 312 1629 25% 2 038 Billets (FERR) 646 870 17% 1 017 Scrap metal

PLN / Ton

2009 2010

% YoY 2011

UNIT PRICES (2)

(1)_{Source: World Steel Association} (2)_{Source: COGNOR SA}

1 220,0 1 395,5 7% 1 490,1 Global 567,8 626,7 9% 683,3 China 139,0 172,9 3% 177,4 EU (27) 7,2 8,0 10% 8,8 Poland mln tonnes Y 2009 Y 2010 % YoY Y 2011

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Business Overview

Segments

56 309 88 355

120 064 TOTAL SALES in '000 PLN

94 357 102 991

118 098 TOTAL SALES in TONNES

407 736 443 511

622 417 TOTAL INTERNAL USE in TONNES

524 606 529 248

711 743 TOTAL PURCHASES in TONNES

56 309 88 355

120 064 CONSOLIDATED

SALES ‘000 PLN

1 841 975 0 OTHER 92 516 102 016 118 098 ZLMET

SALES TO EXTERNAL CUSTOMERS Tonnes

111 849 157 241 211 872 HSJ 286 700 286 270 410 545 FERR

INTERNAL USE Tonnes

1 106 620 0 OTHER 77 474 105 533 123 718 HSJ 351 289 332 240 429 488 ZLMET 86 839 90 855 158 537 FERR

PURCHASES FROM EXTERNAL SUPPLIERS Tonnes

Y 2009 Y 2010

Y 2011 SCRAP METAL

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Business Overview

Segments

212 235 193 442

265 460 TOTAL INTERNAL USE in TONNES

346 288 374 708

534 608 TOTAL PRODUCTION in TONNES

1 922 0

0 TOTAL PURCHASES in TONNES

178 520 295 338

15 24 0 COG 2 309 2 409 16 909 HSJ 133 657 178 857 252 239 FERR 129 0 0 ZLOM

95 648 132 256 169 103 HSJ 115 166 61 186 96 357 FERR

INTERNAL USE Tonnes

96 035 134 665 186 012 HSJ 248 823 240 043 348 596 FERR PRODUCTION Tonnes 1 922 0 0 EXTERNAL SOURCES PURCHASES Tonnes Y 2009 Y 2010 Y 2011 BILLETS

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Business Overview

Segments

407 763 478 102

718 070 TOTAL SALES in '000 PLN

201 459 182 234

231 573 TOTAL SALES TO EXTERNAL CUSTOMERS in TONNES

197 567 170 146

240 657 TOTAL PRODUCTION in TONNES

407 763 478 102

92 954 122 337 147 282 HSJ 108 419 59 897 84 291 FERR 86 0 0 ZLOM

97 546 116 379 158 335 HSJ 33 472 0 0 FERR 66 549 53 767 82 322 ZWWB PRODUCTION Tonnes Y 2009 Y 2010 Y 2011 FINISHED PRODUCTS

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Section 3

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Financials

-50 355 -45 788

-44 169 Depreciation and amortization

-289 715 -184 153

115 901 Profit for the period

-178 842 -88 118

92 011 Profit/loss for the period from discontinued operations

23 641 -8 887

21 887 Income tax expense

-134 514 -87 148

2 003 Profit before tax

-17 437 -51 725

-98 479 Net financing costs

-77 204 -66 167 -105 041 Financial expenses 59 767 14 442 6 562 Financial income -117 077 -35 423 100 482 EBIT -28 501 -18 080 -14 546 Other expenses 1 126 -10 118 15 309 Other gains/(losses) – net

-45 017 -50 718 -46 600 Administrative expenses -27 073 -32 394 -36 171 Distribution expenses 9 765 9 673 9 919 Other income -27 377 66 214 172 571 Gross profit -809 392 -909 068

-1 377 076 Cost of sales

782 015 975 282

1 549 647 Revenue '000 PLN Y 2009 Y 2010 Y 2011 INCOME STATEMENT

• EBITDA adjusted for

non-recurring items:

PLN 131,2 m

• Net profit adjusted for

non-recurring items:

PLN 35,7 m

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Financials

1 558 650 1 436 178

979 617 TOTAL ASSETS

196 014 544 534

0 V. Assets of disposal groups and disc. oper.

43 039 103 733

16 708 IV. Assets classified as held for sale

32 422 9 280

47 166 III. Cash and cash equivalents

5 536 10

25 186 3. Other investments

2 004 590

7 744 2. Current income tax receivable

204 235 142 620

204 904 1. Trade receivables

211 775 143 220 237 834 II. Receivables 249 052 176 216 178 472 I. Inventories 732 302 976 983 480 180 B. TOTAL CURRENT ASSETS

57 082 40 784

70 826 VI. Deferred tax assets

45 857 19 257

19 850 V. Prepaid perpetual usufruct of land

14 488 4 608

4 377 IV. Investment property and other investments

3 295 241

44 583 III. Other receivables

663 451 373 818

342 734 II. Property, plant and equipment

42 175 20 487

17 067 I. Intangible assets

826 348 459 195

499 437 A. TOTAL NON-CURRENT ASSETS

'000 PLN

Y 2009 Y 2010

Y 2011 ASSETS

• A.III. includes PLN 44.3

m in Croatian Claim

• A.VI. Increased due to

additional tax asset

creation due to internal

reorganization

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Financials

834 403

381 7. Provisions for payables

323 0

293 6. Current income tax payable

2 317 4 713

5 677 5. Employee benefits obligation

1 145 1 007

865 4. Deferred government grants

269 074 250 570

176 117 3. Trade payables

126 657 83 884

25 236 2. Bank overdraft

169 904 107 249

45 878 1. Interest-bearing loans and borrowings

570 254 447 826

254 447 II. Current liabilities

19 310 10 369 8 621 3. Other 534 110 503 162 532 138 2. Interest-bearing loans and borrowings

38 819 11 862

7 970 1. Employee benefits obligation

592 239 525 393

548 729 I. Non-current liabilities

1 317 425 1 344 320

803 176 B. LIABILITIES

12 923 8 803

12 201 III. Minority interest

125 928 -49 389

31 796 II. Reserves and retained earnings

102 374 132 444

132 444 I. Issued share capital

241 225 91 858 176 441 A. EQUITY '000 PLN Y 2009 Y 2010 Y 2011 EQUITY AND LIABILITIES

• Debt reduced by PLN

128.9 m

• Debt reduction offset by

PLN 55.8m of net FX

losses regarding

indebtedness

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Financials

-66 947 7 776

-180 506 NET INCREASE IN CASH

-62 186 -31 651

-140 658 C. FROM FINANCING ACTIVITIES

1 432 8 658

-7 151 B. FROM INVESTING ACTIVITIES

-6 193 30 769

-32 697 A. FROM OPERATING ACTIVITIES

Y 2009 Y 2010 Y 2011 CASH FLOW -12,0 66,1 3,8 Net debt / EBITDA

798 249 685 015 556 086 Net debt 241 225 91 858 176 441 Equity -37,0% -18,9% 7,5% Net profit margin

-8,5% 1,1% 9,3% EBITDA margin 95 53 48 Trade receivables turnover (days)

112 71

47 Inventories turnover (days)

0,67 0,98 1,19 Quick ratio 1,01 1,19 1,89 Liquidity ratio Y 2009 Y 2010 Y 2011 MAIN METRICS

• PLN 130,2 negative

cash flow from working

capital

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Section 4

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Divestiture of Distribution Division and

Considerations Behind Internal Reorganization

• Sale of 100% of shares in Cognor Stahlhandel GmbH to Mechel

• Conditional SPA – 09.12.2010, closing 31.01.2011 r.

• Price for 100% of shares was set at EUR 32.8m and referenced to the company’s figures as of 31.12.2009 r. Final price to be established based on

Cognor Stahlhandel GmbH

group equity difference between 31.12.2009 i 31.01.2011 r.

• Part of the transaction was a repayment of intercompany loan extended by Złomrex S.A. (currently HSJ S.A.) at the amount of EUR 9.8m

• Cognor S.A. (Cognor) has received and expects to receive the following proceeds:

• EUR 24.6m – Feb 2011

• EUR 0.9m – Feb 2012

• EUR 1.5 -2.0m – H1 2012, the amount is subject to the dispute between Cognor and the buyer

• HSJ S.A. has received and expects to receive the following amounts:

• EUR 5.0m – Apr / Oct 2011

• EUR 4.8m – Feb 2012

• Sale of the domestic distribution assets to Arcelor Mittal Distribution

• Conditional APA – 16.11.2010, closing 04.05.2011 r. The transaction comprised of: inventories, real property and other fixed assets.

• Total sale price accounted for PLN 181.2m net (PLN 197.2m VAT incl.)

• Cognor has received and expects to receive the following proceeds:

• PLN 168.8m – 04.05.2011,

• PLN 4.1m – Jun 2011

• PLN 2.0m – Q4 2011

• PLN 7.4m– May 2012

• PLN 14.9m– May 2013

• Internal reorganization of the Group

• Acquisition of Złomrex S.A. by Cognor including an indirect acquisition of shares in (i) steel plants - Ferrostal + HSW-HSJ and (ii) scrap collection network - Złomrex Metal

• Downstream application of proceeds and repayment of bank loans as well as working capital improvement

• Simplification of the Group’s structure by the following subsidiary companies’ mergers aimed at increasing internal efficiencies and tax benefits

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Group’s Structure Post Internal

Reorganization

ZW-WB 92.4% Scrap HSJ (ZLX + HSW-HSJ)

100%

COGNOR

FERROSTAL ZLXMETAL ZIF 99,9% SCRAP COLLECTION AND TRADING STEEL Other Production 100% 100% NOTES’ ISSUER ZLX CENTRUM BSS COG

SERVICES COG FINANSE

CEN SZCZ

KAPITAŁ

100% 100% 100%

100% 75% COG BLD KAPITAŁ SK 100% 51% FINANCE SUBSIDIARIES REAL PROPERTIES ROOFING SHEETS 100%

PS Holdco

Other Production OMS Zlomrex-Finans Zlomrex China 100% 100% 64,4%

Restricted

Group

Cognor Group

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Section 5

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2012 Outlook

Main factors

• Polish GDP around 3%

• Production expected to slightly fall in Europe with relatively strong Polish market. Demand,

prices and margins likely to stabilize on 2011 levels with zloty to strengthen further against

the EUR and the USD

• Utilization rates may continue to rise, at HSJ in particular

• Positive free cash flow, net debt to EBITDA towards 3x multiple by 2012 yearend

• Refinancing of the Notes

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Section 6

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