Stemcor announces half year results 2007

Highlights

Record turnover and profits:

• Steel tonnage invoiced up from 4.2m tonnes to 4.8m tonnes (+15%)
• Raw materials invoiced up from 3.1m tonnes 4.1m tonnes (+29%)
• Turnover up from £1,387m to £2,132m (+54%)
• Operating profit up from £32m to £48m (+51%)
• Pre-tax profit up from £20m to £26m (+29%)

Salient points:

• Acquired Steel Plate & Sections Ltd (SPS), a UK-based stockholding company specialising in high value steel plate for the offshore oil and gas industry - key development in the growth of Stemcor's stockholding and distribution business.
• Sold Savage River iron ore mine and pellet plant to Chinese steel producer Shagang. Retained 10% share - further estimated profits of £34m expected between 2009 and 2022.

• Strong prospects for H2 2007, with solid forward order book.

Chairman's Statement

Trading conditions were again favourable in the first half of this year. All our units contributed positively to our results. As compared to the first half of 2006, our steel tonnage invoiced rose by 15%, raw materials by 29%, turnover by 54% and pre-tax profit by 29%.

Profit after tax attributable to shareholders was, however, down by 8% as a result of higher tax and minorities. Shareholders funds excluding minorities rose 17% to £119 million in the six months and are now 34% above the level of twelve months ago.

On the 2nd of July we acquired Steel Plates and Sections Limited, a stockholder specialising in high value steel for the off-shore energy sector, with two warehouses in the UK and stock also in Rotterdam, Dubai and Singapore.

On the 9th of August we sold 90% of Savage River, the iron ore mine and pellet plant in Tasmania. We estimate that our results in the second half of this year will benefit from £7 million of disposal profits. Dependent on performance of the mine and world pellet prices, further profits estimated at £34 million should be recognised in the years from 2009 to 2022.

We finished the period with a solid forward order book and, though there is considerable uncertainty in both credit markets and in steel pricing at present, we have made proper provision for counter-party risk and unsold positions. Subject to unforeseen circumstances we can therefore predict a good second half.

Ralph Oppenheimer
10 August 2007

Click here for the corresponding consolidated profit and loss account and consolidated balance sheet.