Release of consolidated financial results of the SIJ Group and bond issue announcement

Ljubljana, Monday, 10 November 2014 – Release of consolidated financial results of the SIJ Group for the period of 9 months in 2014 and bond issue announcement.

In the first nine months (January–September 2014) of this year, the SIJ Group has generated an income of EUR 561.2 million (an increase of 9% compared to the same period last year), EBITDA in the amount of EUR 66 million (an increase of 86% compared to the same period last year) and a net profit of EUR 25.5 million. While the global steel market growth was slightly over 2.1% (in the same period), the growth of the SIJ Group was more rapid and a high level of operating earnings was maintained, as the EBITDA margin in the period in question was 11.8 %.

The results for the period of nine months show that the SIJ Group is successful in pursuing its annual (2014) plans to increase the level of income to EUR 742 million, generate an EBITDA of over EUR 80 million and a net profit of EUR 32 million.

The key reasons for the continuing trend of growing profitability are the optimisation of key product groups (production mix) and numerous measures for the consolidation and optimisation of the Group SIJ operation, both at the sales level and in many other business processes. As part of its sustainable development strategy until 2020, in 2014 the SIJ Group has ensured an additional increase in the share of products with higher added value, thus continuing its move away from the mass market of low-cost steel, where competition is the most severe.

The growth of income is directly related to the increase in export, which totalled EUR 485 million or 86.6% of all income in the first nine months. The key markets in the export structure are EU member states, although there has been an increase in the share of other markets, e.g. the US (7.9% share in the export structure). The above clearly demonstrates the Group’s global competitiveness, which will continue to increase in the coming years based particularly on the increase in the share of products with high added value and the increase of market shares in niche market segments, where demand remains high regardless of the short-term macroeconomic trends.

With the aim of optimising the dispersal and long-term nature of financing sources, the SIJ Group will issue five-year bonds with the face value of EUR 50 million in the second half of November (the anticipated date of issue is 24 November). The interest rate on the bonds will be 4.50% per year. In the period of market testing and inviting non-binding tenders, the SIJ Group has seen considerable interest in the bond issue among investors, since a bond issue from a new issuer will also have a positive impact on the bond market in Slovenia. The assets will be used for the purposes of realising the SIJ Group strategy of development until 2020.

All sales organisation and bond issue activities are conducted by NLB d.d. The call for tenders and first sale of bonds will be carried out pursuant to the provisions of the Financial Instruments Market Act; two exemptions from the obligation to publish a prospectus for certain types of securities pursuant to Article 49 of the Financial Instruments Market Act will be applied cumulatively. Namely, the bonds will be offered solely to qualified investors or to fewer than 150 natural or legal persons other than qualified investors. The issuer will prepare a bond issue prospectus at the Central Securities Clearing Corporation; once the prospectus has been approved by the Securities Market Agency, the bonds will be listed on the regulated market of the Ljubljana Stock Exchange.

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Dr. Denis Mancevič, Executive Director for Corporate Communications