DANIELI YEAR 2007 CONTENTS

DANIELI YEAR 2007 CONTENTS Danieli & C. Officine Meccaniche S.p.A. Headquarters in Buttrio (Udine) Italy Share Capital: Euro 81,304,556 fully-paid The data in this publication refer to the period 01.07.2006 / 30.06.2007 2 DANIELI GROUP AT A GLANCE 12 LETTER TO THE SHAREHOLDERS 16 MAIN EVENTS OF THE YEAR 34 REPORT OF THE BOARD OF DIRECTORS ANNEXES DANIELI WORKSHOPS WORLDWIDE DANIELI QSP: STILL ON THE RACE

DANIELI TEAM Danieli Team mission is to serve Customers with competitive plant and process technology/automation to produce quality at the lowest depreciation and production cash costs and offer friendly after-sale service involving top-specialized engineers. The technology spectrum -from ore to finished product- and relevant process know-how provided by our Product Lines, the well-known tendency towards innovation and high reliability are the best guarantees in reaching this target. Danieli Engineering Since 1964 Italy Turnkey Plants and Systems Engineering Danieli Corus Since 1977 The Netherlands Integrated Steelmaking Plants Danieli Centro Metallics Since 1987 Italy Ore Processing and Direct Reduction Plants Danieli Centro Met Since 1914 Italy, Sweden Steelmaking Plants Danieli Davy Distington Since 1951 UK, Italy Slab Casters Danieli Wean United Since 1901 Italy, USA Flat Product Casting, Rolling and Processing Danieli Kohler Since 1959 USA Air Wiping Equipment for Metal Coating Danieli Fröhling Since 1947 Germany Speciality Mills and Strip Finishing Lines Danieli Morgårdshammar Since 1856 Italy, Sweden Long Product Rolling Mills Danieli Centro Tube Since 2004 Italy Tube Processing Plants Danieli Automation Since 1969 Italy, Sweden, USA Process Control Systems Danieli Centro Maskin Since 1953 Italy, Sweden Conditioning, Drawing, Finishing Lines Danieli Rotelec Since 1977 France EMS and Induction Heating Systems Danieli Breda Since 1950 Italy Extrusion and Forging Plants Danieli Centro Combustion Since 1981 Italy Reheating Systems Danieli Environment Since 1973 Italy Ecological Systems Danieli Construction Since 2003 Italy Turnkey Construction, Erection and Systems Engineering Danieli Service Since 1961 Italy Technical Service and Spare Parts 2 DANIELI YEAR 2007

THE RELIABLE INNOVATIVE TEAM IN THE METALS INDUSTRY DANIELI GROUP AT A GLANCE DANIELI 3

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GROUP STRUCTURE DANIELI GROUP AT A GLANCE Investment Holding Companies Product Lines Industrial Companies Technical Offices DANIELI ITALY Industrielle Beteiligung SA LUXEMBOURG Danieli International SA LUXEMBOURG EUROPE AMERICA ASIA ITALY THE NETHERLANDS UK GERMANY AUSTRIA SWEDEN POLAND UKRAINE RUSSIA FRANCE SPAIN USA CANADA CHINA THAILAND INDIA JAPAN Danieli Engineering Danieli Centro Metallics Danieli Centro Met Danieli Wean United Danieli Morgårdshammar Danieli Centro Tube Danieli Centro Maskin Danieli Breda Danieli Environment Danieli Service Danieli Construction SpA Danieli Automation SpA Danieli Centro Combustion SpA Stem Srl Inde SpA More Srl Danieli Corus TS Danieli Davy Distington Ltd Danieli Fröhling GmbH W+K Industrie Technik GmbH Danieli Engineering & Services GmbH Danieli Centro Met Danieli Centro Maskin Morgårdshammar AB Sund Birsta AB Danieli Polska Engineering Danieli Heavy Machinery Danieli Russia Engineering Rotelec SA Danieli Morgårdshammar Iberica SA Procome SA Danieli Corporation Inc Danieli Technology Inc Morgårdshammar Inc Danieli Canada Inc Danieli Metallurgical Equipment Beijing Co Ltd Danieli Metallurgical Equipment Changshu Co Ltd Danieli Far East Co Ltd Danieli Engineering India Ltd Danieli Engineering Japan The development plan which provided for the acquisition of leading companies in the supply of equipment for the steel industry has been completed. Since 2000, our product lines have been expanded to cover blast furnaces, DR plants, seamless and welded pipe mills and now cover the whole spectrum of ironmaking and steelmaking plants, from iron ore to any steel finished products as well as those for non-ferrous metals. DANIELI 5

Danieli ranks amongst the three largest suppliers of plants and equipment to the metals industry, worldwide. We are leaders in minimills, in long product casting and rolling plants, and amongst the front runners in the flat product sector and integrated steel plants. Our product lines cover the whole technology spectrum from ore to flat and long steel finished-product processing. Steel culture Danieli s global expertise benefits from steel cultures and know-how stemming from notable industrial centers in Italy, Germany, Sweden, UK, The Netherlands, USA and France. Thanks to our process and production know-how we provide not only high-tech equipment, but performance, too. Market is worldwide Mining and ironmaking plants; pelletizing and DRI plants; electric steelmaking and steel refining plants; long and flat product casting, rolling and finishing lines; seamless tube processing lines and forging shops. Rolling, slitting and extrusion lines for nonferrous metals are also part of our product porfolio. Social responsibility We see ourselves not only as a valuable part of our regional economy but also as a contributor to a positive professional and international body of progressive young engineers, including through our own Industrial Design educational center. We have a strong sense of responsibility towards society. Competitiveness There s just one word to express Danieli s design philosophy and overall mentality. We strive to develop processes that reduce production costs while improving product quality. Earnings We aim to generate the highest possible earnings in order to ensure the Company's future investments in research and development, as well as to increase the shareholders' investment value. Strategic approach Continuously improve design, manufacturing and process know-how. Maintain our leadership in the field of minimill design. Supply integrated steel plants with the same competitive approach we developed for minimills. Engage personnel in a creative and motivating atmosphere that rewards merit, professionalism and ability to achieve business objectives. Product quality and reliability We don t shop around for noble equipment, we build it in our own state-of-the-art workshops. In-house manufacturing, including heat treating, assembly and functional testing, allows constant and precise quality control through the whole process, from engineering to shipment of the equipment. WE ARE 6 DANIELI YEAR 2007

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Danieli workshops are equipped with the most modern facilities and rank to levels of absolute excellence world-wide. 8 DANIELI YEAR 2007

In-house manufacturing, assembly and functional testing permits a constant and precise quality control through the whole process, from engineering to shipment of the equipment. DANIELI 9

(thousand of Euro) 98/99 99/00 00/01 01/02 02/03 03/04 04/05* 05/06* 06/07* Order backlog 1,162,028 1,191,466 989,699 835,457 1,141,000 1,455,549 1,981,534 2,148,918 3,098,132 Sales revenue 832,328 936,440 966,777 999,938 729,843 1,149,940 1,495,020 2,002,319 2,456,624 Net income 27,687 21,898 10,419 10,052 10,483 12,110 35,001 46,750 73,284 Total net worth 360,765 402,205 401,417 427,556 431,555 438,700 507,887 553,647 597,896 Research 29,375 36,668 46,000 32,000 35,000 40,000 45,000 69,700 120,500 and development Employees 3,007 3,175 3,026 2,945 2,756 3,492 3,797 4,881 6,816 Consolidated net 0.38 0.27 0.13 0.12 0.13 0.15 0.43 0.57 0.91 income per share (Euro) No. of ordinary shares 36,361 40,879 40,879 40,879 40,879 40,879 40,879 40,879 40,879 No. of non convertible 36,361 40,424 40,424 40,424 40,425 40,425 40,425 40,425 40,425 saving shares Dividends distribution 6,764 6,637 4,558 3,276 3,277 4,567 5,652 7,263 11,820 Net income per ordinary 0.08 0.07 0.05 0.03 0.03 0.05 0.06 0.08 0.14 share (Euro) Net income 0.10 0.09 0.07 0.05 0.05 0.07 0.08 0.1007 0.1607 per non convertible saving share (Euro) 10 DANIELI YEAR 2007

FINANCE Danieli Group: Sales Revenue (millions of Euro) The positive results continuously scored in the last decades -including those characterized by steel market difficultiesgive Danieli customers the certainty of dealing with a reliable partner. This is thanks to Company s continuous pursuit of technological innovation and entrepreneurial spirit. Danieli Group: Net Worth (millions of Euro) Danieli Group: Net Income (millions of Euro) *according to IAS/IFRS DANIELI 11

LETTER TO THE SHAREHOLDERS Dear Shareholders, The results of the fiscal year 2006/2007 The company s results for fiscal year 2006-2007 are: (million of Euro) Forecast Actual Sales 2,100/2,200 2,456.6 EBITDA 185/200 231.5 Order book 2,200/2,300 3,098.0 For 2007-2008 the targets are: (million of Euro) Sales 2,500/2,600 EBITDA 255/265 Order book 3,000/3,200 12 DANIELI YEAR 2007

Some comments on the general situation: The commodities super cycle supported the consumption of old economy products such as steel, energy, minerals, and transport, against the usual backdrop for such conditions, i.e. a low dollar and high energy prices. The situation is likely to continue for the next three to four years, thanks to the growth in consumption and infrastructures in the next billion countries: Brazil, Russia, India, Eastern Europe and the Middle East. This scenario, of course, bars any unexpected events that might disrupt the current cycle of growth. To boost our competitiveness and prepare for a reversal of trend, we have continued to invest heavily in product research and innovation (Euro 120 million) and acquired some leading firms in certain segments of our industry. On the innovation front, we are planning to start up the largest quality steel bloom caster in the world, installed at ABS to produce 700 mm rounds, and acquired the high-tech German company W+K IndustrieTechnik with its technology for large welded pipe production plants. We have opened our new factory in Thailand, which currently employs 1,300 people, and have started building a second Chinese factory in Shanghai. The first seamless pipe plants in Kazakhstan and China are now in the start-up phase, and the first direct reduction plant operated by Danieli Centro Metallics will be opened during the first half of next year. Finally, we achieved a successful start up with the heavy beam plant up to 1,200 mm at Arcelor Mittal in Luxembourg. Last but not least, our innovative spirit has been rewarded by Tokyo Steel in Japan, which has ordered the largest electric furnace in the world with a remarkable 420 tons of liquid steel, and by Dongbu in Korea, which has ordered not one but two thin slab casters for a QSP (Quality Steel Production) plant. It has been a year of achievements, then, especially for technology and innovation, which honor our motto "Danieli, the innovative and reliable team in the steel industry". In this respect, we thank the Danieli team who with heart as well as intellect, and with commitment, enthusiasm and skill, has made all of this possible. We thank the shareholders for your confidence in our work, and share with you our pleasure and our thrill in working, planning, building, and innovating for a stronger competitive edge. All of us at Danieli reaffirm our commitment to honoring your faith in us to the best of our ability. Gianpietro Benedetti Chairman DANIELI 13

Danieli Construction International: reliability in turnkey construction and systems engineering. After three years of a successful activity of engineering and installation of fluid networks and the electrical and mechanical installations of both machinery and plant, Danieli Construction is giving further proofs of its abilities in the realization of huge and complex civil works. 14 DANIELI YEAR 2007

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MAIN EVENTS OF THE YEAR

Main orders acquired Minimills, ironmaking and steelmaking plants In 2006-2007 main orders have been acquired for high-productivity ironmaking and steelmaking plants from 13 different countries, including 10 complete electric steel meltshops (with capacities ranging from 0.8 to 2.5 Mtpy), and the two largest AC and DC EAFs ever built worldwide. Americas Order for a 220 kg/thm PCI System for a 1,500 m 3 Blast furnace, including engineering, supply, site services, and personnel training. Americas Order for 70 watercooled coke plant standpipe caps, following successful engineering of the replacements during Phase 1 of the project. Americas Order for a 800,000-tpy SBQ minimill, based on a 90-t FastArc single-charge EAF, LMF station, twin-tank VD station, threestrand FastCast bloom conticaster, a rolling mill with a reversing breakdown stand and eight-stand intermediate/finishing mill, and complete facilities for the cold finishing of the SBQ products. Americas Order for a 100-t integrated vacuum degassing / ladle furnace facility for a 2.5-Mtpy steelworks producing wide-flange beams, H-piling, sheet piling, standard I-beams, channels, and other structural shapes. Europe Order for the design and supply of a greenfield blast furnace installation. The furnace will have 4,450 m 3 inner volume and will be designed for a 20-year uninterrupted campaign. Europe Order for the design, supply, installation, and commissioning of a back pressure valve system for two Blast Furnaces. This will enable the customer to run their stoves on a higher BF gas pressure, resulting in NG cost savings. Europe Order for basic and detail engineering, supervision and services for a BF revamp project, according to "Hoogovens" furnace design concept, for a 15 year, uninterrupted campaign. Europe Order for the greenfield supply of a new minimill complex to process scrap into 550,000 tpy of special steel long products for the automotive industry. Europe Order for a 1.2-Mtpy steel refining and slab casting complex, made up of a state-of-the-art 140-t LF-VD refining facility and a singlestrand slab caster to produce an extremely wide range of ULC; LC; MC; HC; peritectic; API; HSLA; stainless (AISI 300 and 400 series); and silicon OG and NOG grades. Europe Order for a 2.5-Mtpy jumbo minimill, one of the largest integrated plants ever built in the world for production of long products, to be supplied on a turnkey basis. The new plant will be made up of a steelmaking plant -with two 130-t EAFs, Lfs and twin-tank VD; two seven-stand conticasters for billets, blooms, and beam blanks; a mediumsection mill for production of up to 400-mm beams and large-size profiles; and a superflexible mill for production of round bars and wire rod coils. Europe Order for a 1.3-Mtpy electric steelmaking plant made up of a 160-t FastArc AC EAF, a twin-station Ladle Furnace, a double-tank VD unit and two FastCast continuous casting machines, to cover a wide range of round billets and blooms for pipe and rail wheels production. Far East Repeat orders for two and three sublances and SDM systems for 120-t converters. Far East Repeat orders for four sublance systems complete with SDM model, waste gas analysis system and three smart lances for prediction of the slag level in the converter. Far East Order for a Pulverized Coal Injection (PCI) system for a 2-Mtpy new blast furnace. Far East Repeat order for a hot metal desulphurization facilities, including three injection stations with four skimming stations. Far East Repeat order for two hot metal De-S facilities for a 150-t converter project. Far East Repeat order for a hot blast stove to be added to the three previously supplied to keep pace with the BF s inner volume enlargement from 2,650 m 3 to 3,200 m 3 inner volume. Far East Order for a three-station hot metal De-S facility for a converter steelmaking thin slab casting project. DANIELI 17

Far East Order for a newlydesigned cyclone deduster system to be installed at a 5,500 m 3 Blast Furnace. A second order received covers two sublance systems, waste gas analysis systems and a Level 2 BOF converter automation system with the SDM model. Far East Order for six ceramic burners for the hot blast systems at two 3,200 m 3 blast furnaces and four ceramic burners for a 3,800 m 3 blast furnace. Far East Order for a 300,000-tpy steelmaking and hot rolling facilities for special steel long products, based on a 50-t FastArcAC EAF, 50/60t AOD and 50-t LF, 50-t double-tank VD/VOD unit, a 3-strand, FastCast bloom caster, a 22-stand continuous mill. Far East Order for a 500,000-tpy melting and refining plant for special steel ingots, based on a 70-t AC FastArc EAF, ladle furnace, and a 70-t vacuum degasser. Far East Order for a 1-Mtpy complete steelmaking plant for special steel blooms, based on a 150-t AC EAF, LF, twin-tank VD/VOD unit, and a four-strand 14-m-radius FastCast large-size bloom caster. Far East Order for an electric steelmaking plant, based on a 420-t twin-electrode DC EAF -the largest EAF ever built, worldwide-, a ladle furnace, and a twin-tank vacuum degasser, to produce up to 2.6 Mtpy of ULC and Al-killed grades for flat products. In 2006-2007 the market recognized again Danieli as the preferred supplier for minimill plants. Orders for three complete plants were acquired, with capacities from 0.3 to 2.6 Mtpy, for long products, flat products and special and engineering steels. Far East Order for a 2-Mtpy Hot Mill Complex for automotive and pipe applications, based on two 160-t AC EAFs, two twin-station ladle furnaces, a double-tank vacuum degasser, and two singleline thin slab casters for 70 to 85 mm thick slabs (after dynamic soft reduction), 800 to 1650 mm in width. Far East Order for a 800,000-tpy complete steel meltshop, based on 100-t AC FastArc EAF; 100-t ladle furnace; and a 5-strand billet conticaster. 18 DANIELI YEAR 2007

Main orders acquired Flat product casting, rolling and strip processing lines Danieli Flat Products Division has reaffirmed its leadership in continuous casting technology for both thick and thin slab plants, with orders for nine new plants -totaling 18 casting strands- for annual capacities of up to 5 Mt. Americas Order for a tandem cold mill modernization to enable fully continuous operation to reach a capacity of 1.3 Mtpy. Europe Order for a state-of the-art single-strand thick slab caster capable of producing up to 0.8 Mtpy of stainless steels including AISI 200, 300, and 400 families. Europe Order for revamping of a 3.5-Mtpy hot strip mill, including a new roughing mill with attached edging stand. Europe Order for the revamping of a complete 2300-mm-wide plate mill. The supply also includes a state-of-the-art electrical, instrumentation, automation, and process control system in order to cope with performance requirements. Europe Order for the supply of the exit section of a new hot strip mill, including a high-speed shear and three downcoilers that will be the heart of the new plant for the endless rolling technology. Europe Repeat order for a hot dip galvanizing line for 450,000 tpy of top-quality products, including those intended for further polymer coating. Europe Order for a complete new cold mill complex, including a 0.65-Mtpy Push-pull pickling line for heavy gauges; a 1.7-Mtpy continuous pickling line coupled with a 3-stand, 6-high tandem mill; two 0.35-Mtpy each hot dip galvanizing lines. Europe Order for a greenfield cold mill complex including a two-stand 4-high reversing mill, a 0.35-Mtpy combined galvanizing and painting line and a 0.6-Mtpy hot-dip galvanizing line for pickled coils and heavy-gauge CR coils. Europe Order for the third and final stage of the modernization project which included the complete reconstruction of three two-strand slab casters for automotive steels. Far East Repeat order for a twostrand slab caster capable of producing up to 2.8 Mtpy of IF, LC, peritectic, MC, HC, HSLA, API and Si-steels. Far East Repeat order for a 1,780-mm semicontinuous hot strip mill capable of producing up to 3.3 Mtpy. Far East Order for a 3.5-Mtpy HR coil complex made up of two 2- strand state-of-the-art slab casters for and a 1,780-mm semicontinuous hot strip mill. The product mix includes IF, LC, PC, MC, HSLA, and API grades. Far East Order for a 7-Mtpy slab casting complex, made up of two 2-strand state-of-the-art slab casters for a wide product mix for both HR and CR coil applications, covering IF, DDQ, LC, MC, HC, Dual Phase, Trip, HSLA, and API grades. Far East Order for a 5-Mtpy stateof-the-art slab casting complex, made up of a single-strand and a two-strand slab casters. The customer already successfully operates since 2005 two singlestrand Danieli Thin Slab Casters. DANIELI 19

Main orders acquired Long product casting and rolling plants. Seamless pipe mills Americas Order for the upgrade of a 90-tph bar and section mill, through the installation of automatic cold finishing services (multiline straightening and cutto-length, stacking, bundling, and strapping services). Africa and Middle East Order for the modernization of the finishing services for a bar mill to increase productivity up to 130 tph. Africa and Middle East Order for a 400,000-tpy light section mill equipped with EWR billet welding system. Europe Order for a 35-mps Spooler line for a 70-tph bar mill. Europe Order for a 750,000-tpy superflexible, multi-line rolling mill and cold finishing services for sections and SBQ bars in an extremely wide range of product types and sizes. Europe Order for the modernization of a 110-tph bar mill through the installation of a 9-stand rougher with ESS cantilever stands. Europe Order for the modernization of a wire rod mill for stainless and specialty steels to improve product quality and to increase finishing speed up to 90 mps. Europe Order fro a 0.7-Mtpy highspeed rolling mill for bars and sections, complete with automatic cold finishing services. Europe Order for the third modernization step of a 150-tph bar and rod mill, which now includes HSS shears and laying heads on oil-film bearings, a new high-speed bar finishing services, new single-strand rougher and a Spooler line for up to 3.5-t coils. Europe Repeat order for a 0.5- Mtpy superflexible bar and rod mill to be directly connected to a sixstrand Danieli conticaster for billet hot charging operation. Europe Order for the major upgrade of a 6-strand bloom caster for high-quality piping grades and a super-flexible ultra-high capacity 1.2-Mtpy bar,section and wire rod mill. Europe Order for the reconstruction of a 4-strand bloom caster aimed at increasing the casting range, to improve product quality, and to reach up to 800,000 t of total productivity. Europe Order for the upgrade of a four-strand bloom caster to produce Beam Blank sections of 520x400x150 mm at rates of up to 160 tph. Europe Order for a state-of-the-art four-strand FastCast bloom caster for automotive and stainless steels. Far East Order for a 18-mps Spooler line for quenched round bars from 12 to 50 mm. Far East Order for the core equipment for two 800,000-tpy rolling mills for medium sections and H-beams, including SHS Universal finishing stands and heavy-duty straighteners. Far East Order for the key technological equipment (Piercing mill, cross roll cone-type with guiding discs; retained mandrel rack & pinion box; 5 stands Fine Quality Mill) for a new 350,000-tpy seamless pipe plant. Danieli Long Products division has acquired significant orders in 27 different countries, including 10 complete rolling mills (capacities of up to 0.8 Mtpy) and 74 continuous casting strands, confirming its leadership in the fields of conticasting and hot rolling of special steels. Europe Order for the modernization of a 90-tph bar mill through the installation of a 10-stand roughing/intermediate mill with ESS cantilever stands and a QTB quenching and tempering line for rebars. Europe Order for 35-mps Spooler line for a 70-tph bar mill equipped with EWR billet welding system. 20 DANIELI YEAR 2007

Main orders acquired Extrusion and forging presses. Inspection, conditioning and cold finishing lines Americas Order for a 70,000-tpy greenfield plant for copper tubes based on the innovative ECT endless production technology (melting furnace, continuous casting, surface milling, highreduction cross-roll planetary rolling mill, chain-track-type breakdown drawing, tube finishing and packing lines). Americas Order for an automatic bar finishing line including a RLL 150 two-roll straightener and chamfering facilities. Americas Order for a 45-MN pushdown type forging press for heavy forgings with stringent mechanical property requirements. Europe Order for two billet/rolled bar inspection and conditioning lines for a 550,000-tpy greenfield minimill to be supplied on a complete turnkey basis. Europe Order for an inspection and finishing line for 30 to 120- mm-dia SBQ bars, made up of straightening machine, chamfering station and a NDT system for a 750,000-tpy superflexible bar mill. Europe Order for a peeling machine for round bars of up to 160 mm, capable of producing tolerances up to ISO h7. Europe Order for a 30-MN pushdown type forging press with two prestressed columns. Europe Order for a 45-MN pushdown type forging press with four prestressed columns for open-die forgings for a variety of automotive, construction, power, engineering, and aerospace applications. Europe Order for a 75-MN pushdown type forging press with four prestressed columns for an integrated forging plant including an electrically-driven mobile forging manipulator. Far East Two consecutive orders in less than two months, totalling three billet/bloom grinders for engineering steels. Far East Order for four 200-kW bloom grinders for automotive steels, equipped with the Hi-Grind fully digital grinding operation control system. In 2006-2007 Danieli Centro Maskin introduced a breakthrough innovation in high-quality copper tube production technology: the ECT process, based on heavy deformation of continuously cast hollow tube shells. The first industrial plant of this kind is currently under installation in the USA. DANIELI 21

Two-strand slab caster started up four months ahead of schedule. After only 8 days, it was able to cast 14 heats (295-t each) per day in 12 hours of continuous production. Danieli QSP plant. Danieli QSP technology grants superior quality for a wide range of steel grades, and over 3 Mtpy productivity, with two strands. 22 DANIELI YEAR 2007

Cold strip mills. Danieli has the process know-how to ensure controllability of strip thickness and flatness, and plant reliability even in rolling of ultra-thin strip (0.15x1,200 mm) and ultra-hs steels. 1.7-Mtpy semicontinuous pickling line for strip thicknesses up to 4 mm. DANIELI 23

Melting and refining facilities in a 450,000-tpy electric steel meltshop for special engineering steels. RH-type Vacuum Degassing station. The Danieli-Inteco team offers the widest range of services to build any new and customized RH or VCP degasser system. (Courtesy of voestalpine Stahl) 24 DANIELI YEAR 2007

Six-strand conticaster for large-size (up to 500 mm) round blooms for special engineering steels. 500,000-tpy superflexible rolling mill for bars, wire rod and sections in a 1.2-Mtpy minimill. DANIELI 25

Startup and commissioning of new plants Minimills, ironmaking and steelmaking plants Americas Startup of a 350,000-tpy steelmaking plant for specialty steels, including a 75-t EAF, LF, VD, and a 4-strand bloom consticaster. Americas Startup of a 100-t EAF that reached a pace of 24 heats/day in less than a month from the first heat. Africa and Middle East Startup of a 75-t ladle furnace. Africa and Middle East Startup of a 850,000-tpy electric steel meltshop supplied on a turnkey basis, mainly based on a 100-t EAF, ladle furnace, and a 5/6- strand FastCast billet caster. Europe Startup of a 80-t EAF for specialty steels, as part of the complete 700,000-tpy meltshop reconstruction project, including LF, VD, and FTP. Europe Startup of a 70-t ladle furnace to complete the 400,000-tpy Danieli steelmaking plant for engineering steels for the automotive industry. Far East Blow-in of two greenfield blast furnaces having 8.4 m hearth diameter and are equipped with the revolutionary rotating charging unit. Far East Startup of a 80-t EAF and a 2-strand conticaster for 390x510-mm blooms, supplied in a record-time of 11 months. Far East Startup of a 120-t ladle furnace to complete the 2.5-Mtpy Danieli refining station which include a second ladle furnace and a VD unit. Far East Fast blow-in of a reconstructed Blast Furnace that reached 3,000 thm/day in 7 days. Far East Startup of two 180-t ladle furnaces designed to process up to 76 heats per day coming from two BOF converters. Far East Startup of a 120-t ladle furnace that, together with the Danieli ladle furnace and VD station supplied in a previous step, makes ot possible the treatment of 1.7 Mtpy of liquid steel. Eleven secondary metallurgy stations -for heat sizes up to 210 t- started up and commissioned in nine different countries in 2006-2007 confirmed the leadership of Danieli Centro Met steelmaking technology. 26 DANIELI YEAR 2007

Direct Reduction Plants. Energiron technology from the Tenova HYL and Danieli alliance is the most advanced and flexible way for high-quality, addedvalue steelmaking. Danieli Corus 1,874-m 3 blast furnace that reached 3,000 thm per day in less than 3 weeks from blow-in. DANIELI 27

Startup and commissioning of new plants Flat product casting, rolling and strip processing lines 28 DANIELI YEAR 2007 Thick and thin slab casters, hot and cold strip mills, and strip processing lines started up and commissioned by Danieli Flat Product division in eight different countries have set new worldwide standards for both productivity and quality. Americas Startup and commissioning of a hot strip mill revamped to increase mill productivity and coil PIW, to widen the product mix and to improve product quality Africa and Middle East Commissioning of a 250,000-tpy cold mill complex for pre-painted and unpainted flat galvanized products. Europe Startup of a state-of-the art two-strand slab caster that was able to cast 24 haets per day just 10 days after startup and brilliantly overcame the most optimistic productivity and quality expectations. Europe Startup of a reconstructed single-strand slab caster that quickly reached peaks of 25 heats/day. Europe Commissioning of a plate leveler for high-quality and ultra-high strength steel production featuring the MultiMoTor-Multi More Torque innovative driving system. Europe Commissioning of an advanced strip slitting line designed to cut at high speed up to 120 strips simultaneously. Far East Startup of a two-strand slab caster four months ahead of schedule. The machine was able to cast 14 heats (295 tons each) in 12 hours after only eight days of operation. Max sequence length of 70 heats (with peaks of 36 heat/day) and the casting speed of 2.2 mpm were reached soon afterwards. Far East Startup of a hot skinpass mill -third order in a row that included two high-performance hot strip mills- for processing up to 650,000 tpy of high-quality carbon and HSLA steel strip. Far East Startup of one of the world fastest trimming lines (1,500 mpm) for aluminium strip from 0.15 to 2.0 mm. Far East Commissioning of a plate/steckel mill that largely surpassed the target production levels in less than a year from startup, processing steel grades that included automotive cross beam grades and pipeline grades up to API X80. Far East Commissioning of a 450,000-tpy cold mill complex (Push-pull pickling line, cold reversing mill, cold reversing/ temper mill, batch annealing furnaces, recoiling line), that shown the ability on both cold mills of rolling 0.15 mm gauges at speeds of up to 1,380 mpm. Far East Startup and commissioning of a 400,000-tpy complete hot dip galvanizing line for CQ, DQ, DDQ, HSLA steel grades with thicknesses ranging from 0.3 to 1.6 mm. It is the fourth strip processing line supplied to the same customer site in two years. Far East Fast and successful startup and commissioning in a two-week-time of a singlestrand slab caster equipped with Danieli Technological Packages for the core plant areas (INMO mould, integrated hydraulic oscillator, breakout prevention system, and the relevant automation control packages.

Startup and commissioning of new plants Long product casting and rolling plants Danieli Long Products Division started up innovative machinery and systems in 15 different countries confirming and strengthening its worldwide technology leadership. Americas Startup of a 0.6-Mtpy bar mill featuring high-speed (35 mps) bar discharging system. Americas Startup of a 300,000 tpy wire rod mill for carbon and low alloyed steels. Americas Startup of revamped automatic finishing services for two medium section mills with capacities of 120 and 140 shtph, respectively. Americas Startup of a last phase of a 2-Mtpy minimill for long products, including the meltshop No. 2 and the wire rod mill No. 3 that will bring the complex to an annual capacity of 2.8 Mtpy of bars and wire rod. Americas Startup of a 400,000-tpy minimill revamped in order to widen the product mix and to increase productivity up to 0.5 Mtpy. Europe Startup of a new finishing line for a 50-tph rolling mill for stainless steel bars. Europe Startup of a 6-strand billet caster, added to a first similar Danieli plant that reached over 90,000 tons per month since its startup Europe Startup of a 320,000-tpy bar-in-coil line for specialty and stainless steels. Europe Startup of an upgraded billet caster and a new wire rod line as part of a modernization project aimed at increasing plant efficiency and productivity. Europe Startup of a 0.5-Mtpy superflexible mill for straight bars, spooled bars and wire rod, as the first startup step of the 1.2-Mtpy minimill. Europe Startup of a 110-mps state-of-the-art wire rod line equipped with LTR, HSS and oil-film bearing laying head technologies. Europe Startup of a LTSK steelworks modernization project that involved a new 6-strand bloom caster, and the upgrade of a 160-tph medium section mill and of a 200-tph 4-strand wire rod mill. Europe Startup of the tubing finishing lines in a 270,000-tpy complete seamless pipe plant. Europe Startup of a revolutionary super-compact bar finishing line in a 0.5-Mtpy rebar mill. Europe Startup of a revolutionary system to handle high-speed rolled bars already cut in final commercial lengths in a ultracompact high-speed rebar mill. Far East Startup of the meltshop and casting sections to complete the commissioning of a 0.5-Mtpy minimill for long products. Far East Startup of two rolling mill for large-size SBQ products for automotive applications with capacities of 0.5 and 0.8 Mtpy, respectively. Far East Startup of 0.5-Mtpy highspeed (100 mps) wire rod line. Far East Startup of a highproductivity (up to 30 tph/strand) 6-strand billet caster for engineering steels. Far East Startup of a 0.8-Mtpy, 4-strand FastCast conticaster for large-size (350X470 mm) blooms in engineering specialty steels. Far East Startup of a 1.2-Mtpy, six-strand FastCast conticaster for large-size round blooms (up to 500 mm) in engineering specialty steels. Far East Startup of 0.75-Mtpy 4-strand bloom conticaster supplied on a turnkey basis. Far East Startup of a 350,000-tpy plant for seamless pipes for the oil industry and mechanical applications. Far East Startup of a LPP rolling mill for ultra-light profiles (15x3 to 20x6 mm flat bars). DANIELI 29

Startup and commissioning of new plants Extrusion and forging presses. Inspection, conditioning and cold finishing lines Americas Commissioning of a 120,000-tpy straightening and inspection line for SBQ bars. Americas Startup of a conditioning line for hot billets (300 C) supplied on a turnkey basis. Americas Startup of a 45-MN push-down type forging press for heavy forgings with stringent mechanical property requirements. Africa and Middle East Startup of 2,000-t revamped direct press for aluminium. Europe Startup of a 6-t chain-track machine for finishing drawing of copper tubes for sanitary applications at 200 mpm. Danieli Breda has started up and commissioned five forging plants equipped with push-down presses of up to 75 MN and an innovative plant for the extrusion of 55,000-tpy of stainless steel pipes for hi-tech applications. Europe Startup of a 1,400-t direct press front loader-type for aluminium. Europe Startup of an integrated forging plant made up of a 20/60-t manipulator and a 30-MN 2-column push-down press. Europe Startup of an integrated forging plant made up of a 20/125-t manipulator and a 75-MN 4-column push-down press. Europe Startup of a 45-MN pushdown type forging press for opendie forgings for automotive, construction, power, engineering, and aerospace applications. Europe Startup of two 2,200-t revamped direct presses for aluminium. Europe Startup of two 1,600-t revamped direct presses for aluminium. Far East Startup of a peeling machine for stainless steel bars, granting a surface roughness below 1.6 µm, destined for extruding hi-techseamless pipes. Far East Startup of a 0.5-Mtpy inspection and conditioning line for engineering steel billets. Far East Commissioning of an innovative extrusion line for 55,000-tpy of stainless steel pipes. Far East Startup of a Casttgrind plant for cold or hot (up to 1,000 C) stainless steel slabs. 30 DANIELI YEAR 2007

Research and development Research and Development. R&D activity to provide our customers with technologies capable of producing superior quality products with savings in investment and production costs, involved a cost in the period of over 120.5 M Euro on a volume of innovative job orders close to 700 M Euro. IRONMAKING AND STEELMAKING PLANTS > Further developments in the field of electric arc furnace technology with the aim of consolidating the fastest melting cycle on the market. > Design, construction and successful startup of the biggestsize continuous casting machine for long products, for sizes up to 700 mm round. > Further developments in the Endless Casting Rolling technology. ROLLING MILLS FOR LONG PRODUCTS > Startup of two new revolutionary systems to handle high-speed rolled bars already cut in final commercial lengths and relevant tuning and proper modifications to make them industrially reliable. > Successful startup of a new pipeless laying machine for highspeed wire rod production, aimed at improving final product quality. > Development of new sizing technologies for improved tolerances in wire rod production. > Development and complete testing of a new concept forming press to produce high quality up-set pipe end. > Development and complete testing of a new concept billet loader for extrusion press. > Design of a Smart Motor management system for extrusion presses to maximise energy saving. > Study, development and testing of a prototype machine for copper tube drawing with better perfromances related to drawing speed and set-up time. > Study, development, and testing of a new size of grinding machine (Super Grinder), with double performances compared to previous series. > Development of the 3-roll FQM- Fine Quality Mill technology for the production of seamless pipes with OD up to 14. HOT AND COLD STRIP MILLS AND PROCESSING LINES > Development of an innovative model for metallurgical prediction to be applied on Hot Strip Mill and Plate Mill control, either in open or in closed loop. In open loop operation the model makes it possible to predict the metallurgical characteristics of the outcoming coil or plate. In closed loop, according to the feedback signals coming from the process, is possible to adapt the plant set-up in order to achieve the required quality. > Study, development, and testing of an innovative process to obtain Ultra Fine Grain in hot rolled sheets, to produce a new family of high strength steels which characteristics are obtained starting by a less expensive chemical analysis. > Study, development, testing and patenting of a new system -named Confined Jet Dryer- to dry the strip at the exit of a cold rolling mill. > Study, development and testing of an innovative process to produce CR stainless steel strip with a surface quality close to the BA finishing, in terms of mirror properties, but with a higher productivity and lower production costs. The industrial plant has an encumbrance similar to that for the production of 2B finishing coils. Moreover, the new process is expected to give a strong reduction of acid consumption. DANIELI 31

Installation of the 380-m 3 cooler vessel for a 1.6-Mtpy Energiron direct reduction plant in an integrated minimill for long products. 32 DANIELI YEAR 2007

Installation of a four-high stand housing weighing 390 t for a 1-Mtpy wide plate mill. The rolling stand features a 100,000 kn separating force. DANIELI 33

DIRECTORS REPORT ON OPERATION IN THE YEAR TO JUNE 30, 2007

Board of Directors GIANPIETRO BENEDETTI CARLA DE COLLE FRANCO ALZETTA CLAUDIO ANGELI DARIO FABRO GERARDO BROGGINI LUIGI CAPPUGI AUGUSTO CLERICI BAGOZZI ANTONIO DARIO MARTEGANI Chairman Vice Chairman Executive Director Executive Director Executive Director Director Director Director Director Board of Statutory Auditors RENATO VENTURINI GUIDO CROCI GAETANO TERRIN GIULIANO RAVASIO PIERO VIDONI President Auditor Auditor Deputy Auditor Deputy Auditor Directors Executive Board GIANPIETRO BENEDETTI CARLA DE COLLE FRANCO ALZETTA CLAUDIO ANGELI DARIO FABRO Executive Management Committee GIANPIETRO BENEDETTI CARLA DE COLLE FRANCO ALZETTA, ENZO RUSCIO, UGO TOSO, ERICH GROSSMANN, GIOVANNI NIGRIS, STEFANO DEPLANO DARIO FABRO, ROBERTO BORSI PAOLO IURI, FABRIZIO VICARIO, FRANCO LUSURIELLO LUIGI BARBANTE, GIANCARLO LAVARONI CLAUDIO ANGELI, PIER GIORGIO BOZZETTO MARCO DI GIACOMO CARLO DI PAOLO, SERGIO BOTTO FERRUCCIO DELLA VEDOVA LUCA FERRARESI, ALESSANDRO BRUSSI LUCINA FILIPUT GIANPIETRO BENEDETTI MARCO BOSSI Chairman Vice Chairman Steelmaking, Continuous Casting, Rolling Mills and Cold Finishing Plants for Long Products, Seamless and Welded Pipe Mills, Heating and Thermal Treatment systems, Extrusion and Forging Presses Slab Casters, Rolling Mills for Flat Products and Strip Processing Lines Danieli Engineering Danieli Centro Metallics Purchasing, Manufacturing, Planning Danieli Service Plant Erection, Startup and Commissioning Automation Process Control Systems, IT Administration, Finance and Internal Auditing, KPI Research and Development Human Resources DANIELI 35

Dear Shareholders, This report accompanies the financial statements for the year to June 30, 2007 of the company Danieli & C. Officine Meccaniche S.p.A., which operates in the sector for the design, construction and sale of machinery and plant for the iron and steel industry, including on a turnkey basis. We refer you to the notes on the financial statements for more detailed information concerning the values in the balance sheet and profit and loss account. In this report, we review company operations with reference to both the financial year just ended and future prospects, in compliance with the provisions of Article 2428 of the Italian Civil Code. Market conditions and operating results The market and order book Since company activities are directly influenced by the steel market, we provide below some indications of the current market situation and its possible future developments. The steel market During the first six months of 2007, the world steel market showed a growth trend in line with that in 2006. China, Japan and the United States were leaders in a market which maintained very high production levels, good profitability in nearly all product ranges and positive production and consumption trends for the next 12 to 18 months at least. Even though selling prices reached values not believed possible in the past, it is believed that these levels will also be maintained in the future, particularly because of the ever greater impact of certain production costs such as energy and transport, and identical trends in exchange and interest rates; profitability remains good, however, especially in absolute terms. The market for steelmaking plants Awareness of the strategic and economic importance of the iron and steel industry and the good prospects for future steel consumption has led to renewed interest in the construction of new plants by both the major world steel groups and smaller players with the aim of strengthening their market position. During 2007, the plant market has continued its positive trend, with satisfactory order levels in terms of both type and margin. Globalization of the economy and the continuance of significant growth in the economies of emerging countries have ensured a positive outlook for the steel plant market, also backed up by significant current negotiations and negotiations in prospect. Danieli Group activities The Danieli Group is involved in the design, construction and sale of plant for the iron and steel industry, offering a complete range of machines from primary process management to manufacture of the finished product (practically from ore to finished product), as well as the production and sale of special steels for the long products market, through subsidiary company Acciaierie Bertoli Safau S.p.A. Construction and sale of plant for the steel industry The Danieli Group designs and builds plants for all process areas, such as: > Mines; > Pellet production plants; > Blast furnaces; > Direct reduction; > Steelworks for production of liquid steel; > Continuous casting for: > Blooms and billets; > Slabs; > Thin slabs. > Rolling mills for long products: > Rolling mills for seamless tubes; > Lines for welded tubes; > Hot and cold rolling mills for flat products; > Process lines for flat products; > Complete plants for Dimensional Checking and for non-destructive quality control, and Conditioning Plants; > Plants for secondary processing, such as Peeling, Straightening, 2-Roll Reeling and Drawing machines > Forging Presses and Manipulators and complete forging plants; > Extrusion presses for ferrous and non-ferrous materials; > Plants for longitudinal cutting and for transversal cutting to size of sheet and plate in all non-ferrous metals and stainless steel; > Level 1, 2, 3 and 4 Plant Automation Systems In the long product rolling plant sector, the Danieli Group is world market leader, in terms of both the number of plants in use and annual sales and, in particular, is the undisputed technological leader for level of automation as well as plant reliability, productivity and achievable product quality. Danieli Group: Order backlog at June 30, 2007 per product line. 36 DANIELI YEAR 2007

DaNews: the quarterly magazine of Danieli Group provides readers with thorough information about the activities and the technology developments carried out by Danieli Product Lines. Group structure Activities relating to the construction and sale of plant for the steel industry are structured with eleven design centres: Danieli Danieli Holdings Danieli Morgårdshammar Danieli Rotelec Danieli Davy Distington Danieli Hi Tech Danieli Fröhling Danieli Polska Engineering Danieli Heavy Machinery Danieli Metallurgical Equipment Danieli Far East There are four production units: Danieli Danieli Fröhling Danieli Far East Danieli Metallurgical Equipment The product lines are as follows: > Danieli Engineering, Italy Turn-key plants and plant engineering > Danieli Centro Metallics, Italy Pelletizing and Direct Reduction > Danieli Centro Met, Italy, Sweden Steelworks and casting machines > Danieli Wean United, Italy, USA, UK Hot and cold rolling for strip, continuous casting and process lines Italy USA Sweden France UK Germany Germany Poland Ukraine China Thailand Italy Germany Thailand China > Danieli Morgårdshammar, Italy, Sweden Rolling mills and finishing plants for long products > Danieli Automation, Italy, USA, UK Equipment and lines for process, plant and machinery automation > Danieli Rotele, France Electromagnetic systems and induction reheating systems > Danieli Centro Combustion, Italy, USA Reheating and heat treatment furnaces, furnaces for process lines > Danieli Breda, Italy Extrusion presses > Danieli Fröhling, Germany Non-ferrous rolling > Danieli Centro Maskin, Italy, Sweden Secondary processing machines, grinding, drawing, straightening and peeling machines > Danieli Service, Italy, USA, UK Installation, start-up, after-sales service Spare parts > Danieli Centro Tube, Italy Seamless and welded tube production plants > Danieli Construction International, Italy Large construction projects management. The operating result for the plant sector was evenly spread over the main product lines (steelworks, long products and flat products) ensuring essentially uniform profitability in all related geographical areas. Production and sale of special steels This activity is carried out by our subsidiary Acciaierie Bertoli Safau S.p.A., leader at a European level in the special steels for the manufacturing sector, with production to order of top-level products for the most-demanding uses, in the form of ingots, blooms, rolled and forged products with thicknesses from 15 to 800 mm. The manufacturing steels family includes high quality carbon steels, case-hardened, hardened and tempered and surface hardened steels which have applications in all mechanical components. Their field of use is extensive: cars, tractors, earthmoving machines, machine tools, textile machinery, power plants and the oil industry, through to aerospace applications. DANIELI 37

The Group DANIELI & C. OFFICINE MECCANICHE S.P.A. DANIELI AUTOMATION S.P.A. 1 The Parent Company Danieli & C. Officine Meccaniche S.p.A. directly owns the following companies: > Industrielle Beteilungung S.A., which is the holding company for other group companies which perform production activities; > Danieli International S.A., whose activity is the investment of liquidity in international financial markets; The company s sales and other income amounted to 1,361.0 million euro (1,235.9 million euro in 2006) with EBITDA of 91.1 million euro (84.3 million euro in 2006) and net profit of 19.4 million euro (28.0 million euro in 2006). The company continued its planned capital expenditure programme to optimise production, updating operating machinery more than fifteen years old. Continuous research activity was maintained for the design of new machines and development of new techniques, consuming substantial company resources but making it possible to innovate plants offered, aligning their technology to the current state of the art. The company worked to ensure maximum efficiency of treasury management with satisfactory net liquidity and orders taken in line with the budget forecast; this volume is also such as to ensure a profit for 2007/08. Sales and other income amounted to 137.8 million euro (113.3 million euro in 2006), in line with budget forecasts. The net profit for the financial year was 12.1 million euro (6.6 million euro in 2006) confirming the company s ability to generate profit due to the high level of reliability and functionality of systems sold, to initiatives undertaken to strengthen awareness of its technological processes and to the new electronic and computer technologies available. The company has its own technologies, which are the result of applied research in the field of opto-electronics and electro-magnetism, which enable it to create special sensor systems for steel plants. The principal research activities in the period were mainly directed towards applications relating to new devices, such as: > stereoscopic instruments for measuring the width, thickness and shape of strip and plate, working in real time on both cold and hot products on exit from the roughing and finishing mills; > process control software for electric steelworks, secondary metallurgy and continuous casting; > models and algorithms for operational control of process lines and hot and cold rolling mills in order to optimise production quality and times. The company s order book at June 30, 2007 reached a total value of 276 million euro (212 million euro at June 30, 2006) and was such as to lead to a forecast result for the 2007/2008 financial year in line with that for the financial year just closed. DANIELI CENTRO COMBUSTION S.P.A. 2 Sales and other income were 87.5 million euro (59.0 million euro in 2006) with a profit before tax of euro 4.6 million (euro 3.6 million in 2006). The company s order book was 109 million euro, with 114 million euro of orders taken in the period, exceeding the original budget forecast; this is because the position of our products has strengthened in the market due to their achieved performance and reliability. Achievements include the new furnace for the Corus Group in Great Britain as well as furnaces for the Romanian company Dunaferr and the Belgian company Duferco currently in course of completion. Regarding acquisition of orders, special mention should be made of the large 350 tph slab reheating furnace for the Ilva company in Taranto and new slab and beam reheating furnaces for Dunaferr in Romania and Nucor in the United States respectively. 38 DANIELI YEAR 2007

DIRECTORS REPORT MORGÅRDSHAMMAR AB DANIELI MORGÅRDSHAMMAR IBERICA SA 3 5 The company s sales and other income were 536.9 million SEK (400.9 million SEK in 2006), with a net income of 12.9 million SEK (loss of 23.3 million SEK in 2006). The company continued to be in profit due to its actions to reduce organisation costs and to complete orders acquired in an efficient way. Orders taken during the year to June 30, 2007 generated an order book of 306 million SEK and the margins expected on job orders indicate a profit for the next financial year too. The company closed the financial year with sales and other income of 26.7 million euro (2006: 25.4 million euro), maintaining a positive result with net profit for the year of 1.4 million euro (2006: 1.1 million euro). It is anticipated that the operating performance will also make it possible to ensure a profit for the next financial year in line with previous results. SUND BIRSTA AB DANIELI PROCOME 4 6 Sales and other income of 582 million SEK improved compared with the previous financial year (423 million SEK), while profit before tax was 58.1 million SEK (2006: 49.7 million SEK). During the year, the company strengthened its position as world leader in the long product packaging sector, continuing development of innovative plants for handling flat product coils and for service and packaging plant used with lines which cut product to size for packs of both steel sheet and coils. The level of orders taken was good and resulted in an order book at June 30, 2007 of 246 million SEK (2006: 269 million SEK) which already ensures sufficient sales to guarantee a good level of profit for the next financial year. The company, with registered office in Bilbao, Spain, was purchased at the beginning of 2007 and operates in the long product finishing machine sector, achieving sales for the six months of 4.4 million euro with net profit of 0.4 million euro. It is expected that the profitability will also continue in the next financial year. 1 Control pulpit of a 5-strand FastCast billet caster in a 650,000-tpy minimill for bars and sections. 2 280-tph walking beam reheating furnace for slabs. 3 Danieli Morgårdshammar 8-pass DWB high-speed block for special steel wire rod finishing rolling. 4 Automatic pressing and tying machine for wire rod coils. 5 Revolutionary high-speed system for rebars cooling, cut-to-length, bundling and collecting. 6 Automatic finishing services for cold drawn and bars in special engineering steels for automotive applications. DANIELI 39

The Group DANIELI HOLDING INC. GROUP ROTELEC S.A. 1 2 The consolidated financial statements of the United States Group, which consists of Danieli Holdings Inc. (the USA holding company), Danieli Corporation (U.S.A.), Danieli Technology Inc. (U.S.A), Danieli Canada Inc. (Canada), Morgardshammar Inc. (U.S.A.) and Danieli Property Holdings LLC (U.S.A.) showed sales and other income of 93.6 million USD (2006: 62.7 million USD) and a net profit of 10.7 million USD (2006: profit of 8.5 million USD). The profit for the period reflected income from the execution of orders taken up to now, due to the good recovery in the North American market which brought new orders to our United States subsidiaries for machinery and equipment, mostly with technologies developed locally. DANIELI CORPORATION INC. Company activities, which essentially cover the North American market, are divided into the following product lines: > DWU USA has developed sales, design, supply and project management business activities for flat product plants; > DMH USA and DCM USA handle sales, design, supply and project management of plant and machinery for long product rolling mills, steelworks and casting machines; > DA USA handles development and sale in the North American market of products for the Danieli Automation line; > Danieli Service handles sale and supply of service and spare parts for all product lines in the North American market. The company obtained new orders for projects with local customers and a profit is forecast in the current financial year as well. DANIELI TECHNOLOGY INC. The company was formed in 2000 with the objective of managing patents and know-how associated with Wean and United technologies, developing know-how and designs for rolling mills and strip process plants. DANIELI CANADA The company operates in the Canadian market and is currently managing some new local projects for plants of significant technological interest. It is anticipated that the current financial year will also close with a profit. MORGÅRDSHAMMAR INC. The company is active in the North American market for long product plant spare parts and operates efficiently with a good reputation in the market and satisfactory profitability. The financial year showed sales and other income of 20.6 million euro (2006: 14.8 million euro) and net profit of 4.1 million euro (2006: 2.5 million euro). Orders taken in the financial year were in line with the previous year, generating an order book of 16.3 million euro at June 30, 2007 (2006: 13.8 million euro). Rotelec strengthened its leadership position in the market for electromagnetic stirrers and plants for heating strip edges during the rolling of coils, enabling it to improve on the results achieved in the previous financial year in terms of both sales and orders acquired, also with positive prospects for the next financial year. Rotelec is continuing its research activities to develop new improvements in systems for electrodynamic control of the flow of liquid steel for continuous casting of both long and flat products. 3 DANIELI ENGINEERING INDIA LTD. The company is active in the secondary metallurgy plant sector, supplying furnaces and continuous casting machines and, in addition, designing, manufacturing and selling induction hardening plants for heat treatment in general, together with other plant in the out of furnace area. The company operates mainly in the Indian steel market and achieved sales of 853.4 million Indian rupees in the year to June 30, 2007 (2006: 1,115.7 million Indian rupees) with a loss of 125 million Indian rupees compared with a profit of 21.5 million Indian rupees in the previous financial year. A return to profit is already forecast for the next financial year. DANIELI PROPERTY HOLDINGS LLC. The company, formed during the financial year, is concerned with the management of the real estate assets of the North American group. 40 DANIELI YEAR 2007

DIRECTORS REPORT DANIELI METALLURGICAL EQUIPMENT (BEIJING) CO LTD. FRÖHLING GROUP 4 6 The company operates mainly in the Chinese market, providing local customers with plants which are accessory and complementary to the noble plant supplied by other Danieli Group companies. Planned capital expenditure being complete, the company was able to generate sales of 303 million CNY (2006: 141 million CNY), with a profit of 8.2 million CNY (2006: 2.2 million CNY). It is considered that the company, establishing its technological leadership in the market for competitively-priced quality products, can further improve its results from next financial year. The Fröhling Group (consisting of Josef Fröhling GmbH and Fröhling Verwaltungs GmbH) closed the year to June 30, 2007 with sales and other income of 27.2 million euro (2006: 21.3 million euro) and a profit of 1.4 million euro (2006: 0.8 million euro). The reorganisation completed in the previous financial year enabled the Fröhling Group to return competitively to the non-ferrous flat rolled product production plant and slitting line sectors, making maximum use of technological synergies present in the Danieli Group. Orders taken in the financial year (with an order book of 28.7 million euro at June 30, 2007), availability from September of the new 20,000 sq. m. operating premises at Meinerzhagen and important sales negotiations in progress lead to expectations of a profitable result also in the next financial year, with strong possibilities of repositioning the company as the technological market leader. DANIELI CHANGSHU METALLURGICAL EQUIPMENT & SERVICE CO. LTD. DANIELI HI TECH GMBH 5 7 Work to build the new factories of the subsidiary Danieli Changshu started during the first six months of 2007, with the objective of starting initial operations in the next financial year. The company, which is located in Shanghai province, currently has 87 employees and, when in full operation, will produce machines and spare parts for the local and world markets. The Company, with registered office in Mülheim, Germany, operates in the engineering and project management sector, having a modern design and computer centre. The company, with sales of 3.7 million euro (2006: 3.7 million euro) and a profit of 1.8 million euro, continues its commercial and design activities for Group Product Lines with the objective of improving results achieved, even in the next financial year. 1 Dual temper mill and double reduction cold mill for tin-free steel strip. 2 Continuous casting mould for 700 mm round blooms equipped with Danieli Rotelec EMS. 3 90-t ladle furnace equipped with inert-roof to prevent liquid steel oxidation in the ladle during refining. 4 Assembly and testing of speed reducers at Danieli Metallurgical Equipment. 5 Computer rendering of the new facilities under construction at Danieli Changshu, P.R. of China. 6 High-speed slitting of copper alloys strip in a Danieli Fröhling hightech line. 7 In 2006-2007 Danieli Hi Tech continued to provide engineering and project management for Group Product Lines. DANIELI 41

The Group DANIELI ENGINEERING & SERVICES GMBH DANIELI CONSTRUCTION INTERNATIONAL S.P.A. 1 3 Work is starting on construction of the new factory in Völkermarkt, in Austria, with production start-up planned for the first half of 2008; the company will provide Service to our customers, in order to ensure greater efficiency in the worldwide supply of machines and spare parts. The company, with registered office in Italy, specialises in plant installation and start-up; it operates on a worldwide basis and is equipped with a suitable operating structure for managing large construction sites. Sales and other income were 16.9 million euro (2006: 16.4 million euro), substantially breaking even for the financial year; the intention is to continue future development of the company until it reaches its optimum size, with profitable results as from the current financial year. DANIELI DAVY DISTINGTON LTD DANIELI FAR EAST CO. LTD. 2 4 In the 2006/2007 financial year, the company had sales and other income of 26.3 million GBP (2006: 11.6 million GBP) and made a loss of 9.8 million GBP (2006: 4.3 million GBP), mainly due to exceptional and nonrecurring expenses relating to completion of a large locally supplied order. The company, with its recognised technological know-how, designs and sells continuous casting machines for slabs, within the DWU product line, direct to the worldwide market; it is expected to return to profit in the next financial year. The company substantially completed capital expenditure on the new Rayong site, in Thailand, starting up production within the scheduled time and complying with the originally planned quality and competitiveness. The company is now able to both manufacture complete machines in-house (providing the Group with increased production capacity, previously performed by outside suppliers), and to design, produce and sell complete machines using its own technology on a worldwide basis, direct to international markets. The company closed the financial year with sales and other income of 2,097 million baht and a loss of 86.2 million baht (2006: 84.7 million baht) resulting from initial start-up costs and has the objective of already achieving a profit next year. 1 Computer rendering of the 40,000 square meters facility under construction at Danieli Engineering and Services, Austria. 2 Two-strand slab caster that cast 24 heats (270 t each) just 10 days after startup. 3 Danieli Construction continued to provide quality services in largesize construction sites worldwide. 4 Danieli Far East completed capital expenditure on the Rayong site, and is now producing within schedule, with the planned quality and competitiveness. 42 DANIELI YEAR 2007

DIRECTORS REPORT MORE S.R.L. ACCIAIERIE BERTOLI SAFAU (ABS) S.P.A. 5 7 The company, which operates in the field of technological components for steelworks, achieved sales and other income of 15.1 million euro (2006: 13.8 million euro) with net profit for the year of 3 million euro (2006: 2.6 million euro) and an order book of euro 8.0 million (2006: 7.5 million euro); due to the good technological level of products sold, it is believed that the company will produce good results in the 2007/2008 financial year. DANIELI CORUS GROUP The IAS/IFRS financial statements for the 2006/2007 period of the company ABS show sales and other income of 792.8 million euro (529.4 million euro in 2005/2006) with net profit of 36.9 million euro (2006: 13.2 million euro). Company production performance was good throughout the 2006/2007 financial year, enabling it to clear orders for around 959 thousand tonnes against 803 thousand in 2005/2006, an increase of 19% compared with the previous period. Raw material price pressures and buoyant demand caused selling prices to be generally maintained, producing attractive results for the company, which continued with its initiatives to penetrate new market segments, improving its profitability and the quality of products sold. The order book at June 30, 2007 amounted to around 420 thousand tonnes and has made it possible for the company to program production efficiently for the half year in progress. Due to completion of substantial capital expenditure and encouraged by the good name gained in the market, the company strategy, directed towards achievement of a satisfactory profit for the next financial year, through a policy of selecting higher margin products and initiatives to ensure further increases in internal efficiency and reduced product verticalisation, is confirmed. 6 The Group, consisting of the parent company Danieli Corus Technical Services BV and a few of its subsidiaries, operates in the sector for blast furnaces and associated auxiliary plant and is 50% owned by the Danieli Group and 50% by the Tata Corus Group, one of the world's largest steel producers. The joint venture, with registered office in Holland, closed the period July 1, 2006 to June 30, 2007 with sales of 48 million euro (94.2 million euro in the previous period) and profit of 5.7 million euro, compared with a loss of 0.4 million euro in the previous period. Results to date and the good prospects of obtaining new orders make it possible for the management to guarantee a profit in the current financial year too. 8 DANIELI INTERNATIONAL S.A. 5 Oxy-carbon injection for an optimal exploitation of the chemical energy in EAF steelmaking. 6 In 2006-2007 Danieli Corus continued to provide tailor-made solutions for the primary metals industry, using proven technology from Corus state-of-the-art integrated mills. 7 100-t ingot cast in ABS for the forging of highquality components. 8 Management of liquidity generated a profit of 21.6 million Euro, in line with the previous year. Management of liquidity continued in accordance with traditional principles of prudence which, in a period characterised by lower volatility of the financial markets, favoured low risk investments and the liquidity of these investments. Average portfolio profitability was maintained substantially in line with that of previous financial years and enabled the 2006/2007 period to be closed with net profit of 21.6 million euro, mostly associated with the management of cash and of the bonds portfolio and, to a limited extent, of the shares portfolio. DANIELI 43

Danieli Group Results In the financial year to June 30, 2007, the Danieli Group achieved (in the market situation described above) a net profit of 73.3 million euro compared with that of 46.8 million euro in the last financial year. For the year to June 30, 2007, the principal income and financial numbers were: > sales: 2,456.6 million euro with an increase of 23% compared with the amount of 2,002.3 million euro in the year to June 30, 2006; > profit before tax: 141.4 million euro with an increase of 93% compared with the amount of 73.3 million euro in the year to June 30, 2006; > shareholders equity: 597.9 million euro with an increase of 8% compared with the amount of 553.6 million euro in the year to June 30, 2006; > net financial position: 402.7 million euro, down by 57.4 million euro compared with the amount of 460.1 million euro at June 30, 2006. The Group order book at June 30, 2007 amounted to 3,098 million euro, including 362 million euro in the special steel production sector, compared with 2,149 million euro at June 30, 2006 (including 283 million euro for special steels); the order book is well diversified over the product lines and is positioned in a market environment with a positive outlook for the next 24 months. Sales and operating results Sales by geographical area The analysis of Group consolidated sales by geographical area, calculated on the basis of the composition of the order book, was as follows. The gross operating margin of 190.8 million euro for the year to June 30, 2007 was 40% higher than that for the financial year ended June 30, 2006, reflecting a substantially unchanged trend in the plant construction sector, accompanied by a significant improvement in the steel production sector profit. Net financial and extraordinary income, amounting to 2.9 million euro for the year to June 30, 2007, represented a change of 117% compared with the negative amount of 17.5 million euro for the year to June 30, 2006, due to optimal liquidity management during the financial year, ensuring cover for capital expenditure made and also maintaining a satisfactory net financial position. It is considered that further improvements in group financial management could be achieved in the next financial year, with the expectation of an increase in available net liquidity further optimising the yield of the cash component while maintaining minimum risk in respect of investments and their maximum availability. Profit before tax for the period amounted to 141.4 million euro, with an improvement of 87% compared with that of 73.3 million euro for the year to June 30, 2006; net profit was penalised by a substantial tax burden due to the presence of some non-deductible items in taxable income relating to accruals made for tax disputes still outstanding. The 23% increase in sales compared with the previous financial year reflects processing of the greater volume of orders taken during the previous period by the plant sector and greater production efficiency in the steel sector, with no significant changes in the consolidation and without any significant impact from euro-usd exchange rate movements. The substantial volume of research costs, and the accruals necessary to cover potential charges on completion of large orders and for outstanding disputes, limited growth in the gross operating margin, but profit improved in spite of this due to satisfactory group financial management. Due to capital expenditure on production facilities in Thailand, China, India and the Ukraine, concrete programmes to transform and internationalise the Group are being put into effect to ensure quality and satisfaction to company customers, while protecting margins by precision of production planning and optimisation of company processes. In the steel sector, a strategy was followed that gave preference to the sale of products which competitors found it difficult to make due to size or type of steel, resulting in attractive margins in a market receptive to quality products; this strategy required revision of some operating procedures, with the need for significant capital expenditure which will be completed during the next financial year. ABS production reached a volume of 959 thousand tonnes in the period, up 19% on the last financial year, exporting over 40% of production with quality standards and delivery times, competitive with the best producers at a world level. 44 DANIELI YEAR 2007

Summary of consolidated profit and loss for the year to June 30, 2007 in millions of euro June 30, 2007 June 30, 2006 Change Sales 2,456.6 2,002.3 23% Gross Operating Margin 190.8 136.1 40% % sales 8% 9% Depreciation and amortization (49.3) (38.1) 29% Adjustment to fixed asset values (6.1) (6.3) 3% Operating profit 135.4 91.7 48% % sales 6% 5% Financial and extraordinary income/(charges) 2.9 (17.5) 117% Companies valued by equity method 3.1 (0.9) Profit before tax 141.4 73.3 93% % sales 6% 4% Tax for the year (67.5) (25.6) -164% Net profit for the year 73.9 47.7 55% % sales 3% 2% Minority interest in the profit (0.6) (0.9) 33% Net Profit attributable to the Group 73.3 46.8 57% % sales 3% 2% Cash Flow (Net Profit plus Depreciation and Amortization) 123.2 85.8 44% Cash flow for capital expenditure 178.7 67.8 164% Sales and operating results in millions of euro Sales EBITDA Profit before tax June 30 June 30 June 30 June 30 June 30 June 30 2007 2006 Change 2007 2006 Change 2007 2006 Change Plant making 1,663.8 1,472.9 13% 129.4 123.7 5% 80.3 53.5 50% Steel making 792.8 529.4 50% 102.1 55.8 83% 61.1 19.8 209% Total 2,456.6 2,002.3 23% 231.5 179.5 29% 141.4 73.3 93% Sales by geographical area in millions of euro Year ended Year ended June 30, 2007 % June 30, 2006 % Change Europe and Russia 1,154.6 47.0% 841.0 42% 37.3% Middle East 712.4 29.0% 440.5 22% 61.7% Far East and America 589.6 24.0% 720.8 36% -18.2% Total 2,456.6 100% 2,002.3 100% 22.7% DANIELI 45

Summary of reclassified balance sheet and financial data in millions of euro June 30, 2007 June 30, 2006 Net financial assets 25.0 26.3 Net tangible and intangible fixed assets 444.3 323.9 Net fixed assets 469.3 350.2 Working capital (74.0) (91.9) Net capital invested 395.3 258.3 Group shareholders' equity 597.9 553.6 Minority interest in shareholders' equity 1.5 2.6 Total shareholders' equity 599.4 556.2 Reserves 198.6 162.2 Total non-current assets (34.6) (19.1) Total current assets (619.9) (631.8) Total non-current liabilities 91.0 55.5 Total current liabilities 160.8 135.4 Net financial position (402.7) (460.1) Total coverage 395.3 258.3 Summary of reclassified balance sheet and financial data TThe increase in Net Invested Capital was directly due to the higher assets needed to manage the increased sales volumes resulting from the higher value of the order book. It is considered that this position, accompanied by positive expectations for financial performance in the next few months, could assist in lowering group indebtedness, with a substantial reduction in gross liabilities (even in the presence of significant capital expenditure), ensuring a significant improvement in treasury management income in the next half year. Main financial indices The net financial position at June 30, 2007 was 57.4 million euro lower than at the end of the previous financial year, reaching a value of 402.7 million euro; this change was mainly due to the existence of new loans, negotiated to cover capital expenditure in China and Thailand in the Plant Making sector and use of liquidity to ensure financial cover for substantial capital expenditure in the Steel Making sector. Maintaining this level of cash enables the Group to appropriately meet the technological challenges associated with the manufacture of plants with a highly innovative content, with the capability of independently meeting all extraordinary expenses associated with any technical difficulties during their start up. 46 DANIELI YEAR 2007

Danieli Group: Net Worth. Danieli Group: Net Income. Danieli Group: Sales Revenue. *according to IAS/IFRS Danieli Group: Capital Expenditure. Danieli Group: Investments in R&D (gray) and costs incurred for new product development (red). millions of Euro DANIELI 47

Analysis of the net consolidated financial position in millions of euro June 30, 2007 June 30, 2006 change Non-current financial assets - medium/long term financial receivables 34.6 19.1 15.5 Total non-current assets 34.6 19.1 15.5 Current financial assets - securities and other financial receivables 103.6 77.4 26.2 - cash at banks 516.3 554.5 (38.2) Total current assets 619.9 631.9 (12.0) Non-current financial liabilities - payables to banks and other lenders 91.0 55.5 35.5 Total non-current liabilities 91.0 55.5 35.5 Current financial liabilities - payables to banks and other lenders 160.8 135.4 25.4 Total current liabilities 160.8 135.4 25.4 Net non-current financial position (56.4) (36.4) (20.0) Net current financial position 459.1 496.5 (37.4) Net financial position 402.7 460.1 (57.4) Main financial indices in millions of euro June 30, 2007 June 30, 2006 EBITDA 231.5 179.5 Shareholders' equity 599.4 39% 556.2 32% EBITDA 231.5 179.5 Liabilities 2,449.2 9% 1,869.2 10% EBITDA 231.5 179.5 Gross financial indebtedness 251.8 92% 190.9 94% EBITDA is operating profit before writedowns, depreciation and amortisation, and accruals to reserves, net of any use during the period. Cash flow summary in millions of euro June 30, 2007 June 30, 2006 Financial position at July 1, 2006 460.1 244.9 Cash flow from operations 111.7 284.6 Flows for tangible and intangible capital expenditure (171.4) (62.3) Investments in financial assets 10.8 (1.2) Dividends distributed (8.5) (5.9) Net change in the financial position (57.4) 215.2 Net financial position at period end 402.7 460.1 48 DANIELI YEAR 2007

Capital expenditure and research activities DIRECTORS REPORT The principal capital expenditure in the period related to: > 93.5 million euro for new plant used in the steel making sector to provide greater steel production capacity, widening the range of products offered with improvements to their finish and quality, as well as improving environmental management of all phases of production; > 85.2 million euro essentially for starting up the new production facilities in China, Thailand, India and the Ukraine, with the objective of both reducing production costs and widening the market for sales of our plants, as well as to provide for replacement of operating machinery in use for more than fifteen years in the Parent Company s workshops. During the period, the Group continued to work on the research plan initiated in previous years with the objective of providing our customers with new technology plants, capable of producing superior quality products with savings in investment costs and production costs; this process involved a cost in the period of over 120.5 million euro on a volume of innovative job orders close to 700 million euro. Management of financial risks Exchange risk The Danieli Group has always followed a policy of minimising financial risks associated with foreign exchange fluctuations by use of specific derivative instruments, in particular relating to movements in US dollar rates. Foreign exchange risk exposure is closely correlated to forecast cash flows linked to the progressive completion of contracts in progress; the impacts of these operations are reflected in both sales and the valuation of current inventories. Planning, coordination and management of these activities at Group level is supervised by the Parent Company Financial Management, which monitors the correct correlation between derivative instruments and underlying cash flows and proper representation in the accounts in compliance with international accounting standards. Interest rate risk Interest rate movement risks within the Danieli Group are mainly associated with long-term borrowing negotiated at variable rates. Receivables risk Receivables risk exposure accruals are minimised by using suitable insurance instruments to cover solvency of the customer or of the system of the country in which this latter operates. Exposure to risks associated with financial investment instruments is minimised by giving preference to financial instruments with issuer credit ratings of not less than AA and always avoiding, in other cases, a concentration of risk in instruments with ratings lower than AA. Danieli Research Center. Computational Fluid Dynamics (CFD) analysis of oxy-carbon injectors for EAF steelmaking, air-knives for zinc wiping in hot dip galvanizing lines, and confined jet system for stainless steels strip drying. DANIELI 49

Future prospects We believe that the expansion phase of the world economy could continue at sustained rates for at least the next 18 to 24 months, especially in China, India, Russia and other emerging countries, accompanied by lower growth in Europe, the United States and Japan. This situation, together with synergies arising from the restructuring of the principal players in the steel market (confirming the tendency of production to migrate to countries where energy and ore costs permit more profitable production), will have a favourable influence on the plant market for the next few years, ensuring a good volume of orders for new plants. Our subsidiary Acciaierie Bertoli Safau S.p.A., due to the increase in production efficiency associated with the new capital expenditure, will strengthen its position as leader in the special steels market, providing its customers with quality and compliance with delivery times for a wide range of highly finished products.in this context, it is considered that the next financial year could bring better results to the group than previously achieved, there remaining however some uncertainty relating to possible negative impacts associated with energy factors and possible anomalous fluctuations in the foreign exchange market. Danieli Group: Educational level. Danieli Group: Age of Employees. Personnel The number of employees at June 30, 2007 was 6,816 analysed as follows: Plant making Steel making Danieli & C SpA in Italy 2,014 In Italian subsidiary companies 721 1,081 In foreign subsidiaries and offices 3,000 5,735 1,081 Own shares held Danieli Group: Seniority of Service. At June 30, 2007, the Company held 944,250 of its own ordinary shares and 1,572,947 savings shares with a nominal value of 1 euro and a total nominal value of 2,517 thousand euro (3.10% of the Share Capital). During the period, 57,050 ordinary shares were sold at current market prices. Company social and cultural activities > Strengthening of the training department continues, with the cooperation of the University of Udine, the Milan Polytechnic and the Universities of Beijing, Dnepropetrovsk (Ukraine), Moscow and Kharagpur (India). > The new Danieli campus Fabbricando is currently in course of completion for around 200 persons, comprising foreign students and personnel in training to increase group internationalisation awareness. > The foundation stone is about to be laid for the Cecilia Danieli day nursery to provide a contribution to the quality of family life of Danieli employees. > Danieli Sports Centre activities continue with over 1,100 members. > Support continues for the Danieli Foundation and the internal Assistance Fund. 50 DANIELI YEAR 2007

Danieli provides opportunites for professionalism and the force of ideas. We believe in creativity and individual ambitions. Passion and enthusiasm guide us in our on-going search for excellence and we are ready to accept and launch new technological and entrepreneurial challenges. We are well aware that today success comes when there is intelligent interaction of these forces within a strong work group. DANIELI 51

Events occurring after the end of the financial year On September 5, 2007, acquisition of the German company W+K Industrie Technik GmbH & Co. KG, operating in the welded tube machine sector, was finalised; this operation completes the product range of the Centro Tube line, which has an excellent reputation with the most important customers. No events occurred after June 30, 2007, which would have an impact on the balance sheet and financial position as shown in the Balance Sheet at that date and Profit and Loss Account for the year to that date or which would require further changes or additional notes to the financial statements. We believe that, for the current financial year, except for events beyond our control, there cannot be any specific factors which would require mention, other than normal operations. Latest News Danieli Centro Tube We successfully started up the first 350,000-tpy seamless pipe mill featuring the Danieli 3-roll FQM-Fine Quality Mill technology at Chengdu (Pangang Group), P.R. of China. We also started up the 270,000-tpy seamless pipe mill complex at KSP, Kazakhstan. The recent acquisition of W+K Industrie Technik GmbH, Germany, completes the range of own technologies available in the field of seamless and welded pipe mills. CONCLUSIONS AND PROPOSALS We express our appreciation and thanks to all those whose perseverance and professionalism contribute to maintaining the Company s strong competitive position and high technological status in world markets. We rely on their enthusiasm, as well as on our own, as we seek to progress with the serenity, confidence and strength necessary to meet future challenges. The financial statements for the 2006/2007 financial year, which we submit for your approval, show a profit of 19,435,492 euro which we propose be allocated as follows: 5% to legal reserve Euro 971,775 Dividend to shareholders for payment from Nov. 8, 2007 (coupon removal date Nov. 5, 2007) to the 39,932,283 (1) ordinary shares Euro 0.1400 per share Euro 5,590,520 to the 38,767,035 (2) savings shares Euro 0.1607 per share Euro 6,229,863 Euro 11,820,382 To extraordinary reserve Euro 6,643,335 For a total of Euro 19,435,492 (1) Net of 947,250 own ordinary shares held at September 26, 2007. (2) Net of 1,657,998 own savings shares held at September 26, 2007 We advise you that you will be asked to authorise the Board of Directors to make any purchases and subsequent sales of the company s shares in accordance with art. 2357 and subsequent of the Civil Code. 52 DANIELI YEAR 2007