SAME CORPORATE BRAND ON ALL MARKETS

ANNUAL REPORT 2006

SAME CORPORATE BRAND ON ALL MARKETS BE Group will change the names of all subsidiaries in the first half of 2007 and launch a corporate brand for the entire Group. Bröderna Edstrand in Sweden and Starckjohann Steel in Finland as well as eight subsidiaries in Eastern and Central Europe and Denmark will be doing business under the BE Group name. As part of the Group s orientation towards Excellent Service and higher service content, the BE logo has also been developed into a softer, more modern design idiom.

CONTENTS Investor information............... 5 Highlight 2006................... 6 Message from the CEO............. 8 The BE Group share.............. 12 Becoming a stronger competitor through Excellent Service and independence... 14 Trends in the market leading to new business opportunities........ 18 Higher efficiency means better business for our customers...... 22 Working closely with customers...... 27 BE Group overview............... 30 Sweden....................... 34 Finland....................... 38 New Markets................... 42 Expanded service proposition based on leadership and skills........ 46 High standards for environmental efforts............. 49 Financial statements 2006 Management report.............. 50 Financial statements 2006.......... 56 Audit report.................... 90 Corporate Governance report........ 91 Board of Directors................ 98 Group Management............. 100 Key ratios..................... 102

4 ANNUAL REPORT 2006 BE GROUP

INVESTOR INFORMATION BE Group is a Swedish public limited liability company. The company was formed and registered under Swedish law under the name BE Group AB (publ), company registration number 556578-4724. The registered office is in Malmö, Sweden. All figures are expressed in SEK thousands unless otherwise stated. Figures in parentheses refer to 2005 unless otherwise stated. Market information is based on BE Group s assessment if no other source is specified. Assessments are based on the best available factual information. The official annual report is published in Swedish and is translated to English. This report contains forward-looking information. While BE Group s management believes this information is reasonable, no warranties are given, whether expressed or implied, that these expectations will prove accurate. Actual future outcomes may vary from the statements in forward-looking information due to factors including changes in economic, market and competitive conditions, changes in legal requirements and other political measures and fluctuations in exchange rates. FINANCIAL REPORTS Interim reports and the annual report are posted on the BE Group website at www.begroup.com. Printed material may also be ordered online. Current information is published on www.begroup.com and is available via Waymaker. ANNUAL GENERAL MEETING BE Group s annual general meeting will be held Tuesday, May 15, 2007 at 4 p.m., Malmö Börshus, Malmö, Sweden. Notices concerning registration for the meeting and the agenda will be provided in press releases and published well in advance of the meeting on the BE Group website (www.begroup.com). BE Group s audited annual accounts will be available on the website and at the head office on Spadegatan in Malmö after April 16, 2007. Shareholders whose holdings are nominee registered must temporarily register their shares under their own names ( direct registration ) by May 9, 2007. Shareholders should request the custodian to temporarily change the registration well in advance of the meeting. REGISTRATION The Company must receive notice of intent to attend the general meeting by May 9, 2007 at 4 p.m. Shareholders may register by e-mail to arsstamma@begroup.se or by phone on +46 (0) 40-38 42 00. The notice must state the shareholder s name, personal or company registration number, address and telephone number, as well as the details concerning the shareholder s proxy, if any. DIVIDEND Last day for right to dividend is May 21, 2007 and expected distribution is May 24, 2007. The Board of Directors and Chief Executive Officer are proposing a distribution to shareholders of SEK 3.50 per share in cash, corresponding to 44% of profit after tax. REPORTING DATES IN 2007 Interim report January-March: April 26 Interim report April-June: July 18 Interim report July-September: October 26 Year-end report 2007: February 2008 ANNUAL REPORT 2006 BE GROUP 5

HIGHLIGHTS 2006 BE Group is reporting its best financial year ever. Net sales increased by 15.4% to SEK 6,681.2M (5,790.2). Underlying sales growth was 8.5%. Operating profit increased to SEK 550.2M (265.4). Underlying EBITA * was SEK 473.7M (395.6) and the underlying EBITA margin increased to 7.1% (6.8). Underlying return on operating capital * excluding intangible assets increased to 72.5% (54.5) on the strength of an improved capital turnover rate. Profit after tax was substantially higher than in the preceding year, totaling SEK 394.7M (170.1). Earnings per share increased to SEK 7.90 (3.41). Robust volume growth continued in the New Markets business area and sales increased by 42.6%. 6 ÅRSREDOVISNING 2006 BE GROUP

BE Group established operations in St Petersburg, Russia. Restructuring of the Swedish business continued during the year to enhance service, streamline operations and reduce capital tied up. The project is slated for completion in the second quarter of 2007. Aimed at increasing and developing service sales, BE Group will be investing SEK 17M in production service equipment at the site in Lapua, Finland. BE Group was listed on the Stockholm Stock Exchange on November 24, 2006. Proposed dividend to shareholders of SEK 3.50 per share. BE Group is forecasting sustained healthy demand and relatively high prices in 2007. * See pages 104-105 for definitions. ÅRSREDOVISNING 2006 BE GROUP 7

MESSAGE FROM THE CEO MESSAGE FROM THE CEO Welcome to BE Group, a listed company on the Stockholm Stock Exchange as of late 2006. The market extended an enthusiastic welcome to the Group and the IPO was over-subscribed eleven times. As I write this, BE Group has more than 11,000 shareholders and I would like to welcome each and every one of our owners to participate in the continued development of the Group. Håkan Jeppsson, President and Chief Executive Officer OUR VALUE DIMENSIONS As this is BE Group s first public annual report, I would like to begin by explaining a few of the disciplines upon which BE Group is creating value for its shareholders, customers and employees. BE Group is a leading trading and service company in steel, stainless steel and aluminium in the Nordic region with expanding operations in Eastern Europe. We have leveraged our capacity to sustain cost-effective and capital-effective operations and strong customer relationships to build market shares over a long period of time. I would like to particularly emphasize four value dimensions that have been fundamental to consolidating our strong market position: LOGISTICS: BE Group has built an efficient logistics structure with robust distribution and strategically located production and warehouse facilities. EFFICIENCY: We have developed a costeffective organization with high earnings per employee. The Group maintains low working capital and high inventory turnover compared to industry norms. ANNUAL REPORT 2006 BE GROUP

MESSAGE FROM THE CEO CUSTOMER INTIMACY: We work closely with our customers in long-term relationships. Keeping our objectives always in mind, we are investing in developing our employees skills and understanding of our customers businesses and needs. INDEPENDENCE: BE Group is independent of steel and metal producers. Our independent status has allowed us to develop a more vital corporate culture and take decisions that are good for us and good for our customers. This approach was supported by BE Group s early presence in Eastern European markets, which has fortified our growth and made BE Group one of the few multinational trading and service companies in our industry. We began organically establishing new operations in Eastern Europe only ten years ago and quickly achieved profitability. Most recently in 2006, we opened a company in Russia. BE Group is now operating in ten countries in the Nordic region, Eastern Europe and Central Europe. The new markets now account for nearly 10% of consolidated sales, up from 3% four years ago. We have pursued a comprehensive change project over the last three or four years aimed at developing BE Group into an integrated, multinational corporation and reinforcing Group management and the skills of our employees. As of spring 2007, we are performing in all markets under the single BE Group brand to enhance our image and efficiency. The cornerstone of our strategy in recent years has been to elevate the level of processing and focus on providing expanded service to our customers. We call this Excellent Service and that is all about creating value for our customers through more comprehensive processing and new services in areas such as logistics, production, advice, recycling and financing. Service now accounts for 30% of our sales and service sales have increased by 50% in the last three years. A BANNER YEAR Before I discuss BE Group s ambitions for 2007 and beyond, I would first like to comment on the past financial year. The global market for steel and metals remained buoyant throughout the year, with high demand from China a key market driver. Trends in BE Group s Nordic and Eastern European markets shadowed the international economy, with healthy demand from the engineering industry combined with a strengthening in the constructionrelated sector. The Group also benefited from rising global market prices for steel and metals. The favorable economic trend and higher sales of services helped make 2006 a banner year for BE Group. Consolidated sales rose in volume and the service component of sales was higher than in any previous year. Sales and profits reached their highest levels ever. All business areas demonstrated favorable growth. BE Group s performance was remarkable in Eastern Europe, where New Markets leveraged major investments in infrastructure to increase sales volume by 41%. Carried by strong development, BE Group met all five long-term financial We are strengthening our leading position in Sweden and Finland, achieving rapid growth primarily in Eastern Europe and continuing the powerful expansion of our service offer. ANNUAL REPORT 2006 BE GROUP 9

MESSAGE FROM THE CEO targets for the individual year of 2006. Underlying return on operating capital (excluding intangible assets), one of our key management targets, reached 72.5% (54.5) due to higher margins and improved turnover on operating capital. The restructuring of operations in Sweden commenced in 2005 continued in 2006 and will be fully implemented in the second quarter of 2007. The objectives are to improve customer service, enhance operational efficiency and reduce capital tied-up. BE Group streamlined operations and increased capacity at the site in Finland in order to meet rising demand for processed products. The expansions will continue in 2007 with relatively substantial investments in new equipment at our facility in Lapua. The expansion into Eastern European markets continued at a brisk pace in 2006 when, as mentioned, BE Group opened its first company in the Russian market in the expansionary St Petersburg region. BE Group also sold its remaining real estate in Eastern Europe. The year was otherwise characterized by extensive preparations for the IPO and implementation of the listing process, causing a heavy workload in large parts of the organization. EXPANSION AND ENHANCED SERVICE BE Group has been growing rapidly for several years and we intend to sustain our growth and become an even more efficient, more profitable company. We will accomplish this by strengthening our leading position in Sweden and Finland, expanding primarily in Eastern Europe and enhancing the service proposition to our customers in all markets. Much of our growth is likely to originate with acquisitions in Eastern Europe, where rapid expansion will be a key factor due to the forecasted increase in competition. We expect to achieve higher volumes and gross margins and bolster our capacity to gain and keep market shares by increasing the service component of sales. By offering products with higher added value, we are strengthening our position as the link in the value chain between steel and metal producers and our customers, primarily in the engineering and construction sectors. Two general trends among our suppliers and customers are driving BE Group s performance. As the major steel and metal producers consolidate, they are investing in more large-scale production and standardized products, resulting in longer lead-times. This is expanding scope in the market for trading companies like BE Group to step up creation. On the customer side, there is a concurrent trend towards greater specialization and more customer-specific solutions. Companies in the engineering and construction sectors are focusing increasingly on their core business and outsourcing simpler production processes, including to trading and service companies. Alongside a growing need for production service, we expect this trend to progressively trigger higher demand for financial, logistics, advisory and recycling services. BE Group s critical success factors as we move forward will include successful acquisitions in Eastern Europe. We must 10 ANNUAL REPORT 2006 BE GROUP

MESSAGE FROM THE CEO also continue developing our production expertise so that we can efficiently handle an increasing share of processing and service in operations. We need to further develop the skills of our workforce and recruit employees with new skills to augment our capacity to help our customers do business and ensure optimum product and service development and pricing. OUTLOOK 2007 The steel industry is forecasting sustained favorable global demand in 2007. Strong growth in China is expected to persist and total global steel production and consumption to increase further, but probably at a somewhat slower rate than in 2006. As before, the uncertainty refers primarily to forecasts of developments in China and the global economy. The International Iron and Steel Institutes are forecasting an increase of 5-6% in global steel consumption in 2007. The increase in demand should cause some upwards pressure on raw materials prices, already evident in the annual contracts made early in the year between leading raw materials producers and steel producers. Sustained consolidation among steel producers combined with producer efforts to maintain equilibrium between supply and demand should keep steel and metal prices high. Additional capacity among new market players in Asia, the Middle East, Africa and elsewhere along with exports from China to Europe and the US may negatively impact prices. BE Group is forecasting continued robust demand and relatively high prices. The engineering and construction sectors in Sweden and Finland are considered strong, while high growth rates and major investments in infrastructure still distinguish countries in the New Markets segment. Malmö, April 2007 Håkan Jeppsson ANNUAL REPORT 2006 BE GROUP 11

THE BE GROUP SHARE THE BE GROUP SHARE The Group has been operating for some years under the name BE Group. Formerly Bröderna Edstrand Group AB, the parent company s name was changed in the third quarter to BE Group AB (publ). SHARE CAPITAL BE Group has authorized capital of 50,000,000 shares, each carrying one vote. Total share capital in BE Group on December 31, 2006 was SEK 102.0M (101.9). Upon application by BE Group Holding, the 51,788 warrants issued by the company on September 17, 2004 were cancelled by the Swedish Companies Registration Office on October 9, 2006. Accordingly, increases in share capital consequent upon new share subscriptions based on these warrants are no longer possible. The Company currently has no outstanding warrants or convertible loans. NEW ON THE MARKET The initial public offering of BE Group on the Stockholm Stock Exchange took place on November 24, 2006. The offering comprised 25,000,000 shares and the price was set in a bid procedure at SEK KEY RATIOS 2006 2005 (SEK unless otherwise stated) Basic earnings per share 7.90 3.41 Underlying earnings per share 6.72 5.27 Diluted earnings per share 7.60 3.24 Underlying diluted earnings per share 6.46 5.01 Equity per share 13.28 19.45 Diluted equity per share 13.28 18.98 Proposed dividend per share 3.50 Direct return, % 5.0 Price quoted on Dec. 29, last price paid 70.50 P/E ratio, multiple 9 62 per share. This corresponds to a value of SEK 1.550 million for the IPO, which was over-subscribed more than eleven times. SHARE PERFORMANCE The price quoted for the BE Group share was SEK 70.50 on December 29, 2006, the last trading day of the year, corresponding to growth of 13.7% since the IPO. The highest price paid in 2006 of SEK 71 was noted on December 29. The price quoted on February 28, 2007 was SEK 83,25, corresponding to an increase of 34% since the IPO. OWNERSHIP STRUCTURE As of year-end BE Group had 11,042 shareholders. Nordic Capital through BE Group Holding AB was the largest shareholder. Other principal shareholders are listed in the table on the following page. Total institutional ownership (legal persons) was 83.7%. At year-end, 23.1% of BE Group was owned by foreign shareholders. Ownership structure data was obtained from VPC. DIVIDEND POLICY According to the Group dividend policy, BE Group will distribute at least 50% of profit after tax to shareholders if justified by the Group s financial position and outlook. For the 2006 financial year, the Board of Directors and CEO are proposing a cash dividend to shareholders of SEK 3.50 per share, corresponding to 44% of profit after tax. ANALYST COVERAGE BE Group stock is monitored particularly by analysts at Carnegie, Handelsbanken and Swedbank. 12 ANNUAL REPORT 2006 BE GROUP

THE BE GROUP SHARE SHARE PERFORMANCE SEK 95 90 85 80 75 70 65 60 06-11-24 06-11-27 06-11-28 06-11-29 06-11-30 06-12-01 06-12-04 06-12-05 06-12-06 06-12-07 06-12-08 06-12-11 06-12-12 06-12-13 06-12-14 06-12-15 06-12-18 06-12-19 06-12-20 06-12-21 06-12-22 06-12-27 06-12-28 06-12-29 07-01-02 07-01-03 07-01-04 07-01-05 07-01-08 07-01-09 07-01-10 07-01-11 07-01-12 07-01-15 07-01-16 07-01-17 07-01-18 07-01-19 07-01-22 07-01-23 07-01-24 07-01-25 07-01-26 07-01-29 07-01-30 07-01-31 07-02-01 07-02-02 07-02-05 07-02-06 07-02-07 07-02-08 07-02-09 07-02-12 07-02-13 07-02-14 07-02-15 07-02-16 07-02-19 07-02-20 07-02-21 07-02-22 07-02-23 07-02-26 07-02-27 2006 2007 PRINCIPAL SHAREHOLDERS ON DECEMBER 31 NAME SHARES % BE Group Holding AB 18,159,546 36.32 BNP Paribas Securities Services 1,375,000 2.75 Swedbank Robur 1,132,000 2.26 Goldman Sachs International LTD 1,126,000 2.25 Caceis Bank 927,800 1.86 Nordea Bank Finland ABP 906,160 1.81 IF Skadeförsäkrings AB 904,800 1.81 Bank Of New York 788,415 1.58 Carnegie Funds 659,000 1.32 SEB Funds 582,500 1.16 Länsförsäkringar Funds 577,400 1.15 Jeppsson, Håkan 567,450 1.13 AMF Pensionsförsäkrings AB 510,000 1.02 Odin Sverige 1, Nordea Bank Norge ASA 506,000 1.01 Nordea Funds 490,438 0.98 Handelsbanken Funds 484,520 0.97 Investors Trading Aktiebolag 440,800 0.88 Okobank Oy 430,000 0.86 Société Générale 429,375 0.86 Dresdner bank Luxembourgs S.A. 400,000 0.80 Nordea Bank Norge Odin Sverige II 389,000 0.78 Ridderstråle, Carl-Erik 377,603 0.76 Aktie-Ansvar Funds 375,000 0.75 General Account 350,000 0.70 JP Morgan Chase Bank 311,233 0.62 SHARE DISTRIBUTION ON DECEMBER 31 SHAREHOLDING SHAREHOLDERS SHARES % ISSUED CAPITAL 1 500 7,762 1,970,345 3.94% 501 1,000 1,625 1,379,766 2.76% 1,001 5,000 1,289 3,042,803 6.09% 5,001 10,000 153 1,240,866 2.48% 10,001 15,000 47 603,636 1.21% 15,001 20,000 31 576,242 1.15% 20,001 135 41,186,342 82.37% TOTAL 11,042 50,000,000 100.00% TOTAL, 25 principal shareholders 33,200,040 66.39 TOTAL, others 16,799,960 33.61 TOTAL SHARES OUTSTANDING 50,000,000 100,00 ANNUAL REPORT 2006 BE GROUP 13

PRESENTING BE GROUP BECOMING A STRONGER COMPETITOR THROUGH EXCELLENT SERVICE AND INDEPENDENCE SALES PER BUSINESS AREA Sweden: SEK 3,515.8M / 52.6% Finland: SEK 2,550.6M / 38.2% New Markets: SEK 614.8M / 9.2% EBITA (BEFORE EXCEPTIONAL ITEMS) PER BUSINESS AREA* Sweden: SEK 287.9M / 48.6% New Markets: SEK 41.2M / 44.4% Finland: SEK 263.1M / 7.0% * Excluding parent company and Group items BE Group is a leading trading and service company in steel and other metals in the Nordic region with expanding operations in Eastern Europe. Sales in 2006 amounted to SEK 6,681.2M (5,790.2) and EBITA before exceptional items to SEK 551.9M (267.0). The Group has a workforce of 935 (898) employees on December 31, 2006. The head office is in Malmö, Sweden. BE Group was forged in 1999 through the merger of a Swedish company founded in 1885, Bröderna Edstrand, and a Finnish company founded in 1868, Starckjohann Steel. BE Group was listed on the Stockholm Stock Exchange in November 2006. MISSION STATEMENT BE Group s mission is to create value and increase competitiveness for its customers by saving them time, costs and capital. This will be accomplished by streamlining goods flows, reducing the number of business contacts and supplying a customer-oriented range of products and Excellent Service in the form of superior delivery capacity, integrated customer solutions and extraordinary availability. OBJECTIVES AND STRATEGIES BE Group s main objective is to create value for its customers to strengthen their market position and competitiveness. This objective imbues every aspect of the Group s operations. BE Group s financial targets and dividend policy are described on page 30. The four main pillars of the strategy are to: Ensure strong growth through - organic and acquisition-driven growth in Eastern Europe, - sustained leading position in Sweden and Finland, - higher service component in sales; Offer the best service in the market through - growth and increased profitability in production service, - introduction of new value-adding services; Coordinate operations for higher profitability and stronger cash flow through - steady focus on costs and operating capital, especially in Sweden and Finland, - acting as an integrated multinational corporation; Develop strong, results-oriented managers through - training and recruiting managers to ensure broader competence. PRODUCTS, SERVICE AND LOGISTICS BE Group s independent status enables the Company to offer a broad and competitive range of steel, stainless steel and aluminium products. Sales are through three main channels: inventory sales at 48%, direct sales at 22% and the growing category of service sales (including component materials) at 30%. Value is added to the product in service sales primarily in the form of processing, which distinguishes BE Group from conventional wholesalers. Logistics are expansive and efficient at BE Group, contributing to the high turnover rate for company-owned inventory, compared to the industry norm. BUSINESS AREAS Operations are divided into three business areas: Sweden, Finland and New Markets. 14 ANNUAL REPORT 2006 BE GROUP

PRESENTING BE GROUP SWEDEN 1 Malmö 2 Gothenburg 3 Jönköping 4 Norrköping 5 Karlstad 6 Stockholm 7 Borlänge 8 Sundsvall FINLAND 9 Lahti 14 10 11 Helsinki Turku 12 Lapua 13 Pori 18 14 15 Oulu Tampere 5 7 8 6 12 16 13 15 9 11 10 19 17 30 16 Jyväskylä 17 Lappeenranta 18 Joensuu ESTONIA 19 Tallinn LATVIA 20 Riga 4 LITHUANIA 21 Kaunas 2 3 20 POLAND 22 Gdynia 23 Warsaw 29 1 24 25 Poznan Wroclaw 21 26 Sosnowiec 22 CZECH REPUBLIC 27 Prerov 24 23 SLOVAKIA 28 Michalovce DENMARK 29 Copenhagen 25 27 26 RUSSIA 30 St Petersburg 28 Head office, sales offices, warehouses and production centres Sales offices and production centres Sales offices ANNUAL REPORT 2006 BE GROUP 15

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PRESENTING BE GROUP Sweden is the largest business area, accounting for 53% of sales in 2006. Finland generated 38% and New Markets 9%. New Markets is made up of expanding operations in eight countries: Denmark, Estonia, Latvia, Lithuania, Poland, Russia, Slovakia and the Czech Republic. CUSTOMERS BE Group has maintained stable market shares in its two main markets over the years. In 2006, the Company had approximate market shares of 20% in Sweden and 25% in Finland. BE Group s market shares vary in New Markets, where the markets are relatively fragmented among a great many small companies. BE Group s customers are primarily industrial companies in a wide variety of sectors. The largest are equipment and machinery (27%) and construction (20%). Other significant industries include automotive, process, other transport, energy and power, heating and ventilation, mining and telecommunications. BE Group had a large customer base of about 10,000 active customers in 2006. A few of the Company s largest customers are Peab, Volvo, Skanska, Starkki, Pintos and Metso Paper. are made from steel producers in Western Europe, but the Group also buys from other regions including Asia. BE Group works with some 500 suppliers, including several worldleading steel producers like Beltrame, Corus, Arcelor Mittal, Outokumpu and SSAB. PREPARED FOR THE FUTURE BE Group expects to continue its growth trajectory and become an even leaner, more profitable company. The Group s leading position in Sweden and Finland will be strengthened through organic growth and business acquisitions in Eastern Europe and by providing Excellent Service to customers in all markets. SUPPLIERS BE Group is an independent market player. As one of the largest buyers of steel, stainless steel and aluminium in the Nordic region, the Company has the muscle to negotiate competitive prices and favorable purchase terms and conditions. A large portion of BE Group s purchases ANNUAL REPORT 2006 BE GROUP 17

MARKET AND BUSINESS ENVIRONMENT TRENDS IN THE MARKET LEADING TO NEW BUSINESS OPPORTUNITIES BE GROUP S GEOGRAPHICAL MARKETS (Figures refer to 2005 unless otherwise stated. Statistics for 2006 are not yet available.) SWEDEN GDP (SEK bn) 2.673 Growth 2005 2.7% Industrial production growth rate 2005 1.9% Investment growth rate 2005 8.5% Capital expenditures (machinery and equipment) growth rate 2005 14.1% Steel consumption 2005 4.0 m tonnes Annual volume growth 2000 2005 2% FINLAND GDP (SEK bn) 1.461 Growth 2005 3.0% Industrial production growth rate 2005-2.0% Investment growth rate 2005 3.5% Capital expenditures (machinery and equipment) growth rate 2005 1.3% Steel consumption 2005 2.1 m tonnes Annual volume growth 2000 2005 2% NEW MARKETS GDP (SEK bn) 5.900 Growth 2005 3.7% Industrial production growth rate 2005 3.9% Investment growth rate 2005 7.7% Steel consumption 2004* 19.1 m tonnes Annual volume growth 2000 2004 6% * Excluding Russia Strong focus on volume has traditionally characterized the steel market, but customer needs for services are increasing. Trading and service companies are responding with service development initiatives that are generating additional growth and profitability. MARKET WORTH Volumes in the trading and service market for steel, stainless steel and aluminium are dependent on two factors: total sales tonnage and the share of tonnage distributed via trading and service operations. Total steel tonnage in BE Group s geographical markets was approximately 25 million tonnes in 2005 excluding Russia, which alone accounted for some 33 million tonnes. A significant share is distributed via trading and service operations. MARKET GROWTH Average volume growth in BE Group s markets was 5% per year for 2000-2005. Steel prices rose considerably during the period and growth was substantially higher in terms of market worth. Shipped volume is affected by prices, but primarily in other respects by developments in the sectors where BE Group s customers operate. Growth in these industries, such as engineering and construction, often co-varies with growth rates for GDP and industrial production. Growth rates differ significantly among BE Group s geographical markets. Demand is accelerating in the expansionary Eastern European economy, while countries in a more mature phase of development are demonstrating more stable demand oriented towards more services and more sophisticated products such as aluminium and stainless steel. COMPETITION Trading and service in the steel industry are characterized by significant economies of scale, primarily in purchasing but also in logistics and the increasingly important production processes. The Nordic market features a number of players. BE Group is one of a few large leading companies with a broad product range and stable and substantial market shares. BE Group is an exception in a market where many of the largest trading and service operations are integrated with producers. The Eastern European markets are still relatively fragmented among many small competitors of varying size. TRENDS A distinct trend in the steel and metals market is that the various players in the value chain are increasingly structuring and focusing their operations aimed at achieving higher cost-effectiveness and profitability. Consolidation and cost-eff ectiveness among steel producers The steel production sector is undergoing global consolidation towards fewer and larger companies, longer lead-times, higher volumes and standardized production. Higher efficiency and more stable price formation are the objectives. One result of this development is that only major users can efficiently order directly from producers. BE Group has the capacity to help small and mediumsize customers attain more cost-effective production and flexible purchasing. 18 ANNUAL REPORT 2006 BE GROUP

ANNUAL REPORT 2006 BE GROUP 19

PRICE TRENDS IN THE NORTHERN EUROPEAN STEEL MARKET USD/ton 900 800 700 Long 600 500 400 300 200 Flat 2 4 6 8 10 2 4 6 8 10 2005 2006 PRICE TRENDS IN THE NORTHERN EUROPEAN STEEL MARKET USD/ton 4500 4000 3500 Aluminium Stainless steel 3000 2500 2000 1500 1000 2 4 6 8 10 2 4 6 8 10 2005 2006 PRICE TREND FOR BE GROUP Index 150 140 130 120 110 100 90 80 70 Long Flat 2 4 6 8 10 2 4 6 8 10 2005 2006 PRICE TREND FOR BE GROUP Index 160 150 140 130 120 110 100 90 80 Aluminium Stainless steel 2 4 6 8 10 2 4 6 8 10 2005 2006 20 ANNUAL REPORT 2006 BE GROUP