Glossary

Business and Financial Terms

Asset-backed securitization (ABS)
Selling receivables with securitization on the capital market.

At equity
Method of capital consolidation with which an affiliated company's proportionate equity is valued.

Capital Employed
The sum total of equity, provisions for taxes (excluding deferred taxes) and interest-bearing liabilities. Minority interests are reported under equity.

Cashflow

• from operating activities
  Increase/decrease of liquid funds not dependent on the acquisition or disposal of investments or financing activities.
• from investment activities
  Increase/decrease of liquid funds as a result of the acquisition/disposal of investments.
• from financing activities
  Increase/decrease of liquid funds as a result of financing activities: issue/redemption of bonds, raising/redemption of loans, issue/repurchase of shares etc.

Corporate Governance
The term used to describe responsible corporate management and control. In the interests of improving corporate management, in the year 2001 the German Federal Minister of Justice set up the Government Commission on the German Code of Corporate Governance which is tasked with making the rules of corporate management and supervision applicable in Germany more transparent and improving the corporate structure of German corporations. The capital markets attach an increasing importance to good corporate governance.

Current assets
Assets not intended to remain within the long-term operations of a business enterprise. Current assets include, for example, inventories and trade receivables.

Declaration of Compliance
Declaration by the Executive and Supervisory Boards pursuant to Section 161 of the German Stock Corporation Act (AktG) regarding implementation of the recommendation by the Government Commission on the German Code of Corporate Governance.

Deferred taxes
Tax charges and reliefs likely to arise at a future date as a result of temporary differences between the book values applied in the consolidated financial statements and the tax valuations of assets and liabilities.

EBIT (Earnings before Interest and Taxes)
Earnings before interest and tax payments (excluding the interest component in appropriation to provisions for pensions).

EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)
Earnings before interest and tax payments (excluding the interest component in appropriations to provisions for pensions) and depreciation and amortization (also of financial assets).

EBT (Earnings before Taxes)
Earnings before deduction of taxes.

Equity
Funds made available to a company by its owners as a cash payment and/or capital investment, as well as retained earnings.

External funds
Provisions, liabilities and deferred income.

External sales
The proportion of total sales accounted for by transactions with companies outside of the consolidated Salzgitter Group.

Fixed assets
Assets intended to remain in the long-term operations of a business enterprise. A distinction is drawn between:

• Tangible fixed (noncurrent) assets
  Land and buildings, technical plant and machinery etc.
• Intangible fixed (noncurrent) assets
  Goodwill/negative goodwill, patents, licenses, development costs etc.
• Financial assets
  Shares in affiliated and associated companies, other shareholdings, long-term securities etc.

Forfaiting
Sale of export receivables without recourse to previous owners of the receivables (supplier), usually to a bank.

Free float
That part of a company's capital stock which is freely traded on the stock market.

IAS/IFRS
International Accounting Standards/International Financial Reporting Standards: Standards intended to guarantee international comparability in the preparation of accounts.

Internal sales
The proportion of total sales accounted for by transactions between companies within the consolidated Salzgitter Group.

Joint venture
A business venture undertaken in cooperation between and under the joint control of at least two companies which remain independent of one another.

Lifo
Last in, first out: Method of valuing inventories based on their assumed sequence of consumption.

Market capitalization (stock market capitalization)
Current (stock) market capitalization of a quoted company. The market capitalization is a product of the share price and the number of shares. Deutsche Börse AG calculates market capitalization for index weighting purposes based on the product of share price and free float.

Material costs
Expenditure on raw materials and supplies, goods, items kept in reserve, tooling and outsourced supplies and services such as energy, contract processing and internal transport costs.

Pension provisions
Provisions formed to cover retirement, invalidity and surviving dependents' pension and benefit commitments. Pension obligations are calculated using the projected unit credit method (IFRS) or the going-concern value method (HGB) and valued on the basis of actuarial assumptions and calculations.

Personnel expenses
Expenditure on wages and salaries as well as social security, pension and other benefits. These expenditures do not include the interest element in allocations to pension provisions which is reported as part of the financial result.

Result from ordinary activities
The result from ordinary activities is synonymous with EBT (Earnings before Taxes).

ROCE (Return on Capital Employed). Interest yield on capital invested.
Ratio of EBIT to capital employed.

Unappropriated retained earnings
Profit after appropriation to or transfer from reserves as shown in the annual financial statements of Salzgitter AG calculated in accordance with German Commercial Code. It is this result which principally determines the dividend paid to shareholders.

Technical Terms

Blanks
Stampings punched out of (mainly) surface-coated sheet for the automobile industry.

Blast furnace
A shaft furnace lined with heat-resistant (refractory) bricks and used by integrated steelworks to smelt pig iron from iron ore.

Bloom
An intermediate product manufactured from crude steel by the continuous casting process and used as pre-material for the production of sections.

Coating
The application of a coat of zinc, organic material, paint or foil, primarily to improve the resistance of steel sheet to corrosion.

Coke
A reduction agent required in the blast furnace for smelting pig iron out of iron ore. Coke is manufactured by heating specific types of coal (coking coal) in a coke oven plant under exclusion of air.

Cold-rolled steel
Non-surface-coated sheet produced by cold rolling.

Cold rolling
Forming process at room temperature. Cold rolling is used for example to turn hot-rolled strip into sheet steel.

Continuous casting
A semi-continuous process for the manufacture of slabs, blooms and tube rounds from molten steel.

Electric steel
Steel produced by smelting scrap in an electric arc furnace.

Elements for roofing and cladding
Components produced from profiled surface-coated steel sheet which are used in the construction industry as wall and ceiling elements and for exterior cladding.

Flat rolled steel/Flat carbon steel
Flat rolled steel products are manufactured by the hot- and cold-rolling of slabs, including other work stages, as necessary. The term specifically refers to sheet steel with a thickness of less than 30 mm, used mainly for automobiles and home appliances.

Hollows
Seamless tubes used as pre-material for the manufacture of seamless precision tubes.

Hot-rolled (wide) strip
Hot-rolled and coiled steel strip used as feedstock for cold rolling or sold as an intermediate product (e.g. as wide strip).

Hot rolling
Forming process carried out at high temperatures. Different types of rolling mills are used to convert semi-finished material into hot-rolled strip, plate, sections or seamless tubes.

LD steel
Oxygen steel produced out of pig iron by the Linz-Donawitz process (top blowing process).

Pellets
Small spheres manufactured from fine-grain iron ore with the addition of water and binding agents, hardened in an oven. Pellets are used in the blast furnace along with lump ore and sinter as a source of iron.

Pickling
Hot strip oxidized (covered in scale) by the hot rolling process is passed through a bath of hydrochloric or sulfuric acid. This can either be a continuous (continuous pickling) or discontinuous (push-pull pickling) process.

Plate
Sheet steel of 30 mm or more in thickness. Plate is required mainly in the construction industry, for mechanical engineering and equipment manufacturing, shipbuilding and large-diameter pipes.

Precision tubes
Seamless or welded steel tubes utilized in mechanical engineering and the automobile industry.

Reduction agent
Sources of carbon such as coke, coal or heating oil used in the blast furnace process to convert iron ore (iron oxide) into pig iron.

Relining
Cladding the blast furnace with refractory material, a process repeated in intervals from ten to fifteen years.

Rolled steel
The sum total of all end products to emerge from rolling mills.

Sections
Long products such as beams and sheet piles, used primarily in building construction and civil engineering.

Semi-finished goods
A general term for pre-material made from crude steel for use in rolling mills (slabs, blooms, tube rounds).

Shuttle coater
Technical facility for covering galvanized thin sheet with various coatings.

Slab
An intermediate product manufactured from crude steel by the continuous casting process and used as pre-material for the production of flat rolled steel.

Surface-coated steel products
Products which by special processes are provided with a metallic or organic surface coating, for example by galvanizing or paint-coating.

Tailored Blanks
Bonded blanks composed of sheet steel of varying shapes, qualities and properties which are welded together by laser beam. Automobile manufacturers use tailored blanks to produce press parts for vehicle construction.

Tube rounds
An intermediate product manufactured from crude steel by the continuous casting process and used as pre-material for the production of seamless tubes.

Tubes

• Welded tubes
  Tubes made by welding plate or hot-rolled strip. A distinction is drawn between longitudinally welded tubes (where the weld seam runs along the axis of the tube) and spiral-welded tubes (where the weld seam spirals around the circumference of the tube).
• Seamless tubes
  Tubes made from tube rounds. After heating, by a variety of processes (including pilgering) a hollow body is first created which is then rolled and if necessary drawn to its final dimensions.