Swiss Steel : SSG Short Report 202

Short Report

Financial Year 2023

Key

Figures 1,375

Sales volume

kilotons -17.3 % vs. PY

19

20

21

22

23

Net working capital

826.2

million EUR -25.7 % vs. PY

19

20

21

22

23

Net revenue

3,244.2

million EUR -19.9 % vs. PY

19

20

21

22

23

Net debt

828.6

million EUR -2.3 % vs. PY

19

20

21

22

23

Adj. EBITDA

- 40.9

million EUR

20		23
19	21	22

Shareholders' equity

234.4

million EUR -55.8 % vs. PY

19

20

21

22

23

Free cash flow

85.4

million EUR

20	21	22
19		23

Employees

8,812

headcount -10.6 % vs. PY

19

20

21

22

23

Management Report

Letter to the Stakeholders 4

Strategy 6

Financial Development 10

Capital Market 12

Outlook 14

Swiss Steel Group

Short Report

Financial Year 2023

Management Report

Letter to the Stakeholders

Strategy

Financial Development

Capital Market

Outlook

Letter to the Stakeholders

Jens Alder	Frank Koch
Chairman of the Board	CEO

Dear stakeholders,

The past financial year was truly an "Annus Horribilis" for Swiss Steel Group - a year of unprecedented challenges. Our full-year performance was impacted by very weak market demand. Order activity from the mechanical and plant engineering sector remained weak throughout 2023 and the Euro- pean automotive production remained below pre-pandemic levels. In addition, customers were destocking their invento- ries, and an increase of imports further exacerbated demand weakness. This led to a sales volume which was 17.3 % lower year-over-year.

2023 revenue of EUR 3,244.2 million was down by 19.9 %. In addition, the performance of the Group was impacted by many one-time effects: After unprecedented price peaks and volatilities in 2022, energy markets stabilized in 2023, albeit still above pre-crisis levels. However, significantly decreasing spot prices for electricity and gas in combination with declining raw material prices resulted in significant one-time inventory valuation losses. As a result, adjusted EBITDA decreased to EUR -40.9 million in 2023. Free cash flow, on the other hand, was positive at EUR 85.4 million on the back of strong net working capital reduction efforts, proceeds from the divestment of non-core distribution activities and cost control measures. At the end of December 2023, shareholders' equity had decreased by EUR 296.5 million to EUR 234.4 million since December 31, 2022. This is attributable to the negative Group result of EUR -294.8 million. As a result, equity ratio decreased to 12.1 %.

Securing portfolio quality for future profitability

To build a competitive basis for a strong and resilient Swiss Steel Group, we focused on portfolio optimization for our core business. We divested entities that do not contribute to our strategic vision, and initiated restructuring programs at other entities, which have the potential to contribute to sustainable profitability. Swiss Steel Group successfully divested eight distribution entities, as well as its share in the joint venture in China. The Group is eliminating complexity from its worldwide distribution network and concentrating on activities that focus on our own products in relevant markets. The Group entered a binding agreement to sell the former headquarter in Düsseldorf. Further, the contemplated divesture of parts of Ascometal France as announced in December 2023 has not yet materialized. Ascometal France Holding is examining all strategic options for the future of all its entities.

Finkl Steel will not be integrated into the Group and a dives- ture is under study. Until further notice, Finkl will continue to operate as a standalone investment.

Restoring a competitive cost structure and ensuring operational excellence

SSG 2025 includes measures to restore a competitive cost structure and ensuring operational excellence throughout the remaining Group. In 2023, our focus lay on the initiation of an extensive restructuring program for our largest entity, Deutsche Edelstahlwerke (DEW) in Germany. The program includes a comprehensive performance improvement program which is designed to reduce structural costs by over EUR 130 million from 2023 until 2025. In collaboration with employee representatives, we have reached comprehensive agreements for the reduction of over 350 jobs. The majority of this reduction has been already successfully implemented by the end of 2023. Further, it includes the organizational separation of DEW into two legal production entities. The organizational separation has been successfully completed and will allow a better focus on the relevant businesses. The legal separation is planned to be implemented retroactively to January 1, 2024.

4

Swiss Steel Group

Short Report

Financial Year 2023

Management Report

Letter to the Stakeholders

Strategy

Financial Development

Capital Market

Outlook

Across Swiss Steel Group, headcount decreased by 1,045 employees or 10.6 % to 8,812. Additionally, we implemented measures to enhance flexibility in personnel costs, such as the introduction of short-time work and flexible working time accounts. Going forward, we see further potential to streamline and right-size our workforce, particularly in administrative functions, as part of our ongoing commitment to operational efficiency and to address demographic trends and the shortage of skilled workers.

Intended capital increase as an indispensable basis for further strengthening and future growth

As a result of the implemented measures, we have made good progress in the stabilization phase of our strategy, even if it has been delayed due to unforeseen internal and external factors. In line with our SSG 2025 program, we intend to strengthen our capital to shift our focus to fully re-entering the market, especially against the backdrop of an improving econ- omy. The recapitalization and refinancing of the company will include two measures: A capital increase for an equivalent of approximately EUR 300 million fully backstopped by BigPoint Holding AG to strengthen liquidity, and the balance sheet, to fully participate in the market again and to restore the Group's competitiveness in the medium to long term. An extension of the Group's material financing arrangements with our financial lenders including the shareholder loans by BigPoint Holding AG until September 2028 conditional on the equity capital increase.

Refocusing the go-to-market strategy and capitalizing on our leading position in green steel

As Europe's largest electric arc furnace steel producer, our expertise in recycling, circular economy, and electric arc furnace technology, paired with the use of low-emission electricity forms the foundation for a carbon footprint of our products up to 83 % below the industry average. Swiss Steel Group supplies sustainable steel to essential future markets - e.g. mobil- ity, energy generation, medical, aerospace - and thus makes a significant contribution to the decarbonization of our society. In consequence, we are strategically positioned to not only recover but surpass the European market share held before the COVID-19 pandemic. To advance on this ambitious goal, SSG 2025 includes a comprehensive set of measures to increase sales volume.

Swiss Steel Group remains dedicated to reaching its ultimate goal of net-zero by 2038

To achieve decarbonization of end products, it is necessary to interweave efforts throughout the entire value chain. Steel, playing the distinctive role in this chain, becomes a crucial element in the essential process of decarbonization. Against the backdrop of climate change and the requirements for decarbonization in the value chains of our customers across various industries, the green steel segment is expected to grow beyond the overall market growth in 2024. Present discussions and a notable uptick in orders for greener products with our customers confirm the ongoing global transforma- tion. Through intensified R&D efforts for innovative products and especially for the increasing requirements towards green steel, we aim to recapture market potential and ensure sustained growth. To capitalize fully on the potential of green steel, additional investments in processes, equipment, mindset and knowledge are essential. Swiss Steel Group remains dedicated to reaching its ultimate goal of net-zero by 2038.

Initiating the next stage of our strategy execution

After a disappointingly weak 2023, heavily influenced by economic conditions, we initiate the next stage of our strategy execution to build the necessary competitiveness for growth in a rapidly changing market. As the leading European producer of green steel we have very attractive opportunities for growth. As part of our strategy we are implementing far-reaching measures to stabilize and future proof our business. Following the capital increase, we shall be able to progress the restructuring and to refocus on profitable growth. Considering the magnitude of changes in our industry and the work required at Swiss Steel Group, this transformation is fundamental. It requires time, capital and a great commitment from our teams across Swiss Steel Group. The planned capital increase is imperative for our success.

We would like to thank our employees for their great commitment under the most adverse conditions, our customers for their trust in an extremely challenging market environment and our shareholders for their loyalty and patience.

Jens Alder	Frank Koch
Chairman of the Board	CEO

5

Swiss Steel Group

Short Report

Financial Year 2023

Management		Letter to the		Strategy		Financial		Capital		Outlook
Report		Stakeholders				Development		Market

Strategy

With our strategic program SSG 2025, we will strengthen our resilience, enhance performance and lay the groundwork for organic growth by prioritizing cost improvement and customer- centricity. Swiss Steel Group is a driver of green transformation and has all means to shape the future because our products are essential in nearly all areas of transformation.

Building on a strong foundation

More than ever, we are faced with change - whether economic, geopolitical, environmental or driven by the relentless force of innovation. The world around us is evolving at an accelerating pace, compelling societies, industries and companies to think beyond traditional boundaries, adapt existing business models, and have the courage to break new ground. In a fast-changing environment,

it is crucial to build on a strong foundation, embrace change and evolve with vision.

Leading player for the production of Green Steel

Thanks to our expertise in recycling, proven electric arc furnace technology and highest operating standards, we are well positioned to become the leading player for the production of Green Steel. Our product portfolio addresses a wide range of customer needs. We foster a high level of innovation driven by our talented, motivated and dedicated employees. In short, Swiss Steel Group holds enormous potential for the future - a potential we are now leveraging for the benefit of our stakeholders.

Shaping the transformation of our Group

Our journey has not been without challenges and setbacks, but we remain steadfast in our commitment to our strategic vision for Swiss Steel Group. The past year has underscored the importance of adhering to our strategic program SSG 2025. Through this program, we actively shape the transformation of our Group and react to the transformation of the world around us. We fortify our resilience, enhance performance, continue to lead the green transformation and lay the groundwork for organic growth by prioritizing cost improvement and customer-centricity.

Together. For a future that matters.

In a constantly changing world, businesses, institutions and individuals must be able to adapt and seize opportunities. This process can involve transforming business models, introducing new technologies or adjusting to changing market conditions. Shaping this transition requires innovative ideas, sustainable practices and collaboration among various stakeholders. Only in this way can we create a better, sustainable future.

6

Swiss Steel Group

Management

Letter to the

Strategy

Financial

Capital

Outlook

Short Report

Report

Stakeholders

Development

Market

Financial Year 2023

Resilience and

Profitability

Ensuring resilience, profitability and growth in a challenging environment requires courage to change. With our strategy program SSG 2025, we have initiated a fundamental transformation that will set the course for a successful future.

Maintain a stable performance

The implementation of our strategy will make us stronger and more resilient. Resilience is the answer to current and future challenges as it encompasses the ability to successfully adapt to a changing environment, no matter what comes our way. For us, in fact, this explicitly reflects the capability and strength to maintain a stable performance within the profitability target corridor in any conceivable market phase. With that in mind, it is crucial to build a strong core founded on stable pil- lars, by minimizing risks and focusing on the core business.

Spot leverage potential

Knowing the sources of our profitability and their levers allows targeted steering toward businesses offering attractive margins. This makes it crucial to continuously reassess the current and future viability of each of our entities to spot obvious leverage potential, uncover hidden leverage potential and especially to channel efforts into forward-thinking new ideas. We have realigned our focus on our core business, systematically divesting entities that do not contribute to our strategic vision.

Stabilize

The first phase of SSG 2025 prioritizes the stabilization of our Group. Through strategic portfolio optimization, we have focused on our core business to become more resilient and reduce our financial leverage. This necessitated a thorough assessment of all our assets with regard to their future viability. Further, the comprehensive turnaround program for our German entity allows us to drive process efficiencies. As we transition into the strengthening phase, a capital increase and debt refinancing becomes crucial for the further development of the Group, to allow participation in markets and to strengthen the balance sheet.

Strengthen

To secure long-term success, we must ensure that our core business areas have a clear focus and mission, ultimately elevating their performance. Further, we are reshaping our organizational setup to respond quickly and flexibly in our changing business environment. This allows us to focus on key activities and drives us to achieve greater efficiency and performance. The rollout of our new target operating model enables to develop into an integrated Group with one strong brand. Leveraging our position among the leading producers for Green Steel, we are preparing to further expand our position and our Green Steel portfolio.

Scale up

Backed by the same resolve and building on our strong foundation, we will intensify our efforts to seize further growth opportunities in our core markets and execute our Green Steel strategy within the context of the Group's decarbonization targets. With a robust and resilient basis in place, we aim to excel in performance, reliability and customer satisfaction.

The triad for sustainable value

Scale up

Strengthen

Stabilize

2022 2023 2024 2025 2026 2027

Significant challenges - including the closure of our Ugitech Production Asset for the major part of 2022 due to a serious industrial accident, the shutdown in Hagen following the flood of the century in Germany, and the energy crisis - have resulted in setbacks of approximately one year in the initial phase of our strategic plan. However, in the face of these adversities, our commitment to the strategic vision of Swiss Steel Group remains resolute.

7

Swiss Steel Group

Short Report

Financial Year 2023

Management Report

Letter to the Stakeholders

Strategy

Financial Development

Capital Market

Outlook

Customer Centricity and Reliability

Reshaping our sales organization

One strong brand

As a consequence of the reorganization of the Group, the former entity brands have

Transforming into an efficient and effective organization

On our transformation path, we are reshaping and strengthening our organization, evolving from a group of loosely connected companies into one integrated and actively managed Swiss Steel Group. We are refocusing our sales organization around the three Divisions Engineering Steel, Stainless Steel and Tool

been merged into one strong brand: Swiss Steel Group. We now stand united under one flag that encompasses all our entities. Our logo continues to combine the colors of glowing steel with the shape of infinity - symbolizing our commitment to a sustainable value chain and circular economy.

Edelstahlwerke

Deutsche

Ugitech

Steeltec

Ascometal

Finkl Steel

Production Assets

We have embarked on a journey to create one united Swiss Steel Group with integrated operations

• to stabilize and strengthen our business for growth, to increase efficiency and effectiveness, and above all to better serve our customers.

Steel, which will allow a more holistic market approach and more effective and tailored customer service.

Backbone of best-in-class production

Each Division leverages its sales and distribution networks and has access to the full production network of our Group. Nonetheless, best-in-class production remains the backbone of our Group. While the Divisions know our markets and their needs, our Production Assets ensure that quality, service levels and cost efficiency are spot on.

One central point of contact

Our customers will benefit from more clarity about our portfolio, access to the entire Group offering via one central point of con- tact, combined innovative strength and even stronger reliability when it comes to produc- tion, quality and delivery.

Fortifying our market presence

This strategic move symbolizes a significant realignment, strengthening our market presence and paving the way for the future - a future marked by enhanced collaboration among the former Business Units, tailored to meet individual customer requirements more effectively. Commencing in January 2023, the Swiss Steel Group companies underwent a systematic alignment of branding, which was completed by the end of the same year. The newly established organizational structure and shared brand identity, while transforma- tive, do not alter the existing legal framework.

Engineering

Steel

Stainless

Steel

Tool

Steel

As per end 2023

Swiss Steel Group has, based on customer requirements, created a corporate structure consisting of three Divisions: Engineering Steel, Stainless Steel, and Tool Steel. This organization pursues a holistic market approach and enables more individualized care for our customers.

8

Swiss Steel Group

Short Report

Financial Year 2023

Management Report

Letter to the Stakeholders

Strategy

Financial Development

Capital Market

Outlook

Innovation and

Sustainability

Our Green Steel approach positions us and empowers our customers and partners in their decarbonization efforts to become leading sustainability champions for a future that matters.

Sustainable steel production is our DNA

As one of the biggest CO2 emitters, the steel sector plays a key role in achieving the EU's climate goals for 2050. And as one of Europe's largest electric arc furnace steel producers, Swiss Steel Group is committed to living up to its responsibility. Because steel is such a valuable material, it influences our daily lives in so many ways that we cannot do without it. With that in mind, we at Swiss Steel Group see it as our duty to contribute to shaping a better, greener and more sustainable world. By exclusively operating electric arc furnaces, we are already applying the technology of future steelmaking today. Because sustainable steel production based on circular economy and recycling runs in our DNA.

Carbon footprint well below industry average

Our profound expertise in recycling and electric arc furnace technology, highest operational standards and use of energy from low-carbon sources have allowed us to reduce the carbon footprint of our products up to 83 % below the industry average, offering a distinct environmental value proposition to our cus- tomers.

Circular economy in Swiss Steel Group's production

Whether in transportation, infrastructure, energy or mechanical engineering, steel has been one of the most important materials for centuries. Not least because steel is the only material that is 100 % recyclable, making it a prime example of a circular economy.

~ 93 %	> 20 %
recycled	transported
metals	by rail
as metallic input	scrap, raw and
material	finished material

Production	~2 mnt	Usage
	of scrap
	recycled per year

~ 80 %	~ 1,400 k
electrical	sales
energy	volume
used in steel mill	of special steel

FiguresZahlen 2023

9

Swiss Steel Group

Management

Letter to the

Strategy

Financial

Capital

Outlook

Short Report

Report

Stakeholders

Development

Market

Financial Year 2023

Financial Development

In light of the global economic slowdown, activity in our main customer industries was depressed throughout 2023. This resulted in a low sales volume which - combined with significant one-time effects - weighed on the Group's profitability. The sales volume was 17.3 % below 2022 levels and Group revenue of EUR 3,244.2 million was 19.9 % below the prior-year. Cash generation was positive on the back of strong net working capital reduction efforts.

At 619 kilotons (H2 2022: 726 kilotons), 14.7 % less steel was sold in the second half of 2023 compared to the second half of 2022, resulting in a capacity utilization below break-even. Declining raw material prices weighed on the valuation of our inventories and thus negatively affected our financial performance. Despite

a series of countermeasures to support profitability and cash generation, adjusted EBITDA was EUR -110.9 million for the second half of 2023 (H2 2022: EUR 46.1 million). Notwithstanding the very low profitability, cash generation was positive with a free cash flow of EUR 148.1 million for the second half-year 2023 (H2 2022: EUR 120.4 million), owing to the typical seasonal working capital release and a successful inventory reduction initiative. Likewise, our full-year financial performance was characterized by weak market demand. Rising interest rates dampened capital invest- ment, affecting demand from the mechanical and plant engineering sector, and European

automotive production remained below pre-pandemic levels. At 1,375 kilotons in 2023 (2022: 1,663 kilotons), the sales volume was down 17.3 % year on year. After unprecedented price peaks and volatilities in 2022, energy markets stabilized again in 2023. However, decreasing spot prices for electricity and gas in combination with declining raw material prices resulted in significant one-time inventory valuation losses. As a result, adjusted EBITDA decreased to EUR -40.9 million in 2023 compared to EUR 217.0 million in 2022. Free cash flow, on the other hand, was positive at EUR 85.4 million (2022: EUR -53.7 million) on the back of strong net working capital reduction efforts and proceeds from divestment of non-core activities in line with our ongoing strategy program SSG 2025.

Swiss Steel Group		Unit		2023			2022
Sales volume			kilotons		1,375.0			1,663.0
Average sales price		EUR/t	2,362.9	2,438.1
Revenue		million EUR	3,244.2	4,051.4
Gross profit		million EUR	867.5	1,147.1
Adjusted EBITDA		million EUR		- 40.9	217.0
Adjusted EBITDA margin	%		- 1.3	5.4
Free cash flow		million EUR	85.4			- 53.7
Net working capital		million EUR	826.2	1,112.4
Net debt			million EUR	828.6		848.2
Shareholders' equity			million EUR	234.4		530.9

• in %

• 17.3
• 3.1
• 19.9
• 24.4
  -
  -
  -
• 25.7
• 2.3
• 55.8

H2 2023

619.0

2,244.3

1,386.9

317.3

• 110.9
• • 8.0
    148.1
    826.2
    828.6
    234.4

H2 2022

Δ in %

726.0 - 14.7

2,629.3		- 14.6
1,906.8		- 27.3

483.4 - 34.4

46.1-

1. -

1. 23.0

1,112.4

- 25.7

848.2 - 2.3

530.9 - 55.8

10