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DANIELI ANNUAL REPORT AT JUNE 30, 2014

ITALY GERMANY SWEDEN AUSTRIA FRANCEHOLLANDUKSPAINUSABRAZILRUSSIATHAILANDINDIACHINAJAPAN

1914 / 2014

DANIELICENTURY

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ANNUAL REPORT FOR THE PERIOD

JULY 1, 2013 TO JUNE 30, 2014

Contents

2 Group structure 5 Boards and officers 6 Mission statement 7 Financial highlights 8 Key share data

DIRECTORS’ REPORT 9 The steel market 9 The market for steelmaking plants 9 Group operations 11 Group structure 22 Analysis of consolidated profit and financial position of the Danieli Group 22 Reclassified consolidated income statement for the year ended June 30, 2014 23 Summary of results by business segment 23 Revenues by geographical area 24 Reclassified consolidated balance sheet at June 30, 2014 25 Analysis of the consolidated net financial position for the year ended June 30, 2014 26 Key consolidated financial ratios 26 Statement of changes in net financial position 27 Capital expenditure and research activities 28 Analysis of the profit and financial position of Danieli & C. Officine Meccaniche S.p.A. 28 Reclassified income statement for the year ended June 30, 2014 29 Reclassified balance sheet at June 30, 2014 29 Analysis of the net financial position at June 30, 2014 30 Key financial ratios 31 Management of business risks 32 Disclosure on the formation and distribution of the value added generated by the Group on

human resources, safety and the environment 32 Consolidated value added 32 Human resources 35 Environment 37 Atypical and unusual transactions 37 Treasury shares 37 Statement pursuant to Italian Legislative Decree no. 196 of June 30, 2003 37 Secondary headquarters 37 Management and coordination 37 Statement pursuant to Art. 2.6.2, paragraph 8 of the Stock Exchange Regulations 38 Governance 38 Events occurring after the balance sheet date 38 Outlook 69 Reconciliation between Parent Company shareholders’ equity and profit and Group

shareholders’ equity and profit 39 Proposals by the Board of Directors to the annual general meeting

CONSOLIDATED FINANCIAL STATEMENTS 42 Accounting schedules 47 Explanatory Notes 88 Supplementary schedules 95 Board certification of the consolidated financial statements 96 External auditors’ report on the Group’s consolidated financial statements

SEPARATE FINANCIAL STATEMENTS 100 Accounting schedules 104 Explanatory Notes 132 Supplementary schedules 159 Board certification of the separate financial statements 160 Report of the Board of Statutory Auditors 162 External auditors’ report on the Parent Company separate financial statements 165 Resolutions of the annual general meeting

2 GROUP STRUCTURE

GROUP STRUCTURE (*)

(*) line-by-line consolidated companies as at June 30, 2014

Plant making

Steel making

Finance companies

Services and other activities

DANIELIINTERNATIONAL SALUXEMBOURG

DANIELI & C.OFFICINE MECCANICHE SPAITALY

ABS SPA(ITA)

ABS SISAK DOO(HRV)

ABS CENTRE METALLURGIQUE SARL(FRA)

ABS DEUTSCHLAND GMBH(DEU)

ABS SCANDINAVIA AB (SWE)

EUROPE

DANIELI BANKINGCORPORATION SA(LUX)

DANIELI CONSTR.INTERNATIONAL SPA(ITA)

DANIELI MALAYSIASDN BHD (MYS)

DANIELI CZECHENGINEERING AS(CZE)

FINDAN SPA(ITA)

DANIELI ENGINEERING& SERVICE GMBH(AUT)

DANIELI ANATOLIAMACH. IND. CO(TUR)

DANIELI ENGINEERINGROMANIA SRL(ROM)

DANIELI HEAVYMACHINERY ENG. LLC(UAH)

DANIELI HELLAS SA(GRC)

DANIELI HENSCHEL SAS(FRA)

DANIELI HENSCHEL GMBH(DEU)

DANIELI HENSCHEL SERVICES OOO(RUS)

DANIELI HITECH GMBH(DEU)

JOSEF FRÖHLING GMBH(DEU)

W+K INDUSTRIE GMBH(DEU)

DANIELI RUSSIAENGINEERING LLC(RUS)

DANIELI VOLGA LLC(RUS)

DANIELI UK HOLDING LTD(GBR

DWU ENG. POLSKA SP. Z.O.O.(POL)

INNOVAL TECHNOLOGY LTD (GBR)

DANIELI SPECIALCRANES SRL (ITA)

INDE SPA (ITA)

MORGÅRDSHAMMAR AB(SWE)

MORE SRL (ITA)

DANFLAT SPA(ITA)

DANIELI CENTROMET SWISS(CHF)

DANIELI CENTROCOMBUSTION SPA(ITA)

DANIELI CENTROCRANES SPA(ITA)

CENTRO MASKIN AB(SWE)

ELSID CHEDA LTD(RUS)

SYSTEC ENG. DOO(SRB)

SYSTEC DOO(SVN)

SYSTEC AUTOM. DOO(HRV)

DANIELIAUTOMATION SPA(ITA)

DANIELI PROCOMEIBERICA SA(ESP)

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INDUSTRIELLEBETEILIGUNG SALUXEMBOURG

SOUTH EAST ASIA AMERICAS MIDDLE EAST

TURISMO 85 SRL(ITA)

CECILIA DANIELIASILI SRL(ITA)

QUALISTEEL SPA(ITA)

ROTELEC SA (FRA)

SUND BIRSTA AB(SWE)

BIRSTATEKNIK AB(SWE)

SUND BIRSTA (BEIJING) MET. EQ. LTD(CHN)

TERMO MAKINA SAN.V.T. A.S. (TUR)

STEM SRL (ITA)

CENTRO COMBUSTIONFURNACES PVT LTD(IND)

DANIELI CHANGSHUMET. EQ. & SERV. CO LTD (CHN)

DANIELI CHANGSHUTRADING CO LTD(CHN)

DANIELI CO LTD(THA)

DANIELI ENGINEERINGJAPAN LTD(JPN)

DANIELI METALL. EQUIP. BEIJING CO LTD(CHN)

DANIELI INDIA LTD(IND)

DANIELI AUTOMATIONCO LTD(THA)

INDUSTRIELLEBETEILIGUNG CO LTD(VNM)

DANIELIDO BRASIL SA(BRL)

DANIELIHOLDINGS INC(USA)

DANIELICORPORATION(USA)

DANIELI CANADA INC(CAD)

DANIELI RIVERSIDE INC(USA)

MORGÅRDSHAMMAR INC(USA)

DANIELI PROPERTYHOLDINGS LLC(USA)

DANIELITECNOLOGY INC(USA)

DANIELI MIDDLE EASTENG. & SERV. CO(EGY)

INDUSTRIALBETEILIGUNG CO(SAU)

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Boards and officers

Boards and officers at September 25, 2014 were as follows:

Board of Directors Gianpietro Benedetti (1) (4) Chairman and CEO

Carla de Colle (2) (4) Vice Chairman

Franco Alzetta (3) (4) Managing Director

Augusto Clerici Bagozzi (5) Director

Giacomo Mareschi Danieli Director

Board of Statutory Auditors Renato Venturini Chairman

Gaetano Terrin Standing auditor

Chiara Mio Standing auditor

Giuseppe Alessio Vernì Alternate auditor

Vincenza Bellettini Alternate auditor

Giuliano Ravasio Alternate auditor

Common representative

of the savings shareholders Edgardo Fattor

Independent external

auditors Reconta Ernst & Young S.p.A. (6)

(1) All powers of the Board of Directors except those that by law cannot be delegated, granted by Board of Directors’ resolution of October 25, 2012

(2) Powers granted by Board of Directors’ resolution of October 25, 2012(3) Powers granted by Board of Directors’ resolution of October 25, 2012(4) Member of the Executive Committee(5) Independent director in accordance with Article 148, Paragraph 3 of Italian Legislative Decree no. 58/1998 (Consolidated

Finance Act)(6) Appointed by the annual general meeting on October 28, 2010

6 DIRECTORS’ REPORT ON THE GROUP

Mission statement

Danieli produces and installs innovative machinery and plant worldwide for the iron and steel industry and for the non-ferrous metals sector. The company’s reputation is based on research, know-how and experience, as Danieli supplies not only highly technological plants but also specialised services of undisputable quality. Investment in research and development is considered a prerequisite for maintaining and strengthening the Group’s leadership position in the global market.

Strategic approach

Danieli started operations in 1914 when Timo and Mario Danieli founded Acciaierie Angelini, one of the first steelmaking plants to use electric arc melting furnaces.From the outset Danieli began to develop and produce equipment for the iron and steel industry, such as forges and auxiliary plant for rolling mills, which later gave rise to the motto “We know the Art of Steel”.Continuous efforts to produce innovative, environmentally sustainable plants and an unwavering commitment to quality and on-time delivery have driven the Danieli Group to expand its operations offering an ever more complete range of equipment with multiple production facilities throughout the world, in order to efficiently integrate itself into the international market, effectively applying the concept “We don’t shop around for Noble Components” and striving for customer satisfaction as its main objective.

Among Danieli’s key phrases:

– “Passion to innovate and perform”The Danieli Group will thus continue to consolidate and expand its activities to assure better competitiveness in terms of innovation, technology, quality, costs, productivity and customer service. Danieli is not just known for its plant engineering capabilities, but also for its manufacturing skills: in Europe, with high-value, high-tech products, and in Asia with the design and production of consolidated, proven products with European quality levels.

– “A step ahead” the goal is to define a new organisational model for the group, to develop the current structure in a way that better meets the markets’ new requirements.

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Financial highlights

(millions of euro) June 30, 2014 June 30, 2013 Change

Revenues 2,944.1 2,782.3 6%

Gross operating margin (EBITDA) 308.8 277.5 11%

EBIT 210.7 182.4 16%

Net profit 153.6 163.2 -6%

Net profit attributable to the Group 153.5 162.5 -6%

Free Cash Flow 13.6 46.9 -71%

Capital expenditure in tangible and intangible fixed assets

140.5 168.0 -16%

(millions of euro) June 30, 2014 June 30, 2013

Consolidated shareholders’ equity 1,548.4 1,427.3

Positive net financial position 844.3 851.1

Gross operating margin (EBITDA)/Revenues 10.5% 10.0%

Net profit/Revenues 5.2% 5.9%

Positive net financial position/Shareholders’ equity 0.55 0.60

Number of employees 11,424 10,944

Group order book 3,079 3,206

(of which steel making) 217 184

Period results

2014 20132014 2013

0

1,000

2,000

2,944.1 2,782.3

308.8 277. 5 162.5 153.5

3,000

Revenues EBITDA Profitattributable

to the Group


Key share data

June 30, 2014 June 30, 2013

No. of shares in share capital 81,304,566 81,304,566

of which ordinary shares 40,879,533 40,879,533

n.c. savings shares 40,425,033 40,425,033

Average no. of ordinary shares outstanding 37,918,320 38,022,897

Average no. of savings shares outstanding 36,479,670 35,827,268

Basic earnings per ordinary share (euro) 2.0525 2.1906

Basic earnings per savings share (euro) 2.0732 2.2113

Shareholders’ Equity per share (euro) 20.8123 19.1842

Period-end price of ordinary shares (euro) 23.2200 17.8980

Period-end price of savings shares (euro) 16.4630 11.5850

Maximum trading price of ordinary shares in the period (euro) 26.6870 21.4080

Maximum trading price of savings shares in the period (euro) 17.9920 13.5860

Minimum trading price of ordinary shares in the period (euro) 17.8170 17.8030

Minimum trading price of savings shares in the period (euro) 11.6560 11.5850

June 30, 2014 June 30, 2013

Total stock exchange capitalisation - ordinary shares (thousands of euro)

949,223 731,662

Total stock exchange capitalisation - savings shares (thousands of euro)

665,517 468,324

Total 1,614,740 1,199,986

Danieli ordinary shares compared with FTSE IT All-Shares for the time interval July 2011 - June 2014

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DIRECTORS’ REPORT

The recovering trend of the global economy for 2014 maintains a growth rate of 3.0-3.3%, substantially in line with the 2013 figures: however, GDP growth remains differentiated between the emerging countries, where it is positive but slightly less buoyant, and the mature economies, where USA, UK and Japan have encouraging growth figures, while other countries, mostly in the EU, exhibit still negative values without any improvements compared to last year.There is a clear need to provide incentives to new infrastructure investments, especially in Europe, to close readily apparent development differences, remove the inefficiencies present in some countries and promote greater competitiveness in the weaker economies. Some areas are already showing clear signs of recovery, while there are still some difficulties in other countries, penalised by delays in the changes needed to modernise their leadership structures.Applied research and operator training (with greater specialisation and flexibility in the labour market) remain the best possible response (together with the elimination of bureaucracy across the board) for the re-shoring of many industrial activities that in past years had migrated to Southeast Asia. The manufacturing industry and the infrastructure sector especially need new governmental instruments and schemes to have easier access to financial resources in support of new investments, particularly in North America, Russia, Japan and EU area countries.There is still a need for a globally coordinated economic/financial policy to sustain growth through structured development plans fostering more efficient medium- and long-term investments.

The steel marketWorldwide steel production reached nearly 820 million tonnes in the second half of 2014, up by 2.5% compared to the same period of the previous year.The steel market is thus building on the results achieved in 2013, with the prospect of exceeding the previous year’s output in 2014: China, India and Middle East are exhibiting faster volume growth while Russia, USA, Japan and EU are gradually returning to the output levels of the past.In the short term, a slight improvement is expected in the EU market, albeit with still weak prices and demand and with declining raw material costs thanks to the increased supplied tied to the greater extraction capacity attained by large mining companies.In addition, production is expected to be stable in Southeast Asia, where the economic conditions are more favourable with still strong domestic demand: this situation is inducing many operators to update the technology of less efficient plants, to improve production quality and speed up the financial return of the investments.In any case, an improvement is expected starting in 2015, thanks to the many private investments and public infrastructure projects that will come into effect especially in countries with emerging economies.

The market for steelmaking plantsBecause worldwide steel consumption is expected to remain strong over the next few years, with the financial markets more stable and open to credit, there is still solid interest in investing in new plants, especially to serve geographic areas where major manufacturers are not yet operating, whilst ensuring greater flexibility and a more efficient use of available resources.The confirmation of the strategic role of the metal industry and of its multiplier effect for growth and employment in the manufacturing industry in general, has led to greater interest in maintaining and developing this industry investing in plants with innovative technologies even in countries with mature economies.Demand is maintaining appreciable growth in the BRIC countries, the USA, the Middle East and North Africa for integrated mid-size plants with quality products used in mechanical engineering, carmaking and infrastructure.The prospect of using new technologies to improve plants’ energy efficiency with environmentally friendly production through the efficient implementation of recycling principles is encouraging American, European and Russian operators, too, to make fresh investments to boost plant quality and efficiency, whilst reducing emissions and pollutions to protect the environment. Maintenance by the Group of a substantial order book confirms the solidity of demand and an inclination to invest in quality plant that affords cutting-edge production techniques.

Group operations The Danieli Group designs, builds and sells plant for the iron and steel industry, offering a complete range of machines from primary process management to the manufacture of finished goods (essentially from ore to finished product). It also produces and sells special steels for the long products market through its subsidiaries Acciaierie Bertoli Safau S.p.A. and ABS Sisak D.o.o.


Construction and sale of plant for the steel industry

– twelve design centres:• Danieli Centro Combustion Italy – India• Danieli Hi Tech Germany• Danieli Polska Engineering Poland• Danieli UK Holding United Kingdom• Danieli Innoval United Kingdom• Danieli Czech Engineering Czech Republic • Danieli Romania Romania• Danieli Procome Iberica Spain• Danieli Centro Met Swiss Switzerland• Danieli Heavy Machinery Ukraine• Danieli Engineering Japan Japan• Danieli Industrielle Beteiligung Vietnam

– nineteen production units and design centres:• Danieli & C. S.p.A. Italy• Danieli Automation Italy• Danieli Centro Cranes Italy• Danieli Special Cranes Italy• More Italy• Stem Italy• Danieli Engineering & Services Austria• Rotelec France• Danieli Fröhling Germany• Danieli Henschel Germany – France – Russia• W + K Industrie Germany• Morgardshammar AB Sweden• Sund Sweden – People’s Republic of China• Termo Makina Turkey• Danieli Riverside USA• Danieli India India • Danieli Metallurgical Equipment (Beijing) People’s Republic of China• Danieli Changshu Met. Equipment (Shanghai) People’s Republic of China• Danieli Co. Thailand

The product lines are as follows: Danieli Engineering DE ItalyTurnkey plants and plant engineering• Danieli AREX HKR DAX Italy

Pelletizing and direct reduction• Danieli CentroMet DCM Italy – Sweden

Steelworks and casting machines• Danieli Wean United DU Italy – USA – UK

Hot and cold rolling for strip, continuous casting and process lines

• Danieli Morgårdshammar – Sund – Danieli AKV DMH Italy – Sweden –Rolling mills and finishing plants People’s Republic of Chinafor long products

• Danieli Automation DA Italy – USA – UKEquipment and process Thailandautomation lines, plant and machinery

• Danieli Rotelec DR FranceElectromagnetic systems andinduction reheating systems

• Danieli Centro Combustion DCC Italy – USAReheating and heat treatment furnaces, furnaces for process lines

• Danieli Breda DB ItalyExtrusion presses

• Danieli Fröhling FRÖHLING GermanyNon-ferrous rolling

• Danieli Centro Maskin DCMK Italy – Sweden• Secondary processing machines,

grinding, drawing, straightening and peeling machines• Danieli Service DS Italy – USA – UK

Installation, start-up, after-sales serviceSpare parts

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• Danieli Centro Tube DCT Italy • Seamless and welded tube production plants• Danieli Construction International• Large site management DCI Italy • Danieli Centro Cranes – Danieli Special Cranes DCCR Italy• Cranes for harbours and industrial plants• Danieli LYNXS DLYX UK• Scrap shredders

Production and sale of special steelsThese operations are handled by the subsidiaries Acciaierie Bertoli Safau S.p.A. and ABS Sisak D.o.o., which are in a position of leadership in Europe in the special structural steels sector, with production to order of high quality products for the most demanding applications in the form of ingots up to 160 tonnes, blooms, billets, forged and rolled products with a high level of verticalisation, with diameters from 15 to 800 mm.The structural steels family includes high carbon steels, case-hardened, hardened and tempered, and surface hardened steels which have applications in all engineering components. Their field of use is very extensive: motor vehicles and engines in general, tractors and earthmoving machines, machine tools, the railway industry, and the energy and petrochemical industries.

GROUP STRUCTURE

Danieli & C. Officine Meccaniche S.p.A. (Parent Company)The company’s revenues amounted to 1,057.9 million euro (983.9 million euro in 2013) with EBITDA of 22.5 million euro (32.2 million euro in 2013) and net profit of 131.5 million euro (71.6 million euro in 2013).Sales volumes remained strong, slightly higher than the previous year’s, but with operating margins penalised by extra start-up costs for a number of highly innovative projects and by the settlement of some technical disputes on complex projects.Major research and development activities continued nevertheless, with a view to expanding and completing the range of high-tech products to be used mainly in cutting-edge machines and systems.The company continued to implement its investment plan, starting work in the new Research Centre and increasing the productivity and efficiency of the Buttrio plant by replacing operating machinery older than 15 years.The period’s financial operations were penalised by the negative trend in the exchange rate between the USD and the euro, but they are supported by the collection of sizeable intercompany dividends with a direct effect on the improvement of the net profit for the period.Order acquisition was in line with the budget, and it assures good production planning for next year, with positive operating income expected also for the 2014/2015 financial year.

The Parent Company Danieli & C. Officine Meccaniche S.p.A. directly owns the following companies:• INDUSTRIELLE BETEILIGUNG S.A., the holding company for the Group’s manufacturing firms;• DANIELI INTERNATIONAL S.A., which invests liquidity in the international financial markets through

the company Danieli Banking Corporation S.A. (formerly, Danfin International SA).Below is a description of the operations and results of Danieli’s Italian-based steelmaking and plant making businesses and its other Group companies around the world. Results are based on the companies’ own financial statements, suitably reclassified and adjusted to bring them into line with the international accounting standards followed by the Group.

Group companies – Italy

Steel making

Acciaierie Bertoli Safau S.p.A. (ABS) In 2013/2014 ABS had revenues of 766.3 million euro (672.4 million euro in 2012/2013), with a net profit of 30.2 million euro (profit of 14.9 million euro in the previous year). During the year, the performance of the company, in terms of output, was positive thanks to the improvement in the buoyancy of domestic and European special steels market with the technical/commercial support of operating affiliates in the French, German and Swedish market.ABS increased its presence in the “premium” markets of special steels by consolidating its own production practices, also with new partnerships, with the goal of obtaining high-quality products that better meet customers’ requirements and can belong to a more competitive market.In addition, a thorough assessment was carried out on the product, to analyse the effects of all materials and equipment that come in contact with the steel during the production phases, comparing these indications with the best practice linked to the manufacturing process.Investments for the ROTOFORGIA project continue, while the project to revamp the MCC3 continuous casting machine has just begun; its goal is to increase the casting section up to a maximum diameter of 850 mm and a minimum section of 405 mm, providing for a reduction in the machine’s set-up times. The completion of the project is planned for the end of October 2014.


The order book at June 30, 2014 amounted to approximately 278 thousand tonnes, compared with approximately 223 thousand tonnes at June 30, 2013; this level of orders maintains the company’s visibility to the short term and requires ever more meticulous replanning of production, along with flexibility of labour and plant organisation. ABS confirmed its strategy, oriented at manufacturing high quality finished products, a point of excellence of the company, with the goal of achieving positive results in the future through constant diversification of the product range it has created to satisfy market demand and acquire additional (highly profitable) niche positions.

Qualisteel S.r.l. Qualisteel S.r.l. provided production support during the year for the cold conditioning of ABS products, completing their verticalisation.For the year 2013/2014, the company’s revenues amounted to 11.9 million euro, compared to 10.9 million euro in 2012/2013, substantially breaking even as at June 30, 2014.During the year, analyses and studies were initiated to reduce times with a view to lean manufacturing in order to create productive efficiency, engaging in the search for new finished product packaging systems with the goal of assuring the delivery of compliant products (in particular, not oxidised and protected against impacts and cuts), allowing additional guarantees on the delivery of the goods and lower packaging times.In addition, the “zero nero” project was started; it provides exclusively for processing ground bars and no longer rolled bars; this activity will enable the company to install a new production line to process polished bars with greater profitability.

ABS Centre Métallurgique (ACM) SARL ACM operates as a centre of excellence in the study of steel production covering the entire operating chain, starting from the raw material (scrap) and ending with the final product to be delivered to the customer.Research and innovation activities have begun on the steelmaking process through collaboration with Danieli &C. Officine Meccaniche S.p.A.; these activities include the study of the thermal model for continuous casting machines.During the financial year, the company consolidated its relationships and joint projects with “Ecole Art et Mètiers Paristech” (mechanical engineering specialisation school) of Metz and with the Paris Polytechnic and joint collaboration projects have been started with other research centres (e.g. Fiat research centre, PSA and Schaeffler).

ABS Deutschland GmbHABS Deutschland operates in Germany for the development of Steelmaking sales on the German market. In 2013/2014, it consolidated its sales of the new products of ABS Sisak and in the Automotive segment.

ABS Sisak d.o.o.The company started production activities again in November 2013, after an idle period necessary to complete the investments for the technological update of the plant.In this first year of partial production, the ramp-up process was substantially completed, so the company will be able to operate more efficiently and productively from 2014/2015. During the year, the company continued to pursue the consolidation of products for flanges, for rerolling, for tube production, while also developing new case-hardened steels, for bearing races and free cutting.A new VD steel treatment furnace was installed and the layout of the auxiliary equipment for fabrication and handling was streamlined.These investments will enable the company to manufacture higher quality steels, markedly boosting the production volumes and efficiency of the site.

Plant making

Danieli Automation S.p.A. The revenues amounted to 194.4 million euro (2013: 190.6 million euro), with a net profit of 42.3 million euro (35.6 million euro as at June 30, 2013).During the year, Danieli Automation appointed new directors and structured a new corporate leadership, organising the company operationally in six Business Units, with the following responsibilities: – primary steelmaking;– long rolled products;– flat rolled products;– power products;– measurement and robotic products;– plant start-up and service.Danieli Automation invested approximately 5 million euro in research and development, specifically in the sectors of non-ferrous flat products.

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During the year, research activities made it possible further to improve the range offered to customers with new products, including:– Medium voltage inverter: system for commanding large synchronous and asynchronous motors

with speed control through a vector technology that assures high precision levels and dynamic performance required to use such motors in continuous rolling processes.

– Induction reheating systems: to be used in continuous rolling processes for Flat and Long Products (between the casting and the rolling stage). This technology allows for better management of reheating processes, with significant cost reduction and a better approach to environmental issues.

– Safe Star System: it enables operators continuously to notify their position within the plant perimeter and rapidly and automatically to warn of any dangerous situation within the plant.

Work continues on the implementation of the new DA platform called “3Q”, pertaining to automation systems. The system is able to:– facilitate management of technological manufacturing processes;– support operators during all stages of the operation of machines/plants through interactive modes;– boosting the typical potential of a classic automation system, providing with “knowledge” about

the operating modes of plants and processes to assure consistent production quality and quantity, regardless of the operators and their capabilities.

The order book at June 30, 2014 amounted to 258.5 million euro (292 million euro at June 30, 2013), enabling to forecast a good level of production and a positive result for 2014/2015 as well.

Danieli Centro Combustion S.p.A.The revenues came to 61.2 million euro (60.1 million euro in 2013) with a net profit of 3.1 million euro (3.3 million euro in 2013).The Research Centre opened at the University of Savona and in operation since last year, consisting of two test furnaces and a closed-loop cooling system, consolidated its activities; pursuing research to improve the design of products, such as regenerative burners, oxyfuel, flameless and self-recuperative burners, enabling to address the international market with offers of plants with low environmental impact and use of gas with low heat of combustion.An additional test furnace is under construction; it will make it possible to test new types of rollers both for tunnel furnaces and radiant tube furnaces, allowing to expand the product range and to propose innovative solutions with improved performance compared to the products currently on the market.Among the main orders acquired during the year is the supply of two HDGL revamping contracts for two German customers, two revamping contracts for Pusher furnace for an Egyptian customer and a revamping contract for a furnace in a Z4 galvanisation line. During the year, major plants were started up, including a furnace pre-heating equipment set and a furnace preheating and revamping contract in Brazil.The order book at June 30, 2014 amounted to 118.9 million euro (93 million euro at June 30, 2013); this value will ensure a healthy profit in 2014/2015 thanks to products known for their solid reputation, reliability and performance.

Danieli Centro Cranes S.p.A. This company, based in Rezzato (BS), is specialized in the supply of cranes for industrial plants. Its secondary location in Latisana (UD) supplies electrical/automation systems for cranes. Revenues came to 42.6 million euro with net profit of 2.6 million euro (2013: 39.1 million euro with net profit of 0.9 million euro).The company continues to pursue the following objectives:become a specialized nucleus for all cranes in use in Europe, North America and Russia;for the other areas of the world, focus on the production of “crane kits” (spare parts and components) as opposed to structural frames;concentrate more closely on the production of technologically advanced cranes and opt for sub-contracting solutions for simple cranes.At June 30, 2014 Danieli Centro Cranes had an order book of 26.2 million euro (23.2 million euro at June 30, 2013) and the company expects that turnover next year will be in line with 2013/2014, but that margins will be more rewarding thanks to the improvements to planning, cost estimating and delivery times for cranes.

Danieli Special Cranes S.r.l. Danieli Special Cranes, based in Gradisca d’Isonzo (GO), is specialized in the design and construction of cranes for harbours and special cranes for shipyards.Revenues in 2013/2014 came to 6.5 million euro, substantially breaking even (2013: 3.7 million euro, with a net profit of 0.1 million euro). The company operates as a Global Project Contractor, outsourcing all components purchasing and construction according to design, handling the follow-up and expediting of the orders placed.Its strategy is to focus on the supply of technologically advanced wheeled and jib cranes for the loading and unloading of ships (loose cargo and containers), fully designed in-house. Among the main orders of the year, of note are the construction of a harbour jib crane for the French customer Cherbourg and a 50-tonne bucket unloader for Arcelor Mittal Gent.


The research and development work carried out during the year focused on the study of a new equipment item called “Coil Grab” to be placed on the marked in 2014/2015. This study has already been partially utilised on two job orders with satisfactory results.The order book of 19.8 million euro at June 30, 2014 assures, for next year, a volume of sales in line with last year, but with better margins.

Danieli Construction International S.p.A.This company, based in Italy, specializes in site management for plant installation in the metals sector with the coordination of the work required to build the technological foundation, assemble the equipment and start up plants, and it operates on a worldwide basis with an independent operating structure for managing large construction sites in particular.Revenues, at 16.6 million euro, decreased from the previous period (2013: 19.4 million euro) with a loss of 0.9 million euro as at June 30, 2014 (the company broke even at June 30, 2013). During 2013/2014, the company successfully completed some major construction sites, using its structures in Italy to complete pre-assembly work and its movable machines abroad for site moving, while standardizing the operating protocols for more efficient management and more effective control over mounting activities.

More S.r.l. The company, which sells technological packages for electric furnaces used at steelworks, reported revenues of 16.1 million euro (2013: 17.9 million euro), with net profit of 3 million euro (3.9 million euro in 2013) and an order book of 7.1 million euro at June 30, 2014. More completed the expansion of its workshop in Gemona del Friuli installing two additional machine tools for in-house production of all critical and high-value parts of its equipment at competitive costs and with better quality standard, in compliance with prescribed delivery times. Research and development continues with the objective to improve the performance and reliability of the equipment built with the company’s own technologies and new innovative solutions. More’s reputation, consolidated testimonials and commitment to research and development confirm its leadership role and the likelihood that future results will be in line with those of the year that has just ended.

Stem S.r.l. Based in Magnago (MI), this company works in metal treatment and finishing plants, designing and developing equipment for rolling mills used in the production of light and heavy long products.In 2013/2014 it earned revenues of 13.8 million euro and a net profit of 0.8 million euro (2013: 6.8 million euro with net profit of 0.3 million euro).The year that has just ended was very important for Stem, which addressed a far broader international market thanks to the construction and start-up, in Canada, of the first plant for the production of coiled aluminium wire and to its consolidated presence in Italy, with the new operating site in Brescia, to better manage Italian customers offering a competent local service for the modernisation of rolling mills and steelworks.Within Stem, an internal product line was created: called “FAST”, it is dedicated to serving first and foremost Italian steel mills by designing and building equipment and specific spare parts with close focus on quality and delivery times.The site in Brescia has also enabled the company to create new contacts with local universities and to offer local young people who have just completed high school and university to attend the Danieli Academy for the development and training of young talents.

Group companies - Europe

Danieli Centro Met Swiss GmbH (Switzerland) The company, based in Rheinfelden, falls within the Danieli Centro Met product line and is involved in the design, construction and sale of electric furnaces and plant for secondary metallurgy.It has developed excellent technological know-how and sells the plant it designs directly in the worldwide market.

Danieli UK Holding Ltd. (United Kingdom) Danieli UK Holding Ltd reported revenues of 22.4 million GBP in 2013/2014, equivalent to 26.9 million euro (2013: 17.3 million GBP, i.e. 21.0 million euro) and a profit of 0.2 million GBP, equivalent to 0.3 million euro (0.3 million GBP or 0.4 million euro the previous year).The company increased revenues by 30% during the year, thanks to the deliveries of some plants for processing and recycling ferrous and non-ferrous scraps; however, there were also extraordinary costs for after-sale service.

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Innoval Technology Limited The company has earned revenues of 2.4 million GBP (equivalent to 2.9 million euro) and a net profit of 0.2 million GBP (0.3 million euro).Innoval has become well consolidated within the Group after its acquisition in 2012, providing technological support to commercial activities for the sale of innovative rolling mills for new aluminium alloys.During the year, additional process models were developed, including the Innoval Rolling Model, an IT model used both to design new rolling mills and to improve the control and performance of existing ones.Particular care was paid to the development of new innovative alloys, free of impurities, and to process technologies aimed at increasing the use of recycled aluminium for automobile construction. The research centre also developed new technologies for the manufacture of individual plates with different thicknesses within the same piece, making them already suitable for final stamping, even for applications in the automotive industry.In addition to the development of new aluminium alloys for existing markets, the company has continued to support the development of new markets for aluminium and to maintain strong ties with major English universities such as the University of Manchester, Brunel, Warwick and the Imperial College of London through research and cooperation programmes.

Danieli Engineering & Services GmbH (Austria) This company, based in Völkermarkt, Austria, is specialised in the sale of components, spare parts and after-sale services for stillworks and rolling mills and its sales volume for the period was 70.6 million euro (2013: 62.2 million euro) and a net profit of 10.3 million euro (2013: 12.8 million euro).During the year, the company also nearly completed the installation and start-up work for two plants in the aluminium sector, i.e. respectively: “80 MN Stretcher” and a “Hot Rolling Line” for the Austrian customer AMAG.Among the company’s specialist activities, of note are the management of the rolling guide assembly set (which last year saw the manufacturer of a new series of products) and the assembly department, qualified in overhauling machines and sets for the European market.The company also has a separate office in Linz which develops, designs and provides technical and commercial service for the construction and sale of converters for steel production.The company’s order book remains significant and it enables the company to face 2014/2015 from a good competitive position.

Danieli Heavy Machinery Engineering LLC (Ukraine) Based in Dnepropetrovsk, Ukraine, this company has its own design centre and during the year it completed a major project for a local customer with the construction of civil works and installation of a 1.3 million t/y steelworks. Revenues for the year were 121.3 million UAH, equivalent to 9.6 million euro (136.0 million UAH or 13.0 million euro for the year to June 30, 2013), with a loss for the period of 2.6 million UAH, equivalent to 0.2 million euro (profit of 13.2 million UAH or 1.3 million euro at June 30, 2013). Hence, the company substantially broke even, influenced essentially by the negative effect of the devaluation of the exchange rate on financial statement items expressed in the local currency. With a view to consolidating and strengthening its local technical organisation, both to expand its design capacity and to diversity available skills, the company is satisfactorily continuing its cooperation with the Metalworking Academy and the Academy of Architecture and Civil Engineering in Dnepropetrovsk. The objective is to recruit the best students to strengthen the local technical offices and steering them toward supervisory roles at Danieli sites around the world.The company has also invested in improving and modernizing its SW and HW design tools in order to increase design quality with the use of new 3D techniques.The company continues to be at the forefront in the governmental project to modernize the Ukrainian metallurgic industry, promoting itself as a reliable, well-reference partner for future projects in this sector.

Danieli Czech Engineering (Czech Republic)The company, located in Prague, has its own design, project management and expediting centre and it is specialised in EPC (Engineering Procurement & Construction), mainly using local sub-contractors for the supply of equipment of steelworks and rolling mills for high quality steel bars.The company, with revenues of 63.9 million CZK, equivalent to 2.4 million euro (2013: 176.6 million CZK, equivalent to 6.9 million euro) and it was close to breaking even (in line with June 30, 2013).In 2013/2014 DCZ completed the supply of equipment for a rolling mill to the customer MECHEL, a 4-line continuous casting machine to the customer Železiarn� Podbrezová, while the contract with the Yehuda customer, for the supply of a rolling mill with MI.DA.® technology, came definitively into force.The order book at June 30, 2014 amounted to 30 million euro and it will enable the company to operate efficiently next year.


Danieli Hi Tech GmbH (Germany) The company, with registered office in Mülheim, Germany, operates in the engineering and project management business through its own design and computing centre.With revenues of 1.8 million euro (2013: 1.9 million euro) the company broke even (in line with June 30, 2013), continuing its commercial and design activities for the Group’s product lines with the objective of confirming its results next year. The company has the following holdings:

• Fröhling Group (Germany) The Fröhling Group, with its registered office in Meinerzhagen, operates in the sector of cold rolling machines for steel and aluminium and it closed the year to June 30, 2014 with revenues of 141.8 million euro (2013: 67.1 million euro) and a loss of 3.6 million euro (2013: loss of 3.7 million euro).The negative result of the company was essentially due to unrealised exchange rate differences on contracts with the price expressed in US Dollars. Thanks to the good prospects for the aluminium sector, driven in particular by buoyant demand from the automotive industry, and the company’s solid order book of 205 million euro at June 30, 2014, a positive performance is expected for 2014/2015, confirming the company’s position as the technological leader in the market.

• Danieli W+K IndustrieTechnik GmbH (Germany) The company, based in Dortmund, Germany, operates in the rolling mills and welded tube production plant sector and closed the year with revenues of 58.5 million euro (2013: 15.8 million euro) and a net profit of 5.6 million euro (loss of 4.0 million euro the previous year) as a result of the completion of the work for a major project for the supply of equipment for a bar and rod rolling mill for a Russian customer.The order book at June 30, 2014 amounted to 28.0 million euro and thanks to the expansion of the range of new products and to the positive references in the supply of spiral pipes, a good result is also expected in 2014/2015.

Danieli Procome Iberica SA (Spain) Based in Sondica, Spain, this company produces long product finishing machines and closed the year with revenues of 16.5 million euro (2013: 23.9 million euro) and a net profit of 0.5 million euro (0.4 million euro the previous year).During the year, in cooperation with the Danieli Research Centre, a project for the qualitative improvement of finishing equipment was undertaken, while developing a system to eliminate the environmental problems deriving from the emission of dusts.Thanks to a satisfactory order book and with the use of 3D design techniques applied to the standardisation and re-engineering of Procome products, the company will maintain a profit in 2014/2015 as well.

Morgårdshammar AB (Sweden)The company reported revenues of 149.9 million SEK, equivalent to 16.9 million euro (2013: 203.1 million SEK, or 23.8 million euro) and a net loss of 10.8 million SEK, the equivalent of 1.2 million euro (versus a profit of 5.9 million SEK, or 0.7 million euro, the previous year).The result was affected by lower sales in the period, essentially connected with unfavourable conditions in the Indian market for equipment and spare parts for rolling mills for long products.The company proposed a new digital revamping kit to the market (known as “Smart Eye”) to optimise optical instruments in rolling mills; once testing is successfully completed, it will be introduced in the market by 2014.At June 30, 2014 the order book stood at 10.7 million euro, and the company expects to break even next year.

Rotelec S.A. (France) Revenues for the year declined from 18.2 million euro at June 30, 2013 to 15.1 million euro, however a good profit of 2.4 million euro was maintained (2013: 3.0 million euro) thanks to effective cost optimisation measures.During the period, the company developed a new electromagnetic brake (MM_EMB) for continuous castings. The prototype was tested internally with successful results. In addition, a new low frequency power supply for EMS applications was developed with the aid of a microprocessor control, reducing costs by 25%. The first power supplies will be delivered by the autumn of 2014.The company is proceeding with research activities in order to further develop systems for electro-dynamic control of the flow of liquid steel in continuous casting machines of both long and flat products.Rotelec also maintains its technological leadership of the worldwide market for electromagnetic stirrers and plants for heating strip edges for coils, enabling the company to maintain good results in terms of sales and margins, with positive prospects for the coming year.

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Sund Birsta AB (Sweden) The company’s revenues amounted to 406.5 million SEK, equivalent to 45.9 million euro (2013: 469.6 million SEK, or 55.0 million euro), whilst net profit was 45.7 million SEK, the equivalent of 5.2 million euro (2013: 41.1 million SEK, equivalent to 4.8 million euro).The company developed a new electric actuation technology for tying machines, suitable for replacing hydraulic machines, obtaining a reduction of operating costs, optimising energy consumption and reducing maintenance; after further testing, the machine will be offered on the market during the 2014/2015 financial year.Sund consolidated the electric actuation technology for the components of the horizontal compactor called “PCH Alpha II”. This machine was designed mainly for rolling mills with high-productivity and quality products, essentially in the Asian market. Co-operation with the University of Lulea continues, with the goal of improving the technology of key components in the cutting and drilling process. Sund Birsta AB closed the financial year at June 30, 2014 with an order book of 27.4 million euro, ensuring strong production levels and a positive result for 2014/2015, maintaining its position as a global leader in the sector of packaging systems for long products.

Danieli Corus Group (Holland) The Danieli Corus Group, consisting of the company Danieli Corus Technical Services BV and various subsidiaries in Asia and the USA, operates in the primary metallurgy sector, offering blast furnaces and associated auxiliary systems; 50% of the Group is owned by the Danieli Group and 50% by the Tata Corus Group, one of the world’s biggest steel producers.The joint venture, with registered offices in Holland, closed the period from July 1, 2013 to June 30, 2014 with revenues of 69.2 million euro (80.2 million euro in the previous period) and a profit of 3.7 million euro (versus a loss of 1.8 million euro the previous period), thanks to the restructuring of the subsidiary companies and efficient work performance on some Indian and Russian work orders, in addition to good absorption of the structural costs linked to the number of orders acquired during the period. The primary steelmaking market is still depressed at present; however, the order book at June 30, 2014 and the currently ongoing negotiations enable the company to expect a profit or at least a break-even situation for 2014/2015.

Danieli International S.A. / Danieli Banking Corporation S.A. (Luxembourg) During the period, liquidity continued to be managed according to the traditional principles of prudence in investments; the low returns in the financial markets enabled in any case to achieve a positive, but still reduced and unsatisfactory, yield, while still maintaining low-risk, highly liquid investments. On the other hand, the component of deposits expressed in US Dollars was aligned to the negative exchange rate at the closing rate of the year, eliminating most of the profits achieved during the period. On January 16, 2014, Danieli Banking Corporation SA (formerly Danfin International SA) completed the long and complex process to receive the Luxembourg Ministry of Finance’s license to operate on the banking market as a qualified financial operator. The company’s operating structure was implemented in accordance with the requirements of the Luxembourg financial market regulator (CSSF) and, within the scope of an overall enhancement of the presence in the country, a new headquarters building, needed for the company’s operations, was acquired. Average portfolio returns remained substantially in line with the previous year, whilst the result was negatively impacted, as indicated above, by the exchange rate effect tied to the alignment of cash expressed in US Dollars to the Group’s functional currency (euro). At June 30, 2014, the profit from liquidity management amounted to 24.0 million euro (23.4 million euro at June 30, 2013), sterilised by negative exchange rate differences of 10.1 million euro (net losses of 13.5 million euro at June 30, 2013).

Danieli Henschel Group (France, Germany, Russia)This company is headquartered at Chambéry, France, but it is active through operating affiliates in Germany and Russia. The Group is the world’s leading designer and builder of metal scrap processing machinery (pre-shredders, balers, stationary and mobile grinders, and shears) and has its own well-tested technology with outstanding references in the market.The Group’s revenues came to 40.7 million euro, with a net profit of 0.5 million euro (2013: 26.8 million euro with a net profit of 0.3 million euro). Danieli Henschel’s objectives are:– to use its workshops in Europe as specialized facilities in the production and development of

machines for the Europe, Russia and Middle East area;•– to build machines in the Far East as well, leveraging the Danieli Group’s synergies to promote their

sales in the Asian market.Danieli Henschel France co-operates with excellent results with the ENISE mechanical engineering school in Saint Etienne, with the goal of recruiting the best students in order to further develop the activity of the local company and of those located abroad.The order book of 20.3 million euro at June 30, 2014 will generate a healthy volume of sales, assuring a satisfactory net profit next year.


Group companies – Russia / Turkey

Danieli Russia EngineeringDanieli Russia, based in Moscow, Russia, had revenues of 330.9 million roubles, equivalent to 7.2 million euro, at June 30, 2014, with a net profit of 6.1 million roubles or 0.1 million euro. The company is specialised in the acquisition of installation, start-up and commissioning orders as Main Contractor with customers in the Russian market; it is successfully completing the installation of a bar rolling mill in Tyumen for the Russian customer UMMC with the goal of completing the order in 2014/2015.

Danieli Volga Danieli Volga (incorporated in Nizhny Novgorod in October 2011, and operating there with the new factory since December 2013) has furthered the internationalization of the Danieli Group by adding local production capacity to serve strategic markets.The production site, which covers approximately 10,000 square meters of manufacturing spaces and 3,000 square meters of technical offices, cafeteria and personnel dressing rooms, has been in the operational ramp-up phase since the first half of 2014. All machinery has been installed, tested and commissioned. The water drainage system and the landscaping of the site will be completed by the second half of 2014.The company, equipped to move heavy machinery, is provided with latest-generation operating machines and technical office, supporting Russian steelmaking companies’ demand for spare parts, plant parts reconditioning, environmental equipment and for better energy management in the production process.DVG also provides qualified technical assistance and maintenance services with local personnel at customers’ plants throughout the CIS, with the goal of designing, manufacturing and marketing machinery, mechanical components, and turnkey production plants in the mechanical engineering sector in general, and more specifically in the steelmaking business.

Danieli Anatolia The company, located in Izmir, operates in the country to promote Danieli products with major local steel operators.Its purpose is to design, buy, produce and market all kinds of machinery, device or equipment, in particular for the steelmaking and metal industries, providing all related technical services.

Termo MakinaThe company, based in Duzce (Turkey) operates with an autonomous operating structure of approximately 46,000 square meters near the industrial harbour. It was acquired by the Danieli Group in March 2014.Termomakina is specialised in the supply of:– cranes for steel mills (loading cranes, internal handling cranes, etc.);– equipment for electric furnaces (cooled panels, etc.);– equipment for rolling mills (roller ways, cooling plates, etc.)– equipment for continuous casting plants (bucket cars, ladle cars, transferring cars) in addition to a

broad range of spare parts for steel mills.The company reported a loss of 1.9 million Turkish lira, equivalent to 0.7 million euro, at June 30, 2014.The company’s strategy, already underway, is to:become a specialised centre for cranes with standard characteristics to be supplied in Turkey and in the Middle East-North Africa region;focus on the supply of equipment and spare parts on the local market for electric furnaces and continuous casting plants.For the next year, thanks to ongoing negotiations and the expected turnover tied to project scheduling according to the already acquired order book, the company is expected to be profitable once again.

Group Companies – America

Danieli Holdings Inc. (United States) The Daniel Group operates in North America with Danieli Holding Inc., which coordinates the work of several local affiliates. The United States Group, comprised of Danieli Holdings Inc. (the USA holding company), Danieli Corporation (U.S.A.), Danieli Technology Inc. (U.S.A.), Danieli Canada Inc. (Canada), Morgårdshammar Inc. (U.S.A.), Danieli Property Holdings LLC (U.S.A.) and Danieli Riverside Products (U.S.A.), had consolidated revenues of 305.4 million USD, equivalent to 225.1 million euro (2013: 144.5 million USD, i.e. 111.7 million euro) and a profit of 7.9 million USD, equivalent to 5.9 million euro (2013: profit of 5.3 million USD, i.e. 4.1 million euro).On July 18, 2014 Danieli Holding Inc. acquired a 50% interest in Danieli Taranis LLC. The company, located in Birmingham (Alabama), will concentrate on developing the automation and process control business in North America.

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The company has the following operating holdings:

Danieli Corporation The company continues to operate as the main operating company in the American continent, covering the entire range of products offered by the Group on the local market and providing assistance to customers for revamping and post-sale maintenance services for metal plants, machinery and spare parts.Company activities are divided into the following product lines:– DWU USA – sale, design, supply and project management activities for flat product plants;– DMH USA and DCM USA – sale, design, supply and project management of plant and machinery

for long product rolling mills, steelworks and casting machines;– DA USA – development and sale in the North American market of products from the Danieli

Automation line for automation and process control;– DANIELI SERVICE – provision of services and spare parts for all product lines to the North American

market.During the year, the North American market showed convincing signs of economic recovery, especially thanks to the lower cost of energy in the country, tied to long-term benefits deriving from exploration and exploitation of Shale Gas and Sand Oil, and demand for the company’s products is expected to increase.The seamless tube production plant for the US customer Bentler is under construction, with delivery expected by the end of 2015.

Danieli Riverside Products Inc.The company, based in Bettendorf (Iowa), follows the market for consumable components (rotors and hammers) for scrap processing machines in North and South America, operating as a privileged platform to introduce other Danieli product to the American market.Danieli Riverside has earned revenues of 12.0 million USD (equivalent to 8.8 million euro) and a net loss of 1.8 million USD (1.3 million euro).During the year, the utilization rates of plants in the USA declined slightly, leading to a contraction in the market where the company operates, both with regard to anti-abrasion spare parts and for the delivery of spare rotors (which nonetheless recovered in the second half of 2014). The result was also penalised by an inefficient management of logistics, procurement and quality control processes; therefore, Danieli Riverside launched a project for optimising the aforementioned processes in order to boost its market competitiveness.The company continued to develop a new, innovative series of anti-abrasion components made of carbon steel, called “Carbon Series”, that will enable it further to consolidate its position as a provider of high quality products in a field dominated by manufacturers of components with highly similar standard characteristics. The anti-abrasion components of the Carbon Series enable customers significantly to reduce operating expenses related to maintenance work, thanks to a longer working life compared to traditional components.The market recovery, the revision of key company processes and the order book, amounting to 4.2 million euro at June 30, 2014, will drive the company to achieve a positive result for next year.

Group Companies – Southeast Asia

Danieli Co., Ltd. (Thailand) The net profit was 51.4 million euro (2013: 68.3 million euro) with revenues of 357.4 million euro (2013: 519.2 million euro). These results were achieved through careful production planning with better operating efficiencies, obtained with workshop optimization programs implemented by management in recent years.Some of the significant events during the year were:the consolidation of the range of products tied to the hydraulic component of equipment and to Pressure Vessels;the development and marketing of new products tied to the Oil & Gas market.The company started a new investment program, which calls, inter alia, for the further expansion of existing sheds, the purchase of a new system to reduce dusts originated from the work processes and the introduction of new software and hardware to improve engineering and automation.The financial forecasts for 2014/2015 remain positive with stable revenues and margins thanks to the execution of new contracts with local, East European and Asian customers. Also of note are the good results thanks to the consolidated collaboration with a major world player in plants for the O&G industry, tied to the supply of high quality pressure vessels. The company is active in the development of projects with the local community with support for school, religious and social activities in general, among which particularly noteworthy is the relationship with the prestigious local engineering university King Monkgut.The order book at June 30, 2014 suggests a positive result for next year as well.


Danieli Automation CO., Ltd. (Thailand)The company, based in Rayong, continued its work on the development of engineering and automation software with particular technical specifications to be used mainly by Far East customers.In 2014/2015, the goal is to strengthen the structure and continue with new investments in software and hardware.

Danieli ChinaDanieli China is a well-established business serving the local and international market, comprised of three independent companies, located strategically in the Beijing and Shanghai areas.

Danieli Metallurgical Equipment (Beijing) Co Ltd. (People’s Republic of China) The Beijing based company had revenues of 532.1 million CNY, equivalent to 63.9 million euro (2013: 534.7 million CNY, i.e. 66.2 million euro) and a net loss of 25.6 million CNY, equivalent to 3.1 million euro (2013: a loss of 54.0 million CNY or 6.7 million euro). During the year, the company specialised in the supply of tying machines and new automation technologies with a dedicated workshop.DME operates mainly in the North China market; among its major acquisitions, of note is the modernisation of the rod rolling line for the customer Anshan and a finishing line for the customer Qinghai.The company is undergoing a general restructuring process, to optimise its production processes and return to profit from the current year onwards.

Danieli Changshu Metallurgical Equipment and Services Co Ltd. (People’s Republic of China) The company, with its operating headquarters in Changshu in the Shanghai province, has become Danieli China’s foremost production centre with new sheds dedicated to assembly and a considerable increase in manufacturing capacity with new boring machines, work centres and vertical lathes for high-precision machining. The company’s revenues amounted to 2,396.2 million CNY, equivalent to 287.8 million euro (2013: 1,557.4 million CNY, equivalent to 192.8 million euro) and a net profit of 319.7 million CNY, i.e. 38.4 million euro (2013: 183.7 million CNY, equivalent to 22.7 million euro).Local production expanded the product range, offering high quality reheating furnaces, electromagnetic stirrers, a new generation of compactors, recycling machines, cold rolling mills, longitudinal cutting and packaging machines. The high value components of the machines are manufactured internally to assure high quality standards. The company is developing post-sale and technical assistance activities, to meet local customers’ needs. The goal is to be more competitive on the market by boosting process efficiency and optimising production costs.Among the most significant orders acquired during the period, of note is a combined pickling and galvanisation line for Rizhao (China), a casting mill for round billets consisting of 5 rolling stands and the modernisation of a bloom casting system for Jiangsu Shagang Huaigang (China).The order book at June 30, 2014, and the ongoing negotiations, suggest a positive result for next year as well.Co-operation continues with the best Chinese universities (Beijing, Anhui, YanShan and Nanjing) to promote the recruitment of young talents in the Group.

SUND Birsta Metallurgical Equipment Co., Ltd. (People’s Republic of China)Sund Birsta Metallurgical Equipment Co., Ltd. , based in Beijing, China, is consolidating its function as an autonomous operating centre of Sund Birsta AB in the Chinese market with a view to developing sales in the Far East. The current organization includes the sales, design, purchasing and local customer service functions.

Danieli India Ltd. (India) The Calcutta-based company is active in the secondary metallurgy plant sector, supplying furnaces, continuous casting machines, induction hardening plants for heat treatment and in general all other systems in the “out of furnace” area. Danieli India operates mainly in the Asian steel market and achieved revenues of 9,002.2 million INR for the year ended June 30, 2014, equivalent to 108.0 million euro (2013: 6,841 million INR, i.e. 96.4 million euro), with a net profit of 69.6 million INR or 0.8 million euro (2013: net profit of 317.4 million INR, i.e. 4.5 million euro).Construction and start-up work was completed on the new production plant in the Sri City area (near Chennay) in the state of Andhra Pradesh, significantly boosting operating capacity in the country, as the company is now able to build its own machines and equipment for the local steelmaking market, with Western quality and at competitive prices. Danieli India also renovated and expanded its operating site at Taratala (Calcutta), used for automation and the assembly of electrical and automation equipment. During the year it closed two important projects with the customer Steel Authority of India, for a bloom caster and a reheat furnace.

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In 2014, the Indian economy is going through a transition phase; the country’s GDP grew by approximately 5.7% and the government is pushing for large investments in infrastructure, so domestic demand for steel will grow.The company ended the year with a solid order book: the good prospects in the Indian market allow to forecast another bottom-line profit next year.

Danieli Centro Combustion India Pvt. Ltd. (India) The company ended the year with revenues of 457.5 million INR, i.e. 5.5 million euro and with a net profit of 21.5 million INR or 0.3 million euro (2013: 542.7 million INR, i.e. 7.6 million euro, with profit of 38.1 INR or 0.5 million euro). Danieli Centro Combustion India operates locally, with full autonomy with regard to the engineering of reheating furnaces for long products, heat treatments, process lines for strip and bell furnaces with the goal of becoming a centre of excellence in the country and locally manufacture all components required for its products.During the year, among the work orders acquired was a 200 tph reheating furnace for long products, whilst two 120 tph and 200 tph furnaces were completed for two Indian customers.The order book of 12.7 million euro at June 30, 2014 will generate a healthy volume of sales for 2014/2015.

Danieli Engineering Japan Ltd. (Japan) Based in Yokohama, Japan, the company reported revenues of 319.5 million JPY (equivalent to 2.3 million euro) for the year to June 30, 2014 (316.4 million JPY or 2.8 million euro the previous year). It operates in the local market as a premium engineering and project management centre for the Group’s product lines.Start-up work was successfully completed on the plants delivered to Nippon Steel & Sumitomo Metal Corporation, in particular for the Hikari ultra special steel rolling mills.In March 2014, the company entered into a major technical/commercial alliance pertaining to the direct reduction technology Energiron with Nippon Steel & Sumitomo Metal Engineering, making it possible to create significant applications by integrating blast furnace technology with direct reduction technology.In August 2014, a major work order was acquired for the supply of new rolling stands between Danieli Engineering Japan and Nippon Steel & Sumitomo Metal of Tokyo. For Danieli, the potential for new deliveries and systems in Japan is increasing, thanks to the positive references in the Country and to the strong economic growth in terms of GDP, deriving from the devaluation of the Yen.

Industrielle Beteiligung Company Ltd. (Vietnam) This company is based in Ho Chi Minh City, Vietnam and had revenues of 180,177.7 million VND (equivalent to 6.3 million euro at June 30, 2014), with a net profit of 526.8 million VND or 18 thousand euro (2013: 183,101 million VND, i.e. 6.8 million euro, with a profit of 11.2 million VND or 0.4 thousand euro).During the year, the company:developed its commercial structure to assure closer focus on post-sale services to local customers;further structured the function dedicated in the integration of engineering for civil works, technological foundations and mechanical equipment sector relating to plants supplied by the Danieli Group; structured functions dedicated to assembly, mounting, installation and commissioning for automation equipment connected with the plants supplied by the Danieli Group.It continues to make progress and will likely be profitable also in upcoming years.

Group companies – Middle East

Industrial Beteiligung Services and Contracting Co. LLC (Saudi Arabia) The company, based in Al Khobar, Saudi Arabia, operates in the management of large projects and closed the financial year with a loss of 37.5 million SAR, equivalent to 7.4 million euro (2013: loss of 43.3 million SAR, equivalent to 8.9 million euro).The bottom line was negative influenced, in the current year as well, by non-recurring completion and start-up costs for a major local project that was substantially completed during the period.

Danieli Middle East for Engineering & Services LLC (Egypt) This Cairo-based company operates in the local management of large projects and closed the year with a profit of 7.0 million EGP, equivalent to 0.7 million euro, compared with a profit of 0.4 million EGP or 0.1 million euro for the year to June 30, 2013.The company’s operations, which remained severely limited in the past two years, has returned to normal as formerly suspended sites have been reopened, with the prospect of maintaining a bottom-line profit in the future as well.


Analysis of consolidated profit and financial position of the Danieli GroupFor the year ended June 30, 2014, in the market situation described above, the Danieli Group achieved a net profit attributable to the Group of 153.5 million euro, compared with 162.5 million euro the previous year.For the year ended June 30, 2014, the main economic and financial data were as follows:– revenues: 2,944.1 million euro, an increase of 6% compared with the prior-year amount of 2,782.3

million euro at June 30, 2013;– profit before tax: 204.8 million euro, in line with the previous year’s 208.4 million euro at June 30,

2013;– consolidated shareholders’ equity: 1,548.4 million euro, up by 8% compared with 1,427.3 million

euro at June 30, 2013;– net financial position: positive by 844.3 million euro, down by 6.8 million euro from 851.1 million

euro at June 30, 2013.

The Group order book at June 30, 2014 amounted to 3,079 million euro (of which 217 million euro in the special steelmaking segment), compared with 3,206 million euro at June 30, 2013 (of which 184 million euro for special steels). New orders acquired in the period were in line with the budgeted amount, in a market that continues to be receptive thanks to the innovative solutions offered by our plants and Danieli’s presence across the entire metal making industry.

Reclassified consolidated income statement for the year ended June 30, 2014


Revenues 2,944.1 2,782.3 6%

Gross operating margin (EBITDA) (*) 308.8 277.5 11%

% of revenues 10.5% 10.0%

Depreciation, amortization and write-downs of fixed assets (98.0) (95.1)

Operating income 210.7 182.4 16%


Financial income/(charges) (7.4) 26.9

Investments accounted for with the equity method 1.5 (0.9)

Profit before tax 204.8 208.4 -2%

Income taxes (51.2) (45.2)

Net profit for the period 153.6 163.2 -6%


Profit/(loss) attributable to non-controlling interests (0.1) (0.7)

Net profit attributable to the Group 153.5 162.5 -6%


(*) The gross operating margin (EBITDA) represents operating profit as in the consolidated income statement, before fixed asset depreciation, amortization and write-downs.Gross Operating Margin (EBITDA) is used by the issuer to monitor and evaluate Danieli Group performance, although it is not defined as an accounting measurement within IFRS. Consequently, the criteria for determining this value may not be consistent with the one used by other entities, and therefore not be altogether comparable.

The Group’s revenue performance remained substantially stable in the plant sector, but with a significant increase in the steelmaking sector, without appreciable changes in the scope of consolidation.The operating profit for the period was solid, thanks in part to the release of some provisions made in prior years, and it was positively affected by the good contribution from the steelmaking sector, where ABS was still among the few companies worldwide with a positive net income and balanced financial income and charges.Start-up work began on the new production facilities in Russia and India, whilst the new production facilities in China and Thailand are successfully up and running, which have enabled the group’s transformation into an international force that can assure production quality and punctuality for better customer satisfaction.In the steel segment, work was carried out both in ABS Cargnacco, to streamline production and further to expand the steel brands produced (within a highly competitive, selective market), and in ABS Sisak to complete upgrades to facilities and boost their operating capacity and manufacturing efficiency: the level of demand for ABS remains buoyant, allowing for efficient planning of deliveries without anomalous fluctuations in transport and production costs.

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ABS achieved an output of approximately 795 million euro for the period, an improvement compared to the previous year’s figure, but with more satisfactory revenue volumes (approximately 686 million euro in 2012/2013) and margins<, thanks to a more favourable production mix. Group EBITDA for the year ended June 30, 2014 was 308.8 million euro, an increase of approximately 11% on the previous year, and margins were still substantial enough to cover the very high research and development costs incurred in the period.Net financial charges, instead, came to 7.4 million euro, a considerable reduction with respect to the year ended June 30, 2013, negatively affected by the trend in the EUR/USD exchange rate and by the reduced returns obtainable with our deposits that still need to retain a high solvency and liquidity profile. Cash management was in any case handled prudently, maintaining satisfactory profitability to provide hedges for all investments while closing the year with a satisfactory net cash position.During the next year, the Group expects it will be able to improve its financial position, consolidating available net cash with greater profitability of short term financial assets, while always retaining the short-term nature of its investments. The net profit attributable to the Group came to 153.6 million euro, decreasing by 6% compared with 163.2 million euro at June 30, 2013.

Summary of results by business segment

The results discussed above are broken down by business segment in the following table:

(millions of euro)

Revenues June 30, 2014 June 30, 2013 Change

Plant making 2,149.0 2,095.9 3%

Steel making 795.1 686.4 16%

Total 2,944.1 2,782.3 6%

Gross operating margin (EBITDA) June 30, 2014 June 30, 2013 Change

Plant making 218.1 213.2 2%

Steel making 90.7 64.3 41%

Total 308.8 277.5 11%

Operating income June 30, 2014 June 30, 2013 Change

Plant making 165.8 162.9 2%


Total 210.7 182.4 16%

Net profit June 30, 2014 June 30, 2013 Change

Plant making 125.3 151.9 -18%


Total 153.5 162.5 -6%

Revenues by geographical area

(millions of euro) June 30, 2014 % June 30, 2013 % % Change

Europe and Russia 1,272.1 43.2% 1,157.1 41.6% 9.9%

Middle East 450.0 15.3% 396.8 14.3% 13.4%

The Americas 352.8 12.0% 348.9 12.5% 1.1%

South East Asia 869.2 29.5% 879.6 31.6% -1.2%

Total 2,944.1 100.0% 2,782.3 100.0% 5.8%


Consolidated revenues by geographical area, calculated on the basis of the order book, are as follows:

In the plant making segment, the geographical distribution of revenues is based primarily on the volume of shipments made, as well as progress with equipment construction operations both at our factories and in terms of on-site installation and start-up throughout the world.As for steelmaking, 27.0% of revenues were concentrated in Europe and Russia in the year ended June 30, 2014 (compared with 43.2% of total revenues of the area), while in the year ended June 30, 2013, that region accounted for 24.7% of steelmaking revenues and 41.6% of the total.

Reclassified consolidated balance sheet at June 30, 2014

(millions of euro)

Balances atJune 30, 2014

Balances atJune 30, 2013

Investments 26.6 25.2

Net tangible and intangible fixed assets 828.6 794.6

Total fixed assets 855.2 819.8

Working capital 81.1 (8.3)

Net invested capital 936.3 811.5

Group shareholders’ equity 1,547.4 1,422.4

Non-controlling interests 1.0 4.9

Total shareholders’ equity 1,548.4 1,427.3

Provisions and post-employment benefits 232.2 235.3

Total non-current financial assets (0.4) (7.6)

Total current financial assets (1,640.8) (1,845.0)

Total non-current financial liabilities 202.5 183.1

Total current financial liabilities 594.4 818.4

Positive net financial position (844.3) (851.1)

Total coverage 936.3 811.5

The increase in Net Invested Capital essentially derives from the investments completed in both operating sectors and from the increase in working capital, mostly related to the payments of advances from customers on new orders acquired during the period and to the absorption of said advances in relation to progress on the work orders.This situation, along with expectations of continuing positive cash flows in the next few years, is expected to allow the Group easily to repay much of its debt to financial institutions, with a substantial reduction in gross payable positions even though substantial capital expenditure is again planned in Italy and abroad.

Danieli Group: Revenues per geographical area at 30/06/14

43,2%

12,0%

15,3%

29,5%

Europeand Russia

South East Asia

The Americas

Middle East

Danieli Group: Revenues per geographical area at 30/06/13

Europe and Russia

Americas

Middle East

South East Asia31,6%

14,3%

41,6%

12,5%

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Analysis of the consolidated net financial position for the year ended June 30, 2014


Non-current financial assets

- non-current financial receivables 0.4 7.6 (7.2)

Total non-current financial assets 0.4 7.6 (7.2)

Current financial assets

- securities and other financial receivables 337.0 197.8 139.2

- cash at banks 1,303.8 1,647.2 (343.4)

Total current financial assets 1,640.8 1,845.0 (204.2)

Non-current financial liabilities

- bank debts 202.5 183.1 19.4

Total non-current financial liabilities 202.5 183.1 19.4

Current financial liabilities

- bank debts and other financial liabilities 594.4 818.4 (224.0)

Total current financial liabilities 594.4 818.4 (224.0)

Non-current net financial position (202.1) (175.5) (26.6)

Current net financial position 1,046.4 1,026.6 19.8

Positive net financial position 844.3 851.1 (6.8)

Gross financial indebtedness (796.9) (1,001.5) 204.6

The net financial position was calculated by including, within “bank debts and other financial liabilities”, customer advance payments on job orders not yet in production, amounting to 400.4 million euro at June 30, 2014 and 557.3 million euro at June 30, 2013. These amounts are included in other current liabilities in the consolidated balance sheet.The remaining customer advances, amounting to 424.1 million euro at June 30, 2014 and 614.8 million euro at June 30, 2013, are included in working capital as they are used to finance jobs in progress. These amounts are included in trade payables in the consolidated balance sheet.Gross financial indebtedness represents total payables to banks and other lenders.The net positive financial position at June 30, 2014 decreased by 6.8 million euro since the previous year, reaching the amount of 844.3 million euro. This amount, stemming partly from advances collected on current contracts and partly from the active financial management of production on job orders, will enable the Group to independently finance its upcoming investments in India, Russia, China, and Thailand in the plant making segment as well as those planned in Italy and Croatia in the steelmaking segment to improve productivity and efficiency.By maintaining this level of cash, the Group can meet without financial stresses the new technological challenges of building plants with high innovative content, by independently covering all extraordinary expenses that may arise from technical difficulties during their start-up.


Key consolidated financial ratios

Profitability Ratios Description June 30, 2014 June 30, 2013

ROE Group profit for the yearGroup shareholders’ equity

9.9% 11.4%

ROI

Operating income Net capital employed

22.5% 22.5%

GOM (EBITDA)Financial charges

18.30 15.27

Gross financial indebtednessGOM (EBITDA)

2.58 3.61

ROS Operating income Revenues

7.2% 6.6%

GOM (EBITDA) GOM (EBITDA)Revenues

10.5% 10.0%

Financial chargesover revenues

Financial charges Revenues

0.6% 0.7%

Capital Ratios Description June 30, 2014 June 30, 2013

Debt to equity ratio

Gross financial indebtednessConsolidated shareholders’ equity

51.5% 70.2%

Financial independence

Consolidated shareholders’ equityTotal assets

30.2% 26.8%

Primary structural margin

Consolidated shareholders’ equityNon-current assets

141.7% 139.9%

Secondary structural margin

Consolidated shareholders’ equity+ non-current liabilitiesNon-current assets

183.5% 182.9%

Current ratio Current assetsCurrent liabilities

129.3% 124.5%

Quick ratioCurrent assets (- Inventories)Current liabilities

93.4% 91.5%

Profit indicators June 30, 2014 June 30, 2013

Revenues per employee (thousands of euro) 257.71 254.23

Note that the figures used to calculate the performance ratios shown above do not always constitute standard measurements in the context of the Group’s accounting policies.

Statement of changes in net financial position

The statement of changes in net financial position highlights once again the Group’s ability to generate significant positive cash flows from operations, only partly absorbed by investment coverage and by the change in working capital. The net cash flow from operations amounted to 148.2 million euro (215.5 million in the previous period) and it financed net operating investments, which totalled 134.6 million euro (168.6 million euro at 30 June 2013). Hence, “free cash flow”, i.e. the residual cash surplus or deficit after financing operating investments, totals 13.6 million euro (46.9 million euro at June 30, 2013).

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The total decrease in the financial position, amounting to 6.8 million euro, in any case includes the outlay for the payment of dividends in November 2013.


Positive net initial financial position 851.1 826.1

Profit before tax 204.7 208.3

Adjustment for the determination of cash flows from operations

Depreciation, amortization and other non monetary components 100.2 72.6

Losses/(gains) on disposal of property, plant and equipment (0.1) (1.0)

Financial charges/(income) for the period 10.1 (15.8)

Gross cash flow from operations 314.9 264.1

Net change in working capital (135.0) (0.5)

Collected (paid) interest and income taxes (31.7) (48.1)

Net cash flow generated / (absorbed) by operations 148.2 215.5

Capital expenditure in tangible and intangible fixed assets (140.5) (168.0)

Business combinations of the period - payments made and payables taken

0.0 (8.1)

Equity investments (1.8) (0.6)

Dividends collected 0.0 1.3

Disposals of tangible and intangible fixed assets 2.0 5.4

Disposals of equity investments 2.4 0.0

Changes in fair value of financial instruments measured at equity 3.3 1.4

Net cash flow generated / (absorbed) by operating investments (134.6) (168.6)

Free cash flow 13.6 46.9

Other changes in net financial position

(Purchase) sale of treasury shares 0.0 (0.3)

Distribution of dividends to parent company shareholders (23.1) (25.1)

Changes in balance sheet items as a result of exchange rate translation

(2.7) 3.5

Total other changes in net financial position (20.4) (21.9)

Total change in net financial position in the period (6.8) 25.0

Positive net ending financial position 844.3 851.1

Capital expenditure and research activities The main increases in tangible and intangible fixed assets in the period, totalling 140.5, were as follows:– 68.1 million euro for new plants used in the steelmaking segment to provide greater flexibility and

efficiency in steel production, by expanding the range of products offered with improvements to their finish and quality, together with the active environmental management of all phases of production;

– 72.5 million euro essentially for new machine tools installed in production facilities in India, Russia, China and Thailand, with the objective of producing more efficiently by expanding the market for sales of our plants, as well as providing for the replacement of operating machinery in use for more than fifteen years in the Parent Company’s factories in Italy.

During the period the Group moved ahead with research programmes initiated in previous years, with a view to providing customers with new-technology plants capable of superior quality output and lower investment and production costs. These efforts involved expenditure of approximately 40 million euro for direct and indirect research activities, with more than 300 million euro in innovative job orders managed during the year.


Analysis of the profit and financial position of Danieli & C. Officine Meccaniche S.p.A.

Reclassified income statement for the year ended June 30, 2014


Revenues 1,057.9 983.9 8%

Gross operating margin (EBITDA) (*) 22.5 32.2 -30%


Depreciation, amortization and write-downs of fixed assets

(17.5) (15.6)

Operating income 5.0 16.6 -70%


Financial income/(charges) 131.1 59.2

Profit before tax 136.1 75.8 80%

Income taxes (4.6) (4.2)

Net profit 131.5 71.6 84%


(*) The gross operating margin (EBITDA) represents operating profit as in the income statement, before fixed asset depreciation, amortization and write-downs.Gross operating margin (EBITDA) is used by the issuer to monitor and evaluate its own performance, although it is not defined as an accounting measurement within IFRS. Consequently, the criteria for determining this value may not be consistent with the one used by other entities, and therefore not be altogether comparable.

The 8% increase in revenues since the previous year reflects higher receipts, during the year, on orders in the order book at the end of the previous year, essentially due to the rescheduling of certain major jobs to the second half of 2013. However, the profit for the year was negatively affected by additional expenses for starting up certain orders in the Middle East, covered only partly by the use of previously allocated provisions; the net result is still positive, thanks to the release of provisions as some industrial risks were eliminated, but above all by effect of financial management. Net financial income was positive in the period, at 131.1 million euro, mainly thanks to the dividends collected from the Luxembourg-based subsidiaries Danieli International SA and Industrielle Beteiligung SA and it includes the unfavourable exchange rate effect on receivables and payables and on borrowings expressed in USD. Cash continued to be managed actively to allow the financial coverage of investments while maintaining reasonable subcontractor payment times, with good profitability and an improvement in net financial position at the close of the year, though it remained negative.In the next financial year, financial income is expected to improve, thanks to optimization of the yield from the cash component while minimising risk in respect of investments and maximising the availability of these investments.Profit before tax amounted to 136.1 million euro, (75.8 million at June 30, 2013).After taxes calculated according to the company’s taxable income base, the net profit rose from 71.6 million euro the previous year to 131.5 million euro.

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Reclassified balance sheet at June 30, 2014


Investments 1,097.0 1,097.0

Net tangible and intangible fixed assets 93.6 90.4

Total fixed assets 1,190.6 1,187.4

Working capital (370.0) (383.4)

Net invested capital 820.6 804.0

Shareholders’ equity 535.5 426.6

Provisions and post-employment benefits 139.7 155.1

Total current financial assets (98.9) (98.7)

Total non-current financial liabilities 41.6 56.5

Total current financial liabilities 202.7 264.5

Negative net financial position 145.4 222.3

Total coverage 820.6 804.0

The change in net invested capital is essentially tied to an increase in working capital by 13.4 million euro deriving both from the collection and absorption of advance payments from customers on work in progress, and from the general contraction of the other components of working capital (trade receivables, inventories and trade payables).The negative net financial position of 145.4 million euro was determined (consistently with previous years), without taking into account financial receivables and payables to Group companies, and at June 30, 2014 it was penalized by an unfavourable temporary combination of unavoidable expenditures and lower collections from customers on orders not yet in force; The company’s cash management policy is confirmed, with preference given to the use of own resources and limiting debt to international credit institutions with the goal of improving cash management efficiency, thanks to better balance in monthly receipts and outlays tied to financial operations.

Analysis of the net financial position at June 30, 2014



- other financial receivables 0.2 0.3 (0.1)

- cash at banks 98.7 98.4 0.3

Total current financial assets 98.9 98.7 0.2


- bank debts 41.6 56.5 (14.9)

Total non-current financial liabilities 41.6 56.5 (14.9)


- bank debts and other financial liabilities 202.7 264.5 (61.8)

Total current financial liabilities 202.7 264.5 (61.8)

Non-current net financial position (41.6) (56.5) 14.9

Current net financial position (103.8) (165.8) 62.0

Negative net financial position (145.4) (222.3) 76.9

Gross financial indebtedness (244.3) (321.0) 76.7

(*) Items in the analysis of the net financial position are shown net of financial payables to and receivables from Group companies.

The net financial position has been calculated by including, within “Bank debts and other financial liabilities”, customer advance payments on job orders not yet in production, amounting to 133.7 million euro at June 30, 2014 and 193.4 million euro at June 30, 2013. These amounts are included in other current liabilities in the balance sheet.The remaining customer advances (including those from Group companies), amounting to 153.8 million euro at June 30, 2014 and 299.2 million euro at June 30, 2013, are included in working capital as they are used to finance jobs in progress. These amounts are included among trade payables in the balance sheet.


Gross financial indebtedness represents total payables to banks and other lenders.The net financial position at June 30, 2014 amounted to minus 145.4 million euro, with a positive change of 76.9 million euro compared to the previous year: the position is expected further to improve next year, thanks to the flow of collections expected on the basis of the order book as at June 30, 2014.Maintaining an adequate gross level of cash enables the company to suitably meet the technological challenges associated with the supply and start-up of innovative plants, with the ability to independently meet all extraordinary expenses associated with any technical difficulties.

Key financial ratios

Profitability Ratios Description June 30, 2014 June 30, 2013

ROE ProfitShareholders’ equity

24.6% 16.8%

ROI Operating income Net capital employed

0.6% 2.1%

GOM (EBITDA)Shareholders’ equity

4.2% 7.5%

GOM (EBITDA)Financial charges

2.68 3.08

Gross financial indebtednessGOM (EBITDA)

10.86 9.97

ROS Operating incomeRevenues

0.5% 1.7%

GOM GOM (EBITDA)Revenues

2.1% 3.3%

Financial charges over revenues

Financial charges Revenues

0.79% 1.06%

Capital Ratios Description June 30, 2014 June 30, 2013

Debt to equity ratio

Gross financial indebtednessShareholders’ equity

45.6% 75.2%

Financial independence

Shareholders’ equityTotal assets

22.6% 16.6%

Primary structuralmargin

Shareholders’ equityNon-current assets

39.7% 32.6%

Secondary structuralmargin

Shareholders’ equity + non-current liabilitiesNon-current assets 53.2%

48.8%

Current ratio Current assetsCurrent liabilities

61.8% 65.3%

Quick ratio Current assets - (Inventories)Current liabilities

39.8% 39.9%

Profit indicators June 30, 2014 June 30, 2013

Revenues per employee (thousands of euro) 425.71 395.14

Note that the figures used to calculate the performance ratios shown above do not always constitute standard measurements in the context of the company’s accounting policies.

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Management of business risks

The Danieli Group carries out continuous management of business risks for all corporate functions by actively monitoring them, in accordance with risk management methodology and principles, in order to identify, reduce and eliminate risks and thereby safeguard shareholders’ rights.The centrally identified guidelines are valid for both business segments of the Danieli Group (steelmaking and plant making) and are followed with a view to standardizing and coordinating Group policies.The principal industrial risks monitored by the Danieli Group are the following:– Risks associated with the general state of the economy;– Risks associated with market conditions;– Risks associated with commodity prices, the cancellation of job orders and relationships with

suppliers– Risks associated with environmental policy;– Risks associated with human resources, safety and management.For information on financial risks, see the section “Management of financial risks” in the notes to the consolidated financial statements.

Risks associated with the general state of the economyThe earnings and finances of the Danieli Group are balanced and diversified by segments and product lines, but they are still influenced by the various macro-economic situations of the markets it serves around the world. In the financial year ended June 30, 2014, financial markets exhibited less volatility, which allowed for a positive performance of the real economy on a global basis. In the first half of 2014, the monetary policies implemented to promote growth and contain sovereign debt increases in major industrialized countries brought about a slight improvement in the economic situation, which could stabilize further at the end of 2014 thanks to the low cost of money in the EU and in the USA. The bank credit market is still very closed, with possible negative changes in some areas of the world: this could negatively affect the strategies and outlook of the Danieli Group, in particular for the steelmaking sector, more sensitive to short term changes. The plant making segment, on the other hand, in which jobs extend over several years, is able to plan production over the long term and thereby reduce the short term impact of market volatility.

Risk associated with market conditionsThis risk consists of the possibility that there may be no demand from the market for Danieli products, either for technological reasons or because of financial problems. We believe, however, that the Danieli Group’s constant focus on the research and development of new solutions to propose to customers to promote environmentally sustainable production and operate with ever better production efficiency is one of our major strengths. Group Management continuously monitors these aspects so as to safeguard our leadership position. The Danieli Group operates in the engineering and plant making business and in the special steelmaking business through its subsidiaries ABS S.p.A. and ABS Sisak D.o.o.; manufacturing operations are certified to ISO 140001 and ISO 9001 and involve a continuous process of identifying, managing and mitigating the price risk that might have an impact on the Group’s performance:– in the plant making segment, prices of the main components used in the facilities due to their

nature and/or because of long delivery times are fixed by ordering them as soon as the job order is actioned;

– in the steelmaking segment, procurement of scrap, ferroalloys and energy is carefully planned to correlate purchases and production with orders received from customers in order to reduce any price imbalances between purchases and sales.

Risks associated with commodity prices, the cancellation of job orders and relationships with suppliersDanieli Group results can be significantly influenced by fluctuations in commodity prices, insofar as they affect the cost of completing job orders. Group Management follows an ongoing process for the identification, management and mitigation of price risks.In the steelmaking segment, selling prices include a variable component related to scrap and ferroalloy prices, which substantially limits commodity price risk. In the plant making segment, the management of each individual project is always structured to align the “expenditure curve” with the “receipts curve”, so as to limit financial imbalances in the event a job order is cancelled; in addition, for unusual projects in terms of type or geographical area, suitable insurance or financial coverage is taken out to counteract the risk of customer insolvency.The Danieli Group is active in several markets around the world; operating mainly to order, for each individual contract it sets up a policy for the management of subcontract price volatility, negotiating orders with deliveries exceeding six to eight months as soon as job orders are actioned.


Risks associated with environmental policyDanieli Group activities are subject to many national and international environmental protection laws and regulations: for the steelmaking segment, in particular, an environmental policy has been adopted which complies with and often goes beyond the currently required standards. The ABS steelworks has received the approval of the Conferenza dei Servizi (conference of administrative departments which reviews environmental projects) under Legislative Decree 59/2005 for issue of the AIA (integrated environmental authorization), received in July 2010, whilst production of Ecogravel continues, confirming it as worthy endeavour.In the plant making segment, developments in environmental policy should be seen as an opportunity rather than a risk: with the enactment of more stringent rules and regulations (in addition to energy restraints in steel production, applying concepts like SustSteel and GreenSteel), the company can explore new favourable markets for its internally developed technologies and for its innovative plants.

Risks associated with human resources, safety and managementAt June 30, 2014, the Danieli Group had 11,424 employees, of whom 1,357 in the steelmaking segment.The human resource department has worked to manage normal turnover (with an improvement in education level and a decrease in average employee age), but also to adapt personnel for the Group’s international needs at the new operating units in Southeast Asia and to keep production shifts in line with the current demand for plants.At ABS especially but at all other Group companies as well, measures have been taken to reduce injury risks by implementing plant management policies in line with the best industrial practices, and by turning to the insurance market to make sure our units are well protected even in the event construction is halted or against third-party liability. Action has also been taken to train and motivate executive managers to ensure efficiency and continuity of operations, in the context of a difficult market caused by general reduction in consumption.

Disclosure on the formation and distribution of the value added generated by the Group on human resources, safety and the environment

Consolidated value addedThe following tables show the distribution of economic value among stakeholders through the reclassification of the figures of the consolidated income statement. In particular, the determination of the generated value added shows the Group’s capacity to create wealth and its method for distributing it to the identified stakeholders.

(millions of euro)

Determination of global value added June 30, 2014 June 30, 2013

A. Value of production 2,944.1 2,782.3

B. Intermediate costs of production 2,304.6 2,181.0

(A - B) Core global value added 639.5 601.3

C. Non recurring ancillary components 2.9 35.7

Global value added 642.4 637.0

Non recurring ancillary components are given by net financial income and expenses (excluding the expenses relating to payables to banks), gains and losses from foreign currency transactions and income and expenses on equity investments.Net global value added is divided among the following beneficiaries: personnel (direct remuneration consisting of wages, salaries, employee severance indemnity and indirect remuneration consisting of social security contributions); Public Administration (income taxes and other taxes and duties); venture capital (dividend distribution); third parties (non-controlling interests); company remuneration (reinvested earnings); remuneration to lenders (interest on loans) and donations and sponsorships (sponsorships, donations and other forms of contribution).

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(millions of euro)

Distribution of global value added June 30, 2014 June 30, 2013

A. Personnel remuneration 416.7 64.9% 409.0 64.2%

B. Public Administration remuneration 62.2 9.7% 54.1 8.5%

C. Venture capital remuneration 23.1 3.6% 25.1 3.9%

D. Third party remuneration 0.1 0.0% 0.6 0.1%

E. Company remuneration 130.6 20.3% 137.4 21.6%

F. Lender remuneration 8.8 1.4% 9.8 1.5%

G. Donations and sponsorships 0.9 0.1% 1.0 0.2%

Global value added 642.4 100.0% 637.0 100.0%

The percentage assigned to personnel remuneration continues to be high, at 64.9% of global value added, as personnel maintains a central role within the Danieli Group’s organisation

Human resources

Danieli pursues a brisk pace of innovation to assure the excellence and quality of customer service; its main goal remains to keep human resources central in its organization, and achieves it through constant focus on enhancing employee potential and aptitudes, promoting their professional development with instruments and initiatives to improve and enrich managerial skills, technical and specialist competencies, ethics and dedication to perform.This continuous investment, together with the constant offer of career opportunities and prospects tied to merit, engenders a strong pride of place among our personnel, stimulating all of them to do their part in maintaining efficiency and competitiveness.The number of Group employees at June 30, 2014 was 11,424 (10,944 at June 30, 2013), broken down as follows:

June 30, 2014 June 30, 2013

Plantmaking

Steelmaking

Plantmaking

Steelmaking

Danieli & C. Officine Meccaniche S.p.A., in Italy 2,411 2,416

Italian affiliates 977 1,049 886 1,115

Foreign offices and affiliates 6,679 308 6,358 169

TOTAL 10,067 1,357 9,660 1,284

Compared to 2013, the number of employees trended upwards again, by 4%, as a result of the development of the Indian initiative, but also of the consolidation of the Group’s presence in Europe.

Figure by category June 30, 2014 June 30, 2013

Apprentices 114 0

Blue collars 4,178 4,041

White collars and Managers 6,877 6,633

Executives 255 270

Total employees 11,424 10,944


Absenteeism June 30, 2014 June 30, 2013

Average per capita missed work hours 64.2 67.5

% absence 3.08% 3.70%

The chart of absenteeism hours shows a strong incidence of factors that cannot be easily normalised on a global scale, in relation to specific local contractual provisions. The percentage of the figure for injuries highlights the positive results of the investments made.

Training

Training investments (1,380 courses totalling 159,008 hours) are aimed both at developing an understanding of the Danieli enterprise by sharing all general technical knowledge that provide the company its value and uniqueness, and will do so even more in the future, and at developing technical-specialist role/function skills, with initiatives enabling employees to complete their professional profiles with basic managerial skills, useful across the organisation. In this regard, Danieli, to promote the growth and development of human resources, has established a dedicated organisational unit, the “Danieli Academy”, with the goals of consolidating corporate values and train resources both from a managerial and a technical standpoint.

Age of employees

Over 50

Up to 3041-50

31-40

32%21% 28%

36%

23%

13%

Educational level

43%

36%

21%

High School

Other

Degree

Seniority of service

11 - 20

Over 20

0 - 56 - 10

6%

11%

57% 26%

Employee gender

Female

Male32%88%

12%

Absenteism

Injury

Illness

Maternity

Other32%46%

4%14%

36%

Training

Generalmanagementtraining

Specializedmanagementtraining

Generaltechnicaltraining

Specializedtechnicaltraining

32%50%

29%

6%

15%

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Safety

The company policy for the prevention of accidents and injuries has achieved overall positive results through the years; in particular, in the period in question there was a significant drop both in the frequency and severity of injuries. In the three-year period, the Danieli Group’s average position in relation to injury frequency is 15.05, a good result compared to 35.9, the 2008/2010 INAIL average (latest available figure). In the three year period, the subsidiary ABS had an average position of 16.12, an excellent result compared to the 2011 Federacciai figure, i.e. 35.1. The ABS frequency index increased slightly compared to the trend of the last 2 years; to improve the indicator, in the second quarter of 2014 an internal audit campaign was launched with the goal of involving supervisors and workers in carrying out more inspections and checks in terms of behaviour during and outside working hours, maintaining order and cleanliness, compliance with procedures and use of personal protective equipment.In particular, the injury frequency and severity indicators show a significant reduction with the introduction of an integrated management system, in compliance with OHSAS 18001/07 and through both personnel training/information initiatives, and safety-enhancing work carried out on plants and work processes. In the three-year period, the Danieli Group’s average position in relation to injury severity is 0.15, an excellent result compared to 2.52, the 2008/2010 INAIL average. In the three year period, ABS had an average position of 0.61, a good result compared to the 2011 Federacciai figure, i.e. 1.12.

Environment

The Danieli Group has defined reference targets in order to maintain high environmental protection standards:• promoting a culture of health and environmental protection in all workers and their families;• designing plants with ever better performance from the viewpoint of the environment and workers’

health and safety;• constantly informing and training workers on general and specific risks, on rules of behaviour and

company procedures;• making available economic, technical and human resources to achieve environmental protection

goals;• promoting awareness of the importance of compliance with environmental rules by example and

through systematic oversight;• improving waste management by providing specific labelled containers and dedicated areas

bearing appropriate signs, and through more accurate separation of waste for disposal;• improving hazardous materials management by identifying and labelling all containers, providing

containment basins and suitable absorbing materials in case of spills, conducting practical emergency simulation exercises.

Plant making

Energy June 30, 2014 June 30, 2013 June 30, 2012

Direct consumption

LPG (TEP) 173 191 178

Methane gas (TEP) 2,479 2,812 2,710

Diesel (TEP) 595 264 345

Total electricity (TEP) 14,025 11,737 11,206

Energy consumption per hours worked(TEP/hours worked) 0.0013 0.0012 0.0012

Through the years, the Danieli Group has implemented a consumption reduction policy that has enabled to optimize consumption, relative to hours worked, reaching constant levels in the past three years compared to previous periods. These results were achieved thanks both to the favourable weather conditions and to renovations to existing plants which boosted their efficiency in terms of consumption.

Injury frequence indicator

Steel Making

Plant Making

10

0

20

30

2012 2013 2014

21.73

14.51 14.53

16.96

6.45

19.32

2012

0.15 0.15

0.41

0.14

0.60

0.81

2013 2014

0.5

1.0

0

1.5

Injury severity indicator

Steel Making Plant Making


Water June 30, 2014 June 30, 2013 June 30, 2012

Total water utilization (m3) 289,302 308,471 292,418

Consumption (m3) per hour worked 0.022 0.025 0.024

The positive performance in the consumption of a major resource, i.e. water, is confirmed; it was achieved through the environmental protection policies adopted by the Group, including the optimisation of discharges with their reuse.

Waste June 30, 2014 June 30, 2013 June 30, 2012

Tonnes of waste produced 13,651 13,373 12,093

of which hazardous 1,645 1,151 749

of which non hazardous 12,006 12,222 11,344

Waste per hour worked 0.0013 0.0013 0.0012

Through the years, the Group has carried out a policy of sensitizing personnel on the proper differentiation of waste, which has enabled to manage a high percentage of non hazardous waste.However, in the past two years the quantity of waste has increased, mainly in relation to the introduction of new plants and the replacement of obsolete ones, with the associated disposal costs.

Steel making

Energy June 30, 2014 June 30, 2013 June 30, 2012

Direct consumption

Methane gas (TEP) 55,101 48,880 57,968

Diesel (TEP) 741 725 794

Total electricity (TEP) 180,579 156,464 179,543

Energy consumption per hours worked (TEP/hours worked) 0.13 0.12 0.13

In view of the importance of energy costs in the production process, ABS constantly strives to introduce innovations and technological solutions to contain energy consumption by improving savings and plant efficiency. A significant activity, included in the company’s policy for sustainable development, was the commissioning of the new energy generating plant that recovers fume heat (the “ORC”, Organic Rankine Cycle); this project is expected to enable the recovery of 5,760,000 kW in 1 year and to save 1,800 t/year of CO2.

Water June 30, 2014 June 30, 2013 June 30, 2012

Total water utilization (m3) 1,242,693 1,130,379 1,150,978

Consumption (m3) per hour worked 0.70 0.66 0.64

The above consumption figures are in line with previous years in relation to the quantity of steel tapped, thanks to the recycling of the plants’ cooling water from direct to indirect loops.

Waste June 30, 2014 June 30, 2013 June 30, 2012

Tonnes of waste produced 96,002 63,352 113,245

of which hazardous 27,685 24,356 28,258

of which non hazardous 68,317 38,996 84,987

Waste per hour worked 0.0544 0.0371 0.0634

Waste volumes remained constant in relation to the quantity of steel tapped.

Community commitmentThe Danieli Group is a strong believer in its role within the complex systems where it operates worldwide; it takes an active part in the development of positive relations with local communities, defining and managing initiatives in their favour (e.g., the Telethon in Udine, work in support of orphans in Dnepropetrovsk in Ukraine, contributions to local musical events, structural restoration work on public interest buildings, support to schools through contributions to expand classrooms/improve learning instruments, etc.).

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The Group is also determined to create new development opportunities, with particular reference to technology and employment, and it actively cooperates with major Universities and Education Institutions, sponsoring innovation projects and offering concrete suggestions to promote youth employment. Danieli provides the children of its employees and of contractor workers with the support of the company kindergarten, accommodating family needs through work schedule flexibility and welcome days and providing, from September 2014 onwards, the possibility of caring for children from 3 to 6 years of age with the same flexibility of working hours and hospitality.The Danieli Foundation assures health care for former employees and their families.The Fabbricando – Scuole in azienda contest successfully consolidates the cooperation between ABS in Cargnacco and nationwide primary and secondary schools. The goal of the project is to contribute to build a stable education path of integration between schools and companies.The Turismo 85 travel agency offers attractive prices to employees, proposing monthly tourist destinations at discounted prices or day trips, promoting co-worker socialisation outside working hours. The Danieli Sports Group is an association, open to the community at large, founded to promote aggregation, physical fitness and team spirit whilst maintaining a healthy sense of sporting competition.

Atypical and unusual transactionsThere were no significant atypical or unusual transactions during the year, other than those already mentioned.

Treasury sharesAt June 30, 2014 the company held 2,961,213 ordinary shares and 3,945,363 savings shares with a par value of 1 euro each, for a total par value of 6,907 thousand euro (8.49% of the share capital). No ordinary or savings shares were purchased or sold during the year.

Statement pursuant to Italian Legislative Decree no. 196 of June 30, 2003The company declares that the Data Security Plan required by Legislative Decree 196 of June 30, 2003 has been duly updated.

Secondary headquartersPursuant to art. 2428 of the Civil Code, the Parent Company declares that it does not have any secondary headquarters.

Management and coordinationDanieli & C. Officine Meccaniche S.p.A. is not subject to management and control activities by companies or organizations and determines its own strategic, general and operating policies on a wholly independent basis. Pursuant to art. 2497-bis of the Civil Code, the Italian companies controlled directly or indirectly, except for particular cases, have identified Danieli & C. Officine Meccaniche S.p.A. as the body which exercises the activity of management and coordination. This activity consists of indicating Group strategic, general and operating policies and is achieved by defining and adapting the internal control system and corporate governance model and company structures, by issuing a Code of Ethics adopted at Group level and by formulating general policies for managing human and financial resources, procurement of production components, and marketing and communication.The above enables the subsidiary companies, which retain full responsibility for their own managerial and operating independence, to achieve economies of scale, taking advantage of the skills and specialist services with increasing quality levels, and to concentrate their own resources on the management of their core business.

Statement pursuant to Art. 2.6.2, paragraph 8 of the Stock Exchange RegulationsPursuant to Art. 2.6.2, paragraph 8 of the Stock Exchange Regulations, to comply with the terms of Art. 36 and subsequent of the CONSOB Market Regulations, Danieli & C. Officine Meccaniche S.p.A.— as the parent of companies formed and governed under the laws of countries outside the European Union — declares that: 1. it has made available to the public (in the forms specified in section III.II.II.V of the regulations

adopted by CONSOB with Resolution 11971/1999, as amended) the financial statements of its subsidiaries as prepared for drawing up these consolidated financial statements, including at least the balance sheet and income statement;

2. it has acquired from the subsidiaries the company charter and the composition and powers of company boards;

3. it has verified that the subsidiaries have a suitable administration and accounting system for sending, in a timely manner, the necessary profit and loss, balance sheet and financial data to the parent company’s management and external auditors for preparation of the consolidated financial statements.


GovernanceThe report on “Corporate Governance and Ownership Structure” (hereafter Report) required by Art. 123-bis of the Consolidated Finance Act is an independent document approved by the Board of Directors on September 25, 2014 and published on the authorised storage system 1Info, www.1info.it, and on the company’s website, www.danieli.com, in the section “Investors - Corporate documents”.The Report was prepared in compliance with the spirit of transparency and correctness inspired by the Code of Conduct for Listed Companies issued by Borsa Italiana S.p.A., even though the Company, in 2010, decided not to continue to adopt it. The Report provides a general and complete picture of the adopted corporate governance system: it describes the profile of Danieli & C. Officine Meccaniche S.p.A. and its guiding principles; it discusses the ownership structure and the main governance practices followed, including the principal characteristics of the internal control and risk management system; and it describes the functioning and composition of the governing and control bodies and their committees, roles and responsibilities. It also presents the procedures adopted with regard to transactions involving interests of directors and statutory auditors and transactions with related parties, whose Regulations are available on the company’s website in the section “Investors - Corporate documents”, and the policy for communications with institutional investors and shareholders, and for the management of corporate information. The values and criteria used to determine the compensation of directors are disclosed in the “2014 Remuneration Report”, prepared in accordance with Art. 123-ter of Italian Legislative Decree 58/1998 and Art. 84-quater of the CONSOB Regulations for Issuers, and published online in the section “Investors - Corporate documents”.

Events occurring after the balance sheet dateIn a steel market which is still favourable though not yet stable, operations have continued with no significant events occurring since June 30, 2014.

OutlookThe complexity and slowness in identifying suitable coordinated instruments to restart the economy by the governments of major industrialised countries is bringing about only a partial improvement in the economic recovery for the manufacturing, mechanical engineering and steelmaking industries, still burdened by a policy that is not very accommodating for credit and investments.In any case, steel consumption is expected to remain strong in 2014 and we are likely to see moderate growth in the BRIC countries and substantially stable consumption in the USA/Japan and EU.Given this scenario, we expect that the steelmaking segment (ABS) will nonetheless perform satisfactorily in 2014/2015 with an efficient production mix and good production volumes. For the plant making segment, revenues and margins are expected to hold steady in the 2014/2015, thanks to careful management of operating costs and better planning of plant start-ups. The Group continues to pursue its efficiency objectives such as increased productivity, reduction in structural costs, innovation, and improved customer service. Together with substantial investment in structures, facilities and people in Southeast Asia, these efforts will keep the Group highly competitive in the global market.There are no other significant unknown factors for the year ahead, barring unforeseeable events beyond our control.

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Reconciliation between Parent Company shareholders’ equity and profit and Group shareholders’ equity and profitThe reconciliation between shareholders’ equity and profit for the year to June 30, 2014 and June 30, 2013, as shown in the financial statements of the Parent Company and in the consolidated financial statements, can be summarized as follows:

June 30, 2014 June 30, 2013

(thousands of euro)

Shareholders’ equity

Net profit for the year


Net profit for the year

Balances in the financial statements of Danieli & C. Officine Meccaniche S.p.A.

535,452 131,525 426,625 71,557

Elimination of the book value of shareholdings and of the shareholders’ equity of subsidiaries 999,599 981,231

Share in subsidiaries’ results 298,630 271,534

Intercompany dividends (274,532) (176,252)

Impact of the valuation with the equity method of certain investments not consolidated line-by-line 13,798 1,491 12,307 (2,199)

Elimination of the effect of intercompany transactions (1,413) (3,658) 2,245 (2,119)

Shareholders’ equity and profit/loss attributable to Danieli Group 1,547,436 153,456 1,422,408 162,521

Non-controlling interests in shareholders’ equity and profit/loss 960 121 4,858 644

Amounts in the Danieli Group consolidated financial statements 1,548,396 153,577 1,427,266 163,165

Proposals by the Board of Directors to the annual general meeting

Dear Shareholders,

We express our appreciation and thanks to all those whose perseverance and professionalism contribute to maintaining our 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 of Danieli & C. Officine Meccaniche S.p.A. for the financial year ended June 30, 2014, which we submit for your approval, show a profit of 131,525,081 euro which we propose be allocated as follows:

Allocation of net profit for the yearNumber

of sharesDividend per share

Total euro

Dividend payable from 12/11/2014 (distribution date 10/11/2014; record date 11/11/2014)

Ordinary shares (1) 37,918,320 0.3000 11,375,496

Savings shares (2) 36,479,670 0.3207 11,699,030

Total dividends 23,074,526

To the extraordinary reserve 108,450,555

Total net profit for the year 131,525,081

(1) net of ordinary treasury shares held on September 25, 2014(2) net of savings treasury shares held on September 25, 2014

You are reminded that the annual general meeting, called to approve the financial statements, has been convened for October 28, 2014.

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DANIELI GROUP

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR TO JUNE 30, 2014

42 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

Consolidated Balance Sheet

(in thousands of euro)

ASSETS Note June 30, 2014 June 30, 2013

Non-current assets

Property, plant and equipment 1 779,005 734,975

Intangible assets 2 49,604 59,664

Investments accounted for with the equity method 3 24,837 23,346

Other investments 3 1,808 1,806

Deferred tax assets 4 69,618 65,087

Other financial receivables 5 358 7,629

Trade and other receivables 6 167,739 127,742

Total non-current assets 1,092,969 1,020,249

Current assets

Inventories 7 1,116,610 1,140,567

Trade receivables 8 1,158,209 1,210,709

Other receivables 9 90,538 82,433

Current tax assets 10 22,899 18,837

Current financial assets 11 337,022 197,822

Cash and cash equivalents 12 1,303,785 1,647,161

Total current assets 4,029,063 4,297,529

Total assets 5,122,032 5,317,778


LIABILITIES AND SHAREHOLDERS’ EQUITY June 30, 2014 June 30, 2013


Share capital 81,305 81,305

Treasury shares (82,935) (82,935)

Other reserves and profit carried forward, including profit for the year 1,549,066 1,424,038

Group shareholders’ equity 1,547,436 1,422,408

Non-controlling interests 960 4,858

Total shareholders’ equity 13 1,548,396 1,427,266

Non-current liabilities

Loans 14 202,497 183,050

Deferred tax liabilities 4 22,024 19,940

Employee termination 15 35,029 34,506

Provisions 16 197,211 200,802

Other liabilities 89 440

Total non-current liabilities 456,850 438,738

Current liabilities

Trade payables 17 2,373,125 2,496,042

Other liabilities 18 524,138 674,645

Current tax liabilities 19 25,490 20,023

Bank debts and other financial liabilities 20 194,033 261,064

Total current liabilities 3,116,786 3,451,774

Total liabilities and shareholders’ equity 5,122,032 5,317,778

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Consolidated Income Statement

(in thousands of euro)Note

Financial year ended

June 30, 2014


June 30, 2013

Revenues 2,986,994 2,937,693

Other operating income 68,463 95,120

Changes in finished products and construction contracts

7 (111,355) (250,516)

Total revenues 22 2,944,102 2,782,297

Purchase costs of raw materials and consumables 23 (1,503,774) (1,399,271)

Personnel costs 24 (416,703) (409,005)

Other operating costs 25 (707,681) (693,513)

Depreciation, amortization and write-downs 26 (105,211) (98,106)

Operating income 210,733 182,402

Financial income 27 31,402 37,400

Financial charges 28 (16,872) (18,175)

Gains (losses) on foreign exchange transactions 29 (22,025) 7,661

Gains from the valuation of investments in associates with the equity method

30 1,491 (949)

Profit before tax 204,729 208,339

Income taxes 31 (51,152) (45,174)

Net profit 153,577 163,165

(Profit)/loss attributable to non-controlling interests (121) (644)

Net profit attributable to the Group 153,456 162,521

Basic and diluted earnings per share (euro):

Ordinary shares 32 2.0525 2.1906

Savings shares 32 2.0732 2.2113

Consolidated Statement of Comprehensive Income

(in thousands of euro)Note


June 30, 2014


June 30, 2013

Net profit 153,577 163,165

Components of comprehensive income that will subsequently be reclassified in the profit (loss) for the year:

Foreign financial statements translation difference (9,075) (1,341)

Change in cash flow and fair value hedge reserves 4,521 1,656

Tax effect related to the other components of comprehensive income

(1,243) (290)

13 (5,797) 25

Components of comprehensive income that will not subsequently be reclassified in the profit (loss) for the year:

Actuarial gains / (losses) recognized in the statement of comprehensive income

(741) (3,356)

Tax effect 204 937

13 (537) (2,419)

Consolidated comprehensive income 147,243 160,771

Attributable to:

Danieli Group 147,091 160,260

Non-controlling interests 152 511

147,243 160,771


Consolidated Statement of Changes in Shareholders’ Equity


ShareCapital

Treasury Sharepremiumaccount

Cash flowhedge

reserve

Shareholders’ equity at June 30, 2012 81,305 (79,881) 19,748 (3,561)

Operations with shareholders

- allocation of 2011/2012 profit per shareholders’ meeting resolution of October 25, 2012

: to reserves

: dividends to shareholders

- acquisition of non-controlling interests

- change in treasury shares (3,054) 2,775

Total operations with shareholders (3,054) 2,775 0

Profit for the year to June 30, 2013

Other comprehensive income

- change in cash flow and fair value reserves 764

- actuarial gains (losses) from IAS 19

- translation difference

Comprehensive income (expenses) 0 0 764



: to reserves

: dividends to shareholders

- acquisition of non-controlling interests

- acquisition/sale of controlling interests

Total operations with shareholders 0 0 0

Profit for the year at June 30, 2014


- change in cash flow and fair value reserves 513

- actuarial gains (losses) from IAS 19

- foreign financial statements translation difference

Comprehensive income (expenses) 0 0 513


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Fairvalue

hedge

Otherreserves

Translationdifference

reserve

Net profit(loss)

for the year

GroupShareholders’

equity

Non-controllinginterests in

Shareholders’equity

TotalShareholders’

equity

244 1,082,795 14,987 191,868 1,307,505 (15,392) 1,292,113

166,866 (166,866) 0 0

(25,002) (25,002) (87) (25,089)

(17,888) (2,188) (20,076) 19,826 (250)

(279) (279)

0 148,978 (2,188) (191,868) (45,357) 19,739 (25,618)

162,521 162,521 644 163,165

602 0 1,366 1,366

(2,419) (2,419) (2,419)

(1,208) (1,208) (133) (1,341)

602 (2,419) (1,208) 162,521 160,260 511 160,771

846 1,229,354 11,591 162,521 1,422,408 4,858 1,427,266

139,446 (139,446) 0 0

(23,075) (23,075) 0 (23,075)

1,012 1,012 (2,800) (1,788)

0 (1,250) (1,250)

0 140,458 0 (162,521) (22,063) (4,050) (26,113)

153,456 153,456 121 153,577

2,765 0 3,278 3,278

(537) (537) (537)

(9,106) (9,106) 31 (9,075)

2,765 (537) (9,106) 153,456 147,091 152 147,243

3,611 1,369,275 2,485 153,456 1,547,436 960 1,548,396


Consolidated Statement of Cash Flows


Financial yearJune 30, 2014

Financial yearJune 30, 2013

Adjustments to reconcile profit before taxes with net cash flows from operating activities


Net increase/(decrease) in provisions (3,591) (27,233)

Write-down/(write-back) of investments (1,491) 1,240

Depreciation, amortization and write-downs of fixed assets 98,034 95,086

Losses/(gains) on disposal of property, plant and equipment (88) (1,040)

Write-down of receivables 5,640 1,982

Other write-downs 1,537 1,038

Change in employee severance indemnity provision (14) 500

Unrealized foreign exchange losses/(gains) 24,633 3,419

Financial income for the period (31,402) (37,400)

Financial charges for the period 16,872 18,175

Total 314,859 264,106

Net change in working capital

(Increase)/decrease in inventories 23,957 (107,116)

(Increase)/decrease in trade and other receivables (3,536) 69,381

Increase/(decrease) in trade and other payables (123,589) 40,673

Unrealized foreign exchange losses/(gains) (24,633) (3,419)

Total (127,801) (481)

Interest paid in the period (16,183) (19,463)

Interest received in the period 36,723 32,530

Taxes paid in the period (52,194) (61,175)

Cash flow generated/(absorbed) by operating activities 155,404 215,517

Investing activities

Capital expenditure:

Property, plant and equipment (133,074) (149,230)

Intangible assets (7,407) (18,739)

Business combinations of the period - payments made 0 (8,077)

Acquisition of non-controlling interests (1,788) 0

Business combinations of previous periods - payments made (3,416) (3,968)

Business combinations of the period (excl. investment activities) 0 (568)

Dividends collected (from unconsolidated equity investments) 0 1,250

Net treasury share investments /(disposals) 0 (279)

Available-for-sale financial assets (166,237) 0

Other financial receivables 0 (52,006)

Disposals:

Property, plant and equipment 2,031 5,436

Other financial receivables 32,358 0

Disposal of equity investments 2,407 0

Available-for-sale financial assets 0 135,736

Cash flow generated/(absorbed) by investing activities (275,126) (90,445)

Financing activities

New loans payable 92,556 180,228

Increase/(decrease) in advances received on job orders not yet in production

(156,958) 31,854

Loans payable reimbursed (137,229) (123,848)

Short-term derivative financial instruments (1,642) (293)

Dividends paid to shareholders (23,075) (25,089)

Cash flow generated/(absorbed) by financing activities (226,348) 62,852

Changes in balance sheet items as a result of exchange rate translation

3,456

Net cash flow (343,376) 191,380

Opening cash and bank position 1,647,161 1,455,781

Closing cash and bank position 1,303,785 1,647,161

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EXPLANATORY NOTES

Introduction

These annual consolidated financial statements for the year ended June 30, 2014, consisting of the balance sheet, income statement, statement of comprehensive income, statement of cash flows, statement of changes in shareholders’ equity and these notes, are presented in euro with amounts rounded to the nearest thousand (except where otherwise specified) for greater clarity.

Danieli & C. Officine Meccaniche S.p.A. (the Parent Company) is a joint stock company, listed on the Borsa Italiana (Italian stock exchange), operating in the design, construction and sale of plants for the iron and steel industry. Its registered office is at Via Nazionale 41, Buttrio (Udine, Italy). The key ordinary shareholders at June 30, 2014 were:

Sind International S.p.A. - Milan 67.175%

Treasury shares held at June 30, 2014 7.240%

The remaining shares were outstanding in the market.

The consolidated financial statements of the Danieli Group have been audited by Reconta Ernst & Young S.p.A.The draft consolidated financial statements were approved on September 25, 2014 by the Board of Directors, which authorized their publication in the September 25, 2014 press release containing the main elements of these financial statements.

Danieli Group operationsDanieli & C. Officine Meccaniche S.p.A. is a corporate entity set up in accordance with the law of the Italian Republic and has been listed on the Milan Stock Exchange since 1984.The Danieli Group constructs and sells plants for the iron and steel industry, offering a range of machines extending from primary process management to the manufacture of finished goods (essentially from ore to finished product), and produces and sells special steels through the subsidiaries Acciaierie Bertoli Safau S.p.A. and ABS Sisak D.o.o.

In brief, the Danieli Group designs and builds plants for the iron and steel industry for all process areas, such as:

• Mines;• Pellet production plants;• Blast furnaces;• Direct reduction;• Scrap shredders,• 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 (all ferrous and non ferrous metals and stainless steel);• 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;• Cranes and lifting equipment.

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 plant reliability, productivity and achievable product quality as well as for level of automation.

48 EXPLANATORY NOTES

Statement of compliance with IFRSThe consolidated financial statements for the year ended June 30, 2014 have been prepared in compliance with the IFRS issued by the International Accounting Standards Board and endorsed by the European Commission, in accordance with the procedure per Art. 6 of Regulation (EC) no. 1606/2002 of the European Parliament and the Council of July 19, 2002, in force at the date of preparation (September 2014), together with recommendations set out in the Regulations for Issuing Companies as approved by CONSOB (the Italian S.E.C.). The term “IFRS” encompasses all of the International Accounting Standards (IAS) and all interpretations published by the International Financial Reporting Interpretations Committee (IFRIC), previously known as the Standing Interpretations Committee (SIC).The consolidated financial statements have been prepared on the historic cost principle, except for derivative financial instruments and available-for-sale financial assets, which have been recorded at fair value; investments in associates and joint ventures, valued by the equity method; and construction contracts, recognized according to the percentage of completion method. From the various options permitted by IAS 1, the Group has chosen, in the balance sheet, to show current and non-current assets and liabilities separately on the basis of whether they will be realized/settled as part of the company’s normal operating cycle within twelve months of the closure of the period, and to provide an analysis of costs on the basis of their nature in the income statement.The statement of cash flows has been drawn up using the indirect method.

SUMMARY OF ACCOUNTING STANDARDS

The accounting standards used to prepare the consolidated financial statements for the year ended June 30, 2014 are the same as those followed the previous year, with the exception of the following new or revised IFRS and IFRIC that have been applied by the company for the first time as from July 1, 2013.

New accounting standards and interpretations adopted by the Group since July 1st, 2013Since July 1st, 2013 the Group adopted the following new standards and interpretations, which had impacts limited to the disclosure on the consolidated financial statements or did not have any impact because they regulated cases not present therein.

IFRS 13 “Fair Value Measurement” - On May 12, 2011 the IASB issued IFRS 13 “Fair Value Measurement”, which establishes a single framework for measuring fair value when required or permitted by other IFRS and sets out disclosure requirements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Amendments to IFRS 7 “Disclosures - Offsetting Financial Assets and Financial Liabilities” – On December 16, 2011 the IASB issued amendments to IFRS 7 “Disclosures - Offsetting Financial Assets and Financial Liabilities”, which require the entity to provide disclosure for all financial instruments to be set off in accordance with IAS 32 Financial Instruments: Presentation.

Standards and interpretations issued by IASB/IFRIC and endorsed by the European Commission but not yet mandatorily applicable to the Group

Amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities” – On December 16, 2011 the IASB issued amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities”, which establish the rules for offsetting financial assets and liabilities and the related disclosure requirements. Specifically, the amendments to IAS 32 establish that: (i) an entity’s right to offset must be legally enforceable under all circumstances, i.e. both in the normal course of business and in the event of default, insolvency or bankruptcy of either of the two contracting parties; and (ii) under certain conditions, the simultaneous settlement of financial assets and liabilities on a gross basis, using a mechanism that eliminates or significantly reduces credit and liquidity risk, can be considered the equivalent of net settlement. The provisions of the amendments to IAS 32 are effective for financial years beginning on or after January 1st, 2014 (for the Danieli group: the 2014/2015 financial statements).

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IFRS 10 “Consolidated Financial Statements” and IAS 27 “Separate Financial Statements” – On May 12, 2011 the IASB published IFRS 10 “Consolidated Financial Statements” and the revised version of IAS 27 “Separate Financial Statements”, which establish the principles to be followed for the preparation and presentation of, respectively, the consolidated and separate financial statements. IFRS 10 also establishes a single definition of control that applies to all entities, including special purpose entities. According to that definition, an entity is deemed to exercise control when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The standard provides some indicators to consider when determining whether control exists, which include but are not limited to potential rights, protective rights, and the existence of agency or franchising relationships. The new provisions also recognize the possibility to exert control over an investee even without a majority of voting rights, due to the dispersion of holdings or the passive behaviour of other investors. IFRS 10 and the new version of IAS 27 are effective for financial years beginning on or after January 1, 2014 (for the Danieli Group: the 2014/2015 financial statements).

IFRS 11 “Joint Arrangements” and IAS 28 “Investments in Associates and Joint Ventures” – On May 12, 2011 the IASB issued IFRS 11 “Joint Arrangements” and a revised version of IAS 28 “Investments in Associates and Joint Ventures”. On the basis of the rights and obligations of the parties, IFRS 11 identifies two types of agreement, joint operations and joint ventures, and states which accounting treatment should accordingly be followed. Joint ventures are to be accounted for using the equity method only, with proportional consolidation no longer possible. The revised version of IAS 28 defines the appropriate accounting treatment in the event of the total or partial sale of an investment in an associate or joint venture. IFRS 11 and the new version of IAS 28 are effective for financial years beginning on or after January 1, 2014 (for the Danieli Group: the 2014/2015 financial statements).

IFRS 12 “Disclosure of Interests in Other Entities” - On May 12, 2011 the IASB published IFRS 12 “Disclosure of Interests in Other Entities”, establishing the required disclosures about subsidiaries and associates, joint operations and joint ventures, as well as unconsolidated “structured entities”. IFRS 12 is effective for financial years beginning on or after January 1, 2014 (for the Danieli Group: the 2014/2015 financial statements).

Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” – On May 29, 2013, the IASB issued amendments to IAS 36, which address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal, clarifying that the scope of the disclosure is limited to assets that were actually impaired. The provisions of the amendments to IAS 36 are to be applied retrospectively for financial years beginning on or after January 1st, 2014 (for the Danieli group: the 2014/2015 financial statements).

Amendments to IAS 39 “Financial Instruments: Recognition and measurement - Novation of Derivatives and Continuation of Hedge Accounting” – On June 27, 2013, the IASB issued amendments to IAS 39, regarding the introduction of certain exemptions to hedge accounting requirements when an existing derivative, designated as a hedging derivative, is novated as a consequence of laws or regulations to replace the original counterparty in order to assure the fulfilment of the obligation assumed and if certain conditions are met. The amendments to IAS 39 are to be applied retrospectively for financial years beginning on or after January 1st, 2014 (for the Danieli group: the 2014/2015 financial statements).

IFRIC 21 “Levies, an interpretation of IAS 37 - Provisions, Contingent Liabilities and Contingent Assets” - IFRIC 21 clarifies that an entity shall recognise a liability for a levy/withdrawal when the obligating event that triggers the payment in accordance with the relevant legislation actually occurs. For a levy/withdrawal triggered on reaching a minimum threshold, the interpretation clarifies that no liability shall have to be recognised before the specified minimum threshold is actually reached. IFRIC 21 is effective for annual periods beginning on or after June 17, 2014 (for the Danieli group: the 2014/2015 financial statements)

The Danieli Group intends to adopt these standards when they become effective. Upon preliminary review of the standards, no material impacts are expected either in the recognition or in the initial and subsequent measurement of the assets, liabilities, costs and revenues of the Group.


The accounting standards applied for the preparation of the financial statements to June 30, 2014 are described below.

Consolidation scope and methodThe consolidated financial statements of the Danieli Group include the fully consolidated financial statements for the year ended June 30, 2014 of Danieli & C. Officine Meccaniche S.p.A. and of the following Italian and foreign companies over which it exercises control, either directly or indirectly:

Companies consolidated on a full line-by-line basis

Percentage of shares held by

the Group

Shareholding (d) direct

Currency Share

Italian subsidiaries

Cecilia Danieli - Asili per l’infanzia Srl, 100.00 (i) EUR 500

Danflat SpA, Buttrio (UD) 100.00 (i) EUR 34,000

Danieli Automation SpA, Buttrio (UD) 100.00 (i) EUR 10,000

Danieli Centro Combustion SpA, Cinisello Balsamo (MI) 100.00 (i) EUR 2,500

Danieli Construction International SpA, Buttrio (UD) 100.00 (i) EUR 6,000

Danieli Special Cranes Srl, 100.00 (i) EUR 100

Findan SpA, Pradamano (UD) 100.00 (i) EUR 2,500

IN.DE. SpA Industrial Design, 100.00 (i) EUR 100

More Srl, Gemona del Friuli (UD) 100.00 (i) EUR 240

Qualisteel Srl, Pozzuolo del Friuli (UD) 100.00 (i) EUR 21,500

Stem Srl, Magnago (MI) 100.00 (i) EUR 265

Turismo 85 Srl, Buttrio (UD) 100.00 (i) EUR 10

Acciaierie Bertoli Safau SpA,Pozzuolo del Friuli (UD) 99.999 (i) EUR 290,000

Danieli Centro Cranes SpA, Rezzato (BS) 90.00 (i) EUR 120

Foreign subsidiaries

ABS Deutschland GmbH, Mülheim (DEU) 100.00 (i) EUR 25

ABS Centre Métallurgique Sarl Metz (FRA) 100.00 (i) EUR 2,500

ABS Scandinavia AB, Örebro (SWE) 100.00 (i) SEK 50

ABS Sisak Doo, Sisak (HRV) 100.00 (i) EUR 66,785

Birstateknik AB, Sundsvall (SWE) 100.00 (i) SEK 100

Centro Maskin AB, Gothenburg (SWE) 100.00 (i) SEK 100

Danieli Anatolia Makine San.V.T. AS, 100.00 (i) TRY 250

Danieli Automation Co. Ltd. Rayong (THA) 100.00 (i) THB 20,000

Danieli Banking Corporation SA, Luxembourg (LUX) 100.00 (i) EUR 400,000

Danieli Canada Inc., Toronto (CAN) 100.00 (i) CAD 7,922

Danieli Centro Combustion India Pvt. Ltd. 100.00 (i) INR 24,000

Danieli Changshu Metall. Equipment & Services Co Ltd., Changshu (CHN) 100.00 (i) CNY 280,111

Danieli Changshu Trading Co. Ltd., 100.00 (i) CNY 1,000

Danieli Centro Met Swiss GmbH, 100.00 (i) CHF 21

Danieli Co., Ltd. Rayong (THA) 100.00 (i) THB 1,445,000

Danieli Corporation, Wilmington (USA) 100.00 (i) USD 1

Danieli Czech Engineering A.S., Prague (CZE) 100.00 (i) CZK 3,000

Danieli do Brasil Ltda, Diadema (BRA) 100.00 (i) BRL 3,373

Danieli Engineering Japan Ltd. 100.00 (i) JPY 40,000

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Danieli Engineering & Services GmbH, Völkermarkt (AUT) 100.00 (i) EUR 4,000

Danieli Engineering Rom SRL, 100.00 (i) RON 10

Danieli India Ltd, Kolkata (IND) 100.00 (i) INR 1,426,413

Danieli Heavy Machinery Engineering LLC, Dnepropetrovsk (UKR) 100.00 (i) UAH 177,882

Danieli Hellas SA, Athens (GRC) 100.00 (i) EUR 62

Danieli Henschel Sas, Chambery (FRA) 100.00 (i) EUR 192

Danieli Henschel GmbH, Kassel (DEU) 100.00 (i) EUR 250

Danieli Henschel Service OOO, 100.00 (i) RUB 50

Danieli Hi Tech GmbH, Mülheim (DEU) 100.00 (i) EUR 10,000

Danieli Holdings Inc., Wilmington (USA) 100.00 (i) USD 2,225

Danieli International SA, Luxembourg (LUX) 100.00 (d) EUR 650,224

Danieli Malaysia Sdn Bhd, 100.00 (i) MYR 500

Danieli Metallurgical Equipment (Beijing) Co. Ltd., Beijing (CHN) 100.00 (i) CNY 41,297

Danieli Property Holdings LLC, 100.00 (i) USD -

Danieli Riverside Products Inc., 100.00 (i) USD 0.001

Danieli Russia Engineering LLC, 100.00 (i) RUB 50,350

Danieli Technology Inc, Wilmington (USA) 100.00 (i) USD 1

Danieli Volga LLC, Dzerdzhinsk (RUS) 100.00 (i) RUB 514,557

Danieli UK Holding Ltd, Sheffield (GBR) 100.00 (i) GBP 12,489

Elsid-Cheda Ltd., Moscow (RUS) 100.00 (i) RUB 10

Industrial Beteiligung Services & Contracting Co. LLC, Al Khobar (SAU) 100.00 (i) SAR 500

Industrielle Beteiligung SA, Luxembourg (LUX) 100.00 (d) EUR 328,700

Industrielle Beteiligung Co. Ltd.; 100.00 (i) VND 69,583,393

Innoval Technology Ltd. Banbury (GBR) 100.00 (i) GBP 1

Josef Fröhling GmbH, Meinerzhagen (DEU) 100.00 (i) EUR 3,480

Morgårdshammar AB, Smedjebacken (SWE) 100.00 (i) SEK 25,000

Morgårdshammar Inc., Charlotte (USA) 100.00 (i) USD 0.001

Sund Birsta AB, Sundsvall (SWE) 100.00 (i) SEK 10,000

Sund Birsta (Beijing ) Metallurgical Equipment Co., Ltd Beijing (CHN) 100.00 (i) CNY 5,000

W+K Industrie Technik GmbH & Co KG, Dortmund (DEU) 100.00 (i) EUR 765

Systec Automatizacija Doo, Labin (HRV) 100.00 (i) HRK 750

Systec Eng. Doo, Smederevo (SRB) 100.00 (i) RSD 51

Systec Doo System Technology, 100.00 (i) EUR 38

Danieli Procome Iberica SA, 99.99 (i) EUR 108

Rotelec SA, Bagnolet Cedex (FRA) 99.99 (i) EURO 600

Danieli Middle East for Engineering & Services LLC., Cairo (EGY) 99.80 (i) EGP 50

DWU Engineering Polska SP Zo.O., 78.67 (i) PLN 900

Termo Makina San.V.T. AS, Istanbul (TUR) 75.00 (i) TRY 11,597


Changes in the consolidation compared with the financial year ended June 30, 2013 are summarized below:• Entities removed from the scope of consolidation: – Premium Property Partner SA, with registered office in Luxembourg, merged by incorporation into

Danieli International SA; – Sund Birsta Machinery Co. Ltd. with registered office in Beijing, sold to third parties who already

held 35%;• Acquisitions in the period: – Termo Makina, San. V.T. AS, with registered office in Istanbul, of which the Group acquired 75%,

mainly active in the field of cranes; – Danieli Malaysia Sdn Bhd with registered office in Kuala Lumpur, incorporated by Danieli

Construction International Spa to implement a local project; • Changes in equity interests held: – Danieli Centro Cranes SpA, of which an additional interest of 15% was acquired from minority

shareholders (hence, the Group’s percentage of ownership rose to 90%); – Systec Doo System Technology, Systec Automatizacija Doo and Systec Eng. Doo, of which the

entire interest held by minority shareholders was acquired, so the Group now owns 100% of these companies.

The activity of the most significant newly incorporated or acquired companies is described in the Directors’ report.The financial statements used in the consolidation were those prepared for approval by each company’s annual general meeting and, in the case of subsidiaries whose financial years do not coincide with that of Danieli & C. Officine Meccaniche S.p.A., interim annual financial statements specially prepared for this purpose by the Directors for the year ended June 30, 2014. All such statements have been appropriately reclassified and adjusted to bring them into line with the accounting standards adopted by the Danieli Group.

Companies consolidated using the equity method

CompanyPercentage of shares

held by the GroupShareholding

(d) directShare Capital

(thousands)

Omnia Factor S.p.A. - Milan 20.00 (i) euro 4,000

Danieli Corus B.V. – IJmuiden (NLD) 50.00 (i) euro 14,840

Investments in subsidiariesIncluded in the consolidation on a full line-by-line basis are companies over which the Group exercises control (subsidiaries), as a result either of directly or indirectly owning the majority of the shares with the right to vote or of exercising a dominant influence, demonstrated by the power to determine, even indirectly, the financial and operating policies of these companies and to obtain the relative benefits, irrespective of shareholding relationships. The existence of potential voting rights which can be exercised at the date of the financial statements is considered for the purpose of determining control. Subsidiaries are consolidated from the date on which control is acquired and deconsolidated from the date on which control ceases.Business combinations whereby control of a company is acquired are accounted for by use of the purchase method: on the basis of this method, the acquisition is valued as the sum of the consideration transferred, measured at fair value at the date of purchase, and the amount of any non-controlling interests in the acquired company. For each business combination, this latter can be measured at fair value or in proportion to the acquired company’s net assets attributable to non-controlling interests. Acquisition costs are charged to the income statement.The consideration recognized for a business combination includes the fair value of any contingent consideration as of the acquisition date. A change in the fair value of contingent consideration classified as an asset or liability is recognized in accordance with IAS 39, in the income statement or in the statement of comprehensive income. If the contingent consideration is classified as equity, it needs not be remeasured until settlement of the contingency is reflected within equity.Goodwill from a business combination is initially stated at cost, measured as the excess between the consideration paid and the amount recognized for the non-controlling interest in respect of the net identifiable assets acquired and the liabilities assumed by the Group. If the consideration paid and the recognized value of the non-controlling interests are less than the fair value of the subsidiary’s net purchased assets, the difference is recorded in the income statement. Recognition of goodwill, even initially, is only made where, as a result of the business combination, there are tangible valuation criteria and measurable future profitability of the new subsidiary. Where these cannot be clearly identified, due to the difficulty of integrating the subsidiary into the Group and adapting to its manufacturing policies, or if the subsidiary’s independent capability to generate profits cannot be objectively proved, the goodwill is prudently written down.

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After the acquisition, goodwill is subjected to impairment test once a year or more frequently in case of events or changes that may lead to impairment, in accordance with the provisions of IAS 36 - Impairment of Assets. Any impairment is identified through valuations that refer to each unit’s capability to generate cash flows sufficient to recover the part of goodwill allocated to it, with the procedures indicated subsequently in the section “impairment of tangible and intangible assets”. If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of shall be included in the carrying amount of the operation when determining the gain or loss on disposal. The goodwill associated with the operation disposed of must be measured on the basis of the relative values of the disposed operation and the portion of the cash-generating unit retained.If a business combination is achieved in stages, upon acquiring control the investor has to remeasure the fair value of the interest previously held that was valued using the equity method; any resulting gain or loss is recognized in the income statement. The effects of purchasing or selling shares subsequent to taking control, without this resulting in a loss of control, are accounted for through equity. If the partial disposal of an investment results in loss of control, the residual holding is remeasured to fair value, and any difference is included in the capital gain or loss on the disposal.During consolidation, using the full line-by-line method:– the following are eliminated: accounts payable and receivable between companies included in the

consolidation, income and expenses relating to transactions between those same companies, and profits and losses resulting from transactions between these companies relative to items included in the balance sheet;

– the non-controlling interests in shareholders’ equity of subsidiaries is entered as a specific shareholders’ equity item called “Non-controlling interests”. The non-controlling interest in the consolidated profit and loss is recognized as “Net (profit)/loss attributable to non-controlling interests”;

– the financial statements of foreign subsidiaries are translated into euro using the year-end exchange rates for assets and liabilities and, for items in the income statement, exchange rates that approximate the average rate for the year.

Investments in associatesInvestments in companies over which a significant influence is exercised (“associates”), which is presumed to be the case when the percentage of shares held is between 20% and 50%, are valued by the equity method. As a consequence of using this method, the book value of the investment is aligned with its equity (adjusted, where necessary, to reflect the application of IFRS approved by the European Commission) and includes any goodwill identified at the time of the acquisition.The share of profits and losses made by associates after the acquisition is recognized through the income statement, while movements in reserves subsequent to acquisition are entered in reserves in shareholders’ equity. When the Group share of losses in an associate equals or exceeds the amount of its holding in that company, the value of its shareholding is reduced to zero and the Group does not book further losses relating to its share, unless and to the extent that the Group is responsible for them. Unrealized profits and losses generated by transactions with associates are eliminated in proportion to the percentage of the Group’s investment in those companies.

Other investmentsOther investments in which the ownership percentage is less than 20%, or 10% if listed, or over which the Group exercises no significant influence, are measured at fair value. If the fair value of these assets cannot be reliably calculated, they are measured at purchase or subscription cost net of any write-downs for impairment losses. They continue to be carried at cost even when this exceeds the amount determined by the equity method, provided that earnings prospects or implicit capital gains make it likely that the higher value will be recovered.

Translation of foreign currency accounts and financial statementsIdentification of the functional currencyAmounts in the income statement and balance sheet of each Group company are entered in the currency of the primary economic environment in which the entity operates (functional currency). The Danieli Group consolidated financial statements are prepared in euro, which is the functional currency of the Parent Company.

Translation of foreign currency transactionsElements in currencies other than the functional currency, both monetary (liquid assets, assets and liabilities which will be paid in preset or determinable amounts of cash, etc.), and non-monetary (advances to suppliers and advances received from customers for goods and/or services, goodwill, intangible assets, etc.), are initially recorded at the exchange rate on the date when the transaction takes place. Subsequently, monetary items are translated into the functional currency on the basis of exchange rates at the date of the financial statements and differences arising from the conversion are booked to the income statement. Non-monetary items are maintained at the historic rate of exchange of the transaction except in the case of a persistent unfavourable trend in the reference exchange rate. The allocation of differences (to the income statement or translation reserve) follows that applied for changes in value of the related items.


Translation of financial statements in currencies other than the functional currencyThe rules for translation of financial statements in foreign currencies into the functional currency of the Parent Company are as follows:– assets and liabilities are translated using financial year-end closing exchange rates;– costs, revenues, expenses and income are translated at the average rate for the period;– the “translation reserve” holds both exchange differences generated by translation of foreign

currencies at rates different from those at the reference date of the consolidated financial statements and those generated by translation of opening shareholders’ equity at an exchange rate different from that at the end of the period;

– oodwill and adjustments resulting from the fair value associated with the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates for the period.

The exchange rates used for translation of financial statements in currencies other than the euro for the years ended June 30, 2014 and June 30, 2013 are shown below (foreign currency value of 1 euro):

Financial year 2013-2014 Financial year 2012-2013

Avg. June 30, 2014 Avg. June 30, 2013

Thai Baht 43.530 44.323 39.358 40.613

Czech Koruna 26.860 27.453 25.410 25.949

Swedish Krona 8.8629 9.1762 8.531 8.7773

Serbian Dinar 114.93 115.81 113.53 113.94

Canadian Dollar 1.4528 1.4589 1.3000 1.3714

US Dollar 1.3566 1.3658 1.2939 1.3080

Vietnamese Dong 28,658.9 29,134.1 27,029.0 27,715.6

Swiss Franc 1.2267 1.2156 1.2179 1.2338

Ukrainian Hryvna 12.661 16.047 10.464 10.560

Croatian Kuna 7.6066 7.5760 7.5351 7.4495

Romanian Leu 4.4552 4.3830 4.4590 4.4603

Egyptian Lira 9.4630 9.7723 8.3671 9.1820

British Pound Sterling 0.8343 0.8015 0.8255 0.8572

Turkish Lira 2.8257 2.8969 2.3374 2.5210

Brazilian Real 3.1075 3.0020 2.6366 2.8899

Chinese Renminbi (Yuan) 8.3266 8.4722 8.0782 8.0280

Malaysian Ringgit 4.4002 4.3856 - -

Saudi Riyal 5.0880 5.1224 4.8526 4.9053

Russian Rouble 45.953 46.378 40.457 42.845

Indian Rupee 83.368 82.202 70.978 77.721

Japanese Yen 137.12 138.44 113.67 129.39

Polish Zloty 4.1958 4.1568 4.1512 4.3376

Property, plant and equipmentProperty, plant and equipment are recognized in the balance sheet at cost of purchase or internal production, including directly attributable ancillary expenses, net of accumulated depreciation. Where there is a present obligation and where significant, cost is increased by the present value of the estimated cost of dismantling and removing the asset. Borrowing costs directly attributable to the purchase, construction or production of an asset that requires significant time before the asset is available for use (a qualifying asset pursuant to IAS 23 – Borrowing costs) are capitalized, as part of the cost of such asset, and amortized over the useful life of the class of asset to which they refer. Plant and machinery may include parts with different useful lives. Depreciation is calculated over the useful life of each individual part; in the event of replacement, the new parts are capitalized to the extent that they meet the criteria for recognition as assets, and the carrying value of the parts replaced is derecognized. The residual value and useful lives of the assets are reviewed at least every year-end. Regardless of existing depreciation, whenever impairment is determined on the basis of IAS 36, the asset is written down accordingly; the write-down is reversed in subsequent years, net of depreciation, if the reasons cease to apply. Ordinary maintenance costs are expensed in full in the income statement, while maintenance costs which increase the value of assets are allocated to the relative assets and depreciated over their residual useful lives.

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Leases in which the lessor substantially retains the risks and rewards associated with ownership of the assets are classified as operating leases. Operating lease costs are recognized as an expense in the income statement on a straight-line basis over the term of the leasing contract.Depreciation charged to the income statement has been calculated on a systematic and straight-line basis, at rates considered to be representative of the estimated useful economic and technical life of the assets. For some specific plant in the steelmaking segment, and, in particular, melting furnaces and endless casting rolling plant, considering the technological innovations inherent in their realization and the long period necessary for start-up and bringing them up to capacity, it has been considered appropriate to relate the depreciation rate to the actual production capacity used in the period, compared with the total production capacity expected throughout the useful life of the plant. The principal yearly or annualized depreciation rates are as follows:

Buildings and light constructions 3-10%

Plant and machinery from 10 to 17.5%

Furnaces and large automated plants from 5 to 23.4%

Equipment 20-25%

Motor vehicles, wheeled internal transport and cars 20-25%

Furniture and office machinery 12-20%

Land, free of construction or annexed to buildings, is not depreciated since it has an unlimited useful life.

Intangible assetsIntangible assets are recognized at purchase or production cost, including directly attributable ancillary expenses.The cost of an internally generated intangible asset includes only those expenses which can be directly attributed to the asset as from the date on which the criteria for recognition of that asset are met.After initial recognition, intangible assets are recorded at cost, net of accumulated amortization and any impairment losses calculated as set out in IAS 36. Research costs relating to production activities are fully expensed the year they are incurred.Intangible assets are subject to amortization unless they have indefinite useful lives. Amortization is charged systematically over the useful life of the asset in accordance with estimated future economic use. The residual value at the end of the useful life is assumed to be zero, unless there is a commitment by third parties to buy the asset at the end of its useful life or if there is an active market for the asset. The Directors review the estimated useful lives of intangible assets every financial year-end.The principal annual amortization rates applied are in the following ranges:

Intellectual property rights from 6.67% to 20%

Licences and trademarks 20%

Other intangible assets from 20 to 33%

Impairment of tangible and intangible assetsAt the date of each set of financial statements and in the circumstances in which indicators of a possible impairment are identified, the recoverable value of the intangible or tangible assets, or of the group of intangible or tangible assets (Cash Generating Unit, hereafter also “CGU”), net of the sale costs and its value in use, is estimated. If the carrying amount of an asset exceeds its recoverable value, then the asset is written down to its recoverable value.The recoverable value is the fair value after sale costs or value in use, whichever is higher. In measuring value in use, expected future cash flows are discounted using a rate before taxes that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate amply independent cash flows, the realization value is determined in relation to the cash flow generating unit to which said asset belongs. Impairment losses are accounted for in the income statement among costs for depreciation, amortization and write-downs. These impairment losses are reversed if the reasons that caused them no longer apply, with the exception of goodwill impairment losses.

Financial receivables and assetsInitially, all financial assets are recorded at fair value, which is equivalent to the amount paid including transaction costs. The classification of financial assets determines their subsequent valuation, as follows:– financial assets held for trading: these are recorded at fair value, unless fair value cannot be reliably

determined, in which case they are recognized at cost less any impairment; gains and losses are taken to the income statement;

– held-to-maturity investments, loans receivable and other financial receivables: these are recognized at amortized cost, net of any write-downs for impairment; gains and losses pertaining to these assets are taken to the income statement when the investment is removed at maturity or in the case of permanent impairment;


– loans and receivables: these are non-derivative financial instruments, with fixed or definable payments, not listed in an active market. They are included in current items except for those with expiry dates beyond twelve months after the balance sheet date. These latter are classified as non-current. Such assets are valued at cost amortized using the effective interest method. Any losses in value determined by impairment testing are taken to the income statement. In particular, trade receivables are initially recognized at their current value and subsequently recalculated using the amortized cost method net of any write-downs for impairment losses. The provision for doubtful accounts is created when there is objective evidence that the Group will not be able to collect the original amount of the receivable. Accruals to the provision for doubtful accounts are charged to the income statement;

– available-for-sale financial assets: these are recorded at fair value, and gains and losses resulting from subsequent valuations are recognized through equity. If the fair value of such assets cannot be reliably determined, they are valued at cost less any impairment.

If it is no longer appropriate to classify an investment as “held-to-maturity”, following a change of intention or of capacity to hold it until maturity, it must be reclassified as “available-for-sale” and measured at fair value. The difference between carrying value and fair value remains incorporated within shareholders’ equity until the asset is sold or otherwise disposed, at which time it must be taken to the income statement.Financial assets are derecognized when the right to receive cash flows from the instrument is extinguished and the Group has transferred all risks and rewards relative to the instrument.

Treasury sharesTreasury shares which are purchased back are deducted from shareholders’ equity on the basis of the purchase price. The purchase, sale, issue and cancellation of equity instruments in the company share capital do not have any impact on profit or loss in the income statement. Voting rights associated with treasury shares are cancelled, as is the right to receive dividends.

InventoriesInventories of raw and ancillary materials and consumables are recognized at the lower of purchase cost (including ancillary expenses), determined using the weighted average cost method, and estimated realizable value as determined from market trends at the end of the period.Finished and semi-finished products are valued at the weighted average purchase or production cost; any negative difference between cost and the corresponding market value at the end of the period is accrued to a specific product write-down reserve, which directly reduces the closing value of inventories.Products in work in progress are valued at the production cost relative to the year of manufacture, based on the stage of completion achieved.Construction contracts with durations of one year and more than one year are recorded using the state of advancement (or percentage of completion) method, under which costs, revenues and margins are recognized on the basis of production progress, determined by the Group using the cost to cost method. For all construction contracts in respect of which invoicing based on progress toward completion exceeds the costs incurred plus identified margins, the total of costs incurred and identified income, net of invoicing based on production progress, is shown in trade payables.Construction contracts with duration exceeding one year, for which estimates necessarily have a significant subjective component, are measured on the basis of estimated revenues and costs over the full life of the contract. The assumptions on which the measurements are based are updated periodically. Any effects on profit and loss are recorded in the financial year in which the updates are made.The valuation of construction contracts includes additional fees, compared with those agreed contractually, if their receipt is considered probable and the amount can be reliably estimated.If it is expected that completion of a construction contract will result in a loss at operating margin level, this is recognized in full in the financial year in which such loss becomes reasonably predictable. Where any future charges are forecast which could exceed the relative income, a provision for contractual risks is set up for construction contracts in progress and included under the item “Provisions”.Construction contracts denominated in currencies other than the functional currency and exceeding the advances collected are influenced by the exchange rate at the end of the reporting period. However, Group policy relative to exchange risk requires contracts whose incoming and outgoing cash flows are significantly affected by exchange rate fluctuations to be monitored to determine the best hedging policy, which may include use of derivative contracts or the management of foreign currency purchases in order to obtain a natural hedging effect.

Cash and cash equivalents Cash and cash equivalents are kept to meet short-term cash commitments; the latter are highly liquid and easily convertible to cash for a known amount. Their value is subject to an irrelevant risk of fluctuation, with the exception of those in foreign currencies, which are subject to exchange rate risk.

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Employee termination indemnityEmployee severance indemnity (trattamento di fine rapporto, or TFR) for employees of the Group’s Italian companies falls within the scope of IAS 19 (employee benefits), since it is similar to defined benefit plans. The amount recorded in the balance sheet is subject to actuarial valuation in the form of the projected unit credit method, which discounts the obligation at an interest rate reflecting the market yield on high quality corporate bonds of comparable maturity; the calculation concerns accrued TFR for service already rendered, and incorporates assumptions about future salary increases. Actuarial gains and losses are recognized in the statement of comprehensive income entirely in the period in which they occur. Actuarial gains and losses are classified among retained earnings and will not be reclassified in the income statement in subsequent periods.Following the changes made to the TFR provision rules by Law 296 of December 27, 2006, and subsequent decrees and regulations issued in the early months of 2007, TFR accrued from January 1, 2007 has assumed the nature of a defined contribution plan, whether the employee has opted for benefits to be held in a complementary pension fund or in the Treasury Fund managed by the Social Security agency INPS.

ProvisionsThe Group accrues a provision only when a present obligation exists for a future outflow of economic resources as a result of past events, and when it is probable that this outflow of economic resources will be required to settle the obligation, whose amount can be estimated with reasonable precision. The amount recognized is the best estimate of the expense required to completely extinguish the present obligation.Restructuring costs are recognized if the Group has a detailed restructuring plan that it has communicated to the interested parties.For contracts whose execution involves inevitable costs that exceed the presumed economic benefits of the agreements, the present contractual obligation is recorded on the same basis as a standard provision.

Greenhouse gas emission sharesGreenhouse gas emission shares (grey certificates) represent the right to inject a certain quantity of greenhouse gas into the atmosphere. These shares are an instrument to reduce pollution that originates from the Kyoto Protocol, and they were introduced with the goal of abating greenhouse gas emissions through the improvement of technologies used in the production of energy and in industrial processes, as well as more efficient use of energy.Emission shares are assigned, free of charge, by the competent national authority and they allow to inject a certain quantity of greenhouse gases into the atmosphere.If this quantity is exceeded, it will be necessary to hand over shares to be acquired on the market; surplus shares may be used in following years or sold at auctions organised by the competent national authority.Purchasing emission shares entails recognizing a cost in the income statement and a payable in the balance sheet. Their sale entails recognizing a revenue and a receivable. The Group has adopted a policy whereby the net liability pertaining to granted emission rights is recognized. Therefore, an allocation to the provision for risks is recognized only when actual emissions exceed the emission rights received and still available.

Financial liabilitiesGroup financial liabilities include trade payables, other liabilities, bank debts and loans.

Trade payables and other liabilitiesTrade payables, including advance payments received from customers and payables relating to construction contracts, and other current and non-current liabilities are entered initially at nominal value, which represents fair value at the reference date. After initial recognition, financial liabilities are valued at amortized cost, using the original effective interest method.

LoansInitially, all loans are entered at the fair value of the amount received, net of transaction costs incurred to obtain the loan. After initial recognition, loans are valued at amortized cost using the effective interest rate method. Loans are classified within current liabilities unless Group companies have an unconditional right to defer payment for at least 12 months after the balance sheet date.Financial liabilities are removed from the balance sheet when they are extinguished and the Group has transferred all risks and charges relative to the instrument.

Derivative financial instrumentsThe Group uses derivative financial instruments such as: forward sales/purchases of foreign currency, including synthetic ones with knock-out clause and accumulation of forward purchases/sales, interest rate swaps.


All derivative financial instruments are initially recognized at fair value at the date of execution of the derivative contract and, subsequently, at fair value as at the reporting date. Derivatives are accounted for as financial assets when fair value is positive and as financial liabilities when fair value is negative. Derivative financial instruments are used only for hedging purposes, in order to reduce exchange and interest rate risks. In accordance with IAS 39 as endorsed by the European Commission, derivative financial instruments may be recognized on a hedge accounting basis only if, at the inception of the hedge, the relationship is formally designated and documented; the hedge is expected to be highly effective; its effectiveness can be reliably measured; and the hedge is assessed as being highly effective throughout the financial reporting periods for which it was designated.When financial instruments qualify for hedge accounting, the following rules apply:– fair value hedge - If a derivative financial instrument is designated as a hedge against changes in

the fair value of a recognized asset or liability attributable to a particular risk that may affect profit or loss, the gain or loss arising from subsequent fair value accounting of the hedge is recognized in profit or loss.

– cash flow hedge - If a financial instrument is designated as a hedge against exposure to variations in the cash flows of a recognized asset or liability or a forecast transaction that is highly probable and could affect profit or loss, the effective portion of the gain or loss on the financial instrument is recognized in a shareholders’ equity reserve. The cumulative gain or loss is transferred from shareholders’ equity to the income statement in the same period in which the hedged transaction is recognized. The ineffective portion of the gain or loss on the hedging instrument is recognized immediately in profit or loss. If a hedge or a hedging relationship is closed, but the hedged transaction has not yet taken place, the gains or losses accrued up to that time in equity are reclassified to the income statement as soon as the transaction occurs. If the hedged transaction is no longer expected to occur, the unrealized gains or losses still recognized in equity are immediately taken to the income statement.

If hedge accounting cannot be used, the gains or losses arising from the fair value accounting of the derivative financial instrument are recognized immediately in the income statement.

RevenuesRevenues from construction contracts are recognized on the basis of the agreed consideration in proportion to the stage of completion of the work, determined using the cost to cost method. This is illustrated in greater detail in the section on inventories. Revenues from sales and services, excluding construction contracts, are recognized when the major risks and benefits associated with the ownership are effectively transferred or on completion of the service. Revenues for partially provided services are recognized for the amount of the consideration earned, provided it is possible to reliably determine the stage of completion and there is no significant uncertainty about the amount or existence of the income and relative costs; otherwise they are recognized up to the amount of the recoverable costs incurred.Revenues are booked net of returns, discounts, allowances and rebates, as well as of directly associated taxes on sales (value added tax).Among the other operating revenues are recorded the “energy efficiency credits” (titoli di efficienza energetica, TEE), also known as white certificates, issued by the Italian Power Exchange in favour of certain parties as a result of energy efficiency improvement projects. They are credits that certify the reduction in consumption achieved within a certain time interval and they are allocated to companies only after the competent authorities give their prior approval to the project and subsequently verify the periodic reports filed; they may be exchanged within a dedicated organised market or through bilateral contracts outside the aforesaid market. The right matured with respect to the Power Exchange is recorded in the financial year when the production that generated the energy savings takes place, evaluated on the basis of the presumable realisation value of the energy efficiency credits at the date of recognition.For all financial instruments valued at amortized cost and interest-bearing financial assets classified as available-for-sale, interest income is entered using the effective interest rate (EIR), which is the rate that discounts estimated future payments and receipts over the expected life of the financial instrument. Dividends are recognized the year in which they are resolved.

CostsCosts are recognized when they relate to goods and services sold or consumed in the financial year or by systematic allocation or when a useful future life can no longer be determined. Operating lease instalments are allocated to the income statement over the life of the contract. Personnel costs include the amount of earnings paid, accruals for complementary pension funds and holidays due but not taken and social security costs, in accordance with the labour contracts and current legislation. Costs for the acquisition of new knowledge or discoveries; for research into alternative products or processes, new technologies or models; for design and construction of prototypes or, in any case, for other scientific research or technological development activities are normally treated as research costs and charged to the income statement the year they are incurred.

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Development costs incurred relative to a given project are recorded as intangible assets when the Group can demonstrate:

i) the technical feasibility of completing the project to make it available for use or sale; ii) its intention to complete the asset;iii) its ability to use it or sell it; iv) the way in which the asset will generate future economic benefits; v) the existence of available resources to complete the asset; and vi) the ability to reliably evaluate the cost attributable to the asset during its development.

Borrowing costs directly attributable to the purchase, construction or production of an asset that requires significant time before the asset is available for use (a qualifying asset pursuant to IAS 23 – Borrowing costs) are capitalized as part of the cost of such asset. All other financial charges are recognized as costs the year they are incurred.

Income taxesCurrent tax receivables and payables are valued at the amount that is expected to be recovered from or paid to the tax authorities, in accordance with the laws in force at the closing date of the financial statements in the countries where the Group operates and generates its taxable income. Current taxes relative to items not reported in the income statement are taken directly to equity or to the statement of comprehensive income, consistently with the accounting for the item to which they refer. Current tax assets and liabilities are only offset if there is an exercisable right to offset the amounts recorded in the accounts and the Group intends to settle or pay the net amounts or to realize the asset and settle the liability at the same time. Deferred tax assets are recorded for all timing differences to the extent that it is probable that taxable income will be achieved against which the deductible timing difference can be used. The same principle applies to the recording of deferred tax assets for usable tax losses.The book value of deferred tax assets is reviewed at the date of the financial statements and, if necessary, reduced to the extent that it is no longer probable that sufficient taxable income will be generated to permit recovery of all or part of the asset. Such reductions are reversed in the event that the conditions for which they were made no longer apply. Deferred tax liabilities are calculated using the “liability method” on all temporary differences existing at the reporting date between the value of assets and liabilities for tax purposes and the value reported in the balance sheet, save for specific exceptions.Deferred tax assets and liabilities are calculated using tax rates and regulations which are in force or substantially in force at the balance sheet date in the countries where the Group operates.

Accounting estimatesPreparation of the consolidated financial statements involves making accounting estimates based on complex and/or subjective opinions, estimates based on past experience, and assumptions considered to be reasonable and realistic on the basis of information known at the time of the estimate. The use of accounting estimates influences the carrying value of assets and liabilities, and information on potential assets and liabilities at the date of the financial statements, as well as the amount of income and costs for the period. Actual results may differ due to the uncertainty of the assumptions and the conditions on which the estimates are based.The following accounting estimates used in drawing up the consolidated financial statements are considered to be critical because they involve significant recourse to subjective judgements, assumptions and estimates regarding matters that are by nature uncertain. Changes in the conditions on which opinions and assumptions are based can have a significant effect on the subsequent results.

Construction contractsThe valuation of construction contracts is based on estimates of income and costs over the entire life of projects (sometimes very complex projects) with durations exceeding one year, whose measurement is necessarily influenced by a significant subjective component. The valuation of construction contracts includes additional fees, compared with those agreed contractually, if their receipt is considered more than probable and the amount can be reliably estimated.

Provisions The Danieli Group makes accruals mainly in connection with employee benefits, legal disputes (stemming in part from the risks inherent to the production of technologically complex plants), and tax disputes. Estimates for these accruals, in particular those tied to the construction of plants, are the result of a complex process involving the subjective opinions of Company management, which may affect the overall results even to an appreciable extent. In particular, the removal of estimated risks at the end of the previous year led to the freeing of provisions amounting to 29.1 million euro, whilst certain allocations, of which 8.1 million euro were used, were in fact not altogether sufficient to cover the costs actually incurred.


Write-downsTangible and intangible fixed assets are written down in value when events or changed circumstances indicate that the amount recognized in the balance sheet is not recoverable. The write-down is calculated by comparing the carrying value with the relative recoverable amount, represented by the greater of fair value net of disposal costs and value in use, which is calculated by discounting to present value the expected cash flows deriving from use of the asset, net of disposal costs. Expected cash flows are quantified in light of the information available when the estimate is made, on the basis of subjective opinions on the trend of future variables — such as prices and the consequent revenues, costs, growth in demand and production profiles — and discounted to present value using a rate that takes into account the risk inherent in the asset in question.The impairment test carried out entailed the further write-down by 2 million euro of the goodwill arisen in previous years, totalling 6.7 million euro in view of the acquisition of the Henschel Group; said goodwill had already been written down by 1.5 million at June 30, 2013. The net carrying value of the goodwill at June 30, 2014, therefore was 3.2 million euro.

Payables for business combinationsPayables for business combinations are essentially based on an estimate of the contingent consideration due for each acquisition, which is initially made at fair value on the basis of the information available at the time of the transaction. That estimate may be revised to reflect either additional information obtained by the Group after the acquisition date concerning facts and circumstances in effect as of that date, or events occurring after the acquisition date, relating to the achievement of earnings objectives, the realizable value of assets or the generation of liabilities.During the financial year, the Group defined certain price revisions referred to business combinations completed in previous years. In particular, as better specified in the paragraph on Business Combinations, for the acquisition of CMC Sisak doo (now ABS Sisak doo) an additional amount of 1.4 million euro was recognised, whilst for the acquisition of Akros Henschel Sas the payables allocated at the end of the previous year, amounting to 1.8 million euro, are no longer due; lastly, for the Riverside Products Inc. acquisition, a receivable of 0.6 million euro was recorded.

Deferred tax assetsDeferred tax assets are recognized on the basis of expected profit in future years. The estimation of future profits for the purpose of recognizing deferred tax depends on factors that can change over time and significantly impact the measurement of the deferred tax assets.The Group recognized assets for tax losses amounting to 14.0 million euro, to the extent to which it is highly likely that there will be such a taxed income as to allow use of the aforesaid losses. The Group also has prior tax losses amounting to 107 million euro, relating to subsidiaries with a record of losses, which cannot be used to offset the taxable income in other members of the Group. Since the aforesaid subsidiaries do not have temporary taxable differences that could partially support the recognition of assets for prepaid taxes connected to such losses, the Group correctly deemed that the conditions are not met for the recognition of the related deferred tax assets, whose total amount would be approximately 18 million euro.

Estimate of fair valueThe fair value of financial instruments listed in an active market is based on prices quoted on the balance sheet date.The fair value of financial instruments not traded in an active market is calculated using measurement techniques. Various techniques are used and the assumptions are based on market conditions at the date of the financial statements. Specifically:– the fair value of interest rate swaps is calculated on the basis of the present value of future cash

flows based on interest rate curves;– the fair value of foreign currency hedging contracts is calculated on the basis of the present value of

the differentials between contractual forward exchange rates and market forward exchange rates at the date of the financial statements. This latter value is calculated on the basis of the forward rates.

Management of financial risksThe principal financial risks identified, monitored and managed by the Danieli Group are the following:market risk, arising from fluctuations in interest rates and exchange rates between the euro and other currencies in which Group companies operate;credit and country risk, concerning the possibility of default by a counterparty;liquidity risk, which could arise from a lack of financial resources to meet short-term financial commitments.Management of financial risks is based on centrally-issued guidelines designed to standardize and coordinate Group policies. Concerning industrial risks, see the section “Management of business risks” in the Directors’ Report.

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Market risk associated with fluctuations in exchange rates and interest rates Market risk concerns the possibility that changes in interest rates and exchange rates between the euro and other currencies in which the Group operates could negatively affect the value of assets or liabilities or the amount of cash flows.

Exchange rate riskThe Danieli Group has always followed a policy of minimizing financial risks from foreign exchange rate fluctuations, in particular between the US dollar and the euro.Group policy relative to exchange risk requires contracts whose incoming and outgoing cash flows are significantly affected by exchange rate fluctuations to be monitored to determine the best hedging policy, which may include use of derivative contracts or the management of foreign currency purchases in order to obtain a natural hedging effect.Exposure to exchange rate risks can have the following impacts:– income risk from the different valuation of costs and income expressed in foreign currencies at

different periods of time;– transaction risk from the conversion of trade and/or financial receivables and payables expressed in

foreign currencies;– translation risk from the conversion of the assets and liabilities of consolidated companies that

prepare their financial statements in non-euro currencies.Risk management by the Group’s finance department addresses both income and transaction risks, whereas translation risks are not monitored.Exposure to exchange rate risk is closely correlated with future cash flows from the gradual completion of contracts, taking account of contractual advances received, and with the payment of purchases in currencies other than the euro. The effects of such transactions are reflected in revenues and the valuation of current inventory, as well as in purchase cost. The planning, coordination and management of these activities, and the measurement of exchange rate derivative instruments at fair value, are supervised by the Group’s finance department which monitors the correct correlation between derivative instruments and underlying cash flows, systematically basing these on market prices and ensuring proper accounting in compliance with international accounting standards.In the year ended June 30, 2014, minimal use was made of derivative instruments to cover exchange rate risk. This also reflects the mix of construction contracts in progress and in the order backlog, comprised of contracts with prices expressed in US dollars for which a substantial portion of direct costs are expressed in currencies closely linked to the US dollar, as well as the routine receipt of contract advances in foreign currency.The net exchange loss shown in the income statement for the period arose partly from exchange losses on investments and partly from the alignment to the year-end exchange rate of balance sheet items expressed in US dollars.Regarding all significant financial assets and liabilities in foreign currencies, net of any items covered by forward exchange contracts, a sensitivity analysis has been conducted to determine the impact on the income statement and balance sheet in the event of a hypothetical 10% positive or negative change in the euro/USD exchange rate compared with exchange rates at June 30, 2014. This analysis did not consider the impact of exchange rate fluctuations on the measurement of construction contracts (as these are not financial assets according to IAS 32), or the impact of translating financial statements of foreign subsidiaries with functional currencies other than the euro (not required by IFRS 7).An appreciation of the euro against the US dollar and other foreign currencies would have a negative impact on the consolidated shareholders’ equity and income statement, before the tax impact, of around 55.5 million euro. Likewise, a weakening of the euro against the US dollar and other foreign currencies would have a positive impact on consolidated shareholders’ equity and income statement, gross of the tax impact, of around 67.9 million euro.

Interest rate riskFor the Danieli Group, the risk associated with interest rate fluctuations essentially concerns variable-rate, long-term loans for which no interest rate swaps (IRS) have been negotiated. A sensitivity analysis has been conducted to measure the profit and loss impact which could arise from a hypothetical positive or negative variation of 10 or 15 bp in interest rates. This positive or negative change in interest rate would entail higher or lower financial income and charges before the tax effect as reported below:

-15BP -10BP +10BP +15BP

(Lower)/Higher financial income (2,620) (1,747) 1,747 2,620

Lower/(Higher) financial charges 633 422 (422) (633)

Total (1,988) (1,325) 1,325 1,988


Credit and country riskCredit risk is the Danieli Group’s exposure to potential losses arising from the failure of counterparties to meet their obligations; this activity is monitored continuously by both the Group’s financial and executive management teams as part of routine business operations, starting from the contract negotiation stage for the construction of plants for the plant making sector and from the review of the supply request for the steel making sector.The Danieli Group carries out most of its activities in foreign countries and continuously evaluates political, social and financial risks in the areas in which it does business.Exposure to counterparty credit risk is minimized by using insurance coverage to protect against the insolvency of customers or the countries in which they operate.Thus far there have been no significant cases of counterparty default, with the exception of the results of a complex pending dispute with a customer, which led to the removal of receivables amounting to approximately 16 million euro, which had been fully allocated to provisions in previous years, and credit risk is not significantly concentrated by area and/or customer, except for receivables from Ezz Steel that are covered by the provision for doubtful accounts.

Liquidity riskLiquidity is managed prudently, favouring low risk investments with certain convertibility to cash.By maintaining this level of cash along with unutilized credit lines, the Group can meet the new technological challenges of building plants with high innovative content, by independently covering all extraordinary expenses that may arise from technical difficulties during their start-up.

Management of capitalCapital includes ordinary shares, savings shares and equity attributable to the shareholders of the parent company.The primary objective of Group capital management is to obtain a strong credit rating and healthy financial ratios, in order to support operating activities and maximize shareholder value.The Group manages and makes adjustments to its capital structure, based on changes in general economic conditions. To maintain and adapt the capital structure, the company can adjust dividend payments to shareholders, return capital to shareholders, issue new shares or buy and sell treasury shares. There were no changes to the objectives, policies and processes during the financial years ended June 30, 2014 and June 30, 2013, or capital transactions during the two periods, except for the distribution of dividends and the purchase/sale of treasury shares, but only in the previous year.The Group monitors capital by following the indebtedness ratio, which compares the amount of net indebtedness with total capital plus net indebtedness. For this purpose, net indebtedness includes interest on loans and borrowing and cash and cash equivalents.

(in millions of euro) June 30, 2014 June 30, 2013

Gross financial indebtedness 796.9 1,001.5

Financial assets (1,641.2) (1,852.6)

Net financial position (844.3) (851.1)

Shareholders’ equity 1,547.4 1,422.4

Capital and net indebtedness 703.1 571.3

Indebtedness ratio with third parties n.a. n.a.

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Classes of financial instruments and hierarchical levels of valuation at fair value

The following table shows the classes of financial instrument held by the Group:

June 30, 2014


Note Loansand receivables

Financial assets

at fair value recognized

through profit or loss

Derivative instruments

Held-to-maturity

investments

Available-for-sale

financial assets

Total Fair value

Financial assets as in the balance sheet

Non-current financial assets 5 358 358 358

Non-current trade receivables 6 167,739 167,739 167,739

Trade receivables 8/9 1,248,747 1,248,747 1,248,747

Current financial assets 11 27,996 2,456 306,570 337,022 337,022

Total financial assets 1,444,840 0 2,456 0 306,570 1,753,866 1,753,866

June 30, 2014


Note Other liabilitiesat amortized

cost

Financial liabilitiesat fair value recognized


Derivative instruments Total Fair value

Financial liabilities as in the balance sheet

Bank debts and loans 14/20 393,494 3,036 396,530 396,530

Trade payables 17 2,373,125 2,373,125 2,373,125

Other liabilities 18 524,138 524,138 524,138

Total financial liabilities 3,290,757 0 3,036 3,293,793 3,293,793

June 30, 2013


Note Loansand receivables

Financial assets



Derivative instruments

Held-to-maturity

investments

Available-for-sale

financial assets

Total Fair value


Non-current financial assets 5 7,629 7,629 7,629


Trade receivables 8/9 1,293,142 1,293,142 1,293,142

Current financial assets 11 58,676 1,578 137,568 197,822 197,822

Total financial assets 1,487,189 0 1,578 0 137,568 1,626,335 1,626,335

June 30, 2013


Note Other liabilitiesat amortized

cost

Financial liabilitiesat fair value recognized


Derivative instruments Total Fair value


Bank debts and loans 14/20 439,961 4,153 444,114 444,114

Trade payables 17 2,496,042 2,496,042 2,496,042

Other liabilities 18 674,645 674,645 674,645


Group financial instruments measured at fair value include available-for-sale financial assets, as detailed in note 11, and derivative contracts, whose essential aspects are summarized below: For the other financial instruments, the carrying value represents a reasonable approximation of fair value.


June 30, 2014 June 30, 2013

(in thousands)Currency

Nominal value

Fair value in euro

Nominal value

Fair value in euro

Outrights (sales) with positive fair value USD 114,980 711 5,275 187

Outrights (sales) with negative fair value USD 3,541 (19) 24,173 (241)

Total outrights (sales) in USD 692 (54)

Outrights (purchases) with positive fair value USD 13,901 115 22,217 674

Outrights (purchases) with positive fair value EUR 21,000 1,630 21,000 645

Outrights (purchases) with negative fair value USD 12,550 (32) 16,584 (51)

Outrights (purchases) with negative fair value CNY 10,000 (16)

Total outrights (purchases) 1,713 1,252

Interest rate swaps EUR 80,000 (2,715) 120,000 (3,896)

Interest rate swaps USD 25,837 (270) 25,837 123

Total IRS (2,985) (3,773)

All financial instruments measured at fair value can be classified into the three categories set out below:Level 1: market quote;Level 2: measurement techniques (based on observable market data);Level 3: measurement techniques (not based on observable market data).

All assets and liabilities measured at fair value at June 30, 2014 are classified in Level 2. Furthermore, in 2013/2014, no transfers were made from Level 1 to Level 2/Level 3 or vice versa.

Business combinations

Termo Makina San.V.T. ASIn March 2014 the Group, through the subsidiary Industrielle Beteiligung SA, purchased 75% of the shares of Termo Makina San.V.T. AS, with its operating headquarters in Duzce. Termo Makina is specialised in the supply of crane for steel mills and equipment for electric furnaces, for rolling mills and for continuous casting plants, in addition to a broad range of spare parts for steel mills.The consideration paid for the transaction amounted to 1 euro. The Group also has the option of acquiring the remaining stake in the company (call option) no later than May 31, 2017 at a price to be defined according to the EBITDA of the company reported in the financial statements for the year ended December 31, 2016 (or from an earlier set of financial statements if the option is exercised early); said price shall in any case not exceed 1 million euro. The fair value of the assets and liabilities identifiable at the date of acquisition is as follows:


Fair value recognised at the time of acquisition

Carrying amount

Total non-current assets 5,281 5,281

Total current assets 2,335 2,335

Total assets 7,616 7,616

Total non-current liabilities 0 0

Total current liabilities 7,445 7,445

Total liabilities 7,445 7,445

Fair value of net assets 171

Price paid 1

Liquidity acquired 0

Of the fair value of net assets acquired, 128 thousand euro are attributable to the Group and 43 thousand euro to non-controlling interests. It is stressed that the price paid for the acquisition of the company is lower than the portion of fair value of net assets at the date of acquisition. This difference, amounting to 128 thousand euro, was recognised in the income statement as prescribed by the relevant accounting standards.

Since the date of acquisition, the company contributed 8.3 million Turkish lira (approximately 2.9 million euro) to the Group’s revenues and a loss of 1.9 million Turkish lira (approximately 0.7 million euro) to the group’s overall profit.

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CMC Sisak Doo (now ABS Sisak doo): definition of the priceWith reference to this acquisition, completed near the end of the 2011/2012 financial year, the price still to be paid to the seller, amounting to 1.1 million euro at the end of last year, was adjusted, on the basis of the negotiations concluded with the American Group Commercial Metals Company (CMC), to 2.5 million euro recognised among other financial liabilities at June 30, 2014. The increased debt was accounted for as a contra entry to the negative financial components of the income statements.

Akros Henschel Sas: definition of the priceWith reference to this acquisition and in relation to the attainment of lower income than estimated upon definition of the acquisition price, the payable allocated in the previous year, i.e. 1.78 million euro, is no longer due. The deletion of the payable was accounted for in the income statement among the positive financial components.

Riverside Products Inc (now Danieli Riverside Products, Inc.): definition of the priceWith reference to this acquisition, completed in April 2013, the price recorded in the financial statements for the year ended June 30, 2013, i.e. 0.9 million USD (0.6 million euro) to be determined definitively one year after the acquisition according to the attainment of certain objectives for the year ended December 31, 2013 and already paid into an escrow account, will no longer be due to the seller. The receivable that thus emerged was recognised in the income statement among the positive financial components.


INFORMATION ON THE BALANCE SHEET

NON-CURRENT ASSETS

1) Property, plant and equipment

The net value of 779,005 thousand euro at June 30, 2014 increased by 44,030 thousand euro compared with the previous year’s 734,975 thousand euro, due to the difference between capital expenditure in the period (including through acquisitions) and depreciation charged, as shown below.Property and plant at June 30, 2014 were encumbered by mortgages or liens of approximately 23,000 thousand euro, as guarantees for loans obtained (7,325 thousand euro still outstanding at June 30, 2014), as shown in detail in attachment III-C.


Land Buildings and light

constructions

Plant and machinery

Industrial and commercial equipment

Othertangible

assets

Assetsunder

construction

Total

Historic cost 59,921 388,893 824,257 68,277 96,127 64,746 1,502,221

Accumulated depreciation (175,961) (543,183) (55,588) (61,215) (835,947)

Balance at at June 30, 2012 59,921 212,932 281,074 12,689 34,912 64,746 666,274

Movements in the period

Increases 10,064 27,674 58,204 4,612 6,900 41,776 149,230

Changes in scope of consolidation 50 722 28 829 17 0 1,646

Exchange impact and other movements (501) (362) (473) (832) 481 (1,556) (3,243)

Transfers and disposals (6) (226) (1,072) (14) (49) (1,367)

Write-downs 0 0 (41) 0 0 (41)

Depreciation (11,915) (51,819) (4,100) (9,690) (77,524)

Historic cost 69,528 416,013 875,103 70,670 104,633 104,966 1,640,913




Increases 2,071 55,809 69,107 4,149 11,245 (9,307) 133,074

Changes in scope of consolidation 74 2,744 2,351 0 66 240 5,475

Exchange impact and other movements (106) (3,654) (3,234) (131) (325) (4,355) (11,805)

Transfers and disposals (13) (195) (1,715) (33) (75) (2,031)

Write-downs 0 0 0 0 0 0 0

Depreciation (12,026) (54,905) (4,585) (9,167) (80,683)

Historic cost 71,554 468,779 936,992 73,261 112,216 91,544 1,754,346



Depreciation charged to the income statement amounted to 80,683 thousand euro, calculated at rates considered to be representative of the estimated useful economic and technical lives of the assets. “Other tangible assets” include 14,420 thousand euro for transport vehicles, 6,479 thousand euro for furniture and fittings, 10,941 thousand euro for electronic machines and 2,475 thousand euro for other items.The main capital expenditure in the period concerned new plant used by the subsidiary Acciaierie Bertoli Safau Spa in the steelmaking segment, to improve production capacity and ensure appropriate environmental management at all stages of production, as well as the completion of new manufacturing facilities in China, Thailand, India and Russia in the plant making segment.

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2) Intangible assets

The balance of 49,604 thousand euro at June 30, 2014 is lower than the previous year’s total of 59,664 thousand euro due mainly to the difference between capital expenditure in the period (including through acquisitions) and amortization and write-downs charged, as shown below.


Goodwill Intellectual property

rights

Concessions, licences

and trademarks

Other intangible

assets

Assets under development

and advances

Total

Historic cost 17,446 24,291 56,217 24,802 1,060 123,816

Write-downs (8,931) (8,931)

Amortization 0 (17,477) (38,896) (9,220) (65,593)

Balance at June 30, 2012 8,515 6,814 17,321 15,582 1,060 49,292


Increases 6,144 9,022 430 3,143 18,739

Changes in scope of consolidation 0 0 0 9,668 9,668

Exchange impact and other movements (126) (11) 63 (441) 1 (514)

Write-downs (1,504) (1,504)

Amortization 0 (1,126) (5,480) (9,411) (16,017)

Historic cost 17,320 30,235 65,078 34,336 4,204 151,173

Write-downs (10,435) 0 0 0 (10,435)

Accumulated amortization 0 (18,414) (44,152) (18,508) (81,074)

Balance at June 30, 2013 6,885 11,821 20,926 15,828 4,204 59,664


Increases 0 2,086 6,696 413 (1,788) 7,407

Changes in scope of consolidation 0 0 0 0 0 0

Transfers and disposals 0 0 0 (64) 0 (64)

Exchange impact and other movements 140 150 (548) 206 0 (52)

Amortization (1,558) (6,857) (6,854) (15,269)

Write-downs (2,082) (2,082)

Historic cost 17,460 32,168 71,610 31,514 2,416 155,168

Write-downs (12,517) 0 0 0 (12,517)

Accumulated amortization 0 (19,669) (51,393) (21,985) (93,047)

Balance at June 30, 2014 4,943 12,499 20,217 9,529 2,416 49,604

“Goodwill” in the financial statements at June 30, 2013 included the higher amounts paid for the acquisitions that took place in previous years, and in particular for the acquisition of Innoval Technology Ltd. (1.8 million euro), Akros Henschel Sas and subsidiaries (5.1 million euro). These goodwill amounts were allocated to CGUs identified by the same acquired companies, all belonging to the plant making sector.The impairment test, in accordance with IAS 36 - Impairment of Assets, was carried out comparing the recoverable value of the goodwill attributed to the individual CGUs with the related carrying amount at June 30, 2014. The recoverable value utilised was the value in use, since it was deemed reasonably higher than fair value, after selling costs. To calculate value in use, the projected cash flows in the time interval from June 30, 2015 to June 30, 2019 were used, extrapolating them from the financial plans prepared by the companies. Cash flows after the last year of the plan were discounted assuming, for the different CGUs, an infinite time horizon with a growth rate of 1.9%, calculated on the basis of the mean projected growth rate of prices in European countries.The main parameters used to calculate the discount rate (WACC) were the following:

Risk free

Market premium

Beta unlevered

Risk premium

Debt/equity ratio

Cost of debt

WACC

Akros Henschel and subsidiaries 2.75% 5.00% 0.98 0.00% - - 7.67%

Innoval Technology Ltd. 2.75% 5.00% 0.98 0.00% - - 7.67%


With regard to the risk free figure, the average rate of return for the past 12 months relative to the starting date of the reference period of the plan data (June 30, 2014) of ten-year Italian Government bonds was used. This parameter, a single beta unlevered, was used with a debt/equity ratio of zero which assumes that the business is entirely financed with equity. The impairment tests showed that the discounted cash flows for the CGU of the Henschel Group are 2.1 million euro lower than the carrying amount at the date of the financial statements, so a write-down of the same amount was necessary. Considering the acquired order portfolio but above all the market situation, the management did not deem that it could totally confirm, for future years, the profitability assumptions used upon acquiring the companies of the Henschel Group. The lower profitability of the Henschel Group and the consequent failure to achieve certain objectives in terms of margins entailed, as mentioned in the paragraph dedicated to business combinations, the cancellation of the residual payable recorded in view of the consideration still due. With regard to Akros Henschel and subsidiaries, the plan assumptions adopted show that, if the growth rate “g” is maintained at 1.9%, use of a WACC that is 0.5% lower would have entailed a reduction in the write-down by approximately 1.1 million euro, whilst a WACC that is 0.5% higher would have caused an additional write-down by approximately 1.1 million euro.“Concessions, licences and trademarks” consist mainly of the costs of acquiring licences and of developing management software and programs used in Group company activities. “Other intangible assets” includes mainly the higher prices compared to the shareholders’ equity of the acquired companies, allocated to specific intangible assets, in addition to other costs accounted for by Group companies. Assets under development refer to costs incurred by some Group companies up to June 30, 2014 for intangible assets not yet completed. The consolidated balance sheet does not include any intangible assets with indefinite useful lives, with the exception of goodwill.

3) Equity investments

(in thousands of euro) June 30, 2014 June 30, 2013

Investments valued by the equity method 24,837 23,346

Other investments 1,808 1,806

Total 26,645 25,152

Movements in the various items are shown in attachment I-C.The investment in Danieli Corus Technical Services BV (owned 50%) has not been consolidated on a line-by-line basis because the Danieli Corus Group is managed by the Tata Corus group. It is therefore recognized using the equity method. The related application entailed the recognition of a write-back totalling 1,810 thousand euro. In addition, a write-down of 319 thousand euro was recognised in order to align the value of the equity investment in Omnia Factor SpA to its shareholders’ equity at December 31, 2013 (latest approved financial statements).The essential figures of the financial statements of the associates, including the aggregate value of current and non-current assets and liabilities, revenues and costs of production, financial income and charges, income taxes, the net profit or loss for the period and the number of employees are shown in Attachment II C.

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4) Deferred tax assets and liabilities

These include the provisions for benefits and liabilities respectively connected with losses which may be carried forward by Group companies, and timing differences between assets and liabilities entered in the balance sheet and their corresponding values for tax purposes.The amounts of deferred tax assets and deferred tax liabilities for which recovery is expected within or beyond the next financial year are as follows:


Deferred tax assets

- recoverable within the next financial year 47,223 41,424

- recoverable beyond the next financial year 22,395 23,663

Total 69,618 65,087

Deferred tax liabilities

- payable within the next financial year 20,191 16,670

- payable beyond the next financial year 1,833 3,270

Total 22,024 19,940

Net position 47,594 45,147

Deferred tax assetsThe composition of deferred tax assets and their movements in the years ended June 30, 2014 and June 30, 2013 were as follows:

(in thousands of euro) Changes with impact on

June 30, 2013

Income Statement

Shareholders’ equity (cash flow and fair

value reserves)

Other movements

June 30, 2014

Taxed provision 54,156 (7,890) (30) 46,236

Recoveries of unrealized exchange differences

86 581 0 667

Tax losses 4,262 9,402 316 13,980

Other adjustments 4,625 3,417 (317) 7,725

Employee benefits 21 (56) 179 119 263

IAS derivatives 1,937 (543) (324) (323) 747

Total 65,087 4,911 (145) (235) 69,618


June 30, 2012

Income Statement


value reserves)

Other movements

June 30, 2013

Taxed provision 54,674 (1,268) 750 54,156

Recoveries of unrealized exchange differences

0 111 (25) 86

Tax losses 4,366 125 (229) 4,262

Other adjustments 5,063 1,596 19 (2,032) 4,646

IAS derivatives 1,255 0 100 582 1,937

Total 65,358 564 119 (954) 65,087

Deferred tax assets are recognized on the tax losses which, at this time, are reasonably expected to be recoverable through future income; for the sake of prudence, deferred tax assets totalling 18 million euro (38 million euro the previous year) have not been recognized because it is not expected at the moment that they will be recovered through future taxable profits. Most of that amount refers to tax losses that can be carried forward, of approximately 107 million euro (165 million euro at June 30, 2013), realized by certain Group companies this year and in previous years.


Deferred tax liabilitiesThe breakdown of deferred tax liabilities and their movements in the years ended June 30, 2014 and June 30, 2013 were as follows:


June 30, 2013

Income Statement


value reserves)

Other movements

June 30, 2014

Property, plant and equipment

1,840 (1,105) 1 736

Measurement at fair value 0 1,370 0 1,370

Changes in scope of consolidation

4,713 2,675 (498) 6,890

Taxes on IAS changes 13,387 (104) 0 (255) 13,028

Total 19,940 1,466 1,370 (752) 22,024


June 30, 2012

Income Statement


value reserves)

Other movements

June 30, 2013

Property, plant and equipment

2,235 (395) 1,840

Derivative financial instruments

97 (97) 0 0

Changes in scope of 4,190 (826) (759) 2,108 4,713

Taxes on IAS changes 13,488 (101) 0 0 13,387

Total 20,010 (1,322) (856) 2,108 19,940

5) Other financial receivables


Bank deposits and other financial receivables 358 7,629

Total 358 7,629

6) Trade and other receivables


Trade receivables 76,213 62,152

Bills of exchange 2,672 10,033

Other receivables 57,374 32,246

Receivables from tax authorities for VAT reimbursement requested 31,480 23,311

Total 167,739 127,742

Trade and other receivables mainly include non-current receivables relating to the terms of sale negotiated for the supply of complex plants with long start-up times due to their technical characteristics and receivables from tax authorities for VAT reimbursements on annual returns and for other receivables not expected to be paid before the end of the next financial year. “Other receivables” comprise mainly the receivables amounting to 74,704 USD claimed from Al Ezz Group Holding and Ezz Flat Steel with relate to the management of certain significant work contracts currently being performed with the Al Ezz group, which for this reason are deemed to be trade receivables.

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Receivables are broken down below by maturity at the end of this and the previous year:

(in thousands of euro) June 30, 2014

Due dates Trade receivables

Bills of exchange

Other receivables

Receivables from tax

authorities

Total

2015/2016 76,213 418 10,433 27,090 114,154

2016/2017 0 566 17,508 4,390 22,464

2017/2018 0 543 16,473 0 17,016

2018/2019 0 664 12,826 0 13,490

2019/2020 and beyond 0 481 134 0 615

Total 76,213 2,672 57,374 31,480 167,739

(in thousands of euro) June 30, 2013

Due dates Trade receivables

Bills of exchange

Other receivables

Receivables from tax

authorities

Total

2014/2015 4,525 6,587 707 16,648 28,467

2015/2016 19,331 2,813 8,903 6,663 37,710

2016/2017 37,835 633 7,315 0 45,783

2017/2018 461 0 7,320 0 7,781

2018-2019 and beyond 0 0 8,001 0 8,001

Total 62,152 10,033 32,246 23,311 127,742

CURRENT ASSETS

7) Inventories

The balance of 1,116,610 thousand euro at June 30, 2014 decreased by 23,957 thousand euro from its value of June 30, 2013, i.e. 1,140,567 thousand euro.


Raw and ancillary materials and consumables 166,255 166,148

Write-down provision for raw and ancillary materials and consumables

(15,131) (14,452)


Work in progress and semi-finished products 166,027 164,034

Construction contracts 604,790 605,367

Finished products and goods 105,124 106,532

Advance payments to suppliers 89,545 112,938

Total 1,116,610 1,140,567

Construction contracts can be broken down as follows:


Construction contracts for third parties valued using the cost to cost method

1,366,905 1,347,024

- less invoicing on construction contracts in production for third parties

(762,115) (741,657)

Total construction contracts 604,790 605,367

Construction contracts with a negative value, resulting, for each individual construction contract, from the deduction of customer advances from the stage of completion, have been reclassified to “Trade payables” in the liabilities for a total amount of 996,087 thousand euro (967,095 thousand euro at June 30, 2013).


8) Trade receivables

The balance of 1,158,209 thousand euro at June 30, 2014 was 52,500 thousand euro lower than the amount of 1,210,709 thousand euro at June 30, 2013.Trade receivables are shown net of the provision for doubtful accounts in the amount of 26,831 thousand euro.


Customers 1,065,110 1,094,335

Bills receivable (accepted and unaccepted) 119,757 159,760

Provision for doubtful accounts (26,831) (43,926)

Total third party trade receivables 1,158,036 1,210,169

Trade receivables from Group companies 173 540

Total trade receivables 1,158,209 1,210,709

Trade receivables from Group companies are due from companies not consolidated on a full line-by-line basis.Movements in the “Provisions for doubtful accounts” are shown below:


Opening balance 43,926 51,337

Accruals for the year 5,640 1,982

Utilizations for the year (23,055) (9,699)

Other movements 320 306

Closing balance 26,831 43,926

Regarding the provision for doubtful accounts, the risk of loss on receivables is often a combination of technical risk (arising from design changes and/or delays in execution), customer risk and country risk. Credit risk and the appropriateness of this provision should therefore be viewed together with the provision for contractual risks described in note 16.Use of the provision for doubtful accounts is mainly related to the definition of a major position that had long been doubtful and that entailed the immediate collection of a portion, the removal of a part of the receivable for a total amount of approximately 16 million euro, and the rescheduling of the residual amount.

9) Other receivables

These amounted to 90,538 thousand euro at June 30, 2014, showing an increase of 8,105 thousand euro compared with the previous year’s balance of 82,433 thousand euro, and comprising:


Receivables from SACE and prepaid premiums 580 965

Accrued income from customers 3,175 4,010

Prepayments to suppliers 6,164 7,035

Due from social security institutions 1,221 1,542

Other foreign tax receivables 1,596 1,455

Travel expense advances to employees, consultants and sites

1,526 2,195

Deposits with third parties 1,347 4,327

Indirect tax receivables 62,395 46,968

Other current receivables 12,534 13,936

Total 90,538 82,433

Other current receivables included 2,670 thousand euro (5,457 thousand euro at June 30, 2013) of receivables from the Italian Power Exchange relating to Energy Efficiency Credits accrued on the basis of savings in energy sources in the production process of the Steelmaking segment.

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10) Current tax assets

This item is made up as follows:


Foreign tax receivables 4,748 5,212

Direct tax receivables 10,811 8,054

Other current tax receivables 7,340 5,571

Total 22,899 18,837

Direct tax receivables at June 30, 2014 originated mainly from excess advance payments during the year, net of the provision for current taxes.

11) Current financial assets

At June 30, 2014 they amounted to 337,022 thousand euro, up by 139,200 compared to the balance at June 30, 2013, i.e. 197,822 thousand euro. In addition to the portfolio of securities and equities carried at market value by Danieli Banking Corporation SA and recorded among available for sale financial assets, they include certain financial receivables and existing derivative instruments. They can be broken down as follows:


Bonds in euro, nom. val. 185,600, at variable rates from 0.147% to 6.75% maturing by 2020(*)

191,410

118,004

Bonds in USD, nom. val. 152,700, at variable rates from 0086% to 2% maturing by 2019(*)

USD 152,560 112,867

USD24,046 18,384

Other securities and accrued interest on securities

2,293

1,180

Other financial receivables 24,220 49,307

Accrued interest on bank deposits and other financial receivables

3,776

9,369

Derivative financial instruments 2,456 1,578

Total 337,022 197,822

(*) descriptions refer to the portfolio at June 30, 2014

The portfolio does not include any bonds issued by central or local governments or government entities.Regarding the effects of the valuation of securities, at June 30, 2014 the change in the fair value reserve, net of the tax impact, came to 2,765 thousand euro. The other financial receivables comprise time deposits with banks, with maturity over three months (but lower than twelve months).The characteristics and fair value of derivative financial instruments at June 30, 2014 and June 30, 2013 are summarized below:

(in thousands) June 30, 2014 June 30, 2013

CurrencyNominal

valueFair value

in euroNominal

valueFair value

in euro

Outrights (sales) with positive fair value USD 114,980 711 5,275 187

Outrights (sales) with negative fair value USD 3,541 (19) 24,173 (241)

Total outrights (sales) in USD 692 (54)

Outrights (purchases) with positive fair value USD 13,901 115 22,217 674

Outrights (purchases) with positive fair value euro 21,000 1,630 21,000 645

Outrights (purchases) with negative fair value USD 12,550 (32) 16,584 (51)

Outrights (purchases) with negative fair value CNY 10,000 (16)

Total outrights (purchases) 1,713 1,252

Interest rate swaps euro 80,000 (2,715) 120,000 (3,896)

Interest rate swaps USD 25,837 (270) 25,837 123

Total IRS (2,985) (3,773)


Forward foreign currency sales and purchases are financial instruments designed to hedge exchange rate risk in various currencies (in particular the US Dollar). If these instruments qualify as cash flow hedges and meet the effectiveness tests set up by the Group, the gains and losses deriving from their fair value measurement at year-end are recognized in shareholders’ equity in the Cash Flow reserve.In case of instruments that qualify as fair value hedge, ineffective cash flow hedges or instruments entered into for hedging purposes but not meeting hedge accounting rules, the effects of fair value measurement are recognised through profit or loss. Net income pertaining to the measurement of these instruments recognized during the period amount to 701 thousand euro.For interest rate swaps meeting the hedge requirements of IAS 39, changes in fair value are booked directly to shareholders’ equity. Such instruments have the following characteristics:

Date of subscription January 18, 2011 April 3, 2012

Notional amount 80 million euro 25.8 million USD

Fixed rate 2.61% 6.25%

Floating rate 6-month Euribor + spread 12-month Libor USD + spread

12) Cash and cash equivalents

The balance of 1,303,785 thousand euro at June 30, 2014 decreased by 343,376 thousand euro compared with the amount at June 30, 2013 (1,647,161 thousand euro) and included cash in hand of 1,812 thousand euro and short-term bank deposits of 1,301,973 thousand euro.The change in cash is essentially connected with the repositioning of a part of the liquidity on financial instruments to improve the profitability of financial operations without effects on the Group’s gross financial position. Part of this liquidity will be used in the coming year to finance new investments at the subsidiaries in India, Russia, China and Thailand, and for the new capital expenditures planned in the Steelmaking segment, while providing these companies with enough working capital to support the substantial production volumes currently being achieved.See the statement of cash flows for further details.

SHAREHOLDERS’ EQUITY

13) Shareholders’ equity

Shareholders’ equity at June 30, 2014 amounted to 1,548,396 thousand euro, compared with 1,427,266 thousand euro the previous year, with an increase of 121,130 thousand euro. Changes in the various components are summarized in the “Consolidated statement of changes in shareholders’ equity”. Those components are as follows:

13.1) Share capitalShare capital is fully paid in and amounted to 81,305 thousand euro at June 30, 2014 (81,304,566 shares with a par value of 1 euro each, comprised of 40,879,533 ordinary shares and 40,425,033 savings shares).

13.2) Treasury shares At June 30, 2014, the portfolio of treasury shares held amounted to 82,935 thousand euro, without any change from June 30, 2013, and consisted of 2,961,213 ordinary shares and 3,945,363 savings shares, with a par value of 1 euro each and a total par value of 6,907 thousand euro (8.49% of the share capital).

13.3) Other reservesThese totalled 1,393,125 thousand euro (1,249,926 thousand euro at June 30, 2013) and consist of:

Share premium accountAt June 30, 2014 this amounts to 22,523 thousand euro (unchanged compared to June 30, 2013) and concerns the share premiums paid on the exercise of warrants associated with the conversion of bonds from the bond loans that matured in November 1999 and on July 1, 2003 and the gains/losses realised from the sale of treasury shares.

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Fair value reserveAt June 30, 2014 the fair value reserve had a balance of 3,611 thousand euro (846 thousand euro at June 30, 2013) and it includes the changes arising from the fair value measurement of available-for-sale financial assets.

Cash flow reserveThis reserve, amounting at June 30, 2014 to negative 2,284 thousand euro (negative 2,797 thousand euro at June 30, 2013), includes changes in the fair value measurement of the effective portion of derivative instruments designated as cash flow hedges.

Other reservesAs follows:


Revaluation reserves 7,634 7,634

Legal reserve 18,576 18,576

Other Parent Company reserves 358,792 310,458

Undistributed profits and impact of consolidation adjustments 984,273 892,686

Total other reserves 1,369,275 1,229,354

The Legal Reserve amounts to 18,576 thousand euro as at June 30, 2014, unchanged since June 30, 2013: its balance exceeds the requirement stated in art. 2430 of the Civil Code, so further accruals are no longer mandatory.

13.4) Translation difference reserveAt June 30, 2014 this reserve had a positive balance of 2,485 thousand euro (11,591 thousand euro at June 30, 2013).The change was due to the negative exchange impacts from translation of the financial statements of foreign companies prepared in the local currency, principally the Chinese Renminbi, the Indian Rupee, the US Dollar and the Swedish Krona.

13.5) Net profit The Group’s share of net profit amounted to 153,456 thousand euro at June 30, 2014 (162,520 thousand euro the previous year).

13.6) DividendsDividends paid by the Parent Company in the financial years ended June 30, 2014 and June 30, 2013, relative to the years ended June 30, 2013 and June 30, 2012, were as follows:

Dividends paid during the financial years ended

June 30, 2014 June 30, 2013

(in thousands of euro) euro per share euro per share

Ordinary shares 0.3000 11,376 0.3300 12,543

Savings shares 0.3207 11,699 0.3507 12,459

Total dividends paid 23,075 25,002

13.7) Non-controlling interestsNon-controlling interests in shareholders’ equity at June 30, 2013 amounted to 960 thousand euro (4,858 thousand euro at June 30, 2013), with a decrease of 3,898 thousand euro of which 4,050 thousand are due to changes to the scope of consolidation (decrease of 1,650 thousand euro consequent to the acquisition, by the Group, of minority interests in Systec Doo System Technology, Systec Automatizacija Doo and Systec Eng. Doo; a decrease of 1,150 thousand euro consequent to the Group’s purchase of the additional minority interests of 15% in Danieli Centro Cranes Spa; a decrease of 1,293 thousand euro consequent to the sale of Sund Birsta Machinery Co. Ltd; an increase of 43 thousand euro consequent to attributing 25% of the shareholders’ equity to minority interests at the data of acquisition of Termo Makina San VT AS), 31 thousand euro to the non-controlling interests’ share of the translation difference, and 121 thousand euro to the profit attributable to non-controlling interests.


NON-CURRENT LIABILITIES

14) Loans Loans, which amounted to 202,497 thousand euro at June 30, 2014 (183,050 thousand euro a year earlier, with an increase of 19,447 thousand euro), consist of the non-current portions of loans arranged with banks and other institutional lenders. There continue to be contractual covenants on some Group loans. Specifically: Regarding the loan of 80,000 thousand euro granted to the parent company Danieli & C. Officine Meccaniche S.p.A. by the European Investment Bank, for the entire duration of the loan: (a) net liquid assets on a consolidated basis must not be less than 250,000 thousand euro or five

times the outstanding capital payable of the loan, whichever is lower; (b) the ratio between consolidated gross operating margin and consolidated financial charges must be

greater than 5:1; (c) the ratio of consolidated shareholders’ equity to consolidated financial indebtedness, excluding

financial payables for advances received, must be more than 1.75; and (d) the ratio between consolidated financial indebtedness, excluding financial payables for advances

received, and the consolidated gross operating margin, must be no more than 2:1. All covenants in effect at June 30, 2014 were fulfilled.A detailed list of debts and their breakdown by current/non-current portion is provided in attachment III-C. The maturity dates of the non-current portions of loans were as follows:


2014/2015 n.a. 21,115

2015/2016 53,522 29,611

2016/2017 58,150 38,051

2017/2018 59,911 23,455

2018/2019 13,975 70,818

2019/2020 and beyond 16,939 n.a.

Total 202,497 183,050

The breakdown of the Group’s net financial position at June 30, 2014 was as follows:

(in thousands of euro) June 30, 2014 June 30, 2013 Change

Non-current financial assets

- non-current financial receivables 358 7,629 (7,271)

Total non-current assets 358 7,629 (7,271)


- securities and other financial receivables 337,022 197,823 139,199

- cash at banks 1,303,785 1,647,161 (343,376)

Total current assets 1,640,807 1,844,984 (204,177)


- bank debts and other financial liabilities 202,497 183,050 19,447

Total non-current liabilities 202,497 183,050 19,447


- bank debts and other financial liabilities 594,387 818,376 (223,989)

Total current liabilities 594,387 818,376 (223,989)

Non-current net financial position (202,139) (175,421) (26,718)

Current net financial position 1,046,420 1,026,608 19,812

Positive net financial position 844,281 851,187 (6,906)

Gross financial indebtedness (796,884) (1,001,426) 204,542

“Bank debts and other financial liabilities” at June 30, 2014 included 400,354 thousand euro (557,312 thousand euro at June 30, 2013) for advances received from customers on construction contracts not yet in force. These amounts are included in other current liabilities in the consolidated balance sheet.The remaining customer advances, amounting to 424,072 thousand euro at June 30, 2014 and 614,793 thousand euro at June 30, 2013, were included in working capital as they are used to finance jobs in progress. These amounts are included in trade payables in the consolidated balance sheet.

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Gross financial indebtedness represents total payables to banks and other lenders.Lastly, the calculation of the net financial position includes both the net fair value of derivative contracts and the present value of the remaining amount due for the purchase of equity investments. At June 30, 2014 these amounted, respectively, to a negative 1,105 thousand euro (negative 3,260 thousand euro at June 30, 2013) and to 3,042 thousand euro (5,365 thousand euro at June 30, 2013).

15) Employee termination indemnityThe balance of 35,029 thousand euro increased by 523 thousand euro compared to 34,506 thousand euro at June 30, 2013.Movements were as follows:



Cost relating to employee compensation with defined benefits 854 1,123

Benefits paid (1,983) (1,913)

Actuarial losses / (gains) recognized in the statementof comprehensive income

741 3,356

Other accruals for employee benefits 911 352


The cost relating to employee compensation with defined benefits was accounted for in the income statement among financial expenses, whilst payments to complementary pension funds and other accruals to pension funds from the Group’s foreign companies were accounted for among personnel costs, as indicated in Note 24.

The principal actuarial assumptions used were the following:

June 30, 2014 June 30, 2013

Discount rate 2.29% 2.45%

Rate of increase in management salaries 1.0% 1.0%

Rate of increase in other wages and salaries 1.0% 1.0%

Turnover rate 5.0% 5.0%

16) ProvisionsTotalling 197,211 thousand euro at June 30, 2014, this item decreased by 3,591 thousand euro with respect to the previous year’s balance of 200,802 thousand euro, as a result of the following changes:



Accruals 33,675 17,423

Release of unused provisions (29,132) (43,602)

Utilizations and other movements (8,134) (1,054)


Provisions are set up to cover costs and expenses that may arise from situations which, at June 30, 2014, were still of uncertain outcome. They include a provision against probable future costs and liabilities relating to pending legal actions, tax disputes, and technical disputes with certain customers. The provisions include:– approximately 145 million euro to cover contractual risks in respect of likely expenses and technical

disputes associated with the different composition and nature of construction contracts at the end of the period;

– approximately 52 million euro against pending legal actions and disputes, including tax disputes.

Estimates for these accruals, in particular those tied to the construction of plants, are the result of a complex process involving the subjective opinions of Company management, which may affect the overall results even to an appreciable extent. In particular, the removal of estimated risks at the end of the previous year led to the freeing of provisions amounting to 29.1 million euro, whilst certain allocations, of which 8.1 million euro were used, were in fact not altogether sufficient to cover the costs actually incurred.


CURRENT LIABILITIES

17) Trade payablesTrade payables, totalling 2,373,125 thousand euro at June 30, 2014, changed by 122,917 thousand compared to 2,496,042 thousand euro at June 30, 2013, and their breakdown is as follows:


Due to suppliers 952,966 914,154

Payables for construction contracts 996,087 967,095

Customer advance payments 424,072 614,793

Total 2,373,125 2,496,042

Amounts due to suppliers increased by 38,812 thousand euro, due mainly to the characteristics and financial conditions negotiated in purchase orders.There are no significant concentrations of payables on one or a small number of suppliers.“Payables for construction contracts” represent the higher amount invoiced to customers for construction contracts in progress with respect to the state of completion. The change in this item correlates with production carried out and with the invoicing terms of construction contracts in progress.“Customer advance payments” represent amounts paid by customers prior to the start of work under construction contracts. These will be reabsorbed in proportion to the invoices issued as work progresses.The change in this item relates to the volume of orders acquired and the contractual terms of payment.

18) Other current liabilitiesThese amounted to 524,138 thousand euro at June 30, 2014 (674,645 thousand euro at the end of the previous year) and they are mainly comprised of:


Due to employees 50,038 51,578

Indirect tax payables 2,341 1,738

Withholding tax due 6,858 6,346

Other commercial accruals 13,186 13,436

Customer guarantee deposits 422,758 575,206

Due to social security institutions 15,966 14,024

Due to company boards and committees 627 563

Other payables 12,364 11,754

Total 524,138 674,645

“Customer guarantee deposits” include 400,354 thousand euro in advances received from customers on construction contracts not yet in force, included in the net financial position (557,312 thousand euro at June 30, 2013).

19) Current tax liabilitiesThese amount to 25,490 thousand euro and include accruals for current taxes on the estimated profits of Group companies. The increase of 5,467 thousand euro, compared with the balance of 20,023 thousand euro at June 30, 2013, was due to the higher taxable income for the year ended June 30, 2014 and the amount of advance payments made, based on the tax charge for the previous year.

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20) Bank debts and other financial liabilitiesThese refer to the current portion of non-current borrowing and loans, to bank advances and overdrafts on bank current accounts, to derivative financial instruments and to payables for business combinations. At June 30, 2014 they amounted to 194,033 thousand euro, compared with 261,064 thousand euro the previous year.


Bank advances and current account overdrafts 62,598 46,814

Short-term loans 30,082 37,453

Current portion of long-term loans 93,438 166,368

Accruals on financial payables 1,312 226

Total bank debts 187,430 250,861

Payables for business combinations 3,042 5,365

Derivative financial instruments - Fair value of outrights (sales and purchases)

51 257

Derivative financial instruments – Fair value of IRS 2,985 3,896

Derivative financial instruments – Interest on IRS 525 685

Total derivative financial instruments 3,561 4,838

Total 194,033 261,064

Concerning derivative financial instruments, see the comments in note 11) Current financial assets.Payables for business combinations refer (2,500 thousand euro) to the residual payable due for the acquisition of ABS Sisak doo, as redefined during the year, and (the residual part, i.e. 542 thousand euro) to the acquisition of Innoval Technology Ltd.

21) Guarantees and commitmentsThese show commitments and guarantees given by the Group to third parties and consist of the following:


Bank guarantees and liens to third parties 1,330,704 1,594,869

Total 1,330,704 1,594,869

The guarantees of 1,330,704 thousand euro, given by banks to third parties on behalf of Group companies, consist mainly of performance bonds for various construction contracts. Guarantees in foreign currencies are entered at the year-end exchange rates.

INFORMATION ON THE INCOME STATEMENT

22) Revenues

Revenues are broken down as follows:


Revenues from sales and services 2,986,994 2,937,693

Changes in finished products and construction contracts (111,355) (250,516)

Other operating income 68,463 95,120

Total revenues 2,944,102 2,782,297

The Group’s revenue performance remained substantially stable in the plant sector, but with a significant increase in the steelmaking sector, without appreciable changes in the scope of consolidation.Other operating income includes 29,132 thousand euro for the release of unused provisions (43,602 thousand euro as at June 30, 2013), as well as revenues from Energy Efficiency Credits accrued on the basis of energy savings in the Steelmaking production process and certified by the competent supervisory body, totalling 4,405 thousand euro, of which 755 thousand euro are non recurring and refer to previous years (the total balance amounted to 5,457 thousand euro at June 30, 2013, referred both to that year and to previous years).


23) Purchase costs of raw materials and consumablesThe purchase costs of raw materials and consumables net of changes in inventories amounted to 1,503,774 thousand euro for the year ended June 30, 2014 (1,399,271 thousand euro at June 30, 2013, with an increase of 104,503 thousand euro) and are directly tied both to the composition and type of construction contracts and to product sales included under “Revenues”.

24) Personnel costsPersonnel costs of 416,703 thousand euro for the year ended June 30, 2014 are broken down below:

June 30, 2014 June 30, 2013


Staff andmanagers

Blue collars

Staff andmanagers

Blue collars

Wages and salaries 233,459 74,787 232,994 72,469

Social security 59,055 20,934 59,516 19,583

Employee severance indemnity and pension fund accruals

9,588 3,833 10,720 3,523

Other costs 10,516 4,531 7,680 2,520

Total 312,618 104,085 310,910 98,095

Total personnel costs 416,703 409,005

The average number of personnel in the Group during the last two financial years was as follows:

June 30, 2014 June 30, 2013

Managers 253 265

Staff 6,797 6,476

Blue collars 4,159 3,935

Apprentices 80 0

Total 11,288 10,676

Changes in “Personnel costs” relate to changes in compensation and to the number of employees. Compared to 2013, the number of employees trended upwards again, mainly as a result of the development of the Indian initiative, but also of the consolidation of the Group’s presence in Europe.

25) Other operating costs


Cost of services 615,530 621,938

Rentals and leasing 17,811 16,355

Accruals 33,675 17,423

Other operating costs 40,665 37,797

Total other operating costs 707,681 693,513

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These amounted to 707,681 thousand euro for the year ended June 30, 2014 (693,513 thousand euro at June 30, 2013) and consisted of:

25.1) Cost of servicesCost of services included in “Other operating costs”, amounting to 615,530 thousand euro for the year ended June 30, 2014 (621,938 thousand at June 30, 2013, with a decrease of 6,408 thousand euro), are made up as follows:


Outsourcing 225,243 252,645

Energy and motive power 62,875 60,060

Other utilities 27,455 27,860

Plant management, repairs and maintenance 22,412 18,010

Travel and living expenses 53,602 58,500

Third party commissions 18,612 23,721

Despatch, transport and porterage 112,794 91,560

Insurance premiums and membership dues 11,186 9,229

Legal and financial consultancy 29,332 30,274

Cleaning and security 5,652 5,232

Bank charges 9,720 9,720

Telecommunication costs 7,502 7,740

Advertising and promotion expenses 2,574 3,204

Other services 26,571 24,183

Total cost of services 615,530 621,938

“Other services” include emoluments to the Board of Statutory Auditors, amounting to 204 thousand euro (187 thousand euro for the year ended June 30, 2013).The fees due to the independent external audit company and associated entities for auditing and other services provided in the financial year, included among other services and totalling 860 thousand euro, are indicated in detail in Attachment V-C.

25.2) Cost for use of third party assetsAt 17,811 thousand euro for the year ended June 30, 2014, this item increased by 1,456 thousand euro compared with the previous year’s 16,355 thousand euro and refers mainly to property rentals and the leasing of electronic equipment.

25.3) AccrualsThe balance of 33,675 thousand euro for the year ended June 30, 2014 (17,423 thousand euro the previous year) reflects the adjustment of provisions to bring them into line with reasonably expected liabilities, which mainly concern pending disputes and possible charges due upon the closure of some construction contracts.

25.4) Other operating costsThese amounted to 40,665 thousand euro at June 30, 2014, compared with 37,797 thousand euro the previous year, with an increase of 2,868 thousand euro. They were made up as follows:


Losses on receivables 1,580 2,551

Capital losses 267 174

Sundry taxes 11,026 8,824

Other charges 522 67

Charitable contributions and donations 1,048 1,082

Other operating costs 9,983 11,271

Extraordinary expense 16,239 13,828

Total other operating costs 40,665 37,797

The amount of extraordinary expense included penalties incurred for the late start-up of some construction contracts in progress, net of the utilizations of provisions allocated in view of the potential risk.


26) Depreciation, amortization and write-downs In detail:


Depreciation of property, plant, and equipment 80,683 77,524

Amortization of intangible assets 15,269 16,017

Total depreciation and amortization 95,952 93,541

Write-down of receivables 5,640 1,982

Other write-downs 1,537 1,038

Write-down of intangible assets 2,082 1,504

Write-down of property, plant, and equipment 0 41

Total write-downs 9,259 4,565

Total depreciation, amortization and write-downs 105,211 98,106

The depreciation, amortization and write-downs of tangible and intangible assets are illustrated in notes 1 and 2 above, providing information on the balance sheet.

27) Financial income This amounted to 31,402 thousand euro for the year ended June 30, 2014 and consisted mainly of:


Income from securities 5,798 2,599

Income from options 701 4,498

Income from equity investments 2,880 426

Interest on bank deposits 18,022 22,386

Interest from customers 2,928 4,883

Other financial income 1,073 2,608

Total financial income 31,402 37,400

Income from equity investments referred to dividends received from non-Group companies. The change in interest on bank deposits reflects the global decline in interest rates and the smaller amount of cash invested in bank deposits, offset by the change in income from securities which benefited from the increase in the capital invested in securities in order to improve their profitability; interest from customers declined (in proportion to the decrease in discounting interest, under financial charges) due to the different payment terms agreed in contracts.

28) Financial chargesThese consisted of:


Interest on loans and bank debts 8,831 9,796

Interest on discounting operations 1,863 3,631

Other financial charges 6,178 4,748

Total financial charges 16,872 18,175

The change in interest on loans and bank debts is tied to a global decrease in rates and to a general reduction in the Group’s indebtedness. Interest on discounting operations arises from the management of the bills portfolio and is directly correlated with the trend in interest from customers and interest subsidies included under financial income.

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29) Gains (losses) on foreign exchange transactions


Exchange gains 32,964 47,379

Exchange losses (54,989) (39,718)

Total exchange gains (losses) (22,025) 7,661

The overall negative result on foreign exchange derives from the exchange differences realised on monetary investments and from the alignment of balance sheet items in USD to the year-end exchange rate.

30) Gains arising from the valuation of investments in associates with the equity methodNet gains from the valuation of companies not consolidated with the equity method, amounting to 1,491 thousand euro for the year ended June 30, 2014 (negative 949 thousand euro the previous year), relate primarily to the 50% owned company Danieli Corus Technical Services B.V. and to Omnia Factor S.p.A, as shown in Attachment I-C.

31) Income taxesIncome taxes amounted to 51,152 thousand euro and cover an estimate of current and deferred tax assets and liabilities commensurate with the results of Group companies for the year. The breakdown of income taxes is as follows:


Current income taxes 54,597 54,366

IRES credit for IRAP deduction on cost of labour for previous years 0 (7,306)

Deferred tax liabilities 1,466 (1,322)

Deferred tax assets (4,911) (564)

Total 51,152 45,174

The IRES (corporate income tax) and IRAP (regional tax) rates applied by the Parent Company and by the Italian companies of the Group to estimated taxable income were 27.5% and 3.9% respectively for current taxes, and 3.5% for the determination of deferred taxes with regard to the IRAP rate, in accordance with recent regulatory changes. Taxes for other countries in which the Group operates were calculated according to the current rates in those countries.The reconciliation between the theoretical tax charge and the amount actually shown in the income statement (without considering for the previous year the positive effects of income taxes from previous years) is provided in attachment IV-C.The effective average income tax rate indicated in the aforesaid attachment essentially reflects the tax charge estimated on the basis of individual companies’ results, whilst the value of the previous year was affected by the lack of deferred tax assets recognized on the losses of certain Group companies whose profitability was not expected to recover in the near future.

32) Earnings per shareEarnings per share for the years ended June 30, 2014 and 2013 were calculated on the basis of profit attributable to the Group and are shown separately for savings shares and ordinary shares.

Basic and diluted earnings per share Basic earnings per share is calculated by dividing net profit for the year, attributable to ordinary and savings shareholders, by the weighted average number of both ordinary and savings shares outstanding during the financial year, net of weighted treasury shares. Profit attributable to savings shares is increased, compared with that of ordinary shares, by 2.07% of the shares’ par value.


The weighted average number of shares and attributable net profit by category of shares are indicated below:

June 30, 2014 June 30, 2013

(thousands of shares)

Ordinary Shares

SavingShares

OrdinaryShares

Saving Shares

Issued shares at the start of the period 40,880 40,425 40,880 40,425

Shares outstanding at the start of the period 37,918 36,480 38,358 35,898

Treasury shares (purchased)/sold in the period 0 0 (440) 582

Total shares outstandingat period end 37,918 36,480 37,918 36,480

Weighted average of shares outstanding 37,918 36,480 38,023 35,827

Net profit attributable to Parent Company shareholders (in thousands of euro) 77,827 75,629 83,295 79,226

June 30, 2014 June 30, 2013


Ordinary Shares

SavingShares

Ordinary Shares

Saving Shares

Profit reserved for holders of savings shares

(0.0207 euro per share) 0 755 0 741

Residual profit divided among all shares 77,827 74,874 83,295 78,485

Total 77,827 75,629 83,295 79,226

Basic earnings per share (euro) 2.0525 2.0732 2.1906 2.2113

No account has been taken of diluted profit per share since, at June 30, 2014, there were no financial instruments with a dilutive effect on the profit attributable to shares outstanding.

33) Information by business segment and geographical areaIn accordance with IFRS 8, the segment reporting schedules are provided below. The steelmaking segment comprises the production and sale of special steels.The plant making segment concerns the production and sale of plant for the iron and steel industry and also includes the operations of the subsidiary Danieli International SA.Profit and loss and balance sheet data are shown below, subdivided by activity segment, aggregating the financial statements prepared by companies belonging to the two specific segments.

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June 30, 2014

(in thousands of euro)Steel Plant

Inter-segment derecognition

Consolidated

Net revenues from core businesses 795,124 2,151,408 2,946,532

less inter-segment revenues (2,430) (2,430)

Revenues from third parties 795,124 2,151,408 (2,430) 2,944,102

Gross operating margin (EBITDA) 90,718 218,049 0 308,767

Depreciation, amortization and write-downs of fixed assets (45,792) (52,242) (98,034)

Operating income 44,926 165,807 0 210,733

Net financial income (charges) (2,950) (1,856) (1,198) (6,004)

Profit before tax 41,976 163,951 0 205,927

Income taxes (13,762) (37,390) (51,152)

Net profit 28,214 126,561 0 154,775

Segment assets 970,326 4,225,253 (73,547) 5,122,032

(of which increases in tangible and intangible fixed assets) 68,114 72,367 140,481

Segment liabilities 434,475 3,212,708 (73,547) 3,573,636

Total shareholders’ equity 1,548,396

Total segment liabilities and shareholders’ equity 5,122,032

Net financial position (99,958) 990,923 (46,684) 844,281

June 30, 2013

(in thousands of euro)Steel Plant

Inter-segment derecognition

Consolidated

Net revenues from core businesses 686,432 2,100,995 2,787,427

less inter-segment revenues (5,130) (5,130)

Revenues from third parties 686,432 2,100,995 (5,130) 2,782,297

Gross operating margin (EBITDA) 64,339 213,149 0 277,488

Depreciation, amortization and write-downs of fixed assets (44,877) (50,209) (95,086)

Operating income 19,462 162,940 0 182,402

Net financial income (charges) (2,616) 29,009 (456) 25,937

Profit before tax 16,846 191,949 0 208,795

Income taxes (6,279) (38,895) (45,174)

Net profit 10,567 153,054 0 163,621

Segment assets 964,946 4,449,158 (96,326) 5,317,778

(of which increases in tangible and intangible fixed assets) 38,483 129,486 167,969

Segment liabilities 462,323 3,524,515 (96,326) 3,890,512

Total shareholders’ equity 1,427,266

Total segment liabilities and shareholders’ equity 5,317,778

Net financial position (96,391) 1,031,258 (83,681) 851,186

Consolidated revenues by geographical area, calculated on the basis of the order book, are as follows:

(in thousands of euro) June 30, 2014 % June 30, 2013 % % Change

Europe and Russia 1,272,088 43.2% 1,157,062 41.6% 9.9%

Middle East 449,961 15.3% 396,820 14.3% 13.4%

The Americas 352,810 12.0% 348,856 12.5% 1.1%

Southeast Asia 869,243 29.5% 879,559 31.6% -1.2%

Total 2,944,102 100.0% 2,782,297 100.0% 5.8%


In the plant making segment, the geographical distribution of revenues is based primarily on the volume of shipments made, as well as progress with equipment construction operations both at our factories and in terms of on-site installation and start-up throughout the world.As for steelmaking, 27.0% of revenues were concentrated in Europe and Russia in the year ended June 30, 2014 (compared with 43.2% of total revenues), while in the year ended June 30, 2013, that region accounted for 24.7% of steelmaking revenues and 41.6% of the total.

Below is the division of fixed assets by geographical area:

(in millions of euro) June 30, 2014 % June 30, 2013 % % Change

Europe and Russia 575,691 69.5% 543,521 68.4% 6%

Middle East 1,056 0.1% 1,484 0.2% -29%

The Americas 4,281 0.5% 7,011 0.9% -38.9%

Southeast Asia 247,581 29.9% 242,623 30.5% 2.0%

Total 828,609 100.0% 794,639 100.0% 4.3%

Related party transactionsTransactions carried out by Danieli & C. Officine Meccaniche S.p.A. and other companies in the scope of consolidation with related parties essentially concerned the provision of services and the trading of goods. They form part of standard operations and are at arm’s length, i.e. at the conditions that would apply between two independent parties. Related party transactions can be summarized as follows:

June 30, 2014 June 30, 2013

Company Receivables Payables Receivables Payables

Danieli Corus Technical Services BV IJmuiden (NLD) 173 0 432 0


Company Revenues Costs Revenues Costs

Danieli Corus Technical Services BV IJmuiden (NLD) 0 0 0 0

Omnia Factor S.p.A. - Milan 0 0 0 0

The following is reported with regard to the compensation of directors, statutory auditors and general managers of Danieli & C. Officine Meccaniche S.p.A. by the Company and its subsidiaries:


Set fees 1,203 1,203

Variable compensation 350 240

Benefits in kind 113 36

Other remuneration 429 420

Total 2,095 1,899

Disclosures pursuant to art. 114 of Legislative Decree 58/1998Pursuant to Legislative Decree 58/1998 and CONSOB letter 6064293 of July 28, 2006, the disclosures concerning related party transactions, significant events, non-recurring and/or atypical and unusual transactions and the net financial position are presented in the corresponding sections of these notes.

Events occurring after the balance sheet dateIn a steel market which is still favourable though not yet stable, operations have continued with no significant events occurring since June 30, 2014.

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88 ATTACHMENTS TO THE EXPLANATORY NOTES

ATTACHMENT No. I-C

SCHEDULE SUMMARISING EQUITY INVESTMENTS


Financial year-end

or interim reportdate

Interest held

%

Associates

Danieli Corus Technical Services B.V. - IJmuiden (NLD) June 30, 2014 50.00

Omnia Factor S.p.A. - Milan December 31, 2013 20.00

Total investments in associated companies

OTHER INVESTMENTS

Confirmec S.p.A. - Milan June 30, 2013 5.00

Alfieri Associated Investors SA - Luxembourg (LUX) December 31, 2013 0.25

Other minor holdings

Total investments in other companies

Total equity investments

ATTACHMENT No. II-C

SCHEDULE SUMMARISING THE PRINCIPAL ITEMS IN THE APPROVED FINANCIAL STATEMENTS OF ASSOCIATED COMPANIES

(Values in thousands)

OriginalCurrency

Last approved Fin. Statements

Danieli Corus Technical Services B.V. - IJmuiden (NLD) EUR March 31, 2014

Omnia Factor S.p.A. - Milan EUR December 31, 2013

(Values in thousands)

OriginalCurrency

Value of production

Danieli Corus Technical Services B.V. - IJmuiden (NLD) EUR 71,648

Omnia Factor S.p.A. - Milan EUR 0

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Valuation at

June 30, 2013

Revaluationsand

increases

Othermovements

Salesand

reimbursements

Write-downs Valuation at

June 30, 2014

22,242 1,810 24,052

1,104 0 (319) 785

23,346 1,810 0 0 (319) 24,837

516 516

817 0 0 817

473 0 2 0 475

1,806 0 2 0 0 1,808

25,152 1,810 2 0 (319) 26,645

Non-current assets

Current assets

Shareholders’Equity


Current liabilities

8,281 52,440 45,260 0 15,461

8 45,621 3,926 191 41,512

ProductionCosts

Financial Incomeand Charges

Taxesfor the year

Net Profit

Number ofEmployees

(71,530) 406 (110) 414 183

(1,045) (1,828) 921 (1,952) 3


ATTACHMENT No. III-C

LOANS


Original amounts

Current portion due by

June 30, 2015

Current portion due after

June 30, 2015

Total

Bank debts for loans

- Banca Popolare Friuladria loan(Annual floating rate of 2.164%last instalment by September 2018, in euro)

15,000 0 14,867 14,867

- Barclays loan(Annual floating rate of 2.355%last instalment by October 2018, in euro)

25,000 3,125 21,606 24,731

- Banca Intesa San Paolo loan(Annual floating rate of 1.925%last instalment by March 2015, in euro)

30,000 10,000 0 10,000

- Credit Agricole loan(Annual floating rate of 2.078%last instalment by April 2018, in euro)

50,000 0 49,616 49,616

- Unicredit loan(Annual floating rate of 1.11%last instalment by June 2015, in euro)

5,000 5,000 0 5,000

- EBRD loan (Annual floating rate of 2.673%last instalment by December 2020, in euro)

20,000 0 18,050 18,050

- EBRD loan (Annual floating rate of 11.48%last instalment by July 2020, in roubles)

13,192 600 12,593 13,193

- Banca Reiffeisen loan (Annual floating rate of 3%last instalment by December 2019, in roubles)

6,200 1,520 4,680 6,200

- Banca Intesa Nizhny Novgorod loan(Annual floating rate of 3.17%last instalment by June 2015, in euro)

3,000 3,000 0 3,000

- BNP Paribas loan(Annual floating rate of 2.206%last instalment by August 2019, in euro)

7,500 0 7,500 7,500

- HSBC Kolkata Branch loan(Annual floating rate of 12.45%last instalment by July 2015, in USD)

21,120 3,005 18,920 21,925

- Citibank Ha Noi loan(Floating rate of 2.87%last instalment by June 2017, in euro)

3,777 0 3,777 3,777

TOTAL 199,789 26,250 151,609 177,859

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Original amounts

Current portion due by

June 30, 2015

Current portion due after

June 30, 2015

Total

Bank debts with collateral security

- Unicredit loan(Annual floating rate of 0.6%last instalment by January 2018, in euro)

10,500 1,050 3,150 4,200

- Unicredit loan(Annual floating rate of 1.05%last instalment by July 2016, in euro)

12,500 1,250 1,875 3,125

TOTAL 23,000 2,300 5,025 7,325

Bank debts for subsidised research project loans

- MICA 72393/06(Annual rate 3.6% last instalment by June 2016, in euro)

13,809 1,555 1,611 3,166

- BEI RDI 25961(Annual rate 1.755% last instalment by January 2018, in euro)

80,000 13,333 40,000 53,333

- Banca Intesa Brescia 1000/10054(Annual rate 1.407%last instalment by December 2014, in euro)

50,000 50,000 0 50,000

TOTAL 143,809 64,888 41,611 106,499

Other loans 4,252 4,252

TOTAL LOANS 366,598 93,438 202,497 295,935

SHORT-TERM BANK DEBTS 93,992 93,992

GRAND TOTAL 366,598 187,430 202,497 389,927


ATTACHMENT No. IV-C

RECONCILIATION BETWEEN THE TAX CHARGE IN THE FINANCIAL STATEMENTS

AND THE THEORETICAL TAX CHARGE


Profit before tax

Theoretical income tax charge

Accrued but not allocated deferred tax assets

Use of past year tax losses not allocated in provisions

Different tax rates applied by group companies

Permanent changes and other effects

Total changes

Actual income taxes

Actual IRAP

Higher/(lower) taxes allocated in previous years and other taxes

Non recurring effect of the deduction of IRAP on labour cost of previous years

Total taxes recognised in the financial statements

Total taxes recognised in the financial statements before the non recurring effect of the deduction of IRAP on labour cost of previous years

Effective rate (before non recurring components)

ATTACHMENT NO. V-C

SCHEDULE SUMMARISING FEES DUE TO THE INDEPENDENT EXTERNAL

AUDIT COMPANY AND ASSOCIATED ENTITIES FOR SERVICES PROVIDED IN THE FINANCIAL YEAR

Type of service

Accounting audit

Total services rendered to the Parent Company

Accounting audit

Accounting audit

Tax consulting services

Other audit services

Other services

Total services rendered to Subsidiary Companies

Total euro

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At June 30, 2014 At June 30, 2013

Taxable income Rate Tax Taxable income Rate Tax

204,729 208.339

27.5% 56,300 27.5% 57,293

10,404 2,861 16,555 4,553

(5,969) (1,641) (4,488) (1,234)

(75,034) (20,634) (74,660) (20,532)

11,296 3,106 10,487 2,884

(59,303) (16,308) (52,106) (14,329)

39,992 42,964

11,160 9,516

0 0

(7,306)

51,152 45,174

51,152 52,480

25.0% 25.2%

Entity providing the service Receiver of service Fees

(i) Independent Auditor of the Parent Company Parent Company 135,533

135,533

(i) Independent Auditor of the Parent Company (i) Subsidiary companies 116,475

(ii) Associated to the Independent Auditor of the Parent Company (ii) Subsidiary companies 306,836




724,936

860,469

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DECLARATION IN ACCORDANCE WITH ART. 154-B PARA. 5 OF THE

TAX CONSOLIDATION ACT RELATIVE TO CONSOLIDATED FINANCIAL

STATEMENTS (PURSUANT TO ART. 81-C OF CONSOB REGULATION

NO. 11971 OF MAY 14, 1999 AND SUBSEQUENT MODIFICATIONS

AND ADDITIONS)

1. We, the undersigned Gianpietro Benedetti, Chairman of the Board of Directors, and Alessandro Brussi, Manager responsible for the preparation of company accounting documents, of Danieli & C. Officine Meccaniche S.p.A. certify, also taking account of the provisions of art. 154-b, paragraphs 3 and 4, of legislative decree no. 58 of February 24, 1998:

• the suitability in relation to the characteristics of the company and • the effective application of administrative and accounting procedures for the preparation of the

consolidated financial statements, during the period from July 1, 2013 to June 30, 2014.

Assessment of the suitability of the administrative and accounting procedures for the preparation of the consolidated financial statements for the year to June 30, 2014 was based on a model established by Danieli & C. Officine Meccaniche S.p.A. consistent with the CoSO framework and also takes account of the document “internal control over financial reporting - Guidance for Smaller Public Companies”, both developed by the Committee of Sponsoring Organizations of the Treadway Commission, which is an internationally generally accepted reference framework.

2. It is also certified that the financial statements for the year to June 30, 2014

a) were prepared in compliance with the applicable international accounting standards recognised by the European Community pursuant to EC regulation no. 1606/2002 of the European Parliament and the Council, of July 19, 2002;

b) correspond with the accounting records and the entries therein;

c) provide, in an appropriate way, a true and fair view of the balance sheet, profit and loss and financial position of the issuing company and of the companies included in the consolidation as a whole.

3. The directors’ report includes a reliable analysis of performance and profit, as well as of the situation of the issuing company and of the companies included in the consolidation as a whole, together with a description of the principal risks and uncertainties to which they are exposed.

September 25, 2014

Chairman of the Board of Manager responsible for Directors the preparation of company Gianpietro Benedetti accounting documents Signed Alessandro Brussi Signed

96 EXTERNAL AUDIT REPORT

EXTERNAL AUDIT REPORT

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DANIELI & C. Officine Meccaniche S.p.A.

SEPARATE FINANCIAL STATEMENTS

FOR THE YEAR TO JUNE 30, 2014

100 ACCOUNTING SCHEDULES

ACCOUNTING SCHEDULES

Balance Sheet

(in euro)

Financial year endedJune 30, 2014


ASSETS Noteof which with

related partiesof which with

related parties

Non-current assets

Property, plant and equipment 1 82,007,314 79,480,022

Intangible assets 2 11,600,250 10,913,543

Investments in subsidiaries 3 1,097,019,835 1,097,019,835

Deferred tax assets 4 42,092,259 42,783,346

Trade and other receivables 5 114,399,804 0 78,796,104 0

Total non-current assets 1,347,119,462 1,308,992,850

Current assets

Inventories 6 363,169,649 142,594,263 490,910,371 161,777,062

Trade receivables 7 522,864,947 96,780,906 638,362,517 106,166,926

Other receivables 8 20,853,683 21,310,148

Current tax assets 9 9,226,202 7,655,979

Other financial receivables 10 3,760,356 3,565,549 5,979,958 5,693,097

Cash and cash equivalents 11 98,686,944 98,354,237

Total current assets 1,018,561,781 1,262,573,210

Total assets 2,365,681,243 2,571,566,060

(in euro)



LIABILITIES AND SHAREHOLDERS’ EQUITY of which with

related partiesof which with

related parties


Share capital 81,304,566 81,304,566

Treasury shares (82,934,969) (82,934,969)

Other reserves and profit carried forward, including profit for the year

537,082,404

428,255,032

Shareholders’ equity 12 535,452,001 426,624,629


Loans 13 41,610,862 56,499,081

Deferred tax liabilities 4 532,576 661,977

Employee termination 14 20,313,049 20,771,422

Provisions 15 119,405,998 134,362,220

Total non-current liabilities 181,862,485 212,294,700

Current liabilities

Trade payables 16 1,215,377,654 286,430,941 1,387,346,386 225,134,894

Other current liabilities 17 195,482,550 248,532,438

Current tax liabilities 18 22,372 27,155

Bank debts and other current financial liabilities

19 237,484,181 168,456,948 296,740,752 225,605,560

Total current liabilities 1,648,366,757 1,932,646,731

Total liabilities and shareholders’ equity 2,365,681,243 2,571,566,060

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Income Statement

(in euro)



Note of which with

related parties

of which with related

Revenues 1,221,973,982 76,889,249 1,189,905,309 60,364,370

Other operating income 33,407,155 18,331,575 46,648,378 15,448,338

Changes in finished products and construction contracts

6 (197,531,498) 76,150,976 (252,637,240) 61,932,553

Total revenues 21 1,057,849,639 171,371,800 983,916,447 137,745,261

Purchase costs of raw materials and consumables

22 (604,343,565) (257,712,332) (502,403,095) (186,327,305)

Personnel costs 23 (147,992,420) (150,516,892)

Other operating costs 24 (280,260,123) (60,739,545) (298,536,024) (60,885,150)

Depreciation, amortization and write-downs

25 (20,275,822)

(15,848,652)

Operating income 4,977,709 16,611,784

Financial income 26 143,782,538 140,422,499 61,806,590 54,564,494

Financial charges 27 (8,404,647) (2,431,268) (10,457,760) (2,012,087)

Gains (losses) on foreign exchange transactions

28 (4,210,930)

7,815,294

Profit before tax 136,144,670 75,775,908

Income taxes 29 (4,619,589) (4,219,227)

Net profit 131,525,081 71,556,681

Statement of Comprehensive Income

(in euro) Note



Net profit 131,525,081 71,556,681

Components of comprehensive income that will subsequently be reclassified in the profit (loss) for the year:

Change in cash flow reserves 723,343 329,259

Tax effect (198,919) (90,546)

12 524,424 238,713

Components of comprehensive income that will not subsequently be reclassified in the profit (loss) for the year:

Actuarial gains/(losses) recognized in the statement of comprehensive income

(206,627)

(2,175,688)

Tax effect 56,822 598,314

12 (149,805) (1,577,374)

Total comprehensive income 131,899,700 70,218,020

102 ACCOUNTING SCHEDULES

Statement of changes in shareholders’ equity


ShareCapital

Treasury Sharepremiumaccount

Cashflow hedge

reserve

Otherreserves

Netprofit (loss)for the year

TotalShareholders’

equity

Shareholders’ equity at June 30, 2012

81,305 (79,881) 19,748 (2,732) 315,208 48,038 381,686



: to reserves 23,036 (23,036) 0

: dividends to shareholders (25,002) (25,002)

- unclaimed dividends 1 1

(3,054) 2,775 (279)

Total operations with shareholders

(3,054) 2,775 0 23,037 (48,038) (25,280)

Profit for the year to June 30, 2013 71,557 71,557


- change in cash flow reserves 239 239

(1,577) (1,577)

Comprehensive income (expenses) 0 0 239 (1,577) 71,557 70,219


81,305 (82,935) 22,523 (2,493) 336,668 71,557 426,625



: to reserves 48,482 (48,482) 0

: dividends to shareholders (23,075) (23,075)

- unclaimed dividends 2 2

Total operations with shareholders 0 0 0 48,484 (71,557) (23,073)

Profit for the year at June 30, 2014 131,525 131,525


- change in cash flow reserves 525 525

- actuarial gains (losses) from IAS 19 (150) (150)

Comprehensive income (expenses) 0 0 525 (150) 131,525 131,900


81,305 (82,935) 22,523 (1,968) 385,002 131,525 535,452

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Statement of Cash Flows (*)


June 30, 2014Financial year ended

June 30, 2013 Restated (*)


of which with related parties

of which withrelated parties

Adjustments to reconcile profit before taxes with net cash flows from operating activities


Net increase/(decrease) in provisions (14,956) (24,855)

Write-down/(write-back) of investments accounted for with the equity method

0

291

Depreciation, amortization and write-downs of fixed assets 17,526 15,558

Losses/(gains) on disposal of property, plant and equipment (3) 67

Write-down of receivables 2,750 0

Change in employee severance indemnity provision (608) 305

Unrealized foreign exchange losses/(gains) 4,211 (7,816)

Financial income for the period (143,784) (140,422) (61,807) (54,564)

Financial charges for the period 8,404 2,431 10,458 2,012

Total 9,684 7,978

Net change in working capital

(Increase)/decrease in inventories 127,741 19,183 (2,773) 24,229

(Increase)/decrease in trade and other receivables 77,748 9,386 (4,494) (61,921)

Increase/(decrease) in trade and other payables (165,319) 61,296 (255,146) 26,593

Unrealized foreign exchange losses/(gains) (4,211) 7,816

Total 35,959 (254,597)

Interest paid in the period (8,151) (2,431) (10,970) (2,012)

Interest received in the period 3,580 126 7,431 77

Taxes (paid)/received in the period (5,775) 3,369

Cash flow from operating activities 35,297 (246,789)

Investing activities

Capital expenditure:

Property, plant and equipment (14,667) (25,912)

Intangible assets (6,172) (6,563)

Dividends collected 140,296 140,296 54,487 54,487

Net treasury share investments /(disposals) 0 (279)

Disposals:

Property, plant and equipment 98 448

Short-term derivative financial instruments (357) 191

Total investing activities 119,198 22,372

Financing activities

Change in loans receivable 2,128 2,128 2,397 1,207

New loans payable 0 69,860 69,348

Increase/(decrease) in advances received on job orders not yet in production

(59,700)

74,959

Loans payable reimbursed (73,515) (57,149) (19,390)

Dividends paid to shareholders (23,075) (25,002)

Total financing activities (154,162) 102,824

Net cash flow 333 (121,593)

Opening cash and bank position 98,354 219,947

Closing cash and bank position 98,687 98,354

(*) Restated figures classifying the dividends collected within the financing activities, in lieu of operating activities


EXPLANATORY NOTES

Introduction

The financial statements for the year ended June 30, 2014, consisting of the balance sheet, income statement, statement of comprehensive income, statement of cash flows, statement of changes in shareholders’ equity and these notes, are presented in euro; for greater clarity, amounts in the notes are rounded to the nearest thousand euro (except where otherwise specified).In addition, with reference to CONSOB Resolution no. 15519 of 27 July 2006 pertaining to the financial statements of companies issuing financial instruments listed on Italian regulated market, significant transactions with related parties were included in dedicated columns of the balance sheet, of the income statement and of the statement of cash flows, without compromising the overall legibility of the statements.Danieli & C. Officine Meccaniche S.p.A. is a joint stock company, listed on the Borsa Italiana (Italian stock exchange), operating in the design, construction and sale of plant for the iron and steel industry. Its registered office is at Via Nazionale 41, Udine, Italy. The key ordinary shareholders at June 30, 2014 were:

Sind International S.p.A. - Milan 67.175%

Treasury shares held at June 30, 2014 7.24%

The remaining shares were outstanding in the market.

The separate financial statements of Danieli & C. Officine Meccaniche S.p.A. have been audited by Reconta Ernst & Young S.p.A.The draft financial statements were approved on September 25, 2014 by the Board of Directors, which authorized their publication in the September 25, 2014 press release containing the main elements of these financial statements.

Statement of compliance with IFRSThe financial statements for the year ended June 30, 2014 have been prepared in compliance with the IFRS issued by the International Accounting Standards Board and endorsed by the European Commission, in accordance with the procedure per Art. 6 of Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of July 19, 2002, in force at the date of the financial statements, together with recommendations set out in the Regulations for Issuing Companies as approved by CONSOB (the Italian stock market regulator). The term “IFRS” encompasses all of the International Accounting Standards (IAS) and all interpretations published by the International Financial Reporting Interpretations Committee (IFRIC), previously known as the Standing Interpretations Committee (SIC).The financial statements have been prepared on the historical cost principle, except for derivative financial instruments which have been recorded at fair value and construction contracts which are included on the basis of the percentage of completion method. From the various options permitted by IAS 1, the company has chosen, in the balance sheet, to show current and non-current assets and liabilities separately on the basis of whether they will be realized/settled as part of the company’s normal operating cycle within twelve months of the closure of the period, and to provide an analysis of costs on the basis of their nature in the income statement.The statement of cash flows has been drawn up using the indirect method.

SUMMARY OF ACCOUNTING STANDARDS

The accounting standards used to prepare the financial statements for the year ended June 30, 2014 are the same as those followed the previous year, with the exception of the following new or revised IFRS standards or IFRIC interpretations that have been applied by the company for the first time as from July 1, 2013. Moreover, with reference to the statement of cash flows, in the current year the collection of dividends from subsidiaries was represented within the flows from investment activities and not from operating activities, as allowed by IFRS 7. For comparison purposes, the representation provided in the previous year was adjusted.

New accounting standards and interpretations adopted by the Company since July 1st, 2013Since July 1st, 2013 the Company adopted the following new standards and interpretations, which had impacts limited to the disclosure on the consolidated financial statements or did not have any impact because they regulated cases not present therein.

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IFRS 13 “Fair Value Measurement” - On May 12, 2011 the IASB issued IFRS 13 “Fair Value Measurement”, which establishes a single framework for measuring fair value when required or permitted by other IFRS and sets out disclosure requirements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Amendments to IFRS 7 “Disclosures - Offsetting Financial Assets and Financial Liabilities” – On December 16, 2011 the IASB issued amendments to IFRS 7 “Disclosures - Offsetting Financial Assets and Financial Liabilities”, which require the entity to provide disclosure for all financial instruments to be set off in accordance with IAS 32 Financial Instruments: Presentation.

Standards and interpretations issued by IASB/IFRIC and endorsed by the European Commission but not yet mandatorily applicable to the companyAmendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities” – On December 16, 2011 the IASB issued amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities”, which establish the rules for offsetting financial assets and liabilities and the related disclosure requirements. Specifically, the amendments to IAS 32 establish that: (i) an entity’s right to offset must be legally enforceable under all circumstances, i.e. both in the normal course of business and in the event of default, insolvency or bankruptcy of either of the two contracting parties; and (ii) under certain conditions, the simultaneous settlement of financial assets and liabilities on a gross basis, using a mechanism that eliminates or significantly reduces credit and liquidity risk, can be considered the equivalent of net settlement. The provisions of the amendments to IAS 32 are effective for financial years beginning on or after January 1st, 2014 (for Danieli: the 2014/2015 financial statements).

IFRS 10 “Consolidated Financial Statements” and IAS 27 “Separate Financial Statements” – On May 12, 2011 the IASB published IFRS 10 “Consolidated Financial Statements” and the revised version of IAS 27 “Separate Financial Statements”, which establish the principles to be followed for the preparation and presentation of, respectively, the consolidated and separate financial statements. IFRS 10 also establishes a single definition of control that applies to all entities, including special purpose entities. According to that definition, an entity is deemed to exercise control when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The standard provides some indicators to consider when determining whether control exists, which include but are not limited to potential rights, protective rights, and the existence of agency or franchising relationships. The new provisions also recognize the possibility to exert control over an investee even without a majority of voting rights, due to the dispersion of holdings or the passive behaviour of other investors. IFRS 10 and the new version of IAS 27 are effective for financial years beginning on or after January 1st, 2014 (for Danieli: the 2014/2015 financial statements).

IFRS 11 “Joint Arrangements” and IAS 28 “Investments in Associates and Joint Ventures” – On May 12, 2011 the IASB issued IFRS 11 “Joint Arrangements” and a revised version of IAS 28 “Investments in Associates and Joint Ventures”. On the basis of the rights and obligations of the parties, IFRS 11 identifies two types of agreement, joint operations and joint ventures, and states which accounting treatment should accordingly be followed. Joint ventures are to be accounted for using the equity method only, with proportional consolidation no longer possible. The revised version of IAS 28 defines the appropriate accounting treatment in the event of the total or partial sale of an investment in an associate or joint venture. IFRS 11 and the new version of IAS 28 are effective for financial years beginning on or after January 1st, 2014 (for Danieli: the 2014/2015 financial statements).

IFRS 12 “Disclosure of Interests in Other Entities” - On May 12, 2011 the IASB published IFRS 12 “Disclosure of Interests in Other Entities”, establishing the required disclosures about subsidiaries and associates, joint operations and joint ventures, as well as unconsolidated “structured entities”. IFRS 12 is effective for financial years beginning on or after January 1st, 2014 (for Danieli: the 2014/2015 financial statements).

Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” – On May 29, 2013, the IASB issued amendments to IAS 36, which address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal, clarifying that the scope of the disclosure is limited to assets that were actually impaired. The provisions of the amendments to IAS 36 are to be applied retrospectively for financial years beginning on or after January 1st, 2014 (for Danieli: the 2014/2015 financial statements).


Amendments to IAS 39 “Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting” – On June 27, 2013, the IASB issued amendments to IAS 39, regarding the introduction of certain exemptions to hedge accounting requirements when an existing derivative, designated as a hedging derivative, is novated as a consequence of laws or regulations to replace the original counterparty in order to assure the fulfilment of the obligation assumed and if certain conditions are met. The amendments to IAS 39 are to be applied retrospectively for financial years beginning on or after January 1st, 2014 (for Danieli: the 2014/2015 financial statements).

IFRIC 21 “Levies, an interpretation of IAS 37 - Provisions, Contingent Liabilities and Contingent Assets” - IFRIC 21 clarifies that an entity shall recognise a liability for a levy/withdrawal when the obligating event that triggers the payment in accordance with the relevant legislation actually occurs. For a levy/withdrawal triggered on reaching a minimum threshold, the interpretation clarifies that no liability shall have to be recognised before the specified minimum threshold is actually reached. IFRIC 21 is effective for annual periods beginning on or after June 17, 2014 (for Danieli: the 2014/2015 financial statements)

The Company intends to adopt these standards when they become effective. Upon preliminary review of the standards, no material impacts are expected either in the recognition or in the initial and subsequent measurement of the assets, liabilities, costs and revenues of the company.

The main accounting standards applied for the preparation of the financial statements for the financial year ended June 30, 2014 are described below.

Property, plant and equipmentProperty, plant and equipment are recognized in the balance sheet at cost of purchase or internal production, including directly attributable ancillary expenses, net of accumulated depreciation. Where there is a present obligation and where significant, cost is increased by the present value of the estimated cost of dismantling and removing the asset. Borrowing costs directly attributable to the purchase, construction or production of an asset that requires significant time before the asset is available for use (a qualifying asset pursuant to IAS 23 – Borrowing costs) are capitalized, as part of the cost of such asset, and amortized over the useful life of the class of asset to which they refer. Plant and machinery may include parts with different useful lives. Depreciation is calculated over the useful life of each individual part; in the event of replacement, the new parts are capitalized to the extent that they meet the criteria for recognition as assets, and the carrying value of the parts replaced is derecognized. The residual value and useful lives of the assets are reviewed at least every year-end. Regardless of existing depreciation, whenever impairment is determined on the basis of IAS 36, the asset is written down accordingly; the write-down is reversed in subsequent years, net of depreciation, if the reasons cease to apply. Ordinary maintenance costs are expensed in full in the income statement, while maintenance costs which increase the value of assets are allocated to the relative assets and depreciated over their residual useful lives.Leases in which the lessor substantially retains the risks and rewards associated with ownership of the assets are classified as operating leases. Operating lease costs are recognized as an expense in the income statement on a straight-line basis over the term of the leasing contract.Depreciation charged to the income statement has been calculated on a systematic and straight-line basis, at rates considered to be representative of the estimated useful economic and technical life of the assets. The principal annual depreciation rates applied are the following:

Buildings and light constructions 3 - 10%

Plant and machinery from 10 to 15%

Furnaces and large automated plants from 15 to 15.5%

Equipment 25%

Motor vehicles, wheeled internal transport and cars 20 - 25%

Furniture and office machinery 12 - 20%

Land, free of construction or annexed to buildings, is not depreciated since it has an unlimited useful life.

Intangible assetsIntangible assets are recognized at purchase or production cost, including directly attributable ancillary expenses.The cost of an internally generated intangible asset includes only those expenses which can be directly attributed to the asset as from the date on which the criteria for recognition of that asset are met.After initial recognition, intangible assets are recorded at cost, net of accumulated amortization and any impairment losses calculated as set out in IAS 36.

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Research costs relating to production activities are fully expensed the year they are incurred.Intangible assets are subject to amortization unless they have indefinite useful lives. Amortization is charged systematically over the useful life of the asset in accordance with estimated future economic use. The residual value at the end of the useful life is assumed to be zero, unless there is a commitment by third parties to buy the asset at the end of its useful life or if there is an active market for the asset. The Directors review the estimated useful lives of intangible assets every financial year-end.The principal annual amortization rates applied are in the following ranges:

Intellectual property rights from 6.67% to 20%

Licences and trademarks 10%

Other intangible assets from 20 to 33%

Investments in subsidiariesSubsidiaries are entities over which the company exercises control, as a result either of owning the majority of the shares with the right to vote or of exercising a dominant influence, demonstrated by the power to determine, even indirectly, the financial and operating policies of these entities and to obtain the relative benefits, irrespective of shareholding relationships. The existence of potential voting rights which can be exercised at the date of the financial statements is considered for the purpose of determining control. Investments in subsidiaries are recognized at the cost of purchase or subscription, including transaction costs, from which any reimbursements of capital are deducted. That amount is subsequently adjusted for impairment, calculated in the same way indicated for property, plant and equipment. In particular, if circumstances indicate that the carrying value of investments may not be recovered, it is written down to realizable value, represented by the higher of net sale price and value in use. In measuring value in use, future cash flows are discounted at a rate reflecting current market assessments of the time value of money and the risks specific to the subsidiary. The risk of losses exceeding shareholders’ equity is provided for to the extent that the company has undertaken to satisfy legal or constructive obligations vis-à-vis the subsidiary or in any case to cover its losses.The original value of the investment is reinstated in future accounting periods should the reasons for such write-downs no longer apply. Both the write-down and any reversals thereof are taken to the income statement, in gains/(losses) on equity investments.

Financial receivables and assetsInitially, all financial assets are recorded at fair value, which is equivalent to the amount paid including transaction costs. The classification of financial assets determines their subsequent valuation, as follows:financial assets held for trading: these are recorded at fair value, unless fair value cannot be reliably determined, in which case they are recognized at cost less any impairment; gains and losses are taken to the income statement;held-to-maturity investments, loans receivable and other financial receivables: these are recognized at amortized cost, net of any write-downs for impairment. Gains and losses pertaining to these assets are taken to the income statement when the investment is removed at maturity or in the case of permanent impairment;loans and receivables: these are non-derivative financial instruments, with fixed or definable payments, not listed in an active market. They are included in current items except for those with expiry dates beyond twelve months after the balance sheet date. These latter are classified as non-current. Such assets are valued at cost amortized using the effective interest method. Any losses in value determined by impairment testing are taken to the income statement. In particular, trade receivables are initially recognized at their current value and subsequently recalculated using the amortized cost method net of any write-downs for impairment losses. The provision for doubtful accounts is created when there is objective evidence that the company will not be able to collect the original amount of the receivable. Accruals to the provision for doubtful accounts are charged to the income statement;available-for-sale financial assets: these are recorded at fair value, and gains and losses resulting from subsequent valuations are recognized through equity. If the fair value of such assets cannot be reliably determined, they are valued at cost less any impairment.If it is no longer appropriate to classify an investment as “held-to-maturity”, following a change of intention or of capacity to hold it until maturity, it must be reclassified as “available-for-sale” and measured at fair value. The difference between carrying value and fair value remains incorporated within shareholders’ equity until the asset is sold or otherwise disposed, at which time it must be taken to the income statement.Financial assets are removed from the balance sheet when the right to receive cash flows from the instrument is extinguished and the company has transferred all risks and rewards relative to the instrument.


Treasury sharesTreasury shares which are purchased back are deducted from shareholders’ equity on the basis of the purchase price. The purchase, sale, issue and cancellation of equity instruments in the company share capital do not have any impact on profit or loss in the income statement. Voting rights associated with treasury shares are cancelled, as is the right to receive dividends.

InventoriesInventories of raw and ancillary materials and consumables are recognized at the lower of purchase cost (including ancillary expenses), determined using the weighted average cost method, and estimated realizable value as determined from market trends at the end of the period.Finished and semi-finished products are valued at the weighted average purchase or production cost; any negative difference between cost and the corresponding market value at the end of the period is accrued to a specific product write-down reserve, which directly reduces the closing value of inventories.Products in work in progress are valued at the production cost relative to the year of manufacture, based on the stage of completion achieved.Construction contracts with durations of less than or more than one year are recorded according to progress (or percentage of completion) method, under which costs, income and margins are recognized on the basis of production progress, determined by the company using the cost to cost method. For all construction contracts in respect of which invoicing based on progress toward completion exceeds the costs incurred plus identified margins, the total of costs incurred and identified income, net of invoicing based on production progress, is shown in trade payables.Construction contracts with duration exceeding one year, for which estimates necessarily have a significant subjective component, are measured on the basis of estimated revenues and costs over the full life of the contract. The assumptions on which the measurements are based are updated periodically. Any effects on profit and loss are recorded in the financial year in which the updates are made.The valuation of construction contracts includes additional fees, compared with those agreed contractually, if their receipt is considered more than probable and the amount can be reliably estimated.If it is expected that completion of a construction contract will result in a loss at operating margin level, this is recognized in full in the financial year in which such loss becomes reasonably predictable. Where any future charges are forecast which could exceed the relative income, a provision for contractual risks is set up for construction contracts in progress and included under the item “Provisions”.Construction contracts denominated in currencies other than the functional currency (euro for the company) and exceeding the advances collected are influenced by the exchange rate at the end of the reporting period. However, company policy relative to exchange risk requires contracts whose incoming and outgoing cash flows are significantly affected by exchange rate fluctuations to be monitored to determine the best hedging policy, which may include use of derivative contracts or the management of foreign currency purchases in order to obtain a natural hedging effect.

Cash and cash equivalents Cash and cash equivalents are kept to meet short-term cash commitments; the latter are highly liquid and easily convertible to cash for a known amount. Their value is subject to an irrelevant risk of fluctuation, with the exception of those in foreign currencies, which are subject to exchange rate risk.

Employee termination indemnityEmployee severance indemnity (trattamento di fine rapporto, or TFR) falls within the scope of IAS 19 (Employee benefits), since it is similar to defined benefit plans. The amount recorded in the balance sheet is subject to actuarial valuation in the form of the projected unit credit method, which discounts the obligation at an interest rate reflecting the market yield on high quality corporate bonds of comparable maturity; the calculation concerns accrued TFR for service already rendered, and incorporates assumptions about future salary increases. Actuarial gains and losses are recognized in the statement of comprehensive income entirely in the period in which they occur. Actuarial gains and losses are classified among retained earnings and will not be reclassified in the income statement in subsequent periods.Following the changes made to the TFR provision rules by Law 296 of December 27, 2006, and subsequent decrees and regulations issued in the early months of 2007, TFR accrued from January 1, 2007 has assumed the nature of a defined contribution plan, whether the employee has opted for benefits to be held in a complementary pension fund or in the Treasury Fund managed by the Social Security agency INPS.

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ProvisionsThe company accrues a provision only when a present obligation exists for a future outflow of economic resources as a result of past events, and when it is probable that this outflow of economic resources will be required to settle the obligation, whose amount can be estimated with reasonable precision. The amount recognized is the best estimate of the expense required to completely extinguish the present obligation.Restructuring costs are recognized if the company has a detailed restructuring plan that it has communicated to the interested parties.For contracts whose execution involves inevitable costs that exceed the presumed economic benefits of the agreements, the present contractual obligation is recorded on the same basis as a standard provision.

Financial liabilitiesCompany financial liabilities include trade payables, other liabilities, bank debts and loans.

Trade payables and other liabilitiesTrade payables, including advance payments received from customers and payables relating to construction contracts, and other current and non-current liabilities are entered initially at nominal value, which represents fair value at the reference date. After initial recognition, financial liabilities are valued at amortized cost, using the original effective interest method.

LoansInitially, all loans are entered at the fair value of the amount received, net of transaction costs incurred to obtain the loan. After initial recognition, loans are valued at amortized cost using the effective interest rate method. Loans are classified within current liabilities unless the company has an unconditional right to defer their payment for at least 12 months after the date of the financial statements.Financial liabilities are removed from the balance sheet when they are extinguished and the company has transferred all risks and charges relative to the instrument.

Derivative financial instrumentsThe Company uses derivative financial instruments such as: forward sales/purchases of foreign currency, including synthetic ones with knock-out clause and accumulation of forward purchases/sales, interest rate swaps. All derivative financial instruments are initially recognized at fair value at the date of execution of the derivative contract and, subsequently, at fair value as at the reporting date. Derivatives are accounted for as financial assets when fair value is positive and as financial liabilities when fair value is negative. Derivative financial instruments are used only for hedging purposes, in order to reduce exchange and interest rate risks. In compliance with the provisions of IAS 39 as ratified by the European Commission, hedge accounting for derivative financial instruments may only be used when: i) at the start of the hedge, there is formal designation and documentation of the hedging

relationship; ii) the hedge is expected to be highly effective; iii) its effectiveness can be measured and the hedge is highly effective throughout the financial

reporting periods for which it was designated.When financial instruments qualify for hedge accounting, the following rules apply:– fair value hedge - If a derivative financial instrument is designated as a hedge against changes in

the fair value of a recognized asset or liability attributable to a particular risk that may affect profit or loss, the gain or loss arising from subsequent fair value accounting of the hedge is recognized in profit or loss.

– cash flow hedge - If a financial instrument is designated as a hedge against exposure to variations in the cash flows of a recognized asset or liability or a forecast transaction that is highly probable and could affect profit or loss, the effective portion of the gain or loss on the financial instrument is recognized in a shareholders’ equity reserve. The cumulative gain or loss is transferred from shareholders’ equity to the income statement in the same period in which the hedged transaction is recognized. The gain or loss associated with a hedge, or that part of the hedge which has become ineffective, is taken to the income statement immediately. If a hedge or a hedging relationship is closed, but the hedged transaction has not yet taken place, the gains or losses accrued up to that time in equity are reclassified to the income statement as soon as the transaction occurs. If the hedged transaction is no longer expected to occur, the unrealized gains or losses still recognized in equity are immediately taken to the income statement.

If hedge accounting cannot be used, the gains or losses arising from the fair value accounting of the derivative financial instrument are recognized immediately in the income statement.


RevenuesRevenues from construction contracts are recognized on the basis of the agreed consideration in proportion to the stage of completion of the work, determined using the cost to cost method. This is illustrated in greater detail in the section on inventories. Revenues from sales and services, excluding construction contracts, are recognized when the major risks and benefits associated with the ownership are effectively transferred or on completion of the service. Revenues for partially provided services are recognized for the amount of the consideration earned, provided it is possible to reliably determine the stage of completion and there is no significant uncertainty about the amount or existence of the income and relative costs; otherwise they are recognized up to the amount of the recoverable costs incurred.Revenues are booked net of returns, discounts, allowances and rebates, as well as of directly associated taxes on sales (value added tax).For all financial instruments valued at amortized cost and interest-bearing financial assets classified as available-for-sale, interest income is entered using the effective interest rate (EIR), which is the rate that discounts estimated future payments and receipts over the expected life of the financial instrument. Dividends are recognized the year in which they are resolved.

CostsCosts are recognized when they relate to goods and services sold or consumed in the financial year or by systematic allocation or when a useful future life can no longer be determined.Operating lease instalments are allocated to the income statement over the life of the contract. Personnel costs include the amount of earnings paid, accruals for pension funds and holidays due but not taken and social security costs, in application of the labour contracts and current legislation.Costs for the acquisition of new knowledge or discoveries; for research into alternative products or processes, new technologies or models; for design and construction of prototypes or, in any case, for other scientific research or technological development activities are normally treated as research costs and charged to the income statement the year they are incurred. Development costs incurred relative to a given project are recorded as intangible fixed assets when the company can demonstrate: i) the technical feasibility of completing the project to make it available for use or sale; ii) its intention to complete the asset; iii) its ability to use it or sell it; iv) the way in which the asset will generate future economic benefits; v) the existence of available resources to complete the asset; and vi) the ability to reliably evaluate the cost attributable to the asset during its development.Borrowing costs directly attributable to the purchase, construction or production of an asset that requires significant time before the asset is available for use (a qualifying asset pursuant to IAS 23 – Borrowing costs) are capitalized as part of the cost of such asset. All other financial charges are recognized as costs the year they are incurred.

Income taxesCurrent income tax payables are allocated at the expected amount payable to the tax authorities, in accordance with the laws and rates in force (27.5% for IRES – corporation tax and 3.9% for IRAP – regional tax) at the date of the financial statements. Current taxes relative to items not reported in the income statement are taken directly to equity or to the statement of comprehensive income, consistently with the accounting for the item to which they refer. Current tax assets and liabilities are only offset if there is an exercisable right to offset the amounts recorded in the accounts and the Group intends to settle or pay the net amounts or to realize the asset and settle the liability at the same time. Deferred tax assets are recorded for all timing differences to the extent that it is probable that taxable income will be achieved against which the deductible timing difference can be used. The same principle applies to the recording of deferred tax assets for any usable tax losses.The book value of deferred tax assets is reviewed at the date of the financial statements and, if necessary, reduced to the extent that it is no longer probable that sufficient taxable income will be generated to permit recovery of all or part of the asset. Such reductions are reversed in the event that the conditions for which they were made no longer apply. Deferred tax liabilities are calculated using the “liability method” on all temporary differences existing at the reporting date between the value of assets and liabilities for tax purposes and the value reported in the balance sheet, save for specific exceptions.Deferred tax assets and liabilities are calculated on the basis of the amounts expected to be recovered from tax authorities at the tax rates expected to be applicable in the year the asset is realized or the liability settled, based on the tax rates and regulations which are in force or substantially in force at the reporting date (27.5% for IRES corporate tax and 3.5% for IRAP regional tax).

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Accounting estimatesPreparation of the financial statements involves making accounting estimates based on complex and/or subjective opinions, estimates based on past experience and assumptions considered to be reasonable and realistic on the basis of information known at the time of the estimate. The use of accounting estimates influences the carrying value of assets and liabilities, and information on potential assets and liabilities at the date of the financial statements, as well as the amount of income and costs for the period. Actual results may differ due to the uncertainty of the assumptions and the conditions on which the estimates are based.The following accounting estimates used in drawing up the separate financial statements are considered to be critical because they involve significant recourse to subjective judgements, assumptions and estimates regarding matters that are by nature uncertain. Changes in the conditions on which opinions and assumptions are based can have a significant effect on the subsequent results.

Construction contractsThe valuation of construction contracts is based on estimates of income and costs over the entire life of projects with durations exceeding one year, whose measurement is necessarily influenced by a significant subjective component. The valuation of construction contracts includes additional fees, compared with those agreed contractually, if their receipt is considered probable and the amount can be reliably estimated.

Provisions The company makes accruals mainly in connection with employee benefits, legal disputes (stemming in part from the risks inherent to the production of technologically complex plants), and tax disputes. Estimates for these accruals are the result of a complex process involving the subjective opinions of Company management. In particular, the removal of estimated risks at the end of the previous year led to the freeing of provisions amounting to 16 million euro, whilst certain allocations, of which 6.5 million euro were used, were in fact not altogether sufficient to cover the costs actually incurred.

Write-downsTangible and intangible fixed assets are written down in value when events or changed circumstances indicate that the amount recognized in the balance sheet is not recoverable. The write-down is calculated by comparing the carrying value with the relative recoverable amount, represented by the greater of fair value net of disposal costs and value in use, which is calculated by discounting to present value the expected cash flows deriving from use of the asset, net of disposal costs. Expected cash flows are quantified in light of the information available when the estimate is made, on the basis of subjective opinions on the trend of future variables — such as prices, costs, growth in demand and production profiles — and discounted to present value using a rate that takes into account the risk inherent in the asset in question.

Deferred tax assetsDeferred tax assets are recognized on the basis of expected profit in future years. The estimation of future profits for the purpose of recognizing deferred tax depends on factors that can change over time and significantly impact the measurement of the deferred tax assets. Deferred tax assets deriving from temporary differences, deductible for IRAP purposes, in relation to the regulatory changes made to the tax rate, were calculated applying the rate of 3.5%, versus 3.9% adopted in the previous financial statements. The rate change entailed a decrease of 0.15 million euro in the opening balance of deferred tax assets.

Estimate of fair valueThe fair value of financial instruments listed in an active market is based on prices quoted on the balance sheet date.The fair value of financial instruments not traded in an active market is calculated using measurement techniques. Various techniques are used and the assumptions are based on market conditions at the date of the financial statements. Specifically:the fair value of interest rate swaps is calculated on the basis of the present value of future cash flows based on interest rate curves;the fair value of foreign currency hedging contracts is calculated on the basis of the present value of the differentials between contractual forward exchange rates and market forward exchange rates at the date of the financial statements. This latter value is calculated on the basis of the forward rates.

Management of business and financial risksThe company provides continuous management of business risks for all corporate functions by actively monitoring them, in accordance with risk management methodology and principles, in order to identify, reduce and eliminate risks and thereby safeguard shareholders’ rights.


Risks associated with the general state of the economyThe income statement, balance sheet and financial situation of the company is balanced and diversified by segments and product lines, but is influenced by the various macro-economic situations of the markets it serves around the world. In the financial year ended June 30, 2014, financial markets exhibited less volatility, which allowed for a positive performance of the real economy on a global basis. In the first half of 2014, the monetary policies implemented to promote growth and contain sovereign debt increases in major industrialized countries brought about a slight improvement in the economic situation, which could stabilize further at the end of 2014 thanks to the low cost of money in the EU and in the USA. Nonetheless, the bank credit market is still very closed, and negative changes are possible in some areas of the world: this could negatively affect the strategies and outlook of the Company, which, however, mostly manages multi-year work contracts and performs long-term production planning, thereby reducing short-term impacts deriving from market volatility.

Risk associated with market conditionsThis risk consists of the possibility that the market may no longer demand Danieli products, either for technological reasons or because of financial problems: we believe that the Company’s constant focus on research and development, with a view to offering solutions to customers that will boost their production efficiency, is one of our major strengths. Group Management continuously monitors these aspects so as to safeguard our leadership position. The company operates in the engineering and plant making sectors and is certified under ISO 140001 international standards; it follows a continuous process of identifying, managing and mitigating the price risks that might affect its performance, issuing subcontracting orders that set the prices of components deemed to be strategic due to their nature or long delivery times.

Risks associated with commodity prices, the cancellation of job orders and relationships with suppliersCompany results can be significantly influenced by fluctuations in commodity prices, insofar as they affect the cost of completing job orders. Management follows an ongoing process for the identification, management and mitigation of price risks.The company is active in several markets around the world; operating mainly to order, for each individual contract it sets up a policy for the management of subcontract price volatility, negotiating orders with deliveries exceeding six to eight months as soon as job orders are actioned.The management of each individual project is always structured to align the “expenditure curve” with the “receipts curve”, so as to limit financial imbalances in the event a job order is cancelled; in addition, for unusual projects in terms of type or geographical area, suitable insurance or financial coverage is obtained, to counteract the risk of customer insolvency.

Market risk associated with fluctuations in exchange rates and interest ratesMarket risk concerns the possibility that changes in interest rates and exchange rates between the euro and other currencies in which the company operates could negatively affect the value of assets or liabilities or the amount of cash flows.

Exchange rate riskThe company has always followed a policy of minimizing financial risks from foreign exchange rate fluctuations, in particular involving the US dollar.Company policy relative to exchange risk requires contracts whose incoming and outgoing cash flows are significantly affected by exchange rate fluctuations to be monitored, to determine the best hedging policy, which may include use of derivative contracts or the management of foreign currency purchases in order to obtain a natural hedging effect.Exposure to exchange rate risks can have the following impacts:– income risk from the different valuation of costs and income expressed in foreign currencies at

different periods of time;– transaction risk from the conversion of trade and/or financial receivables and payables expressed in

foreign currencies.Exposure to exchange rate risk is closely correlated with future cash flows from the gradual completion of contracts, taking account of contractual advances received, and with the payment of purchases in currencies other than the euro. The effects of such transactions are reflected both in revenues and in the valuation of current inventory, as well as in purchase cost. Planning, coordination and management of these activities, and valuation of exchange rate derivative instruments at fair value is carried out by the company financial management which monitors the correct correlation between derivative instruments and underlying cash flows, methodically basing these on market prices and ensuring proper accounting in compliance with international accounting standards.In the financial year ended June 30, 2014, modest use was made of derivative instruments to cover exchange risk.

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The reduction reflects the composition of construction contracts in progress and in the order backlog, comprised of contracts with US dollar proceeds for which a substantial portion of costs are expressed in currencies closely linked to the US dollar, as well as the routine receipt of contract advances in foreign currency.The net foreign exchange loss shown in the income statement for the period arose both from realized foreign exchange gains and losses and from the alignment to the year-end exchange rate of balance sheet items expressed in US dollars.Regarding all significant financial assets and liabilities in foreign currencies, net of items covered by forward exchange contracts, a sensitivity analysis has been conducted to determine the impact on the income statement and balance sheet in the event of a hypothetical 10% positive or negative change in the euro/USD exchange rate compared with exchange rates at June 30, 2014. This analysis did not consider the impact of exchange rate fluctuations on the measurement of construction contracts (as these are not financial assets according to IAS 32).An appreciation of the euro against the US dollar and other foreign currencies would have a negative impact on shareholders’ equity and on the income statement, before the tax impact, of approximately 12.6 million euro. Likewise, a weakening of the euro against the US dollar and other foreign currencies would have a positive impact on shareholders’ equity and the income statement, gross of the tax impact, of around 15.4 million euro.

Interest rate riskFor the company, the risk associated with interest rate fluctuations essentially concerns floating-rate, long-term loans for which no interest rate swaps have been negotiated. A sensitivity analysis has been conducted to measure the profit and loss impact which could arise from a hypothetical positive or negative variation of 10 or 15 bp in interest rates. This positive or negative change in interest rate would entail higher or lower financial income and charges before the tax effect as reported below:

-15BP -10BP +10BP +15BP

(Lower)/Higher financial income (148) (99) 99 148

Lower / (Higher) financial charges 136 90 (90) (136)

Total (13) (9) 9 13

Credit and country riskCredit risk is the company’ exposure to potential losses arising from the failure of counterparties to meet their obligations; this activity is monitored continuously by the Group’s financial and executive management teams as part of routine business operations.The company carries out most of its activities in foreign countries and continuously evaluates political, social and financial risks in the areas in which it does business.Exposure to counterparty credit risk is minimized by using insurance coverage to protect against the insolvency of customers or the countries in which they operate.Thus far there have been no significant cases of counterparty default, with the exception of the results of a complex pending dispute with a customer, which led to the removal of receivables amounting to approximately 16 million euro, which had been fully allocated in previous years, and credit risk is not significantly concentrated by area and/or customer, except for receivables from Ezz Steel that are covered by the provision for doubtful accounts.

Liquidity riskThe company enjoys financial equilibrium by funding its plant making activities essentially with advance payments from customers. Liquidity, bolstered by access to partially utilized credit lines, is managed prudently by investing most temporary cash surpluses in short-term instruments.

Management of capitalCapital includes ordinary shares, savings shares and equity attributable to the shareholders of the parent company.The primary objective of capital management is to obtain a strong credit rating and healthy financial ratios, in order to support operating activities and maximize shareholder value.The company manages and makes adjustments to its capital structure, based on changes in general economic conditions. To maintain and adapt the capital structure, the company can adjust dividend payments to shareholders, return capital to shareholders, issue new shares or buy and sell treasury shares. There were no changes to the objectives, policies and processes during the financial years ended June 30, 2014 and June 30, 2013, or capital transactions during the two periods, except for the distribution of dividends and purchases of treasury shares.The company monitors capital by following the indebtedness ratio, which compares the amount of net indebtedness with total capital plus net indebtedness. Net indebtedness includes interest on loans and borrowing and cash and cash equivalents; the company considers separately the net financial position with third parties and with Group companies, as the dynamics are considerably different.


(in millions of euro) June 30, 2014 June 30, 2013

Gross financial indebtedness 244.3 321.0

Financial assets (98.9) (98.7)

Net financial position with third parties 145.4 222.3

Net financial position with Group companies 164.9 219.9

Total net financial position 310.3 442.2

Shareholders’ equity 535.5 426.6

Capital and net financial position with third parties 680.9 648.9

Indebtedness ratio with third parties 21.4% 34.3%

Total capital and net indebtedness 845.8 868.8

Total indebtedness ratio 36.7% 50.9%

Risks associated with environmental policyThe company’s activities are subject to many national and international environmental protection laws and regulations.In the industry where the company operates, developments in environmental policy should be seen as an opportunity rather than a risk: with the enactment of more stringent rules and regulations (in addition to energy restraints in steel production), the company can explore new favourable markets for its internally developed technologies and for its innovative plants.

Risks associated with human resources, safety and managementAt June 30, 2014, the company had 2,492 employees.The human resource department has worked to manage normal turnover (with an improvement in education level and a decrease in average employee age), but also to optimize personnel for the company’s new international needs.Measures have been taken to reduce accident risks by implementing plant management policies in line with the best industrial practices, and by turning to the insurance market to make sure our units are well protected against third-party liability even in the event construction is halted. Action has also been taken to train and motivate executive managers to ensure efficiency and continuity of operations, in the context of a difficult market caused by general reduction in consumption.

Classes of financial instruments and hierarchical levels of valuation at fair valueThe following table shows the classes of financial instrument held by the company:

June 30, 2014


Note Loans and receivables

Financial assets



Hedging derivatives

Held-to- maturity

investments

Available-for-sale

financialassets

Total Fair value



Trade receivables 7 522,866 522,866 522,866

Other receivables 8 20,854 20,854 20,854

Other financial receivables 10 3,761 3,761 3,761

Total financial assets 661,881 0 0 0 0 661,881 661,881

June 30, 2014


Note Other liabilitiesat amortized cost

Financialliabilities at fair

value recognized through

profit or loss

Hedging derivatives

Total Fair value


Derivatives

Bank debts and other 13/19 276,380 2,715 279,095 279,095

Trade payables 16 1,215,378 1,215,378 1,215,378

Other payables 17 195,485 195,485 195,485


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June 30, 2013


Note Loans and receivables

Financial assets



Hedging derivatives

Held-to- maturity

investments

Available-for-sale

financialassets

Total Fair value



Trade receivables 7 638,363 638,363 638,363

Other receivables 8 21,310 21,310 21,310

Other financial receivables 10 5,980 5,980 5,980

Total financial assets 744,449 0 0 0 0 744,449 744,449

June 30, 2013


Note Other liabilitiesat amortized cost

Financialliabilities at fair

value recognized through

profit or loss

Hedging derivatives

Total Fair value


Bank debts and other 13/19 349,802 3,438 353,240 353,240

financial liabilities 16 1,387,346 1,387,346 1,387,346

Other payables 17 248,532 248,532 248,532


The only financial instruments measured by the company at fair value were derivative contracts, the essential aspects of which are summarized below. For the other financial instruments, the carrying value represents a reasonable approximation of fair value.

Cash flow hedges June 30, 2014 June 30, 2013


Currency Nominal value

Fair value in euro

Nominal value

Fair value in euro


Total IRS euro 80,000 (2,715) 80,000 (3,438)

All financial instruments measured at fair value can be classified into the three categories set out below:Level 1: market quoteLevel 2: measurement techniques (based on observable market data)Level 3: measurement techniques (not based on observable market data)

Derivatives on rates measured at fair value at June 30, 2014 are classified in Level 2. Furthermore, in 2013/2014, no transfers were made from Level 1 to Level 2/Level 3 or vice versa.


INFORMATION ON THE BALANCE SHEET

NON-CURRENT ASSETS

1) Property, plant and equipmentThe net value of 82,007 thousand euro at June 30, 2014 increased by 2,527 thousand euro compared with the previous year’s 79,480 thousand euro, due to the difference between capital expenditure in the period and depreciation charged, as shown below.


Land Buildings and light

constructions

Plant and

machinery

Industrial and

commercial equipment

Other Assetsunder

construction

Total

Historic cost 2,704 61,782 137,198 22,222 29,389 66 253,361


Balance at June 30, 2012 2,704 30,786 18,361 1,745 11,209 66 64,871

Movements

Increases 0 4,831 6,807 1,595 2,060 10,619 25,912

Transfers 0 (171) (333) (1) (6) (511)

Depreciation (2,232) (4,299) (734) (3,527) (10,792)

Historic cost 2,704 66,228 137,921 23,785 30,717 10,685 272,040

Accumulated depreciation (33,013) (117,385) (21,180) (20,982) 0 (192,560)

Balance at June 30, 2013 2,704 33,215 20,536 2,605 9,735 10,685 79,480

Movements

Increases 0 1,962 11,502 871 2,822 (2,490) 14,667

Transfers 0 (29) (13) 0 (57) (99)

Depreciation (1,719) (5,652) (1,145) (3,525) (12,041)

Historic cost 2,704 68,146 149,144 24,651 32,916 8,195 285,756

Accumulated depreciation (34,717) (122,771) (22,320) (23,941) 0 (203,749)

Balance at June 30, 2014 2,704 33,429 26,373 2,331 8,975 8,195 82,007

Depreciation charged to the income statement amounted to 12,041 thousand euro, calculated at rates considered to be representative of the estimated useful economic and technical lives of the assets. The main capital expenditure in the period related to new plants, models and electronic machines, included in the general plan for the technological updating of plants.No write-downs were charged to the value of property, plant and equipment in current and previous financial years.

2) Intangible assetsThe balance of 11,600 thousand euro at June 30, 2014 is greater than the previous year’s total of 10,914 thousand euro due mainly to the difference between capital expenditure in the period and amortization charged (see details).At June 30, 2014, there were no indications that the value of intangible assets was impaired, so in accordance with IAS 36 no impairment tests were conducted.

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Intellectualproperty rights

Concessions, licences

and trademarks

Total

Historic cost 12,900 40,012 52,912

Amortization (11,755) (32,040) (43,795)

Balance at June 30, 2012 1,145 7,972 9,117


Increases 1,093 5,470 6,563

Transfers and disposals 0 0 0

Amortization (988) (3,778) (4,766)

Historic cost 13,993 45,482 59,475

Accumulated amortization (12,743) (35,818) (48,561)

Balance at June 30, 2013 1,250 9,664 10,914


Increases 1,487 4,685 6,172

Transfers and disposals 0 (1) (1)

Amortization (1,187) (4,298) (5,485)

Historic cost 15,480 50,166 65,646

Accumulated amortization (13,930) (40,116) (54,046)

Balance at June 30, 2014 1,550 10,050 11,600

“Intellectual property rights” include the cost of purchasing and finalizing new patents for process solutions, machinery and equipment.“Concessions, licences and trademarks” consist mainly of the costs of acquiring licences and of developing management software and programs used in the company’s operations.The balance sheet does not include any intangible assets with indefinite useful lives.

3) Investments


Investments in subsidiaries 1,097,020 1,097,020

Total 1,097,020 1,097,020

The list of investments and changes in the various items is shown in attachment I.There were no changes from the balance at June 30, 2013.Considering the performance of Danieli & C. Officine Meccaniche S.p.A.’s indirect subsidiaries and the absence of specific indications that they may be impaired, given that at June 30, 2014 the carrying values of the investments in Industrielle Beteiligung SA and Danieli International SA were lower than the corresponding shares of net equity, the company’s directors have found it unnecessary to conduct any further analysis demonstrating the recoverability of the value of investments in subsidiaries. Comparison between the balance sheet value of investments and the corresponding proportion of shareholders’ equity showed a higher net value of directly and indirectly held investments, as shown in detail in attachment III.In accordance with art. 10 of Law 72 of March 19, 1983 and art. 2427 of the Civil Code, we report that no financial or monetary revaluation has ever been applied to the investments included in the balance sheet at June 30, 2014.Key data from the financial statements of Group companies at June 30, 2014 are provided in attachment II.


4) Deferred tax assets and liabilitiesTiming differences have been calculated between amounts recognized in accordance with IFRS and those reported for tax purposes.The amounts of deferred tax assets and deferred tax liabilities for which recovery is expected within or beyond the next financial year are as follows:


Deferred tax assets

- recoverable within the next financial year 28,337 27,726

- recoverable beyond the next financial year 13,755 15,057

Total 42,092 42,783

Deferred tax liabilities

- payable within the next financial year 533 662

- payable beyond the next financial year 0 0

Total 533 662

Net position 41,559 42,121

The composition of deferred tax assets/liabilities in the years ended June 30, 2013 and June 30, 2014 is reported in attachment IX, which also summarizes the effects on the income statement and shareholders’ equity along with any reclassifications.

5) Trade and other receivables These are mainly trade receivables due beyond the next financial year, amounting to 114,400 thousand euro at June 30, 2014 (78,796 thousand euro at June 30, 2013).


Trade receivables 43,565 33,993

Bills of exchange 2,672 10,033

Other receivables 68,163 34,770

Total 114,400 78,796

Trade receivables from customers and non-current bills of exchange related to terms of sale negotiated for the supply of complex plants with long start-up times as a result of their technical characteristics. “Other receivables” comprise mainly the receivables amounting to 74,704 thousand USD claimed from Al Ezz Group Holding and Ezz Flat Steel which relate to the management of certain significant work contracts currently being performed with the Al Ezz group, and for this reason these items are deemed to be trade receivables.Receivables are broken down below by maturity at the end of this and the previous year:

June 30, 2014


Trade receivables

Bills of exchange

Other receivables

Total

Financial year 2015-2016 43,565 418 17,470 61,453

Financial year 2016-2017 0 566 21,514 22,080

Financial year 2017-2018 0 543 16,460 17,003

Financial year 2018-2019 and beyond 0 1,145 12,719 13,864

Total 43,565 2,672 68,163 114,400

June 30, 2013


Trade receivables

Bills of exchange

Other receivables

Total

Financial year 2014-2015 0 6,587 0 6,587

Financial year 2015-2016 3,943 2,813 13,469 20,225

Financial year 2016-2017 30,050 633 7,100 37,783

Financial year 2017-2018 and beyond 0 0 14,201 14,201

Total 33,993 10,033 34,770 78,796

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CURRENT ASSETS

6) InventoriesThe balance of 363,170 thousand euro at June 30, 2014 was 127,741 thousand euro lower than the amount of 490,911 thousand euro at June 30, 2013.This change, due mainly to the valuation of construction contracts with durations exceeding one year, is directly correlated with the magnitude and degree of progress on existing construction contracts.



Work in progress 46,875 42,894

Construction contracts 174,630 257,214

Advance payments to Group companies 96,294 129,620

Advance payments to suppliers 17,812 33,641

Total 363,170 490,911

The total includes 174,630 thousand euro for construction contracts, as follows:


Construction contracts for third parties valued using the cost to cost method

288,378 489,647

- less invoicing on construction contracts in production for third parties

(160,048) (264,591)

Construction contracts with third parties 128,330 225,056

Construction contracts with Group companies valued by the cost to cost method

118,193 80,289

- less invoicing on construction contracts in progress with Group companies

(71,893) (48,131)

Construction contracts with Group companies 46,300 32,158

Total construction contracts 174,630 257,214

Construction contracts with a negative net value, resulting, for each individual construction contract, from the deduction of customer advances from the stage of completion, have been reclassified to “Trade payables” in the liabilities. The reconciliation between the change in inventory in the balance sheet and the impact on the income statement is shown below:

(in thousands of euro)June 30, 2014 June 30, 2013

Income statement impact

Assets side

Work in progress 46,875 42,894 3,981

Construction contracts 406,571 569,936 ( 163,365)

- l ess invoicing on construction contracts in progress

231,941 312,722

Liabilities side

Construction contracts 5,082,911 5,121,058 ( 38,147)

- less invoicing on construction contracts in progress

5,679,932 5,799,982

Total change in inventories in the income statement

(197,531)


7) Trade receivablesThe balance of 522,865 thousand euro at June 30, 2014 was 115,498 thousand euro lower than the amount of 638,363 thousand euro at June 30, 2013.Trade receivables are shown net of the provision for doubtful accounts in the amount of 12,589 thousand euro (27,800 thousand euro at June 30, 2013).


Third party trade receivables:

Customers 435,015 523,579

Bills receivable (accepted and unaccepted) 3,658 36,417

Provision for doubtful accounts (12,589) (27,800)

Total third party trade receivables 426,084 532,196

Trade receivables from Group companies 96,781 106,167

Total trade receivables 522,865 638,363

Trade receivables from Group companies are detailed in attachment X. The decrease in trade receivables correlates with the invoicing of progress on construction contracts and was also influenced by changes in payment terms agreed with customers.No receivables were factored without recourse in the financial year.Movements in the provisions for doubtful accounts were as follows:



Accruals for the year 2,750 0

Utilizations for the year (17,961) (5,030)


Regarding the provision for doubtful accounts, the risk of loss on receivables is often a combination of technical risk (arising from design changes and/or delays in execution), customer risk and country risk. Credit risk and the appropriateness of this provision should therefore be viewed together with the provision for contractual risks described in note 15. During the year, the provision for doubtful accounts was used, inter alia, to close a major position that had long been doubtful and that entailed the collection of a portion, the removal of a part of the receivable for a total amount of approximately 16 million euro, and the rescheduling of the residual amount.

8) Other receivables These amounted to 20,854 thousand euro at June 30, 2014, with a decrease of 456 thousand euro compared with the previous year’s balance of 21,310 thousand euro, and they comprise:


Receivables from SACE and prepaid premiums 580 522

Other prepayments 678 922

Receivables from foreign tax authorities 250 86

Expense advances to employees, sites and consultants 706 1,121

Due from social security institutions 767 845

Indirect tax receivables 17,134 17,010

Other current receivables 739 804

Total 20,854 21,310

9) Current tax assetsThis item is made up as follows:


Direct tax receivables 4,907 2,899

Other tax receivables 773 773

Foreign tax receivables 3,546 3,984

Total 9,226 7,656

Direct tax receivables at June 30, 2014 include the excess IRES and IRAP advance payments during the year, net of the provision for current taxes, and receivables for taxes paid abroad, recoverable in accordance with relevant Italian and/or foreign laws and regulations.

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10) Other financial receivables


Financial receivables from Group companies 3,566 5,693

Other financial receivables 195 287

Total 3,761 5,980

These amount to 3,761 thousand euro at June 30, 2014, a decrease of 2,219 thousand euro compared with the previous year’s balance of 5,980 thousand euro; 3,566 thousand euro concerns intra-group financing operations through an intercompany current account governed at market rates and conditions, while 195 thousand euro consists of accrued income and prepayments on financial transactions. Loans to Group companies are detailed in attachment X.

11) Cash and cash equivalentsThe balance of 98,687 thousand euro at June 30, 2014 had increased by 333 thousand euro compared with the amount at June 30, 2013 (98,354 thousand euro) and included cash in hand of 1,053 thousand euro and short-term bank deposits of 97,634 thousand euro. The Company’s cash remained stable, allowing it to manage on its own a possible extraordinary expenditure connected with the start-up of innovative plants.See the statement of cash flows for further details.

SHAREHOLDERS’ EQUITY

12) Shareholders’ equityShareholders’ equity at June 30, 2014 amounted to 535,452 thousand euro, an increase of 108,827 thousand euro compared with 426,625 thousand euro at June 30, 2013.Dividends paid in the financial years ended June 30, 2014 and June 30, 2013, relative to the years ended June 30, 2013 and June 30, 2012, in accordance with art. 7 of the Articles of Association, were as follows:

Dividends paid during the financial years ended

June 30, 2014 June 30, 2013

(in thousands of euro) euro per share euro per share

Ordinary shares 0.3000 11,376 0.3300 12,543

Savings shares 0.3207 11,699 0.3507 12,459

Total dividends paid 23,075 25,002

Changes in the various components are summarized in the statement of changes in shareholders’ equity.

12.1) Share CapitalShare capital is fully paid in and amounted to 81,305 thousand euro at June 30, 2014 (81,304,566 shares with a par value of 1 euro each, comprised of 40,879,533 ordinary shares and 40,425,033 savings shares).

12.2) Treasury sharesAt June 30, 2014, the portfolio of treasury shares held amounted to 82,935 thousand euro (unchanged from June 30, 2013) and was made up of 2,961,213 ordinary shares and 3,945,363 savings shares, with a par value of 1 euro each and a total par value of 6,907 thousand euro (8.49% of the share capital); Treasury share acquisition costs and sale revenues are recognized as changes in shareholders’ equity.

12.3) Share premium accountAt June 30, 2014 this amounts to 22,523 thousand euro (unchanged from June 30, 2013) and concerns the share premiums paid on the exercise of warrants associated with the conversion of the bonds that matured in November 1999 and on July 1st, 2003 and the gains/losses realised from the sale of treasury shares.


12.4) Cash flow reserveThis reserve, set up in accordance with IAS 32/39 and amounting at June 30, 2014 to a negative 1,968 thousand euro (negative 2,493 thousand euro at June 30, 2013), covers changes in the fair value measurement of the effective portion of derivative instruments designated as cash flow hedges.

12.5) Other reservesThese have a combined balance of 385,002 thousand euro and increased by 48,334 thousand euro with respect to the previous year’s balance of 336,668 thousand euro. They are comprised as follows:


Legal reserve 18,576 18,576

Other reserves

- extraordinary reserves 350,399 301,915

- gains (losses) from discounting per IAS 19 (2,643) (2,493)

- revaluation reserves 7,634 7,634

- merger surplus 11,036 11,036

Total other reserves 385,002 336,668

Attachment IV presents the situation of reserves and provisions, broken down on the basis of their tax treatment in the event of distribution, and indicates their origin, possible use, eligibility for distribution, and utilization in previous years.

Legal reserveIt amounts to 18,576 thousand euro as at June 30, 2014, unchanged since June 30, 2013: its balance exceeds the requirement stated in art. 2430 of the Civil Code, so further accruals are no longer mandatory.

Other reservesThe remaining reserves consist of:

Extraordinary reserves The extraordinary reserves amount to 350,399 thousand euro, compared with 301,915 thousand euro at June 30, 2013. The increase by 48,484 thousand euro is due to the allocation, per the shareholders’ resolution of October 28, 2013, of the undistributed share of the profit for 2013/2014 (48,482 thousand euro) and the recognition of unclaimed dividends (2 thousand euro).

Gains (losses) from IAS 19They comprise the recognition in the comprehensive income of the actuarial gains and losses deriving from application of the new version of IAS 19.

Revaluation reservesTotalling 7,634 thousand euro (unchanged since June 30, 2013), these represent revaluations of assets carried out in accordance with the law.

Merger surplusThis amounts to 11,036 thousand euro at June 30, 2014, unchanged since June 30, 2013.

12.6) Net profitThe Group’s share of net profit came to 131,525 thousand euro at June 30, 2014 (71,557 thousand euro the previous year).

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NON-CURRENT LIABILITIES

13) Loans Loans, which amounted to 41,611 thousand euro at June 30, 2014 (56,499 thousand euro a year earlier, with a decrease of 14,888 thousand euro), consist of the non-current portions of loans arranged with banks and other institutional lenders. A detailed list of debts and interest rates and their breakdown by current/non-current portion is provided in attachment V. There continue to be contractual covenants on certain loans. Specifically, regarding the loan of 80,000 thousand euro granted to the company by the European Investment Bank, for the entire duration of the loan: (a) net liquid assets on a consolidated basis must not be less than 250,000 thousand euro or five times the outstanding capital payable of the loan, whichever is lower; (b) the ratio between consolidated gross operating margin and consolidated financial charges must be greater than 5:1; (c) the ratio of consolidated shareholders’ equity to consolidated financial indebtedness, excluding financial payables for advances received, must be more than 1.75; and (d) the ratio between consolidated financial indebtedness, excluding financial payables for advances received, and the consolidated gross operating margin, must be no more than 2:1. All covenants in effect at June 30, 2014 were fulfilled.The maturity dates of the non-current portions of loans were as follows:


Financial year 2014-2015 n.a 14,888

Financial year 2015-2016 14,944 14,944

Financial year 2016-2017 13,333 13,333

Financial year 2017-2018 13,334 13,334

Total 41,611 56,499

Details of the company’s net financial position at June 30, 2014 are shown below, net of financial payables and receivables with Group companies (net payables of 164,891 thousand euro and net payables of 219,913 thousand euro at June 30, 2013):

(in thousands of euro) June 30, 2014 June 30, 2013 Change


- securities and other financial receivables 195 287 (92)

- cash at banks 98,687 98,354 333

Total current assets 98,882 98,641 241



Total non-current liabilities 41,611 56,499 (14,888)



Total current liabilities 202,699 264,507 (61,808)

Non-current net financial position (41,611) (56,499) 14,888

Current net financial position (103,817) (165,866) 62,049

Negative net financial position (145,428) (222,365) 76,937

Gross financial indebtedness (244,310) (321,006) 76,696

The net financial position has been calculated by including, within “Bank debts and other financial liabilities”, customer advance payments on job orders not yet in production, amounting to 133,672 thousand euro at June 30, 2014 and 193,372 thousand euro at June 30, 2013. These amounts are included in other current liabilities in the balance sheet.The remaining advances from customers and Group companies, amounting to 153,834 thousand euro at June 30, 2014 and 299,170 thousand euro at June 30, 2013, are instead included in working capital as they are used to finance jobs in progress. These amounts are included among trade payables in the balance sheet.Lastly, the calculation of the net financial position includes the negative fair value of derivative financial contracts, amounting to 2,715 thousand euro (negative by 3,438 thousand euro at June 30, 2013).Gross financial indebtedness represents total payables to banks and other lenders.


14) Employee termination indemnityThe balance of 20,313 thousand euro is 458 thousand euro lower than the value of 20,771 thousand euro at June 30, 2013 and is fully adequate to satisfy contractual and legal obligations. Movements were as follows:



Cost relating to employee compensation 500 725

Benefits paid (1,164) (1,019)

Actuarial gains / (losses) recognized in the statement of comprehensive income

206 2,176


The cost relating to employee compensation with defined benefits was accounted for in the income statement among financial expenses, whilst payments to complementary pension funds were accounted for among personnel costs, as indicated in Note 23).

The principal actuarial assumptions used were the following:

June 30, 2014 June 30, 2013

Discount rate 2.29% 2.45%

Rate of increase in management salaries 1.00% 1.00%

Rate of increase in other wages and salaries 1.00% 1.00%

Turnover rate 5.00% 5.00%

15) Provisions

Totalling 119,406 thousand euro at June 30, 2014, this item had decreased by a total amount of 14,956 thousand euro with respect to the previous year’s balance of 134,362 thousand euro, as a result of the following movements:



Accruals 7,500 0

Utilizations (6,500) 0

Release of unused provisions (15,956) (24,855)


Provisions are set up to cover costs and expenses that may arise from situations which, at June 30, 2014, were still of uncertain outcome. They include a provision against probable future costs and liabilities relating to pending legal actions, tax disputes, and technical disputes with certain customers. The provisions include:– approximately 86 million euro to cover contractual risks in respect of likely expenses and technical

disputes associated with the different composition and nature of construction contracts at the end of the period;

– approximately 33 million euro for pending disputes.

Estimates for these accruals, in particular those tied to the construction of plants, are the result of a complex process involving the subjective opinions of Company management, which may affect the overall results even to an appreciable extent. In particular, the removal of estimated risks at the end of the previous year led to the freeing of provisions amounting to 15,956 thousand euro, whilst certain allocations, of which 6,500 thousand euro were used, were in fact not altogether sufficient to cover the costs actually incurred.

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CURRENT LIABILITIES

16) Trade payablesThis item, totalling 1,215,378 thousand euro at June 30, 2014, decreased by 171,968 thousand euro from 1,387,346 thousand euro at June 30, 2013, comprises:


Customer advance payments 107,263 257,869

Group company advance payments 46,571 41,301

Payables for construction contracts 591,970 674,758

Payables to Group companies for construction contracts 5,051 4,166

Due to suppliers 229,712 229,584

Trade payables to Group companies 234,809 179,668

Total 1,215,378 1,387,346

“Customer advance payments” and “Group company advance payments” represent amounts paid by customers inside and outside the Group prior to the start of work under construction contracts. These are reabsorbed in proportion to the invoices issued as work progresses. The change in this item relates to the volume of orders acquired and construction contracts in progress.“Payables for construction contracts” include the negative net value resulting, for each individual contract, from the sum between work progress and amounts invoiced in advance.Payables due to suppliers changed by 128 thousand euro. This item includes payables in foreign currencies totalling 48.2 million euro (of which 60 million USD, equivalent to 44 million euro) at the financial year-end exchange rate. At the end of the previous years, payables in foreign currencies totalled 26 million euro (of which 27.7 million USD, equivalent to 21.2 million euro) at the exchange rate prevalent at the end of the previous financial year.There are no significant concentrations of payables on one or a small number of suppliers.Advance payments received and trade payables with Group companies are detailed in attachment X.

17) Other current liabilitiesThese amounted to 195,488 thousand euro at June 30, 2014 (248,532 thousand euro at the end of the previous year) and they are mainly comprised of:


Due to employees 26,103 26,436

Customer guarantee deposits 155,920 211,111

Due to social security institutions 6,361 6,539

Due to supplementary pension funds 582 566

Due to company boards and committees 207 210

Other taxes due 5,391 3,451

Other payables 924 219

Total 195,488 248,532

Amounts due to employees consist mainly of the accrual for holidays earned but not taken at the end of the year.“Customer guarantee deposits” are amounts received from customers to ensure the performance of construction contracts, of which 133,672 thousand euro relating to contracts not yet in force, included in the net financial position (193,372 thousand euro at June 30, 2013).“Other taxes due” include 5,391 thousand euro in withholding tax due.

18) Current tax liabilitiesAt June 30, 2014 the net balance of current tax liabilities, which includes accruals for taxes on estimated profits and advance payments made during the year, shows a net receivable for the company and is therefore recognized under current assets. Other current taxes were accounted for among liabilities and amounted to 22 thousand euro (27 thousand euro the previous year).


19) Bank debts and other financial liabilitiesThese referred to the current portion of non-current borrowing and loans, bank current account overdrafts and intra-group financing operations, at market rates and conditions, through an intercompany current account, and to existing derivative financial instruments. At June 30, 2014 they amounted to 237,484 thousand euro, compared with 296,741 thousand euro the previous year.


Current portion of long-term loans 64,888 66,151

Financial payables to Group companies 168,457 225,606

Derivative financial instruments – Interest on IRS 526 685

Derivative financial instruments – Fair value of IRS 2,715 3,438

Accruals on financial payables 898 861

Total 237,484 296,741

Financial payables with Group companies are detailed in attachment X.The characteristics and fair value of derivative financial instruments at June 30, 2014 and June 30, 2013 are summarized below:

Cash flow hedges June 30, 2014 June 30, 2013

(in thousands of euro)Currency

Nominal value

Fair value in euro

Nominal value

Fair value in euro


Total IRS euro 80,000 (2,715) 80,000 (3,438)

The interest rate swaps contracted by the company meet the hedge requirements of IAS 39, so changes in fair value are booked directly to shareholders’ equity. Such instruments, taken out on January 18, 2011 and maturing in January 2018, entail payment of a fixed rate of 2.61% p.a. and the collection of a variable rate (six-month Euribor), amounting to 0.31% at June 30, 2014.

20) Guarantees and commitmentsThese show commitments and guarantees given by the company to third parties and were made up as follows:


Bank guarantees and liens to third parties 767,125 878,166

Bank guarantees and liens to third parties given on behalf of Group companies

281,347 311,216

Total 1,048,472 1,189,382

Guarantees given by banks to third parties on the company’s behalf consist mainly of performance bonds for various construction contracts. Items in foreign currencies are entered at the year-end exchange rates.At June 30, 2014, guarantees from third parties in the company’s favour amounted to 105,989 thousand euro.

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INFORMATION ON THE INCOME STATEMENT

21) RevenuesRevenues are broken down as follows:

June 30, 2014 June 30, 2013


Of which from related parties


Revenues from sales 1,196,748 76,889 1,164,946 60,364

Revenues from services 25,225 24,959

Change in finished products and construction contracts

(197,531) 76,151 (252,637) 61,933

Other operating income 33,407 18,332 46,648 15,448

Total revenues 1,057,849 171,372 983,916 137,745

The different composition between revenues from sales and changes in construction contracts depends on how much progress has been made on contracts in course and to what extent they have been completed. Revenues from Group companies are detailed in attachment X.Other operating income includes 15,956 thousand euro for the release of unused provisions (24,855 thousand euro the previous year).

22) Purchase costs of raw materials and consumables

June 30, 2014 June 30, 2013




Raw materials and semi-finished products 37,818 41,325

Finished products and goods 566,217 257,712 460,764 186,327

Other purchases 308 314

Total purchase costs of raw materials and consumables 604,344 257,712 502,403 186,327

Purchase costs of raw materials and consumables, net of the respective changes in inventories, are directly correlated with the composition and type of construction contracts included under “Revenues”.

23) Personnel costsPersonnel costs are broken down as follows:

June 30, 2014 June 30, 2013


Staff and managers

Blue collars

Staff and managers

Blue collars

Wages and salaries 88,496 19,450 89,649 19,142

Social security 24,387 6,566 25,217 6,692

Complementary pension fund accruals 5,596 1,400 6,624 1,281

Other costs 2,097 1,912

Total 120,576 27,416 123,402 27,115

Total personnel costs 147,992 150,517

The average number of personnel during the last two financial years was as follows:

June 30, 2014 June 30, 2013

Managers 79 73

Staff 1,764 1,805

Blue collars 585 612

Apprentices 65 0

Total 2,493 2,490

Changes in “Personnel costs” relate to the size of the organization and the natural trend in earnings.


24) Other operating costsThese amounted to 280,260 thousand euro for the year ended June 30, 2014 (298,536 thousand euro at June 30, 2013) and consisted of:

June 30, 2014 June 30, 2013




Cost of services 250,449 60,263 279,388 60,432

Rentals and leasing 1,924 163 1,729 162

Accruals 7,500 0

Other operating costs 20,387 314 17,419 291

Total other operating costs 280,260 60,740 298,536 60,885

24.1) Cost of servicesCost of services included in “Other operating costs” amounted to 250,449 thousand euro for the year ended June 30, 2014 and 279,388 thousand the previous year, thus decreasing by 28,939 thousand euro; they are made up as follows:

June 30, 2014 June 30, 2013




Outsourcing 148,498 60,263 176,296 60,432

Despatch, transport and 30,727 24,311

Motive power 3,563 3,512

Other utilities 1,081 1,305

Maintenance and repairs 5,771 5,431

Travel and living expenses 24,530 29,327

Third party commissions 11,200 15,712

Insurance premiums and membership dues 2,761 3,521

Legal and financial consultancy 3,616 2,902

Cleaning and security 1,013 1,027

Bank charges 6,640 5,007

Telecommunication costs 5,115 5,073

Other services 5,934 5,964

Total cost of services 250,449 60,263 279,388 60,432

Outsourcing to Group companies is detailed in attachment X.

24.2) Cost for use of third party assetsAt 1,924 thousand euro for the year ended June 30, 2014 (including 163 thousand euro with related parties), this item increased by 195 thousand euro compared with the previous year’s 1,729 thousand euro (including 162 thousand euro with related parties) and refers mainly to property rentals and the leasing of electronic and manufacturing equipment.

24.3) AccrualsAt June 30, 2014, these amounted to 7,500 thousand euro to make provisions adequate to cover reasonably foreseeable liabilities. At June 30, 2013, there were no accruals to the risk provision.

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24.4) Other operating costsThese amounted to 20,390 thousand euro for the year ended June 30, 2014, an increase of 2,971 thousand euro compared with 17,419 thousand euro at June 30, 2013. They were made up as follows:

June 30, 2014 June 30, 2013




Capital losses 12 116

Sundry taxes 995 1,056

Charitable contributions and donations 687 641

Other operating costs 4,665 314 4,035 291

Extraordinary expense 14,031 11,571

Total other operating costs 20,390 314 17,419 291

The amount of extraordinary expenses included penalties incurred for the late start-up of some construction contracts in progress, net of the utilizations of provisions allocated in view of the potential risk.

25) Depreciation, amortization and write-downs In detail:


Depreciation of property, plant, and equipment 12,041 10,792

Amortization of intangible assets 5,485 4,766

Total depreciation and amortization 17,526 15,558

Write-down of receivables 2,750 0

Write-down of equity investments 0 291

Total write-downs 2,750 291

Total depreciation, amortization and write-downs 20,276 15,849

26) Financial income

This amounted to 143,783 thousand euro for the year ended June 30, 2014 and consisted mainly of:

June 30, 2014 June 30, 2013




Dividends from subsidiaries 140,296 140,295 54,487 54,487

Interest income on bank and other loans 341 127 578 77

Interest income from customers 2,719 4,501

Other financial income 427 2,241

Total financial income 143,783 140,422 61,807 54,564

Dividends from subsidiaries represent the company’s share of the dividends paid by Danieli International SA and Industrielle Beteiligung SA, collected by the company during the year.


27) Financial chargesThese consisted of:

June 30, 2014 June 30, 2013




Interest on IRS 1,308 1,423

Interest on loans and debts with banks and other lenders

4,374 2,431 4,670 2,012

Interest on discounting operations 1,863 3,630

Financial charges on the employee severance indemnity

500

725

Other financial charges 360 10

Total financial charges 8,405 2,431 10,458 2,012

Interest on discounting operations arises from the management of the bills portfolio and is directly correlated with the trend in interest from customers and interest subsidies included under financial income. Financial charges on the employee severance indemnity relate to the recognition as a result of the application of the amendments to IAS 19 - Employee Benefits.

28) Gains (losses) on foreign exchange transactions


Exchange gains 6,771 16,475

Exchange losses (10,982) (8,660)

Total exchange gains (losses) (4,211) 7,815

This item reflects both exchange differences realized in the period and the effect of aligning amounts in foreign currencies to financial year-end exchange rates.

29) Income taxesThese amounted to 4,619 thousand euro and were broken down as follows:


Current taxes 4,200 7,751

IRES credit for IRAP deduction on cost of labour for previous years

0 ( 4,210)

Deferred tax liabilities (237) (1,634)

Deferred tax assets 656 2,312

Total 4,619 4,219

They include the estimate of deferred tax assets and liabilities commensurate with the results of the year, net of the positive component deriving from the tax credit for the deduction of the IRAP referred to cost of labour from the IRES. The IRES (corporate income tax) and IRAP (regional tax) rates applied by the company to estimated taxable income were 27.5% and 3.9% respectively. To calculate deferred taxes in relation to the IRAP rate, the value of 3.5% was used in accordance with recent regulatory changes. The 0.40% reduction entailed the decrease in deferred tax assets and deferred tax liabilities by a net amount of 154 thousand euro. There are no other deferred tax assets to be recognized in the financial statements relating to timing differences between amounts entered for IFRS purposes and those valid for tax purposes or other prior-year losses.The reconciliation between the theoretical tax charge and that actually shown in the income statement, without considering the positive effects of income taxes from previous years, is provided in attachment VIII.

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31) Related party transactionsTransactions carried out by Danieli & C. Officine Meccaniche S.p.A. with related parties basically concerned the supply of services, the trading of goods, and the contracting and use of financial resources with other companies in which shares are held directly or indirectly; they form part of standard operations and are governed by normal market conditions, equivalent to those that would apply between two independent parties.

Disclosures pursuant to art. 114 of Legislative Decree 58/1998Pursuant to Legislative Decree 58/1998 and CONSOB letter 6064293 of July 28, 2006, the disclosures concerning related party transactions, significant events, non-recurring and/or atypical and unusual transactions and the net financial position are presented in the corresponding sections of these notes.

Events occurring after the balance sheet dateOperations have proceeded since June 30, 2014 with no events of significance occurring.There are no other significant unknown factors for the year ahead, barring unforeseeable events beyond our control.


ATTACHMENT No. I

SCHEDULE OF EQUITY INVESTMENTS


Balance at

30/06/2012

Purchases and

subscriptions

Salesor

decreases

Write-downs

Direct subsidiaries

Danieli International S.A. - Luxembourg (LUX) 667,705

Industrielle Beteiligung S.A. - Luxembourg (LUX) 429,315

Mediterranean Iron Industry Co. (LBY) 290 (290)

1,097,310 0 0 (290)

Grand Total 1,097,310 0 0 (290)

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Balance at

30/06/2013

Purchases and

subscriptions

Salesor

decreases

Write-downs

Balance at30/06/2014

No. ofShares

shares held

%

667,705 0 667,705 10,080,173 83.83

429,315 429,315 11,833,200 90.00

290 0

1,097,020 0 0 0 1,097,020

1,097,020 0 0 0 1,097,020


ATTACHMENT No. II

SCHEDULE SUMMARISING THE PRINCIPAL ITEMS IN THE APPROVED FINANCIAL STATEMENTS OF SUBSIDIARY AND ASSOCIATED COMPANIES

BALANCE SHEET

(in thousands)

OriginalCurrency

Last appr. Fin. Stat.

CONSOLIDATED COMPANIES

ABS Centre Métallurgique Sarl - Metz (FRA) EUR June 30, 2014

ABS Deutschland GmbH - Mülheim (DEU) EUR June 30, 2014

ABS Scandinavia AB - Örebro (SWE) SEK June 30, 2014

ABS Sisak Doo - Sisak (HRV) * EUR June 30, 2014

Acciaierie Bertoli Safau S.p.A. - Pozzuolo (UD) EUR June 30, 2014

Birstateknik AB - Sundsvall (SWE) SEK June 30, 2014

Cecilia Danieli - Asili per l’Infanzia Srl - Buttrio (UD) EUR June 30, 2014

Centro Maskin AB - Göteborg (SWE) SEK June 30, 2014

Danflat S.p.A. - Buttrio (UD) EUR June 30, 2014

Danieli Anatolia Makine San - Istanbul (TUR) TRY June 30, 2014

Danieli Automation S.p.A. - Buttrio (UD) EUR June 30, 2014

Danieli Automation Co. Ltd. - Rayong (THA) * EUR June 30, 2014

Danieli Banking Corporation S.A. - Luxembourg (LUX) EUR June 30, 2014

Danieli Canada Inc. - Toronto (CAD) CAN June 30, 2014

Danieli Centro Combustion India Pvt. Ltd. - Pune (IND) IRS June 30, 2014

Danieli Centro Combustion S.p.A. - Cinisello Balsamo (MI) EUR June 30, 2014

Danieli Centro Cranes S.p.A. - Rezzato (BS) EUR June 30, 2014

Danieli Centro Met Swiss GmbH - Rheinfelden (CHE) CHF June 30, 2014

Danieli Changshu Metall. Equipment & Services (Changshu) Co Ltd. Changshu (CHN)

*CNY June 30, 2014

Danieli Changsu Trading Co. Ltd - Changshu (CHN) * CNY June 30, 2014

Danieli Co. Ltd. - Rayong (THA) * EUR June 30, 2014

Danieli Construction International S.p.A. - Buttrio (UD) EUR June 30, 2014

Danieli Corporation - Wilmington (USA) USD June 30, 2014

Danieli Czech Engineering A.S. - Prague (CZE) CZK June 30, 2014

Danieli Do Brasil SA - Diadema (BRA) BRL June 30, 2014

Danieli Engineering & Services GmbH - Völkermarkt (AUT) EUR June 30, 2014

Danieli Engineering Japan Co. Ltd. - Yokohama (JPN) JPY June 30, 2014

Danieli Engineering Rom Srl - Cluj Napoca (ROU) RON June 30, 2014

Danieli Heavy Machinery Engineering L.L.C.- Dnepropetrovsk (UKR) UAH June 30, 2014

Danieli Hellas SA - Athens (GRC) * EUR June 30, 2014

Danieli Henschel GmbH - Kassel (DEU) * EUR June 30, 2014

Danieli Henschel SAS - Chambery (FRA) * EUR June 30, 2014

Danieli Henschel Service OOO - Moscow (RUS) * RUB June 30, 2014

Danieli Hitech Gmbh - Mülheim (DEU) EUR June 30, 2014

Danieli Holdings Inc. - Wilmington (USA) USD June 30, 2014

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Non-current assets

Current assets



Current liabilities

6,972 4,297 3,276 7,500 493

0 203 87 0 116

27 599 237 0 389

41,343 24,232 26,201 20,024 19,350

316,862 555,911 487,159 101,234 284,380

0 116 116 0 0

1,755 243 958 478 562

0 4,173 4,159 0 14

0 35,962 35,939 0 23

17 359 267 0 109

179,746 148,069 150,790 27,414 149,611

28 7,936 1,474 0 6,490

3,186 967,817 968,680 1,370 953

12 640 636 0 16

12,761 520,123 95,543 17,741 419,600

9,958 92,704 22,642 11,601 68,419

8,863 36,118 12,383 609 31,989

21 2,736 1,929 63 765

790,198 3,008,958 879,996 138,256 2,780,904

0 86,502 14,410 0 72,092

77,839 593,781 106,914 13,487 551,219

13,624 33,849 31,256 108 16,109

5,127 368,394 17,070 2,559 353,892

9,146 530,578 303,003 47,273 189,448

939 12,538 2,613 0 10,864

6,302 48,506 26,321 2,902 25,585

51,451 188,104 6,552 161,016 71,987

648 21,632 12,183 0 10,097

39,204 132,429 (46,721) 74,859 143,495

0 361 135 0 226

91 9,618 965 382 8,362

434 15,201 7,380 667 7,588

179 48,010 5,051 0 43,138

27,499 2,623 29,997 0 125

64,145 2,782 54,696 0 12,231


BALANCE SHEET

(in thousands)

OriginalCurrency

Last appr. Fin. Stat.


Danieli India Ltd, Kolkata (IND) * IRS June 30, 2014

Danieli International S.A. - Luxembourg (LUX) EUR June 30, 2014

Danieli Metallurgical Equipm.(Beijing) Co Ltd. - Beijing (CHN) * CNY June 30, 2014

Danieli Middle East for Eng. Services (LMTD) - Cairo (EGY) * EGP June 30, 2014

Danieli Malaysia Sdn Bhd - Kuala Lumpur (MYS) * MYR June 30, 2014

Danieli Procome Iberica S.A. - Sondica (ESP) EUR June 30, 2014

Danieli Property Holdings LLC. - Wilmington (USA) USD June 30, 2014

Danieli Riverside Products Inc. Bettendorf (USA) USD June 30, 2014

Danieli Russia Engineering LLC - Moscow (RUS) * RUB June 30, 2014

Danieli Special Cranes Srl - Gradisca d’Is. (GO) EUR June 30, 2014

Danieli Technology Inc. - Wilmington (USA) USD June 30, 2014

Danieli Uk Holding Ltd. - Sheffield (GBR) GBP June 30, 2014

Danieli Volga LLC - Dzerdzhinsk (RUS) * RUB June 30, 2014

DWU Engineering Polska - Wroclaw (POL) PLZ June 30, 2014

Elsid Cheda Ltd. - Moscow (RUS) RUB June 30, 2014

Findan S.p.A. - Pradamano (UD) EUR June 30, 2014

IN.DE. S.p.A. Industrial Design - Pradamano (UD) EUR June 30, 2014

Industrial Beteiligung Serv. & Contracting Co. LLC - Al Khobar (SAU) SAR June 30, 2014

Industrielle Beteiligung Company Ltd. - HoChiMinh City (VNM) VND June 30, 2014

Industrielle Beteiligung S.A. - Luxembourg (LUX) EUR June 30, 2014

Innoval Technology Ltd.- Banbury (GBR) GBP June 30, 2014

Josef Fröhling GmbH - Meinerzhagen (DEU) EUR June 30, 2014

More S.r.l. - Gemona del Friuli (UD) EUR June 30, 2014

Morgårdshammar AB - Smedjebacken (SWE) SEK June 30, 2014

Morgardshammar Inc. - Charlotte (USA) USD June 30, 2014

Qualisteel Srl - Pozzuolo del Friuli (UD) EUR June 30, 2014

Rotelec SA - Bagnolet (FRA) EUR June 30, 2014

Stem S.r.l. - Magnago (MI) EUR June 30, 2014

Sund Birsta AB - Sundsvall (SWE) SEK June 30, 2014

Sund Birsta Beijing Metallurgical Equipment Co. Ltd., Beijing (CHN) CNY June 30, 2014

Systec Automatizacija Doo - Labin (HRV) HRK June 30, 2014

Systec Doo - Nova Gorica (SLV) EUR June 30, 2014

Systec Eng. Doo - Smederevo (SRB) * RSD June 30, 2014

Termo Makina San.V.T. AS, Istanbul (TUR) * TRY June 30, 2014

Turismo 85 S.r.l. - Buttrio (UD) EUR June 30, 2014

W + K IndustrieTechnik GmbH & Co KG - Dortmund (DEU) EUR June 30, 2014

* numbers in the accounts prepared for the consolidated financial statements

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Non-current assets

Current assets



Current liabilities

7,938,381 10,528,271 2,686,325 3,286,067 12,494,260

1,021,093 15,154 1,026,657 566 9,024

94,991 774,316 73,658 3,579 792,070

10,204 239,798 (49,786) 17,500 282,288

0 490 460 0 30

2,024 12,386 6,372 204 7,834

0 6,110 6,110 0 0

1,031 2,761 203 127 3,462

617,765 275,778 711,141 17,975 164,427

972 4,599 627 144 4,800

0 2,584 2,584 0 0

5,675 19,551 10,120 2,085 13,021

1,314,475 305,466 249,935 810,807 559,199

531 1,839 1,534 0 836

155 9,895 5,850 0 4,200

6,085 5,488 11,512 0 61

0 2,714 2,700 0 14

62 81,736 (73,798) 205 155,391

124,711,785 89,932,265 98,519,554 108,582,205 7,542,291

655,113 50,410 690,560 0 14,963

177 1,453 778 0 851

5,830 167,504 12,435 3,488 157,411

4,768 17,842 16,834 2,128 3,648

19,143 280,529 201,219 6,065 92,388

0 3,629 3,629 0 0

24,386 4,197 21,656 2,339 4,588

1,020 11,384 8,301 67 4,036

293 23,405 6,266 210 17,222

8,829 394,073 260,765 16,667 125,470

2,913 42,413 4,062 0 41,264

11,323 29,667 28,368 0 12,622

490 2,052 2,430 0 112

4,275 172,158 136,835 0 39,598

15,300 9,661 1,456 0 23,505

805 2,559 346 330 2,688

122 33,034 (4,544) 3,545 34,155


ATTACHMENT NO. II

SCHEDULE SUMMARISING THE PRINCIPAL ITEMS IN THE APPROVED FINANCIAL STATEMENTS OF SUBSIDIARY AND ASSOCIATED COMPANIES

INCOME STATEMENT

(in thousands)

Original Currency

Value of Production


ABS Centre Métallurgique Sarl - Metz (FRA) EUR 2,864

ABS Deutschland GmbH - Mülheim (DEU) EUR 480

ABS Scandinavia AB - Örebro (SWE) SEK 2,440

ABS Sisak Doo - Sisak (HRV) * EUR 43,406

Acciaierie Bertoli Safau S.p.A. - Pozzuolo (UD) EUR 766,379

Birstateknik AB - Sundsvall (SWE) SEK 0

Cecilia Danieli - Asili per l'Infanzia Srl - Buttrio (UD) EUR 276

Centro Maskin AB - Göteborg (SWE) SEK 0

Danflat S.p.A. - Buttrio (UD) EUR 0

Danieli Anatolia Makine San - Istanbul (TUR) TRY 819

Danieli Automation S.p.A. - Buttrio (UD) EUR 194,421

Danieli Automation Co. Ltd. - Rayong (THA) * EUR 1,822

Danieli Banking Corporation S.A. - Luxembourg (LUX) EUR 0

Danieli Canada Inc. - Toronto (CAD) CAN 0

Danieli Centro Combustion India Pvt. Ltd. - Pune (IND) IRS 457,475

Danieli Centro Combustion S.p.A. - Cinisello Balsamo (MI) EUR 61,161

Danieli Centro Cranes S.p.A. - Rezzato (BS) EUR 42,554

Danieli Centro Met Swiss GmbH - Rheinfelden (CHE) CHF 3,179

Danieli Changshu Metall. Equipment & Services (Changshu) Co Ltd. Changshu (CHN)

*CNY 2,396,201

Danieli Changsu Trading Co. Ltd - Changshu (CHN) * CNY 138,959

Danieli Co. Ltd. - Rayong (THA) * EUR 357,358

Danieli Construction International S.p.A. - Buttrio (UD) EUR 16,586

Danieli Corporation - Wilmington (USA) USD 293,467

Danieli Czech Engineering A.S. - Prague (CZE) CZK 63,890

Danieli Do Brasil SA - Diadema (BRA) BRL 21,584

Danieli Engineering & Services GmbH - Völkermarkt (AUT) EUR 70,620

Danieli Engineering Japan Co. Ltd. - Yokohama (JPN) JPY 319,520

Danieli Engineering Rom Srl - Cluj Napoca (ROU) RON 41,368

Danieli Heavy Machinery Engineering L.L.C.- Dnepropetrovsk (UKR) UAH 121,268

Danieli Hellas SA - Athens (GRC) * EUR 0

Danieli Henschel GmbH - Kassel (DEU) * EUR 16,973

Danieli Henschel SAS - Chambery (FRA) * EUR 22,897

Danieli Henschel Service OOO - Moscow (RUS) * RUB 39,675

Danieli Hitech Gmbh - Mülheim (DEU) EUR 1,786

Danieli Holdings Inc. - Wilmington (USA) USD 0

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Costs of Production


Taxesfor the year

Net Profit

Number ofEmployees

(2,474) (169) 446 667 19

(457) (1) (8) 14 3

(2,336) (7) (27) 70 2

(45,324) (867) 0 (2,785) 218

(720,401) (1,787) (13,976) 30,215 1,049

0 0 0 0 0

(123) (14) (46) 93 0

(10) 13 (1) 2 0

(64) 309 (90) 155 0

(819) 41 0 41 0

(146,186) 9,818 (15,765) 42,288 218

(1,237) 40 (93) 532 4

(1,424) (10,051) 3,140 (8,335) 8

(35) 17 0 (18) 3

(433,277) 6,436 (9,093) 21,541 67

(55,682) (278) (2,124) 3,077 130

(38,982) (99) (917) 2,556 82

(2,829) (14) (45) 291 9

(2,053,438) 31,264 (54,296) 319,731 1,245

(129,362) 561 (2,496) 7,662 0

(302,461) (272) (3,256) 51,369 1,724

(17,584) 25 60 (913) 205

(283,562) (343) (403) 9,159 75

(65,465) 15,402 (2,638) 11,189 8

(20,592) 3 (187) 808 25

(56,720) (165) (3,428) 10,307 60

(323,994) 13,876 (4,560) 4,842 10

(36,157) 67 (474) 4,804 88

(80,883) (42,838) (181) (2,634) 88

(33) 0 0 (33) 0

(16,845) (37) 0 91 31

(22,406) (75) 39 455 55

(38,772) 0 0 903 9

(1,659) 13 (51) 89 8

573 (98) 0 475 0


INCOME STATEMENT

(in thousands)

Original Currency

Value of Production


Danieli India Ltd. - Kolkata (IND) * IRS 9,002,222

Danieli International S.A. - Luxembourg (LUX) EUR 34

Danieli Malaysia Sdn. Bhd. - Kuala Lumpur (MYS) * MYR 0

Danieli Metallurgical Equipm.(Beijing) Co Ltd. - Beijing (CHN) * CNY 532,151

Danieli Middle East for Eng. Services (LMTD) - Cairo (EGY) * EGP 192,431

Danieli Procome Iberica S.A. - Sondica (ESP) EUR 16,469

Danieli Property Holdings LLC. - Wilmington (USA) USD 0

Danieli Riverside Products Inc. Bettendorf (USA) USD 11,971

Danieli Russia Engineering LLC - Moscow (RUS) * RUB 330,852

Danieli Special Cranes Srl - Gradisca d'Is. (GO) EUR 6,545

Danieli Technology Inc. - Wilmington (USA) USD 0

Danieli Uk Holding Ltd. - Sheffield (GBR) GBP 22,408

Danieli Volga LLC - Dzerdzhinsk (RUS) * RUB 72,303

DWU Engineering Polska - Wroclaw (POL) PLZ 10,334

Elsid Cheda Ltd. - Moscow (RUS) RUB 48,241

Findan S.p.A. - Pradamano (UD) EUR 530

IN.DE. S.p.A. Industrial Design - Pradamano (UD) EUR 10

Industrial Beteiligung Serv. & Contracting Co. LLC - Al Khobar (SAU) SAR 43,976

Industrielle Beteiligung Company Ltd. - HoChiMinh City (VNM) VND 180,177,667

Industrielle Beteiligung S.A. - Luxembourg (LUX) EUR 483

Innoval Technology Ltd.- Banbury (GBR) GBP 2,383

Josef Fröhling GmbH - Meinerzhagen (DEU) EUR 141,819

More S.r.l. - Gemona del Friuli (UD) EUR 16,099

Morgårdshammar AB - Smedjebacken (SWE) SEK 149,943

Morgardshammar Inc. - Charlotte (USA) USD 0

Qualisteel Srl - Pozzuolo del Friuli (UD) EUR 11,908

Rotelec SA - Bagnolet (FRA) EUR 15,088

Stem S.r.l. - Magnago (MI) EUR 13,763

Sund Birsta AB - Sundsvall (SWE) SEK 406,509

Sund Birsta Beijing Metallurgical Equipment Co. Ltd. - Beijing (CHN) CNY 48,785

Systec Automatizacija Doo - Labin (HRV) HRK 75,064

Systec Doo - Nova Gorica (SLV) EUR 1,278

Systec Eng. Doo - Smederevo (SRB) * RSD 260,991

Termo Makina San.V.T. AS, Istanbul (TUR) * TRY 8,281

Turismo 85 S.r.l. - Buttrio (UD) EUR 5,286

W + K IndustrieTechnik GmbH & Co KG - Dortmund (DEU) EUR 58,530

* numbers in the accounts prepared for the consolidated financial statements

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Costs of Production


Taxesfor the year

Net Profit

Number ofEmployees

(8,911,193) (16,482) (4,900) 69,647 1,084

(178) 21,503 (1,838) 19,521 1

(40) 0 0 (40) 0

(561,039) (1,531) 4,863 (25,556) 614

(187,781) 4,639 (2,322) 6,967 21

(15,743) (83) (135) 508 37

(4) 52 0 48 0

(13,746) (2) 0 (1,777) 14

(311,515) (7,459) (5,756) 6,122 2

(6,628) (17) 0 (100) 17

0 21 0 21 0

(22,601) 49 383 239 68

(235,365) (87,414) 48,831 (201,645) 131

(9,683) (261) (109) 281 73

(49,375) (922) 91 (1,965) 34

(269) 912 (107) 1,066 0

(24) 20 (2) 4 0

(77,248) (4,243) 0 (37,515) 16

(173,646,175) (5,856,092) (148,588) 526,812 231

(24,662) 113,979 (1,135) 88,665 2

(2,195) (57) 83 214 29

(145,988) 627 (90) (3,632) 147

(11,550) (1) (1,515) 3,033 69

(169,223) 5,601 2,921 (10,758) 74

43 30 0 73 0

(11,495) (99) (220) 94 66

(11,249) 17 (1,475) 2,381 40

(12,402) (51) (466) 844 25

(372,330) 19,726 (8,180) 45,725 77

(47,886) (74) (565) 260 28

(67,475) 758 (1,755) 6,592 179

(1,287) 21 (1) 11 23

(200,466) 988 (8,430) 53,083 40

(9,262) (954) 0 (1,936) 88

(5,203) (6) (62) 15 31

(52,712) (133) (113) 5,572 36


ATTACHMENT No. III

SCHEDULE SUMMARISING INVESTMENTS IN SUBSIDIARY AND ASSOCIATED COMPANIES


Financialyear-end

date

%Interest

held

(A)Shareholders'

equity:carrying

amount (1)

(B) Cost value

at June 30, 2014

(C)=(A-B)Difference

Note

SUBSIDIARIES

Direct

Danieli International S.A. - Luxembourg (LUX) June 30 100.00 1,026,657 824,303 202,354

Industrielle Beteiligung S.A. - Luxembourg (LUX) June 30 100.00 690,560 477,276 213,284

Indirect

Acciaierie Bertoli Safau S.p.A. - Pozzuolo (UD) June 30 100.00 487,159 348,989 138,170

ABS Centre Métallurgique Sarl - Metz (FRA) June 30 100.00 3,276 2,500 776

ABS Deutschland GmbH - Mülheim (DEU) June 30 100.00 87 25 62

ABS Scandinavia AB - Örebro (SWE) June 30 100.00 26 6 20

ABS Sisak Doo - Sisak (HRV) June 30 100.00 26,201 29,011 (2,810) (3)

Birstateknik AB - Sundsvall (SWE) June 30 100.00 13 5 8

Cecilia Danieli - Asili per l'Infanzia Srl - Buttrio (UD) June 30 100.00 958 500 458

Centro Maskin AB - Göteborg (SWE) June 30 100.00 474 9 465

Danflat S.p.A. - Buttrio (UD) June 30 100.00 35,939 33,966 1,973

Danieli Anatolia Makine San - Istanbul (TUR) June 30 100.00 92 111 (19) (2)

Danieli Automation S.p.A. - Buttrio (UD) June 30 100.00 150,790 12,664 138,126

Danieli Automation Co. Ltd. - Rayong (THA) June 30 100.00 1,474 506 968

Danieli Banking Corporation S.A. - Luxembourg (LUX) June 30 100.00 968,680 972,455 (3,775) (2)

Danieli Canada Inc. - Toronto (CAD) June 30 100.00 436 436 (0)

Danieli Centro Combustion India Pvt. Ltd. -Pune (IND) June 30 100.00 1,162 366 796

Danieli Centro Combustion S.p.A. - Cinisello Balsamo (MI) June 30 100.00 22,642 3,292 19,350

Danieli Centro Met Swiss GmbH - Rheinfelden (CHE) June 30 100.00 1,587 4,541 (2,954) (3)

Danieli Changshu Metall. Equipment & Services (Changshu) Co Ltd. Changshu (CHN) December 31 100.00 103,869 30,000 73,869

Danieli Changsu Trading Co. Ltd - Changshu (CHN) December 31 100.00 1,701 118 1,583

Danieli Co. Ltd. - Rayong (THA) June 30 100.00 104,047 29,918 74,129

Danieli Construction International S.p.A. - Buttrio (UD) June 30 100.00 31,256 24,769 6,487

Danieli Corporation - Wilmington (USA) June 30 100.00 12,498 12,498 0

Danieli Czech Engineering A.S. - Prague (CZE) December 31 100.00 11,037 116 10,921

Danieli Engineering & Services GmbH - Völkermarkt (AUT) June 30 100.00 26,321 4,000 22,321

Danieli Engineering Japan Co. Ltd. - Yokohama (JPN) June 30 100.00 47 13 34

Danieli Engineering Rom Srl - Cluj Napoca (ROU) June 30 100.00 2,780 5 2,775

Danieli Heavy Machinery Engineering L.L.C.- Dnepropetrovsk (UKR) June 30 100.00 (2,911) (2,911) (0)

Danieli Hellas SA - Athens (GRC) December 31 100.00 135 168 (33) (2)

Danieli Henschel GmbH - Kassel (DEU) December 31 100.00 965 250 715 (3)

Danieli Henschel SAS - Chambery (FRA) December 31 100.00 7,380 19,282 (11,902) (3)

Danieli Henschel Service OOO - Moscow (RUS) December 31 100.00 109 2 107 (3)

Danieli Hitech Gmbh - Mülheim (DEU) June 30 100.00 29,997 29,997 0

Danieli Holdings Inc. - Wilmington (USA) June 30 100.00 41,839 34,240 7,599

Danieli India Ltd. - Kolkata (IND) June 30 100.00 32,679 22,588 10,091

Danieli Malaysia Sdn Bhd - Kuala Lumpur (MYS) June 30 100.00 105 111 (6) (2)

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Danieli Metallurgical Equipm.(Beijing) Co Ltd. - Beijing (CHN) December 31 100.00 8,694 4,000 4,694

Danieli Property Holdings LLC. - Wilmington (USA) June 30 100.00 4,474 0 4,474

Danieli Riverside Products Inc. Bettendorf (USA) June 30 100.00 149 7,390 (7,241) (3)

Danieli Russia Engineering LLC - Moscow (RUS) December 31 100.00 15,334 15,334 (0)

Danieli Special Cranes Srl - Gradisca d'Is. (GO) June 30 100.00 627 785 (158) (2)

Danieli Technology Inc. - Wilmington (USA) June 30 100.00 1,892 1,892 0

Danieli Uk Holding Ltd. - Sheffield (GBR) June 30 100.00 12,834 7,904 4,930

Danieli Volga LLC - Dzerdzhinsk (RUS) December 31 100.00 5,389 5,389 0

Findan S.p.A. - Pradamano (UD) June 30 100.00 11,512 5,524 5,988

IN.DE. S.p.A. Industrial Design - Pradamano (UD) June 30 100.00 2,700 2,289 411

Industrial Beteiligung Serv. & Contracting Co. LLC - Al Khobar (SAU) June 30 100.00 (14,407) (14,407) 0

Industrielle Beteiligung Company Ltd. - HoChiMinh City (VNM) June 30 100.00 3,382 2,514 868

Innoval Technology Ltd.- Banbury (GBR) June 30 100.00 971 4,191 (3,220) (3)

Josef Fröhling GmbH - Meinerzhagen (DEU) June 30 100.00 12,435 12,435 (0)

More S.r.l. - Gemona del Friuli (UD) June 30 100.00 15,834 3,346 12,488

Morgårdshammar AB - Smedjebacken (SWE) June 30 100.00 21,928 9,896 12,032

Morgardshammar Inc. - Charlotte (USA) June 30 100.00 2,657 436 2,221

Qualisteel Srl - Pozzuolo del Friuli (UD) June 30 100.00 21,656 21,690 (34) (2)

Stem S.r.l. - Magnago (MI) June 30 100.00 6,266 2,205 4,061

Sund Birsta AB - Sundsvall (SWE) June 30 100.00 28,418 3,217 25,201

Sund Birsta Beijing Metallurgical Equipment Co. Ltd. - Beijing (CHN)

June 30 100.00 3,536 564 2,972

Systec Automatizacija Doo - Labin (HRV) June 30 100.00 3,744 12 3,732

Systec Doo - Nova Gorica (SLV) June 30 100.00 2,430 13 2,417

Systec Eng. Doo - Smederevo (SRB) June 30 100.00 1,545 0 1,545

Turismo 85 S.r.l. - Buttrio (UD) June 30 100.00 346 76 254

W + K IndustrieTechnik GmbH & Co KG - Dortmund (DEU) June 30 100.00 (4,544) (4,544) (0)

Danieli Procome Iberica S.A. - Sondica (ESP) June 30 99.99 6,372 218 6,154

Danieli Do Brasil SA - Diadema (BRA) June 30 100.00 871 625 246

Rotelec SA - Bagnolet (FRA) June 30 99.99 8,301 341 7,960

Danieli Middle East for Eng. Services (LMTD) - Cairo (EGY) December 31 99.80 (5,080) (5,095) 15

Elsid Cheda Ltd. - Moscow (RUS) June 30 100.00 126 79 47

Danieli Centro Cranes S.p.A. - Rezzato (BS) June 30 90.00 9,213 7,573 1,640

DWU Engineering Polska - Wroclaw (POL) June 30 78.67 290 122 168

Termo Makina San.V.T. AS, Istanbul (TUR) June 30 75.00 627 1,000 (374) (2)

ASSOCIATES

Indirect

Danieli Corus Technical Services BV - Ijmuiden (NLD) March 31 50.00 24,052 24,052 0

Omnia Factor S.p.A. - Milan December 31 20.00 785 785 0

OTHERS

Indirect

Confirmec S.p.A. - Milan June 30 5.00 881 516 365

Alfieri Associated Investors SA- Luxembourg (LUX) December 31 0.25 274 817 (543) (2)

Total higher value 999,258

Key to letters: 1) Proportion attributable at the date of the last approved financial statements or interim position prepared for the purposes of the consolidated

financial statements, converted at the financial year-end exchange rate.2) Non-permanent losses because they relate to temporary situations; there are well-founded reasons to believe that these situations will not

continue, as shown in company budgets.3) Differences on companies acquired in previous years recognised, at the consolidated level, in goodwill when not specifically attributed to

specific assets and liabilities.


ATTACHMENT No. IV

TAX REGIME OF CAPITAL AND RESERVES (ITALIAN PRESIDENTIAL DECREE NO. 917 OF DECEMBER 22, 1986)


Total Reserves or other fundswhich, in the event

of distribution, form part of the the taxable income

of the company

Share capital 22.492

Legal reserve (1) 58,813 750

Total Share Capital 81,305 750

Legal reserve 18,576

Share premium account 22,398 0

Treasury shares at cost (82,935)

Extraordinary reserve 331,236

Merger difference 11,036

Revaluation reserve per law no. 72/1983 2,825 2,825

Revaluation reserve per law no. 413/1991 4,809 4,809

VAT allowances on investments Laws no. 526/82 and no. 130/83 125 125

Research grant law no. 46/1982 4,639 4,264

Non-opted Rights reserve 125

IAS transition impact 14,399

Actuarial reserves from IAS 19 (2,643)

Cash flow reserve (1,968)

Total Reserves 322,622 12,023

Profit for the year 131,525

Grand total 535,452 12,773

Key to letters: A for increases in capital; B: to cover losses; C: for distribution to shareholders

(1) Scrip issues in previous financial years made by use of the Legal Reserve

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Reserves or other funds which, in the event of

distribution, do not formpart of the taxable income

of the shareholders

Profit reservesor other funds

Potential uses

Available portion

22.492

15,122 42,941

15,122 65,433

18,576 B

22,398 A B 22,398

(82,935) -

331,236 A B C 331,236

11,036 A B C 11,036

A B C 2,825

A B C 4,809

A B C 125

375 A B C 4,639

125 A B C 125

14,399 -

(2,643) -

(1,968) -

22,523 288,076 377,193

131,525

37,645 485,034 377,193

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ATTACHMENT No. V

BANK DEBTS


Original amounts

Current portiondue by

June 30, 2015

Portion dueafter

June 30, 2015

Total

Bank debts for subsidised research project loans

- MICA 72393/06(Annual rate 3.6% - last instalment June 12, 2016) 13,809 1,555 1,611 3,166

- BEI RDI 25961(Annual rate 2.851% - last instalment January 18, 2018) 80,000 13,333 40,000 53,333

- INTESA BRESCIA 10000/10054(Annual rate 2.177% - last instalment November 24, 2013) 50,000 50,000 0 50,000

TOTAL 143,809 64,888 41,611 106,499


ATTACHMENT No. VI

EQUITY INVESTMENTS HIGHER THAN 10% IN UNLISTED COMPANIES AT JUNE 30, 2014

no. company in which shares are held % at June 30. 2014 dir. ind. through %Share Capital

(thousands)

currency Amount

Italian companies

1 Cecilia Danieli - Asili per l'Infanzia Srl - Via Nazionale 41 - 33042 Buttrio (UD)

100.00xx

Turismo 85 SrlFindan S.p.A.

99.001.00

euro 500

2 Danflat S.p.A. - Via Nazionale 41 - 33042 Buttrio (UD)100.00

xx

Industrielle Beteiligung SAFindan S.p.A.

99.9990.000

euro 34,000

3 Danieli Automation S.p.A. - Via B. Stringer 4. 33042 Buttrio (UD)

100.00xx


99.950.05

euro 10,000

4 Danieli Centro Combustion S.p.A. - Via G. Galilei 40 - Cinisello Balsamo (MI)

100.00xx


99.800.20

euro 2,500

5 Danieli Construction International S.p.A. Via Nazionale 41 - 33042 Buttrio (UD)

100.00xx


99.9990.00

euro 6,000

6 Danieli Special Cranes Srl - Via dell'Industria 6 - 34072 Gradisca d'Is. (GO)

100.00 x Findan S.p.A. 100.00 euro 100

7 Findan S.p.A. - Via Dante 56 - 33040 Pradamano (UD)100.00

xx

Industrielle Beteiligung SADanieli Constr. International S.p.A.

99.960.04

euro 2,500

8 IN.DE. S.p.A. Industrial Design - Via Dante 56 - Pradamano (UD)100.00

xx


99.500.50

euro 1,000

9 More S.r.l. - Via Santa Lucia 7 - Gemona del Friuli (UD)100.00

xx


79.16720.84

euro 240

10

Qualisteel Srl - Via Buttrio 57 - 33050 Pozzuolo del Friuli (UD)100.00

xx


99.500.50

euro 21,500

11

Stem S.r.l. - Via Manzoni 12 - 20020 Magnago (MI)

100.00xx


99.001.00

euro 265

12

Turismo 85 S.r.l. - Via Nazionale 71 - 33042 Buttrio (UD)

100.00xx


99.001.00

euro 10

13

Acciaierie Bertoli Safau S.p.A. - Via Buttrio 28 - 33050 Pozzuolo (UD)

100.00xx


99.9180.081

euro 290,000

14 Danieli Centro Cranes S.p.A. - Via Gardesana 22 - 25086 Rezzato (BS)

90.00xx


75.0015.00

euro 120

15 Inter-Rail S.p.A. -Via Carducci 44 - 33100 Udine 50.00 x Acc. Bertoli Safau S.p.A. 50.00 euro 120

16 Omnia Factor S.p.A. - Via A. Cechov 502 - 20151 Milano 20.00 x Industrielle Beteiligung SA 20.00 euro 4,000

no. company in which shares are held % at June 30. 2014 dir. ind. through %Share Capital

(thousands)

currency Amount

Foreign companies

1 Birstateknik AB - Sundsvall (SWE) 100,00 x Sund Birsta AB 100,00 sek 100

2 Danieli Centro Combustion India Pvt. Ltd. -Pune (IND) 100,00 x Industrielle Beteiligung S.A. 100,00 inr 24,000

3 Centro Maskin AB in liquidazione - Göteborg (SWE) 100,00 x Industrielle Beteiligung SA 100,00 sek 100

4 Danieli Banking Corporation S.A. - Luxembourg (LUX) 100,00 x Danieli International SA 100,00 euro 400,000

5 Danieli Anatolia Makine San.- Istanbul (TUR)100,00

xx

Dan. Eng. & Services GmbHIndustrielle Beteiligung SA

99,980,02

try 250

6 Danieli Canada Inc. - Toronto (CAD) 100,00 x Danieli Corporation 100,00 cad 7,922

7 Danieli Centro Met Swiss GmbH - Rheinfelden (CHE) 100,00 x Industrielle Beteiligung SA 100,00 chf 21

8 Danieli Changshu Metall. Equipment & Services Co Ltd. Changshu (CHN)

100,00 x Industrielle Beteiligung SA 100,00 cny 280,111

9 Danieli Changsu Trading Co. Ltd - Changshu (CHN) 100,00

xx

Dan. Changsu Met. Equip. & Serv.Dan. Metallurgical Equip.(Beijing)

90,0010,00

cny 1,000

10 Danieli Co. Ltd. - Rayong (THA) 99,999 x Industrielle Beteiligung SA 99,999 thb 1,445,000

11 Danieli Corporation - Wilmington (USA) 100,00 x Danieli Holdings Inc. 100,00 usd 1

12 Danieli Czech Engineering A.S. - Praha (CZE) 100,00 x Industrielle Beteiligung SA 100,00 czk 3,000

13 Danieli do Brasil LTDA - Diadema (BRA) 100,00 x Industrielle Beteiligung SA 100,00 brl 3,373

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14 Danieli Engineering & Services GmbH - Völkermarkt (AUT) 100.00 x Industrielle Beteiligung SA 100.00 euro 4,000

15 Danieli Engineering Japan Co. Ltd. - Yokohama (JPN) 100.00 x Industrielle Beteiligung SA 100.00 jpy 40,000

16 Danieli Engineering Rom Srl - Cluj Napoca (ROU) 100.00 x Industrielle Beteiligung SA 100.00 ron 10

17 Danieli Heavy Machinery Engineering L.L.C.- Dnepropetrovsk (UKR)

100.00 x Industrielle Beteiligung SA 100.00 uah 177,882

18 Danieli Hellas SA - Athens (GRC) 100.00 x Industrielle Beteiligung SA 100.00 euro 62

19 Danieli Henschel SAS - Chambery (FRA) 100.00 x Industrielle Beteiligung SA 100.00 euro 192

20 Danieli Henschel GmbH - Kassel (DEU) 100.00 x Danieli Henschel S.a.s. 100.00 euro 250

21 Danieli Henschel Service OOO - Moscow (RUS) 100.00 x Danieli Henschel S.a.s. 100.00 rub 50

22 Danieli Hi Tech GmbH - Mülheim (DEU) 100.00 x Industrielle Beteiligung SA 100.00 euro 10,000

23 Danieli Holdings Inc. - Wilmington (USA) 100.00 x Industrielle Beteiligung SA 100.00 usd 2,225

24 Danieli India Ltd. - Kolkata (IND) 100.00 x Industrielle Beteiligung SA 100.00 inr 1,426,413

25 Danieli International S.A. - Luxembourg (LUX) 100.00x

xDanieli & C. Off. Mecc. S.p.A.Danieli Automation S.p.A.

83.8316.17

euro 650,224

26 Danieli Malaysia Sdn. Bhd. - Kuala Lumpur (MYS) 100.00 x Danieli Constr. International S.p.A. 100.00 myr 500

27 Danieli Metallurgical Equipm.(Beijing) Co Ltd. - Beijing (CHN) 100.00 x Industrielle Beteiligung SA 100.00 cny 41,297

28 Danieli Property Holdings LLC. - Wilmington (USA) 100.00 x Danieli Holdings, Inc. 100.00 usd -

29 Danieli Riverside Products Inc. Bettendorf (USA) 100.00 x Danieli Holdings, Inc. 100.00 usd 0,001

30 Danieli Russia Engineering OOO - Moscow (RUS) 100.00 x Industrielle Beteiligung SA 100.00 rub 50,350

31 Danieli Technology Inc. - Wilmington (USA) 100.00 x Danieli Holdings, Inc. 100.00 usd 1

32 Danieli UK Holding Ltd. - Sheffield (GBR) 100.00 x Industrielle Beteiligung SA 100.00 gbp 12,489

33 Danieli Volga OOO - Dzerdzhinsk (RUS) 100.00 x Danieli Russia Eng. OOO 99.99 rub 514,557

34 Elsid Cheda Ltd. - Moscow (RUS) 100.00 x Danieli Automation S.p.A. 100.00 rub 10

35Industrial Beteiligung for Serv. & Contracting Co. LLC - Al Khobar (SAU)

100.00xx

Industrielle BeteiligungFindan Spa

99.001.00

sar 500

36 Industrielle Beteiligung S.A. - Luxembourg (LUX) 100.00x

xDanieli & C. Off. Mecc. S.p.A.Danieli International S.A.

90.0010.00

euro 328,700

37 Industrielle Beteiligung Company Ltd. - HoChiMinh City (VNM) 100.00 x Industrielle Beteiligung SA 100.00 vnd 69,583,393

38 Innoval Technology Ltd.- Sheffield (GBR) 100.00 x Danieli UK Holding Ltd. 100.00 gbp 1

39 Josef Fröhling GmbH & Co. KG Walzw. - Meinerzhagen (DEU) 100.00 x Danieli Hi Tech GmbH 100.00 euro 3,480

40 Fröhling Verwaltungs GmbH - Meinerzhagen (DEU) 100.00 x Danieli Hi Tech GmbH 100.00 eur 26

40 Morgårdshammar AB - Smedjebacken (SWE) 100.00 x Industrielle Beteiligung SA 100.00 sek 25,000

41 Morgardshammar Inc. - Charlotte (USA) 100.00 x Danieli Holdings, Inc. 100.00 usd 0,1

42 Sund Birsta AB - Sundsvall (SWE) 100.00 x Industrielle Beteiligung SA 100.00 sek 10,000

43 Sund Birsta (Beijing) Metallurgical Equipment Co. Ltd. - Beijing (CHN)

100.00 x Sund Birsta AB 100.00 cny 5,000

44 Systec Automatizacija doo - Labin (HRV) 100.00 x Danieli Automation S.p.A. 100.00 hrk 750

45 Systec doo - System Technology - Nova Gorica (SLV) 100.00 x Danieli Automation S.p.A. 100.00 euro 38

46 Systec Eng. doo - Smederevo (SRB) 100.00 x Danieli Automation S.p.A. 100.00 rsd 51

47 W + K IndustrieTechnik GmbH & Co KG - Dortmund (DEU) 100.00 x Danieli Hi Tech GmbH 100.00 euro 765

48 W+K Verwaltungsgesellschaft mbH - Dortmund (DEU) 100.00 x W + K Industrie Technik GmbH 100.00 eur 26

48 Danieli Automation Co. Ltd. - Rayong (THA) 100.00 x Industrielle Beteiligung SA 100.00 thb 20,000

49 ABS Centre Métallurgique Sarl - Metz (FRA) 100.00 x Acc. Bertoli Safau S.p.A. 100.00 euro 2,500

50 ABS Deutschland GmbH - Mülheim (DEU) 100.00 x Acc. Bertoli Safau S.p.A. 100.00 euro 25

51 ABS Sisak doo - Sisak (HRV) 100.00 x

Industrielle Beteiligung SAAcc. Bertoli Safau S.p.A.

99.910.09

hrk 491,495

52 ABS Scandinavia AB - Örebro(SWE) 100.00 x Acc. Bertoli Safau S.p.A. 100.00 sek 50

53 Danieli Procome Iberica S.A. - Sondica (ESP) 99.99 x Industrielle Beteiligung SA 99.99 euro 108

54 Rotelec SA - Bagnolet (FRA) 99.99 x Industrielle Beteiligung SA 99.99 euro 600

55 Danieli Middle East for Eng. Services LLC - Cairo (EGY) 99.80 x Industrielle Beteiligung SA 99.80 egp 50

56 DWU Engineering Polska SP.z.o.o.- Wroclaw (POL) 78.67 x Industrielle Beteiligung SA 78.67 pln 900

57 Termo Makina Sanayi Ve Tic. AS - Istanbul (TUR) 75.00 x Industrielle Beteiligung SA 75.00 try 10,000

58 Danieli Corus Technical Services BV - Ijmuiden (NLD) 50.00 x Industrielle Beteiligung SA 50.00 euro 14,840


ATTACHMENT No. VII

SCHEDULE OF RESEARCH AND DEVELOPMENT ACTIVITIES RELATIVE TO PROJECTS FOR PRODUCT AND PROCESS INNOVATION (ART. 2428 ITALIAN CIVIL CODE)


A) NAME AND NATURE OF PROJECT B) COSTS INCURRED FROM JULY 1, 2013 TO JUNE 30, 2014

Personnel and similar costs

for R&D

Materials and services

used forR&D

projects

Total C) Basic results achieved

C) Potential manufacturing

spin-offs

1 Research and development work on innovative solutions in the sector for rolling, casting and continuous casting for long and flat products, and on new solutions in the direct reduction sector. Specific research and development on process lines for production of thick rolled sections, welded and seamless tubes.

18,810 22,965 41,775 Improved specific process

control

Reduction in production

costs and improved

finished product quality

Total R&D for the 2013/2014 financial year 18,810 22,965 41,775

Total R&D 41,775

D) The company, aware of the importance of research and development for the future of its business, invested large amounts during the 2013/2014 financial year. The projects shown, innovative at a world level, related to activities in the course of completion, which it is considered could bring significant future benefits to the company.

The costs quantified for performing research and development activities during the 2013/2014 financial year, taken from the management accounting records and the relevant sections of a detailed report are summarised below:

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ATTACHMENT No. VIII

RECONCILIATION BETWEEN THE TAX CHARGE IN THE FINANCIAL STATEMENTS AND THE THEORETICAL TAX CHARGE

June 30, 2014 June 30, 2013


Taxable income

Rate TaxTaxable income

Rate Tax


Theoretical income tax charge 27.5% 37,439 27.5% 20,838

Permanent changes and other effects (135,076) (37,146) (52,602) (14,465)

Actual IRES 293 6,373

Actual IRAP 4,326 3,304

Higher/(lower) taxes allocated in previous years and other taxes 0 (1,248)

Non recurring effect of the deduction of IRAP on labour cost of previous years 0 (4,210)

Total taxes recognised in the financial statements 4,619 4,219

Total taxes recognised in the financial statements before the non recurring effect of the deduction of IRAP on labour cost of previous years 4,619 8,429

Effective rate (before non recurring components) 34% 11.1%


ATTACHMENT No. IX

INFORMATION ON DEFERRED TAX ASSETS AND LIABILITIES AND CONSEQUENT EFFECTS


DEFERRED TAX ASSETS June 30, 2013

IRES IRAP Taxablebase

Deferredtax assets

Taxed provisions 27.50% 3.90% 36,730 11,533

Taxed provisions 109,412 29,912

Tax losses that may be carried fwd - 0

Recovery of unrealised exchange losses 27.50% - 0

Other tax changes 27.50% 3.90% 1,251 393

Fair value on hedging contracts 27.50% 3,438 945

Actualisation of employee severance indemnity

TOTAL DEFERRED TAX ASSETS 150,831 42,783

DEFERRED TAX LIABILITIES June 30, 2013


Deferredtax assets

Change in construction contracts 27.50% 3.90% 1,813 662

Actualisation of employee severance indemnity 27.50% (389) (107)

Other tax recoveries 27.50% 3.90% 300 107

TOTAL DEFERRED TAX LIABILITIES 1,724 662

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June 30, 2014


Deferredtax assets

Reclassifications Impact on income

statement

Impact on shareholders’

equity

27.50% 3.50% 36,730 11,386 (147)

27.50% 83,534 22,972 (6,940)

27.50% 21,700 5,950 5,950

27.50% 2,100 578 578

27.50% 1,010 289 (104)

27.50% 2,715 747 1 (199)

27.50% 622 171 107 7 57

148,411 42,093 108 (656) (142)

June 30, 2014


Deferredtax assets

Reclassifications Impact on income

statement

Impact on shareholders’

equity

27.50% 3.50% 1,719 533 0 (129)

27.50% 0 0 107

27.50% 3.50% 0 0 (107)

1,719 533 107 (236) 0


ATTACHMENT No. X

SCHEDULE SUMMARISING AMOUNTS INCLUDED IN THE BALANCE SHEET RELATIVE TO SUBSIDIARY AND ASSOCIATED COMPANIES


Inventories and

advances (*)

TradeReceivables

FinancialReceivables

Advances received

Trade Payables

Financial Payables

SUBSIDIARIES

Indirect, residing in Italy

Acciaierie Bertoli Safau S.p.A. - Pozzuolo (UD) 4,011 1,736 0 10,592 303 46,684

Cecilia Danieli - Asili per l’Infanzia Srl - Buttrio (UD) 0 1 337 0 0 0

Danflat S.p.A. - Buttrio (UD) 0 5 0 0 82 35,840

Danieli Automation S.p.A. - Buttrio (UD) 72,034 9,998 0 0 65,657 29,681

Danieli Centro Combustion S.p.A. - Cinisello Balsamo (MI) 18,812 913 0 0 22,670 11,588

Danieli Centro Cranes S.p.A. - Rezzato (BS) 1,878 50 586 0 11,851 0

Danieli Construction International S.p.A. - Buttrio (UD) (159) 10,482 0 0 3,856 2,588

Danieli Special Cranes Srl - Gradisca d’Is. (GO) 0 40 0 20 189 195

Findan S.p.A. - Pradamano (UD) 0 14 0 0 11 5,041

IN.DE. S.p.A. Industrial Design - Pradamano (UD) 0 7 0 0 5 2,277

More S.r.l. - Gemona del Friuli (UD) 266 6 0 0 1,221 2,014

Qualisteel Srl - Pozzuolo del Friuli (UD) 0 360 0 0 0 0

Stem S.r.l. - Magnago (MI) (148) 232 0 0 20 1,874

Turismo 85 S.r.l. - Buttrio (UD) 0 580 0 0 159 0

Total companies residing in Italy 96,694 24,424 923 10,612 106,024 137,782

Direct, not residing in Italy

Danieli International S.A. - Luxembourg (LUX) 0 1 0 0 0 0

Industrielle Beteiligung S.A. - Luxembourg (LUX) 0 2 0 0 10 0

Indirect, not residing in Italy

ABS Centre Métallurgique Sarl - Metz (FRA) 0 0 0 0 11 0

ABS Sisak Doo - Sisak (HRV) 0 135 0 0 0 0

Danieli Centro Combustion India Pvt. Ltd. - Pune (IND) 0 1 0 0 0 0

Danieli Anatolia Makine San - Istanbul (TUR) 0 0 1 0 51 0

Danieli Banking Corporation S.A. - Luxembourg (LUX) 0 1 0 0 0 0

Danieli Canada Inc. - Toronto (CAD) 0 2 0 0 0 0

Danieli Centro Met Swiss GmbH - Rheinfelden (CHE) 0 2 0 0 1,002 0

Danieli Corporation - Wilmington (USA) (1,285) 8,999 0 1,252 3,181 0

Danieli Corus BV - Ijmuiden (NLD) 0 0 20 0 0 0

Danieli Czech Engineering A.S. - Prague (CZE) 660 0 178 0 17 0

Danieli UK Holding Ltd - Sheffield (GBR) 0 73 0 229 955 5,431

Danieli Do Brasil SA - Diadema (BRA) 2 184 0 24 609 0

Danieli Engineering Japan Co. Ltd. - Yokohama (JPN) 0 2 333 0 264 0

Danieli India Ltd - Kolkata (IND) 632 251 0 708 919 0

Danieli Engineering & Services GmbH - Völkermarkt (AUT) 0 3,330 1,941 0 2,784 0

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Danieli Co. Ltd. - Rayong (THA) 16,795 7,828 0 11,788 56,000 0

Danieli Heavy Machinery Engineering L.L.C.- Dnepropetrovsk (UKR) 0 1,530 0 0 829 0

Danieli Hellas SA - Athens (GRC) 0 4 0 0 0 0

Danieli Henschel GmbH - Kassel (DEU) 0 13 0 0 35 0

Danieli Henschel SAS - Chambery (FRA) 0 2 0 0 0 0

Danieli Henschel Service OOO - Moscow (RUS) 0 2 0 0 0 0

Danieli Hitech Gmbh - Mülheim (DEU) 0 0 0 0 348 1,562

Danieli Changshu Metall. Equipment & Services (Changshu) Co Ltd. Changshu (CHN) 15,605 4,832 0 13,586 8,392

0

Danieli Changsu Trading Co. Ltd - Changshu (CHN) 0 54 0 0 514 0

Danieli Metallurgical Equipm.(Beijing) Co Ltd. - Beijing (CHN) (374) 414 0 0 758 0

Danieli Middle East for Eng. Services (LMTD) - Cairo (EGY) 0 324 0 0 8,945 0

Danieli Procome Iberica S.A. - Sondica (ESP) (463) 280 0 62 1,256 1,728

Danieli Engineering Rom Srl - Cluj Napoca (ROU) 0 3 0 0 883 0

Danieli Riverside Products Inc. Bettendorf (USA) 0 4 0 0 0 0

Danieli Russia Engineering LLC - Moscow (RUS) 0 595 0 0 0 0

Danieli Volga LLC - Dzerdzhinsk (RUS) 0 274 0 0 0 0

DWU Engineering Polska - Wroclaw (POL) 0 2 17 0 124 0

Elsid Cheda Ltd. - Moscow (RUS) 0 0 0 0 4 0

Josef Fröhling GmbH - Meinerzhagen (DEU) 9,145 36,033 153 7,974 13,591 0

Industrial Beteiligung Serv. & Contr. Co. LLC - Al Khobar (SAU) 0 91 0 0 2,155 0

Industrielle Beteiligung Company Ltd. - HoChiMinh City (VNM) 0 91 0 0 273 0

Innoval Technology Ltd.- Banbury (GBR) 0 0 0 0 51 0

Morgårdshammar AB - Smedjebacken (SWE) 458 307 0 0 548 9,644

Rotelec SA - Bagnolet (FRA) (96) 17 0 0 4,401 1,745

Systec Automatizacija Doo - Labin (HRV) 0 5 0 0 768 0

Systec Doo - Nova Gorica (SLV) 0 3 0 0 158 0

Systec Eng. Doo - Smederevo (SRB) 0 5 0 0 101 0

Sund Birsta AB - Sundsvall (SWE) 241 26 0 0 1,177 9,849

Termo Makina San.V.T. AS, Istanbul (TUR) 362 22 0 0 442 0

W + K IndustrieTechnik GmbH & Co KG - Dortmund (DEU) (831) 6,767 0 337 17,285 716

Exchange differences (154) (56)

Total companies not residing in Italy 40,851 72,357 2,643 35,960 128,785 30,675

TOTAL 137,545 96,781 3,566 46,572 234,809 168,457

(*) including 5,050 thousand euro accounted for in current liabilities


ATTACHMENT No. X continued

SCHEDULE SUMMARISING AMOUNTS INCLUDED IN THE INCOME STATEMENT RELATIVE TO SUBSIDIARY AND ASSOCIATED COMPANIES


Operating revenues

Operating costs

Financial income

Financialcharges

SUBSIDIARIES

Indirect, residing in Italy

Acciaierie Bertoli Safau S.p.A. - Pozzuolo (UD) 9,731 (100) 3 (1,195)

Cecilia Danieli - Asili per l’Infanzia Srl - Buttrio (UD) 0 (250) 3 0

Danflat S.p.A. - Buttrio (UD) 5 0 0 (309)

Danieli Automation S.p.A. - Buttrio (UD) 13,089 (97,235) 0 (205)

Danieli Centro Combustion S.p.A. - Cinisello Balsamo (MI) 1,153 (25,379) 0 (92)

Danieli Centro Cranes S.p.A. - Rezzato (BS) 202 (12,420) 4 0

Danieli Construction International S.p.A. - Buttrio (UD) 798 (5,943) 3 (8)

Danieli Special Cranes Srl - Gradisca d’Is. (GO) 20 (702) 0

Findan S.p.A. - Pradamano (UD) 20 (351) 0 (44)

IN.DE. S.p.A. Industrial Design - Pradamano (UD) 7 0 0 (20)

More S.r.l. - Gemona del Friuli (UD) 6 (1,515) 0 (13)

Qualisteel Srl - Pozzuolo del Friuli (UD) 367 0 0 0

Stem S.r.l. - Magnago (MI) 589 (576) 0 (26)

Turismo 85 S.r.l. - Buttrio (UD) 569 0 0 0

Total companies residing in Italy 26,556 (144,471) 13 (1,913)

Direct, not residing in Italy

Danieli International S.A. - Luxembourg (LUX) 1 0 50,296 0

Industrielle Beteiligung S.A. - Luxembourg (LUX) 6 (20) 90,000 0

Indirect, not residing in Italy

ABS Centre Métallurgique Sarl - Metz (FRA) 1 (11) 0 0

ABS Sisak Doo - Sisak (HRV) 678 0 0 0

Danieli Centro Combustion India Pvt. Ltd. -Pune (IND) 1 0 0 0

Danieli Banking Corporation S.A. - Luxembourg (LUX) 1 0 70 (133)

Danieli Anatolia Makine San - Istanbul (TUR) 0 (156) 0 0

Danieli Canada Inc. - Toronto (CAD) 2 0 0 0

Danieli Centro Met Swiss GmbH - Rheinfelden (CHE) 2 (2,596) 0 0

Danieli Corporation - Wilmington (USA) 12,238 (1,906) 0 0

Danieli Czech Engineering A.S. - Prague (CZE) 963 (82) 1 0

Danieli Uk Holding Ltd. - Sheffield (GBR) 125 (2,384) 0 (40)

Danieli Do Brasil SA - Diadema (BRA) 386 (1,168) 0 0

Danieli Engineering Japan Co. Ltd. - Yokohama (JPN) 931 (430) 2 0

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DANIELI 157

Danieli India Ltd. - Kolkata (IND) 2,211 (1,135) 0 0

Danieli Engineering & Services GmbH - Völkermarkt (AUT) 8,785 (4,889) 5

Danieli Co. Ltd. - Rayong (THA) 29,214 (56,126) 0 0

Danieli Heavy Machinery Engineering L.L.C.- Dnepropetrovsk (UKR) 860 (2,235) 0 0

Danieli Hellas SA - Athens (GRC) 3 0 0 0

Danieli Henschel GmbH - Kassel (DEU) 13 (35) 0 0

Danieli Henschel SAS - Chambery (FRA) 553 (950) 0 0

Danieli Hitech Gmbh - Mülheim (DEU) 0 (1,107) 0 (14)

Danieli Changshu Metall. Equipment & Services (Changshu) Co Ltd. Changshu (CHN) 24,460 (14,865) 0 0

Danieli Changsu Trading Co. Ltd - Changshu (CHN) 841 (1,269) 0 0

Danieli Middle East for Eng. Services (LMTD) - Cairo (EGY) 26 (7,525) 0 0

Danieli Metallurgical Equipm.(Beijing) Co Ltd. - Beijing (CHN) 2,513 (2,114) 0 0

Danieli Procome Iberica S.A. - Sondica (ESP) 931 (4,131) 0 (9)

Danieli Riverside Products Inc. Bettendorf (USA) 4 0 0 0

Danieli Engineering Rom Srl - Cluj Napoca (ROU) 3 (940) 0 0

Danieli Russia Engineering LLC - Moscow (RUS) 1,924 0 0 0

Danieli Volga LLC - Dzerdzhinsk (RUS) 274 (60) 0 0

DWU Engineering Polska - Wroclaw (POL) 1 (1,593) 1 0

Elsid Cheda Ltd. - Moscow (RUS) 0 (25) 0 0

Josef Fröhling GmbH - Meinerzhagen (DEU) 48,250 (662) 0 (15)

Industrial Beteiligung Serv. & Contracting Co. LLC - Al Khobar (SAU) 497 (1,219) 0 0

Industrielle Beteiligung Company Ltd. - HoChiMinh City (VNM) 92 (890) 0 0

Innoval Technology Ltd.- Banbury (GBR) 0 (131) 0 0

Morgårdshammar AB - Smedjebacken (SWE) 190 (349) 1 (158)

Rotelec SA - Bagnolet (FRA) 17 (5,144) 0 (18)

Sund Birsta AB - Sundsvall (SWE) 27 (3,205) 0 (130)

Systec Doo - Nova Gorica (SLV) 3 (503) 0 0

Systec Automatizacija Doo - Labin (HRV) 5 (1,755) 0 0

Systec Eng. Doo - Smederevo (SRB) 5 (244) 0 0

Termo Makina San.V.T. AS, Istanbul (TUR) 22 (359) 0 0

W + K IndustrieTechnik GmbH & Co KG - Dortmund (DEU) 7,757 (51,768) 34 0

Total companies not residing in Italy 144,816 (173,981) 140,410 (518)

TOTAL 171,372 (318,452) 140,423 (2,431)

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DANIELI 159

DECLARATION IN ACCORDANCE WITH ART. 154-B PARA. 5 OF THE

TAX CONSOLIDATION ACT RELATIVE TO THE ANNUAL FINANCIAL

STATEMENTS (PURSUANT TO ART. 81-C OF CONSOB REGULATION

NO. 11971 OF MAY 14, 1999 AND SUBSEQUENT MODIFICATIONS

AND ADDITIONS)

1. We, the undersigned Gianpietro Benedetti, Chairman of the Board of Directors, and Alessandro Brussi, Manager responsible for the preparation of company accounting documents, of Danieli & C. Officine Meccaniche S.p.A. certify, also taking account of the provisions of art. 154-b, paragraphs 3 and 4, of legislative decree no. 58 of February 24, 1998:

• the suitability in relation to the characteristics of the company and

• the effective application of administrative and accounting procedures for the preparation of the annual financial statements, during the period from July 1, 2013 to June 30, 2014.

Assessment of the suitability of the administrative and accounting procedures for the preparation of the financial statements for the year to June 30, 2014 was based on a model established by Danieli & C. Officine Meccaniche S.p.A. consistent with the CoSO framework and also takes account of the document “internal control over financial reporting - Guidance for Smaller Public Companies”, both developed by the Committee of Sponsoring Organizations of the Treadway Commission, which is an internationally generally accepted reference framework.

2. It is also certified that the financial statements for the year to June 30, 2014

a) were prepared in compliance with the applicable international accounting standards recognised by the European Community pursuant to EC regulation no. 1606/2002 of the European Parliament and the Council, of July 19, 2002;

b) correspond with the accounting records and the entries therein;

c) provide, in an appropriate way, a true and fair view of the balance sheet, profit and loss and financial position of the issuing company.

3. The directors’ report contains a reliable analysis of performance and profit, together with a description of the principal risks and uncertainties to which they are exposed.

September 25, 2014

Chairman of the Board of Manager responsible for Directors the preparation of company Gianpietro Benedetti Alessandro Brussi Signed Signed

160 REPORT OF THE BOARD OF LEGAL AUDITORS

REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE

SHAREHOLDERS’ MEETING PURSUANT TO ART. 153

OF LEGISLATIVE DECREE 58/98 AND ART. 2429 OF THE CIVIL CODE

The monitoring activities for which the Board of Statutory Auditors is responsible were also carried out during the financial year ended June 30, 2014, in accordance with the principles of conduct recommended by the National Council of Accountants and Accounting Experts (the Italian accounting bodies), taking into account the indications provided by CONSOB (the Italian stock market regulator).

In particular, we report the following:

– we monitored observance of the law and of the company charter;

– we obtained from the directors, at least quarterly, information on activities and on the most important income statement, financial and balance sheet operations performed by the company (and its subsidiaries); we can, therefore, reasonably certify that the actions decided and put into effect did not appear to be obviously imprudent, risky, inconsistent with shareholders’ meeting resolutions or such as to compromise the integrity of the company assets;

– we obtained information about and monitored, insofar as it was within our competence, the adequacy of the company’s organisational structure, the observance of the principles of proper financial administration and the adequacy of the instructions given to the subsidiary companies pursuant to art. 114, paragraph 2 of Legislative Decree 58/98; we have no significant observations to make in this respect, as we consider that even external monitoring activities would only confirm the accuracy of the company’s operations;

– we noted that the company is effectively working to reduce the risk of administrative liability; for this purpose, through the Watchdog Committee, the company has improved the organisation of areas most at risk, such as those specified in Legislative Decree 231/01 and in subsequent supplementary provisions; it has also introduced new protocols and assigned resources to carry out tests and manage its Organization Model;

– we evaluated and monitored the adequacy of the administrative and accounting system (particularly the reliability of the latter to correctly represent the facts);

– we noted that the company has adopted an integrated risk management system as a valuable support to evaluate financial disclosure and compliance with the adopted processes and procedures (administrative and accounting), whose adequacy is thus verified; all in compliance with Italian Law 262/2005 and according to the provisions of Article 19, Letter a) of Italian Legislative Decree 39/10;

– we recommended on various occasions that the company improve and reinforce its internal control system, and that new qualified resources be assigned to it since the current system was deemed inadequate to perform this important task; however, we trust that the system will evolve and strengthen during this fiscal year, also considering that the procedure “COSO framework 2013” - already discussed in the period – was adopted;

– we held meetings with representatives of the external auditing company, pursuant to art. 150 paragraph 3 of Legislative Decree 58/98; no significant facts or information emerged that should be included in this report; the external auditors’ report (on both the company and consolidated financial statements) did not contain anything of significance;

– we held meetings with members of the Boards of Statutory Auditors of the subsidiaries; no anomalous situations were reported by them;

– we did not find any occurrence of atypical and/or unusual operations with Group companies or with third parties; the directors’ report includes exhaustive information about operations between group companies which – being numerous and of both an operating and financial nature – were carried out (also in the opinion of the Board of Statutory Auditors) within the framework of normal company activities and at market rates, and were appropriate to and in the interest of the company;

– the company has formulated and adopted procedures pertaining to transactions with related parties, as required by the specific regulations, should the requirements for the appointment of a specific committee not be in place on a recurring basis;

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DANIELI 161

– the company has opted not to adhere (since 2010) to the Corporate Governance Code established by the Committee for Corporate Governance of listed companies, providing justification in this respect;

– the company continues to comply with obligations pertaining to the proper use of information systems and the protection of privacy in accordance with the provisions of Legislative Decree 196/2003, working on and monitoring their implementation through the Watchdog Committee with the application of a specific protocol, and through personal data controllers;

– the directors’ report includes the directors’ evaluation of company risks, implementing the provisions contained in Legislative Decree 32/07, enacting European Community directive EC 51/2003;

– during the year, the currently appointed auditing company carried out the mutually agreed audit services; other entities associated with said company provided other services for the company or other Group companies (not those listed as disallowed in art. 159 paragraph 7 of Legislative Decree 58/98) for € 237,909. In any case, no situations emerged which could call into question the independence of the external audit company.

During the financial year or later and until now, no reports of irregularities were made to the Board of Statutory Auditors, nor were any reports or complaints submitted in accordance with art. 2408 of the Italian Civil Code.

Regarding the Consolidated Financial Statements for the year ended June 30, 2014, we advise that they were handed over to us within the timeframe required by law, together with the schedules, the attachments and the Directors’ Report.

The external audit company Reconta Ernst & Young S.p.A. was required to check that the consolidated financial statements matched the accounting records and were compliant with the regulations governing them; in its dedicated Report, the audit company stated that the consolidated financial statements of the Danieli Group for the year ended June 30, 2014 complied with the International Financial Reporting Standards adopted by the European Union and that items in the Consolidated Balance Sheet and Income Statement match information provided by companies included in the Consolidation. As part of the duties assigned to the Board of Statutory Auditors by law, and taking into account the principles of conduct recommended by the National Council of Accountants and Accounting Experts (the Italian accounting bodies), we have analyzed the form and content of the financial statements in question, which appear to have been prepared according to the criteria set out in the Explanatory Notes; the most significant questions pertaining to the main subsidiaries were brought to the attention of the Board of Statutory Auditors.

The information and data contained in the Directors’ Report on Consolidation Operations appear to match the results of the consolidated financial statements; the Report adequately illustrates the Group’s performance during the financial year and it represents the income statement, balance sheet and financial position of companies included in the consolidation; the consolidation criteria and accounting standards applied, as well as the scope of consolidation, are clearly indicated in the Explanatory Notes.

We certify, therefore, that the preparation of the consolidated financial statements can be reasonably considered as correct and – as a whole – complies with specific regulations.

Our monitoring activities were carried out in the course of nine meetings of the Board of Statutory Auditors and by attending five meetings of the Board of Directors.

During these activities, no omissions and/or reprehensible actions and/or irregularities or otherwise significant facts were found which would require mention in this report.

In conclusion, we invite you to approve the financial statements for the year ended June 30, 2014, in the form submitted to you for examination, together with the directors’ report, expressing our agreement to the proposal for allocation of the profit for the financial year.

Buttrio, October 3, 2014

The Board of Statutory Auditors

Renato Venturini

Gaetano Terrin

Chiara Mio

162 EXTERNAL AUDIT REPORT

EXTERNAL AUDIT REPORT

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DANIELI 163

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DANIELI 165

SHAREHOLDERS’ RESOLUTIONS

The shareholders’ of Danieli & C. – Officine Meccaniche S.p.A. met on October 28, 2014, to approve the financial statements for the year ended June 30, 2014, and to examine the consolidated financial statements for the same period.The assembly also resolved:1. to distribute a gross unit dividend of euro 0.30 for ordinary shares and of euro 0.3207 for non-

convertible savings shares, with both types of shares payable as of Nov. 12, 2014 (detachment date of coupon n.36: Nov.10, 2014 - record date Nov.11, 2014;); as per the statutory financial statements the distributed dividends represent the profits from fiscal 2013/2014.

2. to authorize the purchase/sale of own ordinary and savings shares to the maximum extent allowed by current regulations; the minimum and maximum purchase and sale price shall be a unit price between +20% and –20% of the official stock exchange price on the day preceding the one on which the transaction is to take place.

The shareholders also approved Danieli’s remuneration policy, the amounts paid and the implementation procedures described in the corresponding report. In an extraordinary session, the shareholders - pursuant to articles 2443 and 2420-ter of the Civil Code - resolved to renew the powers of the board of directors to increase share capital and to issue bonds; these powers had expired at the end of a 5-year term.

Danieli & C. Officine Meccaniche S.p.A.

Via Nazionale, 41

33042 Buttrio (Udine)

Share capital euro 81.304.566 i.v.

Number of registration with the Register

of Companies of Udine and

tax code: 00167460302

REA: 84904 UD

Phone +39 0432 1958111

fax +39 0432 1958289

www.danieli.com

[email protected]

Relations with institutional investors and

financial analysts:

fax +39 0432 1958863

e-mail [email protected]

Financial statements and publications are available at the company’s headquarters,

on the authorized storage mechanism www.1info.it

and on the company website:www.danieli.com, Investors section

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