SIMS LIMITED — Annual Report 2007

Aug 30, 2007

31 AUGUST 2007

==> picture [74 x 37] intentionally omitted <==

==> picture [74 x 37] intentionally omitted <==

==> picture [163 x 36] intentionally omitted <==

ASX & MEDIA RELEASE (ASX CODE: SGM)

SIMS GROUP REPORTS 29% INCREASE IN NET PROFIT AFTER TAX TO RECORD $254.4 MILLION

Highlights

• Sales revenue of $5.55 billion up 48% on FY06

• EBITDA of $459.4 million up 34% on FY06

• Record net profit after tax of $254.4 million up 29% on FY06

• Earnings per share of 203.6 cents up 17% on FY06

• Dividends per share of 120 cents up 14% on FY06

• Mitsui becomes a substantial cornerstone investor

• North American region the largest contributor to revenue and profits

• Continued focus on growth via consolidation

• Strong and growing contribution from Sims Recycling Solutions

Sims Group Limited Group Chief Executive, Jeremy Sutcliffe, announced today that the Company had achieved a record net profit after tax for the financial year ended 30 June 2007 of $254.4 million, a 29% increase on the previous year. This represents a 17% increase in earnings per share to 203.6 cents. EBITDA (earnings before interest, tax, depreciation and amortisation) was up by 34% on the previous year. Sales revenue increased 48% to $5.55 billion.

Mr. Sutcliffe said, “the 2007 result, which is at the top end of our recent guidance, reflects a strong year for all of our regional businesses. The fourth quarter result was very strong with net profit after tax of $78.9 million, following a rebound in global ferrous prices and a greatly improved contribution from our North American operations. Volumes approaching 10 million tonnes handled in the year are a true reflection of the size and strength of our business today.”

Australia & New Zealand Region

Sims’ Australian and New Zealand businesses achieved a solid result with sales revenue up 20% to $1.47 billion and EBIT (earnings before interest and tax) up by 23% to $153.6 million.

Mr Sutcliffe said, “both our Australian ferrous and non ferrous operations performed well with EBIT growth year on year in excess of 30%.”

North American Region

The performance of Sims’ North American business (including the former Hugo Neu business which, for the first time, contributed a full 12 months) improved significantly in the fourth quarter. For the full year, sales revenue was up 69% to $2.94 billion and EBIT up by 49% to $184.1 million.

Mr Sutcliffe said, “the 2007 financial year saw the completion of the operational and management integration of the former Hugo Neu business. Markets in the US remain intensively competitive, but as the fourth quarter shows, a combination of the right market dynamics and management focus can deliver excellent returns.

“In the short term, our focus is on completing the Adams Steel joint venture in Southern California (scheduled for 1 September 2007). Management is also committed to technological upgrades to further improve metallic and plastics yields from our shredder waste streams.

“Looking further ahead, we will also continue to review further opportunities in the fragmented North American metals recycling market to consolidate our existing positions and further extend our footprint,” Mr Sutcliffe said.

European Region

Sims’ European businesses (include Sims Recycling Solutions) also performed strongly with sales revenue up 44% to $1.44 billion and EBIT up by 31% to $70.1 million.

Mr Sutcliffe said, “as with Australia, we saw improvements in our UK metals recycling business with EBIT increasing by in excess of 20% for both our ferrous and non ferrous divisions.”

Sims Recycling Solutions

Sims Recycling Solutions continued its impressive growth with sales revenue of $450.2 million up 79% on the previous year and EBIT of $66.9 million (pre-corporate costs) up 82% on 2006.

“Sims Recycling Solutions delivered a very encouraging result and its contribution to Group EBIT (net of corporate costs) for the year was 14.1%. This increased to 16.1% (net of corporate costs) in the fourth quarter, with the acquisitions of URI and Noranda in North America”, noted Mr Sutcliffe.

Sustainability

Sims’ ferrous scrap used by steel manufacturers (as opposed to virgin materials), generated embedded energy savings of 105 petajoules, in the 2007 financial year alone, which is enough to power almost 40% of Australian homes for one year. The use of Sims’ recycled ferrous scrap in 2007 also reduced carbon dioxide emissions by 10.3 million tonnes.

“In addition, the use of Sims’ recycled non ferrous metals and plastics (as opposed to virgin materials) also resulted in very significant embedded energy savings. The electronic equipment recycled by Sims Recycling Solutions contributed a further 625,000 tonnes of carbon dioxide emission reductions,” Mr Sutcliffe said.

Sims remains strongly committed to Corporate Sustainability Reporting and considers the management of non-financial risk of equal importance to the traditional areas of governance and fiscal management.

Safety

The Group’s lost time injury frequency rate rose slightly again for the second consecutive year. Mr Sutcliffe said, “Safety is a matter of ongoing concern for Sims’ directors and management, and we will continue to do everything we can to improve the safety performance of our operations. Tragically, we experienced a fatality in the UK during the year. We must, and will, redouble our energies to provide a safe working environment for our employees and the public.”

Markets and Outlook

The potential benefits flowing from improved US$ C&F (cost and freight) ferrous prices in the first quarter were more than offset by higher ocean freight rates and a weak US dollar. For these reasons, we anticipate a softer quarter, with earnings unlikely to match those of the corresponding period in the 2006 financial year, which was $68 million.

On the positive side, the Company is now seeing further increases in US$ C&F ferrous prices as it makes sales for the second quarter. This, coupled with freight rates currently easing slightly (albeit from high levels) and a stronger US dollar, give cause for optimism as we look beyond September. Similarly, the supply/demand equation for non ferrous metals is balanced in favour of the supplier and with the strength of Asian economies outweighing any negative impact of a slowdown in the US economy.

We remain confident about the Company’s prospects in the year ahead.

Dividend

The Company has determined that a final dividend of 60 cents per share (51% franked) will be paid on 19 October 2007 to shareholders on the Company’s register at the record date of 5 October 2007. This provides shareholders with a total dividend for the year of 120 cents (54% franked) up 14% on the previous year.

The Company’s Dividend Reinvestment Plan (‘DRP’) will apply to the final dividend. All eligible shareholders who are registered as holding shares in the Company at the record date and who have provided the Company with the requisite Notice of Election form prior to that date will be eligible to participate. Shares will be issued at a 2.5% discount to the Company’s weighted average market price over a period of 5 trading days commencing on the trading day after the record date.

The dividend determined above is payable in cash or additional shares (pursuant to the DRP) at the election of eligible shareholders. Foreign shareholders will be relieved of any withholding tax on the unfranked portion of dividends paid, as a consequence of the application by the Company of Foreign Conduit Income Credits .

Sims Group’s core business is metal recycling, with a growing business in recycling solutions. Headquartered in Australia, Sims earns around 70 per cent of its revenue from international operations in the United Kingdom, Continental Europe, North America, New Zealand and Asia. Sims has over 3,500 employees, annual turnover of A$5.5 billion and is listed on the Australian Stock Exchange (ASX CODE: SGM)

For further information contact :

Jeremy Sutcliffe Group Chief Executive

or

Stuart Nelson Director, Corporate Services

Sims Group Limited 41 McLaren Street NORTH SYDNEY NSW 2060 ABN 69 114 838 630

Phone: (02) 9956 9180

Encl.

31 AUGUST 2007

==> picture [74 x 37] intentionally omitted <==

==> picture [74 x 38] intentionally omitted <==

==> picture [163 x 36] intentionally omitted <==

FINANCIAL OVERVIEW FY07

	FY07	FY06	Change (%)
Operating Revenue ($m)	5,548.5	3,752.4	48%
EBITDA ($m)	459.4	343.4	34%
EBIT ($m)	407.8	301.9	35%
NPAT ($m)	254.4	196.6	29%
EPS (cents)	203.6	174.2	17%
DPS (cents)	120	105	14%
ROCCE (%)	24.4	26.2	(7%)
ROE (%)	19.2	16.4	17%
Operating Cash Flow ($m)	313.5	208.6	50%
Capital Expenditure (exc. Acquisitions) ($m)	90.5	76.5	18%
Net Debt ($m)	302.8	285.7	6%
Net Debt / (Net Debt + Equity) (%)	18.6	19.3	4%
Sales Tonnes (m)	9.589	7.706	24%
Final Dividend (51% franked) (cents)	60.0	60.0	0%

FY07 EBIT BY REGION

$m	FY07	FY06	Change (%)
Australia & NZ	153.6	124.8	23%
North America	184.1	123.4	49%
Europe	70.1	53.7	31%
Total	407.8	301.9	35%

FY07 EBIT BY PRODUCT

$m	FY07	FY06	Change (%)
Ferrous Trading incl. NFSR	245.6	193.7	27%
Ferrous Brokerage	20.5	12.0	71%
Non Ferrous Trading	99.5	74.6	33%
Non Ferrous Brokerage (incl. stainless)	17.3	4.1	321%
Manufacturing / JVs / SimsSteel	26.1	26.8	(2.6%)
Recycling Solutions	66.9	36.8	82%
Corporate Costs	(68.1)	(46.1)	48%
Total	407.8	301.9	35%