SIMS LIMITED — Annual Report 2008

Aug 28, 2008

SIMS GROUP LIMITED

ABN 69 114 838 630

Preliminary Final Report given to the ASX under listing rule 4.3A

30 JUNE 2008

Appendix 4E

Preliminary final report

Name of entity
SIMS GROUP LIMITED
ACN or ARBN 69 114 838 630	Financialyear ended
69 114 838 630	30 June 2008

Results for announcement to the market

Results for announcement to the market	Results for announcement to the market	Results for announcement to the market
A$'000 Revenue from ordinary activities (item 1.1) Up 38.2% to 7,670,536 Profit (loss) from ordinary activities after tax attributable to members_(item 1.22) Up 81% to 433,162 Profit (loss) from extraordinary items after tax attributable to to members(item 2.5) (gain) loss of - Net profit (loss) for the period attributable to members (_item 1.11) Up 81% to 433,162
Dividends (distributions)	Amount per security	Franked amount per security
Final dividend_(item 13.4)_	75.0¢	23%
Previous corresponding period_(item 13.5)_	60.0¢	51%
Record date for determining entitlements to the dividend, (in the case of a trust, distribution) (item 13.2) Brief explanation of any of the figures reported above and any short details of any bonus or cash issue or other item(s) of importance not previously released to the market: Not applicable 10 October 2008

Page 1 of 16

SIMS GROUP LIMITED

Condensed consolidated statement of financial performance 1.1 Revenue from ordinary activities_(items 1.23 - 1.25) 1.2 Expenses from ordinary activities(item 1.26) 1.3 Borrowing costs expense 1.4 Share of pre-tax profits from associates and joint venture entities(item 14.1)_	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
	7,670,536 (7,048,905) (34,374) 64,573	5,550,897 (5,171,357) (30,405) 7,030
1.5 Profit (loss) from ordinary activities before income tax expense 1.6 Income tax expense on ordinary activities	651,830 (218,668)	356,165 (116,813)
1.7 Profit (loss) from ordinary activities after related income tax expense 1.8 Profit (loss) from extraordinary items after tax_(item 2.5)_	433,162 -	239,352 -
1.9 Net profit (loss) 1.10 Net profit (loss) attributable to outside equity interests	433,162 -	239,352 -
1.11 Net profit (loss) for the period attributable to members	433,162	239,352
1.12 Increase (decrease) in revaluation reserves 1.13 Net exchange differences recognised in equity 1.14 Other revenue, expenses and initial adjustments recognised directly in equity Defined benefit plan actuarial gain / (loss) (net of tax) Changes in fair value of cash flow hedges (net of tax) 1.15 Initial adjustments from UIG transitional provisions	34,145 (137,188) (7,827) (9,656) -	40,040 (82,169) 5,211 9,121 -
1.16 Total transactions and adjustments recognised directly in equity_(items 1.12 - 1.15)_	(120,526)	(27,797)
1.17 Total changes in equity attributable to members other than those resulting from transactions with owners in their capacity as owners	312,636	211,555
Earnings per security	Current period	Previous corresponding period
1.18 Basic EPS 1.19 Diluted EPS	306.0¢ 303.0¢	191.6¢ 190.5¢

Page 2 of 16

SIMS GROUP LIMITED

Notes to the condensed consolidated statement of financial performance

1.20 Profit from ordinary activities after tax_(item 1.7)_ 1.21 Less (plus) outside equity interests Profit (loss) from ordinary activities attributable to members	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
	433,162 -	239,352 -
1.22 Profit (loss) from ordinary activities after tax attributable to members	433,162	239,352
1.23 Revenue from sales of goods and services 1.24 Interest revenue 1.25 Other relevant revenue 1.26 Details of relevant expenses Other income Raw materials and finished goods included in cost of sales Freight expense Employee benefits expense Depreciation and amortisation expense Repairs and maintenance expense Other expenses from ordinary activities Revenue and expenses from ordinary activities	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
	7,665,591 2,876 2,069	5,548,520 2,364 13
	7,670,536	5,550,897
	(51,448) 5,324,584 778,668 404,873 94,557 126,192 371,479	(8,978) 3,847,254 540,178 296,421 75,177 117,993 303,312
	7,048,905	5,171,357
1.27 Interest costs capitalised in asset values 1.28 Outlays capitalised in intangibles (unless arising from an acquisition of a business) Capital outlays	- -	- -
1.29 Retained profits (accumulated losses) at the beginning of the financial period 1.30 Adjustment to opening retained profits - Identified Intangibles Adjustment 1.31 Net profit (loss) attributable to the members_(item 1.11)_ 1.32 Actuarial (loss)/gain on retirement benefit obligations (net of tax) 1.33 Net effect of changes in accounting policies 1.34 Dividends and other equity distributions paid 1.35 Transfers from/(to) reserves Consolidated retained profits	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
	420,734 - 433,162 (7,827) - (174,712) 3,821	337,840 (11,647) 239,352 5,211 - (150,022) -
1.36 Retained profits at end of financial period	675,178	420,734 Page 3 of 16

SIMS GROUP LIMITED

Intangible items 2.1 Amortisation of intangibles 2.2 Write off of goodwill in joint venture 2.3 Total amortisation of intangibles	CONSOLIDATED Currentperiod to 30 Jun 08	CONSOLIDATED Currentperiod to 30 Jun 08	CONSOLIDATED Currentperiod to 30 Jun 08	CONSOLIDATED Currentperiod to 30 Jun 08
	Before tax A$'000	Related tax A$'000	Related outside equity interests A$'000	Amount (after tax) attributable to members A$'000
	28,196 -	- -	- -	28,196 -
	28,196	-	-	28,196
2.4 Extraordinary items Details 2.5 Total extraordinary items	-	-	-	-
	-	-	-	-

Comparison of half year profits 3.1 Consolidated profit (loss) from ordinary activities after tax attributable to members reported for the 1st half year_(item 1.22 in the half yearly report)_ 3.2 Consolidated profit (loss) from ordinary activities after tax attributable to members for the 2nd half year	A$'000 Current period	A$'000 Previous corresponding period
	102,235	112,864
	330,927	126,488

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SIMS GROUP LIMITED

Current assets 4.1 Cash and cash equivalents 4.2 Receivables 4.3 Inventories 4.4 Derivative financial instruments 4.5 Assets classified as held for sale - land and buildings 4.6 Total current assets Condensed consolidated statement of financial position	At end of current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000	As in last half- yearly report 31 Dec 07 A$'000
	133,487 866,101 1,010,921 3,948 -	38,560 365,173 374,289 14,798 -	42,190 404,730 413,064 3,174 -
	2,014,457	792,820	863,158
Non-current assets 4.7 Receivables 4.8 Investments accounted for using the equity method 4.9 Property, plant and equipment 4.10 Retirement benefit surplus 4.11 Deferred tax assets 4.12 Intangibles (net) 4.13 Total non-current assets	2,963 335,826 950,210 - 111,360 1,402,156	- 25,945 681,846 7,454 64,599 626,414	- 249,426 628,562 7,803 66,584 417,180
	2,802,515	1,406,258	1,369,555
4.14 Total assets	4,816,972	2,199,078	2,232,713
Current liabilities 4.15 Payables 4.16 Derivative financial instruments 4.17 Current tax liabilities 4.18 Provisions 4.19 Total current liabilities	964,034 2,463 131,429 28,064	379,911 492 41,374 17,809	307,038 1,235 16,946 16,117
	1,125,990	439,586	341,336
Non-current liabilities 4.20 Payables 4.21 Interest bearing liabilities 4.22 Deferred tax liabilities 4.23 Provisions 4.24 Retirement benefit obligations 4.25 Total non-current liabilities	2,270 496,633 190,434 34,729 4,828	- 341,326 119,617 19,119 -	- 491,972 75,394 17,553 -
	728,894	480,062	584,919
4.26 Total liabilities	1,854,884	919,648	926,255
4.27 Net assets	2,962,088	1,279,430	1,306,458
Equity 4.28 Capital/contributed equity 4.29 Reserves 4.30 Retained profits 4.31 Equity attributable to members of the parent entity 4.32 Outside equity interests in controlled entities 4.33 Total equity	2,325,924 (39,014) 675,178	811,976 46,720 420,734	821,938 30,422 454,098
	2,962,088 -	1,279,430 -	1,306,458 -
	2,962,088	1,279,430	1,306,458

Page 5 of 16

SIMS GROUP LIMITED

Consolidated statement of cash flows Cash flows related to operating activities 5.1 Receipts from customers (inclusive of goods and services tax) 5.2 Payments to suppliers and employees (inclusive of goods and services tax) 5.3 Dividends received from associates and jointly controlled entities 5.4 Interest received 5.5 Interest paid 5.6 Income taxes paid 5.7 Net cash inflows from operating activities	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
	7,361,526 (7,009,047) 5,153 2,876 (34,374) (144,477)	5,683,089 (5,205,939) - 2,364 (30,405) (135,612)
	181,657	313,497
Cash flows related to investing activities 5.8 Payment for purchases of property, plant and equipment 5.9 Proceeds from sale of property, plant and equipment 5.10 (Payments)/proceeds from sale of controlled entities, equity and other investments and businesses Payment for purchases of equity investments and businesses 5.11 Net cash outflows from investing activities	(129,691) 2,022 (58,517) 48,496	(90,503) 8,203 (158,914) -
	(137,690)	(241,214)
Cash flows related to financing activities 5.12 Proceeds from borrowings 5.13 Repayment of borrowings 5.15 Proceeds from issues of securities (shares, options, etc) 5.16 Dividends paid 5.17 Net financing cash flows	936,670 (733,458) 5,735 (156,589)	940,339 (871,690) 1,872 (120,026)
	52,358	(49,505)
5.18 Net increase (decrease) in cash held 5.19 Cash at beginning of the financial year (see Reconciliation of cash) 5.20 Exchange rate adjustments to item 5.18	96,325 38,560 (1,398)	22,778 15,800 (18)
5.21 Cash at end of financial year (see Reconciliation of cash - Item 6.3)	133,487	38,560

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SIMS GROUP LIMITED

Non-cash financing and investing activities

Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows. If an amount is quantified, show comparative amount.

On 19 October 2007 $9.9m of dividends was satisfied by the issue of 330,581 shares and on 9 April 2008 $8.2m of dividends was satisfied by the issue of 286,836 shares under the Dividend Reinvestment Plan.

On 14 March 2008 Sims Group Limited acquired 100% of the share capital of Metal Management, Inc for $1,491m. The consideration given comprised of 53,473,817 ordinary shares in Sims Group Limited with a fair value of $1,491m and $10.5m of fully vested stock options assumed at fair value.

On 1 September 2007 Sims Group Limited completed the merger of its Southern Californian Metal Recycling assets with those of Adams Steel LLC amounting to an investment of $342.3m.

Reconciliation of cash

Reconciliation of cash at the end of the period (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows:	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
6.1 Cash on hand and at bank 6.2 Deposits at call 6.3 Total cash at end ofperiod (item 5.27)	112,944 20,543	31,404 7,156
	133,487	38,560
Ratios Profit before tax / revenue 7.1 Consolidated profit (loss) from ordinary activities before tax_(item 1.5)as a percentage of revenue from ordinary activites(item 1.1)._	Current period 30 Jun 08	Previous corresponding period 30 Jun 07
	8.5%	6.4%
Profit after tax / equity interests 7.2 Consolidated net profit (loss) from ordinary activities after tax attributable to members_(item 1.11) as a percentage of equity (similarly attributable) at the end of the period(item 4.33)_	14.6%	18.7%

• 8 Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of AASB 1027: Earnings Per Share are as follows.

Earnings per security (EPS) (a) Basic EPS Earnings calculated as net profit or loss adjusted to exclude: - any portion attributable to outside equity interest Weighted average number of ordinary shares outstanding during the period used in the calculation of the Basic EPS	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
	433,162 -	239,352 -
	433,162	239,352
	141,574,196	124,916,157
(b) Diluted EPS Basic earnings Weighted average number of ordinary shares outstanding during the period used in the calculation of the Basic EPS Weighted average number of potential ordinary shares	433,162	239,352
	141,574,196 1,374,355	124,916,157 704,319
	142,948,551	125,620,476

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SIMS GROUP LIMITED

NTA backing 9.1 Net tangible asset backing per ordinary security	Current period 30 Jun 08	Previous corresponding period 30 Jun 07
	$8.02	$4.67

Discontinued Operations

10.1

Not applicable

Control gained over entities having material effect

• 11.1 Name of entity (or group of entities)

Metal Management Inc

• 11.2 Consolidated operating profit (loss) and extraordinary items after tax of the controlled entity (or group of $87 million entities) since the date in the current period on which control was acquired

• 11.3 Date from which such profit has been calculated 14 March 2008 11.4 Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of $120 million entities) for the whole of the previous corresponding period

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SIMS GROUP LIMITED

Loss of control of entities having material effect

• 12.1 Name of entity (or group of entities) Not applicable 12.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group Not applicable of entities) for the current period to the date of loss of control

• 12.3 Date to which the profit (loss) in item 12.2 has been calculated Not applicable 12.4 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous Not applicable corresponding period

• 12.5 Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest leading Not applicable to loss of control

Dividends

13.1 Date the dividend is payable

27 October 2008

• 13.2 Registrable transfers received by the Company's share registrar, Computershare Investor Services Pty Limited at Level 3, 60 Carrington Street, Sydney, NSW, up to 5.00 pm if paper based, or by End of the Day if a proper SCH transfer, on 10 October 2008 will be registered before entitlements to the dividend are determined.

• 13.3 If it is a final dividend, has it been determined ?

Yes

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SIMS GROUP LIMITED

Amount per security

		Amount per security	Franked amount per security at 30% tax	Amount per security of foreign sourced dividend
13.4 13.5	Final dividend: Current Year Current Year - special Previous Year	65.0¢ 60.0¢ 10.0¢	23% 23% 51%	NIL NIL NIL
13.6 13.7	Interim dividend: Current Year Previous Year	55.0¢ 60.0¢	47% 57%	NIL NIL

Total dividend per security (interim dividend paid plus final declared dividend)

13.8 Ordinary securities held by: 13.9 Preference securities	Current year	Previous year
	130.0¢ -	120.0¢ -

Final dividend on all securities

Final	dividend on all securities
			Previous
			corresponding
		Current period	period
		30 Jun 08	30 Jun 07
		A$'000	A$'000
13.10	Ordinary securities	135,395	75,660
13.11	Preference securities	-	-
13.12	Other equity instruments	-	-
13.13	Total	135,395	75,660
The dividendplans shown below are in operation

The Sims Group Limited Dividend Reinvestment Plan, adopted by the Board of the Company on 2nd February 2006, applies to the final dividend. Shares will be issued at a 2.5% discount to the market. ARD holders will not be able to participate in the DRP, but the Company is reviewing various options to facilitate their participation in the future.

The last date(s) for receipt of election notices for the
dividend plans	10 October 2008
Anyother disclosures in relation to dividends

Not Applicable

Page 10 of 16

SIMS GROUP LIMITED

Details of aggregate share of profits (losses) of associates

Groups share of associates' and joint venture entities: 14.1 Operating profit (loss) from ordinary activities before income tax 14.2 Associates share of income tax expense 14.3 Operating profit (loss) from ordinary activities after tax 14.4 Jointly controlled entities income tax expense 14.5 Net profit (loss) 14.6 Adjustments 14.7 Share of net profit (loss) of associates and joint venture entities	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
	64,573 (4,161)	7,030 (2,281)
	60,412 (19,331)	4,749 -
	41,081 -	4,749 -
	41,081	4,749

Material interests in entities which are not controlled entities

The economic entity has an interest (that is material to it) in the following entities:

Name of entity	Percentage of ownership interest held at end of period	Percentage of ownership interest held at end of period	Contribution to operating profit (loss) and extraordinary items after tax(item 1.4 )	Contribution to operating profit (loss) and extraordinary items after tax(item 1.4 )
15.1 Equity accounted associates and joint venture entities	Current period 30 Jun 08 %	Previous corresponding period 30 Jun 07 %	Current period 30 Jun 08 A$'000	Previous corresponding period 30 Jun 07 A$'000
SA Recycling LLC Metal Management Nashville LLC Rondout Iron & Metal LLC Port Albany Ventures LLC Richmond Steel Recycling Ltd LMS Generation Pty Ltd Australian Refined Alloys Pty Ltd Australian Refined Alloys Sales Pty Ltd Extruded Metals (New Zealand) Ltd Sims Pacific Metals Ltd Consolidated Extrusions Pty Ltd Consolidated Extrusions (Management) Pty Ltd	50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 33.0 50.0 33.3 33.3	0.0 0.0 0.0 0.0 50.0 50.0 50.0 50.0 33.0 50.0 33.3 33.3	29,833 2,197 188 39 5,823 2,965 - - - 36 - -	- - - - 2,939 1,810 - - - - - -
15.2 Total			41,081	4,749
15.3 Other material interests
15.4 Total			-	-

Page 11 of 16

SIMS GROUP LIMITED

Issued and quoted securities at end of current period

16.1 16.2 16.3 16.4 16.5	Category of securities Ordinary securities Opening balance for accounting purposes Issued during the period Exercise of performance rights under the Former LTI Plan Vesting of restricted stock units under the Former LTI Plan Dividend Reinvestment Plan - Oct 07 Dividend Reinvestment Plan - Apr 08 Shares issued under the employee share plan recognised as issued following repayment of associated employee loans. Shares issued under the employee share plan recognised as issued following repayment of associated employee loans. Issued on acquisition of Metal Management Inc Issued on acquisition of Metal Management Inc Exercise of options issued under the Sims Group Limited Transition Incentive Stock Plan (SGLTISP) Exercise of options issued under the SGLTISP Exercise of options issued under the SGLTISP Closing balance for accounting purposes Ordinary shares issued under the Employee Share Scheme deemed unissued under AIFRS for accounts presentation purposes Opening balance Employee Shares issued during the period Recognised as issued for accounting purposes following repayment of associated employee loans. Recognised as issued for accounting purposes following repayment of associated employee loans. Closing balance for accounting purposes Ordinary Shares per share register	Total number	Number quoted	Issue price per security	Amount paid up per security
		125,851,663 52,711 123,431 330,581 286,836 15,517 67,142 53,217,567 256,250 123,000 61,500 30,750	125,851,663 52,711 123,431 330,581 286,836 15,517 67,142 53,217,567 256,250 123,000 61,500 30,750	$0.00 $0.00 $29.97 $28.64 $14.99 $18.73 $28.00 $0.00 $23.59 $16.00 $11.66 $14.99 $18.73	- - $29.97 $28.64 - - $14.99 $18.73
		54,565,285	54,565,285
		180,416,948 191,348 - (15,517) (67,142)	180,416,948 191,348 - (15,517) (67,142)
		108,689	108,689
		180,525,637	180,525,637

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SIMS GROUP LIMITED

Segment reporting

Refer Appendix 1

Basis of accounting preparation

• 17.1 This general purpose financial report for the financial year ended 30 June 2008 has been prepared in accordance with Accounting Standards, other mandatory professional reporting requirements (Urgent Issues Group Consensus Views), other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The accounting policies adopted are in accordance with Australian International Financial Reporting Standards. Comparative information has been reclassified where necessary to ensure comparability with the current period.

• 17.2 Material factors affecting the revenues and expenses of the economic entity for the current period.

Refer press release to ASX announcing financial year results

• 17.3 A description of each event since the end of the current period which has had a material effect and which is not already reported elsewhere in this Appendix or in attachments, with financial effect quantified (if possible).

None

• 17.4 Franking credits available and prospects for paying fully or partly franked dividends for at least the next year.

Based on current projections it is anticipated that dividends that may be paid next year will be partly and not fully franked.

• 17.5 Unless disclosed below, the accounting policies, estimation methods and measurement bases used in this report are the same as those used in the last annual report

Refer Appendix 2

• 17.6 Revisions in estimates of amounts reported in previous interim periods.

None

• 17.7 Changes in contingent liabilities or assets.

None

• 17.8 Events occurring after balance date

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SIMS GROUP LIMITED

Annual meeting

The annual meeting will be held as follows:

Place

Hotel Inter-Continental 117 Macquarie Street, Sydney Date Friday 21 November 2008 Time 11.00 am Approximate date the annual report will be available 21 October 2008

Compliance statement

• 1 This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX.

Identify other standards used Not applicable

• 2 This report, and the accounts upon which the report is based (if separate), use the same accounting policies.

• 3 This report does give a true and fair view of the matters disclosed.

• 4 This report is based on accounts to which one of the following applies.

The accounts have been audited. The � audit report which is unqualified will be The accounts have been subject to made available with the Company's review. financial report. The accounts are in the process of The accounts have not yet being audited or subject to review. been audited or reviewed.

• 5 The entity has a formally constituted audit committee.

==> picture [162 x 31] intentionally omitted <==

Sign here: ........................................................... Date: 29 August 2008 (Company Secretary) Print name: Frank Moratti

Page 14 of 16

Appendix 1

SIMS GROUP LIMITED

OPERATING SEGMENTS

Sales to external customers Inter-segment sales Total sales revenue Other revenue / income Total segment revenue / income Share of pre-tax profits of associates Segment EBITDA Depreciation and amortisation expense Segment EBIT Interest income Finance costs Profit before income tax Segment and Total Assets Segment and Total Liabilities Net Assets Acquisitions of property, plant and equipment Acquisition of goodwill and intangibles Other non-cash expenses Sales to external customers Inter-segment sales Total sales revenue Other revenue / income Total segment revenue / income Share of pre-tax profits of associates Segment EBITDA Depreciation and amortisation expense Segment EBIT Interest income Finance costs Profit before income tax Segment and Total Assets Segment and Total Liabilities Net Assets Acquisitions of property, plant and equipment Acquisition of goodwill and intangibles	North America $'000	Australasia $'000	Europe $'000	Inter-segment eliminations/ unallocated $'000	Consolidated $'000
	2008
	4,607,898 1,745,109 1,312,584 - 7,665,591 - 400 - (400) -
	4,607,898 1,745,509 1,312,584 (400) 7,665,591 2,293 1,182 1,470 - 4,945
	4,610,191 1,746,691 1,314,054 (400) 7,670,536
	60,271 4,302				64,573
	466,096 195,232 116,557 54,516 17,116 22,925				777,885 94,557
	411,580 178,116 93,632 3,435,660 685,798 695,514 1,056,584 266,382 531,918				683,328 2,876 (34,374)
					651,830
					4,816,972 1,854,884
	2,379,076 419,416 163,596				2,962,088
	59,987 32,588 37,115				129,690
	995,996 17,630 24,315				1,037,941
	11,843 23,765 2,132				37,740
	2007
	2,938,246 1,465,383 1,144,891 - 5,548,520 - 894 - (894) -
	2,938,246 1,466,277 1,144,891 (894) 5,548,520 512 435 1,430 - 2,377
	2,938,758 1,466,712 1,146,321 (894) 5,550,897
	4,446 2,584 - -				7,030
	204,326 167,721 87,336 - 40,676 14,100 20,401 -				459,383 75,177
	163,650 153,621 66,935 - 1,167,673 514,759 516,646 - 363,976 177,416 378,256 -				384,206 2,364 (30,405)
					356,165
					2,199,078 919,648
	803,697 674,686 138,390 -				1,279,430
	42,684 25,019 22,800 -				90,503
	52,698 4,744 41,798 -				99,240

Page 15 of 16

Appendix 2

SIMS GROUP LIMITED

Effect of Correction of Error on the Financial Statements

As part of the process of preparing for the merger with Metal Management Inc and during the course of the current year audit of the company’s financial statements, two errors were revealed that required adjustments to the made to its accounts. Both these adjustments, which related to prior periods and were of a non-cash nature, were made in the financial statements, as appropriate, in the relevant comparative years presented therein.

The first of the two adjustments related to the recognition of amortisable intangible assets including supplier relationships that had not been previously recognised in past business combinations. This adjustment impacted prior period Income Statements and Balance Sheets. The second related to the recognition of deferred tax liabilities on land revaluations not previously recorded in respect of certain US subsidiaries and impacted prior period Balance Sheets and Statements of Recognised Income and Expenses. Applying the principles of AASB 108 Accounting Policies, Changes in Accounting Policies Estimates and Errors the Group determined these items to be material to the consolidated financial statements and therefore fully quantified and adjusted for these prior to the finalisation of the financial statements.

The Group is improving its control systems to minimise the risk of a recurrence of such errors. The Group may make further disclosure regarding these matters, in its Form 20F expected to be lodged with the US Securities and Exchange Commission prior to 31 December 2008.

The effect of the correction of the errors on the Statements of Recognised Income and Expense is as follows:

Effect of correction of error Total equity at the beginning of the financial year Recognition of deferred tax on US subsidiaries land revaluations Recognition of intangible asset amortisation Restated total equity at the beginning of the financial year Profit as reported in the 2007 financial report Recognition of deferred tax on US subsidiaries land revaluations Recognition of intangible asset amortisation Restated profit	Consolidated 2008 2007 2006 $'000 $'000 $'000 1,324,652 1,196,785 517,001 (20,723) (1,921) - (24,499) (11,666) -
	1,279,430 1,183,198 517,001
	- 254,375 196,646 - - - - (15,023) (10,277)
	- 239,352 186,369

Effect of correction on earnings per share:

The above correction to 2007 and 2006 profits reduced earnings per share by 12.0 cents and 9.1 cents to 191.6 cents and 165.1 cents respectively, and reduced diluted earnings per share by 12.0 cents and 9.1 cents to 190.5 cents and 164.6 cents respectively.

• This item is consistent with that previously reported by the Group in its 31 December 2007 Half Year Report.

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