Contents CONTENTS MESSAGE FROM THE GENERAL MANAGER... 5

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1 Annual Report 09

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3 Annual Report 09

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5 CONTENTS Contents MESSAGE FROM THE GENERAL MANAGER... 5 Invitation to Ordinary General Shareholders Meeting... 7 BOARD OF DIRECTORS MEMBERS... 8 THE ETEM GROUP... 8 FINANCIAL FIGURES...17 AUDIT REPORT OF INDEPENDENT CERTIFIED AUDITOR-ACCOUNTANT...21 ANNUAL REPORT...23 CONTACT WITH SHAREHOLDERS...37

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7 Message From The General Manager During the fiscal year 2009, the company made successful efforts to reduce operating expenses, improve working capital and further strengthen its presence in the market so as to evolve into an extrovert and customer-centred organization. The outcome of these efforts became evident in the second half after a difficult start due to the macroeconomic crisis. Regarding the architectural product, we laid emphasis on more rigorous quality control, ongoing development, better service and training of our network and focus on end consumers. As a result of these efforts, we estimate that starting from the second half, we improved both our presence and our market share in a nonetheless difficult and downward market. Regarding the industrial product, we gave priority to the quality and competitiveness of our exports and as of the second half we saw a slight recovery of our sales. At Group level, sales amounted to 103,3 million with losses equal to 13,1 million compared to sales of 158,7 million in 2008 and losses of 15,7 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the ETEM Group stood at profit equal to 1 million (2008: losses 3 million). In 2009, the sales of ETEM S.A. amounted to 53,4 million with losses equal to 10,8 million compared to sales of 101,2 million in 2008 and losses of 17,3 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the company stood at loss equal to 2,7 million (2008: losses 10,1 million). Throughout the fiscal year 2009, the company geared its efforts to reduce operating cost and generate positive cash flows. More specifically, the cash flows from the year s operating activities are positive at both consolidated and company level. Consolidated operating flows stood at 8 million compared to 9,4 million in 2008, while the respective company flows amounted to 3,3 million compared to 3,1 million over the previous fiscal year. During 2009, the separation of the ETALBOND sector and its transfer to ETALBOND S.A. was completed, to ensure better service to our customers. In addition, it was decided to launch the merger of ETALBOND S.A. and ELVAL COLOUR S.A. (subsidiary of ELVAL S.A.) through absorption of ETALBOND S.A. by ELVAL COLOUR SA. The absorption is expected to be completed during the first six months of In Bulgaria, the plastic unit construction works were completed while the PVC profile production process started. The company pursues its discussions with candidate partners for the construction of an extrusion plant in Libya while during 2009 our Italian subsidiary Alubuild was put into a state of liquidation. Dear Shareholders, 2010 raises new macroeconomic challenges. We believe we have taken the right steps to develop our network, promote our products in Greece and abroad and also to further reduce working capital, wherever possible. We will pursue the efforts to rationalize and improve our network internally and within our subsidiaries together with the design of new innovative products. Dimitris Pavlakis General Manager 5Message From The General Manager

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9 Invitation to Ordinary General Shareholders Meeting INVITATION Invitation to Ordinary General Shareholders Meeting of the Societe Anonyme trading as ΕΤΕΜ S.A. LIGHT METALS COMPANY, Société Anonyme Société Anonyme Registry No. 7777/06/Β/86/17. In accordance with the law and the Company s Articles of Association, the Board of directors of the société anonyme ETEM S.A. - LIGHT METALS COMPANY Société Anonyme hereby invites its shareholders to an Ordinary General Assembly on Wednesday, 16 June 2010, 11:30 am, at the PRESIDENT Hotel, at 43, Kifissias Avenue, Athens. ITEMS OF THE AGENDA 1. To approve the annual financial statements of fiscal year 2009 and the reports prepared by the Board of Directors and Certified Auditors thereon. 2. To relieve the members of the Board of Directors and the Certified Auditors of all liability with regard to the financial administration for fiscal year To appoint ordinary and alternate Certified Auditors for fiscal year 2010 and determine their fees. 4. To elect a new member on the Board of Directors as a substitute of the withdrawing Mr. Efstathios Striber. 5. To elect a new member on the audit committee. 6. To approve the fees paid to the Board of Directors in compliance with Article 24(2) of Codified Law 2190/ To issue ordinary bond loans. 8. Miscellaneous announcements. Any shareholders who wish to attend the General Assembly are required, at least five (5) days prior to the date of the Assembly, namely until Friday 11 June 2010, to deposit the documents certifying that their relevant shares are blocked together with the powers of attorney appointing their proxies, to the company s offices, at 16 Cheimaras Str., Marousi (tel.: , fax: ), in accordance with the provisions laid down in the Law and in the company s Articles of Association. Athens, 20 May 2010 THE BOARD OF DIRECTORS 7Invitation to Ordinary General Shareholders Meeting

10 Board Of Directors Members 1. Kallergis Markos Chairman, Non-Executive Member 2. Pavlakis Dimitrios Vice-Chairman, Executive Member 3. Kallergis Antonios Executive Member 4. Ikonomou Ioannis Executive Member 5. Papanikolaou Charalambos Non-Executive Member 6. Kyriazis Andreas - Non-Executive, Independent Member 7. Striber Efstathios - Non-Executive, Independent Member The Etem Group Board Of Directors Members 1. ETEM Factory (Magoula) Aluminium extrusion ETEM S.A. is operating in the production of architectural systems and industrial profiles. It has aluminium extrusion facilities in Magoula, Attica, and Sofia, Bulgaria. The factory at Magoula started its operation in 1971 and now has 3 extrusion lines (extrusion force of 2.200, and tons), with a state-of-the-art vertical powder coating plant, a horizontal powder coating plant for woodlike surfaces and a heat-insulating aluminium system production line. Its total annual production capacity is almost tons. The total surface area of the factory s building facilities is 27 thousand square meters in a plot of land of a surface area of 73 thousand square meters. The factory manufactures aluminium profiles and components for doors, windows and façades, heat-insulating and other systems, which are powder-coated or anodized. It also manufactures aluminium bars of different cross-sections and alloys, as well as special aluminium profiles for the automotive industry. 2. ANOXAL Factory (Agios Thomas, Viotia) Foundry The foundry of the ETEM Group was established at Agios Thomas, Viotia, in In late 2008, it was transferred by ETEM to the subsidiary ANOXAL and was further sold by 55% to ELVAL. The foundry focuses on the recycling and casting of aluminium for the production of billets and slabs, and includes the following: 1 horizontal casting unit of a total annual production capacity of tons. 3 casting furnaces. 3 homogenization furnaces.

11 3. ETALBOND Factory (Agios Thomas, Viotia) Composite aluminium panels Three production lines that produce composite panels ETALBOND are established at Agios Thomas, Viotia, which following the separation of the ETALBOND sector from ETEM, now belong to the subsidiary ETALBOND S.A. COM- POSITE ALUMINIUM PANELS. The factory manufactures especially produced ETALBOND sheets (sandwich panels), which are made from aluminium and feature an intermediate layer of ETALBOND LIGHT polyethylene insulation. The plant s total annual production capacity reaches square meters. 4. STEELMET Factory (Sofia, Bulgaria) Aluminium extrusion The factory of the STEELMET subsidiary in Sofia, Bulgaria, started its operation in 1999 and now focuses on the manufacture of industrial and architectural aluminium profiles. Its manufacturing facilities are housed in buildings of a total surface area of 40 thousand square meters, and include the following: 3 extrusion lines of an extrusion power of 1.500, and tons. 1 state-of-the-art vertical powder coating plant. 1 horizontal powder coating plant for wood imitation surfaces. 2 heat-insulating aluminium system production lines. In the plot of land owned by STEELMET in Sofia, of a total surface area of 131 thousand square meters, a modern product distribution centre was constructed in 2008 to meet the needs of the wider geographical region of the Balkans, and the Central and Eastern Europe. 5. QUANTUM Factory (Sofia, Bulgaria) The factory of QUANTUM, which is a subsidiary of Steelmet Bulgaria, was set up in 2007, started its production activities in 2009 and is operating in the production of plastic profiles. The investment has been established in a plot of a total surface area of sq.m. and includes: 3 extrusion lines; 1 plastic compound production line; 1 packaging line; 1 plastic recycling unit. EXTRUDED PRODUCTS 1. Architectural aluminium profiles The ETEM architectural aluminium profiles include products used in houses and professional facilities. The line of products used in houses includes opening or sliding systems for doors and windows, roller shutters and blinds, as well as photovoltaic systems. Their main features are perfect heat insulation, sound insulation, tightness and security properties. The line of products used in professional facilities includes ventilated façades, indoor partitions, surface coating products, shading systems, glass panes and photovoltaic systems. During the last few years, ETEM has invested in the development of innovative architectural systems by integrating and upgrading the range of its architectural solutions. The Etem Group 9

12 The main driver was to provide upgraded solutions to individual customers and professionals of the sector by offering systems attaining superior certifications without any resultant increase in the weight and, thus, the construction cost. ETEM now has the fullest range of architectural systems which includes: 2. Industrial aluminium profiles Having a wide gamut of products ranging from custom-made profiles for general and special architectural applications such as greenhouses, pyramids and domes, shading systems, furniture, profile systems for road signs and other kinds of signs of a width from 150 to 300mm to photovoltaic system support profiles, sheds, garages, over the last few years ETEM has evolved especially with respect to profiles for truck, bus and ship bodies and frames, seats, ramps, as well as applications intended strictly for the automotive industry. Our involvement in the quite demanding car manufacturing industry enabled us to approach extrusion, production as well as testing and quality assurance in a totally different manner. In addition to the know-how regarding production, sale and distribution, ETEM is driven by an attitude that is totally new to the Greek extrusion industry, being dedicated to the supply, customer service and maintenance of extremely demanding and complex products. Through significant investments in leading-edge equipment and personnel training, as of 2004 ETEM is a direct supplier of BMW, providing the company with the frames for the 1 and 3 series, and is an indirect supplier of AUDI for AUDI A3 doors and for the new AUDI TT frame support structures, of VOLKSWAGEN and PORSCHE for the Porsche Cayenne and VW TUAREG doors while a partnership for new models of electric vehicles is underway. Ongoing evaluation by our customers BMW and AUDI demonstrates our success in terms of customer satisfaction and ranks us among the most effective suppliers of the automotive industry. Of all the Industrial Profiles that are manufactured, 25% are allocated to the domestic market for furniture, shading products, signposts, photovoltaic systems and various other industrial applications. The remaining production is exported all over the world and especially in Europe with the largest markets consisting in Germany, Czech Republic, Poland, France, Italy, Spain, United Kingdom as well as Bulgaria, Romania and Cyprus where the assistance and support offered by our sales offices, which are located in the heart of these major European countries, enable us to offer our services in a very professional and conscientious manner. INTERNATIONAL ACTIVITIES The Etem Group Strategy, incentives and presence of the ETEM Group via subsidiaries ETEM currently strengthens its position in Greece and the Balkans while expanding on the global map. We are committed to an equally dynamic performance in the future, with new increased capabilities and more competitive terms, modern organization and corporate transparency, efficient strategy and innovative spirit, consistent vision and respect for inheritance and our primary goal: to create and offer value, today and in the future. The incentives of the multinational activity of our subsidiaries are related to the quest for new markets and are the following: Exploitation of new markets Maintenance of competitive position in the international market Creation of a global product Meeting consumer needs in the host countries Horizontal integration The products manufactured or forwarded to our subsidiaries are adapted to the needs of each host market, clearly reflecting the pressure of the international competition which necessitates immediate response to specific consumer circumstances.

13 Our subsidiaries in Bulgaria and Serbia have a leading position in the architectural profile sector with strong trademarks and the largest distribution network in these countries. They are dynamic financial players given that they are important employers and investors promoting employment and development of the above countries. The modern industrial facilities in both Greece and Bulgaria provide quality products and take advantage of the strong team of executives that has a significant geographical presence in more than 20 countries owing to their accumulated experience in international development. Our trading companies in Ukraine and Romania implement a multi-area expansion strategy and bolster the parent company s extrovert character aiming at the future development of the ETEM Group. The dynamic presence of all ETEM subsidiaries abroad stresses the high skills and capabilities of these companies to penetrate new markets and prevail over other domestic and foreign competitors. Innovative Products ETEM ventilated façade systems The ETEM ventilated façade systems are designed so as to create a safe installation of various materials for façades in a building s main structure. The main principles applying to the design of our Bravo, Vario and Forte systems ensure a gap of 4x8 cm between the façade s materials and the building s thermal insulation so as to attain the best result, allowing the free movement of each element in line with the respective ratio of expansion to absorption of dynamic loads. The core elements of the systems are designed following preliminary simulation under the highest pressure and strain and, thus, the optimum shape is determined, ensuring a high level of construction reliability. ETEM, in cooperation with Agrob Buchtal, the leading manufacturer of ceramic façades in Germany, has developed ventilated systems for ceramic tile support systems of the Kera Twin series with a thickness of mm. The Vario system is different from all existing solutions because it has a basic support profile the shape of which accurately joins the gap between the two adjacent tiles. The Etem Group 11

14 The Etem Group The Bravo system is designed for the installation of composite materials and metal plates using the most successful principle of suspended panels. The unique design of the ETEM architectural systems combines the main support profiles with mounting arms for L-shaped walls. There are more than 30 types of support arms with a length ranging from 40 to 300 mm, which ensure the alignment of the façade s materials while also eliminating any irregularities in the construction base. The Forte ventilated façades are designed to support façades materials of a large weight such as stone and marble with a thickness over 20 mm. The profiles and components are designed to bypass extreme loads caused by the façades materials weighing up to 80 kg/m2. Forte systems are designed according to the EIS (ETEM INTEGRATED SO- LUTION). The EIS is a product including a system of procedures aiming to guarantee to customers the highest safety levels of the architectural systems that are used. The Forte system is developed in compliance with the rules of UNI 7959, DIN and the European standards that have been adopted by the ETEM architectural systems. The procedure applying to the ETEM ventilated façades guarantees each system in its entirety and each separate element of the infrastructure. The selection of the ETEM architectural systems as supplier is also secured by an Allianz guarantee and safety system for more than Euro 1 million. In addition, the ventilated façade systems take advantage of the natural ventilation principle according to which cold air moves from lower layers to higher ones thus cooling the façade s material. Based on the natural ventilation principle, it also cools photovoltaic panels while guaranteeing their rapid and safe installation. Furthermore, they are designed to have photovoltaic panels (PV) installed in each façade and allow the ideal use of their capacity. ETEM shading system One of the most important factors in modern buildings is their protection from overheating in the summertime.

15 Concurrently, natural light and controlled access thereto ensure significant comfort for residents and contribute to the efficient energy operation of buildings. These important functions are fulfilled through sun-protection elements. The E-66 system offers shades of various types and designs with their dimensions ranging from 150 to 600 mm. The rich colour charts boost the creativity of each designer. In addition, they come with the option of self-cleaning finish that offers significant advantages in an urban environment. The multiple variations and support methods foster free creation of modern operational buildings with impressive prospects. Shades may be installed horizontally or vertically, parallel or vertically to a building. They may be also used as pergolas on terraces or sheds in entrance doors. They may also be mounted in a specific angle that will be calculated according to the sun s position in the specific area throughout the warmest months of the year or they may be moving. Their movement may be manual or mechanical using remote control. ETEM E90 façade system EASY INSTALLATION WITHOUT SCAFFOLDS The Etem Group 13

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17 Composite panels with various types of materials may be manufactured Variety of solutions for building coating System s width: 90mm Gap between frames: 20mm, which ensures movement and shaping up to 14 mm Top quality factory frames Decrease in installation time by 70% Unaffected by weather conditions Glass panes with a thickness from 23mm to 40 mm Compatible system with all ETEM window systems Controlled channelling of rainwater and condensation High level of three-level water-tightness Adaptability of the support console in all directions Easy installation and adjustment of frames Complex panels may be constructed with various types of materials The ETEM façade systems are tested and certified by the internationally acknowledged ift Rosenheim institute. Air permeability A4 according to EN Water-tightness R7 according to EN Resistance to wind load according to EN Impact resistance I4/E4 according to pr EN INVESTING IN THE FUTURE ETEM believes that the continuing development of the global market together with the growth of the company s international reputation and its focus on the establishment of long-term relationships guarantee the ongoing success of ETEM in the future. Therefore, the company aims to launch partnerships and to identify opportunities that will stimulate the use of advanced technology to support new opportunities and activities. The Etem Group 15

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19 Financial Figures Ι. Balance Sheets CONSOLIDATED FIGURES COMPANY FIGURES Amounts in Euro 31/12/ /12/ /12/ /12/2008 ASSETS Non-current assets Tangible fixed assets Intangible assets Investment property Investments in entities consolidated using equity method Investments in entities consolidated using full consolidation method Available-for-sale financial assets Derivatives Other receivables Current assets Inventories Trade and other receivables Receivable from income tax Derivatives Cash and cash equivalents Financial Figures Total assets SHAREHOLDERS EQUITY Shareholders equity attributable to shareholders Share capital Share premium reserves Reserves at fair value Other reserves Foreign exchange differences from foreign subsidiaries consolidation Profits carried forward Total Minority Interest Total shareholders equity LIABILITIES Long-term liabilities Loans Liabilities from financial leasing Derivatives Deferred tax liabilities Liabilities for staff retirement indemnities Grants Provisions Short-term liabilities Suppliers and other liabilities Payable from income tax Other tax liabilities Loans Liabilities from financial leasing Derivatives Provisions Total liabilities Total shareholders equity and liabilities

20 ΙΙ. Income Statement Financial Figures CONSOLIDATED FIGURES COMPANY FIGURES Amounts in Euro 12 months until 12 months until 12 months until 12 months until 31/12/ /12/ /12/ /12/2008 Sales Cost of sales Gross Profit Selling expenses Administrative expenses Other operating income (net) Operating results Financial expenses Financial income Income from dividends Profits/(losses) from associated companies Profits/(Losses) before taxes Income tax Net profits/(losses) of the period from continuing activities Distributed to: The parent company s shareholders Minority Interest Profits/(Losses) per share attributable to the parent company s shareholders for the period (presented in per share) Basic and diluted -0,4338-0,5216-0,3626-0,5752 III. Statement Of Comprehensive Income CONSOLIDATED FIGURES COMPANY FIGURES Amounts in Euro 1/1 till 31/12/2009 1/1 till 31/12/2008 1/1 till 31/12/2009 1/1 till 31/12/2008 Period net profit/(losses) Other comprehensive income items Foreign exchange differences Profit/(loss) from derivatives valuation for cash flow risk hedging Income tax to other items of comprehensive income Other comprehensive income items Total comprehensive income items for the period Distributed to: Parent s shareholders Minority Interest Total comprehensive income items for the period

21 ΙV. Statement of changes in Shareholders Equity Amounts in Euro CONSOLIDATED FIGURES Share capital and share premium Attributable to the parent company s shareholders Reserves at fair value Other reserves Results carried forward Foreign exchange differences of consolidation Total Minority interests Total shareholders equity Balance as at 31 December Balance as at 1 January Foreign exchange differences Loss recognized directly to shareholders equity Net profits/(losses) of the period Comprehensive total income Share capital issue Decrease in holdings in subsidiaries Transfer of reserves Dividend Transactions with shareholders Balance as at 31 December Financial Figures Balance as at 1 January Foreign exchange differences Loss recognized directly to shareholders equity Net losses of the period Comprehensive total income Share capital issue Change in shareholders equity due to change in the consolidation method of ANOXAL Decrease in holdings in subsidiaries Dividend Transactions with shareholders Balance as at 31 December COMPANY FIGURES Balance as at 31 December Balance as at 1 January Loss recognized directly to shareholders equity Net profit of the period Comprehensive total income Transfer of reserves Dividend Transactions with shareholders Balance as at 31 December Balance as at 1 January Loss recognized directly to shareholders equity Net losses of the period Comprehensive total income Transfer of reserves Dividend Transactions with shareholders Balance as at 31 December

22 V. Cash flow statements Financial Figures 1/1 till 31/12/2009 CONSOLIDATED FIGURES 1/1 till 31/12/2008 1/1 till 31/12/2009 COMPANY FIGURES 1/1 till 31/12/2008 Amounts in Euro Cash flows from operating activities Profits/(Losses) before taxes Depreciation (note 6, 7, 8 & 21) Fair value of derivatives through profit and loss (note 18.1) Results from Investment Activity Financial expenses (note 26) Provisions (note 13, 14, 23) Impairment of fixed assets (note 6) Decrease/ (Increase) in inventories Decrease/ (Increase) in receivables Increase/(decrease) in liabilities (excluding banks) Other adjustments Increase in liabilities for staff retirement indemnities (note 20) Interest paid Tax paid Net cash flows from operating activities Cash flows from investment activities Purchase of tangible & intangible assets (note 6, 7) Sale of tangible & intangible assets Sale of holdings Dividends received Changes in other financial assets Interest received Sale of holding Purchase of minority interest in subsidiary Grants received Other Net cash flows from investment activities Cash flows from financing activities Dividends paid Participation of minority shareholders in a newly-established subsidiary Long-term loans taken out Long-term loan repayment Net change in short-term loans Changes in leasing capital Net cash flows from financing activities Net increase/ (decrease) in cash and cash equivalents Cash at beginning of year (Note 16) Cash at end of year

23 AUDIT REPORT OF INDEPENDENT CERTIFIED AUDITOR-ACCOUNTANT To the shareholders of ETEM S.A. Report on the Company and Consolidated Financial Statements We audited the attached company and consolidated financial statements of ETEM S.A. and its subsidiaries, which consist of the company and consolidated balance sheet as at 31 December 2009, the company and consolidated income statements and additional total income, statements of changes in equity and cash flows for the year ended on such date as well as a summary of the significant accounting policies and other explanatory notes. Financial Figures Management s responsibility for the Company and Consolidated Financial Statements Management is responsible for the compilation and fair presentation of these company and consolidated financial statements in accordance with the International Financial Reporting Standards, as adopted by the European Union, and in line with those internal checks and balances which Management considers necessary to make it possible to draw up company and consolidated financial statements free of material misstatements due to fraud or error. Auditor s responsibility Our responsibility is limited to forming and expressing an opinion on the company and consolidated financial statements, based on the audit conducted. Our audit was performed according to the Greek Auditing Standards. These Standards require our compliance with the ethical rules and the planning and implementation of our audit in a way that ensures with reasonable certainty that the company and consolidated financial statements do not contain substantial inaccuracies. The audit includes the conduct of procedures for the collection of audit data, supporting the amounts and information included in the company and consolidated financial statements. The procedures are selected according to the auditor s judgment and include the estimation of risk of substantial inaccuracies of the company and consolidated financial statements due to fraud or error. To estimate this risk, the auditor takes into account the internal checks and balances regarding the compilation and fair presentation of the company and consolidated financial statements that aim to the design of audit procedures which are suitable under the circumstances and not to express an opinion on the effectiveness of the company s internal checks and balances. The audit also includes an evaluation of the suitability of the accounting policies applied and of the fairness of the Management s estimations and, generally, an evaluation of the overall presentation of the company and consolidated financial statements. We believe that the audit conducted provides sufficient basis for substantiating our opinion. 21

24 Opinion Financial Figures In our opinion, the attached company and consolidated financial statements present in a true and fair manner the financial position of ETEM S.A. and its subsidiaries on 31 December 2009, their financial performance and cash flows for the year ended on such date in accordance with the International Financial Reporting Standards as these are adopted by the European Union. Report on other legal and regulatory issues We have checked the agreement and correspondence of the Report prepared by the Board of Directors against the attached company and consolidated financial statements, within the framework of the stipulations laid down in articles 43a, 107 and 37 of Codified Law No. 2190/1920. Athens, 24 March 2010 The Certified Auditor Accountant DIMITRIOS SOURBIS REG.NO. SOEL PRICEWATERHOUSECOOPERS Auditing Société Anonyme CERTIFIED AUDITORS ACCOUNTANTS 268 Kifisias Ave. Halandri, SOEL REG. No 113

25 Annual Report Dear Shareholders, Annual Report PREPARED BY THE BoD OF «ΕΤΕΜ S.A. LIGHT METALS COMPANY» ON THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2009 In accordance with the provisions laid down in Law No. 3556/2007 and the executive decisions made by the Capital Market Commission based on that law, we would like to submit to you the Annual Report prepared by the Board of Directors for fiscal year This report includes a summary of the financial results and changes that happened during 2009, reference to important events that took place, an analysis of prospects and risks as well as a list of transactions with affiliated entities. Such information pertains both to the company and the ETEM Group. The consolidated Financial Statements arose from the consolidation of the relevant data included in the Financial Statements of the parent company ΕΤΕΜ S.A.- LIGHT METALS COMPANY, and its subsidiaries ETALBOND S.A., based in Magoula, Attica; STEELMET S.A. Plovdiv AM U, based in Philippopolis (Plovdiv), Bulgaria; STEELMET S.A. Sofia AM U, based in Sofia Bulgaria; ALUBUILD S.R.L., based in Reggio Emillia Italy; MOPPETS LTD., based in Nicosia Cyprus; ETEM SCG d.o.o., based in Belgrade Serbia; ETEM SYSTEMS S.R.L., based in Bucharest Romania; LLC ETEM SYSTEMS UKR, based in Kiev Ukraine; QUANTUM PROFILES S.A., based in Sofia Bulgaria and AL AMAR SA, based in Tripoli, Libya. The relation that made the consolidation necessary was a parent-subsidiary one. Annual Report Associated companies STEELMET ROMANIA S.A. based in Bucharest Romania, ENERGY SOLUTIONS based in Sofia Bulgaria, KANAL ALUMINIUM CENTRAL RECYCLING S.A. based in Athens, Attica as well as ANOXAL S.A., based in Athens, were also consolidated using the equity method. Neither the parent company nor any of the companies included in the consolidation hold any shares of the parent company. 23

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27 I. SUMMARY REPORT ON THE FISCAL YEAR 2009 Results of the fiscal year The financial crisis and especially the drop in building activity in Greece as well as in the Balkans and Western European countries continue to have a negative impact on the sales and results of ETEM and its subsidiaries. Amid this difficult environment, we acquired new distribution points of our products and new customers, partnerships with more manufacturers while we laid emphasis on quality and increased added value in heat-insulating and conventional frames for consumers. In the context of our continuing corporate restructuring, the ETALBOND sector of ETEM S.A. was separated and was absorbed by ETALBOND S.A., a wholly-owned subsidiary of ETEM SA. The separation was completed on 31/05/2009 while the transferred items of the ETALBOND sector are as follows: Category Value Tangible fixed assets Inventories Trade and other receivables Deferred tax ( ) Provision for staff indemnities (69.737) Loans ( ) Other liabilities ( ) Total In the following tables there is a summary of the consolidated and company results of ETEM S.A.: Annual Report CONSOLIDATED FIGURES 31/12/ /12/2008 Change % Sales ,90% Net earnings/(losses) before interest, taxes, depreciation and amortization ,59% % on Sales 1,00% -1,88% Net earnings/(losses) before tax, depreciation and amortization ,20% % on Sales -4,79% -6,67% Net profits/(losses) before taxes ,32% % on Sales -11,67% -11,57% Net profits / (losses) after taxes ,42% % on Sales -12,68% -9,87% COMPANY FIGURES 31/12/ /12/2008 Change % Sales ,25% Net earnings/(losses) before interest, taxes, depreciation and amortization ,99% % on Sales -5,09% -9,94% Net earnings/(losses) before tax, depreciation and amortization ,42% % on Sales -11,68% -14,81% Net profits before taxes ,70% % on Sales -19,57% -20,52% Net profits/(losses) after taxes ,97% % on Sales -20,38% -17,06% 25

28 Balance sheet The Group s assets as at 31 December 2009 amounted to 207,1 million, reduced by 31,5 million compared to 2008 which was mainly due to a reduction in current assets by 24,4 million and in particular the reduction in inventories by 11,97 million and in trade receivables by 11,2 million. The reduction in current assets resulted from the emphasis placed by the ETEM Management, both in Greece and abroad, on reducing working capital and restraining operating expenses. Accordingly, the company s liabilities to suppliers reduced by 4,9 million while total borrowing is reduced by 9,3 million standing at 111,1 million from 120,4 million on 31/12/2008. Finally, Shareholders Equity amounts to 65,8 million in relation to 78,7 million at the end of the previous fiscal year. Cash flows Cash flows from operating activities are positive both at a consolidated and a company level. The consolidated operating cash flows amounted to 7,98 million, and the respective company cash flows amounted to 3,34 million.. The generation of positive cash flows is the outcome of the efforts that started last year to reduce loan liabilities and manage working capital more rationally. The cash flows from investment activities at the end of the year 2009 amounted to -0,4 million for the Group and 2,5 million for the company while there were outflows from financing activities equal to 9 million and 6,2 million for the Group and the company respectively. Annual Report Investments In 2009, the Group realized investments of a total value of 9,2 million, out of which 2,7 million pertained to parent company investments, approximately 2,9 million referred to Steelmet S.A. and 2,4 million to Quantum S.A.. Following is a table of the main financial ratios of the Group and the company. Ομίλου Εταιρίας 12Μ Μ Μ Μ 2008 Gross Profit Margin 18,97% 10,20% 18,15% 2,11% (Gross Profit/Sales) Net Profit Margin -12,68% -9,87% -20,38% -17,06% (Net Profit/Sales) Debt/equity ratio 2,15 2,03 1,57 1,72 (loans/ shareholders equity) Liquidity ratio 1,06 1,35 0,99 1,55 (current assets/ short-term liabilities) Return on equity -19,90% -19,92% -20,01% -26,44% (Net income/ shareholders Equity) Inventory Turnover Ratio (Inventory/ cost of sales) x 360 days Receivable turnover ratio (Receivables/ Sales) x 360 days Payable turnover ratio (Short-term liabilities/ cost of sales) x 360 days

29 II. IMPORTANT EVENTS FROM 1/1/2009 TO 31/12/2009 Following are important events that took place in the fiscal year 2009: i. Investment in ETEM subsidiaries During the fiscal year 2009, the changes in the holdings of ETEM S.A. are as follows: A) An 1% stake of ANOXAL S.A. was acquired in exchange for 1,00. B) Cash equal to 7,14 was paid to increase the share capital of ANOXAL SA so as to round the number of shares of ANOXAL S.A. due to the absorption of the foundry branch. C) On 23/04/2009, ETEM S.A. sold 55% of its wholly-owned subsidiary ANOXAL S.A. to ELVAL SA. The selling price stood at and for the purposes of the financial statements as at 30/06/2009 ANOXAL S.A. was consolidated using the equity method of accounting. D) On 31 May 2009, the separation of ETALBOND sector and its transfer to the wholly-owned subsidiary of ETEM S.A. named ETALBOND S.A. were completed. The transferred assets and liabilities are as follows: Category Value Tangible fixed assets Inventories Trade and other receivables Deferred tax ( ) Provision for staff indemnities (69.737) Loans ( ) Other liabilities ( ) Total Annual Report E) By way of its decision dated 30/06/2009, the BoD of KANAL returned share capital equal to to its shareholders while cancelling at the same time shares out of as a whole. The proportionate amount of capital return for ETEM S.A. stood at F) On 30/09/2009, ETEM S.A. sold its total holding in KARAY METALS INCORPORATED which has its registered office in New York, USA. Its holding came to 11% while the selling price amounted to USD Note that the acquisition cost of the above company had been fully written off at both company and consolidated level while profit equal to ,32 arose from the sale. ii. Changes in the management and administration of the Group A) Following a resolution passed by the company s Board of Directors on 14/05/2009, the Head of Shareholders Service Mr. Vardis Kounalakis was replaced by Ms. Alexandra Tseni. B) As of 01/05/2009, Mr. Panagis Stratiotis was transferred from the CFO post of the ETEM Group to that of General Manager of ANOXAL and, by way of a more recent resolution of the BoD, he was appointed financial advisor to ETEM SA. C) Mr. Antonis Kallergis who held the post of deputy General Manager of ETEM S.A. took over the duties of General Manager in the wholly-owned subsidiary of ETEM S.A. named ΕΤΑLBOND S.A. and Mr. Vardis Kounalakis who held the post of the accounting department head of ETEM S.A. took over the duties of the Head of Financial Services of ETALBOND SA. 27

30 iii. Annual Ordinary General Assembly of Shareholders On 17 June 2009, the Annual Ordinary General Assembly of the Shareholders of ETEM took place. The assembly was attended by persons representing 78,52% of the company s shares, and they passed the following resolutions unanimously: 1. To approve the annual financial statements of the fiscal year 2008 and the reports prepared by the Board of Directors and Auditors thereon. 2. To relieve the members of the Board of Directors and the Auditors of all liability with regard to the financial administration for fiscal year To appoint the auditing firm PRICEWATERHOUSECOOPERS as certified auditor for fiscal year 2009, in accordance with their offer. 4. To approve in advance the fees to be paid to the members of the Board of Directors for the services they provide to the company. 5. To elect the following persons as audit committee members pursuant to article 37 of Law No. 3693/2008: Annual Report 1. ANDREAS KYRIAZIS 2. PAPANIKOLAOU CHARALAMBOS 3. STRIBER EFSTATHIOS A detailed account of the resolutions passed by the Annual Ordinary General Assembly is posted on the ΕΤΕΜ Website ( and on the Website of the Athens Stock Exchange (

31 III. PROSPECTS AND MAJOR RISKS & UNCERTAINTIES FOR FISCAL YEAR 2009 i. Prospects 2009 was a difficult year for the company and it is expected that 2010 will be an equally difficult year given the budgetary uncertainty and adaptation to the new fiscal regime with eventual adverse consequences and despite the prospects of indirect government support to the branch. In its attempt to deal with this adverse environment, the company pursues its activities that aim to reduce costs, reduce working capital and, therefore, attain lower leverage while also entering new markets. During 2009, the company geared its efforts to increase the sales network and distribution points, increase quality associated manufacturers and also focus on the needs of end consumers. At the same time, efforts to expand the sales of industrial profiles in and beyond Greece and also to penetrate new markets of architectural profiles abroad are intensified. In addition, the company considers prospects in market segments in which it had not been present until recently by designing and launching new innovative products. Moreover, efforts are still made to align the activities of ETEM subsidiaries and maximize the economies of scale. Finally, regarding the investment in Libya, we take positive steps toward a strategic partnership with local partners, which was our initial goal. ii. Main risk and uncertainties The company and its subsidiaries apply risk management policies so that risks can be promptly identified and analyzed, risk-taking limits can be set, and suitable risk controls can be implemented. Supervision of such policies has been assigned to the Internal Audit Department, which conducts ordinary and extraordinary audits regarding the application of procedures, whose findings are disclosed to the company s Board of Directors. Annual Report Credit Risk Credit risk is the risk of loss in the event that a customer or third party to a financial transaction fails to fulfil its contractual obligations; such risk is mainly related to trade receivables and investments in securities. (a) Trade and other receivables The company and its subsidiaries have credit control departments and have implemented appropriate procedures to ensure the maximum possible security of their trade receivables. Each customer is scrutinized separately as to his credit capacity, and then appropriate payment terms are proposed, such as limits and deadlines for payment of liabilities. Furthermore, the company and its subsidiaries insure the balances of their trade receivables with insurance companies to the maximum possible degree, and international sales are mostly covered by Bank Credits. (b) Investments Investments are classified by the Group in accordance with the purpose for which they were acquired. The Management decides on the appropriate classification of an investment upon acquisition and reviews such classification on each presentation date. (c) Collateral According to the Group s policy, no collateral is provided; however, if the Board of Directors decides so in exceptional cases, such collateral may be provided to subsidiaries. Liquidity Risk Liquidity risk is the risk that the Group may be unable to fulfil its financial liabilities upon maturity. The approach adopted by the Group to manage liquidity is to ensure, by holding absolutely necessary cash and adequate credit lines with cooperating banks, that it will always have adequate liquidity to fulfil its liabilities upon maturity, under normal or more difficult conditions, without suffering unacceptable losses or jeopardizing its reputation. In order to avoid liquidity risks, the Group sets up a cash flow provision for one year when preparing the annual budget and a monthly rolling provision for three months so as to ensure sufficient cash in hand to meet its operating needs, including fulfilment of its financial liabilities. This policy does not take into account the relevant effect of unforeseeable extreme conditions. 29

32 Market Risk Market risk is the risk of changes in the prices of raw materials, in exchange rates and interest rates that have an effect on the Group s results or the value of its financial instruments. The purpose of market risk management is to control the Group s exposure to such risks within the context of acceptable parameters while optimizing returns. The Group enters into transactions with derivative financial instruments so as to hedge part of the risks arising from market conditions. (a) Metal price fluctuation risk (aluminium) The Group bases part of its purchases and sales on market prices/ ratios relating to the price of aluminium and other metals used and contained in its products. The risk from metal price fluctuation is covered by hedging instruments (futures in the London Metal Exchange-LME). The Group, however, does not use hedging instruments for its entire operating inventory and thus any possible drop in metal prices may have a negative effect on its results due to the devaluation of inventories. (b) Foreign exchange risk The Group is exposed to foreign exchange risk with regard to its purchases and sales. The currencies used to effect such transactions are mainly Euro, USD, GBP, RON, the Serbian dinar, and the Bulgarian lev. Annual Report If the foreign currency was increased by 10% in relation to Euro, the effect would be: GROUP Results Shareholders equity USD GBP Lev RON Dinar COMPANY Results Shareholders equity USD GBP Lev RON Dinar If the foreign currency was depreciated by 10% in relation to Euro, the effect would be: COMPANY Results Shareholders equity USD GBP Lev RON Dinar

33 GROUP Results Shareholders equity USD GBP Lev RON Dinar Loan interest is denominated in the same currency as that of cash flows which arises from the Group s operating activities and is mostly Euro. The investments of the Group in other subsidiaries are not hedged because these foreign exchange positions are considered to be long-term. (c) Interest rate risk The Group finances its investments and its needs for working capital through bank loans and bond loans, with the result of burdening its results with interest charges. Any interest rate upward trend will have a negative effect on results since the Group will bear additional borrowing costs. Interest rate risk is mitigated since a small part of the Group s borrowings is set at fixed rates either directly or using financial instruments (interest rate swaps). If interest rates were increased/ decreased by 25 basis points, the effect on results and shareholders equity would be: GROUP Results Shareholders equity Variable rate -/ / Interest rate swaps - - -/ / Annual Report COMPANY Results Shareholders equity Variable rate -/ / Interest rate swaps - - -/ / Capital management The Board of Director s policy consists in maintaining a strong capital structure so as to ensure the confidence of investors, creditors and the market in the Group and enable the development of the Group s future activities. The Board of Directors monitors the return on capital which is defined by the Group as its net results divided by its total equity, save non-convertible preferential shares and minority interests. The Board of Directors also monitors the level of dividends distributed to holders of ordinary shares. The Board of Directors tries to maintain equilibrium between higher returns that would be feasible through higher borrowing levels and the advantages and security offered by a strong and robust capital structure. The Group does not have a specific plan for the purchase of own shares. There were no changes in the approach adopted by the Group in relation to capital management during the fiscal year. 31

34 IV. SIGNIFICANT TRANSACTIONS WITH AFFILIATED ENTITIES Following is a summary of the ETEM Group s transactions with affiliated entities that are not consolidated: Annual Report (Amounts in Euro) Company Sale of goods, services & fixed assets Purchase of goods, services & fixed assets Receivables Liabilities ΕLVAL SA (**) ANOXAL (*) SOFIA MED (**) STEELMET ROMANIA SA(*) SYMETAL (**) HELLENIC CABLES (**) ΑΝΑΜΕΤ (**) STEELMET Α.Ε.(**) VIOMAL SA (**) ΤΕΚΑ SYSTEMS SA (**) Other Companies TOTAL * Companies consolidated using the equity method. ** Companies that belong to the VIOHALCO S.A. Group, parent company of ELVAL S.A. (Basic shareholder of ETEM S.A.). Following is a list of the transactions of parent company ETEM S.A. with subsidiaries & affiliated entities: (Amounts in Euro) Company Sale of goods, services & fixed assets Purchase of goods, services & fixed assets Receivables Liabilities STEELMET SA (2)(BG) ALUBUILD SRL ETEM SCGDOO AL-AMAR ETEM SYSTEMS SRL ETALBOND ETEM SYSTEMS UKR SUBSIDIARIES TOTAL

35 (Amounts in Euro) Company Sale of goods, services & fixed assets Purchase of goods, services & fixed assets Receivables Liabilities ANOXAL (*) , ΕLVAL SA (**) , STEELMET Α.Ε.(*) 100, ΑΝΑΜΕΤ (**) 952, ΤΕΚΑ SYSTEMS SA(**) STEELMET ROMANIA SA(*) , METAL AGENCIES (*) , ELVAL AUTOMOTIVE GMBH (*) 40, VIOMAL SA(**) , ENERGY SOLUTIONS (*) , Other Companies , AFFILIATED ENTITIES TOTAL GROUP S GRAND TOTAL * Companies consolidated using the equity method. ** Companies that belong to the VIOHALCO S.A. Group, parent company of ELVAL S.A. (Basic shareholder of ETEM S.A.). Fees paid to members of the Board of Directors and high-ranking executives Annual Report The fees paid to executive officers and members of the management in 2009 amounted to (2008: ) for the company and (2008: ) for the Group. V. DETAILED INFORMATION PURSUANT TO ART. 4, PAR. 7 OF L.3556/2007 a) Share capital structure The Company s share capital amounts to Euro divided in ordinary bearer shares of a nominal value of Euro 0,31 each. All shares are traded in the Athens Stock Exchange, in the Middle & Small Cap market segment. Company shares are dematerialized, bearer shares incorporating voting rights. According to the Company s Articles of Association, the rights and obligations of shareholders are as follows: i) Right to a dividend from the annual profits of the Company. The dividend to which each share is entitled shall be paid to the shareholder within two (2) months from the date of approval of the financial statements by the General Assembly. The right to collect a dividend shall be deleted after the elapse of five (5) years from the end of the year in which the General Assembly approved its distribution. ii) A pre-emption right whenever the share capital is increased and new shares are made available. iii) A right to take part in the General Assembly of shareholders. iv) The status of a shareholder implies ipso jure acceptance of the Company s articles of association and the decisions of its bodies that are in accordance with the law. 33

36 Annual Report v) The shares of the Company are inseparable and the Company does not recognize more than one owner for each share. All co-owners of a share, as well as those having the usufruct or naked property of such share, shall be represented in the General Assembly of Shareholders only by one person appointed upon agreement between them. In case of disagreement the share of the aforementioned owners shall not be represented. vi) Shareholders shall bear no liability other than the nominal value of each share. b) Limitations in transferring Company shares Company shares are transferred in accordance with the Law and there is no limitation arising from the articles of association in connection with such transfer. c) Major direct or indirect holdings within the meaning of Articles 9 to 11 of L. 3556/2007 The major holdings (over 5%) as at 31/12/2009 were as follows: ELVAL S.A.: 58,78% of the share capital (parent company, direct holding) MARKOS KALLERGIS: 9,55% of the share capital VIOHALCO S.A.: 58,78% of voting rights (parent company of ELVAL S.A.) d) Shares granting special rights of control There are no Company shares providing their holders with special rights of control. e) Restrictions on voting rights There are no limitations on the voting rights of Company shares arising from its articles of association. The rules laid down in the Company s articles of association that regulate voting matters are included in article 24 of the articles of association and state: Each share entitles its holder to one (1) vote in the General Assembly. The shareholders, in order to acquire the rights to participate in the General Assembly of Shareholders are obliged, at least five (5) days before the date of the assembly, to submit to the headquarters of our Company a certificate issued by the Athens Central Securities Depository stating the number of shares registered under their name and including a commitment that they will not transfer the above shares until the date of the General Assembly of Shareholders. Within the same deadline, shareholders are obliged to submit to the Company headquarters the powers of attorney appointing their proxies. f) Agreements between Company Shareholders To the best of the Company s knowledge, there are no agreements between shareholders. g) Rules on the appointment and replacement of Board members and the amendment of the Articles of Association The rules contained in the Company s Articles of Association on the appointment and replacement of members of the Board of Directors and the amendment of such Articles are not different from those contained in Codified Law No. 2190/1920. h) Authority of the Board of Directors to issue new shares or purchase own shares Article 6 1 of the Company s articles of association states that only the General Assembly of Shareholders, when 2/3 of the paid-up share capital is present, has the right to decide to increase the Company s share capital with the issue of new shares, whereas such a decision requires a majority of 2/3 of the represented votes. The Company s articles of association do not allow the transfer to the Board of Directors or to some of its members of any right that falls within the powers of the General Assembly of Shareholders regarding any issue of shares and share capital increase. The Board of Directors may proceed to purchase own shares in implementation of a resolution passed by the General Assembly in accordance with article 16, paragraphs 5 to 13 of Codified Law No. 2190/20.

37 i) Major agreements which shall take effect, be amended or expire in the event of a change in control The Company s common bond loan agreements which were assumed in full by Banks and are referred to in note 19 of the annual financial statements (Corporate bond loans , out of which are short-term ones & Consolidated bond loans , out of which are short-term ones), include a change-ofcontrol clause which, if used, enables lenders to terminate such loans prior to their maturity dates. To the best of the Company s knowledge, there are no other agreements which shall take effect, be amended or expire in the event of a change in the control of the Company. h) Agreements with Board members or Company employees To the best of the Company s knowledge, there are no agreements between the Company and its Board members or employees providing for the payment of indemnity in the event of resignation or discharge without an important reason or due to a termination of their tenure or employment. Annual Report 35

38 STATEMENTS BY MEMBERS OF THE BOARD OF DIRECTORS PURSUANT TO ART. 5, PAR.2 OF L.3556/2007 We hereby state and confirm that, to the best of our knowledge, the company and consolidated financial statements of ETEM S.A., for the period 01/01/2009 to 31/12/2009, which were prepared according to applicable accounting standards, accurately present the assets and liabilities, net position and results of the fiscal year for the Group and the Company, as well as those of the companies included in the consolidation that are aggregately taken into account, according to the stipulations laid down in paragraphs 3 to 5 of L. 3556/2007. We hereby state and confirm that, to the best of our knowledge, the annual report prepared by the Board of Directors accurately presents the information required according to paragraph 6 of article 5 of L. 3556/2007. Annual Report Dimitris Pavlakis Magoula, 19 March 2010 Certified by Markos Kallergis Charalambos Papanikolaou Vice Chairman of the Board of Directors Chairman of the Board of Directors Member of the Board of Directors

39 CONTACT WITH SHAREHOLDERS To obtain information, investors can contact Mrs. Alexandra Tseni and Mrs. Maria Michael, who serve as Shareholders Contact Persons, Tel.: (210) , (210) Fax: (210) , (210) Contact With Shareholders 37

40 OFFICES-FACTORY 1 Iroon Polytechniou Str., Magoula Tel.: , , Fax: , etem@etem.gr